M/s Ecom Gill Coffee Trading Pvt. Ltd., Bangalore V. DCIT, Bangalore

ITA 1228/BANG/2012

• Counselvise Citation: 122821114 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R AKESH BHASKAR
• Keywords: Transfer pricing; International transaction
• Section: 92C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER IT (TP) A NO. 1228 / BANG/20 12 (ASSESSMENT YEAR: 20 0 8 - 09 ) M/S.ECOM GILL COFFEE TRADING PVT. LTD. ECOM HOUSE , #489/11 BOREWELL ROAD, WHITEFIELD, BANGALORE. APPELLANT PAN: AAACE 7863 N VS. DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 11(3), BANGALORE. RESPONDENT APPELLANT BY: SHRI TATA KRISHNA, ADVOCATE. RESPONDENT BY: SHRI R AKESH BHASKAR, CIT(DR). DATE OF HEARING : 12/02/2015. DATE OF PRONOUNCEMENT: 20 /02/2015. O R D E R PER SMT.P.MADHAVI DEVI, JM: IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (AO) DATED 27/08/2012 WHIC H IS PASSED IN PURSUANCE OF THE DIRECTIONS OF THE DRP U/S 143(3) R.W.S. 144C OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. IT (TP) A NO . 1228 /BANG/20 1 2 M/S.ECOM GILL COFFEE TRADI NG PVT. LTD. PAGE 2 OF 5 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING OF COFFEE, COTTON, COCOA AND OTHER COMMODITIES, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 ON 28/10/2007 DECLARING A LOSS OF RS.2,43,45,229/ - . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3), THE AO NOTICED THAT THE ASSESSEE HAD INT ERNATIONAL TRANSACTION WITH ITS ASSOCIATED ENTERPRISES (AE) EXCEEDING RS.15 CRORES. THEREFORE, REFERENCE WAS MADE TO THE TRANSFER PRICING OFFICER (TPO) U/S 92C OF THE ACT FOR DETERMINATION OF THE ARMS LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION. THE ASSESSEE HAD ADOPTED THE CUP METHOD AS THE MOST APPROPRIATE METHOD FOR DETERMINING THE ALP. THE TPO DETERMINED THE ALP U/S 92C(5) OF THE ACT AND HELD THAT THE SALE PRICE OF THE ASSESSEE WAS FOUND TO BE LOWER THAN THE UNCONTROLLED PRICE AND THAT THE INTERNATIONAL TRANSACTION IS NOT AT ARMS LENGTH. HE, THEREFORE, DETERMINED THE ALP ADJUSTMENT AT RS.1,35,96,260/ - FOR THE FINANCIAL YEAR 2007 - 08 I.E. FOR THE ASSESSMENT YEAR 2008 - 09. T HE ASSESSEE FILED OBJECTIONS BEFORE THE DRP STATING THAT THE TPO IS NOT JUSTIFIED IN ADOPTING CUP METHOD IN DETERMINING THE ALP AND THAT TNMM SHOULD BE ADOPTED AS IT IS THE METHOD ADOPTED BY THE TPO AS WELL AS THE DRP FOR THE ASSESSMENT YEAR 2006 - 07. THE DRP, HOWEVER, REJECTED THE ASSESSEE S CONTENTION AND CONFIRMED THE O RDERS OF THE TPO AND THE AO ACCORDINGLY PASSED THE FINAL ORDER. IT (TP) A NO . 1228 /BANG/20 1 2 M/S.ECOM GILL COFFEE TRADI NG PVT. LTD. PAGE 3 OF 5 3. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST ADOPTION OF CUP METHOD FOR DETERMINATION OF THE ALP. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASS ESSEE HAD ADOPTED CUP AS THE MOST APPROPRIATE METHOD DURING THE ASSESSMENT YEAR 2006 - 07, BUT THE TPO HAD REJECTED THE SAME AND HAD ADOPTED TNMM AND THE ISSUE IN ASSESSMENT YEAR 2006 - 07 HAD TRAVELLED UPTO THE TRIBUNAL AND THE TRIBUNAL BY ITS ORDER DATED 26/ 04/2012 ( TO WHICH ONE OF US I.E. THE JUDICIAL MEMBER IS A SIGNATORY ) HAD REMANDED THE ISSUE BACK TO THE FILE OF THE TPO TO RE - EXAMINE AND DETERMINE THE MOST APPROPRIATE METHOD FOR DETERMINATION OF THE ALP. HE SUBMITTED THAT WHILE GIVING EFFECT TO THE ORDER S OF THE TRIBUNAL, FOR THE ASSESSMENT YEAR 2006 - 07 AND 2007 - 08, THE T PO HAS ADOPTED TNMM AS THE MOST APPROPRIATE METHOD AND HAS HELD THAT NO ADJUSTMENT IS REQUIRED U/S 92CA OF THE ACT. COPIES OF THE ORDERS OF THE T PO DATED 29/1/2014 FOR ASSESSMENT YEAR 20 06 - 07 AND 2007 - 08 ARE FILED BEFORE US. HE ALSO FILED COPIES OF THE ORDERS OF THE TPO FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 I.E. SUBSEQUENT TO THE ASSESSMENT YEAR UNDER CONSIDERATION WHEREIN THE TNMM METHOD HAS BEEN ADOPTED FOR DETERMINING THE ALP AN D NO ADJUSTMENT WAS MADE U/S 92C A OF THE ACT. THUS, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE REVENUE HAS BEEN ADOPTING TNMM AS THE MOST APPROPRIATE METHOD FROM THE ASSESSMENT YEAR 2006 - 07 TO 2010 - 11 EXCEPT FOR THE ASSESSMENT YEAR 2008 - 09 I.E. ASSESSMENT YEAR BEFORE US AND THE REVENUE IT (TP) A NO . 1228 /BANG/20 1 2 M/S.ECOM GILL COFFEE TRADI NG PVT. LTD. PAGE 4 OF 5 SHOULD ADOPT A CONSISTENT AND UNIFORM STAND FOR SIMILAR TRANSACTIONS . THEREFORE, HE PRAYED THAT THE TPO BE DIRECTED TO ADOPT TNMM AS THE MOST APPROPRIATE METHOD. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE, HOWE VER, SUBMITTED THAT THE ASSESSEE ITSELF HAD ADOPTED CUP METHOD FOR DETERMINATION OF THE ALP AND THEREFORE IT CANNOT TAKE A CONTRARY STAND BEFORE THE TRIBUNAL. AS REGARDS THE ADOPTION OF TNMM FOR EARLIER AS WELL AS SUBSEQUENT ASSESSMENT YEAR S , THE LEARNED DEPARTMENTAL REPRESENTATIVE HAD SOUGHT TIME TO G ET CLARIFICATION AND HAS FILED WRITTEN SUBMISSION S ON 12/2/2015. ON GOING THROUGH THE SAME, WE FIND THAT ON SET ASIDE OF THE ASSESSMENT ORDER AND DE NOVO CONSIDERATION FOR EARLIER ASSESSMENT YEAR, THE TPO HA S ADOPTED TNMM METHOD AND HAS CONTINUED TO A DO PT THE SAME FOR ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 AS WELL. SINCE THE REVENUE HAS BEEN CONSISTENTLY ADOPTING TNMM FOR DETERMINATION OF THE ALP OF THE INTERNATIONAL TRANSACTION OF THE ASSESSEE, WHICH IS SIMILA R TO THE TRANSACTION DURING THE RELEVANT ASSESSMENT YEAR I.E. 2008 - 09, WE DIRECT THE TPO TO ADOPT TNMM FOR THE ASSESSMENT YEAR 2008 - 09 AS WELL. 5. IN THE RESULT, THE ASSESSEE S APPEAL IS ALLOWED. PRON OUNCED IN THE OPEN COURT ON 20 TH FEBRUAR Y , 201 5 . S D/ - SD/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU IT (TP) A NO . 1228 /BANG/20 1 2 M/S.ECOM GILL COFFEE TRADI NG PVT. LTD. PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE