ACIT Corporate Circle 4(1), CHENNAI V. Myoung Shin India Automotive Private Limited, Kanchipuram

ITA 1239/CHNY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2494 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SRINIVASA RAO
• Assessee Lawyers: SANDEEP BAGMAR R
• Keywords: Depreciation; Transfer pricing; International transaction; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . , . , BEFORE SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1239/CHNY/2019 /ASSESSMENT YEAR: 2009-10 & CROSS OBJECTION NO.73/CHNY/2019 (IN ITA NO.1239/CHNY/2019) /ASSESSMENT YEAR: 2009-10 THE ASST. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI-600 034. VS. M/S.MYOUNG SHIN INDIA- AUTOMOTIVE PVT. LTD., NO.496/2, MANNUR VILLAGE, VALAPURAM POST, SRIPERUMBUDUR TALUK, KANCHIPURAM-602 105. [PAN: AAECM 7841 G] ( /APPELLANT) ( /RESPONDENT / CROSS-OBJECTOR) DEPARTMENT BY : MR.M.SRINIVASA RAO, CIT ASSESSEE BY : MR.SANDEEP BAGMAR.R, ADV. /DATE OF HEARING : 10.11.2020 /DT. OF PRONOUNCEMENT : 23.11.2020 / O R D E R PER BENCH: THE REVENUE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI, IN ITA NO.101/1 7-18 DATED 30.01.2019 FOR THE AY 2009-10 AND THE ASSESSEE FILE D CROSS-OBJECTION ON THE SAME. ITA NO.1239/CHNY/2019 & CO NO.73/CHNY/2019 :- 2 -: 2. M/S.MYOUNG SHIN INDIA AUTOMOTIVE PVT. LTD., THE ASSESSEE, IS ENGAGED IN THE BUSINESS OF MANUFACTURING AUTOMOBILE PARTS A ND HAS ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATE ENTER PRISES DURING THE PERIOD RELEVANT TO THE AY 2009-10. THE AO ISSUED A NOTICE U/S.148 AND ON SCRUTINIZING ASSESSEES RETURN FOR THE AY 2009-10, THE AO FOUND THAT THE ASSESSEE CLAIMED HIGHER DEPRECIATION @30% ON MOULDS AND DYES AND HENCE PROPOSED TO RESTRICT THE SAME @15%. THE ASSESSEE H AS AGREED TO IT AND ACCORDINGLY, THE AO RESTRICTED THE DEPRECIATION CLA IM SO. FURTHER, THE AO FOUND THAT THE ASSESSEE CLAIMED FEE FOR TECHNICAL S ERVICES (FTS) & ROYALTY IN ITS P&L A/C. ON EXAMINATION OF ASSESSEES AGREE MENT WITH M/S.AUTOTECH CO. LTD., DATED 01.08.2007, WHEREIN THE LATTER IS L ICENSOR, THE AO FOUND THAT THE TERMS OF IT WAS SIMILAR TO THE TERMS DECID ED BY THE HONBLE APEX COURT IN THE CASE OF M/S.SCIENTIFIC ENGG. HOUSE (P) LTD. V. CIT (1985) 23 TAXMANN 66 AND HENCE HELD THAT THE FTS & ROYALTY AM OUNT CLAIMED BY THE ASSESSEE ARE TO BE TREATED AS CAPITAL EXPENDITURE A ND ACCORDINGLY, DISALLOWED THEM AND COMPLETED THE RE-ASSESSMENT. A GGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMM ISSIONER OF INCOME TAX (APPEALS). THE LD.CIT(A) PARTLY ALLOWED THE APPEAL . AGGRIEVED AGAINST THAT ORDER, THE REVENUE FILED AN APPEAL AND THE ASSESSEE FILED THE CROSS- OBJECTION. 3. THE CASE WAS POSTED FOR HEARING THROUGH VIDEOCON FERENCING. THE LD.DR INVITED OUR ATTENTION TO PARA NOS.5 & 8 OF TH E ASSESSMENT ORDER AND SUBMITTED THAT THE AO HAS CORRECTLY COME TO A CONCL USION THAT THE IMPUGNED ITA NO.1239/CHNY/2019 & CO NO.73/CHNY/2019 :- 3 -: EXPENDITURE IS CAPITAL IN NATURE AND THE LD.CIT(A) WITHOUT EXAMINING THIS ISSUE PROPERLY, SIMPLY BASED ON THE MODE OF PAYMENT S MADE BY THE ASSESSEE ALONE CONCLUDED THE ISSUE AND HENCE PLEADE D TO ALLOW THE APPEAL. PER CONTRA, THE LD.AR SUBMITTED THAT THE AO HAS NOT EXAMINED THIS ISSUE PROPERLY AND WHAT IS EXTRACTED BY THE AO IN PARA NO .5 OF THE ASSESSMENT ORDER IS NOTHING BUT A PARA FROM THE APEX COURT DEC ISION IN THE CASE RELIED ON BY HIM AND PARA NO.8 IS NOTHING BUT ASSESSEES R EPLY TO THE AO. WHEN WE POINTED OUT THAT THE ESSENTIAL FACTS AND ASSOCIA TED CIRCUMSTANCES ARE NOT DULY EXAMINED BY THE AO, THE LD.AR SUBMITTED TH AT THE ISSUES MAY BE REMITTED BACK FOR DUE EXAMINATION, HOWEVER, THE ASS ESSEE MAY BE GIVEN DUE LIBERTY TO RAISE THE JURISDICTIONAL ISSUE ON TH E ISSUE OF NOTICE U/S.148 AS RAISED IN ITS CROSS-OBJECTION. THE LD.DR SUBMITTED THAT HE HAS NO OBJECTION, IF THE ISSUES ARE REMITTED BACK TO THE AO FOR DUE E XAMINATION. 4. WE HEARD THE RIVAL SUBMISSIONS. IT IS CLEAR FRO M THE ABOVE THAT THE FACTS AND CIRCUMSTANCES ASSOCIATED WITH THE ISSUES OF FTS & ROYALTY ARE NOT PROPERLY EXAMINED WITH RELEVANT DOCUMENTS. THEREFO RE, IN THE INTERESTS OF JUSTICE, WE REMIT THIS ISSUE TO THE AO FOR A FRESH EXAMINATION. THE ASSESSEE IS ALSO GIVEN THE LIBERTY TO RAISE THE JURISDICTION AL ISSUE IN CONNECTION WITH THE REOPENING OF THE ASSESSMENT. THE ASSESSEE SHAL L LAY RELEVANT MATERIAL ON WHICH IT RELIES IN SUPPORT OF ITS CONTENTIONS AN D COMPLY WITH THE AO IN ACCORDANCE WITH LAW. THE AO, AFTER AFFORDING ADEQU ATE OPPORTUNITY TO THE ASSESSEE SHALL DECIDE THIS ISSUES IN ACCORDANCE WIT H LAW. ITA NO.1239/CHNY/2019 & CO NO.73/CHNY/2019 :- 4 -: 5. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS CROSS OBJECTION OF THE ASSESSEE ARE TREATED AS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED ON THE 23 RD DAY OF NOVEMBER, 2020, IN CHENNAI. SD/- SD/- ( . . ) (DUVVURU R.L. REDDY) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 23 RD NOVEMBER, 2020. TLN /COPY TO: 1. /APPELLANT 4. ! /CIT 2. ' /RESPONDENT 5. /DR 3. ! ( ) /CIT(A) 6. /GF