RADIANT PLASTIC INDUSTRIES P.LTD, MUMBAI V. DCIT CIR 3(3)(1), MUMBAI

ITA 1265/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2006 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Next Hearing Date: 02-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRI N K CHAND
• Keywords: Transfer pricing; International transaction
• Section: 143(3)

Judgement Text

INCOME-TAX APPELLATE TRIBUNAL -KBENCH MUMBAI , ,, , , , , , , ,, , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND SAKTIJIT DEY,JUDICIAL MEMBER / ITA NO.1265/MUM/2015 : /ASSESSMENT YEAR-2010-11 M/S. RADIANT PLASTIC INDUSTRIES PVT. LTD. 722, MAKER CHAMBER-V, NARIMAN POINT MUMBAI (W)-400 021. PAN:AAACR 3302 F VS. DCIT-3(3)(1) AAYAKAR BHAVAN MUMBAI. (APPELLANT) (RESPONDENT) REV ENUE BY: SHRIN.K. CHAND -CIT ASS ESSEE BY: NONE / DATE OF HEARING: 04.10.2016 / DATE OF PRONOUNCEMENT: 16.11.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ASSESSMENT ORDER DATED.30.01.2015 OF THE ASSESSING OFFICER (A.O.), PASSED U/S. 143(3) R.W.S. 144C (13) THE ASSESSEE HAS FILE D THE PRESENT APPEAL. 2. ASSESSEE-COMPANY, ENGAGED IN THE BUSINESS OF TRADIN G IN VARIOUS ITEMS ,FILED ITS RETURN OF INCOME ON 4.9.2010, DECLARING INCOME OF RS.62.90 LA KHS. THE AO, IN PURSUANCE OF THE DISPUTE RESOLUTION PANEL (DRP) DETERMINED THE INCOM E OF THE ASSESSEE AT RS.2.26 CRORES. 3. FIRST EFFECTIVE GROUND OF APPEAL (GOA-1-5) IS ABOUT UPWARD ADJUSTMENT OF RS.1.63 CRORES IN RESPECT OF THE INTERNATIONAL TRANSACTIONS (IT.S) PERTAINING TO SALE OF GOODS AND SERVICES. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THA T THE ASSESSEE HAD ENTERED INTO IT.S WITH ITS ASSOCIATE ENTERPRISES (AE.S)OF RS.17.18 CRORES. HE MADE A REFERENCE TO THE TRANSFER PRICING OFFICER (TPO).DURING THE TRANSFER PRICING ( TP) PROCEEDINGS,HE FOUND THAT THE ASSESSEE HAD ADOPTED TNMM AS MOST APPROPRIATE METHO D FOR DETERMINATION OF ARMS-LENGTH PRICE(ALP) OF THE IT.S.THE ASSESSEE FURNISHED DATA OF 16 COMPARABLES IN THAT REGARD . THE TPO REJECTED 12 COMPARABLES SELECTED BY THE ASSESSE E AND SELECTED THE FINAL SET OF COMPARABLES AS UNDER:- I. ABC TUBE INDS. LTD. 14.21% II. ACL COMPONENTS LTD. 11.61% III. CUPRUM BAGRODIA LTD. 12.26% IV. MITUTOYO SOUTH ASIA PVT. LTD. 17.16% 1265/M/15-RADIANT PLASTIC 2 AVERAGE 13.8% 3.1. HE RE-COMPUTED THE PLI OF THE ASSESSEE AT 2.02% CO NSIDERING THE COST OF GOODS SOLD AS AN EXPENSE AND EXCLUDING OTHER INCOME NOT OPERATING IN NATURE. HE OBSERVED THAT AVERAGE PLI OF THE COMPARABLES WORKED OUT AT 13.8% AS AGAINST THE PLI OF THE ASSESSEE AT 2.02%. AS A RESULT HE MADE AN ADJUSTMENT OF RS.1.98CRORES. ACCORDINGLY THE AO PROPOSED TO ADD THE SAID AMOUNT IN THE DRAFT ASSESSMENT ORDER. THE ASSESSEE FILED ITS OBJECTION BEFORE THE DRP AND SUBMITTED THAT THE OTHER INCOME I.E. SALE OF DEPB ( RS.16.13 LAKHS), DUTY DRAWBACK (RS.8.23 LAKHS) AND INTEREST FROM CUSTOMERS (RS.19.27LAKHS) OUGHT TO BE TREATED AS OPERATING IN NATURE WHILE COMPUTING PLI, THAT THE TPO HAD USED DIFFEREN T YARDSTICK FOR COMPUTING PLI IN THE CASE OF COMPARABLES, THAT IN THE FINANCIAL STATEMEN TS OF THE COMPARABLES OTHER INCOME HAS BEEN CONSIDERED AS PART OF OPERATING INCOME AND HEN CE OPERATING PROFIT. IT REFERRED TO FINANCIALS OF ACC TUBE INDUSTRIES, ACL COMPONENTS L TD. AND CUPRUM BAGRODIA LTD., THAT THE TPO HAD ERRED IN OMITTING THE OTHER INCOME FROM OPERATING INCOME OF THE ASSESSEE, THAT IT DID NOT CONSIDER INTEREST RECOVERED FROM CUSTOMERS THAT DECREASED THE OPERATING PROFIT.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE TPO THE DRP DIRECTED THE TPO TO ADAPT A CONSISTENT STAND WHILE INCLUDING/EXCLUDING ITEMS OF INCOME,THAT ALL ITEMS OF INCOME CONSIDERED AS OPERATING IN NATURE HAD TO BE CONSIDE RED AS PART OF THE OPERATING INCOME IN CASE OF COMPARABLES.ACCORDINGLY THE TPO WAS DIRECTED TO RE-COMPUTE THE ALP. 4. DURING THE COURSE OF HEARING BEFORE US,NO ONE APPEA RED,AS STATED EARLIER.THE DEPARTMENTAL REPRESENTATIVE (DR) LEFT THE ISSUE TO THE DISCRETIO N OF THE BENCH. WE HAVE HEARD SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE DRP HAD DIRECTED THE TPO TO ADAPT A CONSISTENT STAN D WHILE INCLUDING/EXCLUDING ITEMS OF INCOME.IN OUR OPINION,THE ORDER OF THE AO PASSED IN PURSUANCE OF THE DRP DIRECTIONS DOES NOT SUFFER FROM ANY INFIRMITY.SO,CONFIRMING THE SAM E WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. AS A RESULT, APPEAL FIL ED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH NOVEMBER, 2016. 16 , 2016 SD/- SD/- ( / SAKTIJIT DEY ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 16 . 11.2016. JV.SR.PS. 1265/M/15-RADIANT PLASTIC 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.