Dy. Commissioner of Income Tax , Circle-16(1), Hyderabad V. Nagarjuna Fertilizers and Chemicals Limited , Hyderabad

ITA 1268/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5403 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 28-04-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 13-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C S SUBRAMANYAM
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 48

Judgement Text

ITA NO 1268 OF 2019 NAGARJUNA FERTILIZERS AND CHE MICALS LTD HYDERABAD PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1268/HYD/2019 ASSESSMENT YEAR: 2014-15 DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1) HYDERABAD VS. M/S. NAGARJUNA FERTILIZERS AND CHEMICALS LTD, HYDERABAD PAN:AADCK1533E (APPELLANT) (RESPONDENT) REVENUE BY: SRI ROHIT MUJUMDAR, DR ASSESSEE BY : SRI C.S. SUBRAMANYAM DATE OF HEARING: 28/04/2021 DATE OF PRONOUNCEMENT: 05/05/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2014-15 AGAIN ST THE ORDER OF THE CIT (A)-4, HYDERABAD, DATED 29.05. 2019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME FOR THE A.Y 2014-15 ON 2 9.11.2014 ADMITTING LOSS INCOME OF RS.200,95,68,402/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A SSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS AE AND THEREFORE, DETERMINATI ON OF THE ALP OF THE SAID TRANSACTIONS WAS REFERRED TO THE TPO. T HE TPO OBSERVED THAT THE ASSESSEE HAS GIVEN AN ADVANCE OF RS.20,64,413/- TO ITS SUBSIDIARY DURING THE YEAR AN D THERE WAS ALSO A CLOSING BALANCE OF ADVANCE TO SUBSIDIARY OF ITA NO 1268 OF 2019 NAGARJUNA FERTILIZERS AND CHE MICALS LTD HYDERABAD PAGE 2 OF 3 RS.34,88,85,713/-. THE TPO PROPOSED AN INTEREST @ 1 4.75% ON THE ADVANCES GIVEN BY THE ASSESSEE TO ITS SUBSIDIAR Y, AGAINST WHICH, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO DIRECTED THE ASSESSING OFFICER TO ADOPT THE AVERAGE LIBOR PERCENTAGE OF INTEREST ON THE ADVANCE GIVEN TO ITS SUBSIDIARIES. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT (A) IS JUSTIFIED IN DETERMINING THE I NTEREST ON LOANS GIVEN BY THE TAXPAYER TO ITS FOREIGN ASSOCIAT E ENTERPRISES AT AVERAGE LIBOR RATE EVEN THOUGH THE TAXPAYER PAID INTEREST TO BANKS AT THE AVERAGE RATE OF 12.15%. 2. ANY OTHER GROUND THAT MAY BE RAISED AT THE TIME OF HEARING. 3. THE LEARNED DR RELIED UPON THE ORDERS OF THE ASS ESSING OFFICER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE CIT (A) AND ALSO PLACED RELIANCE UPON THE FOLLOWING CASELAW: I ) ITA NO.93 & 2031/HYD/2017 IN ASSESSEES OWN CASE FOR A.Y 2012-13 & 2013-14. II) HEAD NOTE OF CASE BS LTD (2019) 102 TAXMANN.COM 458 (HYD.TRIB) III) HEAD NOTE OF CASE HINDUJA GLOBAL SOLUTIONS LTD (2013) 35 TAXMANN.COM 348 (MUMBAI TRIB.) IV) HEAD NOTE OF CASE COTTON NATURALS (I) (P) LTD ( 2013) 40 TAXMANN.COM 226 (DEL.TRIB.) V) ORDER IN CASE OF GEODESIC LTD (2015) 62 TAXMANN. COM 383 (MUMBAI TRIB.) VI) HEAD NOTE OF CASE SIVA INDUSTRIES & HOLDINGS LT D (2012) 26 TAXMANN.COM 96 (CHENNAI TRIB.) VII) HEAD NOTE OF CASE TATA AUTOCOMP SYSTEMS LTD (2 015) 56 TAXMANN.COM 206 (BOMBAY HIGH COURT) ITA NO 1268 OF 2019 NAGARJUNA FERTILIZERS AND CHE MICALS LTD HYDERABAD PAGE 3 OF 3 VIII) ORDER IN CASE OF VAIBHAV GEMS LTD (2018) 99 T AXMANN.COM 2 (S.C) 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT IN A NUMBER OF CASES INCLUD ING THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR TH E ASSESSEE IT HAS BEEN HELD THAT WHERE AN ASSESSEE ADVANCES LOANS TO ITS AES OUTSIDE INDIA, RATE OF INTEREST WAS TO BE DETERMINE D ON THE BASIS OF RATE PREVAILING IN THE COUNTRY WHEREIN THE LOAN HAS BEEN CONSUMED AND IT IS NOT TO BE DETERMINED AT A RATE P REVAILING IN INDIA. WE FIND THAT THE CIT (A) HAS FOLLOWED THE PR ECEDENTS ON THE ISSUE AND HAS HELD THAT THE LIBOR+ BASIS POINTS IN THE RATE OF INTEREST APPLICABLE IN THIS CASE. THEREFORE, WE FIN D NO REASON TO INTERFERE WITH THE ORDERS OF THE CIT (A). 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2021. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 5 TH MAY, 2021. VINODAN/SPS COPY TO: S.NO ADDRESS ES 1 DY. CIT, CIR CLE 16(1) 1 ST FLOO R, B BLOCK, IT TOWERS, AC GAURDS, MASAB TANK, HYDERABAD 2 M/S. NAGARJUNA FERTILIZERS & CHEMICALS LTD, 8-2-2 48 PUNJAGUTTA, NAGARJUNA HILLS, HYDERABAD 500082 3 CIT (A) - 4, HYDERABAD 4 PR. CIT - 4, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER