Assistant Commissioner of Income-tax, Circle - 9, Pune V. M/s. Mahle Behr India Pvt. Ltd., Pune

ITA 1487/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9329 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 12-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: R D ONKAR
• Keywords: Transfer pricing; International transaction
• Section: 271(1)(c); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 1487 /PUN/2017 / ASSESSMENT YEAR : 20 03 - 04 ASST. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE ....... / APPELLANT / V/S. M/S. MAHLE BEHR INDIA PVT. LTD., GAT NO. 626/1/2 AND 622/1/0, MILESTONE, PUNE - NASHIK HIGHWAY, VILL. - KURULI, TAL - KHED, PUNE 410501 PAN : AABCB2186L / RESPONDENT ASSESSEE BY : SHRI R.D. ONKAR REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 11 - 08 - 2020 / DATE OF PRONOUNCEMENT : 14 - 0 8 - 2020 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 28 - 02 - 2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 9, PUNE [CIT(A)] FOR ASSESSMENT YEAR 2003 - 04 WHEREIN HE DELETED THE PENALTY IMPOSED BY THE AO U/S. 271(1)(C) OF THE ACT. 2 ITA NO . 1487/PUN/2017, A.Y. 2003 - 04 2. THE ONLY ISSUE IS TO BE DECIDED IS AS TO WHETHER THE CIT(A) JUSTIFIED IN DELETING THE ADDITION MADE BY AO U/S. 271(1)(C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO IMPOSED PENALTY OF RS.74,46,316/ - ON THE TP ADDITION OF RS.2,48,21,053/ - ON ACCOUNT OF IMPORTS OF COMPONENTS AND RAW MATERIAL, PRODUCT TESTING, EXPORT OF EVAPORATORS AND CONDENSERS AND EXPORT OF IT ENABLED DESIGN ENGINEERING SERVICES. THE SAID TP ADJUSTMENT TO THE ALP OF INTERNATIONAL TRANSACTIONS AROSE DUE TO DIFFERENCE IN THE INTERPRETATION OF STATUTORY PROVI SIONS. THE ASSESSEE HAD COMPUTED THE ALP OF INTERNATIONAL TRANSACTIONS WITH ITS AES IN ACCORDANCE WITH THE SAID PROVISIONS AS THE TPO NOR THE ASSESSING OFFICER DISPUTED THE SAME. THE TPO HAS NOT ONLY ACCEPTED THE SOME VARIABLES DUE TO APPLICATION OF DIFF ERENT CRITERIA WHICH RESULTED IN RE - WORKING OF THE ALP OF INTERNATIONAL TRANSACTIONS. THE CIT(A) SUSTAINED THE SAID UPWARD TP ADJUSTMENT. THE LD. AR PLACED ON RECORD THE ORDER OF ITAT AND REFERRED TO PARA 15 WHEREIN WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE IN QUANTUM PROCEEDINGS FOR A.Y. 2003 - 04 VIDE ORDER DATED 22 - 09 - 2017 REMANDED THE MATTER TO THE FILE OF AO TO RE - ADJUDICATE THE ISSUE OF BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF THE IMPORT SUB - SEGMENTS OF THE MANUFACTURING SEGMENT OF THE ASSESSEE. FOR READY REFERENCE THE PARA 15 OF THE ORDER DATED 22 - 09 - 2017 IN ASSESSEE OWN CASE OF A.Y. 2003 - 04 IS REPRODUCED HERE - IN - BELOW : 15. CONSIDERING THE ABOVE FUNCTIONAL DIFFERENCES, WE ARE OF THE VIEW THAT THERE IS PR IMA - FACIE MISTAKE IN COMPARING THE ABOVE SAID COMPANIES TO THAT OF THE ASSESSEE. CONSIDERING THE SAID MISTAKES, WE ARE OF THE VIEW THAT THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. TATA POWER SOLAR SYSTEMS LTD., IS APPLICABLE TO THE ABOVE REFERRED LEGAL PROPOSITION AND IN SUPPORT OF REMANDING THE ISSUE TO THE FILE OF THE AO/TPO. FOLLOWING THE PRECEDING IN THE ASSESSEES OWN CASE FOR THE A.Y. 2002 - 03, WE ARE OF THE VIEW THAT THE ASSESSEES REQUEST FOR REMANDING THIS ISSUE FOR EXCL USION OF THESE 3 COMPARABLES TO THE FILE OF THE AO WITH IDENTICAL DIRECTIONS IS APPROVED. ACCORDINGLY, WITHOUT ADJUDICATING GROUND NOS. 1 TO 4 ON MERITS, WE REMAND THE SAID ISSUE TO THE FILE OF THE AO TO RE - ADJUDICATE THE ISSUE OF 3 ITA NO . 1487/PUN/2017, A.Y. 2003 - 04 BENCHMARKING THE INTERNAT IONAL TRANSACTIONS OF THE IMPORT SUB - SEGMENT OF THE MANUFACTURING SEGMENT OF THE ASSESSEE. ACCORDINGLY, GROUND NOS. 1 TO 4 BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 4. SHRI S.P. WALIBME, THE LD. DR DID NOT DISPUTE THE ABOVE OBSERVATION BY T HE ITAT AND TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES, WE DEEM IT PROPER TO REMAND THE MATTER TO THE FILE OF AO TO DECIDE THE PENALTY ON SUCH ADJUSTMENT IN CONFORMITY WITH THE VIEW TAKEN BY THE AO IN PROCEEDINGS PURSUANT TO THE DIRECTIONS GIVEN BY THE TRIBUNAL. THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF HEARING. THUS, ONLY GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2020 . SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 14 TH AUGUST, 2020. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 9, PUNE 4. THE PR. CIT - 5, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE