The Deputy Commissioner of Income Tax, Circle-2(1)(1), Vadodara V. M/s. Sabic Innovative Plastic India Pvt. Ltd., Vadodara

ITA 1493/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4032 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 16-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MSA KHAN
• Assessee Lawyers: MIRAL SANGHARAJKA RESP; MANOJ PARDASINI
• Keywords: Set aside
• Section: 143(3)

Judgement Text

ITA NOS:1493/AHD/ 2017 ASSESSMENT YEAR: 2008-09 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR VP AND MADHUMITA ROY JM] ITA NO.: 1493/AHD/ 2017 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2(1)(1), VADODARA .....APPELLANT VS SABIC INNOVATIVE PLASTICS INDIA PVT LTD ... .......RESPONDENT PLASTICS AVENUE, JAWHARNAGAR 391 320 VADODARA DISTRICT, GUJARAT [PAN: AABCE7565N] APPEARANCES BY MSA KHAN AND VINOD TANWANI FOR THE APPELLANT MANOJ PARDASINI AND MIRAL SANGHARAJKA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 12, 2018 DATE OF PRONOUNCEMENT : MARCH 08, 2019 O R D E R PER PRAMOD KUMAR, VP: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 31 ST MARCH 2017 PASSED BY THE CIT(A) IN THE MATTER OF A SSESSMENT UNDER SECTION 143(3) R.W.S. 92CA OF THE INCOME TAX ACT, 1961, FOR THE AS SESSMENT YEAR 2008-09. 2. GRIEVANCE RAISED BY THE APPELLANT IS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THAT SEGMENTAL ACCOUNTS SHOU LD BE USED FOR COMPARABILITY ANALYSIS WHEN SUCH SEGMENTAL ACCOUNT CONSIST OF CER TAIN UNALLOCABLE EXPENSES WHICH CANNOT BE REASONABLY ALLOCATED AND TURNOVER O F THE RELEVANT SEGMENT IS AROUND 90% OF TOTAL TURNOVER OF THE COMPARABLE. 3. THE ISSUE IN APPEAL LIES IN A NARROW COMPASS OF MATERIAL FACTS. IN THE PRESENT PROCEEDINGS BEFORE THE CIT(A) IN THE SECOND ROUND, WHICH WAS A RESULT OF THE MATTER BEING SET ASIDE TO THE FILE OF THE CIT(A) BY A COORDINATE BEN CH, THE CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE THAT CIBA INDIA LIMITED AND EI DUPONT INDI A PVT LTD WERE VALID COMPARABLES AND NOTED THAT UNDISPUTEDLY, THE AO/TPO HAS CONSIDERED SEGMENTAL ACCOUNTS IN THE CASE OF APPELLANT AND, ACCORDINGLY, MADE ADJUSTMENTS IN THE MARGINS OF TRADING OPERATIONS ONLY..SEGMENTAL ACCOUNTS IN THE CASE OF CIBA IND IA LIMITED HAVE TO BE CONSIDERED FOR BENCHMARKING SINCE THE SAME ARE AVAILABLE. LEARNED CIT(A) HOWEVER, AS A MEASURE OF ITA NOS:1493/AHD/ 2017 ASSESSMENT YEAR: 2008-09 PAGE 2 OF 2 ABUNDANT CAUTION, PUT A RIDER AND ADDED THAT THE A O/TPO ARE DIRECTED TO VERIFY THE CORRECTNESS OF COMPUTATIONS OF MARGIN DONE BY THE L EARNED REPRESENTATIVE VIS--VIS TPO AND THEN DETERMINE NET OPERATING MARGIN FOR ADJUSTMENT TO ALP. THE ASSESSING OFFICER, HOWEVER, IS AGGRIEVED AND IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 5. WE FIND THAT THE CIT(A) HAS REMITTED THE MATTER FOR VERIFICATION OF CORRECT MARGINS AT THE ASSESSMENT STAGE. IT IS FOR THE ASSESSING OFFIC ER TO TAKE A CALL ON WHAT IS CORRECT COMPUTATION OF SEGMENTAL MARGIN, AND, AS AN INTEGRA L PART THEREOF, CORRECT ALLOCATION OF COMMON EXPENSE. YET, RATHER THAN DOING THIS EXERCIS E DILIGENTLY, HE IS IN APPEAL BEFORE US ON AN ALTOGETHER NEW PLEA THAT CERTAIN EXPENSES ARE UN ALLOCABLE. IF THE EXPENSES ARE UNALLOCABLE, THE EXPENSES MUST NOT BE ALLOCATED WHICH WILL INCRE ASE THE MARGINS OF COMPARABLES- SOMETHING THAT THE REVENUE AUTHORITIES CANNOT BE AG GRIEVED OF. HOWEVER, WHERE THERE IS A REASONABLE BASIS FOR ALLOCATION OF SUCH EXPENSES, T HE ASSESSING OFFICER CAN ALWAYS ADOPT THE SAME. ALL THE ISSUES WITH REGARD TO THE COMPUTATION OF CORRECT MARGINS ARE OPEN BEFORE HIM. IN OUR HUMBLE UNDERSTANDING, THERE IS NO OCCASION T O BE AGGRIEVED OF THE DIRECTIONS OF THE CIT(A). IN ANY CASE, NO SPECIFIC ISSUES WERE RAISED BEFORE US IN SUPPORT OF THE GRIEVANCE RAISED IN THE APPEAL. WE HAVE CAREFULLY PERUSED THE WRITTEN SUBMISSIONS FILED BY THE TPO AS WELL, AND WE FIND NO SPECIFIC ISSUES, WITH RESPECT TO THE GRIEVANCE BEFORE US, RAISED THEREIN. 6. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARIN G IN MIND ENTIRETY OF THE CASE, WE CONFIRM THE CONCLUSIONS ARRIVED AT BY THE CIT(A) ON THIS ASPECT, AND DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNC ED IN THE OPEN COURT TODAY ON THE 8 TH DAY OF MARCH, 2019. SD/- SD/- MADHUMITA ROY PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMB ER) AHMEDABAD, DATED THE 8 TH DAY OF MARCH, 2019. COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD