M/s Biesse Manufacturing Company Ltd., Bangalore V. DCIT, Bangalore

ITA 1496/BANG/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95209 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R REDDY
• Assessee Lawyers: CHYTHANYA K K
• Keywords: Transfer pricing
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI GEORGE GEORGE. K, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER IT(TP)A NO.1496(BANG) 2012 (ASSESSMENT YEAR : 2008-09) M/S BIESSE MANUFACTURING CO.LTD, SURVEY NO.32, NO.469, JAKKASANDRA VILLAGE, SONDEKOPPA ROAD, NELAMANGALA TALUK, BANGALORE-562 123 PAN NO.AAJCS2898A APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-11(2), BANGALORE RESPONDENT ASSESSEE BY : SHRI CHYTHANYA, K.K. ADVOCATE REVENUE BY : SHRI G.R.REDDY, CIT-DR DATE OF HEARING : 10-08-2015 DATE OF PRONOUNCEMENT : 1 4-08-2015 O R D E R PER SHRI GEORGE GEORGE, K, JM THIS APPEAL AT THE INSTANCE OF ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16-12-2011 PASSED U/S 143(3) R.W.S.144C OF TH E IT ACT, 1961. THE RELEVANT ASSESSMENT YEAR IS AY: 2008-09. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLL OWS; IT(TP)A NO.1496(BANG)2012 2 THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS O F MANUFACTURING AND SALE OF FURNITURE MACHINERY AND I TS COMPONENTS. FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE FILED ITS RETURN OF INCOME ON 27-09-2008 DECLARING NIL TOTAL INCOME. THE SAID RETURN WAS PROCESSED UNDER SECTION 143(1) AND SUBSEQUENTLY SELECTED FOR SCRUTINY BY ISSUING NOTICE UNDER SECTION 143(2) ON 04-09-2009. A REFER ENCE WAS STATED TO BE MADE TO THE TRANSFER PRICING OFFICER (TPO) TO DETER MINE THE ARMS LENGTH PRINCE (ALP) BY THE AO. THE TPO VIDE HIS ORDER UND ER SECTION 92CA(3) DATED 31-10-2011 CALLED FOR AN ADJUSTMENT IN THE AL P TO THE EXTENT OF RS.1,34,86,742/-. SUBSEQUENTLY, THE AO PASSED A DR AFT ASSESSMENT ORDER DATED 16-12-2011. (A) INCORPORATING THE ADJUS TMENT TO THE ALP AS SUGGESTED BY THE LEARNED TPO (B) MAKING AN ADDITION OF RS.9,01,401/- & (C) DISALLOWING EXPENDITURE OF RS.6,77,534/-. 3. THE ASSESSEE AGGRIEVED BY THE AFORESAID DRAFT AS SESSMENT ORDER FILED ITS OBJECTION BEFORE THE DISPUTE RESOLUTION P ANEL (DRP) ON 23-01- 2012. THE DRP DISMISSED THE APPLICATION AND REFUSE D TO ISSUE ANY DIRECTIONS IN RESPECT OF ALP ADJUSTMENTS AS CARRIED OUT BY THE TPO IN ITS DIRECTION DATED 04-07-2012 AND PASSED ITS DIRECTION UNDER SECTION 144C READ WITH SECTION 144C (8) OF THE IT ACT. THE AO THEREAFTER, PASSED AN ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S.144C CO NSIDERING THE DIRECTIONS OF THE DRP. IT(TP)A NO.1496(BANG)2012 3 4. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US RAISI NG SEVERAL GROUNDS, CONCERNING THE TRANSFER PRICING ADJUSTMENT OF RS.1,34,86,742/- AND THE CORPORATE ISSUE WITH REFERENCE TO ADDITION OF RS.9,01,401/- RELATING TO AIR INFORMATION AND DISALLOWANCE OF EX PENDITURE OF RS.6,77,534/- RELATING TO RAISING OF WORKING CAPIT AL THROUGH EQUITY FINANCE. 5. THE LEARNED AR SUBMITTED THAT THE DRP DIRECTIONS ISSUED U/S 144C OF THE IT ACT, 1961 IS WITHOUT PROPER APPLICAT ION OF MIND. IT WAS SUBMITTED THAT THE ISSUE WHICH ARE SUBJECT MATTER O F OBJECTION BEFORE THE DRP WAS NON-GRANTING OF ADJUSTMENT OF UNDER UTILIZA TION OF CAPACITY WHICH WAS NOT CONSIDERED IN ITS DIRECTIONS DATED 04 -02-2012. IT WAS STATED THAT THE DIRECTIONS ARE NOTHING BUT CUT, COP Y & PASTE OF DRP DIRECTIONS IN ANOTHER CASE NAMELY, M/S AZTEC SOFTWA RE PVT.LTD. (DRP PANEL COMPRISING SAME COMMISSIONERS). AS REGARDS THE CORPORATE TAX ISSUE, THE LEARNED DR SUBMITTED THAT THE ASSESSEES OBJECTIONS WERE NOT CONSIDERED IN THE CORRECT PERSPECTIVE. THEREFORE, IT WAS PRAYED THAT THE ISSUE OF TRANSFER PRICING ADJUSTMENT AND TWO CORPOR ATE ISSUES RAISED IN THIS APPEAL MAY BE REMANDED TO AO/TPO FOR FRESH CON SIDERATION. 6. LEARNED DR DID NOT TAKE STRONG OBJECTIONS FOR RE MANDING THE CASE TO THE AO/TPO, WITH REFERENCE TO THE TRANSFER PRICING ADJUSTMENT. IT(TP)A NO.1496(BANG)2012 4 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS REGARDS THE TRANSFER PRICING ADJUSTMENT , THE PRIMARY OBJECTION THAT WAS RAISED BEFORE THE DRP WAS THAT SUITABLE AD JUSTMENT OUGHT TO HAVE BEEN GRANTED TO THE ASSESSEE FOR UNDER UTILIZA TION OF CAPACITY UTILIZATION. WE FIND THAT THE DRP HAS NOT CONSIDE RED THIS OBJECTION OF THE ASSESSEE. IN THE INSTANT CASE, THE TPO HAS NOT COLLECTED ANY INFORMATION U/S 133(6) OF THE IT ACT, 1961. SUCH BE ING THE CASE, THE QUESTION OF ASSESSEE TAKING OBJECTION TO ALLEGED CO LLECTION INFORMATION U/S 133(6) OF THE IT ACT, 1961 DOES NOT ARISE AND AS PE R THE DRP THE DIRECTIONS AT PARA NOS.8.1 TO 8.3 IN THIS REGARD IS DEVOID OF ANY MERITS. ON READING THE DRP DIRECTIONS, WE NOTICE THAT IT IS VERBATIM SIMILAR TO WHAT HAS BEEN STATED BY THE DRP IN ITS DIRECTIONS D ATED 17-09-2012 IN THE CASE OF M/S AZTEC SOFTWARE PVT.LTD (SUPRA) (CO PY OF WHICH IS PLACED AT PAGE-300 OF THE PAPER BOOK FILED BY THE ASSESSEE ). SINCE THE OBJECTIONS OF THE ASSESSEE ARE NOT CONSIDERED BY THE DRPS AND THEY HAVE TAKEN INTO CONSIDERATION SOME OTHER IRRELEVANT ISSUES, WE DEEM IT APPROPRIATE TO RESTORE THE ISSUE OF TRANSFER PRICING ADJUSTMENT, T O THE FILES OF AO/TPO FOR DE-NOVO CONSIDERATION. AS REGARDS THE CORPORATE ISSUES ARE CONCERNED, NAMELY THE ADDITION OF RS.9,01,401/- WE FIND THAT T HE ADDITION IS ON ACCOUNT OF DIFFERENCE IN TURNOVER DISCLOSED BY THE ASSESSEE IN ITS VAT RETURN AND THE AIR INFORMATION. WE FIND THAT THE ASSESSEE HAD FILED A RECONCILIATION STATEMENT, WHEREBY THE ASSESSEE HAS BEEN ABLE TO EXPLAIN AND RECONCILE TO THE EXTENT OF RS.7,08,736/- OUT OF THE ALLEGED DIFFERENCE IT(TP)A NO.1496(BANG)2012 5 OF RS.9,01,401/-. WE ALSO NOTICE THAT THE INFORMATI ON COLLECTED BY THE DEPARTMENT IN AIR IS NOT PLACED ON RECORD TO SHOW H OW REVENUE HAVE ARRIVED AT DIFFERENCE IN FIGURE OF RS.9,01,401/-. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY AND WHEN SUBSTANTIAL ISSUE RA ISED IN THIS APPEAL NAMELY TP ADJUSTMENT IS ALREADY REMANDED TO THE AO/ TPO (WHICH HAS NOT BEEN STRONGLY OPPOSED BY THE LEARNED DR), IT IS ONLY APPROPRIATE, WE RESTORE THE ISSUE OF CORPORATE TAX MATTERS ALSO TO THE FILES OF THE AO/TPO FOR DE-NOVO CONSIDERATION. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE 14 TH AUGUST, 2015. SD/- (JASON P BOAZ) SD/- (GEORGE GEORGE, K ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 14-08-2015 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE