DCIT, New Delhi V. M/s. Marubeni India Pvt. Ltd., New Delhi

ITA 1556/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6900 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 23-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Assessee Lawyers: SAWAN SAPRA
• Keywords: Transfer pricing; International transaction
• Section: 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. KULDIP SINGH, JUDICIAL MEMBER ITA NO.1556/DEL/2016 ASSESSMENT YEAR: 2011-12 DCIT CIRCLE 16 (1) NEW DELHI VS M/S. MARUBENI INDIA P. LTD. 5 TH FLOOR, LOTUS TOWER, COMMUNITY CENTRE, NEW FRIENDS COLONY, NEW DELHI-110065 PAN NO. AAACM6413A (APPELLANT) (RESPONDENT) APPELLANT BY SH. SANJAY I. BARA, CIT DR RESPONDENT BY SH. SAWAN SAPRA, CA DATE OF HEARING: 15/10/2019 DATE OF PRONOUNCEMENT: 16/10/2019 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER DATED 29.01.2016 FRAMED U/S. 143 (3) R.W.S. 144 C O F THE ACT. 2. THE GRIEVANCE OF THE REVENUE READ AS UNDER :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCE OF THE CASE T HE DISPUTE RESOLUTION PANEL (DRP) IS JUSTIFIED IN DISAGREEING WITH THE DES CRIPTION OF THE ACTIVITY CARRIED OUT BY THE ASSESSEE AS THAT OF BEING AKIN TO TRADIN G WHEN ISSUE WAS ALREADY DECIDED BY ITS COORDINATE BENCH (MITSUBISHI CORPORA TION INDIA PVT. LTD. VS ACIT, RANGE-6, NEW DELHI ON 23 RD AUGUST 2013/ITA NO. 5147/DEL/2010) AND ALSO 2 AFFIRMED BY THE HIGH COURT AND ALSO WHEN THE FUNCTI ONS AS PER ASSESSEES SUBMISSION REMAINS THE SAME IN ALL ITS BUSINESS SEG MENTS. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN LAW IN REJECTING THE FUNCTIONAL ANALYSIS CARRIED OU T BY THE TPO BASED ON THE TP STUDY AND SUBMISSIONS MADE IN THIS CASE. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN LAW IN REJECTING THE PRIMACY OF FUNCTIONS CARRIED O UT BY THE ASSESSEE AND BASING ITS DECISION ON THE GROUND THAT RISKS WERE MINIMAL IN THE CASE OF THE ASSESSEE 4. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN LAW IN STATING THAT NO INTANGIBLES WERE CREATED OF THE SUPPLY CHAIN AND HUMAN INTANGIBLES WHEN THESE INTANGIBLES HAVE BEEN SPECIF ICALLY ACKNOWLEDGED BY THEIR INCORPORATION IN THE EXPLANATION (II) TO SECTION 92 B OF THE INCOME TAX ACT. 5. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN LAW IN REJECTING THE TPOS ANALYSIS WITHOUT GOING I NTO THE AGREEMENTS THE ASSESSEE HAS ENTERED INTO WITH ITS AE BEING THE FINAL FACT FI NDING AUTHORITY. 6. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN LAW IN REJECTING THE USE OF FOB IN THE COST BASE WH EN IT IS THE RELEVANT COST BASE FOR DETERMINING THE ALP OF THE INTERNATIONAL TRANSAC TION OF THE ASSESSEE WITH ITS AES. 7. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN LAW IN RESTORING THE MATTER TO THE FILE OF THE TPO BY ALREADY DECIDING THAT BERRY RATIO BE APPLIED. 8. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN LAW IN DIRECTING ACCEPTANCE OF A PLI THAT DOES NOT INCLUDE COST OF GOODS AMONG EXPENSES, WHEN ALL THE FUNCTIONS PERFORMED, ASSETS UTILIZED AND RISK UNDERTAKEN WERE IN THAT CONTEXT ONLY. 9. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN APPLYING THE RATIO OF THE DELHI HIGH COURTS DECISI ON IN THE CASE OF LI AND FUNG INDIA PVT. LTD. VS. CIT TO THE FACTS OF THIS CASE W HEN THE ASSESSEE IS A SOGO SOSHA COMPANY AND LI & FUNG IS NOT. 10. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE DRP IS JUSTIFIED IN ACCEPTING THE FUNCTIONAL ANALYSIS OF THE ASSESSEE W HEN THE ASSESSEE HAD NOT SUBMITTED THE INFORMATION REGARDING ITS AGREEMENTS TO THE TPO. 11. THAT THE ORDER OF THE LD. DRP IS ERRONEOUS AND IS NO T TENABLE ON FACTS AND IN LAW? 12. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING O F THE APPEAL.? 3 3. AT THE VERY OUTSET THE DR STATED THAT THE QUARR EL IS NOW WELL SETTLED BY THE ADVANCE PRICING AGREEMENT U/S.92CC O F THE ACT DATED 06.03.2017 WITH SUPPLEMENTARY UNILATERAL ADVA NCE PRICING AGREEMENT DATED 23.07.2018 BETWEEN THE CBDT AND THE ASSESSEE. THE COUNSEL FAIRLY CONCEDED TO THIS. 4. WE HAVE CAREFULLY PERUSED THE APA U/S. 92 CC OF THE ACT DATED 06.03.2017. THE TERM OF THE AGREEMENT, THE CO VERED TRANSACTIONS AND THE ALP HAVE BEEN AGREED AS UNDER :- THE TERM OF THE AGREEMENT THE AGREEMENT SHALL REMAIN IN FORCE FOR CONSECUTIVE FIVE YEARS FROM PREVIOUS YEAR 2013-14 TO PREVIOUS YEAR 2017-18, (RELEVANT TO ASSESSMENT YEARS 2014- 15 TO 2018-19){HEREINAFTER REFERRED TO AS APA YEAR S}. THE AGREEMENT SHALL ALSO APPLY TO FOUR ROLLBACK YEA RS I.E., PREVIOUS YEARS2009-10, 2010-11, 2011-12 AND 2012-13 (RELEVAN T TO ASSESSMENT YEARS 2010-11, 2011-12, 2012-13 AND 2013-14) [HEREI N AFTER REFERRED TO AS 'ROLLBACK YEARS}. 3. COVERED TRANSACTIONS THE INTERNATIONAL TRANSACTIONS BETWEEN MARUBENI IND IA PRIVATE LIMITED AND MARUBENI CORPORATION, JAPAN, AS DESCRIB ED IN APPENDIX I (A) SHALL BE THE COVERED TRANSACTIONS FOR THE AGREE MENT AND THIS AGREEMENT SHALL APPLY TO THESE INTERNATIONAL TRANSA CTIONS. 4. FUNCTIONS, ASSETS AND RISKS THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS UNDERTAKEN (HEREINAFTER REFERRED TO AS ''FAR 1 ') BY THE APPLICANT, AND MCJ, FOR THE COVERED TRANSACTIONS SHALL BE AS GIVEN IN APPENDIX 1(D). 5. MOST APPROPRIATE TRANSFER PRICING METHOD THE MOST APPROPRIATE TRANSFER METHOD FOR THE COVERE D TRANSACTIONS SHALL BE AS DESCRIBED IN APPENDIX I(B). 6 . ARMS LENGTH PRICE 4 ARMS LENGTH PRICE (HEREINAFTER REFERRED TO AS 'ALP' ) OF THE COVERED TRANSACTIONS SHALL BE DETERMINED AS IN APPENDI X I(C) FOR EACH PREVIOUS YEAR OF APA YEARS AND ROLLBACK YEARS . 5. AND THE DETAILS OF COVERED TRANSACTIONS AND THE AE IS AS UNDER :- 1. MIPL'S PROVISION OF SUPPORT AND BUSINESS FACILIT ATION SERVICES TO MCJ, INVOLVING COMMISSION INCOME, FIXED SERVICE FEE (INDENT TRANS ACTION) 2. BUY-SELL TRANSACTIONS OF GOODS BETWEEN MCJ AND M IPL (PRINCIPAL TRANSACTION) 3. COST ALLOCATION FOR IT/SOFTWARE AND OTHER RELATE D SERVICES AVAILED FROM MCJ TO MIPL 4. OTHER MISCELLANEOUS TRANSACTIONS INCLUDING REIMB URSEMENT OF EXPENSES BETWEEN MCJ AND MIPL 6. SINCE THE YEAR UNDER CONSIDERATION IS COVERED BY THE RULE BACK YEAR AS MENTIONED ABOVE, WE DEEM IT FIT TO RES TORE THE ENTIRE APPEAL TO THE FILES OF THE AO. THE AO IS DIRECTED TO DECIDE THE ISSUES AFRESH AS PER THE ADVANCE PRICING AGREEMENT U/S. 92CC OF THE ACT AFTER GIVING A REASONABLE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.10. 2019. SD/- SD/- [KULDIP SINGH] [N.K. BIL LAIYA] JUDICIAL MEMBER A CCOUNTANT MEMBER DATED: 16 OCTOBER , 2019 *NEHA* COPY FORWARDED TO: 1. APPELLANT 5 2. RESPONDENT 3. CITI 4. CIT(A) 5. DR ASST. REGISTRAR ITAT, NEW DELHI DATE OF DICTATION 15.10.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.10.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 16.10.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 16.10.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 16.10.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 16.10.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 18.10.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER