Dongfang Electric Corporation, Kolkata V. D.D.I.T. (International Taxation),1(1), Kolkata

ITA 1741/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3064 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 27-11-2012
• Court: TRIBUNAL
• Department Lawyers: L K S DEHIYA
• Keywords: Transfer pricing; Principle of natural justice; International transaction
• Section: 92B

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [ () . .. . . .. . , ,, , , !' #! $'# #! $'# #! $'# #! $'#, ,, , ] ]] ] [BEFORE HONBLE SRI K.K.GUPTA, AM & HONBLE SRI MAHAVIR SINGH, JM] '& '& '& '& /ITA NO.1741/KOL/2012 $'( !)*/ ASSESSMENT YEARS : 2008-09 (,- / APPELLANT ) - !' - ( /0,- /RESPONDENT) DONGFANG ELECTRIC CORPORATION . D.D.I.T., INTERNA TIONAL KOLKATA -VERSUS- TAXATION-1(1),KOLKATA (PAN:AACCD 0559 L) ,- 1 2 / FOR THE APPELLANT: SHRI NAGESWAR RAO /0,- 1 2 / FOR THE RESPONDENT: SHRI L.K.S.DEHIYA, CIT(DR) '!3 1 4 /DATE OF HEARING : 09.04.2013 5) 1 4 /DATE OF PRONOUNCEMENT : 09.04.2013. 6 / ORDER PER SHRI K.K.GUPTA, AM BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, D ONGFANG ELECTRIC CORPORATION HAS PREFERRED AN APPEAL AGAINST THE ORD ER DATED 19 OCTOBER, 2012 ISSUED BY DEPUTY DIRECTOR OF INCOME-TAX, INTERNATIONAL TAX ATION-1(1) IN PURSUANCE OF THE DIRECTIONS ISSUED BY DISPUTE RESOLUTION PANEL, KOLK ATA U/S 253 OF THE INCOME-TAX ACT, 1961 ON THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE AO HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN MAKING REFER ENCE U/S 92CA OF THE ACT TO THE TRANSFER PRICING OFFICER ON ERRONEOUS ASSUMPTIO N THAT : (I) THE PROJECT OFFICE AND THE HEAD OFFICE IN CHINA ARE ASSOCIATED ENTERPRISE; (II) DOMESTIC ACTIVITIES CARRIED OUT BY THE PROJECT OFFI CE ARE INTERNATIONAL TRANSACTIONS WITHIN THE MEANING OF SECTION 92B OF T HE ACT; 2. THE LEARNED AO/TPO/DRP HAVE ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN MAKING AN ADJUSTMENT O F RS.290,306,227 BY ITA NO. 1741/KOL/2012 2 APPLYING TRANSFER PRICING PROVISIONS AND THEREBY RE JECTING THE BOOK RESULTS OF THE PROJECT OFFICE WHICH WERE ARRIVED AT IN CONSONA NCE WITH ARTICLE 7(1) OF DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA A ND CHINA READ WITH ARTICLE 5 THEREOF BY IGNORING THE DIRECTION AND FIN DINGS GIVEN BY THE INCOME TAX APPELLANT TRIBUNAL FOR ASSESSMENT YEAR 2007-08 IN APPELLANTS OWN CASE. 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ADJUSTM ENT OF RS.290,306,227 MADE BY THE AO/TPO/DRP IS BAD IN LAW AND ON THE FAC TS AND CIRCUMSTANCES OF THE CASE AS THE SAME HAS BEEN MADE :- (I) BY APPLYING COST PLUS METHOD AND REJECTING COMPARAB LE UNCONTROLLED PRICE METHOD OR PROFIT SPLIT METHOD FO R DETERMINING THE AMOUNT OF PROFIT; (II) BY TAKING INTO CONSIDERATION THE COMPARABLE FOR WHI CH NO DESCRIPTIVE INFORMATION GIVING DETAILS ABOUT THE BACKGROUND AND BUSINESS OPERATIONS IS AVAILABLE ON THE PUBLIC DOMAIN; (III) WITHOUT MAKING ADJUSTMENTS NECESSARY TO ACCOUNT FOR DIFFERENCES IN THE COMPARABLE; (IV) BY ADOPTING THE COST BASE WITHOUT APPRECIATION OF T HE SCOPE OF ACTIVITIES UNDERTAKEN BY THE PROJECT OFFICE. (V) WITHOUT APPRECIATING THAT THE TOTAL ADJUSTMENT MADE IS IN EXCESS OF THE REVENUE RECEIVED BY THE APPELLANT FROM THE THIR D PARTY CONTRACTEES; 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO ERRED IN GRANTING TDS CREDIT OF RS.54,910, 135 INSTEAD OF RS.78,608,196 A S CLAIMED BY THE APPELLANT RESULTING INTO A SHORT GRANT OF TDS TO THE EXTENT O F RS.23,698,061. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE AO BASED ON DIRECTIONS OF DRP ERRED IN LEVYING INTEREST U/S 234 B AND 234D OF THE ACT. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, WITHDRAW ANY GROUND OF APPEAL IN THE INTEREST OF NATURAL JUSTICE EITHER BEFORE OR DU RING THE COURSE OF APPEAL PROCEEDINGS. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE APPELLANT HAS SUBMITTED THAT THE ISSUES STAND COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WHO HAD ITA NO. 1741/KOL/2012 3 UPHELD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YEAR 2007-08 WHEREIN THE TRIBUNAL AFTER DELIBERATION ON THE ISSUE HAD RE STORED THE ISSUE IN RESPECT TO THE ARMS LENGTH PRICE ADJUSTMENT WAS TO BE RESTORED TO THE F ILE OF AO FOR RECONSIDERATION. REGARDING ADJUSTMENT OF THE SAME TO THE VALUE OF TH E OFFSHORE SUPPLIES AND SERVICES CONTRACT, TO THE FILE OF THE AO FOR FRESH ADJUDICAT ION IN ACCORDANCE WITH LAW WAS NOTED BY THE TRIBUNAL. AN ORDER OF THE TRIBUNAL ALONG WIT H THE ORDER OF THE JURISDICTIONAL HIGH COURT ORDER DATED 28 TH JANUARY, 2013 HAVE BEEN FURNISHED AND PLACED ON RE CORD. 3. THE LD. DR FOR THE REVENUE SUBMITTED THAT THE AO WAS AWARE OF THE TRIBUNAL ORDER HAD TRIED TO INCULCATE THE ADDRESS OF THE ASS ESSEE APPELLANT AS PER THE TRIBUNAL AND HAS PASSED THE ORDER U/S 144C (5) R.W.S.144C(8) . HE, THEREFORE HAD NO OBJECTION AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE FOR R ESTORATION TO THE AO ON THE ISSUE OF ADJUSTMENT TO BE CONSIDERED IN ACCORDANCE WITH THE FINDING OF THE TRIBUNAL AND AS UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. ON OUR PERUSAL OF FACTS AND CI RCUMSTANCES, WE ARE INCLINED TO ACCEDE TO THE PRAYER OF THE LD. COUNSEL FOR THE ASS ESSEE TO RESTORE THE ISSUE TO THE FILE OF AO FOR CONSIDERATION AFRESH IN THE LIGHT OF THE HONBLE JURISDICTIONAL HIGH COURTS ORDER IN ASSESSEES OWN CASE FOR A.YEAR 2007-08 DAT ED 28 TH JANUARY, 2013. WHEN THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE ORDER OF THE TRIBUNAL WAS JUST AND FAIR FOR RESTORING THE ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION WE ALLOW ASSESSEES APPEAL FOR STATISTICAL PURPOSES AS MENTIONED ABOVE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09.04.2013. SD/- SD/- [ .#! $'# , ] [ .., ,, , ] [MAHAVIR SINGH ] [K.K.GUPTA] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (4 4 4 4) )) ) DATE: 09.04.2013. R.G.(.P.S.) ITA NO. 1741/KOL/2012 4 6 1 /$$7 87)9- COPY OF THE ORDER FORWARDED TO: 1. DONGFANG ELECTRIC CORPORATION, KOLKATA PROJECT OFFI CE, CK-189 & CK-141, SECTOR-II, SALT LAKE CITY, KOLKATA-700091. 2 D.D.I.T. (INTERNATIONAL TAXATION)-1(1),KOLKATA 3 . CIT KOLKATA 4 . CIT(A)- KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 07 /$/ TRUE COPY, 6'/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES