M/s Digital Juiice Animations Pvt Ltd , Bangalore V. The Deputy Commissioner of Income TAx Circle-2(1)(2), Bangalore

ITA 1756/BANG/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1883 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-06-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 31-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR SHANKAR PRASAD
• Keywords: Transfer pricing; International transaction; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V VASUDEVAN, VICE PRESIDNET AND SHRI B.R BASKARAN, ACCOUNTANT MEMBER ITA NO.1756/BANG/2017 ASSESSMENT YEAR : 2009-10 M/S DIGITAL JUICE ANIMATIONS PVT. LTD., #18, SALEH CENTER, UNIT NO.201, 2 ND FLOOR, CUNNINGHAM ROAD, BANGALORE-560 052. PAN AABCD 9298H. VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1)(2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI SURESH MUTHUKRISHNAN, C.A RESPONDENT BY : DR. SHANKAR PRASAD, ADDL. CIT DATE OF HEARING : 13.06.2019 DATE OF PRONOUNCEMENT : .06.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER PASSED BY LD CIT(A)-2, BENGALURU FOR ASSESSMENT YEA R 2009-10. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT (A) IN REJECTING THE CLAIM FOR ENHANCEMENT OF DEDUCTION CLAIMED U/S 10A OF THE ACT. 2. THE APPEAL IS BARRED BY LIMITATION BY 89 DAYS . THE ASSESSEE HAS MOVED AN APPLICATION REQUESTING THE BENCH TO CO NDONE THE DELAY ALONG WITH AFFIDAVITS OF DIRECTOR AND STAFF. HAVING REGARD TO ITA NO.1756/BANG/2017 PAGE 2 OF 6 THE SUBMISSIONS MADE THEREIN, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 3. THIS IS SECOND ROUND OF PROCEEDING. THE O RDER IN THE FIRST ROUND WAS PASSED BY THE CO-ORDINATE BENCH ON 05-09- 2015 IN IT(TP)A NO.138 (BANG) 2014, WHEREIN IT RESTORED THE MATTER OF DETERMINATION OF ARMS LENGTH PRICE (ALP) OF INTERNA TIONAL TRANSACTION TO THE FILE OF AO/TPO WITH THE FOLLOWIN G OBSERVATIONS:- 11. WE ARE THEREFORE, OF THE OPINION THAT THE DIR ECTIONS OF THE DRP HAS NOT BEEN PROPERLY CONSIDERED BY THE LOW ER AUTHORITIES. IF THE ASSESSEES CLAIM FOR REVISED S EGMENTAL RESULTS ARE FOUND TO BE ACCEPTABLE, THERE IS EVERY POSSIBILITY THAT PRICING OF ITS INTERNATIONAL TRANSACTIONS WOUL D COME WITHIN +/- 5% OF THE PLI WORKED OUT BY THE TPO HIMS ELF. THEN THE ISSUE REGARDING EXCLUSION AND/OR INCLUSION OF COMPARABLES MAY NOT ARISE AT ALL. WE THEREFORE, SE T ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE ISSUE BACK TO THE FILE OF THE AO/TPO FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. RIGHT OF ASSESSEE TO CHALLENGE ALL OTHER ASPECTS OF THE ASSESSMENT AND CONDITIONS ARE KEPT OPEN. 4. CONSEQUENT TO THE ORDER PASSED BY THE ITAT, T HE ASSESSING OFFICER PASSED THE IMPUGNED ASSESSMENT ORDER. IN T HE SET ASIDE PROCEEDINGS, THE ASSESSEE CLAIMED THAT THE DEDUCTIO N ALLOWED U/S 10A OF THE ACT IN THE FIRST ROUND SHOULD BE ENHANCE D BY RE- COMPUTING THE DEDUCTION. THE AO REJECTED THE SAID CLAIM OF THE ASSESSEE BY OBSERVING THAT THE HONBLE ITAT HAS NOT ISSUED ANY SPECIFIC DIRECTIONS ON THIS ISSUE. AGGRIEVED, THE ASSESSEE FILED ITA NO.1756/BANG/2017 PAGE 3 OF 6 APPEAL BEFORE LD CIT(A) SEEKING ENHANCED DEDUCTION U/S 10A OF THE ACT. THE FIRST APPELLATE AUTHORITY ALSO REJECTED T HE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL. 5. THE LD A.R INVITED OUR ATTENTION TO THE LAS T LINE OF THE ORDER OF ITAT EXTRACTED ABOVE AND SUBMITTED THAT THE TRIBUNA L HAS OBSERVED THAT THE RIGHT OF ASSESSEE TO CHALLENGE ALL OTHER ASPECTS OF THE ASSESSMENT AND CONDITIONS ARE KEPT OPEN. HE SUBMI TTED THAT THE ASSESSEE HAS CLAIMED FOR MODIFICATION OF ELIGIBLE D EDUCTION U/S 10A ON THE STRENGTH OF THE ABOVE SAID OBSERVATION OF TH E TRIBUNAL. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. 6. ON THE CONTRARY, THE LD D.R SUBMITTED THAT T HE TRIBUNAL HAS RESTORED THE ISSUE OF DETERMINATION OF ALP OF INTER NATIONAL TRANSACTIONS ONLY, TO THE FILE OF THE AO AND THE OB SERVATIONS MADE BY THE TRIBUNAL IN THE FIRST ROUND REGARDING RIGHTS OF THE ASSESSEE WERE RELATED TO THE ABOVE SAID ISSUE ONLY. HE SUBM ITTED THAT THE SCOPE OF THE SET ASIDE PROCEEDINGS IS LIMITED TO TH E MATTERS RESTORED TO THE FILE OF THE AO AND HENCE NEITHER THE ASSESSE E NOR THE AO IS ENTITLED TO EXPAND THE SAID SCOPE. 7. WE HEARD THE PARTIES ON THIS ISSUE AND PERUS ED THE RECORD. WE NOTICE THAT THE CO-ORDINATE BENCH HAS RESTORED T HE ISSUE OF DETERMINATION OF ALP OF THE INTERNATIONAL TRANSACTI ONS ONLY TO THE FILE OF THE AO. THIS FACT IS MADE CLEAR IF WE GO T HROUGH THE ORDER DATED 05-09-2014 PASSED BY THE CO-ORDINATE BENCH IN THE FIRST ROUND OF PROCEEDINGS. WE NOTICE THAT THE ONLY ISSU E URGED BEFORE ITA NO.1756/BANG/2017 PAGE 4 OF 6 THE TRIBUNAL IN THE FIRST ROUND WAS DETERMINATION O F ALP OF INTERNATIONAL TRANSACTIONS ONLY. THE ENTIRE ORDER PASSED BY THE TRIBUNAL DEALS WITH THE SAID ISSUE ONLY. THE QUEST ION OF DEDUCTION U/S 10A OF THE ACT WAS NOT RAISED AT ALL BEFORE THE TRIBUNAL IN THE FIRST ROUND OF PROCEEDINGS. HENCE THE OBSERVATIONS MADE BY THE CO- ORDINATE BENCH ON THE RIGHT OF THE ASSESSEE SHOULD REFER ONLY TO THE DETERMINATION OF ALP OF INTERNATIONAL TRANSACTIONS ONLY. 8. IT IS WELL SETTLED PROPOSITION THAT THE SCOP E OF SET ASIDE PROCEEDINGS IS RESTRICTED TO THE MATTERS RESTORED T O THE FILE OF THE AO. SINCE THE ISSUE RELATING TO DEDUCTION U/S 10A OF THE ACT WAS NOT RESTORED TO THE FILE OF THE AO, WE ARE OF THE V IEW THAT THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE NEW CLAI M RAISED BEFORE HIM IN THE SET ASIDE PROCEEDINGS BY OBSERVING THAT THE SAME IS OUTSIDE SCOPE OF DIRECTIONS GIVEN BY THE ITAT. ACC ORDINGLY WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN DISMIS SING THE APPEAL OF THE ASSESSEE. ACCORDINGLY WE UPHOLD HIS ORDER. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE, 2019. SD/ - (N.V VASUDEVAN) VICE PRESIDENT SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 26 TH JUNE, 2019. / VMS / ITA NO.1756/BANG/2017 PAGE 5 OF 6 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NO.1756/BANG/2017 PAGE 6 OF 6 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..