M/s Paxar India Pvt. Ltd., Bangalore V. DCIT,

ITA 1788/BANG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0197 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR P K SRIHARI
• Keywords: Transfer pricing
• Section: 234B; 6

Judgement Text

ITA NO. 1788/B/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER ITA NO. 1788/B/2013 ASSESSMENT YEAR 2007 08 THE DCIT, CIRCLE 12 (2), BANGALORE VS M/S PAXAR INDIA PRIVATE LIMITED, (NOW KNOWN AS M/S AVERY DENNISON (INDIA) PRIVATE LIMITED, PLOT NO. 6 (B), 1 ST MAIN, PHASE I, KIADB, PEENYA INDUSTRIAL AREA, BANGALORE 560058. PAN AAACM0158N (RESPONDENT) (APPELLANT) SHRI MANONEET DALAL, C.A. ASSESSEE BY DR. P. K. SRIHARI, ADDL. CIT REVENUE BY 20/07/2016 DATE OF HEARING 20/07/2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, AM. THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIRE CTED AGAINST THE ORDER OF CIT (A) IV, BANGALORE DATED 28.10.2013 FOR A. Y. 2007 08. 2. IT IS SUBMITTED BY THE LEARNED AR OF THE ASSESSE E THAT GROUND NO. 1 AND 2 TO 2.3 ARE NOT PRESSED AND ACCORDINGLY, THESE GROUNDS ARE REJECTED AS NOT PRESSED. 3. HE FURTHER SUBMITTED THAT TRANSFER PRICING ISSUE IS INVOLVED IN GROUNDS 2.4 TO 8 BUT IF THE ASSESSEE SUCCEEDS ON ONE ASPECT OF TRANSFER PRICING ISSUE THEN OTHER ASPECTS OF THIS ISSUE WILL BE REDUNDANT. REGARDING THIS ONE ASPECT HE SUBMITTED THAT TP ADJUSTMENT OF RS. 426,22,944/- HAS BEEN MADE ONL Y IN RESPECT OF PAYMENT OF ITA NO. 1788/B/2013 2 COMMISSION OF RS. 642,30,815/- TO AES. HE SUBMITTED THE COMMISSION WAS PAID @ 10 BY THE ASSESSEE TO AES AND AS PER THE ASSESSEE, IN THE PRESENT CASE, CUP METHOD IS MOST APPROPRIATE METHOD BECAUSE SIMILAR COMMISSI ON WAS PAID BY THE AE OF THE ASSESSEE COMPANY IN USA TO UNCONNECTED PARTIES WHO ACTED AS SELLING AGENTS @ AROUND 8%. HE SUBMITTED THE COPY OF AGREEMENT OF THE ASSESSEE COMPANY WITH AES AND SUBMITTED THAT AGREEMENT OF AE WITH UN CONN ECTED PARTIES ARE AVAILABLE IN THE PAPER BOOK AND AS PER THE SAME, THE SCOPE OF WO RK OF THE AE IS MUCH MORE THAN THE SCOPE OF WORK AS PER THE AGREEMENTS BETWEE N AE AND UN CONNECTED PARTIES AND THEREFORE, NO T P ADJUSTMENT IS CALLED FOR. HE FURTHER SUBMITTED THAT OTHERWISE ALSO, THE DIFFERENCE IS WITHIN +/- 5% RANGE AND THE REFORE, FOR THIS REASON ALSO, NO ADJUSTMENT IS CALLED FOR. IN REPLY, LEARNED DR OF T HE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. AT THIS JUNCTURE, A QUERY WAS RAISED BY THE BENCH FROM LEARNED DR OF THE REVENUE AS TO HOW CUP METHOD IS N OT MAM IN THE PRESENT CASE AND IF THAT METHOD IS ADOPTED THEN HOW ANY ADJUSTME NT IS CALLED FOR. IN REPLY, HE SIMPLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELO W. HE ALSO SUBMITTED THAT ON PAGE 24 OF HIS ORDER, A FINDING IS GIVEN BY THE TPO THAT THE UNCONTROLLED COMPARABLES CITED BY THE ASSESSEE AS NOTED ON THIS PAGE OF HIS ORDER ARE FROM USA I.E. FROM A MARKET DIFFERENT FROM INDIA AND HENCE, THE RATE OF COMMISSION PAID IN THOSE CASES CANNOT BE COMPARED IN THE PRESENT CASE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGAR DING THIS OBJECTION OF THE TPO THAT IN THE CASE OF THE UNCONTROLLED COMPARABLE S CITED BY THE ASSESSEE AS NOTED ON PAGE 24 OF THE ORDER OF THE TPO ARE FROM USA I.E . FROM A MARKET DIFFERENT FROM INDIA AND HENCE, THE RATE OF COMMISSION PAID IN THO SE CASES CANNOT BE COMPARED IN THE PRESENT CASE, WE FEEL THAT THIS OBJECTION IS N OT VALID BECAUSE THE COMMISSION PAID BY THE ASSESSEE TO AES IS ALSO FOR SERVICES RE NDERED IN RESPECT OF SALES IN USA ITA NO. 1788/B/2013 3 AND THE SCOPE OF SERVICES RENDERED BY THE AES IS MU CH MORE THAN THE SCOPE OF SERVICES BEING RENDERED IN SUCH CASES OF THE UNCONT ROLLED COMPARABLES CITED BY THE ASSESSEE AND HENCE, THE RATE OF COMMISSION PAID IN THOSE CASES AT AROUND 8% AND 10% IN THE PRESENT CASE IS AT ARMS LENGTH AND NO T P ADJUSTMENT IS CALLED FOR. WE HOLD ACCORDINGLY AND TP ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 5. GROUND NO. 9 IS ABOUT INTEREST U/S 234B AND 234D AND THIS INTEREST ISSUE IS CONSEQUENTIAL AND THEREFORE, NO ADJUDICATION IS CAL LED FOR. 6. REGARDING GROUND NO. 10 IN RESPECT OF TAX DEMAND COMPUTED BY THE A.O. ON THIS BASIS THAT REFUND OF RS. 69,32,830/- WAS AL LOWED TO THE ASSESSEE BUT IN FACT, NO REFUND VOUCHER WAS ISSUED TO THE ASSESSEE, IT WA S SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT THIS ISSUE WAS RAISED BY THE A SSESSEE BEFORE CIT (A) AS PER GROUND NO. 6 BUT WAS NOT DECIDED BY CIT (A). UNDER THESE FACTS, WE RESTORE THIS MATTER TO CIT (A) WITH THE DIRECTION THAT HE SHOULD DECIDE GROUND NO. 6 RAISED BY THE ASSESSEE BEFORE HIM. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN THE TERMS INDICATED ABOVE. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) (ASHA VIJAYRAGHAVAN) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 20/07/2016 PLACE: BANGALORE AM* ITA NO. 1788/B/2013 4 COPY TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., BANGALORE ASSTT. REGISTRAR