Saipem India Projects Limited, CHENNAI V. ACIT, CHENNAI

ITA 1809/CHNY/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96506 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 05-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 09-11-2011
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Retrospective amendment
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1809 /MDS./2011 ( !' #' / ASSESSMENT YEAR :2007-08) M/S.SAIPEM INDIA PROJECTS LTD ., (FORMERLY KNOWN AS SAIPEM INDIA PROJECTS SERVICES LTD.,) YARIAGADDA TOWERS, 4,FOURTH LANE, OFF NUNGAMBAKKAM HIGH ROAD, CHENNAI -34. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(1), CHENNAI. PAN AACI 7915 F ( / APPELLANT ) ( / RESPONDENT ) $% & ' / APPELLANT BY : MR.AJIT KUMAR JAIN,ADVOCATE ()$% & ' / RESPONDENT BY : MR.MILIND MADHULKAR BHUSARI, CIT, D.R * + & ,- / DATE OF HEARING : 14.10.2015 .# & ,- /DATE OF PRONOUNCEMENT : 11.12.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(1) ITA NO. 1809/MDS/2011 2 CHENNAI DATED 19.09.2011 PASSED U/S.143(3) R.W.S. 1 44C OF THE ACT PURSUANT TO THE ORDER OF THE T.P.O AND THE DIRECTIO NS ISSUED BY THE D.R.P. 2. THE ASSESSEE HAS RAISED FOUR ELABORATE GROUNDS IN ITS APPEAL AS FOLLOWS:- ASSESSMENT YEAR 2007-08 CONCISE GROUNDS OF APPEAL GENERAL THE FINAL ASSESSMENT ORDER DATED SEPTEMBER 19, 2011 PASSED BY THE LEARNED ASSESSING OFFICER (AO) UNDER SECTION 143(3) READ WITH SECTION 1 44C OF THE INCOME-TAX ACT, 1961 (ACT) IS NOT IN ACCORDANCE W ITH THE LAW, MADE IN VIOLATION OF THE PRINCIPLES OF EQUITY AND NATURAL JUSTICE AND ARE CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. SELECTION OF COMPARABLES 2. THE HONOURABLE DRP AND THE LEARNED AOITPO HAVE E RRED IN CONSIDERING ENGINEERS INDIA LIMITED AS A COMPARABLE IN BENCHMAR KING THE ASSESSEES TRANSACTIONS. COMPUTATIONAL ISSUES 3. THE HONOURABLE DRP AND THE LEARNED AO/TPO HAVE E RRED IN LAW AND ON FACTS, IN RESPECT OF THE FOLLOWING COMPUTATIONAL ISSUES: ITA NO. 1809/MDS/2011 3 A) IN REJECTING THE IDLE CAPACITY ADJUSTMENT SOUGHT BY THE APPELLANT; B) IN NOT ACCEPTING THE MARGINS OF THE COMPARABLE C OMPANIES AS COMPUTED BY THE ASSESSEE AND DETERMINING HIGHER MARGINS FOR THE COMPARABLES AFTER MAKING UNWARRANTED ADJUSTMENTS IN COMPUTING THE MARGINS; C) IN NOT CONSIDERING THE LOWER RANGE OF 5 PERCENT FROM THE MEAN MARGIN IN ARRIVING AT THE ARMS LENGTH MARGIN, AS PER SECTION 92C(2) OF THE ACT; D) HAVE FAILED TO PROVIDE RISK ADJUSTMENT OF 3.81 P ERCENT TO THE OPERATING MARGINS COMPUTED BY THE ASSESSEE; E) IN COMPUTING THE ADJUSTMENT UNDER SECTION 92CAON THE BASIS OF THE TOTAL REVENUE WITHOUT CONSIDERING THE SETTLED POSITION IN LAW THAT THE ADJUSTMENT TO INCOME IS TO BE COMPUTED ONLY BASED ON THE TRANSACT IONS WITH AE AND NOT THE TOTAL REVENUE WHICH WOULD INCLUDE TRANSACTIONS WITH NON-AES SUPPLEMENTARY METHOD OF BENCHMARKING 4. THE HONOURABLE DRP AND THE LEARNED AOITPO HAVE E RRED IN REJECTING THE ASSESSEES SUBMISSIONS BASED ON THE COMPARABLE UNCONTROLLED PRICE (CUP) METHOD. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMI T, SUBSTITUTE OR AMEND THE ABOVE GROUNDS, AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. EACH OF THE ABOVE OBJECTIONS IS INDEPENDENT AND WITHOUT PREJUDICE TO THE OTHER GROUNDS PREFERRED BY THE APPELLANT. ITA NO. 1809/MDS/2011 4 3. AT THE OUTSET THE LD. A.R. SUBMITTED THAT THOUG H THE ASSESSEE HAD ELABORATE SUBMISSIONS, WITHOUT CONSIDERING THE SAME THE LD. TPO HAS REJECTED THE CONTENTION OF THE ASSESSEE WIT H RESPECT TO IDEAL CAPACITY ADJUSTMENT ON THE WORKING OF THE MARGINS O F THE COMPARABLE COMPANIES IN A CRYPTIC MANNER. THEREFORE, AS AN ALT ERNATE PLEA HE PLEADED THAT THE MATER MAY BE REMITTED BACK TO THE FILE OF LD.TPO FOR DENOVO CONSIDERATION. THE LD. DR ON THE OTHER HAND SUBMITTED THAT THE LD.TPO HAD REJECTED THE SUBMISSIONS OF THE LD. A.R. BECAUSE THE AMENDMENT IN THE ACT WAS APPLICABLE FROM 01.10.2009 AND NOT WITH RETROSPECTIVE EFFECT. HE THEREFORE PLEADED THAT THE ORDER OF THE REVENUE MAY BE CONFIRMED. 4. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE LD. TPO HAS NOT ADDRESSED TO THE SUBMISSIONS OF THE LD. A.R. ON MER ITS BY PASSING A REASONED ORDER. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE CASE OF THE ASSESSEE IS REQUIRED TO BE CONSIDERED B Y THE LD.TPO AFRESH AND THEREAFTER PASS APPROPRIATE ORDER AS PER MERITS AND LAW AFFORDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. ITA NO. 1809/MDS/2011 5 ACCORDINGLY, THE CASE OF THE ASSESSEE IS REMITTED B ACK TO THE FILE OF LD. TPO FOR DENOVO CONSIDERATION. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 11 TH DECEMBER,2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 11 TH DECEMBER,2015. K S SUNDARAM. & (,/0 1 0#, /COPY TO: 1. $% /APPELLANT 2. ()$% /RESPONDENT 3. * 2, ( ) /CIT(A) 4. * 2, /CIT 5. 05 (,6! /DR 6. ' 7+ /GF