Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 8834 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-07-2016
Appeal Filed By
Assessee
Bench Allotted
D
Next Hearing Date
13-06-2016
Assessment Year
2011-2012
Appeal Filed On
03-02-2016
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' ! # . $ , % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO. 191/MDS/2016 / ASSESSMENT YEAR : 2011-12 M/S. SHIPNET SOFTWARE SOLUTIONS INDIA PVT. LTD., NO.2/4, MOUNT TOWERS, MOUNT POONAMALLEE ROAD, MANAPAKKAM, CHENNAI 89. PAN AALCS8600A APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE-VI(1), CHENNAI 600 034. RESPONDENT) / APPELLANT BY : SHRI VIKRAM VIJAYARAGHAVAN, ADVOCAT E / RESPONDENT BY : SHRI ANURAG SAHAY, CIT ! / DATE OF HEARING : 13.06.2016 '# ! / DATE OF PRONOUNCEMENT: 15.07.2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE ASSESSING OFFICER DATED 23.12.2015 FOR THE A SSESSMENT - - ITA 191/ 16 2 YEAR 2011-12, WHICH IN TURN EMANATING FROM THE DIRE CTIONS OF THE DISPUTE RESOLUTION PANEL DATED 23.11.2015. 2. IT IS ALSO PERTINENT TO MENTION HERE THAT THE RE GISTRY HAS NOTED THAT THERE WAS A DELAY OF 12 DAYS IN FILI NG THIS APPEAL. HOWEVER, THE ASSESSEE CLARIFIED VIDE LETT ER DATED NIL THAT THE APPEAL AGAINST THE ORDER U/S.143(3) R.W.S.144C(13) R.W.S.92CA(3) OF THE ACT, WAS FILED ON 3.2.2016 AND THE ORDER AGAINST WHICH THE APPEAL IS BEING FILED ON 23.12.2015, WAS RECEIVED ON 30 TH DEC., 2015. IT WAS STATED THAT THE ASSESSEE FILED REVISED FORM 36B TO MENTION THE DATE OF RECEIPT OF THE ORDER APPEALED A GAINST THE DATE OF THE DRP DIRECTIONS(23.12.2015). SINCE THE APPEAL HAS TO BE FILED WITHIN 60 DAYS BEFORE THE TR IBUNAL, THE APPEAL WAS FILED ON 3.2.2016, AND THERE IS NO D ELAY IN FILING THE APPEALS. ACCORDINGLY, WE ARE OF THE OP INION THAT THERE IS NO DELAY IN FILING THE APPEAL. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE DRP HAS NOT PASSED A SPEAKING ORDER AND IT IS BAD IN LAW. 2. THAT THE DRP/TPO HAS NOT PROVIDED ADJUSTMENTS TOWARDS DEPRECIATION AND UN-OCCUPIED CAPACITY AND T P ADJUSTMENT. - - ITA 191/ 16 3 3. THAT THE DRP/TPO ERRED IN NOT GIVING ADJUSTMEN T TO PLI OF APPLICANT FOR DIFFERENCES IN RETURN ON NET W ORTH OF COMPARABLE COMPANIES. 4. THAT DRP/TPO ERRED IN NOT PROVIDING FOR RISK ADJUSTMENT AS SOUGHT BY THE ASSESSEE. 5. THAT THE DRP/TPO ERRED IN NOT ACCEPTING THE JUSTIFICATION OF ALP BY CPM AS A SUPPLEMENTARY METH OD OF JUSTIFICATION. 6.1 THAT THE DRP/TPO GROSSLY ERRED IN REJECTING THE COMPARABILITY ANALYSIS OF THE APPELLANT AND OUGHT T O HAVE ACCEPTED THE COMPARABLES PROVIDED BY THE APPELLANT. 6.2 THAT THE DRP/TPO ERRED IN SELECTING THE FOLLOW ING COMPANIES AS COMPARABLES TO THE APPELLANT: I. ACROPETAL TECHNOLOGIES LTD. II. FCS SOFTWARE SOLUTIONS LTD. III. E-ZEST SOLUTIONS LTD. IV. PERSISTENT SYSTEMS AND SOLUTIONS LTD. V. SPRY RESOURCES VI. R S SOFTWARE (INDIA) LIMITED 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY FILED ITS RETURN OF INCOME ELECTRONICALLY FOR THE ASSESSM ENT YEAR 2011- 12 ON 29.11.2011 ADMITTING TOTAL INCOME OF 1,84,88,466/-. THE ASSESSEE HAS COMPUTED ITS MARGIN (OP/OC) AT 9.5 % W ITHOUT ANY ADJUSTMENT AND IT HAD ARRIVED AT 19.83% (OP/OC) UNDER TNMM AFTER MAKING ADJUSTMENT TOWARDS RENT, PERSONAL COST, POWER & FUEL, REPAIR & MAINTENANCE AND DEPRECIATION . IT WAS - - ITA 191/ 16 4 REJECTED BY THE TPO U/S.92CA AND VIDE ORDER DATED 2 0.1.2015 MADE AN ADJUSTMENT OF 1.19 CRORES. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE THE DRP CHALLENGING THE FOLLO WING SUBMISSIONS : OBJECTION # 1-2 : GENERAL GROUNDS ON TP OBJECTION # 3 : DEPRECIATION IN EXCESS OF SCHEDULE XIV RATES 0.60 CR. OBJECTION # 4 : ADJUSTMENT FOR UN- OCCUPIED CAPACITY 1.14 CR. OBJECTION # 5 : ADJUSTMENT FOR LIMIT ED RISK AND LIMITED FUNCTIONS OBJECTION # 6 : JUSTIFICATION BASED ON RETURN ON NET WORTH OBJECTION # 7 : ADOPTING CPM AS A SUPPLEMENTA RY METHOD OBJECTION # 8 : ERRONEOUS SELECTION OF FOLLOWING COMPARABLES BY TPO: OBJECTION # 9 : ERRONEOUS REJECTION OF COMPARABLE B Y TPO THE DRP HAS, IN SUMMARY MANNER CONFIRMED THE ORDER OF THE TPO AND REJECTED THE PETITION OF THE ASSESSEE. CONS EQUENT TO THIS, THE AO PASSED THE ASSESSMENT ORDER. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THA T THE DRPS DIRECTION IS NOT IN CONSONANCE WITH THE PROVI SIONS OF SEC.144C OF THE ACT. AS SUCH, HE SUBMITTED THAT IT SHOULD BE - - ITA 191/ 16 5 REMITTED BACK TO THE FILE OF THE DRP AS HELD BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 IN ITA NO.363/MDS/15 VIDE ORDER DATED 11.9.2015. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE DIRE CTION OF THE DRP. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, THE DRP HAS N OT GIVEN ANY FINDINGS RELYING ON COMPARABLES AND THE REASONS FOR REJECTING THE VARIOUS ADJUSTMENTS SOUGHT BY THE ASSESSEE. THE TR IBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR 201 0-11 VIDE ORDER DATED 11.09.2015, HAS HELD AS UNDER : 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE PRIMARY OBJECTION OF THE L D. AR IS THAT THE ORDER OF THE DRP IS NOT IN CONSONANCE WITH THE PROVISIONS OF SEC.144C OF THE ACT. WE HAVE GONE THROUGH THE PROVISIONS OF SEC.144C, WHICH READS AS UNDER: (5) THE DRP SHALL, IN CASE WHERE ANY OBJECTION IS RECEIVED UNDER SUB-S.(2), ISSUE SUCH DIRECTIONS, AS IT THINKS FIT, FOR THE GUIDANCE OF THE AO TO ENABLE HI M TO COMPLETE THE ASSESSMENT. (6) THE DRP SHALL ISSUE THE DIRECTIONS REFERRED TO IN SUB-S. (5), AFTER CONSIDERING THE FOLLOWING, NAMELY - (A) DRAFT ORDER; (B) OBJECTIONS FILED BY THE ASSESSEE; - - ITA 191/ 16 6 (C) EVIDENCE FURNISHED BY THE ASSESSEE; (D) REPORT, IF ANY, OF THE AO, VALUATION OFFICER OR TPO OR ANY OTHER AUTHORITY; (E) RECORDS RELATING TO THE DRAFT ORDER; (F) EVIDENCE COLLECTED BY, OR CAUSED TO BE COLLECTE D BY, IT; AND (G) RESULT OF ANY ENQUIRY MADE BY, OR CAUSED TO BE MADE BY, IT. (7) THE DRP MAY, BEFORE ISSUING ANY DIRECTIONS REFERRED TO IN SUB-S. (5),- (A) MAKE SUCH FURTHER ENQUIRY, AS IT THINKS FIT; OR (B) CAUSE ANY FURTHER ENQUIRY TO BE MADE BY ANY IT AUTHORITY AND REPORT THE RESULT OF THE SAME TO IT. (8) THE DRP MAY CONFIRM, REDUCE OR ENHANCE THE VARIATIONS PROPOSED IN THE DRAFT ORDER SO, HOWEVER, THAT IT SHALL NOT SET ASIDE ANY PROPOSED VARIATION OR ISSUE ANY DIRECTION UNDER SUB-S.(5) FOR FURTHER ENQ UIRY AND PASSING OF THE ASSESSMENT ORDER. (9) IF THE MEMBERS OF THE DRP DIFFER IN OPINION ON ANY POINT, THE POINT SHALL BE DECIDED ACCORDING TO THE OPINION OF THE MAJORITY OF THE MEMBERS. (10) EVERY DIRECTION ISSUED BY THE DRP SHALL BE BINDING ON THE AO. (11) NO DIRECTION UNDER SUB-S. (5) SHALL BE ISSUED UNLESS AN OPPORTUNITY OF BEING HEARD IS GIVEN TO TH E ASSESSEE AND THE AO ON SUCH DIRECTIONS WHICH ARE PREJUDICIAL TO THE INTEREST OF THE ASSESSEE OR THE INTEREST OF THE REVENUE, RESPECTIVELY. (12) NO DIRECTION UNDER SUB-S. (5) SHALL BE ISSUED AFTER NINE MONTHS FROM THE END OF THE RNONTH IN WHI CH - - ITA 191/ 16 7 THE DRAFT ORDER IS FORWARDED TO THE ELIGIBLE ASSESS EE. (13) UPON RECEIPT OF THE DIRECTIONS ISSUED UNDER SU B- S. (5), THE AO SHALL, IN CONFORMITY WITH THE DIRECT IONS, COMPLETE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN S. 153, THE ASSESSMENT WITHOUT PROVIDING ANY FURTHER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WITHIN ONE MONTH FROM THE END OF THE MONTH IN WHICH SUCH DIRECTION IS RECEIVED.' 6. WE FIND THAT THE DRP IN THIS CASE, AGAINST THE ABOVE PROVISIONS OF THE ACT, PASSED A VERY NON- SPEAKING ORDER, THOUGH THE ASSESSEES COUNSEL MADE A VOLUMINOUS SUBMISSIONS BEFORE THE DRP AGAINST THE ASSESSMENT ORDER DATED 18.12.2014. IT IS ACCEPTED BY THE DRP THAT IT HAS TO BE CONSIDERED EVERY POINT OF DISPUTE AND PASSED A SPEAKING ORDER. CONTRARY TO T HIS, THE ORDER PASSED BY THE DRP VERY CRITIC AND THERE I S NO ADDRESSING ANY ISSUED RAISED BY THE ASSESSEE AND IT WAS NOT PROPERLY ADJUDICATED. BEING OF, WE ARE NOT IN A POSITION TO UPHOLD THE ORDER OF THE DRP AS IT IS NOT CONSISTENT WITH THE PROVISIONS OF SEC.194 C OF THE ACT. WE FIND THAT THE SUPREME COURT IN THE CASE OF SAHAR A INDIA VS. CIT & ANR. (300 ITR 403) HAS HELD THAT EV EN AN ADMINISTRATIVE ORDER HAS TO BE CONSISTENT WITH THE RULES OF NATURAL JUSTICE. THE SAME VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF THE TRIBUNAL IN THE CAS E OF GAP INTERNATIONAL SOURCING INDIA (P) LTD. VS. DCIT (8 ITR 0177). FURTHER, IN THE CASE OF M/S. ADOBE SYSTEMS INDIA PRIVATE LTD. V. ADDL. CIT IN ITA NO.5043/DEL/2010 DATED 21.01.2011, THE DELHI BENCH OF THE TRIBUNAL HELD THAT WHEN THE DRP PASSED THE ORDER IN CURSORY AND LACONIC ORDER WITHOUT GOING IN TO THE DETAILS OF THE SUBMISSIONS, IT SHOULD BE DECIDE D AFRESH. CONSIDERING ALL THESE FACTS AND CIRCUMSTAN CES, WE ARE INCLINED TO THE REMIT THE ISSUES BACK TO THE DRP TO PASS A SPEAKING ORDER ON THE DISPUTED ISSUES. SINCE, WE HAVE ADJUDICATED THE PRIMARY GROUND, WE REFRAIN FROM GOING TO OTHER ISSUES RAISED BY THE - - ITA 191/ 16 8 ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE HAVE NO HESITATION IN REMITTING THE ISSUE TO THE FILE OF DR P TO PASS A SPEAKING ORDER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 15 TH OF JULY, 2016 AT CHENNAI. SD/- SD/- ( $ % . & '( ) ( ) * + , ) DUVVURU RL REDDY - ./012304556037- 8 9: /JUDICIAL MEMBER ! 9:;<<5=1>01>?@AB@3 )8 /CHENNAI, C9 /DATED, THE 15 TH JULY, 2016. MPO* 9D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H- /CIT(A) 4. H /CIT 5. FIJ K /DR 6. J(L /GF.
