M/s GE Power Electronics India Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-3(1)(2), Bangalore

ITA 194/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1101 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-03-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 01-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; Opportunity of being heard; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER IT (TP) A NO.194/BANG/2019 ASSESSMENT YEARS : 2014 15 M/S. GE POWER ELECTRONICS INDIA PRIVATE LTD., VELANKANI TECH PARK, SURVEY NO. 43, 44/3 (P), 46 (P), ELECTRONICS CITY, PHASE II, BEGUR HOBLI, BENGALURU 560 100. PAN : AABCL3929K VS. DCIT, CIRCLE 3 (1) (2), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI SACHIT JOLLY, ADVOCATE REVENUE BY : MS. NEERA MALHOTRA, CIT (DR) DATE OF HEARING : 12.03.2020 DATE OF PRONOUNCEMENT : 29.05.2020 O R D E R PER A. K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ASSESSMENT ORDER PASSED BY THE AO ON 30.10.2018 U/S 143 (3) R.W.S. 144 C AS PER THE DIRECTIONS OF DRP FOR ASST. YEAR 2013 14. IT(TP)A NO. 194/BANG/2019 PAGE 2 OF 3 2. THE ASSESSEE HAS RAISED AS MANY AS 18 GROUNDS AND AS PER GROUNDS NO. 11, THE GRIEVANCE OF THE ASSESSEE IS ABOUT UPHOLDING OF THE ORDER OF AO/TPO AS PER WHICH THE TP ADJUSTMENT WAS NOT RESTRICTED TO THE AMOUNT OF INTERNATIONAL TRANSACTION. IN COURSE OF HEARING, LEARNED AR OF THE ASSESSEE SUBMITTED THAT EXCEPT THIS GROUND NO. 11, REMAINING GROUNDS ARE NOT PRESSED. ACCORDINGLY, WE PROCEED TO DECIDE ONLY GROUND NO. 11 AND ALL REMAINING GROUNDS ARE REJECTED AS NOT PRESSED. 3. IN THIS REGARD, LEARNED AR OF THE ASSESSEE SUBMITTED THAT AS PER PARA 2.8.1 ON PAGE 7 OF THE ORDER OF DRP, THIS ISSUE IS DECIDED BY DRP BY WAY OF A CRYPTIC ORDER WITHOUT CONSIDERING THE RELEVANT ASPECTS, RELEVANT LEGAL PROVISIONS AND VARIOUS ARGUMENTS OF THE ASSESSEE. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF TPO/AO AND IN FACT, IT AMOUNTS TO SUPPORTING THE ORDER OF DRP BECAUSE THE AO HAS TO DECIDE AS PER THE DIRECTIONS OF DRP. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND FORCE IN THE SUBMISSIONS OF LEARNED AR OF THE ASSESSEE THAT THIS ISSUE IS DECIDED BY DRP BY WAY OF A CRYPTIC ORDER WITHOUT CONSIDERING THE RELEVANT ASPECTS, RELEVANT LEGAL PROVISIONS AND VARIOUS ARGUMENTS OF THE ASSESSEE BECAUSE AS PER TNMM, THE REASONABLENESS OF THE PROFIT PERCENTAGE OF THE TESTED PARTY IS EXAMINED BY COMPARING IT WITH THE SAME OF COMPARABLES. IF THE PROFIT RATE OF COMPARABLES IS MORE AS COMPARED TO THE TESTED PARTY, SUCH DIFFERENCE IS CONSIDERED AS A LESSER PROFIT REALIZED BY THE TESTED PARTY BY CHARGING LESSER PRICE. NOW, IF THE ENTIRE TURNOVER IS OF INTERNATIONAL TRANSACTION ONLY THEN ENTIRE SUCH DIFFERENCE CAN BE ADDED AS TP ADJUSTMENT BUT IF ONLY PART OF THE TURNOVER IS ON ACCOUNT OF INTERNATIONAL TRANSACTION, THEN LESSER PROFIT REALIZED ON ACCOUNT OF SUCH INTERNATIONAL TRANSACTION ONLY CAN BE ADDED BY WAY OF TP ADJUSTMENT AND LESSER PROFIT REALIZED ON ACCOUNT OF THAT PART OF THE TURNOVER WHICH IS NOT ON ACCOUNT OF INTERNATIONAL TRANSACTION, LESSER PROFIT REALIZED BY THE TESTED PARTY IT(TP)A NO. 194/BANG/2019 PAGE 3 OF 3 CANNOT BE ADDED AS TP ADJUSTMENT BECAUSE IT CANNOT BE ON ACCOUNT OF LESSER PRICES CHARGED TO AE. BUT DRP HAS NOT EXAMINED THESE ASPECTS IN THE LIGHT OF THE RELEVANT LEGAL PROVISIONS ABOUT TP ADJUSTMENT. HENCE, WE RESTORE THE MATTER BACK TO DRP FOR A FRESH DECISION ON THIS ISSUE ONLY BY WAY OF A SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES AND WHILE DOING SO, OUR ABOVE OBSERVATIONS SHOULD BE KEPT IN MIND. GROUND NO. 11 IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- S SD/- SD/- (PAVAN KUMAR GADALE) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 29 TH MAY, 2020. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.