M/s. Ravindra Heraeus Pvt. Ltd., UDAIPUR V. CIT, UDAIPUR

ITA 206/JODH/2013

• Counselvise Citation: 20623314 RSA 2013
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Keywords: Transfer pricing; International transaction; Prejudicial to interest
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.206/JODH/2013 (A.Y. 2009-10) M/S. RAVINDRA HERAEUS PVT. LTD. VS. CIT, 16, MUMAL TOWER, A-196, F-ROAD, MADRI INDUSTRIAL AREA, SAHELI MARG , UDAIPUR. UDAIPUR. PAN NO. AAACR 9695 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJENDRA JAIN DEPARTMENT BY : DR. DEEPAK SEHGAL- D.R. DATE OF HEARING : 10/01/2014. DATE OF PRONOUNCEMENT : 19/02/2014. O R D E R PER HARI OM MARATHA, J.M THIS APPEAL OF THE ASSESSEE FOR A.Y. 2009-10 IS DI RECTED AGAINST THE ORDER OF THE LD. CIT(ADMN.), UDAIPUR DATED 18/03/20 13 PASSED UNDER SECTION 263 OF THE I.T. ACT, 1961 (HEREINAFTER REFE RRED TO AS THE ACT IN SHORT) BY WHICH HE HAS SET ASIDE THE ASSESSMENT ORD ER DATED 23/05/2011 MADE UNDER SECTION 143(3) OF THE ACT. 2 2 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND ITS MAIN BUSINESS BEING MANUFACTURING AND DEALING IN ELECTRICAL CONTACTS, NON-FERROUS METAL W IRE STRIPS, GAUZES, LAB APPARATUS AND OTHER ARTICLES OF PRECIOUS METALS AND ALLIED PRODUCTS FOR A.Y. 2009-10. THE ASSESSEE FILED ITS E-RETURN OF I NCOME DECLARING TOTAL INCOME OF RS. 4,20,04,083/- ON 26/09/2009. THE ASS ESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT ON 23/05/2011 BY AC CEPTING THE RETURNED INCOME. SUBSEQUENTLY, LD. COMMISSIONER NOTICED THA T DURING THE YEAR THE ASSESSEE-COMPANY HAD ENTERED INTO INTERNATIONAL TRANSACTIONS EXCEEDING RS. 15 CRORES WITH ITS ASSOCIATED ENTERPR ISES(AE). SINCE ACCORDING TO HIM, UNDER THE PROVISIONS OF SECTION 9 2CA(1) OF THE ACT, THE ASSESSING OFFICER WAS REQUIRED TO REFER THE MATTER REGARDING INTERNATIONAL TRANSACTIONS TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINATION OF THEIR ARMS LENGTH PRICE (ALP) AND THE ASSESSING OFFICER HAS FAILED TO DO SO HE HAS TREATED THE ASSESSMENT O RDER AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REV ENUE. THEREFORE, AFTER CALLING THE RECORDS OF THIS CASE AND AFTER BEING SA TISFIED THAT AS PER THE CENTRAL BOARDS INSTRUCTION NO. 03 DATED 25/05/2003 IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER TO MAKE REFERENCE OF THESE INTERNATIONAL TRANSACTIONS REGARDING DETERMINATION OF ALP WHERE A GGREGATE VALUE OF 3 INTERNATIONAL TRANSACTIONS EXCEEDED RS. 5 CRORES (N OW 15 CRORES) TO TPO, AND ALSO BECAUSE THERE BEING FALL IN THE GP DECLARE D IN THIS YEAR AS COMPARED TO THE IMMEDIATE PAST YEAR WHICH WAS NOT P ROPERLY EXAMINED BY THE ASSESSING OFFICER, HE SHOW-CAUSED THE ASSESS EE-COMPANY UNDER SECTION 263 OF THE ACT FOR THE ABOVE GROUNDS. THE ASSESSEE COMPANY FILED ITS REPLY/OBJECTIONS AGAINST THE PROPOSED ACT ION. AFTER CONSIDERING THE SAME, THE ORDER OF THE ASSESSING OFFICER WAS PR OPOSED TO BE SUITABLY MODIFIED/CANCELLED BY INVOKING THE PROVISIONS OF SE CTION 263 OF THE ACT AS THE ORDER WAS FOUND TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AS NEITHER ASSESSING OFFICER MA DE A REFERENCE UNDER SECTION 92CA(1) OF THE ACT NOR VERIFIED THE FALL IN THE GROSS PROFIT AT THE TIME OF COMPLETING THE ASSESSMENT. THE SUBMISSION OF THE ASSESSEE THAT REFERENCE TO TPO IS NOT MANDATORY UNDER THE ACT IN ALL THE CASES AND ONLY IF THE ASSESSING OFFICER CONSIDERED IT NECESSARY OR EXPEDIENT TO DO SO HE MAY WITH THE PRIOR APPROVAL OF THE CIT REFER THE SAME TO TPO; THAT THE INTERNATIONAL TRANSACTIONS IN THIS CASE WERE BASED EITHER ON THE PURCHASE PRICE, BASED ON CURRENT MARKET PRICE AND WERE SAME AS THE EXPORT SALE PRICE; THAT THE INTERNATIONAL TRANSACTIONS WERE BAS ED ON INTERNATIONAL RATES PREVAILING ON THE DATE OF TRANSACTIONS ON THE INTERNATIONAL LONDON METAL EXCHANGE AND JOHNSON METTHEY EXCHANGE; THAT M AJORITY OF THE 4 PURCHASES FROM ASSOCIATED COMPANY WERE AGAINST DUTY FREE ADVANCE LICENCE ETC., WERE ALL REJECTED BY LD. COMMISSIONER AND ON THE PREMISE THAT THE ASSESSING OFFICER HAS NOT FOLLOWED THE CBD T INSTRUCTIONS WHICH IS BINDING ON HIM, HE HAS FINALLY SET ASIDE THE ASSESS MENT ORDER FOR DENOVO CONSIDERATION AFTER REFERENCE TO TPO. NOW THE ASSE SSEE IS AGGRIEVED FROM THE IMPUGNED ORDER AND HAS FILED THIS APPEAL. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE RECORD. AFTER CONSIDERING THE RIVAL SUBMISS IONS, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSMENT ORDER IN QUE STION IS NOT ONLY ERRONEOUS BUT IS ALSO PREJUDICIAL INTEREST OF THE R EVENUE. IN THIS CASE, BOTH THE REQUISITE CONDITIONS OF SECTION 263 OF THE ACT I.E. THE ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE DO CO-EXIST. IT IS MANDATORY ON THE PART OF THE ASSES SING OFFICER TO MAKE REFERENCE TO TPO FOR DETERMINATION OF ALP WHEREVER THE AGGREGATE VALUE OF INTERNATIONAL TRANSACTION(S) EXCEEDS RS. 5 CRORE S. THE INSTRUCTION NO. 3 OF CBDT CIRCULAR DATED 25/05/2003 IS SPELT OUT CL EARLY THAT EFFECT. THE CBDT INSTRUCTION IS BINDING ON THE ASSESSING OFFICE R. IN THIS REGARD, THE DECISION OF HON'BLE DELHI HIGH COURT RENDERED IN TH E CASE OF RANBAXY LABORATORIES LTD. VS. CIT REPORTED IN 345 ITR 193 (DELHI) IS RELEVANT. 5 ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THIS APPEA L AND DISMISS THE SAME. 4. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DISM ISSED. (ORDER PRONOUNCED IN THE COURT ON 19 TH FEBRUARY, 2014). SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH FEBRUARY, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.