AGRITRADE INDIA SERVICES P.LTD, NAVI MUMBAI V. DCIT 6(1), MUMBAI

ITA 2109/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3469 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 10-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEBASHIS CHANDA
• Keywords: Transfer pricing; Opportunity of being heard; International transaction
• Section: 92C; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER IT A NO. 2109 /MUM/20 14 : (A.Y : 20 09 - 10 ) AGRITRADE INDIA SERVICES PVT. LTD., TRIMURTI GRANDEUR, 2 ND FLOOR, PLOT NO. 88, OPP. APMC GRAIN MARKET, SECTOR 19/C, VASHI, NAVI MUMBAI 400 703 PAN : AAFCA4370F ( APPELLANT ) VS. DCIT - 6(1), MUMBAI (RESPONDENT) ASSESSEE BY : SHRI PARAS SAVLA & SHRI PRATIK PODDAR REVENUE BY : SHRI DEBASHIS CHANDA (CIT - DR) DATE OF HEARING : 24 /0 8 /2016 DATE OF PRONOUNCEMENT : 26 /0 8 /2016 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF DCIT - 6(1) , MUMBAI DATED 3 0 . 0 1 .20 1 4 , PERTAINING TO THE ASSESSMENT YEAR 20 09 - 1 0 , WHICH IN TURN HAS ARISEN FROM THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL 1, MUMBAI DATED 1 8 . 12 .20 1 3 UNDER SECTION 144C ( 5 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. AT THE TIME OF HEARING, THE ONLY GRIEVANCE PROJECTED BY THE LEARNED REPRESENTATIVE FOR THE APPELLANT IS THAT TRANSFER PRICING ADJUSTMENT HAS BEEN MADE TO THE TOTAL INCOME U/S 92CA(4) OF THE ACT WITHOUT CONSIDERING THE PROVISIONS OF SECOND PROVISO BELOW SEC . 92C(2) 2 AGRITRADE INDIA SERVICES PVT. LTD. ITA NO. 2109/MUM/2014 OF THE ACT. NOTABLY, THE SECOND PROVISO TO SEC. 92C(2) OF THE ACT PRESCRIBES THAT IF THE VARIATION BETWEEN THE ARM S LENGTH PRICE DETERMINED BY THE INCOME - TAX AUTHORITIES AND THE PRICE AT WHICH THE INTERNATIONAL TRANSACTION HAS ACTUALLY BEEN UNDE RTAKEN DOES NOT EXCEED SUCH PERCENTAGE AS PRESCRIBED THEREIN, THEN THE PRICE AT WHICH THE INTERNATIONAL TRANSACTION HAS BEEN ACTUALLY UNDERTAKEN SHALL BE DEEMED TO BE THE ARM S LENGTH PRICE. 3. IN THIS CONTEXT, IT WAS POINTED OUT THAT AN ASSESSMENT U/S 14 3(3) R.W.S. 144C(13) OF THE ACT WAS COMPLETED ON 21.01.2014 AT AN INCOME OF RS.94,85,320/ - WHICH, INTER - ALIA , INCLUDED AN ADJUSTMENT ON ACCOUNT OF TRANSFER PRICING DETERMINED BY THE TRANSFER PRICING OFFICER (TPO) U/S 92CA(3) OF THE ACT OF RS. 4,68,23,563/ - . THE LEARNED REPRESENTATIVE POINTED OUT THAT SUBSEQUENTLY THE TPO VIDE ORDER DATED 27.01.2014 RECOMPUTED THE ADJUSTMENT AT RS.41,68,656/ - AND THEREAFTER THE ASSESSING OFFICER PASSED AN ORDER U/S 154 OF THE ACT DATED 30.01.2014 WHEREBY THE ASSESSMENT ORDER DATED 21.01.2014 WAS AMENDED AND THE TOTAL INCOME HAS BEEN ASSESSED AT A LOSS OF RS.3,31,69,585/ - BY MAKING THE TRANSFER PRICING ADJUSTMENT IN CONFORMITY WITH THE AMENDED ORDER OF THE TPO. 4. THE PLEA SET - UP BY THE ASSESSEE IS THAT THE VARIATION BETWEEN THE ARM S LENGTH PRICE RE - DETERMINED BY THE TPO AND THE STATED VALUE OF INTERNATIONAL TRANSACTION OF RS.38,23,28,097/ - WAS LESS THAN 5% AND, THEREFORE, AS A CONSEQUENCE, THE STATED VALUE OF THE TRANSACTION IS TO BE ACCEPTED AS THE ARM S LENGTH PRICE. THE LEARNED REPRESENTATIVE POINTED OUT THAT THE APPELLANT WOULD BE SATISFIED IF THE MATTER IS SET - ASIDE TO THE 3 AGRITRADE INDIA SERVICES PVT. LTD. ITA NO. 2109/MUM/2014 FILE OF ASSESSING OFFICER WITH DIRECTION S THAT APPROPRIATE RECTIFICATION BE CARRIED OUT AFTER APPLYING THE PROVISIONS OF THE SECOND PROVISO TO SEC. 92C(2) OF THE ACT. 5. THE LD. CIT - DR, ON THE OTHER HAND, REFERRED TO PARA 8.5 OF THE ORDER OF DRP TO POINT OUT THAT ASSESSEES CLAIM FOR ADJUSTMENT OF + 5% AS A STANDARD DEDUCTION WAS DISALLOWED IN VIEW OF THE AMENDMENT MADE BY FINANCE (NO. 2) ACT, 2009 T O SEC. 92C OF THE ACT. 6. IN OUR CONSIDERED OPINION, THE PLEA RAISED BY THE LD. CIT - DR IS NOT MAINTAINABLE INASMUCH AS WHAT THE APPELLANT IS SEEKING IS THE IMPLEMENTATION OF THE MECHANICS OF SECOND PROVISO TO SEC. 92C(2) OF THE ACT AS IT EXISTED FOR THE P ERIOD UNDER CONSIDERATION AND OBVIOUSLY SUCH A PLEA OF THE ASSESSEE IS NOT TO BE GOVERNED BY THE ANTERIOR PROVISIONS OF SEC.92C OF THE ACT REFERRED BY THE DRP. AS A CONSEQUENCE, WE ALLOW THE PLEA OF ASSESSEE AND DIRECT THE ASSESSING OFFICER TO RECOMPUTE T HE ADJUSTMENT ON ACCOUNT OF TRANSFER PRICING BY IMPLEMENTING THE PROVISIONS OF SECOND PROVISO TO SEC. 92C(2) OF THE ACT. NEEDLESS TO SAY, ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD AND THEREAFTER PASS AN APPROPRIATE ORDER ON THIS LIMITED ISSUE AS PER LAW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 6 T H AUGUST, 2016. SD/ - SD/ - ( RAVISH SOOD ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 2 6 T H AUGUST , 2016 * SSL * 4 AGRITRADE INDIA SERVICES PVT. LTD. ITA NO. 2109/MUM/2014 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, K BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI