Mold-Tek Packaging Limited, Hyderabad V. Asst. Commissioner of Income Tax, Circle-16(2), Hyderabad

ITA 2154/Hyd/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5290 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 03-05-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 15-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; Speculation loss
• Section: 143(3); 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA NOS. 2153/HYD/2017 A.Y . 2013 - 14 MOLDTEK TECHNOLOGIES LTD., HYDERABAD. PAN: AABCM 9845 R VS. DCIT, CIRCLE - 16(2), HYDERAAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: NONE REVENUE BY: SHRI ROHIT MUJUMDAR, DR ITA NOS. 215 4 /HYD/2017 A.Y . 2013 - 14 MOLD - TEK PACKAGING LIMITED, HYDERABAD. PAN: AABCT 0845 L VS. ACIT, CIRCLE - 16(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: NONE REVENUE BY: SHRI ROHIT MUJUMDAR, DR DATE OF HEARING: 03/05/2021 DATE OF PRONOUNCEMENT: 04 /05/2021 ORDER PER A. MOHAN ALANKAMONY, AM: THESE TWO APPEALS ARE FILED BY THE ASSESSEE S AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A) - 4, HYDERABAD. ITA NO. 2153/HYD/2017 IS FILED AGAINST THE ORDER OF THE LD. CIT(A) - 4, 2 HYDERABAD IN APPEAL NO. 0469/2016 - 17/DCIT, CIR. 16(2)/CIT(A) - 4/HYD/17 - 18, DATED 21/09/2017 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE A.Y. 2013 - 14. THE OTHER APPEAL, ITA NO.2154/HYD/2017 IS AGAINST THE ORDER OF THE LD. CIT(A) - 4, HYDERABAD IN APPEAL NO. 0205/2016 - 17/DCIT, CIR.16(2)/CIT(A) - 4, HYD/17 - 18, DATED 21/09/2017 PASSED U/S. 143(3) R.W.S 92CA(3) OF THE ACT FOR THE A.Y. 2013 - 14. 2. IN ITA NO. 2153/HYD/2017, T HE ASSESSEE HAS RAISED FIVE GROUNDS IN ITS APPEAL AND THEY ARE EXTR ACTED HEREIN BELOW FOR REFERENCE: - 1. T HE APPELLATE ORDER DATED 21/09/2017 AS PASSED BY THE CIT(A) IS CONTRARY TO FACTS AND LAW. 2. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 2,33,13,452/ - BEING LOSS ON DERIVATIVES AS SPECULATIVE LOSS DISREGARDING THE FACT THAT SUCH DERIVATIVE TRANSACTIONS HAVE BEEN ENTERED INTO WITH THE BANKS FOR HEDGING THE LOSSES DUE TO FOREIGN EXCHANGE FLUCTUATIONS ON THE EXPORT PROCEEDS AND ARE TO BE CONSIDERED INTEGRAL OR INCIDENTAL TO THE EXPORT ACTIVITY OF THE ASSESSEE. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF R S. 97, 35,194/ - MADE BY THE A.O. AS ARMS LENGTH PRICE OF THE INTEREST RECEIVABLE FROM ITS ASSOCIATED ENTERPRISE. 4. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 5,90,632/ - BEING EXPENDITURE FORMING PART OF GENERAL EXPENDITURE BY STATING THAT SUCH EXPENDITURE IS NOT VERIFIABLE. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND OR ALTER ANY OF THE AFORESAID GROUNDS AS THE OCCASION MAY ARISE. 3 . IN ITA NO. 2154/HYD/2017, THE ASSESSEE HAS RAISED FOUR GROUNDS IN ITS APPEAL AND THEY ARE EXTRACTED HEREIN BELOW FOR REFERENCE: - 3 1. T HE APPELLATE ORDER DATED 21/09/2017 AS PASSED BY THE CIT(A) IS CONTRARY TO FACTS AND LAW. 2. THE LD. CIT(A) ERRED IN CONFIRM ING THE DISALLOWANCE OF RS. 29,250/ - BEING DEDUCTION CLAIMED U/S. 35D MADE BY THE A.O. ON THE GROUND THAT THE SAID EXPENDITURE IS CAPITAL IN NATURE. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF R S. 15,34,251 / - U/S. 14A MADE BY THE A.O. ON THE GROUND THAT THE APPELLANT EARNED DIVIDEND INCOME DURING THE YEAR, DISREGARDING THE FACT THAT DIVIDEND YIELDING INVESTMENTS WERE MADE OUT OF OWN FUNDS AND INTEREST BEARING FUNDS HAVE NO NEXUS TO THE INVESTMENTS MADE. 4 . THE APPELLAN T CRAVES LEAVE TO ADD, TO AMEND OR ALTER ANY OF THE AFORESAID GROUNDS AS THE OCCASION MAY ARISE. 4 . AT THE OUTSET, NONE APPEARED BEFORE US TO REPRESENT THE CASES OF THE ASSESSEES. FROM THE ORDERS OF THE LD. CIT(A) IT APPEARS THAT THE LD. CIT(A) HAS PAS SED EX - PARTE ORDERS WITHOUT PROVIDING PROPER OPPORTUNITY TO THE ASSESSEE S AND DISMISSED THE APPEALS OF THE ASSESSEES. BEFORE US, THE LD. DR SUBMITTED THAT SUFFICIENT OPPORTUNITIES HAD BEEN PROVIDED TO THE ASSESSEE S HOWEVER, ON THE GIVEN DATES OF HEARING, NEITHER THE ASSESSEE S NOR THEIR REPRESENTATIVE S APPEARED BEFORE THE LD. CIT (A). THEREFORE THE LD. CIT (A) HAD NO OTHER OPTION BUT TO PASS EX - PARTE ORDER S BASED ON THE MATERIALS AVAILABLE ON RECORD. HENCE, IT WAS P LEADED THAT THE ORDER S PASSED BY THE LD. CIT(A) DO NOT CALL FOR ANY INTERFERENCE. 5 . HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASES BEFORE US, WE ARE OF THE VIEW THAT THOUGH THE LD. CIT(A) HAS PROVIDED SEVERAL OPPORTUNITY TO THE ASSESSEES, NON E APPEARED ON BEHALF OF THE ASSESSEE S 4 BEFORE THE CIT(A) ON THE GIVEN DATES OF HEARING EXCEPT FILING CERTAIN WRITTEN SUBMISSIONS IN BOTH THE CASES . THEREFORE, THE LD. CIT (A) WAS LEFT WITH NO OTHER OPTION EXCEPT TO ADJUDICATE THE APPEAL S EX - PARTE. HOWEVER , KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASES BEFORE US AND THE ISSUES INVOLVED IN THE APPEALS, IN THE INTEREST OF JUSTICE, WE HEREBY REMIT ALL THE ISSUES INVOLVED IN BOTH THE APPEALS BACK TO THE FILE OF LD. CIT (A) IN ORDER TO CONSIDER THE AP PEAL S AFRESH ON MERITS AFTER AFFORDING ONE MORE OPPORTUNITY TO THE ASSESSEE S OF BEING HEARD. AT THE SAME BREATH, WE ALSO HEREBY CAUTION THE ASSESSEE S TO PROMPTLY CO - OPERATE BEFORE THE LD. CIT (A) IN THE PROCEEDINGS FAILING WHICH THE LD. CIT (A) SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDER S IN ACCORDANCE WITH LAW AND MERITS BASED ON THE MATERIALS ON THE RECORD. IT IS ORDERED ACCORDINGLY. 6 . IN THE RE SULT, BOTH THE APPEAL S FILED BY THE ASSESSEE S ARE ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREINABOVE. PRONOUNCED IN THE OPEN COURT ON THE 04 TH M AY , 2021. SD/ - SD/ - (S.S. GODARA) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 04 TH MA Y , 2021 OKK COPY TO: - 5 1) (I) M/S. MOLDTEK TECHNOLOGIES LTD, PLOT NO. 700, ROAD NO. 36, JUBILEE HILLS, HYDERABAD. (II)M/S. MOLDTEK PACKAGING LIMITED, PLOT - 700, ROAD NO.36, JUBILEE HILLS, HYDERABAD. 2) (I) DCIT, CIRCLE - 16(2), HYDERABAD. (II)ACIT, CIRCLE - 16(2), HYDERABAD. 3) (I) THE CIT (A) - IV, HYDERABAD. (II)THE CIT(A) - 4, HYDERABAD. 4) (I) THE PR. CIT - 4, HYDERABAD. (II) THE PR. CIT - 4, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE