Asst. Commissioner of Income Tax, Circle-16(1), Hyderabad V. Niehoff of India Private Limited, Hyderabad

ITA 2171/Hyd/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6558 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT MAJUMDAR
• Keywords: Transfer pricing
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L . P . SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 2171 /HYD/20 17 (ASSESSMENT YEAR : 20 13 - 14 ) ASST. COMMISSIONER OF INCOME TAX, CIRCLE 16(1), HYDERABAD. ..APPELLANT. VS. M/S. NIEHOFF OF INDIA PVT. LTD., HYDERABAD. ..RESPONDENT. PAN AABCN 0947R APPELLANT BY : SHRI ROHIT MAJUMDAR. (D.R.) RESPONDENT BY : NONE. DATE OF HEARING : 14. 06 . 2021. DATE OF PRONOUNCEMENT : 07 .0 9 .2021. O R D E R PER SHRI S.S. GODARA, J.M. : THIS ASSESSEES APPEAL FOR ASST. YEAR 20 13 - 14 ARISES FROM THE COMMISSIONER OF INCOME TAX (APPEALS) - 4 , HYDERABAD S ORDER DT. 14.09.2017 PASSED IN CASE NO. 0282/2016 - 17/ACIT, CIR.16(1)/CIT(A) - 4/HYD/17 - 18 IN 2 ITA NO. 2171/HYD/2017 PROCEEDINGS UNDER SECTION 143(3) R.W.S. 92CA(3) R.W.S. 144C(3) OF INCOME TAX ACT, 1961 (THE ACT ). CASE CALLED TWICE. NONE APPEARED ON BEHALF OF ASSESSEE'S BEHEST. CASE FILE PERUSED. 2. THE REVENUE PROPOSES THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL : 1 . THE CIT(A) ERRED IN DELETING THE ADDITION TOWARDS ROYALTY WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE WITH REGARD TO SUPPLY OF TECHNOLOGY, RENDERING OF TECHNICAL SERVICES BY ASSOCIATED ENTERPRISES ESPECIALLY IN THE LIGH T OF THE FACT THAT KNOWHOW, AGREEMENT WITH ASSOCIATED ENTERPRISE HAS BEEN ENTERED DURING THE FINANCIAL YEAR UNDER CONSIDERATION I.E. F.Y. 2012 - 13. 2. THE CIT(A) ERRED IN RELYING ON THE DECISION OF HONBLE ITAT IN THE CASE OF M/S. AIR LIQUID ENGINEERING INDIA PVT. LTD., IN THE SUBSEQUENT YEARS OF WHICH THE SETTLEMENT COMMISSION DIRECTED A.O. TO RESTRICT ROYALTY PAYMENT TO 50% AFTER EXAMINING NATURE OF TECHNICAL KNOWHOW SUPPLIED IN THAT CASE. 3 ITA NO. 2171/HYD/2017 3. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 3. LEARNED DEPARTMENT REPRESENTATIVE INVITED OUR ATTENTION TO CIT(A)S DETAILED DISCUSSION DELETING THE IMPUGNED ARMS LENGTH PRICE (ALP) ADJUSTMENT REGARDING THE ASSESSEE'S ROYALTY PAYMENT AS UNDER : 4 ITA NO. 2171/HYD/2017 5 ITA NO. 2171/HYD/2017 6 ITA NO. 2171/HYD/2017 7 ITA NO. 2171/HYD/2017 8 ITA NO. 2171/HYD/2017 4. SUFFICE TO SAY , IT EMERGES DURING THE COURSE OF HEARING THAT THE TRANSFER PRICING OFFICER (TPO) HAD APPLIED BENEFIT TEST WHILE DISALLOWING THE ASSESSEE'S ROYALTY PAYMENTS MADE TO THE OVERSEAS ASSOCIATED ENTERPRISES (AES). SUCH AN APPLICATION OF BENEFIT TEST, ADMITTE DLY FO RMED SUBJECT MATTER OF ADJUDICATION BEFORE THEIR LORDSHIP S (SUPRA) WHEREIN THE REVENUES ARGUMENTS SUPPORTING THE SAME STOOD DECLINED. HONBLE DELHI HIGH COURT HELD THAT IT IS NOT FOR THE DEPARTMENT TO SIT IN THE ARMCHAIR OF THE ASSESSEE TO 9 ITA NO. 2171/HYD/2017 INCUR A PARTICULAR PAYMENT BY APPLYING THE ACTUAL BENEFIT DERIVED. COUPLED WITH THIS, THERE IS FURTHER NO DISPUTE THAT THE ASSESSEE HAS FILED ALL THE SUPPORTIVE EVIDENCE ( S ) RELATING TO ITS ROYALTY PAYMENT. WE THEREFORE FIND NO REASON TO DISTURB THE CIT(A)S CON CLUSION DECIDING THE ISSUE IN ASSESSEE'S FAVOUR. 5. THE REVENUE LASTLY ARGUED THAT THIS TRIBUNAL DECISION IN M/S. AIR L IQUID ENGINEERING INDIA LTD. (SUPRA) HAS BEEN RENDERED IN A DIFFERENT CONTEXT. BE THAT AS IT MAY, WE HOLD THAT ONCE THE REVENUES OUGHT NO T TO APPLY BENEFIT TEST HEREIN ABOVE STAND DECLINED, ITS INSTANT LATTER PLEA ONLY CARRIES ACADEMIC IMPORTANCE. THE SAME STAND DECLINED THEREFORE. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH SEPT . , 2021. SD/ - SD/ - (L .P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 07 .0 9 .2021. * REDDY GP 10 ITA NO. 2171/HYD/2017 COPY TO : 1. M/S. NIEHOFF OF INDIA PVT. LTD., PLOT NO.186 TO 194, INDUSTRIAL PARK, PHASE III, PASHAMYLARAM, PATANCHERU, MEDAK. 2. ACIT, CIR. 16(1), HYDERABAD. 3. PR. C I T - 4 , HYDERABAD. 4. CIT(APPEALS) - 4, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.