M/s Norwich Clinical Services Pvt Ltd, Bangalore V. Assistant Commissioner of Income Tax Circle-2(3)(1), Bangalore

ITA 2180/BANG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3553 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 12-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PRASHANTH
• Assessee Lawyers: PRIYADARSHI MISRA
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN , ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2180/BANG/2018 ASSESSMENT YEAR : 2012-13 M/S NORWICH CLINICAL SERVICES PVT. LTD., NO.147/F, GROUND & FIRST FLOOR, 8 TH MAIN, 3 RD BLOCK, KORAMANGALA, BENGALURU-560 034. PAN AADCN 1161B VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-2(3)(1), BENGALURU. APPELLANT RESPONDENT REVENUE BY : SHRI G.S PRASHANTH, C.A ASSESSEE BY : SHRI PRIYADARSHI MISRA, JCIT (DR) DATE OF HEARING : 03.03.2020 DATE OF PRONOUNCEMENT : 04.03.2020 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 26/4/2018 PASSED BY LD CIT(A)-5, BENGALURU AN D IT RELATES TO THE ASST. YEAR 2012-13. 2. AT THE TIME OF HEARING THE LD AR FIRST ADVANCED HIS ARGUMENT ON GROUND NO.6, WHICH READ AS UNDER:- 6. A) THE ORDER OF ASSESSMENT IS BAD IN LAW AS THE LEARNED ASSESSING OFFICER EXCEEDED THE JURISDICTION IN NOT REFERRING THE MATTER TO TPO FOR DETERMINATION O F ITA NO.2180 /BANG/2018 PAGE 2 OF 5 ALP AND THEREFORE THE ORDER PASSED NEEDS TO BE QUASHED ON THE FACTS OF THE CASE. B) THE ACTION OF THE LEARNED ASSESSING OFFICER IN DETERMINING ALP WITHOUT REFERENCE TO TPO IS CONTRAR Y TO THE CBDT INSTRUCTION NO. 3 OF 2003 AND THUS THE ASSESSMENT ORDER HAS NO LEGS TO STAND THE TEST OF L AW ON THE FACTS OF THE CASE. 3. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING CLI NICAL RESEARCH SERVICES. DURING THE YEAR UNDER CONSIDERATION IT H AD ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTE RPRISES (AE) TO THE TUNE OF RS.6.15 CRORE. THE ASSESSEE ADOPTED CUP ME THOD AS MOST APPROPRIATE METHOD TO BEING MARK ITS INTERNATIONAL TRANSACTIONS IN ITS TRANSFER PRICING STUDY. THE LD AR SUBMITTED TH AT THE AO HIMSELF HAS, HOWEVER. ADOPTED COST PLUS METHOD WITHOUT RE FERRING THE MATTER TO TPO AND ACCORDINGLY MADE TRANSFER PRICING ADJUSTMENT OF RS.9.55 CRORE. THE LD AR SUBMITTED THAT THE ACTION OF THE AO IS IN VIOLATION OF CBDT INSTRUCTION NO.3/2003 DATED 20/5/ 2003, WHEREIN THE CBDT HAS STATED THAT THE REFERENCE TO THE TRANS FER PRICING OFFICER U/S 92CA OF THE ACT IS COMPULSORY WHEREVER THE AGGREGATE VALUE OF INTERNATIONAL TRANSACTION EXCEEDS RS.5 CRO RES OF RUPEES. 4. THE LD AR FURTHER SUBMITTED THAT AN IDENTICAL IS SUE OF VIOLATION OF INSTRUCTION OF CBDT REFERRED ABOVE WAS CONSIDERED BY HONBLE SUPREME COURT IN THE CASE OF PCIT VS. SG AS IA HOLDINGS (INDIA) PVT. LTD., (2019) 108 TAXMANN.COM 213 AND T HE MATTER WAS ITA NO.2180 /BANG/2018 PAGE 3 OF 5 RESTORED TO THE FILE OF AO SO THAT APPROPRIATE REFE RENCE COULD BE MADE TO THE TPO IN TERMS OF SEC. 92CA(1) OF THE ACT . ACCORDINGLY THE LD AR SUBMITTED THAT THE IMPUGNED ASST. ORDER B E QUASHED AND THE MATTER MAY BE RESTORED TO THE FILE OF THE AO. 5. THE LD DR ALSO AGREED TO THE PRAYER PUT FORTH BY LD AR. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . IT IS AN ADMITTED FACT THAT THE AGGREGATE VALUE OF INTERNATI ONAL TRANSACTIONS ENTERED BY THE ASSESSEE WITH ITS AE HAS EXCEEDED TH E THRESHOLD LIMIT OF RS.5.00 CRORES FIXED BY THE CBDT IN ITS IN STRUCTION REFERRED ABOVE. AS PER THE SAID INSTRUCTIONS, THE AO IS REQ UIRED TO REFER THE MATTER OF DETERMINATION OF ALP OF INTERNATIONAL TRA NSACTIONS TO THE TRANSFER PRICING OFFICER, WHEN THE AGGREGATE VALUE OF INTERNATIONAL TRANSACTIONS EXCEEDED RS.5.00 CRORES. ADMITTEDLY, THE AO HAS NOT REFERRED THE MATTER TO THE TPO. AS PER THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF PCIT VS. SG AS IA HOLDINGS (INDIA) PVT. LTD.,(SUPRA), THE MATTER REQUIRES TO B E RESTORED TO THE FILE OF AO FOR COMPLYING WITH THE PROVISIONS OF SEC.92CA AND INSTRUCTIONS ISSUED BY CBDT. ACCORDINGLY, WE DEEM IT PROPER TO RESTORE IMPUGNED ISSUE TO THE FILE OF THE AO SO THA T APPROPRIATE REFERENCE WOULD BE MADE TO THE TPO AND MATTERS MAY BE DECIDED AFRESH. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF AO F OR EXAMINING IT AFRESH IN ACCORDANCE WITH LAW AND IN COMPLIANCE OF CBDT INSTRUCTION REFERRED ABOVE. ITA NO.2180 /BANG/2018 PAGE 4 OF 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH , 2020. SD/ - (BEENA PILLAI) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 4 TH MARCH, 2020. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.