M/s. Oren Hydrocarbons Pvt Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2249/CHNY/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73789 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 25-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-12-2012
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: K RAVI
• Keywords: Transfer pricing; International transaction

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 2249/MDS/2012 / ASSESSMENT YEAR : 2008-09 M/S.OREN HYDROCARBONS PVT. LTD., 28/2B, SARAVANA STREET, T.NAGAR, CHENNAI 600 017 [PAN: AAACO 3649 L] ( !% /APPELLANT) VS ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-V(1), CHENNAI ( &'!% /RESPONDENT) / APPELLANT BY : SHRI K. RAVI , ADVOCATE / RESPONDENT BY : SHRI ANIRUDH RAI, CIT-DR / DATE OF HEARING : 25-03-2014 ! / DATE OF PRONOUNCEMENT : 25-03-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNIN G THE ASSESSMENT ORDER DATED 19-10-2012 PASSED U/S.143(3) R.W.S.144C(13) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) RELEVANT TO THE ASSESSMENT YEAR (A Y) 2008-09. I.T.A. NO. 2249/MDS/2012 2 2. THE ASSESSEE IS ENGAGED IN MANUFACTURE, TRADE AN D EXPORT OF CHEMICALS USED IN OIL AND GAS EXPLORATION INDUST RY. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY.2008 -09 ON 27-09-2008 DECLARING ITS TOTAL INCOME AS ` 4,56,64,700/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTIC E U/S. 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 11-09-2008. SINCE THE ASSESSEE HAD ENTERED INTO CERTAIN INTERNATIONAL TRA NSACTIONS, THE CASE OF THE ASSESSEE WAS REFERRED TO THE TRANSFER P RICING OFFICER [TPO] TO DETERMINE THE ARMS LENGTH PRICE [ALP]. B EFORE REFERRING THE MATTER TO TPO, THE ASSESSING OFFICER ON THE BAS IS OF THE INFORMATION AVAILABLE ON THE WEBSITE OF M/S.OREN HY DRO CARBON MIDDLE EAST INCORPORATION HELD THAT, MR.RIZWAN AHME D WHO IS THE MANAGING DIRECTOR OF THE ASSESSEE-COMPANY IS ALSO T HE CHAIRMAN AND MANAGING DIRECTOR OF THE OVERSEAS COMPANY WITH WHOM THE ASSESSEE HAD TRANSACTIONS WORTH MORE THAN ` 34.00 CRORES, THEREFORE, INTERNATIONAL TRANSACTIONS WERE WITH ASS OCIATED ENTERPRISE [AE]. THE TPO VIDE ORDER DATED 31-10-20 11, MADE ADJUSTMENT OF ` 3.24 CRORES IN THE ALP OF AE. AGGRIEVED AGAINST THE ORDER OF THE TPO PASSED U/S.9 2CA OF THE ACT, THE ASSESSEE FILED OBJECTIONS BEFORE THE D ISPUTE RESOLUTION PANEL [DRP]. APART FROM OTHER OBJECTION S ON MERITS, I.T.A. NO. 2249/MDS/2012 3 THE ASSESSEE OBJECTED TO THE FINDINGS OF ASSESSING OFFICER ON THE ISSUE OF AE RELATIONSHIP BY MERELY RELYING ON THE I NFORMATION AVAILABLE ON THE WEBSITE ON THE OVERSEAS COMPANY. HOWEVER, THE DRP REJECTED THE OBJECTION RAISED BY THE ASSESSEE O N THIS GROUND. THE ASSESSING OFFICER VIDE IMPUGNED ORDER MADE THE ADDITIONS IN THE INCOME RETURNED BY THE ASSESSEE ON THE BASIS OF THE DIRECTIONS OF DRP DATED 31-08-2012. THE ASSESSEE AGGRIEVED AGAINST THE ASSESSMENT ORDER , HAS COME IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI K.RAVI, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN COMING TO THE CONCLUSION THAT THE INTERNATIONAL TRANSACTIONS ENTE RED INTO BY THE ASSESSEE-COMPANY ARE WITH AE. THE ASSESSING OFFICE R WITHOUT REFERRING TO ANY DOCUMENT OR EVIDENCE ON RECORD FOR MED AN OPINION THAT THE INTERNATIONAL TRANSACTIONS WERE WITH AE. THE ASSESSING OFFICER MERELY RELIED ON THE INFORMATION AVAILABLE ON THE WEBSITE OF THE OVERSEAS COMPANY TO COME TO THE CONCLUSION THAT THE OVERSEAS COMPANY IS AE OF THE ASSESSEE-COMPANY. THE LD.COUN SEL FURTHER SUBMITTED THAT MR.RIZWAN AHMED, THE MANAGING DIRECT OR OF THE ASSESSEE WAS APPOINTED AS CHAIRMAN AND MANAGING DIR ECTOR OF I.T.A. NO. 2249/MDS/2012 4 M/S.OREN HYDRO CARBON MIDDLE EAST INCORPORATION IN THE PERIOD RELEVANT TO THE AY.2009-10. THEREFORE, IN THE AY U NDER CONSIDERATION, THERE WAS NO RELATIONSHIP OF AE WITH THE OVERSEAS COMPANY. THE LD.COUNSEL FURTHER CONTENDED THE OBJE CTION WAS RAISED BEFORE TPO BUT THE TPO REFUSED TO CONSIDER T HE SAME ON PRIMACIES DETERMINATION OF EXISTENCE OF AE RELATION SHIP COMES WITHIN THE PURVIEW OF THE JURISDICTION OF AO. THE TPO WITHOUT ANSWERING THE QUESTION PROCEEDED TO DETERMINE ALP O F AE EXPORTS. THE DRP ALSO BRUSHED ASIDE THE EVIDENCE F URNISHED BY THE ASSESSEE AND DISMISSED THE OBJECTION RAISED BY THE ASSESSEE ON THE ISSUE. THE LD.COUNSEL CONTENDED THAT BEFORE PROCEEDING WITH THE ISSUES ON MERITS, IT IS ESSENTIAL TO DETER MINE; WHETHER THE ASSESSEE HAD TRANSACTIONS WITH AE IN THE AY.2008-09 ? 4. ON THE OTHER HAND, SHRI ANIRUDH RAI, APPEARING O N BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ISSUE WITH REGARD TO T HE AE RELATIONSHIP WAS CONSIDERED BY THE DRP AND AFTER CO NSIDERING THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE DRP CAME T O THE CONCLUSION THAT THERE IS NO MERIT IN THE CONTENTION S OF THE ASSESSEE AND CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER . I.T.A. NO. 2249/MDS/2012 5 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE EXAMINED THE ORDERS OF THE AUTHORITIES BELOW. THE QUESTION WHETHER THE A SSESSEE HAS INTERNATIONAL TRANSACTIONS WITH THE AE? GOES TO TH E ROOT BEFORE PROCEEDING WITH DETERMINATION OF ALP. A PERUSAL OF THE DRAFT ASSESSMENT ORDER DATED 05-12-2011 SHOWS THAT THE AS SESSING OFFICER HAS MENTIONED THAT THE ASSESSEE HAS ENTERED INTO INTERNATIONAL TRANSACTIONS WORTH MORE THAN ` 35.00 CRORES WITH AE AND REFERRED THE CASE TO TPO TO DETERMINE THE ALP O F THE INTERNATIONAL TRANSACTION. THE ASSESSEE OBJECTED T O THE FINDINGS OF ASSESSING OFFICER WITH REGARD TO TRANSACTION WITH A E. BEFORE THE TPO, THE ASSESSEE VIDE LETTER DATED 21-03-2011 CATE GORICALLY STATED THAT THE ASSESSEE DOES NOT HAVE ANY AE RELAT IONSHIP AS DEFINED U/S.92A OF THE ACT IN THE FINANCIAL YEAR 20 07-08 WITH M/S.OREN HYDRO CARBON MIDDLE EAST INCORPORATION. T HE TPO PROCEEDED WITH THE DETERMINATION OF ALP OF THE AE E XPORTS WITH THE FOLLOWING OBSERVATIONS: THE EXISTENCE OF AE RELATIONSHIP OR NOT COMES WITH IN THE PURVIEW OF ASSESSING OFFICER JURISDICTION. HENCE, AS TPO, AS THE CASE IS REFERRED TO TP U/S.92CA(1), I AM PROCEE DING FURTHER TO DETERMINE THE ALP OF AE EXPORTS AS FOLLO WS. I.T.A. NO. 2249/MDS/2012 6 THIS CLEARLY SHOWS THAT THE TPO HAS NOT APPLIED HIS MIND TO THE OBJECTION RAISED BY THE ASSESSEE BEFORE PROCEEDING WITH THE DETERMINATION OF ALP. 6. ASSESSEE AGAIN RAISED OBJECTION BEFORE DRP WITH REGARD TO AE RELATIONSHIP AND PLACED ON RECORD LETTER DATED 0 9-05-2012 FROM M/S.OREN HYDRO CARBON MIDDLE EAST INCORPORATION IN SUPPORT OF ITS CLAIM. THE DRP WITHOUT EXAMINING THE VERACITY OF T HE CLAIM OF THE ASSESSEE, REJECTED THE OBJECTIONS OF THE ASSESSEE. 7. A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW SHOW THAT THE ASSESSING OFFICER HAS FORMED HIS OPINION THAT THE A SSESSEE HAS INTERNATIONAL TRANSACTIONS WITH ITS AE ON THE BASIS OF INFORMATION AVAILABLE ON THE WEBSITE OF THE ASSESSEE AND OVERSE AS COMPANY. THE ASSESSING OFFICER HAS NOT ASCERTAINED FROM DOCU MENTS ON RECORD, WHETHER THE OVERSEAS ENTERPRISES IS AE OF T HE ASSESSEE IN THE AY UNDER CONSIDERATION. THE LD.COUNSEL FOR THE ASSESSEE HAS ADMITTED THE FACT THAT IN AY.2009-10, THERE IS A RE LATIONSHIP OF AE BETWEEN THE TWO ENTITIES. WE ARE OF THE CONSIDERE D VIEW THAT THE QUESTION WHETHER THERE IS A RELATIONSHIP OF AE OR N OT IN AY.2008-09 NEEDS RE-DETERMINATION ON THE BASIS OF THE DOCUMENT ARY EVIDENCE. ACCORDINGLY, WE DEEM IT APPROPRIATE TO REMIT THE IS SUE TO I.T.A. NO. 2249/MDS/2012 7 ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE IN ACCORDANC E WITH LAW. THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 25 TH MARCH, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VI KAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 25 TH MARCH, 2014 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR