M/s. Abicor Binzel Production (I) Pvt. Ltd., Pune V. Deputy Commissiner of Income-tax,

ITA 2255/PUN/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6989 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-12-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 18-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAUBHAGYA AGARWAL
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Arm length price
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO , AM AND SHRI VIKAS AWASTHY, JM . / I TA NO S . 2253 TO 2255 /PUN/20 14 / ASSESSMENT YEAR S : 2005 - 06 TO 2007 - 08 M/S. ABICOR BINZEL PRODUCTION (INDIA) PVT. LTD. SURVEY NO. 297, VILLAGE - URAWADE, TALUKA - MULSHI, PUNE - 412 108. PAN : AACCA2959F .... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), PUNE. / RESPONDENT A SSESSEE BY : SHRI SAUBHAGYA AGARWAL & SHRI DARPAN KIRPALANI REVENUE BY : SHRI RAJEEV KUMAR, CIT. / DATE OF HEARING : 14.12.2017 / DATE OF PRONOUNCEMENT : 15 .12.2017 / ORDER PER VIKAS AWASTHY, JM THESE THREE APPEALS BY ASSESSEE ARE FOR ASSESSMENT YEARS 2005 - 06 TO 2007 - 08. IN ITA NO. 2253/PUN/2014, THE ASSESSEE HAS ASSAILED THE ASSESSMENT ORDER DATED 30.10.2014 PASSED U/S. 143(3) R.W.S 147 & 144C(13) OF THE INCOME TAX ACT , 1961 ( HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005 - 06. IN ITA NO. 2254/PUN/2014, THE ASSESSEE HAS ASSAILED THE ASSESSMENT ORDER DATED 30.10.2014 PASSED 2 ITA NOS. 2253 TO 2255/PUN/2014 A.YS. 2005 - 06 TO 2007 - 08 U/S. 143(3) R.W.S 147 & 144C(13) OF THE ACT FOR ASSESSMENT YEAR 2006 - 07. IN ITA NO. 2255/PUN/2014, THE ASSESSEE HAS ASSAILED THE ASSESSMENT ORDER DATED 30.10.2014 PASSED U/S. 143(3) R.W.S 147 & 144C (13) OF THE ACT FOR ASSESSMENT YEAR 2007 - 08. SINCE THE ISSUES INVOLVED IN ALL THE THREE APPEALS ARE SIMILAR, THESE THREE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION. 2. SHRI SAUBHAGYA AGARWAL & SHRI DARPAN KIRPALANI APPEARING ON BEHALF OF THE ASSESSEE SUBMITT ED AT THE OUTSET THAT ASSESSEE HA S ENTERED INTO ADVANCE PRICING AGREEMENT (APA) WITH CENTRAL BOARD OF DIRECT TAXES (CBDT) ON 22 ND JANUARY, 2016. THE SAID AGREEMENT PERTAINS TO FIVE CONSECUTIVE ASSESSMENT YEARS STARTING FROM ASSESSMENT YEAR 2014 - 15 TO 2018 - 19. THE LD. AR OF ASSESSEE FURTHER SUBMITTED THAT AS PER TERMS OF THE AGREEMENT, THE SAID AGREEMENT SHALL ALSO AP PLY TO FOUR ROLLBACK YEARS COMMENCING FROM THE YEAR 2010 - 11 TO 2013 - 14. THUS, ROLLBACK YEARS COMMENCING FROM THE YEAR 2010 - 11 TO 2013 - 14. THUS, THE AGREEMENT COVERS NINE ASSESSMENT YEARS STARTING FROM ASSESSMENT YEAR 2010 - 11 TO 2018 - 19. 2.1 THE LD. AR CONTENTED THAT INTERNATIONAL TRANSACTION S UNDERTAKEN BY THE ASS ESSEE FOR ASSESSMENT YEA R S UNDER CONSIDERATION ARE IDENTICAL TO THE ASSESSMENT YEARS WHICH ARE PART OF APA PROCEEDINGS. THER EFORE, TP ADJUSTMENT, IF ANY, REQUIRED TO BE MADE , SHALL BE IN SAME TERMS AS HAS BEEN AGREED BY ASSESSEE IN APA PROC EEDINGS. THE LD. AR PLACED ON RECORD COPY OF ADVANCE PRICING AGREEMENT U/S. 92CC OF THE ACT. 2.2 THE LD. AR FURTHER SUBMITTED THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN APPEAL IN ITA NO.139/PN/2014 FOR ASSESSMENT YEAR 2009 - 10 AFTER TAK ING INTO CONSIDERATION APA REMITTED 3 ITA NOS. 2253 TO 2255/PUN/2014 A.YS. 2005 - 06 TO 2007 - 08 THE ISSUE BACK TO THE FILE OF TRANSFER PRICING OFFICER ( TPO ) TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH TERMS AND CONDITIONS OF APA. 3. SHRI RAJEEV KUMAR REPRESENTING THE DEPARTMENT ADMITTED THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009 - 10. THE REPORT WAS CALLED FOR FROM THE DEPUTY COMMISSIONER OF INCOME TAX (DCIT) (TP) 1(1), PUNE. AS PER THE REPORT, INTERNATIONAL TRANSACTION S CARRIED OUT BY THE ASSESSEE IN ASSESSMENT Y EAR 2009 - 10 WERE SIMILAR TO THE TRANSACTIONS ENTERED DURING THE ASSESSMENT YEARS 2010 - 11 TO 2015 - 16 BY THE ASSESSEE. THE TERMS AND CONDITIONS OF APA CAN BE FOLLOWED ONLY, IF, AFTER VERIFICATION TPO IS SATISFIED THAT INTERNATIONAL TRANSACTIONS IN ASSESSMENT YEAR UNDER APPEAL ARE SIMILAR IN NATURE. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL 4. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE ALSO CONSIDERED THE APA EXECUTED BY ASSESSEE WITH CBDT ON 22.01.2016 AND THE ORDER OF CO - ORDINATE BENCH OF THE TRIBU NAL IN ASSESSEES OWN APPEAL IN ITA NO. 139/PN/2014 (SUPRA). ON PERUSAL OF ORDER OF TPO, WE FIND THA T THE ASSESSEE HAS ENTERED INTO FOLLOWING INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES (AE) DURING THE ASSESSMENT YEARS UNDER APPEAL : ASSE SSMENT YEAR DETAILS OF TRANSACTIONS VALUE OF THE TRANSACTIONS 2005 - 06 1.PURHCASE OF RM & COMPONENTS 2. SALE OF FINISHED GOODS 3.PURCHASE OF TOOLS 4. PURCHASE OF TRADED GOODS TOTAL 1,99,69,492/ - 6,67,32,797/ - 36,467/ - 78,69,689/ - 9,46,08,445/ - 4 ITA NOS. 2253 TO 2255/PUN/2014 A.YS. 2005 - 06 TO 2007 - 08 2006 - 07 1.PURHCASE OF RM & COMPONENTS 2. SALE OF FINISHED GOODS 3. PURCHASE OF TRADED GOODS 4. REIMBURSEMENT OF EXPENSES (HOTEL EXPENSES, EXHIBITION EXPENSES) TOTAL 1,94,54,590/ - 7,31,09,980/ - 1,29,15,445/ - 63,332/ - 10,55,43,347/ - 2007 - 08 1.PURHCASE OF RM & COMPONENTS 2. PURCHASE OF TRADED GOODS 3.SALE OF FINISHED GOODS 4. REIMBURSEMENT OF EXPENSES (PURCHASE OF TOOLS AND VIDEO CONFERENCING SYSTEM) TOTAL 6,25,25,045/ - 17,00,138/ - 12,45,46,395/ - 8,51,316/ - 18,96,22,894 / - THE ASSESSEE APPLIED COST PLUS METHOD (CPM) AS MOST APPROPRIATE METHOD TO BENCHMARK ITS TRANSACTIONS. HOWEVER, THE SAME WAS REJECTED BY TPO. THE TPO COMPUTED ARM LENGTH PRICES (ALP) WITH AE BY ADOPTING CPM WITH INTERNAL COMPARABLES. THE TPO FURTHER HELD THAT CUP IS THE MOST APPROPRIATE METHOD FOR MAKING TP ADJUSTMENT. THE ASSESSEE FILED OBJECTION BEFORE THE DISPUTE RESOLUTION PANEL (DRP) . THE DRP UPHELD THE ACTION OF TPO IN MAKING ADJUSTMENT ON THE BASIS OF CPLM. THE DRP FURTHER UPHELD THE ACTION OF TPO IN APPLYING CUP AS THE MOST APPROPRIATE METHOD. THE DRP DIRECTED TH E ASSESSING OFFICER TO ADOPT ADJUSTMENT FOR THE RESPECTIVE ASSESSMENT YEAR S AS UNDER : THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL HAS ASSAILED APPLICATION OF INTERNAL CUP AS WELL AS COMPUTATION OF ALP UNDER INTERNAL COST PLUS METHOD. ASSESSMENT YEAR ADJUSTMENT S 2005 - 06 RS. 4,30,96,040/ - 2006 - 07 RS.4,80,82,007/ - 2007 - 08 RS.5,69,68,540/ - 5 ITA NOS. 2253 TO 2255/PUN/2014 A.YS. 2005 - 06 TO 2007 - 08 5. IN T HE LIGHT OF FACT THAT ASSESSEE HA S ENTERED INTO APA, THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSMENT YEAR 2009 - 10 HAS DIRECTED ASSESSING OFFICER TO DECIDE THE ISSUE IN ACCORDANCE WITH THE TER MS AND CONDITIONS OF A PA AS NATURE OF TRANSACTIONS ARE SIMILAR. THE RELEVANT EXTRACT OF FINDINGS OF THE TRIBUNAL ON THIS ISSUE ARE AS UNDER: 8. THE PERUSAL OF GROUNDS OF APPEAL REFLECTS THAT THE ASSESSEE IS IN APPEAL ON ACCOUNT OF TRANSFER PRICING ADJU STMENT MADE IN THE HANDS OF ASSESSEE. NO OTHER GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE OTHER THAN TRANSFER PRICING ADJUSTMENT. THE ASSESSEE HAS MADE A REQUEST SINCE IT HAD ENTERED INTO ADVANCE PRICING AGREEMENT (APA) WITH CBDT COVERING NINE YE ARS FROM ASSESSMENT YEARS 2010 - 11 TO 2013 - 14 UNDER ROLL BACK PROVISIONS AND FROM ASSESSMENT YEARS 2014 - 15 TO 2018 - 19 BEING THE BALANCE APA PERIOD, SIMILAR PROPOSITION SHOULD BE APPLIED TO THE YEAR UNDER CONSIDERATION ALSO AS THE INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH ITS ASSOCIATE ENTERPRISES IN THE INSTANT ASSESSMENT YEAR ARE IDENTICAL TO THE INTERNATIONAL TRANSACTIONS WHICH WERE PART OF APA PROCEEDINGS. THE DCIT(TP) 1(1), PUNE HAS SUBMITTED A REPORT DATED 13.07.2016, IN WHICH IT HAS BEEN STATED THAT THE INTERNATIONAL TRANSACTIONS DURING THE ASSESSMENT YEAR 2009 - 10 WERE SIMILAR TO THE INTERNATIONAL TRANSACTIONS ENTERED DURING ASSESSMENT YEARS 2010 - 11 TO 2015 - 16. IN VIEW THEREOF, WHERE THE INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH ITS ASSOCIATE ENTERPRISES ARE SIMILAR TO THE INTERNATIONAL WITH ITS ASSOCIATE ENTERPRISES ARE SIMILAR TO THE INTERNATIONAL TRANSACTIONS IN THE SUCCEEDING YEARS, THEN WHERE THE APA PROCEEDINGS HAVE BEEN CARRIED OUT IN THE CASE OF ASSESSEE AND THE BOARD AND THE ASSESSEE HAVE COME TO A SETTLEMENT VIS - - V IS THE MANNER OF COMPUTATION OF ARM'S LENGTH PRICE IN THE CASE OF ASSESSEE IN RELATION TO THE INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATE ENTERPRISES, WE DEEM IT FIT TO RESTORE THIS ISSUE ALSO BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL CONSIDER THE PLEA OF ASSESSEE AND SHALL AFTER OBTAINING REPORT FROM THE TPO IN THIS REGARD, DECIDE THE ISSUE IN ACCORDANCE WITH LAW. REASONABLE OPPORTUNITY OF BEING HEARD SHALL BE AFFORDED TO THE ASSESSEE WHILE DECIDING THE ISSUE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. IN RESPECT OF THE BALANCE ADDITIONS, NO SPECIFIC GROUND OF APPEAL HAS BEEN RAISED NOR ANY ARGUMENTS HAVE BEEN MADE BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE, HENCE THE SAME ARE NOT DISTURBED. IN VIEW OF THE FACTS DISCUSSED ABOVE, WE ARE OF CONSIDERED OPINION THAT IT WOULD BE JUST AND PROPER TO RESTORE THESE ISSUES TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS AS ABOVE BY THE TRIBUNAL IN ASSSESSEE S APPEAL FOR ASSESSMENT YEAR 2009 - 10. WE FURTHER FIND FORCES I N THE SUBMISSION OF LD. DR THAT BEFORE D ECIDING THE ISSUES RAISED IN 6 ITA NOS. 2253 TO 2255/PUN/2014 A.YS. 2005 - 06 TO 2007 - 08 APPEALS UNDER CONSIDERATION, IT WOULD BE RELEVANT TO ASCERTAIN THE NATURE OF INTERNATIONAL TRANSACTIONS THAT HAVE BEEN CARRIED OUT DURING ASSESSMENT YEARS 20 05 - 06 TO 2007 - 08. IF THEY ARE OF SIMILAR NATURE , THE SAME CAN BE DECIDED AFRES H IN LINE WITH THE TERMS AND CONDITIONS OF APA. THE APPEALS OF THE ASSESSEE ARE THUS, ALLOWED FOR STATISTICAL PURPOSE WITH AFORESAID DIRECTIONS. 6. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRO NOUNCED ON FRIDAY, THE 15 TH DAY OF DECEMBER , 201 7 . SD/ - SD/ - ( . / D. KARUNAKARA RAO ) ( /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 15 TH DECEMBER , 2017 . SB SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS) - 13, PUNE. 4. THE CIT (APPEALS) IT/TP, PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // TRUE COPY / / / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE .