M/s Saint -Gobain India Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-6(1)(1), Bangalore

ITA 2295/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7910 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-04-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 01-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHARATHA RAO SMT RENUGA D
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Additional evidence; Reasonable cause; TDS; Rule 8D
• Section: 92C; 143(3); 244A; 142(1); 14A; 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BENCH: BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA. NO.2295/BANG/2018 ASSESSMENT YEAR: 2013 - 14 SAINT - GOBAIN INDIA PRIVATE LIMITED (FOR THE MERGED ENTITY SAINT - GOBAIN CRYSTALS & DETECTORS INDIA LIMITED) 171/2, MARUTHI INDL. ESTATE HOODI RAJAPALYA, WHITEFIELD MAIN ROAD, BANGALORE 560001. PAN: AAACB 6794 R VS. DCIT, CIRCLE - 6(1)(1 ), BMTC BUILDING, 80 FEET ROAD, 6 TH BLOCK, KORAMANGALA, BANGALORE 560095. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI SHARATHA RAO FOR REVENUE : SMT RENUGA DEVI, JCIT DATE OF HEARING : 09.04.2019 DATE OF PRONOUNCEMENT : 15 .04.2019 ORDER PER PAVAN KUMAR GADALE, JM . THE ASSESSEE HAS FILED AN APPEAL AG AINST THE ORDER OF THE CIT (A) - 6 , BANGALORE, DATED 31/01 /2018 PASSED U/S 143(3) AND U/S 250 OF THE IT ACT, 1961 FOR THE ASSE SSMENT YEAR 2013 - 14 . 2. AT THE OUTSET, WE NOTICE THAT THERE IS A DELAY OF 65 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. LD AR DRAWN OUR ATTENTION TO THE AFFIDAVIT FILED BY THE ASSESSEE, EXPLAINING THE REASONS FOR NOT FILING THE APPEAL 2 BEFORE THE TRIBUNAL WITHIN THE PRESCRIBED TIME LIMIT AND SEEKING CONDONATION OF DELAY, AND READ OUT THE RELEVANT PARAS FROM THE AFFIDAVIT DATED 30/07/2018. FOR THE SAKE OF CONVENIENCE AND READY REFERENCE, THE RELEVANT PARAS ARE EXTRACTED AS UNDER: 5. THE APPEAL DOCUMENTS ARE FILED BY THE ASSE SSEE COMPANY ON 01/08/2018. 6. IN THIS REGARD, THE APPELLANT WISHES TO SUBMIT THAT THE SENIOR MANAGER - FINANCE WHO WAS IN - CHARGE OF TAX MATTERS OF THE COMPANY WAS TRAVELLING TO FRANCE FOR BUSINESS PURPOSES. FURTHER, IN LIGHT OF THE ONGOING AUDIT PROCESS, THE FILING OF THE PRESENT APPEAL WAS INADVERTENTLY LOST SIGHT OF AND THERE WAS AN INADVERTENT DELAY IN FILING OF THE APPEAL IN TIME. LATER ON IT WAS REALIZED THAT AN APPEAL CHALLENGING THE ORDER OF THE CIT (A) HAD NOT BEEN FILED. IMMEDIATELY, NECESSARY S TEPS WERE TAKEN TO GET THE INSTANT APPEAL FILED. 7. THE APPELLANT WISHES TO SUBMIT THAT THE DELAY IN FILING THE APPEAL IS NEITHER DELIBERATE NOR INTENTIONAL BUT DUE TO BONA - FIDE AND REASONABLE CAUSE. IT WAS DUE TO GENUINE HARDSHIP THAT THE NECESSARY APPEA L COULD NOT BE SUBMITTED IN TIME. I SUBMIT THAT ALL POSSIBLE EFFORTS HAVE BEEN MADE TO ARREST THE DELAY AND THAT THERE ARE GOOD AND SUFFICIENT REASONS TO CONDONE THE DELAY IN FILING THE ACCOMPANYING APPEAL. 3. ON PERUSAL OF THE CONTENTS OF THE AFFIDAVIT , WE FIND THERE IS A REASONABLE AND SUFFICIENT CAUSE FOR THE ASSESSEE IN NOT FILING THE APPEAL BEFORE TRIBUNAL WITHIN THE STIPULATED TIME LIMIT A ND THE LD DR HAS NO SERIOUS OBJECTION AND HENCE , WE CONDONE THE DELAY OF 65 DAYS AND ADMIT THE APPEAL OF THE AS SESSEE . 4. AT THE TIME OF HEARING, LD AR HAS NOT PRESSED THE GROUNDS OF APPEAL B IN RESPECT OF INCOME CORRESPONDING TO TDS APPEARING IN FORM 26AS AND MADE ENDORSEMENT IN THE APPEAL MEMO. ACCORDINGLY, THE SAID 3 GROUND B IS TREATED AS NOT PRESSED AND DI SMISSED AND THE EFFECTIVE GROUNDS OF APPEAL A AND C READ AS UNDER: A. DISALLOWANCE UNDER SECTION 14A OF THE ACT RS. 6,56,293/ - 1. THE LEARNED AO AND HONBLE CIT (A) HAS ERRED IN LAW AND FACTS BY DISALLOWING AN AMOUNT OF RS. 6,56,293/ - U/S 14A OF TH E ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 2. THE LD AO FAILED TO APPRECIATE THAT THE APPELLANT HAD SUO MOTTO CONSIDERED A DISALLOWANCE OF RS. 35,290/ - AND THE SAME HAS BEEN CERTIFIED BY THE AUDITOR IN THE NEXT AUDIT REPORT. 3. NOTWITHSTANDING THE ABOVE, THE LD AO HAS ERRED IN COMPUTING THE DISALLOWANCE UNDER THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES, 1962. 4. NOTWITHSTANDING AND WITHOUT PREJUDICE THE A BOVE GROUNDS THE HONBLE CIT (A) HAS ERRED IN CONFIRMING THE AMOUNT OF DISALLOWANCE MA DE BY THE LD AO. C. INTEREST ON REFUND U/S 244A 1. THE LD AO HAS ERRED IN REDUCING THE AMOUNT OF INTEREST U/S 244A FROM THE REFUND AMOUNT INSTEAD OF ADDING IT TO THE REFUND AMOUNT. 5. LD AR FILED A PETITION FOR ADMISSION OF ADDITI ONAL EVIDENCE IN RESP ECT OF DISALLOWANCE MADE BY THE AO U/S 14A R.W. RULE 8D. FURTHER, T HE LD AR SUBMITTED THAT THESE ADDIT IONAL EVIDENCE WERE NOT FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDINGS AND EXPLAINED THE REASONS AND PRAYED FOR PERMISSION TO FILE THE ADDITIONAL EVIDENCE WHICH ARE VITAL FOR THE DECISION MAKING IN RESPECT OF THE GROUND OF APPEAL OF DISALLOWANCE U/S 14A. LD DR HAS NO SPECIFIC OBJECTION AND SUBMITTED THAT THE AO BE PROVIDED OPPORTUNITY TO VERIFY AND EXAMINE THE ADDITIONAL EVIDENCE. A CCORDINGLY, WE ADMIT THE ADDITIONAL EVIDENCE. 4 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF GROWING CRYSTALS & MANUFACTURING OF INSTRUMENTS AND APPARATUS FOR MEASURING AND DETECTING LONISING RADIATORS & ASSEMBLE OF ARRAYS, FILED T HE RETURN OF INCOME ELECTRONICALLY ON 29/11/2013 DECLARING TOTAL INCOME OF RS. 3,99,89,350/ - . THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISS UED. LD AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED THE DETAILS. SINCE THE ASSESSEE - COMPANY HAS INTERNATIONAL TRANSACTION S WITH ITS ASSOCIATED ENTERPRISES (AES), ASSESSING OFFICER , WITH THE PRIOR APPROVAL OF PR. COMMISSIONER OF INCOME TAX (TRANSFER PRICING) - 2(2)(2), BANGALORE HAS REFERRED THE MATTER TO THE TRANSFER PRICING OFFICER FOR DETERMINING THE ARMS LENGTH PRICE (ALP) WHEREAS THE TPO VIDE ORDER DATED 28/10/2016 HAS PASSED THE ORDER U/S 92CA READ WITH SECTION 92C W ITH NO ADJUSTMENT T O THE ALP WHEREAS I N RESPECT OF THE DISALLOWANCE S U/S 14A OF THE ACT MADE BY THE ASSESSING OFFI CER, THE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF RS. 72,10,906/ - AND CLAIMED EXPENDITURE. ASSESSING OFFICER ON PERUSAL OF THE BALANCE SHEET FOUND THAT THE IN VESTMENTS MADE BY THE ASSESSEE ARE RS. 2,09,29,158/ - AND THE ASSESSEE HAS SUO MOTTO DISALLOWED 35,290/ - FOR CALCULATION OF SECTION 14A DISALLOWANCE , WHEREAS THE AO OVERLOOKED THESE FACTS AND MADE DISALLOWANCE U/S 14A R.W. RULE 5 8D OF RS. 6,56,293/ - . SIMILAR LY AO MADE OTHER ADDITIONS OF RS. 40,080/ - AND A SSESSED TOTAL INCOME OF RS. 4,06,85,723/ - AND PASSED THE ORDER U/S 143(3) DATED 30/11/2016. 7. AGGRIEVE D BY THE ORDER, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A), WHEREAS THE CIT (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER AND DISMISSED THE ASSESSEES APPEAL. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 8. LD AR HAS NOT PRESSED GROUND B A ND MADE SUBMISSIONS IN RESPECT OF GROUND A RELATING TO DISALLOWANCE U/S 14A OF THE ACT. THE CONTENTION OF THE LD AR THAT THE ASSESSING OFFICER HAS ERRED IN CALCULATING THE DISALLOWANCE TO THE EXTENT OF RS. 6,56,293/ - WHEREAS THE ASSESSEE HAS SUO MOTTO M ADE DISALLOWANCE OF RS. 35,290/ - IN THE COMPUTATION . LD AR FILED ADDITIONAL EVIDENCE IN RESPECT OF THE SUO MOTTO D ISALLOWANCE WHICH COULD NOT BE FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS. LD AR PRAYED THAT THE ASSESSEE HAS A GOOD CASE ON MERITS AND P RAYED FOR AN OPPORTUNITY TO SUBSTANTIATE THE CLAIM. 9. CONTRA, THE LD DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND OBJECTED TO THE ADDITIONAL EVIDENCE AND MENTIONED THAT THE AO BE PROVIDED AN OP PORTUNITY TO VERIFY AND EXAMINE THE CLAIM. 6 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE ON PERUSAL OF THE ASSESSMENT ORDER WE FIND THAT THE AO HAS MADE THE CALCULATION U/S 14A R.W. RULE 8D AND WORKED OUT THE DISALLOWANCE TO THE EXTENT OF RS. 6,91,583/ - AFTER GIVING SET - OFF OF DISALLOWANCE BY THE ASSESSEE. SINCE THE ADDITIONAL EVIDENCE S I S FILED BY THE ASSESSEE WITH REASONS FOR BASIS OF DISALLOWANCE MADE BY THE ASSESSEE, WE ARE OF THE SUBSTANTIVE OPINION THAT THE MATTER HAS TO BE EX AMINED AND VERIFIED. A CCORDING LY WE REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AND EXAMINE THE ADDITIONAL EVIDENCE . FURTHER THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF BEING HEARD AND THE ASSESSEE SHALL COOPERATE IN SUBMITTING THE DETAILS / INFO RMATION F O R EARLY DISPOSAL OF THE CASE. ACCORDINGLY, THE GROUND OF APPEAL A IS ALLOWED FOR STATISTICAL PURPOSES. 11. THE ASSESSEE HAS RAISED G ROUND C THAT THE ASSESSING OFFICER WHILE GRANTING INTEREST U/S 244A, REDUCED THE INTEREST AMOUNT INSTEAD OF ADDING IT TO THE REFUND OF TAX. WE PER USED THE ASSESSMENT ORDER AND FOUND THAT THE ASSESSING OFFICER WHILE GRANTING REFUND HAS ALLOWED INTEREST U/S 244A BUT IT WAS REDUCED FROM THE REFUND AMOUNT WHICH IS NOT CORRECT. . ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RECTIFY THE INTEREST CALCULATION AND THE GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUN CED IN THE OPEN COURT ON 1 5 T H DAY OF APRIL, 2019. S D / - S D / - (A.K. GARODIA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 5 T H APRIL , 2019 . OKK, SR.PS COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE