M/s. Andersen Bjornstad Kane Jacobs Inc., Bangalore V. Income-Tax Officer, Bangalore

ITA 2310/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7517 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-07-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 26-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R N PARBAT CIT III
• Assessee Lawyers: G S PRASHANTH
• Keywords: Transfer pricing; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE S HRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I.T . (I.T) A. NO. 2310 /BANG/20 16 (ASSESSMENT YEAR : 20 13 - 14 ) M/S. ANDERSEN BJORNSTAD KANE JACOBS INC., C /O ABKJ INFRASTRUCTURE & DESIGN SOLUTIONS PVT. LTD., 309, 3 RD FLOOR, RAHEJA CHAMBERS, 12, MUSEUM ROAD, BANGALORE - 560 025 . . APPELLANT. VS. INCOME TAX OFFICER, (INTERNATIONAL TAXATION), WARD 1(1), BA NGALORE. .. RESPONDENT. APPELLANT BY : SHRI G.S. PRASHANTH, CA R E SPONDENT BY : SHRI R. N. PARBAT, CIT - III (D.R) DATE OF H EARING : 21.09.2017. DATE OF P RONOUNCEMENT : 28.09.2 01 7 . O R D E R PER SHRI VIJAY P AL RAO, J .M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ASSESSMENT ORDER DT. 17 .10.201 6 PASSED UNDER SECTIO N 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') IN PURSUANT TO THE DIRECTIONS OF THE DISPUTE 2 IT A NO. 2310 /BANG/20 16 RESOLUTION PANEL (IN SHORT DRP ) DT. 29.09.2016 FOR THE ASSESSMENT YEAR 2013 - 14 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 3 IT A NO. 2310 /BANG/20 16 3. THE ASSESSEE IS A US BASED CORPORATION AND ENGAGED IN THE BUSINESS OF CIVIL AND STRUCTURAL DESIGNS CONSULTANCY BUSINESS. THE ASSESSEE HAS ESTABLISHED A 95% OWNED SUBSIDIARY COMPANY, ABKJ INFRASTRUCTURE AND DESIGN SOLUTIONS PVT. LTD. WHICH IS ENGAGED I N THE SIMILAR BUSINESS. THUS THE ASSESSEE AND ITS INDIAN SUBSIDIARY ARE ASSOCIATED ENTERPRISES (AES). DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY RENDERED STRUCTURAL DESIGN SERVICES FOR ITS AES IN INDIA. THE ASSESSEE RECEIVED A SUM OF RS.1 ,11,26,729 FOR THE SERVICES RENDERED IN INDIA BY SENDING ITS EMPLOYEES TO INDIA. THE ASSESSEE HAS SHOWN TO HAVE INCURRED A SUM OF RS.1,12,76,512 TO EARN THE ABOVE SAID SERVICES. THE ASSESSING OFFICER WHILE FRAMING THE DRAFT ASSESSMENT ASSESSED THE TOTAL INCOME OF THE ASSESSEE BY ADOPTING AT 15% PROFIT MARGIN ON THE EXPENSES CLAIMED BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE DRP BUT COULD NOT SUCCEED. 4 IT A NO. 2310 /BANG/20 16 4. WE HAVE HEARD THE LEARNED A.R. AS WELL AS LEARNE D D.R. AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE ASSESSING OFFICER AS WELL AS DRP HAS ESTIMATED THE INCOME OF THE ASSESSEE AT 15% PROFIT MARGIN ON THE EXPENSES CLAIMED BY THE ASSESSEE BY FOLLOWING THE ORDERS FOR THE ASSESSMENT YEAR 2012 - 13. THE DRP HAS DECIDED THIS ISSUE IN PARA 4 AS UNDER : 5 IT A NO. 2310 /BANG/20 16 6 IT A NO. 2310 /BANG/20 16 HENCE IT IS MANIFEST FRO M THE R E CORD THAT BOTH THE ASSESSING OFFICER AND DRP HAS DECIDED THIS ISSUE BY FOLLOWING THE DIRECTIONS OF DRP FOR THE ASSESSMENT YEAR 2012 - 13. AT THE OUTSET WE NOTE THAT FOR THE ASSESSMENT YEAR 2012 - 13, THE TRIBUNAL HAS CONSIDERED AND DECIDED THIS ISSUE VIDE ORDER DT.29.07.2016 IN IT(TP)A NOS.218 & 375/BANG/2016 IN PARA 10 TO 12 AS UND ER : 10. THE L EA RN E D ASSESS IN G OFF I CER C ONCLUD ED T H E ASSESS M E NT B Y C ON S I D E RI NG TH E DIR E CTI O N S OF THE D R P A N D P ASSE D T H E ASSESS M E N T ORD ER UND ER SECTION 14 3(3) R EA D W ITH SECT I ON 144C( L 3) OF TH E ACT V ID E HI S OR D ER DA TE D 0 7 . 01 . 2 01 6 B Y R A I S IN G A D E M A N D OF RS. 4 , 08 , 017 / - . AGG RI EVED BY T H E ORDER OF AS S ESS M ENT, T H E APP E LL ANT IS PREFE R RI N G T H E APPEA L B EFO R E T H IS HO N ' B LE B ENC H . 11. THE LD COUNSEL FOR THE ASSESSEE PRODUCED THE LETTER AT PG 18 OF THE PAPER BOOK DATED 6/4/2015 WHICH IS AS FOLLOWS: - SUB: SCRUTINY ASSESSMENT U/S 143(2) OF THE IT ACT, 1961 FOR AY 2012 - 13 REG. 7 IT A NO. 2310 /BANG/20 16 REF: YOUR REPLIE S DATED 31/3/2015 PLEASE REFER THE ABOVE. IN THIS CASE, THE ASST. WAS COMPLETED BASED ON THE SUBMISSIONS MADE BY THE ASSESSEE COMPANY TIME TO TIME AND HEARING THE AUTHORIZED REPRESENTATIVES AND DRAFT ASSESSMENT ORDER WAS DI SPATCHED ON 31/3/2015. THE ASSESSEE COMPANY FILED TWO REPLIES VIDE REFERENCE CITED ABOVE, AFTER DISPATCH OF THE DRAFT ASSESSMENT ORDER ON 31/3/2015. HENCE, THE SAME COULD NOT BE TAKEN INTO CONSIDERATION IN THE SAID DRAFT ASSESSMENT ORDER. SD/ - DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION), CIRCLE - 1(1), BANGALORE. 12. SINCE THE DY. COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION CIR CLE - 1(1) HAS STATED THAT SHE HAD RECEIVED REPLIES FILED BY THE ASSESSEE COMPANY ONLY AFTER DISPATCH OF DRAFT ASSESSMENT ORDER ON 31/3/2015 AND THAT SHE WAS UNABLE TO TAKE INTO CONSIDERATION THE SAID LETTERS FILED WHILE DISPOSING OF THE DRAFT ASSESSMENT OR DER, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF THE DCIT, CIRCLE - 1(1), WHO SHALL PASS THE FRESH ORDER DENOVO AFTER TAKING INTO CONSIDERATION THE REPLIES FILED BY THE ASSESSEE DATED 31/3/2015. THUS IT IS CLEAR THAT THE ISSUE HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE RECORD OF ASSESSING OFFICER FOR RECONSIDERATION. HENCE TO MAINTAIN RULE OF CONSISTENCY, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER ON SAME TERMS. 8 IT A NO. 2310 /BANG/20 16 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH SEPT., 2017. SD/ - ( INTURI RAMA RAO ) ACCOUNTANT MEMBER SD/ - ( VIJ AY PAL RAO ) JUDICIAL MEMBER BANGALORE, DT. 28 .09.2017. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.