VIHI LLC (Formerly Known as Visteon International Holdings Inc), V. AdIT International Taxtation II (1), CHENNAI

ITA 2333/CHNY/2012

• Counselvise Citation: 233321714 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2012
• Court: TRIBUNAL
• Department Lawyers: JOE SEBASTIAN
• Keywords: Transfer pricing; International transaction
• Section: 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2333/MDS/2012 / ASSESSMENT YEAR : 2008-09 M/S VIHI LLC [FORMERLY KNOWN AS VISTEON INTERNATIONAL HOLDINGS INC] ONE VILLAGE CENTRE DRIVE VAN BUREN TOWNSHIP MICHIGAN, USA 48111 VS. THE ASST. DIRECTOR OF INCOME-TAX INTERNATIONAL TRANSACTION II(1) CHENNAI [PAN AACCV 5659 B] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI S.P.CHIDAMBARAM, ADVOCATE /RESPONDENT BY : SHRI JOE SEBASTIAN, CIT / DATE OF HEARING : 27 - 05 - 2015 ! / DATE OF PRONOUNCEMENT : 10 - 0 7 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFF ICER CONSEQUENT TO THE DIRECTION OF THE DRP, THE ASSESS EE FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH R EGARD TO DETERMINATION OF ARMS LENGTH PRICE(ALP) IN TRANSFE R OF SHARES. ITA NO.2333/12 :- 2 -: 3. SHRI S.P. CHIDAMBARAM, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HELD 12,41,33,300 SHARE S IN M/S VISTEON AUTOMOTIVE SYSTEMS INDIA PVT. LTD. THE HOLDINGS OF THE ASSESSEE COMES TO NEARLY 94%. THE BALANCE 6% OF THE SHARES WAS HELD BY M/S HALLA CLIMATE CONTROL CORPORATION, KOREA. DURING T HE FINANCIAL YEAR 2007-08, THE ASSESSEE SOLD AWAY ITS ENTIRE SHARES I N VISTEON AUTOMOTIVE SYSTEMS INDIA PVT. LTD TO M/S CLIMATE G LOBAL LLC, KOREA, AN ASSOCIATE ENTERPRISE OF THE ASSESSEE. THE TRANS ACTION OF SHARES WAS CONSIDERED AS INTERNATIONAL TRANSACTION AND THE ASSESSEE HAS FILED TP STUDY IN FORM 3CEB. ACCORDING TO THE LD. COUNSE L, THE ASSESSEE VALUED THE SHARES ON THE BASIS OF GUIDELINES ISSUED BY CONTROLLER OF CAPITAL ISSUES (CCI). HOWEVER, THE TPO FOUND THAT CCI METHOD IS NOT THE MOST APPROPRIATE METHOD FOR VALUING THE SHARES. ACCORDING TO THE TPO, DISCOUNTED CASH FLOW (DCF) METHOD IS THE MOST APPROPRIATE METHOD. THE DRP ALSO FOUND THAT DCF IS THE MOST AP PROPRIATE METHOD FOR VALUING THE SHARES TRANSFERRED BY THE ASSESSEE . ACCORDINGLY, THE DRP DIRECTED THE ASSESSING OFFICER TO VALUE THE SHA RES AT DCF METHOD. THE LD. COUNSEL POINTED OUT THAT DCF METHOD IS AN O LD CONCEPT THEREFORE, CCI METHOD WOULD BE MORE APPROPRIATE TO VALUE THE SHARES. THE LD. COUNSEL VERY FAIRLY SUBMITTED THAT AN IDENT ICAL ISSUE CAME UP BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AS SESSMENT YEAR 2007- 08 IN I.T.A.NO.17/MDS/2012 AND THIS TRIBUNAL VIDE O RDER DATED ITA NO.2333/12 :- 3 -: 12.11.2013, FOUND THAT DCF METHOD IS THE MOST APPRO PRIATE METHOD FOR VALUING THE SHARES. 4. WE HEARD SHRI JOE SEBASTIAN, LD. DEPARTMENTAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. DR, THE ASSESSEE ITSELF VALUED THE SHARES AS PER DCF METHOD FOR THE YEAR UN DER CONSIDERATION. EVEN THOUGH THE ASSESSEE CLAIMED THAT CCI METHOD I S THE MOST APPROPRIATE METHOD, THE ASSESSEE ITSELF VALUED TH E SHARES IN DCF METHOD, THEREFORE, THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 FOUND THAT WHEN THE METHOD WAS MUTUALLY AGREED AND APPLIED FOR ASSESSMENT YEAR 2008-09, IT MAY NOT BE JUSTIFIED TO TAKE A DEVIANT APPROACH FOR ASSESSMENT YEAR 2007-08. THEREFORE, ACCORDING TO THE LD. DR, DCF IS THE MOST APPROPRIATE METHOD WHICH WAS MUTUALLY AGREED BY THE ASSESSEE A ND THE TPO. THEREFORE, THE DRP HAS RIGHTLY CONFIRMED THE ORDER OF THE TPO. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THIS TRIBUNAL EXAMINED THIS ISSUE FOR ASSESSMENT YEAR 2007-08 IN THE ASSESSEES OWN CASE AND FOUND THAT DFC IS THE MOST APPROPRIATE METHOD FOR VALUING THE SHARES. THIS TRIBUNAL HAS ALSO FOUND THAT THE ASSESSEE ITSELF V ALUED THE SHARES IN DCF METHOD FOR THE YEAR UNDER CONSIDERATION. THERE FORE, THIS TRIBUNAL ITA NO.2333/12 :- 4 -: DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. 6. THE ASSESSEE HAS ALSO RAISED ONE MORE GROUND WITH REGARD TO LEVY OF INTEREST U/S 234B OF THE ACT. 7. THE INTEREST LEVIED U/S 234B WAS DELETED BY THE TR IBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 BY PLACING RELIANCE ON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX VS JACABS CIVIL INCORPORATED , 330 ITR 578. SINCE THE FACTS ARE IDENTICAL, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT LEVY OF INTEREST U/S 234B IS NOT JUSTIFIED. ACCORDINGLY, BY FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSE ES OWN CASE FOR ASSESSMENT YEAR 2007-08, THE INTEREST LEVIED U/S 2 34B IS DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH OF JULY, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 10 TH JULY, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF