R.A.K.Ceramics India Private Limited , Secunderabad V. Dy. Commissioner of Income Tax , Circle-3(1), Hyderabad

ITA 2378/Hyd/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4041 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 26-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BALA KRISHNA
• Keywords: Transfer pricing
• Section: 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L . P . SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 2378 /HYD/20 18 (ASSESSMENT YEAR : 20 14 - 15 ) M/S. R.A.K. CERAMICS INDIA PVT. LTD., HYDERABAD. PAN AACCR 6424N ..APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(1), HYDERABAD. ..RESPONDENT. APPELLANT BY : SHRI ALIASGAR RAMPURWALA. R ESPONDENT BY : SHRI BALAKRISHNA ( CIT - D.R.) DATE OF HEARING : 07.09 . 2021. DATE OF PRONOUNCEMENT : 15 .0 9 .2021. O R D E R PER SHRI S.S. GODARA, J.M. : THIS ASSESSEES APPEAL FOR ASST. YEAR 2014 - 15 ARISES AGAINST THE DCIT, CIRCLE 3(1), HYDERABADS ASSESSMENT DT.30.10.2018 FRAMED IN FURTHERANCE TO THE DISPUTE RESOLUTION PANEL (DRP) - I, BANGALURUS DIRECTION DT.5.9.2018 IN F. NO. 24/DRP - 1/BNG/2081 - 19 IN P ROCEEDINGS 2 ITA NO. 2378/HYD/2018 U/S. 143 (3) R.W.S. 144C (13) OF THE INCOME TAX ACT, 1961 ('THE ACT'). HEARD BOTH THE PARTIES . C ASE FILE PERUSED. 2. THE ASSESSEE RAISES THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL : 3 ITA NO. 2378/HYD/2018 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. A.O. HAS ERRED IN NOT GRANTING THE MAT CREDIT CARRIED FORWARD FROM PREVIOUS ASSESSMENT YEARS. 3. L EARNED COU NSEL SUBMITS AT THE OUTSET THAT THE ASSESSEE RESTRICTED HIS PLEADINGS ONLY QUA WRONGFUL INCLUSION OF TWO COMPARABLES M/S. H SIL LTD AND M/S. CERA SANITARY W ARE LIMITED BY THE TRANSFER PRICING OFFICER (TPO) IN HIS ORDER DT.31.10.2017 AND UPHELD IN THE DRPS DIRECTION D T.5.9.2018 AS UNDER : 3.1.1. HSIL LIMITED > FUNCTIONALLY NOT COMPARABLE DIVERSIFIED ACTIVITIES. > SEGMENTS FINANCIALS NOT AVAILABLE. > ENGAGED IN R & D ACTIVITIES. 3.1.1.1 HAVING CONSIDERED THE SUBMISSIONS, WE NOTE THAT THE TPO HAS GIVEN DETAILED REASONS FOR CONSIDERING THIS COMPANY AS FUNCTIONALLY COMPARABLE, REFERRING TO THE ANNUAL REPORT OF THIS COMPANY. WE NOTE THAT THE ASSESSEE HAS NOT CONTROVERTED THE FACTUAL FINDINGS OF THE TPO. THEREFORE WE UPHELD THE SELECTION OF THIS COMP ARABLE . 3.1.2 CERA SANITARY WARE LIMITED; AND > FUNCTIONALLY NOT COMPARABLE. > SEGMENTS FINANCIALS NOT AVAILABLE. > ENGAGED IN R & D ACTIVITIES. 3.1.2.1 HAVING CONSIDERED THE SUBMISSIONS, WE NOTE THAT THE TPO HAS GIVEN DETAILED REASONS FOR CONSIDERING THIS COMPANY AS FUNCTIONALLY COMPARABLE, REFERRING TO THE ANNUAL REPORT OF THIS COMPANY. WE NOTE THAT THE ASSESSEE HAS NOT 4 ITA NO. 2378/HYD/2018 CONTROVERTED THE FA CTUAL FINDINGS OF THE TPO. THEREFORE WE UPHELD THE SELECTION OF THIS COMPARABLE . 4. L EARNED DEPARTMENT REPRESENTATIVE FAILS TO DISPUTE THAT THE DRP HEREIN HAS NOWHERE TAKEN INTO CONSIDERATION THE ASSESSEE'S DETAILED OBJECTION S QUOTING F UNCTIONAL SIMILARITY, LACK OF THE RELEVANT SEGMENTAL FINANCIALS AND ENGAGEMENT OF THE SAID TWIN ENTITIES IN R & D ACTIVITIES , WHILST DECLINING THE IMPUGNED OBJECTION IN A CRYPTIC MANNER. 5. FACED WITH THIS SITUATION, WE DEEM IT APPROPRIATE TO RESTORE THE ASS ESSEE'S INSTANT SUBSTANTIVE GROUND S BACK TO THE DRP FOR ITS AFRESH ADJUDICATION ON MERITS A FTER CONSIDERING ALL THE DETAILED EVIDENCE FILED; AS PER LAW WITHIN THREE EFFECTIVE OPPORTUNITIES OF HEARING. 6. NO OTHER GROUND HAS BEEN PRESSED BEFORE US A T THIS STAGE SINCE WE ARE RESTORING THE ISSUE OF SELECTION OF COMPARABLES IN ASSESSEE'S GROUND NO.3(A) BACK TO THE DRP. ALL OTHER SUBSTANTIVE GROUNDS ARE THEREFORE REJECTED A CONSEQUENTIAL IN NATURE AT THIS STAGE. 5 ITA NO. 2378/HYD/2018 7. THIS ASSESSEE'S APPEAL IS PARTLY ACCEPTED FOR STATISTICAL PURPOSES IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH SEPT . , 2021. SD/ - SD/ - (L .P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 15 .0 9 .2021. * REDDY GP COPY TO : 1. M/S. R A K CERAMICS INDIA PVT. LTD., 9 - 1 - 164, FLAT NO.105, 1 ST FLOOR, AMSRI PLAZA, SD ROAD, SECUNDERABAD - 500 003 2. DCIT, CIRCLE 3(1), HYDERABAD. 3. DRP - 1, KENDRIYA SADAN, 4 TH FLOOR, C WING, BENGALURU - 560 034 4. CIT(APPEALS) - HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.