DCIT 6(1)(1), MUMBAI V. AEGIS LTD, MUMBAI

ITA 2391/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3546 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 27-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Keywords: Reasonable cause; Valuation report
• Section: 143(3)

Judgement Text

I.T.A. NO. 2391/MUM/15 ASSESSMENT YEAR: 2009 - 10 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI K BENCH, MUMBAI [CORAM: PRAMOD KUMAR AM AND PAWAN SINGH JM ] I.T.A. NO. 2391/MUM/15 ASSESSMENT YEAR: 2009 - 10 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 6(1)(1), MUMBAI . .APPELLANT VS. AEGIS LIMITED .. . RESPONDENT 11, ESSAR HOUSE K K ROAD, MAHALAXMI MUMBAI 400 034 [PAN:AAACE8354Q] APPEARANCES BY: N K CHAND FOR THE A PPELLANT RAJAN VORA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JANUARY 1 4 , 2016 DATE OF PRONOU NCING THE ORDER : FEBRUARY 29 , 201 6 O R D E R PER PRAMOD KUMAR , AM : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGE D CORRECTNESS OF THE DIRECTIONS CONTAINED IN THE ORDER PASSED BY THE DISPUTE RESOLUTION PANEL - I, MUMBAI, IN THE MATTER OF ASS ESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009 - 10 (HEREINAFTER REFERRED TO AS THE IMPUGNED ORDER ). 2. THE APPEAL IS, AS PER THE OFFICE NOTE PLACED ON THE FILE , TIME BARRED BY 419 DAYS. 3. THE APPELLANT CONTENDS THAT THE APPEAL IS DELAYED BY 393 DAYS AND HE HAS ALSO FILED A PETITION SEEKING CONDONATION OF THIS DELAY. WHETHER THE DELAY IS 419 DAYS OR 393 DAYS, IT IS, FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE, NOT REALLY MATERIAL AND THAT LITTLE VARIANCE IN T HE NUMBER OF DAYS MUST NOT DETAIN US. I.T.A. NO. 2391/MUM/15 ASSESSMENT YEAR: 2009 - 10 PAGE 2 OF 7 SUFFICE TO NOTE THAT WHILE THE ASSESSING OFFICER HAD RECEIVED THE IMPUGNED ORDER ON 3 RD JANUARY 2014, THE APPEAL WAS FILED ONLY ON 27 TH APRIL 2015. THE CONDONATION PETITION SUBMITS THAT THE DELAY IS BONAFIDE, INA DVERTENT AND FOR GOOD AND SUFFICIENT REASONS. IT IS POINTED OUT THAT THE SCRUTINY REPORT ON THE DRP ORDER WAS SUBMITTED BY THE APPELLANT ASSESSING OFFICER ON 9 TH MARCH 2015 WHICH, THROUGH THE CONCERNED ADDITIONAL COMMISSIONER OF INCOME TAX, ROUTED TO THE PRINCIPAL COMMISSIONE R OF INCOME TAX. IT IS SUBMITTED THAT DUE TO CADRE RESTRUCTURING THE PRESENT ASSESSING OFFICER RECEIVED THE CASE RECORDS SOMETIME IN JANUARY 2015 AND THAT IS THE REASON FOR WHICH DELAY TOOK PLACE. IN HIS AFFIDAVIT, LEARNED PRINCIPAL C OMMISSIONER OF INCOME TAX STATES THAT CONSEQUENT TO CADRE RESTRUCTURING, THE PENDING APPEAL WAS TRANSFERRED TO THIS (HIS) CHARGE ONLY ON 26.03.2015, WHILE COMMENTS OF THE TPO WERE OBTAINED ON 17.04.2015 BY THE AO . THE EARLIER ASSESSING OFFICER, VIDE HIS AFFIDAVIT DATED 24 TH DAY OF MARCH, 2015, HAS EXPLAINED THE DELAY FOR THE REASONS GIVEN BELOW: I, MILIND V RAJGURU, DCIT 5(1)(1) & 5(1)(2), MUMBAI WORKING IN THE OFFICE OF THE PR. COMMISSIONER OF INCOME TAX - CIT - 5, HAVING OFFICE AT AAYAKAR BHAVAN, M.K. RO AD, MUMBAI 400 020, DO HEREBY SOLEMNLY AFFIRM AND STATES AS UNDER: 1. I SAY THAT THE LAST DATE FOR FILING THE SECOND APPEAL WAS 28.03.2014. AS SUCH, THERE IS DELAY OF 330 DAYS IN FILING THE APPEAL. THE REASONS CAUSING THE DELAY IS APPENDED BELOW: - H ENCE, IT IS HUMBLY REQUESTED THAT THE DELAY MAY BE CONDONED AS IT OCCURRED INADVERTENTLY AND THERE WAS NO WILFUL OMISSION AND IT OCCURRED WITH A REASONABLE CAUSE. 2. I SAY THAT DELAY FOR SUBMITTING THE SCRUTINY REPORT WAS INADVERTENT AND COMPLETELY BONAFI DE. 3. I SAY THAT IT MAY PLEASE BE APPRECIATED THAT THE PROVISION FOR APPEALING AGAINST THE DRP ORDER (SECTION 253 (3A)) WAS INTRODUCED IN THE IT ACT, 1961 W.E.F. FROM JULY 2012 AND HENCE THIS WAS THE FIRST CYCLE OF DRP ORDERS AGAINST WHICH SECOND APPEAL COULD BE RECOMMENDED AND FILED. SINCE THERE WAS NO PRECEDENCE OF FILING APPEAL AGAINST THE DRP ORDERS, IT INADVERTENTLY REMAINED TO BE FILED. 4. I SAY THAT SINCE THE FINAL ASSESSMENT ORDER WAS PASSED ON 27.01.2014 BY THE ADDL. CIT AND THE CASE RECORDS SU BSEQUENTLY TRANSFERRED TO ME FOR I.T.A. NO. 2391/MUM/15 ASSESSMENT YEAR: 2009 - 10 PAGE 3 OF 7 COLLECTION OF DEMAND AND OTHER ADMINISTRATIVE MATTERS, I HAD NO OCCASION TO REALLY GO THROUGH THE DRP ORDER. 5. I SAY THAT IT MAY BE APPRECIATED THAT DURING THE MONTHS OF FEBRUARY AND MACH 2014, I HAD TO DISPOSE OFF 184 TI ME BARRING CASES AND PENALTY ORDERS, APART FROM ENFORCING COLLECTION OF ARREAR AND CURRENT DEMAND TO ACHIEVE THE BUDGET TARGET. 6. I SAY THAT THERE WAS NO REMINDER FROM THE OFFICE OF THE DCIT (JUDICIAL) O/O MUMBAI, AS IS THE NORMAL PRACTICE. THIS FURTHER GOES TO SHOW THAT MOST OF US WERE LARGELY UNAWARE OF THIS PROVISION OF FILING SECOND APPEAL AND THAT IT WAS AN INADVERTENT OVERSIGHT OWING TO WHICH THE APPEAL WAS NOT FILED. 7. I SAY THAT IN VIEW OF THE ABOVE, IT IS REQUESTED THAT THE ABOVE ERROR MAY KIN DLY BE CONDONED. THE UNDERSIGNED ALSO ASSURES THAT MORE CAREFUL MONITORING WILL BE EXERCISED IN FUTURE AND SUCH A MISTAKE WILL NOT RECUR. 8. I SAY THAT THE DELAY FOR FILING OF SECOND APPEAL BEFORE THE HON BLE TRIBUNAL MAY BE CONDONED. 9. I SAY THAT WHAT EVER STATED HEREINABOVE IS TRUE TO THE BEST OF KNOWLEDGE AND BELIEVE THE SAME TO BE TRUE. SOLEMNLY AFFIRMED AT MUMBAI. DATED THIS 24TH DAY OF MARCH, 2015 MILIND V RAJGURU DCIT - 5(1)(1) & 5(1)(2), MUMBAI 4. LEARNED COUNSEL, HOWEVER, POINTS OUT THAT THE F ILING OF THIS APPEAL IS AN AFTERTHOUGHT, AND, THEREFORE, THE DELAY SHOULD NOT BE CONDONED. IT IS POINTED OUT THAT THE HEARING ON THE APPEAL FILED BY THE ASSESSEE, AGAINST THE SAME ORDER, WAS FIRST CONCLUDED ON 5 TH JANUARY 2015. UNTIL THE TIME THE HEARING O N ASSESSEE S APPEAL WAS CONCLUDED, THE APPEAL BY THE ASSESSEE WAS NOWHERE IN SIGHT. IT IS ALSO POINTED OUT THAT NOT ONLY THAT THE ASSESSEE HAD FILED APPEAL ON 24 TH FEBRUARY 2014, THE ASSESSEE HAD ALSO FILED A STAY PETITION BEFORE THIS TRIBUNAL. THE FIRST S TAY WAS GRANTED BY THIS TRIBUNAL ON 7 TH MARCH 2014, WHICH WAS EXTENDED ON 5 TH SEPTEMBER 2014. OBVIOUSLY, ALL ALONG THE ASSESSING OFFICER WAS AWARE OF THE FACT OF PENDENCY OF THIS APPEAL BEFORE THE TRIBUNAL AND YET HE DID NOT PREFER AN APPEAL. IT IS POINTED OUT THAT AS SOME CLARIFICATIONS WERE REQUIRED BY THE BENCH, THE MATTER WAS FIXED AGAIN FOR HEARING ON 17 TH APRIL 2015 AND THE I.T.A. NO. 2391/MUM/15 ASSESSMENT YEAR: 2009 - 10 PAGE 4 OF 7 HEARING WAS FINALLY CONCLUDED ON THAT DATE. THE APPEAL WAS FILED BY THE ASSESSING OFFICER ON 27 TH APRIL 2015. BY POINTING OUT THI S SEQUENCE OF EVENTS , ACCORDING TO THE LEARNED COUNSEL, IT IS CLEAR THAT THE APPEAL WAS AN AFTERTHOUGHT. UNTIL THE POINT OF TIME WHEN HEARING WAS CONCLUDED ON THE APPEAL FILED BY THE ASSESSEE, THE APPEAL WAS NOT FILED BY THE ASSESSING OFFICER, AND, AS A MA TTER OF FACT, EVEN THE CALL AS TO WHETHER OR NOT THE APPEAL IS TO BE FILED WAS TAKEN. LEARNED COUNSEL CONTENDS THAT IT IS INCORRECT TO SAY THAT THE JURISDICTION IN THIS CASE WAS TRANSFERRED ON 26 TH MARCH 2015 BECAUSE THE SCRUTINY ASSESSMENT NOTICE, FOR THE ASSESSMENT YEAR 2010 - 11, WAS ISSUED BY THE CURRENT JURISDICTION ON 30 TH JANUARY 2015. THE DELAY IN FILING OF APPEAL, ACCORDING TO THE LEARNED COUNSEL, SHOULD NOT BE CONDONED PARTICULARLY AS THE APPEAL HAS BEEN FILED AFTER HEARING ON ASSESSEE S APPEAL WAS CONCLUDED AT THE TRIBUNAL LEVEL. IT WAS ALSO POINTED OUT THAT ALL THE ISSUES WHICH ARE BEING RAISED NOW HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL. OUR ATTENTION WAS ALSO INVITED TO A CHART, WHICH IS REPRODUCED BELOW, TO HIGHLIGHT THAT THE ISSUES BEING RAIS ED NOW ARE ALREADY COVERED, IN FAVOUR OF THE ASSESSEE, BY TRIBUNAL S ORDER 27 TH JULY 2015: S.NO. DEPARTMENT S GROUNDS OF APPEAL APPELLANT S CORRESPONDING GROUNDS OF APPEAL DIRECTIONS OF THE HON BLE ITAT 1. GROUND NO. 1 : WHETHER ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW, THE HON'BLE DRP ERRED IN FACT & LAW WHILE REDUCING THE RATE OF THE CORPORATE GUARANTEE FEE WHEN THE SAME WAS ARRIVED AT BY THE TPO BY ADOPTING A SCIENTIFIC APPROACH TO APPLY DIFFERENTIAL IN THE CORRESPONDING CREDIT RATING OF TH E ASSESSEE AND THE AE GROUND NO. 13 : THE LEARNED TPO / AO / DRP HAVE ERRED IN RE - DETERMINING THE ARM'S LENGTH COMPENSATION FOR CORPORATE GUARANTEES EXTENDED BY APPELLANT ON BEHALF OF ITS AES. THE HON'BLE ITAT IN PARA 22 OF ITS ORDER HAS FOUND HELD THAT S INCE THE APPELLANT ITSELF HAD AGREED TO CHARGE GUARANTEE COMMISSION @ 1 PERCENT OF OUTSTANDING GUARANTEED AMOUNT, THEREFORE COMMISSION SHOULD BE BENCHMARKED BY TAKING THE RATE OF 1 PERCENT OF THE OUTSTANDING GUARANTEED AMOUNT. [REFER PARA 22 ON PAGES 21 A ND 22 OF THE ITAT ORDER] 2. GROUND NO. 2: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP ERRED IN FACT & LAW BY CHANGING THE GROUND NO. 9: THE LEARNED DRP HAVE ERRED IN DETERMINING THE ARM'S LENGTH PRICE OF THE SHARES OF THE HON'BLE ITAT IN PARA 16 OF ITS ORDER HAS UPHELD THE APPLICATION OF DCF METHOD AND RESTORED TH E GROUND BACK TO THE I.T.A. NO. 2391/MUM/15 ASSESSMENT YEAR: 2009 - 10 PAGE 5 OF 7 COMPLETE WORKING OF VALUATION OF SHARE OF ASSESSEE AS PER DCF METHOD FROM A VALUE OF RS. 452/ - PER EQUITY SHARE TO RS.313/ - PER SHARE BY WAY OF COMPLEX ARGUMENTS/ METHODS, WITHOUT PROVIDING AN OPPORTUNITY OF HEARING TO TPO GROUND NO. 3 : WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP ERRED IN DIRECTING THE TPO TO TAKE TH E VALUE OF SHARE OF ABGL AS RS. 104.33 PER SHARE INSTEAD OF VALUE OF RS. 150.66 PER SHARE TAKEN BY THE TPO. AEGIS BPO SERVICES GURGAON LTD. AT RS.104.33. GRO UND NO. 10: THE LEARNED TPO / AO / DRP HAVE ERRED IN REJECTING THE VALUATION REPORT USED FOR SUBSTANTIATING TRANSFER OF EQUITY SHARES BY THE APPELLANT TO ITS AE AND RE - DETERMINING ALP OF THE SAID TRANSACTION BY UNDERTAKING A FLAWED VALUATION ANALYSIS OF HI S OWN. GROUND NO. 11: THE LEARNED TPO / AO / DRP HAVE ERRED IN APPLYING DISCOUNTED CASH FLOW METHOD IN DETERMINING THE VALUE OF THE SHARES TRANSFERRED BY IT. FILE OF LEARNED AO FOR THE PURPOSE OF VERIFICATION AND EXAMINATION OF THE VALUATION AS PER THE DCF METHOD GIVEN BY THE APPELLANT. [REFER PARA 16 ON PAGES 17 AND 18 OF THE ITAT ORDER] 5. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTL Y CONTENDED THAT IT IS FACTUALLY INCORRECT THAT THE PRESENT APPEAL IS FILED AFTER THE HEARING ON ASSESSEE S APPEAL WAS CONCLUDED, AND , POINTED OUT THAT, AS EVIDENT FROM THE DATE OF CONCLUSION OF HEARING STATED AT PAGE 1 OF THE TRIBUNAL S ORDER, THE HEARING WAS CONCLUDED ON 17 TH APRIL 2015 WHEREAS, BY THAT TIME, THE PROCESS FOR FILING THE APPEAL WAS SET IN MOTION EVEN THOUGH APPEAL WAS EVENTUALLY FILED ON 27 TH APRIL 2015. WE WERE ONCE AGAIN URGED TO CONDONE THE DELAY WHICH, ACCORDING TO THE LEARNED DEPARTMEN TAL REPRESENTATIVE, BONAFIDE, INADVERTENT AND ON ACCOUNT OF FACTORS BEYOND THE CONTROL OF THE APPELLANT. AS FOR THE MATTERS BEING RAISED IN THE APPEAL BEING COVERED BY THE TRIBUNAL S ORDER DATED 27 TH JULY 2015, LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT D ISPUTE THE SAME. HE, HOWEVER, SUBMITTED THAT IT CANNOT BE TREATED AS A COVERED MATTER , AND THAT IN CASE THE DELAY IS CONDONED, THE HEARING WILL HAVE TO BE GIVEN ON THE POINTS RAISED IN THE APPEAL. 6. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL CO NTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. I.T.A. NO. 2391/MUM/15 ASSESSMENT YEAR: 2009 - 10 PAGE 6 OF 7 7. WE HAVE NOTED THAT THE APPEAL FILED BY THE ASSESSEE AGAINST THE SAME ORDER, WHICH IS ALSO BEING CALLED INTO QUESTION BY THIS APPEAL, HAS ALREADY BEEN DISPOSED OF ON 27 TH JULY 2015. THE HEARING IN THIS CASE WAS CONCLUDED ON 5 TH JANUARY 2015 , AND, EVEN AT THAT POINT OF TIME, THE INITIATION OF PROCESS FOR FILING THE APPEAL WAS NOWHERE IN SIGHT. THEREAFTER, THE MATTER WAS REFIXED FO R CLARIFICATION ON 17 TH APRIL 2015, FOR TECHNICAL PURPOSES AND TO EXTEND THE TIME FOR PASSING THE ORDER, AND FINALLY AN ORDER WAS PASSED BY THE TRIBUNAL ON 27 TH JULY 2015. WE HAVE NOTED THAT TILL THE TIME THE HEARING WAS CONCLUDED THE PROCESS OF FILING THE APPEAL WAS NOT EVEN INITIATED. WE HAVE ALSO NOTED THAT ON TWO OCCASIONS, I.E. ON 7 TH MARCH 2014 AND 5 TH SEPTEMBER 2014, STAY ORDERS WERE PASSED BY THIS TRIBUNAL AND THE ASSESSING OFFICER, THEREFORE, CANNOT BE UNAWARE OF THE FACT THAT THE ASSESSEE S APPEAL WAS PENDING BEFORE THE TRIBUNAL. YET, THE ASSESSING OFFICER DID NOT CONSIDER IT APPROPRIATE TO FILE THE APPEAL. HIS BEING BUSY WITH 184 TIME BARRING MATTERS CANNOT BE AN EXCUSE ENOUGH NOT TO TAKE THE CALL WHETHER OR NOT THE APPEAL SHOULD BE FILED. WHEN THE ASSESSING OFFICER WAS ALL ALONG AWARE OF THE TRIBUNAL BEING IN SEISIN OF THE MATTER, AND PARTICULARLY THE SAME ASPECTS OF THE MATTER AS BEING RAISED NOW, AND YET HE PREFERS NOT TO FILE AN APPEAL, IT CANNOT BE OPEN TO HIM TO WAKE UP NOW, AFTER THE HE ARING IS CONCLUDED AND A FTER THE ASSESSEE S APPEAL IS DISPOSED OF, AND AGITATE THE SAME ISSUES WHICH HAVE BEEN ADJUDICATED UPON BY THE TRIBUNAL IN ANY CASE. IF THIS BELATED APPEAL IS ADMITTED AT THIS STAGE, ON THE SAME ISSUES ON WHICH HEARING IS ONCE CONC LUDED, THERE WILL BE NO CHOICE EXCEPT TO SET ASIDE THE EARLIER ORDERS PASSED BY THE TRIBUNAL AND HEAR THE CROSS APPEALS TOGETHER - WHICH WILL CAUSE LEGITIMATE PREJUDICE TO THE ASSESSEE AND UNSETTLE THE SETTLED MATTERS. IN ANY EVENT, THE ARGUMENTS IN SUPPO RT OF THE STAND OF THE ASSESSING OFFICER HAVE ALREADY BEEN ADVANCED BY THE DEPARTMENTAL REPRESENTATIVE, DEFENDING ASSESSEE S APPEAL, AND ADJUDICATED UPON BY THE TRIBUNAL. NO NEW ISSUE IS BEING RAISED NOW. THESE ARE ONLY DIFFERENT FACETS OF THE SAME CORE I SSUES WHICH HAVE ALREADY BEEN ADJUDICATED BY THE TRIBUNAL. I.T.A. NO. 2391/MUM/15 ASSESSMENT YEAR: 2009 - 10 PAGE 7 OF 7 8. THE SITUATION COULD HAVE BEEN MATERIALLY DIFFERENT IF THE ASSESSING OFFICER WAS SEEKING TO AGITATE THE MATTERS WHICH HAVE REMAINED INTACT FROM TRIBUNAL S ADJUDICATION ON ASSSESSEE S APPEAL, BUT THAT IS NOT THE SITUATION BEFORE US. ADMITTING THIS APPEAL NOW WILL END UP NECESSITATING RECALLING OF THE ORDER ALREADY PASSED BY THE TRIBUNAL ON THE APPEAL FILED BY THE ASSESSEE, AND UNSETTLE THE THINGS ALREADY SETTLED. ONCE THE ASSESSING OFFICER HAS P ARTICIPATED IN THE APPELLATE PROCEEDINGS IN RESPECT OF AN ORDER, IT CANNOT BE OPEN TO HIM TO RAISE THE SAME ISSUES AGAIN BY WAY OF HIS BELATED APPEAL. 9. IN THE LIGHT OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIN D ENTIRETY OF THIS CASE, WE DEEM FIT AP PROPRIATE NOT TO CONDONE THE DELAY IN FILING OF APPEAL. THE SAME ISSUES, WHICH THE ASSESSING OFFICER IS RAISING NOW, HAVE ALREADY BEEN ADJUDICATED UPON BY THE TRIBUNAL AND THE ASSESSING OFFICER, THROUGH THE DEPARTMENTAL REPRESENTATIVE, HAS DULY PARTICIPATE D IN THE PROCEEDINGS BEFORE US. 10. AS THE APPEAL IS DISMISSED AS TIME BARRED, WE SEE NO NEED TO TAKE UP MERITS OF THE CASE. THAT ASPECT OF THE MATTER IS WHOLLY ACADEMIC. 11 IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON 29 TH DAY OF FEBRUARY, 2016. SD/ - SD/ - PAWAN SINGH PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 29 TH DAY OF FEBRUARY , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPART MENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI