Asst.C.I.T., Bangalore V. M/s Faurecia Automotive Seating India Pvt, Bangalore

ITA 249/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8595 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 25-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 143(3); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI S.K.YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER IT (TP) A NO.249 (BANG) 2016 (ASSESSMENT YEAR : 2011-12) THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-3, BANGALORE APPELLANT VS M/S FAURECIA AUTOMOTIVE SEATING INDIA PVT. LTD. PLOT NO.T-187, PIMPRI IND. AREAS, (B.G.BLOCK) BHOSARI,PUNE-411 026 PAN NO.AADCS8694Q RESPONDENT AND IN IT(TP)A NO.290(BANG)/2016 (ASSESSMENT YEAR : 2011-12) (BY ASSESSEE) REVENUE BY : SHRI SANJAY KUMAR, CIT-III ASSESSEE BY : SHRI KAMAL SAWHNEY AND SHRI HARSH R SHAW, ADVOCATE DATE OF HEARING : 14-12-2016 DATE OF PRONOUNCEMENT : 22.02.2017 O R D E R PER SHRI A.K.GARODIA, AM THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE AND THESE ARE DIRECTED AGAINST THE ASSESSMENT ORDER DATED 30-12-2015 PASSED BY THE AO U/S 143(3) R.W.S.144C OF THE IT AC T, 1961 FOR THE ASSESSMENT YEAR 2011-12 AS PER THE DIRECTIONS OF TH E DRP. 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEA L ARE AS UNDER:- BA S ED ON THE FACT S AND CIRCUM S TANCES OF THE CA S E , FA URECIA AUTOMOTI V E SE A TING INDI A PRI V ATE L IMITED (HERE IN AFTER REFERRED TO AS THE ' APPE L LANT ' ) RESPECTFULL Y CRAVES LEA V E TO PREF E R A N APP E AL AGAIN S T THE ORDER PAS S ED B Y THE A SS I S TANT COMMISSIONER OF INCOME TAX , CIR C LE - 3 ( 1) ( 1 ) ( ' A O ') DATED 30 DECEMB E R 2 015 (RECEI V ED B Y THE A PPELLANT ON 3 F EBRUAR Y 2 016 ) IN PURSUANCE OF THE DIRECTION S I SS UED B Y DI S PUTE RE S OLUTION P A NEL ( ' DRP ') , BANGALORE , DATED 3 0 NOVEMBER 2015 UNDER S ECTION 2 53 OF THE IN C OME - T A X A CT , 1961 ' A C T ' ) ON TH E FOLLOWIN G G ROUNDS , W HICH ARE INDEPENDENT OF A ND WITHOUT PREJUDICE TO EACH OTHER : ON THE F ACT S A ND IN THE CIR C UM S T A NCE S O F THE CA S E AND IN LA W, THE HON ' BLE DRP A ND CO N S EQUENTI A LL Y THE L E ARNED A O / T RAN S FER PRI C IN G O F FICER (' TPO ' ) HAS : A . GE N ERA L 1. ERRED IN A SS E S SIN G THE TOTAL INCOME A T R S 1 7,9 0 , 77, 545 AS AGA IN S T INCOME OF RS 6 , 26 ,8 4 , 551 (AS P E R THE RETURN OF INCOME FILED B Y T HE APPELLANT ) ; B. T RAN SFE R P RI C I N G ADJ U ST M E N T UND ER PROVISIONS OF C H A P TE R X OF T H E ACT I N RESPECT OF I NT ER N AT ION A L T R A N SA CT IO N S 2. ERRED IN CONFORMING THE A RM ' S LEN G TH PRICE FO R I NT E RN A TION A L TRAN S ACT IO N I N RE S P E CT OF AVA IL ING PROFE S SIONAL S ER V ICES BY THE A PPELL A NT F ROM ITS ASSOC I A TED E NTERPRISE S ( , AES ' ) AT R S. NI L AS AGAI N S T THE S UM OF R S. 11 , 6 3 , 92 , 994 1 - AS DETERMINED B Y THE A PP E LL A NT AND TH ER EB Y PROPO S IN G A N A D J U S T MENT OF R S. 11 , 63 , 92 , 9 94 / - 3. E RR E D I N A LL EGI N G T H A T N O TA N G IBLE OR DIRECT B ENEFIT WAS DE RI V ED B Y THE A PPELLANT F ROM THE REC EI P T OF P ROFESS I ONA L SE R V ICE S A ND F UR T HER E RRED IN DI S R EGAR DIN G THE SE R V ICE AG R E EM E NT A ND OTHER DOCUM E NT S F IL E D B Y THE A PPELLANT F R O M T IME TO TI ME TO S UB STANTIA T E T HE R E CE I PT , BEN EF IT S D ER I VE D T HERE F ROM A ND C O S T I NC URR E D B Y THE AE FO R RE ND E RIN G TH E SE SE R V ICES . 4. E RRED IN A L L EG IN G TH AT T H E A PP E LL A NT H AS NOT PRO DU CE D A N Y PRIM A R Y E V IDENCE T O S H OW T H A T SE R V I CES WERE AC TU A LLY RENDERED B Y T H E AE . 5. E RR E D IN DI S RE GA RDIN G THE B E NCHM A R KING ANA L Y SI S CO NDUCTED B Y THE A PPELL A NT U S IN G T H E T R A N S A CT ION AL NE T MARG IN METHOD (' T N MM ' ) TO DE M O N ST R A T E THE AR M ' S L E N G TH NA TURE OF T H E PR I C IN G OF T HE SA ID IN TE RNATI O N A L T RAN SA CTION . F UR T HER , THE LEARN ED T PO A L S O ERR E D IN A PPL Y IN G CO MP ARA BLE U N CO N T R O LLED PRICE ( ' C U P ') METHOD TO BENCHM A RK THE IN TE RNATION A L T R A N SA CTION O F PA Y MENT OF PR OFESSIO NAL F EES WITHOUT PRO V IDIN G A NY COMPARABLE UNCON T R O LL E D TR A N SA CTION . 6. ERRED IN FACT S A ND IN LAW IN QUESTIONIN G T H E COMMERCI A L E X PEDIENCY F O R A V AI LI NG S U C H SERV ICE S A ND N O T APPRE C I AT IN G THE J URI S PRUDENCE THAT THE LE A RNED A O 1 T PO CANNOT GO B EYO ND HI S PO WE R S IN QUE S TIONIN G COMM E RCI A L D E CISION O F THE APPELLANT . 7. E RRED I N A LLE G IN G T H A T THE APPELLANT HA S NOT S HOWN HOW S U C H SE R V I C E S W OULD BE VA LUED B Y A N INDEPENDENT ENTIT Y D EA L I N G IN S IMILAR C I RCUM S TANCE S . 8. ERRED IN IGNORING THE FACT THAT THE AE HAS PAI D TAX ON PROFESSIONAL FEES AND HAS FILED THE RETURN OF INCOM E IN INDIA FOR THE YEAR UNDER CONSIDERATION. 9.ERRED IN REFERRING THE CASE TO THE TPO WITHOUT SATISFYING THE CONDITIONS UNDER SECTION 92CA(3)OF T HE ACT. APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMIT, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL , SO AS TO ENABLE THE LD. AO TO DECIDE THIS APPEAL ACCORDIN G TO LAW . 3. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: - 1. THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL ARE OPPOSED TO LAW AND FACTS OF THE CASE. 2. IN THE FACTS AND IN THE CIRCUMSTANCED OF THE CAS E, THE DRP HAS ERRED IN ALLOWING THE EXPENSES CLAIMED IN T HE REVISED RETURN IGNORING THE FACT THAT THE EXPENSES HAVE BEEN REDUCED FROM NET PROFIT IN THE STATEMENT OF COMPUTATION AND HAVE NOT BEEN ROUTED THROUGH THE BOOKS OF ACCOUNT. 3. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE DRP HAS FAILED TO EXAMINE THE NATURE AND CLAIM OF ADDITIONAL EXPENSES CLAIMED IN ITS REVISED RETURN W HICH IS NOT IN THE FORM OF ADJUSTMENTS TO BE MADE IN THE STATEMENT OF COMPUTATION OF INCOME BUT TO BE CLAIM ED IN THE BOOKS OF ACCOUNTS. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE DIRECTIONS O F THE DRP IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 4. AT THE VERY OUTSET, IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE THAT THE ORDER PASSED BY THE DRP IS VERY C RYPTIC AND IT IS NOT A SPEAKING AND REASONED ORDER. THEREFORE, IN THE INTE REST OF JUSTICE, THE ENTIRE MATTER MAY BE RESTORED BACK TO THE FILE OF T HE AO/TPO FOR A FRESH DECISION. 5. THE LD. DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM T HE READING OF THE ORDER PASSED BY THE DRP, IT IS SEEN THAT THE ORDER PASSED BY THE DRP IS IN FACT VERY CRYPTIC AND IT IS NOT A SPEAKING AND R EASONED ORDER AND THEREFORE, WE FIND FORCE IN THE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE THAT IN THE PRESENT CASE, THE ENTIRE MATTER SHOULD GO BACK TO THE FILE OF THE AO/TPO FOR A FRESH DECISION. ACCORDINGLY, WE S ET ASIDE THE ASSESSMENT ORDER AND RESTORE THE ENTIRE MATTER BACK TO THE FILE OF THE AO/TPO FOR A FRESH DECISION. WE WANT TO MAKE IT CLE AR THAT WE HAVE NOT EXPRESSED ANY OPINION ON ANY OF THE ISSUES RAISED B Y BOTH SIDES IN THEIR RESPECTIVE APPEALS. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE A SSESSEE AND REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MEN TIONED ON THE CAPTION PAGE. SD/- (SUNIL KUMAR YADAV) SD/- (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE: D A T E D : 22.02.2017. AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE 1. DATE OF DICTATION 2. , , DATE ON WHICH TYPED DRAFT IS PLACED BEFORE THE DICT ATING MEMBER .. 3. !' # . $ %# / $ %# # & DATE ON WHICH THE APPROVED DRAFT COMES TO THE PS/SR .PS. 4. ''() & * + DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTAT ING MEMBER FOR PRONOUNCEMENT 5. * . %# / # . . %# # + DATE ON WHICH THE ORDER COMES BACK TO THE PS/SR.PS .. 6 * !', + DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. ! !', ' , - ) IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. .% / 0 + DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. * 1'2 / 34 & 5 + DATE ON WHICH ORDER GOES FOR XEROX &ENDORSEMENT 10. 0 6 / + DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 11. * 7 & 0 8 + THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 12. !) * 9() & 0 9() /#5 . + THE DATE ON WHICH THE FILE GOES TO DESPATCH SECTION FOR DESPATCH OF THE TRIBUNAL ORDER 13. * 9() + DATE OF DESPATCH OF ORDER .