Bailey Hydropower (P) Ltd., Sriperambudur V. ACIT, CHENNAI

ITA 2605/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7792 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 18-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2014
• Court: TRIBUNAL
• Department Lawyers: M M BHUSANCIT
• Keywords: Transfer pricing

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' #! ' $ . %& ' () BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2605 /MDS./2014 ( / ASSESSMENT YEAR :2009-10) M/S.BAILEY HYDROPOWER (P) LTD ., (NOW KNOWN AS WAYNE BURT PETROCHEMICALS (P) LTD.) A-10 SIPCOT INDUSTRIAL PART, IRUNGATTUKOTTAI, SRIPERUMBUDUR 602 105. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(2), CHENNAI 600 034. PAN AABCB 1804 F ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT ) / APPELLANT BY : MRS.PUSHYA SITARAMAN,SR.ADVOCATE MRS.J.SREE VIDYA,ADVOCATE / RESPONDENT BY : MR.M.M.BHUSAN,CIT, D.R / DATE OF HEARING : 18.01.2017 ! /DATE OF PRONOUNCEMENT : 17.02.2017 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTED AG AINST THE DIRECTION OF THE DISPUTE RESOLUTION PANEL, CHENNAI PERTAINING TO THE ASSESSMENT YEAR 2009-10. ORIGINALLY THIS APPEAL C AME BEFORE THIS ITA NO.2605/MDS/2014 2 TRIBUNAL, THE TRIBUNAL DISMISSED THE APPEAL VIDE OR DER DATED 09.03.2016 WITHOUT CONDONING THE DELAY OF 201 DAYS IN FILING THE APPEAL. THE ASSESSEE WENT IN APPEAL BEFORE THE JUR ISDICTIONAL HIGH COURT, THE HONBLE HIGH COURT CONDONED THE DELAY IN W.P. NO.1597/2016 DATED 27.04.2016. HENCE, THE CASE WAS RE-LISTED FOR HEARING. 2. THE ASSESSEE HAS RAISED ONLY THE FOLLOWING GROU ND FOR ADJUDICATION. 1. THE LEARNED ASSISTANT COMMISSIONER OF INCOME T AX ERRED IN MAKING AN ADDITION OF RS.7.1 CRORES TO THE APPELLANT AS PER THE TPOS ORDER DT.08.01.2013/DRP ORDER DATED 20.12.13 INSPITE OF THE FACT THAT THE COMPANI ES IDENTIFIED BY THE TPO AS COMPARABLE TO THAT OF THE APPELLANT ARE NOT AT ALL COMPARABLE WITH THEM IN PRODUCT & PR ODUCT RANGE; SALES; AREAS OF OPERATION; AND THE MARKETS T HEY SERVICE. 2.1 THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND ALONG WITH PETITION FOR ADMISSION OF SAME WHICH IS AS FOLLOWS: ITA NO.2605/MDS/2014 3 1. THE DRP OUGHT TO HAVE DETERMINED THE ARMS LENGT H PRICE AFTER GIVING A DOWNWARD ADJUSTMENT TOWARDS UN DER UTILIZATION OF CAPACITY DUE TO LABOUR UNREST. 3. BEFORE US, LD.A.R SUBMITTED THAT THE ASSESSEE F AILED TO RAISE THIS GROUND ON EARLIER OCCASION BY OVERSIGHT AND TH E FACTS RELATING TO THIS ADDITIONAL GROUND REQUIRES NO FRESH ENQUIRY AN D AS SUCH THIS GROUND TO BE ADMITTED IN THE INTEREST OF JUSTICE FO R ADJUDICATION LD.D.R DID NOT PUT ANY SERIOUS OBJECTION. 4. AFTER HEARING BOTH THE PARTIES REGARDING ADMISS ION OF ADDITIONAL GROUND, WE ARE INCLINED TO ADMIT THE ADDITIONAL GRO UND BY PLACING RELIANCE ON THE JUDGEMENT OF SUPREME COURT IN THE C ASE OF NATIONAL THERMAL POWER COMPANY LTD. V. CIT [1998] 229 ITR 38 3, TO CONTEND THAT IT WAS OPEN TO THE ASSESSEE TO RAISE THE POINT S OF LAW EVEN BEFORE THE APPELLATE TRIBUNAL. FURTHER, AT THE TIME OF HEARING, THE LD.A.R MADE AN ENDORSEMENT TO THAT ASSESSEE IS NOT INTERESTED IN PROSECUTING THE MAIN GROUND. ACCORDINGLY, THE MAIN GROUND RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. ITA NO.2605/MDS/2014 4 5. THE FACTS RELATING TO THE ADDITIONAL GROUND ARE THAT IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE W ENT THROUGH SHUTDOWNS AND LOCKOUT FOR A LONGER PERIOD OF TIME W HICH HAMPERED THE PRODUCTION, WHICH WAS THE EVENTUAL CAUSE FOR TH E LOSSES INCURRED BY THE ASSESSEE. THERE WAS A LABOUR PROBLEM TO THE EXTENT THAT THE FOREIGN COMPANY HOLDING 100% SHARES SOLD OUT TO A L OCAL OWNER IN 2009 AND THUS BAILEY HYDROPOWER LIMITED IS NO LONG ER ASSOCIATED ENTERPRISE FOR THE BAILEY GROUP EFFECTIVE THAT DATE . IN EARLIER YEAR, THE TPO CONSIDERED THIS AND HAD MADE NO TP ADJUSTMENTS. ACCORDING TO LD.A.R, THE SAME METHODOLOGY TO BE FOLLOWED AND NO ADJUSTMENTS TO BE MADE. HOWEVER, THE CONTENTION OF THE ASSESSEE WA S REJECTED BY THE TPO WE WELL AS BY THE DRP. THE DRP OBSERVED THA T ASSESSEES PRODUCTION IS BETTER THAN THE EARLIER YEAR. NO ACTU AL DETAILS OF SHUT DOWN OR THE LOSS CAUSED BY LABOUR PROBLEMS HAVE BEE N FURNISHED. AS A PERCENTAGE OF SALES, THE EMPLOYEE COST THIS YEAR IS LESS THAN THE LAST YEAR. THUS, ACCORDING TO DRP, IT DOES NOT SHOW ANY ADVERSE EFFECT ON ASSESSEES MARGINS. IN THE ABSENCE OF FU LL DETAILS, THE DRP CONFIRMED THE ORDER OF THE LOWER AUTHORITIES. ITA NO.2605/MDS/2014 5 6. BEFORE US, LD.A.R FILED A TABULAR STATEMENT CON TAINED THE DETAILS OF POWER AND FUEL, SALARY AND WAGES, CAPACITY UTILI ZATION IN THE LAST THREE YEARS AND ALSO PRESENT ASSESSMENT YEAR WISE A S FOLLOWS:- A.Y POWER AND FUEL SALARIES AND WAGES CAPACITY UTIL IZATION (INSTALLED CAPACITY - 1,80,000-CYLINDERS) 2006-07 1,14,04,586.50 2,72,17,606.65 1,54,694 2007-08 1,10,38,773.80 3,00,020280.15 1,51,664 2008-09 65,06,702.51 2,55,83,170.65 74,253 2009- 10(PERIOD IN QUESTION) 45,23,358.10 1,88,21,880.24 70,951 6.1 THE DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF LOWER AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, PRIMA FACIE LOOKS THAT THER E IS N UNDER UTILIZATION OF INSTALLED CAPACITY TOWARDS WHICH SUI TABLE ADJUSTMENTS TO BE MADE WHILE COMPUTING THE TP ADJUSTMENTS. BEFORE THE DRP, ASSESSEE HAS NOT FURNISHED ALL THE DETAILS. IN OUR OPINION, IT IS APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF THE D RP TO CONSIDER THE UNDER UTILIZATION OF INSTALLED CAPACITY AND GRANT S UITABLE DEDUCTION IN ITA NO.2605/MDS/2014 6 THE TP ADJUSTMENTS, IF REQUIRE IN ACCORDANCE WITH L AW. IF REQUIRE, THE DRP WILL CALL FOR A REMAND REPORT FROM THE TPO ON T HIS ISSUE. WITH THIS OBSERVATION, WE REMIT THE ISSUE TO THE FILE OF DRP FOR FRESH CONSIDERATION. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9. ORDER PRONOUNCED ON 17 TH FEBRUARY, 2017. SD/- SD/- ' # $ . % & ' ( DUVVURU RL REDDY ) ) ( ( ( ) * + ) ) ' CHANDRA POOJARI ', JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH FEBRUARY,2017. K S SUNDARAM. -.,, /0,10 /COPY TO: , 1. /APPELLANT 2. /RESPONDENT 3. , 2,'' /CIT(A) 4. , 2 /CIT 5. 034, 5 /DR 6. 4,6 /GF