General Motors (I) Pvt.Ltd., Panchmahal V. The ACIT.,Panchmahal Circle, Godhra

ITA 2634/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0801 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

I.T.A. NO. 2634/AHD/2012 ASSESSMENT YEAR: 2008 - 09 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM] I.T.A. NO . 2634/AHD/2012 ASSESSMENT YEAR : 2008 - 09 GENERAL MOTORS INDIA PVT LTD . .APPELLANT CHANDRAPURA INDUSTRIAL ESTATE, HALOL DIST RICT PANCHMAHAL, GUJARAT - 389 351 [PAN: A A ACG8371P] VS. ASSISTANT COMMISSIONER OF INCOME TAX GODHARA CIRCLE, GODHARA . RESPONDENT APPEARANCES BY : S N SOPARKAR , SR ADVOCATE, ALONG WITH MUKESH BUTANI , VISHAL KALRA , SHWETA KASHYAP, SUMI T SINGH, SAUMYA SHETH AND DHINAL SHAH FOR THE APPELLANT SANJAY AGARWAL CIT(DR) ALONG WITH B Y CHAVAN FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : MAY 11 , 201 6 DATE OF PRONOUNCING THE ORDER : AUGUST 11 , 201 6 O R D E R PER PRAM OD KUMAR , AM : 1. THIS APPEAL, FILED BY THE ASSESSEE, IS DIRECTED AGAINST THE ORDER DATED 25 TH OCTOBER 2012 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEA R 2008 - 09. 2. WHEN THIS APPEA L WAS CALLED OUT FOR HEARING, LEARNED COUNSEL FAIRLY ACCEPTED THAT SO FAR AS THE MAIN ISSUE IN THIS APPEAL, I.E. ARM S LENGTH PRICE ADJUSTMENT OF RS 210.69 CRORES, IN RESPECT OF IMPORTS OF CKD KITS , IS CONCERNED, THE MATTER IS REQUIRED TO BE REMITTED TO TH E FILE OF THE TRANSFER PRICING OFFICE FOR ADJUDICATION DE NOVO AFTER ADOPTING GMDAT AS TESTED PARTY. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, RELIED UPON HIS DETAILED ARGUMENTS IN SUPPORT OF THE PRAYER FOR REFERENCE TO THE SPECIAL BENCH. FOR THE SAKE OF BREVITY, THESE ARGUMENTS, WHICH HAVE BEEN DEALT AT I.T.A. NO. 2634/AHD/2012 ASSESSMENT YEAR: 2008 - 09 PAGE 2 OF 3 LENGTH IN ORDER OF EVEN DATE FOR THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08, ARE NOT BEING SET OUT IN DETAIL. 3. FOR THE DETAIL ED REASONS SET OUT IN OUR ORDER OF EVEN DATE FOR THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 WHICH ARE DEEMED TO BE ATTACHED TO AND FORMING PART OF THIS ORDER ALSO , AND RESPECTFULLY FOLLOWING DECISIONS OF THE THIS AND OTHER COORDINATE BENCHES IN ASSESSEE S OWN CASES, WE HOLD THAT THE GMAT IS REQUIRED TO BE TREATED AS THE TESTED PART Y, FOR THE PURPOSES OF BENCHMARKING OF TRANSACTIONS WITH RESPECT TO SALE CKD KITS, AND THE MATTER IS REQUIRED TO BE REMITTED TO THE FILE OF THE TRANSFER PRICING OFFICER. THE OBSERVATIONS MADE IN THE EARLIER YEARS, FOR CONDUCTING SIMILAR EXERCISE, WILL APPL Y MUTATIS MUTANDIS TO THIS ASSESSMENT YEAR AS WELL. 4. AS THIS TRANSFER PRICING ISSUE, WHICH IS MAIN ISSUE IN THIS APPEAL, IS BEING REMITTED TO THE FILE OF THE TRANSFER PRICING OFFICER, WE ALSO CONSIDER IT APPROPRIATE TO REMIT TWO OTHER REMAINING TRANSFER PRICING ISSUES, I.E. ALP ADJUSTMENT OF RS 47.80 CRORES IN RESPECT OF TECH CENTRE OPERATIONS AND ALP ADJUSTMENT OF RS 10.46 CRORES IN RESPECT OF ROYALTY PAYMENT, WE CONSIDER IT APPROPRIATE TO, WITH THE CONSENT OF THE PARTIES, REMIT THESE ISSUES ALSO TO THE FILE OF THE TPO FOR ADJUDICATION DE NOVO IN THE LIGHT OF, INTER ALIA, DECISIONS OF EARLIER YEARS ON THESE ISSUES. IN ANY CASE, IN THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 ALSO, THESE ISSUES WERE REMITTED TO THE FILE OF THE TRANSFER PRICING OFFICER FOR AD JUDICATION DE NOVO IN THE LIGHT OF CERTAIN OBSERVATIONS. THESE OBSERVATIONS WILL APPLY MUTATIS MUTANDIS FO R THIS ASSESSMENT YEAR AS WELL. 5. THE ONLY REMAINING ISSUE IN THIS APPEAL IS WITH RESPECT TO DISALLOWANCE OF RS 14,38,015 BEING PROPORTIONATE LEASE CHARGES IN RESPECT TO LEASE HOLD LAND HOLDING. 6. LEARNED COUNSEL SUBMITS THAT, AS HELD BY HON BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF DCIT VS SUN PHARMACEUTICALS INDIA LTD (329 ITR 479), THE PROPORTIONATE LEASE CHARGES IN RESPECT OF LEASE HOLD LAN D IS NOT A CAPITAL EXPENDITURE, AND THAT WAS THE ONLY REASON AS TO WHY THE DISALLOWANCE WAS MADE. ON THIS ISSUE, LEARNED DEPARTMENTAL REPRESENTATIVE S PRAYER IS THAT THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER SO THAT THE MATTER CAN BE EXA MINED AGAIN FROM THE POINT OF VIEW OF ADMISSIBILITY AS REVENUE EXPENDITURE ON ALL THE RELEVANT PARAMETERS. HE SUBMITS THAT EARLIER THE EXPENDITURE WAS DISALLOWED AS CAPITAL EXPENDITURE AND NO OTHER ASPECT OF THE MATTER, THEREFORE, EXAMINED AT ALL. EVEN IF IT IS NOT A CAPITAL EXPENDITURE, AS HELD BY HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DCIT VS SUN PHARMACEUTICALS INDIA LTD (329 ITR 479), IT DOES NOT MEAN THAT IT CONSTITUTES ADMISSIBLE DEDUCTION AS REVEN UE EXPENDITURE. HAVING CONSIDERED THE RIVA L SUBMISSIONS, AND PARTICULARLY AS ALL THE THREE TRANSFER PRICING ISSUES ARE BEING REMITTED AT THE ASSESSMENT STAGE, WE ARE INCLINED TO ACCEPT THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. I.T.A. NO. 2634/AHD/2012 ASSESSMENT YEAR: 2008 - 09 PAGE 3 OF 3 ACCORDINGLY, THIS ISSUE IS REMITTED TO THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO, IN THE LIGHT OF OUR OBSERVATIONS ABOVE, IN ACCORDANCE WITH THE LAW, BY WAY OF A SPEAKING ORDER AND AFTER YET ANOTHER OPPORTUNITY OF HEARING TO THE ISSUE. WE ORDER SO. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTI CAL PURPOSES. PRONOUNCED IN THE OPEN COURT TODAY ON 11 TH DAY OF AUGUST, 2016. SD/ - SD/ - S S G ODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: AUGUST 11 , 201 6 . COPIES TO : (1) THE APPE LLANT (2) THE RESPONDENT (3) D IT (4) DRP (5) DR (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABA D BENCHES, AHMEDABAD