The DCIT.Circle-8, Ahmedabad V. Suzlon Energy Limited, Ahmedabad

ITA 2791/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6238 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDRA UPMANYU
• Assessee Lawyers: T P HEMANI
• Keywords: Transfer pricing; International transaction; Question of law
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2791 & 2530/AHD/2014 (ASSESSMENT YEAR: 2010-11) DY. COMMISSIONER OF INCOME TAX, CIRCLE-8, AHMEDABAD SUZLON ENERGY LTD. 5, SHRIMALI SOCIETY NAVRANGPURA, AHMEDABAD-380009 V/S V/S SUZLON ENERGY LTD. 5, SHRIMALI SOCIETY NAVRANGPURA, AHMEDABAD- 380009 DY. COMMISSIONER OF INCOME TAX, CIRCLE-8, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AADCS0472N APPELLANT BY : SMT. VASUNDRA UPMANYU, CIT /DR RESPONDENT BY : SHRI T. P. HEMANI, A.R. ( )/ ORDER DATE OF HEARING : 03 -01-201 8 DATE OF PRONOUNCEMENT : 08 -01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 2791 & 2530/AHD/2014 . A.Y. 2010-11 2 1. ITA NO. 2791/AHD/2014 & 2530/AHD/2014 ARE CROSS APP EALS BY THE REVENUE AND THE ASSESSEE PREFERRED AGAINST THE ORDER OF LD. CIT(A)-XIV, AHMEDABAD DATED 04.07.2014 PERTAINING TO A.Y. 2010-11. 2. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 2791/AHD/2014 REVENUES APPEAL 3. THE FIRST GRIEVANCE RELATES TO THE PART RELIEF GIVE N ON ACCOUNT OF TP ADJUSTMENT IN RESPECT OF INTEREST ON LOANS TO AES AND ON ACC OUNT OF CORPORATE GUARANTEE. 4. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSE E STATED THAT THE IMPUGNED ISSUES HAVE BEEN DECIDED BY THE TRIBUNAL IN ASSESSE ES OWN CASE IN A.Y. 2009- 10. THE LD. COUNSEL PLACED THE ORDER OF THE CO-ORDI NATE BENCH FOR CONSIDERATION. THE LD. D.R. FAIRLY CONCEDED TO THIS . 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. WE FIND THAT THE TRIBUNAL HAS CONSIDERED A SIMILAR ISSUE IN ASSESSEES OWN CASE IN ITA NO. 207 4 & 2179/AHD/2013. THE ISSUES WAS CONSIDERED AT PARA 23 OF THE ORDER WHILE DECIDING GROUND NO. 4.1 AND THE RELEVANT FINDINGS READ AS UNDER:- 23. IN GROUND NO.4.1, THE ASSESSING OFFICER HAS RAI SED THE FOLLOWING GRIEVANCE:- 4.1). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) -XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING UPWARD AD JUSTMENT OF ITA NO. 2791 & 2530/AHD/2014 . A.Y. 2010-11 3 RS.14,91,87,270/- MADE ON ACCOUNT INTEREST CHARGED ON THE LOANS GRANTED TO THE ASSOCIATED ENTERPRISES' AT DISCOUNTE D RATE TO THE PREVAILING MARKET RATE. 24. SO FAR AS THIS ISSUE IS CONCERNED, IT IS SUFFIC IENT TO TAKE NOTE OF THE FACT THAT IN THE IMPUGNED CIT(A)S ORDER, HE HAS MERELY FOLLO WED HIS ORDER FOR THE ASSESSMENT YEAR 2008-09 WHICH HAS NOT BEEN CHALLENG ED, ON THIS POINT, BY THE REVENUE AUTHORITIES. LEARNED DEPARTMENTAL REPRESEN TATIVE DOES NOT DISPUTE THIS FACT. 25. IN THE LIGHT OF THE ABOVE FACTUAL POSITION, IT IS CLEAR THAT ONCE THE REVENUE AUTHORITIES ACCEPT THE STAND OF THE CIT(A) ON AN IS SUE AND ALLOW IT TO REACH FINALITY IN ONE ASSESSMENT YEAR, IT CANNOT BE OPEN TO THEM T O CHALLENGE THE SAME IN THE SUBSEQUENT ASSESSMENT YEAR. AS NOTED BY HONBLE SU PREME COURT, IN THE CASE OF CIT VS. RADHASOAMI SATSANG [(1992) 193 ITR 321 (SC) ], WHILE STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDIN GS, WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT AT ALL B E APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 26. IN VIEW OF THESE DISCUSSIONS, GRIEVANCE RAISED BY THE ASSESSING OFFICER IS NOT MAINTAINABLE, AND IS DISMISSED AS SUCH. 6. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT ON R ECORD, RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDINATE BENCH, TH E DELETION OF THE TP ADJUSTMENT ON ACCOUNT OF INTEREST ON LOAN IS UPHELD . 7. SIMILARLY, THE TP ADJUSTMENT ON ACCOUNT OF CORPORAT E GUARANTEE FOR WORKING CAPITAL AND CORPORATE GUARANTEE FOR FINANCING AND O THER ARRANGEMENTS WAS ITA NO. 2791 & 2530/AHD/2014 . A.Y. 2010-11 4 CONSIDERED BY THE TRIBUNAL AT PARA 24 OF ITS ORDER. THE RELEVANT FINDINGS READ AS UNDER:- 24. WE ARE IN RESPECTFUL AGREEMENT WITH THE VIEWS S O EXPRESSED BY THE COORDINATE BENCH. HAVING SAID THAT, WE MAY ADD THAT WHILE IT IS TRUE THAT AN APPEAL AGAINST THE SAID ORDER, ON THE SAME ISSUE, I S ADMITTED BY HONBLE JURISDICTIONAL HIGH COURT BUT THEN IT IS NOT, AND IT CANNOT BE, ANYBODYS CASE THAT MERE ADMISSION OF APPEAL CAN VITIATE BINDING NATURE OF THIS JUDICIAL PRECEDENT. IN ANY CASE, WHATEVER WE HOLD IS, AND SHALL ALWAYS REM AIN, SUBJECT TO WHATEVER HONBLE JURISDICTIONAL HIGH COURT HAS TO HOLD ON TH E ISSUE, AND HONBLE HIGH COURT, THOUGH IN THE CASE OF ANOTHER ASSESSEE I.E. MICRO INK (SUPRA) IS ALREADY SEIZED OF THE MATTER. RESPECTFULLY FOLLOWING THE VI EWS EXPRESSED BY THE COORDINATE BENCH, WE HOLD THAT THE ASSESSEE EXTENDI NG CORPORATE GUARANTEES TO ITS AES, PARTICULARLY ON THE FACTS AND IN THE CIRCU MSTANCES OF THIS CASE AND WHEN THE ASSESSEE HAS DONE SO IN THE COURSE OF ITS STEWA RDSHIP ACTIVITIES FOR ITS SUBSIDIARIES, DOES NOT CONSTITUTE AN INTERNATIONAL TRANSACTION, AND, AS SUCH, NO ALP ADJUSTMENT CAN BE MADE IN RESPECT OF THE SAME. ACCORDINGLY, ENTIRE ALP ADJUSTMENT STANDS DELETED. AS FOR THE QUANTUM OF TH IS ADJUSTMENT, WHICH IS MAINLY THE SUBJECT MATTER OF GRIEVANCE RAISED IN RE VENUES APPEAL, ONCE THE ENTIRE ALP ADJUSTMENT STANDS DELETED, THAT ASPECT OF THE M ATTER IS WHOLLY ACADEMIC AND DOES NOT CALL FOR ANY ADJUDICATION BY US. 25.GROUND NO. 3 IN THE ASSESSING OFFICERS APPEAL I S THUS DISMISSED AS INFRUCTUOUS, AND GROUND NOS. 4,5,6 AND 7 IN THE ASSESSEES APPEA L ARE THUS ALLOWED IN THE TERMS INDICATED ABOVE. 6. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAT THE VIEW SO TAKEN, BY THE CO-ORDINATE BENCH, FOR THE IMMEDIATEL Y PRECEDING ASSESSMENT YEAR. WE, THEREFORE, UPHOLD THE GRIEVANCES OF THE ASSESSE E AND DELETE THE IMPUGNED ALP ADJUSTMENTS. 7. AS WE HAVE HELD THAT NO SUCH ALP ADJUSTMENT IS PERMISSIBLE, GRIEVANCES RAISED BY THE ASSESSING OFFICER, WITH RESPECT TO QUANTIFIC ATION OF ALP ADJUSTMENT, ARE DISMISSED AS INFRUCTUOUS. 8. AS WE PART WITH THE MATTER, WE MAY ADD THAT A SU BSTANTIAL QUESTION OF LAW ON THIS ISSUE, IN THE CASE OF MICRO INK LIMITED THE DECISION FOLLOWED BY US IN COMING TO OUR AFORESAID CONCLUSIONS, HAS BEEN ADMIT TED BY HONBLE JURISDICTIONAL ITA NO. 2791 & 2530/AHD/2014 . A.Y. 2010-11 5 HIGH COURT AND THE ISSUE IS THUS PENDING FOR ADJUDI CATION BY THEIR LORDSHIPS. IN THIS VIEW OF THE FACTUAL POSITION, EVEN BY DECIDING THIS APPEAL IN FAVOUR OF THE ASSESSEE, IT IS NOTHING MORE THAN SHIFTING OF JUDIC IAL FORUM BEFORE WHICH THE MATTER IS NOW TO BE AGITATED. WE HAVE, THEREFORE, REFRAINED FROM DEALING WITH ELABORATE ARGUMENTS OF THE PARTIES ON MERITS AT THI S STAGE. 9. IN THE RESULT, AND SUBJECT TO THE ABOVE OBSERVAT IONS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE FIN DINGS OF THE FIRST APPELLATE AUTHORITY. 9. THE SECOND GRIEVANCE RELATES TO THE DELETION OF THE DISALLOWANCE OF 4,94,79,650/- BEING FOREIGN EXCHANGE FLUCTUATION LO SS. 10. AN IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL W HILE DECIDING THE APPEAL FOR A.Y. 2009-10. THE ISSUE WAS CONSIDERED AT PARA 16 V IDE GROUND NO. 2 OF REVENUES APPEAL WHEREIN THE CO-ORDINATE BENCH HAS FOLLOWED THE DECISION IN ASSESSEES OWN CASE FOR A.Y. 2008-09. 11. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH, WE DECLINE TO INTERFERE. GROUND NO. 2 IS DISMISSED. 12. GROUND NO. 3 RELATES TO THE DELETION OF THE POSITIV E ADJUSTMENT U/S. 14A WHILE DETERMINING BOOK PROFIT U/S. 115JB OF THE ACT. 13. WHILE DECIDING THE APPEAL FOR A.Y. 2009-10, THE TRI BUNAL HAS CONSIDERED THIS ISSUE AT PARA 38 WHILE DECIDING GROUND NO. 7 OF REV ENUES APPEAL WHEREIN THE ITA NO. 2791 & 2530/AHD/2014 . A.Y. 2010-11 6 CO-ORDINATE BENCH HAS DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE BY DRAWING SUPPORT FROM THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF ALEMBIC LTD. IN ITA NO. 1249 OF 2014. 14. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT ON R ECORD IN FAVOUR OF THE REVENUE. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDINATE BENCH, WE DECLINE TO INTERFERE. GROUND NO. 3 IS ALSO DISMISSE D. 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ITA NO. 2530/AHD/2014 ASSESSEES APPEAL 16. GROUND NO. 1 RELATES TO THE DISALLOWANCE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESI. 17. THIS ISSUE IS NO MORE RES INTEGRA AS IT HAS BEEN DE CIDED BY THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN FAVOUR OF T HE REVENUE AND AGAINST THE ASSESSEE IN THE CASE OF GSRTC 366 ITR 170. 18. RESPECTFULLY FOLLOWING THE SAME, GROUND NO. 1 IS DI SMISSED. 19. GROUND NO. 2 RELATES TO THE PART ADDITION CONFIRMED ON ACCOUNT OF TP ADJUSTMENT IN RESPECT OF CORPORATE GUARANTEE. 20. THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DECIDING GROUND NO. 1 OF REVENUES APPEAL. FOR OUR DETAILED DISCUSSION THEREIN, THIS G RIEVANCE IS ALLOWED.