Kehin India Manufacturing Pvt. Ltd., Gurgaon V. Addl. CIT, New Delhi

ITA 2851/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8670 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2013-2014
• Appeal Filed On: 08-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PALLAVI DINODIA
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 143(3); 144C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI I-1 B ENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NO. 2851/DEL/2017 [ASSESSMENT YEAR: 2013-14] KEHIN INDIA MANUFACTURING PVT. LTD VS. THE AD DI.CIT [FORMERLY KEHIN PANALFA LTD SPECIAL RANGE 5 2315/23, OPPOSITE PAYAL CINEMA NEW DELHI BEHIND KARIM RESTAURANT DELHI ROAD, GURGAON PAN: AAACK 5968 [APPELLANT] [RESPONDENT] DATE OF HEARING : 14.01.2020 DATE OF PRONOUNCEMENT : 15.01.2020 ASSESSEE BY : MS. PALLAVI DINODIA, ADV REVENUE BY : SHRI SURENDRA PAL, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER DATED 09.03.2017 FRAMED U/S 143(3) R.W.S 144C OF THE INCO ME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] PERTAINING T O ASSESSMENT YEAR 2013-14. 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE TPO AS WELL AS THE DRP ERRED IN NOT ACC EPTING THE TRANSACTIONAL NET MARGIN METHOD [TNMM] AS MOST APPR OPRIATE METHOD [MAM] AND SELECTED RESALE PRICE METHOD [RPM] AS MAM . 3. AT THE VERY OUTSET, LD. COUNSEL FOR THE ASSESSEE STATED THAT IDENTICAL ISSUES WERE CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2010-11, 2011-12 AND 2012-13. THE LD COUNSEL FURNISHED COPIES OF THE ORDERS OF THE TRIBUNAL FOR ASSESSMENT YEARS 2010-11 AND 2012-13. IT IS THE SAY OF THE LD. COUN SEL FOR THE ASSESSEE THAT THE TRIBUNAL HAS DECIDED THE IMPUGNED ISSUES I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 4. PER CONTRA, THE LD. DR COULD NOT BRING ANY DISTI NGUISHING DECISION IN FAVOUR OF THE REVENUE BUT HEAVILY RELIE D UPON THE FINDINGS OF THE TPO. 5. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE OR DERS OF THE AUTHORITIES BELOW. WE FIND FORCE IN THE CONTENT IONS OF THE LD. COUNSEL FOR THE ASSESSEE. THE APPLICABILIT Y OF MAM HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH IN ASS ESSMENT 3 YEAR 2010-11 IN ITA NO. 2051/DEL/2015 AND IN ASSESS MENT YEAR 2012-13 IN ITA NO. 6085/DEL/2016. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER: 10. NOW COMING TO THE APPLICABILITY OF TNMM AS MAM , WE FIND THAT IN ALL THE EARLIER YEARS TNMM HAS BEEN FINALLY HELD TO BE MOST APPROPRIATE METHOD ON THE FACTS OF THE ASSESSE ES CASE AND SINCE THERE IS NO CHANGE IN MATERIAL FACTS OR F AR, THEN TNMM SHOULD BE ADOPTED AS THE MOST APPROPRIATE METH OD TO BENCHMARK THE INTERNATIONAL TRANSACTION OF THE ASSE SSEE WITH THE AE IN THE TRADING SEGMENT. SINCE THIS METHOD HA S NOT BEEN ANALYSED BY THE TPO AND THE SAME COMPARABLE SELECTE D BY THE ASSESSEE HAS BEEN ADOPTED BY THE TPO FOR THE PURPOS E OF RPM, THEREFORE, WE ARE OF THE OPINION THAT THE MATTER SH OULD BE REMANDED BACK TO THE FILE OF THE TPO AND AO, FIRSTL Y, TO CONSIDER TNMM AS THE MAM CONSTITUTING THE PAST HIST ORY OF THE ASSESSEE; AND SECONDLY, TO CARRY OUR FRESH SEAR CH ANALYSIS OF THE COMPARABLES AND THEN BENCHMARK THE ASSESSEES T RANSACTION IN THE TRADING SEGMENT. THE TPO SHALL GIVE EFFECTIV E OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CASE AND AFTER ANALYSING THE COMPARABLES, ALP OF THE TRADING SEGMENT SHOULD BE D ETERMINED. ALL THE OTHER GROUNDS RAISED BY THE ASSESSEE BEFORE US RELATING TO TRANSFER PRICE ADJUSTMENT SHALL BE OPEN BEFORE T HE TPO, EXCEPT FOR THE DIRECTIONS 12 GIVEN HEREIN ABOVE. IN THE RESULT, GROUND PERTAINING TO TRANSFER PRICING ADJUSTMENT IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 4 6. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-OR DINATE BENCH [SUPRA], WE SET ASIDE THE MATTER TO THE FILE OF THE TPO/ASSESSING OFFICER. THE TPO/ASSESSING OFFICER I S DIRECTED TO DECIDE THE ISSUE AFRESH AS PER DIRECTIONS OF THE CO- ORDINATE BENCH. ACCORDINGLY, GROUND PERTAINING TO TP ADJUSTMENT IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15.01. 2020. SD /- SD/- [SUDHANSHU SRIVASTAVA ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 TH JANUARY, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR 5 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER