M/s GMR Infrastructure Limited Tax , Bangalore V. Assistant Commissioner of Income Tax Central Circle-2(2), Bangalore

ITA 2870/BANG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7141 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-01-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 16-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL JAIN
• Keywords: Transfer pricing; Commercial expediency
• Section: 143(3); 14A; 115JB; 250; 201; 144C; 143(2); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BENCH: BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO 2870 . /BANG/2018 (ASSESSMENT YEAR: 201 4 - 15 ) M/S. GMR INFRASTRUCTURE LIMITED, 25/1, SKIP HOUSE, MUSEUM ROAD, BANGALORE - 560 025 .APPELLANT PAN AABCG8889P VS. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), BANGALORE. RESPONDENT. ASSESSEE BY: SHRI SUNIL JAIN, C.A. REVENUE BY: MS. NEERA MALHOTRA, CIT (D.R) DATE OF HEARING : 22.01 .20 20 DATE OF PRONOUNCEMENT : 03 .02 .20 20 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 11, BANGALORE PASSED UNDER SECTION 143(3) R.W.S. 144C AND 250 OF THE INCOME TAX ACT, 1961 ('THE ACT'). 2. THE A SSESSEE HAS RAISED THE ONLY GR OUND OF APPEAL: 2 ITA NO. 2870/BANG/2018 3. THE ASSESSEE COMPANY IS IN THE BUSINESS OF PROMOTION OF INFRASTRUCTURE DEVELOPMENT AND INVESTMENT S IN THE SHARES AND SECURITIES, AND FILED THE RETURN OF INCOME ON 29.11.2014 WITH TOTAL LOSS OF RS.35,66,74,072 UNDER THE NORMAL PROVISI ONS OF INCOME TAX AND BOOK PROFITS U/SEC 115JB RS.211,85,82,199. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE IT ACT WAS ISSUED. THE ASSESSING OFFICER AS PER FORM 3CB REPORT FILED BY THE ASSESSEE , FOUND THAT THE ASSESSEE HAS INTERNATIONAL TRANS ACTIONS , AND REFERRED THE MATTER FOR DETERMINATION OF ARMS LENGTH PRICE (ALP) TO THE TRANSFER PRICING OFF ICER (TPO). WHEREAS THE TPO MADE AN ADJUSTMEN T OF RS.15,45,49,138 ON TRANSACTION OF STAND BY LETTER OF CREDIT (SBLC) AND SI MILARL Y ON CORPORATE GUARANTEE TP ADJUSTMENT OF RS.41,28,60,585 AND PASSED ORDER U/SEC 92 CA OF THE ACT. SUBSEQUENTLY, THE AO ALONG WITH THE TRANSFER PRICING ADJUSTMENT S, MADE DISALLOWANCE UNDER SECTION 14A OF THE ACT AND UNAMORTIZED AMOUNT S CLAIMED AND FINALLY A SSESSED THE TOTAL INCOME OF RS.1,67,87,08,248 AND PASSED THE ORDER UNDER SECTION 143(3) R.W.S. 144C OF THE ACT DT.15.12.2017. AGGRIEVED BY THE ORDER , THE ASSESSEE HAS 3 ITA NO. 2870/BANG/2018 FILED AN APPEAL WITH THE CIT(APPEALS). THE CIT(APPEALS) ON THE DISPUTED ISS UE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND OBSERVED THAT THE TPO HAS MADE ADJUSTMENTS TOWARDS COMMISSION FOR UTILIZA TION OF NON - FUND BASED LIMITS OF THE ASSESSEE BY ASSOCIATED ENTERPRISES (AE S) AND THE BANK HAS ISSUED SBLC AND CHARGED COMMISSION OF R S.35,56,7 87. WHEREAS THE ASSESSEE HAS RECOVERED AN AMOUNT OF RS.11 , 07,050 CHARGED BY THE BANK FROM ITS ISG AE, AND BALANCE AMO UNT OF RS.24,49,737 IS NON - RECOVERABLE .HENCE CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF RS.24,49,737 AND WITH OTHER RELI EFS PARTLY ALLOW ED THE APPEAL . AGGRIEVED BY THE CIT ( A) ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 4. AT THE TIME OF HEARING, THE LEARN ED AUTHORIZED REPRESENTATIVE ARGUED THAT THE CIT(APPEALS) HAS ERRED IN RESTRICTING THE ADDITION T O THE EXTENT OF RS.24,4 9,737 . THE CONTENTION S OF THE LEARNED AUTHORIZED REPRESENTATIVE THAT THERE IS NO REQUIREMENT OF ALP ADJUSTMENT ON THIS ISSUE , AS THE AE IS PERMITTED TO UTILIZE ITS NON - FUND BASED LIMITS , WHICH IS IN THE NATURE OF SHAREHOLDERS OPERAT IONS AND ON COMMERCIAL EXPEDIENCY ,AND PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF CIT ( APPEALS). 5. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE MATRIX OF THE DISPUTED ISSUE AS ENVISAGED BY THE LEARNED AUTHORIZED REPRESENTATIVE THAT THERE IS NO REQUIREMEN T OF TP ADJUSTMENT, AS THE STANDBY LETTER OF CREDIT (SBLC) WAS ISSUED IN GROUP CONCERNS , WHERE THE AE WAS ALLOWED TO UTILIZE THE 4 ITA NO. 2870/BANG/2018 NON - FUND BASE LIMITS OF THE ASSESSEE, WHICH ARE IN THE NATURE OF A SH AREHOLDER ACTIVITY AND SATISFY THE TEST OF COMMERCIAL EXPEDIENCY. WE FOU ND THE CIT(APPEALS) HAS MADE OBSERVATIONS AT P AGE 10 AND PARA 6.1.4 OF THE ORDER WHIC H IS READ AS UNDER : 5 ITA NO. 2870/BANG/2018 T HE LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY SUBMITTED THAT, THERE IS NO NECESSITY OF TRANSFER PRICING ADJUSTMENT ON SLBC BECAUSE OF COMMERCIAL EXPEDIENCY , BUT COULD NOT CONTROVERT THE OBSERVATIONS AND FINDINGS OF THE CIT(APPEALS) WITH COGENT EVIDENCE. ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT ( A) ON THIS DISPUTED ISSUE AND CONFIRM THE SAME AND DISMISS THE GROUND OF APPEAL OF THE ASSES SEE . 6. IN THE RESULT, THE ASSESSEE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. S D / - S D / - (A.K. GARODIA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 0 3 .02 . 20 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE