DCIT, Bangalore V. M/s LM Wind Power Technologies India pvt. Ltd., Bangalore

ITA 289/BANG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9407 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 29-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R REDDY
• Assessee Lawyers: T SURYANARAYANA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A, BAN GALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER SHRI INTURI RAMA RAO, ACCOUNTANT MEM BER IT(TP)A NO.289/BANG /2016 (ASST. YEAR 2011-2012) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-4(1)(1), BANGALORE. . APPELLANT VS. M/S LM WIND POWER TECHNOLOGIES INDIA PVT. LTD., NO.302, RMZ INFINITY, TOWER B 3 RD FLOOR, OLD MADRAS ROAD, BANGALORE-560 016. . RESPONDENT APPELLANT BY : SHRI GR REDDY, CIT RESPONDENT BY : SHRI T SURYANARAYANA, ADVOCATE DATE OF HEARING : 8-9-2016 DATE OF PRONOUNCEMENT : 8-9-2016 O R D E R PER A SHA VIJAYARAGHAVAN, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX, BANGALORE DATED 31.12.2 015 AND IT PERTAINS TO THE ASSESSMENT YEAR 2011-12. ITA NO.289/B/16 2 2. THE DEPARTMENT HAS FILED THE FOLLOWING GROUNDS OF A PPEAL: (1) THE DIRECTIONS OF THE DISPUTE RESOLUTION PANE L ARE OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE HONBLE DRP ERRED IN GRANTING 1% RISK ADJUSTMENT ARBITRARILY WITHOUT APPRECIATING THE FAC TS OF THE CASE AND ITS COMPARABLES. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 3. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED AS UND ER:- AS REGARDS ADJUSTMENT ON ACCOUNT OF RISK ANALYSIS, THE OBJECTIONS OF THE TAX PAYER HAVE BEEN CONSIDERED ALONG WITH THE JUDICIAL DECISIONS CITED. THIS ISSUE WAS BEFORE DRP FOR AY 2010-11 ALSO AND THE OBJECTION OF THE ASSESSEE WAS ACCEPTED. THE HONBLE BANGALORE ITAT IN CASE OF INTELLINET TECHNOLOGIES PVT. LTD., VS. ITO (ITA NO.1237/BANG/2007) REJECTED THE TAX DEPARTMENTS ARGUMENT THAT A SINGLE CUSTOMER RISK BORNE BY THE TAX PAYER IN ITS STATUS OF A CAPTIVE SERVICE PROVID ER WAS EQUIVALENT TO THE MARKETING AND TECHNICAL RISK ITA NO.289/B/16 3 ATTACHED TO THE COMPARABLES. THE HONBLE ITAT HELD THAT THE RISK OF HAVING A SINGLE CUSTOMER IS A N ANTICIPATED RISK WHICH MAY OR MAY NOT HAPPEN UNLIKE THE MARKETING AND TECHNICAL RISKS WHICH HAVE TO BE CONTEMPORANEOUSLY DEALT WITH BY THE COMPA5RBLES. THE ITAT DID NOT ACCEPT THAT THE RISK ADJUSTMENT SHOULD BE BY 5% OR AT THE DIFFERENCE OF PLR OF THE RBI AND THE BANKS, AND DIRECTED THE TPO TO CONSIDER ALL THE CONTENTIONS AND DECIDE THE PERCENTAGE OF RISK ADJUSTMENTS TO BE MADE IN ACCORDANCE WITH LAW. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT BANGALORE AS ABOVE THE TPO IS DIRECTED TO DECIDE THE PERCENTAGE OF RIS K ADJUSTMENTS TO BE CALCULATED IN THIS CASE. BY MEAN S OF GUIDANCE, IT MAY BE MENTIONED THAT IN THE CASE O F DCIT VS. HELLO SOFT PVT. LTD., (2013) 32 TAXMANN.COM 101 (ITAT, HYD) 1% ADJUSTMENT TO THE AVERAGE MARGIN WAS PROVIDED TOWARDS RISK DIFFERENTIAL. ITA NO.289/B/16 4 4. WE ARE OF THE OPINION THAT REVENUES GROUNDS ARE MISCONCEIVED AND HENCE WE DISMISS THE SAME. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH SEPTEMBER , 2016. SD/- SD/- (INTURI RAMA RAO) (ASHA VIJAYAR AGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED : 8/09/2016 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR , ITAT, BANGALORE .