DCIT, CHENNAI V. Motonic India Automotive Private Limited In Liquidation), Bangalore

ITA 3365/CHNY/2018

AI Insights

The case involves appeals by the Deputy Commissioner of Income Tax (DCIT), Corporate Circle-4(1), Chennai against M/s. Motonic India Automotive Pvt Ltd concerning the assessment years 2013-14 and 2014-15. The primary issue revolves around the adjustments made by the TPO related to customs duty, foreign exchange rates, and working capital, which were contested by both parties in different capacities. The Tribunal's decision to remand the case was influenced by prior judgments from the Hon'ble High Court of Madras, which emphasized the need for a fresh evaluation of the adjustments by the TPO without being influenced by previous observations.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133891 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-06-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 09-12-2018
• Other Referred Cases: TCA No.138 of 2017, TCA No.920 of 2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A. SASIKUMAR LD
• Keywords: Transfer pricing

Judgement Text

आयकर अपीलीय अिधकरण ‘डी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI माननीय ,ी महावीर िसंह, उपा23 एवं माननीय ,ी मनोज कु मार अ8वाल ,लेखा सद; के सम3। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.3141/Chny/2017 (िनधाCरण वषC / Assessment Year: 2013-14) & आयकर अपील सं./ ITA No.3365/Chny/2018 (िनधाCरण वषC / Assessment Year: 2014-15) DCIT. Corporate Circle-4(1) Chennai. बनाम / Vs . M/s. Motonic India Automative Pvt Ltd. C/o. Shri Saji P.John, Liquidator 463, 13 th Cross, 10 th Main, Wilson Garden, Bengaluru-560 027. थायी लेखा सं. /जीआइ आर सं. /P AN / G I R No . AAF C M - 360 3-F (अपीलाथ&/Appellant) : ('(थ& / Respondent) अपीलाथ& की ओरसे/ Appellant by : Shri A. Sasi Kumar (CIT)-Ld. DR '(थ& की ओरसे/Respondent by : Shri Vikram Vijayaraghavan (Advocate) –Ld.AR सुनवाई की तारीख/Date of Hearing : 12-06-2023 घोषणा की तारीख /Date of Pronouncement : 12-06-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. During hearing of captioned appeals, the undisputed position that emerges is the fact that the appeals have to restored back to Ld. Transfer Pricing Officer (TPO) considering the decisions of Hon’ble High Court of Madras in assessee’s own case in TCA No.138 of 2017 dated 07.02.2019 for Assessment Year (AY) 2009-10 and TCA No.920 - 2 - of 2018 dated 21.07.2020 for AY 2012-13. The copies of the orders have been placed on record. In the said background, the appeals are disposed-off as under. 2. In AY 2013-14, Ld. TPO rejected the economic analysis undertaken by the assessee and proceeded to perform fresh economic analysis. The Ld. TPO disregarded the economic adjustments as claimed by the assessee in relation to excess custom duty paid, difference in foreign exchange rates and difference in working capital position vis-a-vis the comparable entities. Finally, an adjustment was proposed by Ld. TPO to the extent of Rs.1283.38 Lacs. The Ld. CIT(A), relying upon the decision of Tribunal for AY 2009-10, directed Ld. AO to grant customs duty adjustment and foreign exchange rate adjustment. The ground relating to working capital adjustment was not pressed. Aggrieved, the revenue is in further appeal before us. Similar are the facts in AY 2014-15. 3. We find the aforesaid decision of Tribunal for AY 2009-10 was subject matter of further challenge by revenue before Hon’ble High Court of Madras vide TCA No.138 of 2017 dated 07.02.2019 wherein it was held as under: - 6. From the above, it is clear that though the issue relating to customs duty adjustment, Air Freight Adjustment and foreign exchange adjustment were directed to be reconsidered by the Transfer Pricing Officer for determining the arm’s length price (ALP) in the case of the assessee, the tribunal, has in fact fixed how much adjustments have to be made or not to be made. This hardly leaves any discretion to deal with these issues afresh with the Transfer Pricing Officer since the Transfer Pricing officer, being the lower authority, would be bound by the observations and findings of the tribunal. 7. This frustrates the very purpose of remand for inquiry by the Transfer Pricing Officer into these three issues by Transfer Pricing Officer, as directed by the Tribunal itself. Therefore, we allow the present appeal of the revenue and while upholding the remand order passed by the Tribunal, we observe that the Transfer Pricing Officer will pass such fresh orders in pursuance of the remand directions, uninfluenced by the observations of the Tribunal, on the merits of the case. It goes - 3 - without saying that the assessee will be again given the due opportunity of hearing to make out its case before the Transfer Pricing Officer and fresh orders may be passed by the Transfer Pricing Officer, after providing reasonable opportunity of hearing to the assessee in this regard. 9. With the above observation, the appeal of the revenue is allowed. No costs. Respectfully following the aforesaid decision, we set-aside the impugned orders and remand the matter for both years to Ld. Transfer Pricing Officer (TPO) to redetermine ALP of the impugned transactions on similar lines. 4. Both the appeals stand allowed for statistical purposes. Order pronounced on 12 th June, 2023. Sd/- (MAHAVIR SINGH) उपा23 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद; / ACCOUNTANT MEMBER चे6ई / Chennai; िदनांक / Dated : 12-06-2023 DS आदेश की Xितिलिप अ 8ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आय ु त/CIT 4. वभागीय त न ध/DR 5. गाड फाईल/GF