Wipro GE Healthcare Pvt, Ltd., Bangalore V. DCIT CR 7(1)(2), Bangalore

ITA 344/BANG/2015

• Counselvise Citation: 34421114 RSA 2015
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R REDDY
• Assessee Lawyers: K R PRADEEP
• Keywords: Transfer pricing; Principle of natural justice; International transaction; Revised return
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELATE TRIBUNAL BANGALORE A BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.(T.P.)A.NO.344/BANG/2015 ASSESSMENT YEAR 2010 - 2011 WIPRO GE HEALTHCARE PVT. LTD., BANGALORE 560 067. PAN AAACW 1685J VS. DCIT, CIRCLE 7(1)(2) BANGALORE (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. K.R. PRADEEP FOR REVENUE : MR. G.R. REDDY DATE OF HEARING : 2 1 .07.2015 DATE OF PRONOUNCEMENT : 18 .0 9 .2015 ORDER PER SMT. P. MADHAV I DEVI, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE FINAL ASSESSMENT ORDER PASSED BY THE A.O. UNDER SECTION 143(3) READ WITH SECTION 144C(13) OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY , WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN MEDICAL EQUIPMENTS, ALSO PROVIDED SOFTWARE SERVICES IN TECHNOLOGY SOLUTIONS TO ITS PARENT COMPANY, FOR PRODUCTS MANUFACTURED WORLDWIDE . IT FILED ITS RETURN OF INCOME ON 07.10.2010 DECLARING TOTAL INCOME OF RS.129,24,35,906 UNDER REGULAR PROVISIONS OF 2 I.T.(T.P.) A.NO.344/BANG/2015 WIPRO GE HEALTHCARE PVT. LTD., BANGALORE. THE ACT AND BOOK PROFITS OF RS.146,32,42,412 UNDER SECTION 115JB OF THE ACT. SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 30.03.2012 DECLARING TOTAL INCOME AT RS.129,24,35,906 IN ORDER TO CLAIM ADDITIONAL TDS CREDIT AND FOREIGN TAX CREDIT. THEREAFTER, DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THE A.O. OBSERVED THAT THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTIONS WITH IT S A.E. AND THE VALUE OF SUCH TRANS ACTIONS EXCEEDED THE PRESCRIBED LIMIT. THEREFORE, HE MADE A REFERENCE TO THE TRANSFER PRICING OFFICER (IN SHORT TPO ) FOR DETERMINATION OF THE ARMS LENGTH PRICE UNDER SECTION 92CA OF THE ACT. THE TPO, VIDE ORDERS DATED 30.01.2014 , DETERMINED RS.74,23,34,7 67 AS TOTAL ADJUSTMENTS TO THE ALP UNDER SECTION 92CA OF THE ACT. THE A.O. IN THE DRAFT ASSESSMENT PROCEEDINGS , ADDED BACK THE SAID ADJUSTMENT TO THE TAXABLE INCOME AND BROUGHT IT TO TAX ALONG WITH THE OTHER DISALLOWANCES AND ADDITIONS . THE ASSESSEE FILED ITS OBJECTIONS TO THE DRAFT ASSESSMENT ORDER BEFORE THE DRP WHICH CONFIRMED THE DRAFT ASSESSMENT ORDER AND CONSEQUENTLY, THE A.O. PASSED THE FINAL ASSESSMENT ORDER DATED 30.01.2015 AGAINST WHICH, THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HE ARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FOREMOST OBJECTION OF THE ASSESSEE IS THAT BOTH THE TPO AS WELL AS THE DRP HAVE NOT CONSIDERED THE ELABORATE CONTENTIONS RAISED BY THE ASSESSEE BEFORE THEM AND THEREFORE, THERE IS VIOLATION OF PRIN CIPLES OF NATURAL JUSTICE. HE HAS DRAWN OUR ATTENTION 3 I.T.(T.P.) A.NO.344/BANG/2015 WIPRO GE HEALTHCARE PVT. LTD., BANGALORE. TO THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE TPO AS WELL AS DRP AND ALSO AS TO HOW NEITHER THE TPO NOR DRP HAVE CONSIDERED THE ASSESSEE S CONTENTIONS AND HAVE COME TO ERRONEOUS CONCLUSION S. HE SUBMITTED THAT SIMILAR WA S THE SITUATION IN THE ASSESSEE S OWN CASE FOR THE EARLIER ASSESSMENT YEAR 2006 - 2007 AND THIS TRIBUNAL AFTER CONSIDERING THE ISSUE AT LENGTH , HAD REMITTED BACK THE ISSUE TO THE TPO, FOR RECONSIDERATION ON MERITS. A COPY OF TH E ORDER OF THIS TRIBUNAL FOR THE A.Y. 2006 - 07 IS FILED BEFORE US. 4. FROM THE MATERIAL ON RECORD, WE FIND THAT THE TPO HAD ISSUED SHOW CAUSE NOTICES DATED 26.08.2013 AND 15.01.2015 AND THE ASSESSEE HAD FILED THE REQUIRED DETAILS AND THE EXPLANATIONS BEF ORE THE TPO VIDE LETTERS DATED 15.10.2013 AND 23.01.2014 RESPECTIVELY. IN ITS REPLY DATED 23.01.2014, THE ASSESSEE HAD CLEARLY STATED THAT THE ADJUSTMENT PROPOSED BY THE TPO IS ON THE ENTIRE DISTRIBUTION SEGMENT WHICH CONSISTS OF REVENUE OUT OF SALES TO NO N - A.E. ALSO AND THAT T.P. ADJUSTMENT IS TO BE MADE TO INTERNATIONAL TRANSACTION WITH IT S A.E. ONLY. THE ASSESSEE HAS ALSO GIVEN THE DETAILS OF THE PURCHASES WITH THE A.E. AND NON - A.E. ENTITIES. BUT WE FIND THAT THE TPO HAS CONSIDERED THE TOTAL OF SALES OF BOTH A.E. AND NON - A.E. TRANSACTIONS TO PROPOSE THE T.P. ADJUSTMENT. THE ASSESSEE HAS ALSO RAISED THE OBJECTION AGAINST THIS PROPOSAL BEFORE THE DRP BY GIVING THE DETAILS OF THE LOCAL SALES, BUT THE DRP HAS FAILED TO ADJUDICATE THE ISSUE. SIMILARLY, ASSESS EE HAS FILED ITS OBJECTIONS IN DETAIL TO THE 4 I.T.(T.P.) A.NO.344/BANG/2015 WIPRO GE HEALTHCARE PVT. LTD., BANGALORE. OTHER ISSUES, BUT NONE OF THE AUTHORITIES BELOW HAVE CONSIDERED THE ISSUES JUDICIOUSLY. THEREFORE, H AVING R EGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT SIMILAR FACTS AND CIRCUMSTANCES EXIS TED FOR THE A.Y. 2006 - 07 IN ASSESSEE S OWN CASE AND TH E COORDINATE BENCH OF THIS TRIBUNAL VIDE ITS ORDER DATED 29.07.2011 IN ITA.NO.1433/ BANG/ 2010 HAS DISCUSSED THE ISSUE AT LENGTH AND AT PARA 10 OF ITS ORDER HAS HELD AS UNDER : 10. HAVING HEARD BOTH TH E PARTIES AND HAVING CONSIDERED THE RIVAL CONTENTIONS, WE FIND THAT U/S CHAPTER X OF THE ACT, THE TPO WHILE COMPUTING THE ALP HAS TO ISSUE NOTICE TO THE ASSESSEE AND IF THE ASSESSEE RAISES ANY OBJECTIONS RELATING TO THE METHOD ADOPTED BY THE TPO IN SELECT ION OF THE COMPARABLES OR IN RELATION TO COMPARABLES SELECTED, HE HAS TO CONSIDER THE OBJECTIONS RAISED BY THE ASSESSEE AND DEAL WITH THEM BY A SPEAKING ORDER. HOWEVER IN THE CASE BEFORE US, THE TPO HAS FAILED TO CONSIDER THE ASSESSEE'S OBJECTIONS AND DEAL WITH THEM JUDICIOUSLY. THE DRP ALSO, IN OUR OPINION, HAS DEALT WITH THE ISSUE SUMMARILY WITHOUT CONSIDERING ASSESSEE'S OBJECTIONS AT ALL. THE ASSESSEE HAS APPROACHED ORP ONLY AGAINST THE ORDER OF THE TPO AND IT IS THE DUTY OF THE DRP TO CONSIDER THE ASSES SEE'S OBJECTIONS TO THE TPO ORDERS IN JUDICIOUS WAY. BY SUMMARILY ACCEPTING THE ORDER OF THE TPO, THE DRP HAS FAILED TO PERFORM THE DUTY ENTRUSTED TO IT. HOWEVER, SINCE THE TPO HAS NOT DEALT WITH THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE COMPARABLE S SELECTED BY THE TPO, WE DEEM IT FIT AND PROPER TO REMIT THE ISSUE TO THE FILE OF THE ASSESSING AUTHORITY FOR TAKING NECESSARY ACTION OF MAKING A REFERENCE TO THE T'PO TO DEAL WITH THE ASSESSEE'S OBJECTIONS AND F OR PASSING A SPEAKING ORDER. THE AO/TPO IS DIRECTED TO GIVE FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE AND 5 I.T.(T.P.) A.NO.344/BANG/2015 WIPRO GE HEALTHCARE PVT. LTD., BANGALORE. ALSO CONSIDER THE JUDICIAL PRECEDENTS ON THE ISSUE INCLUDING THE ORDERS, OF THE TRIBUNAL IN ASSESSEE'S OWN CASE WHILE DETERMINING THE ALP. 5. HAVING GONE THROUGH THE RECORD BEFORE US, AS RECORDED ABOVE, WE FIND THAT EVEN DURING THE RELEVANT ASSESSMENT YEAR , THE ASSESSEE HAD MADE ELABORATE SUBMISSIONS AND BOTH THE TPO AS WELL AS THE DRP HAVE FAILED TO CONSIDER THE SAID OBJECTIONS OBJECTIVELY. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER T O REMIT THIS ISSUE TO THE FILE OF THE A.O./TPO FOR RECONSIDERATION OF THE ISSUE IN ACCORDANCE WITH LAW. THE A.O./TPO IS DIRECTED TO GIVE FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE AND ALSO CONSIDER JUDICIAL PRECEDENTS ON THE ISSUE INCLUDING THE ORDERS OF THE TRIBUNAL IN ASSESSEE S OWN CASE WHILE DETERMINING THE ALP. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPT., 2015. SD/ - SD/ - (JASON P. BOAZ) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 18 TH SE TEMBER , 2015. VBP/ - 6 I.T.(T.P.) A.NO.344/BANG/2015 WIPRO GE HEALTHCARE PVT. LTD., BANGALORE. COPY TO 1. WIPRO GE HEALTHCARE PVT. LTD., BANGALORE 560067. C/O. MR. K.R. PRADEEP, 20, FLAT NO.101, EDEN PARK, VITTAL MALLYA RO AD, BANGALORE 560 001. 2. THE DCIT, CIRCLE 7(1)(2), BANGALORE. 3. DISPUTES RESOLUTION PANEL - II, H.M.T. BHAVAN, NO.59, BELLARY ROAD, GANGANAGAR, BANGALORE 560 032. 4. COMMISSIONER OF INCOME - TAX (TDS)/MEMBER DRP - II, BANGALORE. 5. ADDL. COMMISSIONER OF INCOME TAX, TRANSFER PRICING - III, BANGALORE. 7. D.R. ITAT A BENCH, BANGALORE 8. GUARD FILE