Dymos Lear Automotive India Private Limited, Kancheepuram V. ACIT, CHENNAI

ITA 3472/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4442 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 31-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 26-12-2016
• Court: TRIBUNAL
• Department Lawyers: MILIND MADHUKAR BHUSARI
• Keywords: Transfer pricing; International transaction

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , . , ! BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER , AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.3472/MDS/2016 /ASSESSMENT YEAR: 2012-13 M/S.DYMOS LEAR AUTOMOTIVE INDIA PVT. LTD., PLOT NO.A6 & A7, SIPCOT INDUSTRIAL ESTATE, IRUNGATTUKOTTAI, SRIPERAMBUDUR, KANCHIPURAM DISTRICT, TAMIL NADEU-602 117. VS. THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE RANGE-1, CHENNAI. [PAN: AACCD 7225 K ] ( % /APPELLANT) ( &'% /RESPONDENT) % ( / APPELLANT BY : MR.SANDEEP BAGMAR, ADV. &'% ( /RESPONDENT BY : MR.MILIND MADHUKAR BHUSARI, CIT ( /DATE OF HEARING : 31.05.2017 ( /DATE OF PRONOUNCEMENT : 31.05.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.3472/MDS/2016 IS AN APPEAL FILED BY THE ASS ESSEE AGAINST THE ORDER OF DISPUTE RESOLUTION PANEL-2, BANGALORE, IN F.NO.552/DRP-2- BNG/2015-16 DATED 29.08.2016 & 08.09.2016 FOR THE A Y 2012-13. ITA NO.3472/MDS/2016 :- 2 -: 2. SHRI MILIND MADHUKAR BHUSARI, CIT REPRESENTED ON BEHALF OF THE REVENUE AND SHRI SANDEEP BAGMAR, ADVOCATE REPRESENT ED ON BEHALF OF THE ASSESSEE. 3. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD.AR THAT THE ONLY ISSUE IN THE ASSESSEES APPEAL WAS AGAINST TRANSFER PRICING ADJUSTMENT MADE IN RESPECT OF PAYMENT OF TECHNICAL AND MANAGEM ENT SERVICE FEE TO M/S.DYMOS, KOREA. IT WAS A SUBMISSION THAT THE ASS ESSEE IS IN THE BUSINESS OF MANUFACTURING OF AUTOMOBILE SEATS. IT WAS A SUBMISSION THAT M/S.DYMOS, KOREA WAS 65% SHAREHOLDER IN THE ASSESSE E COMPANY AND ALL THE DESIGN AND TECHNICAL DRAWINGS OF THE SEATS WERE MADE BY M/S.DYMOS, KOREA AND THE ASSESSEE WAS ONLY DOING MANUFACTURING OF SEATS IN INDIA. IT WAS A SUBMISSION THAT THE ASSESSEE HAD PAID RS.2.09 CR. AS TECHNICAL AND MANAGEMENT SERVICE FEE TO M/S.DYMOS, KOREA. IT WAS A SUBMISSION THAT THE ASSESSEE HAD TURN OVER NEARLY RS.765.00 CR. AND THE NET OPERATING PROFIT WAS NEARLY RS.28.74 CR. GIVING A PROFIT MARG IN OF 3.17%. IT WAS A SUBMISSION THAT THE ASSESSEE HAD APPLIED TNMM METHO D AND IN ITS TP REPORT, NO ADJUSTMENT WAS CALLED FOR. IT WAS A SUB MISSION THAT THE TPO APPLIED CUP METHOD AND HELD THAT THE TRANSFER PRICI NG ADJUSTMENT OF THE ENTIRE TECHNICAL AND MANAGEMENT SERVICE FEE PAID TO M/S.DYMOS, KOREA WAS LIABLE TO BE ADDED BACK UNDER THE TRANSFER PRIC ING ADJUSTMENT. 4. AT THE TIME OF HEARING, IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT THE FIRST ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH ITA NO.3472/MDS/2016 :- 3 -: OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2010-11 IN ITA NO.928 & 943/MDS/2015 & CO NO.48/MDS/15 WHEREIN THE CO-ORDINATE BENCH OF THIS TRIBUNAL AS HELD AS FOLLOWS: 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN PLEA OF THE LD.A.R IS THAT TO ACHIEVE PROJECTED REVENUE. TH E ASSESSEE INCURRED MANAGEMENT FEES EXPENSES AND THERE IS NO NECESSITY OF TP ADJUSTMENT S ON THIS ISSUE. FURTHER, HE SUBMITTED THAT ALL INTERNATIONAL TRANSACTION ON AGGREGATE BAS IS TO BE CONSIDERED TO DETERMINE THE ALP. FURTHER, IT WAS STATED IN THE ABSENCE OF IDENTICAL UN-CONTROLLED PRICE, THE CUP METHOD WAS NOT POSSIBLE. HENCE, TNMM METHOD IS MOST APPROPRIAT E. AT THIS STAGE, WE ARE OF THE OPINION THAT IT IS NOT APPROPRIATE TO COMMENT ON THE METHOD TO BE FOLLOWED WHETHER TNMM OR CUP TO DETERMINE THE ALP. FIRST OF ALL, THE TPO/AO HAS T O ASCERTAIN WHETHER TECHNICAL MANAGEMENT SERVICE EXPENSES ARE AT ARMS LENGTH OR NOT, AS COMPARE TO THE ACTUAL SALES ACHIEVED BY THE ASSESSEE. ACCORDINGLY, HE HAS TO RE CONSIDER THE ISSUE AFRESH. IN THE LIGHT OF OUR OBSERVATION IN ASSESSEES APPEAL, THIS ISSUE IS REMITTED TO THE FILE OF AO FOR FRESH CONSIDERATION. 5. IT WAS FURTHER CLARIFIED BY THE LD.AR THAT FOR T HE AY 2010-11, THE TPO HAD ALLOWED THE ISSUE AS PER THE DIRECTIONS OF THE TRIBUNAL AND NO ADJUSTMENT WAS MADE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IN APPEAL BEFORE US IN RESPECT OF THE TRANSFE R PRICING ADJUSTMENT IN REGARD TO THE TECHNICAL AND MANAGEMENT SERVICE FEE PAID BY THE ASSESSEE TO M/S.DYMOS, KOREA IS SQUARELY COVERED BY THE DECI SION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES O WN CASE FOR THE AY 2010-11, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE REFERRED T O SUPRA, THE ISSUE IN THIS APPEAL IS ALSO RESTORED TO THE FILE OF THE AO TO TH E IDENTICAL DIRECTIONS AS GIVEN BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2010-11. ITA NO.3472/MDS/2016 :- 4 -: 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2017, AT CHENNAI. SD/- SD/- ( . ) ( A. MOHAN ALANKAMONY ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 31 ST MAY, 2017. TLN ( &12 32 /COPY TO: 1. % /APPELLANT 4. 4 /CIT 2. &'% /RESPONDENT 5. 2 & /DR 3. 4 ( ) /CIT(A) 6. /GF