AGFA INDIA PRIVATE LIMITED (NOW MERGED WITH AGFA HEALTHCARE INDIA PRIVATE LIMITED), Thane V. ASSISTANT COMMISSIONER OF INCOME TAX 1, CIRCLE-1, Thane

ITA 377/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4228 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2007-2008
• Appeal Filed On: 17-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEV SHAH; PARAS SAVLA AW SHRI HARSH SHAH
• Keywords: Transfer pricing; Revised return
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI NABIN KUMAR PRADHAN , ACCOUNTANT MEMBER ITA NO. 3 77 / MUM . /2018 ( ASSESSMENT YEAR : 20 07 08 ) AGFA INDIA PVT. LTD. (NOW MERGED WITH AGFA HEALTHCARE INDIA PVT. LTD.), B 14, ROAD NO.1 WAGLE INDUSTRIAL ESTATE, THANE (W) THANE 400 604 PAN AABCB2567K . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 1, MUMBAI . RESPONDENT REVENU E BY : SHRI PARAS SAVLA A/W SHRI HARSH SHAH AND SHRI DEV SHAH ASSESS EE BY : SHRI RAJNEESH YADAV DATE OF HEARING 01.05.2019 DATE OF ORDER 10.05.2019 O R D E R PER SAKTIJIT DEY. J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE FINAL ASSESSMENT ORDER DATED 24 TH DECEMBER 2017, FOR THE ASSESSMENT YEAR 2007 08. 2 . IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF FINAL ASSESSMENT ORDER ON THE GROUND THAT THE ORDER PASSED UNDER SECTION 2 AGFA INDIA PVT. LTD. 263 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'TH E ACT') IN PURSUANCE TO WHICH THE DRAFT ASSESSMENT ORDER WAS PASSED CULMINATING INTO THE FINAL ASSESSMENT ORDER , IN THE MEAN WHILE , HAS LOST ITS RELEVANCE . CONSEQUENTLY, ALL PROCEEDINGS PURSUANT TO THE ORDER PASSED UNDER SECTION 263 OF THE ACT WOULD BE INV ALID. 3 . BEFORE WE PROCEED TO DEAL WITH THE AFORESAID GROUND, IT IS NECESSARY TO BRIEFLY NARRATE THE CHRONOLOGICAL DATES AND EVENTS LEADING TO THE FINAL ASSESSMENT ORDER WHICH IS SUBJECT MATTER OF CHALLENGE IN THE PRESENT APPEAL. SL. NO. DATE EVENT 1 . 31.10.2007 A SSESSEE FILED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR. 2 . 07.11.2007 A SSESSEE FILED REVISED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR. 3 . 22.10.2010 A SSESSMENT ORDER PASSED U/S 143(3) OF THE ACT ACCEPTING THE INCOME DECLARED IN THE REVISED RETURN OF INCOME. 4 . 19.01.2012 A SSESSMENT COMPLETED EARLIER WAS RE OPENED U/S 147 OF THE ACT AND NOTICE UNDER SECTION 147 OF THE ACT ISSUED. 5 . 25.03.2013 ASSESSING OFFICER PASSED ORDER U / S 147 R/W SECTION 143(3) OF THE ACT. 6 . 05.02.2015 PCIT PASSED ORDER U/S 263 OF THE ACT SETTING ASIDE THE ASSESSMENT ORDER DATED 25.03.2013, PASSED UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT WITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE A REFERENCE TO THE TRANSFER PRICING OFFICER FOR DETERMINING THE AR M'S LENGTH PRICE OF THE INTERNATIONAL TAXATION. 7 . 15.12.2016 THE ASSESSING OFFICER PASSED DRAFT ASSESSMENT ORDER IN PURSUANCE TO THE DIRECTIONS OF THE PCIT UNDER SECTION 263 OF THE ACT. 3 AGFA INDIA PVT. LTD. 8 . 15.09.2017 THE TRIBUNAL IN ITA NO.1020/PUN./2015, DATED 15.09.2017, HELD THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT AS INVALID AND QUASHED IT. 9 . 22.09.2017 THE DRP PASSED THE DIRECTIONS IN PURSUANCE OF DRAFT ASSESSMENT ORDER DATED 15 TH DECEMBER 2016. 10 . 24.10.2017 THE ASSESSING OFFICER PASSED THE FINAL ASSESSMENT ORDER IN PURSUANCE TO THE DIRECTIONS OF THE DRP IMPUGNED IN THE PRESENT APPEAL. 11 . 15.11.2017 THE TRIBUNAL PASSED ORDER IN ITA NO.689/PUN./2015 ARISING OUT OF ORDER PASSED UNDER SECTION 263 OF THE ACT. 4 . THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED BEFORE US , IN VIEW OF THE FACT THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT AND THE ORDER PASSED UNDER SECTION 263 OF THE ACT WERE QUASHED BY THE TRIBUNAL AND CONSEQUENT P ROCEEDINGS IN PURSUANT TO THE ORDER PASSED UNDER SECTION 263 OF THE ACT WOULD BECOME INVALID. HENCE, THE FINAL ASSESSMENT ORDER PASSED HAS TO BE QUASHED. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT CONTROVERTED THE FACTUAL POSITION LEADING TO THE PAS SING OF THE FINAL ASSESSMENT ORDER. AS COULD BE SEEN FROM THE SEQUENCE OF EVENTS NARRATED ABOVE, LEARNED PCIT IN EXERCISE OF POWER UNDER SECTION 263 OF THE ACT REVISED THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT AND WHILE SE TTING ASIDE THE SAID ASSESSMENT ORDER DATED 25 TH MARCH 2013, HAD DIRECTED THE ASSESSING OFFICER TO MAKE A REFERENCE TO THE TRANSFER PRICING OFFICER TO DETERMINE THE ARM'S LENGTH PRICE OF THE 4 AGFA INDIA PVT. LTD. INTERNATIONAL T RANSACTION WITH THE A E. IN PURSUANCE TO SUCH DIREC TIONS OF LEARNED PCIT UNDER SECTION 263 OF THE ACT, THE ASSESSING OFFICER MADE A REFERENCE TO THE TRANSFER PRICING OFFICER AND THE ADJUSTMENTS TO THE ARM'S LENGTH PRICE SUGGESTED BY THE TRANSFER PRICING OFFICER WAS ADDED BACK IN THE DRAFT ASSESSMENT ORDER DATED 15 TH DECEMBER 2016, PASSED IN PURSUANCE TO THE DIRECTIONS OF THE PCIT UNDER SECTION 263 OF THE ACT. AGAINST THE SAID DRAFT ASSESSMENT ORDER, THE ASSESSEE RAISED OBJECTION BEFORE LEARNED DRP AND AFTER DISPOSAL OF THE OBJECTIONS RAISED BY THE ASSESSEE, THE ASSESSING OFFICER HAS PASSED THE FINAL ASSESSMENT ORDER CHALLENGED IN THE PRESENT APPEAL. IN FACT, LEARNED DRP IN THEIR ORDER HAS ALSO ACKNOWLEDGED THAT THE DRAFT ASSESSMENT ORDER WAS PAS SED IN PURSUANCE TO THE DIRECTIONS OF LEARNED PCIT UNDER SECTION 263 OF THE ACT. THUS, FROM THE AFORESAID FACTS ON RECORD, IT IS CLEARLY ESTABLISHED THAT THE DRAFT ASSESSMENT ORDER WAS IN PURSUANCE TO THE DIRECTIONS OF LEARNED PCIT UNDER SECTION 263 OF THE ACT AND FINAL ASSESSMENT ORDER IS A CULMINATION OF THE DRAFT ASSESSMENT ORDER. IT IS A FACT ON RECORD THAT THE ASSESSMENT ORDER DATED 25 TH MARCH 2013, PASSED UNDER SECTION 143(3) R/W 147 OF THE ACT WAS CHALLENGED BY THE ASSESSEE BEFORE LEARNED COMMISSION ER (APPEALS) AND THEREAFTER BEFORE THE TRIBUNAL. THE TRIBUNAL WHILE DISPOSING OFF THE ASSESSEES APPEAL IN ITA NO.1020/ PUN./2015, DATED 15 TH SEPTEMBER 2017, HAS HELD THE SAID ORDER TO BE INVALID AND HAS QUASHED IT. SUBSEQUENTLY, THE APPEAL BY THE ASSESSEE CHALLENGING THE ORDER PASSED UNDER SECTION 263 OF THE 5 AGFA INDIA PVT. LTD. ACT WAS DISMISSED BY THE TRIBUNAL AS INFRUCTUOUS, SINCE, IT HAD ALREADY QUASHED THE ASSESSMENT ORDER PASSED UNDER SECTION I43(3) READ WITH SECTION 147 OF THE ACT . IN OTHER WORDS, THE ORDER PASSED UNDER SECTION 263 OF THE ACT LOST ITS RELEVANCE . THAT BEING THE CASE, ANY SUBSEQUENT PROCEEDINGS AS A COROLLARY TO THE ORDER PASSED UNDER SECTION 263 OF THE ACT , INCLUDING , THE DRAFT ASSESSMENT ORDER AND THE FINAL ASSESSMENT ORDER WOULD HAVE NO LEGAL FORCE OR V ALIDITY. THAT BEING THE CASE, WE HAVE NO HESITATION IN HOLDING THAT THE FINAL ASSESSMENT ORDER BEING AN ORDER IN PURSUANCE TO THE ORDER PASSED UNDER SECTION 263 OF THE ACT , WHICH IS NO LONGER VALID , HAS TO BE HELD AS INVALID. ACCORDINGLY, WE DO SO AND QUAS H THE IMPUGNED ASSESSMENT ORDER. THIS GROUND IS ALLOWED. 6 . IN VIEW OF OUR DECISION IN GROUND NO.1, THE GROUNDS RAISED ON MERIT S ARE OF PURE ACADEMIC IMPORTANCE, HENCE; DO NOT REQUIRE ADJUDICATION IN THE PRESENT APPEAL. HOWEVER, THE ISSUES RAISED IN THESE GR OUNDS ARE LEFT OPEN FOR ADJUDICATION IF THEY ARISE IN ANY OTHER ASSESSMENT YEAR . 7 . IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 10.05.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 10.05.2019 6 AGFA INDIA PVT. LTD. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI