DCIT 13(2)(2), MUMBAI V. PERI INDIA P. LTD, MUMBAI

ITA 3852/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0588 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 06-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 3852 / MUM/20 1 6 ( ASSESSMENT YEAR : 2011 - 12 ) DCIT 13(2)(2) 2 ND FLOOR, R.N. 218 AAYAKAR BHAVAN M.K.ROAD, MUMBAI - 400 020 VS. M/S. PER I INDIA PVT. LTD., 1006, DLH PARK, S.V. ROAD, GOREGAON (W), MUMBAI 400 062 PAN/GIR NO. AAECP4115E ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY SHRI SUHAS KULKARNI ASSESSEE BY SHRI NIMESH VORA DATE OF HEARING 27 / 11 /201 8 DATE OF PRONOUNCEMENT 30 / 11 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 57, MUMBAI DATED 15/02/2016 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. FOLLOWING GROUNDS HAVE B EEN TAKEN BY THE REVENUE: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF ARM 'S LENGTH PRICE IN RELATION TO INTERNATIONAL TRANSACTIONS WITH ASSOCIA TED ENTERPRISES~'AMOUNTING TO RS. 75,75,863/ - WITHOUT APPRECIATING THE FACT THAT THE SERVICES, IF ANY, PROVIDED BY THE AE REPRESENTS 'DUPLICATE SERVICES' AND HENCE NO CHARGE FOR THE SAME BY THE AE IS CALLED FOR . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF ARM'S LENGTH PRICE IN RELATION TO INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES WITHOUT APPRECIATING THE FACT ITA NO. 3852/MUM/2016 M/S. PERI INDIA PVT. LTD., 2 THAT THE SERVICES, IF ANY , PROVIDED BY THE AE REPRESENTS 'SHAREHOLDER ACTIVITY' AND HENCE NO CHARGE FOR THE SAME BY THE AE IS CALLED FOR. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLAN T CRAVES LEAVE TO ADD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF APPEAL. 3. AT THE OUTSET, LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2008 - 09 WHEREIN ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DAT ED 14/01/2015. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND FOUND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SUPPLY OF FORM WORK AND SCAFFOLDING MATERIAL. THE RETURN OF INCOME FOR THE YE AR UNDER APPEAL WAS FILED ON 15/ 10 / 2010 DECLARING TOTAL INCOME OF RS. 5,47,34,729/ - . THE ASSESSMENT U/S. 143(3) OF THE IT ACT 1961 IS COMPLETED ON28.02.2014 MAKING ADDITION OF RS. 24,29,869/ - ON ACCOUNT OF ALP IN RELATION TO INTERNATIONAL TRANSACTION WITH AE. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSIN ESS OF SUPPLY OF FORM WORK AND SCAFFOLDING MATERIAL. THE MAIN CUSTOMERS OF THE ASSESSEE ARE LARGE ENGINEERING/CONSTRUCTION COMPANIES BASED IN INDIA. THE ASSESSEE IMPORTS FINISHED GOODS IN THE NATURE OF FROM WORK AND SCAFFOLDING MATERIAL FROM PERI GMBH GERM ANY RECEIVED TECHNICAL ADVICE FOR SUBMISSION OF TENDER FOR HIGHLY SPECIALIZED JOB AND WHEN CONTRACT AWARDED, FOR ITS EXECUTION AS PER THE OFFER LETTER AND REQUIREMENT OF CLIENT AND SELLS THE SAME IN INDIA. 5. DURING THE COURSE OF ASSESSMENT, AO DISALLOWED EXPENDITURE OF RS.24,29,869/ - WHICH HAS BEEN PAID AS TECHNICAL FEES. ITA NO. 3852/MUM/2016 M/S. PERI INDIA PVT. LTD., 3 6. BY THE IMPUGNED ORDER, CIT(A) ALLOWED ASSESSEES CLAIM AFTER OBSERVING THAT ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2008 - 09 AND 2009 - 10. PRECIS E OBSERVATION OF CIT(A) WAS AS UNDER: - I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE FINDINGS OF THE AO AND THE SUBMISSIONS OF THE APPELLANT THE ISSUE IS HAVING DECIDED IN THE BACKGROUND OF THE DECISION OF THE HON'BLE ITAT MUMBAI IN ASSESSEE'S OWN CAS E FOR AY 2008 - 09 IN ITA NO 7265/MUM/2012. IN 2008 - 09 THE MATTER HAD BEEN REFERRED BY THE ASSESSEE BEFORE THE DRP WHICH DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADJUSTMENT PROPOSED IN THE DRAFT ORDER ON THE ISSUE OF TECHNICAL FEES PAI D TO PERI GMBH. THE SAID DECISION HAS BEEN ADJUDICATED UPON BY THE HON'BLE ITAT. THE HON'BLE ITAT AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE AND REVENUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE DECISION PARA IS GIVEN ABOVE. FOR THE PRESENT YEAR IT IS SEEN THAT THE FACTS OF THE CASE REMAIN THE SAME IN THIS YEAR ALSO. THE APPELLANT IS PROVIDING PERI AUTOMATIC CLIMBING STATIONS FOR CONSTRUCTION OF HIGH RISE BUILDINGS. THE HON'BLE HAVE HELD THAT IT IS NOT FOR THE AO TO QUESTION THE RELEVANCE OF THE SERVICE IN AS MUCH AS THAT IT IS NOT THE CASE OF THE REVENUE THAT THE APPELLANT HAD THE ABILITY TO PROVIDE FOR THE TECHNICAL SERVICES IN - HOUSE. IN FACT IT IS NOT EVEN THE CASE OF REVENUE THAT SUCH SERVICES WERE AVAILABLE ELSEWHERE. THE AO DOES NOT HAVE THE CASE THAT THE APPELLANT DID NOT REQUIRE SUCH TECHNICAL ASSISTANCE. ALSO IT IS NOT DISPUTED THAT THE APPELLANT DOES NOT HAVE REQUISITE STAFF. IT IS ALSO UN DISPUTED THAT THE AE, PERI GRNBH GERMANY PROVIDES SUCH SUPPORT FUNCTIONS TO ALL DISPUTED THAT THE APPELLANT DOES NOT HAVE REQUISITE STAFF. IT IS ALSO UNDISPUTED THAT THE AE, PERI GMBH GERMANY PROVIDES SUCH SUPPORT FUNCTIONS TO ALL ITS SUBSIDIARIES. THE AO HAS ALSO NOT DISPUTED THE ACTUAL SPECIFIC BILLS RAISED BY THE AE AND THE INVOICES WHICH RECORD TH E SPECIFICITIES OF MANHOUR DATA ETC. IN LIGHT OF THE ABOVE, I AM OF THE CONSIDERED VIEW THAT THE DISALLOWANCE MADE BY THE AO IS UNCALLED FOR. THE PRINCIPLES SET OUT IN THE DECISION OF THE HON'BLE ITAT IN THE APPELLANTS EARLIER YEAR REMAIN APPLICABLE TO THE PRESENT YEAR ALSO AND THEREFORE IN LIGHT OF THIS THE GROUND OF APPEAL IS ALLOWED. 4. AT THE END OF THE GROUNDS OF APPEAL IT IS MENTIONED THAT - 'THE APPELLANTS CRAVE LEAVE TO ALTER, AMEND AND / OR MODIFY/ADD ANY OTHER GROUND OF APPEAL.' 4.1 THERE IS NO SPECIFIC SUBMISSION MADE BY THE APPELLANT IN RESPECT OF SUCH MENTION. ACCORDINGLY SUCH MENTION BY THE APPELLANT IS ITA NO. 3852/MUM/2016 M/S. PERI INDIA PVT. LTD., 4 CONSIDERED GENERAL IN NATURE AND DOES NOT NEED ANY SEPARATE ADJUDICATION AND IS ACCORDINGLY DISPOSED OFF. 5. IN THE RESULT, THE APPEAL I S ALLOWED. 7. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US. 8. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR T HE A.Y.2008 - 09 DATED 14/01/2015 AND FOUND THAT ADDITION MADE ON ACCOUNT OF TECHNICAL FEES PAID TO PERI GMBH HAS BEEN DELETED BY THE TRIBUNAL AFTER GIVING DUE REASONING. DURING THE YEAR UNDER CONSIDERATION ALSO ASSESSEE HAS PAID TECHNICAL FEES UNDER THE VERY SAME AGREEMENT WHICH CONTINUED FROM THE EARLIER YEAR. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). MOREOVER, THE TAX EFFECT IN RESPECT OF ADDITION DELETED BY CIT(A) IS LESS THAN RS. 20 LAKHS, THEREFORE, IN VIEW OF THE CBDT CIRCULAR NO. 3/2018 DATED 11.07.2018, THE APPEAL FILED BY REVENUE IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 / 11 /201 8 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 30 /11 /201 8 ITA NO. 3852/MUM/2016 M/S. PERI INDIA PVT. LTD., 5 KARUNA SR. PS C OPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//