American Express (India) Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 3990/DEL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7094 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS GEETMALA MOHNANY
• Keywords: Depreciation; Transfer pricing
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NO.4362/DEL/2010 ASSESSMENT YEAR : 2006-07 AMERICAN EXPRESS SERVICES INDIA LTD., FIRST FLOOR, MERCANTILE HOUSE, 15, KASTURBA GANDHI MARG, NEW DELHI. PAN : AABCT0555D VS. ACIT, CIRCLE-1(1), NEW DELHI. ITA NO.3990/DEL/2010 ASSESSMENT YEAR : 2006-07 AMERICAN EXPRESS (INDIA) PVT. LTD., FIRST FLOOR, MERCANTILE HOUSE, 15, KASTURBA GANDHI MARG, NEW DELHI. PAN : AAACA8163F VS. ACIT, RANGE-1, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY IYER, CA, SHRI ARIJIT CHAKRAVORTHY, SHRI MANOMEET DALAL, SHRI ATULAN SAHA, ADVOCATES. REVENUE BY : MRS. GEETMALA MOHNANY, CIT, DR ORDER PER BENCH: BOTH THE ABOVE MENTIONED APPEALS ARE FILED BY THE A SSESSEE AND THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY THE DISPUTE ITA NOS.4362 & 3990/DEL/2010 2 RESOLUTION PANEL (DR), NEW DELHI DATED 24 TH MAY, 2010 IN THE CASE OF THE RESPECTIVE ASSESSEES. 2. BOTH THESE APPEALS WERE ARGUED TOGETHER BY THE LEA RNED COUNSEL APPEARING ON BEHALF OF BOTH THE ASSESSEES, HENCE, FOR TH E SAKE OF CONVENIENCE BOTH THESE APPEALS ARE DISPOSED OF BY THIS C OMMON ORDER. 3. IN ITA NO.4362/DEL/2010 THE RETURN DECLARING NIL INCOME WAS FILED BY THE ASSESSEE WHICH HAS BEEN ASSESSED AT AN INCOME OF ` 14,20,22,828/- BY MAKING ADDITIONS IN RESPECT OF DEPR ECIATION ON ACQUIRED BUSINESS DATA BASE AND ADJUSTMENT MADE ON ACCOU NT OF ARMS LENGTH PRICE. THE ORDER PASSED BY THE ASSESSING OFFICER IS DATED 26 TH JULY, 2010 UNDER THE PROVISIONS OF SECTION 143(3)/144 C(1). THE ASSESSMENT ORDER HAS BEEN PASSED AFTER DRAFT ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WHICH HAS BEEN CONFIRMED B Y THE DRP VIDE ORDER DATED 24 TH MAY, 2010. IN THE APPEAL IT IS THE CASE OF THE ASSESSEE THAT THE ORDER PASSED BY DRP IS BAD IN LAW INASMUC H AS DRP HAS FAILED TO APPRECIATE THE FACTS INVOLVED AND THE L AW THEREON. SIMILARLY, THE ASSESSEE HAS OBJECTED TO THE VARIOUS ADDIT IONS MADE IN THE ASSESSMENT ORDER AND HAS OBJECTED TO BE ASSESSED AT ` 14,20,22,828/- AGAINST NIL INCOME. THE ASSESSEE HAS ALSO OBJECTED TO LEVY INTEREST U/S 234B AND 234D OF THE ACT AND HAS ALSO OBJECTED TO DENIAL OF SET OFF OF BROUGHT FORWARD BUSINESS LOSSES AND U NABSORBED DEPRECIATION AGAINST THE INCOME OF THE RELEVANT ASSESSME NT YEAR. 4. SIMILARLY, IN ITA NO.3990/DEL/2010, THE RETURN O F INCOME WAS FILED AT ` 52,46,51,340/- AND IT HAS BEEN ASSESSED AT ` 142,97 ,43,842/- BY MAKING THE TWO ADDITIONS, NAMELY, ADDITION OF ` 54,1 8,93,742/- ON ACCOUNT OF ADJUSTMENT IN ARMS LENGTH PRICE AND ` 36, 31,98,760/- BEING DEDUCTION DISALLOWED U/S 10A. THE ASSESSMENT ORDER IS DAT ED 5 TH JULY, 2010 AND IT IS PASSED AS PER DIRECTIONS OF DRP DATED 24 TH MAY, 2010. ITA NOS.4362 & 3990/DEL/2010 3 THE ASSESSEE IN THE APPEAL FILED BEFORE US HAS CONTESTED T HE ADDITIONS MADE ON MERITS AND HAS ALSO CONTESTED THE ORDER OF DRP ON THE GROUND THAT DRP HAS FAILED TO APPRECIATE THE FACTS INVOLVED AND LAW THEREOF. THE ASSESSEE HAS ALSO CONTESTED THE LEVY OF INTEREST U/S 234 A, 234B AND 234D. 5. AT THE OUTSET, REFERRING TO THE ORDERS PASSED BY DRP , IT WAS SUBMITTED BY THE LEARNED AR THAT THE MATTER IS REQUIR ED TO BE RESTORED BACK TO THE FILE OF DRP WITH A DIRECTION TO PASS A SPE AKING ORDER AS THE ORDER PASSED BY THE DRP IS BASED ONLY ON THE FINDINGS RE CORDED BY TPO AND THE ASSESSING OFFICER. IT IS THE CASE OF THE LEARNED AR THAT VARIOUS OBJECTIONS WERE RAISED BEFORE DRP WHICH WERE REQUIRED TO BE CONSIDERED AND DECIDED BY WAY OF A SPEAKING ORDER AND THIS PROCESS HAVING NOT ADOPTED BY THE DRP, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF DRP. REFERENCE IN THIS REGARD WAS MADE T O THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VODA FON ESSAR LTD. VS. DISPUTE RESOLUTION PANEL-II 240 CTR 263 (DEL) WHEREIN IT HAS BEEN HELD THAT WHEN A QUASI JUDICIAL AUTHORITY LIKE THE DRP DE ALS WITH A LIS U/S 144C OF THE ACT, THEN, IT IS OBLIGATORY ON ITS PART T O ASCRIBE COGENT AND GERMANE REASONS AS THE SAME IS HEART AND SOUL OF THE MATT ER AND ALSO FACILITATES APPRECIATION WHEN ORDER IS CALLED IN QUEST ION BEFORE SUPERIOR FORUM. 6. ON THE OTHER HAND, LD. CIT, DR VEHEMENTLY OBJECT ED TO SUCH PLEA OF THE LEARNED AR. SHE SUBMITTED THAT ON EACH GROUN D DRP HAS STATED THE GRIEVANCE OF THE ASSESSEE AND HAS EXPRESSED THAT TPO A ND ASSESSING OFFICER HAVE GIVEN REASONED FINDING AND ON THE BASIS OF THAT THE ISSUES HAVE BEEN DECIDED AGAINST THE ASSESSEE. THEREFO RE, IT IS THE CASE OF CIT, DR THAT THE ORDER OF LD. DRP CANNOT BE SAID TO BE A NON- SPEAKING ORDER. THEREFORE, SHE OBJECTED TO THE REQUE ST OF THE THE LEARNED AR FOR RESTORING THE MATTER BACK TO THE FILE OF DRP. ITA NOS.4362 & 3990/DEL/2010 4 7. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. WE HAV E ALSO CAREFULLY GONE THROUGH THE ORDER PASSED BY THE LD. DR P. IN BOTH THE CASES WHILE DECIDING THE VARIOUS ISSUES RAISED BY THE ASSESSEE IN THE OBJECTIONS BEFORE DRP, LD. DRP LARGELY HAS RELIED UP ON THE ORDER OF TPO AND THEY HAVE STATED THAT ACCORDING TO THEIR OPI NION THE TPO HAS RIGHTLY DONE SO. THEREFORE, NO INDEPENDENT FINDING WHATSOEVER HAS BEEN RECORDED BY DRP AND THE ORDER IS BASED ON THE FI NDINGS RECORDED BY THE TPO. ACCORDING TO THE AFOREMENTIONED DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF VODAFON ESSAR LTD. VS. DRP-I I, IT HAS BEEN HELD THAT LD. DRP IS A QUASI JUDICIAL AUTHORITY AND W HILE DEALING WITH A CASE U/S 144C, IT IS UNDER AN OBLIGATION TO ASCRIBE COG ENT AND GERMANE REASONS AS THE SAME ARE HEART AND SOUL OF THE MATTER. A SCRIBING REASON IS ALSO NECESSARY AS THE SAME WOULD FACILITATE APPR ECIATION WHEN THE ORDER IS CALLED IN QUESTION BEFORE SUPERIOR F ORUM. THE ASSESSING OFFICER IS BOUND TO FOLLOW THE DIRECTIONS OF DR P. WHEN THE ORDER OF DRP DOES NOT INDICATE THE COGENT AND GERMAN E REASONS FOR REJECTING THE OBJECTIONS OF THE ASSESSEE AND SIMPLY RELIE D UPON THE ORDER PASSED BY THE TPO, THEN, IT CANNOT BE SAID THAT A SPEAKING ORDER HAS BEEN PASSED BY DRP. THEREFORE, WE ARE OF THE OPIN ION THAT THE ORDERS PASSED BY DRP IN BOTH THE CASES DO NOT MEET THE R EQUIREMENTS OF LAW AS THE DRP IS A QUASI JUDICIAL AUTHORITY AND IS UNDER AN OBLIGATION TO PROVIDE COGENT AND GERMANE REASON FOR DECIDING TH E ISSUES IN FAVOUR OF OR AGAINST THE ASSESSEE. THEREFORE, WE RESTORE BOTH T HESE APPEALS TO THE FILE OF DRP TO RE-ADJUDICATE ALL THE ISSUES RAI SED BEFORE IT AFTER PROVIDING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARI NG AND AFTER CONSIDERING ALL THE SUBMISSIONS MADE IN THIS REGARD BY WA Y OF A SPEAKING ORDER GIVING COGENT AND GERMANE REASONS FOR N OT ACCEPTING THE CLAIM OF THE ASSESSEE OR FOR ACCEPTING THE CLAIM OF THE ASSESSEE AS THE CASE MAY BE. AS WE ARE RESTORING ALL THE ISSUES TO T HE FILE OF DRP, WE DO NOT EXPRESS ANY OPINION AS THE MATTER WILL BE RE -ADJUDICATED BY ITA NOS.4362 & 3990/DEL/2010 5 THE DRP AS PER THE DIRECTIONS GIVEN IN THIS ORDER AND AS PER THE PROVISIONS OF LAW. 8. IN THE RESULT, FOR STATISTICAL PURPOSES BOTH THE APPE ALS ARE CONSIDERED TO BE ALLOWED IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.12.20 11. SD/- SD/- [G.D. AGRAWAL] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED, 29.12.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES