Daimler Financial Services India Private Limited, CHENNAI V. ACIT(OSD), CHENNAI

ITA 401/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5868 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 15-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RU GEORGE
• Keywords: Transfer pricing; International transaction; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.401/MDS/2017 ' (' / ASSESSMENT YEAR : 2012-13 M/S DAIMLER FINANCIAL SERVICES INDIA PVT. LTD., UNIT 202, 2 ND FLOOR, CAMPUS 3B, RMZ MILLENIA BUSINESS PARK, 143, DR. MGR ROAD, PERUNGUDI, CHENNAI - 600 096. PAN : AADCD 6300 J V. THE ASSISTANT COMMISSIONER OF INCOME TAX (OSD), CORPORATE RANGE 1, CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI NISHANT THAKKAR, ADVOCATE ,-*+ . / / RESPONDENT BY : SMT. RUBY GEORGE, CIT 0 . 1# / DATE OF HEARING : 07.11.2017 23( . 1# / DATE OF PRONOUNCEMENT : 09.11.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF ASSESSMENT DATED 20.12.2016 PASSED CONSEQUENT TO TH E DIRECTION ISSUED BY THE DISPUTE RESOLUTION PANEL. 2. SHRI NISHANT THAKKAR, THE LD.COUNSEL FOR THE ASS ESSEE, SUBMITTED THAT THE ASSESSEE-COMPANY IS A WHOLLY OWN ED SUBSIDIARY 2 I.T.A. NO.401/MDS/17 COMPANY OF DAIMLER AG. ACCORDING TO THE LD. COUNSE L, THIS IS THE FIRST YEAR OF BUSINESS. THE LD.COUNSEL FURTHER CLA RIFIED THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF NON-BANKING FINANCE COMPANY WITHOUT ACCEPTING ANY DEPOSIT FROM PUBLIC. THE LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE PROV IDED FINANCIAL SERVICES FOR VEHICLES MANUFACTURED BY DAIMLER INDIA COMMERCIAL VEHICLES PVT. LTD. AND MERCEDES-BENZ INDIA PVT. LTD . IN RESPECT OF INTERNATIONAL TRANSACTION, THE TRANSFER PRICING OFF ICER MADE ADJUSTMENT WITHOUT CONSIDERING THE CLAIM OF THE ASS ESSEE WITH REGARD TO ADJUSTMENT OF FIXED COST AND WORKING CAPI TAL. EVEN THOUGH AS MANY AS 23 GROUNDS WERE RAISED BEFORE THIS TRIBU NAL, THE LD.COUNSEL HAS FAIRLY SUBMITTED THAT THE ISSUE INVO LVED IN THIS APPEAL IS WITH REGARD TO CONSIDERATION OF FIXED COST AND W ORKING CAPITAL WHILE MAKING TRANSFER PRICING ADJUSTMENT. 3. REFERRING TO THE DIRECTION OF DRP, THE LD.COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE DRP REJECTED THE INFORM ATION FILED BY THE ASSESSEE WITH REGARD TO ECONOMIC ADJUSTMENT ON THE GROUND THAT THE SAME WAS NOT FILED EARLIER. ACCORDING TO THE LD. COUNSEL, THE OBJECT OF TRANSFER PRICING ADJUSTMENT UNDER THE SCHEME OF INCOME-TAX ACT IS TO DETERMINE THE ARM'S LENGTH PRI CE WITH REGARD TO 3 I.T.A. NO.401/MDS/17 TRANSACTION OF THE ASSESSEE WITH ITS ASSOCIATED ENT ERPRISE OUTSIDE THE COUNTRY. THEREFORE, ACCORDING TO THE LD. COUNS EL, EVEN THE ADDITIONAL EVIDENCE OR ADDITIONAL GROUND RAISED BY THE ASSESSEE NEEDS TO BE CONSIDERED AFTER CALLING FOR REMAND REP ORT FROM THE ASSESSING OFFICER. MERELY BECAUSE THE ASSESSEE COU LD NOT FURNISH CERTAIN INFORMATION WITH REGARD TO ECONOMIC ADJUSTM ENT, ACCORDING TO THE LD. COUNSEL, THAT CANNOT BE A REASON TO REJE CT THE CLAIM OF THE ASSESSEE WITH REGARD TO FIXED COST ADJUSTMENT AND W ORKING CAPITAL ADJUSTMENT. THEREFORE, THE LD.COUNSEL SUBMITTED TH AT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE TPO TO CONS IDER THE CLAIM OF FIXED COST ADJUSTMENT AND WORKING CAPITAL ADJUSTMEN T ON MERIT. 4. ON THE CONTRARY, SMT. RUBY GEORGE, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAD NOT PROVIDED ANY FIXED COST INFORMATION / DETAILS BEFORE THE TRANSFE R PRICING OFFICER. IN THE ABSENCE OF ANY MATERIAL, THE TPO HAS NOT MADE A NY ECONOMIC ADJUSTMENT AS CLAIMED BY THE ASSESSEE. ACCORDING T O THE LD. D.R., THE TRANSFER PRICING OFFICER ADOPTED OPERATING PROF IT / OPERATING COST AT THE MARGIN AND THEREAFTER WORKED OUT THE ADJUSTM ENT. SINCE THE INFORMATION REGARDING WORKING CAPITAL ADJUSTMENT WA S NOT FURNISHED BY THE ASSESSEE EVEN THOUGH IT WAS AVAILABLE AT THE TIME OF FILING 4 I.T.A. NO.401/MDS/17 OBJECTIONS BEFORE THE DRP, ACCORDING TO THE LD. D.R ., THE DRP HAS RIGHTLY REJECTED THE ADDITIONAL GROUND RAISED BY TH E ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE WORK ADJUSTMENT, NAMELY, FIXED COST ADJUSTMENT AND WORKI NG CAPITAL ADJUSTMENT, WAS ADMITTEDLY CLAIMED BEFORE THE TPO A ND DRP. THE TPO REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUN D THAT ECONOMIC ADJUSTMENT DETAILS WERE NOT PROVIDED BY TH E ASSESSEE BEFORE THE TPO. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE MADE CLAIM WITH REGARD TO ECONOMI C ADJUSTMENT SUCH AS FIXED COST ADJUSTMENT AND WORKING CAPITAL A DJUSTMENT, THE TPO AND DRP HAVE TO CONSIDER THE CLAIM OF THE ASSES SEE ON ITS MERIT. THE INFORMATION / DETAILS FURNISHED BY THE ASSESSEE BEFORE THE DRP CANNOT BE REJECTED MERELY BECAUSE THE SAME WAS NOT FILED AT THE INITIAL STAGE. THE FACT REMAINS THAT AT THE TIME OF HEARING OF OBJECTIONS, THE INFORMATION WAS AVAILABLE BEFORE TH E DISPUTE RESOLUTION PANEL. THEREFORE, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THE DRP OUGHT TO HAVE CONSIDERED THE C LAIM OF THE ASSESSEE ON THE BASIS OF MATERIAL / INFORMATION FUR NISHED BY THE ASSESSEE. SINCE SUCH AN EXERCISE WAS NOT DONE BY T HE DRP, THIS 5 I.T.A. NO.401/MDS/17 TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RECONSIDERED BY THE TRANSFER PRICING OFFICER. ACCO RDINGLY, ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE R AISED BY THE ASSESSEE WITH REGARD TO FIXED COST ADJUSTMENT AND W ORKING CAPITAL ADJUSTMENT IS REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER. THE ASSESSING OFFICER SHALL REFER THE MATTER TO TPO WIT H REGARD TO FIXED COST ADJUSTMENT AND WORKING CAPITAL ADJUSTMENT. TH E TPO SHALL CONSIDER THE CLAIM OF THE ASSESSEE ON MERIT ON THE BASIS OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE. 6. IT IS OPEN TO THE TPO TO COLLECT INFORMATION FRO M PUBLIC DOMAIN. WHEN THE INFORMATION WAS COLLECTED BY THE TRANSFER PRICING OFFICER, THE SAME SHALL BE FURNISHED TO THE ASSESSEE. IT IS MADE CLEAR THAT AFTER THE TPOS ORDER, IT IS OPEN T O THE ASSESSEE TO FILE OBJECTION, IF ANY, AS PER THE PROVISIONS OF SE CTION 144C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') BEFORE TH E DISPUTE RESOLUTION PANEL. IF SUCH AN OBJECTION IS FILED BY THE ASSESSEE, THE DRP SHALL DISPOSE OF THE OBJECTION ON ITS MERIT. I T IS FURTHER CLARIFIED THAT THIS TRIBUNAL IS NOT EXPRESSING ANY OPINION ON MERIT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 6 I.T.A. NO.401/MDS/17 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 9 TH NOVEMBER, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 9 TH NOVEMBER, 2017. KRI. . ,167 87(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. CIT(TP), CHENNAI 4. PRINCIPAL CIT- 1, CHENNAI 5. DCIT, TP-1(2), CHENNAI 6. 79 ,1 /DR 7. ' : /GF.