Nava Bharat Ventures Limited, Hyderabad V. Addl.CIT, Range-16, Hyderabad

ITA 401/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6330 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Transfer pricing
• Section: 143(3); 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 401/HYD/2014 ASSESSMENT YEAR: 2008-09 NAVA BHARAT VENTURES LTD., HYDERABAD. PAN AAACN 7327 C VS. ASST. COMMISSIONER OF INCOME-TAX, RANGE 16, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. SIVA KUMAR REVENUE BY : SHRI V. SRINIVAS DATE OF HEARING 04-08-2016 DATE OF PRONOUNCEMENT 10-08-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - V, HYDE RABAD, DATED 15/10/ 2013 FOR AY 2008-09. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF FERRO ALL OYS, SUGAR, FABRICATION OF EQUIPMENT AND GENERATION OF POWER, F ILED ITS RETURN OF INCOME FOR THE AY 2008-09 ADMITTING TOTAL INCOME OF RS. 164,50,75,780/- AFTER CLAIMING DEDUCTION UNDER CHAP TER VIA ( 80G RS. 1,16,50,000 AND U/S 80A RS. 200,83,31,236/-). THE ASSESSMENT WAS COMPLETED U/S 143(3) RWS 92CA OF THE ACT AT RS. 176,59,86,167 BY ADDING TRANSFER PRICING ADJUSTMENT U/S 92CA AMOU NTING TO RS. 4,12,88,587/- ARRIVED AT BY THE TPO VIDE HIS ORDER DATED 12/10/2011. 2 ITA NO. 401/H/14 NAVA BHARAT VENTURES LTD., HYD. 3. WHEN THE MATTER CARRIED IN APPEAL BY THE ASSESSE E TO THE CIT(A), THE CIT(A) DISMISSED THE APPEAL OF THE ASSE SSEE BY OBSERVING AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF T HE APPELLANT, ORDER U/S 92CA OF THE TRANSFER PRICING O FFICER AND THE ASSESSMENT ORDER. I FIND THAT THE TPO, VIDE DETAILE D REASONS MENTIONED IN HIS ORDER DATED 12/10/2011, HAS RIGHTL Y MADE THE TRANSFER PRICING ADJUSTMENT OF RS. 4,12,88,587, AFT ER DULY CONSIDERING THE VARIOUS SUBMISSIONS OF THE APPELLAN T, WHICH HAS BEEN FOLLOWED BY THE AO IN HIS ORDER U/S 143(3) RWS 92CA OF THE ACT AND MADE THE ADDITION. HENCE, THE SUBMISSIONS O F THE APPELLANT CANNOT BE ACCEPTED. IN THIS REGARD, I FIN D NO INFIRMITY IN THE ACTION OF THE AO IN MAKING THE ADDITION TOWARDS TRANSFER PRICING ADJUSTMENT U/S 92CA OF THE ACT AMOUNTING TO RS. 4,12,88,587. HENCE, I CONFIRM THE SAME. 4. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSE E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS)-V, HYDERABAD, DATED 15.10.2013 IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. A) THE COMMISSIONER OF INCOME TAX (APPEALS) IS N OT JUSTIFIED IN CONFORMING THE ORDER OF THE ASSESSING OFFICER IN WHICH TRANSFER PRICING ADJUSTMENT OF RS.4,12,88,587/- WAS MADE. TH E COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO GIVE A REASON AS TO WHY SUCH ADDITION IS UPHELD AND THE SUBMISSIONS OF THE APPELLANT CANNOT BE ACCEPTED EXCEPT STATING THAT TH E TRANSFER PRICING ADJUSTMENT WAS RIGHTLY MADE BY THE ASSESSIN G OFFICER AFTER DULY CONSIDERING SUBMISSIONS OF THE APPELLANT . B) COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO S EE THAT THE ASSESSING OFFICER USED THE TNMM METHOD FOR MAKING COMPARATIVE STUDY OF TRANSFER PRICING DURING THIS Y EAR WHEREAS IN THE EARLIER AND SUBSEQUENT ASST. YEAR, THE ASSESSIN G OFFICER USED THE CUP METHOD IN THE SIMILAR SET OF FACTS. C) COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO S EE THAT THE COMPARATIVE CASES SELECTED BY THE TRANSFER PRICING OFFICER ARE NOT SIMILAR TO THE BUSINESS ACTIVITY OF THE APPELLA NT AND THEREFORE SUCH COMPARISON IS NOT JUSTIFIED. 3. FOR ALL OF THE ABOVE AND SUCH OTHER GROUNDS AS M AY BE URGED AT THE TIME OF HEARING IT IS MOST RESPECTFULLY PRAY ED THAT THIS HON'BLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPEAL AND DIRECT 3 ITA NO. 401/H/14 NAVA BHARAT VENTURES LTD., HYD. THE RESPONDENT HEREIN TO DELETE THE ADJUSTMENT OF RS.4,12,88,587/- MADE ON ACCOUNT OF TRANSFER PRICIN G IN THE ASST. ORDER. 5. THE LD. AR SUBMITTED BEFORE US THAT THE LD. CIT( A) FAILED TO GIVE A REASON AS TO WHY SUCH ADDITION IS UPHELD AND THE SUBMISSIONS OF THE ASSESSEE CANNOT BE ACCEPTED EXCEPT STATING THAT THE TRANSFER PRICING ADJUSTMENT WAS RIGHTLY MADE BY THE AO AFTER DULY CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE. FURTHER, HE SUBMITTED THAT THE CIT(A) FAILED TO SEE THAT THE AO USED THE TNMM METHOD FOR MAKING COMPARATIVE STUDY OF TRANSFER PRICING DURING THIS Y EAR WHEREAS IN THE EARLIER AND SUBSEQUENT AY, THE AO USED THE CUP METH OD IN THE SIMILAR SET OF FACTS. HE ALSO SUBMITTED THAT THE C IT(A) FAILED TO SEE THAT THE COMPARATIVE CASES SELECTED BY THE TPO ARE NOT SIMILAR TO THE BUSINESS ACTIVITY OF THE ASSESSEE AND THEREFORE SUC H COMPARISON IS NOT JUSTIFIED. HE, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND RESTORE ISSUE BACK TO CIT(A) FOR A REASONABLE ORDER. 6. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 7. AFTER HEARING THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL ON RECORD, WE FIND THAT TH E ORDER OF CIT(A) IS NOT IN ACCORDANCE WITH SECTION 250(6) WHICH REQUIRES THAT THE ORDER OF CIT(A) DISPOSING OFF THE APPEAL SHALL BE IN WRITING AND SHALL STATE POINTS FOR DETERMINATION, DECISIONS THEREON AND THE REASONS FOR THE DECISION. THE LD. CIT(A) MERELY DISMISSED THE GROUND OF APPEA L OF THE ASSESSEE WITHOUT GOING INTO THE MERITS OF THE CASE. THUS, THE ORDER OF THE LD. CIT(A) SUFFERS FROM LEGAL INFIRMITY AND CAN NOT BE SUSTAINED IN LAW. THE LD. CIT(A) SHALL HAVE TO RECORD REASONS FO R DECISION WHILE ALLOWING OR DISMISSING THE APPEAL. THE LD. CIT(A), HOWEVER, DID NOT RECORD ANY REASONS WHILE DISMISSING THE GROUND OF APPEAL OF ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ISSUE TO HIS FILE WITH A DIRECTION TO RE-DECIDE THE SAME AFRESH BY GIVING REASONABLE AND SUFFICIENT OPPORTUN ITY OF BEING HEARD 4 ITA NO. 401/H/14 NAVA BHARAT VENTURES LTD., HYD. TO THE ASSESSEE. THE LD. CIT(A) SHALL PASS THE ORDE R ON MERITS BY GIVING REASONS FOR DECISION IN THE APPELLATE ORDER. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 10 TH AUGUST, 2016 KV COPY TO:- 1) NAVA BHARAT VENTURES LTD., 6-3-1109/1, RAJ BHAV AN ROAD, SOMAJIGUDA, HYDERABAD. 2) ADDL. CIT, RANGE 16, HYDERABAD. 3) CIT(A) - V, HYDERABAD 4) CIT - IV, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.