Addl.CIT, Central Range-3, Hyd, Hyderabad V. Hill County Properties Limited, Hyd, Hyderabad

ITA 420/HYD/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98755 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 21-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2015
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU; VALLURI SRINIVAS
• Assessee Lawyers: S RAMA RAO
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 92D; 92B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 420/HYD/2015 ASSESSMENT YEAR: 2008-09 ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE-3, HYDERABAD VS M/S. HILL COUNTY PROPERTIES LIMITED, (FORMERLY KNOWN AS M/S. MAYTAS PROPERTIES LIMITED) HYDERABAD [PAN: AAECM2732Q] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI VALLURI SRINIVAS & SHRI B. KURMI NAIDU, DR FOR ASSESSEE : S HRI S. RAMA RAO, AR DATE OF HEARING : 2 1 - 1 0 - 201 5 DATE OF PRONOUNCEMENT : 18 - 1 1 - 2015 O R D E R PER SMT. P. MADHAVI DEVI, JM : THIS IS REVENUES APPEAL FOR THE AY. 2008-09. IN THIS APPEAL, REVENUE IS AGGRIEVED BY THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS)-XI, HYDERABAD DATED 28-01-2015 IN DEL ETING THE PENALTY LEVIED BY THE ASSESSING OFFICER (AO) U/S. 2 71G OF THE INCOME TAX ACT [ACT]. 2. BRIEF FACT OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE AY. 2008-09 ON 29-09-2009 DECLARI NG INCOME I.T.A. NO. 420/HYD/2015 M/S. HILL COUNTY PROPERTIES LIMITED (FORMERLY KNOWN AS M/S. MAYTAS PROPERTIES LIMITED) :- 2 -: RS. 29,38,81,950/-. DURING THE ASSESSMENT PROCEEDI NGS U/S. 143(3) OF THE ACT, THE AO OBSERVED THAT THE ASSESSE E-COMPANY HAD MADE AN INVESTMENT IN EQUITY SHARES OF ITS SUBSIDIA RY COMPANY I.E., M/S. MAYTAS PROPERTIES M.E(FZE) PVT. LTD., DU BAI OF AN AMOUNT OF RS. 16,34,625/- AND TOWARDS THE SHARE APP LICATION MONEY OF AN AMOUNT OF RS. 50,33,42,956/-. ON FURTH ER VERIFICATION, AO OBSERVED THAT THE SAME AMOUNT OF R S. 50 CRORES WAS ALSO SHOWN UNDER LOANS AND ADVANCES GIVEN TO ITS SUBSIDIARY AT UAE WITH A NOTE THAT IT IS SHARE APPLICATION MONEY DEPOSITED WITH ITS SUBSIDIARY . ON VERIFICATION, AO OBSERVED THAT THE TAXPAYER HAS NOT MADE ANY DISCLOSURE OF THE SHARE APPLICATIO N MONEY SEPARATELY IN ITS BALANCE SHEET. AFTER EXTENSIVELY CONSIDERING THE RECORDS, THE AO CAME TO THE CONCLUSION THAT IT IS I N FACT LOANS AND ADVANCES GIVEN TO THE SUBSIDIARY AND THEREFORE, IT IS AN INTERNATIONAL TRANSACTION U/S. 92B OF THE ACT. HE THEREFORE REFERRED THE TRANSACTION TO THE TRANSFER PRICING OFFICER (TP O) U/S. 92CA OF THE ACT FOR DETERMINATION OF ALP. THEREAFTER, THE AO OBSERVED THAT ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SE CTION 92D OF THE ACT R.W. RULE 10D OF THE IT RULES AND HAS FAILE D TO FURNISH THE INFORMATION OR DOCUMENTS AS REQUIRED BY SUB-SECTION 3 OF SECTION 92D OF THE ACT. THEREFORE, HE PROPOSED TO INITIATE THE PENALTY PROCEEDINGS U/S. 271G OF THE ACT. 3. THE ASSESSEE OBJECTED TO THE PENALTY PROCEEDINGS STATING THAT THE TRANSACTION OF INVESTING IN THE CAPITAL OF THE SISTER-CONCERN OUTSIDE INDIA WAS NOT AN INTERNATIONAL TRANSACTION AND THEREFORE, THE PROVISIONS OF SECTION 92CA OF THE ACT ARE NOT A PPLICABLE. IT WAS FURTHER SUBMITTED THAT THOUGH THE ASSESSEE HAS MAIN TAINED THE RELEVANT DOCUMENTS AS REQUIRED UNDER RULE 10D OF TH E ACT, THE SAME WERE NOT FURNISHED TO THE AUTHORITIES AS THE T RANSACTION ITSELF I.T.A. NO. 420/HYD/2015 M/S. HILL COUNTY PROPERTIES LIMITED (FORMERLY KNOWN AS M/S. MAYTAS PROPERTIES LIMITED) :- 3 -: WAS NOT AN INTERNATIONAL TRANSACTION. THE AO WAS, HOWEVER, NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND HELD THAT THE PENALTY U/S. 271G IS ATTRACTED. ACCORDINGLY, HE LE VIED THE PENALTY OF RS. 1,00,99,552/- BEING 2% OF THE TOTAL VALUE OF THE INTERNATIONAL TRANSACTION OF RS. 50,49,77,581/- FOR NON-SUBMISSIO N OF TP STUDY/TP DOCUMENTATION BEFORE THE TPO. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO DELETED THE SAME AND AGAINST THE RELIEF GRANTED BY THE CIT(A) THAT REVEN UE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FI ND THAT ASSESSEE HAD PREFERRED OBJECTIONS BEFORE THE DRP AGAINST THE TP ADJUSTMENTS PROPOSED BY THE AO PURSUANT TO THE ORDE R OF TPO U/S. 92CA OF THE ACT AND THAT THE DRP HAD UPHELD THE ORD ER OF THE TPO/AO. IT HAS BEEN RECORDED BY THE CIT(A) THAT AG AINST THE ORDER OF DRP, THE ASSESSEE WENT IN FURTHER APPEAL BEFORE THE ITAT, HYDERABAD AND THIS TRIBUNAL IN ITA NO. 1404/HYD/201 3 DT. 06-06- 2014 HAS HELD THAT THE INVESTMENT IN SHARE CAPITAL OF SUBSIDIARIES OUTSIDE INDIA ARE NOT IN THE NATURE OF TRANSACTIONS REFERRED TO IN SECTION 92B OF THE ACT AND THE TP PROVISIONS ARE NO T APPLICABLE. FOR COMING TO THE CONCLUSION, THE TRIBUNAL HAS FOLL OWED THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VIJAY ELECTRICALS LTD., VS. ADDL. CIT [36 TAXMANN.C OM 386 (HYD- TRIB)]. AFTER TAKING NOTE OF THE ABOVE ORDER OF TH E ITAT, IT HAS BEEN HELD THAT THE TRANSACTION IS NOT AN INTERNATIONAL T RANSACTION WITHIN THE MEANING OF SECTION 92B OF THE ACT AND THEREFORE , THERE WAS NO REQUIREMENT FOR THE ASSESSEE TO KEEP AND MAINTAIN T HE INFORMATION AND DOCUMENTATION REFERRED TO IN SECTION 92D OF THE ACT. CIT(A) HAS, THUS, RIGHTLY HELD THAT SECTION 271G IS APPLIC ABLE FOR I.T.A. NO. 420/HYD/2015 M/S. HILL COUNTY PROPERTIES LIMITED (FORMERLY KNOWN AS M/S. MAYTAS PROPERTIES LIMITED) :- 4 -: CONTRAVENTION OF THE PROVISIONS OF SECTION 92D AND IS NOT ATTRACTED IN ASSESSEES CASE. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2015 SD/- SD/- (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 18 TH NOVEMBER, 2015 TNMM COPY TO : 1. ADDL. COMMISSIONER OF INCOME TAX, CENTRAL RANGE- 3, 3 RD FLOOR, POSNETT BHAVAN, TILAK ROAD, HYDERABAD. 2. M/S. HILL COUNTRY PROPERTIES LIMITED, (FORMERLY KNOWN AS M/S. MAYTAS PROPERTIES LIMITED), BACHUPALLY, HYDERABAD. 3 . CIT (APPEALS) - X I , HYDERABAD. 4. CIT - (CENTRAL) , HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.