Atrenta (India) Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 4263/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81850 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 09-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH JAIN
• Assessee Lawyers: S B GARG FCA ACHIN GARG
• Keywords: Depreciation; Transfer pricing; International transaction
• Section: 143(3); 144

Judgement Text

ITA NO. 4263/DEL/2010 ASSTT.YEAR: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `I NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO. 4263/DEL/2010 ASSESSMENT YEAR : 2006-07 ATRENTA (INDIA) PVT. LTD. VS INCOM E TAX OFFICER, VP 34B, PITAM PURA, WARD-2(2), DELHI-110088 NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI S.B.GARG, FCA, ACHIN GARG RESPONDENT BY : SHRI PEEYUSH JAIN, CIT DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ASSESSMENT ORDER DATED 19.7.2010 PASSED U/S 143(3) R/W SECTIO N 144C OF THE INCOME TAX ACT, 1961 IN PURSUANCE TO THE ORDER OF THE DISPUTE RESOLUTION PANEL, NEW DELHI DATED 04.06.2010 IN APPEAL NO. 63 DATED 31.12.2009 FOR AY 2006-07. 2. HOWEVER, THE ASSESSEE HAS RAISED AS MANY AS NINE GROUNDS IN THIS APPEAL BUT LD. AR SUBMITTED THAT THE ASSESSEE HAS RAISED S EVERAL ARGUABLE AND SUBSTANTIAL OBJECTIONS TO THE DRAFT ASSESSMENT ORDE R DATED 30.11.2009 BUT THE OBJECTIONS OF THE ASSESSEE COMPANY WERE NOT DEALT W ITH BY THE DRP IN A PROPER MANNER. LD. AR FURTHER CONTENDED THAT THE DRP HAS PASSED A VERY CRYPTIC ORDER WITHOUT PROPERLY ADJUDICATING ALL THE OBJECTIONS IN REGARD TO FACT AND LAW RAISED ITA NO. 4263/DEL/2010 ASSTT.YEAR: 2006-07 2 BY THE ASSESSEE AGAINST THE DRAFT ASSESSMENT ORDER. LD. AR PLACED RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF GUJARAT IN THE CASE OF AIA EN GG. LTD. VS DISPUTE RESOLUTION PANEL & OTHERS (2011) 240 CTR 287 AND SUBMITTED THAT THE OBJECTIONS OF DRP AGAINST THE AOS DRAFT ORDER VIS-A-VIS NORMAL APPEAL IN TERMS OF SECTION 44C(2) SHOULD BE DECIDED IN ACC ORDANCE WITH THE PROVISIONS OF THE ACT. THE AR VEHEMENTLY CONTENDED THAT AS A CONSEQUENCE OF THE IMPUGNED ASSESSMENT ORDER PASSED IN PURSUANCE TO DR P ORDER, FIRSTLY, THE OBJECTIONS RAISED BY THE ASSESSEE HAVE NOT BEEN DEC IDED AND, SECONDLY, OBJECTIONS RAISED BY THE ASSESSEE SHOULD BE ADJUDIC ATED IN A JURIDICAL MANNER AFTER PROVIDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE. THE AR HAS DRAWN OUR ATTENTION TOWARDS IMPUGNED ORDER OF THE DRP DAT ED 4.6.2010 AND SUBMITTED THAT THE ASSESSEE FILED OBJECTIONS ON 31.12.2009 WH ICH WERE NOT ADJUDICATED PROPERLY AND THE DRP SIMPLY REPRODUCED THE OBJECTIO NS OF THE ASSESSEE AND REJECTED THE SAME WITHOUT ANY ELABORATE DISCUSSION, OBSERVATION AND FINDING. 3. REPLYING TO THE ABOVE LEGAL CONTENTIONS, LD. DR SUPPORTED THE IMPUGNED ORDER AND SUBMITTED THAT THE OBJECTIONS OF THE ASSE SSEE WERE SIMILAR WHICH WERE SUBMITTED BEFORE THE AO AND THE AO ADJUDICATED THEM , THEREFORE, IT CANNOT BE SAID THAT THE OBJECTIONS OF THE ASSESSEE HAVE NOT B EEN ADJUDICATED BY THE REVENUE AUTHORITIES IN A PROPER MANNER. THE DR FURTHER CON TENDED THAT WITHOUT PREJUDICE TO THE ABOVE ARGUMENTS, IF IT IS FOUND JU ST, PROPER AND NECESSARY TO ITA NO. 4263/DEL/2010 ASSTT.YEAR: 2006-07 3 REMIT THE CASE TO DRP FOR A FRESH ADJUDICATION, THE N THE DEPARTMENT HAS NO SERIOUS OBJECTION TO THAT. 4. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AN D CONTENTIONS AND VIGILANT PERUSAL OF THE DECISION OF HONBLE HIGH CO URT OF GUJARAT IN THE CASE OF AIA ENGG. LTD. VS DISPUTE RESOLUTION PANEL & OTHERS (SUPRA), WE ARE OF THE VIEW THAT WHERE THE DRP HAS DIRECTED THE AO U/S 144 C(5) TO PASS THE ASSESSMENT ORDER IN CONSONANCE WITH THE DRAFT ORDER MADE BY THE AO WITHOUT ADJUDICATING THE OBJECTIONS AND CONTENTIONS OF THE ASSESSEE IN A PROPER MANNER, THEN THE ORDER OF THE DRP SUFFERS FROM THE BIAS OF BEING CONTRARY TO THE RECORD AS WELL AS NON-APPLICATION OF MIND. 5. FROM THE IMPUGNED ORDER OF THE DRP DATED 21.6.20 10 (SUPRA), WE OBSERVE THAT THE DRP HAS SIMPLY REPRODUCED THE OBJE CTIONS OF THE ASSESSEE FROM PARA 2.1 TO 2.3 AND AFTER THAT, THE DRP HAS REJECTE D THE OBJECTIONS OF THE ASSESSEE WITH FOLLOWING BRIEF AND CRYPTIC OBSERVATIONS AND C ONCLUSION:- 2.4 THE ASSESSEE COMPANY HAS RAISED OBJECTIONS ON DETERMINATION OF ALP BY THE TPO AND SUBSEQUENT ACCE PTANCE BY THE AO. DURING THE YEAR THE ASSESSEE COMPANY EN TERED INTO INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENT ERPRISES. A REFERENCE WAS MADE TO THE TRANSFER PRICING OFFICE R UNDER THE PROVISIONS OF 92CA(1) OF THE ACT AFTER TAKING S TATUTORY APPROVAL OF COMMISSIONER OF INCOME TAX-I, NEW DELHI . THE TRANSFER PRICING OFFICER-I(L), NEW DELHI VIDE ORDER U/S 92CA(3) OF THE ACT DATED 05.10.2009 HAS MADE ADJUST MENT OF RS.L,78,58,135/- BEING THE DIFFERENCE ATTRIBUTABLE IN ARM'S LENGTH PRICE' OF THE INTERNATIONAL TRANSACTIONS ENT ERED BY THE ASSESSEE COMPANY WITH ASSOCIATED CONCERNS. AN ADJUS TMENT OF RS. 1,78,58,135 WAS THEREFORE MADE BY THE TPO/AO . ITA NO. 4263/DEL/2010 ASSTT.YEAR: 2006-07 4 BEFORE DRP THE ARGUMENTS TAKEN BEFORE THE TPO AND T HE AO HAVE BEEN REPEATED. THE DRP IS OF THE VIEW THAT THE REASONS GIVEN BY THE TPO ARE SOUND AND SUSTAINABLE. THEREF ORE NO INTERFERENCE IS REQUIRED IN THE ORDER OF THE TPO/AO . 2.5 SEVENTH OBJECTION IS RESTRICTING OF DEPRECIATI ON ON UPS @ 15% TREATING SAME AS PLANT AND MACHINERY WHIL E ASSESSEE CLAIMING SAME AS ELECTRICAL EQUIPMENTS ELI GIBLE FOR DEPRECIATION @ 80%. IN OUR CONSIDERED VIEW UPS IS P ART OF PLANT AND MACHINERY AND DEPRECIATION HAS RIGHTLY BE EN RESTRICTED @ 15%. NO DIRECTIONS ARE GIVEN ON THIS P OINT AS WELL. 2.6 LAST OF THE OBJECTIONS ARE ON CHARGING OF INTE REST UNDER SECTIONS 234B, 234C AND 234D. ISSUE IS CONSEQ UENTIAL TO THE MAIN ISSUES AND DOES NOT CALL FOR ANY INTERF ERENCE AT THIS STAGE. 6. IN THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE DRP HAS NOT DECIDED AND ADJUDICATED THE OB JECTIONS OF THE ASSESSEE AS PER LETTER AND SPIRIT OF THE PROVISIONS OF THE ACT AS WELL AS PROCEDURAL REQUIREMENT OF PROPER ADJUDICATION FOR A QUASI-JUDI CIAL AUTHORITY. THE ORDER OF THE DRP SUFFERS FROM LACK OF APPLICATION OF MIND AS THE DRP HAS NOT PASSED ANY SPEAKING ORDER AND THE OBJECTIONS OF THE ASSESSEE H AVE BEEN REJECTED AT THE THRESHOLD WITHOUT ANY PROPER REASONING THEREON. IN THIS SITUATION, WE ARE INCLINED TO HOLD THAT THE DRP HAS PASSED A CRYPTIC ORDER WHICH IS NOT A SPEAKING ONE AND WHICH HAS BEEN PASSED WITHOUT APPLICATION O F MIND. THEREFORE, THE IMPUGNED ORDER OF THE DRP AND CONSEQUENTIAL ASSESSM ENT ORDER PASSED BY THE AO DESERVE TO BE QUASHED AND WE QUASH THE SAME. 7. RESPECTFULLY FOLLOWING THE RATIO OF THE DECISIO N OF HONBLE HIGH COURT OF GUJARAT IN THE CASE OF AIA ENGG. LTD. (SUPRA), THE DRP IS DIRECTED TO CONSIDER ITA NO. 4263/DEL/2010 ASSTT.YEAR: 2006-07 5 THE OBJECTIONS OF THE ASSESSEE ON MERITS AND TO ADJ UDICATE THE SAME IN ACCORDANCE WITH RELEVANT LAWS AND PROVISIONS OF THE ACT. ACCORDINGLY, LEGAL GROUND OF THE ASSESSEE COMPANY IS ALLOWED. 8. SINCE BY THE EARLIER PART OF THIS ORDER, WE HAVE RESTORED THE CASE TO THE FILE OF DRP FOR CONSIDERATION AND ADJUDICATION OF OBJECT IONS AND CONTENTIONS OF THE ASSESSEE ON MERITS, THEREFORE, OTHER GROUNDS OF THE ASSESSEE COMPANY IN THIS APPEAL DO NOT SURVIVE FOR ADJUDICATION ON MERITS AN D WE DISMISS THE SAME WITHOUT GIVING ANY FINDING OR CONCLUSION ON MERITS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DEE MED TO BE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2014. SD/- SD/- (J.S. REDDY) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 28TH OCTOBER, 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR ITA NO. 4263/DEL/2010 ASSTT.YEAR: 2006-07 6