GLOBAL MARKETS CENTRE P. LTD, MUMBAI V. ASST CIT 6(3), MUMBAI

ITA 4273/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8831 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 17-08-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JENARDHANAN
• Assessee Lawyers: ARVIND V SONDE
• Keywords: Transfer pricing

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -KBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./4273/MUM/2014, /ASSESSMENT YEAR: 2007-08 M/S. GLOBAL MARKETS CENTRA PRIVATE LIMITED (NOW KNOWN AS DEUTSCHE CIB CENTRE PRIVATE LIMITED); BLOCK B7, NIRLON KNOWLEDGE PARK WESTERN EXPRESS HIGHWAY, GOREGAON (E) MUMBAI-400 063. PAN:AACCG 6204 D VS. ACIT -6(3) MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI JENARDHANAN- DR ASSESSEE BY: SHRI ARVIND V.SONDE / DATE OF HEARING: 17.08.2017 / DATE OF PRONOUNCEMENT: 18.10.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) / PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 28.03.2014 OF CIT(A)-15 ,MUMBAI,THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED IN PROVIDIN G OFFSHORE SUPPORT SERVICES TO ITS ASSOCIATED ENTERPRISES(AE),FILED ITS RETURN OF INCO ME ON 31.10.2017,DECLARING TOTAL INCOME OF RS.23,00,816/-.THE ASSESSING OFFICER(AO)COMPLETED T HE ASSESSMENT,U/S.143(3)OF THE ACT, ON 31.12.2010,DETERMINING ITS INCOME AT 1.74 CRORES. BRIEF FACTS: 2.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND TH E ASSESSEE HAD ENTERED INTO INTER- NATIONAL TRANSACTIONS (IT.S)WITH ITS AE.S.HE MADE R EFERENCE TO THE TRANSFER PRICING OFFICER (TPO)TO DETERMINE THE ARMS LENGTH PRICE(ALP)OF THE IT.S. DURING THE TRANSFER PRICING(TP) PROCEEDINGS THE TPO FOUND ASSESSEE HAS ADOPTED TNMM AS MOST APPROPRIATE METHOD FOR DETERMINING THE ALP, TH AT THE PLI WAS NET COST PLUS(NCP),THAT THE MULTIPLE YEAR NCP MARGINS WAS 16.16%, THAT IT H AD CONSIDERED 12 COMPARABLES, THAT THE NCP MARGIN OF THE ASSESSEE WAS AT 23%, THAT THE ASS ESSEE HAD CLAIMED THAT THE MARGIN SHOWN WAS HIGHER THAN MARGIN OF THE COMPARABLES,THAT IT C LAIMED THAT IT.S ENTERED INTO WERE AT ARMS LENGTH. THE TPO REJECTED NINE (9) OF THE COMPARABLE S SELECTED BY THE ASSESSEE ON THE GROUND THAT THEY WERE FUNCTIONALLY DIFFERENT.HE ALSO USED ADDITIONAL FILTERS FOR REJECTING THE COMPARA- BLES OF THE ASSESSEE.HE SELECTED 25 COMPARABLES,INC LUDING THREE COMPARABLES OF THE ASSESSEE, FOR DETERMINING THE ALP OF THE IT.S.HE HELD THAT IN THAT SINGLE YEAR NCP MARGIN OF THE 4273 0F 2014-GLOBAL MA RKETS CENTRE PRIVATE LIMITED 2 COMPARABLES WAS 30.75%, THAT THE NCP MARGIN OF THE ASSESSEE WAS 23%, THAT THE TRANSACTION WERE NOT AT ARMS LENGTH.HE PROPOSED AN ADDITION OF RS.1,51,66,149/-. AFTER RECEIVING ORDER OF THE TPO AND AFTER PROVIDIN G AN OPPORTUNITY OF HEARING TO THE ASSESSEE ABOUT THE PROPOSED TP ADJUSTMENTS,THE AO COMPLETED THE ASSESSMENT BY MAKING AN ADJUST - MENT OF RS.1.51 CRORES TO THE INCOME OF THE ASSESSE E.AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA),WHO DISMISSED THE APPEAL VIDE HIS ORDER,DATED 23.02.2012.THE TRIBUNAL SET AS IDE THE ORDER OF THE FAA,VIDE ITS ORDER, DATED 25.10.2013.IT DIRECTED THE FAA TO DECIDE THE ISSUE/GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ON MERITS. 3. IN PURSUANCE OF THE DIRECTIONS OF THE TRIBUNAL,THE FAA HEARD THE ASSESSEE AGAIN.BEFORE HIM VIDE ITS LETTER DATED 28.08.2013(PG. -155 OF THE PB ),THE ASSESSEE MADE DETAILED SUBMISSIONS ABOUT INCLUSION/EXCLUSION OF THE CERTAIN COMPARABLE S FOR ARRIVING AT ALP.THE FAA AFTER CONSIDERING THE AVAILABLE MATERIAL AGAIN UPHELD THE ORDER OF THE AO/TPO. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE (AR)SUBMITT ED THAT THE ASSESSEE HAD MADE SPECIFIC SUBMISSIONS ABOUT FOUR COMPARABLES,THAT IT HAD GI VEN REASONS TO INCLUDE THEM IN THE FINAL LIST,THAT FOR EXCLUDING NINE COMPARABLES IT HAD MA DE DETAILED SUBMISSIONS,THAT THE FAA DID NOT CONSIDER ANY OF THE SUBMISSIONS AND CONFIRMED T HE ORDER OF THE AO,THAT IF THE EXCLUSION / INCLUSION OF ABOVE REFERRED COMPARABLES WAS DONE TH ERE WOULD NOT BE ANY ADJUSTMENT.THE DEPARTMENTAL REPRESENTATIVE(DR)LEFT THE ISSUE TO TH E DISCRETION OF THE BENCH. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.THIS IS THE SECOND ROUND OF LITIGATION AND IS RESULT OF NON CONSIDERAT ION OF THE SUBMISSIONS OF THE ASSESSEE BY THE FAA.WE FIND THAT BY ITS LETTER DTD.25.10.2013,THE A SSESSEE HAD MADE SPECIFIC ARGUMENTS FOR INCLUDING FOUR COMPARABLES AND EXCLUDING NINE COMPA RABLES.BUT,THE FAA DID NOT TAKE COGNIZANCE OF THE LETTER FOR THE REASONS BEST KNOWN TO HIM.THEREFORE,IN OUR OPINION,IN THE INTEREST OF JUSTICE,MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE FAA FOR FRESH ADJUDICATION. WE DIRECT HIM TO DECIDE THE ISSUE AFRESH AFTER CONS IDERING THE LETTER DATED 25.10.2013 AND OTHER MATERIAL RELIED UPON BY THE ASSESSEE.HE IS DI RECTED TO GIVE CLEAR FINDING ABOUT THE COMPARABLES RELIED UPON BY THE ASSESSEE AS WELL AS ABOUT THE COMPARABLES THAT HAVE BEEN CHALLENGED BY IT.EFFECTIVE GROUND OF APPEAL IS DECI DED IN FAVOUR OF THE ASSESSEE,IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PAR TLY ALLOWED. ! . 4273 0F 2014-GLOBAL MA RKETS CENTRE PRIVATE LIMITED 3 ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER, 2017. 18 , 2017 SD/- SD/- ( / RAM LAL NEGI ) ( '#$ / RAJENDRA ) # %& / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 18.10.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.