M/s.US Technology International P. Ltd, Trivandrum V. The DCIT, Trivandrum

ITA 476/COCH/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5591 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 24-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTHOM BOSE
• Assessee Lawyers: RAGHUNATHAN
• Keywords: Transfer pricing; Application of stay; Capital expenditure
• Section: 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM IT (TP) A NO. 476 /COCH/201 6 : ASST.YEAR 201 2 - 201 3 M/S.US TECHNOLOGY INTERNATIONAL PRIVATE LIMITED 721, NILA, TECHNOPARK CAMPUS, KARIYAVATTOM TRIVANDRUM 695 581. PAN : AAACU5628B. VS. THE DY.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1) TRIVANDRUM. (APPELLANT) (RESPONDENT) SA NO. 11 /COCH/201 8 : ASST.YEAR 201 2 - 201 3 M/S.US TECHNOLOGY INTERNATIONAL PRIVATE LIMITED 721, NILA, TECHNOPARK CAMPUS, KARIYAVATTOM TRIVANDRUM 695 581. VS. THE DY.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1) TRIVANDRUM. ( PETITIONER ) (RESPONDENT) REVENUE BY : SRI. SANTHOM BOSE, CIT - DR ASSESSEE BY : SRI. RAGHUNATHAN S, ADVOCATE DATE OF HEARING : 1 5 .0 5 .2018 DATE OF PRONOUNCEMENT : 18. 05 .2018 O R D E R PER GEORGE GEORGE K., JM THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE FINAL ASSESSMENT ORDER DATED 22.08.2016 PASSED U/S 143(3) R.W.S. 144C R.W.S. 92CA OF THE INCOME - TAX ACT. THE RELEVANT ASSESSMENT YEAR IS 2012 - 2013. 2. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: - 2.1 THE ASSESSEE IS A COM PANY ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT SERVICES. THE ASSESSEE IS REGISTERED AS A ITA NO. 476 / COCH /201 6 & SA 11/COCH/2018 . M/S. US TECHNOLOGY INTERNATIONAL PVT.LTD . 2 100% EOU UNDER THE STP SCHEME AND IS REGISTERED WITH SOFTWARE TECHNOLOGY PARKS OF INDIA (STP I). FOR THE ASSESSMENT YEAR 2012 - 2013, THE ASSESSEE FILED THE RETURN OF INCOME ON 31.03.2014 DECLARING A TOTAL INCOME OF RS.83,19,92,720. THE DRAFT ASSESSMENT ORDER DATED 19.02.2016 WAS FRAMED U/S 144C BY THE A.O., WHEREIN THE FOLLOWING ADDITION / DISALLOW ANCE WAS PROPOSED: - ( I ) TRANSFER PRICING ADJUSTMENT AS PER THE ORDER OF TRANSFER PRICING OFFICER DATED 21.01.2016 RS.71,62,557 ( II ) DISALLOWANCE OF CAPITAL EXPENDITURE RS. 1,05,08,760 2.2 AGAINST THE DRAFT ASSESSMENT ORDER, THE ASSESSEE HAD FILED THE OBJECTIONS BEFORE THE DRAFT RESOLUTION PANEL (DRP) U/S 144C(2)(B) OF THE I.T.ACT. THE DRP VIDE ITS ORDER DATED 05.08.2016 REJECTED THE OBJECTIONS RAISED BY THE ASSESSEE. THE DRP HELD THAT THERE IS A DELAY OF ONE DAY IN FILING THE OBJECTIONS U/S 144C(2)(B) OF THE I.T.ACT AND SINCE THE DRP DOES NOT HAVE POWER TO CONDONE THE DELAY, THE OBJECTIONS OF THE ASSESSEE ARE NOT ENTERTAINED. 2.3 ON RECEIPT OF THE REJECTION OF ASSESSEES OBJECTIONS BY THE DRP, FINAL ASSESSMENT ORDER U/S 143(3) R.W.S. 144C R.W.S. 92CA OF THE I.T.ACT WAS PASSED VIDE ORDER DATED 22.08.2016. IN THE FINAL ASSESSMENT ORDER, ADDITION PROPOSED IN THE DRAFT ASSESSMENT ORDER WAS INCORPORATED. ITA NO. 476 / COCH /201 6 & SA 11/COCH/2018 . M/S. US TECHNOLOGY INTERNATIONAL PVT.LTD . 3 2.4 AGAINST THE FINAL ASSESSMENT ORDER, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REJECTION OF APPLICATION OF ASSESSEES OBJECTIONS BY THE DRP CANNOT BE PRESUMED AS A DIRECTION AS MANDATED IN SECTION 144C(5) R.W.S. 144C(6). THEREFORE, ACCORDING TO THE LEARNED COUNSEL, THE FINAL ASSESSM ENT ORDER PASSED ON 22.08.2016 WA S BARRED BY LIMITATION. ACCORDING TO THE LEARNED COUNSEL , THE ASSESSING OFFICER AS PER THE PROVISIONS OF SECTION 144C(4) HAS TO PASS A FINAL ASSESSMENT ORDER U/S 144C(3) WITHIN ONE MONTH FROM THE END OF MONTH IN WHICH THE OUTER TIME LIMIT FOR FILING OBJECTIONS U/S 144C(2) OF THE I.T.ACT EXPIRES. ADMITTEDLY, IN THIS CASE, THE PERIOD FOR SUCH EXPIRY OF ONE MONTH WAS 30.04.2016 AND THE FINAL ASSESSMENT ORDE R WAS PASSED ONLY ON 22.08.2016, AND THEREFORE, IT WAS SUBMITTED THE FINAL ASSESSMENT ORDER NEEDS TO BE QUASHED. IN SUPPORT OF THE ABOVE CONTENTION, T HE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING TWO ORDERS OF THE TRIBUNAL: - ( I ) M/S.AALAYA JEWEL INDUSTRY PVT. LTD. V. ACIT ITA NOS.970 & 971/MDS./2017 ORDER DATED 05.04.2018, ITAT `D BENCH, CHENNAI. ( II ) PLANET ONLINE (P.) LTD. V. ACIT [(2016) 65 TAXMANN.COM46 (HYDERABAD TRIB.)] 3 . 1 ALTERNATIVELY IT WAS SUBMITTED BY PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA ITA NO. 476 / COCH /201 6 & SA 11/COCH/2018 . M/S. US TECHNOLOGY INTERNATIONAL PVT.LTD . 4 PRADESH HIGH COURT IN THE CASE OF M/S.RAIN CEMENTS LIMITED V. DCIT IN W.P. NO.33342 O F 2015 ( JUDGMENT DATED 31.08.2016 ), THE DIRECTION MAY BE ISSUED TO THE DRP TO CONDONE THE DELAY OF ONE DAY IN FILING THE OBJECTIONS BEFORE IT AND TO ENTERTAIN THE SAME ON MERITS. THE LEARNED COUNSEL FOR THE ASSESSEE, SRI. RAGHUNATHAN S, STATED THAT HE WOUL D PREFER THE ALTERNATIVE SUBMISSION TO BE ACCEPTED . IT WAS SUBMITTED THAT SUCH DIRECTION WOULD AVOID UNNECESSARY PROTRACT ED LITIGATION AND IT WOULD SERVE THE INTEREST OF JUSTICE FOR BOTH THE PARTIES. 3 . 2 THE LEARNED DEPARTMENTAL REPRESENTATIVE READILY AG REED TO THE ALTERNATIVE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE. 4 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE HONBLE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHR A PRADESH HIGH COURT IN THE CASE OF M/S.RAIN CEMENTS LIMITED V. DCIT (SUPRA) HAD CONDONED THE DELAY OF ONE DAY IN FILING THE ASSESSEES OBJECTION BEFORE THE DRP AND DIRECTED THE DRP TO CONSIDER THE ISSUE ON MERITS. THE RELEVANT FINDING OF THE HONBLE HIGH COURT READS AS FOLLOWS: - 45. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT IT IS POSSIBLE FOR THIS COURT TO SET ASIDE THE ORDER OF THE DISPUTE RESOLUTION PANEL AND REMIT THE MATTER BACK TO THEM FOR A CONSIDERATION ON MERITS, INSPITE OF THE FACT THAT THE PERIOD STIPULATED IN SUB - SECTION (12) WOULD HAVE EXPIRY BY 31 - 5 - 2015. ITA NO. 476 / COCH /201 6 & SA 11/COCH/2018 . M/S. US TECHNOLOGY INTERNATIONAL PVT.LTD . 5 46. IN VIEW OF THE ABOVE, THE WRIT PETITION IS ALLOWED, THE ORDER OF THE DISPUTE RESOLUTION PANEL, BENGALURU, DATED 22 - 6 - 2015 IS SET ASIDE AND THE DRP, BENGALURU IS DIRECTED TO TAKE U P FORM 35A FILED BY THE PETITIONER ALONG WITH THE ANNEXURES AND THE EVIDENCE FOR A CONSIDERATION ON MERITS. THE DRP SHALL GIVE OPPORTUNITY OF HEARING TO BOTH PARTIES, FOLLOW THE PROCEDURE PRESCRIBED IN SECTION 144C AND ISSUE APPROPRIATE DIRECTIONS UNDER SU B - SECTION (5) WITHIN A PERIOD OF THREE MONTHS FROM THE DATE OF RECEIPT OF A COPY OF THIS ORDER. AS A CONSEQUENCE OF OUR SETTING ASIDE THE DRPS ORDER DATED 22 - 6 - 2015, THE FINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 28 - 8 - 2015 IS SET ASIDE. THE ASSESSING OFFICER SHALL PASS A FINAL ASSESSMENT ORDER, AFTER AND ON THE BASIS OF THE DIRECTIONS ISSUED BY THE DRP, AS PER OUR DIRECTIONS. THE MISCELLANEOUS PETITIONS, IF ANY, PENDING IN THIS WRIT PETITION SHALL STAND CLOSED. THERE WILL BE NO ORDER AS TO C OSTS. 4.1 BOTH THE PARTIES HAD REQUESTED US TO GIVE DIRECTION TO CONDONE THE DELAY IN FILING THE OBJECTIONS. I N THE INTEREST OF JUSTICE AND EQUITY AND TO AVOID PROTRACTED LITIGATION , WE CONDONE THE DELAY OF ONE DAY IN FILING THE ASSESSEES OBJECTION BEFORE THE DRP. THEREFORE, THE ORDER OF THE DRP DATED 05.08.2016 IS SET ASIDE. THE DRP IS DIRECTED TO TAKE UP FORM NO.35A FILED BY THE ASSESSEE ALONG WITH ANNEXURES AND EVIDENCES FOR THE CONSIDERATION OF THE SAME ON MERITS. THE DRP SHALL PROVIDE ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES AND SHALL COMPLY WITH THE PROCEDURE PRESCRIBED U/S 144C OF THE I.T.ACT AND SHALL PASS DIRECTION AS EXPEDIOUSLY AS POSSIBLE. IT IS ORDERED ACCORDINGLY. ITA NO. 476 / COCH /201 6 & SA 11/COCH/2018 . M/S. US TECHNOLOGY INTERNATIONAL PVT.LTD . 6 5 . SINCE T HE APPEAL, IN RESPECT OF THE STAY APPLICATION, IS DISPOSED OFF BY THIS TRIBUNAL, THE STAY APPLICATION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. ACCORDINGLY, THE STAY APP LICATION IS DISMISSED AS INFRUCTUOUS. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE STAY APPLICATION IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED ON THIS 18 TH DAY OF MAY , 2018 . SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIA L MEMBER COCHIN ; DATED : 18 TH MAY , 2018 . DEVDAS* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE PR.CIT, TRIVANDRUM 4. THE CIT(TP) - 2, BANGALORE. 5. THE DR, ITAT, COCHIN. 6. GUARD FILE. BY ORDER ASST.REGISTRAR/ITAT, COCHIN