DCIT (IT) 2(1)(2), MUMBAI V. DET NORSKE VERITAS- INDIA BRANCH OFFICE, MUMBAI

ITA 4785/MUM/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7598 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2007-2008
• Appeal Filed On: 18-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH K DAS LD
• Keywords: Transfer pricing
• Section: 143(3)

Judgement Text

1 ITA NO.4785/MUM/2016 DET NORSKE VERITAS ASSESSMENT YEAR-2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T A.NO.4785/MUM/2016 ( / ASSESSMENT YEAR: 2007-08) D CIT (IT) - 2 (1) (2) ROOM NO.1713 ,17 TH FLOOR, AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021. / VS. DET NORSKE VERITAS - AS (INDIA BRANCH OFFICE) C/O EMGEEN CHAMBERS 10, CST ROAD, VIDHYANAGARI SANTACRUZ (E), MUMBAI-400 098. ./ ./PAN/GIR NO. AABCD-9812-F ( /APPELLANT ) : ( / RESPONDENT ) REVENUE BY : SHRI RIGNESH K.DAS-LD. DR ASSESSEE BY : NONE !' / DATE OF HEARING : 18/07/2019 ! ' / DATE OF PRONOUNCEMENT : 23/07/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2007-08 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME-TAX (APPEALS)-56, MUMBAI, [IN SHORT REFERRED TO AS CIT (A)], APPEAL NO. 2 ITA NO.4785/MUM/2016 DET NORSKE VERITAS ASSESSMENT YEAR-2007-08 CIT(A)56/ADIT (IT)-1(2)/2014-15/264-D DATED 28/03/2016 ON FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A SSESSING OFFICER ON REGIONAL OFFICE EXPENSES OF RS. 78,02,774/-RELYING ON THE MUMBAI TR IBUNAL'S DECISION IN THE APPELLANT'S OWN CASE DESPITE THE FACTS OF THE CASE BEING DIFFER ENT FROM THE A.Y. 2008-09 IN SO FAR AS THE ITAT HAD DISALLOWED THE AD-HOC DISALLOWANCE WHE REAS IN THE YEAR UNDER CONSIDERATION THE DISALLOWANCE IS NOT ON AD-HOC BAS IS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RELYING ON THE ITAT DECISIO N IN THE ASSESSEE'S CASE FOR A.Y. 2008-09 WHERE THE ADJUSTMENT WAS MADE ON AD-HOC BAS IS AS AGAINST THE ADJUSTMENT FOR YEAR UNDER CONSIDERATION, WHICH WAS MADE AS ASSESSE E HAD NOT PROVIDED DOCUMENTARY EVIDENCE IN SUPPORT OF THE EXPENSES CLAIMED. NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJOURN MENT APPLICATION IS ON RECORD WHICH LEAVE US WITH NO OPTION BUT TO PROC EED WITH THE MATTER EX- PARTE QUA THE ASSESSEE. 2. FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE B EING NON-RESIDENT CORPORATE ASSESSEE WAS ASSESSED FOR IMPUGNED AY U/S 143(3) R.W.S. 144C(3) VIDE ORDER DATED 07/02/2011. THE ASSESSEE I S STATED TO BE BRANCH OFFICE OF DET NORSKE VERITAS AS NORWAY WHICH IS PAR T OF DNV GROUP. THE ASSESSEE WAS INTER-ALIA, SADDLED WITH TRANSFER PRICING ADJUSTMENT OF RS.167.94 LACS AS PROPOSED BY LD. TRANSFER PRICING OFFICER IN ITS ORDER U/S 92CA (3) DATED 29/10/2010 WHICH WAS COMPUTED IN THE FOLLOWING MANNER: - N O. PARTICU LARS AMOUNT (RS.) 1. 20% OF TOTAL SOFTWARE CHARGES 83,41,958/- 2. REGIONAL OFFICE EXPENSES PAID TO DNV SHANGHAI 78 ,02,774/- 3. UNEXPLAINED VARIANCE IN REGIONAL OFFICE EXPENSES 6,49,750/- TOTAL ADJUSTMENT 1,67,94,482/- 3 ITA NO.4785/MUM/2016 DET NORSKE VERITAS ASSESSMENT YEAR-2007-08 THE PERUSAL OF THE ORDER OF LD. TPO ESTABLISHES THA T THE ARMS LENGTH PRICE OF THE STATED TRANSACTIONS HAVE BEEN COMPUTED TO TH E BEST OF JUDGMENT AND THE SAME HAS NOT BEEN ARRIVED AT AFTER FOLLOWING AN Y OF THE METHOD AS PRESCRIBED U/S 92C(1). 3. UPON FURTHER APPEAL, FIRST APPELLATE AUTHORITY D ELETED THE ADDITIONS BY RELYING UPON THE ORDER OF THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR AY 2008- 09 ITA NO.200/MUM/2014 DATED 29/02/2016. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US WITH RESPECT TO DELETION O F ADJUSTMENT PERTAINING TO REGIONAL OFFICE EXPENSES FOR RS.78.02 LACS. THE LD. DR HAS SUBMITTED THAT THE FACTS IN AY 2008-09 WERE DIFFERENT SINCE IN THA T YEAR THE ADJUSTMENT WAS MADE ON ADHOC BASIS AS AGAINST THE FACT THAT FOR TH IS YEAR, THE ASSESSEE DID NOT FILE ANY DOCUMENTARY EVIDENCES IN SUPPORT OF TH E EXPENSES CLAIMED. 4. UPON CAREFUL CONSIDERATION, WE DO NOT AGREE WITH THE SUBMISSIONS MADE BY LD. DR SINCE IN AY 2008-09, LD. TPO HAD PRO POSED ADHOC ADJUSTMENT OF 20% OF REGIONAL OFFICE EXPENSES WHERE AS IN THE IMPUGNED YEAR, LD. TPO HAS PROPOSED 100% ADJUSTMENT. IN BOTH THE YEARS, LD. TPO HAS NOT FOLLOWED ANY OF THE PRESCRIBED METHOD U/S 9 2C(1) WHILE ARRIVING AT ARMS LENGTH PRICE OF THE TRANSACTIONS WHICH IS AGA INST THE PROVISIONS OF LAW. THIS OBSERVATION HAS ALREADY BEEN MADE BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008-09 ITA NO.200/MUM/2014 ORDER DATED 29/02/2016, THE OPERATIVE PORTION OF WH ICH HAS ALREADY BEEN EXTRACTED IN THE IMPUGNED ORDER ON PAGE-11. FOR THE SAME VERY REASON, THE FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITIONS . THEREFORE, NO INFIRMITY COULD BE FOUND IN THE SAME. 4 ITA NO.4785/MUM/2016 DET NORSKE VERITAS ASSESSMENT YEAR-2007-08 5. IN RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JULY, 2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) % %% % / JUDICIAL MEMBER % %% % / ACCOUNTANT MEMBER % MUMBAI; DATED : 23/07/2019 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT 3. %% ( ) / THE CIT(A) 4. %% / CIT CONCERNED 5. & '# ( , % ( , / DR, ITAT, MUMBAI 6. ' *+, / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.