EXQUISITE JEWELLERY, MUMBAI V. ITO 16(3)(3), MUMBAI

ITA 4810/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84063 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 13-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing
• Section: 143(3); 92B

Judgement Text

I.T.A. NO.4810/MUM/2012 1 , IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE S/SHRI R.C. SHARMA, (AM) AND VIJAY PAL RAO (JM) , . . , , , ./I.T.A. NO.4810/MUM/2012 ( / ASSESSMENT YEAR : 2008-09) M/S EXQUISITE JEWELLERY, 615/624, PAREKH MARKET, 39, KENNEDY BRIDGE, OPERA HOUSE, MUMBAI-400004 / VS. INCOME TAX OFFICER, 16(3)(3), MUMBAI. ( ! / APPELLANT) .. ( '# ! / RESPONDENT) ./ $ ./PAN/GIR NO. :AABFE2622D ! % / APPELLANT BY SHRI K SHIVRAM '# ! & % /RESPONDENT BY SHRI S.M.KESHKAMAT ' ( & ) * / DATE OF HEARING : 13.08.2014 +, & ) * /DATE OF PRONOUNCEMENT : 5.12.2014 / O R D E R PER R.C. SHARMA, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER DATED 15.6.2012 PASSED BY LD. CIT(A)-15, MUMBAI F OR THE ASSESSMENT YEAR 2008-09, IN THE MATTER OF ORDER PAS SED U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE TRANSFER PRICING OFFICER (TPO) HAS MADE AN AD JUSTMENT IN RELATION TO INTEREST CHARGEABLE ON EXCESS PERIOD OF CREDIT ALLOWED BY THE ASSESSEE TO IT S ASSOCIATE ENTERPRISES (AE). BY THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE ADJUSTMENT AGAIN ST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. I.T.A. NO.4810/MUM/2012 2 3. IN ADDITION TO THE ASSESSEES GROUND WITH REGAR D TO THE ADJUSTMENT MADE BY TPO, A GROUND WAS ALSO TAKEN TO THE EFFECT THAT THE PROVISIONS OF TRANSFER PRICING WAS NOT APPLICA BLE TO THE ASSESSEE. THIS THE GROUND WAS RAISED BEFORE THE LD. CIT(A), BUT THE SAME WAS NOT ADJUDICATED TREATING IT AS NOT PRESSE D. THE LD. AR IN SUPPORT OF HIS CONTENTION THAT HE HAS NOT AGREEING NOT TO PRESS THIS GROUND FILED AN AFFIDAVIT WHICH READS AS UNDER : I SHRI VASANT A. PARIKH, CHARTERED ACCOUNTANT, AGE D ABOUT 60 YEARS, PROPRIETOR OF V. A. PARIKH & CO., CHARTER ED ACCOUNTANTS, HAVING OFFICE AT 7/B, NUSSER HOUSE, 20 M.P. ROAD. OPERA HOUSE, MUMBAI - 400 004, DO HEREBY DECL ARE ON SOLEMN AFFIRMATION AND STATE AS UNDER: 1. I SAY THAT I REPRESENTED M/S EXQUISITE JEWELLERY , A PARTNERSHIP FIRM, HAVING OFFICE AT G7, GEMS & JEWEL LERY COMPLEX II, SEEPZ SEZ, ANDHERI (EAST) MUMBAI - 400 096, BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) - 1 5 [THE 'CIT (A)'] IN CONNECTION WITH THEIR INCOME-TAX APPE AL FOR ASSESSMENT YEAR (AY) 2008-09, AGAINST THE ORDER OF THE ASSESSING OFFICER. 2. I FURTHER SAY THAT IN THE FORM NO. 3CEB OF M/S EXQUISITE JEWELLERY IT IS MENTIONED THAT M/S COMBIN E INTERNATIONAL INC (CII) AND MIS ENVISION LLC ARE NO T COVERED WITHIN THE DEFINITION OF 'ASSOCIATED ENTERPRISES' I N TERMS O: SECTION 92A(2)(I) OF THE INCOME-TAX ACT, 1961 AND T HAT THE REPORTING HA BEEN DONE BY WAY OF ABUNDANT CAUTIONS. 3 I FURTHER SAY THAT DURING THE COURSE OF THEIR ASSES SMENT PROCEEDINGS FOR A 2008-09. M/S EXQUISITE JEWELLERY MADE WRITTEN SUBMISSIONS BEFORE THE TRANSFER PRICING OFF ICER AND THE ASSESSING OFFICER THAT THEY ARE NOT COVE BY TRA NSFER PRICING PROVISIONS FOR THE RELEVANT YEAR. 4. I FURTHER SAY THAT IN ITS APPEAL BEFORE THE CIT (A) FOR AY 2008-09, VIDE LETTER DATED MAY 7. 2012, M/S EXQUISITE JEWELLERY RAISED AN ADDITIONAL GROUND OF APPEAL TH AT THE TWO ENTERPRISES MENTIONED ABOVE ARE NOT 'ASSOCIATED ENTERPRISES' AND THAT THE REPORTING HAD BEEN DONE B Y WAY OF AT CAUTION. I.T.A. NO.4810/MUM/2012 3 5. I FURTHER SAY THAT DURING THE APPELLATE PROCEEDI NGS BEFORE THE CIT (A) I HAD MADE WRITTEN SUBMISSION O N BEHALF OF M/S EXQUISITE JEWELLERY IN SUPPORT OF HE ADDITIO NAL GROUND SO RAISED, VIDE LETTER SUBMISSION DATED JUNE 13, 2012. FURTHERMORE, I HAD ALSO MADE ORAL SUBMISSIONS BEFOR E THE CIT (A) IN THIS REGARD. 6. I FURTHER SAY THAT AFTER DISCUSSION OF THE MATTE R ON MERITS, THE LEARNED CIT(A' ASKED ME NOT TO PRESS TH E ADDITIONAL GROUND AS HE WOULD CONSIDER THE MATTER O N MERITS DIRECTLY. 7. I STATE THAT CONSIDERING THAT M/S EXQUISITE JEWE LLERY WAS GETTING RELIEF FROM THE QUANTUM OF TAX DEMAND, I SIGNED ON THE ORDER SHEET TO THE EFFECT THAT I WAS NOT PR ESSING THE ADDITIONAL GROUND. 8. I ALSO STATE THAT MY INTENTION WAS NEVER TO CONC EDE THE ADDITIONAL GROUND COMPLETELY. I FURTHER SAY THAT I WAS NOT AWARE OF SUCH CONCESSION MADE BEFORE THE APPELLATE AUTHORITY. 9. I FURTHER STATE THAT THE ADDITIONAL GROUND RAIS ED BEFORE CIT(A) WAS A LEGAL GROUND AND GOES TO THE ROOT OF T HE MATTER, THE SAME MAY BE ADJUDICATED UPON BY THE HONOURABLE INCOME-TAX APPELLATE TRIBUNAL, SINCE ALL THE FACTS PERTAINING TO THE ADDITIONAL GROUND ARE ALREADY ON RECORD. 10. I SAY THAT THE ABOVE STATED FACTS ARE TRUE AND CORRECT TO BEST OF MY KNOWLEDGE AND I AM MAKING THIS AFFIDAVIT TO BRING THE TRUE FACTS ON RECORD. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE RECORD. WE FOUND THAT THE ASSESSEE HAD TAKEN A GR OUND WITH REGARD TO TWO PARTIES IN RESPECT OF WHICH THE TRANSFER PR ICING ADJUSTMENT WAS MADE ARE NOT AES OF THE ASSESSEE, FOR THIS PUR POSE THE GROUND WAS RAISED BEFORE THE AO AND THE LD. CIT(A). HOWEV ER, THE LD. CIT(A) HAS NOT DISPOSED OF THIS GROUND. ONCE IT IS FOUND THAT THE TWO PARTIES WITH WHOM THE ASSESSEE HAS TRANSACTIONS ARE NOT ITS AE, THE PROVISIONS OF TRANSFER PRICING WILL NOT BE APPLICAB LE TO THE ASSESSEE RESULTING INTO NO ADDITION U/S 92B OF THE ACT. A S PER AFFIDAVIT FILED BY THE ASSESSEE THAT AN AS ABUNDANT PRECAUTION REPORT ING WAS MADE I.T.A. NO.4810/MUM/2012 4 IN FORM NO.3CEB, HOWEVER, THE TWO PARTIES WERE NOT AE OF THE ASSESSEE. THE ASSESSEE HAS ALSO FILED WRITTEN S UBMISSIONS BEFORE THE TPO. FURTHER GROUND WAS ALSO RAISED BEFORE TH E LD. CIT(A) THAT TWO ENTERPRISES ARE NOT AE OF THE ASSESSEE AND TH AT REPORT HAD BEEN FILED BY WAY OF ABUNDANT PRECAUTION. THIS G ROUND WAS ALSO RAISED BEFORE THE LD. CIT(A). AS PER THE AFFIDAV IT, CONSIDERING THE ASSUMPTION OF LD. CIT(A) THAT MATTER WILL BE CONSID ERED ON MERIT AND THE ASSESSEE WILL GET RELIEF FROM THE QUANTUM TAX D EMAND, THE LD. AR OF THE ASSESSEE APPEARING BEFORE THE LD. CIT(A) SI GNED THE ORDER- SHEET, TO THE EFFECT THAT THIS GROUND WAS NOT PRESS ED. AS PER THE AFFIDAVIT THE LD. AR OF THE ASSESSEE HAVING NO INTE NTION TO CONCEDE THE ADDITIONAL GROUND RAISED BEFORE THE LD. CIT( A. IT WAS A LEGAL GROUND WHICH GOES TO THE ROOT OF THE MATTER AND REQ UIRES ADJUDICATION AT THE END OF THE LD. CIT(A). 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERUSE D THE RECORD AS WELL AS AFFIDAVIT OF THE ASSESSEE AS REPRODUCED ABOVE. IT IS CLEAR FROM THE AFFIDAVIT THAT IN FORM 3CEB FILED WITH THE DEPARTMENT, THE NAME OF THE TWO PARTIES WERE MENTIONED BY WAY OF AB UNDANT PRECAUTION. THE ISSUE WAS ALSO RAISED BEFORE THE TPO AND THE AO TO THE FACT THAT THE ASSESSEE IS NOT COVERED BY TRANSFER PRICING PROVISIONS FOR THE RELEVANT YEAR. THE ISSUE ALSO R AISED BEFORE THE LD. CIT(A), HOWEVER, THIS GROUND WAS NOT DISPOSED BY TH E LD. CIT(A). WITHOUT DECIDING THE FACT THAT TWO ENTERPRISES WHE THER COVERED OR NOT BY THE DEFINITION OF AE IN TERMS OF SECTION 92A(2)(I) OF THE INCOME TAX ACT, 1961, WE DO NOT WISH TO GO INTO TH E MERITS OF ADDITION. THEREFORE, WE CONSIDER IT PROPER AND JUS T THAT THE LD. CIT(A) SHOULD DECIDE THE LEGAL ISSUE. THEREFORE, IN THE I NTEREST OF JUSTICE AND FAIR PLAY, THE ISSUE NEEDS TO BE RESTORED BACK TO THE FILE OF THE CIT(A) FOR FRESH APPLICATION OF MIND AFTER VERIFIC ATION OF FACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND I.T.A. NO.4810/MUM/2012 5 RESTORE THE MATTER TO THE FILE OF THE CIT(A) FOR DE CIDING THE LEGAL GROUND TAKEN BY THE ASSESSEE TO THE EFFECT THAT M/ S COMBINED INTERNATIONAL INC., USA AND ENVISION LLC, USA ARE NOT COVERED WITHIN THE DEFINITION OF AE IN TERMS OF SECTION 92A(2)(I) OF THE INCOME TAX ACT, 1961. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5 TH DEC , 2014. +, ' - . / 5TH DEC, 2014 , & 0( 1 SD SD ( /VIJAY PAL RAO) ( . . / R.C. SHARMA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' 2( MUMBAI 5TH DEC,2014. . . ./ SRL , SR. PS !'#$ %$&' / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. ' 3) ( ) / THE CIT(A)- CONCERNED 4. ' 3) / CIT CONCERNED 5. 4 0 ')5 , * 5 , ' 2( / DR, ITAT, MUMBAI CONCERNED 6. 0 6 7 ( / GUARD FILE. ' / BY ORDER, TRUE COPY 8 (ASSTT. REGISTRAR) * 5 , ' 2( /ITAT, MUMBAI