TCL INDIA HOLDINGS P. LTD, MUMBAI V. DCIT CIR 8(3), MUMBAI

ITA 4912/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8759 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Next Hearing Date: 16-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 25-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN
• Keywords: Transfer pricing; International transaction; Period of limitation; Reasonable cause; Condonation of delay
• Section: 143(3); 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL K , BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO. 4912 / MUM/ 201 4 ( / ASSESSMENT YEAR: 2009 - 10 ) M/S TCL INDIA HOLDINGS PVT. LTD., TOWN CENTRE II, 202/203 A&B, 2 ND FLOOR, ANDHERI KURLA ROAD, MAROL NAKA, ANDHERI (EAST), MUMBAI - 400059 VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCL E 8(3), ROOM NO. 204, AAYKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AABCT 9975 D ( / APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : NONE / REVENUE BY : SHRI V. JENARDHANAN (DR) / DATE OF HEARING : 16 /08 /2017 / DATE OF PRONOUNCEMENT : 31 / 10 / 2017 / O R D E R PER RAM LAL NEGI, JM THIS APPEA L HAS BEEN FILED BY THE ASSESSEE AGAINST DIRECTION DATED 26/12/2013 ISSUED BY THE LD. DISPUTE RESOLUTION PANEL (DRP) - II , MUMBAI , U/S 144C (5) OF THE INCOME TAX ACT, 1961. ( FOR SHO RT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009 - 10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND S OF APPEAL AGAINST THE IMPUGNED DIRECTIONS ISSUED BY THE LD. DRP : - 1. THE LEARNED DCIT ERRED IN COMPUTING THE TOTAL LOSS OF THE APPELLANT AS RS. 25,53,99,167/ - AS AGAINST THE LOSS OF RS. 60,66,57,912/ - RETURNED BY THE APPELLANT. 2 ITA NO. 4912/MUM/2014 ASSESSMENT YEAR: 2009 - 10 2. THE LEARNED DCIT ERRED IN NOT CONSIDERING THE TAX AUDIT REPORT SUBMISSION BY THE APPELLANT DURING THE SCRUTINY PROCEEDINGS. 3. THE LEARNED DCIT ERRED IN DOUBLE ADDI TION OF LOSS ON SALE OF FIXED ASSETS AND IMPAIRMENT OF LOSS OF RS. 1,17,65,000/ - WHEREIN THE APPELLANT HAS ALREADY DISALLOWED THE SAME IN THE COMPUTATION OF THE TOTAL INCOME. 4. TRANSFER 4.1 THE LEARNED DCIT ERRED IN LAW BY NOT CONSIDERING THE FACTS OF THE CASE AND PROPOSING AN UPWARD VARIATION OF RS. 33,88,21,133/ - (RS. 33.88 CRORE APPROX..) TO THE RETURNED INCOME OF THE APPELLANT U/S 92CA(3) OF THE ACT, IN RESPECT OF THE INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE APPELLANT DURING THE YEAR ENDED 31 MARCH 2009 O N THE ALLEGED GROUND OF ITS MARGIN BEING LESS THAN THE ARITHMETIC MEAN OF THE MARGINS OF THE COMPARABLES AS COMPUTED BY THE TRANSFER PRICING OFFICER. 4.2 THE LEARNED DCIT ERRED IN REJECTING THE BENCHMARKING EXERCISE PERFORMED BY THE APPELLANT ON THE GROUND T HAT SOME OF THE COMPARABLE COMPANIES SELECTED BY THE APPELLANT WERE LOSS MAKING. 4.3 THE LEARNED DCIT ERRED IN REJECTING THE INTERNAL COMPARISON FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF THE APPELLANT. 4.4 THE LEARNED DCIT ERRED IN ACCEPTING THE COMPAR ABLE COMPANIES SELECTED BY THE TPO AS VALID COMPARABLES ON THE GROUND THAT UNDER TRANSACTIONAL NET MARGIN METHOD (TNMM) PRODUCT IDENTITY IS NOT A NECESSARY PREREQUISITE. 4.5 THE LEARNED DCIT ERRED IN ACCEPTING THE APPROAC H ADOPTED BY THE TPO OF INITIALL Y SE LECTING THE LOSS MAKING COMPANIES AS 3 ITA NO. 4912/MUM/2014 ASSESSMENT YEAR: 2009 - 10 COMPARABLES AND FINALLY REJECTING THEM WHILE COMPUTING THE ARM S LENGTH PROFIT LEVEL INDICATOR (PLI). 4.6 THE LEARNED DCIT ERRED IN NOT APPRECIATING THE FACT THAT THE BENCHMARKING EXERCISE AND ACCORDINGLY THE WORKING OF TRANSFER PRICING ADJUSTMENT, IF ANY, IN CASE OF THE APPELLANT SHOULD ONLY BE IN RESPECT OF THE INTERNATIONAL TRANSACTIONS AND SHOULD NOT BE DONE AT ENTITY LEVEL. 4.7 THE LEARNED DCIT/DISPUTE RESOLUTION PANEL (DRP) HAS ERRED IN RE - COMPUTING THE OPERATING EXP ENSES OF THE APPELLANT ON THE GROUND THAT NO WORKING WAS GIVEN BY THE APPELLANT IN SUPPORT OF THE COMPUTATION , WITHOUT APPRECIATING THE FACT THAT THE SAME WAS NEVER CALLED FOR BY THE TRANSFER PRICING OFFICER (TPO) DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. 4.8 THE LEARNED DCIT ERRED IN LAW BY NOT GRANTING RANGE BENEFIT OF + _ 5% WHILE COMPUTING TRANSFER PRICING ADJUSTMENT. 4.9 THE LEARNED DCIT ERRED IN IGNORING THE EVIDENCE PROVIDED BY THE APPELLANT FOR THE PURPOSE OF DETERMINATION OF ALP AND ACCORDINGLY FURTH ER ERRED IN COMPUTING THE ALP IN AN ARBITRARY MANNER WITHOUT GIVING PROPER OPPORTUNITY TO THE APPELLANT. 4.10 THE LEARNED DCIT ERRED IN NOT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE IN EITHER PROPER PERSPECTIVE. 5. EACH ONE OF THE ABOVE GROUNDS OF AP PEAL IS WITHOUT PREJUDICE TO THE OTHER. 3. THIS CASE WAS FIXED FOR HEARING ON 16/08/2017. WHEN THE CASE WAS CALLED UP FOR HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE. WE NOTICE D THAT ON THE LAST DATE OF HEARING I.E. ON 13/04/2017 , T HE CASE WAS ADJO URNED DUE TO NON - APPEARANCE THE ASSESSEE AND ACCORDINGLY THE REGISTRY WAS DIRECTED TO ISSUE NOTICE TO THE ASSESSEE BY REGISTERED POST WITH ACKNOWLEDGE DUE . EVEN ON THE EARLIER OCCASION I.E., ON 17.08.16, WHEN THE CASE WAS CALLED FOR HEARING 4 ITA NO. 4912/MUM/2014 ASSESSMENT YEAR: 2009 - 10 NONE APPEARED O N BE H ALF OF THE ASSESSEE AND THE BENCH ADJOURNED THE CASE AND DIRECTED THE REGISTRY TO ISSUE FRESH NOTICE. FROM THE CONDUCT OF THE APPELLANT/ASSESSEE WE ARE CONVINCED THAT THE ASSESSEE IS NO LONGER INTERESTED IN PURSUING ITS APPEAL. WE, THEREFORE, DECIDED TO PROCEED WITH AND DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE ( DR). 4. AT THE OUTSET, THE LD. DR POINTED OUT THAT THE APPEAL IS BARRED BY LAW OF LIMITATION AS THERE IS A DELAY OF 117 DAYS IN FILING THE PRESENT APPEAL. THE LD. DR FURTHER SUBMITTED THAT THE APPLICATION FOR CONDONATION , THOUGH ACCOMPANIED BY AFFIDAVIT , DOES NOT DISCLOSE ANY REASONABLE CAUSE TO CONDONE THE DELAY, THE REFORE THE SAME IS LIABLE TO BE SET ASIDE. 5. WE HAVE GONE THROUGH THE APPLICATION AS WELL AS THE AFFIDAVIT SWORN BY MR. AJI T SINGH ROHTAS SINGH CHOUHAN, DIRECTOR TCL INDIA HOLDINGS PVT. LTD. THE DEPONENT HAS STATED THAT THE COMPANY HAD FILED OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL ( DRP ) AND THE DRP TH E DIRECTIONS U/S 144C(5) OF THE ACT ON 26.12.2013. THEREAFTER, DCIT PASSED ORDER U/S 143(3) OF THE ACT ON 22.01.2014 . THE RELEVANT PORTION OF THE AFFIDAVIT READS AS UNDER: THAT THE TIME FOR FILING OF THE APPEAL BEFORE THE TRIBUNAL WAS TO EXPIRE ON 22/03/ 2014. 1) THAT I WAS ADVISED BY THE LEGAL CONSULTANT TO FILE AN APPEAL BEFORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL - MUMBAI FOR RELIEF BUT THE APPEAL HA D ALREADY BECOME BARRED BY TIME LIMITATION. NEVERTHELESS THE APPEAL WAS FILED BEFORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL - MUMBAI ON DATE 26/07/2014. 2) THAT DELAY IN FILING THE APPEAL IS BECAUSE THERE WAS NO OTHER DIRECTOR IN THE COUNTRY, THE COMPANY IS A MULTINATIONAL COMPANY WHICH HAS HOLDING COMPANY IN CHINA, HAS CLOSED ITS INDIAN OPERATIONS SINCE 31/ 12/2011, I 5 ITA NO. 4912/MUM/2014 ASSESSMENT YEAR: 2009 - 10 AM THE SOLE DIRECTOR OF THE COMPANY AND HAVE BEEN RESIDING IN HARYANA FOR THE PAST SEVERAL MONTHS, THE COMPANY DOES NOT HAVE ANY LOCAL ADDRESS ALSO, THERE IS NO BRANCH OR HEAD OFFICE IN MUMBAI THERE ARE NO EMPLOYEES IN THE COMPANY AS SUCH THE CO MPANY IS CLOSED AND WILL BE INITIATING ACTION TO WIND UP. 3) DCIT ORDER DAT E D JAN , 14 WAS SENT TO THE ADDRESS OF THE COMPANY WHERE THE OFFICE HAS BEEN CLOSED AND RENDERED IN DECEMBER 2011, HOWEVER THE ORDER WAS ALSO SENT TO OUR EARLIER EX - AUTHORIZED REPRESE NTATIVE WHO DID NOT TAKE NOTICE NOR INFORMED ME UNTIL I VISITED AUTHORIZED REPRESENTATIVE IN THE MONTH OF JULY 2014 WHEN I WAS VISITING MUMBAI TO MEET MY PARENTS, HENCE AFTER RECEIVING THE ORDER ON THE 20 TH JULY, 2014 I IMMEDIATELY CONSULTED MY LEGAL REPRE SENTATIVE WHO ADVISED ME THAT THERE IS A DELAY IN NOW FILING THE APPEAL. HOWEVER, THE DELAY OF FILING THE APPEAL FOR THE ABOVE REASONS AS THE COMPANY HAS NO OPERATIONS IN INDIA AND THE NOTICE WAS RECEIVED BY ME ONLY TWO WEEKS EARLIER. 4) THAT I HAD NO INTENT ION TO JEOPARDIZE THE INTEREST OF THE REVENUE BY DELAYING THE FILING OF THE APPEAL. 6 . SUB - SECTION 5 OF SECTION 253 OF THE INCOME TAX ACT PROVIDES THAT THE TRIBUNAL MAY ADMIT APPEAL OR PERMIT FILING OF MEMORANDUM OF CROSS - OBJECTION OF RESPONDENT AFTE R EXPIRY OF RELEVANT PERIOD OF LIMITATION REFERRED TO IN SUB - SECTION 3 AND 4 SECTION 253, IF IT IS SATISFIED THAT THERE WAS SUFFICIENT CAUSE FOR NOT PRESENTING IT WITHIN THAT PERIOD. SO THE SUFFICIENT CAUSE IS A CONDITION PRECEDENT FOR EXERCISING DISCRETI ON BY THE BENCH FOR CONDONATION OF DELAY. AS PER THE SETTLED LAW WHEN MANDATORY PROVISION IS NOT COMPLIED WITH AND THE DELAY IS NOT PROPERLY EXPLAINED, THE COURT CANNOT CONDONE THE DELAY ON SYMPATHETIC GROUNDS ALONE. 7 . IN THE PRESENT CASE WE DO NOT FIND ANY SUFFICIENT CAUSE WHICH PREVENTED THE APPELLANT FROM FILING THE PRESENT APPEAL WITHIN THE PRESCRIBED PERIOD OF LIMITATION. IN OUR CONSIDERED OPINION T HE CIRCUMSTANCES MENTIONED IN THE APPLICATION WERE NOT UNAVOIDABLE OR BEYOND CONTROL OF THE ASSESSEE OR IN OTHER 6 ITA NO. 4912/MUM/2014 ASSESSMENT YEAR: 2009 - 10 WORDS THE ASSESSEE COULD HAVE TAKEN DUE CARE AND CAUTION TO FILE THE APPEAL WITHIN THE PERIOD OF LIMITATION. HENCE, WE FIND MERIT IN THE CONTENTION OF THE LD. DR THAT THERE IS NO MERIT IN THE APPLICATION FOR CONDONATION OF DELAY. HENCE, WE DISMIS S THE APPLICATION FOR CONDONATION OF DELAY HOLDING THAT THE APPELLANT/ASSESSEE HAS FAILED TO ESTABLISH SUFFICIENT CAUSE TO CONDONE THE DELAY. SINCE, WE HAVE DISMISSED THE APPLICATION FOR CONDONATION OF DELAY, THE APPEAL OF THE ASSESSEE IS NOT MAINTAINABLE BEING BARRED BY LAW OF LIMITATION. HENCE WE DISMISS THE APPEAL OF THE ASSESSEE IN LIMINE BEING NOT MAINTAINABLE. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 20 09 - 10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017 . SD/ - SD/ - ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 31 / 10 / 2017 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR , ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. R EGISTRAR) , / ITAT, MU MBAI