ITO, New Delhi V. Yutaka Autoparts (I) Pvt Ltd, New Delhi

ITA 559/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7814 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 28-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH ANTILSR
• Keywords: Transfer pricing; Wholly owned subsidiary

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI I-1 BENCH, NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER, AND SHRI N. K. CHOUDHRY, JUDICIAL MEMBER, ITA NO.559/DEL/2015 [ASSESSMENT YEAR: 2010-11] ITO, WARD-27(4), C.R. BUILDING, NEW DELHI M/S YUTAKA AUTOPARTS INDIA PVT. LTD. 304-305, LOTUS CHAMBER, 2079/38, NALWA STREET, KAROL BAGH, NEW DELHI-110005 PAN- AAACY2991H APPELLANT RESPONDENT APPELLANT BY SHRI DINESH ANTIL-SR. DR RESPONDENT BY NONE DATE OF HEARING 21/01/2020 DATE OF PRONOUNCEMENT 23/01/2020 ORDER PER M. BALAGANESH, AM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE DIRECTION OF THE LD. DRP, PANEL-II, NEW DELHI, DATE D 13/11/2014, FOR ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE DECIDED IS AS TO WHETHER THE LD. DRP IS JUSTIFIED IN DIRECTING THE LD. TPO TO REDUCE THE AD DITION OF RS.2,26,06,786/- BEING ADJUSTMENT TO ARMS LENGTH P RICE. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE THROUGH THE LD. ASSESSING OFFICER. 2 ITA NO. 559/DEL/2015 3. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS A GROUP COM PANY OF HONDA GROUP AND IS A WHOLLY OWNED SUBSIDIARY COMPANY OF Y UTAKA GIKEN COMPANY LIMITED, JAPAN, (YUTAKA GIKEN, JAPAN) ALO NG WITH ITS NOMINEE. WE FIND THAT THE ASSESSEE, IS INCORPORATED IN MARCH 2007, IS INTO A MANUFACTURING AND ASSEMBLING OF AUTO COMPONE NT. THE ASSESSEE BROADLY DEALS IN TWO TYPES OF PRODUCTS NAM ELY; EXHAUST SYSTEMS- IT INFLUENCES THE ENVIRONMENTAL PERFORMANCE OF VEHICLES. THE EXHAUST SYSTEM PURIFIE S AND REDUCES THE EMISSION LEVEL OF THE VEHICLES. IT INCL UDES EXHAUST MANIFOLDS, CATALYTIC CONVERTER AND SILENCER; BRAKING SYSTEMS PRODUCTS -BRAKING SYSTEM IS ONE OF THE MOST IMPORTANT FEATURES IN ANY AUTOMOBILE ESPECIALL Y IN CASE OF TWO WHEELERS. 4. WE FIND THAT THE LD. DRP HAD DIRECTED THE LD. TP O TO INCLUDE THE FOLLOWING ITEMS AS PART OF THE OPERATING INCOME BY OBSERVING AS UNDER:- ASSESSEE HAS POINTED OUT THAT CERTAIN CLAIM RECEIV ED, JOB WORK CHARGES AND SUNDRY BALANCES WRITTEN OFF SHOULD BE TREATED AS OPERATING INCOME. THE DRP IS OF THE VIEW THAT THESE ITEMS SHOULD BE CONSIDERED AS OPERATING IN NA TURE. ACCORDINGLY, THE TPO IS DIRECTED TO RECOMPUTED THE MARGIN OF THE ASSESSEE TAKING CLAIM RECEIVED, JOB WORK CHA RGES AND SUNDRY BALANCES WRITTEN OFF AS OPERATING IN NAT URE WHILE COMPUTING THE ARMS LENGTH PRICE. 3 ITA NO. 559/DEL/2015 5. AGAINST THIS DIRECTION, THE REVENUE IS IN APPEAL BEFORE US. 6. WE FIND THAT THE LD. DRP HAD NOT GIVEN ANY REASO N FOR COMING TO THE CONCLUSION THAT THE AFORESAID THREE I TEMS WERE PART OF OPERATING INCOME SINCE THE ORDER OF THE LD. DRP IS VERY CRYPTIC, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUS TICE AND FAIR PLAY, TO REMIT THE MATTER BACK TO THE FILE OF LD. DRP FOR DE NOVO ADJUDICATION FOR THE IMPUGNED ASSESSMENT YEAR BEFORE US. ACCORDI NGLY, THE GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATI STICAL PURPOSE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23/0 1/2020. SD/- SD/- [N. K. CHOUDHRY] [M. BALAGAN ESH] JUDICIAL MEMBER ACCOUNTANT MEMBE R DELHI; DATED: 23/01/2020. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) 4. , , / DR, ITAT, DELHI 5. / GUARD FILE. / BY ORDER , /ASSISTANT REGISTRAR, , / ITAT, DELHI