M/s Insilco Limited, New Delhi V. DCIT, New Delhi

ITA 5781/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3751 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 20-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; Principle of natural justice

Judgement Text

ITA NO. 5781/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5781/DEL/2010 A.Y. : 2006-07 M/S INSILCO LIMITED, OFFICE NO. 1 & 2, 12 TH FLOOR, GERMAN CENTRE FOR INDUSTRY & TRADE, DLF BUILDING 9, TOWER-B, DLF CYBER CITY, PHASE-III, GURGAON, HARYANA 122002 A AA AND NDND ND M/S INSILCO LIMITED, C/O M/S VP GUPTA & CO., ADVOCATES AND SOLICITORS, 501, ANSAL BHAVAN, 16, KG MARG, NEW DELHI 110 001 (PAN : AAACI1203N) (PAN : AAACI1203N) (PAN : AAACI1203N) (PAN : AAACI1203N) VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 11(1), NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. ANIRUDH AGRAWAL DEPARTMENT BY : SH. N.K. CHAND ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED WITH RESP ECT TO THE ORDER OF THE ASSESSING OFFICER DATED 28.10.2010 AND PERT AINS TO ASSESSMENT YEAR 2006-07. ITA NO. 5781/DEL/2010 2 2. ORDER OF THE ASSESSING OFFICER WAS PASSED PURSU ANT TO DIRECTION U/S 144C BY THE DISPUTE RESOLUTION PANEL DATED 30.9. 2010. 3. THE FIRST ISSUE RAISED IS THAT ASSESSING OFFICER HAS ERRED IN MAKING DISALLOWANCE OF ` 46,315/- ON ACCOUNT OF DEPR ECIATION CLAIMED ON COMPUTER ACCESSORIES I.E. PRINTERS, UPS ETC. @ 60% HOLDING THE SAME TO BE GENERAL PLANT AND MACHINERY AND NOT APPRE CIATING THAT THE SAME ARE PART AND PARCEL OF THE COMPUTERS. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORDS. WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE KOLKATA, ITAT IN THE CASE OF IT O VS. SAMIRAN MAJUMDAR 98 ITD 119. IN THIS CASE, IT WAS HELD THAT T HE PRINTERS AND SCANNERS ARE INTEGRAL PARTS OF THE COMPUTER SYSTEM AND ARE TO BE SO TREATED FOR THE PURPOSE OF ALLOWING 60% RATE OF DE PRECIATION. IN THE LIGHT OF THE ABOVE PRECEDENT, WE DECIDE THE ISSUE I N FAVOUR OF THE ASSESSEE AND HOLD THAT ASSESSEE WAS ELIGIBLE FOR 60 % DEPRECIATION ON THE IMPUGNED ITEMS. 5. THE NEXT ISSUE RAISED READ AS UNDER :- THAT THE ORDER PASSED BY THE DISPUTE RESOLUTION P ANEL DATED 30.9.2010 UNDER SECTION 144C OF THE ACT UPHOLDING T HE DETERMINATION OF ARMS LENGTH PRICE OF INTERNATIONA L TRANSACTIONS MADE BY TPO/ASSESSING OFFICER AND ORDER PASSED BY AS SESSING OFFICER PURSUANT THERETO IS BAD, UNREASONABLE, UN JUSTIFIED AND NOT SUSTAINABLE UNDER LAW AS SAME HAS BEEN PASSED W ITHOUT APPLICATION OF MIND AND WITHOUT PROPERLY CONSIDERING THE FACTS AND SUBMISSIONS OF THE APPELLANT. ITA NO. 5781/DEL/2010 3 THAT THE DRP FAILED TO CONSIDER AND ADJUDICATED THE CONTENTION OF THE APPELLANT THAT THE ASSESSING OFFICER HAD NOT R ECORDED THE REASONS BASED ON WHICH HE HAD REACHED THE CONCLUSIO N THAT IT WAS NECESSARY AND EXPEDIENT IN THE CASE OF THE A PPELLANT TO REFER THE MATTER FOR DETERMINATION OF ARMS LENGTH PR ICE TO TPO. 6. IN THIS CASE, LD. COUNSEL OF THE ASSESSEE ASSAIL ED THAT THE DISPUTE RESOLUTION PANEL (DRP) HAS NOT AT ALL CONSIDERED THE ASSESSEES SUBMISSIONS AND PASSED A VERY LACONIC AND NON-SPEAK ING DIRECTION. ASSESSEE VIDE ITS GROUND HAS ALSO RAISED THAT DRP ER RED IN LAW AND FACTS IN NOT PASSING SPEAKING ORDER AND ERRED IN NOT STATING ANY JUSTIFICATION FOR THE REJECTION OF ASSESSEES OBJE CTION. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT SECTION 144C ENVISAGES FOLLOWING ON THE P ART OF THE DRP:- (5) THE DISPUTES RESOLUTION PANEL SHALL, IN CASE W HERE ANY OBJECTION IS RECEIVED UNDER SUB-SECTION (2), IS SUE SUCH DIRECTIONS, AS IT THINKS FIT, FOR THE GUIDANCE OF THE ASSESSING OFFICER TO ENABLE HIM TO COMPLETE THE ASSESSMENT. (6) THE DISPUTE RESOLUTION PANEL SHALL ISSUE THE DIR ECTIONS REFERRED TO IN SUB-SECTION (5), AFTER CONSIDERING T HE FOLLOWING, NAMELY :- (A) DRAFT ORDER; (B) OBJECTIONS FILED BY THE ASSESSEE; (C) EVIDENCE FURNISHED BY THE ASSESSEE; (D) REPORT, IF ANY, OF THE ASSESSING OFFICER, VALUA TION OFFICER OR TRANSFER PRICING OFFICER OR ANY OTHER AUTHORITY; ITA NO. 5781/DEL/2010 4 (E) RECORDS RELATING TO THE DRAFT ORDER; (F) EVIDENCE COLLECTED BY, OR CAUSED TO BE COLLECTE D BY, IT; AND (G) RESULT OF ANY ENQUIRY MADE BY, OR CAUSED TO BE MADE BY, IT. (7) THE DISPUTE RESOLUTION PANEL MAY, BEFORE ISSUING ANY DIRECTIONS REFERRED TO IN SUB-SECTION (5), - (A) MAKE SUCH FURTHER ENQUIRY, AS IT THINKS FIT; OR (B) CAUSE ANY FURTHER ENQUIRY TO BE MADE BY ANY INCOME TAX AUTHORITY AND REPORT THE RESULT OF THE SAME TO IT. (8) THE DISPUTE RESOLUTION PANEL MAY CONFIRM, REDUCE OR ENHANCE THE VARIATIONS PROPOSED IN THE DRAFT ORDER SO, HOWEVER, THAT IT SHALL NOT SET ASIDE ANY PROPOSED VARIATION OR ISSUE ANY DIRECTION UNDER SUB-SECTION (5) FUR FURTHER ENQUIRY AND PASSING OF THE ASSESSMENT ORDER. (9) IF THE MEMBERS OF THE DISPUTE RESOLUTION PANEL DIF FER IN OPINION ON ANY POINT, THE POINT SHALL BE DECIDE D ACCORDING TO THE OPINION OF THE MAJORITY OF THE MEMBERS. (10) EVERY DIRECTION ISSUED BY THE DISPUTE RESOLUTIO N PANEL SHALL BE BINDING ON THE ASSESSING OFFICER. ITA NO. 5781/DEL/2010 5 (11) NO DIRECTION UNDER SUB-SECTION (5) SHALL BE IS SUED UNLESS AN OPPORTUNITY OF BEING HEARD IS GIVEN TO TH E ASSESSEE AND THE ASSESSING OFFICER ON SUCH DIRECTI ONS WHICH ARE PREJUDICIAL TO THE INTEREST OF THE ASSESSE E OR THE INTEREST OF THE REVENUE, RESPECTIVELY. (12) NO DIRECTION UNDER SUB-SECTION (5) SHALL BE IS SUED AFTER NINE MONTHS FROM THE END OF THE MONTH IN WHICH THE DRAFT ORDER IS FORWARDED TO THE ELIGIBLE ASSESSEE. (13) UPON RECEIPT OF THE DIRECTIONS ISSUED UNDER SU B- SECTION (5), THE ASSESSING OFFICER SHALL, IN CONFO RMITY WITH THE DIRECTIONS, COMPLETE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 153, THE ASSESSMENT WITHOUT PROVIDING ANY FURTHER OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE, WITHIN ONE MONTH FRO M THE END OF THE MONTH IN WHICH SUCH DIRECTION IS RECEIVED. 8. AS AGAINST THE ABOVE PROVISIONS OF THE ACT HERE THE DRP HAS PASSED A VERY LACONIC ORDER. LD. COUNSEL OF THE AS SESSEE CONTENDED THAT VOLUMINOUS SUBMISSIONS HAVE BEEN MADE BEFORE THE DRP AGAINST THE DRAFT ASSESSMENT ORDER. BUT THE DRP HAS BRUSHED THEM ASIDE WITHOUT PROPERLY CONSIDERING THE ASSESSEES OBJECTI ONS AND THE SUBMISSIONS OF THE ASSESSEE. UNDER THE CIRCUMSTAN CES, IN OUR OPINION, THE DIRECTIONS OF THE DRP ARE TOO LACONIC T O BE LEFT UNCOMMENTED. THE DIRECTIONS GIVEN BY THE DRP ALMOST T ANTAMOUNT TO ITA NO. 5781/DEL/2010 6 SUPERVISING THE ASSESSING OFFICERS DRAFT ORDER AN D IN THAT SENSE IT CAN BE EQUATED THAT APPELLATE JURISDICTION BEING EXERCI SED. WE FIND THAT H ONBLE APEX COURT IN THE CASE M/S SAHARA INDIA (FARMS) VS. C IT & ANR. IN [2008] 300 ITR 403 HAS HELD THAT EVEN AN ADMINI STRATIVE ORDER HAS TO BE CONSISTENT WITH THE RULES OF NATURAL JUSTICE . 9. IN THIS REGARD, WE ALSO NOTE THAT HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF VODAFONE ESSAR LTD. VS. DISPUTES RESO LUTION PANEL VIDE ORDER DATED 2.12.2010 THE HONBLE COURT HAS HELD TH AT WHEN A QUASI JUDICIAL AUTHORITY DEALS WITH THE LIS, IT IS OBLIGA TORY ON ITS PART TO ASCRIBE COGENT AND GERMANE REASON AS THE SAME IS A HEART AND SOUL OF THE MATTER AND FURTHER THE SAME ALSO FACILITATES APP RECIATION WHEN THE ORDER IS CALLED IN QUESTION BEFORE THE SUPERIOR FOR UM. ACCORDINGLY, THE HONBLE COURT HAS REMANDED THE MATTER FOR FRESH ADJU DICATION. 10. UNDER THE CIRCUMSTANCES, IN THE BACKGROUND OF T HE AFORESAID DISCUSSION AND PRECEDENT ABOVE, WE FIND CONSIDERAB LE COGENCY IN THE ASSESSEES COUNSEL SUBMISSION THAT THE ASSESSEES SU BMISSION HAS BEEN BRUSHED ASIDE WITHOUT GIVING PROPER CONSIDERAT ION BY THE DRP. 11. LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CONTRO VERT THIS PROPOSITION. ITA NO. 5781/DEL/2010 7 12. UNDER THE CIRCUMSTANCES, IN OUR CONSIDERED OPI NION, THE ISSUE IS REMITTED TO THE FILES OF THE DRP TO CONSIDER THE ISSU E ONCE AGAIN TO PASS A PROPER AND SPEAKING DIRECTION U/S 144C OF TH E IT ACT. SINCE WE ARE REMITTING THE MATTER TO THE FILES OF THE DRP FOR P ASSING A FRESH DIRECTION, OTHER ASPECTS OF MERITS OF THE CASE ARE NOT BEING ADJUDICATED. NEEDLESS TO ADD THAT THE ASSESSEE SHOU LD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08/6/2011. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [I.P. BANSAL] [I.P. BANSAL] [I.P. BANSAL] [I.P. BANSAL] [SHAMIM [SHAMIM [SHAMIM [SHAMIM YAHYA] YAHYA] YAHYA] YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 08/6/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES