ACIT, Circle-27(2), New Delhi V. Wrigley India Pvt. Ltd., New Delhi

ITA 5960/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9090 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 19-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT B GARG
• Keywords: Fair market value
• Section: 80IB; 133(6)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI B BEN CH, NEW DELHI (THROUGH VIDEO CONFERENCING] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 5960/DEL/2017 [A.Y 2004-05] THE A. C.I.T VS. M/S WRIGLEY INDIA [P] LTD CIRCLE 27(2) 206, 2 ND FLOOR, OKHLA INDL. ESTATE NEW DELHI PHASE III, NEW DELHI PAN : AAACW 1789 P [APPELLANT] [RESPONDENT] DATE OF HEARING : 09.08.2021 DATE OF PRONOUNCEMENT : 09.08.2021 ASSESSEE BY : SHRI RAVI SHARMA, ADV SHRI RISHAB MALHOTRA, AR REVENUE BY : SHRI BHARAT B. GARG, S R. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS] - 38, NEW DELH I DATED 27.02.2017 PERTAINING TO ASSESSMENT YEAR 2004-05 . 2 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 4,65,33,658/- O N ACCOUNT OF DEDUCTION CLAIMED U/S 80IB OF THE I.T. ACT, 1961. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE QUARREL HAS BEEN SETTLED BY THE TRIBUNAL IN ASS ESSEES OWN CASE IN ASSESSMENT YEAR 2003-04 WHICH IS THE IMMEDIATELY PR ECEDING ASSESSMENT YEAR AND IN ASSESSMENT YEAR 2005-06, WHI CH IS THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR. 4. THE LD. DR FAIRLY CONCEDED TO THIS. 5. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW AND HAVE CAREFULLY PERUSED THE ORDER OF THIS TRIBUN AL IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2003-04 AND 2005-06. WE F IND FORCE IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THAT THIS TRIBUNAL IN ITA NO. 4794/DEL/2012 FOR ASSESSMENT YE AR 2003-04 HAS CONSIDERED AN IDENTICAL QUARREL. THE RELEVANT FIND INGS OF THE CO- ORDINATE BENCH READ AS UNDER: 3 11. THIS IS A SECOND ROUND OF APPELLATE PROCEEDING S. THE ITAT C BENCH OF THE DELHI TRIBUNAL IN ITA 1562/DEL/2007 FO R THE SAME A.Y. 2004-05 VIDE ORDER DT. 19 TH DECEMBER, 2008, HAS REMANDED THE ISSUE TO THE FILE OF THE A.O. BY OBSERVING AS U NDER. 8.2. WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. IT IS CLEAR THAT THE PROVISION CONTAIN ED IN SECTION 80IA(8) IS APPLICABLE TO THE FACTS OF THIS CASE. BU T AS EARLIER POINTED OUT, WHAT IS REQUIRED TO BE FOUND OUT IS WH ETHER THE MARKET VALUE OF TRANSFERRED GOODS ON THE DATE OF TR ANSFER IN THE INDIAN MARKET. THIS HAS NOT BEEN DONE EITHER AT THE STAGE BY THE LD. COUNSEL, THIS MATTER IS RESTORED TO THE FILE OF THE AO FOR FRESH ADJUDICATION AFTER HEARING THE ASSESSEE. THE MATTER SHALL BE DECIDED IN THE LIGHT OF DIRECTIONS CONTAINED IN THI S ORDER AS AFORESAID. THUS, THESE GROUNDS ARE ALSO TREATED AS ALLOWED FOR STATISTICAL PURPOSES.. 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON A QUERY, THE AO SUBMITTED THAT GUM BASE IS NOT EASILY AVAILA BLE IN THE MARKET AND THAT THERE ARE HARDLY ANY MANUFACTURERS OF THAT QUALITY OF GUM BASE USED BY THE ASSESSEE IN ITS PRO DUCTS. IT WAS SUBMITTED THAT EVEN IF CERTAIN MANUFACTURERS OF GUM BASE ARE FOUND, THE QUALITY STANDARDS DO NOT MATCH WITH THAT OF THE ASSESSEE. ON THE GROUND THAT THERE ARE NO COMPARATI VE PRICES AVAILABLE IN THE MARKET, THE ASSESSEE ADOPTED THE T RANSFER PRICE OF GUM BASE AT THE IMPORTED COST. 4 13. THE A.O. FOR VERIFYING THE MARKET PRICE OF GUM BAS E, ISSUED NOTICES U/S 132(6) TO M/S PERFETTI VAN MELLE. IN RE SPONSE, IT WAS SUBMITTED THAT THIS COMPANY WAS DEPENDENT ON IMPORT ED GUM BASE ONLY. THE AO CARRIED OUT AN INTERNET SEARCH AND FOU ND THAT A COMPANY BY NAME M/S SUN EURO BASE WAS HAVING AN INT ERNATIONAL HIGH QUALITY GUM BASE FACTORY AND THAT M/S CANDICO OF MOHAN COOPERATIVE INDUSTRIAL ESTATE, NEW DELHI WAS ITS CU STOMER. NOTICES U/S 133(6) WERE ISSUED AND IT WAS FOUND FROM THE IN FORMATION GATHERED, THAT THE BASE PRICE OF GUM BASE IN THE LO CAL MARKET RANGES FROM RS.52/- TO RS.96/- ONLY. ACCORDINGLY TH E TRANSFER PRICE OF UNIT IV I.E. GUM BASE UNIT WAS DETERMINED AS UNDER BY THE A.O. 4.5. THE TRANSFER PRICE OF UNIT IV ON THE BASIS O F ABOVE FAIR MARKET VALUE IS WORKED OUT AS BELOW. 4.6. AS PER THE ORIGINAL COMPUTATION OF THE ASSESSE E THE TRANSFER PRICE FROM UNIT IV (GUM BASE UNIT) WAS DECLARED AT RS.20,79,38,948/- PROFIT OF THIS UNIT WAS CLAIMED A T RS.5,26,17,830/-. AFTER RECOMPUTATION AS ABOVE THE SAID TRANSFER S.NO. TYPE OF GUM BASE QUANTITY PRODUCED (KGS) RATE (TRANSFER PRICE) RS. AMOUNT - RS. 1. NON-ACIDIC 1431732 95 136014540 2. ACIDIC 106528 114 12144192 3. ORION 77584 58 4499872 4. LOTTO 59533 121 7203493 15,98,62,097 5 PRICE COMES TO RS. 15,98,62,097/- AND THE PROFIT IS WORKED OUT AS BELOW. 13.1. THERE ARE FOUR TYPES OF GUM BASE. IN THE CASE OF OR ION AND LOTTO THE COST OF PRODUCTION WAS ADOPTED AS THE MAR KET PRICE BY THE ASSESSING OFFICER. THIS IS NOT TENABLE IN VIEW OF DECISIONS RELIED UPON BY THE ASSESSEE IN THE CASE OF JCIT VS. CIPLA LTD. ((SUPRA) MUMBAI BENCH OF THE TRIBUNAL AND THE JUDGE MENT OF THE HONT>LE GUJARAT HIGH COURT IN THE CASE OF ANIL STAR CH PRODUCTS LTD. VS. CIT (SUPRA). 13.2. THE A.O. ON THE ONE HAND OBSERVED THAT THE GUM BASE SOLD RANGES FROM RS.50 TO RS.96 AND THAT THE INFORMATION OBTAINED FROM M/S PERFETTI VAN MELLE WAS RS.168/- FOR THE YEAR 20 03-04 AND RS. 124/- PER KG FOR THE A.Y. 2004-05. THE A.O. HAS APP LIED PRICE OF RS.95 PER KG IN RESPECT OF NON ACIDIC GUM BASE. THE RE IS NO LOGIC GIVEN BY HIM BY ADOPTING THESE RATES. THUS, RATES A DOPTED BY THE A.O. FOR ALL THE FOUR TYPES OF GUM BASE, IN OUR OPI NION, HAS RIGHTLY BEEN HELD AS INCORRECT BY THE FIRST APPELLATE AUTHO RITY. GUMBASE QUANTITY KG. BASE PRICE COST OF PRODUCTION TRANSFER PRICE PROFIT NON - ACIDIC 1431732 90 1288558 80 136014540 7158660 ACIDIC 106528 109 11611552 12144192 532640 ORION 77584 58 4499872 4499872 - LOTTO 59533 121 7203493 7203493 - TOTAL: 76,91,300 6 14. AS THERE IS NO OTHER MATERIAL AVAILABLE ON RECORD, TO CHALLENGE THE TRANSFER PRICE DECLARED BY THE ASSESS EE, WHICH IS ON THE BASIS OF INVOICES FROM CAFOSA, WE HAVE NO OTHER ALTERNATIVE BUT TO/UPHOLD THIS CLAIM. IN THE RESULT WE DISMISS THIS APPEAL BY THE REVENUE. 6. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT T O OUR NOTICE, RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH [SUPRA], THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO. 5960/DEL/2017 IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09.08. 2021 IN THE PRESENCE OF BOTH THE RIVAL REPRESENTATIVES. SD/- SD/- [ MADHUMITA ROY ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09 TH AUGUST, 2021 VL/ 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER