M/s. Delphi Connection System India P. Ltd(Formerly FCI Technology Services Ltd), Cochin V. The ACIT, Cochin

ITA 6/COCH/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7629 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANTOM BOSE
• Assessee Lawyers: SATYANARAYANA
• Keywords: Transfer pricing; International transaction; Application of stay
• Section: 143(3)

Judgement Text

IT(TP)A ITA NO 06/COCH/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE K, JM IT (TP)A IT A NO 06/COCH/2016 (ASST YEAR 2011 - 12 ) & STAY PETITION NO. 02/C OCH/2016 M/S DELPHI CONNECTION SYSTEMS INDIA P LTD ( FORMERLY FCI TECHNOLOG Y SERVICES LTD ) XII/101 THIRUVANIYOOR VEETTICKAL ROAD THIRUVANIYOOR POST PIN 682 308 VS THE ASST COMMR OF INCOME TAX CORPORATE CIRCLE 1(1) KOCHI ( APPELLANT) (RESPONDENT) PAN NO. AAACF5044Q ASSESSEE BY SH SATYANARAYANA REVENUE BY SH SHANTOM BOSE, CIT(DR) DATE OF HEARING 3 RD NOV 2016 DATE OF PRONOUNCEMENT 4 TH ` NOV 2016 ORDER PER GEORGE GEORGE K,JM: THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE FINAL ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 144C OF THE ACT (ORDER DAT ED 9.12.2015 ) . THE RELEVANT ASSESSMENT YEAR IS 2011 - 12. THE ASSESSEE HAS ALSO FIELD STAY PETITION, SEEKING STAY OF DEMAND OF TAX ARREARS AMOUNTING TO RS 2,52,46,442/ - . 2 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A PUBLIC LIMITED COMPANY DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2011 - 12. FOR THE ASSESSMENT 2011 - 12, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE COMPANY ON 30.11.2011 , DECLARING THE TOTAL INCOME AT IT(TP)A ITA NO 06/COCH/2016 2 RS. 1,22,56,074/ - . THE INTERNAT IONAL TRANSACTION ENTERED INTO DURING THE RELEVANT PREVIOUS YEAR WAS AS FOLLOWS: PARTICULARS AMOUNT IN (RS) COMPUTER AIDED DESIGN AND ENGINEERING SERVICES 15,28,73,182.92 SERVICES AND CONSULTANCY EXPENSES 3,71,44,998.92 PATENTS COST 25,32,756.00 TRADEM ARKS 5,43,552.00 EXPENSE RE - IMBURSEMENT 23,01,740.01 MANAGEMENT FEES 93,934.50 TOTAL 19,54,90,164.35 3 SINCE THE INTERNATIONAL TRANSACTIONS ENTERED BY THE ASSESSEE WITH ITS AE WAS EXCEEDED THE THRESHOLD LIMIT, THE MATTER WAS REFERRED TO THE TPO. THE TPO, VIDE LETTER DATED 7.11.2015 REJECTED THE TP STUDY OF THE ASSESSEE AND PROCEEDED TO DETERMINE THE ARMS LENGTH PRICE (ALP) BY TAKING AN INDEPENDENT SEARCH OF COMPARABLES. THE TPO, VIDE ORDER DATED 30.1.2015 U/S 92CA MADE AN UPWARD TRANSFER PRICING AD JUSTMENT OF RS. 4,32,18,348/ - TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. 4 THE ASSESSEE FILED OBJECTIONS TO THE DRAFT ASSESSMENT ORDER BEFORE THE DISPUTE RESOLUTION PANEL (DRP) VIDE LETTER DATED 27.3.2015. THE ASSESSEE COMPANY APPEARED FOR HEARING BEFORE THE DRP - 1 ON 21.9.2015 AND 16.10.2015. THEREAFTER, THE CASE WAS REFERRED TO DRP - 2 AND WAS FIXED FOR HEARING ON 17.11.2015. SINCE THE ASSESSEE DID NOT APPEAR BEFORE THE DRP - 2 ON 17.11.2015, THE DRP PROCEEDED TO DISPOSE OFF THE MATTER EX - PARTY AFTER TAKING INTO CONSIDERATION THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. THE DRP ISSUED ITS DIRECTIONS U/S 144C(5) (DIRECTION DATED 19.11.2015) CONFIRMING THE ORDER OF THE TPO IN MAKING AN UPWARD TRANSFER PRICING ADJUSTMENT OF IT(TP)A ITA NO 06/COCH/2016 3 RS. 4,32,18,348/ - TO THE TOTAL INC OME OF THE ASSESSEE COMPANY. PURSUANT TO THE DRPS DIRECTIONS, THE FINAL ASSESSMENT ORDER WAS PASSED ON 9.12.2015. 5 AGGRIEVED BY THE FINAL ASSESSMENT ORDER INCORPORATING THE DIRECTIONS OF THE DRP, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE US. THE ASSESSEE HAS FILED VARIOUS GROUNDS IN THE APPEAL MEMO. HOWEVER, THE ONLY GROUND I.E. GROUND NO.2 NEEDS TO BE CONSIDERED FOR DISPOSING OFF THE INSTANT APPEAL. IN GROUND NO.2, THE ASSESSEE HAS RAISED OBJECTION WITH REGARD TO DISPOSE OFF ITS OBJECTION FILED BEFORE THE DRP WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT WAS CONTENDED BY THE LD COUNSEL FOR THE ASSESSEE THAT THE DRP ERRED IN PASSING AN EX - PARTY ORDER AND IS NOT JUSTIFIED IN COMMENTING IN PARA 1.1 OF THE IMPUGNED DIRECT IONS OF THE DRP THAT . T HE ASSESSEE IS NOT INTERESTED IN PURSUING THE OBJECTIONS FILED BEFORE THE DRP. IT WAS SUBMITTED THAT THE ASSESSEE HAD APPEARED BEFORE THE DRP - 1 ON 21.9.2015 AND 16.10.2015 AND THE MATTER WAS HEARD IN DETAIL BY THE DRP - 1. T HERE AFTER THE CASE WAS TRANSFERRED TO DRP - 2 AND THE HEARING WAS FIXED FOR 17.11.2015. IT WAS STATED THAT SINCE THE ASSESSEE IS BASED IN KOCHI, HEARING NOTICE SENT ON 12.11.2015 FIXING T H E CASE FOR 17.11.2015 WAS RECEIVED LATE ON ACCOUNT OF INTERVENING HOLIDAYS ; HENCE, THE ASSESSEE COMPANY COULD NOT ENTERED PERSONAL APPEARANCE BEFORE THE HONBLE DRP. 6 THE LD DR PRESENT WAS DULY HEARD. 7 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, BEFORE THE DRP - 1, THE ASSES SEE HAD ENTERED PERSONAL APPEARANCE ON 21.9.2015 AND 16.11.2015 AND THE CASE WAS ELABORATELY HEARD . IT(TP)A ITA NO 06/COCH/2016 4 THEREAFTER , THE CASE WAS TRANSFERRED TO DRP - 2 WHICH HAD DISPOSED OFF THE ASSESSEES OBJECTION VIDE DIRECTION DATED 19.11.2015. THE DRP - 2 , IN ITS DIRECTION S (IN PARA 1.1) , HAD HELD THAT THE MATTER IS HEARD EX - PARTY SINCE THE ASSESSEE HAD NOT ENTERED APPEARANCE. IT IS CLAIMED BY THE REPRESENTATIVE THAT THE HEARING NOTICE SENT O N 12.11.2015 FIXING THE CASE ON 17.11.2015 WAS RECEIVED BY THE ASSESSEE LATE DUE TO INTERVENING HOLIDAYS . I N THE INTEREST OF JUSTICE AND EQUITY, WE ARE OF THE VIEW THAT THE MATTER NEEDS FRESH CONSIDERATION BY THE DRP AND ACCORDINGLY, WE REMIT ALL THE ISSUES RAISED IN THIS APPEAL TO THE FILE OF THE DRP. THE DRP SHALL DISPOSE OFF THE OBJ ECTIONS DATED 27.3.2015 FILED BY THE ASSESSEE AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 8 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. STAY PETITION NO.02/COCH/2016 9 SIN CE THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE, THE STAY APPLICATION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND HENCE, THE SAME IS DISMISSED. 10 TO SUM - UP, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE WH EREAS THE STAY APPLICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF NOV 2016. SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 4 TH NOV 2016 RAJ* IT(TP)A ITA NO 06/COCH/2016 5 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT( A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN