CAMEO GLOBAL COMMUNICATIONS PVT. LTD. (EARLIER KNOWN AS STS INFOTECHNOLOGIES INDIA PVT. LTD.), NAVI MUMBAI V. ITO - 10(3)(4), MUMBAI

ITA 6100/MUM/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1877 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST TH E DATED PASSED
• Keywords: Transfer pricing
• Section: 271(1)(c); 92C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, JM AND SHRI N. K. PRADHAN , AM / I .T.A. NO S . 6100 & 6101 /MUM/20 1 6 ( / ASSESSMENT YEAR: 20 09 - 10 & 2011 - 12 ) CAMEO GLOBAL COMMUNICATION PVT. LTD. (EARLIER KNOWN AS STS INFOTECHNOLOGIES INDIA PVT. LTD.) 50/101, SEA WOODS ESTATE, NRI COMPLEX, PHASE - 2, NERUL NAVI MUMBAI - 400076. / VS. ITO - 10(3)(4) AAYAKAR BHAVAN, M. K. MARG, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAJCS1639R ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 03 / 1 2 /20 20 /DATE OF PRONOUNCEMEN T: 03 /12 / 20 20 / O R D E R PER AMARJIT SINGH, JM: THESE APPEAL S FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 10 . 08 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 24 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A) ] AND PERT AINS TO A.Y S . 2009 - 2010 & 20 1 1 - 12 . ITA. NO . 6100/M/2016 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS.: - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), MUMBAI - 24 HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE L D. ASSESSING OFFICER OF LEVYING PENALTY OF RS.8,93,018 UNDER SECTION 271(1)(C) READ WITH EXPLANATION 1 OF THE I. T. ACT, 1961 ON ADDITION OF RS.29,76,725 TO THE RECEIPT/ SALES RECOGNIZED IN BOOKS OF ACCOUNT BY CHARGING 26.5% MARK UP ON CONVEYANCE/TRANSPOR TATION EXPENSES INCURRED OF RS.23,53,143 FOR TRANSPORT FACILITIES PROVIDED BY THE APPELLANT TO ITS EMPLOYEES. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN HOLDING THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF THE INCOME AND EXPLANATION FURNISHED BY THE APPELLANT WAS FALSE AND NOT BONAFIDE. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FOLLOWING: ASSESSEE BY : SHRI PRANAV SHAH REVENUE BY: SHRI ANAND MOHAN (DR) SHRI SUSHI KR. MISHRA ITA NO S . 6100 & 6101 /M/20 1 6 A.Y S .20 09 - 10 & 2011 - 12 2 A) THE APPELLANT HAS RECOGNIZED REVENUE DURING THE YEAR UNDER APPEAL BASED ON ACTUAL CONTRACT (WITHOU T CHARGING MARK UP OF 26.5% ON TRANSPORTATION FACILITIES PROVIDED TO EMPLOYEES) WITH ITS PARENT COMPANY STS INTERNATIONAL INC. (HERE - IN - AFTER REFERRED TO AS ST US) WHICH IS CONSISTENT WITH GLOBAL TRANSFER PRICING POLICY OF STS GROUP. B) THE PROPOSED CON TRACT I.E. THE PROPOSAL MADE BY THE APPELLANT TO STS US TO CHARGE MARK U P OF 26.5% ON TRANSPORTATION FACILITIES PROVIDED TO EMPLOYEES, WAS NEVER AGREED AND FINALIZED BETWEEN THE APPELLANT AND STS US AS PROPOSAL OF APPELLANT WAS NOT IN ACCORDANCE WITH GLOB AL TRANSFER PRICING POLICY OF STS GROUP. C) THE PROPOSED CONTRACT BASED ON WHICH ADDITION MADE BY THE LD. AO TO RECEIPT /SALES RECOGNIZED IN BOOKS OF ACCOUNT WAS ERRONEOUSLY SUBMITTED BY APPEAL DURING THE ASSESSMENT PROCEEDINGS OF AY 2009 - 10. D) THE DIFF ERENCE IN PRICING METHODOLOGY BETWEEN REVENUE AUTHORITIES AND APPELLANT AND ADDITION MADE THEREBY DOES NOT LEAD TO CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. E) MERE CONFIRMATION OF ADDITION MADE IN QUANTUM PROCEEDINGS BY TH E CIT(A) AND ACCEPTANCE OF THE ADDITION BY THE APPELLANT TO BUY PEACE AND AVOID PROTRACTED LITIGATION DOES NOT ISO FACTO LEADS TO CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. ITA. NO. 6101/M/2016 3 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), MUMBAI - 24 HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE LD. ASSESSING OFFICER OF MAKING ADDITION OF RS 30,89,049 IN THE ASSESSMENT ORDER PASSED U/ S 143(3) OF THE I. T. ACT, 1961 TO THE RECEIPT/SALES RECOGNIZED IN BOOKS OF ACCOUNT BY CHARGING 26.5% MARK - UP ON CONVEYANCE TRANSPORTATION EXPENSES INCURRED OF RS.24,41,936 FOR TRANSPORT FACILITIES PROVIDED BY THE APPELLANT TO ITS EMPLOYEES. 2. THAT ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DISREGARDING THE FACT THAT THE APPELLANT HAS RECOGNIZED REVENUE DURING THE YEAR UNDER APPEAL BASED ON ACTUAL CONTRACT (WITHOUT CHARGING MARK UP OF 26.5% ON TRANSPORTATION FACILITIES PROVIDED TO EMPLOYEES) WITH ITS PARENT COMPANY STS INTERNATIONAL IN C. (HERE - IN - AFTER REFERRED TO AS STS US), WHICH IS CONSISTENT WITH GLOBAL TRANSFER PRICING POLICY OF STS GROUP. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DISREGARDING THE FACT THAT THE PROPOSED CONTRACT I.E. THE PROPOSAL MADE BY THE APPELLANT TO STS US TO CHARGE MARK UP OF 26.5% ON TRANSPORATION FACILITIES PROVIDED TO EMPLOYEES WAS NEVER AGREED AND ITA NO S . 6100 & 6101 /M/20 1 6 A.Y S .20 09 - 10 & 2011 - 12 3 FINALIZED BETWEEN THE APPELLANT AND STS US AS PROPOSAL OF THE APPELLANT WAS NOT IN ACCORDANCE WITH GLOBAL TRANSFER PRICING POLICY OF STS GROUP. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT WHLE PASSING THE ORDER FOR THE YEAR UNDER APPEAL, THE LD. AO HAS NOT APPLIED HIS MIND AT ALL AND HAS BLANKLY FOLLOWED THE ASSESSMENT ORDER PASSED FOR AY 2009 - 10 WHEREIN DURING THE ASSESSMENT PROCEEDINGS OF THE SAID YEAR THE APPELLANT THROUGH OVERSIGHT, SUBMITTED THE PROPOSED CONTRACT BASED ON WHICH ADDITION WAS MADE BY THE LD. AO TO RECEIPT/SALES RECOGNIZED IN THE BOOKS OF ACCOUNT OF THAT YEAR. THE LD. CIT(A) HAS ALSO FAILED TO APPRECIATE THAT THE LD. AO HAS HEAVILY RELIED ON THE FACT THAT THE APPELLANT HAS NOT FILED SECOND APPEAL BEFORE THE HONBLE INCOME TA X APPELLAN T TRIBUNAL AGAINST ORDER OF CIT (A) PASSED FOR ASSESSMENT YEAR 2009 - 10. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN RELYING UPON THE ORDER PASSED BY LD. CIT(A) - 15 FOR ASSESSMENT YEAR 2009 - 10. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT DECISION OF FINDING GIVEN IN ASSESSMENT YEAR 2009 - 10 HAS NO BINDING FORCE UPON INCOME - TAX AUTHORITIES AS THE PRINCIPLE OF RES - JUDICATA HAS NO APPLICATION TO INCOME - TAX AUTHORITIES. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND WITHOUT PREJUDICE TO THE ABOVE GROUND NO. 1,2,3,4 AND 5 TAKEN ABOVE, THE LD. CIT(A) HAS ERRED IN LAW BY NOT TAKING COGNIZANCE OF THE FACT THAT TRANSACTION BETWEEN THE APPELLANT AND STS US IS AT ARMS LENGTH PRICE AS PER THE P ROVISIONS OF SECTION 92C OF THE ACT AS PER TRANSFER PRICING STUDY REPORT. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT PRICING METHODOLOGY AS ADOPTED BY THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT PRICING METHODOLOGY AS ADOPTED BY THE LD. AO FOR MAKING ADDITION U/S 92C OF THE ACT DURING AY 2009 - 10 AS WELL AS IN AY 2011 - 12, IS NOT IN ACCORDANCE WITH LAW. 4. WHEN THESE APPEAL S WERE CALLED OUT FOR HEARING, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT HE HAS FILED THE NECESSARY DECLARATION UNDER DIRECT TAX VIVAD SE VISHWAS ACT, 2020 (ACT 3 OF 2020) AND IS AWAITING FOR FINAL RESOLUTION OF THE MATTER UNDER THE SAID SCHEME. HE SUBMITTED THAT UPON COMPLETION OF THE NECESSARY FORMALITIES, HE WILL WITHDRAW THE APPEAL S . IN RESPONSE TO THE SUGGESTION FROM THE BENCH , HE FAIRLY ACCEPTED THAT HE HAS NO OBJECTION TO THE APPEAL S BEING DISMISSED AS WITHDRAWN AS LONG AS HIS RIGHT FOR REVIVAL OF THE APPEAL S ARE PROTECTED, IN THE EVENT OF, FOR SOME UNFORTUNATE REASON, THE MATTER BEING NOT SETTLED UNDER THE VIVAD SE VISHWAS S CHEME. ITA NO S . 6100 & 6101 /M/20 1 6 A.Y S .20 09 - 10 & 2011 - 12 4 5 . THE LD. DR ALSO DID NOT OBJECT TO DISGRACE SO SUGGESTED. 6 . IN VIEW OF THE ABOVE, WE DISMISS THE APPEAL S AS WITHDRAWN, SUBJECT TO BE RIDER THAT IN THE UNLIKELY EVENT OF MATTER NOT BEING RESOLVED UNDER THE VIVAD SE VISHWAS SCHEME , THE ASSESSEE SHA LL HAVE LIBERTY TO APPROACH THE TRIBUNAL FOR RESTORATION OF HIS APPEAL S . 7 . IN THE RESULT, THE APPEAL S ARE DISMISSED AS WITHDRAWN SUBJECT TO THE OBSERVATION ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 03 / 1 2 /2020 SD/ - SD / - ( N. K. PRADHAN ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 03 /12 / 2020 V IJAY PAL SINGH ( SR.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. REGISTRAR) , / ITAT, MUMBAI