ACTIS Advisers Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 64/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7046 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I2
• Next Hearing Date: 22-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 05-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Transfer pricing

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I - 2 , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO. 64 /DEL/20 1 2 AY: 200 5 - 06 ACTIS ADVISERS PVT.LTD. VS. DY.CIT, CIRCLE 1(1) MIRA, THE CORPORATE SUITES NEW DELHI BLOCK D, GROUND FLOOR 1&2 ISHWAR NAGAR NEW DELHI 110 025 PAN: AAACC 5281 G ( APPELLANT ) (RESPONDENT) APPELLANT BY : DR. RAKESH GUPTA, ADV. RESPONDENT BY : NONE . (APPLICATION REJECTED) ORDER PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS) - XX DATED 31.10.2011 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 2005 - 06. 2. NONE APPEARED ON BEHALF OF THE REVENUE. IN FACT NO PERSON WAS PRESENT IN THE COURT TO REPRESENT THE REVENUE. A N APPLICATION HAS BEEN MOVED BY THE LD.SR.D.R. MS.ANIMA BARNWAL WHEREIN THE REASON CITED FOR THE ADJOURNMENT IS AS FOLLOWS: THE CONCERNED SR.D.R. HAS TO TAKE CARE OF SOME URGENT OFFICIAL WORK AS DIRECTED BY HIS CIT . AFTER CONSIDERING THIS APPLICATION FOR ADJOURNMENT, WE REJECT THE SAME. ALL APPEALS POSTED ON 20 TH JUNE, 2016 AND 21 ST JUNE, 2016 HAD TO BE ADJOURNED AS THE REVENUE HAS SOUGHT ADJOURNMENTS ON THE GROUND OF, NON AVAILABILITY OF SR.D.RS AND ITA 64/DEL/2012 A.Y. 2005 - 06 ACTIS ADVISERS PVT.LTD., NEW DELHI 2 ALSO ON THE G ROUND THAT THE LD.CIT, D.R. IS UNWELL. WITH SOME DIFFICULTY WE COULD HEAR ONE SMALL MATTER ON MONDAY I.E. IN ITA 2555/DEL/16, AS THIS WAS A SIMPLE CASE OF SETTING ASIDE. 3. THE BENCH HAS CRASHED YESTERDAY I.E. ON 21.6.2016. WE HAVE BEEN MAKING REPEATED R EQUESTS TO THE REVENUE TO MAKE SOME ARRANGEMENT BY POSTING ADEQUATE D.RS TO REPRESENT THE CASE OF REVENUE. NO ACTION HAS BEEN TAKEN TILL DATE. UNDER THESE CIRCUMSTANCES, AS WE ARE UNABLE TO ALLOW THE BENCH TO CRASH EVERY DAY, WE REJECT THE APPLICATION OF THE LD. SR. D.R. AND PROCEED TO HEAR TH IS CASE EX PARTE , QUA THE REVENUE ON MERITS. IT WOULD NOT BE OUT OF PLACE TO MENTION THAT WE HAVE GRANTED ADJOURNMENTS IN THE CASES , WHICH ARE POSTED TODAY , WHEREVER THE GROUND OF ADJOURNMENT WAS THAT THE LD.CIT, D.R. WAS UNWELL. IN OUR VIEW, THE ADJOURNMENT APPLICATION FILED BY THE LD. SR. D.R. IN THE CASE ON HAND . 4. WE HAVE HEARD THE LD.COUNSEL FOR THE ASSESSEE DR.RAKESH GUPTA. DR. RAKESH GUPTA SUBMITTED THAT THOUGH A NUMBER OF GROUNDS HAVE BEEN TAKEN IN THIS CASE, THE EFFECTIVE GROUNDS ARE GROUND NOS. 2 AND 4, WHICH RELATE TO TRANSFER PRICING ADJUSTMENTS MADE BY THE A.O. TO THE EXTENT CONFIRMED BY THE LD.CIT(A). 5. AFTER HEARING DETAILED ARGUMENTS WE FIND THAT, OUT OF THE SIX COMPARABLES SELECTED BY THE ASSESSEE, HE DISPUTES THE INCLUSION OF FOUR COMPARABLES BEFORE THE LD.CIT(A). THE SE CONTENTIONS HAVE BEEN REJECTED BY THE LD. FIRST APPELLATE AUTHORITY. THE ASSESSEE FURTHER PLEADED BEFORE THE LD.CIT(A) FOR INCLUSION OF FOUR OTHER COMPARABLES, WHICH WA S NOT PART OF THIS TRANSFER PRICING STUDY. THE LD.CIT(A) REJECTED THE SAME ON THE GROUND THAT THE TURNOVER OF THESE COMPANIES IS MUCH LESSER WHEN COMPARED TO THE TURNOVER OF THE ASSESSEE COMPANY. IN OTHER WORDS TURNOVER FILTER HAD BEEN APPLIED. WE FI ND THAT THE FIRST APPELLATE AUTHORITY HAS TAKEN CONTRADICTORY ITA 64/DEL/2012 A.Y. 2005 - 06 ACTIS ADVISERS PVT.LTD., NEW DELHI 3 STAND ON THE ISSUE OF TURNOVER FILTER. THIS VERY SAME ARGUMENT OF THE ASSESSEE TO APPLY TURNOVER FILTER AND EXCLUDE 4 COMPARABLES WAS REJECTED BY THE LD.CIT(A). THUS ON ONE HAND THE LD.CIT(A ) REJECTS THE ARGUMENTS OF THE ASSESSEE FOR INCLUSION OF CERTAIN COMPARABLES ON THE GROUND THAT THE TURNOVER OF THESE COMPARABLE COMPANIES ARE MUCH LOWER THAN THE TURNOVER OF THE ASSESSEE COMPANY AND ON THE OTHER HAND, THE VERY SAME ARGUMENT OF THE ASSESSE E FOR EXCLUSION OF CERTAIN COMPARABLES, IS REJECTED BY THE LD.CIT(A). SUCH CONTRADICTORY ACTION CANNOT BE UPHELD. 6 . WE FURTHER OBSERVE THAT THIS IS THE FIRST YEAR OF THE COMPANY , WHERE A TRANSFER PRICING STUDY WAS UNDERTAKEN TO DETERMINE THE ARM S LE NGTH PRICE (ALP). DURING THE SUBSEQUENT A.YS THE COMPARABLES SELECTED BY THE COMPANY IN ITS TRANSFER PRICING REPORT AND THE COMPARABLES ACCEPTED BY THE REVENUE ARE DIFFERENT FROM THE COMPARABLE COMPANIES SELECTED IN THIS YEAR. WE FIND THAT NO REASON FO R SUCH INCONSISTENCY WHEN THE FACTS REMAIN THE SAME. THIS SHOWS THAT THE T.P. STUDY IN THE INITIAL YEAR HAS NO T BEEN PROPERLY DONE. THE ASSESSEE SELECTS SIX COMPARABLES AND THEN ARGUES THAT 4 OF THEM HAVE TO BE EXCLUDED. 7. IN VIEW OF THE ABOVE DISCUSS ION WE ARE OF THE CONSIDERED OPINION THAT THIS IS A FIT CASE FOR SETTING ASIDE THE MATTER TO THE FILE OF THE A.O./T.P.O. FOR FRESH DETERMINATION OF ALP. THE ASSESSEE SHALL CONDUCT A FRESH T.P. STUDY AND SUBMIT THE SAME TO THE REVENUE. THE T.P.O. IS ALSO D IRECTED TO UNDERTAKE A FRESH EXERCISE AND DETERMINE THE ALP . N EEDLESS TO SAY THAT CONSISTENCY HAS TO BE MAINTAINED BOTH BY THE ASSESSEE AND REVENUE IN THEIR STANDS. IN CASE THE ASSESSEE OR REVENUE DOES NOT MAINTAIN CONSISTENCY, IT SHOULD EXPLAIN THE REASONS FOR DOING SO. WE HAVE ALSO TO MENTION THAT THE WORKING CAPITAL ADJUSTMENT CLAIMED BY THE ASSESSEE HAS TO BE GRANTED BY THE REVENUE, AS THE TRIBUNAL IN THE SUBSEQUENT ASSESSMENT YEARS IN THE ASS ESSEE S OWN CASE HAS TAKEN A VIEW THAT WORKING CAPITAL ADJUSTMENT IS TO BE MADE FOR DETERMINING THE ALP. ITA 64/DEL/2012 A.Y. 2005 - 06 ACTIS ADVISERS PVT.LTD., NEW DELHI 4 8. HENCE, WE SET ASIDE THE MATTER TO THE FILE OF THE A.O./T.P.O. FOR FRESH ADJUDICATION DE NOVO IN ACCORDANCE WITH LAW. 9. IN THE RESULT THE APPEAL O F THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2016. SD/ - SD/ - ( SUCHITRA KAMBLE ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 29 TH JUNE, 2016 *MANGA COPY OF THE ORDER FORWARDED TO: 1. ASSESSEE ; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR ITA 64/DEL/2012 A.Y. 2005 - 06 ACTIS ADVISERS PVT.LTD., NEW DELHI 5