DCIT, Bangalore V. M/s Coriant Communication India Pvt. Ltd., Bangalore

ITA 652/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5322 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER IT(TP)A NO. 652/BANG/2016 (ASST. YEAR 2011-12) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 2(1)(1), BENGALURU. . APPELLANT VS. M/S CORIANT COMMUNICATION INDIA PVT. LTD. (FORMERLY KNOWN AS TELLABS INDIA PVT. LTD.,) NO.503, WTC BRIGADE GATEWAY, MALLESWARAM WEST, BANGALORE. . RESPONDENT PAN NO.AAACJ9392B CO NO.32/BANG/2017 (BY ASSESSEE) REVENUE BY : SHRI G.R REDDY, CIT ASSESSEE BY : SHRI PADAM CHAND KHINCHA, CA DATE OF HEARING : 29-5-2017 DATE OF PRONOUNCEMENT : 02-6-2017 IT(TP)A NO.652/B /16 CO NO.32/B/17 2 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE ASSESSMENT FOR ASST. YEAR 2011-12 PASSED U/S 143(3) R.W.S 144C(13) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE HAS ALSO PREFERRED CROSS OBJECTIONS (CO) IN RESPECT OF THE A FORESAID ORDER OF ASSESSMENT. REVENUE APPEAL IN IT(TP)A NO.652/BANG.2012 FOR A.Y 2011-12 2.1 IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL: 1 . THE HON'BLE DRP HAS ERRED IN FACTS & LAW AND HOLDING THAT M/S I C C INTERNATIONAL AGENCIES LTD IS NOT A COMPARABLE COMPANY ON THE GROUND OF NON AVAILABILITY OF INFORMATION REGARDING NATURE OF SERVICES, WHEN THE PRIMARY ACTIVITY OF COMPANY INVOLVES PROCESSING ORDERS INCLUDING MARKETING FOR ITS PRINCIPAL PRODUCTS. 2. THE HON'BLE DRP HAS ERRED IN IMPOSING IT(TP)A NO.652/B /16 CO NO.32/B/17 3 CONDITIONS IS BEYOND THE SCOPE OF LAW AND BUSINESS REALITY BY REJECTING ALL CLOSE COMPARABLES ON ONE O R THE OTHER GROUND, WITHOUT APPRECIATING THAT NOT TW O COMPANIES CAN EVER BE SAME. 2.2 AT THE OUTSET, THE LD AR FOR THE ASSESSEE SUBMI TTED THAT WHILE ON THE ONE HAND, IN THE GROUNDS RAISED (SUPRA), REVENU E HAS ASSAILED THE DIRECTIONS/ORDERS OF THE DRP AS ERRONEOUS IN HOLDIN G THAT THE COMPANY M/S ICC INTERNATIONAL AGENCIES LTD., IS NOT A COMPA RABLE COMPANY FOR SOME REASON OR OTHER; ON THE OTHER HAND AT PARA 2.3 OF THE IMPUGNED FINAL ORDER OF ASSESSMENT DATED 27/1/2016 THE ASSESSING OFFICER (AO) RECORDS THAT THE DRP, VIDE ITS ORDER DATED 29/5/2015 DID NOT GIVE ANY RELIEF TO THE ASSESSEE ON THE ISSU E OF TP ADJUSTMENT OF RS.1,06,34,177/- MADE U/S 92CA OF THE ACT. IT WAS STRONGLY CONTENDED THAT FROM THE ABOVE IT IS AMPLY CLEAR THA T THE AO IN THE IMPUGNED FINAL ORDER OF ASSESSMENT HAS NOT GIVEN EF FECT TO OR CARRIED OUT THE DIRECTIONS OF THE DRP; WHICH IS CLEAR VIOLA TION OF THE PROVISIONS OF SEC. 144C(10) AND (13) OF THE ACT. I T IS ARGUED THAT IN THESE FACTUAL CIRCUMSTANCES, NO CAUSE OF ACTION ARI SES TO REVENUE/AO TO FILE AN APPEAL AGAINST THE IMPUGNED FINAL ORDER OF ASSESSMENT, AS THE IT(TP)A NO.652/B /16 CO NO.32/B/17 4 DRPS DIRECTIONS HAVE NOT BEEN CARRIED OUT BY THE A O WHILE PASSING THE FINAL ORDER OF ASSESSMENT AND, THEREFORE, REVEN UES APPEAL IS NOT MAINTAINABLE AND IS LIABLE TO BE DISMISSED IN LIMIN E. 2.3 PER CONTRA, THE LD DR FOR REVENUE CONTENDS THAT WHEN THE DRP HAS ISSUED INCORRECT DIRECTIONS, THE TPO HAS RIGHTL Y NOT FOLLOWED THE SAME. 2.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. AN APPEAL BEFOR E THE TRIBUNAL LIES ONLY WHEN THE FINAL ORDER IS PASSED FRAMING THE ASS ESSMENT IN PURSUANCE OF AND CONFORMITY WITH THE DIRECTIONS ISS UED BY THE DRP. THEREFORE, BEFORE THE FINAL ORDER OF ASSESSMENT IS SO PASSED, NO APPEAL LIES AGAINST THE DIRECTIONS OF THE DRP. IT IS ALSO UNDISPUTED POSITION OF LAW THAT AS PER THE PROVISIONS OF SEC. 144C OF THE ACT, THE DIRECTIONS OF THE DRP ARE BINDING ON THE TPO/AO AND, THEREFORE , THE CAUSE OF ACTION TO FILE THE APPEAL ARISES ONLY AFTER PASSING THE FINAL ORDER FRAMING THE ASSESSMENT IN PURSUANCE TO THE DIRECTIO NS OF THE DRP. IF THE FINAL ORDER OF ASSESSMENT PASSED IS NOT AGAINST OR PREJUDICIAL TO THE INTERESTS OF REVENUE, THEN REVENUE WOULD HAVE NO GR IEVANCE AGAINST THE FINAL ORDER AS WELL AS THE DIRECTIONS OF THE DR P. EVEN OTHERWISE, IT(TP)A NO.652/B /16 CO NO.32/B/17 5 THE INTEREST OF REVENUE WOULD DEPEND UPON THE DEMAN D RAISED BY THE AO AS PER THE FINAL ORDER OF ASSESSMENT BEING FRAME D IN PURSUANCE AND CONFORMITY WITH THE DIRECTIONS ISSUED BY THE DR P. THUS, ONCE THE TPO/AO HAS NOT PASSED THE FINAL ORDER OF ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS OF THE DRP, REVENUE HAS NO CAUS E OF ACTION AND CONSEQUENTLY HAS NO RIGHT TO FILE THE APPEAL AGAINS T SUCH ORDER AS WELL AS THE DIRECTIONS OF THE DRP; AS WE FIND THE POSITI ON TO BE IN THE CASE ON HAND. THE DIRECTIONS ISSUED BY THE DRP BEING BI NDING, THE AO/TPO IS BOUND TO GIVE EFFECT TO THESE DIRECTIONS, IRRESPECTIVE OF FACT WHETHER THE SAME ARE ACCEPTABLE OR NOT TO THE DEPARTMENT. THE REMEDY AGAINST THE DRP DIRECTIONS IS AVAILABLE TO T HE DEPARTMENT TO FILE THE APPEAL, BUT ONLY WHEN AND AFTER THE FINAL ORDER OF ASSESSMENT IS PASSED IN PURSUANCE TO AND IN ACCORDANCE WITH THE D IRECTIONS OF THE DRP WHICH ARE BINDING OF THE TPO/AO. THE CONDUCT O F THE TPO/AO TO THE CONTRARY IS A CLEAR CASE OF DEFIANCE AND DIS REGARD TO THE BINDING DIRECTIONS OF THE HIGHER AUTHORITIES, I.E, THE DRP IN THE CASE ON HAND. 2.4.2 AS REGARDS THE SUBMISSIONS OF THE LD DR, (SUP RA) EVEN IF THE DIRECTIONS OF THE DRP ARE NOT ACCEPTABLE TO THE DEP ARTMENT AND MAY BE CONTRARY TO PRECEDENTS, THE ONLY REMEDY AVAILABL E TO DEPARTMENT IS IT(TP)A NO.652/B /16 CO NO.32/B/17 6 TO CHALLENGE THE SAME IN APPEAL AND NOT BY REFUSING TO OR NOT GIVING EFFECT TO THE SAME. 2.4.3 IN THIS REGARD AT PARA 2.3 OF THE IMPUGNED OR DER, THE AO HAS STATED THAT THE DRP VIDE ORDER DATED 29/12/2015 HAS NOT GIVEN THE ASSESSEE ANY RELIEF. THE SAID 2.3 IS EXTRACTED HER EUNDER:- 2. 3 ACCORDINGLY, A DRAFT ASSESSMENT ORDER WAS PASSED U/S 143(3) RWS 144C(1) OF THE I.T. 1961 ON 02.3.2015 IN WHICH ADDITION OF RS. 1,06,34,177/- WA S MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 92C(4) AND SECTION 92CA(4) OF THE INCOME-TAX ACT, ON THIS ISSUE. THE ASSESSEE AGGRIEVED BY THE DRAFT ASSESSMENT ORDER DATED 02.03.2015, FILED OBJECTION BEFORE DRAFT RESOLUTION PANEL -2, BENGALURU. THE DRP VIDE THEIR ORDER DATED 29/12/2015 DID NOT GIVE ANY RELIEF TO THE ASSESSEE ON THIS ISSUE. 2.4.4 A PERUSAL OF THE SAID PARA 2.3 OF FINAL ASST. ORDER (SUPRA) INDICATES THAT THE AO IS OF THE VIEW THAT THE DRP H AS NOT GIVEN THE ASSESSEE ANY RELIEF IN RESPECT OF THE ISSUES ON THE T.P ADJUSTMENT OF RS.1,06,34,777/-. THEREFORE, IT IS EVIDENT THAT I N THE CIRCUMSTANCES LAID OUT BY THE AO (SUPRA) THERE IS NO CAUSE OF ACT ION FOR REVENUE TO PREFER THIS APPEAL AND THAT RENDERS THIS APPEAL TO BE NOT MAINTAINABLE. IT(TP)A NO.652/B /16 CO NO.32/B/17 7 2.4.5 HOWEVER, A PERUSAL OF THE DIRECTIONS ISSUED B Y THE DRP IN ITS ORDER DATED 29/12/2015, WOULD GO TO SHOW THAT ON P AGE 11 AND 12 THEREOF, WHILE DEALING WITH REGARDS TO THE OBJECTIO NS RAISED TO COMPARABLES SELECTED BY THE TPO, THE DRP HAS DIRECT ED EXCLUSION OF THE COMPANY M/S ICC INTERNATIONAL AGENCIES LTD., HO LDING AS UNDER:- - SPACE LEFT INTENTIONALLY - IT(TP)A NO.652/B /16 CO NO.32/B/17 8 SN COMPANY NAME DRP DIRECTIONS 2.4.6 IT IS THIS DIRECTION OF THE DRP TO THE TPO/AO TO EXCLUDE M/S ICC INTERNATIONAL AGENCIES LTD., AS A COMPARABL E (SUPRA) THAT IN IT(TP)A NO.652/B /16 CO NO.32/B/17 9 OUR CONSIDERED VIEW, HAS TRIGGERED REVENUE PREFERR ING THIS APPEAL AND THE GROUNDS RAISED CHALLENGING THE DRPS DIRECT IONS (SUPRA). 2.4.7 AS DISCUSSED ABOVE AT PARA 2.4.1 TO 2.4.6 OF THIS ORDER (SUPRA), SINCE THE AO HAS NOT EXCLUDED M/S ICC INTERNATIONAL AGENCIES LTD., FROM THE SET OF COMPARABLES, HE HAS EVIDENTLY NOT G IVEN EFFECT TO AND PASSED THE IMPUGNED FINAL ORDER OF ASSESSMENT FOR A SST. YEAR 2011-12 IN PURSUANCE AND CONFORMITY WITH THE DIRECTIONS ISS UED BY THE DRP IN ITS ORDER DATED 29/12/2015, NO CAUSE OF ACTION LIE S WITH REVENUE FOR FILING THE PRESENT APPEAL. IN COMING TO THIS VIEW, WE DRAW SUPPORT FROM THE DECISION OF A CO-ORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF LENOVO INDIA PVT. LTD., IN IT(TP)A NO.511/BANG/2015 DATED 31/3/2017. IN THIS FACTUAL AND LEGAL VIEW OF THE M ATTER, WE HOLD THE PRESET APPEAL PREFERRED BY REVENUE FOR ASST. YEAR 2 011-12 IN IT(TP)A NO.652/BANG/2016 IS NOT MAINTAINABLE AND DESERVES DISMISSAL IN LIMINE. 3. IN THE RESULT, REVENUES APPEAL FOR ASST. YEAR 2 011-12 IS DISMISSED. IT(TP)A NO.652/B /16 CO NO.32/B/17 10 ASSESSS CROSS OBJECTION IN C.O NO.32/BANG/2017 4. IN THE C.O THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: IT(TP)A NO.652/B /16 CO NO.32/B/17 11 5. IN VIEW OF OUR HOLDING THAT REVENUES APPEAL IN IT(TP)A NO.652/BANG/2016 FOR ASST. YEAR 2011-12 IS NOT MAIN TAINABLE AND DISMISSING THE SAME IN LIMINE, WE ARE OF THE CONSID ERED VIEW THAT THIS C.O FILED BY THE ASSESSEE IN RESPECT OF THE SAID AP PEAL WOULD ALSO NOT BE MAINTAINABLE. THE DISMISSAL OF THE C.O IN NO WA Y IMPINGES ON THE RIGHT OF THE ASSESSEE TO FILE AN APPEAL AGAINST THE IMPUGNED FINAL ORDER OF ASSESSMENT FOR ASST. YEAR 2011-12, IF OTHERWISE MAINTAINABLE AND IT IT(TP)A NO.652/B /16 CO NO.32/B/17 12 WISHES TO DO SO. IN THAT VIEW OF THE MATTER, WE AL SO DISMISS THE ASSESSEES C.O FOR ASST. YEAR 2011-12 AS NOT MAINTA INABLE. 6. IN THE RESULT, BOTH REVENUES APPEAL AND THE ASS ESSEES CROSS- OBJECTION FOR ASST. YEAR 2011-12 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JUNE, 2017 . SD/- SD/- (VIJAYPAL RAO) (JASON P BO AZ) JUDICIAL MEMBER ACCOUNTANT M EMBER BANGALORE DATED : 2/6/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REG ISTRAR, ITAT, BANGALORE.