LIEBHERR CMC Tech I P Ltd, Pune V. Assistant Commissioner of Income-Tax, Circle -7, Pune

ITA 663/PUN/2022

AI Insights

The case involves Liebherr CMC Tech. India Private Limited, which appealed against the final assessment order passed by the Assessing Officer under sections 143(3) read with section 144C(13) of the Income Tax Act, 1961. The assessment order included an addition of Rs. 2,32,81,458 due to an alleged mismatch in sales turnover as per the service tax return and the audited financial statements. The appellant argued that this amount represented services availed and was covered under the Reverse Charge Mechanism, thus should not be considered as turnover. The DRP had previously set aside the issue to the Assessing Officer for verification, which was contested by the appellant as a violation of section 144C(8) of the IT Act, 1961.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 137570 (ITAT-PUNE)
• Duration Of Justice: 10 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 06-12-2022
• Assessment Year: misc
• Appeal Filed On: 29-07-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; TDS
• Section: 143(3); 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “C”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.663/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year: 2017-18 LIEBHERR CMC Tech. India Private Limited, Gat No.196/199, Village- Dhaygudewadi, Boripardhi, Taluka- Daund- 412203. PAN : AABCL4052F Vs. ACIT, Circle-7, Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the final assessment order passed by the Assessing Officer u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (‘the Act’) dated 30.06.2022 for the assessment year 2017-18. 2. The appellant raised the following grounds of appeal :- “On the facts and in the circumstances of case and in the law learned assessing officer erred in making an addition of Rs. 2,32,81,458 being alleged mismatch in the amount of sales turnover as per service tax return and amount reflected in notes of audited financial statements, by assuming that said amount is turnover of the appellant without realizing the facts that this amount represent services availed and Assessee by : Shri Pramod Shingte Revenue by : Shri Mallikarjun Utture Date of hearing : 07.12.2022 Date of pronouncement : 12.12.2022 ITA No.663/PUN/2022 2 covered under Reverse Charge Mechanism therefore entire addition needs to be deleted.” 3. The appellant raised the following additional ground of appeal :- “On the facts and in the circumstances of the case and in law the Dispute Resolution Panel (DRP) erred in setting aside the issue of alleged mismatch of service tax turnover, for further enquiry to the Assessing Officer, as the action is in direct violation of provisions of Section 144C(8) of the IT Act, 1961, the order passed by DRP is void ab initio and deserves to be struck down. Your appellant prays accordingly.” 4. Briefly, the facts of the case are as under : The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing, assembling and trading of construction equipment. The Return of Income for the assessment year 2017-18 was filed on 30.11.2017 declaring Rs.Nil income. The assessee company also reported certain international transactions. On noticing international transactions, the Assessing Officer referred the matter to the Transfer Pricing Officer (TPO) for the purpose of benchmarking the international transactions. The TPO vide an order dated 26.10.2020 passed u/s 92CA(3) suggested no TP adjustments. On receipt of the TPO’s order, the Assessing Officer passed a draft assessment order dated 09.08.2021 passed u/s 143(3) r.w.s. ITA No.663/PUN/2022 3 144C(1) making additions on account of Foreign Remittance Outwards – Rs.3,59,79,133/-; Foreign Remittance Inwards – Rs.16,97,03,512/-; Custom Duty Paid – Rs.1,32,07,537/- and Sales turnover/receipts – Rs.2,32,81,458/- totalling to Rs.24,21,71,640/-. 5. On receipt of the draft assessment order, the appellant filed objections before the ld. DRP objecting the proposed additions. The DRP though held that the appellant cannot challenge the jurisdiction u/s 144C as the appellant is not an eligible assessee, had proceeded with issuing directions to the Assessing Officer in respect to the objection of proposed additions on account of mismatch between the receipts shown in Profit & Loss Account and receipts received as TDS, set-aside the matter to the file of the Assessing Officer for verification and de novo consideration. 6. The provisions of sub-section (8) of section 144C specifically bars the DRP to set-aside any proposed variation or issue as well as any direction for further enquiry, which means the DRP itself should decide the issue after causing any further enquiry, as it deem fit. Thus, the direction of the DRP setting aside the issue to the Assessing Officer is contrary to the mandate of the provisions of sub-section (8) of section 144C and, therefore, the direction of the DRP setting aside the issue is quashed. We remit the matter to the ITA No.663/PUN/2022 4 file of the DRP to decide the issue afresh in accordance with law after causing necessary enquiry as it thinks fit on its own. 7. In the result, the appeal filed by the assessee stands partly allowed. Order pronounced on this 12 th day of December, 2022. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 12 th December, 2022. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The DRP-3, Mumbai-2. 4. The Pr. CIT-4, Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “C” बᱶच, पुणे / DR, ITAT, “C” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.