Springer (India) Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 6708/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7259 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I2
• Next Hearing Date: 30-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 30-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 92C; 143(3); 144C; 13; 22

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI I-2 B ENCH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEM BER ITA NO. 6708/DEL/2016 [ASSESSMENT YEAR: 2012-13] SPRINGER [INDIA] PVT LTD VS THE A.C.I.T 7 TH FLOOR, VIJAYA BUILDING CIRCLE-24(1) BARAKHAMBHA ROAD NEW DELHI. NEW DELHI. PAN : AAGCS8935 B [APPELLANT] [RESPONDENT] DATE OF HEARING : 27.08.2020 DATE OF PRONOUNCEMENT : 28.08.2020 ASSESSEE BY : SHRI HIMANSHU SINHA, SR. AD V SHRI BHUWAN DHOOPER, ADV REVENUE BY : SHRI ANUPAM KANT GARG, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ASSESSMENT ORDER DATED 28.11.2016 FRAMED U/S 143(3) R.W.S 144C OF THE INCOME 2 TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] PERTAINING TO A.Y 2012-13. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE ASSESSING OFFICER/TPO/DRP ERRED IN MAKING A TP ADJU STMENT OF RS. 9.58 CRORES IN RESPECT OF INTERNATIONAL TRAN SACTIONS ALLEGING THE SAME TO BE NOT AT ARMS LENGTH IN TERM S OF PROVISIONS OF SECTION 92C OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE APPELLANT HAS BEEN ENGAGED IN THE PUBLISHING, REPRINTING AND DIST RIBUTION OF SCIENTIFIC BOOKS AND JOURNALS. IT ALSO UNDERTAKES MARKETING A ND SALES SUPPORT SERVICES WITH RESPECT TO THE AFOREMENTIONED BOOKS A ND JOURNALS SOLD BY THE ASSOCIATED ENTERPRISES [AE] IN THE TERRITORY OF INDIA, PAKISTAN, BANGLA DESH AND SRI LANKA. 4. THE APPELLANTS BUSINESS OF PUBLISHING BOOKS AND JOURNALS INVOLVED ELECTRONIC AS WELL AS PHYSICAL FORMAT, WHI CH ARE SOLD IN INDIA AS WELL AS OVERSEAS. INTERNATIONAL TRANSACTIONS PE RTAINING TO THIS BUSINESS ARE SUBJECT MATTER OF THE APPEAL. THE APP ELLANT ALSO DERIVES 3 REVENUE FROM BUSINESS OF REPRINTING OF BOOKS AND BY WAY OF COMMISSION ON SALES MADE BY THE AES IN INDIA AND DISTRIBUTION OF BOOKS OF THIRD PARTIES IN INDIA. 5. IN ITS TP STUDY REPORT, THE ASSESSEE HAS ADOPTED THE TRANSACTION BY TRANSACTION APPROACH WHICH WAS DISREGARDED BY TH E TPO BY AGGREGATING ALL TRANSACTIONS AND APPLYING TNMM METH OD AND MADE A TOTAL ADJUSTMENT OF RS. 12.41 CRORES. 6. WHEN THE OBJECTIONS WERE RAISED BEFORE THE DRP, THE DRP UPHELD THE APPLICATION OF TNMM ON THE BASIS THAT THE APPEL LANT HAD ADOPTED TNMM IN THE PREVIOUS YEARS. ACCORDINGLY, MARGINS O F THE COMPARABLE COMPANIES WERE RECOMPUTED. 7. PURSUANT TO THE DIRECTIONS OF THE DRP, THE TPO R ECOMPUTED THE TP ADJUSTMENT AT RS. 9.58 CRORES. 8. IT WOULD BE PERTINENT TO MENTION HERE THAT THIS IS THE SECOND ROUND OF LITIGATION. IN THE FIRST ROUND OF LITIGAT ION, THE APPELLANT 4 APPROACHED THE TRIBUNAL DISPUTING THE APPLICATION O F TNMM METHOD AS AGAINST THE OTHER METHOD APPLIED BY THE APPELLANT. THE TRIBUNAL REMANDED THE MATTER TO THE TPO VIDE ORDER DATED 19. 06.2017 WITH A DIRECTION TO EXAMINE THE CONTENTIONS RAISED BY THE APPELLANT AND DECIDE ON THE APPLICABILITY OF MOST APPROPRIATE MET HOD [MAM]. 9. AGGRIEVED BY THE ORDER OF THE TRIBUNAL, THE APPE LLANT APPROACHED THE HON'BLE HIGH COURT OF DELHI AND THE HON'BLE HIG H COURT VIDE ORDER DATED 15.12.2017, ALLOWED THE APPEAL OF THE APPELLA NT AND REMANDED THE MATTER TO ITAT WITH THE DIRECTION THAT ITAT MUS T DECIDE THE MATTER AFRESH AND GIVE A FINDING ON BOTH, LAW AND F ACTS. 10. SUBSEQUENT TO THE DECISION OF THE HON'BLE HIGH COURT, THE APPELLANT COMPANY HAS ENTERED INTO AN ADVANCE PRICI NG AGREEMENT [APA] U/S 92CC OF THE ACT WITH CBDT ON 06.08.2019 W ITH RESPECT TO SELECTION OF MAM AND COMPUTATION MECHANISM TO DETER MINE THE ALP OF ITS INTERNATIONAL TRANSACTIONS. 5 11. AS PER THIS APA OTHER METHOD HAS BEEN AGREED TO BE THE MAM FOR ALL TRANSACTIONS IN DISPUTE IN THIS YEAR AND IS APPLICABLE FOR THE PREVIOUS ASSESSMENT YEARS 2016-17 TO 2020-21 AND AL SO FOR ROLL BACK PERIOD COMPRISING OF PREVIOUS YEARS 2012-13 TO 2015 -16. 12. EVEN THOUGH THE YEAR UNDER CONSIDERATION IS NOT COVERED UNDER APA AND RISK PROFILE AS CLAIMED BY THE LD. COUNSEL FOR THE ASSESSEE IS CONSISTENT WITH APA YEARS AND, THEREFORE, THE LD. C OUNSEL FOR THE ASSESSEE HAS PRAYED FOR ADOPTION OF THE METHOD AND COMPUTATION MECHANISM ADOPTED IN THE APA TO DETERMINE THE ALP O F THE INTERNATIONAL TRANSACTIONS IN DISPUTE. 13. THE LD. DR, BY WAY OF HIS WRITTEN SUBMISSIONS, OBJECTED TO THE APPLICABILITY OF APA CLAIMING THAT THE YEAR UNDER C ONSIDERATION IS NOT COVERED BY APA. THE LD. DR FURTHER STATED THAT THE ASSESSEE IS REQUIRED TO FILE REQUISITE DOCUMENTS WHICH INCLUDE CERTIFICATE OF AN INDEPENDENT COST ACCOUNTANT OR EQUIVALENT INTER-COM PANY AGREEMENTS, ALL TRUE UPS AND TRUE DOWNS ETC ALONGWITH ANNUAL C OMPLIANCE REPORT AS PER RULE 10-O OF THE IT RULES. THE LD. DR FURTHER CONTENDED THAT THE ASSESSEE IS REQUIRED TO KEEP AND MAINTAIN CERTAIN D OCUMENTS AS PER 6 APA AND THE SAME SHOULD BE PRODUCED BEFORE THE TPO DURING COMPLIANCE AUDIT. 14. THE LD. DR FURTHER STATED THAT THERE IS DIFFERE NCE IN THE TP METHOD PERTAINING TO CERTAIN TRANSACTIONS AS APPLIE D BY THE ASSESSEE IN ITS TP STUDY. 15. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE F ACTUAL MATRIX AND THE SUBMISSIONS OF THE RIVAL REPRESENTATIVES. WE HA VE ALSO CAREFULLY PERUSED THE APA. AS PER CLAUSE 3 UNDER THE HEAD CO VERED TRANSACTION, IT IS MENTIONED THAT THE AGREEMENT IS APPLICABLE TO THE COVERED TRANSACTIONS GIVEN IN APPENDIX II AND MOST APPROPRIATE TRANSFER PRICING METHODS FOR COVERED INTERNATIONAL TRANSACTION OF THE APPLICANT ARE GIVEN IN APPENDIX IV. UNDER THE HEAD THE TERM OF AGREEMENT, IT IS MENTIONED THAT THE AGREEMENT SHAL L APPLY TO PREVIOUS ASSESSMENT YEARS 2016-17 TO 2020-2021 AND SHALL ALSO APPLY TO PREVIOUS YEARS 2012-13 TO 2015-16. 16. APPARENTLY, THE YEAR UNDER CONSIDERATION IS NOT COVERED BY THE APA. LIST OF COVERED TRANSACTIONS ARE AS UNDER: 7 8 9 10 11 12 13 14 15 16 17 18 19 17. IN LIGHT OF THE ABOVE, WE FIND THAT THE TRIBUNA L, IN A SERIES OF DECISIONS, HAVE CONSISTENTLY HELD THAT EVEN IF THE YEAR UNDER DISPUTE IS NOT COVERED BY APA, IF THE FAR IS SAME, APA SHOULD BE ADOPTED FOR INTERNATIONAL TRANSACTIONS FOR THE YEAR UNDER DISPU TE. THIS VIEW HAS BEEN TAKEN IN THE FOLLOWING CASES: 1. HONEYWELL AUTOMATION INDIA LTD 101 TAXMANN.COM 6 [PUNE] 2. ABICOR BINZEL AUTOMATION INDIA LTD ITA 2253 TO 2255/PUNE/2014 3. BUNDY INDIA ITA NO. 720/AHD/2017 4. CELTIC TECHNOLOGIES 109 TAXMANN.COM 334 5. RANBAXY LABORATORIES 68 ITR 322 [DELHI] 6. TIETO I.T. SERVICES ITA 1398/PUNE/2015 18. ACCORDINGLY, WE DIRECT TPO TO CONSIDER THE FAR OF THE YEAR UNDER CONSIDERATION WITH FAR OF THE YEARS IN APA. THE AS SESSEE IS DIRECTED TO PRODUCE ALL NECESSARY DOCUMENTS IN COMPLIANCE WITH APA AND THE ASSESSING OFFICER/TPO IS DIRECTED TO DECIDE THE ISS UE IN LIGHT OF APA IN RESPECT OF INTERNATIONAL TRANSACTIONS IN DISPUTE IN THE PRESENT APPEAL 20 AND ADOPT THE SAME METHODOLOGY WHICH HAS BEEN DIREC TED TO BE ADOPTED IN THE APA. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 6708/DEL/2016 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28.08 .2020. SD/- SD/- [ KULDIP SINGH ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH AUGUST, 2020 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 21 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 22 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER