TRANSOCEANIC FINANCIAL ENGINEERING P. LTD, MUMBAI V. ITO 13(3)(4), MUMBAI

ITA 675/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5412 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2011-2012
• Appeal Filed On: 10-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH KUMAR SINGH
• Assessee Lawyers: DR PRAYAG JHA
• Keywords: Transfer pricing; Opportunity of being heard; Principle of natural justice; International transaction; Additional evidence
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 675 / MUM . /2016 ( ASSESSMENT YEAR : 20 11 12 ) TRANSOCEANIC FINANCIAL ENGINEERING P. LTD. 1) 402, FIELD VIEW, UPPER GOVIND NAGAR MALAD (EAST), MUMBAI 400 097 2) 108, SUJATA NIKETAN, 1 ST FLOOR RANI SATI ROAD, NEXT TO STATION MALAD (EAST), MUMBAI 400 097 PAN AADCT4166A . APPELLANT V/S INCOME TAX OFFICER WARD 13 ( 3 ) (4) , MUMBAI . RESPONDENT ASSESSEE BY : DR. PRAYAG JHA REVENUE BY : SHRI MANISH KUMAR SINGH DATE OF HEARING 28 . 0 1 .201 9 DATE OF ORDER 28.01.2019 O R D E R THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ASSESSMENT ORDER DATED 4 TH JANUARY 2016, PASSED UNDER SECTION 143(3) R/S 144C(13) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 2011 12, IN PURSUANCE TO THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL 2 (DRP), MUMBAI. 2 TRANSOCEANIC FINANCIAL ENGINEERING P. LTD. 2 . BRIEF FACTS ARE, THE ASSESSEE , AN INDIAN COMPANY , PROVIDES CONSULTANCY/ ADVISORY SERVICES ON FINANCIAL MATTERS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 31 ST MARCH 2013, DECLARING LOSS OF ` 13,745. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT , THOUGH , IN THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTION S WIT H ITS ASSOCIATED ENTERPRISES (A E) AGGREGATING TO ` 18,70,20,000, HOWEVER, STA TUTORY AUDIT REPORT CONCERNING SUCH INTERNATIONAL TRANSACTION WAS NOT FILED ALONG WITH THE RETURN OF INCOME. THEREFORE, FOR DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION ENTERED WITH THE AE , THE ASSESSING OFFICER MADE A REFERENCE TO T HE TRANSFER PRICING OFFICER. THE TRANSFER PRICING OFFICER IN HIS ORDER DATED 29 TH JANUARY 2015, MADE AN ADJUSTMENT TO THE ARM'S LENGTH PRICE BY AN AMOUNT OF ` 9,08,60,000. IN PURSUANCE TO THE ORDER PASSED BY THE TRANSFER PRICING OFFICER, THE ASSESSING OFFI CER PASSED THE DRAFT ASSESSMENT ORDER ADDING THE TRANSFER PRICING ADJUSTMENT MADE BY THE TRANSFER PRICING OFFICER. AGAINST THE DRAFT ASSESSMENT ORDER SO PASSED, THE ASSESSEE RAISED OBJECTION S BEFORE THE DRP. HOWEVER, THE DRP REJECTED THE OBJECTIONS OF THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER PASSED THE IMPUGNED ASSESSMENT ORDER CONFIRMING THE ADDITION MADE IN THE DRAFT ASSESSMENT ORDER ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT. 3 TRANSOCEANIC FINANCIAL ENGINEERING P. LTD. 3 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE HAD NOT ENTERED INTO ANY TRANSACTION OF REVENUE NATURE WITH ITS OVERSEAS A E. THEREFORE, THERE IS NO SCOPE FOR THE TRANSFER PRICING OFFICER TO DETERMINE THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , TO JUSTIFY ITS CLAIM AND DEMONSTRATE THAT THE ARM'S LENGTH PRICE DETERMINED BY THE TRANSFER PRICING OFFICER IS IMPROPER AND WITHOUT ANY BASIS , THE ASSESSEE HAD FILED DETAILED WRITTEN SUBMISSION S BEFORE THE DRP ON 7 TH OCTOBER 2015. A PAPER BOOK CONTAINING ADDITIONAL EVIDENCES WAS ALSO SUBMITTED BEFORE THE DRP ON 24 TH SEPTEMBER 2015. HE SUBMITTED , NEITHER THE WRITTEN SUBMISSION NOR THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE WERE TAKEN NOTE OF OR CONSIDERED BY THE DRP WHILE DISPOSING OFF ASSESSEES OBJECTION S . HE SUBMITTED, THOUGH, THE ASSESSEE HAD FILED AN APPLICATION UNDER SECTION 154 OF THE ACT BEFORE THE DRP POINTING OUT THE AFORESAID LAPSES, HOWEVER, THE SAID APPLICATION STILL REMAINS P ENDING. THUS, HE SUBMITTED , ALL THE ISSUES RELATING TO THE TRANSFER PRICING ADJUSTMENT MADE BY THE TRANSFER PRICING OFFICER DESERVES TO BE RESTORED BACK TO THE DRP FOR DE NOVO ADJUDICATION. 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, THOUGH, RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE DRP, HOWEVER, HE HAS NO OBJECTION IF THE ISSUES ARE RESTORED BACK TO THE DRP FOR DE NOVO ADJUDICATION . 4 TRANSOCEANIC FINANCIAL ENGINEERING P. LTD. 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE ARGUMENT OF THE LEARNED AUTHORIS ED REPRESENTATIVE BEFORE US IS TWOFOLD . FIRSTLY, THERE IS NO INTERNATIONAL TRANSACTION OF REVENUE NATURE BETWEEN THE ASSESSEE AND THE AE IN THE RELEVANT FINANCIAL YEAR. SECONDLY, THE SUBMISSIONS MADE BY THE ASSESSEE AND EVIDENCES FILED TO JUSTIFY ITS CLAIM THAT THERE IS NO INTERNATIONAL TRANSACTION OF REVENUE NATURE AND ALSO OBJECTING TO THE TRANSFER PRICING ADJUSTMENT MADE BY THE TRANSFER PRICING OFFICER WERE NOT CONSIDERED BY THE DRP. IN OUR CONSIDERED OPINION, IF FOR JUSTIFYING ITS CLAIM THAT NO TRANSFER PRICING ADJUSTMENT WAS REQUIRED TO BE MADE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE MAKES CERTAIN SUBMISSIONS AND FURNISHES EVIDENCES TO SUPPORT SUCH CLAIM, THE DEPARTMENTAL AUTHORITIES ARE DUTY BOUND TO NOT ONLY CONSIDER THE SUBMISS IONS OF THE ASSESSEE BUT EXAMINE THE EVIDENCES SUBMITTED . NON CONSIDERATION OF THE SUBMISSIONS AND EVIDENCES FURNISHED BY THE ASSESSEE AMOUNTS TO VIOLATION OF RULES OF NATURAL JUSTICE. THEREFORE, WE ARE INCLINED TO RESTORE ALL THE ISSUES RAISED IN THE PRES ENT APPEAL TO THE DRP FOR DE NOVO ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUNDS RAISED ARE ALLOWED FOR STATISTICAL PURPOSES. 6 . BEFORE PARTING, WE MUST MAKE IT CLEAR THAT WE HAVE NOT EXPRESSED ANY OPINION ON THE MERIT S OF THE ISS UES RAISED BY THE ASSESSEE IN THE PRESENT APPEAL. 5 TRANSOCEANIC FINANCIAL ENGINEERING P. LTD. 7 . IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.01.2019 SD/ N.K. PRADHAN ACCOUNTANT MEMBER SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 30.01.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI