Appeal details
Counselvise Citation
[2012] 119 COUNSELVISE.COM (IT) 8351 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-10-2012
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
K
Next Hearing Date
23-10-2012
Assessment Year
2006-2007
Appeal Filed On
29-10-2010
Judgement Text
ITA NOS.7404 & 1584 HSBC SECURITIES & CAPITAL MARKET S (P)LTD MUMBAI PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL 'K' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NOS. 7404/MUM/2010 & 1584/MUM/2012 (ASSESSMENT YEAR: 2006-07) HSBC SECURITIES & CAPITAL MARKETS (P) LTD., 52/60 M.G. ROAD, FORT, MUMBAI 400001 PAN: AAACJ 1395 E VS. ACIT RANGE-4(1) AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI YOGESH THAR DEPARTMENT BY: SHRI AJEET KUMAR JAIN,DR DATE OF HEARING: 23/10/2012 DATE OF PRONOUNCEMENT: 31/10/2012 O R D E R PER BENCH. THESE TWO APPEALS ARE BY ASSESSEE. ITA NO. 7404/MUM/2010 IS ON THE ORDER OF THE DRP-1 DATED 13.7.2010 WHEREI N THE DRP ACCEPTED THE REQUEST OF ASSESSEE FOR WITHDRAWAL OF OBJECTION AS IT WANTED TO PROCEED BEFORE NORMAL APPELATE AUTHORITY I.E. THE CIT (A). ACCORDINGLY THE DRP DIRECTED AO TO COMPLETE THE ASS ESSMENT AS PER THE PROPOSED DRAFT ORDER. ITA NO.1584/MUM/2012 IS ON THE ORDER OF THE CIT (A) WHO DID NOT ENTERTAIN THE APPEAL ON THE REASON THAT AN ORDER PASSED UNDER SECTION 143(3) R.W.S. 144C(13 ) OF THE ACT IS NOT AN APPEALABLE ORDER BEFORE THE CIT (A). THEREFO RE, ASSESSEE IS AGGRIEVED BY THE TWO ORDERS AND HENCE PREFERRED THE ABOVE TWO APPEALS. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS ENGAGED I N SHARE BROKING BUSINESS AND IS A LICENSED EQUITY BROKING H OUSE REGISTERED WITH THE STOCK EXCHANGE MUMBAI AND NATIONAL STOCK E XCHANGE. ITS CUSTOMERS COMPRISE FOREIGN INSTITUTION INVESTOR, MU TUAL FUNDS, DOMESTIC FINANCIAL INSTITUTIONS, BANKS ETC., ASSESS EE HAS ENTERED ITA NOS.7404 & 1584 HSBC SECURITIES & CAPITAL MARKET S (P)LTD MUMBAI PAGE 2 OF 5 INTO INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENT ERPRISES AND RECEIVED VARIOUS FEES/COMMISSIONS WHICH WAS SUBJECT MATTER OF CONSIDERATION UNDER THE PROVISIONS BY THE TPO. THE TPO ISSUED THE ORDER ON 30.10.2009 AND DRAFT ASSESSMENT ORDER BY A O BASED ON TPO ORDER WAS ISSUED ON 15.12.2009. ASSESSEE FILED OBJECTIONS TO THE DRP ON 27.01.2010. CONSEQUENT TO THE CLARIFICAT ION GIVEN BY THE CENTRAL BOARD OF DIRECT TAXES VIDE LETTER DATED 20. 01.2010 WHEREIN THE MEMBER, CBDT CLARIFIED THAT A CHOICE HAS BEEN G IVEN TO ASSESSEE EITHER TO GO BEFORE THE DRP OR TO PREFER N ORMAL APPELLATE CHANNEL. FOLLOWING THE ABOVE CLARIFICATION, ASSESSE E FILED LETTER ON 24.02.2010 WITHDRAWING THE OBJECTION FILED BEFORE T HE DRP AND INTIMATING AO THAT IT INTENDS TO FOLLOW THE NORMAL APPELLATE PROCEDURE. SINCE NO ACTION WAS TAKEN BY THE DRP, AN OTHER APPLICATION FOR WITHDRAWAL OF OBJECTIONS WERE FILED ON 27.04.2010 AND FURTHER A LETTER REQUESTING TO EXERCISE THE OPT ION TO FOLLOW APPEAL BEFORE THE CIT (A) DATED 14.05.2010. CONSEQU ENT TO THIS THE DRP ALLOWED ASSESSEE TO WITHDRAW THE OBJECTIONS AND DIRECTED AO TO PASS ORDER AS PER THE DRAFT ORDER PROPOSED VIDE THE ORDER DATED 13.07.2010. SINCE ASSESSEE HAS NOT RECEIVED THE SAI D ORDER DATED 13.07.2010, CONSEQUENT TO THE CBDT CIRCULAR NO.05/2 010 DATED 3 RD JUNE, 2010 ASSESSEE FILED ANOTHER LETTER BEFORE THE DRP FOR HEARING THE CASE ON THE OBJECTIONS ORIGINALLY FILED AS THE SAID BOARD CIRCULAR CLARIFIED THAT ONCE ASSESSEE FILED OBJECTIONS BEFOR E THE DRP, IT CANNOT PREFER APPEAL CONSEQUENT TO THE AMENDMENT BR OUGHT TO THE ACT. FURTHER, ON 24.07.2010 ASSESSEE FILED RECTIFIC ATION APPLICATION TO THE DRP AND AS INFORMED, NO ACTION HAS BEEN TAKE N ON THAT. AO IN THE MEANTIME HAD PASSED THE FINAL ORDER UNDER SE CTION 143(3) R.W.S. 144C OF THE ACT DATED 27.08.2010. ASSESSEE P REFERRED AN APPEAL UNDER SECTION 246A OF THE ACT ON 29 TH SEPTEMBER, 2010 WHICH APPEAL THE CIT (A) DISMISSED AS NOT MAINTAINA BLE VIDE THE ORDER DATED 27 TH DECEMBER, 2011. THEREFORE, ASSESSEE PREFERRED THE PRESENT TWO APPEALS ONE ON THE DIRECTIONS OF THE DR P ALLOWING THE ITA NOS.7404 & 1584 HSBC SECURITIES & CAPITAL MARKET S (P)LTD MUMBAI PAGE 3 OF 5 WITHDRAWAL OF THE OBJECTION AND THE OTHER ORDER OF THE CIT (A) DISMISSING THE APPEAL AS NOT MAINTAINABLE. 3. THE LEARNED COUNSEL AT THE OUTSET SUBMITTED THAT BA SED ON THE CBDT CLARIFICATION ISSUED BY THE BOARD ON 28.01 .2010, ASSESSEE WITHDREW THE OBJECTIONS BEFORE THE DRP AS CONSTITUT ION OF DRP AND THE RULES ARE NOTIFIED IN THIS YEAR ON 20.11.2009 A ND SINCE IT IS THE INITIAL YEAR OF THE DRP, MANY OF ASSESSEES WERE INQ UIRING WHETHER THEY HAVE TO FILE OBJECTIONS BEFORE THE DRP OR WHET HER CAN CHOOSE TO FILE AN APPEAL THROUGH NORMAL APPELLATE CHANNEL OF CIT (A). BASED ON PROVISIONS OF SECTION 144C SUB-SECTION (2) TO SU B-SECTION 5, THE BOARD HAS CLARIFIED THAT CHOICE HAS BEEN GIVEN TO A SSESSEE EITHER TO GO BEFORE THE DRP OR TO PREFER NORMAL APPELLATE CHA NNEL. ACCORDINGLY ASSESSEE CHOSE TO WITHDRAW THE OBJECTIO NS AND PREFERRED NORMAL APPELLATE PROCEDURES AND ACCORDING LY FILED NUMBER OF LETTERS TO THE DRP AND TO AO. HOWEVER, THE BOARD SUBSEQUENTLY VIDE CIRCULAR NO.5/2010 DATED 3 RD JUNE, 2010 EXPLAINING THE PROVISIONS OF FINANCE ACT 2009, VIDE PARA 45.4 STAT ED THAT ONCE OPTION OF FILING AN OBJECTION AGAINST THE DRAFT ASS ESSMENT ORDER BEFORE THE DRP HAS BEEN EXERCISED, ASSESSEE CANNOT WITHDRAW THE OBJECTION AND OPT FOR THE NORMAL CHANNEL OF FILING THE APPEAL BEFORE THE CIT(A). CONSEQUENT TO THIS CIRCULAR DATED 3 RD JUNE, 2010 ASSESSEE IMMEDIATELY WROTE TO THE DRP-1 WITHDRAWING THE EARLIER WITHDRAWAL OF OBJECTION AND SEEKING FOR HEARING THE CASE ON MERITS. HOWEVER, THE DRP ON 30.07.2010, WITHOUT CONSIDERING THE BOARD CIRCULAR, ALLOWED ASSESSEE TO WITHDRAW THE OBJECTIO N AND DIRECTED AO TO PASS THE ORDER AS PROPOSED. LEARNED COUNSEL S UBMITTED THAT THE PROCEEDINGS MAY BE RESTORED TO THE FILE OF THE DRP FOR CONSIDERING THE OBJECTIONS AND PASS AN ORDER ON MER IT. 4. LEARNED DR HOWEVER, REITERATED THE FACTS STATED BY ASSESSEE AND HAS NO OBJECTION IF THE MATTER IS RESTORED TO T HE DRP AS THE ORDER WAS NOT PASSED ON MERITS. ITA NOS.7404 & 1584 HSBC SECURITIES & CAPITAL MARKET S (P)LTD MUMBAI PAGE 4 OF 5 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WITHOUT G OING INTO MERITS OF VARIOUS GROUNDS RAISED BY ASSESSEE, WE AR E OF THE OPINION THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF A O BY SETTING ASIDE THE ORDERS OF THE DRP-1 AS WELL AS AOS FINAL ORDER DATED 27.08.2010. THIS IS THE FIRST YEAR OF NOTIFICATION OF DRP PROCEDURE AND AS STATED THE RULES WERE NOTIFIED ON 20.11.2009 , ASSESSEES TRANSFER OF PRICING STUDY BY THE TPO WAS DONE ON 30 .10.2009 AND THE DRAFT ASSESSMENT ORDER PASSED ON TPO ORDER WAS PROPOSED ON 15.12.2009. ACCORDINGLY ASSESSEE FILED THE OBJECTIO N FOR DRP IMMEDIATELY. HOWEVER, THE BOARD ISSUED CLARIFICATIO N ON 28.01.2010 THAT ASSESSEE HAS AN OPTION EITHER TO FILE OBJECTIO NS BEFORE THE DRP OR PROCEED WITH THE NORMAL APPELLATE PROCEDURE. BAS ED ON THIS CLARIFICATION ASSESSEE FILED WITHDRAWAL OF OBJECTIO N LETTER ON 24.02.2010. HOWEVER, IN THE MEANTIME ON 30.06.2010 EXPLAINING THE PROVISIONS OF THE FINANCE ACT 2009, THE BOARD C LARIFIED THAT ONCE OPTION OF FILING AN OBJECTION AGAINST DRAFT ASSESSM ENT ORDER HAS BEEN EXERCISED ASSESSEE CANNOT WITHDRAW THE OBJECTION. C ONSEQUENTLY THE ASSESSEE AGAIN APPROACHED THE DRP FOR HEARING THE O BJECTIONS ON MERITS. HOWEVER, THE DRP ON 30.07.2010 ALLOWED THE WITHDRAWAL WITHOUT CONSIDERING THE BOARD CIRCULAR ISSUED AND D IRECTED AO TO PASS THE ORDER IN CONFORMITY WITH THE DRAFT ASSESSM ENT ORDER. THEREFORE, THE DRP HAS NOT DECIDED THE ISSUE ON MER ITS. WHEN ASSESSEE PREFERRED APPELLATE PROCEDURE BY FILING TH E APPEAL BEFORE THE CIT (A), THE CIT (A) DISMISSED ASSESSEES APPEA L ON THE REASON THAT PROVISIONS OF SECTION 246A HAVE BEEN AMENDED B Y THE FINANCE ACT, 2009 WITHDRAWING THE POWER OF APPEAL TO THE CI T (A). THEREFORE, WE ARE OF THE OPINION THAT CIT(A) RIGHTLY DISMISSED THE APPEAL OF ASSESSEE. 6. CONSIDERING THE ABOVE FACTS AND ALSO RESPECTFULLY F OLLOWING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF AIA ENGINEERING LTD VS. DRP IN THE SPECIAL CIVIL APPLIC ATION NO.8179 OF 2010 DATED 31.08.2010, WE ARE OF THE VIEW THAT THE MATTER IS TO BE ITA NOS.7404 & 1584 HSBC SECURITIES & CAPITAL MARKET S (P)LTD MUMBAI PAGE 5 OF 5 RESTORED TO THE FILE OF THE DRP FOR CONSIDERING ASS ESSEES OBJECTIONS ON MERITS AND GIVE SUITABLE DIRECTIONS AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO ASSESSEE. THEREFORE, THE ORDER PASSE D BY THE DRP DATED 13.07.2010 IS HEREBY SET ASIDE ALONG WITH THE CONSEQUENTIAL ORDER PASSED BY AO DATED 27.08.2010 GIVING EFFECT T O THE ORDER OF THE DRP. THE MATTER IS RESTORED TO THE FILE OF AO A CCORDINGLY TO THE STAGE OF DRAFT ORDER ISSUED TO THE ASSESSEE FOR CON TINUATION OF PROCEEDINGS BEFORE DRP-1. 7. IN THE RESULT APPEAL IN ITA NO.1584/MUM/2012 BY ASS ESSEE IS DISMISSED, WHEREAS THE APPEAL IN ITA NO.7404/MUM /2010 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2012. SD/- SD/- (AMIT SHUKLA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31 ST OCTOBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, K BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI
