Kirloskar Ebara Pumps Ltd., V. DCIT, Cir.11(1), Pune,

ITA 796/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3182 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S SINGH
• Keywords: Transfer pricing; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER & SHRI G.S.PANNU ACCOUNTANT MEMBER ITA NO. 796/PN/09 (A.Y. 2005-06) KIRLOSKAR EBARA PUMPS LTD., APPELLANT PRIDE KUMAR SENATE BUILDING, S.B. ROAD, PUNE - 411 016 PAN AAACK7293A VS. DCIT, CIR. 11(1), PUNE RESPONDENT APPELLANT BY : SHRI. C.H. NANIWADEKAR, C.A. RESPONDENT BY : SHRI. A.S.SINGH/ PANKAJ GARG, CIT,D R ORDER PER G.S.PANNU, AM THIS APPEAL OF THE ASSESSEE PERTAINING TO ASSESSMEN T YEAR 2005-06 IS DIRECTED AGAINST THE ORDER OF THE CIT (A) I, PUNE DATED 04-05-2009 WHICH IN TURN HAS ARISEN FROM ORDER OF THE ASSESSING OFFICER DATED 24/10/2008 PASSED U/S.143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT T HE ACT). 2. THE ONLY DISPUTE IN THIS APPEAL RELATES TO AN AD DITION OF RS.4,51,993/- MADE BY THE ASSESSING OFFICER OUT OF ROYALTY PAYMEN T TO M/S. EBARA CORPORATION, JAPAN. 3. AT THE TIME OF HEARING, IT WAS A COMMON GROUND B ETWEEN RIVAL PARTIES THAT THE DISPUTE IS IDENTICAL TO THAT CONSIDERED BY THE TRIBUNAL IN ITA NO.1073/PN/07 DATED 30/07/2009 IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05. A COPY OF THE SAID PRECEDENT HAS ALSO BEEN PLACED F OR THE RECORD. ACCORDINGLY, AFORESAID DISPUTE IS BEING DISPOSED OFF IN THE LIGH T OF THE AFORESAID PRECEDENT. 4. THE APPELLANT COMPANY IS A JOINT VENTURE BETWEEN KIRLOSKAR BROTHERS LTD., AN INDIAN COMPANY AND M/S. EBARA CORPORATION, JAPA N. IN TERMS OF THE ITA NO. 796/PN/09 (A.Y. 2005-06) KIRLOSKAR EBARA PUMPS LTD., . 1998 2 COLLABORATION AGREEMENT, ASSESSEE IS REQUIRED TO PA Y ROYALTY TO M/S. EBARA CORPORATION, JAPAN AT THE RATE OF 4 % OF SALES MADE TO THE THIRD PARTIES. IN THE PROCEEDINGS U/S.92CA(3) OF THE ACT, THE TRANSFER PR ICING OFFICER NOTED THAT JAPANESE COLLABORATOR CHARGED ROYALTY AT THE RATE O F 3 % FROM TWO OF ITS GROUP COMPANIES BASED IN CHINA, WHEREAS ASSESSEE COMPANY WAS BEING CHARGED ROYALTY AT A HIGHER RATE OF 4 %. FOR THE SAID REAS ONS HE MADE AN ADJUSTMENT OF RS.4,51,993/- TO THE ARMS LENGTH PRICE FOR THE ROY ALTY PAYMENT. THE ASSESSING OFFICER MADE THE AFORESAID ADDITION FOLLOWING THE S IMILAR STAND OF THE TRANSFER PRICING OFFICER IN THE EARLIER ASSESSMENT YEAR OF 2 004-05. THE CIT(A) HAS ALSO SUSTAINED THE ADDITION FOLLOWING HIS OWN DECISION I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05. 5. IN TERMS OF THE DECISION OF TRIBUNAL DATED 30/07 /2009 (SUPRA) THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2004-05 HAS SINC E BEEN REVERSED ON THIS COUNT. FOR THE REASONS ASCRIBED BY THE TRIBUNAL I N ITS ORDER DATED 30.07.2010 (SUPRA), IN THIS YEAR ALSO THE IMPUGNED ORDER OF TH E CIT(A) IS UNSUSTAINABLE AS THE FACTS AND CIRCUMSTANCES ARE IDENTICAL. ACCORD INGLY, FOLLOWING THE AFORESAID PRECEDENT WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.4,51,993/- MADE ON ACC OUNT OF ADJUSTMENT IN THE ARMS LENGTH PRICE FOR ROYALTY PAYMENT TO M/S. EBAR A CORPORATION, JAPAN. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 12 TH NOVEMBER, 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S .PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 12 TH NOVEMBER , 2010 ASHWINI ITA NO. 796/PN/09 (A.Y. 2005-06) KIRLOSKAR EBARA PUMPS LTD., . 1998 3 TRUE COPY COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DCIT, CIR.11(1), PUNE 3. CIT(A)-I, PUNE 4. CIT- I, PUNE , 5. D.R. ITAT B BENCH 6. GUARD FILE BY ORDER ASSTT. REGISTRAR I.T.A.T PUNE