M/s Faurecia Automotive Seating India Pvt Ltd , Bangalore V. Assistant Commissioner of Income tax Circle-3(1)(1), Bangalore

ITA 812/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3614 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 10-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR PANDA
• Keywords: Transfer pricing; International transaction
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER IT (TP) A NO. 812 /BANG/201 7 ASSESSMENT YEAR : 20 1 2 - 1 3 M/S. FAURECIA AUTOMOTIVE SEATING INDIA PVT. LTD., PLOT NO. 19, KIADB INDUSTRIAL AREA, 2 ND MAIN, 2 ND DROSS, ATTIBELE, BENGALURU-560027. PAN : AADCS 8694 Q VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-3(1)(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI . BIJOY KUMAR PANDA, CIT - DR DATE OF HEARING : 02 . 0 8 .201 8 DATE OF PRONOUNCEMENT : 21 . 0 8 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), INTER ALIA , ON THE FOLLOWING GROUNDS: A. GENERAL 1. ERRED IN ASSESSING THE TOTAL INCOME AT RS 23,72,62,506 AS AGAINST INCOME OF RS 10,97,59,880 (AS PER THE RETURN OF INCOME FILED BY THE APPELLANT); B. TRANSFER PRICING ADJUSTMENT UNDER PROVISIONS OF CHAPTER X OF THE ACT IN RESPECT OF INTERNATIONAL TRANSACTIONS IT(TP)A NO. 812/BANG/2017 PAGE 2 OF 3 2. ERRED IN CONFORMING THE ARM'S LENGTH PRICE FOR INTERNATIONAL TRANSACTION IN RESPECT OF AVAILING PROFESSIONAL SERVICES BY THE APPELLANT FROM ITS ASSOCIATED ENTERPRISES ('AES') AT RS. NIL AS AGAINST THE SUM OF RS. 12,75,02,626/- AS DETERMINED BY THE APPELLANT AND THEREBY PROPOSING AN ADJUSTMENT OF RS. 12,75,02,626/- 3. EXCEEDED THEIR JURISDICTION BY COMPUTING THE TRANSFER PRICING ADDITION WITHOUT APPLYING ANY PRESCRIBED METHODS AND THUS THEIR ORDERS ON THIS ISSUE ARE BAD IN LAW. 4. ERRED IN ALLEGING THAT NO TANGIBLE OR DIRECT BENEFIT WAS DERIVED BY THE APPELLANT FROM THE RECEIPT OF PROFESSIONAL SERVICES AND FURTHER ERRED IN DISREGARDING THE SERVICE AGREEMENT, FACTUAL DETAILS, SUBMISSIONS AND VARIOUS DOCUMENTARY EVIDENCES FILED BY THE APPELLANT FROM TIME TO TIME TO SUBSTANTIATE THE RECEIPT, BENEFITS DERIVED THERE FROM AND COST INCURRED BY THE AE FOR RENDERING THESE SERVICES. 5. ERRED IN NOT APPRECIATING THAT PAYMENT FOR THESE SERVICES IS BASED ON ALLOCATION OF COSTS ON AN ARM'S LENGTH BASIS, AND APPLICATION OF A MARK-UP THAT HAS BEEN BENCHMARKED ON AN ARM'S LENGTH BASIS. 6. ERRED IN DISREGARDING THE BENCHMARKING ANALYSIS CONDUCTED BY THE APPELLANT USING THE TRANSACTIONAL NET MARGIN METHOD (`TNMM') TO DEMONSTRATE THE ARM'S LENGTH NATURE OF THE PRICING OF THE SAID INTERNATIONAL TRANSACTION. 7. EXCEEDED THEIR JURISDICTION BY MAKING AN AD-HOC DISALLOWANCE OF THE PAYMENT OF PROFESSIONAL SERVICES BY CHALLENGING THE COMMERCIAL WISDOM OF THE APPELLANT. 8. ERRED IN IGNORING THE FACT THAT THE AE HAS PAID TAX ON PROFESSIONAL FEES AND HAS FILED THE RETURN OF INCOME IN INDIA FOR THE YEAR UNDER CONSIDERATION. 9. ERRED IN COMPUTING INTEREST UNDER SECTION 234B AND 234C OF THE ACT; THE APPELLANT PRAYS THAT THE ADDITIONS MADE BY THE LEARNED AO/TPO UNDER THE DIRECTIONS OF THE LEARNED DRP BE DELETED AND CONSEQUENTIAL RELIEF BE GRANTED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY OF THE ABOVE GROUNDS OF APPEAL AND TO SUBMIT SUCH STATEMENTS, DOCUMENTS AND PAPERS AS MAY BE CONSIDERED NECESSARY EITHER AT OR BEFORE THE HEARING OF THIS APPEAL AS PER LAW. 2. THIS APPEAL CAME UP FOR HEARING ON 02.08.2018 BUT NONE APPEARED ON BEHALF OF THE ASSESSEE, DESPITE VALID SERVICE OF NOTICE OF HEARING. WE, THEREFORE, HAD NO OPTION BUT TO HEAR THE APPEAL EX-PARTE AND ACCORDINGLY REVENUE WAS HEARD. 3. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE CIT(A) IN THE LIGHT OF THE RIVAL SUBMISSIONS AND WE FIND THAT CIT(A) HAD ADJUDICATED THE ISSUE RAISED BEFORE IT IN DETAIL AND SINCE WE DO NOT FIND ANY INFIRMITY THEREIN, WE CONFIRM HIS ORDER. IT(TP)A NO. 812/BANG/2017 PAGE 3 OF 3 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST, 2018. SD/- SD/- BANGALORE. DATED: 21 ST AUGUST, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. DR 5. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. ( JASON P BOAZ ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER