WHILEMSEN SHIP MANAGEMENT (I) P. LTD, MUMBAI V. DCIT 8(3), MUMBAI

ITA 8132/MUM/2011

• Counselvise Citation: 813219914 RSA 2011
• Duration Of Justice: 3 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 29-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NISHANT THAKKAR
• Keywords: Transfer pricing; Rectification of order; Principle of natural justice
• Section: 143(3)

Judgement Text

K IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JM AND SHRI RAJENDRA, AM .. , , ./ I.T.A. NO. 8681 /MUM/2011 ( / ASSESSMENT YEAR : 2007-08 ./ I.T.A. NO. 8132 /MUM/2011 ( / ASSESSMENT YEAR : 2007-08 WILHELMSEN SHIP MANAGEMENT (INDIA) PRIVATE LIMITED, APPLE HERITAGE, SIR. M.V. ROAD, ANDHERI (EAST), MUMBAI 400 096. / VS. ASSTT. COMMISSIONER OF INCOME TAX 8(3), ROOM NO. 204, SECOND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : AAACI 1614H ( / APPELLANT ) .. ( ! / RESPONDENT ) A PPELLA NT BY SHRI NISHANT THAKKAR R E SPONDENT BY : SHRI N.K. CHAND, CIT DR SHRI JITENDRA YADAV , CIT ' # $ % & ' / DATE OF HEARING : 30-07-2015 ()*+ % & ' / DATE OF PRONOUNCEMENT : 07-08-2015 [ 3 / O R D E R PER A.D. JAIN, J.M . : .. , THESE TWO ARE ASSESSEES APPEALS FOR ASSESSMENT YEA R 2007-08. 2. FIRST, WE SHALL TAKE UP THE ASSESSEES APPEAL IN ITA NO. 8132/MUM/2011 FOR A.Y. 2007-08, WHEREIN THE FOLLOWI NG GROUNDS OF APPEAL HAVE BEEN RAISED:- ITA 8132 & 8681/M/11 2 THE LEARNED DISPUTE RESOLUTION PANEL II, MUMBAI, ( HEREINAFTER REFERRED TO AS THE 'DRP') HAS ERRED IN TAKING UP THE OBJECTI ONS OF YOUR APPELLANTS, AS TWO OF THE THREE MEMBERS [THE COMMIS SIONER MUMBAI CITY 8, BEING THE ADMINISTRATIVE COMMISSIONER OVER THE ACIT AND DIRECTOR OF INCOME-TAX (TRANSFER PRICING) BEING THE ADMINISTRATIVE DIRECTOR OVER THE TPO] COMPRISING THE HON'BLE DRP W ERE INTERESTED PARTIES. THE SAID MEMBERS OUGHT NOT HAVE TAKEN UP T HE SAID OBJECTIONS AND OUGHT TO HAVE RECUSED THEMSELVES FROM THE PROCE EDINGS. (2) THE LEARNED ASSISTANT COMMISSIONER OF INCOME-TA X 8(3) MUMBAI (HEREINAFTER REFERRED TO AS THE 'ACIT') AND/OR THE ADDL. COMMISSIONER OF INCOME-TAX II( 6) MUMBAI, THE TRANSFER PRICING OFFI CER (HEREINAFTER REFERRED TO AS THE 'TPO') AND/OR THE HON'BLE DRP HA VE ERRED IN LAW AND ON FACTS IN MAKING AN ADJUSTMENT OF RS. L,59,98,901 L- TO THE TOTAL INCOME OF YOUR APPELLANTS, FOR THIS ASST. YEAR. (3) THE ACIT AND/OR THE TPO AND/OR THE HON'BLE DRP HAVE ERRED IN LAW AND ON FACTS IN CALCULATING THE ADJUSTMENT AMOU NT OFRS.L,59,98,901L- AT THE ENTITY LEVEL, WHICH HAD A LREADY BEEN DISAPPROVED BY THE HON'BLE JURISDICTIONAL MUMBAI BE NCH OF THE INCOME- TAX APPELLATE TRIBUNAL (HEREINAFTER REFERRED TO AS 'THE ITAT') IN THE CASE OF DCIT 16(3) MUMBAI VS M/S. STARLITE, MUMBAI & VIC E VERSA (2010) 40 SOT 421 (TBOM) - (2010) 133 TTJ 425 (TBOM) (4) THE LEARNED TPO HAS ERRED IN LAW AND ON FACTS I N REJECTING YOUR APPELLANTS' CONTENTIONS / SUBMISSIONS THAT THE ADJU STMENT COULD BE MADE ONLY WITH REFERENCE TO INTERNATIONAL TRANSACTI ONS WITH ASSOCIATED ENTERPRISES (AES) AND NOT WITH NON-AES AND, THUS, I N REJECTING THEIR RECTIFICATION APPLICATION. (5) THE ACIT AND/OR THE TPO AND/OR THE HON'BLE DRP HAVE ERRED IN LAW AND CONSEQUENTLY, IN RAISING THE NOTICE OF DEMA ND DATED SEPTEMBER 30, IN THE SUM OF RS.34,73,358/-, WITHOUT GIVING APPROPRIATE CREDIT FOR THE AMOUNTS OF TDS-IT AND AD VANCE TAXES PAID DURING THE PREVIOUS YEAR. (6) THE ACIT AND/OR THE DRP HAVE ERRED IN LAW AND O N FACTS IN INITIATING THE PENALTY PROCEEDINGS U/S 271 (1)( C) OF THE IT A EVEN WHEN THERE WAS NO PRIMA FACIE FINDING AND/ CASE FOR INIT IATING THE SAME. (7) THE HON'BLE DRP HAVE ERRED IN LAW AND ON FACTS IN UPHOLDING THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 144C(L) O F THE ITA. ITA 8132 & 8681/M/11 3 2. GROUND NO. 1 IS CHALLENGING THE QUORUM OF THE DR P IN ITS CONSTITUTION. DRAWING ATTENTION TO THE LAST PORTION OF THE LD. DR PS ORDER, IT HAS BEEN CONTENDED THAT THE COMMISSIONER OF INCOME TAX, MUMB AI CITY 8, BEING THE ADMINISTRATIVE COMMISSIONER OVER THE ACIT AND THE D IRECTOR OF INCOME TAX (TRANSFER PRICING), BEING THE ADMINISTRATIVE DIRECT OR OVER THE TPO, THE LD. DRP OUGHT NOT HAVE ENTERTAINED THE CASE IN ITS SAID CON STITUTION. 3. THE LD. D.R., ON THE OTHER HAND, HAS RELIED ON T HE IMPUGNED ORDER. 4. IN THIS REGARD, THE CONTENTION OF THE ASSESSEE I S FOUND TO BE CORRECT. TWO OF THE THREE MEMBERS OF THE DRP, BEING INTEREST ED PARTIES, THE MATTER OUGHT TO NOT HAVE BEEN HEARD BY THEM. 5. IN LIONBRIDGE TECHNOLOGIES (P.) LTD. VS. DCIT, 51 SOT 40 (MUMBAI), IT HAS BEEN HELD THAT WHERE A MEMBER OF THE DRP WAS A JURISDICTIONAL COMMISSIONER OF THE ASSESSEE, THE CONSTITUTION OF T HE DRP WAS CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE. 6. IN VIEW OF THE ABOVE, THE ORDER PASSED BY THE LD . DRP, BEING VIOLATIVE OF THE NATURAL JUSTICE PRINCIPLE THAT NOBODY CAN BE A JUDGE OF HIS OWN CAUSE, IS SET ASIDE AND THE MATTER IS REMITTED TO THE DRP, TO BE DECIDED AFRESH, ON THE RECONSTITUTION OF THE QUORUM, IN ACCORDANCE WITH LA W. ITA NO. 8681/MUM/2011 FOR A.Y. 2007-08 7. IN ITA NO. 8681/MUM/2011, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- (1) THE LEARNED ADDL. COMMISSIONER OF INCOME-TAX ( TP) II(6), MUMBAI (HEREINAFTER REFERRED TO AS THE 'TPO') HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADJUSTMENT OFRS.L,59,98,901L- TO THE TOTA L INCOME OF YOUR APPELLANTS, FOR THIS ASST. YEAR. (2) THE LEARNED TPO HAS ERRED IN LAW AND ON FACTS I N CALCULATING THE ADJUSTMENT AMOUNT OF RS.L,59,98,901L- AT THE ENTITY LEVEL, WHICH HAD ALREADY BEEN DISAPPROVED BY THE HON'BLE JURISDICTIO NAL MUMBAI BENCH ITA 8132 & 8681/M/11 4 OF THE INCOME-TAX APPELLATE TRIBUNAL (HEREINAFTER R EFERRED TO AS 'THE ITAT') IN THE CASE OF DCIT 16(3) MUMBAI V S M/S STA RLITE, MUMBAI & VICE VERSA (2010) 40 SOT 421 (TBOM) = (2010) 133 TT J 425 (TBOM). (3) THE LEARNED TPO HAS ERRED IN LAW AND ON FACTS I N REJECTING YOUR APPELLANTS' CONTENTIONS I SUBMISSIONS THAT THE ADJU STMENT COULD BE MADE ONLY WITH REFERENCE TO INTERNATIONAL TRANSACTI ONS WITH ASSOCIATED ENTERPRISES (AES) AND NOT WITH NON-AES AND, THUS, I N REJECTING THEIR RECTIFICATION APPLICATION. (4) RELIEF: YOUR APPELLANTS, THEREFORE, HUMBLY SUBM IT THAT- (I) THE TP ORDER DATED 29.10.2010 PASSED BY THE TPO U/S 92CA(3) OF THE ITA MAY PLEASE BE QUASHED; (II) THE SAID TP RECTIFICATION ORDER DATED MAY 31, 2011 MAY PLS BE QUASHED ; AND . (III) ANY OTHER RELIEFS DEEMED NECESSARY BY YOUR HO NOURS MAY PLEASE BE GRANTED TO YOUR APPELLANTS. 8. WE FIND THAT, AS CONTENDED, THE DECISION IN THIS APPEAL IS CONSEQUENTIAL TO THAT IN ITA NO. 8132/MUM/2011, WHICH WE HAVE REM ITTED TO THE LD. DRP. AS SUCH, ITA NO. 8681/MUM/2011 IS ALSO REMITTED TO THE LD. DRP, TO BE DECIDED IN ACCORDANCE WITH THE DECISION TO BE TAKEN IN ITA 8132/MUM/11. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE TREATED AS ALLOWED, FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2015. 3 % ()*+ ' 45 6 7 07-08-2015 ) % 8$ SD/- SD/- (RAJENDRA) (A.D. JAIN ) ACCOUNTANT MEMBER /J UDICIAL MEMBER 4 ' D$ MUMBAI ; 6 DATED 07-08-2015 [ #.../ R.K. R.K. R.K. R.K. , SR. PS ITA 8132 & 8681/M/11 5 ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' E& () / THE CIT(A)-4, MUMBAI 4. ' E& / CIT- 2, MUMBAI 5. H#I 8 &JK , ' JK+ , 4 ' D$ / DR, ITAT, MUMBAI E BENCH 6. 8 L M $ / GUARD FILE. ! ( / BY ORDER, ! H& & //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , 4 ' D$ / ITAT, MUMBAI