JCB India Ltd., New Delhi V. DCIT, CIRCLE- 13(2), New Delhi

ITA 8311/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4681 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I1
• Assessment Year: 2010-2011
• Appeal Filed On: 28-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDEEP KR MISHRA
• Assessee Lawyers: SYALI
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: I - 1, NEW DELHI BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 7199/DEL/2017 S.A. NO. 717/DEL/2017 ASSESSMENT YEAR 2009 - 10 ITA NO. 8311/DEL/2018 S.A. NO. 157/DEL/2019 ASSESSMENT YEAR 2010 - 11 ITA NO. 7200 /DEL/201 7 S.A. NO. 7 18 /DEL/201 7 ASSESSMENT YEAR 201 3 - 14 M/S JCB INDIA LTD. B1/I - 1, 2 ND FLOOR MOHAN COOPERATIVE INDUSTRIAL ESTATE MATHURA ROAD NEW DELHI 110 044 PAN: AAACE0078P VS . ACIT, CIRCLE 13(2) C.R.BUILDING NEW DELHI ITA NO. 1546/DEL/2016 ASSESSMENT YEAR 2011 - 12 ACIT, CIRCLE 13(2) C.R.BUILDING NEW DELHI VS . M/S JCB INDIA LTD. NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. M.S.SYALI, SR.ADV. & SH . TARANDEEP SINGH, ADV. DEPARTMENT BY : SH. SANDEEP KR.MISHRA, SR.D.R. DATE OF HEARING : 21/05/2019 DATE OF PRONOUNCEMENT : 31 / 05/2019 ITA 7199/DEL/17 AND GROUP S.A.NOS. 717 AND GROUP JCB INDIA LTD. 2 ORDER PER BE NCH P RESENT APPEALS AND S TAY A PPLICATIONS HAVE BEEN FILED BY ASSESSEE AGAINST FINAL ASSESSMENT ORDER PASSED BY LD.ACIT. IT IS ALSO SUBMITTED THAT THERE IS A CROSS APPEAL FILED BY REVENUE FOR A.Y. 2011 - 12. THE DETAILS OF IMPUGNED ORDER ARE AS UNDER: S. NO. ASSESSMENT YEAR DATE OF IMPUGNED ORDER 1. 2009 - 10 13/09/17 2. 2010 - 11 13/11/18 3. 2011 - 12 13/01/16 4. 2013 - 14 30/10/17 2. LD. C OUNSEL SUBMITTED BEFORE US THAT REVENUE HAS ENTERED INTO SETTLEMENT WITH ASSESSEE UNDER MUTUAL AGREEMENT PROCEDURE (MAP) BETWEEN C OMPETENT A UTHORITY OF INDIA AND C OMPETENT A UTHORITY OF UK UNDER A RTICLE 27 OF INDIA UK D OUBLE T AXATION A VOIDANCE A GREEMENT. IT HAS BEEN SUBMITTED THAT ONLY ISSUE THAT NEEDS TO BE CONSIDERED IN ALL THESE APPEALS ARE IN RESPECT OF DETERMINATION OF ARMS LENGTH PRICE OF ROYALTY PAID BY ASSESSEE TO ITS A SSOCIATED E NTERPRISE (AE) , WHEREIN REVENUE DISPUTED BENCHMARKING METHODOLOGY ADOPTED BY ASSESSEE. HE SUBMITTED THAT BY VIRTUE OF MAP RESOLUTION , APPEALS FILED IN RESPECT OF PRESENT ASSESSMENT YEARS NEEDS TO BE WITHDRAWN. LD. C OUNSEL PLACED BEFORE US LETTER DATED 02/05/2019, RECEIVED FROM O FFICE OF DY. C OM MISSIONER OF I NCOME T AX C IRCLE 13 (2) IN REGARDS TO THE SAME. PLACING RELIANCE UPON CHART AT PAGE 2 - 3 OF COMPILATION FILED BEFORE US TODAY, LD. C OUNSEL SUBMITTED THAT TP ADJUSTMENT IN RELATION TO INTERNATIONAL TRANSACTION OF ROYALTY PAYMENT FOR YEARS UNDER CONSIDERATION WOULD BE AS UNDER: ITA 7199/DEL/17 AND GROUP S.A.NOS. 717 AND GROUP JCB INDIA LTD. 3 A.Y. PRE - ROYALTY PROFIT FILED POSITION ON ROYALTY RATE CAS AGREEMENT ON ROYALTY RATE 2009 - 10 14.75% 5% 4% 2010 - 11 22.96% 5% 5% 2011 - 12 18.91% 5% 5% 2012 - 13 19.38% 5% 5% 2013 - 14 16.57% 5% 4% 2.1 . HE FURTHER SUBMITTED THAT FOR ASSESSMENT YEAR 2013 - 14, ASSESSEE ALSO ENTERED INTO INTERNATIONAL TRANSACTION WITH ITS AE IN GERMANY, FOR WHICH THERE IS NO SETTLEMENT/MAP, THAT HAS BEEN ARRIVED AT. HE SUBMITTED THAT TO THAT EXTENT , TRANSACTION OF ASSESSEE WITH ITS AE GERMANY WILL HAVE TO BE ANALYSED ON THE BASIS OF FAR, AND ARM S LENGTH PRICE OF TRANSACTION WOULD HAVE TO BE DETERMINED AS PER SECTION 92 CA OF I NCOME T AX A CT , 1 961 READ WITH RULE 10 B OF I NCOME T AX R ULES , 1963. 2.2. LD. CIT DR DID NOT OPPOSE TO THE PROPOSITION ADVANCED BY LD. C OUNSEL. 3. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. WE HAVE PERUSED RESOLUTION OF DISPUTE UNDER MAP WITH UNITED KINGDOM IN CASE OF ASSESSEE FOR YEARS UNDER CONSIDERATION. 3. 1 . IN THE LIGHT OF AFORESTATED UNDERSTANDING BETWEEN REVENUE AND C OMPETENT A UTHORITY OF UK, ASSESSEE IS ALLOWED TO WITHDRAW ITS APPEAL S FOR A.Y. 2009 - 10, 2010 - 11, 2011 - 12 AND 2013 - 14 WHEREIN THE ISSUES RAISED ARE IN RESPECT OF TRANSACTION THAT STANDS F ULLY COVERED BY MAP RESOLUTION. 3. 2 . IN RESPECT OF ASSESSMENT YEAR 2013 - 14 , IT HAS BEEN SUBMITTED THAT, ASSESSEE HAD TRANSACTION WITH NON - UK BASED AE, FOR WHICH THERE IS NO MAP RESOLUTION. MAP IS DRAWN AFTER CONSIDERING RELEVANT ASPECTS GIVING RISE TO TR ANSFER PRICING ADJUSTMENT TO WITH A PARTICULAR UK TO DETERMINE THE ARMS LENGTH PRICE, SAME PARAMETERS CANNOT BE APPLIED TO DETERMINE THE ARMS LENGTH PRICE OF TRANSACTION WITH NON - UK BASED AE. WE DRAW OUR SUPPORT FROM THE ITA 7199/DEL/17 AND GROUP S.A.NOS. 717 AND GROUP JCB INDIA LTD. 4 VIEW EXPRESSED BY HONBLE BOMBAY HIGH COURT IN CASE OF PR.CIT VS JP MORGAN SERVICES INDIA PVT.LTD., REPORTED IN 2019 - TII - 33 - HC - MUM - TP . 3. 3 . ACCORDINGLY WE DIRECT LD. TPO TO DETERMINE ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTION ENTERED INTO BY ASSESSEE WITH A SSOCIATED E NTERPRISE IN GERMANY FOR A.Y. 2013 - 14, AS PER LAW. NEEDLESS TO SAY THAT PROPER OPPORTUNITY SHALL BE GRANTED TO ASSESSEE TO REPRESENT ITS CASE. 4. IN THE RESULT APPEAL FOR ASSESSMENT YEAR 2009 - 10, 2013 - 14 IN RESPECT OF TRANSACTION WITH NON - AE IS SET ASIDE TO L D. TPO AS PER THE DIRECTIONS HEREINABOVE , AND IN RESPECT OF ASSESSMENT YEAR 2010 - 11 AND 2011 - 12 THE ASSESSEE IS ALLOWED TO WITHDRAW THE APPEAL. IN RESPECT OF APPEAL FILED BY REVENUE FOR A.Y. 2011 - 12 THE SAME STANDS DISMISSED PURSUANT TO MAP RESOLUTION. IN R ESPECT OF ISSUES RAISED BY ASSESSEE ON THE ISSUES COVERED UNDER MAP FOR A.Y. 2013 - 14 APPEAL STANDS WITHDRAWN. 5. AS WE HAVE ALREADY DISPOSED OF APPEALS FOR ASSESSMENT YEAR UNDER CONSIDERATION, RESPECTIVE S TAY A PPLICATIONS FILED IN RESPECT OF YEARS UNDER C ONSIDERATION , THEREFORE , STANDS INFRUCTUOUS AND ARE DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON 31 /0 5 /2019. SD/ - SD/ - ( R.K.PANDA ) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 31 ST MAY , 2019 GMV ITA 7199/DEL/17 AND GROUP S.A.NOS. 717 AND GROUP JCB INDIA LTD. 5 COPY FORWARDED TO: - APPELLANT RESPONDENT CIT CIT(A) DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA 7199/DEL/17 AND GROUP S.A.NOS. 717 AND GROUP JCB INDIA LTD. 6 DATE DRAFT DICTATED ON 2 8 /05/19 DRAFT PLACED BEFORE AUTHOR 28 /05/19 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 29/5/19 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 29/5/19 APPROVED DRAFT COMES TO THE SR.PS/PS 31 /5/19 KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 31 /05/19 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.