KODAK GRAPHIC COMMUNICATIONS INDIA (P) LTD, MUMBAI V. ACIT 10(1), MUMBAI

ITA 8710/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75276 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 20-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJEET KUMAR JAIN
• Assessee Lawyers: P J PARDIWALA
• Keywords: Depreciation; Transfer pricing

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUM BAI . . , , BEFORE SHRI I. P. BANSAL, J.M. AND SHRI SANJAY ARO RA, A.M. ./ I.T.A. NO. 8710/MUM/2010 ( / ASSESSMENT YEAR: 2006-07) KODAK GRAPHIC COMMUNICATIONS INDIA PVT. LTD., (NOW KOTAK INDIA PVT. LTD.) KALYANIWALLA & MISTRY, ARMY & NAVY BUILDING, 3 RD FLOOR, 148, MAHATMA GANDHI ROAD, FORT, MUMBAI-400 001 / VS. ASST. CIT-10(1), AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI-400 020 ./ ./PAN/GIR NO. AABCK 1644 C ( /APPELLANT ) : ( !' / RESPONDENT ) # $ / APPELLANT BY : SHRI P. J. PARDIWALA !' # $ / RESPONDENT BY : SHRI AJEET KUMAR JAIN % &'( # )* / DATE OF HEARING : 20.01.2014 +,- # )* / DATE OF PRONOUNCEMENT : 20.01.2014 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE ARISING OUT OF IT S ASSESSMENT U/S.143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (THE ACT HEREINA FTER) DATED 18.10.2010 FOR THE ASSESSMENT YEAR (A.Y.) 2006-07. 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE APPEAL RAISES THREE ISSUES PER ITS TEN GROUNDS, WITH ISSUE 1 (PER GD. # 1 TO 3) AND ISSUE 2 (PER GD. # 4 TO 9), 2 ITA NO. 8710/MUM/2010 (A.Y. 2006-07) KODAK GRAPHIC COMMUNICATIONS INDIA PVT. LTD. VS. AS ST. CIT BEING SQUARELY COVERED BY THE TRIBUNALS ORDER IN T HE ASSESSEES OWN CASE FOR A.Y. 2004- 05 (IN ITA NO.1557/MUM/2009 DATED 26.06.2003), PLAC ING A COPY OF THE SAME ON RECORD. HE WOULD THEN TAKE US TO THE RELEVANT PARTS OF THE SAID ORDER, I.E., QUA THE SAID GROUNDS, BEING PARAS 15 TO 20 (PGS. 6-9) AND PARAS 40 TO 49 (PGS.16-28) FOR THE TWO ISSUES RESPECTIVELY. AS REGARDS THE THIRD ISSUE, PRESSED V IDE ITS GROUND NO. 10, THE SAME IS IN RESPECT OF PAYMENT FOR TECHNICAL AND ALLIED SERVICE S, INCURRED IN THE SUM OF RS.47,61,900/-. THE SAME HAS BEEN DISALLOWED BY THE ASSESSING OFFICER (A.O.) U/S. 40(A)(IA) INASMUCH AS THERE HAS BEEN NO DEDUCTION O F TAX AT SOURCE. THE EXPENDITURE INCURRED IS ON THE VISIT OF SPECIALIST TECHNICAL PE RSONNEL FROM AN ASSOCIATE ENTERPRISE (AE) TO INDIA TO SUPPORT AND MAINTAIN EQUIPMENTS SUPPLIE D TO CUSTOMERS IN INDIA, AND WHICH INCLUDES, BESIDES TRAVEL COST, THE COST OF TIME SPE NT (SALARY COSTS). THIS WAS A ONE-TIME COST, AND FOR WHICH THE ASSESSEE HAS RECEIVED A DEB IT NOTE FROM ITS AE, M/S. KODAK POLYCHROME, REFERRING TO PGS.166 TO 168 OF THE ASSE SSEES PAPER-BOOK (PB). THE LD. DEPARTMENTAL REPRESENTATIVE (DR), ON THE O THER HAND, WOULD RELY ON THE ORDERS OF THE A.O. AS WELL AS THE DISPUTE RESOLUTIO N PANEL (DRP), STATING THEM TO BE ON THE BASIS OF LAW AND THE FACTS AS DISCERNED FROM TH E MATERIAL ON RECORD. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE SHALL TAKE UP EACH OF THE ISSUES IN SERIATIM. 3.1 THE FINDINGS BY THE TRIBUNAL FOR A.Y. 2004-05 ( SUPRA) QUA THE FIRST ISSUE APPEAR AT PARA 20 (PGS.8 & 9) OF ITS ORDER, CLEARLY DIRECTING FOR THE ALLOWANCE OF DEPRECIATION ON THE WRITTEN DOWN VALUE (WDV) AS BEING CARRIED OVER; THE DEPRECIATION ON GOODWILL HAVING BEEN IN FACT ALLOWED BY THE REVENUE FOR A.YS. 2000- 01 AND 2002-03, AS ALSO THE SUBSEQUENT YEARS. IN VIEW OF THE FOREGOING; THERE B EING NO FINDING THAT THE SAID ASSET/S HAS BEEN REMOVED FROM THE RELEVANT BLOCK OF ASSETS, WE HAVE NO HESITATION IN FOLLOWING THE SAID DECISION FOR THE CURRENT YEAR AS WELL. ACCORDI NGLY, THE ASSESSEES CLAIM MERITS BEING UPHELD. THAT, IN FACT, IS ALSO IN SUM AND SUBSTANCE THE FINDING BY THE DRP QUA THE ASSESSEES RELEVANT OBJECTION (PARAS 5 TO 9, PG.2 O F ITS ORDER). WE DECIDE ACCORDINGLY. 3 ITA NO. 8710/MUM/2010 (A.Y. 2006-07) KODAK GRAPHIC COMMUNICATIONS INDIA PVT. LTD. VS. AS ST. CIT 3.2 THE SECOND ISSUE, WE AGAIN FIND TO BE SQUARELY COVERED BY THE TRIBUNALS ORDER FOR A.Y. 2004-05; ITS FINDING APPEARING AT PARA 49. THE TRIBUNAL, AFTER AN AT LENGTH EXAMINATION OF THE MATTER, RESTORED THE MATTER BACK TO THE FILE OF THE TRANSFER PRICING OFFICER (TPO) FOR FRESH ADJUDICATION WITH ITS DIREC TIONS. THERE BEING NO MATERIAL CHANGE IN THE FACTS, THE SAME SHALL APPLY FOR THE CURRENT YEAR AS WELL, SO THAT WE DECIDE LIKEWISE, AND WHICH WOULD ALSO ENABLE CONSISTENCY OF ADJUDICA TION AS WELL AS REPRESENTATION BOTH AT THE END OF THE REVENUE AND THE ASSESSEE. WE DECIDE ACCORDINGLY. 3.3 WITH REGARD TO THE THIRD ISSUE, WE FIRSTLY OBSE RVE THAT THE IMPUGNED DISALLOWANCE, AS SOUGHT TO BE ABUNDANTLY CLARIFIED PER THE ASSESS MENT ORDER, IS NOT U/S. 40(A)(IA). RATHER, WE FIND NO ADJUSTMENT TO THE RETURNED INCOME OF RS. 702.89 LACS IN RESPECT OF THE SAID CLAIM; A FACT WHICH THE A.O. SEEKS TO EMPHASIZE. TH E ASSESSEES GRIEVANCE IS, THUS, MISCONCEIVED. AS APPARENT FROM THE ASSESSMENT ORDER , THE DISALLOWANCE U/S. 40(A), AS INITIALLY PROPOSED BY THE A.O., WAS U/S. 37(1), I.E ., IN THE ABSENCE OF THE REQUISITE DETAILS, AND ONLY ALTERNATIVELY, I.E., WITHOUT PREJUDICE, U/ S. 40(A)(IA) (REFER PARAS 8.1 AND 8.2 OF THE ASSESSMENT ORDER). EVEN BEFORE US THE ASSESSEE, APA RT FROM A DEBIT NOTE, WHICH IS NOT LEGIBLE AT ALL (PB PG.168), COULD HARDLY FURNISH AN Y MATERIAL OR EVIDENCE WITH REGARD TO THE RENDERING OF THE SERVICES, I.E., AS WAS THE CAS E BEFORE THE REVENUE AUTHORITIES. THE LD. AR ALSO CONCEDED BEFORE US TO NO MATERIAL BEING AVA ILABLE WITH THE ASSESSEE TO ESTABLISH THE RENDERING OF THE RELEVANT SERVICES, WHICH THOUG H IS RENDERED OF NO CONSEQUENCE IN THE FACTS OF THE CASE. UNDER THE CIRCUMSTANCES, THE ASS ESSEES GRIEVANCE, AS PROJECTED PER ITS GROUND NO. 10, IS WHOLLY MISCONCEIVED AND UNMAINTAI NABLE. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. /-)0 &12/) # 3. ' 4 ) # ) 56 ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 20, 2 014 SD/- SD/- (I. P. BANSAL) (SANJAY ARORA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % ( MUMBAI; 7& DATED : 20.01.2014 4 ITA NO. 8710/MUM/2010 (A.Y. 2006-07) KODAK GRAPHIC COMMUNICATIONS INDIA PVT. LTD. VS. AS ST. CIT '.&../ ROSHANI , SR. PS ! ' #$%& '&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. % 8) ( ) / THE CIT(A) 4. % 8) / CIT - CONCERNED 5. ;'<= !)&>1 , * >1- , % ( / DR, ITAT, MUMBAI 6. =?2 @( / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , % ( / ITAT, MUMBAI