DCIT CENT. CIR. - 1(1), MUMBAI V. ROLTA INDIA LTD., MUMBAI

ITA 882/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1757 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2012-2013
• Appeal Filed On: 07-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Keywords: Transfer pricing; International transaction
• Section: 92B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M ANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 882 / MUM . /2017 ( ASSESSMENT YEAR : 20 1 2 1 3 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(1), MUMBAI . APPELLANT V/S ROLTA INDIA LTD. ROLTA TOWER A ROLTA TECHNOLOGY PARK ANDHERI (E), MUMBAI 400 093 PAN AAACR2711G . RESPONDENT REVENUE BY : SHRI RIGNESH DAS ASSESSEE BY : SMT. RENU KAPOOR DATE OF HEARING 04 .0 9 .2018 DATE OF ORDER 07.09.2018 O R D E R PER SAKTIJIT DEY, J.M. A FORESAID APPEAL HAS BEEN FILED BY THE REVENUE CHALLE N GING THE ORDER DATED 21 ST OCTOBER 2016, PASSED BY THE LEARNED COMMISSIONER (APPEALS) FOR THE ASSESSMENT YEAR 2012 13. 2 . THE ISSUE IN THE PRESENT APPEAL IS CONFINED TO THE DIRECTION OF THE LEARNED COMMISSIONER (APPEALS) TO APPLY THE COMMISSION RATE OF 0.5% TO THE CORPORATE GUARANTEE PROVIDED TO THE ASSO CIATED ENTERPRISE (A E). 2 ROLTA INDIA LTD. 3 . BRIEF FACTS ARE, THE ASSESSEE, AN INDIAN COMPANY , IS ENGAGED IN TH E B USINESS OF SOFTWARE DEVELOPMENT, DESIGNING / DATA CONVERSION SERVICES, PURCHASE AND MARKETING OF HARDWARE / SOFTWARE PRODUCTS AND E SERVICES. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 31 ST DECEMBER 2012, DECLARING TOTAL INCOME OF ` 4,05,03,240. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS ENTERED INTO INTERNATIONAL TRANSACTION WITH ITS OVERSEAS AE MADE A REFERENCE TO THE TRANSFER PRICING OFFICER FOR DETERMINATION OF ARM'S LENGTH PRICE OF THE INTER NATIONAL TRANSACTION WITH THE A E. IN COURSE OF PROCEEDINGS BEFORE HIM , THE TRANSFER PRICING OFFICER NOTICING THAT THE ASSESSEE HAD GIVEN PE RFORMANCE AND FINANCIAL G UARANTEE ON BEHALF OF THE A ES CALLED UPON THE ASSESSEE WHETHER ANY COMMISSION WAS CHARGED ON SUCH GUARANTEE. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT NO GUARANTEE COMMISSION HAS BEEN CHARGED , SINCE , PROVIDING SUCH GUARANT EE DID NOT FALL WITHIN THE MEANING OF INTERNATIONAL TRANSACTION AS PER SECTION 92B OF THE ACT. THE TRANSFER PRICING OFFICER, HOWEVER , DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT PROVIDI NG CORPORATE GUARANTEE TO THE A ES IS AN INTERNA TIONAL TRANSACTION AS PER SECTION 92B OF THE ACT. HAVING HELD SO, THE TRANSFER PRICING OFFICER ULTIMATELY CHARGED GUARANTEE COMMISSION OF 2.25% WHICH RESULTED IN ADDITION OF ` 2,34,40,824. BEING AGGRIEVED OF SUCH 3 ROLTA INDIA LTD. ADDITION, THE ASSESSEE PREFERRED APPEAL BEF ORE THE FIRST APPELLATE AUTHORITY. 4 . THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THOUGH, HELD THAT PROVIDING CORPORATE GUARANTEE TO THE A ES COMES WITHIN THE AMBIT OF INTERNATIONAL TRANSACTION UNDER SECTION 92B OF THE ACT, HOWEVER, RELYING UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S EVEREST KENTO CYLINDER S LTD. [2015] 378 ITR 57 (BOM.), H E HELD THAT GUARANTEE COMMISSION @ 0.5% SHOULD BE CHARGED. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE TRANSFER PRICING OFFICER. WHEREAS , THE LEARNED AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE DECISION OF THE LEARNED COMMISSIONER (APPEALS). 6 . WE HAVE CONSIDERED RIVAL SUBMISSION S AND PERUSED MATERIALS ON RECORD. AT THE OUTSET, WE MUST OBSERVE, WHETHER PROVISION OF CORPORATE GUARANTEE COMES WITHIN THE AMBIT OF INTERNATIONAL TRANSACTION AS DEFINED UNDER SECTION 92B OF THE ACT HAS NOT BEEN DIS PUTED BY THE ASSESSEE BEFORE US. THEREFO RE , THE ONLY DISPUTE AT THIS STAGE IS CONFINED TO THE RATE OF GUARANTEE CO MMISSION TO BE CHARGED TO THE AE FOR PROVISION OF CORPORATE GUARANTEE. AS COULD BE SEEN, THE TRANSFER PRICING OFFICER HAS CHARGED GUARANTEE COMMISSION @ 2.25%. W HEREAS, THE LEARNED C OMMISSIONER (APPEALS) RELYING UPON THE DECISION OF THE 4 ROLTA INDIA LTD. HON'BLE JURISDICTIONAL HIGH COURT IN EVEREST KENTO CYLINDERS LTD. (SUPRA) HAS HELD THAT GUARANTEE COMMISSION SHOULD BE CHARGED @ 0.5%. SINCE , THE AFORESAID DECISION OF THE LEARNED COMMISSIONER (APPEALS ) IS IN CONSONANCE WITH THE VIEW EXPRESSED BY THE HON'BLE JURISDICTIONAL HIGH COURT ( SUPRA ) AND BY DIFFERENT BENCH ES OF THE TRIBUNAL INCLUDING MUMBAI BENCHES, WE UPHOLD THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THE ISSUE BY DISMISSING THE GROUN D S RAISED. 7 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.09.2018 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 07.09.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI