TORAY INTERNATIONAL (SINGAPORE) PTE LTD, MUMBAI V. ADIT RG 2(2) (IT), MUMBAI

ITA 9194/MUM/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3898 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 16-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR CHOUHAN
• Assessee Lawyers: KISHOR PATEL
• Keywords: Additional evidence; Permanent establishment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH L, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.9194/M/2010 ASSESSMENT YEAR: 2007-08 M/S. TORAY INTERNATIONAL (SINGAPORE) PTE. LTD., 75, 7 TH FLOOR, MITTAL TOWER, B-WING, NARIMAN POINT, MUMBAI 400 021 PAN: AACCT2870L VS. ASST. DIRECTOR OF INCOME TAX, RANGE-2(2), INTERNATIONAL TAXATION, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI KISHOR PATEL, A.R. REVENUE BY : SHRI JASBIR CHOUHAN, D.R. DATE OF HEARING : 16.02.2016 DATE OF PRONOUNCEMENT : 19.02.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 27.09.2010 OF THE DISPUTE RESOLUTION PANEL-II , MUMBAI, RELEVANT TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: THE HON'BLE DISPUTE RESOLUTION PANEL - II, MUMBAI (DRP') ERRED IN CONFORMING THE ADDITION OF RS12,74,842 PROPOSED BY THE LEARNED ASST DIRECTOR OF INCOME TAX, RANGE 2(2), INTERNATIONAL T AXATION, MUMBAI ('LD AO'), IN MAKING THE SAID ADDITION, THE LD AO HAS ER RED IN 1. DEPRIVING THE APPELLANT COMPANY, RIGHT TO NATUR AL JUSTICE BY (I) NOT PROVIDING A SHOW-CAUSE NOTICE PRIOR TO MAKING T HE SAID ASSESSMENT AND (II) NOT CONSIDERING THE ROBUST EVIDENCE PLACED BEFORE T HE HON'BLE DRP IN SUPPORT OF THE PRELIMINARY & AUXILIARY NATURE OF AC TIVITIES UNDERTAKEN BY THE LIAISON OFFICE ('LO') OF THE APPELLANT COMPA NY IN INDIA. 2. CONCLUDING THAT THE APPELLANT COMPANY HAS ESTABLISH ED A BUSINESS ITA NO.9194/M/2010 M/S. TORAY INTERNATIONAL (SINGAPORE) PTE. LTD. 2 CONNECTION/PERMANENT ESTABLISHMENT (PE') IN INDIA BY VIRTUE OF FUNCTIONS RENDERED BY ITS LO IN INDIA. 3. CONCLUDING THAT 50% OF THE GROSS PROFIT RATIO EARNE D BY THE APPELLANT COMPANY IS INCOME ATTRIBUTABLE TO ITS OPERATIONS IN INDIA. THE DETERMINATION OF INCOME ATTRIBUTION AT 50% IS WITHO UT SUBSTANCE AND ANY EVIDENCE IN POSSESSION OF THE LD AO. 4. NOT ALLOWING GENERAL & ADMINISTRATIVE EXPENSES ('G& A') OF RS 69,98,112 INCURRED BY THE LO IN INDIA AGAINST THE GROSS PROFI T ATTRIBUTED (50%) TO THE APPELLANT COMPANY'S OPERATIONS IN INDIA. THE GROUNDS OF APPEAL, AS ABOVE, ARE NOTWITHSTANDIN G EACH OTHER. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER OR ADD F RESH GROUNDS OF APPEAL DURING THE COURSE OF PROCEEDING BEFORE YOUR GOOD SELF. 3. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED THAT THE QUESTION INVOLVED IN THE PRESENT APPEAL IS AS TO WHETHER THE ASSESSEE HAS A PERMANENT ESTABLISHMENT (PE) IN INDIA OR NOT. THE LD. A.R. H AS FURTHER STATED THAT THE ASSESSMENT YEAR UNDER CONSIDERATION IS A.Y. 2007-08 . HOWEVER, THE FIRST APPEALS OF THE ASSESSEE IN RELATION TO A.Y. 2006-07 AND A.Y. 2008-09 ARE PENDING BEFORE THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] FOR DISPOSAL AND FURTHER THAT THE ISSUE INVOLVED IN THE SAID APPEALS I.E. IN THE EARLIER ASSESSMENT YEAR AN D IN THE SUBSEQUENT ASSESSMENT YEAR TO THE ASSESSMENT YEAR UNDER CONSID ERATION IS IDENTICAL. HE HAS FURTHER POINTED OUT THAT IN THE APPEAL FOR A.Y. 200 6-07, THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT IT HAS NO PE IN INDIA, HAD CALLED UPON A REMAND REPORT FROM THE ASSESSING OFFI CER (HEREINAFTER REFERRED TO AS THE AO). THE LD. A.R., FURTHER RELYING UPON THE SAID REMAND REPORT OF THE AO RELEVANT TO A.Y. 2006-07, HAS STATED THAT IN HIS REMAND REPORT, THE AO HAS GIVEN A FINDING OF FACT THAT THE ASSESSEE IS NOT DO ING BUSINESS IN INDIA AND THAT THE ASSESSEE HAS BEEN MERELY ACTING AS A COMMUNICAT ION LINK BETWEEN HEAD OFFICE OF THE ASSESSEE COMPANY AT SINGAPORE AND THE CUSTOMERS IN INDIA. THE LD. A.R. HAS FURTHER BROUGHT OUR ATTENTION TO AN AP PLICATION DATED 16.02.16 REQUESTING FOR ADMISSION OF ADDITIONAL EVIDENCE IN THIS CASE. THE DOCUMENT SOUGHT TO BE PRODUCED IS THE REMAND REPORT OF THE A O IN RELATION TO A.Y. 2006- ITA NO.9194/M/2010 M/S. TORAY INTERNATIONAL (SINGAPORE) PTE. LTD. 3 07. HE HAS FURTHER STATED THAT SINCE IN THE IMMEDI ATE EARLIER ASSESSMENT YEAR, THE IDENTICAL ISSUE IS INVOLVED AND THE EVIDENCE SO UGHT TO BE PRODUCED BY THE ASSESSEE IN THE SHAPE OF COPY OF REMAND REPORT IS A N IMPORTANT EVIDENCE WHICH GOES TO THE ROOT OF THE CASE, HENCE, THE APPEAL UND ER CONSIDERATION OF THE ASSESSEE IS REQUIRED TO BE DECIDED WHILE CONSIDERIN G THE SAID EVIDENCE. HE, IN THE ALTERNATIVE, HAS SUBMITTED THAT THE APPEAL FOR THE YEAR UNDER CONSIDERATION BE ALSO REMANDED TO THE LD. CIT(A) TO BE DECIDED IN THE LIGHT OF THE EVIDENCE WHICH HAS COME IN SUBSEQUENTLY, IN THE SHAPE OF REM AND REPORT OF THE AO FOR A.Y. 2006-07 ON THE IDENTICAL ISSUE. 4. THE LD. D.R. HAS ALSO FAIRLY AGREED THAT THE APP EAL/ISSUE BE RESTORED TO THE FILE OF THE LD. CIT(A) SO THAT THE SAME BE DECI DED ALONG WITH THE APPEALS ON IDENTICAL ISSUE FOR IMMEDIATE EARLIER YEAR I.E. A.Y. 2006-07 AND ALSO IMMEDIATE SUBSEQUENT YEAR I.E. A.Y. 2008-09. 5. CONSIDERING THE ABOVE SUBMISSIONS OF THE LD. REP RESENTATIVES OF THE PARTIES, THE MATTER IS REMANDED BACK TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO DECIDE THE SAME ALONG WITH THE OTHER A PPEALS OF THE ASSESSEE FOR A.Y. 2006-07 AND 2008-09 AFTER CONSIDERING AND CALL ING UPON ANY EVIDENCES, IF SO REQUIRED, FOR THE JUST AND PROPER DECISION OF TH E CASE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.2016. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 19.02.2016. * KISHORE, SR. P.S. ITA NO.9194/M/2010 M/S. TORAY INTERNATIONAL (SINGAPORE) PTE. LTD. 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.