Lotus Labs Private Limited, Bangalore V. DCIT, Bangalore

ITA 92/BANG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9329 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Time period of passing order
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI S.K.YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER IT (TP) A NO.92 (BANG) 2015 (ASSESSMENT YEARS : 2010 11) M/S LOTUS LABS PVT. LTD., 07, JASMA BHAVAN ROAD, MILLERS TANK BED AREA, OPP. GURUNANAK BHAVAN, VASANTHNAGAR, BANGALORE 560052 PAN: AAACL5328D APPELLANT VS DCIT, CIRCLE 4 (1) (1), BANGALORE RESPONDENT ASSESSEE BY : SHRI CHAVALI NARAYAN, C. A. REVENUE BY : MS. NEERA MALHOTRA, CIT DR DATE OF HEARING : 24-08-2016 DATE OF PRONOUNCEMENT: 18-10-2016 O R D E R PER A. K. GARODIA, A. M.: THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ASSESSMENT ORDER DATED 28.11.2014 PASSED U/S 143 (3) R.W.S. 144C OF THE I. T. ACT AS PER THE DIRECTIONS OF DRP. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LOTUS LABS PRIVATE LIMITED (HEREINAFTER REFERRED TO AS THE APPELLANT ) RESPECTFULLY CRAVES LEAVE TO PREFER AN APPEAL AGAINST THE APPEAL ORDER PASSED B THE LEARNED ASSESSING OFFICER [HEREINAFTER REFERRED TO AS THE LEARNED AO] UNDER IT (TP) A NO.92/B/2015 2 SECTION 143(3) READ WITH SECTION 144C(10) OF THE IN COME-TAX ACT, 1961 (THE ACT) ON THE FOLLOWING GROUNDS: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, 1. THE ORDER OF THE LEARNED AO/TPO AND DIRECTIONS OF THE HON'BLE DRP ARE BASED ON INCORRECT INTERPRETATION OF LAW AND TH EREFORE ARE BAD IN LAW. 2. THE LEARNED TPO AND THE LEARNED AO HAVE ERRED, I N LAW AND IN FACTS, BY CONSIDERING THE OUTSTANDING DUES FROM THE AES TO BE IN THE NATURE OF LOAN AND NOT CONSIDERING THE BUSINESS/COMMERCIAL EX PEDIENCIES OF THE ARRANGEMENT. 3. WITHOUT PREJUDICE TO THE ABOVE, NO ADJUSTMENT ON ACCOUNT OF INTEREST FOR DELAY IN RECEIVABLES FROM AE IS WARRANTED AS IT IS ALREADY FACTORED IN THE MARGINS EARNED FROM AES. 4. WITHOUT PREJUDICE TO OUR CONTENTION THAT NOTIO NAL INTEREST ON OUTSTANDING RECEIVABLES SHOULD BE NOT IMPUTED, THE LEARNED TPO AND THE LEARNED AO HAVE ERRED, IN LAW AND IN FACTS, IN NOT OBJECTIVELY SELECTING THE INTEREST RATE TO DETERMINE THE ARM'S LENGTH RATE OF INTEREST APPLICABLE FOR OUTSTANDING DUES FROM THE AES. 5. THE LEARNED TPO HAS PASSED THE ORDER AT THE FAG-END OF THE LIMITATION PERIOD AND PROVIDED INADEQUATE TIME TO THE APPELLAN T FOR SUBMITTING REPLIES/OBJECTIONS AND THAT SUCH AN ORDER IS BAD IN LAW AND LIABLE TO BE QUASHED. THE APPELLANT SUBMITS THAT EACH OF THE ABOVE GROUND S IS INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, VA RY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, SO AS TO ENABLE THE HONBLE TRIBUNAL TO DECIDE ON THE APPEAL IN ACCORDANCE WITH THE LAW. 3. LEARNED AR OF THE ASSESSEE SUBMITTED A COPY OF T HE TRIBUNAL ORDER RENDERED IN THE CASE OF M/S TALLY SOLUTIONS PVT. LT D. VS. ACIT IN ITA NO. 1364/B/2011 DATED 19.08.2016 AND OUR ATTENTION WAS DRAWN TO PARA 5 OF THIS TRIBUNAL ORDER AND IT WAS POINTED OUT THAT IN THAT CASE ALSO, THE TRIBUNAL CONSIDERED THE ISSUE OF EXTENDING CREDIT P ERIOD FOR REALIZATION OF IT (TP) A NO.92/B/2015 3 SALES TO AE AND IT WAS HELD THAT IT IS CLOSELY LINK ED WITH THE TRANSACTION OF PROVIDING SERVICES TO THE AE AND THEREFORE, CANNOT BE TREATED AS AN INDIVIDUAL AND SEPARATE TRANSACTION OF ADVANCE OR L OAN. HE ALSO POINTED OUT THAT THE TRIBUNAL IN THAT CASE CONSIDERED VARIOUS O THER TRIBUNAL ORDERS AND ALSO A JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDER ED IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD. VS. UOI AS REPORT ED IN 368 ITR 1 AND THEREAFTER, THE MATTER WAS RESTORED BACK TO A.O./T. P.O. TO REDO THE EXERCISE OF DETERMINATION OF ALP BY CONSIDERING THE CREDIT P ERIOD ALLOWED IN REALIZATION OF SALE PROCEEDS AS CLOSELY LINKED TRAN SACTION WITH THE TRANSACTION OF PROVIDING SERVICES TO THE AE AND THE REFORE, BOTH HAS TO BE CLUBBED AND AGGREGATED FOR THE PURPOSE OF DETERMINA TION OF ALP. HE SUBMITTED THAT IN THE SAME LINE, IN THE PRESENT CAS E ALSO, THE MATTER MAY BE RESTORED TO AO/TPO. LEARNED DR OF THE REVENUE SUPPO RTED THE ORDER OF AO/TPO AND DRP. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LEARNED DR OF THE REVENUE IN THE PRESENT CASE AND IN THE CASE OF M/S TALLY SOLUTIONS PVT. LT D. VS. ACIT (SUPRA). HENCE, BY RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDE R, WE RESTORE THIS ISSUE TO AO/TPO TO REDO THE EXERCISE OF DETERMINATION OF ALP BY CONSIDERING THE CREDIT PERIOD ALLOWED IN REALIZATION OF SALE PROCEE DS AS CLOSELY LINKED TRANSACTION WITH THE TRANSACTION OF PROVIDING SERVI CES TO THE AE AND THEREFORE, BOTH HAS TO BE CLUBBED AND AGGREGATED FO R THE PURPOSE OF DETERMINATION OF ALP. THE AO/TPO SHOULD PASS NECESS ARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OP PORTUNITY OF BEING HEARD IT (TP) A NO.92/B/2015 4 TO THE ASSESSEE. IN VIEW OF THIS DECISION, NO SEPAR ATE ADJUDICATION IS CALLED FOR IN RESPECT OF VARIOUS GROUNDS RAISED BY THE ASS ESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MEN TIONED ON THE CAPTION PAGE. SD/ - (SUNIL KUMAR YADAV) SD/ - (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE: D A T E D : 18 .10.2016 AM / DS / COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR, ITAT, BANGALORE