APAR INDUSTRIES LTD, MUMBAI V. DCIT CC 6(1), MUMBAI

ITA 956/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7204 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 17-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN LD
• Assessee Lawyers: VIJAY MEHTALD
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 92B

Judgement Text

ITA.NO.956/MUM/2015 APAR INDUSTRIES LIMITED ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.956/MUM/2015 ( ASSESSMENT YEAR: 2009-10) APAR INDUSTRIES LIMITED APAR HOUSE, CORPORATE PARK BUILDING NO.5 SION TROMBAY ROAD CHEMBUR MUMBAI-400 071 VS. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 6(1) [ERSTWHILE ACIT CENTRAL CIRCLE 34] AAYKAR BHAVAN, M.K.ROAD MUMBAI 400 020 PAN/GIR NO. AAACG-1840-M ( ! APPELLANT ) : ( '#! RESPONDENT ) ASSESSEE BY : VIJAY MEHTA, LD. AR REVENUE BY : V.JENARDHANAN, LD. DR $% DATE OF HEARING : 16/04/2018 &'(% / DATE OF PRONOUNCEMENT : 04/05/2018 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-15 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-15/CURR.105/14-15 ITA.NO.956/MUM/2015 APAR INDUSTRIES LIMITED ASSESSMENT YEAR 2009-10 2 DATED 12/11/2014. THE ONLY ISSUE INVOLVED IN THE AP PEAL IS TRANSFER PRICING [TP] ADJUSTMENT ON ACCOUNT OF CORPORATE GUARANTEE GIVEN BY THE ASSESSEE TO ONE OF ITS ASSOCIATED ENTERPRISES [AE]. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONE R OF INCOME TAX, CENTRAL CIRCLE-34 ON 21/03/2013 U/S 143(3) READ WITH SECTION 144C OF THE INCOME TAX ACT, 1961 WHEREIN THE ASSESSEE HA S BEEN SADDLED WITH TP ADJUSTMENT OF RS.1,66,20,644/- AGAINST CORPORATE GUARANTEE AS PROPOSED BY LD. TRANSFER PRICING OFFICER [TPO] U/S 92CA(3). 2. FACTS IN BRIEF, QUA THE SAME ARE THAT THE ASSESS EE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OF TRANSFORMERS/SPECIALTY OILS, CONDUCTORS AND SYNTHET IC RUBBER PROVIDED CORPORATE GUARANTEE AMOUNTING TO RS.35.46 CRORES FOR ONE OF ITS AE NAMELY PETROLEUM SPECIALTY PTE LIMITED, SINGAPORE [PSPL] TO FACILITATE LC FACILITY BY SYNDICATE BANK TO ITS AE . THE ASSESSEE DID NOT BENCHMARK THE SAME ON PREMISE THAT THE UNDERLYING LIABILITY W AS CONTINGENT IN NATURE AND GIVEN FOR OVERALL BUSINESS CONSIDERATION. HOWEV ER, NOT CONVINCED, LD. TPO ARRIVED AT IMPUGNED TP ADJUSTMENT AGAINST THE SAME WHICH WAS CALCULATED AT 5% PER ANNUM. THE SAME HAS BEEN I NCORPORATED IN THE QUANTUM ASSESSMENT ORDER DATED 21/03/2013. AGGR IEVED, THE ASSESSEE CONTESTED THE SAME WITHOUT ANY SUCCESS BEF ORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 12/11/2014, WHEREIN THE S TAND OF THE LOWER AUTHORITIES HAS BEEN CONFIRMED. AGGRIEVED, THE ASSE SSEE IS IN FURTHER APPEAL BEFORE US. 3. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR] PLACING RELIANCE ON VARIOUS DECISIONS OF THE TRIBUNAL SUBMI TTED THAT CORPORATE GUARANTEE WAS NOT AN INTERNATIONAL TRANSACTION WITHIN THE ME ANING OF ITA.NO.956/MUM/2015 APAR INDUSTRIES LIMITED ASSESSMENT YEAR 2009-10 3 SECTION 92B AND THEREFORE, NO ADJUSTMENT THEREOF WA S REQUIRED. THE LD. AR, IN THE ALTERNATIVE, SUBMITTED THAT THE IMPUGNED ADDITION MAY BE RESTRICTED TO 0.495% AS ENJOYED BY THE ASSESSEE FRO M ITS BANKERS. PER CONTRA , LD. DR DREW ATTENTION TO VARIOUS DECISIONS WHERE THE ADDITIONS HAS BEEN UPHELD BY THE JUDICIAL AUTHORITIES. 4. WE HAVE HEARD CAREFULLY HEARD THE RIVAL CONTENTI ONS AND PERUSED RELEVANT MATERIAL ON RECORD. IN OUR OPINION CORPORA TE GUARANTEE PROVIDED BY THE ASSESSEE BROUGHT CERTAIN BENEFITS TO ITS AE BY WAY OF CREDIT FACILITY AND THEREFORE, THE SAME WAS REQUIRED TO BE COMPENSA TED BY ITS AE . OUR VIEW IS DULY SUPPORTED BY THE DECISION OF THIS TRIB UNAL RENDERED IN EVEREST KANTO CYLINDERS LTD. VS. DCIT [34 TAXMANN.C OM 19] AS AFFIRMED BY HONBLE BOMBAY HIGH COURT ON 08/05/2015 [58 TAXM ANN.COM 254] WHEREIN THE RATE OF COMMISSION HAS BEEN ADOPTED @0. 5%. RESPECTFULLY, FOLLOWING THE SAME, WE ESTIMATE THE IMPUGNED ADDITI ONS @0.5% PER ANNUM. THE LD. AO IS DIRECTED TO QUANTITY THE ADDIT ION AND RE-COMPUTE THE INCOME OF THE ASSESSEE IN TERMS OF OUR ABOVE OR DER. 5. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH MAY, 2018 SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER )$ MUMBAI; DATED : 04.05.2018 SR.PS:-THIRUMALESH ITA.NO.956/MUM/2015 APAR INDUSTRIES LIMITED ASSESSMENT YEAR 2009-10 4 ! COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * / THE CIT(A) 4. * / CIT CONCERNED 5. +, '%- -( )$ / DR, ITAT, MUMBAI 6. ,./0$ GUARD FILE ' / BY ORDER, # '$ % (DY./ASSTT.REGISTRAR) )$ / ITAT, MUMBAI