S. VINODKUMAR DIAMONDS P.LTD, MUMBAI V. ASST CIT 5(3)(2), MUMBAI

ITA 968/MUM/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6034 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2011-2012
• Appeal Filed On: 26-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJNEESH YADAV LD
• Assessee Lawyers: MADHUR AGGARWAL LD
• Keywords: Transfer pricing; Notional interest

Judgement Text

ITA NO.968/MUM/2016 M/S. S. VINODKUMAR DIAMONDS PVT.LTD. ASSESSMENT YEAR :2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.968/MUM/2016 ( / ASSESSMENT YEAR:2011-12) M/S. S. VINODKUMAR DIAMONDS PVT . LTD. OFFICE NO.BW-3010 BHARAT DIAMOND BOURSE BANDRA (EAST) MUMBAI-400 051. / VS. A CIT - CIRCLE - 5 ( 3 ) (2) MUMBAI. 9: ./ ./PAN/GIR NO. AAICS-5514-N ( :< /APPELLANT ) : ( =>:< / RESPONDENT ) A PPELLANT BY : SHRI MADHUR AGGARWAL- LD. AR R ESPONDENT BY : SHRI RAJNEESH YADAV - LD.DR / DATE OF HEARING : 16/09/2019 / DATE OF PRONOUNCEMENT : 03/10/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2011-12 CONTEST FINAL ASSESSME NT ORDER DATED 28/01/2016 PASSED BY LD. ACIT-CIRCLE-5(3)(2), MUMBA I U/S.143(3) R.W.S.144C(13) PURSUANT TO THE DIRECTIONS OF LD. DI SPUTE RESOLUTION PANEL-2, MUMBAI [DRP] U/S 144C(5) DATED 14/12/2015 ON VARIOUS GROUNDS OF APPEAL. ITA NO.968/MUM/2016 M/S. S. VINODKUMAR DIAMONDS PVT.LTD. ASSESSMENT YEAR :2011-12 2 2. THE LEARNED AUTHORIZED REPRESENTATIVE, AT THE OU TSET DREW OUR ATTENTION TO GROUND NO. 2.1.2 AND SUBMITTED THAT TH E SOLE ISSUE UNDER APPEAL IS NOTIONAL INTEREST ON EXPORT RECEIVABLES B Y THE ASSESSEE FROM ITS ASSOCIATED ENTERPRISES (AE). THE LD. AR PLEADED THA T THE TERMS OF CREDIT PERIOD WERE UNIFORM AND THE ASSESSEE DID NOT CHARGE ANY INTEREST FROM ITS NON-AES FOR DELAYED PAYMENT AND FOLLOWED A CONS ISTENT POLICY WITH RESPECT TO AES AS WELL AS NON-AES. IN THE ABOVE FAC TUAL MATRIX, RELIANCE HAS BEEN PLACED ON BINDING JUDICIAL PRECEDENT IN TH E SHAPE OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT V/S INDO AMERICAN JEWELLERY LTD. (44 TAXMANN.COM 310 08/01/2013) SUBSEQUENTLY FOLLOWED BY HONBLE COURT IN CIT V/S M/S LIVINGSTONES (ITA NO. 887 OF 2014 DATED 28/11/2016) AS WELL AS MUMBAI TRIBUNAL I N FROST & SULLIVAN INDIA PVT. LTD. (IT(TP) NOS. 6721/MUM/2010 & 2290/MUM/2017 DATED 18/06/2019). THE COPIES OF THE SAME HAS BEEN PLACED ON RECORD. THE LD. DR SUBMITTED THAT NO FACTUAL FINDING SHAVE BEEN RENDERED BY THE LOWER AUTHORITIES IN THIS REGARD. 3. WE HAVE HEARD AND CONSIDERED THE RESPECTIVE ARGU MENTS. 4. UPON PERUSAL OF PARA-4 OF ORDER U/S 92CA (3) DAT ED 31/12/2014 PASSED BY LD. TRANSFER PRICING OFFICER, IT TRANSPIR ES THAT THE ASSESSEE HAD SUBMITTED AS UNDER: - AS A MATTER OF BUSINESS POLICY, THE ASSESSEE NEITHE R CHARGES ANY INTEREST TO ITS AES AND NON-AE DEBTORS NOR PAYS ANY SUCH INTEREST TO ITS AE AND NON-AE CREDITORS. THE SAID SUBMISSIONS WERE REITERATED BY THE ASSESSE E BEFORE LEARNED DRP ALSO WHICH IS EVIDENT FROM ASSESSEES SUBMISSIO NS AS EXTRACTED IN THE DIRECTIONS OF LD. DRP ON PAGE NO.-10 OF THE DIR ECTIONS DATED ITA NO.968/MUM/2016 M/S. S. VINODKUMAR DIAMONDS PVT.LTD. ASSESSMENT YEAR :2011-12 3 14/12/2015. IT WAS ALSO SUBMITTED THAT MAXIMUM DELA Y FROM AE WAS 190 DAYS IN COMPARISON TO MAXIMUM DELAY OF 246 DAYS IN CASE OF NON-AE CUSTOMERS AND NO INTEREST HAS BEEN CHARGED IN EITHE R OF THE CASE. WE FIND THAT ALTHOUGH LD. DRP, AT PARA 5.2 CONSIDERED THIS ASPECT, HOWEVER, FAILED TO CONSIDER THE RATIO OF CITED JUDICIAL PREC EDENT RENDERED BY HONBLE BOMBAY HIGH COURT WHICH WAS CITED BY THE ASSESSEE I N ITS SUBMISSIONS. 5. THEREFORE, AFTER DUE CONSIDERATION, THE BENCH FO RMED AN OPINION THAT THE MATTER WAS TO BE RESTORED BACK TO THE FILE OF LD. DRP TO EXAMINE THIS FACTUAL ASPECT AND RE-CONSIDER THE ASSESSEES SUBMISSIONS IN THE LIGHT OF BINDING JUDICIAL PRECEDENTS AS CITED IN PR ECEDING PARAGRAPH-2. 6. THE OTHER GROUNDS HAVE NEITHER BEEN ARGUED NOR B EEN DELVED INTO BY US AND THEREFORE, THE SAME ARE LEFT OPEN. 7. THE APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD OCTOBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03/10/2019 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. :< / THE APPELLANT ITA NO.968/MUM/2016 M/S. S. VINODKUMAR DIAMONDS PVT.LTD. ASSESSMENT YEAR :2011-12 4 2. =>:< / THE RESPONDENT 3. E ( ) / THE CIT(A) 4. E / CIT CONCERNED 5. FG =@H , H , / DR, ITAT, MUMBAI 6. GIJK / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.