ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, Alwar V. M/S SAKATA INX (INDIA) LTD., Alwar

ITTPA 02/JPR/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9674 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLEE AGARWAL
• Assessee Lawyers: KARAN BHATIA
• Keywords: Transfer pricing; International transaction

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ IT(TP) A. NO. 02/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2014-15 THE ACIT, CIRCLE- 2, ALWAR . CUKE VS. M/S SAKATA INX (INDIA) LTD., B-1245-1246, RIICO INDUSTRIAL AREA, BHIWA DI, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCS 4797 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : MR. KARAN BHATIA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLEE AGARWAL (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 14/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 21/08/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 23.03.2018 FOR THE ASSESSMEN T YEAR 2014-15 WHEREIN THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 3,32,42,000/- IN RESPECT OF ALP OF THE INTERNATIONAL TRANSACTIONS MADE BY THE IT(TP)A NO. 02/JP/2018 ACIT VS. M/S SAKATA INX INDIA LTD. 2 AO ON ACCOUNT OF PAYMENT OF ROYALTY TO THE AE WITHO UT APPRECIATION THE MATERIAL FACTS OF THE CASE. 2. AT THE OUTSET, THE LD. AR HAS SUBMITTED THAT THE MATTER IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCHES IN ASSESSEES OWN CASE IN THE EARLIER YEARS. IT WAS FU RTHER SUBMITTED THAT THE MATTER HAS SINCE BEEN DECIDED BY THE HONBLE RA JASTHAN HIGH COURT IN FAVOUR OF THE ASSESSEE AND THE HONBLE SUPREME C OURT ALSO DISMISSED THE SLP FILED BY THE REVENUE AGAINST THE SAID ORDER OF THE HONBLE RAJASTHAN HIGH COURT. IT WAS ACCORDINGLY SUBMITTED THAT GIVEN THAT THERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ROYALTY HAS BEEN PAID AT THE SAME RATE UNDER THE SA ME AGREEMENTS AS IN THE EARLIER YEARS, THE EARLIER DECISIONS MAY KIN DLY BE FOLLOWED AND THE REVENUE APPEAL BE DISMISSED. 3. THE LD. DR IS HEARD WHO HAS RELIED ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS TRANSFER PRICING OFFICER. AT THE SAME TIME, THE LD. DR HAS FAIRLY SUBMITTED THAT THE MATTER IS COVERED AGA INST THE DEPARTMENT BY THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN ASSESSEES OWN CASE IN THE EARLIER YEARS. IT(TP)A NO. 02/JP/2018 ACIT VS. M/S SAKATA INX INDIA LTD. 3 4. IN ITA NO. 828/JP/2017 & OTHERS DATED 29.01.2018 , THE COORDINATE BENCHE HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF THE HONBLE RAJASTHAN HIG H COURT AND THE RELEVANT FINDINGS ARE CONTAINED AT PARAS 6 TO 8 WHI CH ARE REPRODUCED AS UNDER:- 6. DURING THE COURSE OF HEARING, BOTH THE PARTIES FAIRLY SUBMITTED THAT THE MATTER IS SQUARELY COVERED BY THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN ASSESSEES OWN CASE IN DB APPEAL NO. 71/JP/2015 AND 128/JP/2016 DATED 26.07.2017. 7. THE SUBSTANTIAL QUESTIONS OF LAW FOR CONSIDERAT ION BEFORE THE HONBLE HIGH COURT WERE AS FOLLOWS: INCOME TAX APPEAL NO. 71/2015: (I) WHETHER THE TRIBUNAL WAS LEGALLY JUSTIFIED IN DELETING THE ADDITION OF RS. 1,02,91,000/- MADE ON ACCOUNT OF ADJUSTMENT OF THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION ON PA YMENT OF ROYALTY BY ASSESSEE TO ITS ASSOCIATED ENTERPRISE, FROM THE INC OME OF THE ASSESSEE U/S 92C? (II) WHETHER THE TRIBUNAL WAS LEGALLY JUSTIFIED IN HOLDING THE WORKING OF OPERATING MARGIN AT 5.18% AS AGAINST 7.85% MADE BY THE TPO AND ALSO HOLDING NON-APPLICABILITY OF THE CUP METHOD WI THOUT ANY JUSTIFICATION AND REASONS? INCOME TAX APPEAL NO. 128/2016: IT(TP)A NO. 02/JP/2018 ACIT VS. M/S SAKATA INX INDIA LTD. 4 (I) WHETHER THE TRIBUNAL WAS LEGALLY JUSTIFIED IN UPHOLDING THE NON- APPLICABILITITY CUP METHOD AND DELETING THE ADDITIO N OF ADJUSTMENT OF RS. 1,49,99,000/- MADE ON ACCOUNT OF ADJUSTMENT OF THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION ON PAYMENT O F ROYALTY BY ASSESSEE U/S 92C? (II) WHETHER THE TRIBUNAL WAS LEGALLY JUSTIFIED IN DELETING THE ADDITION OF RS. 1,49,99,000/- BY HOLDING THAT THE COMPARABLE UNCONTROLLED PRICE METHOD (CUP) WAS NOT APPLICABLE? THE HONBLE HIGH COURT WHILE DISPOSING OFF THE ABOV E SUBSTANTIAL QUESTIONS OF LAWS HELD AS FOLLOWS: 4. THE ISSUE IS NOW COVERED BY THE DECISION OF THI S COURT IN INCOME TAX APPEAL NO. 72/2015 (CIT ALWAR VS. M/S SAKATA IN X (INDIA) LTD. DECIDED ON 18.05.2017). 5. IN VIEW OF THE ABOVE, BOTH THE ISSUES ARE ANSWER ED IN FAVOUR OF ASSESSEE AGAINST THE DEPARTMENT. 6. THE APPEALS STAND DISMISSED. A COPY OF THIS JUDG MENT BE PLACED IN EACH FILE. 8. UNDISPUTEDLY, THERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ROYALTY HAS BEEN PAID UNDER THE SAME AGREEMENTS AS IN THE PAST YEARS. IN LIGHT OF THE SAME, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE RAJA STHAN HIGH COURT IN ASSESSEES OWN CASE, THE APPEAL FILED BY THE REVENU E IS DISMISSED. IT(TP)A NO. 02/JP/2018 ACIT VS. M/S SAKATA INX INDIA LTD. 5 5. IN LIGHT OF ABOVE, GIVEN THAT THERE ARE NO CHANG ES IN THE FACTS AND CIRCUMSTANCES OF THE CASE, FOLLOWING THE DECISION O F THE HONBLE RAJASTHAN HIGH COURT, THE MATTER IS DECIDED IN FAVO UR OF THE ASSESSEE AND THE GROUND TAKEN BY THE REVENUE IS HEREBY DISMI SSED. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/08/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:-21/08/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CIRCLE-2, ALWAR. 2. IZR;FKHZ@ THE RESPONDENT-M/S SAKATA INX (INDIA) LTD., BHIWADI , ALWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { IT(TP)A NO. 02/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR