M/s. Tata BlueScope Steel Ltd., Pune V. Deputy Commissioner of Income-tax, Pune

MA 12/PUN/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4862 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 29-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI DEEPAK GARG
• Assessee Lawyers: YOGESH A THAR
• Keywords: Depreciation; Transfer pricing; International transaction; Revenue expenditure
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S.SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI , J UDICIAL M EMBER M.A. NO. 12 /PUN/202 1 ( ARISING OUT OF ITA NO. 567 /PUN/2016 ) / ASSESSMENT YEAR : 2011 - 12 M/S. TATA BLUESCOPE STEEL LIMITED THE METROPOLITAN, 4 TH FLOOR, FINAL PLOT NO.27, SURVEY NO.21, WAKDEWADI, SHIVAJI NAGAR, PUNE - 411 005 PAN : AACCB5628E .. /APPLICANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 7, PUNE. / RESPONDENT A SSESSEE BY : SHRI YOGESH A. THAR REVENUE BY : SHRI SHRI DEEPAK GARG / DATE OF HEARING : 07.05.2021 / DATE OF PRONOUNCEMENT : 18 .05.2021 / ORDER PER S.S. VISWANETHRA RAVI , JM : THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE E TO RECTIFY THE APPARENT MISTAKES CREPT IN ORDER DATED 30.01.2020 PASSED BY THIS TRIBUNAL IN ITA NO.567/PUN/2016 FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE FIRST MISTAKE IN PARA NO.8 AT PAGE NO.4 OF TRIBUNALS CONSOLIDATED ORDER FOR THE ASSESSMENT YEAR 2011 - 12 AND 2012 - 13 IN 6 TH LINE FROM TOP, THE 2 M A NO. 12 /PUN/20 21 A.Y. 2011 - 12 ITA NO. FOR THE ASSESSMENT YEAR 2010 - 11 IS ERRONEOUSLY REFERRED AS ITA NO.847/PUN/2016. THE LD. AR SUBMITTED THAT THE SAME SHOULD BE RECTIFIED. THE LD. DR DID NOT REPORT ANY OBJECTION. IN VIEW T HEREOF, HEREINAFTER, THE SAME SHOULD BE READ AS ITA NO.847/PUN/2015 INSTEAD OF ITA NO.847/PUN/2016. 3. THE SECOND MISTAKE, THIS TRIBUNAL INADVERTENTLY REPRODUCED PARA 12 IN PARA 8 OF THE IMPUGNED ORDER WHICH HAS BEEN MODIFIED BY THIS TRIBUNAL IN ASSESSEE S OWN CASE IN MA NO.48/PUN/2019 VIDE ORDER DATED 30.08.2019. THEREFORE, PARA NO.12 IN PAGE NO.4 IS HEREBY DELETED AND TO THAT EFFECT, PARA NO.12 IN PARA NO.6 OF PAGE NO.4 IN MA ORDER DATED 30.08.2019 IS REPRODUCED HEREIN BELOW: 12. THUS, IN VIEW OF THE FACT THAT THE TPO IN THE INSTANT CASE AT THE OUTSET HAD DETERMINED THE SERVICES I . E. TECHNICAL ASSISTANCE AND PROJECT MANAGEMENT SERVICES AT 'NIL' WITHOUT DETERMINING ALP OF THE TRANSACTIONS, HENCE, WE DEEM IT APPROPRIATE TO REST ORE GROUND NO.3 OF THE APPEAL BACK TO THE FILE OF TPO/ ASSESSING OFFICER TO ASCERTAIN THE ALP OF THE TRANSACTIONS BY ADOPTING MOST APPROPRIATE METHOD PRESCRIBED UNDER THE ACT. THE ASSESSEE IS GRANTED LIBERTY TO FURNISH NECESSARY DOCUMENTS TO FURTHER SUBSTA NTIATE RENDERING OF TECHNICAL ASSISTANCE AND PROJECT MANAGEMENT SERVICES BY AES TO THE ASSESSEE. THE ASSESSEE IS FURTHER DIRECTED TO FURNISH THE DETAILS OF COMPARABLE SERVICES RENDERED BY THE AES TO THIRD PARTIES. THE TPO/ ASSESSING OFFICER WHILE RECONSIDE RING THE ISSUE SHALL GRANT REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. SINCE WE HAVE HELD THAT THE EXPENDITURE ON ACCOUNT OF TECHNICAL FEE PAID TO BIEC INTERNATIONAL INC AND PROJECT MANAGEMENT FEE PAID TO BLUESCOPE STEEL LTD. , AUSTRALIA HAS BEEN CAPITALIZED BY THE ASSESSEE AND SUCH CAPITAL TRANSACTIONS ARE OUTSIDE THE SCOPE OF TRANSFER PRICING MECHANISM, GROUND NO.1 AND 2 OF THE APPEAL DESERVES TO BE ALLOWED, WE HOLD AND DIRECT ACCORDINGLY. ' 4. ACCORDINGLY, IN THE LIGHT OF THE ABOVE, THE MISTAKE IS RECTIFIED AND CONSEQUENTLY THE PARA NO.9 IS TO BE READ AS GROUND NO.1 RAISED BY THE ASSESSE IS ALLOWED SUBJECT TO THE ALP REDETERMINATION OF THE INTERNATIONAL TRANSACTION OF TECHNICAL ASSISTANCE FEES WHICH WILL HAVE BEARING IN SUBSEQUENT YEAR BY MEANS OF THE AMOUNT OF DEPRECIATION OF SUCH ALP OF THE TECHNICAL ASSISTANCE FEES. 3 M A NO. 12 /PUN/20 21 A.Y. 2011 - 12 5. THE THIRD MISTAKE, THIS TRIBUNAL ADJUDICATED GROUND NOS. 1 AND 2 COLLECTIVELY WITH RESPECT TO TECHNICAL FEES AND PROJECT MANAGEMENT FEES IN THE IMPUGN ED ORDER. REFERENCE TO BOTH THE TECHNICAL FEES AND PROJECT MANAGEMENT FEES MADE IN PARA 8 OF THE IMPUGNED ORDER SHOULD BE READ AS ONLY FOR THE PAYMENT OF TECHNICAL FEES AS THE ALP DETERMINATION OF THE PROJECT MANAGEMENT FEES WILL BE SEPARATELY DEALT WITH H EREINAFTER. SINCE WE HAVE MODIFIED REPRODUCTION PART IN PARA NO.8 IN THE AFOREMENTIONED PARAGRAPH WHICH EXCLUSIVELY DEALT WITH ARMS LENGTH PRICE (ALP) OF TECHNICAL ASSISTANCE FEES, THEREFORE, ARMS LENGTH PRICE OF PROJECT MANAGEMENT FEES IS REQUIRED TO BE DECIDED SEPARATELY. 6. WE NOTE, IN THIS BEHALF, THE TRIBUNAL FOR THE ASSESSMENT YEAR 2010 - 11 IN MA NO.48/PUN/2019 IN PARA NO.6 IN REPRODUCTION PART AT PARA NO.13 HELD THAT THE ARMS LENGTH PRICE OF PROJECT MANAGEMENT FEES CANNOT BE DETERMINED AT NIL AND RESTORED THE SAME TO THE FILE OF THE AO/TPO TO DETERMINE ALP OF PROJECT MANAGEMENT FEES. THEREFORE, REPRODUCTION PART IN PARA NO.13 OF MAIN PARA NO.6 IN MA NO.48/PUN/2019 IS REPRODUCED HEREIN BELOW FOR READY REFERENCE: 13. IN GROUND NO.3 OF THE APPEAL, T HE ASSESSEE HAS RAISED ALTERNATE PLEA TO GROUND NO.1 AND 2. IN PRINCIPLE, WE HAVE ALLOWED THE GROUND NO.3 OF THE APPEAL AND RESTORE THE SAME TO THE FILE OF ASSESSING OFFICER/TPO TO DETERMINE ALP OF INTERNATIONAL TRANSACTIONS UNDER DISPUTE, IN ACCORDANCE WI TH THE PROVISIONS OF THE ACT. CONSEQUENTLY, THE GROUND NO.3 OF THE APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE LIGHT OF THE ABOVE, PARA NO.10 IS MODIFIED AND READ AS: THE GROUND NO.3 OF THE APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. 8. THE FOURTH MISTAKE, WE NOTE THAT THE ASSESSE SUBMITTED BEFORE THE LOWER AUTHORITIES THAT THE PROJECT MANAGEMENT FEES ALSO CAPITALIZED AND DISALLOWANCE SHOULD NOT ARISE LIKE THAT OF TECHNICAL ASSISTANCE FEES. IT WAS ALSO ARGUED THAT THE ALP FOR PROJECT MANAGEMENT FEES LIKE THA T OF TECHNICAL 4 M A NO. 12 /PUN/20 21 A.Y. 2011 - 12 ASSISTANCE FEES IN ANY CASE CANNOT BE DETERMINED AT NIL. TO THAT EFFECT, AN AFFIDAVIT DATED 17.12.2019 FILED BY ASSISTANT GENERAL MANAGER AND AUTHORIZED SIGNATORY OF ASSESSE RENDERING SINCERE APOLOGY FOR THE INADVERTENT ERROR IN REPORTING CO RRECTLY IN FORM 3CEB. 9. IT WAS AVERRED IN THE AFFIDAVIT THAT THE PROJECT MANAGEMENT FEES ARE NOT CAPITALIZED BUT ARE CLAIMED AS REVENUE EXPENSES AND THESE PROJECT MANAGEMENT FEES ARE OF A DIFFERENT NATURE AS COMPARED TO PROJECT MANAGEMENT FEES OF EARLIER YEARS. THAT THE ASSESSEE E WHILE PREPARING APPEAL FOR ASSESSMENT YEAR 2011 - 12 NOTICED THE ABOVE SAID INADVERTENT ERROR. WE NOTE THAT THE APPELLANT REPORTED AN ITEM OF RS.98,99,864/ - AS PAYMENT OF PROJECT MANAGEMENT FEES TO BLUESCOPE STEEL LIMITED, AUSTRAL IA. OUT OF THE SAID AMOUNT, THE SUM OF RS.50,87,228/ - BEING TECHNICAL SUPPORT AND MAINTENANCE CHARGES PAID TO BLUESCOPE STEEL LIMITED, AUSTRALIA TOWARDS OLD RUNNING PROJECT AT ASSESSEE'S VARIOUS DOWNSTREAM PLANTS LOCATED IN PUNE, CHENNAI, BHIWADI AND IT DO ES NOT RELATE TO ASSESSEE'S NEW MAINSTREAM PROJECT PLANT AT JAMSHEDPUR. THE SAID AMOUNT IS DEBITED TO THE P & L ACCOUNT AND IS NOT CAPITALIZED. THE REMAINING AMOUNT OF RS.48,12,635/ - BELONGS TO SALARIES OF SOME EXPATRIATE EMPLOYEES ACCOUNTED NET OF RECOVER IES. THE SAID EXPATRIATE ARE NOT RELATED TO THE JAMSHEDPUR PROJECT. WE NOTE THAT THE SAID AMOUNT IS ALSO RECORDED IN P & L ACCOUNT AND IS NOT CAPITALIZED. 10. THE LD. AR SUBMITS THAT THE ISSUE MAY BE DECIDED AFRESH BY REMANDING THE MATTER TO THE FILE OF A O /TPO FOR FRESH CONSIDERATION. THE LD. DR DID NOT REPORT ANY OBJECTION . 11. WE FIND THAT WHILE PASSING THE IMPUGNED ORDER DATED 30.01.2020, THIS TRIBUNAL LOST SIGHT OF ABOVE AVERMENTS MADE IN THE LAID AFFIDAVIT, THEREFORE, IN VIEW OF THE ABOVE DISCUSSION; THIS ISSUE IS REMANDED TO THE FILE OF AO/TPO FOR 5 M A NO. 12 /PUN/20 21 A.Y. 2011 - 12 DETERMINING THE ALP OF PROJ ECT MANAGEMENT FEES. THE ASSESSE IS AT LIBERTY TO FILE EVIDENCES, IF ANY, IN SUPPORT OF ITS CLAIM. THE AO/TPO IS DIRECTED TO GIVE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSE IN ACCORDANCE WITH LAW. AS THE PAYMENT OF PROJECT MANAGEMENT FEES HAS BEEN CL AIMED BY THE ASSESSE AS REVENUE EXPENDITURE DURING THE YEAR THE TRANSFER PRICING ADJUSTMENT, IF ANY, WILL BE MADE TO THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, FOURTH MISTAKE AS CANVASSED BY THE LD.AR ARE ANSWERED IN THE AFOREMENTIONED PARAGRAPHS. HEREINAFTER, THIS ORDER SHALL BE TREATED AS PART AND PARCEL OF MAIN ORDER DATED 30.01.2020 PASSED IN ITA NO.567/PUN/2016 FOR ASSESSMENT YEAR 2011 - 12. 12. IN THE RESULT, MISCELLANEOUS APPLICATION FILED BY THE ASSESSE IS ALLOWED AS INDICATED HE REINABOVE. ORDER PRO NOUNCED ON 18 TH DAY OF MAY, 2021 S D/ - S D/ - R.S.SYAL S.S. VISWANETHRA RAVI VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 18 TH MAY, 2021 SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 13, PUNE. 4. THE PR. CIT - 5, PUNE. 5. , , , / DR, ITAT, C BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // T RUE C OPY // / PRIVATE SECRETARY , / ITAT, PUNE . 6 M A NO. 12 /PUN/20 21 A.Y. 2011 - 12 DATE 1 DRAFT DICTATED ON 07.05.2021 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 17.05.2021 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER