ADITYA BIRLA MINACS, V. DCIT 8(1),

MA 131/MUM/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3642 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: K
• Assessment Year: misc
• Appeal Filed On: 10-06-2015
• Court: TRIBUNAL
• Department Lawyers: JAVED AKTAR
• Assessee Lawyers: R R VORA
• Keywords: Transfer pricing; Rule of consistency

Judgement Text

K IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI KARUNAKARA RAO, AM & SHRI SAKTIJIT DEY, JM M.A. NO.131/M/2015 (ARISING OUT OF I.T.A. NO. 7033/M/2012) (ASSESSMENT YEAR : 2007 - 2008 ) ADITYA BIRLA MINACS WORLDWIDE LTD, TERITEX BLDG, SAKI VIHAR ROAD, SAKI NAKA, ANDHERI (E), MUMBAI 400 072. / VS. DCIT 8(1), R.NO.210, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. ./ PAN : AAACT1567A ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R.R. VORA / RESPONDENT BY : SHRI JAVED AKTAR, DR / DATE OF HEARING : 16.10.2015 / DATE OF PRONOUNCEMENT : 16.10.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS MISCELLANEOUS APPLICATION (MA) IS FILED BY THE ASSESSEE ON 10.6.2015 AND IT AROSE FROM ORDER OF THE ITAT VIDE APPEAL ITA NO.7033/M/2012 (AY 2007 - 2008), DATED 25.3.2015. 2. BEFORE US, SHRI R.R. VORA, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MA ENLISTS A COUPLE OF RECTIFIABLE ERRORS RELATING TO GROUND NOS. 2 AND 5 OF THE GROUNDS OF APPEAL OF THE ASSESSEE. 3. REFERRING TO THE ERROR RELATING TO THE SAID GROUN D NO.2 , LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND RELATES TO THE TP ADJUSTMENT IN RESPECT OF INTEREST ON LOAN GIVEN TO THE FOREIGN ASSOCIATED ENTERPRISES (AES). ON FACTS, HE SUBMITTED THAT THE ASSESSEE GOT A LOAN FROM DBS BANK IN USD, WHERE THE BANK CHARGED INTEREST @ LIBOR + 0.45% + ONE TIME UPFRONT FEE OF 1%. ASSESSEE ADVANCED THE SAME TO ITS AE IE AVTL, CANADA WITH INTEREST RATE OF CAD LIBOR + 1%. IN THE TP STUDIES, ASSESSEE BENCHMARKED THE SAME @ LIBOR + 0.65% USING THE INTERNAL CUP OF LIBOR + 0.65%. TPO REJECTED THE INTERNAL CUP BASED TP STUDIES IN THIS REGARD AND DETERMINED THE ALP @ LIBOR + 0.45%. TP CONSIDERED MARK UP @ 3% ADDITIONALLY. HOWEVER, CIT (A) DETERMINED THE ALP @ 6 MONTHS LIBOR + 200 BPS 2 IE 6.30% . AGGRIEVED WITH THE O RDER OF THE CIT (A), BOTH REVENUE AND ASSESSEE ARE IN APPEAL. 4. IN THE APPEAL, THE TRIBUNAL UPHELD THE ORDER OF THE CIT (A) VIDE PARA 3.6 OF ITS ORDER. IN THE PROCESS, THE TRIBUNAL EXTENSIVELY RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF EVEREST KA NTO CYLINDER LTD , ITA NO.542/MUM/2012, DATED 23.11.2012. HOWEVER, THIS ORDER REFERS TO THE NEED FOR OPTING FOR INTERNAL CUP. 5. IN THE LIGHT OF THE ABOVE FACTS AND DEVELOPMENTS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE TRIBUNAL ON GROUND NO.2 IS ERRONEOUS AS THE TRIBUNAL ON ONE SIDE RELIED ON THE SAID ORDER IN THE CASE OF EVEREST KANTO CYLINDER LTD (SUPRA), WHICH SUGGEST FOR CONSIDERING INTERNAL CUP AND ON THE OTHER SIDE, APPROVE THE DECISION OF THE CIT (A). 6. ON THE OTHER HAND, LD DR POINTED OUT THAT IT IS NOT A RECTIFIABLE MISTAKE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT ORDERS / PAPERS FIL ED BEFORE US . WE HAVE PERUSED THE CONTENTS OF PARA 3.5 AND 3.6 AND FIND THE TRIBUNAL EXTRACTED IN PARA 3.5, THE RELEVANT PARAS (11 AND 12) FROM THE ORDER IN THE CASE OF EVEREST KANTO CYLINDER LTD (SUPRA) AND THE SAME UPHOLDS THE INTERNAL CUP IN BENCHMAR KING THE IMPUGNED TRANSACTION. ON THE OTHER HAND, PARA 3.6 OF THE TRIBUNALS ORDER UPHOLDS THE ORDER OF THE CIT (A) WITHOUT ANY DISCUSSION. 8. IN OUR VIEW, THERE IS SOME MISTAKE IN THE ORDER OF THE TRIBUNAL. IT IS NOT POSSIBLE THAT BOTH THE ORDERS OF THE CIT (A) AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF EVEREST KANTO CYLINDER LTD (SUPRA) ARE CORRECT. THEREFORE, THERE IS ERROR IN THE ORDER WHICH CALLS FOR RECTIFICATION. THEREFORE, THE PART OF THE ORDER (PARA 3.6) IS RECALLED AND THE SAME SHALL HEARD ON 3 RD NOVEMBER, 2015 AS ANNOUNCED IN THE OPEN COURT. 9. THE SECOND ERRO R POINTED OUT IS IN CONNECTION WITH GROUND NO.5 RELATING TO THE ADDITIONAL GROUND. BRINGING OUR ATTENTION TO THE PARA 6.1 OF THE TRIBUNALS ORDER (SUPRA), LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT GAINS OF FOREIGN EXCHANGE OF THE CURRENT YEAR WERE MISTAKENLY CONSIDERED BY THE TRIBUNAL AS LOSSES. FURTHER, THE LOSS OF FOREIGN EXCHANGE WAS MISTAKENLY CONSIDERED AS GAINS OF FOREX. LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THE MISTAKES WITH DOCUMENTARY EVIDENCES. HE 3 PRAYED FOR CORRECTING THE ABOVE MISTAKE. AFTER HEARING THE LD DR, WE ORDER FOR RECTIFYING THE SAME IN PARA 6.1. ACCORDINGLY, AO IS DIRECTED. 10. FURT HER, ON THIS ISSUE, LD AR SUBMITTED THAT THE ASSESSEE OFFERED THE GAINS ON FOREIGN EXCHANGE AS REVENUE RECEIPT IN THE CURRENT AY 2007 - 2008 AND THE LOSSES, IF ANY, IN LATER AYS AS BUSINESS LOSSES. HOWEVER, AO ACCEPTED THE SAID GAINS IN THE CURRENT AY A ND TREATED THE LOSSES IN CAPITAL ACCOUNT. ON THESE FACTS, LD AR CALLS FOR UPHOLDING THE SET PRINCIPLE OF CONSISTENCY. WE FIND MERIT IN THE SAME AND AO IS DIRECTED ACCORDINGLY. 11. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT IMMEDIATELY AFTER COMPLETION OF HEARING ON 16 TH OCTOBER, 2015. SD/ - SD/ - ( SAKTIJIT DEY ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED: 16.10.201 5 . . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI