M/s Ingersoll Rand (India) Ltd., Bangalore V. The Asst. Commissioner of Income Tax, Circle 3 (1)(1), Bangalore

MA 137/BANG/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8342 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ELAMURUGU G
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Depreciation; Transfer pricing; International transaction
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER MP NOS.136, 137, 138, 139 & 140/BANG/2020 IN IT(TP)A NO.442, 614, 650, 615 /BANG/2016 & CO NO.97/BANG/2017) ASSESSMENT YEAR : 201112 M/S INGERSOLL RAND (INDIA) LTD., PLOT NO.35, KIADB INDUSTRIAL AREA, BIDADI, BANGALORE-562 109. PAN NO : AAACI 3099 Q VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 3(1)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI K.R VASUDEVAN, ADVOCATE RESPONDENT BY : SHRI ELAMURUGU G, JCIT (DR) DATE OF HEARING : 04 - 12 - 2020 DATE OF PRONOUNCEMENT : 15 - 1 - 202 1 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT MISCELLANEOUS PETITION IS HAVE BEEN FILED B Y ASSESSEE ALLEGING CERTAIN MISTAKES APPARENT ON RECORD IN ORD ER DATED 18/02/2020 PASSED BY THIS TRIBUNAL . LD. AR BY WAY OF NOTES TO ARGUMENT FILED BEFORE THIS TRIBUNAL ON 26/11/2020 H AS ALLEGED FOLLOWING MISTAKES: 1.IT HAS BEEN SUBMITTED THAT A SEPARATE INDEPENDENT ORDER HAS TO BE PASSED IN CASE OF INGERSOLL RAND INTERNATIONAL ( INDIA) PVT.LTD., AS IT IS A INDEPENDENT ENTITY. THE IMPUGNED ORDER DATED 18/02/2020 HAS BEEN PASSED BY THIS TRIBUNAL IN CASE OF INGERSOLL RAND INDIA PVT.LTD., AND INGE RSOLL RAND INTERNATIONAL INDIA PVT.LTD. ON PERUSAL OF THE IMPU GNED ORDER WE NOTE THAT BOTH ASSESSEES HAVE BEEN SEPARATELY CONS IDERED BY THIS TRIBUNAL BY NARRATING THE ISSUES ALLEGED BY ASSESSEE BEFORE THIS TRIBUNAL. IN OUR VIEW THIS DOES NOT AMOUNT TO BE A MISTAKE AP PARENT ON RECORD AND THEREFORE THIS PLEA IS REJECTED. THIS ISSUE ALLEGED BY ASSESSEE STANDS DISMISSED. 2.THE NEXT ISSUE ALLEGED BY LD.AR IS IN RESPECT OF COMPARABLE M/S.ACROPETAL TECHNOLOGIES, ALLEGED BY REVENUE FOR INCLUSION. LD.AR SUBMITS THAT DRP EXCLUDED THIS COMPARABLE ON SEVERAL GROUNDS, ONE OF WHICH WAS ON-SITE REVENUE EXPENSE F ILTER. HE SUBMITTED THAT, EXCEPT FOR THIS COMPARABLE THE OTHE R COMPARABLES ALLEGED BY ASSESSEE FOR EXCLUSION WAS REJECTED BY D RP. IT IS ALSO SUBMITTED BY LD.AR THAT THIS TRIBUNAL WHILE REMANDING BACK THIS ISSUE DID NOT SPECIFY WHETHER THE REMAND IS MADE TO DRP OR TO LD. AO/TPO. WE HAVE PERUSED THE IMPUGNED ORDER PASSED BY THIS TRIBUNAL AND RELEVANT OBSERVATIONS IN RESPECT OF THIS COMPARABLE IN PARAGRAPH 6. WHILE CONSIDERING THIS COMPARABLE IN AN APPEAL FILE D BY REVENUE, THIS TRIBUNAL AGREED WITH THE SUBMISSION OF LD.CIT.DR, THAT DRP COULD NOT HAVE APPLIED A PARTICULAR FILTER TO ONE O F THE COMPARABLES WITHOUT APPLYING THE SAME TO THE OTHERS. ALSO THAT THE FILTER NOT CONSIDERED BY LD.TPO CANNOT BE APPLIED BY DRP. FURT HER WE NOTE THAT IN CROSS OBJECTION FILED BY ASSESSEE, EXCLUSIO N OF THIS COMPARABLE HAS BEEN SUPPORTED FOR FAILING EMPLOYEE COST FILTER AND HAVING BUSINESS DIFFERENT BUSINESS MODEL. AS THIS TRIBUNAL REMANDED THIS COMPARABLE BACK TO LD.AO/TPO FOR FRES H CONSIDERATION, THE REASON FOR WHICH IT IS REMANDED BECOMES ACADEMIC IN NATURE. ADMITTEDLY IN PARA 5 IT IS NOTED THAT LD.AO/TPO HAS NOT FOLLOWED DIRECTIONS OF DRP AND THEREFORE ALL THE ISSUES RAIS ED BY ASSESSEE AS WELL AS REVENUE NEEDS TO BE REVISITED. THIS VIEW HA S ONCE AGAIN BE EMPHASISED BY THIS TRIBUNAL IN PARA 6 WHILE CONSIDERING THE COMPARABLE ACROPETAL TECHNOLOGIES LTD. IN OUR VIEW THERE IS NO CONFUSION IN REGARDS TO THE REMAND THAT HAS BEEN MA DE TO LD.AO/TPO FOR FRESH CONSIDERATION. FURTHER, THE FINAL CONCLUSION EXPRESSED BY THIS TRIBUNAL AT PAGE 10, MAKES IT CLEAR THAT THE ENTIRE TRANSFER PRICING ISS UES RAISED BY ASSESSEE AS WELL AS REVENUE IN THEIR RESPECTIVE APP EALS AS WELL AS CROSS OBJECTION HAS BEEN REMANDED FOR CONSIDERING I T AFRESH. THOUGH THE REMAND TO LD.AO/TPO IS VERY CLEAR IN PAR A 6, HOWEVER, WE ONCE AGAIN EMPHASISE THAT, THE ENTIRE TRANSFER P RICING ISSUES RAISED BY ASSESSEE AS WELL AS REVENUE IN THEIR APPE ALS AND CROSS OBJECTION IN CASE OF M/S.INGERSOLL RAND INTERNATION AL (INDIA) PVT.LTD STANDS REMANDED FOR RECONSIDERATION TO LD.AO/TPO. THIS ISSUE ALLEGED BY ASSESSEE STANDS PARTLY ALLOWE D. 3. LD.AR SUBMITTED THAT, WHILE REMANDING PROVISION FOR WARRANTY TO LD. AO, THIS TRIBUNAL RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS GOETZ INDIA LTD., REPORTED IN (2010) 8 TAXMANN.COM 303 . IT HAS BEEN SUBMITTED THAT REFERENCE TO THIS DECISION IS NOT NEEDED AND THE SAME MAY BE DELETED. WE NOTE THAT DIRECTION HAS BEEN GIVEN TO LD.AO TO FOLLOW THE CONDITIONS SPECIFIED BY HONBLE SUPREME COURT IN CASE OF ROTORK CONTROLS INDIA PVT. LTD. VS CIT REPORTED IN (2009) 180 TAXMANN 422 . WE NOTE THAT HONBLE DELHI HIGH COURT IN CASE OF CIT VS GOETZ INDIA LTD., (SUPRA) WAS CONSIDERING THE ISSUE WHERE CLAIM MADE BY ASSESSEE EMERGES OUT OF THE ASSESSMENT ORDER EVEN T HOUGH THE SAME WAS NOT RAISED IN THE ROI. IN THE PRESENT FACT S IT IS NOT IN DISPUTE THAT THE CLAIM WAS NOT MADE IN THE STATEMEN T OF ACCOUNT. HOWEVER IT WAS EMPHASIZED TO SAFEGUARD INTEREST OF ASSESSEE. IN OUR VIEW THIS DOES NOT AMOUNT TO MISTAKE APPARENT ON RE CORD. ACCORDINGLY THE SAME IS DISMISSED. 4.THE NEXT ISSUE RAISED BY ASSESSEE IS IN RESPECT O F DEPRECIATION ON SOFTWARE EXPENSES REMANDED TO LD.AO/TPO. IT HAS BEE N SUBMITTED THAT DRPS DIRECTION WAS NOT FOLLOWED BY LD.AO AND THEREFORE THE REMAND TO LD.AO/TPO IS A MISTAKE APPARENT ON RECORD . IN OUR VIEW THE FINAL ASSESSMENT ORDER HAS TO BE PASSED BY LD. AO FOLLOWING THE DIRECTIONS OF DRP AND THEREFORE THE ISSUE HAS BEEN RIGHTLY REMANDED TO LD.AO. THIS ISSUE ALLEGED BY ASSESSEE STANDS DISMISSED. 5.THE NEXT ISSUE ALLEGED BY ASSESSEE IS IN RESPECT OF WRONG PAN NO. BEING MENTIONED AGAINST THE NAME OF ASSESSEE IN CAS E OF M/S INGERSOLL RAND INTERNATIONAL (INDIA) PVT.LTD. THE SAME STANDS VERIFIED AND CORRECTED IN THE TITLE . THIS ISSUE ALLEGED BY ASSESSEE STANDS ALLOWED. 6.NEXT ISSUE RAISED BY ASSESSEE IS IN RESPECT OF IN GERSOLL RAND INDIA LTD WHEREIN ASSESSEE PRAYS FOR A SEPARATE ORDER TO BE PASSED. IN OUR VIEW THIS DOES NOT AMOUNT TO BE A MISTAKE AP PARENT ON RECORD AND THEREFORE THIS PLEA IS REJECTED. THIS ISSUE ALLEGED BY ASSESSEE STANDS DISMISSED. 7.NEXT ISSUE IS IN RESPECT OF MANAGEMENT FEES IN CA SE OF M/S INGERSOLL RAND INDIA LTD. LD.AR SUBMITS THAT THE IS SUE WAS REMANDED TO LD.AO AND THEREFORE GROUND RAISED BY AS SESSEE UNDER SECTION 40(A)(I) HAS REMAINED UNADJUDICATED. 7.1WE HAVE PERUSED THE IMPUGNED ORDER IN PARA 21 AN D NOTE THAT THIS TRIBUNAL HAS OBSERVED THAT ONCE TPO CONSIDERED THESE EXPENSES TO BE INTERNATIONAL TRANSACTION AND HAS COMPUTED AR MS LENGTH PRICE THEN THERE WAS NO NEED FOR AO TO MAKE A SEPAR ATE DISALLOWANCE. HOWEVER THE ISSUE WAS SET-ASIDE TO LD . AO/TPO FOR CONSIDERING IN ACCORDANCE WITH LAW. WE DO NOT FIND THAT THE ALTERNATE GROUND RAISED BY ASSESSEE REGARDING DISAL LOWANCE UNDER SECTION 40 (A) (I) HAS NOT BEEN ADJUDICATED. THIS I SSUE HAS BEEN REMANDED TO LD.AO/TPO FOR CONSIDERING IT AFRESH IN ACCORDANCE WITH LAW AND THEREFORE IT IS FOR ASSESSEE TO RAISE NECESSARY CONTENTIONS BEFORE AUTHORITIES BELOW IN SUPPORT OF ITS CLAIM WHICH SHALL BE CONSIDERED BY LD. AO/TPO IN ACCORDANCE WIT H LAW. IN OUR VIEW THIS DOES NOT AMOUNT TO BE A MISTAKE AP PARENT ON RECORD AND THEREFORE THIS PLEA IS REJECTED. THIS ISSUE ALLEGED BY ASSESSEE STANDS DISMISSED. 8.NEXT ISSUE IS IN RESPECT OF PROVISION OF WARRANTY WHERE IN DRP DIRECTED LD.AO TO DELETE THE DISALLOWANCE. LD.AR SUBMITTED THAT FINDINGS OF THIS TRIBUNAL IN P ARA 22 IS CONTRARY TO THE DIRECTION OF DRP. 8.1.WE HAVE PERUSED THE IMPUGNED ORDER IN PARA 22 A ND DIRECTIONS OF DRP ON THIS ISSUE. WE NOTE THAT, DRP ALLOWED THE CLAIM, PLACING RELIANCE ON DRP OBSERVATION FOR ASSESSMENT YEAR 200 9-10. 8.2.AT THE TIME OF ARGUMENTS, IT WAS SUBMITTED BY LD.AR THAT LD.AO WHILE PASSING FINAL ASSESSMENT ORDER DID NOT ALLOW THE CLAIM AS ASSESSEE DID NOT FILE ANY QUANTITATIVE DETAILS SHOW ING THAT THE PROVISIONS ARE BEING MADE ON HISTORICAL BASIS. 8.3. IT WAS ON THIS BACK GROUND THAT THIS TRIBUNAL REMANDED FOR VERIFICATION IN LIGHT OF DECISION OF HONBLE SUPREME COURT IN CASE OF ROTORK CONTROLS INDIA PVT.LTD(SUPRA). IN OUR VIEW THIS DOES NOT AMOUNT TO BE A MISTAK E APPARENT ON RECORD AND THEREFORE THIS PLEA IS REJECTED. THIS ISSUE ALLEGED BY ASSESSEE STANDS DISMISSED. ACCORDINGLY, THE MISCELLANEOUS PETITION FILED BY AS SESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2021. SD/- SD/- (CHANDRA POOJARI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 15 TH JANUARY, 2021. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL. BANGALORE. DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -1-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -1-2021 JM/AM 4. DRAFT DISCUSSED / APPROVED BY SECOND MEMBER. -1-2021 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -1-2021 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -1-2021 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -1-2021 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -1-2021 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS