NATIONAL FACELESS ASSESSMENT CENTRE, DELHI V. ARCHEAN INDUSTRIES P LTD, CHENNAI

MA 145/CHNY/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4426 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-01-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Appeal Filed On: 11-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Notional interest
• Section: 14A; 260A; 144C

Judgement Text

आयकर अपीलीय अिधकरण, ’डी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI ी वी. दुगा राव, माननीय ाियक सद एवं ी मंजूनाथा.जी, माननीय लेखा सद के सम BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER AND SHRI MANJUNATHA.G, HON’BLE ACCOUNTANT MEMBER Miscellaneous Application No.145/Chny/2023 (in IT (TP) A No.42/Chny/2021) िनधा रण वष /Assessment Year: 2016-17 The Dy. Commissioner of – Income Tax, Corporate Circle-1(1), Chennai. v. M/s.Archean Industries- Pvt. Ltd., No.2, North Crescent Road, T.Nagar, Chennai-600 017. [PAN: AAACA 7344 J] (अपीलाथ /Appellant) ( यथ /Respondent) Department by : Shri AR.V.Sreenivasan, Addl.CIT Assessee by : Shri N. Arjunraj, CA for Shri S. Sridhar, Adv. सुनवाई क तारीख/Date of Hearing : 22.12.2023 घोषणा क तारीख /Date of Pronouncement : 02.01.2024 आदेश / O R D E R PER MANJUNATHA.G, AM: The Revenue has filed present Miscellaneous Application u/s.254(2) of the Income Tax Act, 1961, against the order of the Tribunal in IT (TP) A MA No.145/Chny/2023 (in IT (TP) A No.42/Chny/2021) :: 2 :: No.42/Chny/2021 dated 14.06.2023, and pertains to assessment year 2016-17. 2. The Revenue has narrated the facts of its case and mistakes stated to be apparent on record from the order of the Tribunal dated 14.06.2023 and relevant contents of Miscellaneous Application filed by the Revenue for the AY 2016-17 in IT (TP) A No.42/Chny/2021 are reproduced as under: Archean Industries Pvt. Ltd. - Sequence of events Assessment in the case of the above assessee for the AY 2014-15 was finalized u/s 143(3) r.w.s. 144C r.w.s.92CA(3) of the IT Act on 09.08.2018 incorporating the directions of the DRP in order dated 27.06.2018. Aggrieved by the assessment, the assessee filed appeal before the Hon'ble ITAT. The Hon'ble ITAT vide order in IT(TP)A No.37/Chny/2018 dated 19.10.2022 partly allowed the appeal of the assessee by deciding the various issues in appeal as follows: I. Allowed: Upward adjustment towards Corporate Guarantee Fee of Rs.8,24,34,885/- and upward adjustment towards Notional Interest chargeable on interest free loans extended to AE of Rs.6,19,18,843/-. II. Partly allowed: Disallowance u/s 40(a)(i) of Rs.1,03,95,704/- and disallowance u/s 14A of Rs. 2,01,64,577/-. III. Dismissed: Disallowance of interest on income tax of Rs.3,87,429/-. The TPO on his report on adverse appellate order of the Hon'ble ITAT dated 09.01.2023 has suggested filing of further appeal before the Hon'ble High Court on the two TP issues in the appeal namely, the Upward adjustment towards Corporate Guarantee Fee of Rs.8,24,34,885/- and upward adjustment towards Notional Interest chargeable on interest free loans extended to AE of Rs.6,19,18,843/-. The Central Scrutiny Report dated 20.02.2023 endorsed by the Range Head recommended filing of further appeal before the Hon'ble High Court on the following issues: (i) Upward adjustment towards Corporate Guarantee Fee of Rs.8,24,34,885/- (ii) Upward adjustment towards Notional Interest chargeable on interest free loans extended to AE of Rs.6,19,18,843/- (iii) Disallowance u/s 14A of Rs.2,01,64,577/- After obtaining necessary approvals, a letter dated 08.03.2023 directing the Sr. Standing Counsel to file appeal in the case of the assessee for the AY 2014-15 on MA No.145/Chny/2023 (in IT (TP) A No.42/Chny/2021) :: 3 :: the three issues discussed above was sent to the Counsel along with the necessary documents and the draft questions of law. In the meantime, after about 5 months of the Order of the ITAT for the AY 2014- 15 dated 19.10.2022, the appeal for the AY 2016-17 came for hearing where on similar issue, the AR placed reliance on the above decision of the Hon'ble ITAT dated 19.10.2022. However, when the discrepancy in the order of the ITAT was placed before the Bench, the Member, ITAT had stated that the company had submitted a signed copy of the Corporate Guarantee Agreement, which was not available with any of the lower authorities of the Revenue. Subsequently, CIT(DR), "D" Bench, ITAT, Chennai vide letter dated 12.04.2023 and 30.05.2023 conveyed that the case of the assessee was a fit case for filing of Miscellaneous Application before the Hon'ble ITAT for the following reasons: (i) On the issue of Corporate Guarantee given by the assessee to its AE, as the determination of ALP was brought into statue in Finance Act 2012 w.r.e.f. 01.04.2002, the claim of the assessee that there exists a restrictive covenant clause in their unsigned agreement of 2009 is not acceptable. ii) The DRP in its Speaking Order has also rejected the claim of the assessee citing the unsigned tri-partite agreement of 2009 and the same was brought to the notice of the ITAT but the Hon'ble 1TAT in it Order dated 19.10.2022 has stated in Para 5.4 as follows: "In fact, the TPO or DRP never disputed the fact that there is a tri partite agreement between the parties and as per the said agreement, there is a restrictive covenant for charging guarantee commission" (iii) Hence, the Hon'ble ITAT has passed its order without recording the facts correctly i.e., the findings are completely against the facts on record. (iv) Subsequently, when the case of the assessee for the AY 2016-17 came for hearing, the assessee company relied on the decision of the Hon'ble ITAT in the case of the assessee for the AY 2014-15 in order dated 19.10.2022. When the above discrepancy in the order of the Hon'ble ITAT was pointed out, the Accountant Member of the Bench has informed the DR that the assessee had submitted a signed copy of the Corporate Guarantee Agreement. However, the same was not in possession of the Office of the DR, AO and DRP. (v) Hence, the CIT(DR), after the conclusion of hearing had repeatedly requested the Assistant Registrar, ITAT to provide the said agreement vide letter dated 15.03.2023 and 28.03.2023. However, no reply was received in this regard. (vi) Thus, the CIT(DR) had filed an RTI application requesting to share the document before the CPIO, ITAT on 06.04.2023. The CPIO vide response dated 02.05.2023 forwarded certain documents allegedly submitted on 15.09.2023 by the assessee. However, no evidence that the assessee had submitted the document on the said date was provided. Further, there was not response from the CPIO on the query that under which Rule of the ITAT Rules 1963, the assessee had submitted the document after the case was pronounced heard in open court. (vii) Further in the case of another assessee M/s.Ind Eco Ventures (P) Ltd, also the Hon'ble ITAT had admitted fresh evidence which were not available with any of the lower authorities. MA No.145/Chny/2023 (in IT (TP) A No.42/Chny/2021) :: 4 :: Hence, the Revenue had filed a Miscellaneous Application before the ITAT on 28.04.2023 against the Order of the ITAT for the AY 2014-15. Presently, the Order of the Hon'ble ITAT in IT(TP)A No. 42/Chny/2021 dated 14.06.2023 pertaining to the AY 2016-17 was received in this Office on 28.06.2023 wherein, similar issues to that of the AY 2014-15 was decided in favour of the assessee. Against the above order, appeal u/s 260A is to be preferred by the Revenue. Considering the facts of the case for the AY 2014-15 and the various discrepancy in the whole process of the appeal before the Hon'ble ITAT, filing of miscellaneous appeal before the Tribunal is suggested in this case for the AY 2016-17 also. 3. We have heard both the sides and considered the so-called Miscellaneous Application claims to have been filed by the Revenue by way of letter dated 09.10.2023, and we find that the Revenue has filed a letter addressed to the Assistant Registrar, ITAT, Chennai, along with a note submitted by the DCIT, Corporate Cirlce-1(1), Chennai, recommending filing of Miscellaneous Application against the order of the Tribunal in IT (TP) A No.42/Chny/2021 dated 14.06.2023. After going through the letter filed by the Assessing Officer, we find that Miscellaneous Application filed by the Revenue is not in accordance with prescribed Rules for filing Miscellaneous Application before the Tribunal. Therefore, on this count itself, Miscellaneous Application filed by the Revenue deserves to be dismissed. Be that as it may. The issue raised in the so-called Miscellaneous Application claims to have been filed by the Revenue is for consideration of certain evidences while adjudicating the issue of ‘corporate guarantee’ and said issue is recurring in nature and the same has been raised even in Miscellaneous Application filed for earlier assessment years. The Tribunal in MA No.102/Chny/2023 dated 15.09.2023 for AY 2014-15 has negated the arguments of the Revenue in their Miscellaneous MA No.145/Chny/2023 (in IT (TP) A No.42/Chny/2021) :: 5 :: Application in so far as the issue of ‘corporate guarantee’ and evidences considered by the Tribunal while adjudicating the issue. Since the Revenue has made a similar claim for the for the impugned assessment year, in our considered view, there is no merit in the contentions raised by the Revenue on this issue, and thus, we are of the considered view that the Revenue has failed to make out a case of prima facie mistake apparent on record from the order of the Tribunal, and thus, we dismiss the Miscellaneous Application filed by the Revenue. 4. In the result, the Miscellaneous Application filed by the Revenue is dismissed. Order pronounced on the 02 nd day of January, 2024, in Chennai. Sd/- (वी. दुगा राव) (V. DURGA RAO) याियक सद य/JUDICIAL MEMBER Sd/- (मंजूनाथा.जी) (MANJUNATHA.G) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 02 nd January, 2024. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 3. आयकर आयु /CIT 5. गाड फाईल/GF 2. यथ /Respondent 4. िवभागीय ितिनिध/DR