American Express (India) Private Limited, New Delhi V. ACIT, New Delhi

MA 146/DEL/2019

AI Insights

The case involves American Express (India) Pvt. Ltd. appealing against the adjustments made by the Transfer Pricing Officer (TPO) concerning the arm's length price of purchased fixed assets for the Assessment Year 2009-10. Initially, the Tribunal's order erroneously stated that no adjustments were made in the final assessment order regarding these transactions. The assessee filed a Miscellaneous Application seeking rectification of this oversight. The Tribunal acknowledged the mistake and recalled the original order to properly address the contested ground.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122211 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-02-2023
• Appeal Filed By: Assessee
• Order Result: AllowedAllowedAllowedAllowedAllowed
• Bench Allotted: I2
• Next Hearing Date: 17-11-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2019
• Other Referred Cases: Honda Siel Power Product6 Ltd. vs CIT 295 ITR 466 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.BALI
• Keywords: Transfer pricing; Rectification of order; Fair market value
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “FRIDAY/I-2” BENCH: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER M.A.No.-146/Del/2019 [In ITA No.1973 & 2557/Del/2014] [Assessment Year : 2009-10] American Express (India) Pvt.Ltd., Metropolitan Saket, 7 th Floor, Office Block District Centre, Saket, New Delhi-110017. PAN-AAACA8163F vs ACIT, Circle-1(1), New Delhi. APPELLANT RESPONDENT Appellant by Shri Shatanik Chakrabarty, Adv. Respondent by Shri K.Bali, Sr.DR Date of Hearing 18.11.2022 Date of Pronouncement 15.02.2023 ORDER PER KUL BHARAT, JM : The present Miscellaneous Applications (M.A.) has been filed by the assessee seeking rectification of the order passed by the Tribunal in ITA No.1973 & 2557/Del/2014 pertaining to Assessment Year 2009-10 vide order dated 03.08.2018. 2. Ld. Counsel for the assessee reiterated the submissions as made in the M.A. and submitted that there are certain mistakes apparent from the record. He submitted that the Tribunal in para 30 of the order inadvertently noted that no adjustment on purchase of fixed assets was made in the final assessment order and the Ld. Transfer Pricing Officer (“TPO”) has made this adjustment post Ld. Dispute Resolution Panel (“DRP”) directions in the order passed u/s 154 of the Act on 24.07.2014 much after passing of final assessment order. Similar facts were inadvertently noted in para 31 of the order sought to be rectified. He further contended that Ld.TPO had made upward adjustment of 2 | Page Rs.19,06,467/- in relation to the international transaction pertaining to purchase on fixed assets for the first time in its order dated 21.02.2014 giving effect to the direction of Ld.DRP. Accordingly, the AO made the said adjustment in final assessment order dated 28.02.2014 and thus, was rightly challenged before the Tribunal vide Ground No.15 of the appeal. He further submitted that the order dated 24.07.2014 passed by Ld.TPO for rectifying margins of comparables companies and it was not rectifying its mistake of not making the adjustment on account of purchase of fixed assets in earlier order. He submitted that on the basis of incorrect fact, the Tribunal came into conclusion that no adjustment was made in relation to international transaction pertaining to purchase of fixed assets as borne out of impugned final assessment order. He therefore, submitted that the mistake apparent from the record deserves to be corrected. He further submitted that the law is well-settled under what circumstances the Tribunal can correct its mistake regarding observations and findings. He placed reliance on the judgement of Hon’ble Supreme Court in the case of Honda Siel Power Product6 Ltd. vs CIT 295 ITR 466 (SC). 3. On the other hand, Ld. Sr. DR opposed these submissions and submitted that there is no mistake apparent from the record. Further, he submitted that by way of present M.A, the assessee is trying to seek review of the order which is not permissible under the law. Therefore, Ld. Sr. DR submitted that the present M.A. filed by the assessee deserves to be dismissed. 4. We have heard Ld. Authorized Representatives of the parties and perused the material available on record. The grievance of the assessee is that Ground No.15 raised by the assessee has been erroneously dismissed, treating the 3 | Page same to be infructuous. Thus, Ground No.15 raised by the assessee is reproduced as under:- 15. “That on facts and in law, the TPO/AO have grossly erred in re- determining the arm’s length price of the purchase of fixed assets.” 5. The finding of the Tribunal on the above ground is also reproduced for the sake of clarity as under:- 30. “The next ground raised by the assessee is regarding the ALP on purchase of fixed assets. Before us the Ld. Counsel for the assessee submitted that, first of all, no such adjustment was made by the TPO in his original draft order or in the final assessment order. Even the DRP has not given any direction to the AAO in this regard. The TPO has made these adjustments post DRP direction in the order passed u/s 154 on 24.7.2014, which is even after passing of the final assessment order. Thus, such an adjustment without any DRP's direction could not have been made. On the other hand Ld. DR submitted that though this issue was referred by the TPO in his order no adjustment was made and that is why the TPO has passed order u/s 154, whereby he made the adjustment on purchase of fixed assets. 31. From the perusal of the impugned TPO order, we find that though there is a reference on account of purchase of fixed assets from the AE, but no adjustment was made by the TPO on this score. The TPO in the original order has stated that the assessee purchased assets amounting to Rs. 44,34,339/- from AE for which TPO asked the assessee to furnish the WDV of the aforesaid assets in the books of the AE. The WDV of the assets books was Rs.25,28,872/- whereas assessee has purchased at a higher price. The assessee's contention has been that it has purchased the fixed assets on a fair market value determined by the valuer and WDV of assets cannot be the same as fair market value which may be lower and higher. The TPO made the observation that in arm's length scenario WDV of assets 4 | Page should be taken at arm's length price. Though he has made the discussion but has not made any adjustment. It is for this reason assessee did not file any objection before the DRP. Even in the final assessment order, no such adjustment has been made. Now TPO much after the completion of final assessment order has made this adjustment without any discussion and has made the adjustment of Rs. 19,06,467/- without any discussion. 32. Since the present appeal has been filed by the assessee against the final assessment order where there is no such discussion and if assessee is aggrieved by such a rectification order passed after the passing of final assessment order, then assessee can go for other remedies and cannot challenge the issue which is not borne out from the impugned order, because it neither can be entertained by way of additional ground or additional plea under the rules. This issue is thus treated as infructuous.” 6. It is noticed that the Tribunal noted that adjustment related to purchase of fixed assets qua ALP was first time made by the TPO on 24.07.2014. The Tribunal was of the view that the appeal before it, was against the final assessment order dated 28.02.2014. As per the final assessment order, in para 3.7, the AO made adjustment of Rs.67,05,58,495/-. Para 3.7 of the assessment order is reproduced as under:- 3.7. “The assessee company filed its objection and the Hon’ble DRP after considering the objection of the assessee has given directions u/s 144C (5) of the I.T.Act, 1961 vide order dt.24.12.2013 (received on 01.01.2014) which have been duly incorporated by the TPO-1(1), New Delhi while giving effect to the DRP directions vide order dated 21.02.2014 (copy enclosed as annexure ‘A’). After giving effect to the directions of Hon’ble DRP adjustment on account of Arm’s Length Price works out to Rs.67,05,58,495/-.” 5 | Page 7. The assessee has stated that in the final assessment order, the AO had made adjustment of Rs.19,06,467/- in respect of purchase of fixed assets. However, the Tribunal has noted that these adjustments were made by the TPO vide order dated 24.07.2014. However, as per order dated 24.07.2014, it is stated that order giving effect to the direction of Ld.DRP was passed on 21.02.2014 proposing therein adjustment related to provision of tenable services, receivable and purchase of fixed assets. Thus, the adjustment related to fixed assets was made by Ld.TPO vide its order dated 21.02.2104. 8. We have gone through the order dated 21.02.2014 which also speaks about the adjustment of Rs.19,06,467/-. However, the final assessment order was passed on 28.02.2014 i.e. post rectification order passed by the TPO. Thus, we find merit in the contention of the assessee that the above mistake as crept into the order, sought to be rectified. We therefore, recall the order dated 03.08.2018 in ITA Nos.1973 & 2557/Del/2014 [Assessment Year 2009-10] for the limited purpose to adjudicate Ground No.15 of the assessee’s appeal. Registry is directed to fix the hearing of appeal in due course. 9. In the result, the Miscellaneous Application filed by the assessee is allowed. Order pronounced in the open Court on 15 th February, 2023. Sd/- Sd/- (SHAMIM YAHYA) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER * Amit Kumar * 6 | Page Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI