HILTI MANUFACTURING INDIA P.LTD, NAVI MUMBAI V. ASST CIT CIR 10(1)(1), MUMBAI

MA 22/MUM/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4580 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2012-2013
• Appeal Filed On: 31-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Rectification of order; Wholly owned subsidiary; Liquidation
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER MA No. 22/Mum/2022 (in ITA No. 1565/Mum/2017) (Assessment Year: 2012-13) M/s. Hilti Manu fa cturing India P vt Ltd ., 123 , Ground Floor, Kar ma Stambh Ind Estate, LBS Marg, Chandan Nagar, Vickroli(W) – 40008 3 बनाम/ Vs. ACIT, Circle – 1 0(1)(1 ), Aayakar Bhav an, 2 n d Floo r, M K Marg Mu mbai – 400020. ./ज आइआर ./PAN/GI R No. : AADCB25 66L ( /Appellant) . . ( / Respondent) र / Appellant by : Shri Siddesh Chougule.AR र /Respondent by : Shri.S.N Kabra, Sr.DR र / D a t e o f H e a r i n g 08/04/2022 !"# र /D a t e o f P r o n o u n c e m e n t 12/04/2022 आद श / O R D E R PER PAVAN KUMAR GADALE - JM: The assessee has filed the miscellaneous application (M.A) in ITA. No. 1562/Mum/2017 dated 12.07.2021 seeking rectification of mistake crept in the Hon’ble Tribunal order. MA No. 22/Mum/2022 Hilti Manufacturing Ind P. Ltd, Mumbai. - 2 - 2. At the time hearing, the Ld.AR submitted that the Hon’ble Tribunal has partly allowed the assessee’s appeal considering the outstanding loans and advances, debtors and others receivables from Associate Enterprise (AE) M/s Peacock Diamond Systems BV is doubtful and the AE is liquidated. Whereas the other two AE companies also went into liquation due to heavy losses and the recovery of amount is doubtful and the similar relief granted to peacock diamonds systems BV should be allowed and prayed for rectification of mistake in the Honble Tribunal order. Contra, the Ld.DR supported the order of the Honble Tribunal. 3. We heard the rival submissions and perused the material available on record. Prima-facie the sole crux of the disputed issue envisaged by the Ld. AR that the Hon’ble Tribunal has granted the relief in respect of one AE which was liquidated and no relief was granted in respect of other two AEs. The contentions of the Ld. AR that the financial conditions of the other two AEs are similar to Peacock Diamond Systems BV. We on perusal of the facts found that the Peacock Diamond Systems BV was liquidated on 23.12.2011 observed at page 7 Para 4 of the order read as under: MA No. 22/Mum/2022 Hilti Manufacturing Ind P. Ltd, Mumbai. - 3 - 4. At the time of hearing the Ld.AR submitted that the Grounds of appeal No.1 to 3 are general in nature. And the transfer pricing grounds of appeal are no 4 & 5. The Ld. AR submitted that the DRP has erred in confirming the action of the TPO in making the adjustment of notional interest on loans and advances though provided by the assessee company to its AE in the ordinary course of business. Further Interest is also charged on the outstanding debit balance of debtors with AE. The Ld.AR emphasized that the one of the Associated Enterprise (AE) M/s Peacock Diamond System Inc. USA were advance is provided by the assessee. The AE was incorporated under the laws of Delaware and authorize to transact the business in Georgia USA and it’s a wholly owned subsidiary of the assessee company. During the financial year 2011-12, the AE has incurred heavy losses and went into liquidation on 23.12.2011 and was dissolved w.e.f 05.10.2012. The contention of the Ld.AR that the AE was dissolved and recovery of advances itself is doubtful. Further charging of interest on the outstanding advances and debtors is not financially feasible and the same cannot be treated as international transaction and prayed for the deletion. Contra, the Ld.DR supported the orders of the TPO and DRP. 4. Whereas in respect of the other two AEs, the liquidation process has taken place on 16.04.2013 falls in F.Y.2013-14.Accordingly the relief was granted in respect of the Peacock Diamond Systems BV as it was liquidated on 23.12.2011 and the observations of the Hon’ble Tribunal at page8 Para 5 is read as under: MA No. 22/Mum/2022 Hilti Manufacturing Ind P. Ltd, Mumbai. - 4 - 5. We heard the rival submissions and perused the material on record. On the first issue of the Associated Enterprise (AE) M/s Peacock Diamond System Inc. USA were advances are provided by the assessee, it is borne out on the record and not disputed that the AE company went into liquidation due to heavy losses and was dissolved as per the Governing Laws of the USA. The explanations were filed with documentary evidence in respect of liquidation of the company in USA at Para 7.4 of the TPO order. We are of the view that in such circumstances, the recovery of the amount due is doubtful and the TPO charging interest on such outstanding balances and advances cannot be treated as prudent practice. Therefore we considering the overall facts and the circumstances direct the TPO not to charge interest in respect of balance of advances and outstanding receivables of Peacock Diamond System Inc.USA and partly allow the grounds of appeal of the assessee . 5. Whereas the Hon’ble Tribunal has considered the overall facts and the liquidation of one AE, falling in the same financial year and passed the order. The Ld.AR tried to argue on the merits of the case in the miscellaneous application and praying for similar relief in respect of other Two AEs. We find the provisions of section 254(2) of the Act are envisaged for rectification of mistake apparent from the record but not to review the order. Further, if the submissions of the Ld.AR are accepted, it amount to review of the order, which is not within the purview of Section 254(2) of the Act. MA No. 22/Mum/2022 Hilti Manufacturing Ind P. Ltd, Mumbai. - 5 - Accordingly, we do not find merits in the miscellaneous application filed by the assessee and is dismissed. 6. In the result the MA filed by the assessee is dismissed. Order pronounced in the open court on 12.04.2022 Sd/- Sd/- (SHAMIM YAHYA) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 12/04/2022. KRK, PS /Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. Concerned CIT 5. AR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai