Deputy Commissioner of Income-tax, Circle - 8, Pune V. M/s. Alfa Laval (India) Limited, Pune

MA 23/PUN/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3265 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-08-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-07-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Rectification of order; International transaction
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER M.A. No. 46/PUN/2020 & 23/PUN/2022 ( Arising out of ITA No. 2638/PUN/2016 & ITA No. 1945/PUN/2017) Assessment Year : 2011-12 & 2013-14 The Dy. C.I.T. Cir. 8, Pune. Applicant V/s. M/s. Alfa Laval India Ltd., Mumbai Pune Road, Pune-411 012 PAN; AAACA 5899 A Respondent Applicant by : Shri Piyushkumar Sing Yadav Respondent by : Shri Nikhil Pathak Date of Hearing : 15-07-2022 Date of Pronouncement : 08-08-2022 ORDER PER PARTHA SARATHI CHAUDHURY, JM: These Miscellaneous Applications have been preferred by the Revenue u/s.254(2) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) with a prayer to recall the order of Tribunal in ITA No. 2638/PUN/2016 and 1945/PUN/2017 for the assessment years 2011-12 and 2013-14 dated 09-01- 2019 and 01-04-2019 respectively. 2. We have heard the rival contentions and perused the orders of the Tribunal dated 09-01-2019 and 01-04-2019 and brief facts in these cases were that the assessee is a subsidiary of Alfa Laval AB Sweden and is engaged in manufacturing and sale of plate and spiral head exchanges, decanters and separators and also executes complete projects and systems for its customers. The assessee company has three divisions viz. Equipment Division, Projects Division and the Parts and Services Division. The Equipment Division of the company is engaged in manufacture and sale of plate and spiral exchangers, decanters and separators, etc. whereas the Project Division is engaged in 2 MA No.46 of 2020 and M.A. No.23 of 2022 Alfa Laval India Ltd. A.Y.2011-12 & 2013-14 installation and Commissioning of projects, plants and systems. The parts and service division is engaged in trading of spares and components and serving related activities. The international transactions entered into by the assessee during the A.Y. 2011-12 have been enumerated at para 3 of the order of the Tribunal. The assessee aggregated all its international transactions of the equipment division in its Transfer Pricing study Report. According to the assessee, its international transactions were required to be aggregated because the same are closely interlinked, therefore, it used the Transactional Net Margin Method (TNMM) to benchmark its international transactions. The T.P.O on the other hand rejected the said method used by the assessee and applied Cost Plus Method (CPM) with the Profit Level Indicator (PLI) with respect to its domestic segment of the traded spares @ 136.15% wherein the PLI in the case of export of the traded spares to AE was at 46.02%. With the result, the TPO made the adjustment of Rs. 1,56,00,000/- to the assessee‟s international transaction of export of spares. 3. The ld. CIT(A) placing reliance on the Co-ordinate bench decision in assessee‟s own case for A.Y. 2008-09 to 2010-11 has held that the TNMM has to be applied as the most appropriate method and accordingly the addition was deleted. 4. Thereafter, at para 9 of the Tribunal order in ITA No. 2638/PUN/2016, it had discussed the co-ordinate bench decision in assessee‟s own case for A.Y. 2010-11 and following the same provided relief to the assessee. Similarly, while granting relief to the assessee, the Tribunal in ITA No.1945/PUN/2017 for A.Y. 2013-14 granted relief to the assessee relying on the findings of it‟s earlier order for the A.Y. 2011-12 in ITA No. 2638/PUN/2016. In this view of the matter, we do not find that there is any mistake in the orders of the Tribunal 3 MA No.46 of 2020 and M.A. No.23 of 2022 Alfa Laval India Ltd. A.Y.2011-12 & 2013-14 much less apparent from record. Therefore, in the garb of these Misc. applications, the Revenue is advocating its case asking the Tribunal to review its own order which is not permissible within the legal jurisdiction u/s. 254(2) of the Act 5. Coming to the M.A. No. 23/PUN/2022 we find that the dispute that was adjudicated by the Tribunal was with respect to the most appropriate method. The question adjudicated was whether the ld. CIT(A) was correct in holding that application of cost + method adopted by the T.P.O was incorrect. In this regard, the Tribunal was appraised by the ld. Counsel for the assessee who submitted that in the immediately preceding assessment year 2012-13 identical issues were adjudicated by the Tribunal in ITA No. 937/PUN/2017 dated 01-04- 2019. Therefore, Tribunal had observed for A.Y. 2013-14 the T.P.O had adopted cost + method as most appropriate method as like the earlier assessment year. However, the view taken by T.P.O for applying cost + method was rejected by the Tribunal and placing reliance on the decision in assessee‟s own case for A.Y. 2012-13 relief was provided to assessee. In this case also, we do not find any mistake apparent from record. The Revenue once again in the garb of M.A. has filed for review of the decision which is not permissible u/s 254(2) of the Act. 6. There are series of decisions by the Hon'ble Supreme Court as well as Hon'ble High Court expounding scope of exercising powers under section 254(2) of the Act. We do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, 4 MA No.46 of 2020 and M.A. No.23 of 2022 Alfa Laval India Ltd. A.Y.2011-12 & 2013-14 on which there may conceivably be two opinions. For fortifying this view, we make reference to the decision of the Hon'ble jurisdictional High Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ld., 262 ITR 146 which has been upheld by the Hon'ble Supreme Court reported in 305 ITR 227. 7. The Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric & Trading Company reported as 203 ITR 497 has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment. The relevant observations of the Hon'ble High Court are as under: “The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake which the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself.” 8. The Revenue is in fact contending through these Misc. applications that reliance placed on a particular decision by the Tribunal is mis-placed and when the Tribunal has in its own wisdom relied on the decision of the co-ordinate Bench on the same set of facts and circumstances involving identical issues in question it cannot be said that the Tribunal committed any mistake. 9. In view thereof, the Miscellaneous Applications filed by Revenue are dismissed. Order pronounced on 8 th August of July 2022 Sd/- sd/- INTURI RAMA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 08 th August 2022 Ankam 5 MA No.46 of 2020 and M.A. No.23 of 2022 Alfa Laval India Ltd. A.Y.2011-12 & 2013-14 Copy of the Order forwarded to 1. The Appellant. 2. The Respondent. 3. The CIT(Appeals)-13, Pune. 4. The Pr. CIT-5, Pune. 5. DR, ITAT, “A” Bench, Pune. 6. Guard File. BY ORDER, Senior Private Secretary I.T.A.T. Pune. 6 MA No.46 of 2020 and M.A. No.23 of 2022 Alfa Laval India Ltd. A.Y.2011-12 & 2013-14 Date 1 Draft dictated on 15-07-2022 Sr.PS/PS 2 Draft placed before author 21-07-2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 08-08-2022 Sr.PS/PS 7 Date of uploading of order 08-08-2022 Sr.PS/PS 8 File sent to Bench Clerk 10-08-2022 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order