Sri M.G. Anand Reddy, Bengaluru V. The Assistant Commissioner Of Income Tax, Central Circle-2(1), Bengaluru

MA 29/BANG/2023

AI Insights

The case involves Sri M G Anand Reddy, the appellant, who filed miscellaneous petitions under section 254(2) of the Income-tax Act, 1961, seeking rectification of the Tribunal's earlier order concerning Transfer Pricing adjustments for the assessment years 2012-13 and 2013-14. The adjustments were related to notional interest charged on delayed receivables from an Associated Enterprise, which the Assessing Officer added as a Transfer Pricing adjustment. The Tribunal, upon reviewing the submissions and the relevant legal precedents, particularly the decision of the Hon'ble Karnataka High Court in the case of Delhi International Airport Pvt Ltd, concluded that the additions were not based on any incriminating material found during the search and thus were not sustainable.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124962 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-03-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 06-02-2023
• Other Referred Cases: Delhi International Airport Pvt Ltd vs. Unknown
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V. SRINIVASAN
• Keywords: Transfer pricing; Notional interest
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESEIDENT AND Ms PADMAVATHY S, ACCOUNTANT MEMBER MP Nos.29 & 30/Bang/2023 [in ITA Nos.759 & 760/B/2021] Assessment years : 2012-13 to 2013-14 Sri M G Anand Reddy, Sy.No.46/1 & 46/2, Yadavanahalli Village, Anekal Taluk, Attibele Hobli, Bengaluru – 562 107. PAN: AARPA 3047J Vs. The Assistant Commissioner of Income Tax, Central Circle 2(1). Bengaluru. APPELLANT RESPONDENT Appellant by : Shri V. Srinivasan, Advocate Respondent by : Shri Pavan Kumar, Addl CIT Bengaluru. Date of hearing : 03.03.2023 Date of Pronouncement : 07.03.2023 O R D E R Per Padmavathy S., Accountant Member These miscellaneous petitions are filed u/s. 254(2) of the Income-tax Act, 1961 [the Act] by the assessee seeking rectification of the order of the common order of the Tribunal in ITA 756 to 762/Bang/2021 dated 20.09.2022 for AY 2009-10 to 2015-16. MP Nos.29 & 30/Bang/2023 Page 2 of 4 2. The Tribunal in the above order adjudicated various grounds raised by the assessee pertaining to additions made pursuant to the search in the case of the assessee. One of issues raised and adjudicated by the Tribunal pertains to the Transfer pricing adjustments contented through Ground no.8 for AY 2009-10 to 2011-12 and Ground no.6 for 2012-13 to 2014-15. 3. Now the contention of the assessee through this petition is that the Tribunal while disposing off the appeal vide the above referred order omitted to adjudicate the Ground No.6 of AY 2012-13 & 2013- 14 which pertain to the Transfer Pricing adjustment made towards charging of notional interest on the delayed receivable from Associated Enterprise (AE) 4. On perusal of the order, we note that this ground has not been adjudicated though submissions were made. Accordingly the following paragraphs shall be inserted after para 12 of the above order of the Tribunal 12.1. The AO made an addition of Rs.49,21,244 for AY 2012-13 and an addition of Rs.33,37,553 for AY 2013-14 holding that there was delay in remittance by the Associated Enterprise (AE) M/s.Hidustan Granites Inc, USA in respect of the exports by the assessee’s proprietary concern M/s.Hindustan Granites. The AO computed the interest components for the credit cycle exceeding 90 days and has added the same treating it as a Transfer Pricing (TP) adjustment. 12.2. The ld AR in this regard submitted that the TP adjustments have been made in AY 2012-13and 2013-14 which unabated assessment proceedings and that from the assessment orders passed it is clear that MP Nos.29 & 30/Bang/2023 Page 3 of 4 there was no material found in the course of search u/s.132 of the Act to take a different view in the completed assessment. It is also submitted that the addition is made in the course of assessment proceedings without any reference to search materials. Accordingly the ld AR submitted that the TP adjustment is not sustainable and in this regard placed reliance on the decision of Hon’ble Karnataka High court in the case of Delhi International Airport Pvt ltd (supra) 12.3. We heard the parties and perused the material on record. We have in para 10 of this order already held that the scope of making assessment of total income u/s.153A of the Act in an unabated assessment proceedings is limited and can be only of assessing income that is not disclosed which is detected or which emanates from material found in the course of search of some other person and which relate to the Assessee, as has been held by the Hon’ble Karnataka High Court in the case of M/S. Delhi International Airport Ltd. (supra). The impugned addition made towards notional interest on the delayed receivable from AE is not emanating from any incriminating material found during the course of search and therefore we are of the considered view that the addition made in this regard in AY 2012-13 and 2013-14 is not tenable. Accordingly the same is liable to be deleted. Ground No.6 raised for AY 2012-13 and 2013-14 are allowed in favour of the assessee. 5. In the result, the MP filed by the assessee is allowed. Pronounced in the open court on this 7 th day of March, 2023. Sd/- Sd/- ( N V VASUDEVAN ) ( PADMAVATHY S ) VICE PRESIDENT ACCOUNTANT MEMBER Bangalore, Dated, the 7 th March, 2023. /Mbr-slf-prt/Desai S Murthy / MP Nos.29 & 30/Bang/2023 Page 4 of 4 Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.