Appeal details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 4154 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
26-05-2022
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
C
Assessment Year
2004-2005
Appeal Filed On
30-12-2021
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Rajesh Kumar, Accountant Member M.A. No.35/Kol/2021 (Arising out of ITA No.388/Kol/2017) Assessment Year: 2004-05 MCPI Private Limited (Formerly known as Materials Chemicals and Performance Intermediaries Pvt. Ltd/MCC PTA India Corp. Private Limited.......................................................................................................Appellant 22, Camac Street, Block-C, 4 th Floor, Kolkata-700069. [PAN:AAACM9169K] vs. ACIT, Circle-11, Kolkata..........................................................................Respondent Appearances by: Shri Nageswar Rao, Advocate, appeared on behalf of the appellant. Smt. Ranu Biswas, Addl. CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : April 27, 2022 Date of pronouncing the order : May 27, 2022 ORDER Per Sanjay Garg, Judicial Member: The present miscellaneous application has been filed by the assessee-applicant stating therein that some errors apparent on record have occurred while adjudicating the appeal of the assessee bearing ITA No.388/Kol/2017 vide common order dated 26.03.2021 vide which the appeal of the Revenue bearing No.324/Kol/2017, cross- objection no.25/Kol/2017 and the appeal of the assessee in ITA No.388/Kol/2017 were decided together. 2. The first and foremost contention of the applicant-assessee is that the assessee had moved an application dated 23.11.2020 received by the Registry on 26.11.2020 for seeking admission of additional grounds of appeal. The assessee vide this aforesaid application has sought to raise four additional grounds of appeal bearing Ground no.10 to Ground no.13 which read as under: Ground 10: Considering Adjusted Book Profits instead of Income under the normal provisions for computing the deduction allowable under section 80HHC of the Income Tax Act, 1961 ("the Act') under the provisions of Minimum Alternate Tax (MAT') M.A. No.35/Kol/2021 MCPI Private Limited (Formerly known as Materials Chemicals and Performance Intermediaries Pvt. Ltd/MCC PTA India Corp. Private Limited Assessment Year: 2004-05 2 On the facts and in the circumstances of the case and in law, Ld. Commissioner of Income-tax (Appeals) ['CIT(A)] has erred in not giving specific directions to compute deduction towards section 80HHC of the Act under MAT by considering adjusted book profits instead of the income under normal provisions, in view of the decision of the Hon'ble Supreme Court in the case of CIT vs. Bhari information Technology Systems (Pvt.) Ltd [(2012) 17 taxmann.com 62 (SC)]. Ground 11: Re-computing deduction allowable under section 80HHC of the Act under the MAI without regard to the sub-section (1B) of Section BOHHC On the facts and in the circumstances of the case and in law, the Appellant humbly requests appropriate directions to allow deduction of hundred percent of profits eligible under section 80HHC of the Act under MAT, in view of subsequent decision of the Hon'ble Supreme Court in the case of Ajanta Pharma vs CIT (2010) 327 ITR 0305]. A copy of the judgment is enclosed as Annexure 1. Ground 12: Allowance of deduction under clause (ii) to Explanation 1 of Section 115JB(2) of the Act relating to lower of brought forward business loss or unabsorbed depreciation 12.1 On the facts and in the circumstances of the case and in law, the Appellant prays that appropriate directions be given to the learned AO to allow deduction of lower of the amount of brought forward loss or unabsorbed depreciation as per books of accounts as per the provisions of clause (iii) to Explanation 1 of Section 115JB(2) of the Act. 12.2 On the facts and in the circumstances of the case and in law, the learned AO be directed to compute the brought forward business loss and unabsorbed depreciation available in FY 2003- 04 after setting off the book profits of FY 2002-03 amounting to Rs. 17,46,408 in the proportion of brought forward business loss of Rs. 4,64,058 and unabsorbed depreciation of Rs. 15,37,307 available in FY 2002-03 as per books of accounts. Detailed calculations of the same are enclosed as Annexure 2. Ground 13: Interest under section 244A of the Act On the facts and in the circumstances of the case, Appellant requests for appropriate direction to compute interest under section 244A of the Act on the amount of refund computed pursuant to the order of the Hon'ble ITAT against the captioned appeal. The Appellant craves leave to add to, alter, delete or modify the above grounds of appeal.” 3. We find that the said application seeking admission of additional ground has escaped attention of the Tribunal and no order has been passed by the Tribunal in respect of the said application. In view of this, the error apparent on record has occurred in the common order of the Tribunal dated 26.03.2021 on account of non-adjudication of the application of the assessee for admission of additional grounds. The order of the Tribunal is, therefore, recalled for the limited purpose for adjudication upon the application of the assessee for admission of additional grounds and if the application is accepted by the Tribunal then for adjudication of the aforesaid additional grounds. M.A. No.35/Kol/2021 MCPI Private Limited (Formerly known as Materials Chemicals and Performance Intermediaries Pvt. Ltd/MCC PTA India Corp. Private Limited Assessment Year: 2004-05 3 4. The next contention of the ld. counsel for the assessee has been that in the impugned order dated 26.03.2021, the Tribunal has not made any adjudication upon Ground No.6 & 7 which are pertaining to the levy of interest u/s 234B and 234D of the Income Tax Act. We find from the record that the Ground No.6 & 7 raised by the assessee read as under: “6. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) was not justified in imposing interest u/s 234B of the Act amounting to Rs.3,99,100/- 7. That on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) was not justified in allowing imposition of interest under section 234D of the Act amounting to Rs.2,52,420/-.” 5. We further find that the aforesaid grounds have not been adjudicated by the Tribunal in the common order dated 26.03.2021. This being an error apparent on record, order of the Tribunal is hereby recalled on this limited issue also for the purpose of adjudication of Ground No.6 & 7 of the grounds of appeal of the assessee. 6. The next contention of the ld. counsel for the assessee is regarding non- consideration of certain facts in the common order dated 26.03.2021. The assessee in this respect has pleaded as under: “9. Non-consideration of material facts on record with respect to certain grounds of Assessee's appeal -ITA 388/Kol/2017 [Ground 4 and 5] a. Applicant had filed Ground Nos. 4 and 5 in respect of the transfer pricing addition upheld by the CIT(A). b. While deciding the above ground against taxpayer, Hon'ble Tribunal at para 7.4 on internal page 10 of said order dated 26 th March 2021 inter-alia, observed: No other transaction of purchase of AE is benchmarked with the prices in ICIS-LOR website. c. It is respectfully submitted that aforesaid observation made by Hon'ble ITAT in the order dated 26 March 2021 is a clear mistake apparent from records for reasons set out in following paras. d. Reference to material on Appeal records would show that Applicant's purchase Paraxylene from AEs' was benchmarked using ICIS LOR (kindly refer pages 295 & 296 M.A. No.35/Kol/2021 MCPI Private Limited (Formerly known as Materials Chemicals and Performance Intermediaries Pvt. Ltd/MCC PTA India Corp. Private Limited Assessment Year: 2004-05 4 and have been accepted. For benchmarking each of such purchases, the Applicant had considered ICIS-LOR rates during AY 2004-05. The same is also evident from copy of transfer pricing study report enclosed in the paperbook filed before Hon'ble ITAT on Page 272 273 & pages 295 and 296. Relevant extract of the paperbook is enclosed as Exhibit-D for kind reference. e. Moreover, the Applicant used ICIS-LOR rates for benchmarking of transaction of purchase of another raw material - acetic acid until AY 2004-05. During AY 2004-05, the Applicant has used rates published by PCI Xylenes and Polysters Limited ( PCI), an independent body, similar to ICIS, since ICIS-LOR had stopped publishing contract prices for Acetic Acid from May 2003. The same finds mention on Page 270 of the paperbook filed before Hon'ble ITAT as a part of the transfer pricing study report. We further submit that the Ld TPO/ AO have accepted the benchmarking with ICIS LOR prices and not disputed the same. Relevant extract of the paperbook is enclosed as Exhibit-E for kind reference. f. In above context it can be noticed from appeal record (Page 275 of the paperbook) that applicant has considered the ICIS-LOR rates for benchmarking of transaction of sale of final product i.e. purified Terephthalic acid during AY 2004-05. In view of the fact that Ld TPO/AO have accepted this benchmarking and not disputed the same, it would unjustified and arbitrary if different stand is taken in context of present dispute involving same year and same assessee. Relevant extract of paperbook is enclosed as Exhibit-F for kind reference. Further at para 7.4 Hon'ble ITAT has noted Applicant's contention as: "higher rate was charged by AE on this purchase, as there was a sudden raise in the international prices of this material, as compared to purchases made by assessee, after the transaction dated 25.3.2003". With utmost respect we wish to draw attention to submissions and material on record which show that contention of Applicant was slightly different and was that ICIS- LOR rates reflect market prices. To meet urgent business requirement to replenish its low stock urgent purchase made from AE is compared with ICIS LOR spot rate. It is important to consider that AE is also a trader. Therefore, valid comparison in CUP can be made only by comparing the impugned transaction price with spot price, which itself by all means is market price for such terms and conditions. These facts can be seen from the submissions made before lower authorities also as can be seen from appeal records. Hence the conclusion on Grounds of appeal 4 & 5 appears to result from consideration of mistaken facts. We pray, that Hon'ble Tribunal order dated 26.03.21 be recalled to this extent and justice rendered by considering and adjudicating issues considering complete and correct facts. In view of the above, the Applicant respectfully submits that such obvious error in material facts resulted in grave injustice which may kindly be rectified by issuing appropriate direction recalling the earlier order dated 26 March 2021 in respect of Ground 4 and 5 and request for adjudication of these grounds in accordance with law. M.A. No.35/Kol/2021 MCPI Private Limited (Formerly known as Materials Chemicals and Performance Intermediaries Pvt. Ltd/MCC PTA India Corp. Private Limited Assessment Year: 2004-05 5 10. Applicant had filed Miscellaneous Application under section 254(2) earlier on 30 July 2021 before the Hon'ble Tribunal against captioned combined order, however, the same has been rejected by the ITAT registry vide letter dated 17 November 2021 (received by the applicant on 23 November 2021) as one application was filed against 2 ITA and 1 CO. In this regard, the applicant is filing separate applications for each appeal number. Apart from the same, the Applicant affirms that it has not filed any other Miscellaneous Application against the captioned ITA 388/Kol/2017. 11. This is a bona fide application and made in the interest of justice. 12. In the Circumstances, the Applicant humbly prays before Your Honours that the order dated 26 March 2021 be recalled for complete adjudication of appeal, in the interests of justice. 13. Legal Submission Applicants prayer is supported by decision of Hon’ble Supreme Court in case of Honda Siel Power Product Ltd. v CIT (295 ITR 466) wherein the principle was laid down by Hon’ble Supreme court that in a case where prejudice had resulted to the party due to any mistake, error or omission of Court then Hon'ble Tribunal would be justified in rectifying its mistake. Kind attention is also invited to decision of Hon’ble Supreme court in Krishnaswamy S. Pd. And Another Vs Union of India [2006] 3 SCC 286 (refer paras 14 to 17) which relies on Maxim "actus curiae neminem gravabit" i.e, an act of court shall prejudice no man. Thus, in view of the factual and legal submissions made above, it is respectfully prayed that Hon’ble Tribunal may be pleased to kindly consider appropriate rectification of mistakes apparent from the record and consequently decide the issues, directing grant of relief in accordance with law and justice.” 7. We have considered the submissions of the ld. counsel for the assessee-applicant in this respect, we do not find any error apparent on record in respect of aforesaid pleadings of the counsel for the assessee. The contention of the ld. AR has been that the Tribunal in para 7.4 inter alia has observed that no other transaction of purchase of AE is benchmarked with the prices in ICIS-LOR website; that however the applicant’s purchase of Paraxylene from AE’s was benchmarked using ICIS LOR. 8. However, we find from the order of the Tribunal that the point raised by the assessee was not the sole point to arrive at the final conclusion. The Tribunal has considered the overall facts and circumstances of the case. The relevant para of the observation of the Tribunal are reproduced as under: M.A. No.35/Kol/2021 MCPI Private Limited (Formerly known as Materials Chemicals and Performance Intermediaries Pvt. Ltd/MCC PTA India Corp. Private Limited Assessment Year: 2004-05 6 “On a careful consideration of the rival contentions, perusal of the order of the authorities below as well as case law cited, we are of the considered opinion that the transfer pricing adjustment has to be upheld. The entire adjustment is based on one transaction of purchase of 4754.594 MT of Paraxvlene on 25.03.2003 (Bill of lading date) @ 858.38 USD/MT. The AO compared this purchase price with the purchase price of 4778.496 MT of Paraxylene on 21.03.2003 (Bill of lading date) @ 621.61 USD/MT. We are unable to accept the contention of the assessee that a higher rate was charged by the AE on this purchase, as there was a sudden raise in the international prices of this material, as compared to purchases made by the assessee, after the transaction dated 25.03.2003. The AE is a long term supplier to the assessee. While so to claim that this sole sale was at the spot price of international market does not justify the rate thereto. The claim that the AE could not supply Paraxylene at the normal rates due to abnormal increase in the international prices on 25.03.2003 is not the ground for levy of an exceptionally high price. In fact the assessee should get a preferential price from the AE than non-AEs. It is true that ICIS-LOR prices are considered as benchmark. This in our humble opinion cannot be followed in the case of the assessee. No other transaction of purchase from the AE is benchmarked with the prices in ICIS-LOR/website Thus we agree with the finding of the ld. TP0 on this issue as confirmed by the ld. CIT(A) and dismiss these grounds of the assessee.” 9. In our view, it cannot be said that any error apparent on record has occurred in the aforesaid order of the Tribunal. The applicant has raised this context in just by disputing one observation made by the Tribunal whereas the order passed by the Tribunal is based on overall facts and circumstances of the case. The Hon'ble Bombay High Court in the case of Commissioner of Income-Tax vs. Ramesh Electric And Trading Co. 1993 203 ITR 497 (Bom.), while relying upon the decision or the Hon’ble Supreme Court in the case of 'T. S. Balaram, ITO V. Volkart Brothers' [1971] 82 ITR 50 and further relying upon the decisions of the various High Courts has categorically held that the power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent; mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment and under such circumstances the Tribunal has no jurisdiction under section 254(2) to pass the second order. In view of our above M.A. No.35/Kol/2021 MCPI Private Limited (Formerly known as Materials Chemicals and Performance Intermediaries Pvt. Ltd/MCC PTA India Corp. Private Limited Assessment Year: 2004-05 7 observations and the legal position as stated above, we do not find any merit on this issue. 10. In the result, the Miscellaneous Application of the assessee is partly allowed. Kolkata, the 27 th May, 2022. Sd/- Sd/- [Rajesh Kumar] [SanjayGarg] Accountant Member Judicial Member Dated: .05.2022. RS Copy of the order forwarded to: 1. MCPI Private Limited (Formerly known as Materials Chemicals and Performance Intermediaries Pvt. Ltd/MCC PTA India Corp. Private Limited 2. ACIT, Circle-11, Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches
