JUDE MEDICAL ( HONG KONG) LTD, V. DIT (IT) RG 2(1),

MA 351/MUM/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2552 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Assessment Year: 2004-2005
• Appeal Filed On: 18-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Assessee Lawyers: K K VED; J D MISTRI

Judgement Text

L , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI !' , # $% & & & & , , $% ' BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI VIVEK VARMA, JUDICIAL MEMBER MA NO. : 349/MUM/2014 ARISING OUT OF ITA NO. 2228/MUM/2007, AY 2002-03 MA NO. : 350/MUM/2014 ARISING OUT OF ITA NO. 4623/MUM/2007, AY 2003-04 MA NO. 351/MUM/2014 ARISING OUT OF ITA NO. 6922/MUM/2007, AY 2004-05 ST. JUDE MEDICAL (HONG KONG) LIMITED, 302 CENTRE POINT, J B NAGAR, ANDHERI KURLA ROAD, ANDHERI (EAST), MUMBAI -400 059 %( # .: PAN: AALFS 0469 A VS THE DY. DIRECTOR OF INCOME-TAX (INT. TAXATION) RG. 2(1), SCINDIA HOUSE, BALLARD PIER, N M ROAD, MUMBAI -400 038 (+ (APPELLANT) ,-(+ (RESPONDENT) APPLICANT BY : S/SHRI J D MISTRI & K K VED RESPONDENT BY : SHRI VIJAY KUMAR BORA ./0# /DATE OF HEARING : 26-09-2014 123 ./0#/ DATE OF PRONOUNCEMENT : 14 -10-2014 $ 5 $ 5 $ 5 $ 5 O R D E R , . .. . . .. . : :: : PER VIVEK VARMA, JM : THE INSTANT MISCELLANEOUS APPLICATIONS (MAS) HAVE B EEN FILED BY THE ASSESSEE TO SEEK RECTIFICATION OF THE ORDER, CONCERNING MISS ING WORDS, WHICH WERE INADVERTENTLY LEFT OUT AND, WHICH ARE APPARENT FROM THE CIT(A) ORDER, AS EXTRACTED IN THE ORDER. 2. IN PARA 37 OF THE ORDER AT PAGE 9, THE EXTRACTED PORTION OF THE CIT(A) ORDER READS AS UNDER: THE MANAGEMENT OF SALES OF HONGKONG COMPANY AND TH E US COMPANY WAS TAKEN UPON BY THE BRANCH IN INDIA AS AN ALTOGETHER NEW ACTIVITY AFTER BRANCH CAME INTO EXIS TENCE ON 1 ST OF JANUARY, 2000. IT HAS BEEN THE STAND OF THE AO EVEN PRIOR TO THIS STAGE THAT A PORTION OF THE PROFIT EARNED BY T HE HONGKONG COMPANY IS TAXABLE TO THE EXTENT ATTRIBUTABLE TO TH E BRANCH IN INDIA. THEREFORE, QUESTION OF MANAGEMENT FEE BEING A PART OF THE ST. JUDE MEDICAL (HONG KONG) LIMITED MAS 349 TO 350/MUM/2014 2 SAME PROFIT DOES NOT ARISE AT ALL SINCE THIS MANAGE MENT FEE IS ARISING OUT OF AN ALTOGETHER NEW ACTIVITY OF THE AP PELLANT COMPANY THROUGH ITS BRANCH IN INDIA. THERE IS NO OV ERLAPPING AT ALL. THEREFORE, MANAGEMENT FEE CANNOT BE REDUCED FR OM THE ADDITION MADE BY THE AO. I HASTEN TO ADD THAT THE AM OUNT MENTIONED IN THE GROUNDS OF APPEAL AT RS. 79,20,240/ - INCLUDES MANAGEMENT FEE FOR WORK DONE FOR THE HONGKONG COMPA NY AS WELL AS FOR THE US COMPANY. 3. THE AR SUBMITTED THAT AS PER THE ORDER OF CIT(A) , THE ISSUE OF MANAGEMENT FEE WAS APPLICABLE FOR SJMH AS WELL AS SJMI . 4. BASED ON THIS UNDISPUTED FINDING OF THE CIT(A), WHICH WAS SUSTAINED, PARA 36 OF THE ORDER WOULD READ AS: 36. THE ASSESSEE APPROACHED THE CIT(A), BEFORE WHO M IT WAS SUBMITTED THAT THE CLAIM OF RS. 79,20,240/- AS MANA GEMENT FEE WAS ATTRIBUTABLE TO SJMH AND SJMI . THE CIT(A), AFTER TAKING INTO CONSIDERATION THE ACCOUNTS OF THE ASSES SEE, CONCLUDED THAT MANAGEMENT FEE RECEIVED INCLUDED THE OPERATIONS FOR SJMI AND SJMH . HE THUS SUSTAINED THE OBSERVATIONS OF THE AO. 5. PARA 39 OF THE ORDER WOULD READ AS: 39. BEFORE US, THE AR SUBMITTED THAT THE FACT THAT RECEIPT OF RS. 79,20,240/- PERTAINED TO MANAGEMENT FEE SJMH AND SJMI , IS EVIDENT FROM THE ACCOUNTS SUBMITTED BEFORE THE REVE NUE AUTHORITIES. THE AR SUBMITTED THAT THE ISSUE HAS BE EN FROM TP REGIMEN AS WELL. IT WAS SUBMITTED THAT THE TRANSACT ION WAS DECLARED IN TP REPORT SUBMITTED, WHEREIN IT WAS CAT EGORICALLY MENTIONED THAT TRANSACTION INVOLVED THE RECEIPT OF MANAGEMENT FEE FROM AE DURING THE YEAR ENDED 31.03. 2002. THE AR POINTED OUT THAT THE ASSESSEE HAD DECLARED T HE SAME IN THE TP REPORT IN IDENTIFICATION OF REVENUES, WHICH SHOWED THAT 79,20,240/- PERTAINED TO SJMH AND SJMI . IT WAS ALSO POINTED OUT THAT IT WAS DECLARED AND THE SAME WAS ACCEPTED BY THE TPO VIDE ORDER U/S 92CA(3) DATED 28.02.2005 AND FOU ND THE SAME TO BE CORRECT, AND NO ADJUSTMENT WAS CALLED FO R. 6. PARA 40 OF THE ORDER WOULD READ AS: 40. THE AR, THEREFORE, SUBMITTED THAT MANAGEMENT F EE PERTAINED TO SJMH AND SJMI AND HENCE NO ADDITION WAS CALLED FOR. 7. PARA 42 OF THE ORDER WOULD READ AS: 42. WE HAVE HEARD THE ARGUMENTS OF EITHER SIDE AND HAVE PERUSED THE MATERIAL PLACED BEFORE US. THE FACT WHICH REMAI NS UNCONTROVERTED BY THE REVENUE AUTHORITIES AND THE D R ARE THAT THE ASSESSEE IN THE YEAR UNDER CONSIDERATION WAS CO VERED ST. JUDE MEDICAL (HONG KONG) LIMITED MAS 349 TO 350/MUM/2014 3 UNDER THE TP REGULATIONS AND IN THOSE PROCEEDINGS, THE FACTUM OF MANAGEMENT FEE HAS DEALT WITH EXTENSIVELY AND IN THE PROCESS, THE TPO FOUND THE RECEIPT OF MANAGEMENT FE E BY THE INDIA BRANCH FROM SJMH RELATED TO SERVICES PROVIDED TO BOTH SJMI & SJMH. IT IS EVIDENT FROM THE ACCOUNTS S UBMITTED BEFORE THE AO, BECAUSE IN THE PROFIT & LOSS ACCOUNT SUBMITTED, IT SHOWED THE RECEIPT OF RS. 9,60,57,310/- WHICH IN CLUDED RS. 79,20,240/- UNDER THE HEAD MANAGEMENT FEE FOR MARKE TING SUPPORT AT RS. 79,20,240/- (APB 7 & 12). 8. PARA 44 OF THE ORDER WOULD READ AS: 44. WE, THEREFORE, ARE OF THE OPINION, THAT ALL TH E REQUISITE DETAILS WERE PLACED BEFORE THE AO, ALONG WITH THE RETURN ON INCOME, WHICH BASED THE COMPUTATION OF RETURNED INCOME ON R ECEIPTS RELATED TO SERVICES PROVIDED TO BOTH SJMH AND SJMI . 9. SINCE THE ABSENCE OF THE MISSING WORDS WOULD AFF ECT THE BASIC STRUCTURE OF THE ORDER, WHEREIN, WE HAD DELETED THE ADDITION OF RS. 1,76,87,465/-, WE ACCEPT THAT THE ABOVE POINTED INADVERTENT MISTAKES ARE PATENT AND Q UALIFY TO BE RECTIFIED. 10. WE, THEREFORE, RECTIFY OUR ORDER, AS PRAYED FOR BY THE ASSESSEE. 11. IN THE RESULT, THE MAS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF OCTOBER, 2014. SD/- SD/- ( !' ) ( ) # $% # $% # $% # $% $% $% $% $% ( N.K. BILLAIYA ) ( VIVEK VARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 14 TH OCTOBER, 2014 ,// COPY TO:- 1) (+/ THE APPLICANT. 2) ,-(+/ THE RESPONDENT. 3) THE CIT (A)-11, MUMBAI. 4) 8 _( INTERNATIONAL TAXATION ) , CIT ( INTERNATIONAL TAXATION) , MUMBAI. 5) 9:,/ K, , THE D.R. K BENCH, MUMBAI. 6) :;< ST. JUDE MEDICAL (HONG KONG) LIMITED MAS 349 TO 350/MUM/2014 4 COPY TO GUARD FILE. $5 / BY ORDER / / TRUE COPY / / =/>? , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *AB>.. * CHAVAN, SR. PS