M/s.Biocon Limited, Bangalore V. Joint Commissioner of Income-Tax, Bangalore

MA 43/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2946 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-08-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 24-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10AA; 10B; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER M.P. No. 42 /Bang/2022 (in IT(TP)A No. 230/Bang/2014) Assessment Year : 2009-10 M/s. Biocon Ltd., 20 th KM, Hosur Road, Electronic City, Bangalore – 560 100. PAN: AAACB7461R Vs. The Deputy Commissioner of Income Tax, LTU, Bangalore. APPELLANT RESPONDENT & M.P. No. 43 /Bang/2022 (in C.O. No. 20/Bang/2017) Assessment Year : 2011-12 M/s. Biocon Ltd., 20 th KM, Hosur Road, Electronic City, Bangalore – 560 100. PAN: AAACB7461R Vs. The Joint Commissioner of Income Tax, LTU, Bangalore. APPELLANT RESPONDENT Assessee by : Shri Padamchand Khincha, CA Revenue by : Shri K.R. Narayana, Addl. CIT DR Date of Hearing : 26-08-2022 Date of Pronouncement : 06-09-2022 ORDER Page 2 of 7 M.P. Nos. 42 & 43/Bang/2022 PER BEENA PILLAI, JUDICIAL MEMBER Present miscellaneous petitions are filed by the assessee against common order dated 12/11/2021, seeking certain inadvertent error that is submitted to have crept in. 2. The Ld.AR submitted that, while considering the issue of interest on receivables, this Tribunal in para 11.2 held that, in the event of working capital adjustment subsumes the sundry creditors, then computing interest on outstanding receivables and loans would amount to double taxation. He submitted that this view has been expressed relying on the decision of Hon’ble Delhi Tribunal in case of Orange Business Services India Solutions (P.) Ltd. vs. DCIT reported in (2018) 91 taxmann.com 286. 3. At this juncture, we suomoto came across a typographic mistake in para 11.2. The first sentence of para 11.2 shall be henceforth read as under: “11. Alternatively, it has been argued that working capital adjustment subsumes sundry debtors............” 4. The Ld.AR submits that there is no reference to this view in para 11.3 being the concluding para and therefore seeks a clarification in respect of the same. The Ld.DR on the contrary, relied on the order passed by this Tribunal. We have perused the submissions advanced by both sides in the light of records placed before us. 5. We note that consistently this Tribunal has been remanding this issue to the Ld.AO with identical observation and direction. Therefore there cannot arise any confusion in the minds of the Page 3 of 7 M.P. Nos. 42 & 43/Bang/2022 Ld.AO in respect of the same. However once again we clarify that while considering the issue, the Ld.AO has to first verify if the outstanding receivables are subsumed in the Working Capital Adjustment under TNMM and in the event it does subsume, then a separate adjustment of interest need be computed. We therefore do not find any reason to modify the paragraphs in para 11.3. The Ld.AO is directed to consider this clarification given hereinabove, while disposing off the issues. 6. The next issue alleged by the Ld.AR is in respect of non- considering Ground nos. 7.1 – 7.3, which is in respect of the rate that needs to be charged in the event the outstanding receivables does not get subsumed. On perusal of the order, we note that this issue has not been decided though a submission was made. 7. Accordingly, following paragraphs shall be read after para 11.3 in respect of the same. “11.4 In so far as charging of rate of interest is concerned, he relied on decision of the Hon’ble Delhi High Court in case of CIT vs. Cotton Naturals (I) Pvt. Ltd reported in (2015) 276 CTR 445 (Del) holding that currency in which such amount is to be re-paid, determines rate of interest. He, therefore, concluded by summing up that interest on outstanding trade receivables is an international transaction and its ALP has been correctly determined. Page 4 of 7 M.P. Nos. 42 & 43/Bang/2022 11.5 We note that the Ld.TPO has carried out fresh benchmarking analysis without following the principles laid down by Hon'ble Delhi High Court in case of CIT vs. Cotton Naturals (I) Pvt. Ltd. reported in (2015) 55 taxmann.com 523. 11.6 We direct the Ld.TPO to follow the principles laid down by this Tribunal in case of Cotton Naturals (supra), having referred to the rate applied by the assessee being within threshold limit as per the RBI Circular No. 12/2015-16 dated 01/07/2015 on ECB. These directions would be relevant in respect of the outstanding receivable that did not get subsumed while computing working capital adjustment under TNMM. Accordingly, this ground raised by assessee stands allowed for statistical purposes.” 8. The next issue raised by Ld.AR is in respect of Ground no. 8 wherein this Tribunal has not recorded the conclusion after para 12.11. On perusal of the order, we find this submission of the Ld.AR to be correct. Following paras shall be read after para 12.11:- “12.12 We are therefore remitting issues back to the Ld.AO for examining the factual details in this regards. Page 5 of 7 M.P. Nos. 42 & 43/Bang/2022 12.13 The Ld.AO is directed to verify if the losses are within the limits of the receivables as far as the mark to market losses are concerned. Assessee is directed to file all relevant documents/forward contracts to establish the nexes with the business of assessee and also the fact that such contracts are on account of revenue and not on capital.” 9. The next issue alleged by assessee is that additional ground raised by assessee vide application dated 25/10/2018 has not been adjudicated though they were admitted. We note that in para 16, this Tribunal has considered the relief denied to the assessee u/s. 10AA and 10B of the Act is on interest earned. However following Addl. Ground remained to be adjudicated. Following paras shall be read as para 14.1-14.2. “14.1 The specific Addl. Ground raised by assessee vide application dated 25/10/2018 reads as under: “10A. Incorrect computation of relief under section 10B of the Act 10A.1 That on the facts and circumstances of the case, the Learned Assessing officer ("the Learned AO") ought to have considered income of INR 414,297,000 in computing profits eligible for deduction under section 10B of the Act. . 10A.2. That on the facts and circumstances of the case, the Learned Assessing officer ("the Learned AO") failed to appreciate that amount of INR 414,297,000 was disclosed in the computation of total income filed during the assessment proceedings, which was inadvertently not considered in the computation of deduction under section 10B of the Act. Page 6 of 7 M.P. Nos. 42 & 43/Bang/2022 The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing.” 14.2 It is submitted that the assessee had reflected the claim of deduction in respect of RHI unit, however inadvertently the same was missed to be considered while computing total profits eligible for deduction u/s. 10B of the Act. This has resulted in short deduction. We note that this claim was rejected by the Ld.AO. However in the interest of justice, we direct the Ld.AO to verify the same in accordance with law. Assessee is directed to file relevant details in support. Accordingly this Addl. ground raised by the assessee stands allowed for statistical purposes.” In the result, both the M.Ps. filed by the assessee stands allowed. Order pronounced in the open court on 06 th September, 2022. Sd/- Sd/- (LAXMI PRASAD SAHU) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 06 th September, 2022. /MS / Page 7 of 7 M.P. Nos. 42 & 43/Bang/2022 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore