M/s. Akzo Nobel India Limited, Gurgaon V. DCIT, New Delhi

MA 444/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8195 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 02-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VISHAL KALVA
• Keywords: Transfer pricing
• Section: 92D

Judgement Text

1 M.A NO. 444/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: FRIDAY NEW DELHI SH. R. K. PANDA, ACC OUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER M.A NO. 444/D EL/2018 IN (ITA NO. 3005/DEL/2014 ( A.Y 2007-08) AKZO NOBLE CAR REFINISHES INDIA PVT. LTD. (FORMERLY KNOWN AS AKZO NOBEL CAR REFINISHES INDIA LIMITED) DLF CYBER TERRACES, BUILDING NO. 5, TOWER A, 20 TH FLOOR, DLF CYBER CITY, PHASE III GURGAON PAN : AAACH2439K (APPLICANT) VS DCIT CIRCLE-1 (1), NEW DELHI (RESPONDENT) APPLICANT BY SH. VISHAL KALVA, ADV. RESPONDENT BY SH. AMIT KATOCH, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS MISCELLANEOUS APPLICATION IS FILED IN RESPECT OF ORDER DATED 08/01/2018 U/S 254(2) OF THE INCOME TAX ACT, 1961 . 2. THE LD. AR SUBMITTED THAT WHILE DISPOSING THE AP PEAL, APPARENT MISTAKES HAVE CREPT IN THE AFORESAID ORDER. THE APP EAL FOR A.Y. 2007-08 WAS HEARD BY THE BENCH AND ACCORDINGLY AN ORDER WAS PAS SED. AS REGARDS GROUND NO. 2 PERTAINING TO ADJUSTMENT TOWARDS CONTR ACT R & D SEGMENT CONTENDING THAT THE APPLICANT HAS PREPARED TRANSFER PRICING DOCUMENTATION BONA FIDE AND IN GOOD FAITH IN COMPLIANCE WITH THE PROVISIONS OF SECTION 92D OF THE ACT READ WITH RULE 10D OF THE INCOME TAX RUL ES, 1962 AND THE COMPARABILITY ANALYSIS UNDERTAKEN BY THE ASSESSEE S HOULD NOT BE CHALLENGED. DURING THE COURSE OF TP ASSESSMENT PROC EEDINGS, THE TPO DATE OF HEARING 12.07.2019 DATE OF PRONOUNCEMENT 15.07.2019 2 M.A NO. 444/DEL/2018 DISREGARDED THE ARMS LENGTH NATURE OF THE INTERNAT IONAL TRANSACTION PERTAINING TO CONTRACT R&D SEGMENT BY REJECTING 9 C OMPARABLES FROM THE SET OF 14 COMPARABLES SELECTED BY THE ASSESSEE IN THE F RESH SEARCH CARRIED OUT DURING THE ASSESSMENT PROCEEDINGS AND INTRODUCED 4 NEW COMPARABLES. IN DOING SO, THE TPO ARRIVED AT A FINAL SET OF 9 COMPA RABLE COMPANIES IN THE TP ORDER. THE LD. AR SUBMITTED THAT BENCH ADJUDICATED GROUND NO. 2 IN FAVOUR OF THE APPLICANT BY UPHOLDING THAT CHOKSHI LABORATO RIES HAS BEEN RIGHTLY REJECTED/EXCLUDED BY CIT(A) AND REJECTING TCG LIFES CIENCES LTD. AS WELL AS TRANSGENE BIOTECH LTD. AS COMPARABLE COMPANIES. HOW EVER, WHILE DISPOSING THE GROUND FOR WORKING CAPITAL ADJUSTMENT, AT PARA 18, THE BENCH RELYING ON THE TRIBUNAL ORDER FOR AY 2005-06 IN APPLICANTS OW N CASE INADVERTENTLY MENTIONED THAT THE ISSUE WOULD HAVE TO BE DECIDED FRESH ONLY AFTER THE FRES H COMPARABLES ARE CHOSEN BY THE LD. TPO . THE LD. AR THEREFORE, SEEKS RECTIFICATION OF THE ABOVE MISTAKE IN THE ORDER DAT ED 08.01.2018. 3. THE LD. DR OPPOSED THE MISC. APPLICATION. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. WHILE ADJUDICATING GROUND NO. 2 IN FAVOUR OF THE APPLICANT, WE HOLD THAT CHOKSHI LABORATORIES HAS BE EN RIGHTLY REJECTED/EXCLUDED BY CIT(A). WE ALSO REJECTED TCG L IFESCIENCES LTD. AND TRANSGENE BIOTECH LTD. AS COMPARABLE COMPANIES. FRO M THE RECORDS IT CAN BE SEEN THAT AFTER REJECTING THESE COMPARABLES, THE RE REMAINS COMPARABLES FOR THE TP ADJUDICATION. THEREFORE, THIS IS MISTAKE APPARENT ON RECORD. HENCE, WE RECALL THE ORDER DATED 08.01.2018 TO THE EXTENT OF FINDING GIVEN IN PARA 18 OF THE ORDER. THUS, WE EXPUNGE THE SENTENCE HOWEVER, IT WOULD HAVE TO BE DECIDED FRESH ONLY AFTER THE FRESH COMPA RABLES ARE CHOSEN BY THE TPO WHICH ARE SIMILAR TO THE FUNCTION SEGMEN T AND OWNERSHIP OF THE ASSETS FROM PARA 18. PARA 18 NOW READ AS UNDER AFTER RECT IFICATION: 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDER OF THE ITAT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005 -06. IN THIS PARTICULAR YEAR ALSO, THE WORKING CAPITAL ADJUSTMEN T WAS NOT CONSIDERED BY TPO, THEREFORE, ITAT DIRECTED THE TPO TO DO THE NEE DFUL BY TAKING INTO 3 M.A NO. 444/DEL/2018 ACCOUNT OF THE RELEVANT FACTORS WHICH WAS IGNORED O N THE EARLIER OCCASIONS. THE REMAINING ORDER DATED 08.01.2018 WILL REMAIN SA ME. 5. IN RESULT, MISC. APPLICATION FILED BY THE ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2019 . SD/- SD/- (R.K.PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 15/07/2019 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 4 M.A NO. 444/DEL/2018 DATE OF DICTATION 12/07/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK