M/S LI TRADING PRIVATE LIMITED , MUMBAI V. NFAC , DELHI

MA 447/MUM/2023

AI Insights

The case involves LI Trading Pvt. Ltd., which filed a Miscellaneous Application (MA No. 447/Mum/2023) seeking corrections in the Income Tax Appellate Tribunal's earlier decision (ITA No. 521/Mum/2022) for the Assessment Year 2017-18. The applicant pointed out errors in paragraphs 22 and 23 of the Tribunal's order dated February 9, 2023. The Tribunal acknowledged the error in paragraph 22 regarding the sustainability of an adjustment of \\u20b922,492,930, correcting the wording from 'cannot be disturbed' to 'cannot be sustained'. However, for paragraph 23, the Tribunal did not find any error and thus did not make the suggested modification.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299748 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: K
• Next Hearing Date: 07-09-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 18-06-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI PAVAN KUMAR GADALE, JM MA No. 447/Mum/2023 Arising out of ITA No.521/Mum/2022 (Assessment Year 2017-18) M/s LI T rad in g P vt . Ltd. Vil la ge Kalam gaon, Mum bai, Nasi k H i gh wa y, T al uka, Shapur, T hane, Mum bai-42 1601 Vs. NFAC, Delhi (Applicant) (Respondent) PAN No. AABCL4860B Assessee by : Shri Madhur Agarwal, AR Revenue by : Shri H.M. Bhatt, DR Date of hearing: 08.09.2023 Date of pronouncement : 08.09.2023 O R D E R PER PRASHANT MAHARISHI, AM: 01. This Miscellaneous Application No. 447/Mum/2023 is filed by the assessee in ITA No. 521/Mum/2022 stating that in the order passed for A.Y. 2017-18 dated 9 th February, 2023, contain following errors. 02. MA states that in Para number 22, following mistake has occurred:- “Therefore, it is not unusual that in transaction with the associated enterprises the assessee has considered the benefit of duty entitlement passbook scheme, because even if the transaction between two Page | 2 MA No. 447/Mum/2023 LI Trading Pvt. Ltd.; A.Y. 2017-18 unrelated parties, the price would have been negotiated on that basis only. Therefore, considering the export entitlements by the assessee in price charged is justified. Therefore, the adjustment proposed by the learned transfer-pricing officer and confirmed by the learned dispute resolution panel of ₹ 22,492,930 cannot be disturbed. Accordingly, ground number 1 of the appeal is allowed to the above extent.” Word „disturbed” should be replaced by word „ sustained‟. 03. It is further stated that in Para number 23 assessee suggested some modification stating that mistake has occurred. “In view of this we set aside this issue back to the file of the learned transfer pricing officer to examine whether in the account of the associated enterprises the foreign exchange gain or loss for the year has been reimbursed to the extent of ₹ 14,620,128/– no further adjustment is required.” The Applicant submits that in the above direction, after Rupees 14,620,128,/- “and on such satisfaction” ought to be inserted before no further adjustment is required, which has inadvertently been omitted by the Hon‟ble Tribunal.” 04. The learned authorized representative reiterated the submission made in miscellaneous application and stated Page | 3 MA No. 447/Mum/2023 LI Trading Pvt. Ltd.; A.Y. 2017-18 that these are apparent errors and therefore, it should be rectified. 05. The learned Departmental Representative also agreed with the error. 06. We have carefully considered the submission of both the parties. We find that in paragraph number 22 of the order there is an error wherein after giving the finding we have held that cannot be disturbed, instead of that it should have been held as cannot be sustained. In view of this Para number 22 of the order. As under:- “Now we come to the merits of the addition. We find that in the agreement itself the assessee has agreed to pass on the benefit of export concessions to the associated enterprises. Naturally, if the assessee exports goods to an independent party, the prices may also be charged considering the benefit received by the assessee because of scheme of the government of that particular jurisdiction. No fault can be found with the pricing mechanism entered into by the assessee. Historically also, when the provisions of section 80 HHHC, the regime of cash compensatory support, duty drawback, DFRC, the exporters dues to quote their price after considering all these benefits. There is a definite purpose for giving this incentive by the respective governments. Therefore, it is not unusual that in transaction with the associated enterprises the assessee has considered the benefit of duty entitlement passbook scheme, because even if the transaction between two Page | 4 MA No. 447/Mum/2023 LI Trading Pvt. Ltd.; A.Y. 2017-18 unrelated parties, the price would have been negotiated on that basis only. Therefore, considering the export entitlements by the assessee in price charged is justified. Therefore, the adjustment proposed by the learned transfer-pricing officer and confirmed by the learned dispute resolution panel of ₹ 22,492,930 cannot be sustained. Accordingly, ground number 1 of the appeal is allowed to the above extent.” 07. With respect to the error in Para number 23, we do not find that there is any error in the order in that paragraph. Therefore, we do not agree as suggested by the learned authorized representative with respect to Para number 23 of the order. 08. In the result the miscellaneous application filed by the assessee is partly allowed. Order pronounced in the open court on 08.09.2023. Sd/- Sd/- (PAVAN KUMAR GADALE) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 08.09.2023 Sudip Sarkar, Sr.PS/Dragon Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Page | 5 MA No. 447/Mum/2023 LI Trading Pvt. Ltd.; A.Y. 2017-18 Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai