DCIT, Madurai V. Madura Coats Private Limited, Madurai

MA 47/CHNY/2023

AI Insights

The case involves two Miscellaneous Applications filed by the Revenue against a common order passed by the Tribunal in ITA No.548/Chny/2016 & ITA No.3281/Chny/2019, which pertained to the assessment years 2002-03 & 2011-12. The Revenue sought rectification of the Tribunal's order under section 254(2) of the Income-Tax Act, 1961, claiming that the Tribunal had deviated from its earlier decision without assigning reasons. The Tribunal had earlier directed the AO/TPO to delete TP adjustments made towards some international transactions by adopting the CUP method as the most appropriate method. The Revenue argued that the Tribunal's decision was inconsistent with its earlier rulings and judicial precedents, particularly concerning the CUP method's application. However, the Tribunal found that the Revenue's application was essentially a review of its decision, which is not permissible under the guise of a miscellaneous application.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130036 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-03-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 24-01-2023
• Other Referred Cases: PCIT v. Amphenol Interconnect India (P.) Ltd. [2018] 91 taxmann.com 441 (Bombay)
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 143(3); 254(2)

Judgement Text

Miscellaneous Application No.46/Chny/2023 & Miscellaneous Application No.47/Chny/2023 (in ITA No.3281/Chny/2019 & in ITA No.548/Chny/2016) िनधा रण वष /Assessment Years: 2002-03 & 2011-12 The Dy. Commissioner – of Income Tax, Corporate Circle, Madurai. v. M/s. Madura Coats Pvt. Ltd., 7 th Floor, Jupiter 2A Prestige, Tech Park, Marathahalli – Sarjapur Outer Ring Road, Marathahalli, Bengaluru, Karnataka-560 103. [PAN: AABCM 8279 K] (अपीलाथ /Appellant) ( थ /Respondent) Department by : Mr.Ajay Rotti, CA Assessee by : Mr.P. Sajit Kumar, JCIT सुनवाई की तारीख/Date of Hearing : 31.03.2023 घोषणा की तारीख /Date of Pronouncement : 10.04.2023 आदेश / O R D E R PER MANJUNATHA.G, ACCOUNTANT MEMBER: These two Miscellaneous Applications filed by the Revenue are directed against common order passed by the Tribunal in ITA No.548/Chny/2016 & ITA No.3281/Chny/2019 dated 12.08.2022 and pertains to assessment years 2002-03 & 2011-12. 2. The Revenue has narrated the facts of its case and mistakes stated to be apparent on record from the order of the Tribunal dated 12.08.2022 आयकर अपीलीय अिधकरण, ’डी’ (ायपीठ, चे+ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI ी वी. दुगा राव, माननीय ाियक सद एवं 2ी मंजूनाथा.जी, माननीय लेखा सद3 के सम BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER AND SHRI MANJUNATHA.G, HON’BLE ACCOUNTANT MEMBER MA Nos.46 & 47/Chny/2023 (in ITA No.3281/Chny/2019 & in ITA No.548/Chny/2016) :: 2 :: and relevant contents of Miscellaneous Application filed by the Revenue for the AY 2002-03 in ITA No.3281/Chny/2019 are reproduced as under: 1. The above appeal was disposed by the Hon'ble Tribunal vide order in ITA N0.3281/CHNY/2019 dated 12.08.2022 for the Assessment Year 2002-03. The appellant, in respect of assessment year 2002-03, requests to present this petition for rectification of a mistake which is apparent from record u/s 254(2) of the Income-Tax Act, 1961, in the said order. 2. The assessment was completed u/s 143(3) of the Income-Tax Act, 1961 for the assessment year 2002-03 vide order dated 23.03.2005 by the Deputy Commissioner of Income-Tax, Company Circle-1, Madurai with various additions [ including the addition of Rs.1,62,03,281/-on account of disallowance of value of international transactions based on the order of TPO] 3. The assessee filed an appeal before CIT(A)-I, Madurai against the above assessment order and the appeal of the assessee was disposed vide order in ITA No.0048/05-06 dated 30.03.2007 in which CIT(A) has accepted the method of TNMM adopted by the assessee with regard to the export of thread with AE and the addition made by the AO on account of international transaction to the tune of Rs.1,13,32,042/- was deleted. Further, the CIT(A) has accepted CUP method adopted by the AO with regard to the export of Grey Cotton Canvas and the addition to the tune of Rs.48,71,239/- made by the AO was upheld by the CIT(A)-I, Madurai. 4. The assessee and the department filed an appeal before Hon'ble ITAT against the order of CIT(A)-I, Madurai. The appeal of the department was disposed by Hon'ble ITAT ' B ' Bench vide order in ITA No.2207/Mds/2007 dated 21.12.2012 and remit the matter back to the CIT(A) for deciding the matter afresh by passing a detailed and speaking order. CIT(A)-1, Madurai passed order in ITA No.488/2014-15 dated 30.09.2019 in which CIT(A) has relied on the decision of the Hon'ble ITAT in the assessee's own case for the AY:2009-10 & 2010- 11 which has upheld the CUP method adopted by TPO and directed to consider all identified transactions irrespective of whether the result is positive or negative. Hence, the TPO has requested the assessee to submit the details relating to export of threads for considering the positive as well as negative variance to calculate net adjustment. The assessee through e-mail dated 14.11.2019 submitted that additional details are not available and requested to go ahead with the details as per TP order already available on record. In the absence of the details, the adjustment of Rs.1,13,32,042/- proposed in original order stands confirmed. 5. The appeal filed by the assessee was disposed by the Hon'ble Tribunal ' D ' Bench vide order - in ITA No.3281/CHNY/2019 dated 12.08.2022 for the Assessment Year 2002-03 and direct the AO/TPO to delete TP adjustment made towards few international transactions by adopting CUP as most appropriate method. 6. It is submitted that Hon'ble ITAT has not followed its decision in the assessee's own case for the AY:2009-10 vide order in ITA No.770/Mds/2014 dated 16.11.2016 wherein it is observed that " The decision of the Tribunal is clear that CUP method was appropriately used in preference to TNM method. The only modification suggested was to consider the external comparables under CUP method, if it was given an opportunity". 7. The Appellant, therefore, prays that the Hon'ble Tribunal may be pleased to rectify the order dated 12.08.2022 which allowed the appeal of the assessee by entertaining this Miscellaneous Petition of the department which is filed u/s 254(2) of the Income-Tax Act, 1961. MA Nos.46 & 47/Chny/2023 (in ITA No.3281/Chny/2019 & in ITA No.548/Chny/2016) :: 3 :: 3. The ld.Sr.DR, Mr.P.Sajit Kumar, JCIT referring to petition filed by the AO submitted that there is error in the order of the Tribunal in as much as the Tribunal has allowed the appeals filed by the assessee for both the assessment years by holding that TP adjustment as suggested by the TPO by adopting CUP method is incorrect, ignoring the fact that the Tribunal in the assessee’s own case for the AY 2009-10 vide order in ITA No.770/Chny/2014 dated 16.11.2016 upheld the CUP method, but set aside the issue only with regard to modification on comparables. However, for these two assessment years, the Tribunal has taken an altogether a new view and deviated from the earlier order of the Tribunal without assigning any reasons and said findings of the Tribunal constitute a mistake apparent on record which needs to be rectified u/s.254(2) of the Income Tax Act, 1961. 4. The Ld.Counsel for the assessee referring to the order of the Hon’ble Madras High Court in the case of M/s.Madura Coats Pvt. Ltd. v. DCIT in TCA No.799/2018 dated 30.09.2020 submitted that these appeals have come back from the Hon’ble High Court to decide the issue of appropriate method to be adopted for bench marking transactions of the assessee with its AE and the Hon’ble High Court while deciding the issue had followed earlier decision in the assessee’s own case for the AY 2009-10, where the Hon’ble High Court has set aside the issue to the file of the Tribunal for adjudication on appropriate method. Therefore, the order of the Tribunal for the AY MA Nos.46 & 47/Chny/2023 (in ITA No.3281/Chny/2019 & in ITA No.548/Chny/2016) :: 4 :: 2009-10 is no longer in existence. Further, the assessee has settled the dispute with regard to AY 2009-10 under VSVS, 2020. Therefore, the question of following earlier decision by the Tribunal for the AY 2009-10 does not arise. Moreover, the Tribunal had given its own findings to reach to the conclusion that why method followed by TPO to bench mark international transaction is incorrect? Therefore, it cannot be said that there is an error in the order of the Tribunal which can be rectified u/s.254(2) of the Act, and thus, Miscellaneous Applications filed by the Revenue should be dismissed. 5. We have heard both the sides and considered the contents of Miscellaneous Applications filed by the Revenue for both the assessment years and we find that the Revenue seeks to review the decision rendered by the Tribunal in the given facts and circumstances of the case by way of present Miscellaneous Applications, because, the Tribunal had given its findings on the issue of method selected by the TPO for bench marking international transaction by following certain judicial precedents, including the decision of the Hon’ble Bombay High Court in the case of PCIT v. Amphenol Interconnect India (P.) Ltd. reported in [2018] 91 taxmann.com 441 (Bombay) that when majority of transactions are accepted under TNMM, there cannot be any cherry picking of few transactions and applying CUP method and said findings of the Tribunal is based on appraisal of relevant facts and arguments advanced by both the parties. Moreover, MA Nos.46 & 47/Chny/2023 (in ITA No.3281/Chny/2019 & in ITA No.548/Chny/2016) :: 5 :: there is no merit in grounds raised by the Revenue on the issue of non- consideration of Tribunal order for the AY 2009-10 in the assessee’s own case, because, said order has been set aside by the Hon’ble High Court and restore the issue to the file of the Tribunal for fresh adjudication with open remand without any findings as to which method should be adopted for bench marking transactions of the assessee with its AE. Therefore, we are of the considered view that the Revenue fails to make out a case of prima facie mistake in the order of the Tribunal dated 12.08.2022 for both the assessment years. Therefore, we dismiss the Miscellaneous Applications filed by the Revenue as not maintainable. 6. In the result, the Miscellaneous Applications filed by the Revenue are dismissed as not maintainable. Order pronounced on the 10 th day of April, 2023, in Chennai. Sd/- (वी. दुगा राव) (V. DURGA RAO) (ाियक सद3/JUDICIAL MEMBER Sd/- (मंजूनाथा.जी) (MANJUNATHA.G) लेखा सद3/ACCOUNTANT MEMBER चे+ई/Chennai, िदनांक/Dated: 10 th April, 2023. TLN आदेश की ितिलिप अ4ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु5/CIT 2. थ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु5 (अपील)/CIT(A) 6. गाड फाईल/GF