M/S AARADHANA REALTIES LIMITED (EARLIER KNOWN AS ESSAR INVESTMENT LIMITED), MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX,6(1)(1), MUMBAI

MA 518/MUM/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5678 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 19-10-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 20-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: WAY OF PRESENT
• Keywords: Transfer pricing
• Section: 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "K" BENCH, MUMBAI SHRI B.R. BASKARAN, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER MA No. 518/MUM/2023 (Arising out of ITA No. 2195/Mum/2014) (Assessment Year: 2009-2010) M/s Aaradhana Realities Limited, (earlier known as Essar Investments Limited , 202, United Business Park, Wagle Industrial Estate, Thane [PAN : AABCE0686Q] ................ Appellant The Deputy Commissioner of Income Tax , 6(1)(1), Mumbai Room No. 563B, Aayakar Bhavan, M.K. Road, Mumbai - 400020 Vs ................ Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : None Smt. Mahita Nair Date Conclusion of hearing Pronouncement of order : : 20.10.2023 02.11.2023 O R D E R Per Rahul Chaudhary, Judicial Member: 1. The present Miscellaneous Application has been filed by the Appellant/Assessee for rectification of order, dated 28/12/2022, passed by the Tribunal in ITA No. 2195/Mum/2014, pertaining to the Assessment Year 2009-10. 2. When the application was taken up none was present for the Assessee On perusal of the application we found that the grievance of the Assessee is that in paragraph 22 of the order, dated 28/12/20122, passed by the Tribunal, while deleting the transfer pricing addition, MA No. 518/Mum/2023 Assessment Year: 2009-10 2 amount of INR 4,57,88,125/- [being transfer pricing addition proposed by the Transfer Pricing Officer (TPO)] has been mentioned incorrectly instead of correct amount of INR 5,41,14,332/- disallowed in the Final Assessment Order, dated 29/01/2014, as per the directions of the Dispute Resolution Panel, dated 31/12/2013. The Ld. Departmental Representative agrees that in Ground No. 13 the Appellant/Applicant has challenged the Transfer Pricing Adjustment on account of interest of INR 5,41,14,332/-. 3. On perusal of record, we find that the TPO has proposed transfer pricing addition of INR 4,57,88,125/- [INR.38,12,50,000/- x 282/365 x 15.5%] on account of interest, whereas in the Final Assessment Order transfer pricing addition of INR 5,41,14,332/- [INR.46,69,44,000 x 282/365 x 15%] was made as per the directions of the Dispute Resolution Panel. We note that in Ground No. 13, the Appellant had challenged the transfer pricing adjustment of INR 5,41,14,332/-. While allowing Ground No. 10 to 14 we have held that the aforesaid adjustment was the nature of secondary adjustment which was not permissible under law as applicable at the relevant time. Therefore, we find merit in the request for rectification of mistake apparent on record made by the Assessee by way of present application. Accordingly, amount of INR 4,57,88,125/- stated in paragraph 22 of the order shall stand replaced by and be read as INR 5,41,14,332/-, and the phrase „of INR 4,57,88,125/-„ used in paragraph 21 shall stand deleted. The rectified paragraph 21 and 22 of the order shall, thus, read as under: “21. We have considered the rival submissions and perused the material on record. In the case of Besix Kier Dabhol SA (supra), it was held by the Hon‟ble Bombay High Court that in absence of specific provision in the Act incorporating thin capitalization rules, the TPO was not permitted to re-characterize debt as MA No. 518/Mum/2023 Assessment Year: 2009-10 3 equity for making transfer pricing adjustments. It is admitted position that for the relevant assessment year there were no provisions in the Act providing for secondary transfer pricing adjustment and/or for making transfer pricing adjustment by treating debt as equity (such as general/specific anti-avoidance rules). The amount of receivable outstanding has arisen on account of transfer pricing adjustment made by the TPO/Assessing Officer. In our view, the transfer pricing adjustment made by the TPO/Assessing Officer (by treating the aforesaid amount as interest on outstanding receivables) is clearly in the nature of secondary adjustment and cannot be sustained in the absence of specific provision in the Act providing for the same. 22. In view of the above, the transfer pricing addition of INR 5,41,14,332/- is deleted and Ground No. 10 to 14 raised by the Appellant are allowed.” 4. In terms of the above, the Miscellaneous Application preferred by the Applicant/Appellant is allowed. Order pronounced on 02.11.2023. Sd/- Sd/- (B.R. Baskaran) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 02.11.2023 Alindra, PS MA No. 518/Mum/2023 Assessment Year: 2009-10 4 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai