Zuari Cement Limited , Kadapa V. DCIT ,Circle-1, Kurnool

MA 60/Hyd/2023

AI Insights

The case involves Zuari Cement Limited, which filed miscellaneous applications against the common order of the Tribunal dated 15/02/2023 concerning the assessment years 2016-17 and 2017-18. The applications sought to rectify an oversight in the Tribunal's earlier decision, which did not account for a subsequent order dated 24/09/2021 that supported the use of aggregation and TNMM for transfer pricing assessments. The Tribunal acknowledged the mistake and modified the earlier order to align with the principles established in the 2021 order, directing the TPO to apply these methods in the assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133341 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 24-08-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 02-07-2023
• Other Referred Cases: Serdia Pharmaceutical India Pvt. Ltd Vs. ACIT (2011) 44 SOT 391 (Mum)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing
• Section: 154

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”, HYDERABAD BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT & SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER वि.आिे.सं / M.A. Nos. 60 & 61/Hyd/2023 (Arising out of ITA Nos. 249/H/21 & 132/H/22) (विर्धारण िर्ा / Assessment Years: 2016-17 & 2017-18) Zuari Cement Limited , Kadapa [PAN No. AAACZ1270E] Vs Deputy Commissioner of Income Tax, Circle-1, Kurnool आिेदक / Applicant प्रत्‍यर्थी / Respondent विर्धाररती द्वधरध / Assessee by: Shri Deepak Chopra & Shri Nitin Narang, ARs रधजस्‍ि द्वधरध / Revenue by: Ms. Sheetal Sarin, DR सुििधई की तधरीख/Date of hearing: 25/08/2023 घोर्णध की तधरीख/Pronouncement on: 05/10/2023 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: B y w a y o f t h e s e t w o M i s c e l l a n e o u s A p p l i c a t i o n s , a s s e s s e e p r a y s t o r e c a l l t h e c o m m o n o r d e r o f t h e T r i b u n a l d a t e d 1 5 / 0 2 / 2 0 2 3, p a s s e d i n I T A Nos. 249/Hyd/2021 & 132/Hyd/2022 for the assessment year 2016-17 & 2017-18, stating that while dealing with the issue relating to the segregation of certain international transactions from the MA Nos. 60 & 61/Hyd/2023 Page 2 of 5 manufacturing process and applying C omparable Uncontrolled Price (C UP) and other methods as against the Transactional Net Margin Method (TNMM), the Bench referred to the order dated 17/04/2015 in ITA Nos. 471/Hyd/2014 (order dated 17/04/2015) in the first round of litigation, whereby the matter was remanded to the file of the learned Transfer Pricing Officer (learned TPO), to re-consider the entire matter afresh by determining the Most Appropriate Method (MAM) and then to analyse the transaction under the provisions of the transfer pricing; whereas in the second round of litigation, the Bench took a specific view by order dated 24/09/2021 in ITA No. 181/Hyd/2018 (order dated 24/09/2021) accepting the aggregation as well as T NMM and left it open for the learned T PO to finalise the consequential computation as per law. 2. Learned AR submitted that though the Bench took cognizance of the order dated 17/04/2015, passed in the first round of litigation, an inadvertent mistake had crept in, in not noticing the subsequent order dated 24/09/2021 which was followed in assessee’s own cases for the assessment years 2011- 12 to 2014-15. He, therefore, submits that by recalling the common order dated 15/02/2023, passed in ITA Nos. 249/Hyd/2021 & 132/Hyd/2022 for the assessment years 2016-17 & 2017-18, this inadvertent mistake may be rectified. 3. Though the learned DR opposed the prayer in Miscellaneous Application, there is no denial of the fact that by order dated 17/04/2015 the matter was remanded to the file of the learned Transfer Pricing Officer (learned TPO), to re-consider the entire matter afresh by determining the MAM and then to analyse the transaction under the provisions of the transfer pricing; and when the learned A ssessing Officer/learned TPO repeated the same action taken earlier and the matter travelled again to the Tribunal, in the second round of litigation, the Bench, by order dated 24/09/2021, accepted the aggregation as well as TNMM and left it open for the learned TPO to finalise the consequential computation as per law. MA Nos. 60 & 61/Hyd/2023 Page 3 of 5 4. Having heard the counsel on either side, we are satisfied that a mistake has crept in in not noticing the order dated 24/09/2021 and not noticing the view taken by a Co-ordinate Bench of the Tribunal in assessee’s own case for an earlier assessment year, constitutes mistake apparent on the face of record. We, therefore, modify the order of the Tribunal and direct that paragraph Nos. 16 onwards thereof shall be substituted by the following paragraphs: 16. In the order dated 24/09/2021, it was observed and held that,- 5. The Revenue vehemently contended that the learned lower authorities have rightly adopted a direct method i.e., CUP which carries precedence over all other indirect methods; including TNMM, as per Serdia Pharmaceutical India Pvt. Ltd Vs. ACIT (2011) 44 SOT 391 (Mum). We find no reason to accept the Revenue’s instant argument more particularly in view of the fact that this is second round of consequential proceedings wherein the earlier learned co-ordinate bench had already rejected the very contentions seeking to decline both aggregation as well as TNMM; as the case may be (supra). 6. The Revenue’s next vehement contention before us is that the assessee had not even furnished the relevant details having adopted aggregation as well as TNMM method in the consequential proceedings. We find no substance in the Revenue’s instant last argument as well since this is once again a second round of assessment wherein no such objections had been put forth from the departmental side in the former round. Be that as it may, we therefore accept the assessee’s contentions seeking to imply “aggregation” as well as TNMM method and leave it open for the “TPO” to finalize the consequential computation as per law. We further make it clear that it shall be very much open for the assessee to file on record all the necessary details pertaining to the comparable(s) list submitted in “TNMM” in the consequential computation. Ordered accordingly.” MA Nos. 60 & 61/Hyd/2023 Page 4 of 5 17. Respectfully following the same, we direct the learned Assessing O fficer/learned TPO to imply aggregation as well as T NMM method and finalise the consequential computation as per law, after considering the details if any furnished by the assessee relating to the comparables list submitted in TNMM in the consequential computation. Relevant grounds of both the appeals are allowed in above terms. 18. Insofar as the ground No. 10 in ITA No. 132/Hyd/2022 for the assessment year 2017-18 relating to the benefit under section 80-IA of the Act is concerned, learned AR submitted that on the rectification application filed by the assessee under section 154 of the Act, by order dated 09/05/2022, the learned Assessing Officer reduced the assessed income of the assessee by an amount of Rs. 11,38,15,482/- and, therefore, the grievance of the assessee stands addressed. Accordingly, such a ground is not pressed and hence dismissed. 19. In the result, appeal in ITA No. 249/Hyd/2021 is allowed in terms given in paragraph No. 17 and appeal in ITA No. 132/Hyd/2022 is allowed in part in terms given in paragraph Nos. 17 & 18. 5. B o t h t h e M i s c e l l a n e o u s A p p l i c a t i o ns a r e a l l o w e d a c c o r d i n g l y . O r d e r p r o n o u n c e d i n t h e o p e n c o u r t o n t h i s t h e 5 th d a y o f O c t o b e r, 2 0 2 3 . Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER H y d e r a b a d , D a t e d : 05/10 / 2 0 2 3 TNMM MA Nos. 60 & 61/Hyd/2023 Page 5 of 5 Copy forwarded to: 1. Zuari Cement Limited, Krishna Nagar, Yerraguntla, Kadapa Dist., 2. The Deputy Commissioner of Income Tax, Circle-1, Kurnool. 3. The Dispute Resolution Panel (DRP), Bengaluru. 4. The Director of Income Tax (IT & TP), Hyderabad. 5. The Addl. Commissioner of Income Tax (Transfer Pricing), Hyderabad. 6. DR, ITAT, Hyderabad. 7. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD