M/s Sigma Aldrich Chemicals Pvt. ltd., Bangalore V. The Deputy Commissioner Of Income Tax, Circle- 12(3), Bangalore

MA 7/BANG/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2620 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRAADDL
• Keywords: Depreciation; Transfer pricing

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER MP NO.07/BANG/2021 (IN IT(TP)A 203 & 155/BANG/2014) ASSESSMENT YEAR : 2009-10 M/S SIGMA ALDRICH CHEMICALS PVT.LTD., PLOT NO. 12, BOMMASANADRA JIGANI LINK, ANEKAL TALUK, BENGALURU-560100 PAN AAHCS1882L VS. THE DEPUTY C OMMISSIONER OF INCOME-TAX, CIRCLE -12(3), BENGALURU. APPELLANT RESPONDENT A SSESSEE BY : SRI.TATA KRISHNA ,ADVOCATE RE VENUE BY : SRI. PRIYADARSHI MISHRA,ADDL.CIT DATE OF HEARING : 26 - 02 - 202 1 DATE OF PRONOUNCEMENT : 25 - 06 - 202 1 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT MISCELLANEOUS PETITION HAS BEEN FILED BY AS SESSEE SEEKING CERTAIN TYPOGRAPHIC MISTAKE THAT HAS CREPT IN THE ORDER DATED 15/09/2020 PASSED BY THIS TRIBUNAL. PAGE 2 OF 5 MP NO.07/BANG/2021 2. THE LD.AR SUBMITTED THAT ASSESSEE WAS AGGRIEVED BY DRP, AS THEY DID NOT EXCLUDE THIS DEPRECIATION FROM OPERATI NG COST WHILE COMPUTING NET MARGIN OF R&D SEGMENT HOWEVER THEY EX CLUDED DEPRECIATION WHILE CALCULATING OPERATING COST OF MA NUFACTURING SEGMENT. IT IS BEEN SUBMITTED THAT THE REVENUE WAS AGGRIEVED BY THE ACT OF DRP IN EXCLUDING DEPRECIATION FROM OPERATING COST OF MANUFACTURING SEGMENT. 3. THE LD.AR SUBMITTED THAT THIS TRIBUNAL WHILE DECIDING ASSESSEES APPEAL HELD THAT DEPRECIATION SHOULD NOT BE CONSIDERED FOR COMPUTING OPERATING COST IN THE R&D SEGMENT. TH IS TRIBUNAL WHILE DECIDING IDENTICAL ISSUE IN THE APPEAL FILED BY REVENUE REGARDING MANUFACTURING SEGMENT, DISMISSED THE GROU ND RAISED BY REVENUE AND HELD THAT DEPRECIATION CANNOT BE INCLUD ED WHILE CALCULATING THE OPERATING COST OF MANUFACTURING SEG MENT. HOWEVER IT IS SUBMITTED THAT IS IN PARAGRAPH 83 THIS TRIBUNAL DIRECTED LD.AO/TPO TO GRANT DEPRECIATION AS OPERATING EXPENS ES WHILE COMPUTING THE MARGIN WHICH IS CONTRARY TO THE VIEW TAKEN. 4. THE LD.DR THOUGH SUPPORTED THE OBSERVATIONS OF T HIS TRIBUNAL HOWEVER COULD CONTROVERT THE INADVERTENT MISTAKE TH AT HAS CREPT IN. 5. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. WE HAVE PER USED PARA 83 OF THE IMPUGNED ORDER AT PAGE 32. WE NOTE THAT, BASED ON THE OBSERVATIONS AND REASONING BY THIS TRIBUNAL IN THE PRECEDING PARAGRAPH, THIS PARA NEEDS TO BE AMENDED AND HAS TO BE READ AS UNDER: PAGE 3 OF 5 MP NO.07/BANG/2021 83. AT THE OUTSET WE NOTE THAT THE ASSESSEE HAD CONSIDERED MANUFACTURING AND R&D SEGMENT IS COMPOSI TE UNIT, WHICH WAS SUBSEQUENTLY SEPARATED BY THE LD.TP O AND THE TRANSFER PRICING PROCEEDINGS. IT HAS NOT BEEN D ISPUTED BY AUTHORITIES BELOW THAT BOTH SEGMENTS ARE INTERRE LATED TO EACH OTHER AND THAT THERE WILL BE OVERLAPPING OF PRODUCTS,/MACHINERY/MANPOWER BEING USED UNDER 2 SEGMENTS. WHEN DRP DIRECTED TO EXCLUDE APPRECIATION FROM OPERATING EXPENSES IN MANUFACTURING SEGMENT, R &D SEGMENT CANNOT BE LOOKED CONTRARY. WE THEREFORE DIR ECT LD.AO/TPO TO EXCLUDE DEPRECIATION FROM OPERATING EXPENSES WHILE COMPUTING THE MARGINS FOR PURPOSES O F ARMS LENGTH UNDER R&D SEGMENTS. ACCORDINGLY THIS MISCELLANEOUS PETITION FILED BY AS SESSEE STANDS ALLOWED. IN THE RESULT MISCELLANEOUS PETITION FILED BY THE A SSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 25 TH JUNE, 2021. SD/- SD/- (B.R BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEM BER BANGALORE, DATED, THE 25 TH JUNE, 2021. /VMS/ PAGE 4 OF 5 MP NO.07/BANG/2021 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE PAGE 5 OF 5 MP NO.07/BANG/2021 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -6-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -6-2021 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -6-2021 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -6-2021 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -6-2021 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -6-2021 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -6-2021 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS