INDIA MEDTRONIC PRIVATE LIMITED, MUMBAI V. DCIT , 10(1)(1), MUMBAI

MA 74/MUM/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6040 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2014-2015
• Appeal Filed On: 13-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UODAL RAJ
• Keywords: Transfer pricing; International transaction

Judgement Text

M.A. NO.74/MUM/2020 (ARISING OU T OF ITA NO.7263/MUM/2018) INDIA MEDTRONIC PVT. LTD. VS. ACIT,10(1)(1) (AY. 2014 - 15) 1 IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER M.A. NO. 74/MUM/2020 (ARISING OUT OF ITA NO. 7263/MUM/2018) (ASSESSMENT YEAR: 2014 - 15) INDIA MEDTRONIC PRIVATE LIMITED 1241, SOLITAIRE CORPORATE PARK BLDG. NO. 12. 4 TH FLOOR, ANDHERI GHATKOPAR LINK ROAD, ANDHERI (E), MUMBAI 400093 VS ACIT,10(1)(1) ROOM NO. 209, AAYAKAR BHAVAN, MUMBAI - 400020 PAN AAACI4227Q (APPLICANT) (RESPONDENT) APPLICANT BY: SHRI RAJAN VORA , A.R RESPONDENT BY: SHRI UODAL RAJ , D.R DATE OF HEARING: 25 .09.2020 DATE OF PRONOUNCEMENT: 28 .09.2020 O R D E R PER RAVISH SOOD, JM THE CAPTIONED MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE ARISES FROM THE ORDER PASSED BY THE TRIBUNAL IN ITA NO. 7263/MUM/2018, DATED 13.09.2019. AS PER THE APPLICATION FILED BY THE ASSESSEE TWO MISTAKES HAD CREPT IN THE ORDER PASSED BY THE TRIBUNAL, WHICH BEING PATENT, OBVIOUS, APPARENT AND GLARING FROM RECORD RENDERS THE SAME AMENABLE FOR RECTIFICATION UNDER SEC.254(2) OF THE ACT. 2. ON A PERUSAL OF THE AFORESAID APPLICATION, WE FIN D, THAT THE ASSESSEE IN ITS APPEAL HAD ASSAILED THE ADJUSTMENT CARRIED OUT BY THE TPO ON ACCOUNT OF REIMBURSEMENT OF EXPENSES AMOUNTING TO RS.4,05,62,976/ - (OUT OF THE TOTAL REIMBURSEMENT OF EXPENSES OF RS.4,78,82,596/ - ). AS SUBMIT TED BY THE ASSESSEE, AS T HE TPO HAD ACCEPTED THE REIMBURSEMENT OF EXPENSES TO THE EXTENT OF RS.73,19,620/ - (OUT OF RS.4,78,82,596/ - ) , THEREFORE, THE ASSESSEE HAD ASSAILED THE ADJUSTMENT OF THE BALANCE REIMBURSEMENT OF EXPENSES OF RS.4,05,62,976/ - SO CARRIED OUT BY THE TPO. IT IS S TATED BY THE ASSESSEE, M.A. NO.74/MUM/2020 (ARISING OU T OF ITA NO.7263/MUM/2018) INDIA MEDTRONIC PVT. LTD. VS. ACIT,10(1)(1) (AY. 2014 - 15) 2 THAT THE TRIBUNAL WHILE RESTORING THE MATTER FOR NECESSARY VERIFICATION TO THE FILE OF THE TPO, HAD INADVERTENTLY DIRECTED HIM TO VERIFY THE VERACITY OF THE ENTIRE AMOUNT OF REIMBURSEMENT OF EXPENSES OF RS.4,78,82,596/ - AS CLAIMED BY THE ASSESSEE. IT IS THEREIN STATED, THAT AS THE ASSESSEE HAD ASSAILED THE ADJUSTMENT OF REIMBURSEMENT OF EXPENSES ONLY TO THE EXTENT OF RS.4,05,62,976/ - , THEREFORE, THE TRIBUNAL HAD INADVERTENTLY ERRED IN DIRECTING THE TPO TO VERIFY THE ENTIRE CLAIM OF R EIMBURSEMENT OF EXPENSES OF RS.4,78,82,596/ - . FURTHER, IT IS STATED BY THE ASSESSEE APPLICANT THAT IT HAD ASSAILED BEFORE THE TRIBUNAL THE NON - GRANTING OF THE WORKING CAPITAL ADJUSTMENT BY THE LOWER AUTHORITIES WHILE COMPUTING THE OPERATING MARGIN OF COMPA RABLE COMPANIES FOR THE PURPOSE OF DETERMINATION OF THE ARMS LENGTH OF THE INTERNATIONAL TRANSACTIONS OF IMPORT OF FINISHED GOODS. IT IS STATED BY THE ASSESSEE, THAT THOUGH THE TRIBUNAL HAD RESTORED THE MATTER TO THE FILE OF THE TPO FOR FRESH ADJUDICATION , BUT INADVERTENTLY IT HAD WRONGLY STATED THAT THE MATTER IN ALL FAIRNESS REQUIRES TO BE VISITED BY THE DRP. 3. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE TOOK US THROUGH THE APPLICATION FILED BY THE ASSESSEE APPLICANT, AND SUBMITTED, THAT THE AFORESAID MISTAKES EMANATING FROM THE ORDER OF THE TRIBUNAL MAY BE RECTIFIED. 4. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) THOUGH DID NOT OBJE CT TO THE CLAIM OF THE ASSESSEE THAT THE ISSUE AS REGARDS ADJUSTMENT ON ACCOUNT OF RE IMBURSEMENT OF EXPENSES WAS REQUIRED TO BE RESTORED TO THE TPO ONLY TO THE EXTENT THE SAME HAD BEEN ASSAILED BY THE ASSESSEE BEFORE THE TRIBUNAL, BUT SUBMITTED, THAT THE CLAIM OF THE ASSESSEE IN RESPECT OF THE SECOND ISSUE WHEREIN IT HAD SOUGHT RESTORING OF THE MATTER TO THE FILE OF THE TPO INSTEAD OF THE DRP DID NOT MERIT ACCEPTANCE, AS THE SAME FELL BEYOND THE REALM OF THE POWERS VESTED WITH THE TRIBUNAL UNDER SEC.254(2) OF THE ACT. 5. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BO TH THE PARTIES, PERUSED THE APPLICATION FILED BY THE ASSESSEE APPLICANT, AND ALSO THE ORDER PASSED BY THE TRIBUNAL IN ITA NO. 7263/MUM/2018, DATED 13.09.2019. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE ISSUE PERTAINING TO THE ADJUSTMENT CARRIED OUT BY THE TPO ON ACCOUNT OF REIMBURSEMENT OF EXPENSES COULD HAVE BEEN RESTORED TO HIS FILE FOR NECESSARY VERIFICATIONS ONLY TO THE EXTENT HE HAD DECLINED TO ACCEPT THE SAID CLAIM AND HAD CARRIED OUT THE ADJUSTMENT IN THE HANDS OF THE ASSESSEE, THE SAME IN OUR CO NSIDERED VIEW MERITS ACCEPTANCE. AS OBSERVED BY US HEREINABOVE , THE ASSESSEE HAD ASSAILED BEFORE US THE ADJUSTMENT ON ACCOUNT OF REIMBURSEMENT OF EXPENSES OF RS.4,05,62,976/ - (OUT OF TOTAL REIMBURSEMENT O F EXPENSES OF RS.4,78,82,596/ - ), AS THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.73,19,620/ - HAD ALREADY BEEN ACCEPTED BY THE TPO. TO SUM UP, THE ASSESSEE HAD ASSAILED BEFORE US THE ADJUSTMENT ON ACCOUNT OF REIMBURSEMENT OF EXPENSES TO THE TUNE OF RS.4,05,62,976/ - . HOWEVER, THE TRIBUNAL WHILE RESTORING THE M.A. NO.74/MUM/2020 (ARISING OU T OF ITA NO.7263/MUM/2018) INDIA MEDTRONIC PVT. LTD. VS. ACIT,10(1)(1) (AY. 2014 - 15) 3 MATTER FOR NECESSARY VERIFICATION TO THE FILE OF THE TPO, HAD INADVERTENTLY DIRECTED HIM TO VERIFY THE VERACITY OF THE CLAIM OF THE ASSESSEE IN RESPECT OF THE ENTIRE REMITTANCE OF RS.4,78,82,596/ - MADE TO ITS AES. AS THE AFORESAID MISTAKE WHILE RESTORING THE ISSUE TO THE FILE OF THE TPO HAD INADVERTENTLY CREPT IN OUR ORDER, WE THEREFORE, RECTIFY THE SAME. ACCORDINGLY, MODIFYING OUR EARLIER DIRECTION, WE HEREIN DIRECT THE TPO TO VERIFY THE VERACITY OF THE CLAIM OF THE ASSESSEE THAT THE REMITTANCE OF RS.4,05 ,62,976/ - MADE TO ITS AES WAS IN THE NATURE OF COST TO COST REIMBURSEMENT OF THE EXPENSES WHICH THE AES HAD INCURRED PURELY ON ACCOUNT OF ADMINISTRATIVE CONVENIENCE FOR AND ON BEHALF OF THE ASSESSEE. 6. AS REGARDS THE GRIEVANCE OF THE ASSESSEE APPLICANT, THAT THE TRIBUNAL WHILE RESTORING THE ISSUE PERTAINING TO WORKING CAPITAL ADJUSTMENT TO THE FILE OF THE TPO, HAD INADVERTENTLY ERRED IN STATING IN PARA 26 OF ITS ORDER THAT THE MATTER IN ALL FAIRNESS REQUIRES TO BE REVISITED BY THE DR P FOR FRESH ADJUDICATION, THE SAME IN OUR CONSIDERED VIEW MERITS ACCEPTANCE. WE FIND THAT THOUGH THE AFORESAID ISSUE WAS RESTORE D TO THE FILE OF THE TPO FOR FRESH ADJUDICATION , HOWEVER, INADVERTENTLY IT WAS THEREIN STATED THAT THE MATTER REQUIRES TO BE REVISITED BY THE DRP FOR FRESH ADJUDICATION. WE HEREIN RECTI FY OUR AFORESAID MISTAKE AND HEREIN CLARIFY THAT THE AFORESAID ISSUE HAD BEEN RESTORED TO THE FILE OF THE TPO IN TERMS OF THE OBSERVATIONS RECORDED IN OUR ORDER. 7. THE MISCELLANEO US APPLICATION FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRO NOUNCED IN THE OPEN COURT ON 28 .09.2020 SD/ - SD/ - M. BALAGANESH RAVISH SOOD ( ACCOUNTANT MEMBER ) ( JUDICIAL MEMBER) MUMBAI, DATE: 28 .09.2020 R. KUMAR COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI