M/s Tejas Networks Limited, Bengaluru V. The Deputy Commissioner of Income Tax, Circle 12(4), Bengaluru

MA 79/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5372 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-10-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Transfer pricing; Rectification of order
• Section: 254(2)

Judgement Text

M.P. NO.79/BANG/2020 M/S. TEJAS NETWORKS LIMITED, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANTMEMBER AND SMT BEENA PILLAI, JUDICIAL MEMBER M.P. NO.79/BANG/2020 (ARISING OUT OF IT(TP)A NO.281/BANG/2014 & IT(TP) NO.237/BANG/2014) ASSESSMENTYEAR:2009-10 M/S. TEJAS NETWORKS LIMITED PLOT NO.25, 5 TH FLOOR, J.P.SOFTWARE PARK ELECTRONIC CITY, PHASE-1 HOSUR ROAD BENGALURU-560 100 PAN NO : AABCT1670M VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 12(4) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI K.R. VASUDEVAN, A.R. RESPONDENT BY : SHRI PRIYADARSHI MISHRA, D.R. DATE OF HEARING : 31.07.2020 DATE OF PRONOUNCEMENT : 07.10.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATI ON SUBMITTING THAT THERE ARE MISTAKES APPARENT FROM RE CORD IN THE ORDER DATED 1.10.2019 PASSED IN IT(TP)A NO.237/BANG /2014 & IT(TP)A NO.281/BANG/2014 RELATING TO ASSESSMENT YEA R 2009-10. 2. THE FIRST MISTAKE POINTED OUT BY THE ASSESSEE RE LATES TO THE TRANSFER PRICING ADJUSTMENT MADE IN RESPECT OF INTE REST ON LOAN ADVANCED BY THE ASSESSEE. THE LD. DRP HAD DIRECTED THE A.O. TO M.P. NO.79/BANG/2020 M/S. TEJAS NETWORKS LIMITED, BANGALORE PAGE 2 OF 6 COMPUTE INTEREST AT LIBOR RATE + 500 BASIS POINT. THE TRIBUNAL DIRECTED THE A.O. TO DETERMINE 12 MONTHS LIBOR + 30 0 BASIS POINT. 3. IT IS THE PLEA OF THE ASSESSEE THAT THE ASSESSEE HAD SOUGHT FOR LIBOR RATE + 150 BASIS POINT AND HENCE THE ORDER PA SSED BY THE ITAT IN DIRECTING THE A.O. TO ADOPT 12 MONTHS LIBOR + 300 BASIS POINT IS MISTAKE APPARENT FROM RECORD. 4. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED T HE RECORD. WE NOTICE THAT THE TRIBUNAL HAS TAKEN A VIEW ON THI S ISSUE I.E. AS AGAINST THE DRPS DIRECTION TO ADOPT INTEREST RATE OF LIBOR + 500 BASIS POINT, THE TRIBUNAL HAS DIRECTED THE A.O. TO ADOPT 12 MONTHS LIBOR + 300 BASIS POINT. NON-ACCEPTANCE OF THE PLE A OF THE ASSESSEE DOES NOT AMOUNT TO A MISTAKE APPARENT FROM RECORD. THERE SHOULD NOT BE ANY DISPUTE THAT THE SCOPE OF P OWER OF RECTIFICATION OF MISTAKE GIVEN TO THE TRIBUNAL U/S 254(2) OF THE ACT IS LIMITED AND IT IS WELL SETTLED PROPOSITION OF LAW T HAT THE TRIBUNAL IS NOT ENTITLED TO REVIEW ITS ORDER UNDER THE GARB OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD. THE DECISION TAKEN B Y THE TRIBUNAL IN RESPECT OF THE RATE OF INTEREST TO BE ADOPTED IS A CONSCIOUS DECISION TAKEN BY THE TRIBUNAL. SINCE THE TRIBUNAL HAS TAKEN A VIEW ON THIS MATTER, THE SAME DOES NOT CONSTITUTE M ISTAKE APPARENT FROM RECORD WITHIN THE MEANING OF SEC. 254(2) OF TH E INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. ACCORDINGLY, WE RE JECT THIS PRAYER OF THE ASSESSEE. 5. THE NEXT MISTAKE POINTED OUT BY THE ASSESSEE IS THAT THE TRIBUNAL HAS NOT ADJUDICATED GROUND NO.3 RELATING T O MISTAKE IN COMPUTING THE TP ADJUSTMENT AFTER THE DIRECTIONS GI VEN BY LD. DRP. 6. WE NOTICE THAT THIS ISSUE HAS NOT BEEN ADJUDICAT ED BY THE TRIBUNAL. HOWEVER, WE NOTICE THAT GROUND NO.3 IS A WITHOUT M.P. NO.79/BANG/2020 M/S. TEJAS NETWORKS LIMITED, BANGALORE PAGE 3 OF 6 PREJUDICE GROUND RELATING TO TRANSFER PRICING ADJUS TMENT PERTAINING TO LOANS ADVANCED TO THE AE. IN GROUND NO.3, THE A SSESSEE IS POINTING OUT AN ARITHMETIC ERROR COMMITTED BY A.O./ TPO WHILE GIVING EFFECT TO THE DIRECTION GIVEN BY LD DRP. 7. IN FACT, THIS GROUND DOES NOT REQUIRE SEPARAT E ADJUDICATION, SINCE THE TRIBUNAL HAS ALREADY MODIFIED THE DIRECTI ONS GIVEN BY LD DRP. HENCE THE GROUND NO.3 URGED BY THE ASSESSEE S HALL BECOME INFRUCTUOUS, WHILE GIVING EFFECT TO THE ORDER PASSE D BY THE TRIBUNAL. ACCORDINGLY, THE DECISION RENDERED BY THE TRIBUNAL ON GROUND NO.2 URGED BY THE ASSESSEE WOULD TAKE CARE OF GROUND NO. 3 ALSO. ACCORDINGLY, WE REJECT THIS PLEA OF THE ASSESSEE. 8. THE NEXT MISTAKE POINTED OUT BY THE ASSESSEE REL ATES TO DISALLOWANCE MADE U/S 35(2AB) OF THE ACT. THE TRIB UNAL HAS ADJUDICATED THE SAME IN PARAGRAPHS 10 TO 12 OF THE ORDER. 9. AT THE TIME OF HEARING OF THE APPEALS, IT WAS SU BMITTED THAT THE ASSESSEE HAD CHALLENGED THE DISALLOWANCE MADE B Y THE A.O. U/S 35(2AB) OF THE ACT BY FILING THE WRIT PETITION BEFO RE HONBLE KARNATAKA HIGH COURT. IT WAS SUBMITTED THAT THE HO N'BLE KARNATAKA HIGH COURT, VIDE ITS ORDER PASSED IN WRIT PETITION NO.7004/2014, HAS QUASHED THE ASSESSMENT ORDER TO T HE EXTENT OF DISALLOWANCE MADE U/S 35(2AB) OF THE ACT. WHEN THE SE FACTS WERE BROUGHT TO THE NOTICE OF THE ITAT, THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO E XAMINE THE ISSUE AFRESH IN THE LIGHT OF ORDERS PASSED BY HONBLE KAR NATAKA HIGH COURT. 10. IT IS THE PLEA OF THE ASSESSEE THAT THE TRIBUNA L HAS COMMITTED AN ERROR IN REMANDING THE ISSUE TO THE FILE OF A.O. FOR FRESH EXAMINATION. ACCORDING TO THE ASSESSEE, THE TRIBUNA L CANNOT REMAND THE MATTER TO THE AO FOR FRESH EXAMINATION. M.P. NO.79/BANG/2020 M/S. TEJAS NETWORKS LIMITED, BANGALORE PAGE 4 OF 6 11. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. AS SUBMITTED BY ASSESSEE DURING THE COURSE OF HEARI NG THE APPEAL, THE ASSESSMENT ORDER TO THE EXTENT OF DISALLOWANCE MADE U/S 35(2AB) OF THE ACT HAS BEEN QUASHED BY THE HONBLE KARNATAKA HIGH COURT, MEANING THEREBY, THE CLAIM MADE BY THE ASSESSEE U/S 35(2AB) OF THE ACT WOULD REQUIRE FRESH EXAMINATION AT THE END OF THE A.O. ACCORDINGLY, THE TRIBUNAL, AFTER CONSIDER ING THE FACTS RELATING TO THE ISSUE, HAS RESTORED THE SAME TO THE FILE OF THE A.O FOR EXAMINING IT AFRESH IN THE LIGHT OF ORDER PASSED BY HONBLE KARNATAKA HIGH COURT, I.E., THE AO SHOULD TAKE INTO ACCOUNT THE OBSERVATIONS MADE BY THE HONBLE KARNATAKA HIGH COU RT WHILE EXAMINING THE ISSUE OF DEDUCTION U/S 35(2AB) OF THE ACT. THUS, WE NOTICE THAT THE TRIBUNAL HAS TAKEN A CONSCIOUS VIEW ON THIS MATTER. HENCE WE FIND THAT THE PLEA MADE BY THE ASSESSEE BY EXPRESSING THAT THIS ISSUE CANNOT BE RESTORED TO THE FILE OF A O FOR FRESH EXAMINATION SOUNDS STRANGE. IN ANY CASE, WE ARE OF THE VIEW THAT SUCH A PLEA CANNOT BE MADE IN THE MISCELLANEOUS PET ITION FILED U/S 254(2) OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY MISTAKE APPARENT FROM RECORD IN RESPECT OF THIS ISSUE AS ALLEGED BY THE ASSESSEE. ACCORDINGLY, WE REJECT THIS PLEA OF THE ASSESSEE. 12. THE NEXT MISTAKE POINTED OUT BY THE ASSESSEE RE LATES TO DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U /S 35(1)(I) OF THE ACT. IT IS THE SUBMISSION OF THE ASSESSEE THAT THIS ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY T HE COORDINATE BENCH IN ITS ORDER PASSED FOR ASSESSMENT YEAR 2002- 03, WHICH HAS ALREADY BEEN UPHELD BY HONBLE HIGH COURT AND HONB LE SUPREME COURT. IT IS FURTHER STATED THAT THE ABOVE SAID D ECISION IS BEING FOLLOWED CONSISTENTLY IN OTHER YEARS ALSO. HOWEVER , THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFF ICER FOR EXAMINING IT AFRESH IN THE LIGHT OF ORDERS PASSED BY THE HONBLE KARNATAKA HIGH COURT AND CO-ORDINATE BENCHES. M.P. NO.79/BANG/2020 M/S. TEJAS NETWORKS LIMITED, BANGALORE PAGE 5 OF 6 13. IT IS THE PLEA OF THE ASSESSEE THAT THE TRIB UNAL HAS COMMITTED A MISTAKE APPARENT FROM RECORD IN REMITTING THE ISS UE TO THE FILE OF THE A.O. 14. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE TRIBUNAL HAS RESTORED THE ISSUE RELATING TO DEDUCTION U/S 35(1)(I) OF THE ACT TO THE FILE OF TH E A.O. FOR EXAMINING IT AFRESH IN THE LIGHT OF DECISION RENDERED BY THE COORDINATE BENCH IN ITA NO.1684/BANG/2012 RELATING TO ASSESSMENT YEAR 2 008-09, MEANING THEREBY, THE A.O. IS REQUIRED TO FOLLOW THE DECISION RENDERED BY THE COORDINATE BENCH (REFERRED ABOVE), IF THERE IS PARITY OF FACTS ON THIS ISSUE. THUS, WE NOTICE THAT THE T RIBUNAL HAS TAKEN A VIEW ON THIS MATTER ALSO AND HENCE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY TRIBUNAL ON THIS ISSUE ALSO DOES NO T SUFFER FROM ANY MISTAKE APPARENT FROM RECORD. ACCORDINGLY, WE REJE CT THIS PLEA OF THE ASSESSEE. 15. IN THE RESULT, THE MISCELLANEOUS APPLICATION FI LED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCT 2020 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 7 TH OCT, 2020. VG/SPS M.P. NO.79/BANG/2020 M/S. TEJAS NETWORKS LIMITED, BANGALORE PAGE 6 OF 6 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.