Mapei Construction Products (India) Private Limited, Bangalore V. Assistant Commissioner Of Income Tax,Circle-4(1)(2), Bangalore

MA 79/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2941 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-08-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 20-07-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANDEEP CHALAPATHY
• Keywords: Transfer pricing

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. No. 79/Bang/2022 (in IT(TP)A No. 283/Bang/2021) Assessment Year : 2016-17 M/s. Mapei Construction Products (India) Pvt. Ltd., A01 and B01, Solus Jain Heights, 1 st Floor, 1 st Cross, J C Road, Bangalore – 560 002. PAN: AAHCM0464A Vs. The Assistant Commissioner of Income Tax, Circle 4 (1)(2), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Sandeep Chalapathy, CA Revenue by : Smt. Priyadarshini Baseganni, Addl. CIT DR Date of Hearing : 26-08-2022 Date of Pronouncement : 06-09-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present miscellaneous petition is filed by assessee in order dated 01/06/2022 passed by this Tribunal seeking certain typographic mistakes that has crept in. 2. At the outset, the Ld.AR submitted that this Tribunal while adjudicating the transfer pricing issue, in para 10 did not decide Ground no. 2 after recording the facts leading to the issue. Page 2 of 4 M.P. No. 79/Bang/2022 (in IT(TP)A No. 283/Bang/2021) 3. On verification from the order of this Tribunal, we note that while deciding Ground no. 2 on merits, this Tribunal has recorded the facts relating to the transfer pricing adjustment in para 10.5 however thereafter no decision has been provided. The Ld.DR did not object for the issue to be decided herein. As this is a mistake apparent on record, we adjudicate Ground no. 2 based on the submissions advanced by the Ld.AR and the notings in our log book recorded on the date of hearing. Following paras 10.6 to 10.8 shall be read in continuation to para 10.5 in the order passed by this Tribunal dated 01/06/2022. “10.6 The Ld.AR relying on the written submission placed at page 7 of the paper book submitted that process involved to purchase from AE does not require any efforts and the turnover with the AE therefore is only 27.91 Crores as against the non-AE turnover which is less being 3.12 Crores. It is submitted that the process of purchasing goods from associated enterprises is in a standardised process and not much of time would be spent whereas the purchase from other parties involves a lot of time and therefore the turnover cannot be an appropriate basis to allocate employee expenses between the two segments. 10.7 It is submitted that on one hand the Ld.TPO agrees that internal TNMM as the Page 3 of 4 M.P. No. 79/Bang/2022 (in IT(TP)A No. 283/Bang/2021) most appropriate method, however in the absence of supporting evidences, the Ld.TPO has proceeded to apportion the employee cost in the ratio of sales between the AE and non- AE segments. It is also submitted that the DRP in their directions have held that allocation of employee cost equally is adhoc and without any cogent basis and confirmed the action of the Ld.TPO. The Ld.AR submitted that lot of documents in the form of communication and other evidences were filed to prove the time spent by the purchase team for purchasing items from AE and non- AE which has not been recorded by the DRP. On the contrary, the Ld.DR relied on the orders passed by the authorities below. We have perused the submissions advanced by both sides in the light of records placed before us. 10.8 On a specific query being raised regarding this issue being remanded to the DRP, both sides did not object to the same. We note that the evidences filed by the assessee has not been properly considered having regard to the trading activity carried out by the assessee between the AE and non- AE. In our view, this issue needs to be reconsidered by the DRP based on the Page 4 of 4 M.P. No. 79/Bang/2022 (in IT(TP)A No. 283/Bang/2021) evidences filed by assessee which are already on record and enclosed at pages 258 to 280 of the paper book. The DRP is directed to consider these documents to decide the allocation of expenses, employee cost expenses based on a scientific method. We accordingly remand this issue to the Ld.DRP to consider the issue in accordance with the directions hereinabove. Accordingly, this ground raised by assessee stands allowed for statistical purposes.” In the result, the M.P. filed by assessee stands allowed. Order pronounced in the open court on 06 th September, 2022. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 06 th September, 2022. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore