Aurobindo Pharma Limited, Hyderabad V. ACIT, Central Circle-1(2), Hyderabad

MA 80/Hyd/2023

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9591 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 07-12-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 26-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Search and seizure; Notional interest
• Section: 254(2)

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A” , HYDERABAD BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND SHRI LALIET KUMAR, JUDICIAL MEMBER M.A. No.80/Hyd/2023 in ITA No.485/Hyd/2022 Assessment Year: 2018-19 M/s. Aurobindo Pharma Limited, Hyderabad [PAN No. AABCA7366H] Vs. Asst. Commissioner of Income Tax, Central Circle-1(2), Hyderabad (Applicant / Appellant) (Respondent / Respondent) Assessee by: Sri B.G. Reddy, Advocate. Revenue by: Sri Shakeer Ahamed, Sr. A.R. Date of hearing: 08.12.2023 Date of pronouncement: 12.12.2023 आदेश / O R D E R PER LALIET KUMAR, J.M. : The present Miscellaneous Application has been filed with a request to modify the order passed by the co-ordinate Bench of the Tribunal dt.27.04.2023 in ITA No.485/Hyd/2022 for A.Ys. 2018-19 as per section u/s 254(2) of the Act. 2. Before us, it was submitted by the ld.AR that the DRP had already granted substantial relief to the assessee out of the total addition suggested by the TPO / Assessing Officer. It was submitted that DRP had deleted the amount of Rs.68.05 crore, and for the balance amount of Rs.3,34,24,193/-, the assessee had Page 2 of 5 preferred the appeal before the Tribunal. It was submitted by the ld. AR that as per the order of the Tribunal, the relief already granted by the DRP would be withdrawn and the assessee cannot be worse enough. It was submitted that permission may be given to assessee to withdraw the grounds as not pressed. The relevant portion i.e., Paras 3.2 to 7 of the Miscellaneous Application filed by the assessee read as under : “3.2 Thus, the ground was partly allowed by Hon'ble Tribunal in the order dated 27/04/2023 by following the decision of Tribunal in the case of Apache Footwear in ITA No. 568/Hyd./2022 and with a direction to the Assessing Officer to determine ALP and compute the same by adding notional interest @ 6% on the receivables beyond a period of 60 days. 4. Since the ground of the assessee was partly allowed and as no Revenue appeal lies against the directions of DRP, our understanding of the directions of Hon'ble Tribunal is that credit period of sixty days considered by Hon'ble Tribunal is in addition to credit period mentioned in the export invoices raised on AEs and as allowed by DRP. But in the case Of Apache Footwear (supra) followed by Hon'ble ITAT, it would appear from the order of Hon'ble ITAT in that case that credit period of only 60 days from the due date was allowed for realizations from AEs. If the credit period of only 60 days is considered in the case of present assessee, it would tantamount to setting aside the directions of DRP as the credit period contracted as per export invoices is more than 60 days in majority of the cases. This leads to a situation where TP adjustment/ income on this ground gets enhanced instead of partly allowed. 5. Since DRP has considered credit period as per export invoices, which is more than 60 days in most of the cases, against which no Revenue appeal lies, Hon'ble Tribunal may kindly consider issuing appropriate directions/ clarification that credit period of 60 days mentioned in the order of Hon'ble ITAT is in addition to credit period as per export invoices allowed by DRP. 6. We respectfully submit in this regard that under the provisions of the law, the worst detriment which the Hon'ble Tribunal may visit on an appellant is dismiss the appeal but in no case, it can take away the benefit appellant has received at the lower appellate forum (in the present case DRP), which benefit was not challenged by the Revenue in appeal. In this context, we may refer to the following observations of Hon'ble Supreme Court in the case of Mcorp Global (P.) Ltd. v. CIT [2009] 309 ITR 434/178 Taxman 347 (SC): Page 3 of 5 "6. In the case of Hukumchand Mills Ltd. v. CIT (1967) 63 ITR 232 this Court has held that under Section 33(4) of the Income-tax Act, 1922 (equivalent to Section 254(1) of the 1961 Act), the Tribunal was not authorized to take back the benefit granted to the assessee by the AO. The Tribunal has no power to enhance the assessment. Applying the ratio of the said judgment to the present case, we are of the view that, in this case, the AO had granted depreciation in respect of 42,000 bottles out of the total number of bottles (5,46,000), by reason of the impugned judgment. That benefit is sought to be taken away by the Department, which is not permissible in law. This is the infirmity in the impugned judgment of the High Court and the Tribunal." 7. In view of the above observations of Apex Court, as an alternative to our submission that credit period of sixty days mentioned in the order of Hon'ble ITAT is in addition to credit period considered by DRP, Hon'ble ITAT may consider dismissing the ground of appeal of the assessee instead of 'partly allowed' and in such an event, directions of DRP allowing credit period as contracted and mentioned in export invoices remain unaltered.” 3. On the other hand, the ld. DR has objected and submitted that the order passed by the Tribunal is in accordance with law. 4. We have heard the rival submissions and perused the material on record. Admittedly, the DRP has already granted relief to the assessee which we have mentioned in our order in paras 9 and 10. 5. Since it is the consistent view of the Tribunal that notional interest on 6% is to be charged on outstanding receivables beyond a period of 60 days. However, if the above principle is applied to the present case, then the assessee would be worsen off and the relief already granted by DRP would be withdrawn and it would almost equal to enhancement of additions. That cannot be done in the appeal of the assessee more particularly, when the revenue is not in appeal before us. For the above said proposition, we may Page 4 of 5 fruitfully rely upon the decision of Hon'ble Supreme Court in the case of Mcorp Global Pvt. Ltd. Vs. CIT reported in (2009) 309 ITR 434/178 Taxman 347 (SC). In the light of the above, the assessee is entitled to the relief sought for, in the present application. 6. Since the assessee has submitted before us that the grounds raised with respect to outstanding receivables be dismissed as not pressed, therefore, we do not find any reason to disagree with the contentions of the assessee. Accordingly, we modified the order and Para 14 be read as under: “14. Grounds 3 to 5 were not pressed by the ld. AR for which the ld. DR has no objection. Accordingly, ground nos. 3 to 5 are dismissed as not pressed.” 7. Thus, the grounds raised by the assessee are dismissed as not pressed. Accordingly, Miscellaneous Application filed by the assessee is allowed. 8. In the result, Miscellaneous Application filed by the assessee is allowed. Pronounced in the open Court on this the 12 th day of December, 2023. Sd/- Sd/- (RAMA KANTA PANDA) ACCOUNTANT MEMBER (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 12 th December, 2023 TYNM / SPS Page 5 of 5 Copy to: S.No Addresses 1 Aurobindo Pharma Limited, Galaxy Towers, 22 nd Floor, Plot No.1, Survey No.83/1, Hyderabad Knowledge City, Raidurg, Panmaktha, R.R. District, Hyderabad – 500 032. 2 Asst. Commissioner of Income Tax, Central Circle-1(2), Hyderabad. 3 The Director of Income Tax (IT & TP), Hyderabad. 4 ACIT (Transfer Pricing), Hyderabad. 5 DR, ITAT Hyderabad Benches 6 Guard File By Order