NEXTEER AUTOMOTIVE INDIA PRIVATE LIMITED ,BENGALURU V. .DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-5(1)(1), BENGALURU

ITTPA 1808/BANG/2024

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Nexteer Automotive India Pvt. Ltd., engaged in manufacturing and exporting automotive components, appealed against the orders of the AO and the Dispute Resolution Panel (DRP) concerning adjustments made by the Transfer Pricing Officer (TPO) and disallowances of deductions under sections 10AA and 80JJA. The TPO had made an upward adjustment of INR 6,55,76,380 related to intra-corporate services and royalty payments. The DRP upheld these adjustments and the AO confirmed them in the final assessment. The ITAT found that the DRP and TPO's conclusions regarding the lack of benefit from intra-group services were not tenable and remitted the issues back to the AO for a fresh examination with the additional evidence provided by the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 33996 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 12-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Appeal Filed On: 19-09-2024
• Other Referred Cases: EKL Appliances vs. 24 taxmann.com 199 (Del) (2012)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N. SENTHIL KUMAR
• Assessee Lawyers: CHAVALI NARAYAN
• Keywords: Opportunity of being heard; Additional evidence; Transfer pricing; International transaction
• Section: 143(2); 22; 10AA

Judgement Text

"IT(TP)A No.1808/Bang/2024 Nexteer Automotive India Pvt. Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER IT(TP)A No.1808/Bang/2024 Assessment Year: 2020-21 Nexteer Automotive India Private Limited 98A, KIADB Industrial Area Anekal SO Anekal Bengaluru 562 106 Karnataka PAN NO : AADCR9139D Vs. DCIT Circle-5(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri Chavali Narayan, A.R. Respondent by : Sri N. Senthil Kumar, D.R. Date of Hearing : 09.12.2024 Date of Pronouncement : 12.12.2024 O R D E R PER PRAKASH CHAND YADAV, JUDICIAL MEMBER: Present appeal of the assessee is arising from the order of AO dated 25.7.2024 having DIN No. ITBA/AST/S/143(3)/2024- 25/1067035950(1). 2. Brief facts of the case are that Nexteer Automotive India Private Limited (hereinafter referred to as \"Nexteer India' or \"the Company\" or \"the Assessee\") was incorporated in February 2008, as a private limited company and has its registered office in Bangalore. Nexteer India is engaged in the business of manufacture and export of driveline and steering related automotive components (hereinafter referred to as \"automotive components\") to its overseas Group companies. Nexteer India also sells automotive components to IT(TP)A No.1808/Bang/2024 Nexteer Automotive India Pvt. Ltd., Bangalore Page 2 of 7 Original Equipment Manufacturers (\"OEMs\") in the domestic market and to other unrelated customers overseas. The Company has manufacturing plants located in Bengaluru (Karnataka), Pune (Maharashtra) and Chennai (Tamil Nadu). Further, the Company also has set-up a unit in a SEZ at Embassy Tech Village, Bengaluru (Karnataka) and is providing Software Development Services to its group companies from 01 March 2019. For the Assessment Year (\"AY\") 2020-21, Nexteer India filed its return of income (\"ROI\") on February 15, 2021, declaring a taxable income of INR 22,62,55,910 under the provisions of the Income Tax Act, 1961 (\"the Act\"). The Assessee's case was selected for assessment for the captioned AY and the learned Assessing Officer (“AO\") and notice under section 143(2) of Act has been issued for initiation of the proceedings. During the course of the assessment, the information called for by the learned AO was duly furnished by the Assessee and detailed submissions were made, in support of the tax positions adopted by the Assessee. 2.1 During the course of assessment proceedings, the case of the assessee was referred to TPO, after observing that assessee has entered into international transactions with its AE. The ld. TPO after calling for the information from the assessee has made an upward adjustment of Rs.6,55,76,380/- on account of intra-corporate services and royalty. Thereafter, the AO passed the draft assessment order dated 21.9.2023. Against this draft assessment order, the assessee filed its objections before the ld. DRP challenging the order of TPO as well as the AO. It is pertinent to observe here that the ld. AO while finalizing the assessment has also disallowed the claim of the assessee with respect to the deduction of section 10AA of the Act in respect of SEZ unit, claimed by the assessee. The ld. AO has also disallowed the deduction of section 80JJA of the Act with respect to the manufacturing unit of the assessee and passed draft assessment. IT(TP)A No.1808/Bang/2024 Nexteer Automotive India Pvt. Ltd., Bangalore Page 3 of 7 3. Aggrieved with the order of DRP assessee filed its objections before the DRP. 4. Before DRP, the assessee contended that the adjustments made by the TPO are not tenable in the eyes of law. The assessee has made various arguments in support of the contention that the transactions of intra-group services was at arm’s length and the assessee has received the services from its AE. However, the ld. DRP dismissed the contention of the assessee observing that the assessee has failed to prove the rendition of services by its AE with documentary evidences and hence, sustained the additions. The relevant observations of the ld. DRP with respect to the adjustments made qua inter-corporate services are reproduced hereunder: 2.2 Similarly, with respect to the adjustments made by the AO towards royalty payments amounting to Rs.18,89,961. The ld. DRP has observed as under: IT(TP)A No.1808/Bang/2024 Nexteer Automotive India Pvt. Ltd., Bangalore Page 4 of 7 2.3 The ld. DRP also affirmed the view of the AO for denying the benefits of section 10AA of the Act in respect of SEZ unit and held that the assessee has failed to establish that it was not formed by splitting up and restructuring of the earlier unit. So far as the deduction u/s 80JJA of the Act is concerned, the ld. DRP directed the AO to allow the benefit of section 80JJA of the Act, provided assessee would satisfy the conditions laid down for claiming deduction u/s 80JJA of the Act. 2.4 The ld. AO while giving effect to the order of ld. DRP sustained the disallowances made by TPO and confirmed by the ld. DRP and also disallowed the claim of deduction u/s 10AA & 80JJA of the Act to the assessee. 2.5 Aggrieved with the order of ld. AO, the assessee has come up in appeal. 3. Ld. Counsel for the assessee while presenting the matter has submitted that ground No.1 to 4 are general in nature and not pressed. 4. So far as ground Nos.5 to 8 are concerned, the ld. Counsel for the assessee has contended that the assessee has filed enough evidences vis-a-vis rendition of services by the AE. The counsel for IT(TP)A No.1808/Bang/2024 Nexteer Automotive India Pvt. Ltd., Bangalore Page 5 of 7 the assessee contended that the DRP has not considered those evidences and submissions of the assessee. And craved that the matter may be restored to the file of AO for fresh examination in accordance with law. 4.1 Similarly, for the other grounds i.e. ground Nos.10 to 17, related to denial of deduction u/s 10AA of the Act, the counsel for the assessee submitted that the assessee has made an application under rule 29 before the ITAT for admission of certain additional evidences to dislodge the finding of the AO alleging that assessee unit is formed by splitting of and restructuring of the earlier unit. In Ground Nos.18 to 22 assessee has challenged the denial of deduction u/s 80JJA of the Act, the counsel for the assessee contended that the assessee has not got proper opportunity of being heard before the AO vis-à-vis this issue. In Support of the claim of 80JJA also the assessee has filed an application for admission of additional evidences. 5. The ld. D.R. appearing on behalf of the revenue relied upon the orders of the authorities below and contended that the assessee is not entitled for the deduction u/s 10AA & 80JJA of the Act. Findings of the Bench 6. We have heard the rival submissions and perused the materials available on record. We are of the view that so far as the view of the DRP and TPO that the assessee failed to derive any benefit from the intra-group services, is concerned, the same is not tenable in the eyes of law. Our view is fortified by the Hon’ble Delhi High Court in the case of EKL Appliances reported in 24 taxmann.com 199 (Del) (2012). IT(TP)A No.1808/Bang/2024 Nexteer Automotive India Pvt. Ltd., Bangalore Page 6 of 7 6.1 The next aspect is the rendition of services by the AE to the assessee, for which the ld. Counsel for the assessee has undertaken that the assessee will produce all the relevant documentary evidences to substantiate the factum of rendition of services by the AE of the assessee. Similarly for the deduction u/s 10AA and 80JJA of the Act, the assessee has placed on record certain additional evidences which goes to the root of the matter to which the DR has also not raised any objection. We are of the view that in view of the additional evidences filed by the assessee, the issues of 10AA and 80JJA requires fresh consideration at the end of AO. Considering the totality of the facts and circumstances of the case and in the interest of justice, we remit all these issues i.e. (issue of disallowance of payment made to AE on account of services rendered and the issues of 10AA and 80JJA) to the file of AO for deciding afresh in accordance with law. 7. So far as the ground No.9 is concerned, related to royalty issue, we do not find any force in the arguments of the assessee and hence the same is dismissed. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 12th Dec, 2024 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Prakash Chand Yadav) Judicial Member Bangalore, Dated 12th Dec, 2024. VG/SPS IT(TP)A No.1808/Bang/2024 Nexteer Automotive India Pvt. Ltd., Bangalore Page 7 of 7 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "