SEOYON E-HWA SUMMIT AUTOMOTIVE INDIA PRIVATE LIMITED,KANCHEEPURAM V. ACIT/DCIT, ASSESSMENT UNIT, NFAC, CHENNAI

ITTPA 118/CHNY/2024

AI Insights

The case involves Seoyon E-Hwa Summit Automotive India Private Limited appealing against the orders of the Learned Assessing Officer (Ld.AO) and the Dispute Resolution Panel (Ld.DRP) concerning transfer pricing adjustments and corporate tax additions for the assessment year 2021-22. The primary contention was regarding the Ld.TPO's adjustment of Rs.13,18,81,880 for engineering support services, which the assessee argued was based on erroneous findings and lack of consideration of submitted evidence. The Tribunal found merit in the assessee's arguments and remitted the matter back to the Ld.TPO for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314109 (ITAT-CHENNAI)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V. SREENIVASAN
• Assessee Lawyers: B. SRINATH; C.A
• Keywords: Opportunity of being heard; Transfer pricing; Corroborative evidences; Application of stay
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अधिकरण, ’डी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI माननीय श्री मनु क ुमार धिरर ,न्याधयक सदस्य एवं माननीय श्री अमिताभ शुक्ला, लेखा सदस्य क े सिक्ष BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON’BLE SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./IT(TP)A No.118/Chny/2024, Assessment Year: 2021-22 SA-23/Chny/2025, Assessment Year : 2021-22 Seoyon E-Hwa Summit Automative India Private Limited, No.A8,Irungattukottai S.O, Irungattukottai, Kanchipuram Dist., Tamil Nadu-602 117. [PAN: AAGCS4350J] Income Tax Officer, Corporate Ward-6(1), Chennai. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Shri B.Srinath, C.A, प्रत्यर्थी की ओर से /Revenue by : Shri AR V.Sreenivasan, CIT सुनवाई की तारीख/Date of Hearing : 01.05.2025 घोषणा की तारीख /Date of Pronouncement : 07.05.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / AST / S / 143(3) / 2024-25 / 1069546166(1) dated 09.10.2024 of the Learned Assessing Officer [herein after “Ld.AO), Chennai, for the assessment years 2021-22. The assessee has contested the DRP order dated 18.09.2024 made vide DIN No.ITBA/DRP/M/144C(5)/2024-25/1068772877(1). IT(TP)A No.118/Chny/2022 Page - 2 - of 6 2.0 Perusal of Form 36 shows that the assessee has contested the impugned assessment order raising 03 grounds of appeal including their various sub-grounds. The ground of appeal no.1 is general in nature and hence dismissed. The Ld. Counsel for the assessee submitted that it would like to only press ground of appeal no.2.1 to 2.6, 2.13 being the issues concerning transfer pricing adjustments and the ground of appeal no.3 being the Corporate Tax ground. All other remaining chiefly sub- grounds were not pressed for adjudication and hence stand dismissed as withdrawn. 3.0 The first issued raised by the assessee from ground 2.1 to 2.6 is regarding the action of the Ld.TPO u/s 92CA(3) in making an adjustment of Rs.13,18,81,880/-. The Ld. Counsel drew our attention to page 4 of the order of Ld.TPO where he concluded that “…therefore, in the case, when there is no agreement no evidences available for Engineering support services, there is no question of considering the ALP of the payment related to these services. Thus, the ALP of the payment towards engineering support has to be taken as Nil and a downward adjustment of Rs.13,18,81,880/- has been proposed on a substantive basis by adopting the other method….”. The Ld. Counsel submitted that the impugned erroneous findings of the Ld. TPO have been further erroneously confirmed by the Ld.DRP as evident from para 2.15 on page 12 of the DRP’s order. The Ld. Counsel submitted that the Ld.DRP has IT(TP)A No.118/Chny/2022 Page - 3 - of 6 made totally un-contextual, erroneous and irrelevant reference to non- submission of copies of bills raised by some third party software providers. It was argued that no such facts as discussed by the Ld. DRP, in its order at all exists in assessee’s case. The Ld. Counsel argued that they have provided all the details to the Ld.AO and the Ld. DRP, however, the addition / confirmation has been made in violation of the same. In support its contentions, the assessee has filed voluminous paper book containing agreements, details of visit of employees rendering the impugned services etc to press its case of the expenses being genuine. Request was accordingly made by the assessee to remit the matter back to the Ld.AO for re-adjudication of the matter in the light of above. 4.0 The Ld. DR relied upon the order of lower authorities. 5.0 We have heard rival submissions in the light of material available on records. The action of the Ld. DRP in confirming the order of the Ld.TPO by discussing and considering some irrelevant facts is evident from page 12 and 13 of its order. We have also noted that the Ld.AO made downward adjustment on the solitary premise of non-submission of any supporting evidence. The latter being prima-face in correct. Be that as it may be in the interest of justice, we deem it appropriate to remit the matter back to the Ld.TPO for de novo adjudication by giving due opportunity of being heard to the assessee. The Ld. AO shall pass a IT(TP)A No.118/Chny/2022 Page - 4 - of 6 speaking order, considering evidence produced and in accordance with law. The assessee shall comply with all the statutory notices issued and any non-compliance would be adversely viewed. The ground of appeal no.2.1 to 2.6 are therefore allowed for statistical purposes. 6.0 The ground of appeal no. 2.13 are regarding the action of the Ld. TPO and Ld. DRP in not considering the correct margin computation from the annual reports of the comparables for computing the transfer pricing adjustments. The Ld. Counsel for the assessee fairly conceded that this ground would have a bearing with the readjudication of the ground of appeal no.2.1 to 2.6 above and can also be remitted back to the Ld. TPO for readjudication. The Ld. DR did not pose any serious objections to the proposition. 7.0 We have heard rival submissions in the light of material available on records. We have noted that the ground of appeal no.2.13 has a bearing with the grounds raised in the ground of appeal no.2.1 to 2.6 supra which have been remitted back to the Ld.TPO for de novo adjudication by giving due opportunity of being heard to the assessee. Accordingly, the ground of appeal no. 2.13 is also remitted back to the Ld.AO for readjudication by passing a speaking order, considering evidences produced and in accordance with law. The assessee shall comply with all the statutory notices issued and any non-compliance IT(TP)A No.118/Chny/2022 Page - 5 - of 6 would be adversely viewed. The ground of appeal no.2.13 is therefore allowed for statistical purposes. 8.0 The ground of appeal no.3.1 to 3.3 are challenging the corporate additions made by the Ld. AO. The Ld. Counsel submitted that the Ld.AO has made an addition of Rs.16,41,522/- u/s 37 treating the same as personal expenses. It is the case of the assessee that the impugned expenditure has been already added by the assessee in its income tax return and that therefore the disallowance by the Ld.AO makes it a case of double taxation. In support of its contentions, the assessee has filed a voluminous paper book to indicate that the amount was already offered by it for taxation. 9.0 The Ld. DR relied upon the orders of lower authorities. 10.0 We have heard rival submissions in the light of material available on records. Perusal of the paper book filed by the assessee alludes towards prima-face truth in its submissions. The action of the Ld. DRP in confirming the order of the Ld.AO has been found to be not based upon correct understanding and appreciation of the facts of the case. Be that as it may be in the interest of justice, we deem it appropriate to remit the matter back to the Ld.TPO for de novo adjudication by giving due opportunity of being heard to the assessee. The Ld. AO shall pass a speaking order, considering evidence produced and in accordance with law. The assessee shall comply with all the statutory notices issued IT(TP)A No.118/Chny/2022 Page - 6 - of 6 and any non-compliance would be adversely viewed. The ground of appeal no.3.1 to 3.3 are therefore allowed for statistical purposes. 11.0 Apropos to the discussions above, as we have adjudicated the appeal of the assessee, the Stay Application vide SA-23/Chny/2025, Assessment Year : 2021-22 is dismissed as being infructuous. 12.0 In the result, the appeal of the assessee vide ITA No.IT(TP)A 118/Chny/2024 is partly allowed. Order pronounced on 7th , May-2025 at Chennai. Sd/- (मनु क ुमार धिरर) (MANU KUMAR GIRI) न्याधयक सदस्य / Judicial Member Sd/- (अधमताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 7th , May-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF "