SHAPOORJI PALLONJI OIL AND GAS PRIVATE LIMITED,MUMBAI vs NFAC , DELHI

Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI

Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL

For Appellant: Mr. Gautam Thacker

For Respondent: Dr. Kishor Dhule, CIT-DR

Hearing: 02/05/2023Pronounced: 11/05/2023

This appeal by the assessee is directed against final assessment order dated 22.07.2022 passed by the Assessing Officer of National Faceless Appeal assessment unit, pursuant to the direction of the Ld. Dispute Resolution Panel (DRP) dated 02.03.2022. The grounds raised by the assessee are reproduced as under:

“Ground No. 1:

Shapoorji Pallonji Oil and Gas Pvt. Ltd. Shapoorji Pallonji Oil and Gas Pvt. Ltd. 2 ITA No. No. 2434/M/2022

The assessment Order under section 143(3) read with The assessment Order under section 143(3) read with The assessment Order under section 143(3) read with section 144C(13) read section 144C(13) read with section 144B of the Act passed with section 144B of the Act passed by the NaFAC is bad in law since it is not in compliance with by the NaFAC is bad in law since it is not in compliance with by the NaFAC is bad in law since it is not in compliance with the directions issued by the Hon'ble Dispute Resolution the directions issued by the Hon'ble Dispute Resolution the directions issued by the Hon'ble Dispute Resolution Panel-2, Mumbai ('DRP'). 2, Mumbai ('DRP'). It is prayed that the assessment Order be quashed and It is prayed that the assessment Order be quashed and It is prayed that the assessment Order be quashed and cancelled. Ground No. 2 Ground No. 2: On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the On the facts and circumstances of the case and in law, the NaFAC erred in assessing the loss at Rs. 9,05,39,173 on the NaFAC erred in assessing the loss at Rs. 9,05,39,173 on the NaFAC erred in assessing the loss at Rs. 9,05,39,173 on the basis of the intimation issued under section 143(1) of the Act basis of the intimation issued under section 143(1) of the Act basis of the intimation issued under section 143(1) of the Act dated 12 December 2019 instead of considering the total loss of Rs. December 2019 instead of considering the total loss of Rs. December 2019 instead of considering the total loss of Rs. 14,80,17,785 as per the revised return of income filed by the 14,80,17,785 as per the revised return of income filed by the 14,80,17,785 as per the revised return of income filed by the Appellant on 22 March 2019. Appellant on 22 March 2019. The NaFAC erred in not complying with the specific directions The NaFAC erred in not complying with the specific directions The NaFAC erred in not complying with the specific directions of the Hon'ble DRP. of the Hon'ble DRP. It is prayed that the NaFAC be directed to consider the total It is prayed that the NaFAC be directed to consider the total It is prayed that the NaFAC be directed to consider the total loss of Rs. 14,80,17,7 loss of Rs. 14,80,17,785 as per the revised return of income 85 as per the revised return of income filed by the Appellant. filed by the Appellant. Ground No. 3: Ground No. 3: 3.1 On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, the NaFAC and the Hon'ble DRP has erred in ignoring the the NaFAC and the Hon'ble DRP has erred in ignoring the the NaFAC and the Hon'ble DRP has erred in ignoring the long-term capital loss amounting to Rs. 22,79,65,217 term capital loss amounting to Rs. 22,79,65,217 term capital loss amounting to Rs. 22,79,65,217 (computed in USD terms in accordance with Rule 115 of the n USD terms in accordance with Rule 115 of the n USD terms in accordance with Rule 115 of the Income-tax Rules, 1962) claimed by the Appellant during the tax Rules, 1962) claimed by the Appellant during the tax Rules, 1962) claimed by the Appellant during the assessment proceedings. assessment proceedings. 3.2 On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, the NaFAC and the Hon ble DRP has erred in not allowing to the NaFAC and the Hon ble DRP has erred in not allowing to the NaFAC and the Hon ble DRP has erred in not allowing to carry forward the long orward the long-term capital loss of Rs. 22,79,65,217 term capital loss of Rs. 22,79,65,217 claimed by the Appellant. claimed by the Appellant. 3.3 On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, the DR has erred in not adjudicating upon the claim for long the DR has erred in not adjudicating upon the claim for long the DR has erred in not adjudicating upon the claim for long- term capital loss of Rs. 22,79,65,217 claimed by the term capital loss of Rs. 22,79,65,217 claimed by the term capital loss of Rs. 22,79,65,217 claimed by the Appellant in the course of assessment proceedings. ellant in the course of assessment proceedings. ellant in the course of assessment proceedings.

Shapoorji Pallonji Oil and Gas Pvt. Ltd. Shapoorji Pallonji Oil and Gas Pvt. Ltd. 3 ITA No. No. 2434/M/2022 It is prayed that the NaFAC be directed to consider and allow It is prayed that the NaFAC be directed to consider and allow It is prayed that the NaFAC be directed to consider and allow the long-term capital loss as claimed by the Appellant. term capital loss as claimed by the Appellant. term capital loss as claimed by the Appellant. 3.4 Without prejudice to above, if the Appellant's claim for Without prejudice to above, if the Appellant's claim for Without prejudice to above, if the Appellant's claim for long term capital loss of Rs. long term capital loss of Rs. 22,79,65,217 is not allowed 22,79,65,217 is not allowed then, the long then, the long-term capital loss amounting to Rs. 6,19,79,028 term capital loss amounting to Rs. 6,19,79,028 (computed in Rupee terms) and short (computed in Rupee terms) and short-term capital loss of Rs. term capital loss of Rs. 2,24,00,000 (computed in Rupee terms) should be allowed to 2,24,00,000 (computed in Rupee terms) should be allowed to 2,24,00,000 (computed in Rupee terms) should be allowed to the Appellant. the Appellant. It is prayed that the NaFAC be It is prayed that the NaFAC be directed to consider and allow directed to consider and allow the long-term capital loss of Rs.6,19,79,028 and short term capital loss of Rs.6,19,79,028 and short-term term capital loss of Rs.6,19,79,028 and short capital loss of Rs. 2,24,00,000 as claimed by the Appellant. capital loss of Rs. 2,24,00,000 as claimed by the Appellant. capital loss of Rs. 2,24,00,000 as claimed by the Appellant.

At the outset, the Ld. Counsel of the assessee submitted that , the Ld. Counsel of the assessee submitted that , the Ld. Counsel of the assessee submitted that appeal was filed with the delay of thr appeal was filed with the delay of three days. He referred to the ee days. He referred to the application of the assessee, which is supported by affidavit by the application of the assessee, which is supported by affidavit by the application of the assessee, which is supported by affidavit by the director of the assessee company. He submitted that due to some director of the assessee company. He submitted that due to some director of the assessee company. He submitted that due to some personal exigency of the director of the assessee company resulted personal exigency of the director of the assessee company resulted personal exigency of the director of the assessee company resulted in delay, which was neither d in delay, which was neither deliberate nor wilful. After considering eliberate nor wilful. After considering rival submission we are of the opinion that the assessee had rival submission we are of the opinion that the assessee had rival submission we are of the opinion that the assessee had sufficient cause for not presenting the appeal within the prescribed sufficient cause for not presenting the appeal within the prescribed sufficient cause for not presenting the appeal within the prescribed limitation period. Accordingly, we condoned the delay of three days limitation period. Accordingly, we condoned the delay of three days limitation period. Accordingly, we condoned the delay of three days in filing the appeal and the appeal was admitted for adjudication. al and the appeal was admitted for adjudication. al and the appeal was admitted for adjudication.

Briefly stated, facts of the case are that the assessee company Briefly stated, facts of the case are that the assessee company Briefly stated, facts of the case are that the assessee company was engaged in business of providing onshore, offshore and related was engaged in business of providing onshore, offshore and related was engaged in business of providing onshore, offshore and related services in oil and gas sector to various entities including services in oil and gas sector to various entities including services in oil and gas sector to various entities including Associated Enterprises nterprises (AEs). For the year under consideration, the . For the year under consideration, the assessee filed return of income assessee filed return of income, which was processed by the Central which was processed by the Central Processing Centre (CPC) Processing Centre (CPC), Bangalore on 12.11.2019 in terms of on 12.11.2019 in terms of section 143(1)(a) of the Income section 143(1)(a) of the Income-tax Act, 1961 (in short ‘the Act’). Th tax Act, 1961 (in short ‘the Act’). The Shapoorji Pallonji Oil and Gas Pvt. Ltd. Shapoorji Pallonji Oil and Gas Pvt. Ltd. 4 ITA No. No. 2434/M/2022 return of income was return of income was furher selected for scrutiny and in view of selected for scrutiny and in view of international transactions carried out by the assessee with its AEs, international transactions carried out by the assessee with its international transactions carried out by the assessee with its the matter of determination of the arm’s length price of the matter of determination of the arm’s length price of the matter of determination of the arm’s length price of the international transaction was referred to the Ld. Transfer Pricing international transaction was referred to the Ld. Transfer international transaction was referred to the Ld. Transfer Officer (TPO). The Ld. TPO proposed transfer pricing adjustment of Officer (TPO). The Ld. TPO proposed transfer pricing adjustment of Officer (TPO). The Ld. TPO proposed transfer pricing adjustment of Rs.7,53,62,289/-. However, on further objection raised by the . However, on further objection raised by the . However, on further objection raised by the assessee before the Ld. DRP, the transfer pricing adjustment was assessee before the Ld. DRP, the transfer pricing adjustment was assessee before the Ld. DRP, the transfer pricing adjustment was deleted. But, the Ld DRP rejected a fresh claim of all , the Ld DRP rejected a fresh claim of all , the Ld DRP rejected a fresh claim of allowing capital loss to the assessee. loss to the assessee. In the impugned final assessment order impugned final assessment order passed by the Assessing Officer passed by the Assessing Officer, pursuant to the direction of the Ld. pursuant to the direction of the Ld. DRP, no adjustment has been made and income has been asse no adjustment has been made and income has been assessed no adjustment has been made and income has been asse at a loss of Rs.9,05,39,173 loss of Rs.9,05,39,173/, which was computed under section /, which was computed under section 143(1) of the Act. The assessee is aggrieved with the amount of loss The assessee is aggrieved with the amount of loss The assessee is aggrieved with the amount of loss assessed as well as not admitting one of the assessed as well as not admitting one of the claims by the Ld. DRP. by the Ld. DRP.

We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue We have heard rival submission of the parties on the issue-in- dispute and perused the relevant material on record including the sed the relevant material on record including the sed the relevant material on record including the Paper Book filed by the assessee consisting of pages 1 to 366. Paper Book filed by the assessee consisting of pages 1 to 366. Paper Book filed by the assessee consisting of pages 1 to 366.

4.1 The Ground No. No. 1 is general in nature; therefore, we are not therefore, we are not required to adjudicate adjudicate specifically. In the ground No. 2 of the he ground No. 2 of the appeal, the assessee is aggrieved for non ssessee is aggrieved for non-considering the revised considering the revised return of income while computing the assessed loss. Before us, the return of income while computing the assessed loss. Before us, the return of income while computing the assessed loss. Before us, the Ld. Counsel of the assessee referred to page No. 152 of the Paper Ld. Counsel of the assessee referred to page No. 152 of the Paper Ld. Counsel of the assessee referred to page No. 152 of the Paper Book and submitted that rectification application filed before the Book and submitted that rectification application filed before the Book and submitted that rectification application filed before the Assessing Officer on 18.06.2020 essing Officer on 18.06.2020 for considering the loss as per for considering the loss as per

Shapoorji Pallonji Oil and Gas Pvt. Ltd. Shapoorji Pallonji Oil and Gas Pvt. Ltd. 5 ITA No. No. 2434/M/2022 revised return is still pending and which has not been disposed off. is still pending and which has not been disposed off. is still pending and which has not been disposed off. We note from the impugned order of the Ld. DRP that the Assessing We note from the impugned order of the Ld. DRP that the Assessing We note from the impugned order of the Ld. DRP that the Assessing Officer has been directed for verification and disposal of the Officer has been directed for verification and disposal of t Officer has been directed for verification and disposal of t rectification application observing as under: rectification application observing as under:

“11. We have gone through the objection of the assessee as We have gone through the objection of the assessee as We have gone through the objection of the assessee as well as the written submissions of the assessee. We find that well as the written submissions of the assessee. We find that well as the written submissions of the assessee. We find that the objection relates to certain adjustments done by the CPC the objection relates to certain adjustments done by the CPC the objection relates to certain adjustments done by the CPC in the processing of retu in the processing of return of income us. 143(1) of the Act. rn of income us. 143(1) of the Act. The assessee has also filled rectification application with the The assessee has also filled rectification application with the The assessee has also filled rectification application with the jurisdictional assessing officer vide letter dated 18.06.2020. jurisdictional assessing officer vide letter dated 18.06.2020. jurisdictional assessing officer vide letter dated 18.06.2020. It seems that the same is pending. We direct the assessing It seems that the same is pending. We direct the assessing It seems that the same is pending. We direct the assessing officer to consider the rectificat officer to consider the rectification application and dispose off ion application and dispose off the same at an early date. The ground of objection no. 5 is the same at an early date. The ground of objection no. 5 is the same at an early date. The ground of objection no. 5 is disposed off accordingly. disposed off accordingly.” 4.2 Since the ld DRP already directed the Since the ld DRP already directed the Assessing Assessing Officer for verification, despite the Assessing Officer omitted to give effect to verification, despite the Assessing Officer omitted to give effect to verification, despite the Assessing Officer omitted to give effect to the direction in the impugned final assessment order. direction in the impugned final assessment order. direction in the impugned final assessment order. We are of the opinion that this issue of non opinion that this issue of non-considering the income/loss declared considering the income/loss declared in the revised return of income by the Assessing Officer while in the revised return of income by the Assessing Officer while in the revised return of income by the Assessing Officer while passing the final assessment order is a subject matter of passing the final assessment order is a subject matter of passing the final assessment order is a subject matter of rectification and for which the assessee is already before the ctification and for which the assessee is already before the ctification and for which the assessee is already before the Assessing Officer. Therefore, the ground raised before us, is Therefore, the ground raised before us, is Therefore, the ground raised before us, is infructuous. However, we direct the Ld. Assessing Officer to dispose infructuous. However, we direct the Ld. Assessing Officer to dispose infructuous. However, we direct the Ld. Assessing Officer to dispose off the rectification of the application of the assessee on priority so off the rectification of the application of the assessee on prio off the rectification of the application of the assessee on prio as to resolve the grievance of the assessee raised in the ground No. as to resolve the grievance of the assessee raised in the ground No. as to resolve the grievance of the assessee raised in the ground No. 2 before us. The ground of appeal is accordingly allowed partly for 2 before us. The ground of appeal is accordingly allowed partly for 2 before us. The ground of appeal is accordingly allowed partly for statistical purposes.

Shapoorji Pallonji Oil and Gas Pvt. Ltd. Shapoorji Pallonji Oil and Gas Pvt. Ltd. 6 ITA No. No. 2434/M/2022 4.3 The ground No. 3 The ground No. 3 of the assessee relates to a fresh claim of the assessee relates to a fresh claim of long term capital loss amounting to Rs.22,79,65,217/- which has long term capital loss amounting to Rs.22,79,65,217/ long term capital loss amounting to Rs.22,79,65,217/ been rejected by the Ld. DRP observing as under: been rejected by the Ld. DRP observing as under:

“13. We have gone through the objection of the assessee as 13. We have gone through the objection of the assessee as 13. We have gone through the objection of the assessee as well as the written submissions on the sam well as the written submissions on the same objection. We e objection. We note that the assessee is claiming capital loss arising from note that the assessee is claiming capital loss arising from note that the assessee is claiming capital loss arising from redemption of preferenceshares to be allowed to it. redemption of preferenceshares to be allowed to it. redemption of preferenceshares to be allowed to it. Apparently, the assessee has not claimed the same in the Apparently, the assessee has not claimed the same in the Apparently, the assessee has not claimed the same in the return of income us. 139(1) of the Act. We note that the return of income us. 139(1) of the Act. We note that the return of income us. 139(1) of the Act. We note that the Hon'ble SC in Hon'ble SC in the case of M/s. Goetze (India) Ltd. (2006, 284 the case of M/s. Goetze (India) Ltd. (2006, 284 ITR 323, SC) held that assessing officer does not have ITR 323, SC) held that assessing officer does not have ITR 323, SC) held that assessing officer does not have authority to entertain a claim otherwise than by filing a authority to entertain a claim otherwise than by filing a authority to entertain a claim otherwise than by filing a revised return. The assessee in the instant case has not revised return. The assessee in the instant case has not revised return. The assessee in the instant case has not claimed the loss in the return of inc claimed the loss in the return of income u/s. 139 (1) of the ome u/s. 139 (1) of the Act. The assessee has filed a letter before the assessing Act. The assessee has filed a letter before the assessing Act. The assessee has filed a letter before the assessing officer as well as before us requesting for allowance of the officer as well as before us requesting for allowance of the officer as well as before us requesting for allowance of the capital loss. We note that we are extension of the capital loss. We note that we are extension of the capital loss. We note that we are extension of the assessment proceedings as provided in the scheme of the Act assessment proceedings as provided in the scheme of the Act assessment proceedings as provided in the scheme of the Act regarding the functioning of DRP. The same position about garding the functioning of DRP. The same position about garding the functioning of DRP. The same position about the DRP has been upheld by the Hon'ble Bombay HC in the the DRP has been upheld by the Hon'ble Bombay HC in the the DRP has been upheld by the Hon'ble Bombay HC in the case of M/s. Vodafone India Services Pvt. Ltd (2014, 361 ITR case of M/s. Vodafone India Services Pvt. Ltd (2014, 361 ITR case of M/s. Vodafone India Services Pvt. Ltd (2014, 361 ITR 0531, Bom).Therefore, in view of the decision of the Hon'ble 0531, Bom).Therefore, in view of the decision of the Hon'ble 0531, Bom).Therefore, in view of the decision of the Hon'ble SC in the Goetze case SC in the Goetze case (supra), the ground of objection no. 6 is (supra), the ground of objection no. 6 is dismissed.” 4.4 We find that the Ld. DRP has rejected the claim of the We find that the Ld. DRP has rejected the claim of the We find that the Ld. DRP has rejected the claim of the assessee in view of the decision of the Hon’ble Supreme Court in the assessee in view of the decision of the Hon’ble Supreme Court in the assessee in view of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. Goetze (India) Ltd. [(2006, 284 ITR 323, (SC) (2006, 284 ITR 323, (SC)], on the ground that proceedings under Ld. DRP are extension of the ground that proceedings under Ld. DRP are extension of the ground that proceedings under Ld. DRP are extension of the assessment proceedings. However, the Hon’ble Supreme Court in assessment proceedings. However, the Hon’ble Supreme Court in assessment proceedings. However, the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra) has not restricted the the case of Goetze (India) Ltd. (supra) has not the case of Goetze (India) Ltd. (supra) has not appellate authorities appellate authorities including ITAT from entertaining from entertaining a fresh claim by the assessee. In the facts and circumstances of the case assessee. In the facts and circumstances of the case and in assessee. In the facts and circumstances of the case the interest of substantial justice interest of substantial justice, we feel it appropriate to restore , we feel it appropriate to restore

Shapoorji Pallonji Oil and Gas Pvt. Ltd. Shapoorji Pallonji Oil and Gas Pvt. Ltd. 7 ITA No. No. 2434/M/2022 the matter back to the file of the Assessing Officer for examining the back to the file of the Assessing Officer for examining the back to the file of the Assessing Officer for examining the claim of the assessee in accordance with law. claim of the assessee in accordance with law. The ground No. 3 of The ground No. 3 of the appeal is accordingly allowed for statistical purposes. the appeal is accordingly allowed for statistical purposes. the appeal is accordingly allowed for statistical purposes.

In the result, the appeal is allowed partly for statistical In the result, the appeal is allowed partly for statistical In the result, the appeal is allowed partly for statistical purposes.

SHAPOORJI PALLONJI OIL AND GAS PRIVATE LIMITED,MUMBAI vs. NFAC , DELHI