ACIT, CIRCLE- 10(2), NEW DELHI vs. GP GLOBAL ENERGY PVT. LTD., NEW DELHI
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Income Tax Appellate Tribunal, DELHI BENCH “I-1” NEW DELHI
Before: SHRI G.S. PANNU, HON’BLE & SHRI CHALLA NAGENDRA PRASAD
I.T.A.No.5695/Del/2018
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “I-1” NEW DELHI BEFORE SHRI G.S. PANNU, HON’BLE PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ.अ.सं/.I.T.A No.5695/Del/2018 िनधा�रणवष�/Assessment Year: 2012-13 बनाम ACIT, GP Global Energy Pvt. Circle 10(2), Vs. Ltd., C.R. Building, New Delhi. A-1/292, Janakpuri, New Delhi. PAN No. AAICA3281E अपीलाथ� Appellant ��यथ�/Respondent
Shri Mrinal Kumar Das, Sr. DR राज�वक�ओरसे /Revenue by None िनधा�रतीक�ओरसे /Assessee by
सुनवाईक�तारीख/ Date of hearing: 09.05.2022 26.05.2022 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER C.N. PRASAD, J.M. This appeal is filed by the Revenue against the order of the Ld.
Commissioner of Income Tax (Appeals)-44, New Delhi dated
29.06.2018 for the AY 2012-13. The Revenue has raised the
following grounds of appeal:
Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in directing the AO/TPO to benchmark the international transaction of the assessee by using customs data, ignoring the widely accepted principle that the customs valuation cannot be indiscriminately used for the purpose of determining the Arm’s Length Price under the Income Tax Act as the purpose 1
I.T.A.No.5695/Del/2018
and criteria governing the customs valuation are different and, therefore, it does not relieve the taxpayer’s burden of establishing that the price is at Arm’s Length for the purpose of Transfer Pricing requirements under the Income Tax Act (‘the Act’). a. Ld. CIT(A) has filed to appreciate that the customs rates are minimum presumptive rates prescribed for a class of goods to check evasion of duty, without going into the exact specifications of a particular input, within that class of goods.
Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in directing the AO/TPO to allow adjustment in respect of credit period on the ground that the TPO has accepted the assessee’s claim for such adjustment in the succeeding year (i.e. 2013-14), not appreciating the fact that no such claim was accepted by the TPO in the said year and adjustment was not made in the said year as the variation was within the prescribed tolerance limit.
Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in directing the AO/TPO to consider the entire set of transactions, ignoring the provisions of section 92(3) of the Act and the facts recorded by the TPO in the rectification order dated 30.03.2016.
The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing.”
None appeared on behalf of the assessee nor any adjournment
was sought. Ld. DR submitted that on the directions of the Tribunal
I.T.A.No.5695/Del/2018
the notice was served on the assessee by way of affixture at the last
known address. Copy of service report furnished by the notice
server and the Inspector, Circle 16(1), New Delhi was placed on
record by the Ld. DR. In spite of service of notice as the assessee is
not coming forward to appear before the Tribunal in the case filed
by the Revenue we proceed to dispose off this appeal on hearing
the Ld. DR.
The Ld. DR submits that draft assessment order in this case
was passed on 21.03.2016 proposing Transfer Pricing adjustment
amounting to Rs.6,90,08,437/- but later on the TPO vide his order
dated 30.03.2016 passed u/s 154 reduced the amount of TP
adjustment to Rs.3,94,33,122/- as there were some arithmetical
mistakes in the earlier order passed by the TPO. Ld. DR submitted
that the assessee before the Transfer Pricing Officer (in short ‘TPO’)
submitted that MOPAG prices used as comparables are spot prices
i.e. payment on delivery, whereas assessee had availed credit from
its AE. Therefore, it is submitted that the assessee had increased
MOPAG prices with the financial cost for the credit period enjoyed
by the assessee and the financial cost was computed on the basis of
actual credit period availed by the assessee as multiplied by
interest factor of 7% p.a. which was certified as cost of funds in the
I.T.A.No.5695/Del/2018
hands of AE. Ld. DR submits that the second proviso to section
92C(2) provides if the price computed is within +/- 5% of the price
charged by the AE no adjustment is required to be made. Ld. DR
submits that considering the submissions of the assessee and also
taking the TPO order into consideration the Assessing Officer made
adjustment of Rs.3,94,33,122/-. Ld. DR submits that on appeal the
Ld. CIT(Appeals) placing reliance on the submissions of the assessee
that the TPO in the succeeding assessment year i.e. 2013-14 has
accepted the claim of the assessee for credit period adjustment and
benefit of second proviso to section 92C(2) of the Act the benefit of
second proviso to section 92C(2) was granted to the assessee. The
Ld. DR submits that the benefit of second proviso to section 92C(2)
which was granted to the assessee for the year under consideration
is wrong as the provisions are applicable from 01.04.2013 relevant
to the AY 2013-14.
Heard the Ld. DR perused the orders of the authorities below.
In so far as ground no. 1 is concerned we observe that the Revenue
challenged the order of the Ld.CIT(A) in directing the AO/TPO to
benchmark the international transaction of the assessee by using
customs data.
I.T.A.No.5695/Del/2018
4.1 On perusal of the order of the Ld.CIT(Appeals), we observe
that the assessee contended that the international transaction
should be benchmarked using custom valuation data and relied on
the decision of the Chennai Bench of Tribunal in the case of Coastal
Energy Pvt. Ltd. Vs. ACIT (2011) 12 taxmann.com 355. The Ld.
CIT(A) following this decision directed the TPO to benchmark the
international transaction for the purchase of fuel oil/HSD by the
assessee by using customs data.
In ground no. 2 of grounds of appeal the Revenue challenged
the order of the Ld. CIT(A) in directing the AO/TPO to allow
adjustment in respect of credit period. In view of the submissions of
the assessee that TPO has accepted the assessee’s claim for such
adjustment in succeeding year i.e. 2013-14 the Ld. CIT(A) directed
the AO/TPO to allow adjustment for credit period. It is the case of
the Revenue that no such claim was accepted by the TPO in the
assessment year 2013-14 and adjustment was not made in the said
year as the variation was within the prescribed tolerance limit of
+/- 5%.
In ground no. 3 the Revenue challenged the order of the Ld.
CIT(A) in directing the AO/TPO to consider entire set of transactions
I.T.A.No.5695/Del/2018
as against the transactions considered by the TPO in the order
passed u/s 154 on 30.03.2016.
6.1 On perusal of the Ld. CIT(A) order, we observe that assessee
contended that TPO has not considered the transaction where
difference between the comparable transaction price and
international transaction price is negative. It was contended that
this is not in consonance with the provisions contained in the
Income Tax Act.
6.2 It was further contended that such aggregation was allowed by
the TPO in the original order passed but has been taken back in the
rectification order passed u/s 154 on 30.03.2016. Assessee
contended that TPO cannot disallow the aggregation of negative
values when the same was allowed in the original transfer pricing
order passed by him as the scope of rectification u/s 154 is limited
and not extend to the issues involving interpretation of law.
6.3 Considering the submissions of the assessee, we observe that
the Ld. CIT(A) directed the TPO/AO to consider the entire set of
transactions as has been done in the impugned order of the TPO
dated 30.03.2016.
I.T.A.No.5695/Del/2018
In so far as bench marking the international transactions using
customs data is concerned we sustain the order of the Ld.
CIT(Appeals) as the Ld. CIT(A) observed that the Chennai Bench of
the Tribunal in the case of Coastal Energy Pvt. Ltd. Vs. ACIT (supra)
held that the valuation was made by custom authorities by assigning
values to import goods on the basis of scientifically formulated
methods as they were responsible for making fair assessment value
of the imported goods according to internationally accepted
protocols. Therefore, we see no infirmity in the order of the Ld.
CIT(A) on this issue. Ground no. 1 of the Revenue is rejected.
We also sustain the order of the Ld. CIT(Appeals) in directing
to consider entire set of transactions as has been done in the
impugned order of the TPO dated 30.01.2016 since the scope of
rectification u/s 154 by the TPO is very limited and the TPO cannot
disallow the aggregation of negative values which was allowed in
the original order by the TPO since the issue involves interpretation
of law and is a debatable issue. Therefore, the same is beyond the
scope of section 154. The ground no. 3 of grounds of appeal of the
Revenue is rejected.
Lastly, coming to the direction of the Ld. CIT(A) to the
AO/TPO to allow adjustment in respect of credit period we observe 7
I.T.A.No.5695/Del/2018
that the Revenue contended that no such adjustment in subsequent
assessment year i.e. in 2013-14 was made and no such claim was
accepted by the TPO for the reason that the variation was within
the prescribed tolerance limit and, therefore, no adjustment was
made in the said year in 2013-14. We observe that the above
contentions of Revenue and Assessee have not been thoroughly
examined by the Ld. CIT(A) in proper perspective. We also observe
that no remand report was called for by the Ld. CIT(A) to
appreciate the contentions of Revenue as well as the Assessee.
Therefore, in the interest of justice we restore this ground to the
file of the Ld. AO/TPO for denovo adjudication in accordance with
law after providing adequate opportunity of being heard to the
assessee. Ground no. 2 of grounds of appeal of the Revenue is
allowed for statistical purpose.
In the result, the appeal of the Revenue is partly allowed for
statistical purposes.
Order pronounced in the open court on 26/05/2022
Sd/- Sd/- (G.S. PANNU) (C.N. PRASAD) PRESIDENT JUDICIAL MEMBER Dated: 26/05/2022 *Kavita Arora, Sr. P.S.
I.T.A.No.5695/Del/2018
Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order
Assistant Registrar, ITAT: Delhi Benches-Delhi
