YOUNG BUHMWOO INDIA CO. P. LTD.,KANCHEEPURAM vs. DCIT CORPORATE CIRCLE 3(2), CHENNAI

ITTPA 28/CHNY/2019Status: DisposedITAT Chennai24 February 2025AY 2012-1318 pages
AI SummaryAllowed

What were the facts?

The assessee, M/s. Young Buhmwoo India Co. P. Ltd., is challenging an order passed by the Deputy Commissioner of Income Tax, Corporate Circle-3(2), Chennai, under section 143(3) r.w.s. 144C(5) r.w.s 254 of the Income Tax Act, 1961, for the assessment year 2012-2013. The assessee is engaged in the manufacture of wax products. The case was selected for scrutiny, and the matter was referred to the Transfer Pricing Officer (TPO) concerning international transactions of raw material imports amounting to Rs. 18.22 crores. The TPO issued a draft order on January 14, 2016, denying adjustments claimed by the assessee under Rule 10B(2) and computing a difference in margin. The final assessment order was passed on December 31, 2018.

What did the Tribunal hold?

The Tribunal held that the proceedings were void ab initio. The TPO was required to pass an order in writing under section 92CA(3), but only a draft order was passed on January 14, 2016. A final order under section 92CA(3) was never passed. Consequently, the transfer pricing order dated December 20, 2018, and the final assessment order dated December 31, 2018, passed under section 143(3) r.w.s. 144C(5) r.w.s. 254 of the Act, were quashed as void ab initio. The Tribunal also noted that there is no specific time limitation or provision in section 144C for the DRP to pass directions within a certain time in a set-aside matter to the DRP by the Tribunal. Since the appeal was allowed on these additional grounds, other grounds raised by the assessee became academic and infructuous. The Tribunal relied on the judgment of the Hon'ble Delhi High Court in the case of Undercarriage and Tractor Parts (P.) Ltd. Vs. Dispute Resolution Panel, which held that the DRP can only give directions in pending assessment proceedings and has no power after the assessment order is passed. The Tribunal also noted that section 144C(5) had not been complied with.

What were the issues?

1. Whether the entire proceedings are void ab initio due to the Transfer Pricing Officer (TPO) not passing a final order under section 92CA(3) before the Assessing Officer (AO) issued a draft assessment order under section 144C(1)? (Question of law, concerning Section 92CA and 144C). 2. Whether the assessment order passed on December 31, 2018, is barred by limitation, considering the time taken for DRP proceedings and the exclusion of certain periods? (Question of law, concerning Section 153). 3. Whether the Dispute Resolution Panel (DRP) erred in disposing of objections against the draft assessment order when it believed it lacked the power to set aside an assessment order directly to the DRP? (Question of mixed law and fact, concerning Section 144C). 4. Whether adjustments for differential margin should be made only as a proportion of AE cost to total cost, not to the total cost? (Question of fact, concerning Transfer Pricing principles). 5. Whether depreciation was correctly treated as part of operational cost, ignoring the basis of PLI selection? (Question of fact, concerning Transfer Pricing). 6. Whether adjustments for additional power cost were wrongly denied? (Question of fact, concerning Transfer Pricing). 7. Whether adjustments for longer credit period from associated enterprises were wrongly denied? (Question of fact, concerning Transfer Pricing). 8. Whether risk-related adjustments claimed were wrongly denied? (Question of fact, concerning Transfer Pricing). 9. Whether the benefit of +/-5 adjustments was not considered? (Question of fact, concerning Transfer Pricing). 10. Whether unrealized forex fluctuation loss was wrongly disallowed? (Question of fact, concerning Income Computation). Assessee's Contentions: The TPO failed to pass a final order under section 92CA(3), rendering proceedings void. The assessment order is time-barred. The DRP erred in disposing of objections. Adjustments should be proportional. Depreciation, power cost, credit period, risk adjustments, +/-5 adjustments, and forex loss were wrongly treated by the TPO/DRP. Revenue's Contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(5),Section 254,Section 92CA(3),Section 10B(2),Section 153(3),Section 153(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL & HON’BLE SHRI MANU KUMAR GIRI

Hearing: 05.02.2025Pronounced: 24.02.2025

PER MANU KUMAR GIRI (Judicial Member)

This appeal by the assessee is arising out of the order of the Deputy Commissioner of Income Tax, Corporate Circle-3(2), Chennai passed u/s.143(3) r.w.s.144C(5) r.w.s 254 of the Income Tax Act, 1961 (in short ‘’the Act’) vide order dated 31.12.2018 for assessment year 2012-2013. 2 IT(TP)A No.

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 144C(5)

All 823 judgments and leading authorities on Section 144C(5) →

Recent GST High Court judgments

Search GST case law →