PR. COMMISSIONER OF INCOME TAX GURGAON vs. M/S ITW INDIA LTD LEVEL-1 LOTUS PLAZA 732/1 MG ROAD SEC 14 GURGAON

ITA/1/2016HC Punjab & HaryanaPHHC01110279201623 April 2016Author: MR. JUSTICE RAMESHWAR SINGH MALIK,MR. JUSTICE SURINDER GUPTA6 pages
AI SummaryRemanded

What were the facts?

The assessee, M/s ITW India Limited, filed its return for assessment year 2004-05 claiming deductions under sections 80HHC and 80IB. The Assessing Officer (AO) completed the assessment at a higher income, reducing the 80HHC deduction after adjusting for the 80IB deduction, citing sections 80IB(13) and 80IA(9). The AO also made additions on account of transfer pricing adjustments based on a reference to the Transfer Pricing Officer (TPO). The Commissioner of Income Tax (Appeals) [CIT(A)] partly allowed the assessee's appeal, confirming the AO's treatment of deductions and sustaining part of the transfer pricing additions. The Income Tax Appellate Tribunal (ITAT) partly allowed the assessee's appeal and dismissed the revenue's cross-appeal. The revenue appealed to the High Court.

What did the High Court hold?

The High Court dismissed the appeal on the preliminary ground of territorial jurisdiction. It noted that the assessment proceedings were initiated and completed at Hyderabad, with the AO being the Deputy Commissioner of Income Tax, Circle 2(1), Hyderabad. The appeals before the CIT(A) and the ITAT were also filed at Hyderabad. Citing its own decisions in Commissioner of Income Tax, Faridabad vs. M/s Motorola India Ltd. and Commissioner of Income Tax (Central) Gurgaon vs. M/s Parabolic Drugs Limited, the Court held that it lacks territorial jurisdiction to adjudicate matters where the Assessing Officer is situated outside its territorial limits. Therefore, the Court returned the entire paper book to the revenue appellant for filing before the competent court of jurisdiction.

What were the issues?

1. Whether on the facts and circumstances of the case, the ITAT was justified in law in holding that two separate deductions under section 80HHC and 80IB are allowable to the assessee on the same profits and gains in contravention of section 80IB(13) read with section 80IA(9) of the Act? 2. Whether in view of the facts and circumstances of the case, the Tribunal erred in law in not allowing the amount of deduction allowed under section 80IB to be reduced from the business profits to compute deduction under section 80HHC on the resultant profits? 3. Whether on the facts and circumstances of the case, the Hon'ble ITAT erred in law in not adjudicating about inclusion of export benefits to be part of profit from exports to AE and not adjudicating about allowance of variation to the extent of (+/-) 5% while determining the ALP of international transaction? Assessee's contentions: The judgment does not record specific contentions for the assessee on these issues. Revenue's contentions: The revenue contended that the ITAT erred in allowing dual deductions under sections 80HHC and 80IB on the same profits, violating section 80IB(13) read with section 80IA(9). It also argued that the deduction under section 80IB should have been reduced from business profits before computing the deduction under section 80HHC. The revenue further argued that the ITAT failed to adjudicate on the inclusion of export benefits in profits from exports to Associated Enterprises (AE) and the allowance of a (+/-) 5% variation in Arm's Length Price (ALP) for international transactions.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80HHC,Section 80IB,Section 80IA(9),Section 92CA(1),Section 143(3),Section 154,Section 127

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.1 of 2016 (O&M)

Date of decision:23.4.2016 The Principal Commissioner of Income Tax, Gurgaon ……Appellant M/s ITW India Limited …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE DARSHAN SINGH

1.

Whether Reporters of local papers may be allowed to see the judgment?

2.

To be referred to the Reporters or not? YES

3.

Whether the judgment should be reported in the Digest? Present: Mr. Tajender K.Joshi, Advocate for the appellant. Mr. Rishab Kapoor, Advocate for the respondent.

Ajay Kumar Mittal, J.

1.

This appeal has been preferred by the appellant-revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 27.3.2015 Annexure A.4 passed by the In come

Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad (in short, “the Tribunal”) in ITA No.206/HYD/2009 for the assessment year 2004-05 claiming following substantial questions of law:- GURBAX SINGH 2016.05.09 10:26 I attest to the accuracy and integrity of this document High Court Chandigarh “i) Whether on the facts and cir

The order continues below.

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