PR. COMMISSIONER OF INCOME TAX-6, NEW DELHI vs. M/S MITSUI & CO.INDIA PVT.LTD.

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ITA/789/2016HC DelhiDLHC01263218201628 February 2017Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE NAJMI WAZIRI2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises in these appeals. Regarding the first issue concerning the transfer pricing adjustment, the Tribunal relied on its earlier orders, which were based on the ruling in M/s Li & Fung India Pvt. Ltd. v. CIT. The Court noted that for identical adjustments in AY 2007-08 and 2008-09, the ITAT's order was upheld by this Court in ITA 252-253/2016. Therefore, no substantial question of law arose on this count. Concerning the second issue of disallowance under Section 14A, the Tribunal followed the principle enunciated in Cheminvest v. CIT, which states that disallowance is inadmissible if the investment does not yield tax-exempt income. As the Tribunal followed a judgment of the High Court, no question of law arises. Consequently, the appeals were dismissed.

What were the facts?

The appeals were filed by the Principal Commissioner of Income Tax-6, New Delhi (Revenue) against the assessee, M/s Mitsui & India Pvt. Ltd. The appeals challenged the orders of the Income Tax Appellate Tribunal (ITAT) concerning Assessment Years (AY) 2009-10 and 2010-11. The Revenue raised two main issues: firstly, a transfer pricing adjustment made by the Transfer Pricing Officer (TPO), and secondly, a disallowance made under Section 14A of the Income Tax Act by the Assessing Officer (AO). The ITAT had relied on its earlier orders and High Court rulings for both issues.

What were the issues?

1. Whether the Tribunal erred in deleting the transfer pricing adjustment made by the TPO for AY 2009-10 and 2010-11, relying on its earlier orders and the ruling in M/s Li & Fung India Pvt. Ltd. v. CIT, (2014) 361 ITR 85 (Del)? - Assessee's contention: Not explicitly recorded, but the ITAT's reliance on its prior orders and the High Court's decision in Li & Fung suggests the assessee argued for upholding the ITAT's deletion. - Revenue's contention: The Revenue urged this question, implying disagreement with the ITAT's deletion of the transfer pricing adjustment. 2. Whether the Tribunal erred in holding that disallowance under Section 14A is inadmissible where the investment does not yield tax-exempt income, following the principle in Cheminvest v. CIT, 378 ITR 33? - Assessee's contention: Not explicitly recorded, but the ITAT's reliance on Cheminvest suggests the assessee argued for no disallowance under Section 14A in the absence of exempt income. - Revenue's contention: The Revenue urged this question, implying disagreement with the ITAT's view on the applicability of Section 14A.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

$~1&2 * IN THE HIGH COURT OF DELHI AT NEW DELHI +

ITA 788/2016 & ITA 789/2016

PR. COMMISSIONER OF INCOME TAX-6, NEW DELHI ..... Appellant

Through: Mr. Asheesh Jain, Sr. Standing Counsel.

versus

M/S MITSUI & INDIA PVT.LTD.

..... Respondent

Through: Mr. Piyush Kaushik, Advocate.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI

O R D E R %

28.02.2017

The two questions urged by the Revenue in these appeals relates firstly to the transfer pricing adjustment made by the TPO for AY 2009-10 and 2010-11. The ITAT relied upon its earlier orders which were based upon the ruling in M/s Li & Fung India Pvt. Ltd. v. CIT, (2014) 361 ITR 85 (Del). It is pointed out that in respect of an identical adjustment for AY 2007-08 and 2008-09, the ITAT‟s order was upheld by this Court in ITA 252-253/2016 - by an order dated 28.04.2016; a copy of the said order has been brought to the notice of the Court. Having considered the same, this Court is of the opinion that no substantial question of law arises on that count.

The second question of law urged is with respect to the

ITA 788/2016 & ITA 789/2016

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disallowance made under Section 14A by the AO. The ITAT following the principle enunciated in Cheminvest v. CIT, 378 ITR 33 was of the opinion that where the investment does not yield tax exempt income, disallowance is per se inadmissible under Section 14A. Since the ITAT has followed the judgment of this Court, no question of law arises.

For the above reasons, the appeals are dismissed.

S. RAVINDRA BHAT, J

NAJMI WAZIRI, J FEBRUARY 28, 2017 /vikas/

ITA 788/2016 & ITA 789/2016

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