Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “C” BENCH, PUNE
Before: SHRI R.S.SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the directions of the Ld. Dispute Resolution Panel (DRP) dated 10.11.2016 for the assessment year 2012-13 as per the grounds of appeal on record.
2 ITA No. 715/PUN/2017 A.Y.2012-13
At the outset, the Ld. Counsel for the assessee submitted that they had earlier filed additional grounds of appeal which they are now withdrawing, since, rectification carried out by the Assessing Officer and necessary relief has been provided to the assessee in respect of these additional grounds. Therefore, in view of the submission of the Ld. Counsel for the assessee, these additional grounds are allowed to be withdrawn.
Ground No.1 is general in nature and hence, requires no adjudication.
The Ld. Counsel for the assessee further submitted that the only transfer pricing adjustment in this case is with regard to management fees. Referring to Para 3 of the Transfer Pricing Officer‟s (TPO) order at page 2, the facts were reiterated by the Ld. Counsel. Morganite Crucible India Limited (MICL) was established in 1986 as Greaves Morganite Crucible Limited manufacturing carbon bonded silicon carbide crucibles of various varieties which are used for melting and holding non-ferrous metals like aluminum, copper, brass, gold, silver etc as on 31st March, 2012, 25% of the equity shares of the company were held by general public and balance 75% were held by Morganite Crucible Limited, UK and Morgan Terreasen BV (36.5%), both of which are subsidiaries of the Morgan Crucible Company Plc, the ultimate holding company. That based on this background, the dispute regarding international transactions were with respect to payment for management services fees.
During the year under consideration the assessee had made payments of Rs.4,43,31,023/- to AE namely The Morgan Crucible Company Plc. as management fees. The assessee has selected TNMM for benchmarking the
3 ITA No. 715/PUN/2017 A.Y.2012-13
international transaction. However, the TPO observed on verification that it was only mentioned that services were there. However, no supporting documents have been furnished by the assessee. The assessee has not demonstrated to justify the management services through evidences. It is observed from the order of TPO that repeatedly he has mentioned in his order that no documentary evidences were furnished in respect of the transactions of management fees payment. When we peruse the order of the Ld. DRP, there also, the DRP in their order has categorically mentioned that the assessee has not furnished any evidences in respect of services. That further, the assessee has not done anything independent for benchmarking of international transaction. The assessee has done entry level, TNMM on aggregate transaction.
Per contra, the submission of the Ld. Counsel for the assessee was that they have submitted all these documents before the Revenue Authorities.
We have perused the case records and have given considerable thought to the facts and circumstances in this case. That on hearing the Ld. Counsel for the assessee who states that all the evidences in respect of services for management fees transactions have been submitted before the Revenue Authorities, whereas, the records contradict such submissions. Both the orders of the TPO as well as the Ld. DRP categorically states that no documentary evidences were furnished by the assessee in support of its claim regarding payment of management fees. The assessee was not able to demonstrate the type of receipts of services. It is further observed that the assessee entered into seven international transactions out of which first five international transactions are „Import of raw material & spares/consumables;
4 ITA No. 715/PUN/2017 A.Y.2012-13
Sale of finished goods; Payment for use of trade mark and patent; payment for management services and Commission income. All such five international transactions have been processed on entity level in TNMM. The international transaction under dispute is only payment of management services. Obviously such transaction cannot be clubbed with other international transaction for the purpose of benchmarking. The position of the assessee in benchmarking all the five international transactions in TNMM on aggregate basis has not been approved by the DRP as well. We, therefore, direct that the ALP of the international transaction of payment of management services should be done independently in segregated manner. We, therefore, set aside the impugned order and remit the matter back to the file of AO/TPO to determine ALP of this transaction afresh in accordance with our above directions. Needless to say, the AO/TPO shall grant reasonable opportunity of hearing to the assessee in accordance with law. Thus, ground No.2 raised in appeal by the assessee is allowed for statistical purposes.
That with regard to ground No.3, disallowance u/s.35(1) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) the Ld. Counsel for the assessee at the outset stated that they have no evidences with regard to this ground. After taking into consideration the submissions of the Ld. Counsel for the assessee, since there is no evidence available to him in support of this ground, we uphold the findings of the AO/DRP on this issue. Thus, ground No.3 raised in appeal by the assessee is dismissed.
Ground No.4 raised in appeal by the assessee is with regard to initiation of penalty proceedings u/s.271(1)(c) of the Act which is premature and hence, dismissed.
5 ITA No. 715/PUN/2017 A.Y.2012-13
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced on 22nd day of August, 2019.
Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 22nd August, 2019. SB आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(Appeals)-13, Pune. 4. The Pr. CIT-5, Pune. , आयकर अऩीऱीय अधधकरण, “सी” बेंच, 5. ववभागीय प्रतततनधध ऩुणे / DR, ITAT, “C” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
तनजी सधचव / Private Secretary आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune.
6 ITA No. 715/PUN/2017 A.Y.2012-13
Date 1 Draft dictated on 22.08.2019 Sr.PS/PS 2 Draft placed before author 22.08.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order