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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI N. V. VASUDEVAN & SHRI A. K. GARODIA
O R D E R
Per A.K. Garodia, Accountant Member This appeal is filed by the assessee and the same is directed against the assessment order passed by the AO on 17.01.2015 under section 143(3) r.w.s. 144C of the Income Tax Act, 1961 as per the directions of DRP. The grounds raised
by the assessee are as under:
1. The order of the learned Assessing authority and Honourable Dispute Resolution Panel is bad in law.
2. The learned Assessing authority/Transfer Pricing Officer/Honourable Dispute Resolution erred in computing the Arm's length Price of the assesse on a segmental level and not an entity level since the assesse has only one business segment.
3. The learned Assessing authority/Transfer Pricing Officer/ Honourable Dispute Resolution erred in including Gateway Distriparks (South) Pvt Ltd as a comparable. The learned Assessing authority/Transfer Pricing Officer/ Honourable IT(TP)A No.301/Bang/2015 Page 2 of 6 Dispute Resolution failed to appreciate Gateway Distriparks (South) Pvt Ltd was functionally not comparable with the appellant and that the revenue of Gateway Distriparks (South) Pvt Ltd was derived from function of ground rent, container storage and handling and Operating Container Freight Stations.
4. The learned Assessing authority/Transfer Pricing Officer/ Honourable Dispute Resolution erred in including CGU Logistics Limited as a comparable although the financial statements were not available for Function, Asset and Risk analysis in the public domain.
5. The learned Assessing authority/Transfer Pricing Officer/ Honourable Dispute Resolution erred in including Gateway East India Pvt Ltd as a comparable. The learned Assessing authority/Transfer Pricing Officer/ Honourable Dispute Resolution failed to appreciate Gateway East India Pvt Ltd was functionally not comparable with the appellant and that the revenue of Gateway East India Pvt Ltd was derived from function of ground rent, container storage and handling and Operating Container Freight Stations.
6. The learned Assessing authority/Transfer Pricing Officer/ Honourable Dispute Resolution erred in including Adani Logistics Limited as a comparable. The learned Assessing authority/Transfer Pricing Officer/ Honourable Dispute Resolution failed to appreciate Adani Logistics Limited was functionally not comparable with the appellant and that the function carried on by Adani Logistics was to develop logistics parks for providing various ground facilities, including aggregation, warehousing, holding, inspection, customs bonding, stuffing-destuffing of export import and domestic cargo and loading/unloading onto railway wagons. The function also included multimodal transport operations, general carrier of international and domestic cargo by all modes of transport such as rail, road, sea, air, inland water transport, ropeways etc. and also Terminal handling services at ICD's. The functions carried on by the comparable were significantly different from that of the appellant.
IT(TP)A No.301/Bang/2015 Page 3 of 6
The learned Assessing authority/Transfer Pricing Officer/ Honourable Dispute Resolution erred in including Natura Hue Chem Limited as a comparable. The learned assessing authority/Transfer Pricing Officer/Honourable Dispute Resolution did not appreciate that the function of Natura Hue Chem Limited included cultivation activities and also the major expenditure of the company consisted of HDPE bags consumption. The functional profile of the comparable was also not clear. 2. The assessee has also raised some additional grounds which are as under: 1. The appellant seeks exclusion of Gateway Distriparks (South) Private Limited as a comparable on the following grounds . a. The revenue is derived from Ground Rent, container storage and handling and Operating Container Freight Stations. b. The Asset base of Gateway Distriparks (South) Private Limited is different from that of the appellant. c. Gateway distriparks did not have any foreign exchange Income. d. The function and assets employed by Gateway Distriparks is different from the appellant.
2. The appellant seeks exclusion of Gateway East India Private Limited as a comparable on the following grounds. a. The revenue is derived from Ground Rent, container storage and handling and Operating Container Freight Stations. b. The Asset base of Gateway East India Private Limited is different from that of the appellant. c. Gateway East India Private Limited did not have any foreign exchange Income. d. The function and assets employed by Gateway East India is different from the appellant.
3. The appellant seeks exclusion of Adani Logistics Limited Limited as a comparable on the following grounds.
IT(TP)A No.301/Bang/2015 Page 4 of 6 a. The function of Adani Logistics Limited is different from the appellant. b. Adani Logistics Limited did not have foreign exchange income. c. The assets employed by Adani Logistics is Rs.445.66 Crores against Rs.2.38 Crores of the appellant. 4. The appellant seeks exclusion of Natura Hue Chem Limited as a comparable on the following grounds . a. The function of Natura Hue Chem is cultivation activities which is different from that of the appellant.
5. The appellant submits that the above are statement of facts which are available with the assessing authority and therefore submit that the additional grounds be permitted.
3. In course of hearing of this appeal, it was submitted by learned AR of the assessee that ground No.2 of the original grounds is not pressed and accordingly the same is rejected as not pressed. In the course of hearing, it was submitted by learned AR of the assessee that the TPO has adopted 7 comparables out of which 1 is already rejected by DRP and there are 6 comparables remaining at present out of which the assessee is seeking exclusion of 5 comparables and he submitted a chart containing the assessee’s arguments regarding his request for exclusion of these 5 comparables: i. Gateway Distriparks (South) Pvt. Ltd., ii. Gateway East India Pvt. Ltd., iii. Adani Logistics Ltd., iv. Natura Hue Chem Ltd., v. CGU Logistics Ltd.,
4. Regarding the assessee’s request of the first 4 comparables, it was submitted by learned AR of the assessee that in para 3.9 of the DRP’s order, IT(TP)A No.301/Bang/2015 Page 5 of 6 the DRP has excluded 1 comparable i.e., Gardon Woodriffe on this basis that the foreign exchange earning of this company is merely 16.7% of the total operational revenue. He submitted that these comparables Nos.1 to 4 of the chart do not have any foreign exchange income but still the same were not excluded by DRP by applying the same filter. He submitted that under these facts, either these comparables should be excluded or the matter may be restored back to the file of TPO for a fresh decision. Regarding the 5th comparable as per chart i.e., CGU Logistics Ltd., he submitted that before DRP also, the assessee made request for exclusion of this comparable as noted by DRP on page No.6 of its order but there is no decision of DRP on this aspect. He submitted that the entire matter may be restored back to the file of TPO for a fresh decision. Learned DR of the Revenue supported the order of the AO and DRP.
We have considered the rival submissions and in the facts of the present case as discussed above as per which it is seen that the DRP has applied foreign exchange income filter to reject a comparable i.e., M/s. Gardon Woodriffe Logistics Ltd. but the same filter was not considered by DRP/TPO in respect other comparable and in respect of 1 comparable i.e., CGU Logistics Ltd., there is no decision of the DRP. Under these facts, we set aside the Assessment Order and restore the matter back to the file of AO/TPO for a fresh decision by way of a speaking and reasoned order after providing reasonable opportunity of being heard to the assessee and we make no comments on the merit.
In the result, appeal of the assessee is partly allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page.