DSV AIR & SEA P.LTD,MUMBAI vs. DCIT CIR 9(3)(1), MUMBAI

सुनवाई क� तार�ख / : 27.02.2018 Date of Hearing घोषणा क� तार�ख / : 07.03.2018 Date of Pronouncement आदेश / O R D E R Per Bench: These appeals by the assessee are against the respective orders of the ld. Commissioner of Income Tax (Appeals) for the assessment year 2009-10 and 2010-11 respectively. Since the grounds taken are common and the issues are connected, these have been consolidated and disposed of by this common order.

2 & 4830/Mum/2015 DSV Air & Sea Private Limited vs. Dy. CIT 2. The grounds of appeal read as under: General Ground 1. erred in confirming the action of the learned Assessing Officer ('AO') in determining the total taxable income of the Appellant at Rs 86,98,350 as against the returned income of Rs 7,42,277; Reference made to the Transfer Pricing Officer 2. erred in confirming the action of the learned AO in referring the Appellant's case to the learned Transfer Pricing Officer (TPO') under Section 92CA(1) of the Act, and then making a transfer pricing adjustment of Rs 39,64,096 to the total income without satisfying the conditions specified therein; Management Fees 3. erred in confirming the action of the TPO in determining the value of management services received at Rs Nil, as against payment of Rs. 39,64.096 made to by the Appellant to its Associated Enterprise ('AE') in Denmark; 4. erred in ignoring the details submitted and questioning the benefits received by the Appellant in respect of the management services received from its AE; One of the prescribed methods to be used 5. erred in law in not determining arm's length price of the international transaction of payment of management fees using one of the methods prescribed under Section 92C of the Act read with Rule 10B of the Income Tax Rules, 1962 ( 'Rules'); Powers of the TPO 6. erred in upholding the action of the TPO of determining the value of the management services as nil holding that no benefit has been received by the Appellant, which is in effect beyond the power; since the TPO's power is restricted to determining the arm's length price of the said international transaction and not questioning the benefit test/ commercial expediency; Rejection of Additional Evidence 7. erred in rejecting the additional evidence submitted by the Appellant on procedural grounds (stating that the same is not in the form of additional evidence) without appreciating the fact that the Appellant was prevented from filing the evidence as sufficient opportunity was not provided and the Appellant has, in substance, complied with Rule 46A of the Rules; Disallowances under Section 40(a)(ia) of the Act 8. erred in confirming the disallowance of Rs.3,33,795 paid to Neptune Shipping Company Pvt. Ltd. ('NSCPL') without appreciating the fact that appropriate taxes have been deducted and deposited into the Government Treasury on the said payment; 9. erred in confirming the disallowance of Rs 2,82,227 paid to Saisea Logistics (I) Pvt. Ltd.

3 & 4830/Mum/2015 DSV Air & Sea Private Limited vs. Dy. CIT ('SLIPL') without appreciating the fact that taxes were not withheld on such payments based on the 'Nil' tax withholding declaration obtained from SLDPL; 10. erred in confirming the disallowance of Rs 2,60,821 in respect of Bosch Rexroth India Limited, Rs.3,70,411 paid to Indo Saudi Services (Cargo) Pvt. Ltd. and Rs.3,06,526 paid to AFL Pvt. Ltd., disregarding the submissions made by the Appellant before the Hon'ble CIT(A) for non-disallowance of the said amounts; Wrong addition of fringe benefit tax 11. erred in adding the fringe benefit tax amounting to Rs.8,28,728, without appreciating the fact that the same has not been claimed as a deduction by the Appellant while computing the total income for the subject AY; Lew of interest under Section 234B of the Act 12. erred in levying interest under Section 234B of the Act; Initiation of penalty proceedings under Section 271(l)(c) of the Act 13. erred in initiating penalty proceedings under Section 271 (IXc) of the Act. Each of the above ground is independent and without prejudice to one another. The Appellant craves leave to add, to alter, to amend or to delete any or all of the above grounds of appeal, at or prior to hearing of the appeal so as to enable the Income Tax Appellate Tribunal to decide the appeal according to law. The Appellant prays that appropriate relief be granted based on the said grounds of appeal and the facts and circumstances of the case.

Apropos common issue regarding payment made towards allocation of group management cost:

4. In the present case also there has been an issue of admission of additional evidence which has been rejected by the ld. Commissioner of Income Tax (Appeals) on the same lines. Since ITAT in assessee’s own case has remitted the matter to the ld. Commissioner of Income Tax (Appeals) for admitting the additional evidences and deciding the matter afresh, we also remit this issue to the file of the ld. Commissioner of Income Tax (Appeals) with a similar direction. Both the counsel fairly agreed to this proposition.

Apropos the issue of disallowance u/s. 40(a)(ia) in assessment year 2009-10:

5. On this issue also the ld. Counsel of the assessee pointed out that the assessee has made elaborate submissions including additional details before the ld. Commissioner of Income Tax (Appeals), who summarily upheld the Assessing Officer’s order without dealing with the assessee’s submission.

5 & 4830/Mum/2015 DSV Air & Sea Private Limited vs. Dy. CIT 6. Both the counsel fairly agreed that since the common issue is being remitted to the ld. Commissioner of Income Tax (Appeals), this issue may also be remitted. Accordingly, we remit this issue also to the file of the ld. Commissioner of Income Tax (Appeals). The ld. Commissioner of Income Tax (Appeals) shall consider the issue afresh and pass a speaking order on the assessee’s submission. Needless to add the assessee should be given an opportunity of being heard.