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Income Tax Appellate Tribunal, MUMBAI BENCH “L”, MUMBAI
Before: SHRI SANJAY GARG & SHRI ASHWANI TANEJA
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 27.09.2010 of the Dispute Resolution Panel-II, Mumbai, relevant to assessment year 2007-08.
The assessee has taken the following grounds of appeal: “The Hon'ble Dispute Resolution Panel - II, Mumbai (DRP') erred in conforming the addition of Rs12,74,842 proposed by the Learned Asst Director of Income Tax, Range 2(2), International Taxation, Mumbai ('Ld AO'), In making the said addition, the Ld AO has erred in
1. Depriving the Appellant Company, right to natural justice by (i) not providing a show-cause notice prior to making the said assessment and (ii) not considering the robust evidence placed before the hon'ble DRP in support of the preliminary & auxiliary nature of activities undertaken by the Liaison Office ('LO') of the Appellant Company in India.
2. Concluding that the Appellant Company has established a Business
3. Concluding that 50% of the gross profit ratio earned by the Appellant Company is income attributable to its operations in India. The determination of income attribution at 50% is without substance and any evidence in possession of the Ld AO.
4. Not allowing General & Administrative Expenses ('G&A') of Rs 69,98,112 incurred by the LO in India against the gross profit attributed (50%) to the Appellant Company's operations in India.
The grounds of appeal, as above, are notwithstanding each other.
The appellant craves leave to amend, alter or add fresh grounds of appeal during the course of proceeding before your good self.”
3. At the outset, the Ld. A.R. of the assessee has stated that the question involved in the present appeal is as to whether the assessee has a Permanent Establishment (PE) in India or not. The Ld. A.R. has further stated that the assessment year under consideration is A.Y. 2007-08. However, the first appeals of the assessee in relation to A.Y. 2006-07 and A.Y. 2008-09 are pending before the Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] for disposal and further that the issue involved in the said appeals i.e. in the earlier assessment year and in the subsequent assessment year to the assessment year under consideration is identical. He has further pointed out that in the appeal for A.Y. 2006-07, the Ld. CIT(A), after considering the submissions of the assessee that it has no PE in India, had called upon a remand report from the Assessing Officer (hereinafter referred to as the AO). The Ld. A.R., further relying upon the said remand report of the AO relevant to A.Y. 2006-07, has stated that in his remand report, the AO has given a finding of fact that the assessee is not doing business in India and that the assessee has been merely acting as a communication link between head office of the assessee company at Singapore and the customers in India. The Ld. A.R. has further brought our attention to an application dated 16.02.16 requesting for admission of additional evidence in this case. The document sought to be produced is the remand report of the AO in relation to A.Y. 2006- 3 M/s. Toray International (Singapore) Pte. Ltd.
7. He has further stated that since in the immediate earlier assessment year, the identical issue is involved and the evidence sought to be produced by the assessee in the shape of copy of remand report is an important evidence which goes to the root of the case, hence, the appeal under consideration of the assessee is required to be decided while considering the said evidence. He, in the alternative, has submitted that the appeal for the year under consideration be also remanded to the Ld. CIT(A) to be decided in the light of the evidence which has come in subsequently, in the shape of remand report of the AO for A.Y. 2006-07 on the identical issue.
The Ld. D.R. has also fairly agreed that the appeal/issue be restored to the file of the Ld. CIT(A) so that the same be decided along with the appeals on identical issue for immediate earlier year i.e. A.Y. 2006-07 and also immediate subsequent year i.e. A.Y. 2008-09.
Considering the above submissions of the Ld. Representatives of the parties, the matter is remanded back to the file of the Ld. CIT(A) with a direction to decide the same along with the other appeals of the assessee for A.Y. 2006-07 and 2008-09 after considering and calling upon any evidences, if so required, for the just and proper decision of the case.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 19.02.2016.