Income Tax Appellate Tribunal - Hyderabad
Hill County Properties Limited, Hyd, ... vs Department Of Income Tax on 18 November, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND
SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
I.T.A. No. 420/HYD/2015
Assessment Year: 2008-09
Addl. Commissioner of M/s. Hill County
Income Tax, Vs Properties Limited,
Central Range-3, (Formerly known as M/s.
HYDERABAD Maytas Properties Limited)
HYDERABAD
[PAN: AAECM2732Q]
(Appellant) (Respondent)
For Revenue : Shri Valluri Srinivas &
Shri B. Kurmi Naidu, DR
For Assessee : Shri S. Rama Rao, AR
Date of Hearing : 21-10-2015
Date of Pronouncement : 18-11-2015
ORDER
PER Smt. P. MADHAVI DEVI, JM :
This is Revenue's appeal for the AY. 2008-09. In this appeal, Revenue is aggrieved by the order of the Commissioner of Income Tax (Appeals)-XI, Hyderabad dated 28-01-2015 in deleting the penalty levied by the Assessing Officer (AO) u/s. 271G of the Income Tax Act [Act].
2. Brief fact of the case are that the assessee had filed its return of income for the AY. 2008-09 on 29-09-2009 declaring income I.T.A. No. 420/Hyd/2015 :- 2 -: M/s. Hill County Properties Limited (Formerly known as M/s. Maytas Properties Limited) Rs. 29,38,81,950/-. During the assessment proceedings u/s. 143(3) of the Act, the AO observed that the assessee-company had made an investment in equity shares of its subsidiary company i.e., M/s. Maytas Properties M.E(FZE) Pvt. Ltd., Dubai of an amount of Rs. 16,34,625/- and towards the share application money of an amount of Rs. 50,33,42,956/-. On further verification, AO observed that the same amount of Rs. 50 Crores was also shown under 'loans and advances' given to its subsidiary at UAE with a note that 'it is share application money deposited with its subsidiary'. On verification, AO observed that the taxpayer has not made any disclosure of the share application money separately in its Balance Sheet. After extensively considering the records, the AO came to the conclusion that it is in fact 'loans and advances' given to the subsidiary and therefore, it is an international transaction u/s. 92B of the Act. He therefore referred the transaction to the Transfer Pricing Officer (TPO) u/s. 92CA of the Act for determination of ALP. Thereafter, the AO observed that assessee has not complied with the provisions of Section 92D of the Act r.w. Rule 10D of the IT Rules and has failed to furnish the information or documents as required by sub-Section 3 of Section 92D of the Act. Therefore, he proposed to initiate the penalty proceedings u/s. 271G of the Act.
3. The assessee objected to the penalty proceedings stating that the transaction of investing in the capital of the sister-concern outside India was not an international transaction and therefore, the provisions of Section 92CA of the Act are not applicable. It was further submitted that though the assessee has maintained the relevant documents as required under Rule 10D of the Act, the same were not furnished to the authorities as the transaction itself I.T.A. No. 420/Hyd/2015 :- 3 -: M/s. Hill County Properties Limited (Formerly known as M/s. Maytas Properties Limited) was not an international transaction. The AO was, however, not convinced with the contentions of the assessee and held that the penalty u/s. 271G is attracted. Accordingly, he levied the penalty of Rs. 1,00,99,552/- being 2% of the total value of the international transaction of Rs. 50,49,77,581/- for non-submission of TP study/TP documentation before the TPO. Aggrieved, assessee preferred an appeal before the CIT(A), who deleted the same and against the relief granted by the CIT(A) that Revenue is in appeal before us.
4. Having heard both the parties and having considered the rival contentions and the material on record, we find that assessee had preferred objections before the DRP against the TP adjustments proposed by the AO pursuant to the order of TPO u/s. 92CA of the Act and that the DRP had upheld the order of the TPO/AO. It has been recorded by the CIT(A) that against the order of DRP, the assessee went in further appeal before the ITAT, Hyderabad and this Tribunal in ITA No. 1404/Hyd/2013 dt. 06-06- 2014 has held that the investment in share capital of subsidiaries outside India are not in the nature of transactions referred to in Section 92B of the Act and the TP provisions are not applicable. For coming to the conclusion, the Tribunal has followed the decision of the Co-ordinate Bench of this Tribunal in the case of Vijay Electricals Ltd., Vs. Addl. CIT [36 Taxmann.com 386 (Hyd- Trib)]. After taking note of the above order of the ITAT, it has been held that the transaction is not an international transaction within the meaning of Section 92B of the Act and therefore, there was no requirement for the assessee to keep and maintain the information and documentation referred to in Section 92D of the Act. CIT(A) has, thus, rightly held that Section 271G is applicable for I.T.A. No. 420/Hyd/2015 :- 4 -: M/s. Hill County Properties Limited (Formerly known as M/s. Maytas Properties Limited) contravention of the provisions of Section 92D and is not attracted in assessee's case. Therefore, we see no reason to interfere with the order of the CIT(A).
5. In the result, Revenue's appeal is dismissed.
Order pronounced in the open Court on 18th November, 2015 Sd/- Sd/-
(B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated 18th November, 2015 TNMM Copy to :
1. Addl. Commissioner of Income Tax, Central Range-3, 3rd Floor, Posnett Bhavan, Tilak Road, Hyderabad.
2. M/s. Hill Country Properties Limited, (Formerly known as M/s. Maytas Properties Limited), Bachupally, Hyderabad.
3. CIT (Appeals)-XI, Hyderabad.
4. CIT-(Central), Hyderabad.
5. D.R. ITAT, Hyderabad.
6. Guard File.