Income Tax Appellate Tribunal - Delhi
Ikea Trading (India) Pvt. Ltd., Gurgaon vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `C': NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND SHRI C.L. SETHI, JUDICIAL MEMBER
I.T. A. No.5259/Del/2010
Assessment Year : 2006-07
Ikea Trading (India) Pvt. Ltd., Assistant Commissioner of Income-tax,
DLF Infinity Tower-A, Vs. Circle 11(1), New Delhi.
th
8 Floor, DLF Cybercity,
Sector-25, Gurgaon-122001.
PAN: AAACI1483Q
STAY PETITION No.94/Del/2011
(In I.T. A. No.5259/Del/2010)
Assessment Year : 2006-07
Ikea Trading (India) Pvt. Ltd., Assistant Commissioner of Income-tax,
DLF Infinity Tower-A, Vs. Circle 11(1), New Delhi.
th
8 Floor, DLF Cybercity,
Sector-25, Gurgaon-122001.
(Appellant/Applicant) (Respondent)
Appellant/Applicant by : S/Sh. Salil Kapoor
& Sanat Kapoor, Advocates.
Respondent by : None.
ORDER
PER C.L. SETHI, JUDICIAL MEMBER:
The assessee is in appeal against the assessment order dated 20.10.2011 made by the Assessing Officer under section 143(3) read with 2 sec. 144C of the Income-tax Act, 1961 (the Act) for the Assessment Year 2006-07.
2. The assessee has also filed an application for stay of realization of demand.
3. The assessee's application for stay of realization of demand had come for hearing on 21.10.2011 when at the request of the Departmental Representative the matter was adjourned to 4.11.2011. Thereafter, on 4.11.2011 it was decided that the appeal of the assessee may be pre-poned for hearing at an early date. Therefore, hearing of the appeal was directed to be pre-poned to 12th December, 2011 along with the Stay Application, which was also directed to be fixed on 12th December, 2011. On 12th December, 2011, the matter was adjourned to 15th December, 2011 as none for the department was present on that day. Today i.e. on 15th December, 2011, the learned DR has filed an application for adjournment stating that the case requires preparation as TPO matter is involved and stay matter is also involved and short adjournment was requested. It was noticed by the Bench that the order of the Dispute Resolution Penal passed under sec. 144C of the Act in pursuance to which the Assessing Officer passed the impugned order was cryptic and non-speaking and the mater involved therein would need fresh adjudication and consideration by the learned DRP by passing a 3 speaking and reasoned order. In the light of this aspect of the matter, the adjournment application filed by the learned DR was rejected and the learned counsel for the assessee was heard.
4. Ground Nos. 1 to 8 are directed against the transfer pricing adjustment made in respect of the international transactions. The Assessing Officer made adjustment of Rs.78,80,00,890/- under sec. 92CA(3) on the basis of Transfer Pricing Officer's order, against which, the assessee filed objection before the learned DRP. The various objections filed by the assessee before the learned DRP containing 72 pages disputing the TPO's order in making adjustments to the international transactions have been dealt with by the learned DRP by passing a very short and non-speaking order as under:-
"We agree that the TPO has correctly chosen the comparables in this case.
We agree with the TPO on the legal position that the data of only the relevant financial year is to be used unless the assessee establishes that the data of the preceding two years demonstrate settled facts which have influenced the results of the financial year under consideration. In this case, the assessee has not established any such facts.
The TPO's conclusion that in bench marking its international transactions, the assessee should have also included in its cost the value of the supply chain management intangibles owned by it, the human asset intangibles owned by it and the assessee's location advantage and risk assumed by the assessee however is found to be correct as in the situation of a service provider who is charging a fixed percentage of mark up over its cost as granted profits, the value of the above 4 factor like any marketing intangibles and human intangibles owned by the assessee and its location advantage are not being compensated."
5. After hearing the learned counsel for the assessee and the DRP's order, we find that the matter with regard to the transfer pricing adjustment needs to be reconsidered and re-adjudicated upon by the learned DRP after passing a reasoned and speaking order in the light of the powers and functions given to the learned DRP under sec. 144(5) to 144C(13) of the Act. In similar situation, the Hon'ble High Court of Delhi at New Delhi in the case of Vodafone Essar Ltd. vs. Dispute Resolution Panel [W.P. (C) 7028/2010] restored the matter to the learned DRP to pass fresh order after ascribing cogent and germane reasons in support of the decision that may be taken by the learned DRP. Similarly ITAT, Delhi Bench `C', New Delhi in the case of GAP International Sourcing India Pvt. Ltd. vs. DCIT vide its order dated 10.12.2010 in ITA No.4073/Del/2010, has remitted the matter to the file of the learned DRP for passing afresh speaking and reasoned order. We, therefore, restore these issues raised in ground Nos.1 to 8 regarding adjustment of arm's length price to the file of the learned DRP for their fresh consideration and adjudication. The learned DRP shall pass a well reasoned and speaking order on all the objections raised by the assessee against the 5 Assessing Officer's order read with TPO's order. The learned DRP shall provide reasonable opportunity of being heard to the assessee.
6. Ground Nos.9 & 10 directed against the addition of Rs.9,52,418/- by way of disallowance of advances and deposits written off shall also be freshly considered by the learned DRP after providing the assessee an opportunity to produce any evidences or details in support of assessee's claim and opportunity of being heard.
7. In the result, the issue involved in this appeal are restored back to the file of the learned Dispute Resolution Panel for fresh adjudication as stated above.
8. Since the appeal filed by the assessee has been disposed of by restoring the mater back to the file of the learned DRP for fresh adjudication, the Stay Petition filed by the assessee has become infructuous and is thus, dismissed as redundant.
9. In the result, the appeal filed by the assessee is treated to be allowed for statistical purposes and the Stay Petition filed by the assessee stands dismissed as infructuous.
10. This decision was pronounced on 15th December, 2011 immediately after the hearing was over.
Sd/- Sd/- (G.D. AGRAWAL) (C.L. SETHI) VICE PRESIDENT JUDICIAL MEMBER Dated: 15th December, 2011. 6 ITA No.5259/Del/2010 & Stay Petition No.94/Del/2011. Copy of the order forwarded to:- 1. The appellant/applicant 2. The respondent 3. The CIT 4. The CIT (A), New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.
By Order
*mg Dy. Registrar, ITAT.