Income Tax Appellate Tribunal - Delhi
Ikea Trading (India) Pvt. Ltd., Gurgaon vs Assessee on 31 October, 2011
ITA No.5524/Del/2011 & Stay No.172/D/11 1
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'C' NEW DELHI
BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA NO.5524/DEL/2011
ASSTT. YEAR: 2007-08
Ikea Trading (India) Pvt. Ltd., Vs Asstt.Commissioner of Income Tax,
th
DLF Infinity Tower-A, 8 Floor, Circle 11(1), New Delhi.
DLF CyberCity, Sector-25,
Gurgaon.
(PAN No. AAACH1483Q)
STAY NO.172/DEL/2011
(IN ITA NO.5524/DEL/2011)
ASSTT. YEAR: 2007-08
Ikea Trading (India) P. Ltd. Vs ACIT, Circle 11(1), New Delhi.
Gurgaon.
(Appellant) (Respondent)
Appellant by: Shri Salil Kapoor, Sh. Vikas Jain
Respondent by: Shri B.R.R. Kumar, Sr. DR
O R D E R
PER C. L. SETHI, J.M.
The assessee is in appeal against the order dated 31.10.2011 passed by the AO u/s 143(3) of the I.T. Act, 1961 after following the directions of learned DRP given u/s 144C of the Act for the Asstt. Year 2007-08. ITA No.5524/Del/2011 & Stay No.172/D/11 2
2. The various grounds of appeal raised by the assessee are directed against the AO's order in making an adjustment of Rs.112,21,85,040 to the Arm's Length Price (ALP) of international transactions entered into by the assessee with its associated enterprises. The assessee is engaged in the business of sourcing finished goods for its associated enterprises located outside India. It identifies suppliers of finished textile products like carpets, upholstery, rugs etc. based on product specifications received from various group companies of assessee. The assessee furnished transfer pricing study before the TPO, who suggested overall adjustment of Rs. 112,21,85,040, and on the basis of TPO's order, a draft order was made by the AO, against which an objection was filed before the ld. Dispute Resolution Panel (DRP) against Section 144C of the Act. While deciding various issues raised by the assessee in the objection filed against the draft assessment order, the ld. DRP directed to exclude M/s Reymond Ltd. from the list of comparables inasmuch as the aforesaid concern was not a right comparable functionally in the year under consideration. The DRP therefore directed to recompute the ALP accordingly. The learned TPO then excluded the same from comparables.
3. Ld. DRP further directed the TPO: i) to allow working capital adjustment and; ii) verify and correct any error in the operating margin ITA No.5524/Del/2011 & Stay No.172/D/11 3 calculation for excluding non-operating expenses. However, the TPO failed to carry out the aforesaid these two directions of the ld. DRP. The TPO has stated that since working capital adjustment details have not been received from DRP as well as the assessee, it was not possible to allow such adjustment at the moment. Thus, the TPO made no such adjustment to the ALP in his final order while giving effect to ld. DRP's order. It has been admitted by the ld. DR that these two directions given by the ld. DRP in their order have not been carried out while finalizing the assessment made by the AO. These two adjustments to the ALP may go to the root of the matter and are relevant to determine various other issues such as whether benefit of variation of ±5% in determining the ALP is available to the assessee or as to whether any adjustment is called for in view of ALP to be determined after carrying out the directions of ld. DRP. We, therefore, find that the TPO should make a fresh order after following the directions given by the ld. DRP in their order dated 9th August 2011, and on the basis of revised TPO's order, the ld. AO passed a fresh draft assessment order against which the assessee shall be further entitled to raise objections before the ld. DRP. We, therefore, set aside the assessment order made by the AO and restore the whole assessment back to his file for his fresh adjudication. Various other objections raised by the assessee against the TPO's order shall ITA No.5524/Del/2011 & Stay No.172/D/11 4 also be freshly considered by the authorities below. The AO and TPO shall provide reasonable opportunity of being heard to the assessee.
4. In the result, the appeal filed by the assessee is allowed for statistical purposes.
5. In the light of our order restoring the whole assessment back to the file of the AO for his fresh assessment, Stay Application filed by the assessee has become infructuous and is accordingly dismissed.
6. In the result, the appeal filed by the assessee is treated to be allowed for statistical purposes and Stay Application filed by the assessee is dismissed as infructuous.
Order was pronounced in the open court on 23rd December, 2011, immediately after the hearing was over.
Sd/- Sd/-
(SHAMIM YAHYA ) ( C.L. SETHI )
ACCOUNTANT MEMBER JUDICIAL MEMBER
DT. 23rd DECEMBER, 2011
'GS'
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT (A)
4. CIT 5. DR
By Order
Dy. Registrar
ITA No.5524/Del/2011 & Stay No.172/D/11 5