Income Tax Appellate Tribunal - Delhi
Dcm Shriram Industris Ltd, New Delhi vs Dcit Circle-7(1), New Delhi on 27 January, 2023
Author: G.S.Pannu
Bench: G.S.Pannu
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI "I-FRIDAY" BENCH: NEW DELHI
BEFORE SHRI G.S.PANNU, PRESIDENT &
SHRI KUL BHARAT, JUDICIAL MEMBER
S.A.No.57/Del/2023
[In ITA No.2166/Del/2022]
[Assessment Year : 2018-19]
DCM Shriram Industries Ltd., vs DCIT,
6 Floor, Kanchenjunga Building,
th Circle-7(1),
18, Barakhamba Road, New Delhi.
New Delhi-110001.
PAN-AAACD0204C
APPELLANT RESPONDENT
Appellant by Shri Pradeep Dinodia, CA
Respondent by Shri Sanjay Kumar, Sr. DR
Date of Hearing 27.01.2023
Date of Pronouncement 27.01.2023
ORDER
PER KUL BHARAT, JM :
By way of this stay application, the assessee is seeking stay of disputed tax demand of Rs.30,88,74,957/- for the Assessment Year 2018-19.
2. Ld. Counsel for the assessee reiterated the submissions as made in the stay application. Ld. Counsel for the assessee submitted that the assessment falls under the category of high pitched assessment. He submitted that the assessee had also filed rectification application before the Assessing Officer ("AO") u/s 154 of the Income Tax Act, 1961 ("the Act") seeking correction of the figures recorded by the AO in respect of book profit u/s 115JB of the Act. Ld. Counsel for the assessee submitted that the issues raised in the above- captioned appeal, are squarely covered by the decision of the Tribunal and the Hon'ble High Court in favour of the assessee. He further contended that the assessee has a very strong case on merit. Hence, he prayed for stay of the entire disputed tax demand. He contended that the AO assessed the income of the assessee at Rs.1,20,26,58,340/- against the returned income of Rs.13,25,33,541/-. He contended that direction of deposit of balance tax demand would further jeopardized the financial position of the appellant in the current unprecedented time. Ld. Counsel for the assessee submitted that the assessee is engaged in the business of manufacturing of sugar, industrial fibre, chemicals-organic/fine chemicals, industrial alcohol, power and rayon tyre cords. It has its own in-house co-generation power plant engaged in the generation and distribution of power in order to ensure the regular and uninterrupted power supply to appellant's sugar, chemical and organics unit. It also supplies steam to the sugar unit of the assessee which is used for the crystallization process of the sugar. The power plant installed in the year 2006 at Daurala (Meerut), Uttar Pradesh, is eligible for profit based deduction u/s 80 IA of the Act. During the course of proceeding before Ld. Transfer Pricing Officer ("TPO"), certain transfer pricing adjustments were made. Ld. TPO determined the Arm's Length Price ("ALP") of steam at NIL by contending inter-alia that steam is a by-product not having any cost among other reasons. Hence, he proposed transfer pricing adjustment on account of steam of Rs.107,01,24,795/-. He submitted that this issue is squarely covered by Ld.CIT(A)'s order in assessee's own case for Assessment Year 2015-16. Further, the adjustment was in contravention of Ld. DRP's directions in assessee's own case for Assessment Year 2018-19. He contended that while passing the final assessment order, the AO has simply stated that the Department has not accepted the decision and has filed an appeal before the Tribunal against the order of Ld.CIT(A) for AY 2015-16. He submitted that in Page | 2 the quantum appeal for AY 2016-17, the appeal has been filed before the Tribunal in ITA No.539/Del/2021 and is pending adjudication. It was further submitted that no appeal was filed by Revenue against the order of Ld.CIT(A) in the Assessment Year 2015-16 which fact could be verified from the office of Ld.CIT DR. He contended that if the appeal is not filed which is a critical factor for deciding the appeal of the assessee for Assessment Years 2016-17, 2017-18, 2018-19, hence the issue has attained finality. Ld. Counsel for the assessee further placed reliance on the decision of the Co-ordinate Bench of the Tribunal in the case of Ebro India Pvt. Ltd. [TS-547-ITAT-2022 (DEL)] wherein under the identical facts, the Tribunal had granted stay on recovery of outstanding demand for a period of 180 days. He further submitted that the issue is squarely covered by the decision of the Co-ordinate Bench of the Tribunal in the group concern namely DCM Shriram Ltd. (ITA No.7362/Del/2018). He contended that basis of making addition by Ld.TPO in the case of the appellant is identical as was made in DCM Shriram Ltd.. Hence, for the same reasons, the appellant prays for a complete relief, directing the AO for stay of outstanding tax demand. He further contended that the issue is squarely covered by the direction of Ld.DRP for Assessment Year 2016-17 in the case of SRF Ltd. He submitted that even otherwise also, the issue in question is covered by various judicial pronouncements of Hon'ble High Courts and Co-ordinate Benches of the Tribunal. In support of this, he made reliance on the following case laws:-
• Nectar Life sciences Ltd [TS-438-IT AT -2021(DEL)-TP] • Vardhman Textiles Limited [TS-536-ITAT-2022(CHANDI)-TP] Page | 3 • CIT vs Tanfac Industries Limited (HC of Madras: Tax Case No. 1773 of 2008, dt 6.11.2008) - revenue's SLP against the same has been dismissed by the Hon'ble Supreme Court.
• Thiru Arooran Sugars Ltd. [(2016) 47 CCH 0595 Chen Trib] • N. R. Agarwal Industries Ltd [TS-581-ITAT-2021(SUR)] • M/s DCIT circle-2(1), Hyderabad vs M/s Kakatiya Cement Sugar & Industries Ltd. Hyderabad (ITAT Bench 'A' Hyderabad ITA No.1024/Hyd/2013) • Vishal Fabrics (P.) Ltd. v. Deputy Commissioner of Income-tax (OSD) Circle-8 [2016] 71 taxmann.com 97 (Gujarat) • Sial SBEC Bioenergy Ltd [2004] 4 SOT 730 (DELHI) • Meghmani Energy Ltd. v. Deputy Commissioner of Income-tax, Circle [2016] 389 ITR 281 (Gujarat) • PCIT -2 Vs Jay Chemical Industries Ltd. (R/Tax Appeal No. 62 of 2020) (HC of Gujarat) • SafYeast Company Pvt. Ltd. [TS-614-ITAT-2017 (Mum)] • West Coast Paper Mills Ltd. v. ACIT [2014] 33 ITR(T) 560 (Mumbai -
Trib.)
3. Ld. Counsel for the assessee further submitted that the issue in question is no more res integra and has been decided in favour of the assessee by authoritative judicial pronouncements of various Hon'ble High Courts and Co-ordinate Benches of the Tribunal. He submitted that without prejudice, the excess addition to the tune of Rs.59,22,44,529/- being adjustment amount exceeding the claim of deduction u/s 80 IA of the Act, is erroneously made to the income of the assessee. He submitted that the TPO grossly erred in law and in fact by proposing the adjustment of Rs.1,07,01,24,795/- in respect of steam while the deduction claimed by the assessee u/s 80 IA of the Page | 4 Act in respect of the power unit was merely Rs.47,78,80,266/-. Thus, he made excess adjustment to the tune of Rs.59,22,44,529/-. Hence, he grossly erred in not taking into account the fundamental tenet and intent of the transfer pricing statute. He submitted that the Ld. TPO was required to examine whether the assessee has over-stated the profits of eligible unit by way of related party transaction and claimed a higher profit linked deduction under the Act than what is actually allowable. Thus, the jurisdiction of Ld.TPO was to calculate the profit of the eligible unit for the purposes of deduction under the Act and to ensure that an assessee does not claim a higher deduction. He placed reliance on the decision of the Co-ordinate Bench of the Tribunal in the case of Star Paper Mills Limited [TS-997-ITAT-2021 (Kol)]. To buttress the contention that the issues pertaining to ALP determination u/s 92BA of the Act, are on account of TP adjustment which should be restricted to quantum of the eligible deduction u/s 80 IA of the Act. He submitted that as the AO incorrectly computed the income even after addition made by the AO, disputed tax demand would have been as under:-
Particulars Amount in (Rs.) Aggregate Income as per Income Tax Return 61,04,13,807
The effect of the addition made by the Ld.AO is reflected below u/h 'Deductions' Aggregate assessed Income 61,04,13,807 Gross total income ("GTI") 61,04,13,807 Deductions:
U/s 80G of the Act U/s 80IA of the Act Claimed by the assessee in its 47,78,80,266 returned income Less: Adjsutment made by (47,78,80,266) Ld.AO/TPO on account of re-
computation of ALP amounting to
Rs.1,07,01,24,795/- (restricted to NIL
deduction claimed by the
appellant)
Page | 5
Total Income 61,0413,807
Tax under Normal Provisions @ 34.608% 21,12,52,010
Book profits under MAT 68,20,48,545
Tax as per MAT Provisions @ 21.342% 14,55,60,072
Higher of Taxes as per Normal Provisions and Taxes as per MAT 21,12,52,010
MAT credit-115JAA -
Tax payable 21,12,52,010
Add: Interest u/s 234B & 234C -
Total tax payable alongwith Interest 21,12,52,010
Taxes already paid 21,30,08,786
Demand/(Refund) (17,56,776)
4. Ld. Counsel for the assessee therefore, submitted that since the issue is covered by the various judgements of the Hon'ble High Courts and Co-ordinate Benches of the Tribunal and also in view that assessee has a very strong prima- facie case, he made a prayer that the appeal be fixed for hearing on out of turn basis as the identical issues for Assessment Year 2015-16 have been partly heard and the issues in dispute would be covered by the decision of the Co-ordinate Bench of the Tribunal.
5. On the other hand, Ld. Sr. DR opposed these submissions and supported the action of the AO. He further submitted that the assessee may be directed to make deposit of outstanding disputed tax demand.
6. We have heard Ld. Authorized Representatives of the parties and perused the material available on record. It is undisputed that substantial tax demand is out of transfer pricing adjustment made by the AO. However, Ld. Counsel for the assessee has pointed out that there is error in computation of the tax demand and also the issue in dispute is covered by the decision of the Co-ordinate Bench of the Tribunal including the group entity i.e. SRF Ltd. We are conscious of the fact that the Hon'ble High Court in catena of judgements has held that where the issue is covered in favour of the assessee, in that Page | 6 event, directing the assessee to deposit the outstanding tax demand would not be justified. Therefore, looking to the totality of the facts and respectfully following the binding precedents, we are inclined to grant stay of outstanding tax demand and also allow the request of the assessee to fix the appeal for hearing on out of turn basis. Hence, we hereby grant stay of outstanding tax demand for a period of 180 days or till the disposal of appeal, whichever is earlier. The Registry is hereby, directed to fix the hearing of assessee's appeal in ITA No.2166/Del/2022 (Assessment Year 2018-19) on out of turn basis on 11.04.2023. Further, the assessee is hereby, directed not to seek any adjournment without any reasonable cause. The stay application is disposed off in the terms indicated herein above.
7. In the result, the stay application filed by the assessee is allowed.
Order pronounced in the open Court on 27 th January, 2023.
Sd/- Sd/-
(G.S.PANNU) (KUL BHARAT)
PRESIDENT JUDICIAL MEMBER
* Amit Kumar *
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, NEW DELHI
Page | 7