Income Tax Appellate Tribunal - Cochin
M/S.Hic-Abf Special Foods P. Ltd, ... vs The Acit, Cochin on 17 March, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM
S.P. No. 09/Coch/2017
(Arising out of IT(TP)A. No.46/Coch/2017
Assessment Year : 2012-13
M/s. HIC-ABF Special Foods Vs. The Assistant Commissioner of
Private Ltd. Income-tax, Corporate Circle-1(2),
11/8, Project Colony Road, Kochi.
Industrial Development Area,
Aroor Post,
Alappuzha-688 534.
[PAN: AAACH 9887R]
(Assessee-Appellant) (Revenue-Respondent)
Assessee by Shri Bobby Thomas Verghese, CA
Revenue by Shri A. Dhanaraj, Sr. DR
Date of hearing 17/03/2017
Date of pronouncement 17 /03/2017
ORDER
Per GEORGE GEORGE K.,JUDICIAL MEMBER:
This Stay Petition is filed by the assessee under Rule 35A of the ITAT Rules, 1963 seeking stay of recovery of outstanding tax arrears amounting to Rs.4,26,11,800/-.2 S.P.. No.09/Coch/2017
2. The brief facts of the case are as follows:
The assessee is a Company engaged in the business of processing and export of freeze dried shrimps (FDS). The FDS are packed and exported to Higashimaru International Corporation Japan ("HIC Japan"). For the assessment year 2012- 13, return of income was filed on 19/09/2012. The assessment was taken up for scrutiny by issuance of notice u/s. 143(3) of the Act. During the course of assessment proceedings, the case was referred to Transfer Pricing Officer (TPO) u/s. 92CA(1) of the I.T. Act, as the assessee had entered into international transactions with its associate enterprise (AE). The TPO issued an order on 29/01/2016 u/s. 92CA(3) of the Act, proposing an adjustment of Rs.8,16,55,240/- to the arms's length price entered into by the assessee with its AE on sale of FDS. The draft assessment order u/s. 144C(1) of the Act was passed on 15/03/2016 computing total income of Rs.8,89,47,370/-. The assessee filed objections against the draft assessment order u/s. 144C(2)(b) of the Act before the Dispute Resolution Panel (DRP). The DRP upheld the proposal made by the TPO. The Assessing Officer passed final assessment order u/s. 143(3) r.w.s. 144C of the Act (dated 20.12.2016). The demand was raised pursuant to the final assessment order amounting to Rs.4,26,11,800/-. 3 S.P.. No.09/Coch/2017
3. Aggrieved by the above assessment orders passed, the assessee has filed appeal before the Tribunal which is numbered as IT(TP) No. 46/C/2017 and Stay application seeking stay of recovery of outstanding tax arrears.
4. The Ld. Counsel for the assessee, in the course of hearing of Stay application, submitted that assessee has got prima facie case and the TPO erred in rejecting TNMM method adopted by the assessee. It was further submitted that the TPO has erroneously selected controlled transaction as CUP method as the most appropriate method (MAM). It was submitted by the ld. Counsel that Accelerated Freeze Dried Company and ICF, USA is an associate enterprise and Accelerated Freeze Dried Company prices cannot be taken as an comparable uncontrolled transaction. It was submitted that on identical facts, the Tribunal for the immediate preceding assessment year (I.T.A. No.115/Coch/2016 order dated 07/02/2017 for AY 2011-12) rejected Accelerated Freeze Dried Company (AFDC) as a comparable company, since its relationship with ICF, USA was that of an AE and cannot be said to be an uncontrolled transaction. Therefore, it is prayed that in the interest of justice and equity, the outstanding demand amounting to Rs.4,26,11,800/- should be stayed.
5. The Ld. DR on the other hand submitted that the assessee has not made out a case for financial difficulty and the assessee should be directed to pay a substantial portion of outstanding demand before the year ending 31-03-2017. 4 S.P.. No.09/Coch/2017
6. We have heard the rival submissions and perused the record. It is true that the assessee's case was considered by the Tribunal for the immediate assessment year and hence, the issue seems to be covered by the said order of the Tribunal. The case of the assessee is that Accelerated Freeze Dried Company cannot be taken as a comparable company because its transactions are only with its AE and hence it is controlled transaction. Whether ICF, USA continues to be an AE of Accelerated Freeze Dried Company for the current assessment year is a matter to be examined. Since financial stringency has not been made out in this case, we are of the view that the assessee has made a case for only conditional stay. On a suggestion by the Bench that the assessee has to effect atleast a part payment, the LD. AR agreed to pay 15% of the demand. Accordingly, the assessee is directed to pay 15% of the outstanding tax arrears on or before 30/03/2017. If the assessee pays the said amount, before 30/03/2017, there shall be stay for a period of six months or till the disposal of the appeal whichever is earlier. It is ordered accordingly. 5 S.P.. No.09/Coch/2017
7. In the result, the Stay Petition of the assessee is partly allowed as indicated above.
Pronounced in the open court on 17th-03-2017.
sd/- sd/-
(ABRAHAM P. GEORGE) (GEORGE GEORGE K.)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Place: Kochi
Dated: 17th March, 2017
GJ
Copy to:
1. M/s. HIC-ABF Special Foods Private Ltd., 11/8, Project Colony Road, Industrial Development Area, Aroor Post, Alappuzha-688 534.
2. The Assistant Commissioner of Income-tax, Corporate Circle-1(2), Kochi.
3. The Commissioner of Income-tax, Kochi.
4. D.R., I.T.A.T., Cochin Bench, Cochin.
5. Guard File.
By Order (ASSISTANT REGISTRAR) I.T.A.T., Cochin