Karnataka High Court
M/S Toyota Kirloskar Motor (P) Ltd vs The Commissioner Of on 6 August, 2018
Bench: Vineet Kothari, S.Sujatha
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 06th DAY OF AUGUST 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON'BLE Mrs.JUSTICE S.SUJATHA
I.T.A.Nos.60/2017 & 204/2017
BETWEEN:
M/S. TOYOTA KIRLOSKAR MOTOR (P) LTD.
A LIMITED COMPANY REGISTERED
UNDER THE PROVISIONS OF COMPANIES
ACT, 1956, HAVING ITS OFFICE AT
PLOT No.1, BIDADI IND. AREA
RAMNAGARA DISTRICT
KARNATAKA-562109
REPRESENTED HEREIN BY ITS
AUTHORISED SIGNATORY
PAN: AAACT5415B.
...APPELLANT
(By Mr. S.S. NAGANAND, SR. COUNSEL A/W
Mr. U.R. VIKRAM, ADV.)
AND:
1. THE COMMISSIONER OF INCOME TAX
LTU, JSS TOWERS, BSK III STAGE
BANGALORE-560085.
2. THE DEPUTY COMMISSIONER OF INCOME TAX
LTU, JSS TOWERS, BKS III STAGE
BANGALORE-560085.
...RESPONDENTS
(By Mr. K.V. ARAVIND, ADV.)
Date of Judgment 06-08-2018 I.T.A.Nos.60/2017 & 204/2017
M/s. Toyota Kirloskar Motor (P) Ltd. Vs.
The Commissioner of Income Tax & Anr.
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THESE I.T.A.s ARE FILED UNDER SECTION 260-A OF THE
IT ACT, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION
OF LAW AND ANSER THOSE IN FAVOUR OF THE APPELLANT.
SET ASIDE THE ORDER DATED 19/08/2014 IN ITA
No.15(B)/2014 AND C.O.No.15/B/2016 PASSED BY THE ITAT
(ANNEXURE-E) INSOFAR AS IT REMITS THE MATTER TO THE
AO/TPO, AND ALLOW THE SAID APPEAL & ETC.
THESE I.T.A.s COMING ON FOR HEARING THIS DAY,
Dr. VINEET KOTHARI J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. S.S. Naganand, Sr. Counsel, A/W Mr. U.R. Vikram, Adv. for Appellant- Revenue Mr. K.V. Aravind, Adv. for Respondents - Assessee
1. This appeal has been filed by the Appellant- Assessee - M/s.Toyota Kirloskar Motor Pvt. Ltd., u/s.260A of the Income Tax Act, 1961, raising purportedly one substantial question of law arising from the order of the ITAT, Bangalore Bench 'B', Bangalore, dated 19.08.2016 passed in ITA No.15/B/2014 and C.O.No.15/B/2016 for A.Y.2009-10.
2. The Assessee is aggrieved only by the directions of the learned Tribunal for remanding the case back to the TPO/AO for undertaking the Transfer Pricing Date of Judgment 06-08-2018 I.T.A.Nos.60/2017 & 204/2017 M/s. Toyota Kirloskar Motor (P) Ltd. Vs. The Commissioner of Income Tax & Anr.
3/8 Analysis with regard to Royalty payments made by the Assessee-Indian company to its Associated Enterprise M/s.Toyota Motors Corporation, Japan and other associated companies. The relevant portion of the learned Tribunal remanding the case back to the TPO/AO is quoted below for ready reference:-
"Learned DR of the revenue submitted that similar issue in assessee's own case was decided by the tribunal in A.Y.2008-09 in IT (TP) A No.1595/Bang/2012 dated 14.08.2014, copy on pages 1008 to 1029 of the paper book and in particular, our attention was drawn to page 1026 of the paper book and it was pointed out that in that year, this issue was restored back to AO/TPO for a fresh decision. He submitted that in the present year also, the issue in dispute may be restored to AO/TPO for a fresh decision with similar directions. Learned AR of the assessee could not point out any difference in facts in the present year and therefore, we find no reason to take a contrary view. Hence, by respectfully following the tribunal order in assessee's own case in A.Y.2008-09, we restore this matter back to the file of AO/TPO for fresh decision with same Date of Judgment 06-08-2018 I.T.A.Nos.60/2017 & 204/2017 M/s. Toyota Kirloskar Motor (P) Ltd. Vs. The Commissioner of Income Tax & Anr.4/8
directions as were given by the tribunal in A.Y.2008-09. Regarding C.O. of the assessee, it was fairly conceded by the learned AR of the assessee that if the dispute raised in the appeal of the revenue is restored to AO/TPO with the same directions as were given by the tribunal in A.Y.2008-09 then the issues raised by the assessee in the C.O. will be of academic interest only and no separate adjudication is called for at the present stage. We hold accordingly".
3. The relevant findings of the learned Tribunal in IT (TP) A No.1595/Bang/2012 dated 14.08.2014 for A.Y.2008-09 are quoted in the order dated 06.08.2018 passed by this Court in ITA No.58/2017.
4. The need to remand the matter back to the TPO/AO arose in view of the fact that for the earlier Assessment Year, the TPO had originally made the Transfer Pricing Analysis separately for manufacturing segment and trading segment of the Assessee, but the Tribunal vide para-11 of the Tribunal's order dated Date of Judgment 06-08-2018 I.T.A.Nos.60/2017 & 204/2017 M/s. Toyota Kirloskar Motor (P) Ltd. Vs. The Commissioner of Income Tax & Anr.
5/8 14.08.2014 took a view that on a comprehensive view of the matter, since the trading activity was integrally connected with the manufacturing activity of the Assessee-company, trading the spare parts also to be imported from out of India from its Associated Enterprise, instead of taking separate T.P. Analysis for two different segments of the company, the 'Combined Transaction Approach' was more appropriate to be adopted.
5. The contention raised by the learned senior counsel for the Appellant-Assessee Mr.S.S.Naganand before us is that remand in these circumstances is only an academic because for the previous assessment years, the Tribunal's findings in this regard have already been upheld by this Court while dismissing the Revenue's appeals filed before this Court in ITA No.172/2013 (The Commissioner of Income Tax & Anr. Vs. M/s.Toyota Date of Judgment 06-08-2018 I.T.A.Nos.60/2017 & 204/2017 M/s. Toyota Kirloskar Motor (P) Ltd. Vs. The Commissioner of Income Tax & Anr.
6/8 Kirloskar Motors Pvt. Ltd.,) for A.Y. 2003-04 and ITA No.525/2014 for A.Y.2007-08.
He also relied upon the decision of this Court in the case of Ganapathi Subraya Bhat vs. Land Tribunal, Honnavar (2002(4) KCCR 2328), in which, the case under Karnataka Land Reforms Act, 1961, the co-ordinate Bench of this Court hold that the remand to the Land Tribunal in the facts and circumstances of the case would only be an academic and therefore, was not required to be made.
6. Learned counsel for the Respondent-Revenue supported the impugned order of the learned Tribunal before us.
7. Having heard the learned counsels, we are of the opinion that no substantial question of law arises out of the said order with remand directions of the learned Tribunal. The exercise of Transfer Pricing Analysis on the 'Combined Transaction Approach' Date of Judgment 06-08-2018 I.T.A.Nos.60/2017 & 204/2017 M/s. Toyota Kirloskar Motor (P) Ltd. Vs. The Commissioner of Income Tax & Anr.
7/8 and not on different segment basis, deserves to be undertaken and in our opinion, the learned Tribunal was justified in remanding the case back to the TPO/AO for undertaking such Transfer Pricing Analysis for determining the ALP of the Royalty payments made by the Assessee-Indian company to the Associated Enterprises of Japan.
8. The factual exercise of determination of ALP, whether it results in any T.P. adjustments or not, is not an issue before us at this stage. It is for the authority concerned to look into these facts and figures by undertaking the requisite exercise of T.P. Analysis on the basis of comparables selected by the authorities in accordance with the parameters available with them.
9. We also do not find the aforesaid judgment of this Court in Ganapathi Subraya Bhat (supra) relied upon by the learned senior counsel is of any help to the Assessee, as the facts and context in which the co-
Date of Judgment 06-08-2018 I.T.A.Nos.60/2017 & 204/2017 M/s. Toyota Kirloskar Motor (P) Ltd. Vs. The Commissioner of Income Tax & Anr.
8/8 ordinate Bench of this Court found that the remand was not justified are not available in the present set of facts.
10. We do not feel here that this remand direction would entirely an academic exercise only and TPO/AO should be allowed to undertake this exercise in the present case and therefore, we are not inclined to interfere with the findings of the learned Tribunal in any manner and no substantial question of law arises out of the said order of the learned Tribunal requiring our consideration for further interference in the present appeal.
11. The appeal filed by the Assessee is accordingly dismissed. No costs.
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JUDGE Sd/-
JUDGE Srl.