Income Tax Appellate Tribunal - Delhi
Brahma Center Development Pvt. Ltd., ... vs Acit, New Delhi on 2 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : I-1 : NEW DELHI
BEFORE SHRI R.S. SYAL, VICE PRESIDENT
AND
SMT. BEENA A. PILLAI, JUDICIAL MEMBER
ITA No.1215/Del/2017
Assessment Year : 2012-13
Brahma Center Development Pvt. Ltd., Vs. ACIT,
Flat No.B-8, Cabin No.11, Circle-5(1),
Ansal Tower-38, Nehru Place, New Delhi.
New Delhi.
PAN: AAECB1294N
(Appellant) (Respondent)
Assessee By : Shri Tilak Vaish &
Shri Atul Jain, CAs
Department By : Shri Amrendra Kumar, CIT, DR
Date of Hearing : 01.08.2017
Date of Pronouncement : 02.08.2017
ORDER
PER R.S. SYAL, VP:
This appeal filed by the assessee is directed against the final assessment order dated 31.01.2017 passed by the Assessing Officer ITA No.1215/Del/2017 (AO) u/s 143(3) read with section 144C of the Income-tax Act, 1961 (hereinafter also called 'the Act') in relation to the assessment year 2012-13.
2. The only issue raised in this appeal is against the addition on account of transfer pricing adjustment amounting to Rs.17,62,93,726/-.
3. Briefly stated, the facts of the case are that the assessee, an Indian company, is engaged in the development of township, housing, built up infrastructure in accordance with the foreign direct investment policy. During the year under consideration, the assessee declared two international transactions of Interest on compulsorily convertible debentures in Form No.3CEB. The Assessing Officer (AO) made reference to the Transfer Pricing Officer (TPO) for determining the arm's length price (ALP) of the reported international transactions. The TPO observed that the assessee paid interest @ 12% amounting to Rs.17.17 crore and Rs.9.26 crore on Compulsorily Convertible Debenture (CCDs) to its two associated enterprises, namely, JM Asian Cyprus Ltd. and Neptune Asian Cyprus Ltd. The assessee applied 2 ITA No.1215/Del/2017 Comparable Uncontrolled Price (CUP) Method for demonstrating that its international transactions of payment of interest on CCDs were at ALP. The TPO did not agree with the ALP so determined. Taking cognizance of the directions given by the Dispute Resolution Panel (DRP) in relation to the assessment year 2011-12, the TPO considered an interest rate of 4.00% (based on six months' LIBOR rate as on 31.03.2012 plus 350 basis points) as ALP. That is how, the TPO proposed transfer pricing adjustment amounting to Rs.17,62,93,726/-. The assessee remained unsuccessful before the DRP. The A.O. in the final order made the above addition. The assessee is aggrieved against such addition.
4. We have heard the rival submissions and perused the relevant material on record. It has been noticed above that the TPO took note of the directions given by the DRP in relation to the assessment year 2011- 12 in determining the ALP of the international transactions for the year under consideration. The order for the assessment year 2011-12 came up for consideration before the Tribunal. Vide its order dated 3 ITA No.1215/Del/2017 29.07.2016 in ITA No.373/Del/2016 for assessment year 2011-12, the tribunal restored the matter to the TPO in the light of certain additional evidence filed before it. On the basis of certain additional evidence, it was observed by the tribunal that the assessee carried out an analysis of BSE database which provided the details of comparable instruments and the average rate of return at 13.66%. The TPO was directed to consider additional evidence and determine the ALP afresh. Pursuant to such order of the Tribunal, the TPO passed consequential order u/s 92CA(5) read with section 254 of the Act on 30.11.2016. A copy of such order has been placed at page 986 onwards of the paper book. The TPO noticed that the average comparable uncontrolled lending rate was 13.66% as against the assessee paying interest @ 12%. The same was thus found at ALP and, hence, the adjustment has been reduced to nil. The facts for the instant year are, mutatis mutandis, similar. Page 254 of the paper book is the analysis of comparable transactions for the extant year in the same manner as it was done for the preceding year. The overall average rate of interest has been determined at 14.65% with the real-estate average rate of 17%. The figures so shown have not been 4 ITA No.1215/Del/2017 controverted on behalf of the Revenue. The assessee's payment of interest during the year at the rate of 12%, being the same rate at which the assessee paid in the preceding year is, therefore, held to be at arm's length. We, therefore, order for the deletion of addition.
5. In the result, the appeal is allowed.
The order pronounced in the open court on 02.08.2017.
Sd/- Sd/-
[BEENA A. PILLAI] [R.S. SYAL]
JUDICIAL MEMBER VICE PRESIDENT
Dated, 02nd August, 2017.
dk
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT AR, ITAT, NEW DELHI.
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