GAP International Sourcing (India) Pvt. Ltd., New Delhi v. DCIT, New Delhi

ITA 4073/DEL/2010 | 2006-2007
Pronouncement Date: 10-12-2010 | Result: Allowed

Appeal Details

RSA Number 407320114 RSA 2010
Assessee PAN AACCG3437E
Bench Delhi
Appeal Number ITA 4073/DEL/2010
Duration Of Justice 3 month(s) 9 day(s)
Appellant GAP International Sourcing (India) Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 10-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 10-12-2010
Date Of Final Hearing 09-11-2010
Next Hearing Date 09-11-2010
Assessment Year 2006-2007
Appeal Filed On 01-09-2010
Judgment Text
ITA NO. 4073/DEL/2010 A.Y. 2006-07 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 I.T.A. NO. 4073/DEL/2010 A.Y. : 2006-07 GAP INTERNATIONAL SOURCING INDIA PVT. LTD. B-1/I-2 MOHAN COOPERATIVE INDUSTRIAL ESTATE MATHURA ROAD NEW DELHI 110 044 (PAN/GIR NO. : AACCG3437E) VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12(1) NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. RAHUL K. MITRA CA DEPARTMENT BY : SHRI RIS GILL C.I.T. (D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. ASSESSING OFFICER DATED 29.07.2010 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. DRAFT ORDER OF THE ASSESSING OFFICER WAS PASSED O N 24.11.2009. DISPUTES RESOLUTION PANEL (DRP) PASSED DIRECTION U/S 14 4C ON 31.5.2010. ITA NO. 4073/DEL/2010 A.Y. 2006-07 2 3. AT THE OUTSET OF HEARING LD. COUNSEL OF THE ASSE SSEE ASSAILED THAT THE DISPUTES RESOLUTION PANEL HAS NOT AT ALL CONSIDER ED THE ASSESSEES SUBMISSIONS AND PASSED A VERY LACONIC AND NON-SPEAK ING DIRECTION. THE SAME READS AS UNDER:- THE ASSESSEE HAS FILED OBJECTIONS TO THE DRAFT ASSE SSMENT ORDER ON 5.1.2010 AND THE CASE WAS FIXED BY DRP FOR HEARING ON 14 TH MAY 2010. THE CASE WAS REPRESENTED BY CA RAHUL MEHTA RAM SHARMA AND DEEPAK KAPOOR AND SRI ANANT SARDANA. A FURTHER WRITTEN SUBMISSION WAS FI LED ON 26 TH MAY 2010. THE DRP HAVING CONSIDERED THEIR ARGUMENTS AND WRITTEN SUBMISSIONS BY THE ASSESSEE AN D MATERIAL ON RECORD DECIDES THE MATTER AS UNDER:- 2. ARMS LENGTH PRICE (ALP) U/S 92CA(3) AS NOTICED FROM THE ORDER OF THE TRANSFER PRICING OF FICE (TPO) THE ISSUES INVOLVED ARE FLOWING FROM THE ORDER S OF THE TPO IN EARLIER YEARS. THE MATTER IS UNDER LITIGATI ON FOR THE EARLIER YEARS. THE ASSESSEE HAS USED BERRY RATIOS AS A PROFIT LEV EL INDICATOR (PLI) WHICH IS REJECTED BY THE TPO. IT IS S EEN FROM THE RELEVANT PROVISIONS OF THE LAW THAT THE PLI SHO ULD HAVE AN ELEMENT OF PROFIT IN THE NOMINATOR AND THEREFORE THE TPO IS RIGHT IN REJECTING THE PLI OF THE ASSESSEE. THE TPO HAS PASSED THE ORDER AFTER GIVING SUFFICIE NT OPPORTUNITY TO THE ASSESSEE AND THE POINTS RAISED B Y THE ASSESSEE ARE WELL ANSWERED IN THE TPO ORDER. THE ITA NO. 4073/DEL/2010 A.Y. 2006-07 3 ASSESSEE HAS NOT RAISED ANY NEW ISSUES. THE RISK UNDERTAKEN BY THE ASSESSEE IS SUFFICIENTLY HIGHER REQUIRING HIGHER COMPENSATION TO ITS EFFORTS. THE SUPPLY CHAI N INTANGIBLE DEVELOPED BY THE ASSESSEE ALONGWITH HUMA N CAPITAL EMPLOYED DESERVES HIGHER MARGIN. THEREFORE WE UPHOLD THE METHOD EMPLOYED BY THE TPO ALONGWITH THE P LI USED IN THE ORDER. WE DO NOT SEEN ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND THEREFORE THERE IS NO NEED TO INTERFERE IN THE ORDER OF THE TPO. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT SECTION 144C ENVISAGES FOLLOWING ON THE P ART OF THE DRP:- (5) THE DISPUTES RESOLUTION PANEL SHALL IN CASE WH ERE ANY OBJECTION IS RECEIVED UNDER SUB-SECTION (2) IS SUE SUCH DIRECTIONS AS IT THINKS FIT FOR THE GUIDANCE OF THE ASSESSING OFFICER TO ENABLE HIM TO COMPLETE THE ASSESSMENT. (6) THE DISPUTE RESOLUTION PANEL SHALL ISSUE THE DIR ECTIONS REFERRED TO IN SUB-SECTION (5) AFTER CONSIDERING T HE FOLLOWING NAMELY :- (A) DRAFT ORDER; (B) OBJECTIONS FILED BY THE ASSESSEE; (C) EVIDENCE FURNISHED BY THE ASSESSEE; (D) REPORT IF ANY OF THE ASSESSING OFFICER VALUA TION OFFICER OR TRANSFER PRICING OFFICER OR ANY OTHER AUTHORITY; ITA NO. 4073/DEL/2010 A.Y. 2006-07 4 (E) RECORDS RELATING TO THE DRAFT ORDER; (F) EVIDENCE COLLECTED BY OR CAUSED TO BE COLLECTE D BY IT; AND (G) RESULT OF ANY ENQUIRY MADE BY OR CAUSED TO BE MADE BY IT. (7) THE DISPUTE RESOLUTION PANEL MAY BEFORE ISSUING ANY DIRECTIONS REFERRED TO IN SUB-SECTION (5) - (A) MAKE SUCH FURTHER ENQUIRY AS IT THINKS FIT; OR (B) CAUSE ANY FURTHER ENQUIRY TO BE MADE BY ANY INCOME TAX AUTHORITY AND REPORT THE RESULT OF THE SAME TO IT. (8) THE DISPUTE RESOLUTION PANEL MAY CONFIRM REDUCE OR ENHANCE THE VARIATIONS PROPOSED IN THE DRAFT ORDER SO HOWEVER THAT IT SHALL NOT SET ASIDE ANY PROPOSED V ARIATION OR ISSUE ANY DIRECTION UNDER SUB-SECTION (5) FUR FU RTHER ENQUIRY AND PASSING OF THE ASSESSMENT ORDER. (9) IF THE MEMBERS OF THE DISPUTE RESOLUTION PANEL DIF FER IN OPINION ON ANY POINT THE POINT SHALL BE DECIDE D ACCORDING TO THE OPINION OF THE MAJORITY OF THE MEMBER S. (10) EVERY DIRECTION ISSUED BY THE DISPUTE RESOLUTIO N PANEL SHALL BE BINDING ON THE ASSESSING OFFICER. (11) NO DIRECTION UNDER SUB-SECTION (5) SHALL BE IS SUED UNLESS AN OPPORTUNITY OF BEING HEARD IS GIVEN TO TH E ASSESSEE AND THE ASSESSING OFFICER ON SUCH DIRECTI ONS ITA NO. 4073/DEL/2010 A.Y. 2006-07 5 WHICH ARE PREJUDICIAL TO THE INTEREST OF THE ASSESS EE OR THE INTEREST OF THE REVENUE RESPECTIVELY. (12) NO DIRECTION UNDER SUB-SECTION (5) SHALL BE IS SUED AFTER NINE MONTHS FROM THE END OF THE MONTH IN WHICH THE DRAFT ORDER IS FORWARDED TO THE ELIGIBLE ASSESSEE. (13) UPON RECEIPT OF THE DIRECTIONS ISSUED UNDER SU B- SECTION (5) THE ASSESSING OFFICER SHALL IN CONFO RMITY WITH THE DIRECTIONS COMPLETE NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 153 THE ASSESSMENT W ITHOUT PROVIDING ANY FURTHER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WITHIN ONE MONTH FROM THE END OF THE MONT H IN WHICH SUCH DIRECTION IS RECEIVED. 5. AS AGAINST THE ABOVE PROVISIONS OF THE ACT HERE THE DRP HAS PASSED A VERY LACONIC ORDER. LD. COUNSEL OF THE AS SESSEE CONTENDED THAT VOLUMINOUS SUBMISSIONS HAVE BEEN MADE BEFORE THE DRP AGAINST THE DRAFT ASSESSMENT ORDER. BUT THE DRP HAS BRUSHED ASIDE EVERYTHING WITHOUT EVEN A WHISPER OF THE ASSESSEES OBJECTION S AND THE SUBMISSIONS OF THE ASSESSEE. UNDER THE CIRCUMSTAN CES IN OUR OPINION THE DIRECTIONS OF THE DRP ARE TOO LACONIC T O BE LEFT UNCOMMENTED. THE DIRECTIONS GIVEN BY THE DRP ALMOST TANTAMOUNTS TO SUPERVISING THE ASSESSING OFFICERS DRAFT ORDER AND IN THAT SENSE IT CAN BE EQUATED THAT APPELLATE JURISDICTION BEING EX ERCISED. WE FIND THAT H ONBLE APEX COURT IN THE CASE M/S SAHARA INDIA (FAR MS) VS. CIT & ANR. IN [2008] 300 ITR 403 HAS HELD THAT EVEN AN ADMINISTR ATIVE ORDER HAS TO BE CONSISTENT WITH THE RULES OF NATURAL JUSTICE. ITA NO. 4073/DEL/2010 A.Y. 2006-07 6 6. UNDER THE CIRCUMSTANCES WE FIND THAT CONSIDERAB LE COGENCY IN THE ASSESSEES COUNSEL SUBMISSION THAT THE ASSESSEES S UBMISSION HAS BEEN BRUSHED ASIDE WITHOUT GIVING PROPER CONSIDERATION BY THE DR P. 7. LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROV ERT THIS PROPOSITION. 8. UNDER THE CIRCUMSTANCES IN OUR CONSIDERED OPIN ION THE ISSUE IS REMITTED TO THE FILES OF THE DRP TO CONSIDER THE ISSUE ONCE AGAIN AND PASS A PROPER AND SPEAKING DIRECTION U/S 144C OF TH E IT ACT. SINCE WE ARE REMITTING THE MATTER TO THE FILES OF THE DRP FOR P ASSING A FRESH DIRECTION MERITS OF THE CASE ARE NOT BEING ADJUDICA TED. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPO RTUNITY OF BEING HEARD. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10/12/2010. SD/- SD/- [ [[ [C.L. SETHI C.L. SETHI C.L. SETHI C.L. SETHI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 10/12/2010 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES