General Motors (I) Pvt.Ltd.,, Panchmahal v. The JCIT.,Panchmahal Circle,, Godhra

ITA 793/AHD/2014 | 2009-2010
Pronouncement Date: 25-10-2016 | Result: Allowed

Appeal Details

RSA Number 79320514 RSA 2014
Bench Ahmedabad
Appeal Number ITA 793/AHD/2014
Duration Of Justice 2 year(s) 7 month(s) 7 day(s)
Appellant General Motors (I) Pvt.Ltd.,, Panchmahal
Respondent The JCIT.,Panchmahal Circle,, Godhra
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 25-10-2016
Date Of Final Hearing 07-09-2016
Next Hearing Date 07-09-2016
Assessment Year 2009-2010
Appeal Filed On 18-03-2014
Judgment Text
I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH AHMEDABAD BEFORE SHRI S.S.GODARA JUDICIAL MEMBER AND SHRI MANISH BORAD ACCOUNTANT MEMBER ./ ITA (TP)NO.793/AHD/2014 / ASSTT. YEAR: 2009-2010 AND ./ ITA (TP)NO.713/AHD/2015 / ASSTT. YEAR: 2010-2011 AND ./ ITA (TP)NO.518/AHD/2016 / ASSTT. YEAR: 2011-2012 GENERAL MOTORS INDIA PVT. LTD. PLOT NO. CHANDRAPURA INDUSTRIAL ESTATE HALOL DIST: PANCH MAHALS GUJARAT 389 351. VS JCIT PANCH MAHAL CIRCLE GODHRA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR WITH SHRI VISHAL KATRA SHWETA KASHYAP SHRI SUMIT SINGH REVENUE BY : SHRI B.K.S. PANDYA CIT-DR ! / DATE OF HEARING : 07/09/2016 '#$ ! / DATE OF PRONOUNCEMENT: 25/10/2016 %& / O R D E R PER SHRI S.S.GODARA JUDICIAL MEMBER: THESE THREE ASSESSEES APPEALS ARISE AGAINST ASSES SMENT ORDERS PASSED BY THE JOINT COMMISSIONER OF INCOME TAX PAN CH MAHAL CIRCLE GODHRA (IN A.YS. 2009-10 AND 2010-11) DEPUTY COMMI SSIONER OF ITA(TP) NO.793/AHD/2014 AND 2 OTHERS 2 INCOME TAX PANCH MAHAL RANGE GODHRA (IN A.Y.2011- 12) DATED 17.2.2014 29.1.2015 AND 12.1.2016; RESPECTIVELY I N PROCEEDINGS U/S.143(3) R.W.S. 144C(13) OF THE INCOME TAX ACT; I N SHORT THE ACT. 2. WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF VARIOUS SUBSTANTIAL ADJUS TMENT/ADDITIONS IN THE INSTANT THREE APPEALS PERTAINING TO TRANSFER PR ICING AND OTHER ISSUES AS DISCUSSED IN SUCCEEDING PARAS. SHRI SOPARKAR FIL ES A COMPILATION CHART SUMMARIZING VARIOUS ISSUES RAISED IN THE INST ANT CASES IN WHICH ALL THREE CASES ARE STATED TO BE RAISING MAINLY IDENTIC AL PLEADINGS BEFORE US. THE REVENUE IS FAIR ENOUGH IN NOT DISPUTING CO RRECTNESS OF THIS COMPILATION. WE THUS PROCEED TO DECIDE THESE ISSUE S TOGETHER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. THESE THREE ASSESSEES APPEALS RAISE FIRST COMMI SSION ISSUE CHALLENGING TRANSFER PRICING ADJUSTMENT OF RS.396.6 3 CRORES THEREBY REDUCING EXPENDITURE ON IMPORTED PARTS AND COMPONEN TS IN RESPECT OF CKD KITS FROM ITS ASSOCIATED ENTERPRISE IN FIRST AS SESSMENT YEAR 2009- 10. SIMILAR ADJUSTMENTS IN LATTER TWO ASSESSMENT Y EARS INVOLVE FIGURES OF RS.300.41 CRORES AND RS.393.21 CRORES RESPECTIVE LY. SHRI SOPARKAR STATES IN THE COURSE OF HEARING THAT A CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE ITA NO.2634/AHD/2012 FOR ASS TT.YEAR 2008-09 DECIDED ON 11.8.2016 HAS ACCEPTED IDENTICAL PRAYER SEEKING TO INCLUDE A FOREIGN TESTED PARTY M/S.GMDAT (GENERAL MOTORS DAEW OO AUTO & TECHNOLOGY LTD.) IN THE ARRAY OF COMPARABLES AFTER PLACING RELIANCE ON TRIBUNALS OTHER DECISION FOR ASSTT.YEAR 2006-07. HE INVITES OUR ATTENTION TO ASSESSEES COMPILATION CHART SPECIFICA LLY POINTING OUT STRIKING SIMILARITIES ON FACTS IN ASSTT.YEAR 2008-0 9 VIS--VIS THOSE INVOLVED IN THREE INSTANT APPEALS. THE REVENUE IS FAIR ENOUGH IN NOT POINTING OUT ANY DISTINCTION OF FACTS QUA THIS ISSUE IN THE ABOVE STATED ASSESSMENT YEARS. IT HAS COME ON THE RECORD THAT T HIS TRIBUNAL IN ITA(TP) NO.793/AHD/2014 AND 2 OTHERS 3 ASSESSMENT YEAR 2008-09 HAS ALREADY HELD THAT GMDAT (GENERAL MOTORS KOREA W.E.F. ASSTT.YEAR 2011-12) AS A TESTED PARTY FOR THE PURPOSE OF BENCH-MARKING OF TRANSACTIONS WITH RESPECT OF SALE OF CKD KITS. LD.CO- ORDINATE BENCH HAS REMITTED THIS ISSUE BACK TO TPO FOR ADJUDICATION AFRESH AS PER LAW. WE TOO ADOPT JUDICIAL CONSISTEN CY TO SET ASIDE INSTANT ISSUE ON CORRECTNESS OF THESE IDENTICAL ADJUSTMENTS PERTAINING TO IMPORT OF PARTS AND ENGINE COMPONENTS BACK TO THE TPO FOR DECISION AFRESH IN TUNE WITH HIS ORDER IN THE SAID EARLIER ASSESSMENT YEARS. THIS FIRST ISSUE IS ACCEPTED FOR STATISTICAL PURPOSE. 4. WE NOW COME TO SECOND COMMON ISSUE OF TP ADJUSTM ENT OF RS.70.79 CRORES RS.27.95 CRORES AND RS.3.01 CRORES IN THREE IMPUGNED ASSESSMENT YEARS RESPECTIVELY RELATING TO ENGINEER ING SEGMENT INVOLVING TECH CENTRE OPERATIONS. SHRI SOPARKAR DR AWS OUR ATTENTION TO CASE RECORDS. HE SUBMITS THIS TECH CENTRE OPERATIO NS ADJUSTMENT INVOLVES ENGINEERING SERVICES. AND THAT SOLE QUARR EL BETWEEN THE PARTIES IS QUA SELECTION OF COMPARABLES. LD.COUNSEL CONTENDS THA T ASSESSEE ITSELF SUCCEEDED IN GETTING INCLUDED M/S.A CE SOFTWARE EXPORTS AND PSI DATA SYSTEMS LTD. FOLLOWED BY EXCLUSION OF POWERSOFT GLOBAL SOLUTIONS LTD. AND ROLTA INDIA LTD. IN THE ARRAY OF COMPARABLES IN TRIBUNALS ORDER FOR ASSTT.YEAR 2006-07 (SUPRA). T HE REVENUE AT THIS STAGE QUOTES RULE 10B(4) PROVISO TO HIGHLIGHT THE FACT THAT THIS ISSUE IN THE ASSTT.YEAR 2006-07 HAD EXCLUDED M/S.POWERSOFT G LOBAL SOLUTIONS LTD. FOR THE REASON THAT IT HAD UNDERGONE A MERGER WITH M/S.CADGIS CONSULTANCY IN PREVIOUS YEAR RELEVANT TO ASSTT.YEAR 2006-07. ITS CASE IS THAT THIS MERGER IS NO MORE A RELEVANT FACTOR BEYON D A PERIOD OF TWO SUCCEEDING ASSESSMENT YEARS AS PER THE SAID PROVISO . IT IS EVIDENT TO US THAT TRIBUNALS ORDER ADMITTEDLY DOES NOT DEAL W ITH THIS PROVISO SINCE MERGER PERIOD FELL IN THE PREVIOUS YEAR RELEVANT TO ASSTT.YEAR 2006-07. WE FURTHER FIND THAT THIS TRIBUNAL HAS NOT CONSIDER ED FUNCTIONAL COMPARABILITY OF M/S.POWERSOFT GLOBAL SOLUTIONS WHI LE DECIDING THE ISSUE ITA(TP) NO.793/AHD/2014 AND 2 OTHERS 4 IN QUESTION IN SAID EARLIER ASSESSMENT YEAR. FACT ALSO REMAINS THAT WE ARE REMITTING THIS ISSUE OTHERWISE BACK TO THE TPO FOR ADJUDICATION AFRESH AS PER OUR FINDINGS IN EARLIER ASSESSMENT YE ARS. WE DEEM IT APPROPRIATE IN THIS PECULIAR BACKDROP THAT THIS ISS UE REGARDING EXCLUSION OF M/S.POWERSOFT GLOBAL NEEDS TO BE RE-EXAMINED KEE PING IN MIND VARYING STAND OF THE PARTIES NARRATED HEREINABOVE O N MERITS QUA FUNCTIONAL COMPARABILITY. THE TPO IS ACCORDINGLY D IRECTED TO ADJUDICATE THE INSTANT ISSUE AFRESH AS PER LAW. THIS CORRESPON DING SUBSTANTIAL GROUND IN ALL APPEAL IS ACCEPTED FOR STATISTICAL PU RPOSE. 5. THE ASSESSEE AT THIS STAGE FURTHER TAKES US TO A SSESSMENT YEAR 2009-10 WHEREIN BOTH THE LOWER AUTHORITIES HAVE TAK EN M/S.KLG SYSTEL LTD. AS A COMPARABLE AT ENTITY LEVEL AS AGAINST ASSESSEES SUBMISSIONS THAT IT IS IN FACT LIFECYCLE SOLUTIONS SEGMENTS ONLY WHICH COULD BE TAKEN AS A COMPARABLE FOR THE PURPOSE OF B ENCH MARKING ENGINEERING SERVICES. SHRI SOPARKAR REITERATES ASS ESSEES STAND THAT THE VERY AUTHORITIES HAVE ADOPTED THE ABOVE SEGMENT AS COMPARABLE INSTEAD OF ENTITY ITSELF IN ASSTT.YEARS 2010-11 AND 2011-12 (LATTER TWO ASSESSMENT YEARS BEFORE US) WITHOUT POINTING OUT AN Y DISTINCTION ON FACTS. REVENUE DOES NOT REBUT THIS FACTUAL POSITIO N. WE ACCORDINGLY DIRECT LD.TPO TO PROCEED ON THE ABOVE QUOTED SEGME NTAL BASIS ONLY REGARDING THE ABOVE ENTITY. 6. WE NOW COME TO THIRD ISSUE OF ROYALTY PAYMENT AD JUSTMENTS OF RS.8.47 CRORES RS.12.74 CRORES AND RS.16.44 CRORES ; RESPECTIVELY AS RAISED IN THE THREE IMPUGNED ASSESSMENT YEARS BEFOR E US. SHRI SOPARKAR STATES THAT THIS TRIBUNALS ORDER IN THE A SSTT.YEAR 2008-09 IN ASSESSEES CASE ITSELF (SUPRA) ON THE VERY ISSUE RE MITS THE MATTER BACK TO TPO TO BE DECIDED AS PER ANOTHER CO-ORDINATE BEN CHS FINDING IN ASSTT.YEAR 2006-07. REVENUE FAIRLY CONCEDES THAT T HERE IS NO EXCEPTION ON THE FACTS PERTAINED TO THE ISSUE IN QUESTION INV OLVED IN THESE ITA(TP) NO.793/AHD/2014 AND 2 OTHERS 5 ASSESSMENT YEARS. WE APPRECIATE THIS FAIR STAND. T HIRD ISSUE OF ROYALTY ADJUSTMENT IS ACCORDINGLY SET ASIDE TO THE TPO. TH E ASSESSEES CORRESPONDING SUBSTANTIVE GROUNDS ARE ACCEPTED FOR STATISTICAL PURPOSE IN ALL THE THREE IMPUGNED ASSESSMENT YEARS. 7. SHRI SOPARKAR AT THIS STAGE REITERATES ASSESSEE S NEXT SUBMISSION IN THREE IMPUGNED ASSESSMENT YEARS SEEKING WORKING CAPITAL ADJUSTMENTS. HIS CASE IS THAT THIS TRIBUNAL IN ABO VE EARLIER ASSESSMENT YEARS HAS FURTHER RESTORED ISSUE BACK TO THE FILE O F TPO. THE REVENUE DOES NOT DISPUTE THIS FACTUAL POSITION. WE DO NOT DEEM IT APPROPRIATE TO ENTER INTO MUCH A LENGTHIER DISCUSSION AND SET ASID E THIS ISSUE ALSO BACK TO THE TPO FOR ADJUDICATION OF IMPUGNED WORKING CAP ITAL ADJUSTMENT AS PER LAW. 8. THE ASSESSEES LAST SUBMISSION IN THE ASSTT.YEAR 2010-11S ITA NO.713/AHD/2015 AVERS THAT AO HAS ALLOWED SHORT CRE DIT OF TAXES OF RS.6 48 375/-. THE REVENUE AT THIS STAGE SUGGESTS THAT THE SAME IS ESSENTIALLY A COMPUTATION EXERCISE TO BE FINALIZED BY THE AO AT AN APPROPRIATE STAGE. IT HIGHLIGHTS THE FACT THAT WE HAVE ALREADY REMITTED THE ABOVE SUBSTANTIAL ISSUES BACK TO THE TPO. WE A CCORDINGLY DIRECT THE AO TO PROCEED AFRESH ON THIS TAX CREDIT ISSUE AT TH E TIME OF FINALISING THE CONSEQUENTIAL ASSESSMENTS. THIS GROUND IS ALSO ACC EPTED FOR STATISTICAL PURPOSE. 9. THESE THREE ASSESSEES APPEALS ARE ALLOWED FOR S TATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 25 TH OCTOBER 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER AHMEDABAD; DATED 25/10/2016