IN THE ITAT AHMEDABAD BENCH ‘D’
Atul Ltd.
Versus
Assistant Commissioner of Income-tax, Range-1
IT Appeal No. 3118 (Ahd.) of 2010
[Assessment Year 2006-07]
October 29, 2012
ORDER
Mukul Kr. Shrawat, Judicial Member
This is an appeal filed by the Assessee on Form No. 36B i.e ‘Memorandum of Appeal’ as prescribed u/s 253(1)(d) being a direct appeal emanating from the Assessment Order passed u/s 143(3) r.w.s.144C dated 22.10.2010. However, the chronology of the connected orders passed by the Revenue Authorities is as follows:-
1. T.P.O. order U/s 92 CA(3) dated 12.10.09.
2. Draft Assessment Order U/s 144 C dated 22.12.2009.
3. D R P ( Dispute Resolution Panel ) order U/s 144C (5) dated 22.09.2010.
4. Assessment Order U/s 143(3) r.w.s. 144C dated 22.10.2010.
2. Ground-wise decision is as under.
Ground Nos.1 to 6 :-
1. Learned AO/DRP has erred in law and on facts in adding Rs.4,46,52,496/- on account of adjustments to the Arm’s length price without there being any jurisdiction as well as legal and factual basis for the same.
2. Learned AO has erred in law and on facts in referring the case of the appellant to the transfer pricing officer. Under the facts and circumstances of the case, there was no reasons to interfere with the pricing adopted by the appellant as the same is falling within the parameters of transfer pricing laid down under the scheme of the Act.
3. Alternatively and without prejudice, the order of the Additional Commissioner of Income Tax acting as Transfer Pricing Officer is without jurisdiction and against the express provisions of law in as much as Commissioner of Income Tax could not have acted as transfer pricing officer.
4. The learned assessing officer has erred in law and on facts in invoking the provisions of Chapter X without prima facie demonstrating that there was some tax avoidance.
5. The learned assessing officer has erred in law and on facts in making a reference to the Transfer pricing Officer (TPO) u/s.92C(3) r.w.s. 92CA(1) of the Act without providing an opportunity of being heard to the appellant.
6. In any case the whole reference and the consequent orders are bad and illegal because the alleged approval granted by CIT u/s.92CA(1) of the Act is vitiated in law firstly because the appellant was not heard before any such approval and secondly because the same has been granted mechanically, without any application of mind and without due diligence.
2.1 Apart from these grounds, the appellant has also raised an Additional Ground, reproduced below:-
1. The Learned Transfer Pricing Officer, and consequentially the D.R.P. and the Assessing Officer, have no jurisdiction to make any adjustment in relation to alleged commission income of GBP 3,45,418/- (Rs.2,71,82,980/-) in as much as the same were not subject mater of Reference made to the Transfer Pricing Officer under section 92CA(1) of the Income Tax Act, 1961.
3. At the outset, it is worth to mention that the appellant had also moved a petition for admission of Additional Evidences as follows:-
“1. Statement of account of the assessee in the books of Atul Europe Ltd. for A.Y. 2004/05 & F.Y.2005/06 in support of the submissions made before ld. TPO vide letter dated 01/07/2010 placed @ page 351 para 1 of the paper book that assessee accounted for the commission income on net basis since Atul Europe Ltd. forwarded GEB 141714 only after adjusting the expenses for the transactions with the Agricultural Support Service Company (ASSC).
2. Statement of account of assessee in the books of Atul Europe Ltd. from Financial Year 2000/01 to Financial Year 2004/05 in support of the submissions made before ld.TPO vide letter dated 01/07/2010 placed @ 351 para 2 of the paper book that though Atul Europe Ltd. accounted commission receivable from P P Site in their books for earlier years, it was written off in Financial Year 2005/06 and hence no such commission income was accounted for in the books of assessee as it was never received from Atul Europe Ltd.
3. Re. Summary of comparative data for sales made to AE and non AEs’ for Financial Year 2005/06 submitted as part of audited accounts placed @ page 95 of the paper book reproduced as Annexure A of the order of Transfer Pricing Officer, the assessee submits that on verification of the sale transaction with AE / Non AE, discrepancy in the nature of sale of product code 111108 (product name Novatic Brown R Pure) to non AE parties was through oversight shown as sale of product code 110308 (product name Novatic Olive R Pure). A certificated dated 6th August 2011 of M/s.Ghanshyam Parekh & Co., Chartered Accountants with the sale Invoices in support of the above contention are annexed herewith for appreciation of the Hon’ble Bench.”
3.1 The ITAT Bench has considered the petition and thereafter vide an order sheet entry dated 25.01.2012 has decided that the additional evidences as mentioned at Serial no. 1 & 2. are to be admitted , but the additional evidence at Serial No. 3 was not allowed to be admitted. With this back ground now we shall proceed to decide the controversies raised in this appeal.
4. Before us in respect of the above grounds the Appellant has primarily raised the objections about the stand taken by the T.P.O. in respect of the following two additions:-
