Nikon India Pvt. Ltd. Vs DCIT (ITAT Delhi)
Section 154(1A) lays down that rectification can be done for any matter other than the matter considered and decided in appeal/revision. Thus, whene any matter had been considered and decided in any proceeding by way of appeal or revision, rectification of such matter cannot be done by TPO/Assessing Officer under Section 154 of the Income Tax Act, 1961.
The said position is clear in terms of Section 154(1A) of the Act wherein it has been laid that where any matter has been considered and decided in any proceedings by way of appeal or revision relating to an order referred to in sub section (1), the authority passing such order, may notwithstanding anything contained in any law for the time being in force, amend the order under that sub section in relation to any matter other than the matter which has been so considered and decided. The order of the Appellate Tribunal having become final and after the final decision of the Appellate Tribunal, the Revenue could not initiate fresh assessment proceedings, as the order of the Tribunal was binding on the Revenue. It was noted that various High Court had expressed a similar view.
Thus, the questions which are expressly raised before or decided by the appellate or revisional authority cannot be re-agitated and no rectification proceedings will be maintainable in respect thereof, under section 154 of the Income Tax Act, 1961, before the TPO/Assessing Officer in the garb of amending his/her own order. Thus, the assumption of jurisdiction by the TPO/AO u/s 154 is bad in law and void ab intio. Therefore, the assessment order passed by the Assessing Officer on 10.07.2017 is also bad in law and void ab initio, thus, the Assessment order is set-aside.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal is filed by the assessee against the order dated 10/07/2017 passed by the Assessing Officer u/s 144C(3) read with Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2011-12.
2. The grounds of appeal are as under:-
1. That on the facts and circumstances of the case and in law, the AO has erred in assessing the total income of the Appellant under section 143(3) read with section 144C and 254 of the Act, for the relevant assessment year at INR 16,66,11,280 as against the returned income of INR 12,35,25,748.
2. That on the facts and circumstances of the case and in law, the AO / Transfer Pricing Officer (“TPO”) have erred in making an adjustment of INR 4,30,85,529 to the arm’s length price (“ALP”) of (alleged) international transaction of Advertisement, Marketing and Promotion (“AMP”) expenditure holding the same to be not at ALP, applying the intensity approach.
3. That on the facts and circumstances of the case and in law, the order dated May 16, 2017 passed by the TPO is non-est and invalid since the TPO rectified its order dated November 10, 2016 giving effect to the directions of the Hon’ble Tribunal without specifying the mistakes (which is apparent from records) in that order and without considering objections of Appellant.
4. That on the facts and circumstances of the case and in law, the impugned order passed by the AO / TPO is bad in law as it has concluded existence of ‘international transaction’ without discharging onus to prove existence of an agreement, understanding or arrangement between the Appellant and the AE for incurrence of AMP expenditure.
5. That on the facts and circumstances of the case and in law, the order of the TPO is non-est and invalid as the TPO has computed ALP of AMP expenditure (alleged international transaction) simultaneously on substantive as well as protective basis which is against the contours of transfer pricing.
6. That on the facts and circumstances of the case and in law, the AO / TPO have grossly erred in applying Bright Line Test (‘BLT’) to propose transfer pricing adjustment amounting to INR 30,99,61.631, on protective basis, without appreciating that BLT has been rejected by the Hon’ble Tribunal vide its order dated July 15, 2016 (in first round ) thus the order is bad in law and void-ab-initio.
Notwithstanding and without prejudice;
7. That on the facts and circumstances of the case and in law, the AO / TPO. have erred in not allowing the benefit of (+/-) 5% as per second proviso to section 92C(2) of the Act.
8. That on the facts and circumstances of the case and in law, the AO / TPO erred in not granting quantitative / economic adjustments while quantifying arm’s length price of the alleged international transaction of AMP expenditure.
9. That on the facts and circumstances of the case and in law, the AO have erred in levying / charging interest under sections 234B and/or 234C of the Act.
Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant.”
3. Nikon India Private Limited (the assessee company) is a wholly owned subsidiary of Nikon Corporation, Japan (“Nikon Japan”). The assessee company is inter-alia engaged in import, sales and distribution for Nikon Imaging products in India through network of local distributors. For the relevant Assessment Year (“AY”), the assessee company filed its return of income on September 21, 2011 declaring income of Rs. 12,35,25,748/-. The case of the assessee company was selected for scrutiny under section 143 (3) of the Act. During the relevant Assessment Year 2011-12 the assessee company had following ‘international transactions’ with its Associated Enterprise (AE), which were duly reported in Form 3CEB and TP Study.
INTERNATIONAL TRANSACTIONS:
