M/s Lotus Footwear Enterprises Ltd. v. The Dy. Commissioner of Income-tax International Taxation – 1/1(2), Chennai
[Citation -2016-LL-0921-197]

Citation 2016-LL-0921-197
Appellant Name M/s Lotus Footwear Enterprises Ltd.
Respondent Name The Dy. Commissioner of Income-tax International Taxation – 1/1(2), Chennai
Court ITAT-Chennai
Relevant Act Income-tax
Date of Order 21/09/2016
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags additional evidence • transfer pricing • industrial park
Bot Summary: Ld. Counsel for the assessee submitted that all these appeals assailed addition made on account of transfer pricing adjustments made for the respective years apart from one solitary ground taken for assessment year 2009-10 which assailed disallowance of pre-commencement expenditure of 3 47 94 198 -. AR the TPO had in all these years proceeded on a footing that assessee was a contract manufacturer of its Associated Enterprise(AE) named Lotus Footwear Ltd based in British Virgin Islands. AR assessee had become a contract manufacturer only after multiple labour strikes in its units which happened during financial year 2010-11. AR. the APA was applicable for financial year 2014-15 to financial year 2018-19 with a rollback of three years. In our opinion the APA has considerable bearing for the years under appeal since prima facie the rollback of four years which went to assessment year 2011- 12 was curtailed to three years. Obviously the curtailment was allowed in the APA after considering the submissions of the assessee that it had become a contract manufacturer only in financial year 2010-11 pursuant to labour upheaval. Ld TPO in the orders for all the impugned assessment years had considered assessee to be a contract manufacturer and in his order for assessment year 2009-10 this is specifically mentioned at page 69 of the order.


IN INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI [BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER] . I.T.A.Nos.779 Mds 2014 801 Mds 2015 & 810 Mds 2016 Assessment years : 2009-10 2010-11 & 2011-12 M s Lotus Footwear Enterprises Ltd Vs. Dy. Commissioner of (India Branch) Income Tax Plot No.3 SIPCOT Industrial Park International Taxation 1 1(2) Mathur Post Mangal Village Chennai Akkur Via Cheyyar Taluk Tiruvannamalai Dist 631 701 [PAN AABCL 3407 G] ( Appellant) ( Respondent) Appellant by : Shri Sriram Seshadri CA Respondent by : Dr. Milind Madhukar Bhusari CIT Date of Hearing : 7-09-2016 Date of Pronouncement : 21-09-2016 O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER These appeals of assessee for assessment years 2009- 10 2010-11 and 2011-12 are directed against assessment orders dated 30.1.2014 30.1.2015 and 27.1.2016 all passed pursuant to directions of Dispute Resolution Panel under section 144C(13) of Income-tax Act 1961(in short Act ). :- 2 -: ITA No. 779 14 etc 2. Ld. Counsel for assessee submitted that all these appeals assailed addition made on account of transfer pricing adjustments made for respective years apart from one solitary ground taken for assessment year 2009-10 which assailed disallowance of pre-commencement expenditure of ` 3 47 94 198 -. As per ld. AR latter ground was also intrinsically connected to transfer pricing issues. Ld. AR brought to notice of Bench that assessee had filed petition for admitting additional evidence relying on Rule 29 of Income Tax (Appellate Tribunal) Rules 1963 which was in nature of unilateral Advance Pricing Agreement(APA) entered by it with Central Board of Direct Taxes (CBDT) on 24.5.2016. 3. Pleading for admission of additional evidence mentioned above ld. AR submitted that it had fundamental bearing on transfer pricing issues raised in impugned years. As per ld. AR TPO had in all these years proceeded on footing that assessee was contract manufacturer of its Associated Enterprise(AE) named Lotus Footwear Ltd based in British Virgin Islands. However as per ld. AR assessee had become contract manufacturer only after multiple labour strikes in its units which happened during financial year 2010-11. Reliance was placed on letter dated 17.6.2015 :- 3 -: ITA No. 779 14 etc addressed to JCIT(APA) and answer to question one given therein. As per ld. AR. APA was applicable for financial year 2014-15 to financial year 2018-19 with rollback of three years. Continuing his submission ld. AR stated that as per sec. 92CC(9A) of Act read alongwith Rule 10MA(2)(i) of Income Tax Rules 1962 it was mandatory to have rollback of APA for period of four years. Only exemption as per ld. AR was when circumstances mentioned in CBDT Circular No.10 2015 was applicable. As per ld. AR by virtue of APA assessee could be considered as contract manufacturer only from financial year 2011-12 and CBDT had exempted it from being considered so for financial year 2010-11 relevant to assessment year 2011-12. In other words according to him for year 2010-11 and year prior to that Government had agreed to contention of assessee that it was not contract manufacturer and this went against conclusion of TPO for such earlier years. Hence according to him APA was crucial in determining ALP of international transactions of assessee. 4. Ld. DR fairly agreed that APA required consideration while benchmarking pricing of international transactions of assessee. :- 4 -: ITA No. 779 14 etc 5. We have considered contentions. In our opinion APA has considerable bearing for years under appeal since prima facie rollback of four years which went to assessment year 2011- 12 was curtailed to three years. Obviously curtailment was allowed in APA after considering submissions of assessee that it had become contract manufacturer only in financial year 2010-11 pursuant to labour upheaval. Ld TPO in orders for all impugned assessment years had considered assessee to be contract manufacturer and in his order for assessment year 2009-10 this is specifically mentioned at page 69 of order. Nature of business of assessee would have considerable bearing on Arm s Length Pricing study of international transactions with its AEs. APA having been signed on 24.5.2016 assessee had no occasion to produce it before lower authorities. We are therefore of opinion that additional evidence has to be admitted. We therefore admit additional evidence set aside orders of lower authorities and remit all issues back to Assessing Officer TPO for consideration afresh in accordance with law. Needless to say all pleadings taken by assessee shall remain open. 6. In result appeals of assessee for all years are allowed for statistical purposes. :- 5 -: ITA No. 779 14 etc Order pronounced in open court on 21st September 2016 at Chennai. Sd - Sd - ( . . . )) ( . ) (N.R.S. GANESAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 21st September 2016 RD Copy to: 1. Appellant 3. ( ) CIT(A) 5. DR 2. Respondent 4. CIT 6. GF M/s Lotus Footwear Enterprises Ltd. v. Dy. Commissioner of Income-tax International Taxation 1/1(2), Chennai
Report Error