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25-11-2019, Cherokee India, 92C, 2(22)(e), Tribunal Mumbai

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1 week 5 days ago #11616 by amit
Section - 92C, 2(22)(e), 92CA
Order Date - 25-11-2019
Favouring - Assessee Partly
Court - Tribunal Mumbai
Appellant - ACIT
Respondent - Cherokee India Pvt. Ltd.
Justice - Shamim Yahya (AM) & Pawan Singh (JM)
Citation - 1219Taxpundit5
Appeal No. - I.T.A. No. 203/Mum/2015
Asstt. Year - 2010-11


PER : Shamim Yahya (AM)

ITA no. 410/Mum/2015 and ITA No. 203/Mum/2015. These are cross appeals by the assessee and for assessment year 2010-11arising out of order of learned CIT(A) dated 17.10.2014.

2. ITA no. 411/Mum/2015 is appeal by the assessee for assessment year 2009-10 against the order of learned CIT(A) dated 17.10.2014. Appeal by the revenue ITA no 203/Mum/2015

3. Grounds of appeal read as under :-

1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A), in respect of the addition of deemed dividend u/s 2(22)(e) of the Act amounting to Rs. 78 lakhs made by the Assessing Officer, was correct in giving directions of allowing relief amounting to Rs. 54 lakhs and sustaining disallowance only to the extent of Rs. 24 lakhs, without appreciating the position of law?"

2. "Whether the CIT(A) erred in restricting the addition u/s 2(22)(e) to Rs. 24 lakhs out of loans of Rs. 78 lakhs without appreciating the fact the lender company M/s. Pwertel India Pvt. Ltd. has accumulated profit of Rs. 1,08,48,212/- for the year?" The appellant prays that the order of the CIT(A) on the above grounds above be set aside and that of the ITO/AC/DCIT be restored.

4. It transpires that tax effect in this appeal by the revenue is below the limit of rupees 50 lakhs fixed by the CBDT for filing appeals before the ITAT by circular No. 17/2019 dated 8.8.2019. It has not been shown to us that this appeal falls in any of the exceptions mentioned in the said circular. In this view of the matter appeal by the revenue stand dismissed in limine on account of tax effect.

5. One issue raised in assessee’s appeal ITA No. 410/Mum/2015 for assessment year 2009 10 is that the learned CIT(appeals) has erred in taxing intercompany deposit as deemed dividend of the assessee who is neither a registered shareholder not a beneficial shareholder of the lender company.

6. At the outset on this issue learned counsel of the assessee stated that the above submission of the assessee was not considered by the learned CIT appeals as the necessary details about the shareholding patterns were not available at that time. However learned counsel of the assessee submits that now the details are available. Hence he pleads that the issue may be remitted to the file of assessing officer to consider the issue afresh.

7. Upon hearing both the counsel, in our considered opinion the interest of justice demands that this issue be remitted to the file of assessing officer. The assessing officer is now directed to consider the issue afresh in light of the details been submitted by the assessee.

8. One common issue raised in both the appeals relates to Transfer Pricing adjustment which enhanced the assessment.

9. The grounds raised in this regard are as under :- A.Y. 2009-10 :

1. The learned CIT(Appeals) has erred in law and on facts and circumstances of the case in confirming the adjustment to the tr nsfer price to the tune of ^ 2,48,75,146/- .

2. The learned CIT(Appeals) has erred on facts and in law in ignoring the fresh comparables provided by the appellant (at the request of the TPO) during the course of the TP audit for the relevant year and has instead subsequently gone on to uphold the comparables provided by TPO.

3. Without prejudice to Gr unds of Appeal no.2 , the learned CIT (Appeals) has erred on facts and in law in not taking cognizance to the various inconsistencies in search done by TPO, which were pointed out by the appellant , and gone on to uphold the TPO's search to make the adjustment to the ALP.

4. Without prejudice to Grounds of Appeal nos. 1 to 3, the learned OT(Appeals) has erred on facts and in law in not appreciating the fact that the appellan is a low risk consignment manufacturer and that the comparables are full-fledged manufacturers.

5. Without prejudice to Grounds of Appeal nos. 1 to 3, the learned CIT(Appeals) has erred on facts and in law in applying the margins of fullfledged manufacturers without making any Working Capital or Risk adjustment to bring it in line with that of low risk consignment manufacturer.

6. The learned CIT(Appeals) erred in not considering the fact that from A.Y. 2005-06 cowards till A.Y. 2008-09, the TPOs and the CIT(Appeals) had calculated the profits at 6%.on the cost actually incurred by the appellant, and that in order to maintain consistency the same should have been followed for the relevant year too, especially considering that the facts and circumstances for the relevant year and earlier years were exactly the same.

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