Betts India Pvt. Ltd., Margao vs Department Of Income Tax
- CitationITA NO. 94/PNJ/2012 : (A.Y - 2008-09)
Ratio decidendi
The rule this decision rests on
Where the first appellate authority admits fresh evidence under Rule 46A(2) of the Income Tax Rules, it must record in writing its reasons for admitting that evidence; where it has not done so, the admission is defective and the order allowing relief on that evidence cannot stand, and the matter is to be restored to the Transfer Pricing Officer for examination of the evidence and a finding in accordance with law. Where the same issue arises in subsequent assessment years on the footing of a set-aside order for an earlier year, the orders for those later years are likewise set aside and the issue restored to the Assessing Officer to be re-decided in light of the finding given on the evidence for the earlier year.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
ITA NOS. 285 TO 288/PNJ/2013 : (A.Ys - 2005-06 TO 2007-08 & 2009-10)
Asst. Commissioner of Income Vs M/s. Betts India Pvt. Ltd. Tax, Circle-1, Margao (Appellant) L-78, Verna Electronic City, Verna, Salcete, Goa PAN : AACCB8811F (Respondent)
ITA NO. 94/PNJ/2012 : (A.Y - 2008-09)
M/s. Betts India Pvt. Ltd. Vs Asst. Commissioner of Income L-78, Verna Electronic City, Tax, Margao (Respondent) Verna, Salcete, Goa (Appellant) PAN : AACCB8811F
Assessee by : K.R. Vasudevan, Adv. Revenue by : Smt. Asha Desai, DR
Date of Hearing : 22/01/2015 Date of Order : 22/01/2015
ORDER
PER P.K. BANSAL :
1. ITA Nos. 285 to 288/PNJ/2013 have been filed by the Revenue against the common order of CIT(A)-IV, Bangalore dt. 6.8.2013 for A.Ys - 2005-06 to 2007-08 & 2009-10 respectively while ITA No. 94/PNJ/2012 for A.Y 2008-09 has been filed by the Assessee against the order of DRP passed u/s 144C(5) dt. 31.8.2012. The Revenue has also moved an application under 2 ITA NOS. 285 TO 288/PNJ/2013 (A.Y - 2005-06 TO 2007-08 & 2009-10) & ITA NO. 94/PNJ 2012 (A.Y : 2008-09)
Rule 29 for the admission of the following additional grounds in all the assessment years :
"1. Whether on the facts & circumstances of the case, the Ld. CIT(Appeals) erred in holding that the payment of royalty, is genuine and is also in return of benefits, when the assessee failed to furnish the evidence in this regard before the TPO at the time of TP proceedings."
2. After hearing the rival submissions we noted that the additional ground taken by the Revenue is a legal ground and has to be admitted. The ld. AR was fair enough to concede the position. We, therefore, admit the additional grounds.
3. The only issue involved in all these appeals relate to the claim of deduction by the Assessee in respect of Royalty paid on net sales to Betts International, UK for the use of the know-how and process. The AO disallowed the royalty. The Assessee went in appeal before the CIT(A). CIT(A) in the A.Ys 2005-06 to 2007-08 and 2009-10 allowed the deduction claimed for the royalty while in the A.Y 2008-09 the Assessee went before the Dispute Resolution Panel which confirmed the disallowance.
4. After hearing the rival submissions, we noted that this is a fact that A.Y 2005-06 is the first year during which the claim for royalty has been made by the Assessee. The Assessee has not submitted evidence, as has been given in the paper book from Annexure 1-14, before the Transfer Pricing Officer. These evidences were filed for the first time before the CIT(A). CIT(A) without passing any order for the admission of these evidences in accordance with Rule 46A(2) took these evidences on record and allowed the relief to the Assessee for A.Y 2005-06 on the basis of these evidences. Since the relief was allowed in the A.Y 2005-06 and the issue is common in A.Ys 2006-07, 3 ITA NOS. 285 TO 288/PNJ/2013 (A.Y - 2005-06 TO 2007-08 & 2009-10) & ITA NO. 94/PNJ 2012 (A.Y : 2008-09)
2007-08 and 2009-10, relief was allowed to the Assessee during these years also. We do agree with the ld. DR that as per Rule 46A(2) the CIT(A) was bound to record in writing the reasons for admission of the fresh evidence produced by the Assessee before him. We have perused the order of the CIT(A) but we did not find any reasons being recorded by the CIT(A) for the admission of the fresh evidence filed by the Assessee during the course of hearing before the CIT(A) for the A.Y 2005-06. We, therefore, in the interest of justice and fair play to both the parties set aside the order of CIT(A) for A.Y 2005-06 and restore this issue to the file of the authorities below and direct the Assessee to produce all these fresh evidences before the TPO so that the TPO can duly examine them and give a finding in accordance with the law. Since the A.Y 2005-06 is the first year and in the subsequent years also, similar issue has arisen and we have set aside the order for the A.Y 2005-06, we therefore set aside the order of CIT(A) for A.Ys. 2006-07, 2007- 08 and 2009-10 and the order of Dispute Resolution Penal for A.Y 2008-09 and restore this issue to the file of the AO so that the AO can re-decide this issue afresh on the basis of the finding given by the TPO during the A.Y 2005-06.
5. In the result, all the appeals filed by the Revenue as well as the Assessee stand allowed for statistical purposes.
6. Order pronounced in the open court on 22/01/2015.
Sd/- Sd/- (D.T.Garasia) (P.K. Bansal) Judicial Member Accountant Member Place : PANAJI / GOA Dated : 22/01/2015 *SSL* 4 ITA NOS. 285 TO 288/PNJ/2013 (A.Y - 2005-06 TO 2007-08 & 2009-10) & ITA NO. 94/PNJ 2012 (A.Y : 2008-09)
Copy to :
(1) Appellant (2) Respondent (3) CIT(A) concerned (4) CIT concerned (5) D.R (6) Guard file True copy, By order,
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