B)On The Facts And In The Circumstances Of The Case And In Law, Whether Thehon’ble Itat Has Perversely Erred In Law By Applying The Principle Ofconsistency, By v. On The Facts And In The Circumstances Of The Case And In Law, Whether Thehon’ble Itat Has Erred In Law As It Failed To Appreciate That, By Transferringthe More

OD-9 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION ORIGINAL SIDE ITAT/91/2023IA NO.GA/2/2023 PRINCIPAL COMMISSIONER OF INCOME TAX-2, KOLKATA-Versus-M/S. DEEPAK INDUSTRIES LTD. BEFORE: The Hon’ble T.S. SIVAGNANAM, CHIEF JUSTICE -And- The Hon’ble JUSTICE AJAY KUMAR GUPTA Date : 19[th] June, 2023. Appearance :Mr. Soumen Bhattacharjee, Adv...for the appellant. Mr.J.P. Khaitan, Sr. Adv.Mr. A.P. Agarwalla, Adv.…for the respondent. The Court : This appeal by the revenue filed under Section 260A of theIncome Tax Act, 1961 (the ‘Act’) is directed against the order dated 23[rd] June,2022 passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata (Tribunal)in ITA No. 264/Kol/2020 and C.O. No. 05/Kol/2021 for the assessment year2015-16. The revenue has raised the following substantial questions forconsideration : a)On the facts and in the circumstances of the case and in law, whether theHon’ble ITAT has erred in law in relying on the order u/s 143(3) of theIncome Tax Act, 1961 for the A.Y. 2008-09 to 2013-14 and ignoring thefact that the case was not referred to TPO for Transfer Pricing proceeding inA.Y.s 2008-09 to 2013-14 ?Hon’ble ITAT has erred in law in relying on the order u/s 143(3) of theIncome Tax Act, 1961 for the A.Y. 2008-09 to 2013-14 and ignoring thefact that the case was not referred to TPO for Transfer Pricing proceeding inA.Y.s 2008-09 to 2013-14 ? b)On the facts and in the circumstances of the case and in law, whether theHon’ble ITAT has perversely erred in law by applying the principle ofconsistency, by citing case law of Radhaswami Satsang vs C.I.T in 193 ITR321 (SC) which is not applicable in the instant case, since TP proceedingswere never made in earlier A.Y.s 2008-09 to 2013-14 ?Hon’ble ITAT has perversely erred in law by applying the principle ofconsistency, by citing case law of Radhaswami Satsang vs C.I.T in 193 ITR321 (SC) which is not applicable in the instant case, since TP proceedingswere never made in earlier A.Y.s 2008-09 to 2013-14 ? c) On the facts and in the circumstances of the case and in law, whether theHon’ble ITAT has erred in law as well as in facts by violating rule 10B &10C of Income tax Rule, 1962 by not undertaking adequate `comparability’analysis and `reliable and accurate adjustments’ in deleting theadjustments made by the TPO ? d) On the facts and in the circumstances of the case and in law, whether theHon’ble ITAT has erred in law as well as in facts by deleting theadjustments erroneously without taking into consideration theextraordinary difference in operating profitability between eligible and non-eligible unit of the assessee for determining the Arm’s Length Price ? e) On the facts and in the circumstances of the case and in law, whether theHon’ble ITAT has erred in law as it failed to appreciate that, by transferringthe more profitability of the assessee to eligible unit, the assessee is taking advantage to claim more deduction under section 80IC of the Income taxAct ? We have heard Mr. Soumen Bhattacharjee, learned standing counselappearing for the appellant/revenue and Mr. J.P. Khaitan, learned seniorcounsel, assisted by Mr. A.P. Agarwalla, learned Advocate for therespondent/assessee. On the last hearing date the learned senior Counsel for therespondent/assessee submitted that the tax effect in the instant case is less thanRs.1 Crore, that is, Rs.65,05,587/- and therefore the revenue cannot pursue thisappeal on the ground of low tax effect. In order to afford an opportunity to therevenue to come back on the said question, the matter stood adjourned by orderdated 12[th] May, 2023. It appears that no specific written instructions have beengiven to the learned standing Counsel for the appellant in this regard.Nevertheless, the Court examined the matter. As could be seen from the assessment order dated 18[th] January, 2019passed under Section 143(3) of the Act, the particulars with regard to profit ofSection 80IC unit has been given as hereunder :- On the last hearing date the learned senior Counsel for therespondent/assessee submitted that the tax effect in the instant case is less thanRs.1 Crore, that is, Rs.65,05,587/- and therefore the revenue cannot pursue thisappeal on the ground of low tax effect. In order to afford an opportunity to therevenue to come back on the said question, the matter stood adjourned by orderdated 12[th] May, 2023. It appears that no specific written instructions have beengiven to the learned standing Counsel for the appellant in this regard.Nevertheless, the Court examined the matter. As could be seen from the assessment order dated 18[th] January, 2019passed under Section 143(3) of the Act, the particulars with regard to profit ofSection 80IC unit has been given as hereunder :- Hence, the deduction u/s 80IC will be reduced to Rs. 2,13,11,566/- as againstthe claim of the assessee of Rs. 4,10,25,466/-. Penalty u/s 271(1)(c) is initiatedfor furnishing inaccurate particulars of income. From the table above, it is seen that the deduction under Section 80IC at30% of the profit is Rs.2,13,11,566/- as against the claim of the assessee ofRs.4,10,25,466/-. If this is taken, the tax effect will be less than the thresholdlimit of Rs.1 Crore. However, on perusal of the order passed by the Commissionerof Income Tax (Appeals) 22, Kol [CIT(A)] dated 31[st] October, 2019, the tax amountis mentioned as Rs.1,03,10,590/-. In our view, the said computation is onaccount of mistake computed while not rightly noting on what amount the taxhas to be computed. If we peruse the income tax computation form for therelevant assessment year, under the heading Final Details, the followings havebeen mentioned :- FINAL DETAILS 1.Total tax and Interest Payable 80054622.Interest u/s 244A 03.Interest made u/s 244A recovered - 11,18,9542.Interest u/s 244A 03.Interest made u/s 244A recovered - 11,18,954 4.Delay period attributable to Assessee 5.Interest u/s 234D 6.Interest u/s 220 DEMAND/REFUND 1.Net amount payable/In Words Rupees:In Words Rupees: 11,86,174 As could be seen from the above table, the total tax is Rs.80,05,462/-.Thus it is clear that the tax effect in the instant case is less than the thresholdlimit fixed by the CBDT. Hence the revenue cannot pursue this appeal. Accordingly, the appeal stands disposed of on the ground of low tax effectand the substantial questions of law are left open. The stay application IA No.GA/2/2023 also stands disposed of. (T.S. SIVAGNANAM) CHIEF JUSTICE (AJAY KUMAR GUPTA, J.) SN.AR(CR)