Ita/22/2023 Of The Principal Commissioner Of Income Tax,Thiruvananthapuram v. M/S Olam Agro India Pvt Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. MONDAY, THE 3 DAY OF JUNE 2024 / 13TH JYAISHTA, 1946 ITA NO. 21 OF 2023AGAINST THE ORDER DATED 27.12.2022 IN ITA NO.558 OF 2019 OFINCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH, COCHIN APPELLANT/RESPONDENT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX,THIRUVANANTHAPURAM BY ADVS.SRI.CHRISTOPHER ABRAHAMSRI. P.G. JAYASHANKAR PGJSRI.KEERTHIVAS GIRI RESPONDENT/APPELLANR/ASSESSEE: M/S OLAM AGRO INDIA PVT LTDBISHOP JEROME NAGAR, KOLLAM, KERALA -691001 (CURRENTLYM/S OLAM ENTERPRISES INDIA PVT LTD, DLF BUILDING NO -08, TOWER-A, CYBER CITY PHASE-II, GURGAON, HARYANA - 122022), BY ADVS.SRI.ABRAHAM JOSEPH MARKOSSRI.ISAAC THOMAS(K/571/2014)SRI.P.G.CHANDAPILLAI ABRAHAM(MAH/002141/2016)SRI.SHARAD JOSEPH KODANTHARA(K/001677/2018)SRI.ALEXANDER JOSEPH MARKOS(K/001270/2018)SRI.JOHN VITHAYATHIL(K/001877/2021)SRI.AIBEL MATHEW SIBY(K/1376/2020) THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON03.06.2024, ALONG WITH ITA.22/2023, THE COURT ON THE SAME DAYDELIVERED THE FOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. MONDAY, THE 3 DAY OF JUNE 2024 / 13TH JYAISHTA, 1946 ITA NO. 22 OF 2023 AGAINST THE ORDER/JUDGMENT DATED 27.12.2022 IN ITA NO.559 OF2019 OF I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/RESPONDENT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX,THIRUVANANTHAPURAM BY ADVS.SRI.CHRISTOPHER ABRAHAMSRI.ADV. P.G. JAYASHANKAR PGJSRI.KEERTHIVAS GIRI RESPONDENT/APPELLANT/ASSESSEE: M/S OLAM AGRO INDIA PVT LTDBISHOP JEROME NAGAR, KOLLAM, KERALA -691001 (CURRENTLY M/S OLAM ENTERPRISES INDIA PRIVATE LTD. DLF BUILDING NO-08, TOWER A, CYBER CITY PHASE - II, GURGAON, HARYANA - 122022) DLF BUILDING NO-08, TOWER A, CYBER CITY PHASE - II, BY ADVS.SRI.ABRAHAM JOSEPH MARKOSSRI.ISAAC THOMAS(K/571/2014)SRI.ALEXANDER JOSEPH MARKOS(K/001270/2018)SRI.P.G.CHANDAPILLAI ABRAHAM(MAH/002141/2016)SRI.SHARAD JOSEPH KODANTHARA(K/001677/2018)SRI.JOHN VITHAYATHIL(K/001877/2021)SRI.AIBEL MATHEW SIBY(K/1376/2020) THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON03.06.2024, ALONG WITH ITA.21/2023, THE COURT ON THE SAME DAYDELIVERED THE FOLLOWING: JUDGMENT Dr. A.K.Jayasankaran Nambiar, J. In these Income Tax Appeals preferred by the revenue against acommon order of the Income Tax Appellate Tribunal dated 27.12.2022,although various substantial questions of law have been raised, we findfrom a reading of the impugned order of the Tribunal that it does notreally consider the issues that were raised before it by the revenue,which was in appeal before the Tribunal, aggrieved by the orders of theFirst Appellate Authority under the Income Tax Act in relation to theassessment years 2011-2012 and 2012-2013. 2. Before the Tribunal, the revenue had essentially impugned theorder of the First Appellate Authority to the extent it had allowed riskadjustment in case of exports at the rate of 2% in lieu of 1% that wasallowed by the Transfer Pricing Officer, and further to the extent thatthe appellate authority had allowed the commission on the corporateguarantee on the gross loan limits and not on the actual loan availed.The facts, as discernible from the orders of the First AppellateAuthority, would indicate that the assessee had claimed a market risk of2.5% and the Transfer Pricing Officer had reduced the same to 1%. TheFirst Appellate Authority had partly accepted the claim of the assessee ITA Nos.21 & 22 of 2023 2. Before the Tribunal, the revenue had essentially impugned theorder of the First Appellate Authority to the extent it had allowed riskadjustment in case of exports at the rate of 2% in lieu of 1% that wasallowed by the Transfer Pricing Officer, and further to the extent thatthe appellate authority had allowed the commission on the corporateguarantee on the gross loan limits and not on the actual loan availed.The facts, as discernible from the orders of the First AppellateAuthority, would indicate that the assessee had claimed a market risk of2.5% and the Transfer Pricing Officer had reduced the same to 1%. TheFirst Appellate Authority had partly accepted the claim of the assessee ITA Nos.21 & 22 of 2023 and enhanced it to 2%. The revenue was, therefore, in appeal before theTribunal contending that the claim for market risk ought not to haveexceeded 1% as allowed by the Transfer Pricing Officer. On the issue ofcommission on corporate guarantee, while the Transfer Pricing Officerhad found that the expenses claimed in respect of the corporateguarantee that was offered in favour of the assessee by OlamInternational Limited ought to be based on the actual exposure of theassessee to the banks from which the loans were availed, the AppellateAuthority found that the expenses towards commission charges on thecorporate guarantee could extend to the gross guarantee amount forwhich Olam International Limited had given the guarantee. In theappeal before the Tribunal, the stand of the revenue was that theexpenditure towards commission for the corporate guarantee should belimited only to the quantum of actual exposure of the assessee to thevarious banks from which it had availed loans. 3. When we peruse the impugned order of the Tribunal, which isa common order passed for both the assessment years aforementioned,we find that both the aforementioned issues have not been consideredby the Appellate Tribunal on merits although there were specificgrounds of appeal raised by the revenue. Under the said circumstances,we feel it appropriate to set aside the impugned order of the Tribunaland remand the matter back to the Tribunal for a fresh decision on ITA Nos.21 & 22 of 2023 merits on both the aforementioned issues that have been raised by therevenue in their grounds of appeal filed before the Appellate Tribunal.Taking note of the lapse of time since the impugned order of theTribunal, we direct that the fresh order of the Tribunal shall be passedwithin an outer time limit of six months from the date of receipt of acopy of this judgment, after hearing the parties. The Income TaxAppeals are thus allowed by way of remand, and without answering thequestions of law raised. Sd/- DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/- SYAM KUMAR V.M. JUDGE mns APPENDIX OF ITA 21/2023 PETITIONER ANNEXURES Annexure A TRUE COPY OF THE ORDER PASSED BY THE TPOU/S 92CA (3) OF THE IT ACT DATED 28.01.2015FOR ASSESSMENT YEAR 2011-12 Annexure B TRUE COPY OF THE ORDER OF THE AO DATED26.03.2015 FOR ASSESSMENT YEAR 2011-12 Annexure C TRUE COPY OF THE ORDER PASSED BY THE CIT(A) ON 07.03.2019 FOR ASSESSMENT YEAR 2011-12 Annexure D TRUE COPY OF THE GROUNDS OF APPEAL FILEDBEFORE THE ITAT Annexure E TRUE COPY OF THE ORDER OF THE ITAT DATED27.12.2022 FOR THE ASSESSMENT YEAR 2011-12 ITA Nos.21 & 22 of 2023 APPENDIX OF ITA 22/2023 PETITIONER ANNEXURES Annexure A TRUE COPY OF THE ORDER U/S 92CA(3) OF THEINCOME TAX ACT, 1961 DT 20.01.2016 FOR THEASSESSMENT YEAR 2012-13 Annexure B TRUE COPY OF THE ASSESSMENT ORDER OF THE AODATED 28.03.2016 FOR ASSESSMENT YEAR 2012-13 Annexure C TRUE COPY OF THE ORDER PASSED BY THE CIT(A) ON 07.03.2019 FOR ASSESSMENT YEAR 2012-13 Annexure DTRUE COPY OF THE GROUNDS OF APPEAL FILEDBEFORE THE ITAT FOR ASSESSMENT YEAR 2012-13BEFORE THE ITAT FOR ASSESSMENT YEAR 2012-13 TRUE COPY OF THE ORDER PASSED BY THE CIT(A) ON 07.03.2019 FOR ASSESSMENT YEAR 2011-12 Annexure D TRUE COPY OF THE GROUNDS OF APPEAL FILEDBEFORE THE ITAT Annexure E TRUE COPY OF THE ORDER OF THE ITAT DATED27.12.2022 FOR THE ASSESSMENT YEAR 2011-12 ITA Nos.21 & 22 of 2023 APPENDIX OF ITA 22/2023 PETITIONER ANNEXURES Annexure A TRUE COPY OF THE ORDER U/S 92CA(3) OF THEINCOME TAX ACT, 1961 DT 20.01.2016 FOR THEASSESSMENT YEAR 2012-13 Annexure B TRUE COPY OF THE ASSESSMENT ORDER OF THE AODATED 28.03.2016 FOR ASSESSMENT YEAR 2012-13 Annexure C TRUE COPY OF THE ORDER PASSED BY THE CIT(A) ON 07.03.2019 FOR ASSESSMENT YEAR 2012-13 Annexure DTRUE COPY OF THE GROUNDS OF APPEAL FILEDBEFORE THE ITAT FOR ASSESSMENT YEAR 2012-13BEFORE THE ITAT FOR ASSESSMENT YEAR 2012-13 Annexure ETRUE COPY OF THE CERTIFIED COPY OF THEORDER OF THE ITAT DATED 27.12.2022 FORASSESSMENT YEAR 2012-13ORDER OF THE ITAT DATED 27.12.2022 FORASSESSMENT YEAR 2012-13