M/S.andritz Separation And Pumptechnologies India Pvt. Ltd.,S v. The Deputy Commissioner Of Income Tax,Corporate Circle 1(1),Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 09.12.2020CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.544 of 2019 M/s.Andritz Separation and PumpTechnologies India Pvt. Ltd.,S.No.389, 400/2A, 400/2C,Padur Road,Kuttampakkam Village,Poonamallee Taluk,Tiruvalluvar District,Chennai – 600 124PAN:AAACN1940M Versus ..Appellant The Deputy Commissioner of Income Tax,Corporate Circle 1(1),Chennai...Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the IncomeTax Act, 1961, against the order of the Income Tax AppellateTribunal,'D'(TP)Bench,Chennai,madeinI.T.A.No.2012/CHNY/2017 dated 06.06.2019 relating to theAssessment Year 2013-14 Appeal filed against the order of theDeputy Commissioner of Income Tax Corporate Circle 1(1), Chennaidated 21.06.2017 made in PAN No. against the order ofthe Assistant Commissioner of Income Tax OSD Corporate Range 1,Room No.603 6[th] floor Wanaparthy block, 121, Aayakar Bhavan,Mahatma Gandhi Road, Chennai 36 for the Assessment year 2013-14dated 26.12.16 against the assessment order dated 20.10.16 madein CRMA-103/TPO-1(1) AY 2013-14. For Appellant: Mr.Sandeep BagmarFor Respondent : Mr.T.Ravikumar Senior Standing counsel JUDGMENT[Order of the Court was made by T.S.SIVAGNANAM, J.] This appeal filed by the assessee under Section 260A of theIncome Tax Act, 1961 ('the Act' for brevity), is directedagainst the order dated 06.06.2019 passed by the Income Tax https://hcservices.ecourts.gov.in/hcservices/ Appellate Tribunal, 'D' (TP) Bench, Chennai ('the Tribunal' forbrevity) in I.T.A.No.2012/Chny/2017 for the Assessment Year2013-14. The assessee has raised the following SubstantialQuestions of Law for consideration: “1. Whether the TPO was right in determining thearm's length price of international transaction asNIL, when the TPO inappropriately applied CUP methodby not providing any comparable uncontrolledtransaction, thereby the entire exercise beingcontrary to Rules 10B and 10C of the Income-tax Rules,1962? 2. Whether the TPO was right in rejecting theaggregated approach adopted by the Appellant underTNMM Method, when the net operating profit marginafter deducting management charges of the Appellantbased on TNMM Method as required under section 92D ofthe Act read with Rule 10D of the Income-Tax Rules,1962, was higher than the arithmetic mean ofcomparable companies, thereby confirming the arm'slength nature of international transactions? 3. Whether the TPO can usurp the powers of the AOconferred under Section 37 of the Act, when the AO hasreferred the international transaction to TPO tocompute the arm's length price under Chapter X of theAct and rules provided therein? 4. Whether the TPO can question the need benefittest and the genuineness of the internationaltransaction when the same was referred to the TPOunder Section 92CA of the Act to determine only theArms Length Price of the international transaction inaccordance with the methods prescribed under Chapter Xof the Act and rules provided therein? 5. Whether on facts and circumstances of thecase, the order of the Tribunal declaring thetransaction of management services is sham is perverseas the Tribunal failed to consider the materialavailable on record which prove the rendition /receipt of service from its Associate Enterprises?” 2. We have heard Mr.Sandeep Bagmar, learned counsel for theappellant/assessee and Mr.T.Ravikumar, learned Senior Standingcounsel for the respondent/Revenue. 5. Whether on facts and circumstances of thecase, the order of the Tribunal declaring thetransaction of management services is sham is perverseas the Tribunal failed to consider the materialavailable on record which prove the rendition /receipt of service from its Associate Enterprises?” 2. We have heard Mr.Sandeep Bagmar, learned counsel for theappellant/assessee and Mr.T.Ravikumar, learned Senior Standingcounsel for the respondent/Revenue. 3. It may not be necessary for this Court to decide theSubstantial Questions of Law framed for consideration on accountof certain subsequent developments. The Government of Indiaenacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of2020) to provide for resolution of disputed tax and for mattersconnected therewith or incidental thereto. The Act of theParliament received the assent of the President on 17[th] March2020 and published in the Gazette of India on 17[th] March 2020. 4. In terms of the said Act, the assessee has been given anoption to put an end to the tax disputes, which may be pendingat different levels either before the First Appellate Authorityor before the Tribunal or before the High Court or before theHon'ble Supreme Court of India. Under Section 2(j) “disputedtax” has been defined. In terms of Section 3, where a declarantmeans a person, who files a declaration under Section 4 on orbefore the last date files a declaration to the designatedauthority in accordance with the provisions of Section 4 inrespect of tax arrears, then, notwithstanding anythingcontained in the Income Tax Act or any other law for the timebeing in force, the amount payable by the declarant shall bedetermined in terms of Section 3(a-c) thereunder. 5. The First Proviso to Section 3 states that in case, wherean Appeal or Writ Petition or Special Leave Petition is filed bythe Income Tax authority on any issue before the AppellateForum, the amount payable shall be one-half of the amount in thetable stipulated in Section 3 calculated on such issue, in sucha manner as may be prescribed. The second proviso deals with thecases, where the matter is before the Commissioner (Appeals) orbefore the Dispute Resolution Panel. The third proviso dealswith cases, where the issue is pending before the Income TaxAppellate Tribunal. The filing of the declaration is as perSection 4 of the Act and the particulars to be furnished arealso mentioned in the Sub Sections of Section 4. Section 5 ofthe Act deals with the time and manner of the payment andSection 6 deals with Immunity from initiation of proceedings inrespect of offence and imposition of penalty in certain cases.Section 9 of the Act deals with cases, where the Act 3 of 2020will not be applicable. 6. We are informed by the learned counsel for theappellant/assessee that the assessee has already filed thedeclaration under Section 4 of the Act on 30.06.2020. 7. In the light of the fact that the assessee has alreadyavailed the benefit under the Act, no useful purpose would beserved in keeping this appeal pending. At the same time,safeguarding the interest of the assessee in the event the orderto be passed by the Department under the Act is not in favour of 6. We are informed by the learned counsel for theappellant/assessee that the assessee has already filed thedeclaration under Section 4 of the Act on 30.06.2020. 7. In the light of the fact that the assessee has alreadyavailed the benefit under the Act, no useful purpose would beserved in keeping this appeal pending. At the same time,safeguarding the interest of the assessee in the event the orderto be passed by the Department under the Act is not in favour of the assessee. Accordingly, the Tax Case Appeal stands disposedof on the ground that the assessee has already filed adeclaration and the Department shall process the application atthe earliest in accordance with the said Act and communicate thedecision to the assessee at the earliest. As observed, theassessee is given liberty to restore this appeal in the eventthe ultimate decision to be taken on the declaration filed bythe assessee under Section 4 of the said Act is not in favour ofthe assessee. If such a prayer is made, the Registry shallentertain the prayer without insisting upon any application tobe filed for condonation of delay in restoration of the appealand on such request made by the assessee by filing aMiscellaneous Petition for Restoration, the Registry shall placesuch petition before the Division Bench for orders. 8. With this observation, the Tax Case Appeal standsdisposed of with the aforementioned liberty and Consequently,the Substantial Questions of Law are left open. No costs. Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant RegistrarKakTo1.The Income Tax Appellate Tribunal,'D' (TP) Bench, Chennai. 2.The Deputy Commissioner of Income Tax,Transfer Pricing Officer-1(1),Room 504, 5[th] floor, BSNL Building, Tower 1, No.16, Greams Road,Chennai-6. SPD(CO)KKV06/01/2021