While Passing The Said Order, Tribunal Relied Upon Adecision Of The Coordinated Bench Of The Tribunal In Thecase Of M/S Credit Lyonnais v. Adit Decided On

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (IT) NO.1417 OF 2017 Pr.Commissioner of Income-Tax-8… Appellant V/s.RBS Financial Services (India)Pvt. Ltd.… Respondent --- Mr.Suresh Kumar with Mr.Sham Walve, Advocate for theAppellant. Mr.P.J.Pardiwalla with Mr.Niraj Sheth i/by Mr.A.K.Jasani,Advocate for the Respondent. --- CORAM : UJJAL BHUYAN & MILIND N. JADHAV, JJ. DATE : JANUARY 20, 2020 P.C.:- 1.Heard Mr.Suresh Kumar, learned standing counsel,Revenue for the appellant and Mr.P.J.Pardiwalla, learnedsenior counsel for the respondent/assessee. 2.This appeal has been preferred by the Revenue under Section 260A of the Income Tax Act, 1961 (briefly“the Act” hereinafter) assailing the legality andcorrectness of order dated 2[nd] January, 2017 passed bythe Income Tax Appellate Tribunal (ITAT), Mumbai in ITANo.5997/Mum/2013 for the assessment year 2008-09. Priya Soparkar 3.The appeal has been preferred on the following questions, projected as substantial questions of law:- “(i)Whether on facts and circumstances ofthe case and in law, the ITAT was correct indirecting the Assessing Officer to follow theratio of decision in case of M/s Credit Lyonnais(ITA No.1935/Mum/2007 dated 30.09.2013)and M/s Calyon Bank (ITA No.4474/M/2009dated 21.03.2014) when the facts of thosecases are not similar to facts of the assesseeand hence cannot be considered as a validcomparable under Rule 10B of I.T.Rules, 1962so as to adopt the rates as adopted in thosecases? (ii)Whether on the facts and circumstancesof the case and in law, the ITAT was correctin directing the Assessing Officer to decidethe issue by applying rate of 20% in violationof provision of section 92(3) of the I.T.Act,1961 when the assessee itself had consideredthe rate of 50%?”of the case and in law, the ITAT was correctin directing the Assessing Officer to decidethe issue by applying rate of 20% in violationof provision of section 92(3) of the I.T.Act,1961 when the assessee itself had consideredthe rate of 50%?” 4.In the course of the assessment proceeding the Transfer Pricing Officer passed an order dated 30[th]September, 2011 under Section 92CA (3) of the Actdetermining the arms length price of the syndicationfee at 100%. He held that the entire amount ofRs.22,63,47,950/- was received by the assessee. 5.In the assessment order dated 25[th] January, 2012which followed, the same was incorporated whereafter Priya Soparkar 316-1 itxa 1417-17-o an addition of Rs.22,63,47,950/- was made to the incomeof the assessee. 6.On appeal before the first appellate authority,Commissioner of Income Tax (Appeals) by his order dated25[th] July, 2013 upheld the findings of the AssessingOfficer and dismissed the appeal. On appeal before the first appellate authority, 7.Assessee thereafter preferred further appeal before the Tribunal. Tribunal by the impugned order dated 2[nd]January, 2017 remanded the matter back to the file ofthe Assessing Officer to decide the issue afresh byconsidering the decisions relied upon by the Tribunal forallocation of non-syndication fee between the assesseeand associated enterprise after giving opportunity ofbeing heard to the assessee. 8.While passing the said order, Tribunal relied upon adecision of the Coordinated Bench of the Tribunal in thecase of M/s Credit Lyonnais Vs. ADIT decided on 30[th] September, 2012 where it was held as under:- ‘8.8 Having held that para 4 of the Protocoldoes not apply to the case of the assessee,now, the question arises as to whether theadjustment made by the authorities below isjustified. For making the adjustment, the 8.While passing the said order, Tribunal relied upon adecision of the Coordinated Bench of the Tribunal in thecase of M/s Credit Lyonnais Vs. ADIT decided on 30[th] September, 2012 where it was held as under:- ‘8.8 Having held that para 4 of the Protocoldoes not apply to the case of the assessee,now, the question arises as to whether theadjustment made by the authorities below isjustified. For making the adjustment, the authoritiesbelowhavetakenintoconsideration, the income towards interest aswell as the fee charged by the foreign branchfrom the clients. It is pertinent to note thatwhen the loan is provided by the syndicate andthe assessee has not contributed to the loanamount then as regards the income of interest,the same cannot be attributed to the assesseefor providing the services of the financialanalysis of the borrowers, market conditionand regulatory environment in India. Since theassessee has provided certain services for thatarms length charges can be determined as perthe provisions of transfer pricing regulation.The TPO as well as CIT(A) has not brought outany comparable for determination of the armslength price but took the total incomecomprising interest as well as other feescharged by the foreign branches for allocation/attribution to the assessee. In this case, theALP has not been determined by taking intoconsideration uncontrolled similar transaction.In our view, the interest cannot be taken intoaccount for attribution of income towardsservice charges/fees and, therefore, in thefacts and circumstances of the case only thefee charged by the foreign branches can betaken into consideration for makingadjustment under transfer pricing provisions.Accordingly, we direct the AO/TPO to makeadjustment in respect of the servicesperformed by the assessee for foreign currencyloan arranged for its existing clients by takinginto account only the fee and other chargesreceived by the foreign branches from theborrowers in question. Since none of theparties have come out with the suitablecomparables, therefore, we find that theestimation made by the CIT(A) at the rate of20% is just and proper, however, the samewould be only in respect of the fee and Priya Soparkar 516-1 itxa 1417-17-o charges other than interest received by theforeign branches. Thus, these grounds of theassessee are partly allowed.” 9.Further reference was made to another decision of a Coordinated Bench of the Tribunal in the case of Calyon Bank Vs. DDIT decided on 21[st] March, 2014 whereinthe decision in M/s Credit Lyonnais was relied upon. 10. Following the above decisions, Tribunal restored theissue to the file of the Assessing Officer for a freshdecision in accordance with law. 11.In the facts and circumstances of the case, we donot find any error or infirmity in the view taken by theTribunal in remanding the matter back to the file of theAssessing Officer for a fresh decision in accordance withlaw. 12.On thorough consideration, we are of the opinionthat the proposed questions of law does not arise out ofthe impugned order of the Tribunal. 13.order as to costs. In above view, Appeal is dismissed, but without any (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) ….