TMI Blog2019 (4) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... l. - W.M.P.No.7788 of 2019 in Writ Petition No.6845 of 2019 - - - Dated:- 11-3-2019 - Dr. Anita Sumanth, J ORDER Writ Petition No.6845 of 2019 had been came up for hearing before this Court on 08.03.2019 and was adjourned to 02.04.2019 to enable the Department to file a counter. Today, this WMP is moved by the petitioner seeking grant of an order of interim injunction restraining the respondent from proceeding with the recovery of demand pursuant to the order under Section 143 (3) read with Section 144C (13) of the Act in PAN AAAC12706C, dated 06.08.2018, pending disposal of the said Writ Petition. 2. Ms. Hema Muralikrishnan, learned Senior Standing Counsel has taken notice on 08.03.2019 for the respondent and sought three weeks time to obtain instructions and file a counter. 3. Two issues arise in assessment dated 03.08.2018, one relating to a transfer pricing ( TP ) adjustment and the second, a disallowance under Section 80JJAA of the Income Tax Act, 1961 ( Act ). As far as the TP adjustment is concerned, the Income Tax Appellate Tribunal has passed a series of orders relating to AYs 2009-10, 2012-13 and 2013-14, dated 10.04.2017, 16.03.2018 and 16.03.2018, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the AE's and opposed to the grounds. 5. We heard the rival submissions, perused the material on record and judicial decisions cited. The sole crux of the issue that the Ld. TPO has made disallowance of the commission payment as there is no evidence produced and statements were provided on availing services through Email correspondence and the sales commission is paid based on the agreement and the Ld. TPO has accepted these facts and has not doubted the documents but only the nature of services availed. We find strength in the arguments of Ld. AR and the commission is paid for the purpose of business wholly and exclusively based on the turnover. We found similar disputed issue was considered in assessee own case by the co-ordinate bench of this Tribunal in ITA No. 2427/Mds/2005 for the assessment year 2001-02 dated 27.03.2007, where the Tribunal has remitted the disputed issue to be re-examined by the Assessing Officer as held at Para 9 of the order as under: 9. Last issue related to the maintenance of disallowance of commission of ₹ 1,82,06,482/-. 10. We have heard the rival submissions. The assessee is a manufacturer of ladies lingerie and foundation garment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y energy or time for getting customers for the assessee. The only customer is M/s. Mast Industries. AO, did ask the assessee to file details of styles provided by M/s. Triumph International. There were only 22 styles introduced in the year whereas the commission paid was ₹ 2,27,06,482/-. It was also alleged before the AO that if a marketing office is maintained by the assessee in New York, the cost would be more than the commission paid by the assessee. AO negatived this nrgul11cllt on the ground that products are sold to a shareholder only. The benefits listed by the assessee accrued only to the' shareholders and not to outsiders. Therefore, there was no need for having a marketing office abroad. 13. It appears that the AO did not examine the documents. It is necessary to see with exactitude what services were rendered by M/s. Triumph International to the assessee and in the context of those services whether the commission was reasonable or not. If it is not reasonable adequate grounds must be given for treating it unreasonable. It appears that the documents produced before us were not considered by the AO. We therefore in the interest of justice set aside the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he stay of demand. Hence your stay petition is rejected and disposed off accordingly.' 6. The specific submission of the petitioner to the effect that the TP issue was covered by the order of the Tribunal has neither been adverted to nor adjudicated upon, despite being specifically raised by the petitioner. The decision of the Division Bench of the Delhi High Court, in the case of Nokia Corporation v. Director of Income-Tax (International Taxation), New Delhi ((2007) 162 TAXMAN 369), refers to the effect of precedent as noted by the Supreme Court in several celebrated judgements, stating thus:- 12. The Supreme Court stated, many years ago, in Union of India v. Kamlakshi Finance Corporation Ltd. as follows: The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. It was further observed by the Supreme Court that if the order of an appellate authority is the subject matter of further appeal, that cannot furnish any ground for not following it, unless its operation has been suspended by a competent Court. The Supreme Court went on to say that if this healthy rule i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulated by learned Counsel for the Revenue) that each assessment year has to be treated as independent of the other and, therefore, the CIT (A) took the assessment year 2003-04 by itself and applying the decision of the Special Bench of the Tribunal granted relief to the Petitioner by requiring a deposit of only ₹ 4.86 crores. This is, of course, one possible way of looking at the issue. However, it has to be remembered that the State is bound to be fair to those with whom it has to deal with, and to the extent possible, it must avoid any harassment to the assessed public without causing any loss to the exchequer. Therefore, if one looks at the matter in a broader perspective (and there is no reason why we should not), then it would be necessary to take into account the tax liability of the Petitioner for the entire period in respect of which the dispute is still alive, that is to say from the assessment year 1997-98 till the assessment year 2003-04. If this is done and an across the board review is taken of the tax liability of the Petitioner as well as the amounts paid by the Petitioner, as has actually been done by the Tribunal in its order dated 29th July, 2005, then ..... X X X X Extracts X X X X X X X X Extracts X X X X
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