TMI Blog2020 (11) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... s delay from the date of the impugned order passed in the year 2009 till 12.7.2016 is concerned, the belief entertained by the Assessee based on legal advice that the additions made in the original order of assessment can still be challenged in the proceedings pursuant to order passed u/s.263 of the Act, cannot be said to be not bonafide. As far as the delay from the date of Tribunal s order in the year 2016 till filing of the appeal only in the year 2017, is concerned, it has been submitted in the affidavit that after prolonged discussion and legal advice, it was suggested that the appeals should be filed against the orders of CIT(Appeals) dated 15.2.2010 for AY 2005-06. We are of the view that given the factual scenario and nature of disputes, the plea of assessee that delay in fling of the appeals before the Tribunal was due to bona fide reasons has to be accepted. Keeping in mind the principle that substantive rights should not be denied by technicalities, we condone the delay in filing the appeals before the Tribunal. Revision u/s 263 - TP Adjustment - addition on account of determination of ALP/transfer price - HELD THAT:- It is not in dispute before us that the issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act in AY 2004-05 had nothing to do with the issues that the Assessee sought to raise in its appeal against the original order of assessment dated 29.12.2006 passed u/s.143(3) of the Act. Therefore the CIT(A) ought to have adjudicated the issues raised by the Assessee before it. Since the issues sought to be now raised in the present appeals have not been adjudicated by the CIT(Appeals), we deem it fit and proper to set aside the order of CIT(A) and restore the issues raised in the appeals before the CIT(A) for adjudication by the CIT(Appeals) on merits. We hold and direct accordingly. - ITA Nos.1555 And 1556/Bang/2017 - - - Dated:- 3-11-2020 - Shri N.V. Vasudevan, Vice President And Shri B R Baskaran, Accountant Member For the Assessee : Shri T. Suryanarayana, Advocate For the Respondent : Shri R.K. Mishra, CIT-I(DR)(ITAT), Bengaluru ORDER PER N.V. VASUDEVAN, VICE PRESIDENT These are appeals by the Assessee/Assessee against two orders dated 15.2.2010 and 26.3.2009 of the CIT(Appeals)-IV, Bangalore relating to assessment years 2005-06 2004-05 respectively. Both these appeals arise under identical facts and circumstances and were heard together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the AO was an addition of ₹ 50,01,84,225/- on account of determination of Arm s Length Price (ALP) u/s. 92 of the Act, in respect of international transactions entered into with an Associated Enterprise (AE). One of the international transaction was with an AE in United States of America (USA) and addition on account of determination of ALP and transfer pricing with the USA AE was ₹ 32,54,19,721 out of the addition of ₹ 50,01,84,225/-. 4. The Assessee preferred appeal against the aforesaid order of assessment on 2.2.2009 before the learned Commissioner of Income-tax (Appeals) [ CIT(A) ] challenging all the additions made by the AO including the addition on account of determination of ALP/transfer price. Subsequently, Mutual Agreement Procedure was settled and the TP adjustment was agreed at ₹ 273,723,474 as against ₹ 325,419,721 for the transactions with the USA AE. The Assessee withdrew the grounds pertaining to the TP adjustment to the extent of the USA portion and the balance TP adjustment of ₹ 174,764,504 pertaining to non-USA portion was on appeal before the CIT(A). 5. When the appeal of the Assessee before the CIT(Appeals) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctober 18, 2011, wherein he held that the scope of proceedings before the AO pursuant to the order u/s.263 of the Act was only restricted to issues considered in the order u/s.263 of the Act and did not extend to other issues arising from the order of assessment dated 30.8.2008 passed u/s.143(3) of the Act that remain undisturbed. The CIT(A) therefore did not adjudicate those issues. The Assessee filed appeal before the ITAT against the order of CIT(A) holding that he has no authority to adjudicate issues that did not emanate from the order u/s. 263 of the Act. The Tribunal by an order dated 24.6.2016 dismissed the appeal of the Assessee upholding the aforesaid order of the CIT(A) insofar as it relates to jurisdiction of the CIT(A) to consider issues other than the issues that were directed to be considered by the AO in the order u/s.263 of the Act. It was stated by the learned counsel for the Assessee that the Assessee has preferred appeal against the order of the Tribunal dated 24.6.2016 before the Hon ble High Court and the same is pending. 9. According to the Assessee, it was on the basis of professional opinion, under the belief that the issues that were sought to be agitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, cannot be said to be not bonafide. As far as the delay from the date of Tribunal s order in the year 2016 till filing of the appeal only in the year 2017, is concerned, it has been submitted in the affidavit that after prolonged discussion and legal advice, it was suggested that the appeals should be filed against the orders of CIT(Appeals) dated 15.2.2010 for AY 2005-06. We are of the view that given the factual scenario and nature of disputes, the plea of assessee that delay in fling of the appeals before the Tribunal was due to bona fide reasons has to be accepted. Keeping in mind the principle that substantive rights should not be denied by technicalities, we condone the delay in filing the appeals before the Tribunal. 12. As far as merit of appeals are concerned, we are of the view that the scope of proceedings pursuant to an order u/s.263 of the Act, have not been properly appreciated. The relevant provisions of Sec.263 of the Act read thus:- Revision of orders prejudicial to revenue. 263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing] Officer is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and that facet had nothing to do with the issues that were raised by the Assessee in the appeal before the CIT(A). The Transfer pricing adjustment issue was not at all an issue that was considered in the order u/s.263 of the Act. Therefore the CIT(A) ought to have adjudicated the issues raised by the Assessee before it. Since the issues sought to be now raised in the present appeals have not been adjudicated by the CIT(Appeals), we deem it fit and proper to set aside the order of CIT(A) and restore the issues raised in the appeals before the CIT(A) for adjudication by the CIT(Appeals) on merits. We hold and direct accordingly. 14. As far as the appeal for AY 2004-05 is concerned, the facts are identical. In the AY 2004-05, the AO passed order u/s.143(3) of the Act on 29.12.2006. In this year the Assessee claimed deduction u/s.10A of ₹ 139,63,36,628/- and for identical reasons given in AY 2005-06, the AO computed deduction u/s.10A of the Act at ₹ 126,58,02,038/-. The Assessee had claimed deduction u/s.80HHE of the Act at ₹ 39,22,804. The AO allowed the claim for deduction only at ₹ 24,88,343/- but the reasons for such reduction in the claim has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not extend to other issues arising from the order of assessment dated 30.8.2008 passed u/s.143(3) of the Act that remain undisturbed. The CIT(A) therefore did not adjudicate those issues. The Assessee filed appeal before the ITAT against the order of CIT(A) holding that he has no authority to adjudicate issues that did not emanate from the order u/s.263 of the Act. The Tribunal by an order dated 17.10.2016 dismissed the appeal of the Assessee upholding the aforesaid order of the CIT(A) in so far as it relates to jurisdiction of the CIT(A) to consider issues other than the issues that were directed to be considered by the AO in the order u/s.263 of the Act. It was stated by the learned counsel for the Assessee that the Assessee has preferred appeal against the order of the Tribunal dated 17.10.2016 before the Hon ble High Court and the same is pending. 18. According to the Assessee it was, on the basis of professional opinion, under the belief that the issues that were sought to be agitated before the CIT(A) against the order of assessment dated 30.12.2009 could be agitated before the AO in the proceedings before the AO pursuant to order u/s.263 of the Act. But after the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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