W.P.(C)--1773/2016. Case: NOKIA INDIA PRIVATE LIMITED Vs. DEPUTY COMMISSIONER OF INCOME TAX. High Court of Delhi (India)
| Case Number | W.P.(C)--1773/2016 |
| Citation | NA |
| Judgement Date | September 21, 2017 |
| Court | High Court of Delhi (India) |
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 7th September, 2017
Date of decision: 21st September, 2017
+ W.P. (C) No. 1773/2016
NOKIA INDIA PRIVATE LIMITED ...Petitioner
Through: Mr. Vikas Srivastava, Mr. Jatinder Singh, Mr. Sumit Mangal and Ms. Kanika Advocates.
versus
DEPUTY COMMISSIONER OF INCOME TAX ...Respondent
Through: Mr. Sanjay Jain, ASG with Mr. Sahni and Mr. Rahul Chaudhary, Senior Counsel.
CORAM:
JUSTICE S. MURALIDHAR JUSTICE PRATHIBA M. SINGH
JUDGMENT % 21.09.2017 Dr. S. Muralidhar, J. :
1. This writ petition by Nokia India Pvt. Ltd. (‘Assessee’) seeks quashing of the notice dated 14th September 2015 issued by the Commissioner of Income Tax, Circle-18 (2), New Delhi (hereafter Assessing Officer - ‘AO’) under Section 254 read with Sections 144 143 (3) of the Income Tax Act, 1961 (‘Act’) for Assessment Year 2007-08. The Assessee also challenges the consequential order 2nd December 2015 passed by the AO rejecting the plea of the Assessee that in terms of Section 153 (2A) of the Act, the proceedings under
W.P. (C) No. 1773/2016 Page 1 of
aforementioned notice dated 14th September 2015 would be time-barred.
Background facts
2. The Petitioner, which is engaged in manufacture and sale of handsets, filed its return of income for the AY 2007-08 1st November 2007 declaring an income of Rs. 8,10,62,32,096/-. during the AY in question, the Assessee was involved in transactions with its Associated Enterprise (‘AE’), a reference was made the AO to the Transfer Pricing Officer (‘TPO’).
3. The Assessee filed objections to the report of the TPO before the Dispute Resolution Panel (DRP) contesting the transfer pricing (TP) adjustment which the returned income of the Assessee stood enhanced. These objections were disposed of by the DRP. On the basis of the directions issued DRP, the AO completed the assessment by passing an assessment under Section 143 (3) read with Section 144C (13) of the Act 29th September 2011. The total income of the Petitioner was assessed Rs. 12,37,03,19,800/-.
4. In the aforementioned final assessment order, the AO made the following disallowances and additions to the income of the Petitioner:
S. No. Nature of Addition made Amount of addition (
1. Addition on account of disallowance of Marketing Expenses
1,03,96,877/
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87,57,71,395/
2. Addition on account of allowance of depreciation @ 15% (as against 60%) on computer peripherals.
62,91,22,970
3. Addition on account of disallowance of amount claimed as Price Protection Expenses
4. Addition on account of transfer pricing adjustment:
a. Advertising, Marketing and Promotion Expenses
b. Software Development Services
Total
Order of the ITAT
5. Aggrieved by the above assessment order, the Assessee filed an being ITA No. 4559/Del/2011 before the Income Tax Appellate (‘ITAT’). The decision of the ITAT rendered in the aforementioned on 18th May 2012 was as under:
a. As regards disallowance of expenditure incurred on issue of handsets on 'free of cost' basis, the ITAT noted that on an issue for AY 2000-01 and 2001-02, as well as for AY 2006-07, ITAT had set aside the assessment order and remanded the the file of the AO. Accordingly, the impugned assessment order set aside “to the file of the AO with the directions to decide the afresh after affording the assessee a reasonable opportunity of heard.”
b. As regards the applicable rate of depreciation on peripherals, the ITAT allowed the Assessee's appeal and directed AO to allow depreciation on computer peripherals at the rate of instead of 15% as allowed in the original assessment order.
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2,53,48,30,000/
21,07,34,539/ 2,74,55,64,539/
c. As regards disallowance of expenditure on account of price expenses, the ITAT observed that “Since we have admitted additional evidence in respect of other distributors to whom trade protection has been allowed, we set aside this issue to the file AO with the directions to examine the case of the assessee in the light of additional evidence filed before this Tribunal and decide the on merits. Needless to say the AO will provide the assessee reasonable opportunity of being heard.”
d. As regards the TP adjustments in relation to provision of development services to its AEs, the ITAT agreed with the that the DRP had obtained information under Section 133 (6) Act and had used such information without affording the Assessee opportunity of being heard. Consequently, the ITAT held that assessment order needs to be aside to the file of the assessing who will refer the matter to DRP for providing necessary of being heard. We order accordingly.”
e. As regards working capital adjustment for computing the arm's price (‘ALP’) of the international transaction, the ITAT noted that AY 2006-07, the ITAT had remanded the matter to the file AO/TPO for re-consideration in light of the fact that the adjustment had been allowed to the Assessee in the earlier Accordingly, the ITAT set aside the matter to the file of the AO the direction to examine the case of the assessee and decide the
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afresh in accordance with the provisions of law. The AO was asked to provide the Assessee the necessary opportunity of being heard.
f. As regards the addition on account of Advertising, Marketing Promotion (‘AMP’) expenses, it was noted by the ITAT that both parties agreed that the issue be set aside in the light of the provisions of Section 92B of the Act. Accordingly, the ITAT aside the matter to the file of the AO with the directions to decide issue afresh after affording the assessee a reasonable opportunity being heard.”
g. As regards the power of the TPO to determine ALP in respect international transactions not referred to him by the AO, the I held that, in view of the amended provisions of Section 92CA Act with retrospective effect from 1st April 2002, this ground the Assessee had become academic. It was accordingly rejected.
Proceedings on remand
6. On receipt of the ITAT’s order, the AO referred the TP issues to the TPO. While the matter was pending with the TPO, the Assessee filed a 31st March 2014 before the TPO with a copy to the AO’s office. In the letter, the Assessee submitted that under Section 153 (2A) of the Act,
last date for the AO to pass the fresh assessment order was 31st March
The TPO was requested to take the said provision into consideration.
7. On 21st January 2015, the TPO responded to the aforementioned the Assessee. According to the TPO, the limitation for passing the
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the assessment proceedings had to be calculated under Section 153 (3) the Act. According to the TPO, the ITAT had only partly restored original order by giving directions to various authorities for certain issues afresh after giving a reasonable opportunity to the Referring to paragraph 29 of the ITAT's order which stated that the of the Assessee was being partly allowed for statistical purposes, the stated that the limitation date for completing and passing of the order had to be calculated in terms of Section 153 (3) (ii) of the Alternatively, the TPO stated that, even in terms of Section 153 (2A) Act, the proceedings were not time-barred as of 31st January 2015.
8. On 29th January 2015, the Assessee responded to the TPO and a thereof was also sent to the AO. The Assessee reiterated that the period for passage of a fresh order would be calculated in terms Section 153 (2A) of the Act. Thereafter, the AO issued the impugned notice dated 14th September 2015 calling upon the Assessee to attend the office on 22nd September 2015 for proceedings under Section 254 read Sections 144C and 143 (3) of the Act for AY 2007-08.
9. On 21st October 2015, the Assessee responded to the above reiterating that Section 153 (2A) of the Act was applicable and,
the fresh...
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