Allowed

The Principal Commissioner of Income Tax,Thiruvananthapuram v. M/S Olam Agro India Pvt. Ltd.

Kerala HC3 Jun 2024ITA/21/2023

Case brief

AI extract

What is this about?

Revenue appealed against a common Tribunal order for assessment years 2011-12 and 2012-13 concerning transfer pricing issues: market risk adjustment in exports and commission on corporate guarantee. Finding the Tribunal had not considered these grounds on merits, the High Court set aside the order and remanded for fresh decision within six months.

What did the court decide?

Impugned Tribunal order set aside; matters remanded to ITAT for fresh decision on both issues within six months, after hearing parties.

The Principal Commissioner of Income Tax,Thiruvananthapuram Vs M/S… — Income Tax | Kerala HC (2024)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR

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THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.

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MONDAY, THE 3^RD DAY OF JUNE 2024 / 13TH JYAISHTA, 1946

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ITA NO. 21 OF 2023 AGAINST THE ORDER DATED 27.12.2022 IN ITA NO.558 OF 2019 OF INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH, COCHIN

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APPELLANT/RESPONDENT/REVENUE:

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THE PRINCIPAL COMMISSIONER OF INCOME TAX,THIRUVANANTHAPURAM

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BY ADVS. SRI.CHRISTOPHER ABRAHAM SRI. P.G. JAYASHANKAR PGJ SRI.KEERTHIVAS GIRI

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RESPONDENT/APPELLANR/ASSESSEE:

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M/S OLAM AGRO INDIA PVT LTD BISHOP JEROME NAGAR, KOLLAM, KERALA -691001 (CURRENTLY M/S OLAM ENTERPRISES INDIA PVT LTD, DLF BUILDING NO -08, TOWER-A, CYBER CITY PHASE-II, GURGAON, HARYANA - 122022),

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BY ADVS. SRI.ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS(K/571/2014) SRI.P.G.CHANDAPILLAI ABRAHAM(MAH/002141/2016) SRI.SHARAD JOSEPH KODANTHARA(K/001677/2018) SRI.ALEXANDER JOSEPH MARKOS(K/001270/2018) SRI.JOHN VITHAYATHIL(K/001877/2021) SRI.AIBEL MATHEW SIBY(K/1376/2020)

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THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 03.06.2024, ALONG WITH ITA.22/2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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ITA Nos.21 & 22 of 2023

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR

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THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.

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MONDAY, THE 3^RD DAY OF JUNE 2024 / 13TH JYAISHTA, 1946

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ITA NO. 22 OF 2023

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AGAINST THE ORDER/JUDGMENT DATED 27.12.2022 IN ITA NO.559 OF 2019 OF I.T.A.TRIBUNAL,COCHIN BENCH

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APPELLANT/RESPONDENT/REVENUE:

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THE PRINCIPAL COMMISSIONER OF INCOME TAX,THIRUVANANTHAPURAM

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BY ADVS. SRI.CHRISTOPHER ABRAHAM SRI.ADV. P.G. JAYASHANKAR PGJ SRI.KEERTHIVAS GIRI

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RESPONDENT/APPELLANT/ASSESSEE:

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M/S OLAM AGRO INDIA PVT LTD BISHOP JEROME NAGAR, KOLLAM, KERALA -691001 (CURRENTLY M/S OLAM ENTERPRISES INDIA PRIVATE LTD. DLF BUILDING NO-08, TOWER A, CYBER CITY PHASE - II, GURGAON, HARYANA - 122022)

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BY ADVS. SRI.ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS(K/571/2014) SRI.ALEXANDER JOSEPH MARKOS(K/001270/2018) SRI.P.G.CHANDAPILLAI ABRAHAM(MAH/002141/2016) SRI.SHARAD JOSEPH KODANTHARA(K/001677/2018) SRI.JOHN VITHAYATHIL(K/001877/2021) SRI.AIBEL MATHEW SIBY(K/1376/2020)

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THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 03.06.2024, ALONG WITH ITA.21/2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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ITA Nos.21 & 22 of 2023

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JUDGMENT

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Dr. A.K.Jayasankaran Nambiar, J.

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In these Income Tax Appeals preferred by the revenue against a common order of the Income Tax Appellate Tribunal dated 27.12.2022, although various substantial questions of law have been raised, we find from a reading of the impugned order of the Tribunal that it does not really consider the issues that were raised before it by the revenue, which was in appeal before the Tribunal, aggrieved by the orders of the First Appellate Authority under the Income Tax Act in relation to the assessment years 2011-2012 and 2012-2013.

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Before the Tribunal, the revenue had essentially impugned the order of the First Appellate Authority to the extent it had allowed risk adjustment in case of exports at the rate of 2% in lieu of 1% that was allowed by the Transfer Pricing Officer, and further to the extent that the appellate authority had allowed the commission on the corporate guarantee on the gross loan limits and not on the actual loan availed. The facts, as discernible from the orders of the First Appellate Authority, would indicate that the assessee had claimed a market risk of 2.5% and the Transfer Pricing Officer had reduced the same to 1%. The First Appellate Authority had partly accepted the claim of the assessee

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ITA Nos.21 & 22 of 2023

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and enhanced it to 2%. The revenue was, therefore, in appeal before the Tribunal contending that the claim for market risk ought not to have exceeded 1% as allowed by the Transfer Pricing Officer. On the issue of commission on corporate guarantee, while the Transfer Pricing Officer had found that the expenses claimed in respect of the corporate guarantee that was offered in favour of the assessee by Olam International Limited ought to be based on the actual exposure of the assessee to the banks from which the loans were availed, the Appellate Authority found that the expenses towards commission charges on the corporate guarantee could extend to the gross guarantee amount for which Olam International Limited had given the guarantee. In the appeal before the Tribunal, the stand of the revenue was that the expenditure towards commission for the corporate guarantee should be limited only to the quantum of actual exposure of the assessee to the various banks from which it had availed loans.

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When we peruse the impugned order of the Tribunal, which is a common order passed for both the assessment years aforementioned, we find that both the aforementioned issues have not been considered by the Appellate Tribunal on merits although there were specific grounds of appeal raised by the revenue. Under the said circumstances, we feel it appropriate to set aside the impugned order of the Tribunal and remand the matter back to the Tribunal for a fresh decision on

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ITA Nos.21 & 22 of 2023

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merits on both the aforementioned issues that have been raised by the revenue in their grounds of appeal filed before the Appellate Tribunal. Taking note of the lapse of time since the impugned order of the Tribunal, we direct that the fresh order of the Tribunal shall be passed within an outer time limit of six months from the date of receipt of a copy of this judgment, after hearing the parties. The Income Tax Appeals are thus allowed by way of remand, and without answering the questions of law raised.

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Sd/-

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DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/-

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SYAM KUMAR V.M. JUDGE

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mns

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ITA Nos.21 & 22 of 2023

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APPENDIX OF ITA 21/2023

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PETITIONER ANNEXURES

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Annexure A	TRUE COPY U/S 92CA ( FOR ASSESS	OF THE 3) OF TH MENT YEA	ORDER PASSED BY THE TPO E IT ACT DATED 28.01.2015 R 2011-12
Annexure B	TRUE COPY 26.03.2015	OF THE FOR ASS	ORDER OF THE AO DATED ESSMENT YEAR 2011-12
Annexure C	TRUE COPY (A) ON 07. 12	OF THE 03.2019	ORDER PASSED BY THE CIT FOR ASSESSMENT YEAR 2011-
Annexure D	TRUE COPY BEFORE THE	OF THE ITAT	GROUNDS OF APPEAL FILED
Annexure E	TRUE COPY 27.12.2022	OF THE FOR THE	ORDER OF THE ITAT DATED ASSESSMENT YEAR 2011-12

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ITA Nos.21 & 22 of 2023

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APPENDIX OF ITA 22/2023

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PETITIONER ANNEXURES

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Annexure A	TRUE COPY INCOME TAX ASSESSMENT	OF THE ORDER U/S 92CA(3) OF THE ACT, 1961 DT 20.01.2016 FOR THE YEAR 2012-13
Annexure B	TRUE COPY DATED 28.0 13	OF THE ASSESSMENT ORDER OF THE AO 3.2016 FOR ASSESSMENT YEAR 2012-
Annexure C	TRUE COPY (A) ON 07. 13	OF THE ORDER PASSED BY THE CIT 03.2019 FOR ASSESSMENT YEAR 2012-
Annexure D	TRUE COPY BEFORE THE	OF THE GROUNDS OF APPEAL FILED ITAT FOR ASSESSMENT YEAR 2012-13
Annexure E	TRUE COPY ORDER OF ASSESSMENT	OF THE CERTIFIED COPY OF THE THE ITAT DATED 27.12.2022 FOR YEAR 2012-13

The Principal Commissioner of Income Tax,Thiruvananthapuram v. M/S Olam Agro India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

The Principal Commissioner of Income Tax,Thiruvananthapuram v. M/S Olam Agro India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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