2023 (7) TMI 845 - AT - Income Tax

Income accrued in India - assessee held 90% shares of a company based in UAE namely M/s. Rubamin FZC (RFZC) - Taxing entire profit of RFZC, UAE as profit belonging to the assessee - HELD THAT - As decided in favour of assessee as in own case 2021 (10) TMI 506 - ITAT AHMEDABAD wherein held that profit attributable to RFZC with respect to the transactions carried out by it with the company based in China namely Trafigura Beheer BV belongs to DRC companies. Likewise, the profit attributable to RFZC with respect to the transactions carried out by it with the assessee company has already been subject to transfer pricing provisions. Therefore, no inference can be drawn that the profit of the assessee company got diverted. Hence the ground of appeal of the assessee is allowed.

Summary

Issues involved:
Department's appeal against deletion of addition of profit of Rubamin FZC in UAE in assessee's hands as a colorable device for profit shifting.

Issue 1: A.Y. 2015-16
- Facts: Department appealed against deletion of addition of Rs. 73,24,47,597/- representing profit of Rubamin FZC in UAE as income of the assessee.
- Observations: Assessing Officer treated RFZC, UAE as a paper company with no actual activity, adding its entire profit to the assessee's income.
- Decision: Ld. CIT(A) deleted the addition based on ITAT's previous ruling in favor of the assessee for A.Y. 2009-10 to 2014-15.
- Conclusion: ITAT upheld Ld. CIT(A)'s decision, citing previous rulings favoring the assessee, dismissing the Department's appeal for A.Y. 2015-16.

Issue 2: A.Y. 2016-17
- Facts: Similar to A.Y. 2015-16, Department contested deletion of Rs. 40,91,89,643/- addition as profit of Rubamin FZC in UAE.
- Observations: Assessing Officer attributed RFZC, UAE's profit to the assessee, leading to the addition.
- Decision: Ld. CIT(A) relied on ITAT's precedent in the assessee's favor for A.Y. 2011-12 to 2014-15, directing deletion of the addition.
- Conclusion: ITAT dismissed the Department's appeal for A.Y. 2016-17, aligning with the decision for A.Y. 2015-16 based on consistent legal reasoning.

Final Verdict: ITAT upheld Ld. CIT(A)'s decisions to delete the additions of Rubamin FZC's profits in the assessee's hands for both A.Y. 2015-16 and 2016-17, citing precedent rulings and lack of grounds for interference. The appeals of the Department were consequently dismissed for both assessment years.