Nord Drive Systems Pvt. Ltd., Pune V. Assistant Commissioner of Income-tax,Circle-2, Pune

CO 12/PUN/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3967 (ITAT-PUNE)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-11-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2018
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.825/PUN/2016 / ASSESSMENT YEAR : 2011-12 ACIT, CIRCLE-2, PUNE VS. NORD DRIVE SYSTEMS PVT. LTD., 282/2, 283/2, PLOT NO.15, VILLAGE MANN, MULSHI, PUNE 411 057 PAN : AACCN0708R APPELLANT RESPONDENT C.O. NO.12/PUN/2018 (ARISING OUT OF ITA NO.825/PUN/2016) / ASSESSMENT YEAR : 2011-12 NORD DRIVE SYSTEMS PVT. LTD., 282/2, 283/2, PLOT NO.15, VILLAGE MANN, TALUKA MULSHI, ADJ. HINJEWADI MIDC, PHASE-II, PUNE 411 057 PAN : AACCN0708R VS. ACIT, CIRCLE-2, PUNE CROSS OBJECTOR APPELLANT IN THE APPEAL / ORDER PER R.S.SYAL, VP : THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE FINAL ASSESSMENT ORDER DATED 25 -02-2016 ASSESSEE BY SHRI SHARAD SHAH & SHRI ROHIT TAPADIA REVENUE BY SHRI T. VIJAYA BHASKAR REDDY DATE OF HEARING 27-11-2019 DATE OF PRONOUNCEMENT 28-11-2019 ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 2 PASSED BY THE ASSESSING OFFICER U/S.143(3) R.W.S. 144C( 13) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) IN RELA TION TO THE ASSESSMENT YEAR 2011-12. 2. THE REVENUE HAS FILED THE FOLLOWING TWO EFFECTIVE AMENDE D GROUNDS, WHICH READ AS UNDER : 1. WHETHER THE HONBLE DRP WAS RIGHT IN LAW AND ON FACTS IN DIRECTING TO ALLOW CASH PLI TO THE ASSESSEE AND IGNORING THE FACT THAT CASH PROFIT RATIO IS NOT A VALID PLI AS PER THE INDIAN TRANSFER PRICING REGULATIONS. 2. WHETHER THE DRP WAS RIGHT IN LAW AND ON FACTS IN ACCEPTING THE CONTENTION OF ASSESSEE TO GRANT CUSTOM DUTY ADJUSTMENT, WHEN THE ASSESSEE HAS WORKED OUT THE ADJUSTMEN T IN ITS OWN HANDS WHILE AS PER RULE 10B(1)(E)(III), IF ANY ADJUSTMENT IS TO BE MADE IT SHOULD BE MADE IN THE HANDS OF COMPARABLE COMPANIES ONLY. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF COMP ONENTS FOR AUTOMATION OF INDUSTRIAL PROCESSES. THE ASSESSEE MAINLY MANUFACTURES GEARED MOTORS AND GEAR BOXES. RETURN FOR THE YEAR UNDER CONSIDERATION WAS FILED DECLARING NIL INCOME. CERTAIN INTERNATIONAL TRANSACTIONS WERE REPORTED IN FORM NO.3CEB. TH E AO MADE A REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINING THE ARMS LENGTH PRICE (ALP) OF THE INTERNATIONAL ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 3 TRANSACTIONS. THE TPO BENCHMARKED ALL THE TRANSACTIONS IN A CONSOLIDATED MANNER UNDER THE TRANSACTIONAL NET MARGINAL METHO D (TNMM) BY SELECTING CERTAIN COMPANIES AS COMPARABLE WITH THEI R AVERAGE ADJUSTED PROFIT LEVEL INDICATOR (PLI) AT 10.78% AS AG AINST THE ASSESSEES ADJUSTED PLI AT 1.88%, RESULTING INTO TRANSFER PRICING ADJUSTMENT OF RS.4,24,23,050/-. THE AO IN THE DRAFT OR DER PROPOSED THE ABOVE ADDITION. THE ASSESSEE ASSAILED THE CORRECTNESS OF THE DRAFT ORDER BEFORE THE DISPUTE RESOLUTION PANEL (DRP) CONTENDIN G, INTER ALIA, THAT CASH PROFIT PLI SHOULD HAVE BEEN TAKEN INSTEAD OF THE OPERATING PROFIT PLI AND FURTHER THAT THE ADJUSTMENT ON A CCOUNT OF EXCESS PAYMENT OF CUSTOM DUTY SHOULD HAVE BEEN GRANTE D IN THE HANDS OF THE ASSESSEE. THE DRP CALLED FOR THE REMAND RE PORT FROM THE TPO, ON THE BASIS OF WHICH IT ACCEPTED BOTH THE ABOVE CONTENTIONS OF THE ASSESSEE. THESE TWO POINTS CONSTITUTE THE F ILAMENT OF THE ABOVE GROUNDS RAISED BY THE REVENUE BEFORE THE T RIBUNAL. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE FIRST GROUND OF THE DEPARTMENT IS THAT THE CASH PROFIT MARGIN SHOULD NOT HAVE BEEN ACCEPTED BY THE D RP IN THE WORKING OF THE TNMM, WHICH HAS THE EFFECT OF EXCLUSION OF THE DEPRECIATION COST. ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 4 5. IN PRINCIPLE AND AS PER LAW, THE CONTENTION OF THE RE VENUE IS UNASSAILABLE. RULE 10B(1)(E) DEALING WITH THE DETERMINATION O F THE ALP UNDER THE TNMM CLEARLY PROVIDES THAT IT IS THE `NET OPERATING MARGIN REALIZED BY THE ASSESSEE AS WELL AS THE COMPARABLES WHICH SHOULD BE CONSIDERED FOR BENCHMARKING THE INTERNATIONAL TRAN SACTION IN RELATION TO A COMMON BASE, SUCH AS, COSTS INCURRED OR S ALES EFFECTED ETC. SO, THE NUMERATOR IN THE FORMULA FOR COMPUTATIO N OF MARGIN IS ALWAYS `NET PROFIT MARGIN AND DENOMINATOR VARIES, WHICH MAY BE EITHER COSTS INCURRED OR SALES EFFECTED OR ASSETS EMPLOYED ETC. MEANING OF THE TERM `NET PROFIT IN THE FORMULA HAS BEE N CONSIDERED BY THE HONBLE SUPREME COURT IN DIT (IT) VS. MORGAN STANLEY & COMPANY (2007) 292 ITR 416 (SC), IN WHICH IT HAS BEEN HELD THAT THE : `TNMM APPORTIONS THE TOTAL OPERATING PROFIT ARISING FROM THE TRANSACTION ON THE BASIS OF SALES, COSTS, ASSETS, E TC.. HENCE, IT IS EVIDENT THAT THE TERM NET PROFIT OR THE OPERATING NET PROFIT AS USED IN RULE 10B(1)(E) IS TO BE READ AS OPERATING PR OFIT, WHICH MEANS PROFIT FROM BUSINESS OPERATIONS, THAT IS, AFTER ADJUSTM ENT OF ALL THE ITEMS OF OPERATING COSTS, WHICH PREDOMINANTLY INCLUDE DEPRECIATION ALLOWANCE ON ACCOUNT OF WEAR AND TEAR OF THE ASSETS USED. THUS, DEPRECIATION IS AN INSEPARABLE AND AN INTEGRA L PART OF ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 5 THE OPERATING COSTS. THE HONBLE BOMBAY HIGH COURT IN CIT VS. WELSPUN ZUCCHI TEXTILES LTD. (2017) 292 CTR 1 (BOM.) HAD AN OCCASION TO DEAL WITH THE NATURE OF DEPRECIATION. QUESTION NO. (II) AS URGED BEFORE THE HONBLE HIGH COURT READS: (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND DESPITE THE PRESCRIPTION OF PARAMETERS OF COMPARABILITY BY RULE 10 B (2) OF THE INCOME TAX RULES, 1962, THE TRIBUNAL WAS CORRECT IN LAW, IN DIRECTING THE INCLUSION OF DEPB IN TURNOVER AND DEPRECIATION IN N ET PROFIT FOR THE PURPOSE OF PROFIT MARGIN OF COMPARABLES AND ASSESSEE? THE TRIBUNAL IN THAT CASE HELD THAT DEPRECIATION WA S INCLUDIBLE IN ARRIVING AT THE TOTAL OPERATING COSTS. AFFIRMING THE VIE W OF THE TRIBUNAL, THE HONBLE HIGH COURT HELD THAT: `SO FAR A S DEPRECIATION IS CONCERNED, WE FIND THAT THE ANALYSIS DONE BY THE TRIBUNAL TO INCLUDE DEPB BENEFIT TO HOLD IT TO BE AN OPERATING REVENUE TO DETERMINE OPERATING PROFIT, WOULD BE EQUALLY APPLIC ABLE IN CASE OF DEPRECIATION FOR THE PURPOSES OF HOLDING IT TO BE AN OPERATING EXPENSES TO DETERMINE OPERATING COSTS. AT THIS STAGE , IT IS PERTINENT TO NOTE THAT AS AGAINST RULE 10B(1)(E) SPECIFICALLY PROVIDING FOR ADOPTION OF OPERATING MARGIN UNDER THE TNMM, RULE 10B(1)(B) AND 10B(1)(C) CONTAINING MECHANISM FOR DETERMIN ING THE ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 6 ALP UNDER THE RESALE PRICE METHOD AND THE COST PLUS METHOD DISTINCTIVELY PROVIDES FOR ADOPTING THE `GROSS MARGIN. FROM THE FOREGOING DISCUSSION, IT IS MANIFEST THAT DEPRECIATION HAS TO BE NECESSARILY CONSIDERED AS A PART OF THE OPERATING COSTS IN TH E PROCESS OF DETERMINING THE OPERATING PROFIT UNDER THE TNMM. IT IS, THEREFORE, HELD THAT THE STATUTORY MANDATE FOR THE NUMERATOR IN THE FORMULA AS PER RULE 10B(1)(E) IS TO ADOPT OPERATING PROFIT RATHER THAN CASH PROFIT, AS HAS BEEN HELD BY THE DRP. 6. HOWEVER, THE FACT OF THE MATTER IS THAT NOTWITHSTANDING THE CORRECT LEGAL POSITION AS DISCUSSED SUPRA , THE DIRECTION OF THE DRP TO ADOPT CASH PROFIT MARGIN AS NUMERATOR IN THE TNMM IS NOT ITS OWN INDEPENDENT CONCLUSION BUT THE ACCEPTANCE OF THE ARGUMENT B Y THE TPO IN THE REMAND PROCEEDINGS, WHICH STARTED AT THE INSTANCE OF THE DRP, WHEN IT SENT THE ASSESSEES SUBMISSIONS AND CALCULATION TO THE TPO FOR COMMENTS. THE TPO SENT A REMAND REPORT DATED 01.12.2015, WHOSE COPY HAS BEEN PLACED AT PAGES 90 ON WARDS OF THE PAPER BOOK. THIS ISSUE HAS BEEN DISCUSSED BY THE TPO A T THE INTERNAL PAGE NO. 12 OF HIS REPORT UNDER THE CAPTION `CASH PLI G ROUND OF OBJECTION NO. 3.5 OF THE DRP OBJECTIONS. FIRSTLY THE TPO HAS REPRODUCED THE ASSESSEES CONTENTION FOR ADOPTION OF CASH PLI AND ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 7 THEREAFTER A TABLE CONTAINING: `SUMMARY OF THE UNADJUSTED AND ADJUSTED MARGIN (USING CASH PLI) OF COMPARABLE COMPANIES (CONSIDERED IN THE TP ORDER DATED 23 JAN 2015). THEN THE TPO GAVE HIS COMMENTS, WHICH ARE REPRODUCED VERBATIM:- I HAVE ANALYSED THE COMPARABILITY USING CASH PLI. THE DIFFERENCE (DEPRECIATION, IN THE PRESENT CASE) BETWEEN THE CONTROLLED AND THE COMPARABLE CONTROLLED TRANSACTION HAS A LIKELY EFFECT OF AFFECTING THE PRICE, OR COST CHARGED/PAID OR PROFIT ARISING THEREFROM. I AGREE WITH THE CONTENTION OF THE ASSESSEE. HOWEVER, THE DECISION MAY BE TAKEN ON MERIT. 7. THUS, IT IS SEEN THAT THOUGH THE TPO DID NOT ORIGINALLY AGRE E WITH THE ASSESSEE ON ADOPTION OF CASH PROFIT MARGIN DURING THE COURSE OF THE TRANSFER PRICING PROCEEDINGS BUT WHEN THE AS SESSEE RAISED THE ISSUE OF ESPOUSING CASH PROFIT MARGIN ISSUE BEF ORE THE DRP, HE AGREED WITH THE CONTENTION OF THE ASSESSEE. 8. AT THIS STAGE, IT IS RELEVANT TO NOTE THE COMMAND OF SU B-SECTION (2A) OF SECTION 253 OF THE ACT, WHICH, PRIOR TO ITS OMISSION W.E.F. 1.6.2016, WAS INSERTED BY THE FINANCE ACT, 2012 W.E.F. 1 .7.2012 AND LATER ON AMENDED BY THE FINANCE (NO.2) ACT, 2014 W.R. E.F. 1.6.2013 PROVIDING THAT: `THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY, IF HE OBJECTS TO ANY DIRECTION ISSUED BY THE DISPUTE RESOLUTION PANEL UNDER SUB-SECTION (5) OF SECTION 144C IN ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 8 RESPECT OF ANY OBJECTION FILED ON OR AFTER THE 1ST DAY OF JU LY, 2012, BY THE ASSESSEE UNDER SUB-SECTION (2) OF SECTION 144C IN PURSUANCE OF WHICH THE ASSESSING OFFICER HAS PASSED AN ORDER COMPLETING THE ASSESSMENT OR REASSESSMENT, DIRECT THE ASSESSING OFFICER TO APPEAL TO THE APPELLATE TRIBUNAL AGAINST THE ORDER. THIS PROVISION, TH US ENABLED THE REVENUE TO FILE APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF THE AO CONTAINING ANY DIRECTION ISSUED BY THE DISPUTE RESOLUTION PANEL, WHICH IS OTHERWISE BINDING ON THE AO. THE ESSENCE OF THE PROVISION IS THAT THE REVENUE OUGHT TO HAVE SOME RECOURSE AGAINST ANY ADVERSE DIRECTION OF THE DRP. WHAT IS HEREBY REFERRED TO IS THE SUO MOTU DIRECTION GIVEN BY THE DRP NOT FAVORING THE REVENUE. SUCH A DIRECTION CANNOT ENVELOPE ANY CONCESSIO N GIVEN BY THE AO/TPO DURING THE REMAND PROCEEDINGS. IF THE AO/TPO GET SATISFIED WITH THE VERSION GIVEN BY THE ASSESSEE IN THE REMAND PROCEEDINGS, IT IS BUT NATURAL THAT THE SAME, WHEN INCORPORATED IN THE DIRECTION OF THE DRP, CANNOT BE ASSAILED BY THE REVENUE IN TERMS OF SECTION 253(2A) OF THE ACT. THE SITUATION CONTEMPLATED IN THIS SUB-SECTION IS ONLY THE ADVERSE DIRECTIONS QUA THE REVENUE WHICH IS SUO MOTU GIVEN BY THE DRP ON APPRECIATION OF THE MATERIAL AND NOT THE ONE WHICH FLOWS FROM THE CONCESSION OF THE ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 9 AO/TPO DURING THE REMAND PROCEEDINGS. AS ANY OTHER ADVER SE ORDER QUA THE REVENUE PASSED BY THE AO CANNOT BE CHALLENGED BY THE DEPARTMENT IN ANY APPEAL, FOR WHICH, OF COURSE, THER E ARE OTHER STATUTORY REMEDIES, SUCH AS REVISION, RECTIFICATION OR REASSES SMENT, IN THE LIKE MANNER ANY ADVERSE DIRECTION GIVEN BY THE DRP QUA THE REVENUE WHICH IS BASED ON THE CONCESSION GIVEN BY THE AO/T PO, CANNOT BE EQUALLY LEGALLY CHALLENGED BY THE DEPARTMENT IN APPE AL BEFORE THE TRIBUNAL. ON THE FACTS OF THE INSTANT CASE, WE H OLD THAT ALBEIT THE TPO WAS NOT LEGALLY CORRECT IN ACCEPTING THE CASH PROF IT MARGIN IN PLACE OF THE OPERATING PROFIT UNDER THE TNMM IN THE REMAND PROCEEDINGS, BUT THIS ISSUE CANNOT BE RAKED UP IN A PPEAL BEFORE THE TRIBUNAL AS THE CONSEQUENTIAL DIRECTION OF THE DRP IS BASED ONLY ON THE CONCESSION OF THE TPO AND NOT DE HORS THE SAME. IN OUR CONSIDERED OPINION, THERE IS NO QUALITATIVE DIFFERENCE BETWEEN THE TWO SITUATIONS, VIZ., ONE, IN WHICH A LEGALLY WRONG COURSE OF ACTION ADOPTED BY THE ASSESSEE GOES UNNOTICED BY THE AO/TPO AND THE ORDER IS PASSED AS SUCH, AND THE TWO, IN WHICH A LEGA LLY WRONG COURSE OF ACTION ADOPTED BY THE ASSESSEE COMES TO THE NOTIC E OF THE AO/TPO BUT THE SAME GETS CONCURRENCE AS CORRECT. IN BOTH THE CIRCUMSTANCES, THE DEPARTMENT CANNOT CHALLENGE THE ACTION OF THE ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 10 AO/TPO DIRECTLY BEFORE THE APPELLATE FORUMS. EXTANTLY, WE AR E CONFRONTED WITH THE SECOND SITUATION, IN WHICH THOUGH THE ACCEPTANCE OF CASH MARGIN IN THE DETERMINATION OF THE PLI IS LEGALLY INCORRECT, BUT ITS ACCEPTANCE BY THE TPO IN THE REMAND PROCEE DINGS HAS DENUDED THE REVENUE FROM CHALLENGING THE SAME BEFOR E THE TRIBUNAL. THIS GROUND, BEING NOT MAINTAINABLE, IS DISMISSED. 9. NOW WE TURN TO THE SECOND GROUND RAISED BY THE REVENU E ABOUT THE GRANTING OF CUSTOM DUTY ADJUSTMENT IN THE COMPUTATION OF THE ASSESSEES PLI RATHER THAN THAT OF THE COMPARABLES. TH IS ISSUE AROSE FOR THE FIRST TIME BEFORE THE DRP. THE ASSESSEE CONTENDED THAT BECAUSE OF HIGHER VOLUME OF IMPORTS, IT PAID ADDITIONAL IMP ORT DUTY VIS--VIS THE COMPARABLES PAYING ONLY THE BASIC CUSTOM DUTY. THE ASSESSEE FURNISHED CALCULATION OF SUCH EXCESS CUSTOM DUTY BEFORE THE DRP AND REQUESTED THAT SUCH EXCESS SHOULD BE ADJUSTED IN THE COMPUTATION OF ITS OWN PLI. THE DRP SENT SUCH CALCULATION TO THE TPO FOR VERIFICATION AND COMMENTS. AFTER CONSIDERING THE REM AND REPORT, THE DRP DIRECTED TO MAKE SUCH ADJUSTMENT IN THE ASS ESSEES PLI. 10. IN SOFARAS THE LEGAL POSITION ON THIS ISSUE IS CONCERNED, SUB- CLAUSE (I) OF RULE 10B(1)(E) ELOQUENTLY PROVIDES FOR COMPU TING THE ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 11 NET PROFIT MARGIN AS REALIZED BY THE ENTERPRISE FROM THE INTERN ATIONAL TRANSACTION. SUB-CLAUSE (II) DEALS WITH THE COMPUTATION OF NET OPERATING PROFIT MARGIN FROM A COMPARABLE UNCONTROLLED TRANSA CTION, MAY BE INTERNAL OR EXTERNAL. SUB-CLAUSE (III) PROVIDES THAT THE NET PROFIT MARGIN REALIZED BY A COMPARABLE COMPANY , DETERMINED AS PER SUB-CLAUSE (II) ABOVE, IS ADJUSTED TO TAKE INTO ACCOUNT THE DIFFERENCES, IF ANY, BETWEEN THE INTERNATIONAL TRANSACTION AND TH E COMPARABLE UNCONTROLLED TRANSACTIONS, ..... WHICH COULD MATER IALLY AFFECT THE AMOUNT OF NET PROFIT MARGIN IN THE OPEN MARKET. IT IS THIS ADJUSTED NET PROFIT MARGIN OF THE UNRELATED TRANSACTIONS OR OF THE COMPARABLE COMPANIES, AS DETERMINED UNDER SUB-CLAUSE (III), WHICH IS USED FOR THE PURPOSES OF MAKING COMPARISON WITH THE NE T PROFIT MARGIN REALIZED BY THE ASSESSEE FROM ITS INTERNATIONAL TRANSAC TION AS PER SUB-CLAUSE (I). THUS THE LAW EXPLICITLY PROVIDES FOR AD JUSTING THE PROFIT MARGIN OF COMPARABLES ON ACCOUNT OF THE MATERIAL DIF FERENCES BETWEEN THE INTERNATIONAL TRANSACTION OF THE ASSESSEE AND COMPARABLE UNCONTROLLED TRANSACTIONS. IT IS NOT THE OTHER WAY A ROUND TO ADJUST THE PROFIT MARGIN OF THE ASSESSEE. IN OTHER WOR DS, THE NET OPERATING PROFIT MARGIN REALIZED BY THE ASSESSEE FROM ITS INTERNATIONAL TRANSACTION IS TO BE COMPUTED AS SUCH, WITHOUT ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 12 ADJUSTING IT ON ACCOUNT OF DIFFERENCES WITH THE COMPARABLE UNCONTROLLED TRANSACTIONS. THE ADJUSTMENT, IF ANY, IS REQUIRE D TO BE MADE ONLY IN THE PROFIT MARGINS OF THE COMPARABLES. 11. NOW COMING TO THE FACTUAL SCENARIO ON THIS ISSUE, IT IS F OUND THAT THE ASSESSEE MADE A CLAIM BEFORE THE DRP FURNISHING N ECESSARY DETAILS AND SEEKING ADJUSTMENT IN ITS OWN PROFIT MARGIN DUE TO ADDITIONAL CUSTOM DUTY PAID BECAUSE OF THE EXCESSIVE IMPORTS . THE DRP CALLED FOR A REMAND REPORT FROM THE TPO ON THIS COUNT. T HE TPO IN HIS REMAND REPORT FIRSTLY NOTED THE CONTENTION OF THE ASS ESSEE WITH THE RELEVANT CALCULATIONS AND THEN OFFERED HIS COMMENTS AS UNDER: I HAVE ANALYSED THE COMPUTATION OF THE CUSTOM DUTY ADJUSTMENT FOR COMPARABLE COMPANIES BY COMPARING THE RATIO OF IMPORTED GOODS/TOTAL GOODS OF COMPARABLE COMPANIES. I AGREE WITH THE CONTENTION OF THE ASSESSEE. HOWEVER, THE DECISION MAY BE TAKEN ON MERIT. 12. IT IS ON THE BASIS OF THE ABOVE CONCESSION GIVEN BY THE TPO HIMSELF THAT THE DRP DIRECTED TO GIVE ADJUSTMENT ON ACCOUNT OF ADDITIONAL CUSTOM DUTY PAID IN THE PLI COMPUTATION OF THE ASSE SSEE. POSITION HERE IS AGAIN MUTATIS MUTANDIS SIMILAR TO THE FIRST ISSUE DISCUSSED SUPRA INASMUCH AS THOUGH THE DIRECTION OF THE DRP IS NOT ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 13 LEGALLY SOUND, BUT THE SAME IS BASED ON THE CONCESSION GIVEN BY THE TPO IN THE REMAND PROCEEDINGS, WHICH HAS THE EFFECT OF PR OSCRIBING THE REVENUE FROM AGITATING THIS ISSUE IN APPEAL BEFORE THE TR IBUNAL. THIS GROUND OF THE APPEAL IS ALSO DISMISSED AS NOT MAINTAINABLE . 13. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE WILL NOT BE PRESSING THE CROSS OBJECTION, IF THE DEPARTMENTAL APPEAL IS NOT ALLOWED. IN VIEW OF OUR DECISION IN DISMISSING THE DEPARTME NTAL APPEAL, THE CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISS ED AS NOT PRESSED. 14. IN THE RESULT, THE APPEAL AS WELL AS CROSS OBJECTION AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 28 TH NOVEMBER, 2019 ITA NO.825/PUN/2016 & CO. NO.12/PUN/2018 NORD DRIVE SYSTEMS PVT. LTD., 14 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-13, PUNE 4. 5. 6. THE PR.CIT-V, PUNE , , / DR C, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 27-11-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28-11-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *