Bundy India Limited, Vadodara V. The Dy. CIT., Circle-1(1)(1), Baroda

CO 13/AHD/2022

AI Insights

The case involves appeals by the Department of Income Tax and cross objections by Bundy India Ltd. against the orders of the CIT(A) for the assessment years 2012-13, 2013-14, and 2014-15. The primary issues revolved around the adjustments made by the Transfer Pricing Officer (TPO) concerning the payment of management fees to associated enterprises and the disallowance of depreciation on computer software licenses and excess claims on the consumption of self-generated electricity. The CIT(A) had earlier restricted the adjustments made by the TPO, which the Department contested, while the assessee supported the CIT(A)'s decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131489 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 24-03-2022
• Other Referred Cases: Computer Age Management Services Pvt. Ltd. vs. ACIT, National Collateral Management Services Pvt. Ltd. vs. ACIT, A.R. Kema Medical India Pvt. Ltd. vs. ACIT, Castus Imaging India Pvt. Ltd. vs. ACIT
• Laws Referred To: Income-tax Act, Income-tax Rules
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Depreciation; Transfer pricing; International transaction
• Section: 92C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e Dy. CIT, Circle-1 (1 )(1), Vadodara (Appellant) Vs Bundy Ind ia Ltd. Vadodara PAN: AAACB303 9M (Respo ndent) Bu ndy India Ltd . Vadodara PAN: AAACB3039M (Appellant) Vs The Dy. CIT, Circle-1(1)(1 ), Vadodara (Respo ndent) Asses see b y : Shri S. N. Sopa rkar, Sr. A. R. & Shri Parin Shah, A. R. Revenue by : Shri Darsi Suma n Ratnam, CIT- D .R. Date of hearing : 12-09 -2 023 Date of pronouncement : 10-11 -2 023 आदेश/ORDER ITA Nos. 317, 318 & 319/Ahd/2021 A.Ys. 2012-13, 2013-14 & 2014-15 C.O. Nos. 11, 12 & 13/Ahd/2022 (In ITA Nos. 317, 318 & 319/Ahd/2021) A.Ys. 2012-13, 2013-14 & 2014-15 I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 2 PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- These are appeals filed by the Department and Cross Objections raised by the assessee for assessment years 2012-13, 2013-14 and 2014-15 against the common order passed by ld. CIT(A) dated 19-04-2021. 2. Since common issues are involved for the aforesaid assessment years before us, all the appeals and cross objections are being taken up together. 3. We shall first start with Department’s appeal for assessment year 2012-13 and Assessee’s cross objection thereto. 4. The Department has raised the following grounds of appeal:- “(i) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) was justified in deleting the upward adjustment of Rs. 2,11,50,685/- made by the TPO in respect of international transactions of the assessee pertaining to payment of management fees? (ii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in ignoring the fact that the assessee had failed to benchmark the transactions with its AE as per law thereby failing to discharge the primary onus cast upon it by the Act? (iii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in allowing aggregation of transaction which is contrary to the provisions of Section 92C of the Act and Rule 10A to 10C of the Income-tax Rules? (iv) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) was justified in allowing payment of management fees of Rs.2,11,50,685/- without bechmarking the transactions which is contrary to the - provisions of Section 92C of the Act and Rule 10A to 10C of the Income- tax Rules? I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 3 (v) "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) is justified in deleting the addition of Rs.9,47,864/- made by the Assessing Officer on account of disallowance of excess depreciation claimed on computer software license; without appreciating the fact that purchase of ME&S Tool Kit (Nissan) CAD software License is only an additional tool used in the business which comes under the classification of intangible assets and accordingly the same is eligible for depreciation @ 25% only." 5. The assessee has raised the following grounds of cross objection:- “The Ld. AO being aggrieved by the order dated 19 th April 2021 passed by the Hon'ble C1T(A)-13, Ahmedabad which was subsequently rectified vide rectification order dated 05 May 2021, preferred an appeal before Ahmedabad Bench of Hon'ble ITAT vide ITA No. 317 of 2021, Against the same assessee wishes to cross object on the following grounds: The below mentioned grounds are without prejudice to each other. '1. The Ld. CIT(A) erred in law and on facts, in restricting arm's length price of international transaction of management fees paid by the assessee to its associated enterprises to 1.5% of the operating revenue of the assessee; and ought to have upheld entire amount of such management fees, benchmarked by the assessee under Transactions Net Margin Method, at arm's length. The Cross objector prays for leave to add, alter and/or amend all or any of the grounds before final hearing of the Cross objection.” 5. Ground Nos. I to IV of Revenue’s appeal and Cross Objection 1 of assessee’s cross objection: The ld. CIT(A) has erred in deleting upward adjustment of Rs. 2,11,50,685/- by the Transfer Pricing Officer pertaining to payment of management fees (Department’s Appeal) and ld. CIT(A) erred in restricting the arms length price of international transaction of management fees paid by the assessee to 1.5% of the operating revenue of the assessee (assessee’s cross objection). I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 4 6. The brief facts of the case are that the assessee is engaged in the business of manufacturing of copper coated steel tubes, providing support in IT, manufacturing of equipments required to make fluid carrying components etc. The assessee is a subsidiary of PI Automative Holding Ltd., UK which holds 96.9% shares of the assessee company. The assessee has manufacturing facilities located at Manesar, Chennai, Bangalore and Pune. During the course of proceedings before Transfer Pricing Officer, the TPO proposed an adjustment of Rs. 2,50,12,272/- by way of disallowance of payment of management fees by the assessee company to its associated enterprises. During the course of proceedings, the assessee contended that the TPO should not reject TNMM as the most appropriate method since the assessee has received various services from which benefits have accrued to the assessee and payments have been made to the associated enterprises at arms length price, even under the CUP method adopted by the TPO. However, the TPO confirmed the aforesaid transfer pricing officer adjustment amounting to Rs. 2,50,12,272/- in the hands of the assessee. 7. In appeal, the assessee submitted that the TPO for preceding assessment year 2010-11 had proposed an adjustment of Rs. 3,22,18,260/- to the international transaction of payment of management fees by the assessee to its associated enterprise but the DRP had directed to delete the disallowances of management charges. It was further submitted that in a similar issue of disallowance of management fee, the ITAT in the assessee’s own case for assessment year 2011-12 had allowed 2% of the operating revenue towards payment of management fees. It was further submitted that assessee had entered into an APA with the CBDT on 29-12-2016 for the I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 5 international transactions of payment of management fees (including other international transactions) with its associated enterprises and it has been agreed under the APA that the management fees may be kept at 2% of the operating revenue for assessment year 2015-16 and assessment year 2016-17 and at 3% from Assessment Year 2017-18 to Assessment Year 2019-20. Accordingly, in light of the arguments put forth by the assessee, the ld. CIT(A) in the order passed on 19-04-2021 held that addition on this issue should be restricted to 2% of the operation revenue for the under consideration. The Assessing Officer was directed to re-compute the addition accordingly. Thereafter, the ld. CIT(A) passed rectification order dated 05-05-2021 and rectified the above order allowing the claim of management fees to the extent of 1.5% of the operating revenue and directing that anything in excess should be confirmed as addition for the year under consideration. The ld. CIT(A) while coming to the above conclusion observed that ITAT in assessment year 2011-12 had considered 1.5% of operating revenue as allowable expense towards payment of management fees. 8. Both the Department and assessee are in appeal before us against the aforesaid order passed by ld. CIT(A) allowing the international transactions with respect to management fees to the extent of 1.5% of the operating revenue. The Department is in appeal on the ground that the ld. CIT(A) has erred in allowing relief to the assessee to the extent of 1.5% of the operating revenue while the assessee before us on the ground that the ld. CIT(A) has mis-interpreted mis-read the contents of the order passed by ITAT for assessment year 2011-12 since the ITAT has directed that 2% of the I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 6 operating revenue may be allowed to the assessee in respect of the aforesaid transaction, being at an arm’s length price. Before us, the ld. Departmental Representative drew our attention to observations made by the Transfer Pricing Officer and submitted that in the instant facts, no specific services have been rendered to the assessee and accordingly, no benefit has accrued to the assessee. The ld. Departmental Representative submitted that unless assessee submits documentary evidence to justify the receipt of services, the receipt of commensurate direct and tangible benefit and substantiate that the amount paid was not in any way in excess of the amount paid in a third party scenario, such payments for cost allocated cannot be treated at arms length price. In response, the counsel for the assessee submitted that the issue is directly covered in favour of the assessee by the observations made by Hon’ble ITAT in assessee’s own case for assessment year 2011-12. 9. We have heard the rival contentions and perused the material available on record. It would be useful to reproduce the relevant extracts of ITAT order in MA 154/Ahd/2020 in ITA 720/Ahd/2017 for assessment year 2011-12 dated 07-09-2022 for ready reference. “The Miscellaneous Application has been filed by the Revenue praying for rectification of the order passed by the Bench on 27.12.2019. According to Revenue, while calculating the disallowance in respect of operating revenue of manufacturing segment@1.5%, the Bench has wrongly applied 2% of the same. 2. We have perused the order passed by the bench. The paragraph 7 thereof categorically deals with the percentage of operating revenue on the identical facts in case of the assessee in different years and finally applied 2% of the operating revenue of manufacturing segment, which was worked out at Rs.2,20,88,379/- and therefore disallowance was made Rs.10,47,454/- against the assessee in respect of the operating revenue of manufacturing segment. We do not find any error apparent on the face of the record which could at all be prayed for rectification. Hence the Miscellaneous Application is found to be devoid of any merit and thus dismissed. I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 7 3. In the result, the Miscellaneous Application filed by the Revenue is dismissed.” 9.1 In view of the aforesaid observations made by the ITAT in assessee’s own case for assessment year 2011-12, we observe that the ITAT has clarified that 2% of the operating revenue of manufacturing segment would be allowable to the assessee towards management charges. Accordingly, respectfully following the specific directions of ITAT on identical set of facts in assessee’s own case for assessment year 2011-12, ground nos. (i) to (iv) of Department’s appeal are dismissed and ground no. 1 of assessee’s cross objection is allowed. 10. Ground No. (v) of Department’s appeal : Ld. CIT(A) erred in deleting addition of Rs. 9,47,864/- on account of disallowance on excess depreciation claimed on computer software license:- 11. The brief facts in relation to this ground of appeal are that the assessee had claimed depreciation @ 60% on computer software installed during the year under consideration. During the course of assessment proceedings, the Assessing Officer considered this software as “intangible” and restricted the depreciation on such software @ 25%. In appeal before the ld. CIT(A), the assessee submitted that the depreciation rate as per new Appendix-1 for computer including computer software grouped together is 60%. Further, the assessee placed reliance on the decision of Computer Age Management Services Pvt. Ltd. 109 taxman.com 134 (Madras) and also on the case of National Collateral Management Services Pvt. Ltd. vs. ACIT in ITA 2237/Mad/2013, in which on similar set of facts deprecation I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 8 on software was allowed @ 60%. Further, the assessee submitted that in assessment year 2011-12, the ld. CIT(A) on the similar issue held in favour of the assessee and granted depreciation @ 60% and ld. CIT(A)’s order was also accepted by the Department. 11.1 In light of above observations, ld. CIT(A) allowed the appeal of the assessee with the following observations:- “5.5 Ground No. 9 is on disallowance of depreciation on computer software of Rs. 9,47,864 to the income of the Appellant, by considering depreciation on computer software @ 25% as against @ of 60% claimed by the Appellant. The appellant has brought to attention that the predecessor Hon'ble CIT(A)-1, Vadodara has deleted similar addition made by the AO in AY 2011-12 vide para 4.3.1 of the order dated 13.05.2015 following the judgement of Hon'ble Mumbai ITAT in the case of National Collateral Management Services Private Limited v. ACIT ITA No. 2237/Mum/2013) The appellant has also relied on the decision of Hon'ble Madras HC in case of Computer Age Management Services (P.) Ltd. (2019) 109 taxmann.com 134 (Madras). In view of all this the AO is directed to delete the addition of Rs.9,47,864/- The ground succeeds.” 12. The Department is in appeal before us against the aforesaid order passed by ld. CIT(A). 13. We observe that in the case of CIT vs. Computer Age Management Services supra, the Madras High Court has held that where software license acquired by the assessee was in the nature of software application, the assessee was eligible to claim depreciation @ 60%. Again, in the case of A.R. Kema Medical India Pvt. Ltd. 139 taxman.com 540, the ITAT held I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 9 that where the assessee purchased license of ERP SAP Software, the assessee was entitled to depreciation on such license @ 60%. Again, in the case of Castus Imaging India Pvt. Ltd. 93 taxman.com 396, the High Court held that printer being part of computer, it is eligible for depreciation at higher rate of 60%. Accordingly, looking into the facts of the instant case and the judicial precedents on the subject, we are of the considered view that ld. CIT(A) has not erred in allowing depreciation @ 60% on such computer software. 14. In the result, ground no. )v) of Department’s appeal is dismissed. 15. Now, we shall take up Department’s appeal and assessee’s cross appeal for assessment year 2013-14. 16. The Department has raised the following grounds of appeal:- “(i) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) was justified in deleting the upward adjustment of Rs 2,30,14,060/- made by the TPO in respect of international transactions of the assessee pertaining to payment of management fees? (ii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in ignoring the fact that the assessee had failed to benchmark the transactions with its AE as per law thereby failing to discharge the primary onus cast upon it by the Act? (iii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in allowing aggregation of transaction which is contrary to the provisions of Section 92C of the Act and Rule 10A to 10C of the Income-tax Rules? (iv) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) was justified in allowing payment of management fees of Rs I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 10 2,30,14,060/- without benchmarking the transactions which is contrary to the provisions of Section 92C of the Act and Rule 10A to 10C of the Income-tax Rules? (V) Whether on the facts and in the circumstances of the case and in law, the Ld CIT (Appeals) is justified in deleting the addition of Rs.3,33,799/- made by the Assessing Officer on account of disallowance of excess depreciation claimed on computer software license, without appreciating the fact that purchase of licenses to use the software is only an additional tool used in the business which comes under the classification of intangible assets and accordingly the same is eligible for depreciation @ 25% only." (vi) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) is justified in deleting the addition of Rs.1,11,12,560/- made by the Assessing Officer on account of excess claim of consumption of own generation of electricity unit without appreciating the fact that the assessee had purchased electricity of 6935006 units @Rs.6.96 per unit in the FY 2012-13 and had shown own generation of electricity of 1792350 units @ Rs 13.16 per unit during the year under consideration but the assessee has failed to produce necessary supporting evidences required by the Assessing Officer during the course of assessment proceedings to substantiate the huge increase in the cost of own generation of electricity claimed by the assessee during the year under consideration. (vii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) is justified in deleting the addition of Rs.1,11,12,560/- made by the Assessing Officer on account of excess claim of consumption of own generation of electricity unit without appreciating the fact that the assessee has failed to prove commercial expediency for generating the electricity at higher cost @Rs.13.16 per unit of electricity especially when there was purchase of electricity was available @ Rs.6.96 per unit of electricity during the year under consideration and accordingly the Assessing Officer has rightly made the addition on account of excess claim of consumption of own generation of electricity.” 17. The assessee has raised the following grounds in cross objection:- “The Ld. AO being aggrieved by the order dated 19th April 2021 passed by the Hon'ble CIT(A)-13, Ahmedabad which was subsequently rectified vide rectification order dated 05 May 2021, preferred an appeal before Ahmedabad Bench of Hon'ble ITAT vide ITA No. 318 of 2021. Against the same assessee wishes to cross object on the following grounds: The below mentioned grounds are without prejudice to each other. I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 11 1. The Ld. CIT(A) erred in law and on facts, in restricting arm's length price of international transaction of management fees paid by the assessee to its associated enterprises to 1.5% of the operating revenue of the assessee; and ought to have upheld entire amount of such management fees, benchmarked by the assessee under Transactions Net Margin Method, at arm's length. The Cross objector prays for leave to add, alter and/or amend all or any of the grounds before final hearing of the Cross objection.” 18. Ground Nos. (i) to (iv) of Department’s appeal are identical to ground nos. (i) to (iv) of Department’s appeal for assessment year 2012-13 and ground no. 1 of assessee’s cross objection for assessment year 2013-14 is identical to assessee’s cross objection no. 1 for Assessment Year 2012-13. 19. In light of above discussion made in the preceding part of the order relating to assessment year 2012-13, grounds nos. (i)-(iv) of Department’s appeal are dismissed and ground no. 1 of cross objection is allowed for Assessment Year 2013-14. 20. Ground Nos. (vi) to (vii) of Department’s appeal: ld. CIT(A) erred in deleting addition of Rs. 1,11,12,360/- on account of excess claim of consumption of own generation of electricity: 21. The brief facts in relation to this ground of appeal are that during the course of assessment, the Assessing Officer observed that power and fuel during the year under consideration had increased to 898.17 lakhs compared to 537.68 lakhs in the immediately preceding year. On further verification, the Assessing Officer observed that assessee had purchased electricity @ 6.34 per unit in financial year 2011-12 and @ 6.96 in the financial year I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 12 2012-13 and had generated own electricity @ 11.14 per unit in financial year 2011-12 and @ 13.16 per unit in financial year 2012-13. In response to queries raised by the Assessing Officer, the assessee submitted that the electricity generated by own generation is 3.5 liter of diesel oil which is same for both the years. Accordingly, the Assessing Officer asked the assessee to explain as to why the assessee decreased purchase of electricity during the current year as compared to last year when the purchase of electricity was cheaper as compared to cost of own generation of electricity. Further, the Assessing Officer observed that the submission of the assessee that rent has been paid by the assessee for hiring generator set is not substantiated with corroborating evidences like rent agreement and the assessee has only produced copy of invoices of DG set rental expenses which as per the Assessing Officer was not sufficient. The Assessing Officer was of the view that assessee did not produce the calculation of per electricity unit generated and used by it and therefore failed to justify rate taken for own generated units with supporting documents. Accordingly, the Assessing Officer restricted the allowability of cost of own electricity generated units @ 6.96 per unit instead of @ 13.16 per unit and worked the excess claim of Rs. 1,11,12,560/- and disallowed the same and added it to the total income of the assessee. In appeal, the ld. CIT(A) allowed the appeal of the assessee with the following observations:- “9. It is seen that there is neither any factual nor any legal basis for the AO to substitute the rate of Rs.6.96 per unit as against rate of Rs.13.16 per unit of self generated electricity more so without proving that the claims of hiring of DG sets and consumption of diesel oil for generation of electricity were bogus or inflated and without rejecting the books of account. During the appeal proceedings the appellant has given the justifications for own generation of electricity for the purpose of production at the facility which was ready and was required for I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 13 commercial production. It is well settled law that the tax authority cannot substitute its own logic and reasoning as to the conduct of business by the tax payer. In view of the facts and circumstances narrated by the appellant and the case laws relied upon, the addition cannot be sustained. The AO is directed to delete the addition of Rs.1,11,12,560/-. The related ground is allowed.” 22. The Department is in appeal before us against the aforesaid order passed by ld. CIT(A) deleting the addition by ld. CIT(A). Before us, the Department relied upon the observations made by the Assessing Officer at page 18 of the assessment order and it was submitted that the assessee could not justify that the aforesaid expenses were genuine in nature. It was submitted that the Assessing Officer observed that the assessee has not been able to substantiate its claim with supporting documents. In response, the counsel for the assessee submitted that a new plant was acquired at Chennai which commenced its full fledged manufacturing operation from end of July, 2012. But the electricity was not made available till June, 2013. Accordingly, the assessee generated electricity in-house using diesel generator set. The counsel for the assessee further submitted that vide letter dated 22-12-2016, the assessee had filed all necessary details before the Assessing Officer along with full invoices to justify the increase in full cost. It was submitted that expenditure was incurred on account of commercial expediency and commercial expediency is always the prerogative of the businessmen. Accordingly, it was submitted that ld. CIT(A) has correctly deleted the addition holding that Assessing Officer cannot substitute the rate of consumption without rejecting the books of accounts and that the tax authorities are precluded from substituting their own reasoning as to the conduct of business by the taxpayer. I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 14 23. We have heard the rival submission and perused the material available on record. We observe that on perusal of the paper book, it is seen that the assessee had filed various invoices for hiring of generator sets, which have not been disputed. Further, the assessee had also submitted that invoices for purchase of oil for running the DG sets. More importantly, it is also observed that the production in the aforesaid units had also taken place during the impugned year under consideration and the income therefrom has been offered to tax. Accordingly, looking into the facts, we are of the considered view that the assessee has produced necessary invoices for taking the DG sets on rent and the invoices for the purchase of oil for running the aforesaid DG sets. It is also an undisputed fact that the income from manufacturing units have duly been offered to tax by the assessee and also that while disallowing the aforesaid expenditure, the Assessing Officer has also not rejected the books of accounts of the assessee. Accordingly, we find no infirmity in the order of ld. CIT(A) while allowing this ground of appeal of the assessee, so as to call for any interference. 24. In the result, ground no. (vi) and (vii) of the Department’s appeal are dismissed. 25. We shall now take up the Department’s appeal for assessment year 2014-15. 26. The Department has taken the following grounds of appeal:- I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 15 “(i) Whether on the facts and in the circumstances of the case and in law, the ld. CIT(Appeals) was justified in deleting the upward adjustment of Re 3,32,25,148/- made by the TPO in respect of international transactions of t to payment of management fees? (ii) Whether on the facts and in the circumstances of the case and in to the CIT(Appeals) erred in ignoring the fact that the assessee had failed to benchmark the transactions with its AE as per law thereby failing to discharge the primary onus cast upon it by the Act? (iii) Whether on the facts and in the circumstances of the case and in low the Ld. CIT (Appeals) erred in allowing aggregation of transaction which is contrary to the provisions of Section 92C of the Act and Rule 10A to 100 of the Income tax Rules 2 (iv) Whether on the facts and in the circumstances of the case and in law, the Ld CIT (Appeals) was justified in allowing payment of management fees at Rs 3,32,25,148 without benchmarking the transactions which is contrary to the provisions of Section 92C of the Act and Rule 104 to 10C of the Income-tax Rules? (v) Whether on the facts and in the circumstances of the case and in law the Ld CIT (Appeals) is justified in deleting the addition of Rs 3,09,556 made by the Assessing Officer on account of disallowance of excess depreciation claimed on computer software license, without appreciating the fact that purchase of licenses to use the software is only an additional tool used in the business which come under the classification of intangible assets and accordingly the same is eligible for depreciation @ 25% only (vi) Whether on the facts and in the circumstances of the case and in law the Ld CIT (Appeals) is justified in deleting the addition of Rs 2,02,32,475/- made by the Assessing Officer on account of excess claim of consumption of own generation of electricity unit without appreciating the fact that the assessee had purchased electricity of 10865692 units @ Rs 7 58 per unit in the FY 2013-14 and had own generation of electricity of 2557835 units @ Rs 15.49 per unit in the FY 2013-14 but the assessee has failed to produce necessary supporting evidences required by the Assessing Officer during the I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 16 course of assessment proceedings to substantiate the huge increase in the cost of own generation of electricity claimed by the assessee during the year under consideration. (vi) Whether on the facts and in the circumstances of the case and in law, the Ld CIT (Appeals) is justified in deleting the addition of Rs 2,02,32,475/- made by the Assessing Officer on account of excess claim of consumption of own generation of electricity unit without appreciating the fact that the assessee has failed to prove commercial expediency for generating the electricity at higher cost @ Rs 15.49 per unit of electricity especially when there was purchase of electricity was available @Rs 7.58 per unit of electricity during the year under consideration and accordingly the Assessing Officer has rightly made the addition on account of excess claim of consumption of own generation of electricity.” 27. The assessee has taken the following grounds in cross objection:- “The Ld. AO being aggrieved by the order dated 19th April 2021 passed by the Hon'ble CIT(A)-13, Ahmedabad which was subsequently rectified vide rectification order dated 05 May 2021, preferred an appeal before Ahmedabad Bench of Hon'ble ITAT vide ITA No. 318 of 2021 Against the same assessee wishes to cross object on the following grounds: The below mentioned grounds are without prejudice to each other. 1. The Ld. CIT(A) erred in law and on facts, in restricting arm's length price of international transaction of management fees paid by the assessee to its associated enterprises to 1.5% of the operating revenue of the assessee; and ought to have upheld entire amount of such management fees, benchmarked by the assessee under Transactions Net Margin Method, at arm's length. The Cross objector prays for leave to add, alter and/or amend all or any of the grounds before final hearing of the Cross objection.” I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 17 28. We observe that ground no. (i)-(iv) of Department’s appeal for assessment year 2014-15 are identical to ground nos. (i)-(iv) of Department’s appeal for assessment year 2013-14 29. Accordingly, in light of observations made by us with respect to Department’s appeal for assessment year 2013-14, ground no. (i)-(iv) of Department’s appeal are dismissed for assessment year 2014-15. 30. It is observed that ground no. (v) of Department’s appeal for assessment year 2014-15 is identical to ground no. (v) of Department’s appeal for assessment year 2013-14. In light of above observations relating to ground no. (v) of Department’s appeal for assessment year 2013-14, ground no. (v) of Department’s appeal for assessment year 2014-15 is dismissed. 31. We observe that ground nos. (vi)-(vii) of department’s appeal for assessment year 2014-15 are identical to ground no. (vi)-(vii) of Department’s appeal for assessment year 2013-14. In light of above observations with respect to ground no. (vi)-(vii) of Department’s appeal for assessment year 2013-14, ground no. (vi)-(vii) of Department’s appeal for assessment year 2014-15 are dismissed. 32. We observe that ground no. 1 of assessee’s cross objection for assessment year 2014-15 is identical to assessee’s cross objection for assessment year 2012-13 and 2013-14. In light of our observations made with respect to ground no. 1 of assessee’s cross objection for assessment I.T.A Nos. 317, 318 & 319/Ahd/2021 & CO Nos. 11,12 & 13/Ahd/2022 A.Y. 2012-13 to 2014-15 Page No. Dy. CIT vs. Bundy India Ltd. 18 year 2012-13 and 2013-14, ground no. 1 of assessee’s cross objection is allowed for assessment year 2014-15 33. In the combined result, the Department’s appeals for assessment years 2012-13, 2013-14, and 2014-15 are dismissed and assessee’s cross objection for assessment years 2012-13, 2013-14 and 2014-15 are allowed Order pronounced in the open court on 10-11-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 10/11/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद