M/s. Development Consultants (P) Ltd., Kolkata V. DCIT, C ircle- 11, Kolkata, Kolkata

CO 144/KOL/2010

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2827 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 4 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 31-01-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 21-09-2010
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Related party transaction; Transfer pricing; International transaction; Additional evidence; Wholly owned subsidiary
• Section: 92A; 10B; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI N.V.VASUDEVAN, JM & DR. A.L.SAINI, AM ./ ITA NO.1591/KOL/2010 ( / ASSESSMENT YEAR :2005-2006) DY.COMMISSIONER OF INCOME TAX, CIR-11, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 VS. DEVELOPMENT CONSULTANTS LTD.,24B, DEVELOPMENT HOUSE, PARK STREET, KOLKATA-700016 ./ ./PAN/GIR NO. : AAACD 8900 F ( /ASSESSEE ) .. ( / RESPONDENT ) AND CROSS OBJECTION NO.144/KOL/2010 ( / ASSESSMENT YEAR :2005-2006) DEVELOPMENT CONSULTANTS LTD.,24B, DEVELOPMENT HOUSE, PARK STREET, KOLKATA-700016 VS. DY.COMMISSIONER OF INCOME TAX, CIR-11, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 ./ ./PAN/GIR NO. : AAACD 8900 F ( /ASSESSEE ) .. ( / RESPONDENT ) /REVENUE BY : SHRI G.MALLIKARJUNA, CIT, DR /ASSESSEE BY : SHRI KAMAL SAWHNEY, ADVOCATE / DATE OF HEARING : 31/01/2017 /DATE OF PRONOUNCEMENT 15/02/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE AND THE C ROSS OBJECTIONS FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEA R 2005-2006, ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA, IN APPEAL NO.1033/XII/CIR-11/09-10, DATED 27.05.2010, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER (AO) UNDER SECTION 143 (3) OF THE INCOME TAX ACT 1961, (HEREIN AFTER REFERRED TO THE ACT), DATED 17.12.2008. 2. THE APPEAL FILED BY THE REVENUE AND CROSS OBJECT ION FILED BY THE ASSESSEE RELATE TO THE SAME ASSESSEE, SAME ASSESSME NT YEAR, COMMON ISSUES ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 2 INVOLVED, THEREFORE, THESE HAVE BEEN CLUBBED AND HE ARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. BRIEF FACTS OF THE ASSESSEE COMPANY OF M/S DEVEL OPMENT CONSULTANTS PRIVATE LIMITED ( HEREINAFTER REFERRED TO AS DCPL), ARE T HAT THE ASSESSEE IS A CLOSELY HELD PRIVATE LIMITED COMPANY AND PARENT COMPANY OF THE DEVELOPMENT CONSULTANTS (DC) GROUP. THE DCPL HAS SUBSIDIARIES I N THE BAHAMAS AND UNITED STATES OF AMERICA ( NEW YORK AND PHILADELPHIA). MOR EOVER, THE DCPL HAS A 100% SUBSIDIARY IN INDIA- DATA CORE (INDIA) PRIVATE LIMITED. THE DCPL IS THE FOCAL POINT FOR ALL DESIGN ENGINEERING ACTIVITIES. IT DIRECTLY EXECUTES ALL DOMESTIC PROJECTS AND GROUP OPERATIONS ASSIGNED TO IT. THE D CPL IS AN INDIA-BASED, TRANSACTIONAL CONSULTIG ENGINEERING GROUP. IT RENDE RS CONCEPT-THROUGH- COMPLETION SERVICES COVERING PLANNING, TECHNOLOGY S ELECTION AND DEVELOPMENT, DESIGN ENGINEERING, PROCUREMENT ASSISTANCE, CONSTRU CTION SUPERVISION AND PROJECT MANAGEMENT SERVICES, FOR IMPLEMENTING DIVER SE CORE-SECTOR AND HIGH- TECHNOLOGY PROJECTS AROUND THE WORLD. THE DCPL HAS A WHOLLY OWNED SUBSIDIARY IN THE BAHAM AS, M/S DEVELOPMENT CONSULTANT INTERNATIONAL LIMITED (DCIL). THE DCIL IN TURN HAS A WHOLLY OWNED SUBSIDIARY IN THE UNITED STATES OF AMERICA, M/S AMD C INC. USA. THE AMDC INC. USA HAS TWO WHOLLY OWNED SUBSIDIARIES IN USA, DATA- CORE SYSTEMS INC. (DATA- CORE US) AND THE KULJIAN CORPORATION (TKC). THE DCP L (ASSESSEE) ALSO HAS A WHOLLY OWNED SUBSIDIARY IN INDIA M/S DATA-CORE (IND IA) PRIVATE LIMITED (DATA- CORE INDIA). THE DCPL (ASSESSEE) ENTERED INTO THE F OLLOWING INTERNATIONAL TRANSACTIONS DURING THE PREVIOUS YEAR RELEVANT TO A SSESSMENT YEAR 2005-06 WITH THREE RELATED PARTIES, DCLL,TKC AND DATA-CORE USA A LL OF WHICH ARE ASSOCIATED ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 3 ENTERPRISES (AES) WITHIN THE MEANING OF SECTION 92A OF THE INCOME-TAX ACT, 1961. THE DCLL PROVIDES ENGINEERING SERVICES TO ITS CLIEN TS WHO ARE ENGAGED IN TURNKEY PROJECTS AT VARIOUS INDUSTRIAL SITES. IT AC TS AS A DISTRIBUTOR UNDERTAKING MARKETING ACTIVITIES. THE DCPL HAS TP STUDY REPOR T, PREPARED BY PWC ( BIG 4 AUDIT FIRM) AND ANALYSIS MADE BY THE ASSESSEE IN I TS TP STUDY REPORT TO JUSTIFY THE ARM'S LENGTH NATURE OF ITS INTERNATIONAL TRANSA CTIONS AND THE TP STUDY REPORT RECOMMENDED THE CPM AND THE TNMM METHOD AS THE MOST APPROPRIATE METHODS. THE DETAILS OF THE INTERNATIONAL TRANSACTIONS ENTE RED INTO BY THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION ARE AS FOLL OWS: ASSOCIATED ENTERPRISE DESCRIPTION OF TRANSACTION CLASS OF TRANSACTION VALUE (IN RS.) DCIL ENGINEERING DRAWING & DESIGN SERVICES SERVICE 28,054,019 TKC ENGINEERING DRAWING & DESIGN SERVICES SERVICE 4,531,613 DEPUTATION SERVICE 4,768,494 DATA-CORE US REIMBURSEMENTS REIMBURSEMENT 41,219,082 4. ANALYSIS DONE BY TP STUDY REPORT OF THE ASSESSEE IN RESPECT OF ENGINEERING DRAWING & DESIGN SERVICES PROVIDED TO DCLL & TKC AR E AS FOLLOWS: DCLL PROVIDES ENGINEERING SERVICES TO ITS CLIENTS W HO ARE ENGAGED IN TURNKEY PROJECTS AT VARIOUS INDUSTRIAL SITES. IT ACTS AS A DISTRIBUTOR UNDERTAKING MARKETING ACTIVITIES AND DOWNLOADS ALL THE DESIGN AND ENGINEERING WORK GENERATED BY IT TO THE ASSESSEE. TKC IS ENGAGED IN PROVISION OF ENGINEERING SERVICES TO ITS CUSTOMERS MOST OF WHICH ARE IN THE MIDDLE EAST. IN CERTAIN CASES, TKC DOES NOT HAVE THE NECESSARY TECHNICAL EXPERTISE TO COMPLETE THE CONTRACT AND SUCH PORTION OF THE JOB ARE SUBCON TRACTED TO ASSESSEE FOR WHICH TKC PAYS FEES TO THE ASSESSEE BA SED ON MAN- HOURS UTILISED. THE WORK CARRIED OUT BY ASSESSEE IS IN THE NATURE OF ENGINEERING SERVICES LIKE TECHNICAL DRAWING, DESIGN ETC. ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 4 THE ASSESSEE USED THE INTERNAL COST PLUS METHOD (CP M) TO JUSTIFY THIS CLASS OF INTERNATIONAL TRANSACTION. THE ASSESS EE PROVIDES SUCH SERVICES NOT ONLY TO ITS AE'S BUT ALSO TO THIRD PAR TIES. THE MARGINS (GROSS PROFIT/DIRECT & INDIRECT COST OF PRODUCTION OR 'GP/DICOP') EARNED BY THE ASSESSEE IN TRANSACTIONS WITH DCLL & TKC WAS COMPARED WITH MARGINS EARNED BY IT IN TRANSACTIONS WITH THIRD PARTIES. THE RESULTS OF ANALYSIS HAVE BEEN PROVIDED IN THE TABLE BELOW: DESCRIPTIOIN TKC DCIL OTHERS DESIGN DESIGN DESIGN INCOME 45.32 280.54 324.52 LESS:SALARY 3.57 27.28 56.37 LESS DIRECT TRAVEL 35.90 52.64 LESS DIRECT COST TOTAL DIRECT & INDIRECT COST 3.57 63.18 109.01 GROSS MARGIN 41.75 217.36 215.51 GP/DICOP 1169.47% 344.03% 197.70% LESS:OVERHEADS 5.20 39.72 82.07 OPERATING PROFIT 36.55 177.64 133.44 TOTAL COST 8.77 102.90 191.08 OP/TC 416.76% 172.63% 69.83% THE RESULTS OF THE ANALYSIS SHOW THAT THE ARM'S LEN GTH GP /DICOP EARNED BY THE ASSESSEE IN TRANSACTIONS WITH THIRD PARTIES IS 197. 70% WHEREAS THE ASSESSEE EARNED A PROFITABILITY AT THE GROSS LEVEL OF 1169.4 7% ON ITS INTERNATIONAL TRANSACTIONS WITH TKC AND 344.03% ON ITS INTERNATIO NAL TRANSACTIONS WITH DCLL IN THE RELEVANT YEAR. THIS ESTABLISHES THAT THE INTERN ATIONAL TRANSACTIONS WITH AES IN RELATION TO ENGINEERING DRAWING & DESIGN SERVICES A RE AT ARM'S LENGTH. 5. WHILE MAKING ASSESSMENT, THE ASSESSING OFFICER O BSERVED THAT SINCE THE ASSESSEE COMPANY HAS INTERNATIONAL TRANSACTIONS WIT H THE ASSOCIATED ENTERPRISES THEREFORE, HE REFERRED THE MATTER TO TR ANSFER PRICING OFFICER, U/S, 92 OF THE INCOME TAX ACT. THE TRANSFER PRICING OFFICER WHILE PASSING ORDER U/ S 92CA (3) OF THE INCOME TAX ACT,1961, STATED THAT SINCE IN THE EARL IER YEARS, SIMILAR ADJUSTMENTS HAVE BEEN MADE, IN THIS YEAR ALSO, THE SAME ADJUSTMENTS ARE BEING PROPOSED. BY APPLYING THE MAR KUP ON COSTS ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 5 PERCENTAGE EARNED FROM THE UNRELATED PARTIES TO THE COSTS INCURRED IN RELATION TO THE INTERNATIONAL TRANSACTIONS WITH THE AES, THE ALP IS DETERMINED IN THE FOLLOWING MANNER. DETERMINATION OF ALP X ARMS LENGTH MARK-UP% 198% Y DIRECT AND INDIRECT COSTS INCURRED BY ASSESSEE IN INDIA FOR RENDERING SERVICES TO AES 356.13 Z-X X Y ARMS LENGTH MARK-UP ON COSTS 705.14 ALP= Y+Z ARMS LENGTH PRICE OF THE SERVICES RENDERED TO THE AES 1061.27 THUS, THE ARMS LENGTH PRICE FOR SERVICES RENDERED SHOULD HAVE BEEN RS.1061.27 LAKHS AS AGAINST RS.705.14 LAKHS DI SCLOSED BY THE ASSESSEE. ACCORDINGLY, THE ADJUSTMENT TO THE PRICES OF INTERNATIONAL TRANSACTIONS WILL BE RS.275.54 LAKHS. ACCORDINGLY A N ADDITION OF RS.275.54 LAKHS IS TO BE MADE TO THE TOTAL INCOME. THE TRANSFER PRICING OFFICER, DETERMINED THE ARM'S LENGTH PRICE FOR THE INTERNATIONAL TRANSACTIONS WITH ASSESSEE'S ASSOCIAT ED ENTERPRISES TO BE AT RS. 1061.27 LAKHS IN PLACE OF RS.705.14 LAKHS CLAIMED B Y THE ASSESSEE COMPANY. ACCORDINGLY, ON THE BASIS OF ORDER OF TRANSFER PRI CING OFFICER, AN ADDITION OF RS. 275.54 LAKHS IS MADE TO THE TOTAL INCOME OF ASSESSE E. HOWEVER, WE NOTICED THAT THE DIFFERENCE BETWEEN THE ARM`S LENGTH PRICE COMPUTED BY THE TRANSFER PRICING OFFICER AT RS.1061 .27 AND ARM`S LENGTH COMPUTED BY THE ASSESSEE AT RS.705.14 COMES AT RS. 356.13 LAKHS [1061.27- 705.14], THEREFORE, THE TRANSFER PRICING ADJUSTMENT SHOULD BE AT RS. 356.13 LAKHS INSTEAD OF RS. 275.54 LAKHS. SINCE THE REVENUE IS N OT AN APPEAL BEFORE US FOR THIS ARITHMETICAL ERROR THEREFORE, WE JUST HIGHLIGH TED THIS ERROR AS A PASSING REFERENCE AND IT DOES NOT HAVE ANY IMPACT ON OUR AD JUDICATION PROCESS, BECAUSE THE ISSUE BEFORE US, IN THIS APPEAL, IS TO DECIDE W HETHER COST PLUS METHOD (CPM) OR RESALE PRICE METHOD (RPM) WOULD BE APPLICA BLE TO THE ASSESSEE. ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 6 BASED ON THE ORDER OF THE TRANSFER PRICING OFFICER U/S 92CA(3) OF THE I.T. ACT, THE ASSESSING OFFICER MADE THE ADDITION OF RS. 275. 54 LAKHS. 6. AGGRIEVED FROM THE ORDER OF THE ASSESSING OFFICE R, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX ( APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS), OBSERVED THAT SINCE THE ASSESSEE COMPANY WAS ENGAGED IN SIMILAR/IDENTICAL BUSINESS ACTIVITIES WITH ITS SAME AES IN THE ASSESSMENT YEARS 2003-04 & 2004-05 AND THE F ACTS OF THE CASE WERE DULY COVERED, IN ASSESSEE`S OWN CASE, IN THE APPEAL NO. ITA NOS. 79 & 80/KOL/2008, HON'BLE ITAT 'A' BENCH, KOLKATA FOR THE ASSESSMENT YEARS 2003-2004 & 2004- 2005 AND THE AO HAD NOT BROUGHT ON RECORD ANY NEW F ACTS, BASED ON THE ITAT JUDGEMENT. ACCORDINGLY, THE LD CIT(A) DIRECTED TO T HE AO TO COMPUTE ALP ON A TRANSACTION-BY-TRANSACTION BASIS. THE LD CIT(A) ALSO SUPPORTED THE JUDGMENT OF THE HO N`BLE ITAT IN ASSESSEE`S OWN CASE (SUPRA), FOR INTERNATIONAL TRANSACTIONS OF THE ASSESSEE WITH ASSOCIATED ENTERPRISES, NAMELY, THE KULJIAN CORPORATION, USA A ND DATACORE SYSTEMS INC. USA. THE LD CIT(A) CONFIRMED THE ANALYSIS DONE BY T HE ASSESSEE IN CONNECTION WITH INTERNATIONAL TRANSACTIONS OF RENDERING OF ENG INEERING, DRAWING AND DESIGN SERVICES AND DEPUTATION OF EMPLOYEES BY THE ASSESSE E TO ITS AE'S NAMELY THE KULJIAN CORPORATION, USA AND INTERNATIONAL TRANSACT IONS WITH DATA CORE SYSTEMS INC, USA ON THE BASIS OF HON'BLE ITAT'S DECISION TH AT THE TRANSFER PRICING ANALYSIS SHOULD BE DONE FROM THE INDIAN SIDE CONSID ERING THE ASSESSEE AS THE TESTED PARTY. REGARDING INTERNATIONAL TRANSACTIONS OF THE ASSESSE E WITH ITS AE 'DCLL', THE LD CIT(A) AGREED WITH THE HON'BLE ITAT JUDGMENT (SUPRA ) WITH SOME MODIFICATION, ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 7 STATING THAT RESALE PRICE METHOD IS APPROPRIATE MET HOD FOR THE PURPOSE OF CALCULATION OF ALP IN RESPECT OF SUCH INTERNATIONAL TRANSACTIONS. HOWEVER, LD. CIT (A) DEVIATED FROM THE JUDGMENT OF HON`BLE ITAT KOLKATA IN ASSESSEE`S OWN CASE (SUPRA), STATING THAT IF THERE ARE DIFFERENCES BETWEEN THE ACCOUNTING PERIODS, ACCOUNTING POLICIES ETC. OF THE ASSESSEE AND ITS AE'S, THE PRICE AT WHICH SERVICES ARE RESOLD BY THE AE IS NOT COMMENSURATE WITH THE PRICE AT WHICH SERVICES OBTAINED FROM THE ASSESSEE. THERE FORE, LD.CIT(A) HELD THAT IF ALP SHOULD BE COMPUTED FOR THE PURPOSE OF DETERMINI NG THE TOTAL INCOME OF THE ASSESSEE ON THE BASIS OF SALE OF DCIL IT SHALL DIST ORT THE RESULT AND WHOLE PURPOSE OF THE PROVISIONS OF THE ACT IN RELATION TO COMPUTATION OF ALP SHALL BE DEFEATED. THEREFORE, ALP SHALL BE COMPUTED ON THE B ASIS OF RPM AS DIRECTED BY THE HON'BLE ITAT BUT BY USING A CONTEMPORARY RESALE PRICE WHICH IS GENERALLY ALLOWED IN DEVELOPED COUNTRIES BY APPLYING THE MARG IN EARNED BY THE DCIL ON RESALE OF THE SERVICES OBTAINED FROM THE ASSESSEE. BASED ON THE ABOVE OBSERVATIONS THE LD CIT(A) COMPUTED THE ALP AS FOLL OWS: (A).FIRST OF ALL LD. CIT (A) WORKED OUT THE GP/COS T RATIO @ 159.67% BY TAKING THE SALE AND COST OF SALE OF DCIL IN US $, A S UNDER: MARGIN OF THE DCLL IS COMPUTED BY THE CIT(A), AS U NDER: SALE OF DCIL US $ 12,20,404 COST OF SALE (SUB CONTRACTING FEES) US $ 4,69,984 GP/COST = [( 12,20.404-4,69,984)/4,69,984]* 1 00= 159.67 (B)THEREAFTER, THE LD CIT(A) COMPUTED THE ALP IN RE SPECT OF TRANSACTIONS WITH THE DCLL BASED ON RE-SALE PRICE METHOD (RPM ) AS UNDER: SALE VALUE OF THE ASSESSEE (COST OF SALE FOR DCLL) 280.54 LACS ADD: GROSS MARGIN EARNED BY THE DCLL ON SALE OF SUC H 447.94 LACS SERVICES @159.67% ON COST SALES (COST + GROSS MARGIN) 728.48 LACS GP/SALES 61.49% ARM'S LENGTH GP/SALES 25.69% ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 8 ARM'S LENGTH GP/SALE CONSIDERING 5% 26.97% ARM'S LENGTH GROSS MARGIN 196.47 LACS ARM'S LENGTH COST OF SALE 532.01 L ACS DEFICIT IN FEES PAID TO THE ASSESSEE BY DCIL 251.47 LACS ( 532.01 -280.54) THIS WAY, THE LD.CIT (A) CALCULATED THE ALP AT RS. 251.47 LAKHS AND HE, ACCORDINGLY, DIRECTED THE AO TO CALCULATE THE ALP A T RS. 251.47 LAKHS, IN RESPECT OF INTERNATIONAL TRANSACTIONS WITH DCLL. THE LD.CIT(A), ALSO SATED THAT THE ALP DETERMINED IN RESPECT OF THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE WITH AE' S NAMELY THE KULJIAN CORPORATION, USA AND DATACORE SYSTEM INC, USA BY TH E ASSESSEE IS CORRECT. HOWEVER, THE ALP DETERMINED BY THE ASSESSEE IN RESP ECT OF DCLL IS NOT CORRECT AND ACCORDINGLY ALP SHOULD BE RECOMPUTED AT RS.251. 47 LAKHS, AS EXPLAINED IN THE ABOVE CITED COMPUTATION, DONE BY THE LD.CIT( A). IN FACT, THE LD. AR FOR THE ASSESSEE SUBMITTED BEFO RE US THAT LD.CIT(A) HAS DISREGARDED AND DEVIATED FROM THE JUDGMENT OF HO`BL E ITAT KOLKATA, IN ASSESSEE`S OWN CASE (SUPRA), SO FAR THE ALP OF TRAN SACTIONS OF DCIL ARE CONCERNED. THE ALP IN RESPECT OF DCIL TRANSACTIONS, COMPUTED BY THE LD.CIT(A) NEITHER FALLS IN CPM METHOD NOR IN RPM METHOD. 7. THEREFORE, BEING AGGRIEVED FROM THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US, AND ASSESSEE IS IN CROSS OBJECTIO NS BEFORE US. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE AND THE CROSS OBJECT IONS RAISED BY THE ASSESSEE ARE AS FOLLOWS: GROUNDS OF APPEAL TAKEN BY THE REVENUE 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHETHE R THE LD. CIT(A) WAS CORRECT IN REJECTING THE TRANSFER PRICE DETERMI NED BY THE TPO AS PER COST PLUS METHOD AND IN ITS PLACE APPLYING THE RESALE PRICE METHOD. CROSS-OBJECTIONS RAISED BY THE ASSESSEE ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 9 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE APPELLANT ERRED IN NOT APPRECIATING THAT THE LD. CT T (APPEALS) WAS CORRECT IN REJECTING THE TRANSFER PRICE DETERMINED BY THE LD. TRANSFER PRICING OFFICER BY APPLYING THE COST PLUS METHOD AN D ACCEPTING THE RESALE PRICE METHOD APPLIED BY THE RESPONDENT IN DE TERMINING TRANSFER PRICE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (APPEALS) ERRED IN DIRECTING THE LD. ASSESSING OFFICER TO COMPUTE AN ADJUSTMENT OF RS. 25,147,000/- TO THE IN TERNATIONAL TRANSACTIONS OF THE ASSESSEE WITH ITS ASSOCIATED EN TERPRISE (AE), NAMELY, DEVELOPMENT CONSULTANT INTERNATIONAL LTD. W ITHOUT CONSIDERING THE MODE OF COMPUTATION ADJUDICATED BY THE HONB'LE JURISDICTIONAL APPELLATE TRIBUNAL IN THE RESPONDENT 'S OWN CASE, NAMELY ITA NO.79 & 80/KOL/2008 [(2008) 23 SOT 455 ( KOL.)). 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CLT (APPEALS) ERRED IN NOT APPRECIATING THAT THE AF ORESAID VERDICT OF THE HON,BLE JURISDICTIONAL APPELLATE TRIBUNAL IS BI NDING ON THE AUTHORITIES BELOW. 4. WITHOUT PREJUDICE TO GROUNDS (1) TO (3) ABOVE, T HE LD. CTT (APPEALS) ERRED IN IGNORING THE 'ECONOMIC ANALYSIS' WITH RESPECT TO THE INTERNATIONAL TRANSACTION BETWEEN THE ASSESSEE COMPANY AND DEVELOPMENT CONSULTANT INTERNATIONAL LTD., CONTAINE D IN THE 'ANALYSIS OF TRANSFER PRICING ARRANGEMENT WITH ASSO CIATED ENTERPRISES - FISCAL YEAR ENDING 31 ST MARCH, 2005', WHICH WAS FILED BEFORE THE LD. TRANSFER PRICING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING UNDER SECTION 92CA (3) OF THE INCOME-TAX ACT. 5. THAT THE ASSESSEE COMPANY CRAVES LEAVE TO ADD TO AND/OR ALTER, AMEND, MODIFY OR RESCIND THE GROUNDS HEREINABOVE BE FORE OR AT THE HEARING OF THIS APPEAL. 8. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE AND THE CROSS OBJECTIONS RAISED BY THE ASSESSEE RELATE TO THE SAME ISSUE, TH AT IS, WHETHER COST PLUS METHOD (CPM) OR RESALE PRICE METHOD ( RPM) SHOULD BE APPLIED TO DETERMINE THE ARM`S LENGTH PRICE OF TRANSACTIONS WI TH DCIL. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE COST PLUS MET HOD (CPM) SHOULD BE APPLIED TO DETERMINE THE ARM`S LENGTH PRICE (ALP) W HEREAS THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT RE-SALE PRICE MET HOD (RPM) SHOULD BE APPLIED TO COMPUTE THE ALP. ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 10 8.1 BEFORE US, THE LD DR FOR THE REVENUE HAS SUBMIT TED THAT THE ASSESSEE HAS HIMSELF ACCEPTED THE COST PLUS METHOD (CPM) AND TRA NSACTIONAL NET MARGIN METHOD (TNMM) AS MOST APPROPRIATE METHOD IN HIS TRA NSFER PRICING STUDY REPORT (TP-STUDY REPORT), SUBMITTED BY HIM BEFORE T HE TRANSFER PRICING OFFICER (TPO). THEREFORE, THE CPM METHOD RECOMMENDED BY THE TPO IS THE APPROPRIATE METHOD, WHICH IS BASED ON THE TP STUDY REPORT OF THE ASSESSEE. THIS WAY, THE LD DR FOR THE REVENUE HAS STRONGLY DE FENDED THE ORDER PASSED BY THE LD. TPO. HE ALSO POINTED OUT THAT ORDER PASSED BY THE LD CIT(A) IS NOT IN ACCORDANCE WITH THE TP STUDY REPORT OF THE ASSESSEE THEREFORE, IT SHOULD BE DISMISSED AND TPO ORDER SHOULD BE RESTORED. 8.2 B EFORE US, THE LD. AR FOR THE ASSESSEE, HAS SUBMITTE D THAT THE A.O/TPO HAS NOT FOLLOWED THE ITAT'S DECISION IN THE APPELLANT'S OWN CASE ON A SIMILAR ISSUE AND INSTEAD COMPUTED THE ALP IN RESPE CT OF INTERNATIONAL TRANSACTIONS OF THE ASSESSEE BY SELECTING THE COST PLUS METHOD WHEREIN THE TPO COMPARED ALL THE RELATED PARTY TRANSACTIONS WITHOUT CONSIDERING THE TRANSACTION SEPARATELY AS HELD BY THE ITAT. THE HON'BLE INCOME TAX APPELLATE TRIBUNAL- KOLKATA, IN THE APPEAL NO.ITA NOS.79 & 80/KOL/2008, IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2003-04 & 2004-05, HA D CONCLUDED THAT IN RELATION TO THE ENGINEERING DRAWING AND DESIGN SERV ICES RENDERED BY THE ASSESSEE TO ITS ASSOCIATED ENTERPRISE DCLL, THE DCL L SHOULD RETAIN THE GROSS MARGINS AS DETERMINED THROUGH THE BENCHMARKING EXER CISE. IN ACCORDANCE WITH THE RULING OF THE HON'BLE TRIBUNAL, THE ASSESSEE SU BMITTED THE ANALYSIS OF ITS INTERNATIONAL TRANSACTIONS WITH THE ASSOCIATED ENTE RPRISE DCLL RELEVANT FOR ASSESSMENT YEAR 2005-06. THE LD. AR FOR THE ASSESSE E SUBMITTED THAT M/S DEVELOPMENT CONSULTANTS INTERNATIONAL LIMITED ('DCL L') IS A WHOLLY OWNED ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 11 SUBSIDIARY OF THE ASSESSEE IN BAHAMAS. IT IS ENGAGE D IN PROVIDING ENGINEERING SERVICES TO ITS CLIENTS WHO ARE ENGAGED IN TURNKEY PROJECTS AT VARIOUS INDUSTRIAL SITES. SINCE, DCLL DOES NOT HAVE THE NECESSARY TECH NICAL EXPERTISE IT DOWNLOADS ALL THE DESIGN AND ENGINEERING WORK IT GENERATES TO THE ASSESSEE. AS PER THE LD AR FOR THE ASSESSEE THE MARGIN EARNED BY DCLL FOR THE YEAR ENDED 31ST DECEMBER 2004 ARE PROVIDED IN THE TABLE BELOW: (AMOUNT IN US DOLLARS) PROFIT LEVEL INDICATOR-DCIL YEAR ENDING DEC 2004 PARTICULARS TURNOVER 1,220,404 COST OF SALES (COS) SUB CONTRACTING FEE 469,984 SALARY 103,615 TRAVELLING 1,056 TOTAL COS 574,655 GROSS PROFIT 645,749 GP/SALES 52.91% THE ASSESSEE COMPUTED THE ARM'S LENGTH GP/ SALES OF THE COMPARABLE COMPANIES AT 25.69% IN HIS ANALYSIS. THE ARM'S LENG TH GP/ SALES OF THE COMPARABLE COMPANIES AT 25.69% IS LOWER THAN THE G P/SALES OF DCLL FOR THE YEAR ENDED 31ST DECEMBER 2004 OF 52.91% EXPLAINED I N THE TABLE ABOVE, WHICH CLEARLY INDICATES THAT DCLL HAS RETAINED MORE THAN THE ARM'S LENGTH MARGIN. HOWEVER, THE TPO WHILE PASSING THE ORDER FOR THE AS SESSMENT YEAR UNDER CONSIDERATION CHOSE TO IGNORE ORDER OF HON'BLE TRIB UNAL AND FOLLOWING ITS OWN APPROACH WHICH IS NOT JUSTIFIABLE. THE LD AR FOR TH E ASSESSEE MENTIONED THAT VERDICT OF JURISDICTIONAL TRIBUNAL IS BINDING ON TH E AUTHORITIES BELOW I.E. THE ASSESSING AND THE APPELLANT AUTHORITY AS PER THE JU DGMENT OF HON`BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. KAMALAKSHMI FINANCE LIMITED - AIR 1992 SC 711. ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 12 THE LD AR FOR THE ASSESSEE ALSO POINTED OUT THAT LD CIT(A) ACCEPTED THE JUDGMENT OF THE HON`BLE ITAT WITH SOME MODIFICATIO N AND COMPUTED THE ALP IN RESPECT OF TRANSACTIONS WITH THE DCLL BASED ON RE-S ALE PRICE METHOD (RPM ) AS UNDER: SALE VALUE OF THE ASSESSEE (COST OF SALE FOR DCLL) 280.54 LACS ADD: GROSS MARGIN EARNED BY THE DCLL ON SALE OF SUC H 447.94 LACS SERVICES @159.67% ON COST SALES (COST + GROSS MARGIN) 728.48 LACS GP/SALES 61.49% ARM'S LENGTH GP/SALES 25.69% ARM'S LENGTH GP/SALE CONSIDERING 5% 26.97% ARM'S LENGTH GROSS MARGIN 196.47 LACS ARM'S LENGTH COST OF SALE 532.01 L ACS DEFICIT IN FEES PAID TO THE ASSESSEE BY DCIL 251.47 LACS ( 532.01 -280.54) THIS WAY, THE LD.CIT (A) CALCULATED THE ALP AT RS. 251.47 LAKHS AND HE, ACCORDINGLY, DIRECTED THE AO TO CALCULATE THE ALP A T RS. 251.47 LAKHS, IN RESPECT OF INTERNATIONAL TRANSACTIONS WITH DCLL. THE ABOVE CITED METHOD ADOPTED BY THE LD CIT(A) TO COMPUTE THE ALP, NEITHER FALLS IN CPM METHOD NOR IN RPM METHOD. THE GROSS PR OFIT ON SALES OF DCIL HAS BEEN APPLIED BY LD.CIT(A) AS GROSS PROFIT ON COST O F SALES @ 159.67% WHICH IS WRONG. BECAUSE, THE GROSS PROFIT PERCENTAGE ON SALE S CAN NOT BE APPLIED FOR GROSS PROFIT PERCENTAGE ON COST THEREFORE, THE METH OD ADOPTED BY THE LD CIT(A) TO COMPUTE ALP IS WRONG AND AGAINST THE PROVISIONS OF RULE 10B(1) (B) OF THE INCOME TAX RULES, WHICH ARE REPRODUCED BELOW: RULE 10B. DETERMINATION OF ARMS LENGTH PRICE UND ER SECTION 92C. (1) (B) RESALE PRICE METHOD, BY WHICH,- ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 13 (I) THE PRICE AT WHICH PROPERTY PURCHASED OR SERVIC ES OBTAINED BY THE ENTERPRISE FROM AN ASSOCIATED ENTERPRISE IS RESOLD OR ARE PROVIDED TO AN UNRELATED ENTERPRISE, IS IDENTIFIED; (II) SUCH RESALE PRICE IS REDUCED BY THE AMOUNT OF A NORMAL GROSS PROFIT MARGIN ACCRUING TO THE ENTERPRISE OR TO AN U NRELATED ENTERPRISE FROM THE PURCHASE AND RESALE OF THE SAME OR SIMILAR PROPERTY OR FROM OBTAINING AND PROVIDING THE SAME OR SIMILAR SERVICE S, IN A COMPARABLE UNCONTROLLED TRANSACTION, OR A NUMBER OF SUCH TRANS ACTIONS; (III) THE PRICE SO ARRIVED AT IS FURTHER REDUCED BY THE EXPENSES INCURRED BY THE ENTERPRISE IN CONNECTION WITH THE P URCHASE OF PROPERTY OR OBTAINING OF SERVICES; (IV) THE PRICE SO ARRIVED AT IS ADJUSTED TO TAKE IN TO ACCOUNT THE FUNCTIONAL AND OTHER DIFFERENCES, INCLUDING DIFFERE NCES IN ACCOUNTING PRACTICES, IF ANY, BETWEEN THE INTERNATIONAL TRANSA CTION 66 [ OR THE SPECIFIED DOMESTIC TRANSACTION] AND THE COMPARABLE UNCONTROLLED TRANSACTIONS, OR BETWEEN THE ENTERPRISES ENTERING I NTO SUCH TRANSACTIONS, WHICH COULD MATERIALLY AFFECT THE AMO UNT OF GROSS PROFIT MARGIN IN THE OPEN MARKET; (V) THE ADJUSTED PRICE ARRIVED AT UNDER SUB-CLAUSE (IV) IS TAKEN TO BE AN ARM'S LENGTH PRICE IN RESPECT OF THE PURCHASE OF THE PROPERTY OR OBTAINING OF THE SERVICES BY THE ENTERPRISE FROM TH E ASSOCIATED ENTERPRISE; THE LD AR FOR THE ASSESSEE POINTED OUT THAT ALP COM PUTED BY THE CIT (A) BY FOLLOWING CONTEMPORARY RESALE PRICE METH OD IS NOT IN ACCORDANCE WITH RULE 10B (1) (B) OF THE INCOME TAX RULES. THE SAID RULE 10B (1) (B) DEFINES THE RESALE PRICE METHOD, WHICH IS APPLICABLE TO THE ASSESSEE UNDER CONSIDERATION BUT THE LD CIT (A) IGNORED IT AND APPLIED HIS OWN METHOD WHICH IS NOT APPLICABLE IN INDIAN SCENARIO. THEREFORE, LD CIT(A) HAS DEVIATED FROM THE ACCEPTED METHOD IN INDIA. HENCE, LD AR FOR THE ASSESSEE HAS REQUESTED THE BEN CH TO DIRECT THE LD.CIT(A) TO FOLLOW THE METHOD ACCEPTED BY THE HON`BLE TRIBUNAL IN ASSESSEE`S OWN CASE (SUPRA). 8.3. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN T HE SUBMISSIONS OF THE ASSESSEE, AS THE PROPOSITIONS CANVASSED BY THE LD. AR FOR THE ASSESSEE ARE SUPPORTED BY THE JUDGMENT OF HON`BLE ITAT KOLKATA IN ASSESSEE`S OWN CASE (SUPRA). AS LD AR ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 14 FOR THE ASSESSEE HAS RIGHTLY POINTED OUT THAT METHO D ADOPTED BY THE LD.CIT(A) TO COMPUTE ALP NEITHER FALLS IN CPM METHOD NOR IN RPM METHOD.THE HON'BLE INCOME TAX APPELLATE TRIBUNAL-KOLKATA, IN THE APPEA L NO.ITA NOS.79 & 80/KOL/2008, IN THE CASE OF THE ASSESSEE FOR ASSESS MENT YEARS 2003-04 & 2004- 05, HAD CONCLUDED THAT IN RELATION TO THE ENGINEER ING DRAWING AND DESIGN SERVICES RENDERED BY THE ASSESSEE TO ITS ASSOCIATED ENTERPRISE DCLL, THE DCLL SHOULD RETAIN THE GROSS MARGINS AS DETERMINED THROU GH THE BENCHMARKING EXERCISE. IN ACCORDANCE WITH THE RULING OF THE HON' BLE TRIBUNAL, THE ASSESSEE SUBMITTED TO THE TPO, THE ANALYSIS OF ITS INTERNATI ONAL TRANSACTIONS WITH THE ASSOCIATED ENTERPRISE DCLL RELEVANT FOR ASSESSMENT YEAR 2005-06, WHICH IS GIVEN BELOW: SI. NO. PARTICULARS REFERENCE AMOUNT (USD) L. ACTUAL SALES 1,220,404 2. ACTUAL COST OF SALES 574,654 3. ACTUAL GROSS PROFIT (1-2) 645,750 4. GP/SALES 3/1 52.91% 5. ARM'S LENGTH 25.69% 6. ARM'S LENGTH GROSS 1 *5 313522 7. ARM'S LENGTH COST OF 1-6 906,882 8. ARM'S LENGTH COST OF 7*95% 861,53 8 SALES CONSIDERING 5% 9. DEFICIT IN FEES PAID TO 8-2 286,8 84 HENCE, BASED ON THE ABOVE ANALYSIS, THE APPELLANT O FFERED THE AMOUNT OF ADJUSTMENT TO THE INTERNATIONAL TRANSACTION WITH DC IL AT USD 286,884. NO DOUBT, THE LD CIT (A) HAD CONFIRMED THE APPLICAB ILITY OF RE SALE PRICE METHOD (RPM) AS THE MOST APPROPRIATE METHOD, BUT WITH SOME MODIFICATION. THE LD CIT(A) OBSERVED THAT ACCOUNTING PERIOD OF ASSESSEE (DCPL) AND ACCOUNTING ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 15 PERIOD OF DCIL (SUBSIDIARY) IS DIFFERENT. THEREFORE , THE LD.CIT(A) DID THE MODIFICATION IN THE APPROACH ADOPTED BY THE HON`BLE ITAT IN ASSESSEE`S CASE (SUPRA), WHICH IS NOT JUSTIFIABLE. WHILE DOING THE MODIFICATION, THE LD CIT(A) HAD ONLY GONE BY THE ASSUMPTION THAT SINCE SALE FIGURE FOR JANUARY 2005 TO MARCH 2005 WAS NOT AVAILABLE THEREFORE, HE ARRIVED AT SOM E SORT OF A HYPOTHETICAL FIGURE BY APPLYING THE CONTEMPORARY RESALE PRICE METHOD WH EREIN HE TRIED TO CORRELATE THE SALE PRICE OF DCPL FOR MARCH ENDING WITH COST P RICE OF DCIL FOR DECEMBER ENDING AND DETERMINE THE GROSS PROFITABILITY FOR MA RCH ENDING TO COMPUTE THE VALUE OF ADJUSTMENT OF RS.251.47 LAKHS, AS FOLLOWS: MARGIN OF THE DCLL IS COMPUTED BY THE CIT(A), AS U NDER: SALE OF DCIL US $ 12,20,404 COST OF SALE (SUB CONTRACTING FEES) US $ 4,69,984 GP/COST = [( 12,20.404-4,69,984)/4,69,984]* 1 00= 159.67 ADJUSTMENT OF RS.251.47 LAKHS COMPUTED BY THE LD CI T(A), AS UNDER SALE VALUE OF THE ASSESSEE (COST OF SALE FOR DCLL) 280.54 LACS ADD: GROSS MARGIN EARNED BY THE DCLL ON SALE OF SUC H 447.94 LACS SERVICES @159.67% ON COST SALES (COST + GROSS MARGIN) 728.48 LACS GP/SALES 61.49% ARM'S LENGTH GP/SALES 25.69% ARM'S LENGTH GP/SALE CONSIDERING 5% 26.97% ARM'S LENGTH GROSS MARGIN 196.47 LACS ARM'S LENGTH COST OF SALE 532.01 L ACS DEFICIT IN FEES PAID TO THE ASSESSEE BY DCIL 251.47 LACS ( 532.01 -280.54) WE OBSERVED THAT THE ABOVE CITED METHOD ADOPTED BY THE LD CIT(A), TO COMPUTE THE ALP IS NOT ACCEPTED BECAUSE OF THE FOLLOWING RE ASONS: (1). FIRST OF ALL, AS WE HAVE SEEN THAT LD CIT(A) H AS IGNORED THE PROVISIONS OF RULE 10B (1) (B) OF THE INCOME TAX RULES, WHICH CO NTAIN THE DEFINITION OF RPM. ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 16 (2).THE LD.CIT(A) REFERRED THE CONTEMPORARY RESALE PRICE AND STATED THAT THIS METHOD IS INTERNATIONALLY RECOGNIZED IN DEVELOPED C OUNTRIES. THE LD CIT(A) FAILED TO EXPLAIN THAT HOW AND WHY HIS METHOD IS RECOGNIZE D INTERNATIONALLY, HE FAILED TO BRING ANY EVIDENCE AND CITATION ON RECORD. (3) THE LD.CIT (A) FAILED TO DEMONSTRATE THAT WHY R ULE 10B(1) (B) OF THE I.T. RULES IS NOT APPLICABLE TO THE ASSESSEE UNDER CONSI DERATION. THE ONLY GRIEVANCE OF THE LD CIT(A) IS THAT THE ACC OUNTING PERIOD OF THE ASSESSEE (DCPL) IS DIFFERENT FROM THE DCIL. TO ADDRESS THIS ISSUE OF LD CIT(A) THE ASSESSEE HAS SUBMITTED THE FOLLOWING COMPUTATION BE FORE US ( WHICH IS AS PER THE JUDGMENT OF HON`BLE ITAT KOLKATA IN ASSESSEE`S OWN CASE.): DETERMINING DCIL GROSS MARGIN FROM MARCH ENDING FIN ANCIALS PARTICULARS LABEL 31 MARCH 05 USD SALE OF DCIL M 1,337,869 COST OF SALE N 637,590 GP O=M-N 700,279 GP/SALES P=O/M 52.34% ARMS LENGTH GP/SALES H 25.69% ARMS LENGTH GROSS MARGIN Q=M*H 343.699 ARMS LENGTH COST OF SALE R=M-Q 994,170 AMOUNT OF ADJUSTMENT S=R-N 356,580 AVERAGE EXCHANGE RATE IN FY 2004-05* T 43,750 AMOUNT OF ADJUSTMENT (IN INR) K=I*J 15,600,375 TO ADDRESS, CIT(A)S RESERVATIONS, THE AUDITED FINA NCIAL DATA FOR THE PERIOD APRIL 04 TO MARCH 05 IS AVAILABLE NOW AND THE SAME SHOULD BE CONSIDERED FOR DETERMINATION OF ARMS LENGTH PRICE. BASICALLY, THE LD CIT(A) ADOPTED HIS OWN APPROACH BECAUSE DATA FOR THE PERIOD JANUARY 2005 T O MARCH 2005 ( FOR THREE MONTHS) WERE NOT AVAILABLE BEFORE HIM BECAUSE HE DI D NOT GIVE AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE SAME. ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 17 WE ARE OF THE VIEW THAT IN ANY EVENT THE LD CIT(A) CAN NOT APPLY HIS OWN METHOD EXCEPT THE METHOD GIVEN IN RULE 10B (1) (B) OF THE I.T. RULES. HOWEVER, FOR DIFFERENCE IN ACCOUNTING PERIOD THE TPO/AO MAY EXAM INE THE FIGURES FOR THE PERIOD JANUARY 2005 TO MARCH 2005. AS PER THE ADDITIONAL EVIDENCE PRODUCED BY THE LD A R FOR THE ASSESSEE, BEFORE US, (FINANCIALS OF DCIL FROM JANUARY 2005 TO MARCH 2005), SINCE THESE FIGURES OF FINANCIALS OF DCIL FROM JANUARY 2005 TO MARCH 2005 WERE NOT AVAILABLE BEFORE THE TPO/AO. THEREFORE, FOR DIFFERENCE IN ACCOUNTING PERIOD, THE TPO/AO MAY EXAMINE THE FIGURES FOR THE PERIOD JANUARY 2005 TO MARCH 2005 OF DCIL. THEREFORE, WE DIRECT THE TPO/AO TO EXAMINE THE FIGU RES OF THE FINANCIALS OF DCIL FOR THE PERIOD JANUARY 2005 TO MARCH 2005 AND COMPUTE THE ALP AS PER THE METHOD SUGGESTED BY THE HON`BLE ITAT IN ASSESSE E`S OWN CASE AND SUBMITTED BY THE ASSESSEE BEFORE US. WE DIRECT TPO/ AO ONLY TO EXAMINE THE FIGURES OF THE FINANCIALS OF DCIL FROM JANUARY 2005 TO MARCH 2005, AND IF HE FINDS THE FIGURES OF THE FINANCIALS OF DCIL TRUE AN D CORRECT, HE SHOULD ACCEPT THE COMPUTATION OF THE ASSESSEE AS FURNISHED BY THE AS SESSEE BEFORE US, WHICH IS REPRODUCED BY US ABOVE. THEREFORE, BASED ON THE FACTUAL POSITION, WE DIREC T THE AO/TPO TO ACCEPT THE COMPUTATION AS GIVEN BEFORE US, (AFTER VERIFICATION OF FIGURES OF JANUARY 2005 TO MARCH 2005), WHICH IS BASED ON THE METHOD ACCEPTED BY THE HON`BLE ITAT, KOLKATA IN ASSESSEE`S OWN CASE (SUPRA). 8.4 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALSO ALLOWED F OR STATISTICAL PURPOSES. ITA NO.1591/KOL/2010 CO NO.144/KOL/2010 M/S DEVELOPMENT CONSULTANTS LTD. 18 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15/02/20 17. SD/ - (N.V.VASUDEVAN) S D/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; $% DATED 15/02/2017 & '() /PRAKASH MISHRA, . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT. REGISTRAR) % & , / ITAT, KOLKATA 1. / THE ASSESSEE-DCIT, CIR-11, KOLKATA 2. / THE RESPONDENT.-DEVELOPMENT CONSULTANTS LTD 3. * ( ) / THE CIT(A), KOLKATA. 4. * / CIT 5. +, - . , . , / DR, ITAT, KOLKATA 6. - / / GUARD FILE. + //TRUE COPY//