M/s. Conexant Systems (P) Ltd, New Delhi V. ACIT, New Delhi

CO 37/DEL/2010

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1434 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I1
• Next Hearing Date: 30-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR CHADHA
• Assessee Lawyers: PIYUSH CHAWLA
• Keywords: Capital asset; Depreciation; Transfer pricing; International transaction; Wholly owned subsidiary; Bad and doubtful debts; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1 NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY: JUDICIAL MEMBER ITA NO. 4359/DEL/2009 ASSTT. YR: 2004-05 ACIT, CIRCLE 3(1), VS. M/S CONEXANT SYSTEMS PVT. LTD., NEW DELHI. 11-A, SUCHETA BHAWAN, VISHNU DIGAMBAR MARG, NEW DELHI. PAN: AAACF 2723 N AND C.O. NO. 37/DEL/2010 ( IN ITA NO. 4359/DEL/2009 ) ASSTT. YR: 2004-05 M/S CONEXANT SYSTEMS PVT. LTD., VS. ACIT, CIRCLE 3( 1), 11-A, SUCHETA BHAWAN, NEW DELHI. VISHNU DIGAMBAR MARG, NEW DELHI. ( APPELLANT ) (RESPONDENT) DEPARTMENT BY : SH. VIJAY KUMAR CHADHA CIT (DR ) ASSESSEE BY : SH. PIYUSH CHAWLA ADV. DATE OF HEARING : 30/09/2015. DATE OF ORDER : 27/11/2015. O R D E R PER S.V. MEHROTRA, A.M.. : THE CAPTIONED APPEAL BY THE DEPARTMENT AND THE CRO SS OBJECTION BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORDER DATED 23-9-2009 PASSED BY THE LD. CIT(A)-XX, NEW DELHI IN APPEAL NO. 153/2 007-08, RELATING TO ASSESSMENT YEAR 2004-05. 2 2. THE ASSESSEE, A 100% SUBSIDIARY OF GLOBESPAN VIR ATA INC. (GSV), IN THE RELEVANT ASSESSMENT YEAR, WAS INVOLVED IN SOFTW ARE DEVELOPMENT AT VARIOUS LEVELS TO BE USED IN GSVS PRODUCTS. IT PRO VIDED HARDWARE DRIVERS, SYSTEM SOFTWARE, COMMUNICATION PROTOCOL, STACKS ETC . THE ASSESSEE ALSO DEVELOPED MANAGEMENT SOFTWARE WHICH HELPED IN MANAG ING THE CHIP OR EVEN THE WHOLE SYSTEM. THE ASSESSEE ALSO PROVIDED MARKE T SUPPORT SERVICES TO GSV IN THE ASIA PACIFIC REGION. 3. THE ASSESSEE HAD FILED RETURN OF INCOME DECLARIN G TOTAL INCOME OF RS. 1,63,04,536/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ENTERED INTO FOLLOWING INTERNATIONAL TRANSACTIONS: S. NO. INTERNATIONAL TRANSACTIONS METHOD VALUE (IN RUPEES) 1 SOFTWARE RESEARCH & DEVELOPMENT OF SERVICES TNMM 16,74,24,534 2. MARKETING SUPPORT SERVICES TNMM 1,51,51,899 3. RECEIPT OF INTEREST FREE LOAN - 7,02,47,285 4. THE ASSESSEE COMPANY HAD ADOPTED TNMM TO BENCHMA RK THE INTERNATIONAL TRANSACTION OF THE SEGMENTS BY TAKING OPERATIONAL PROFIT OVER OPERATING COST (OP/OC) A PROFIT LEVEL INDICATOR IN BOTH THE SEGMENTS. THE PLI OF SOFTWARE DEVELOPMENT SEGMENT OF THE ASSESSEE WAS 27.28% AND IN THE MARKETING SERVICE SEGMENT ASSESSEE HAD OP/OC OF 9.1 1%. 5. LD. TPO EXAMINED THE CALCULATION OF PLI OF COMPA RABLES ON THE BASIS OF CURRENT YEARS DATA, VIS A VIS THE ASSESSEES MOD E OF COMPUTATION. THERE BEING DIFFERENCES IN THESE WORKINGS, BASED ON THE F INANCIAL OF THE COMPARABLE COMPANIES, LD. TPO REJECTED THE ASSESSEE S CONTENTIONS AND 3 WORKED OUT THE CALCULATION OF OP/OC OF THE COMPARAB LES USING THE FOLLOWING DEFINITIONS AS PER CAPITALINE PLUS DATABASE: OPERATIONAL INCOME (OI)=[NET SALES]+ [EXPORT INCEN TIVES]+ [IMPORT ENTITLEMENTS]+[SALE OF SCRAP]+ [PROVISION W RITTEN BACK]+ [MISCELLANEOUS INCOME]+[STOCK ADJUSTMENTS] OPERATIONAL EXPENSES (OE)=[RAW MATERIALS]+ [POWER & FUEL COST]+ [OTHER MANUFACTURING EXPENSES]+ [EMPLOYEE CO ST]+ [SELLING AND ADMINISTRATION EXP.]+ [LOSS ON FOREX TRANSACTIONS]+ [OTHER MISCELLANEOUS EXPENSES]+ (DEP RECIATION] OPERATION PROFIT (OP)=OI-OE 6. OP/OC OF THE COMPARABLES OF THE ASSESSEE WITH FY 2003-04 DATA IS REPRODUCED BELOW: S. NO CO NAME YEAR END NET SALES OP TC OP/TC% 1 BESANT RAJ INTL 200403 0.29 0.08 0.21 38.10 2. ENGINEERS INDIA 200403 1281.84 303.38 978.46 31. 01 3. MAHIN ACRE CONS 200403 2.62 0.19 2.49 7.63 4. PRIYA INTERN. 200403 5.49 0.32 5.32 6.02 5. RITES 200403 266.95 82.56 176.94 46.66 6. UJJWAL 200403 7.42 0.33 7.15 4.62 7. WATER & POWER CONSULTING 200403 64.67 8.31 53.46 15.54 21.36 7. HE, THEREFORE, DIRECTED FOR ADDITION OF RS. 12,9 6,513/- AS UNDER: ARMS LENGTH MARGIN ON COST 21.36% TOTAL COSTS INCURRED IN MARKETING SERVICES RS. 1,0 5,87,025 ARMS LENGTH PRICE (121.36% OF THE COSTS) RS. 1,28 ,48,414 REMUNERATION RECEIVED RS. 1,15,51,899 DIFFERENCE (IN RS. AND IN % OF ALP) RS. 12,96,515 8. THE AO DETERMINED THE TOTAL INCOME ASSESSEE AT R S. 1,89,57,669/- AFTER MAKING FOLLOWING ADDITIONS: INTEREST PAID TO NOIDA AUTHORITY RS. 17,78,441 DEPRECIATION ON COMPUTER PERIPHERALS RS. 43 ,011 TRANSFER PRICING ADJUSTMENT RS. 12,96,515 4 9. LD. CIT(A), AFTER DETAILED CONSIDERATION OF SUBM ISSIONS, OBSERVED IN PARA 13.1 TO 14 AS UNDER: 13.1. I HAVE CONSIDERED THE ABOVE SUBMISSION OF T HE APPELLANT AND IT IS OBSERVED THAT FOLLOWING TWO ISS UES ARE INVOLVED: I. WHETHER PROVISION WRITTEN BACK SHOULD BE CONSIDERED AS OPERATING INCOME? II. WHETHER PROVISION FOR DOUBTFUL DEBTS/ BAD DEBTS/ PROVISION MADE BE TREATED AS OPERATING EXPENSE? 13.2. IN THIS RESPECT, IT IS INTERESTING TO NOTE TH AT TPO HAS TREATED PROVISION WRITTEN BACK AS OPERATING INCOME, HOWEVER PROVISION CREATED DURING THE YEAR HAS BEEN CONSIDER ED AS NON OPERATING BY THE TPO IN HIS ORDER. IN MY VIEW THE T PO HAS TOTALLY FAILED IN APPLYING THE MATCHING CONCEPT, WH ICH IS ONE OF THE PRIMARY PRINCIPLES OF ACCOUNTING. IN THIS RESPECT, I QUOTE THE RECENT JUDGMENT OF M/S SONY INDIA (P) LIMITED VS. DCIT (I.T.A.NOS.1181/DEL/2005 , 1257/DEL/2007 & 1656/DEL/2007), WHEREIN THE DELHI T RIBUNAL HELD THAT 'CREATION. OF UNPAID LIABILITY AND WRITE BACK IS NORMAL INCIDENT OF BUSINESS OPERATIONS'. BASED ON THIS JUD GMENT, I HOLD THAT PROVISION WRITTEN BACK SHOULD BE CONSIDERED AS OPERATING INCOME AND PROVISIONS CREATED DURING THE YEAR SHOUL D BE TREATED AS OPERATING EXPENDITURE INSTEAD OF NON OPE RATING EXPENDITURE AS DONE BY THE TPO. 13.3 IN VIEW OF THE ABOVE, I HOLD THAT IN CASE OF E NGINEERS INDIA LTD., MAHINDRA & ACRES CONSULTING ENGINEERS LTD., P RIYA INTL. LTD. AND RITES LTD., PROVISION MADE J BAD DEBTS SHO ULD BE CONSIDERED AS OPERATING EXPENSES IN NATURE. 14. BASED ON THE ABOVE, THE AVERAGE OP/TC OF THE COMPARABLES COMES TO 14.27% (DETAILS AS PER ANNEXUR E 2) AS AGAINST 9.11 % THAT OF APPELLANT. 5 10. LD. CIT(A) FURTHER DELETED THE DISALLOWANCE MAD E BY AO IN RESPECT OF INTEREST PAID TO NOIDA AUTHORITY AND ALSO ALLOWED T HE ASSESSEES APPEAL IN REGARD TO DEPRECIATION ON COMPUTER PERIPHERALS @ 60 % AS CLAIMED BY ASSESSEE AS AGAINST 25% ALLOWED BY AO. 11. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), T HE DEPARTMENT IS IN APPEAL BEFORE US AND ASSESSEE HAS FILED CROSS OBJEC TIONS. 12. GROUNDS RAISED BY THE DEPARTMENT IN IT APPEAL, READ AS UNDER: 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD.CIT(APPEALS) WAS RIGHT IN TREATING THE PROVISION S WRITTEN BACK DURING THE YEAR AS OPERATING INCOME? 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD.CIT(APPEALS) WAS RIGHT IN TREATING THE PROVISION S CREATED DURING THE YEAR AS OPERATING EXPENDITURE? ON CORPORATE ADDITION 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD.CIT(APPEALS) WAS RIGHT IN DELETING ADDITION OF R S.I77844 1/- MADE BY THE AO ON ACCOUNT OF INTEREST PAID TO NOIDA AUTHORITY BY HOLDING SAME AS REVENUE EXPENDITURE WH ICH THE AO CAPITALIZED BY TREATING SAME AS PART OF COST OF PLOT(A CAPITAL ASSET)? 4. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD.CIT(APPEALS) WAS RIGHT BY ALLOWING THE DEPRECIAT ION @ 60% ON COMPUTER PERIPHERALS AMOUNTING TO RS.430 I 1 /- THOUGH THE IT RULES ALLOWS 60% DEPRECIATION ONLY ON COMPUT ER AND COMPUTER SOFTWARE? 5. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 6 13. AS FAR AS GROUND NO. 1 IS CONCERNED, WE FIND FR OM THE OBSERVATIONS OF LD. CIT(A), REPRODUCED EARLIER, THAT THE TPO HIMSE LF HAD TREATED THE PROVISION WRITTEN BACK AS OPERATING INCOME. THEREF ORE, THIS GROUND IS MISCONCEIVED AND, ACCORDINGLY, DISMISSED. 14. AS FAR AS GROUND NO. 2 IS CONCERNED, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE OBSERVATIONS OF LD. CIT(A), NOTE D ABOVE, BECAUSE PROVISION CREATED DURING THE YEAR BEING NORMAL INCIDENCE OF BUSINESS, HAS TO BE TREATED AS OPERATING EXPENDITURE INSTEAD OF NON-OPERATING E XPENDITURE, AS DONE BY THE TPO. WE, ACCORDINGLY, DISMISS GROUND NO. 2 ALS O. 15. AS FAR AS GROUND NO. 3 IS CONCERNED, BRIEF FAC TS ARE THAT DURING THE YEAR ASSESSEE HAD PAID RS. 17,78,441/- ON ACCOUNT O F INTEREST TO NOIDA AUTHORITY TOWARDS THE ALLOTMENT OF PLOT TO THE ASSE SSEE AND CLAIMED THE SAME AS DEDUCTION. BEFORE AO, THE ASSESSEES EXPLANATION WAS THAT IT HAD CAPITALIZED THE COST OF THE PREMISES IN THE BOOKS A ND THE INTEREST ACCRUED ON THE DEFERRED INSTALLMENTS TOWARDS THE PREMIUM OF TH E PREMISES AMOUNTING TO RS. 17,78,441/-, HAD BEEN TREATED AS REVENUE EXPEND ITURE. THE AO, HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTION OBSERVING THAT SINCE INTEREST WAS PAID TOWARDS THE CAPITAL ASSET, THE SAME HAD TO BE CAPITALIZED TO THE COST OF THE LAND AND COULD NOT BE ALLOWED AS REVENUE EXPEND ITURE. 16. BEFORE LD. CIT(A) THE ASSESSEE HAD, INTER ALIA, SUBMITTED THAT THE ASSESSEE HAD BEEN ALLOTTED THE LAND INCLUDING SUPER STRUCTURE BY NOIDA ON LEASE FOR A PERIOD OF 90 YEARS FOR WHICH THE ASSESS EE WAS REQUIRED TO PAY UPFRONT 30% OF THE PREMIUM/COST OF THE SAID PREMISE S AND THE BALANCE 70% WAS PAYABLE IN 10 EQUAL HALF YEARLY INSTALMENTS ALO NG WITH INTEREST @ 12% PER ANNUM. IT WAS POINTED OUT THAT THE EXPENDITURE WAS INCURRED TO FACILITATE THE PROJECT OF ESTABLISHING THE DEVELOPMENT CENTRE FOR MANUFACTURE AND EXPORT OF SOFTWARE. IT WAS POINTED OUT THAT THE INT EREST PAYABLE BY THE 7 ASSESSEE TO THE NOIDA AUTHORITY WAS FOR THE PERIOD AFTER ACQUISITION OF LAND INCLUDING SUPERSTRUCTURE WHICH WAS PUT TO USE ON ACQUISITION. THEREFORE, THE INTEREST PERTAINING TO THE PERIOD, POST ACQUISI TION AND PUTTING INTO USE OF SUCH LAND INCLUDING SUPER-STRUCTURE, COULD NOT BE C APITALIZED ALONG WITH THE COST OF LAND IN TERMS OF SECTION 43(1) READ WITH EX PLANATION 8 THERETO. LD. CIT(A), AFTER CONSIDERING THE ASSESSEES CONTENTION , ALLOWED THE CLAIM IN TERMS OF SECTION 36(1)(III), OBSERVING THAT AS PER SECTION 43(1) READ WITH EXPLANATION 8, INTEREST PAYABLE ON ASSET FOR THE PE RIOD, AFTER SUCH ASSET WAS PUT TO USE, COULD NOT BE CAPITALIZED. HE ALSO RELI ED ON FOLLOWING DECISIONS: - BOMBAY STEAM NAVIGATION CO. (P) LTD. VS. CIT 56 ITR 52 (SC) - CIT VS. SIVAKAMI MILLS LTD. 227 ITR 465. 17. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE RECORD. THE FACTS ARE NOT DISPUTED THAT THE INT EREST CLAIMED BY ASSESSEE WAS IN RESPECT OF DEFERRED INSTALMENTS AFTER THE LA ND INCLUDING THE SUPERSTRUCTURE WAS PUT TO USE ON ACQUISITION. THERE FORE, LD. CIT(A) RIGHTLY HELD THAT THE INTEREST PERTAINING TO THE PERIOD POS T ACQUISITION AND PUTTING OF SUCH LAND INCLUDING THE SUPERSTRUCTURE IN USE, COUL D NOT BE CAPITALIZED ALONG WITH THE COST OF LAND. WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY LD. CIT(A), WHICH IS ALSO FORTIFIED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BOMBAY STEAM NAVIGATION CO. (P) LTD. (S UPRA). GROUND IS DISMISSED. 18. GROUND NO. 4: AS FAR AS GROUND NO. 4 IS CONCERN ED, THE SAID ISSUE IS COVERED BY THE DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. BSES YAMUNA POWERS LTD. 358 ITR 47, HOLDING THAT T HE DEPRECIATION ON COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS, PRINT ER, SCANNERS AND SERVER WAS TO BE ALLOWED @ 60% THE SAME BEING PART OF COM PUTER SYSTEM. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURI SDICTIONAL HIGH COURT WE 8 SEE NO REASON TO INTERFERE IN THE ORDER OF LD. CIT( A) ON THE ISSUE IN QUESTION. GROUND FAILS. 19. REVENUES APPEAL STANDS DISMISSED, ACCORDINGLY. ASSESSEES C.O. NO. 37/DEL/2010: 20. IN ITS CROSS OBJECTION, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THA T CURRENT YEAR (I.E. FY 2003-04) FINANCIAL INFORMATION OF COMPARAB LE COMPANIES IS TO BE USED FOR COMPARABILITY ANALYSIS, WHICH WAS NOT AVAILABLE TO THE ASSESSEE COMPANY AT THE TIME O F FILLING ITS RETURN OF INCOME. 2. WITHOUT PREJUDICE TO OBJECTION 1 ABOVE, THE FINA NCIAL INFORMATION OF THE COMPANY VIZ. ESQUIRES ENGINEERS & CONSULTANTS OUGHT TO BE CONSIDERED IN THE FINAL COM PARABLE COMPANY SET IN VIEW OF THE FACT THAT ITS CURRENT YE AR DATA IS AVAILABLE. 3. (A) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN NOT DIRECTING THE LD AO /TPO TO CONSIDER CERTAIN 'OPERATING' EXPENSES, WHICH HAVE B EEN WRONGLY CLASSIFIED AS 'NON- OPERATING FOR THE PURPOSE OF CO MPARABILITY ANALYSIS DONE IN THE ORDER PASSED BY THE LD TPO 3. (B) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN NOT DIRECTING THE LD AO/TPO TO DISREGARD CERTAIN NON-OPERATING' EXPENSES, WHICH HA VE BEEN WRONGLY CLASSIFIED AS 'OPERATING' EXPENSES FOR THE PURPOSE OF COMPARABILITY ANALYSIS DONE IN THE ORDER PASSED BY THE LD TPO 21. AS FAR AS GROUND NO. 1 IS CONCERNED, THE ISSUE IS NO MORE RES-INTEGRA AND IT IS WELL SETTLED LAW THAT ONLY CURRENT YEARS FINANCIAL INFORMATION OF 9 COMPARABLE COMPANIES IS TO BE USED FOR COMPARABILIT Y ANALYSIS. ACCORDINGLY, THIS GROUND IS DISMISSED. 22. AS FAR AS GROUND NO. 2 IS CONCERNED, THE MAIN C ONTENTION OF LD. COUNSEL IS THAT FINANCIAL INFORMATION OF THE COMPANY VIZ. E SQUIRES ENGINEERS & CONSULTANTS FOR CURRENT YEAR IS AVAILABLE AND, THER EFORE, THE MATTER IS RESTORED BACK TO THE FILE OF LD. TPO FOR CONSIDERING THE IN CLUSION OF THIS COMPARABLE DE NOVO IN THE LIST OF COMPARABLES, SELECTED BY HIM . GROUND IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 23. AS REGARDS GROUND NO. 3, THE MAIN CONTENTION OF ASSESSEE IS THAT WHILE COMPUTING THE PLI OF VARIOUS COMPARABLES, SOME OF T HE OPERATING EXPENSES HAVE BEEN CONSIDERED AS NON-OPERATING WHILE SOME OF THE NON-OPERATING EXPENSES HAVE WRONGLY BEEN CLASSIFIED AS OPERATING EXPENSES. IN THIS REGARD, IN THE SYNOPSIS, FILED BY THE ASSESSEE, IT IS POINT ED OUT THAT AS FAR AS WATER & POWER CONSULTANCY SERVICES LTD. (WAPCOS) IS CONCERN ED, THE LD. TPO HAS NOT CONSIDERED POWER AND FUEL EXPENSES AS OPERATING EXPENSES WHILE COMPUTING OPERATING MARGIN. THIS ASPECT WAS NOT ADJ UDICATED BY LD. CIT(A) POINTING OUT THAT THE SAME WAS ACADEMIC IN NATURE. 24. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES, SINCE THE OP/OC OF EACH COMPARABLE AFFECTED THE AVERAGE MARGI N, ON THE BASIS OF WHICH ADDITION IS MADE, THEREFORE, COMPUTATION OF C ORRECT OP/OC OF EACH COMPARABLE IS OF PARAMOUNT IMPORTANCE. WE, THEREFOR E, RESTORE THIS ISSUE TO THE FILE OF LD. TPO TO EXAMINE THE ASSESSEES CONTE NTION. GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 25. THE NEXT OBJECTION IS IN REGARD TO TAKING INTO CONSIDERATION THE MISC. INCOME AS OPERATING INCOME IN COMPUTING THE OPERATI NG MARGINS OF MAHINDRA ACRES CONSULTING ENGINEERS LTD. AND RITES LTD. THE ASSESSEES RELIANCE IS ON THE DECISION OF THE ITAT IN THE CASE OF M/S ROBST INDIA PVT. 10 LTD. VS. ACIT (ITA NO. 512 AND 557/PN/2012), IN WHI CH IT HAS BEEN HELD THAT ANY ITEM OF INCOME OR EXPENDITURE, WHICH IS NO T LINKED TO THE INTERNATIONAL TRANSACTIONS UNDER REVIEW HAS TO BE E XCLUDED FROM THE COMPUTATION OF NET OPERATING PROFITS AND OPERATING REVENUES. 26. WE FIND THAT THIS PLEA HAS NOT BEEN TAKEN BEFOR E LD. CIT(A) AND, THEREFORE, WE REFRAIN FROM MAKING ANY COMMENT ON TH IS ASPECT, PARTICULARLY BECAUSE IF THIS PRINCIPLE IS TO BE APPLIED, THEN IT IS TO BE APPLIED IN RESPECT OF ALL THE ITEMS OF INCOME AND EXPENDITURE, WHICH ASPE CT HAS NOT BEEN EXAMINED BY LOWER REVENUE AUTHORITIES. SINCE THIS I SSUE DOES NOT ARISE OUT OF THE CIT(A)S ORDER, WE REFRAIN TO ADJUDICATE THE SA ME. GROUND IS DISMISSED. 27. IN THE RESULT, REVENUES APPEAL IS DISMISSED AN D THE ASSESSEES CROSS- OBJECTION IS PARTLY ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN OPEN COURT ON 27/11/2015.. SD/- SD/- (A.T. VARKEY) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27/11/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. 11 - + DATE INITIAL 1. DRAFT DICTATED ON 6 - 1 1 .2015 PS 2. DRAFT PLACED BEFORE AUTHOR 9 .1 1 .2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.