BAGADIA BROTHERS PVT. LTD, RAIPUR V. DY.. C.I.T.-2(1), RAIPUR

CO 90/BIL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5209 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 24-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G S AGRAWAL
• Keywords: Transfer pricing; International transaction; Difference of opinion
• Section: 92C; 92

Judgement Text

1 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 IN THE INCOME TAX APPELLA TE TRIBUNAL RAIPUR BENCH: RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 387/BIL /2014 (A.Y 2010-11) DCIT 2(1) AYAKAR BHAWAN CENTRAL REVENUE BUILDING, CIVIL LINES RAIPUR (APPELLANT) VS BAGADIYA BROTHERS PVT. LTD. 15/63, GROUND FLOOR, BAGADIYA MANSION JAWAHAR NAGAR RAIPUR AABCB8934G ( RESPONDANT) C.O NO. 90/BIL/2 015 (A.Y. 2010-11) BAGADIYA BROTHERS PVT. LTD. 15/63, GROUND FLOOR, BAGADIYA MANSION, JAWAHAR NAGAR RAIPUR AABCB8934G (APPELLANT) VS DCIT 2(1) AYAKAR BHAWAN CENTRAL REVENUE BUILDING, CIVIL LINES RAIPUR ( RESPONDANT) RESPONDENT BY SHRI SANJAY KUMAR, DR APPELLANT BY SH. G. S. AGRAWAL, CA ORDER PER SUCHITRA KAMBLE, JM THE APPEAL IS FILED BY THE REVENUE AND THE CROSS OB JECTION IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30/10/2014 PASSED BY CIT(A)-, RAIPUR (CG) FOR ASSESSMENT YEAR 2010-11. DATE OF HEARING 16.08.2018 DATE OF PRONOUNCEMENT 11.10.2018 2 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 2. THE GROUNDS OF APPEAL AND CROSS OBJECTION ARE A S UNDER: I.T.A .NO. 387/BIL/2014 (A.Y 2010-11) 1. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADJUSTMENT OF R S. 81,44,959/- PERTAINING TO ARMS LENGTH PRICE AS SUGGESTED BY TH E TRANSFER PRICING OFFICER? 2. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.2,00,000/- MADE BY THE A.O ON ACCOUNT OF TRAVELLING EXPENSES?. 3. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.2,00,000/- MADE BY THE A.O ON A/C OF LEGAL & PROFESSIONAL CHARGES? 4. THE ORDER OF THE LD.CIT (A) IS ERRONEOUS BOTH IN LAW AND ON FACTS? 5. ANY OTHER GROUND THAT MAY BE ADDUCED AT THE TIME OF HEARING. C.O NO. 90/BIL/2015 (A.Y 2010-11) 1. THAT UNDER THE FACTS AND THE LAW, THE LD.CIT(A ) HAS RIGHTLY DELETED THE ADDITION OF RS.81,44,959/- MADE BY THE LD. ASSE SSING OFFICER ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT. 2. THAT THE LD.CIT(A) AFTER CONSIDERING THE FACTS AND LAW RIGHTLY DELETED THE DISALLOWANCE OF RS.2,00,000/- MADE OUT OF TRAVELLING EXPENSES AND RS.2,00,000/- OUT OF LEGAL & PROFESSIO NAL EXPENSES. 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY DERIVI NG INCOME FROM THE BUSINESS OF EXPORT OF IRON ORE FINES, RICE BRAN OIL , DE-OILED CAKE, RICE ETC. THE ASSESSING OFFICER, MADE AN ADDITION OF RS. 81,44,95 9/- ON THE BASIS OF ORDER PASSED BY DCIT (TPO-II), AHEMADABAD U/S 92C(3) DATE D 28/01/2014. THE IRON ORE 3 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 FINES EXPORT IS MADE IN BULK / LOOSE FORM FROM VARI OUS INDIAN PORTS TO VARIOUS CHINESE PORTS. THE ASSESSEE HAS A WHOLLY OWNED SUBS IDIARY AT SINGAPORE. IT HAS FILED AUDIT REPORT IN FORM 3CEB AND TRANSFER PRICIN G STUDY (TP STUDY) BEFORE THE AO / TPO. THE TURNOVER OF THE ASSESSEE COMPANY WAS RS. 996 CRORES AND THE TRADING RESULTS WERE ACCEPTED BY THE ASSESSING OFFI CER. THE ASSESSEE HAS INTERNATIONAL TRANSACTION WITH THE ASSOCIATE ENTERP RISE (AE) FOR VESSEL FREIGHT (CHARTERING) OF RS. 232,72,71,145; VESSEL FREIGHT ( TRADING) OF RS. 10,66,94,209/-; EXPORT OF IRON ORE FINES OF RS. 204,29,90,919/-; RE IMBURSEMENT OF EXPENSES OF RS. 6,41,193/- AND RECOVERY OF EXPENSES OF RS. 5,43,22 8/-. 4. THE ARMS LENGTH PRICE (ALP) OF INTERNATIONAL TR ANSACTION FOR VESSEL FREIGHT WAS BENCHMARKED USING TRANSACTION NET MARGIN METHOD (TNMM). THE RESULTS WERE ACCEPTED BY AO/TPO AS WITHIN ALP. IN RESPECT OF EXP ORT OF IRON ORE FINES, THE UNCONTROLLED COMPARABLE TRANSACTIONS WERE IDENTIFIE D IN TP STUDY USING INTERNAL EXPORT INSTANCES IN CASE OF ASSESSEE AS WELL AS IMP ORT INSTANCES BY AE. FURTHER, THE EXTERNAL COMPARABLE INSTANCES WERE IDENTIFIED U SING DATA FROM TRADE STEEL INDEX (TSI) AND U-METAL DATABASE. ALL THE COMPARABL E INSTANCES FOUND FOR EACH EXPORT TRANSACTION WERE AVERAGED AND THE AVERAGE PR ICE WAS COMPARED WITH THE EXPORT PRICE CHARGED BY THE ASSESSEE. THE AVERAGE P RICE WAS ALSO ADJUSTED ON ACCOUNT OF VARIOUS ELEMENTS SUCH AS GRADE OF FINES, FREIGHT, INSURANCE, PORT ADJUSTMENT ETC. THE TPO, IN THOSE CASES WHERE THE I NTERNAL TRANSACTIONS WERE AVAILABLE, DID NOT ACCEPT THE EXTERNAL COMPARABLES. ACCORDINGLY THE TPO FOUND THAT IN 14 INSTANCES INTERNAL COMPARABLES WERE AVAI LABLE AND IN REMAINING 7 INSTANCES EXTERNAL COMPARABLES COULD HAVE BEEN USED . IN CASE OF TWO VESSELS, NAMELY THEOSKEPASTI AND 'GOA THE TPO FOUND THAT THERE WAS ONLY ONE COMPARABLE OF TRADE STEEL INDEX. HE, THEREFORE, REJ ECTED THE CLAIM OF THE ASSESSEE FOR ALLOWING BENEFIT OF VARIATION OF (+/-) 5% OBSER VING THAT BENEFIT U/S 92C(2), SECOND PROVISO BY RELYING ON FOLLOWING DECISIONS: > HAWORTH (INDIA) PVT. LTD., A. Y. 2006-07 (ITA NO. 5341/DEL/2010) > ADP PRIVATE LIMITED (2011-TII-44-ITA T-HYD-TP) 4 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 > PEROT SYSTEMS TSI (INDIA) LTD. (2010-TOIL-15-DEL) > ESSAR STEEL LTD. (2011-TII-17-ITAT- VIZAG-TP) > VIPIN ENTERPRISES [18 TAXMANN.COM 85 (DEL)] > UE TRADE CORPORATION (INDIA (2011 -TIL-04-ITAT-DEL- TP) ACCORDINGLY, THE TPO PROPOSED UPWARD ADJUSTMENT OF RS. 81,44,959/- IN HIS ORDER U/S 92C(3) DATED 28/01/2014. THIS WAS ACCEPTE D BY THE ASSESSING OFFICER AND THE ABOVE SUM WAS INCLUDED IN THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO MADE DISALLOWANCE OF RS. 2,00,000/- OU T OF LEGAL & PROFESSIONAL CHARGES AND RS. 2,00,000/- OUT OF TRAVELLING EXPENS ES. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 6. THE LD. DR SUBMITTED THAT AS REGARDS GROUND NO.1 , THE CIT(A) ERRED IN DELETING THE ADJUSTMENT OF RS.81,44,959/- PERTAININ G TO ARMS LENGTH PRICE AS SUGGESTED BY THE TPO. THE LD. DR SUBMITTED THAT TH E TPO OBSERVED AND GAVE FINDING THAT IN 14 INSTANCES INTERNAL COMPARABLES W ERE AVAILABLE IN REMAINING 7 INSTANCES EXTERNAL COMPARABLES COULD HAVE BEEN USED . THE TPO FURTHER OBSERVED THAT IN CASE OF TWO VESSELS, NAMELY THEOSKEPASTI AND GOA, THE TPO FOUND THAT THERE WAS ONLY ONE COMPARABLE OF TRADE STEEL I NDEX. THEREFORE, THE TPO REJECTED THE CLAIM OF THE ASSESSEE FOR ALLOWING BEN EFIT OF VARIATION (+/-) 5% OBSERVING THAT BENEFIT U/S 92C (2) SECOND PROVISO B Y RELYING VARIOUS DECISIONS AND PROPOSED UPWARD ADJUSTMENT OF RS.81,44,959/-. AS R EGARDS GROUND NO. 2, THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 2 LACS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF TRAVELLING EXPENSES AS THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE SAME. AS REGARDS GROUND NO.3, THE LD. DR SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWA NCE OF RS.2 LACS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LEGAL AND PROFESSI ONAL CHARGES. 5 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 7. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) A ND SUBMITTED THAT THE CIT(A) HAS TAKEN ALL THE COGNIZANCE OF THE EVIDENC ES PROVIDED BEFORE HIM AS WELL AS BEFORE THE TPO AND THE ASSESSING OFFICER. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. AS REGARDS GROUND NO 1, THE CIT(A) HELD AS UNDER:- 9. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT, ORDER OF THE TPO, COMMENTS OF THE TP O AND THE AO AND THE MATERIAL AVAILABLE. IT IS SEEN THAT THE TPO/AO HAS ACCEPTED THE TRANSACTIONAL NET MARGIN METHOD (TNMM) WITH REGARD TO FREIGHT CHARGES PAID BY THE APPELLANT TO THE ASSOCIATED ENTERPRISE (AE) AS WITHIN ARMS LENGTH PRICE. THE TPO/AO HAS ALSO ACCEPTED THE COMPARABLE UNCONTROLLED PRICE METHOD IN CASE OF IRON ORE FINES AS ADOPTED BY THE APPELLANT, BARRING IN FOLLOWING TWO VESSELS OUT OF 21 VESSELS: S.NO. NAME OF VESSEL RATE FOB/MT COMPARABLE RATE PER MT DIFFERENCE IN FOB/MT WEIGHT IN DRY/MT AMOUNT OF ADJUSTMENT (USD) 1 THEOSKEPASTI 64.00 65.73 (1.73) 29841.444 51106.70 2 GOA 68.00 70.97 (2.97) 40661.325 120764.13 3 TOTAL 171870.83 THE TPO TOOK AVERAGE EXCHANGE RATE OF USD AT RS. 47.39 PER USD AND WORKED-OUT THE ADJUSTMENT OF RS. 81,44,959/-. THE A PPELLANT USED EXTERNAL CUP OF TRADE STEEL INDEX IN ABOVE CASES. THERE IS S INGLE COMPARABLE, BENEFIT OF (+/-) DEVIATION AS PER SECOND PROVISO OF SEC. 92 C(2) WAS REJECTED BY THE TPO. IF THE BENEFIT OF ABOVE PROVISO IS ALLOWED, BO TH THE ABOVE TRANSACTIONS ARE WITHIN ALP. FOR BETTER UNDERSTANDING, PROVISION S OF SECTION 92C ARE EXTRACTED HEREUNDER: 6 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 SEC. 92C READS AS BELOW: COMPULATION OF ARMS LENGTH PRICE. 92C. (1) THE ARMS LENGTH PRICE IN RELATION TO AN I NTERNATIONAL TRANSACTION SHALL BE DETERMINED BY ANY OF THE FOLLOWING METHODS , BEING THE MOST APPROPRIATE METHOD', HAVING REGARD TO THE NATURE OF TRANSACTION OR CLASS OF TRANSACTION OR CLASS OF ASSOCIATED PERSONS OR FUNCT IONS PERFORMED BY SUCH PERSONS OR SUCH OTHER RELEVANT (A) COMPARABLE UNCONTROLLED PRICE METHOD; (B) RESALE PRICE METHOD; (C) COST PLUS METHOD; (D) PROFIT SPLIT METHOD; (E) TRANSACTIONAL NET MARGIN METHOD; (F SUCH OTHER METHOD AS MAY BE PRESCRIBED BY THE BO ARD. (2) THE MOST APPROPRIATE METHOD REFERRED TO IN SUB- SECTION (1) SHALL BE APPLIED, FOR DETERMINATION OF ARMS LENGTH PRICE, I N THE MANNER AS MAY BE PRESCRIBED: PROVIDED THAT WHERE MORE THAN ONE PRICE IS DETERMINED BY THE MOST APPROPRIATE METHOD, THE ARMS LENGTH PRICE SHALL BE TAKEN TO BE THE PROVIDED FURTHER THAT IF THE VARIATION BETWEEN THE ARMS LENGTH PRIC E SO DETERMINED AND PRICE AT WHICH THE INTERNATIONAL TRA NSACTION HAS ACTUALLY BEEN UNDERTAKEN DOES NOT EXCEED FIVE PER CENT OF TH E LATTER, THE PRICE AT WHICH THE INTERNATIONAL TRANSACTION HAS ACTUALLY BE EN UNDERTAKEN SHALL BE DEEMED TO BE THE ARMS LENGTH PRICE FIND THAT PR OVISOS TO SEC. 92C(2) HAVE BEEN AMENDED AS BELOW: FIRST PROVISO WAS INSERTED BY FINANCE ACT, 2001, W .E.F. 1/04/2002 WHICH READS AS BELOW:- 7 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 PROVIDED THAT WHERE MORE THAN ONE PRICE MAY BE DET ERMINED BY THE MOST APPROPRIATE METHOD, THE ARMS LENGTH PR ICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES . 2. HOWEVER, THE ABOVE PROVISO WAS SUBSTITUTED BY F INANCE ACT 2002, W.E.F. 01/04/2002 AS BELOW:- PROVIDED THAT WHERE MORE THAN ONE PRICE IS DETERMI NED BY THE MOST APPROPRIATE METHOD, THE ARMS LENGTH PRICE SHA LL BE TAKEN TO THE ARITHMETICAL MEAN OF SUCH PRICES, OR, AT THE OPTION OF THE ASSESSEE, A PRICE WHICH MAY VARY FROM THE ARITHMETI CAL MEAN BY AN AMOUNT NOT EXCEEDING FIVE PERCENT OF SUCH ARI THMETICAL MEAN. THUS, THE PROVISO INSERTED BY FINANCE ACT 2001, IN FACT, DID NOT BECOME OPERATIVE. 3. THEREAFTER, FINANCE ACT, 2009 ENJOINED THAT IN SECTION 92C, FOR THE PROVISO, THE FOLLOWING PROVISOS SHALL BE SUBSTITUTE D WITH EFFECT FROM THE 1ST DAY OF OCTOBER, 2009, NAMELY:- 'PROVIDED THAT WHERE MORE THAN ONE PRICE IS DETERMI NED BY THE MOST APPROPRIATE METHOD, THE ARM'S LENGTH PRICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES : PROVIDED FURTHER THAT IF THE VARIATION BETWEEN THE ARM'S LENGTH PRICE SO DETERMINED AND PRICE AT WHICH THE INTERNATIONAL TRANSACTION OR SPECIFIED DOMESTIC TRANSACTION HAS ACTUALLY BEEN UN DERTAKEN DOES NOT EXCEED FIVE PER CENT, OF THE LATTER, THE PRICE AT WHICH THE INTERNATIONAL TRANSACTION OR SPECIFIED DOMESTIC TRA NSACTION HAS ACTUALLY BEEN UNDERTAKEN SHALL BE DEEMED TO BE THE ARM'S LENGTH PRICE.'. 8 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 11. IN MY CONSIDERED VIEW, THE ELEMENT OF ESTIMATIO N IN DETERMINATION OF TRANSFER PRICE CANNOT BE RULED OUT OWING TO THE REA SON THAT THE TWO INDEPENDENT TRANSACTIONS IN THE PRACTICAL WORLD CAN NOT BE ALIKE IN ALL RESPECT. CONSIDERING THIS ASPECT, IN MY OPINION, TH E BENEFIT OF (+/-) 5% HAS BEEN ALLOWED BY THE FINANCE ACT, 2009 W.E.F. 01.10. 2009. FOR THIS REASON, I AM OF THE CONSIDERED OPINION THAT BENEFIT OF (+/-) 5%, AS REFERRED IN SECOND PROVISO TO SEC. 92C(2) IS AVAILABLE NOT ONLY IN THO SE CASES WHERE MORE THAN ONE PRICE IS DETERMINED AS ALP BY THE MOST APPROPRI ATED METHOD BUT ALSO IN THOSE CASES WHERE ONLY ONE PRICE IS DETERMINED AS A LP. ALP IN BOTH THE ABOVE CASES OF TWO VESSELS HAVE BEEN DETERMINED BY HAVING SINGLE COMPARABLE AS PER THE STEEL INDEX. THE OBSERVATI ON OF THE HONBLE MEMBERS IN ITAT A BENCH, MUMBAI IN DCIT (INTERNAT IONAL TAXATION) VS. DEVELOPMENT BANK OF SINGAPORE IN ITA NO. 6621/MUM/ 2006 DATED 17/05/2013 IS REPRODUCED BELOW: AS PER THE FIRST PROVISO WHERE MORE THAN ONE PRICE IS DETERMINED BY THE MOST APPROPRIATE METHOD, THE ARM S LENGTH PRICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES. PER CONTRA, IF THERE IS ONLY ONE PRICE WHICH IS DETERMINED BY THE MOST APPROPRIATE METHOD, THEN AS PER THE MAIN SUB-SECTION (2) WITHOUT THE AID OF PROVISO , THAT PRICE SHALL CONSTITUTE THE ALP. THE SECOND PROVISO COMES INTO PLAY TO DEEM THE ACTUAL TRANSACTED PRICE ASTHE ALP. IT PROVIDES THAT WHERETHE VARIATION BETWEEN THE ALPS O DETERMINED DOES NOT EXCEEDTHE SPECIFIED PERCENTAGE , THE PRICE AT WHICH THE INTERNATIONAL TRANSACTION HAS AC TUALLY BEEN UNDERTAKEN SHALL BE DEEMED TO BE THE ARMS LE NGTH PRICE. THE WORDS SO DETERMINED AS EMPLOYED IN TH E SECOND PROVISO ASSUME SIGNIFICANCE. AS THESE HAVE BEEN USED IN THE SECOND PROVISO DISTINCT FROM THE SUBJEC T MATTER OF THE FIRST PROVISO, NATURALLY THESE WILL APPLY TO THE ALP 9 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 DETERMINED UNDER SUB-SECTION (2) CONSISTING OF THE MAIN PROVISION AND ALSO THE FIRST PROVISO. RESULTANTLY, THE OPTION OF DEEMED ALP SHALL EXTEND NOT ONLY TO A SITUATIO N WHERE MORE THAN ONE PRICE IS DETERMINED AS ALP BY THE MOS T APPROPRIATE METHOD BUT ALSO WHERE ONLY ONE PRICE IS DETERMINED AS ALP. THE NET RESULT IS THAT THE OPTIO N TO THE ASSESSEE SHALL BE AVAILABLE IN BOTH THE SITUATIONS, COVERED UNDER MAIN SUB-SECTION (2) AND ALSO THE FIRST PROV ISO. 12. THE ISSUE OF PRICES QUOTED BY LIBOR WHETHER AVE RAGE OF VARIOUS RATES WAS ALSO DEALT-IN BY THE HONBLE MEMBERS IN T HE AFORESAID ORDER OF HONBLE ITAT, MUMBAI BENCH-K, MUMBAI IN CASE OF THE DEVELOPMENT BANK OF SINGAPORE. IN THE SAID CASE, LIBOR WAS COMPARABLE U NCONTROLLED INTEREST RATE WHICH THE ASSESSEE RELIED UPON. IN THAT CASE, THE H ONBLE MEMBERS OBSERVED AS BELOW: SINCE THE LIBOR IS NOT A RATE IN ITSELF AT WHICH S OME BANK IS WILLING TO BORROW OR LEND, BUT AN AVERAGE OF RATES AT WHICH VARIOUS PANEL BANKS OFFER TO BORROW OR LEND INTER-B ANK OFFERS, THE SAME CANNOT BE CHARACTERIZED AS ONE PRICE DETER MINED UNDER THE COMPARABLE UNCONTROLLED PRICE METHOD. IT IS REQUIRED TOBE CONSIDERED AS ARITHMETICAL MEAN OF SU CH PRICES, THEREBY MAKING AVAILABLE THE OPTION OF PLUS MINUS 5 % VARIATION TO THE ASSESSEE. AS THE PRESENT ADDITION OF RS. 50,476 MADE BY THE AO WAS THE OUTCOME OF NOT ALLOWI NG PLUS MINUS 5% CUSHION, WHICH IN OUR CONSIDERED OPINION I S RICHLY DUE TO THE ASSESSEE, WE HOLD THAT THE LEARNED CIT ( A) WAS JUSTIFIED IN DELETING THIS ADDITION. ACCORDINGLY, I AM OF THE VIEW THAT THE WORDS SO D ETERMINED USED IN SECOND PROVISO IS INDEPENDENT AND UNCONNECTED WITH THE SUBJECT MATTER OF FIRST PROVISO AND AS SUCH CANNOT BE CONSIDERED AS R IDER TO FIRST PROVISO. IN 10 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 MY OPINION, THE SECOND PROVISO TO ABOVE SECTION IS INDEPENDENT ONE. THE WORDS SO DETERMINED REFERS TO WORD USED DETERMIN ED IN OPENING SECTION 92C(2) WHICH REFERS AS MANY AS SIX METHODS TO BE MO ST APPROPRIATE METHOD. THEREFORE, I AM OF THE CONSIDERED OPINION THAT BOTH THE ABOVE TRANSACTION IN TWO VESSELS, NAMELY THEOSKEPASTI A ND GOA ARE WITHIN DEVIATION OF (+/-) 5%, AND THEREFORE, THE TR ANSACTION IS WITHIN ALP. ACCORDINGLY, THE UPWARD ADJUSTMENT OF RS. 81,44,959 /- IS UNCALLED FOR AND DELETED. THE CASE OF THE APPELLANT IS ALSO SUPPORTED FOR A NOTHER REASON. I ALSO FIND THAT PRICES QUOTED BY STEEL INDEX ARE AVAILABL E IN PUBLIC DOMAIN. THE FRONT PAGE OF ABOVE SITE MENTIONS THAT TSI PRICES A RE BASED ON ACTUAL SPOT COMPANIES. THE PRICE DISCOVERY METHODOLOGY IS RIGOR OUS 21 ST CENTURY APPROACH USING ONLINE DATA GATHERING TO PROVIDE FUL LY VERIFIABLE PRICES FREE FROM SUBJECTIVITY. I ALSO FIND THAT THE APPELLANT H AS FILED PRICE DATA OF RELEVANT DATES DURING PROCEEDINGS BEFORE TPO. THE HEADER MEN TIONS THE STEEL INDEX PRICE ANALYZER. IT SUGGESTS STATISTICS FOR IRON O RE FINES 62% AND 58% USD / MT. THERE IS ALSO MENTION AT THE BOTTOM OF THE PA GE EXPRESSING THAT PLATTS ACQUIRED THE STEEL BUSINESS BRIEFING GROUP. A LEADING INFORMATION PROVIDER TO THE GLOBAL STEEL MARKET THROUGH ITS TWO CORE BUSINESS, STEEL BUSINESS BRIEFING (SBB) AND THESE STEEL INDEXES (TS I) IN JULY, 2011. THE ACQUISITION OF THE SBB GROUP ENABLES PLATTS TO PROV IDE CUSTOMERS AND THE MARKET WITH THE BENEFIT OF A TARGET, HIGHLY EXPERIE NCED EDITORIAL TEAM A GRAMMATICALLY EXTENDED BRIEF PRICES ASSESSMENTS AND FAR FROM EXPENSIVE PRODUCT AND VARIANCE MIX. THE TPO HAS ACCEPTED THE TSI PRICES IN TP STUDY FO R DETERMINING ALP. THEREFORE, THE COMMENT OF THE TPO IN HIS REPORT THA T TRADE STEEL INDEX IS ARITHMETICAL MEAN HAS NOT BEEN EXPLAINED BY THE APP ELLANT CANNOT BE ACCEPTED AND APPELLANT HAS SUFFICIENTLY DEMONSTRATE D ABOVE. THE CASE LAWS REFERRED BY THE TPO IN THE TP ORDER AS WELL AS IN THE 11 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 COMMENTS FILED BY TPO PERTAIN TO EARLIER YEAR I.E., PRIOR TO SUBSTITUTION OF FIRST PROVISO IN SEC. 92C(2) BY FINANCE ACT, 2009. HOWEVE R, IN CASE OF UV TRADE CORPORATION INDIA - (2011) T-II04 ITAT - DEL.-TP TH E HONBLE MEMBERS HAVE TAKEN DIFFERENT VIEW AS TAKEN IN CASE OF DEVELOPMEN T BANK OF SINGAPORE SUPRA BY THE HONBLE MEMBERS OF MUMBAI BENCH. THERE BEING DIFFERENCE OF OPINION IN THE DECISION OF TWO DIFFERENT BENCHES OF ITAT, I AM CONVINCED WITH THE DECISION IN CASE OF DEVELOPMENT BANK OF SINGAPO RE, MUMBAI BENCH AND ALSO FOR THE REASONS THAT IN CASE OF DIFFERENT VIEW , VIEW BENEFICIAL TO THE APPELLANT BE TAKEN. THE OTHER JUDGEMENT IN CASE OF GENERAL ATLANTIC PTE. LTD. SUPRA QUOTED BY THE TPO IS OF MUMBAI ITAT WHICH IS PRIOR TO THE JUDGEMENT OF THE SAME BENCH OF ITAT IN DEVELOPMENT BANK OF SI NGAPORE SUPRA. THE LATER JUDGEMENT IS PREFERRED. THEREFORE, THE UPWARD ADJUSTMENT IS DELETED. THE APPELLANT GETS RELIEF OF RS.81,44,959/- THUS, THE CIT(A) AFTER VERIFYING ALL THE ASPECTS AN D ALSO THAT OF THE EVIDENCES PRODUCED BEFORE THE TRANSFER PRICING OFFICER AND T HE ASSESSING OFFICER RIGHTLY COME TO THE CONCLUSION THAT THE TRANSACTION IN TWO VESSELS, NAMELY THEOSKEPASTI AND GOA ARE WITHIN DEVIATION OF ( +/-) 5%, AND THEREFORE, THE TRANSACTION IS WITHIN ALP. ACCORDINGLY, THE UPW ARD ADJUSTMENT OF RS. 81,44,959/- IS RIGHTLY DELETED BY THE CIT(A). THE C ASE OF THE ASSESSEE IS ALSO SUPPORTED BY ANOTHER REASON THAT PRICES QUOTED BY S TEEL INDEX ARE AVAILABLE IN PUBLIC DOMAIN AND ASSESSEE FILED PRICE DATA OF RELE VANT DATES DURING PROCEEDINGS BEFORE TPO. THE TPO HAS ACCEPTED THE TS I PRICES IN TP STUDY FOR DETERMINING ALP. THEREFORE, THE COMMENT OF THE TPO IN HIS REPORT THAT TRADE STEEL INDEX IS ARITHMETICAL WHICH WAS NOT EXPLAINED BY THE ASSESSEE WAS RIGHTLY REJECTED BY THE CIT(A) AND HELD THAT THE ASSESSEE H AS SUFFICIENTLY DEMONSTRATED THE SAME. THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE CIT(A). GROUND NO. 1 OF THE REVENUES APPEAL IS DISMISSED 9. AS REGARDS GROUND NO. 2, WE FIND THAT THE CIT(A) HELD AS UNDER:- 12 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 15. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. THE APPELLANT CLAIMED TRAVELLING EXPENSES AT RS. 71 LAKHS & ODD OUT OF WHICH RS.2,00,000/- HAS B EEN DISALLOWED BY THE AO STATING THAT SOME EXPENSES ARE NOT PROPERLY SUPP ORTED AND COMPLETE DETAILS ARE NOT AVAILABLE AND ALSO THAT SOME EXPENS ES HAVE BEEN INCURRED BY CREDIT CARD BY INDIVIDUAL DIRECTOR. I CONSIDERED THE DETAILS FILED FOR THE SUM OF RS. 71 LAKHS & ODD AND FIND THAT THEY CONTAI N DETAILS WITH REGARD TO PERSON WHO INCURRED THE EXPENSES, PLACE, DETAILS OF TICKET, DETAILS OF HOTEL ETC. THE A.O HAS NOT POINTED OUT ANY SPECIFIC INSTA NCE OF UNSUBSTANTIATED CLAIM OF EXPENDITURE. THE DISALLOWANCE IS, THEREFOR E, UNCALLED FOR AND IS DELETED. THUS, THE CIT(A) HAS TAKEN THE COGNIZANCE OF THE DE TAILS FILED BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BEF ORE THE ASSESSING OFFICER AS WELL AS BEFORE HIM. THE FINDING OF THE CIT(A) IN OUR OPINION IS JUST AND PROPER. THEREFORE, THERE IS NO NEED TO INTERFERE WI TH THE FINDINGS OF THE CIT(A). GROUND NO. 2 OF THE REVENUES APPEAL IS DISMISSED. 10. AS REGARDS GROUND NO. 3, WE FIND THAT THE CIT(A ) HELD AS UNDER :- 18. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. THE APPELLANT INCURRE D RS. 65 LAKHS & ODD TOWARDS LEGAL AND PROFESSIONAL CHARGES. DETAILS WIT H REGARD TO ABOVE WERE FILED BEFORE ME, I HAVE CAREFULLY GONE THROUGH THE SAME, THE A.O HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT TH E EXPENSES WERE NOT INCURRED IN RELATION TO BUSINESS NOR ANY SPECIFIC I NSTANCE OF UNSUBSTANTIATED CLAIM HAS BEEN POINTED OUT BY THE A .O. I DO NOT FIND ANY REASON TO SUSTAIN THE DISALLOWANCE MADE BY THE AO O N ADHOC BASIS. HENCE, THE DISALLOWANCE IS DELETED. THE ASSESSEE INCURRED RS. 65 LAKHS APPROXIMATELY T OWARDS THE LEGAL AND PROFESSIONAL CHARGES AND FOR WHICH THE ASSESSEE SUB MITTED THE DETAILS WHICH 13 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 WAS IGNORED BY THE ASSESSING OFFICER. HOWEVER, WE F IND THAT THE CIT(A) AFTER PROPER APPRECIATION OF THE FACTS OF THE CASE DELETE D THE DISALLOWANCE. THE ORDER OF THE CIT(A) ON THIS ISSUE IS A REASONED ONE, THER EFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). GROUND N O. 3 OF THE REVENUES APPEAL IS DISMISSED. 11. IN RESPECT OF THE CROSS OBJECTION THE SAME IS I N SUPPORT OF THE ORDER OF THE CIT(A). SINCE, ALL THE GROUNDS RAISED BY THE RE VENUE ARE DISMISSED, THE CROSS OBJECTION BECOMES INFRUCTUOUS. ACCORDINGLY, T HE CROSS OBJECTION IS ALSO DISMISSED. 12. IN RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OCTOBER, 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 11/10/2018 R.N* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT PRIVATE SECRETARY ITAT, RAIPUR 14 ITA NO. 387/BIL/2014 & C.O NO. 90/BIL/2015 DATE OF DICTATION 05.10 .2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 05.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 11 .10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT .10.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .10.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER