Dy. CIT, Circle - 9, Pune V. M/s. Keihin Fie Pvt. Ltd., Pune

ITA 1002/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88863 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: DINESH SUPEKAR; PAVAN DUDHEDIYAR D ONKAR
• Keywords: Business income; Transfer pricing; International transaction; Rule of consistency; Revenue expenditure; Capital expenditure
• Section: 143(3); 92B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1441/PN/2010 (ASSESSMENT YEAR : 2006-07) KEIHIN FIE PRIVATE LIMITED, B-3, MIDC CHAKAN, VILLAGE- MAHALUNGE, CHAKAN-TALEGAON ROAD, DISTRICT- KHED, PUNE 410 501. PAN : AABCK2407R . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 9, PUNE. . RESPONDENT ITA NOS.1001 & 1002/PN/2013 (ASSESSMENT YEARS : 2005-06 & 2007-08) DY. COMMISSIONER OF INCOME TAX, CIRCLE- 9, PUNE. . APPELLANT VS. M/S KEIHIN FIE PRIVATE LIMITED, PLOT NO. B-3, MIDC CHAKAN, PHASE-I, MAHALUNGE, PUNE 410 501. PAN : AABCK2407R . RESPONDENT ASSESSEE BY : MR. DINESH SUPEKAR & MR. PAVAN DUDHEDIYA/R.D. ONKAR DEPARTMENT BY : MR. A. K. MODI DATE OF HEARING : 03-11-2014 DATE OF PRONOUNCEMENT : 30-01-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED ARE TWO APPEALS BY THE REVENUE FOR AS SESSMENT YEARS 2005-06 AND 2007-08 AND THIRD APPEAL BY THE ASSESSE E FOR ASSESSMENT YEAR 2006-07. SINCE THE APPEALS RELATE TO THE SAME ASSE SSEE AND INVOLVE A COMMON ISSUE, THEY HAVE BEEN CLUBBED AND HEARD TOGE THER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. IN ALL THE APPEALS, THE SUBSTANTIVE COMMON ISSUE RELATES TO THE DETERMINATION OF ARM'S LENGTH PRICE OF INTERNATIONA L TRANSACTIONS ENTERED BY THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISES FOR THE PU RPOSES OF COMPUTING INCOME THEREFROM IN TERMS OF SECTION 92(1) OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. IN ORDER TO APPRECIATE THE CONTROVERSY AND THE R ELEVANT FACTS OF THE CASE, THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2005-06 IS TAKEN AS THE LEAD CASE. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IT/TP, PUNE DA TED 18.02.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 24.12.2008 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT. 4. THE ASSESSEE BEFORE US IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER -ALIA, ENGAGED IN THE BUSINESS OF MANUFACTURING OF CARBURETTORS AND AIR S UCTION VALVES (ASVS) FOR MOTOR CYCLES/THREE WHEELERS AND IT HAS ITS PRODUCTI ON FACILITY AT PUNE, MAHARASHTRA. THE ASSESSEE IS A JOINT VENTURE BETWE EN KEIHIN CORPORATION, JAPAN (HOLDING 74% SHAREHOLDING) AND FUEL INSTRUMEN TS & ENGINEERS PRIVATE LIMITED, INDIA (HOLDING 26% SHAREHOLDING). FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT FILED A RETURN OF INCOME DECLARIN G A TOTAL INCOME OF RS.80,54,89,846/-, WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD ENTERED I NTO CERTAIN INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES, AND I NCOME ARISING FROM SUCH TRANSACTIONS WAS LIABLE TO BE COMPUTED HAVING REGAR D TO THEIR ARM'S LENGTH PRICE AS PER SECTION 92(1) OF THE ACT. THE ASSESSI NG OFFICER REFERRED THE MATTER FOR COMPUTATION OF ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS TO THE TRANSFER PRICING OFFICER (IN SHORT TPO) U/S 9 2CA(1) OF THE ACT. THE TPO AFTER ALLOWING THE ASSESSEE APPROPRIATE OPPORTUNITI ES OF BEING HEARD, PASSED AN ORDER U/S 92CA(3) OF THE ACT DATED 28.03.2008 DE TERMINING THE ARM'S LENGTH PRICE AT A FIGURE HIGHER THAN THE STATED VALUE OF T HE INTERNATIONAL TRANSACTIONS BY A SUM OF RS.62,72,857/-. THE ASSESSING OFFICER PROCEEDED TO COMPUTE THE TOTAL INCOME OF THE ASSESSEE U/S 92CA(4) OF THE ACT IN CONFORMITY WITH THE ARM'S LENGTH PRICE SO DETERMINED BY THE TRANSFER PR ICING OFFICER. THUS, IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 144C(11) OF THE ACT DATED 24.12.2008 ASSESSING OFFICER MADE AN ADDITION OF RS .62,72,857/- TO THE RETURNED INCOME ON ACCOUNT OF THE TRANSFER PRICING ADJUSTMENT. THIS ADDITION WAS CARRIED IN APPEAL BY THE ASSESSEE BEFORE THE CI T(A). IN APPEAL BEFORE THE CIT(A), ASSESSEE CHALLENGED THE ADDITION BOTH ON PO INTS OF LAW AND ON FACTS. THE CIT(A) HAS SINCE DELETED THE ADJUSTMENT MADE TO THE STATED VALUE OF THE INTERNATIONAL TRANSACTIONS AFTER MAKING FOLLOWING D ISCUSSION :- 2.1.15 I HAVE CONSIDERED THE FACTS OF THE CASE, A RGUMENTS OF THE APPELLANT AND ARGUMENTS OF THE LEARNED TPO. IN MY VIEW, THE LEARNED TPO HAS MADE COUPLE OF FUNDAMENTAL ERRORS. FIRST OF ALL , HE HAS BENCHMARKED NET MARGIN DERIVED FROM THE EXPORT OF COMPONENTS, WHICH IS A TRADING ACTIVITY WITH THE PROFIT MARGIN OF DOMESTIC SALES, WHICH PRIMARIL Y CONSIST OF MANUFACTURED CARBURETTORS. IT HAS BEEN OBSERVED BY THE LEARNED T PO ON THE FIRST PAGE OF ITS ORDER THAT THE APPELLANT DERIVES MAJOR REVENUE FROM THE SALE OF CARBURETTORS. IT IS VERY FUNDAMENTAL THAT THE MARGINS DERIVED IN TRA DING ACTIVITY CANNOT BE COMPARED WITH THE MARGINS DERIVED FROM THE MANUFACT URING ACTIVITY. IN EXPORT SEGMENT, THE APPELLANT HAS PERFORMED FUNCTIONS OF A TRADER WHEREAS IN THE DOMESTIC SALES SEGMENT, THE APPELLANT HAS FUNCTIONE D AS MANUFACTURER AND DISTRIBUTOR. ACCORDINGLY, BOTH THE SEGMENTS ARE NOT COMPARABLE. 2.1.16 SECONDLY, THE LEARNED TPO HAS RELIED ON THE INTERNAL COMPARABLE FOR BENCHMARKING, WHICH IT IS NOT A COMP ARABLE FROM THE POINT OF VIEW OF THE CATEGORIES OF THE PRODUCTS SOLD. THE AP PELLANT HAS EXPORTED COMPONENTS AND PARTS, WHICH PREFERABLY SHOULD BE CO MPARED WITH THE PROFIT DERIVED FROM THE SALE OF PARTS AND NOT MANUFACTURED PRODUCTS. THE LEARNED TPO STATED THAT HE RELIED ON THE INTERNAL COMPARABL E BECAUSE THE APPELLANT DID NOT FURNISH PROFIT AND LOSS ACCOUNT PERTAINING TO DOMESTIC SALES OF COMPONENTS AND PARTS. IT IS ADMITTED FACT THAT VOLU ME OF DOMESTIC SALES OF COMPONENTS AND PARTS IS QUITE INSIGNIFICANT TO CONS TITUTE VALID COMPARABLE WITH THE EXPORT TRANSACTION. IN SUCH CIRCUMSTANCES, THE LEARNED TPO OUGHT TO HAVE BENCHMARKED EXPORT TRANSACTIONS WITH THE EXTERNAL C OMPARABLES. HOWEVER, HE DID NOT DO SO. 2.1.17 THIRDLY, TURNOVER OF EXPORT TRANSACTION IS OF RS 8.12 CR WHEREAS, APPELLANT'S DOMESTIC SALES IS AROUND 258 C R. THE SUBSTANTIAL DIFFERENCE IN TURNOVER BETWEEN EXPORT SALES AND DOM ESTIC SALES MAKE BOTH INCOMPARABLE APPLYING THE RATIO OF GENISYS INTEGRAT ING SYSTEM LTD OF BANGALORE ITAT. 2.1.18 THE LEARNED TPO HAS MENTIONED THAT THE APPE LLANT IN THE TRANSFER PRICING REPORT AND IN THE FORM 3CEB HA D DESCRIBED EXPORT TRANSACTION AS OF 'EXPORT OF FINISHED GOODS'. THIS WAS LATER CHANGED AND IT WAS STATED THAT THE APPELLANT EXPORTED COMPONENTS AND P ARTS. THE LEARNED TPO APPARENTLY HAS ACCEPTED THE CHANGE IN THE POSITION OF THE APPELLANT BECAUSE HE SOUGHT TO COMPARE PROFITABILITY OF THE EXPORT TR ANSACTIONS WITH THE PROFITABILITY OF THE DOMESTIC SALES OF COMPONENTS A ND PARTS. 2.1.19 THE APPELLANT HAS ALSO STATED THAT THE LEAR NED TPO DID NOT MAKE REASONABLY ACCURATE ADJUSTMENTS FOR THE TR ANSACTIONAL DIFFERENCES. I DO NOT CONSIDER THIS ARGUMENT RELEVANT, AS ACCORDIN G TO ME, THE LEARNED TPO HAS COMPARED OTHERWISE INCOMPARABLE, THAT IS, MANUF ACTURING AND DISTRIBUTION WITH TRADING. 2.1.20 IN VIEW OF THE ABOVE DISCUSSION, I DELETE T HE ADJUSTMENT MADE BY THE LEARNED TPO OF RS 62,72,857. 5. THE SUM AND SUBSTANCE OF THE ABOVE DISCUSSION IN THE ORDER OF THE CIT(A) SHOWS THAT ACCORDING TO HIM THE TPO ERRED IN DETERMINING THE ARM'S LENGTH PRICE BY CARRYING OUT COMPARABILITY ANALYSIS BETWEEN TRANSACTIONS WHICH WERE OTHERWISE NOT COMPARABLE. THEREFORE, HE HAS D ELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGAINST SUCH A DECISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 6. BEFORE WE PROCEED FURTHER, IT MAY BE NOTED THAT THE INTERNATIONAL TRANSACTIONS IN QUESTION FOR ALL THE THREE CAPTIONE D YEARS ARE SIMILAR. AT THE TIME OF HEARING, IT WAS ALSO A POINT OF CONVERGENCE BETWEEN THE RIVAL PARTIES THAT THE STAND OF THE TPO IS ALSO SIMILAR IN ALL TH E THREE CAPTIONED YEARS. 7. COMING BACK TO THE FACT-SITUATION FOR ASSESSMENT YEAR 2005-06, WE MAY BRIEFLY NOTE THE ACTIVITY BEING CARRIED OUT BY THE ASSESSEE. ASSESSEE IS ENGAGED IN MANUFACTURING OF CERTAIN MODELS OF CARBU RETTORS AND AIR SUCTION VALVES (ASVS), WHICH ARE MAINLY CATERING TO TWO/THR EE WHEELER MANUFACTURERS IN INDIA. IT WAS POINTED OUT THAT DURING THE PREVI OUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06, MORE THAN 97% OF THE SALES CONSIST OF SALE OF CARBURETTORS AND ASVS THAT ARE MANUFACTURED AND SOL D IN THE DOMESTIC MARKET TO ORIGINAL EQUIPMENT MANUFACTURERS (OEMS) SUCH AS BAJAJ AUTO AND HERO HONDA. THE BALANCE OF THE SALE CONSIST OF SALE OF PARTS AND COMPONENTS TO THE SAID OEMS AND SOME INSIGNIFICANT AND INCIDENTAL EXPORT OF PARTS AND COMPONENTS TO THE ASSOCIATED ENTERPRISES ABROAD. D URING THE ASSESSMENT YEAR 2005-06, ASSESSEE HAD ENTERED INTO THE FOLLOWI NG INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES WITHIN THE MEANING OF SECTION 92B OF THE ACT :- SR. NO. DESCRIPTION AMOUNT (IN RUPEES) A.Y. 2005-06 1. IMPORT OF RAW MATERIAL AND PARTS 30,77,92,702/- 2. EXPORT OF FINISHED GOODS 8,12,54,622/- 3. IMPORT OF CAPITAL GOODS 2,64,23,826/- 4. PAYMENT OF ROYALTY 7,37,36,926/- 5. PAYMENT OF TECHNICAL KNOW-HOW FEES 4,65,66,667/- 6. PAYMENT OF TECHNICAL ASSISTANCE FEES 1,62,49,770 /- 7. REIMBURSEMENT OF EXPENSES 88,62,461/- TOTAL 56,08,86,974/- 8. IN ITS TRANSFER PRICING STUDY, ASSESSEE BENCHMAR KED THE AFORESAID TRANSACTIONS EXCEPT THE TRANSACTION ON IMPORT OF CA PITAL GOODS BY SELECTING THE TRANSACTIONAL NET MARGIN (TNM) METHOD AS THE MOST A PPROPRIATE METHOD. WHILE APPLYING THE TNM METHOD, ASSESSEE AGGREGATED THE TRANSACTIONS MENTIONED ABOVE AT ITEM NOS.1, 2, 4, 5, 6 & 7. FOR THE REMAINING TRANSACTION OF IMPORT OF CAPITAL GOODS, ASSESSEE ADOPTED THE CO MPARABLE UNCONTROLLED PRICE (CUP) METHOD. IN SO FAR AS THE APPLICATION O F CUP METHOD FOR DETERMINING THE ARM'S LENGTH PRICE OF THE TRANSACTI ON OF IMPORT OF CAPITAL GOODS IS CONCERNED, THE TPO ACCEPTED THE SAME AND THERE I S NO DISPUTE AND THEREFORE WE DO NOT DEAL ANY FURTHER ON THIS ASPECT . 9. WITH REGARD TO THE OTHER TRANSACTIONS ENUMERATED ABOVE, WHICH WERE AGGREGATED BY THE ASSESSEE, IT WAS CONTENDED THAT T HE SAME WERE AT AN ARM'S LENGTH PRICE. ASSESSEE COMPUTED ITS OPERATING MARG IN I.E. OPERATING PROFITS/SALES AT 24.82%. SIMILARLY, THE OPERATING PROFITS/SALES OF THE COMPARABLES SELECTED BY THE ASSESSEE WERE DETERMINE D AT 9.25% AND THEREFORE IT WAS CONTENDED THAT THE INTERNATIONAL T RANSACTIONS WERE AT AN ARM'S LENGTH PRICE AND THEIR STATED VALUES DID NOT REQUIR E ANY ADJUSTMENT. 10. THE TPO ACCEPTED ASSESSEES SELECTION OF THE TN M METHOD AS THE MOST APPROPRIATE METHOD FOR THE PURPOSES OF BENCHMA RKING THE INTERNATIONAL TRANSACTIONS. THE TPO ALSO ACCEPTED THE PROFIT LEV EL INDICATOR (I.E. PLI) ADOPTED BY THE ASSESSEE OF OPERATING PROFITS/SALES. HOWEVER, THE TPO DID FULLY ACCEPT THE APPROACH ADOPTED BY THE ASSESSEE F OR AGGREGATION OF THE TRANSACTIONS AT ITEM NOS.1, 2, 4, 5, 6 & 7 IN THE T ABULATION AT PARA 7 ABOVE. THE TPO DISAGREED WITH THE ASSESSEE ONLY WITH RESPE CT TO THE AGGREGATION OF THE TRANSACTION OF EXPORT OF COMPONENTS AND PARTS T O THE ASSOCIATED ENTERPRISES. FOR BALANCE OF THE INTERNATIONAL TRAN SACTIONS, NAMELY, IMPORT OF RAW MATERIAL/PARTS, PAYMENT OF ROYALTY/TECHNICAL KN OW-HOW FEE/TECHNICAL ASSISTANCE FEE AND REIMBURSEMENT OF EXPENSES, THE T PO ACCEPTED ASSESSEES APPROACH OF AGGREGATION OF THE TRANSACTIONS. IN NU TSHELL, THE TPO CONSIDERED THE ASSESSEES TRANSACTION OF EXPORT OF COMPONENTS AND SPARE PARTS OF RS.8,12,54,622/- AS AN INDEPENDENT ACTIVITY, WHICH COULD NOT BE AGGREGATED WITH THE OTHER AFORESAID TRANSACTIONS FOR THE PURPO SES OF COMPUTING THE ARM'S LENGTH PRICE BY APPLYING THE TNM METHOD. 11. FURTHER, THE TPO COMPARED THE NET MARGIN OF THE EXPORT OF COMPONENTS AND PARTS WITH THE NET MARGIN FROM THE DOMESTIC MAN UFACTURING BUSINESS AND THEREBY COMPUTED THE ADDITION OF RS.62,72,857/-, WH ICH, ACCORDING TO HIM, WAS REQUIRED TO BE MADE TO THE STATED VALUE OF THE TRAN SACTIONS IN ORDER TO BRING THEM TO THE LEVEL OF THEIR ARM'S LENGTH PRICE. 12. THE STAND OF THE ASSESSEE BEFORE THE TPO AND TH EREAFTER BEFORE THE CIT(A) WAS ON THE FOLLOWING LINES. AS PER THE ASSE SSEE, THE APPROACH OF THE TPO WAS ERRONEOUS BECAUSE BY COMPARING THE EXPORT O F COMPONENTS AND PARTS TO ASSOCIATED ENTERPRISES WITH THE MARGINS OF THE ASSESSEE FROM A DOMESTIC BUSINESS, IT WOULD IGNORE THE SIGNIFICANT DIFFERENCES BETWEEN THE TWO KINDS OF TRANSACTIONS. IT WAS ALSO CONTENDED THAT ALL THE TRANSACTIONS AGGREGATED BY THE ASSESSEE WERE A PART AND PARCEL A ND WERE INEXTRICABLY LINKED WITH EACH OTHER AND COLLECTIVELY CONSTITUTED THE MANUFACTURING BUSINESS OF ASSESSEE; AND, THEREFORE ONE LIMB OF SUCH TRANSA CTIONS, NAMELY, EXPORT OF COMPONENTS AND PARTS TO ASSOCIATED ENTERPRISES COUL D NOT BE SEGREGATED. IT WAS EXPLAINED BY THE ASSESSEE THAT THERE EXISTED SI GNIFICANT DIFFERENCES BETWEEN THE EXPORT TRANSACTIONS WITH ASSOCIATED ENT ERPRISES AND THE ACTIVITY OF SALE OF CARBURETTORS IN THE DOMESTIC MARKET. FIRST LY, IT WAS POINTED OUT THAT THERE IS NO VALUE ADDITION DONE TO THE COMPONENTS A ND PARTS WHICH ARE EXPORTED TO THE ASSOCIATED ENTERPRISES BECAUSE THEY ARE PROCURED FROM THIRD PARTY VENDORS AND RE-SOLD WHEREAS THE CARBURETTORS MANUFACTURED AND SOLD DOMESTICALLY INVOLVED A TECHNOLOGICALLY ADVANCED MA NUFACTURING PROCESS. THE EXPORT OF COMPONENTS AND PARTS WAS MORE OF A TRADIN G ACTIVITY. FURTHER, AS FAR AS THE ASSUMPTION OF RISKS WAS CONCERNED, IT WAS AS SERTED THAT ASSESSEE FACES THE PRODUCT FAILURE RISK IN CASE OF PRODUCTS MANUFACTURED BY IT WHEREAS IT DOES NOT HAVE ANY PRODUCT RISK, MARKET RISK, BAD DE BT RISK AND CAPACITY UTILIZATION RISK WITH REGARD TO THE TRANSACTION OF EXPORT OF COMPONENTS AND PARTS TO THE ASSOCIATED ENTERPRISES. IT WAS EMPHASIZED T HAT THE VALUE OF THE IMPUGNED EXPORT TRANSACTIONS VIS--VIS TOTAL SALES WAS QUITE INSIGNIFICANT AND THEREFORE IT WAS ONLY APPROPRIATE TO BENCHMARK SUCH TRANSACTIONS AFTER AGGREGATING THE SAME WITH THE DOMESTIC BUSINESS. A LL THESE SUBMISSIONS WERE CONSIDERED BY THE CIT(A) WHO FOUND WEIGHT IN THEM A ND THEREFORE HE HAS DELETED THE ADDITION. 13. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVENUE HAS EMPHASIZED THAT THE ASSESSEE HAD UNDERT AKEN A VARIETY OF INTERNATIONAL TRANSACTIONS WITH THE ASSOCIATED ENTE RPRISES, WHICH ARE DIFFERENT IN THEIR NATURE AND SCOPE AND THEREFORE THE TPO WAS JUSTIFIED IN SEGREGATING THE TRANSACTION OF EXPORT OF COMPONENTS AND PARTS T O ASSOCIATED ENTERPRISES AND INDEPENDENTLY CARRYING OUT THE COMPARABILITY AN ALYSIS FOR DETERMINATION OF THE ARM'S LENGTH PRICE. IT HAS BEEN CONTENDED THAT ASSESSEE HAD USED SAME RESOURCES FOR CARRYING OUT THE EXPORT OF COMPONENTS AND PARTS TO ASSOCIATED ENTERPRISES AS WELL AS THE SALES IN THE DOMESTIC MA RKET. IN NUTSHELL, THE LD. CIT-DR APPEARING FOR THE REVENUE HAS JUSTIFIED THE APPROACH ADOPTED BY THE TPO IN DETERMINING THE ARM'S LENGTH PRICE OF INTERN ATIONAL TRANSACTIONS IN QUESTION. 14. ON THE OTHER HAND, THE LD. REPRESENTATIVE FOR T HE ASSESSEE VEHEMENTLY SUBMITTED THAT THE ASSESSEE HAS BEEN CONSISTENTLY P OINTING OUT BEFORE THE LOWER AUTHORITIES THAT THE EXPORT OF GOODS IN QUEST ION PRIMARILY CONSTITUTES COMPONENTS AND PARTS USED IN THE MANUFACTURE OF CAR BURETTORS AND ASVS AND THAT THE GOODS SO EXPORTED TO THE ASSOCIATED ENTERP RISES HAVE NOT BEEN SOLD TO THIRD PARTIES. BY REFERRING TO THE WRITTEN SUBMISS IONS MADE TO THE TPO DATED 17.08.2008 WHICH HAVE BEEN REPRODUCED IN THE IMPUGN ED ORDER OF THE TPO, IT WAS SOUGHT TO BE POINTED OUT THAT ASSESSEE HAD EXPL AINED THAT THE PARTS AND COMPONENTS EXPORTED TO THE ASSOCIATED ENTERPRISES W ERE PROCURED FROM LOCAL THIRD PARTY VENDORS AND ARE SOLD TO THE ASSOCIATED ENTERPRISES, WITHOUT ANY SIGNIFICANT VALUE ADDITIONS. THE COMPONENTS AND PA RTS WERE USED FOR MANUFACTURING OF CARBURETTORS BY THE ASSOCIATED ENT ERPRISES. FURTHERMORE, IT WAS CONTENDED THAT THE VALUE OF THESE EXPORTS IS QU ITE INSIGNIFICANT COMPARED TO THE OVERALL SALES MADE BY THE ASSESSEE COMPANY. THE LD. REPRESENTATIVE EMPHASIZED THAT THE DOMESTIC SALES, WHICH ARE A MAJ OR PORTION OF THE TOTAL SALES CONSIST OF PRIMARILY SALE OF CARBURETTORS. T HEREFORE, IT WAS CONTENDED THAT WHAT WAS EXPORTED TO ASSOCIATED ENTERPRISES WA S A RAW MATERIAL WHEREAS THE SALES IN THE DOMESTIC MARKET WERE OF FINISHED P RODUCTS I.E. THE CARBURETTORS. THE LD. REPRESENTATIVE ALSO REFERRED TO ASSESSEES SUBMISSIONS BEFORE THE TPO WHEREIN ASSESSEE HAD FURNISHED INVOI CES WHICH CONTAINED THE DESCRIPTION OF THE PRODUCTS EXPORTED AND THE DOMEST IC SALES. AT THIS POINT, THE LD. REPRESENTATIVE ALSO ASSERTED THAT BEFORE THE TP O, IT WAS CLARIFIED THAT THE NOMENCLATURE OF THE TRANSACTION STATED TO BE EXPOR T OF FINISHED GOODS WAS A MISNOMER WHEREAS THE EXPORTS IN QUESTION COMPRISED OF ONLY COMPONENTS AND PARTS, WHICH ARE USED IN THE MANUFACTURE OF CARBURE TTORS. THE AFORESAID ASPECT WAS ALSO CLARIFIED BY THE ASSESSEE BY POINTI NG OUT THE DIFFERENCE IN THE TYPE OF CUSTOMERS IN THE DOMESTIC MARKET VIS--VIS THE IMPUGNED EXPORT OF COMPONENTS AND PARTS. IN SUM AND SUBSTANCE, THE LD . REPRESENTATIVE FOR THE ASSESSEE HAS DEFENDED THE ULTIMATE CONCLUSION OF TH E CIT(A) BY POINTING OUT THAT THERE ARE SIGNIFICANT DIFFERENCES BETWEEN THE IMPUGNED EXPORT ACTIVITY AND THE DOMESTIC MANUFACTURING BUSINESS OF THE ASSESSEE AND THE PROJECT MARGIN OF THE TWO CANNOT BE COMPARED. THEREFORE, ACCORDIN G TO HIM, THE ORDER OF THE CIT(A) BE AFFIRMED. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE CRUX OF THE CONTROVERSY IS WITH REGARD TO THE DETERMINATION OF ARM'S LENGTH PRICE OF THE TRANSACTION OF EXPORT OF COMPONENTS AND PARTS MAD E BY THE ASSESSEE TO ITS ASSOCIATED ENTERPRISES. BEFORE WE PROCEED FURTHER, IT WOULD BE PERTINENT TO NOTE THAT IN ITS TRANSFER PRICING STUDY, ASSESSEE H AS ENUMERATED THE IMPUGNED TRANSACTIONS AS EXPORT OF FINISHED GOODS . THE FINISHED GOODS OF THE ASSESSEE ARE CARBURETTORS AND ASVS WHICH ARE BE ING MANUFACTURED AT ITS PRODUCTION FACILITY IN PUNE AT MAHARASHTRA. THESE PRODUCTS ARE MAINLY SUPPLIED TO TWO/THREE WHEELER MANUFACTURERS IN INDI A. INASMUCH AS 97% OF THE TOTAL SALES OF THE ASSESSEE COMPRISED OF SALE OF CA RBURETTORS AND ASVS TO THE OEMS SUCH BAJAJ AUTO AND HERO HONDA. IN THE COURSE OF THE TRANSFER PRICING PROCEEDING BEFORE THE TPO, ASSESSEE POINTED OUT THA T THE HEADING EXPORT OF FINISHED GOODS ACTUALLY REFERS TO EXPORT OF PARTS AND COMPONENTS USED IN THE MANUFACTURE OF CARBURETTORS AND ASVS. FACTUALLY SP EAKING, THE AFORESAID EXPLANATION/CLARIFICATION RENDERED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE TPO AND EVEN BEFORE US THE REVENUE HAS NOT CONT ROVERTED THE AFORESAID ASPECT OF THE MATTER. 16. NOW, WE MAY COME TO THE AREA OF DIFFERENCE BETW EEN THE ASSESSEE AND THE INCOME-TAX AUTHORITIES. THE TPO, WHILE ACCEPTI NG THE DECISION OF THE ASSESSEE TO SELECT THE TNM METHOD AS THE MOST APPRO PRIATE METHOD, DID NOT ACCEPT ASSESSEES APPROACH OF AGGREGATING THE FOLLO WING INTERNATIONAL TRANSACTIONS AND BENCHMARKING THEM AT ENTITY LEVEL WHILE APPLYING THE TNM METHOD, I.E. IMPORT OF RAW MATERIAL AND PARTS; EXPO RT OF COMPONENTS AND PARTS; PAYMENT OF ROYALTY; PAYMENT OF TECHNICAL KNOW-HOW; PAYMENT OF TECHNICAL ASSISTANCE FEE; AND, REIMBURSEMENT OF EXPENSES. TH E TPO DISAGREED WITH THE ASSESSEE ONLY WITH RESPECT TO AGGREGATION OF TH E TRANSACTION OF EXPORT OF COMPONENTS AND PARTS TO ASSOCIATED ENTERPRISES AND CONSIDERED IT AS AN INDEPENDENT BUSINESS ACTIVITY. 17. ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E CIT(A). IN APPEAL, ASSESSEE INTER-ALIA DISPUTED THE APPROACH OF THE TP O IN DISREGARDING ITS AGGREGATION APPROACH. AT THIS STAGE, WE DO NOT DWE LL ON THIS ASPECT OF THE CONTROVERSY, AS THE CIT(A) HAS ALLOWED RELIEF ON A DIFFERENT FOOTING. THE CIT(A) PROCEEDED ON AN ALTERNATE CLAIM OF THE ASSES SEE TO THE EFFECT THAT THE EVEN IF THE IMPUGNED EXPORT ACTIVITY WAS TO BE CONS IDERED AS AN INDEPENDENT BUSINESS ACTIVITY, THE TPO WAS WRONG IN BENCHMARKIN G IT WITH THE DOMESTIC SALE ACTIVITIES WHICH CONSISTED PRIMARILY OF MANUFA CTURED CARBURETTORS AND ASVS. IN THIS CONTEXT, FROM THE ORDER OF THE AUTHO RITIES BELOW, IT IS QUITE EVIDENT THAT ASSESSEE SUCCEEDED IN POINTING OUT THA T THERE WAS A DIFFERENCE IN THE NATURE OF ITEMS EXPORTED TO ASSOCIATED ENTERPRI SES VIS--VIS SALES IN THE DOMESTIC MARKET. THE FUNDAMENTAL POINT MADE OUT BY THE ASSESSEE WAS THAT THE COMPONENTS AND PARTS EXPORTED TO ASSOCIATED ENT ERPRISES WERE PROCURED FROM LOCAL THIRD PARTY VENDORS WHEREAS THE DOMESTIC SALES WHICH COMPRISED OF ALMOST 97% OF THE TOTAL SALES CONSIST PRIMARILY OF MANUFACTURED CARBURETTORS/ASVS. THE PLEA SETUP BY THE ASSESSEE WAS THAT THE IMPUGNED ACTIVITY OF EXPORT TO ASSOCIATED ENTERPRISES WAS A TRADING ACTIVITY AND THEREFORE NET MARGIN FROM SUCH EXPORT ACTIVITY CANNOT BE COMP ARED WITH THE PROFIT MARGIN OF DOMESTIC BUSINESS WHICH PRIMARILY CONSIST OF MAN UFACTURED CARBURETTORS. IN OUR CONSIDERED OPINION, THIS FACT-SITUATION IS AMPL Y BORNE OUT OF THE MATERIAL ON THE RECORD AND THE FINDING OF THE CIT(A) IN THIS RE GARD IS UNIMPEACHABLE. 18. APART THEREFROM, THE ASSESSEE ALSO DEMONSTRATED BEFORE THE LOWER AUTHORITIES THAT THERE WAS A DIFFERENCE IN THE NATU RE OF CUSTOMERS IN THE DOMESTIC MARKET AND THE IMPUGNED EXPORT MARKET. IN THE DOMESTIC MARKET ASSESSEE WAS SUPPLYING CARBURETTORS AND ASVS TO OEM S SUCH AS BAJAJ AUTO AND HERO HONDA WHO USED THESE PRODUCTS IN THE PRODU CTION OF VEHICLES THAT THEY MANUFACTURED. IN CONTRAST, THE ASSOCIATED ENT ERPRISES TO WHOM THE COMPONENTS AND PARTS WERE EXPORTED WERE ESSENTIALLY MANUFACTURERS OF CARBURETTORS, WHO USED THE PRODUCTS EXPORTED BY THE ASSESSEE FOR MANUFACTURE OF CARBURETTORS WHICH IN TURN THEY SOLD TO THE OEMS. THIS DIFFERENCE WAS BROUGHT OUT BY THE ASSESSEE TO ESTAB LISH THAT THERE WERE DIFFERENCES IN FUNCTIONS PERFORMED AND RISKS ASSUME D WITH REGARD TO EXPORT OF COMPONENTS/PARTS AND THE SALE OF CARBURETTORS/ASVS IN THE DOMESTIC MARKET. THE CIT(A) HAS APPRECIATED THE AFORESAID DIFFERENCE S AND IN OUR CONSIDERED OPINION, THERE IS NO COGENT MATERIAL OR EVIDENCE BE FORE US TO DISSUADE US FROM AFFIRMING THE STAND OF THE CIT(A). THE CIT(A) HAS CATEGORICALLY NOTED THAT ASSESSEE HAD EXPORTED COMPONENTS AND PARTS WHOSE PR OFIT MARGINS SHOULD BE COMPARED WITH THE MARGINS DERIVED FROM SALE OF PART S/COMPONENTS AND NOT SALE OF MANUFACTURED PRODUCTS. GOING FURTHER, THE CIT(A) HELD THAT VOLUME OF DOMESTIC SALE OF COMPONENTS/PARTS WAS QUITE INSIGNI FICANT TO CONSTITUTE A VALID COMPARABLE WITH THE EXPORT TRANSACTIONS. FOR ALL T HE AFORESAID REASONS, CIT(A) HAS DIFFERED WITH THE APPROACH OF THE TPO IN BENCHM ARKING THE IMPUGNED TRANSACTION OF EXPORT OF COMPONENTS AND PARTS WITH THE PROFIT MARGIN OF DOMESTIC SALES WHICH PRIMARILY CONSIST OF MANUFACTU RED PRODUCTS I.E. CARBURETTORS. 19. IN VIEW OF THE ABOVE DISCUSSION, WE FIND NO REA SON TO INTERFERE WITH THE ULTIMATE CONCLUSION OF THE CIT(A) TO DELETE THE ADD ITION ON THE GROUND THAT THE TPO WRONGLY COMPARED THE TESTED TRANSACTIONS WITH A N INCOMPARABLE TRANSACTION. AS A CONSEQUENCE, WE HEREBY AFFIRMED THE ORDER OF THE CIT(A) AND ACCORDINGLY REVENUE HAS TO FAIL ON THIS ASPECT. 20. BEFORE PARTING, WE MAY DEAL WITH THE GROUNDS OF APPEAL NO.2.2 RAISED BY THE REVENUE, WHICH HIS BASED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF CAPGEMINI INDIA PRIVATE LIM TIED (ITA NO.786/MUM/2011) FOR ASSESSMENT YEAR 2007-08. THE POINT MADE OUT IS THAT EVEN IF THE QUANTUM OF EXPORT SALES IS NOT COMPARAB LE WITH THE DOMESTIC SALES DUE TO VARIATION IN VOLUME BUT THE PROFIT MARGINS P ER-SE DO NOT GET EFFECTED BY THE VOLUME OF TURNOVER AND FOR THAT PROPOSITION REL IANCE HAS BEEN PLACED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF CAPGEMINI INDIA PRIVATE LIMITED (SUPRA). IN OUR CONSIDERED O PINION, IT WOULD SUFFICE TO OBSERVE THAT THE AFORESAID STAND OF THE REVENUE IS QUITE MISPLACED BECAUSE IN THE PRESENT CASE, IT IS NOT MERELY THE DIFFERENCE I N VOLUME OF THE TWO CATEGORY OF TRANSACTIONS BUT THE VERY NATURE OF THE TRANSACT IONS HAS BEEN FOUND TO BE INCOMPARABLE. NOTABLY, THE TRANSACTION OF EXPORT O F COMPONENTS AND PARTS IS A TRADING ACTIVITY WHEREAS THE DOMESTIC BUSINESS CONS ISTS OF SALES PRIMARILY OF THE MANUFACTURED CARBURETTORS. THEREFORE, ON THIS GROUND ITSELF, WE FIND THAT THE REFERENCE TO THE DECISION OF THE TRIBUNAL IN TH E CASE OF CAPGEMINI INDIA PRIVATE LIMITED (SUPRA) IN THE PRESENT CASE IS ERRO NEOUS. 21. AT THIS POINT, IT WAS POINTED THAT THE ASSESSEE HAD UNDERTAKEN TRANSACTIONS BY WAY OF EXPORT OF COMPONENTS AND PAR TS TO ASSOCIATED ENTERPRISES IN THE SAME MANNER FOR ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05 ALSO. AT THE TIME OF HEARING, THE LD. REPR ESENTATIVE FOR THE ASSESSEE MADE A STATEMENT AT BAR THAT IN THE TRANSFER PRICIN G STUDY UNDERTAKEN BY THE ASSESSEE FOR SUCH ASSESSMENT YEARS, IT HAD ADOPTED THE AGGREGATION APPROACH AND APPLIED THE TNM METHOD FOR BENCHMARKIN G ITS INTERNATIONAL TRANSACTIONS. IT WAS ASSERTED THAT THE TPO ACCEPTE D THE AGGREGATION METHODOLOGY ADOPTED BY THE ASSESSEE. THIS ASPECT O F THE MATTER HAS NOT BEEN CONTROVERTED BEFORE US AT THE TIME OF HEARING. IT WAS CONTENDED THAT EVEN ON THE PRINCIPLE OF CONSISTENCY, THE IMPUGNED APPROACH OF THE TPO IN CAPTIONED YEARS IS UNTENABLE. 22. AS A CONSEQUENCE, SO FAR AS THE ASSESSMENT YEAR 2005-06 IS CONCERNED, THE GROUNDS OF APPEAL NO.1 & 2 RAISED BY THE REVENUE ARE DISMISSED. 23. IN SO FAR AS THE ASSESSMENT YEARS 2006-07 AND 2 007-08 ARE CONCERNED, THEREIN ALSO THE ASSESSING OFFICER HAS MADE ADDITIO N ON ACCOUNT OF THE TRANSFER PRICING ADJUSTMENT TO THE STATED VALUES OF THE TRANSACTION OF EXPORT OF COMPONENTS AND PARTS TO THE ASSOCIATED ENTERPRISES. IN BOTH THESE YEARS, THE RIVAL PARTIES SUBMITTED BEFORE US THAT THE FACTS AN D CIRCUMSTANCES REMAIN THE SAME, AS CONSIDERED BY US IN THE APPEAL FOR ASSESSM ENT YEAR 2005-06 IN EARLIER PARAS. THE RIVAL CONTENTIONS ALSO REMAIN T HE SAME, AS CONSIDERED BY US IN THE APPEAL FOR ASSESSMENT YEAR 2005-06 (SUPRA ). THEREFORE, OUR DECISION IN ASSESSMENT YEAR 2005-06 (SUPRA) SHALL A PPLY MUTATIS-MUTANDIS IN THE ASSESSMENT YEARS 2006-07 AND 2007-08 ALSO. WE HOLD SO. 24. NOW, IN ASSESSMENT YEAR 2005-06, THE ONLY GROUN D OF APPEAL REMAINING IS AGAINST THE ACTION OF THE CIT(A) IN DE LETING THE ADDITION OF RS.1,21,87,328/- MADE BY THE ASSESSING OFFICER BY T REATING ENGINEERING SERVICE FEE AS CAPITAL IN NATURE. 25. IN THIS CONTEXT, BRIEF FACTS ARE THAT ASSESSEE INCURRED AN EXPENDITURE OF RS.1,62,49,770/- REPRESENTING ENGINEERING SERVICE F EE, WHICH WAS CLAIMED AS A REVENUE EXPENDITURE. THE ASSESSING OFFICER NOTED THAT SIMILAR EXPENDITURE UNDER THE SAME HEAD WAS TREATED AS CAPITAL EXPENDIT URE IN ASSESSMENT YEAR 2004-05 WHICH WAS CONFIRMED BY THE CIT(A) AND ASSES SEE HAD ACCEPTED THE DECISION OF THE CIT(A). ON BEING SHOW-CAUSED, ASSE SSEE AGREED THAT A SUM OF RS.55,25,146/- OUT OF THE TOTAL EXPENDITURE OF R S.1,62,49,770/- BE CONSIDERED AS CAPITAL EXPENDITURE BUT FOR THE REMAINING EXPEND ITURE OF RS.1,21,87,328/-, ASSESSEE CANVASSED THAT IT PERTAINED TO SERVICES PR OVIDED BY THE ENGINEERS WHICH ARE REVENUE IN NATURE. 26. THE ASSESSING OFFICER, HOWEVER, RELIED UPON PAR A 5.2 OF THE TECHNICAL COLLABORATION AGREEMENT WITH THE PARENT COMPANY WHI CH DEALT WITH PROVIDING OF TECHNICAL ASSISTANCE IN INDIA AND CONCLUDED THAT AS SESSEE DERIVED ENDURING BENEFIT FROM THE SERVICES RENDERED BY THE ENGINEERS OF THE PARENT COMPANY. THE ASSESSING OFFICER TREATED THE ENTIRE EXPENDITUR E INCURRED ON ACCOUNT OF THE ENGINEERING SERVICES FEE AS CAPITAL IN NATURE. 27. THE CIT(A), HOWEVER, ACCEPTED THE CLAIM OF THE ASSESSEE THAT EXPENDITURE TO THE EXTENT OF RS.1,21,87,328/- WAS A REVENUE EXPENDITURE SINCE THE SERVICES RENDERED BY THE ENGINEERS OF THE PAREN T COMPANY WERE FOR DAY TO DAY RUNNING OF THE BUSINESS. THE CIT(A) ALSO CONSI DERED PARA 5.02 OF THE TECHNICAL COLLABORATION AGREEMENT WHICH WAS RELIED UPON BY THE ASSESSING OFFICER. THE CIT(A) ALSO TOOK NOTE OF ASSESSEES S UBMISSION THAT IN ASSESSMENT YEAR 2006-07 THE ASSESSING OFFICER HAS H IMSELF ALLOWED SUCH EXPENDITURE AFTER BEING DIRECTED BY THE DRP TO DO S O. WITH REGARD TO THE DISALLOWANCE ACCEPTED BY THE ASSESSEE IN THE EARLIE R ASSESSMENT YEAR OF 2004-05, IT WAS NOTED THAT THE SAME RELATED TO PAYM ENT OF FEE FOR TECHNICAL ASSISTANCE AT THE PRE-INSTALLATION STAGE OF THE IMP ORTED MACHINERY AND FOR THE IMPROVEMENT AND IMPROVISATION IN MANUFACTURING PROC ESS, WHICH WAS INDEED AN ENDURING BENEFIT TO THE ASSESSEE. THE CIT(A) FO UND THE FACTS IN THE CURRENT ASSESSMENT YEAR AS QUITE DIFFERENT FROM THOSE IN TH E ASSESSMENT YEAR 2004- 05. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, AC CORDING TO THE CIT(A), THE EXPENDITURE WAS INCURRED FOR AVAILING OF SERVICES F OR DAY TO DAY FUNCTIONING OF THE BUSINESS; AND, THEREFORE, THE EXPENDITURE WAS R EQUIRED IN NATURE. AGAINST SUCH A DECISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 28. THE RIVAL COUNSELS HAVE MADE THEIR SUBMISSIONS IN LINE WITH THE RESPECTIVE STANDS. THE LD. CIT-DR RELIED UPON THE STAND OF THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED ABOVE AND IS NO T BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, THE LD. REPRES ENTATIVE FOR THE ASSESSEE RELIED UPON THE FINDINGS OF THE CIT(A) IN SUPPORT O F THE CASE OF THE ASSESSEE. 29. WE HAVE CAREFULLY CONSIDERED THE RIVALS SUBMISS IONS. IN OUR CONSIDERED OPINION, NO FAULT CAN BE FOUND IN THE MANNER IN WHI CH THE CIT(A) HAS COME TO CONCLUDE THAT THE EXPENDITURE IN QUESTION IS TO BE ALLOWED AS A REVENUE EXPENDITURE. IT IS ALSO NOT DISPUTED BEFORE US THA T SIMILAR EXPENDITURE IN ASSESSMENT YEAR 2006-07 STANDS ALLOWED AS A REVENUE EXPENDITURE BY THE ASSESSING OFFICER AFTER DUE VERIFICATION. THE CIT( A) ALSO NOTED THAT THE ENGINEERING SERVICES PROVIDED BY THE PARENT COMPANY IN THIS YEAR RELATED TO DAY TO DAY RUNNING OF BUSINESS IN CONTRAST TO THE E ARLIER ASSESSMENT YEAR OF 2004-05 WHEREIN IT RELATED TO THE PRE-INSTALLATION STAGE OF THE IMPORTED MACHINERY. HAVING REGARD TO THE FACTS AND CIRCUMST ANCES OF THE CASE AND THE FINDINGS OF THE CIT(A), WE FIND NO REASONS TO INTER FERE WITH HIS DECISION OF ALLOWING DEDUCTION FOR RS.1,21,87,328/- REPRESENTIN G ENGINEERING SERVICES FEE AS A REVENUE EXPENDITURE. THE REVENUE FAILS ON THI S ASPECT. 30. IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESS MENT YEAR 2005-06 IS DISMISSED. 31. SIMILARLY, IN SO FAR AS THE ASSESSMENT YEAR 200 7-08 IS CONCERNED, THE ONLY DISPUTE IN THE APPEAL OF THE REVENUE IS WITH R EGARD TO THE TRANSFER PRICING ADJUSTMENT, WHICH WE HAVE ALREADY DEALT WITH IN EAR LIER PARAGRAPHS IN FAVOUR OF THE ASSESSEE. THUS, APPEAL OF THE REVENUE FOR ASSE SSMENT YEAR 2007-08 IS ALSO DISMISSED. 32. IN THE ASSESSMENT YEAR 2006-07, THE APPEAL OF T HE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE ASSTT. COMMISSIONER OF INC OME TAX, CIRCLE- 9, PUNE (IN SHORT THE ASSESSING OFFICER) PASSED U/S 143(3 ) R.W.S. 144C(13) OF THE ACT DATED 28.10.2010, WHICH IS IN CONFORMITY WITH THE D IRECTIONS GIVEN BY THE DISPUTE RESOLUTION PANEL, PUNE (IN SHORT THE DRP) DATED 14.09.2010. 33. IN THIS YEAR ALSO THE ONLY DISPUTE IS WITH REGA RD TO THE TRANSFER PRICING ADJUSTMENT MADE BY THE ASSESSING OFFICER ON ACCOUNT OF TRANSACTION PERTAINING TO EXPORT OF COMPONENTS AND PARTS TO THE ASSOCIATED ENTERPRISE, WHICH WE HAVE ALREADY DEALT WITH IN THE EARLIER PAR T OF THIS ORDER IN FAVOUR OF THE ASSESSEE. THUS, ON THIS ISSUE ASSESSEE SUCCEED S IN ITS APPEAL. 34. RESULTANTLY, WHEREAS THE APPEALS OF THE REVENUE ARE DISMISSED THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JANUARY, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH JANUARY, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE DRP, PUNE; 4) THE DIT (INTERNATIONAL TAXATION), PUNE; 5) THE CIT(A)-IT/TP, PUNE; 6) THE CIT-IT/TP, PUNE; 7) THE DR B BENCH, I.T.A.T., PUNE; 8) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE