Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 1741 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 3 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-06-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
K
Assessment Year
2010-2011
Appeal Filed On
26-02-2015
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL K , BENCH MUMBAI BEFORE SHRI M. BALAGANESH , AM & SHRI AMARJIT SINGH , JM ITA NO. 1156 / MUM/20 1 5 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. LINTAS INDIA PRIVATE LIMITED 15 TH FLOOR, EXPRESS TOWERS NARIMAN POINT MUMBAI 400 021 VS. DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 3(2)(1) MUMBAI PAN/GIR NO. AAACL0124F ( APPELLANT ) .. ( RESPONDENT ) ITA NO. 1187 /MUM/201 5 ( ASSESSMENT YEAR : 2010 - 11 ) DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 3(2)(1) MUMBAI VS. M/S. LINTAS INDIA PRIVATE LIMITED 15 TH FLOOR, EXPRESS TOWERS NARIMAN POINT MUMBAI 400 021 PAN/GIR NO. AAACL0124F (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI AJIT KR. JAIN / SHRI SIDDHESH CHAUGULE REVENUE BY SHRI SHISHIR DHAMIJA DATE OF HEARING 20 / 03/ 201 9 DATE OF PRONOUNCEMENT 12 / 06 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THESE CROSS APPEAL S IN ITA NO S . 1156/MUM/2015 & 1187/MUM/2015 FO R A.Y. 2010 - 11 ARISE OUT OF THE ORDER BY THE LD. DISPUTE RESOLUTION PANEL III, MUMBAI IN OBJECTION NO. 51 DATED 14/11/2014 (LD. ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 2 DRP IN SHORT) AGAI NST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 144C(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER RE FERRED TO AS ACT) DATED 10/03/2014 BY THE LD. DY. COMMISSIONER OF INCOME TAX, RANGE - 3(2)(1), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). 2. THE FIRST I SSUE TO BE DECIDED IN THIS APPEAL IS WITH REGARD TO THE ACTION OF THE LD. DRP IN UPHOLDING THE ACTION OF THE LD. TPO BY MAKING AN ADJUSTMENT TO ALP IN RELATION TO IN T RA GROUP SERVICES IN THE SUM OF RS.8,71,14,390/ - . 3. BRIEF FACTS OF THIS ISSUE ARE THAT L INTAS INDIA PRIVATE LIMITED ('LIPL') IS A LOWE WORLDWIDE GROUP ENTITY. LOWE WORLDWIDE IS PART OF THE LOWE GROUP AND IS AN INTERNATIONAL CREATIVE ADVERTISING AGENCY HEADQUARTERED IN LONDON. THE AGENCY IS A UNIT OF THE INTERPUBLIC GROUP (IPG), ONE OF THE W ORLD'S LARGEST ADVERTISING AGENCY HOLDING COMPANIES. LOWE WORLDWIDE IS A COMMUNITY OF MODERN, CREATIVITY DRIVEN, MULTIDISCIPLINARY AGENCIES IN VITAL GLOBAL CENTRES. THE ASSESSEE IS ONE OF THE LARGEST AND OLDEST ADVERTISING AGENCIES. ITS ADVERTISING BUSINES S OPERATES UNDER THE TRADE NAME OF 'LOWE LINTAS'. IN ORDER TO CARRY OUT ITS BUSINESS OPERATIONS LIPL AVAILS THE BENEFIT OF CENTRALIZED FUNCTIONAL SERVICES AVAILABLE WITHIN THE GROUP. 3. 1 . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ENTERED INTO CERTAIN INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES (AE) WITHIN THE MEANING OF SECTION 92 OF THE INCOME - TAX ACT, 1961 ('THE ACT'). THE SAID TRANSACTIONS WERE DULY REPORTED BY THE ASSESSEE IN FORM NO. 3CEB, WHICH WAS FILED ALONG WITH THE R ETURN OF INCOME ('ROI') FOR ASSESSMENT YEAR ('AY') 2010 - 11. THE DETAILS OF THE INTERNATIONAL TRANSACTIONS ARE SUMMARISED IN THE TABLE BELOW: ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 3 SR. NO. TRANSACTION AMOUNT OF TRANSACTION (IN INR) 1 ASSISTANCE IN BRAND BUILDING 57,88,380 2 ASSISTANCE IN PREP ARATION OF ADVERTISEMENT/MEDIA DEVELOPMENT 39,77,993 3 MEDIA RELEASE SERVICES PROVIDED TO AES 23,63,324 4 ASSISTANCE IN PREPARATION OF ADVERTISING MATERIAL 15,44,234 5 I - MIX IMPLEMENTATION COST 3,72,481 6 PAYMENT OF GLOBAL INFORMATION SYSTEM (GIS) SE RVICES 2,68,47,755 7 PAYMENT FOR MULTINATIONAL CLIENT CO - ORDINATION (MNC) SERVICES 38,58,015 8 PAYMENT FOR MANAGEMENT SERVICE FEE (MSF) SERVICES 9,86,12,696 9 REIMBURSEMENT RECEIVED 2,00,26,601 10 REIMBURSEMENT PAID 75,08,219 11 ASSISTANCE IN PUBL IC RELATIONS 37,90,004 3. 2 . THE LD. AO REFERRED THE CASE TO THE LD. TRANSFER PRICING OFFICER (TPO') FOR DETERMINING THE ARM'S LENGTH PRICE ('ALP') IN RESPECT OF THE INTERNATIONAL TRANSACTIONS REPORTED IN FORM NO. 3CEB BY THE ASSESSEE . THE LD. TPO ISSUED AN ORDER DATED JANUARY 27, 2014 UNDER SECTION 92CA(3) OF THE ACT PROPOSING A TOTAL ADJUSTMENT OF INR 8,71, 14,391/ - , SUMMARISED BELOW, TO THE TOTAL INCOME TOWARDS PAYMENT MADE FOR INTRA - GROUP SERVICES. THE SAME IS SUMMARIZED AS UNDER: SR. NO. PARTICULARS OF INTRA - GROUP SERVICES VALUE OF INTERNATIONAL TRANSACTION (INR) BASIS OF ALLOWANCE PROPOSED ADJUSTMENT AMOUNT (IN INR) 1 GIS SERVICES 2,68,47,755 PAYMENTS MADE TOWARDS RENEWAL OF THE LICENSES 62,95,226 2 MNC SERVICES 38,58,015 50% OF THE TOTAL COST 19, 29,008 3 MSF SERVICES 9,86,12,696 20% OF THE TOTAL COST 7,88,90,157 TOTAL 129,318,466 87,114,391 3. 3 . RELYING ON THE SAID TRANSFER PRICING ORDER THE LD. ASSESSING OFFICER (AO) WHILE PASSING THE DRAFT ASSESSMENT ORDER, PROPOSED TO MAKE THE FOLLOWING ADJUSTMENT TOTALLING TO INR 87,940,259/ - INCLUDING THE ADJUSTMENTS IN RELATION TO TRANSFER PRICING. ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 4 SR. NO. PARTICULARS ADDITION (INR) 1. TRANSFER PRICING ADJUSTMENT IN RELATION TO INTRA - GROUP SERVICES 87,114,390 2. ADJUSTMENT ON ACCOUNT OF MIS - MATCH IN THE AIR DATA 825,869 TOTAL 87,940,259 3. 4 . AGAINST THE DRAFT ASSESSMENT ORDER, THE ASSESSEE RAISED OBJECTIONS BEFORE THE HONBLE DRP. THE HONBLE DRP VIDE ITS ORDER DATED 14 NOVEMBER 2014 UPHELD THE TRANSFER PRICING ADJUSTMENT WITH RESPECT TO GIS SE RVICES WHILE DELET ING THE ADJUSTMENT WITH RESPECT TO MSF AND MNC SERVICES. FURTHER THE HONBLE DRP ALSO UPHELD THE DISALLOWANCE ON ACCOUNT OF AIR MIS - MATCH. 3. 5 . CONSEQUENTLY THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE US AS REGARDS ADJUSTMENT PERTAINING TO GIS SERVICES AND AIR MIS - MATCH , WHILE THE REVENUE HAD PREFERRED AN APPEAL AGAINST THE MSF AND MNC SERVICES. THE SAME IS SUMMARIZED AS UNDER: SR. NO. TRANSACTION DESCRIPTION TRANSACTION VALUES ADJUSTMENT BY TPO (INR) ADJUSTMENT POST DRP'S DIRECTIONS (IN R) APPEAL BY TRANSFER PRICING 1 GIS SERVICE 26,847,755 6,295,226 6,295,226 ASSESSEE 2 MNC SERVICE 3,858,015 1,929,008 - DEPARTMENT 3 MSF SERVICES 98,612,696 78,890,157 - DEPARTMENT CORPORATE TAX 4 AIR MIS - MATCH 825,869 ASSESSEE TOTAL 129,318,466 87,940,260 6,295,226 3. 6 . WITH REGARD TO THE TRANSFER PRICING ADJUSTMENT THAT ARE IN DISPUTE, THE BENCHMARKING APPROACH ADOPTED BY THE ASSESSEE IS SUMMARISED AS UNDER: - TRANSACTION PRICING BENCHMARKING METHOD TESTED PARTY TRANSACTION MARGINS COMPARABLE MARGINS ALP PAYMENT FOR GIS SERVICES COST TO COST COMPARABLE UNCONTROLLED PRICING (CUP) METHOD - - - YES PAYMENT FOR MNC SERVICES COST PLUS 5% TRANSACTIONAL NET MARGINS METHOD (TNMM) AE COST PLUS 5% 9.82% YES PAYMENT FOR COST PLUS 5% T NMM AE COST PLUS 5% 9.82% YES ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 5 MSF SERVICES 4. IT WOULD BE PERTINENT TO LOOK INTO THE PAYMENTS MADE IN THE AFORESAID CATEGORY INDIVIDUALLY AS UNDER: - PAYMENT FOR GIS SERVICES THE SERVICES RENDERED BY THE AES TO LIPL UNDER GIS AGREEMENT MAINLY INCLUDED INFRASTRUCTURE S ERVICES, APPLICATION SERVICES, PROCUREMENT SERVICES AND OTHER IT ASSISTANCE. THE DETAILS OF THE SAID SERVICES RECEIVED AND THE BENEFITS DERIVED THEREFROM HAS BEEN DOCUMENTED BY ASSESSEE IN THE TP STUDY REPORT (TPSR). ACCORDING TO THE AGREEMENT, THE AE HA S TO BE COMPENSATED WITH A STANDARD MARK - UP ON THE COSTS INCURRED FOR RENDERING THE SAID SERVICES. HOWEVER, FOR THE YEAR UNDER CONSIDERATION VIZ. FY 2009 - 10, THE AE HAS RECOVERED ONLY THE ACTUAL COST INCURRED IN RENDITION OF GIS SERVICES. THE AE FOLLOWS A COST POOLING MECHANISM FOR SUCH SERVICES AND THE SAID COST IS ALLOCATED TO THE ASSESSEE BASED ON NUMBER OF USERS, LICENCES, INDEXED USAGE, ACTIVE DIRECTORY, NUMBER OF MAILBOXES, ETC. THE ABOVE POLICY IS CONSISTENTLY FOLLOWED ACROSS ALL ENTITIES WITHIN THE GROUP IN THE TPSR, THE ASSESSEE HAS BENCHMARKED THIS TRANSACTIONS USING CUP AS THE MOST APPROPRIATE METHOD, AS ASSESSEE HAS PAID ONLY THE ACTUAL COSTS INCURRED BY THE AE IN RENDITION OF GIS SERVICES, WITHOUT ANY MARK - UP. DURING THE COURSE OF THE TRANSFER PRICING SCRUTINY PROCEEDINGS, THE A SSESSEE SUBMITTED MULTIPLE EVIDENCES IN THE FORM OF EMAIL COMMUNICATION ( ENCLOSED IN PAGES 146 TO PAGE 162, PAGE 439 & 442, 444, 446 AND PAGE 802 TO 813, AND PAGE 813 TO 814 OF PAPER ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 6 BOOK ) TO DEMONSTRATE THE RECEIPT OF V ARIOUS SERVICES FROM THE AES. FURTHER, THE ASSESSEE ALSO SUBMITTED A DETAILED WORKING OF THE COST ALLOCATION FOR GIS ( ENCLOSED IN PAGE 387 OF PAPER BOOK ) DEMONSTRATING HOW INDIVIDUAL COST ITEMS ARE ALLOCATED BY THE AE TO ASSESSEE , BASIS VARIOUS ALLOCATION KEYS SUCH AS INDEXED USAGE, ACTIVE DIRECTORY, NUMBER OF MAILBOXES, ETC. THE AE ALLOCATED LICENSE COSTS SUCH AS MICROSOFT LICENSES, APPLE LICENCES ON THE BASIS OF NUMBER OF LICENSES USED BY ASSESSEE . THE WORKING OF COST ALLOCATION WAS SUPPORTED BY A CERTIF ICATE FROM GROUP CFO, CONFIRMING THE FACT THAT SERVICE FEE MECHANISM ADOPTED BY LOWE GROUP HAS BEEN CONSISTENTLY APPLIED ACROSS ALL THE LOWE GROUP ENTITIES, THE SAME HAS BEEN SCRUTINI Z ED AND ACCEPTED BY THE TAX AUTHORITIES ACROSS THE WORLD. 4.1 . THE LD. T PO AFTER EVALUATING THE VARIOUS EVIDENCES NOTED THAT ONLY SOME SERVICES CAN BE SAID TO HAVE BEEN RENDERED BUT NOT ALL . THE LD. TPO EVALUATED THE EVIDENCES SUBMITTED BY THE ASSESSEE AND POINTED OUT THAT THE ASSESSEE HAS SUBMITTED EVIDENCES WHICH ARE IN THE NATURE OF ROUTINE MATTERS AND DO NOT REQUIRE ANY SPECIAL ARRANGEMENT WITH THE AE. THE LD. TPO ALLEGED THAT THE GIS AGREEMENT IS FOR NAMESAKE PURPOSE ONLY AND ALMOST NO ACTIVITY HAS TAKEN PLACE AS A PART OF GIS. 4.2 . ACCORDINGLY, THE LD. TPO ACCEPTED THE PAYMENTS W ITH RESPECT TO LICENSES TO BE AT ALP AND FOR THE BALANCE SERVICES, THE ALP WAS DETERMINED TO BE NIL. THUS, THE ADJUSTMENT AMOUNT WAS ARRIVED AT INR 62,95,226/ - BEING THE AMOUNT PAID TOWARDS SERVICES COMPONENT. 4.3. THE HONBLE DRP, UPHELD THE AD JUSTMENT MADE BY THE TPO ON THE FOLLOWING GROUNDS : - ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 7 ASSESSEE FAILED TO CORRELATE THE QUANTUM OF EXPENSES INCURRED BY THE AE WITH THE BENEFITS ACCRUING TO THE ASSESSEE SELF - CERTIFICATION BY GLOBAL CFO CANNOT BE TAKEN AS ESTABLISHING ARMS LENGTH CHARACTER OF TRANSACTION WITHOUT SUPPORTING DOCUMENTATION FOR THE COST BASE ASSESSEE FAILED TO DEMONSTRATE HOW THE COST BASE WAS DEMARCATED W ITH RESPECT TO RENDERING OF SERVICES 5. PAYMENT TOWARDS MSF SERVICES: - THE SERVICES RENDERED BY THE AES TO ASSESSEE UNDER T HIS AGREEMENT WERE IN THE NATURE OF ASSISTANCE IN FOSTERING AND DEVELOPING NEW BUSINESS TARGETING, PUBLIC RELATIONS, STRATEGIC PLANNING, MEDIA SUPPORT, FINANCIAL ADMINISTRATION, HUMAN RESOURCES MANAGEMENT AND BUSINESS SERVICES. THE DETAILS SUCH AS THE NATU RE OF EACH SERVICE, SERVICES RECEIVED DURING THE YEAR AND THE BENEFITS DERIVED THEREFROM HAS BEEN DOCUMENTED BY ASSESSEE IN THE TPSR . ACCORDING TO THE AGREEMENT, THE AE HAS TO BE COMPENSATED WITH A MARK - UP OF 5 PERCENT ON THE COSTS INCURRED FOR RENDERING THE SAID SERVICES. FURTHER, THE COSTS INCURRED BY THE AE SHALL BE ALLOCATED ON THE BASIS OF ASSESSEES TOTAL REVENUE AS A PROPORTION OF TOTAL GROUP REVENUE. I N THE TPSR, THE ASSESSEE HAS BENCHMARKED THIS TRANSACTIONS USING TNMM AS THE MOST APPROPRIATE M ETHOD, CONSIDERING AE AS TESTED PARTY AND OPERATING PROFIT/TOTAL OPERATING COST (OP/TC) AS THE PROFIT LEVEL INDICATOR (PLI ). DURING THE YEAR, THE ASSESSEE PAID TO THE AE, THE ACTUAL COST INCURRED BY THE AE FOR RENDITION OF MSF SERVICES PLUS A MARK - UP O F 5 PERCENT AS AGAINST THE OP/TC MARK - UP ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 8 OF 9.82% IN CASE OF COMPARABLES. THUS, THE TRANSACTION WAS CONCLUDED TO BE AT ARMS LENGTH. DURING THE COURSE OF THE TRANSFER PRICING SCRUTINY PROCEEDINGS, THE ASSESSEE SUBMITTED MULTIPLE EVIDENCES IN THE FORM OF EMAIL COMMUNICATIONS, VIDEO ADVERTISEMENTS, CREATIVE IDEAS IN THE FORM OF POWER POINT PRESENTATION TO DEMONSTRATE RECEIPT OF VARIOUS SERVICES FROM THE AES. FURTHER, THE ASSESSEE ALSO SUBMITTED A DETAILED WORKING OF THE COST ALLOCATION FOR MSF SERVICES DEM ONSTRATING HOW THE INDIVIDUAL COST ITEMS WERE ALLOCATED BY THE AE TO ASSESSEE . THE WORKING OF THE COST ALLOCATION WAS ALSO SUPPORTED BY A CERTIFICATE FROM AN INDEPENDENT CHARTERED ACCOUNTANT VIZ. BDO LLP, CONFIRMING THAT THE COSTS INCURRED BY THE AE (INC LUDING 5 PERCENT MARK - UP) HAVE BEEN APPROPRIATELY ALLOCATED TO ASSESSEE IN ACCORDANCE WITH THE AGREEMENT. FURTHER, A DETAILED SEARCH PROCESS INCLUDING THE SEARCH STRINGS APPLIED, DATABASES USED, ACCEPT/REJECT MATRIX AND MARGIN COMPUTATION OF THE COMPARAB LE COMPANIES WAS SUBMITTED BEFORE THE LD. TPO DURING THE SCRUTINY PROCEEDINGS. 5.1. THE LD. TPO AFTER EVALUATING VARIOUS EVIDENCES AND THE DETAILS FILED, CONCLUDED THAT MSF SERVICES CAN BE SAID TO HAVE BEEN RENDERED TO THE EXTENT OF 20% AND ACCORDINGLY MA DE AN ADJUSTMENT FOR THE BALANCE 80% (I.E. INR 7,88,90,157/ - ) OF THE AMOUNT PAID FOR MSF SERVICES. WHILE MAKING THE SAID AD - HOC ADJUSTMENT, THE LD. TPO: ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 9 REJECTED THE BENCHMARKING ANALYSIS UNDERTAKEN BY THE ASSESSEE STATING THAT THE ASSESSEE FAILED TO PROV IDE THE SEARCH PROCESS, DATABASES USED, ACCEPT/REJECT MATRIX, FILTERS USED, ETC. QUESTIONED THE NEED OF THE ASSESSEE TO AVAIL SUCH SERVICES FROM ITS AE QUESTIONED THE QUALITY/CREATIVITY/COMMERCIAL VALUE OF THE CREATIVE INPUTS RECEIVED FROM THE AE REMARKED THAT THE ASSESSEE FAILED TO PROVIDE THE RATIONALE FOR CHARGING A MARK - UP OF 5% ON THE COSTS STATED THAT THE ASSESSEE FAILED TO FURNISH A DIRECT CO - RELATION BETWEEN THE INPUTS FROM GLOBAL TEAM AND THE CORRESPONDING BENEFITS REMARKED THAT THE ASSESSEE FAILED TO CONCLUSIVELY COMMENT ON SPECIFIC OBSERVATION MADE BY THE STATUTORY AUDITOR IN ITS CERTIFICATE 5.2. FURTHER, THE LD. TPO FORMED A VIEW THAT, THE ASSESSEE DOESNT REQUIRE ANY INPUT FROM THE AE FOR THESE SERVICES AS IT HAS BEEN IN EXISTENCE SINCE 1969 . ACCORDINGLY, THE LD. TPO MADE AN ADJUSTMENT OF INR 7,88,90,157/ - BEING 80% OF THE TOTAL PAYMENTS, ON AN AD - HOC BASIS. 5. 3 . THE HONBLE DRP, DELETED THE ADJUSTMENT IN ENTIRETY AND NOTED THAT TPOS APPROACH OF QUANTIFYING 80% OF MSF CHARGE, AS NOT BACKED BY ANY TANGIBLE BENEFIT, IS ARBITRARY IN NATURE ; PAYMENT MADE BY ASSESSEE TO ITS AE IS IN ACCORDANCE WITH THE AGREEMENT; THE ASSESSEE HAS INDEED DEMONSTRATED THE NEED FOR THESE SERVICES; REVENUE AS A BASIS OF ALLOCATION / ALLOCATION KEYS ARE FOUND TO BE REASONABLE; THE DISCLAIMER BY THE AUDITOR IN ITS CERTIFICATE IS ONLY WITH RESPECT TO THE SCOPE OF WORK AND DOES NOT MAKE THE CERTIFICATE OF COST ALLOCATION ANY LESS RELIABLE; ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 10 THE ASSESSEE HAS MAINTAINED SUFFICIENT LEVEL OF DOCUMENTATION IN RESPECT OF THE SAID SERVICE . 5. 4 . ACCORDINGLY, THE HONBLE DRP HAS ADDRESSED EACH OF THE SPECIFIC OBSERVATION MADE BY THE LD. TPO AND AFTER SATISFYING ITSELF, HAS DELETED THE ADJUSTMENTS RELATING TO PAYMENT FOR MSF SERVICES. 6. PAYMENT TOWARDS MNC SERVICES: - THE SERVI CES RENDERED BY THE AES TO ASSESSEE UNDER MNC AGREEMENT ARE IN THE NATURE OF CENTRALLY DEVELOPED WORLDWIDE CLIENT SPECIFIC STRATEGIES AND ACCOUNT PLANS, WORLDWIDE ACCOUNT MANAGEMENT, CENTRALIZED CREATIVE DIRECTIONS AND CO - ORDINATION, CENTRALIZED COMMISSION AND FEE NEGOTIATION, ASSISTANCE IN MANAGING AND PLANNING LOCAL ACCOUNT AND TARGETING, WINNING NEW BUSINESS, IN ASSESSEES TARGET MARKET. THE DETAILS SUCH AS THE NATURE OF EACH SERVICE, SERVICES RECEIVED DURING THE YEAR AND THE BENEFITS DERIVED THEREFROM H AVE BEEN DOCUMENTED BY ASSESSEE IN THE TPSR . ACCORDING TO THE AGREEMENT, THE AE HAS TO BE COMPENSATED WITH A MARK - UP OF 5 PERCENT ON THE COSTS INCURRED FOR RENDERING THE SAID SERVICES. FURTHER, THE COSTS INCURRED BY THE AE SHALL BE ALLOCATED ON THE BASIS OF ASSESSEES REVENUE FROM RELEVANT CLIENTS AS A PROPORTION OF TOTAL GROUP REVENUE FROM SUCH CLIENTS . 6.1. IN THE TPSR, THE ASSESSEE HAS BENCHMARKED THIS TRANSACTION USING TNMM AS THE MOST APPROPRIATE METHOD, CONSIDERING THE AE AS TESTED PARTY AND OPERAT ING PROFIT/TOTAL OPERATING COST (OP/TC) AS THE PROFIT LEVEL INDICATOR (PLI) . DURING THE YEAR, THE ASSESSEE PAID TO THE AE, THE ACTUAL COST INCURRED BY THE AE FOR RENDITION OF MSF SERVICES PLUS A MARK - ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 11 UP OF 5 PERCENT AS AGAINST THE OP/TC MARK - UP OF 9.82 % IN CASE OF COMPARABLES. THUS THE TRANSACTION WAS CONCLUDED TO BE AT ARMS LENGTH.. 6.2. DURING THE COURSE OF THE TRANSFER PRICING SCRUTINY PROCEEDINGS, THE ASSESSEE SUBMITTED MULTIPLE EVIDENCES TO DEMONSTRATE RECEIPT OF VARIOUS SERVICES FROM THE AES. FURTHER, THE ASSESSEE ALSO SUBMITTED A DETAILED WORKING OF THE COST ALLOCATION FOR MNC SERVICES DEMONSTRATING HOW THE INDIVIDUAL COST ITEMS WERE ALLOCATED BY THE AE TO ASSESSEE ON THE BASIS OF REVENUE FROM RELEVANT MNC CLIENTS. THE WORKING OF THE COST ALLO CATION WAS ALSO SUPPORTED BY A CERTIFICATE FROM AN INDEPENDENT CHARTERED ACCOUNTANT VIZ. BDO LLP, CONFIRMING THAT THE COSTS INCURRED BY THE AE (INCLUDING 5 PERCENT MARK - UP) HAVE BEEN APPROPRIATELY ALLOCATED TO ASSESSEE IN ACCORDANCE WITH THE AGREEMENT. 6 . 3 . FURTHER, A DETAILED SEARCH PROCESS INCLUDING THE SEARCH STRINGS APPLIED, DATABASE USED, ACCEPT/REJECT MATRIX AND MARGIN COMPUTATION OF COMPARABLE COMPANIES WAS SUBMITTED BEFORE THE LD. TPO . 6. 4 . THE LD. TPO AFTER EVALUATING VARIOUS EVIDENCES AND TH E DETAILS FILED, CONCLUDED THAT MNC SERVICES CAN BE SAID TO HAVE BEEN RENDERED TO THE EXTENT OF 50% AND ACCORDINGLY MADE AN ADJUSTMENT FOR THE BALANCE 50% (I.E. INR 19,29,008/ - ) OF THE AMOUNT PAID FOR MSF SERVICES. WHILE MAKING THE SAID AD - HOC ADJUSTMENT, THE LD. TPO: REJECTED THE BENCHMARKING ANALYSIS UNDERTAKEN BY THE ASSESSEE STATING THAT THE ASSESSEE FAILED TO PROVIDE THE SEARCH PROCESS, DATABASES USED, ACCEPT/REJECT MATRIX, FILTERS USED, ETC. REMARKED THAT THE ASSESSEE FAILED TO FURNISH DIRECT EVIDENC E IN TERMS OF ASSIGNMENTS UNDERTAKEN FOR THREE CLIENTS AND CORRESPONDING BENEFITS ACCRUING TO ASSESSEE. ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 12 REMARKED THAT THE ASSESSEE FAILED TO PROVIDE THE RATIONALE FOR CHARGING A MARK - UP OF 5% ON THE COSTS . STATED THAT THE ASSESSEE FAILED TO FURNISH A DIREC T CO - RELATION BETWEEN THE INPUTS FROM GLOBAL TEAM AND THE CORRESPONDING BENEFITS . REMARKED THAT THE ASSESSEE FAILED TO CONCLUSIVELY COMMENT ON SPECIFIC OBSERVATION MADE BY THE STATUTORY AUDITOR IN ITS CERTIFICATE . 6. 5 . THE LD. TPO FORMED A VIEW THAT NEITH ER THE SERVICES CAN BE SAID TO HAVE BEEN CONCLUSIVELY RENDERED NOR CAN THESE SERVICES BE SAID TO HAVE BENEFITTED THE ASSESSEE. 6. 6 . FURTHER, THE LD. TPO FORMED A VIEW THAT, THE ASSESSEE DOESNT REQUIRE ANY INPUT FROM THE AE FOR THESE SERVICES AS IT HAS B EEN IN EXISTENCE SINCE 1969 . 6. 7 . ACCORDINGLY, THE LD. TPO DETERMINED THE ARMS LENGTH PRICE (ALP) OF THE SAID TRANSACTION AT INR 19,29,008/ - , BEING 50% OF THE TOTAL PAYMENT MADE, ON AN ADHOC BASIS. 6. 8 . THE HONBLE DRP, DELETED THE ADJUSTMENT IN ENTIR ETY AND NOTED THAT TPOS APPROACH OF QUANTIFYING 50% OF MNC CHARGE, AS NOT BACKED BY ANY TANGIBLE BENEFIT, IS ARBITRARY IN NATURE PAYMENT MADE BY ASSESSEE TO ITS AE IS IN ACCORDANCE WITH THE AGREEMENT; THE ASSESSEE HAS INDEED DEMONSTRATED THE NEED FOR TH ESE SERVICES; REVENUE AS A BASIS OF ALLOCATION / ALLOCATION KEYS ARE FOUND TO BE REASONABLE; ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 13 THE DISCLAIMER BY THE AUDITOR IN ITS CERTIFICATE IS ONLY WITH RESPECT TO THE SCOPE OF WORK AND DOES NOT MAKE THE CERTIFICATE OF COST ALLOCATION ANY LESS RELIABLE ; THE ASSESSEE HAS MAINTAINED SUFFICIENT LEVEL OF DOCUMENTATION IN RESPECT OF THE SAID SERVICE . 6. 9 . ACCORDINGLY, THE HONBLE DRP HAS ADDRESSED EACH OF THE SPECIFIC OBSERVATION MADE BY THE LD. TPO AND AFTER SATISFYING ITSELF, HAS DELETED THE ADJUSTMENTS R ELATING TO PAYMENT FOR MNC SERVICES. 7 . AGGRIEVED, THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: - THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LD. ASSESSING OFFICER / DISPUTE RESOLUTION PANEL / TRANSFER PRICING OFFICER ('TPO') ERRED IN MAKING AN ADHOC ADJUSTMENT OF RS. 62,95,226 IN RESPECT OF INTRA - GROUP SERVICE NAMELY GLOBAL INFORMATION SERVICES ('CIS') AVAILED BY THE APPELLANT FROM ITS ASSOC IATED ENTERPRISES. THE APPELLANT PRAYS THAT THE LEARNED AO BE DIRECTED TO DELETE THE ADDITIONS SO MADE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP / AO /TPO ERRED IN MAKING THE ADJUSTMENT ON ACCOUNT OF GIS IGNORING TH AT: I. THE APPELLANT HAD SUPPORTED THE CLAIMS IN RELATION TO GIS WITH APPROPRIATE EVIDENCES SUCH AS INTER COMPANY AGREEMENT, SAMPLE EVIDENCES.; II. THE QUANTUM OF AVAILING GIS SERVICES WAS SUPPORTED BY A DETAILED CALCULATION FURNISHED BY THE A PPELLANT PROVIDING COSTS INCURRED BY THE AE IN PROVISION OF GIS AND COSTS ALLOCATED TO THE APPELLANT BASED ON APPROPRIATE ALLOCATION KEYS; III. THERE WAS COMMERCIAL RATIONALE AND EXPEDIENCY IN AVAILING GIS SERVICES FROM THE AE; AND ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 14 IV. THE APP ELLANT IS NOT REQUIRED TO ESTABLISH THE BENEFIT ARISING OUT OF THE SAID SERVICES. THE APPELLANT PRAYS THAT THE LEARNED AO BE DIRECTED TO DELETE THE ADDITIONS SO MADE. GROUNDS OF REVENUE ARE AS UNDER: - 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE HON'BLE DRP WAS JUSTIFIED IN DELETING PAYMENTS MADE TOWARDS MNC AMOUNTING TO .RS. 19,20,008/ - AND IN DELETING PAYMENT MADE TOWARDS MSF OF RS. 7,88,90,157/ - WITHOUT GIVING ANY COGENT REASONS' 2. 'THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' ., 3. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY . 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AN D PERUSED THE MATERIALS AVAILABLE ON RECORD. IT WOULD BE PERTINENT TO ADDRESS THE PRELIMINARY ISSUE RAISED BY THE LD. AR BEFORE US THAT THE LD. TPO HAD FAILED TO APPLY ANY METHOD WHILE DETERMINING THE ALP AT NIL FOR GIS SERVICES; FOR DETERMINING THE ALP OF PAYMENT MADE TOWARDS MSF SERVICES BY ACCEPTING 20% THEREON ON ADHOC BASIS AND ACCEPTING 50% FOR MNC SERVICES ON ADHOC BASIS THEREON. WE FIND THAT PROVISIONS OF SECTION 92C(1)OF THE ACT MANDATES ADOPTION OF ONE OF THE PRESCRIBED METHOD MENTIONED THEREIN FO R DETERMINING THE ALP OF INTERNATIONAL TRANSACTIONS. IT IS NOT IN DISPUTE THAT THE DISALLOWANCES/ADJUSTMENTS MADE BY THE LD. TPO TO ALP WERE MADE WITHOUT FOLLOWING ANY OF THE PRESCRIBED METHODS AS PER LAW. 8 .1. WE HOLD THAT ONCE A REFERENCE IS RECEIVED BY THE LD. TPO U/S.92CA(1) OF THE ACT FROM THE LD. AO, THE LD. TPO IS REQUIRED TO DETERMINE THE ALP OF THE INTERNATIONAL TRANSACTION AS PER THE PROVISIONS ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 15 CONTAINED IN SECTION 92C AND 92CA OF THE ACT READ WITH RELEVANT RULES THEREON. FROM THE CONJOINT READING OF THE RELEVANT SECTIONS AND THE RELEVANT RULES, WE FIND THAT THE DUTY OF THE LD. TPO IS RESTRICTED ONLY TO THE DETERMINATION OF THE ARMS LENGTH PRICE OF AN INTERNATIONAL TRANSACTION BETWEEN TWO RELATED PARTIES BY APPLYING ANY OF THE METHODS PRESCRIBED U /S.92C OF THE ACT READ WITH RULE 10B OF THE RULES. THUS, THERE IS NO PROVISION MADE IN THE STATUTE EMPOWERING LD. TPO FOR DETERMINING THE ALP ON A PARTICULAR INTERNATIONAL TRANSACTION ON AN ESTIMATION BASIS / ADHOC BASIS. 8 .2. WE FIND THAT THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JOHNSON & JOHNSON LIMITED IN ITA NO.1030 OF 2014 DATED 07/03/2017 WHEREIN IT WAS HELD AS UNDER: - 4. REGARDING QUESTION (D) : (A) THE RESPONDENT ASSESSEE PAID TO ITS ASSOCIATED ENTERPRISES (AE), TECHNICAL KNOW HO W ROYALTY OF 2%. THE TRANSFER PRICING OFFICER (TPO) BY ORDER DATED 24 TH MARCH, 2005 RESTRICTED THE TECHNICAL KNOW HOW ROYALTY PAID BY THE RESPONDENT ASSESSEE TO ITS AE AT 1% INSTEAD OF 2%, AS CLAIMED. IN TERMS OF THE DETERMINATION DATED 24 TH MARCH, 2005 OF THE TPO ON THE ABOVE ISSUE AMONGST OTHERS, AN ASSESSMENT ORDER DATED 28 TH MARCH, 2005 FOR THE SUBJECT ASSESSMENT YEAR WAS PASSED BY ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT. (B)BEING AGGRIEVED WITH THE ORDER DATED 28 TH MARCH, 2005 OF THE ASSESSIN G OFFICER, THE RESPONDENT ASSESSEE PREFERRED AN APPEAL TO THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)]. BY AN ORDER DATED 22 ND MARCH, 2007, THE APPEAL OF THE RESPONDENT ASSESSEE ON THE ISSUE OF ROYALTY PAYABLE ON TECHNICAL KNOW HOW, ALLOWED THE APPEAL. IT INTER ALIA HELD THAT RESTRICTING THE ROYALTY PAID ON ACCOUNT OF TECHNICAL KNOW HOW TO 1% WAS ARBITRARY AND AD HOC. INASMUCH AS, THERE WERE NO REASONS JUSTIFYING THE RESTRICTION OF THE TECHNICAL KNOW HOW ROYALTY PAID BY THE RESPONDENT ASSESSEE TO ITS AE AT 1%. MOREOVER, IT ALSO RECORDS THE FACT THAT THE TPO DID NOT DETERMINE THE ALP OF THE TECHNICAL KNOW HOW ROYALTY BY ADOPTING ANY OF THE METHODS PRESCRIBED UNDER SECTION 92C OF THE ACT. ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 16 (C) BEING AGGRIEVED, THE REVENUE CARRIED THE ISSUE IN APPEAL TO THE T RIBUNAL. BY THE IMPUGNED ORDER DATED 20 TH AUGUST, 2013 THE TRIBUNAL DISMISSED THE REVENUE'S APPEAL INTER ALIA UPHOLDING THE ORDER OF THE CIT(A). (D)WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNAL UPHOLDING THE ORDER OF THE CIT(A) IN THE PRESENT FACTS CANNO T BE FOUND FAULT WITH. THE TPO IS MANDATED BY LAW TO DETERMINE THE ALP BY FOLLOWING ONE OF THE METHODS PRESCRIBED IN SECTION 92C OF THE ACT READ WITH RULE 10B OF THE INCOME TAX RULES. HOWEVER, THE AFORESAID EXERCISE OF DETERMINING THE ALP IN RESPECT OF THE ROYALTY PAYABLE FOR TECHNICAL KNOW HOW HAS NOT BEEN CARRIED OUT AS REQUIRED UNDER THE ACT. FURTHER, AS HELD BY THE CIT(A) AND UPHELD BY THE IMPUGNED ORDER OF THE TRIBUNAL, THE TPO HAS GIVEN NO REASONS JUSTIFYING THE TECHNICAL KNOW HOW ROYALTY PAID BY THE ASSESSING OFFICER TO ITS ASSOCIATED ENTERPRISE BEING RESTRICTED TO 1% INSTEAD OF 2%, AS CLAIMED BY THE RESPONDENT ASSESSEE. THIS DETERMINATION OF ALP OF TECHNICAL KNOW HOW ROYALTY BY THE TPO WAS AD HOC AND ARBITRARY AS HELD BY THE CIT(A) AND THE TRIBUNAL. (E)IN THE ABOVE VIEW, THE QUESTION AS PROPOSED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. 8 .3. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE HAVE NO HESITATION IN DIRECTING THE L D. TPO TO DELETE ADJUSTMENT MADE TO ALP IN RESPECT OF AFORESAID THREE SERVICES VIZ., GIS SERVICES (RS.62,95,226/ - ), MSF SERVICES (RS.7,88,90,157/ - ) AND MNC SERVICES (RS.19,29,008 / - ). ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED ON THIS TECHNICAL ASPECT AND GROUNDS RAISED BY THE REVENUE ARE DISMISSED ON THIS TECHNICAL ASPECT. 8 .4. IN VIEW OF THE AFORESAID DECISION RENDERED ON TECHNICAL ASPECT, THE OTHER ELABORATE ARGUMENTS MADE BY BOTH LD. AR AND LD. DR BEFORE US ON MERITS FOR JUSTIFICATION OF THE IR RESPECTIVE ACTIONS NEED NOT BE GONE INTO AND BECOMES ACADEMIC IN NATURE. WE MAKE IT CLEAR THAT NO OPINION IS ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 17 RENDERED BY US WITH REGARD TO THOSE ELABORATE ARGUMENTS MADE BY BOTH THE PARTIES BEFORE US. 9 . GROUND NO.3 RAISED BY THE ASSESSEE IN ITS APPEAL IS WITH REGARD TO THE ACTION OF THE LD. DRP IN CONFIRMING ADDITION OF RS.8,25,869/ - ON ACCOUNT OF NON - RECONCILIATION ON CERTAIN AMOUNTS REFLECTED IN FORM 26AS WITH THE RETURN OF INCOME OF THE ASSESSEE. 9.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO RECONCILE THE AIR STATEMENT. ON PERUSAL OF THE RE - CONCILIATION SUBMITTED BY THE ASSESSEE, THE LD. AO FOUND THAT THERE WERE MANY RECEIPTS ENTRIES AS PER FORM 26AS BUT WHICH WERE NOT REPORTED IN TH E BOOKS OF ACCOUNTS OF THE ASSESSEE. THE LD. AO ACCORDINGLY MADE AN ADDITION FOR THE DIFFERENCE IN THE SUM OF RS.8,25,869/ - IN THE ASSESSMENT. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. DRP. 9.2. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 9.3. W E HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE DETAILS OF RE CONCILIATION STATEMENT SUBMITTED BY THE ASSESSEE ARE ENCLOSED IN PAGES 1053,1055,1071 OF THE PAPER BOOK WHERE IN WE FIND THAT ASSESSEE HAD RE CONCILED CERTAIN SPECIFIC CLIENT BALANCES SUCH AS ITC LIMITED, TATA GLOBAL BEVERAGES LIMITED ETC., THE LD. AR CONTENDED BEFORE US THAT ASSESSEE IS AN ADVERTISEMENT AGENCY AND IS ENGAGED IN ACTIVITIES OF RELEASING ADVERTISEMENTS ON BEHALF OF CLIENTS AND PRODUCTION OF ADVERTISEMENT FOR CLIENTS. THE ASSESSEE EARNS REVENUE ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 18 EITHER IN THE FORM OF COMMISSION OR FEES. THE INCOME IN THE CASE OF COMMISSION IS ONLY A SPECIFIED PERCENTAGE OF THE GROSS BILLING, ACCORDINGLY, THE ASSESSEE REPORTS ONLY THE COMMISSION PORTION AS IT S INCOME IN ITS P & L ACCOUNT AND NOT THE GROSS RECEIPTS. HENCE, THERE IS ALWAYS BOUND TO BE DIFFERENCE WITH REGARD TO THE AMOUNTS REFLECTED IN THE FORM 26AS VIS - - VIS BOOKS OF ACCOUNTS OF THE ASSESSEE WITH REGARD TO THIS ASPECT OF THE TRANSACTION. 9. 4 . WE ALSO FIND THAT ASSESSEE HAD IDENTIFIED THE DIFFERENCE IN AMOUNTS WITH RESPECT TO VARIOUS PARTIES WHICH ARE DETAILED IN PAGES 84 & 85 OF THE APPEAL SET. THE ASSESSEE DOES NOT DENY HAVING TRANSACTIONS WITH THESE PARTIES. IT IS ONLY THE AMOUNT WHICH IS REFLE CTED IN FORM 26AS AGAINST THE NAMES OF SAID PARTIES WHICH THE ASSESSEE WAS NOT ABLE TO RECONCILE. WE FIND THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS REASONABLE AND IT IS HIGHLY IMPRACTICABLE FOR RECONCILING THE SAME IN THIS SCENARIO. WE ARE INCLINED TO ACCEPT ARGUMENT OF THE LD. AR THAT INCOME OFFERED BY THE ASSESSEE IS MUCH MORE THAN WHAT IS REFLECTED IN FORM 26AS. 9. 5 . WE ALSO PLACE RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. S. GANESH IN ITA NO.1930/2011 DA TED 18/03/2014 WHEREIN ON SIMILAR FACTS, THE HONBLE JURISDICTIONAL HIGH COURT HAD AGREED WITH THE VIEW OF THE TRIBUNAL AND HELD THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS CASE. FOR THE SAKE OF CONVENIENCE THE SAID ORDER IS REPRODUCED HEREUNDER: - ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 19 1. HAVING HEARD MS.BHARUCHA, LEARNED COUNSEL APPEARING ON BEHALF OF THE REVENUE AND PERUSING THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, WE ARE OF THE OPINION THAT THE TRIBUNAL DID NOT COMMIT ANY ERROR OF LAW OR PERVERSITY IN PARTLY ALLOWING TH E APPEAL OF THE RESPONDENT ASSESSEE. 2. THE ASSESSEE IN REGARD TO GROUNDS 1 TO 7 CHALLENGED THE ORDER OF THE COMMISSIONER OF INCOME TAX IN CONFIRMING THE ADDITION OF RS.47,37,000/ MADE BY ASSESSING OFFICER ON ACCOUNT OF NON - CONCILIATION OF PROFESSIONAL RECEIPTS WITH TDS CERTIFICATES. INSOFAR AS THAT ASPECT IS CONCERNED, THE TRIBUNAL CONSIDERED THIS SUBMISSION OF BOTH SIDES AND FOUND THAT THE ASSESSEE WAS ENGAGED AS AN ADVOCATE TO ARGUE THE MATTERS BY WHAT IS POPULARLY KNOWN AS ADVOCATES ON RECORD OR INST RUCTING ADVOCATES METHOD, MEANING THEREBY THE CLIENT DOES NOT ENGAGE THE ASSESSEE DIRECTLY BUT A PROFESSIONAL OR THE ADVOCATE ENGAGED BY THE CLIENT REQUESTS THE ASSESSEE TO ARGUE THE CASE. THE BRIEF IS THEN TAKEN AS THE COUNSEL BRIEF. THAT BEING THE PRACTI CE, THE ASSESSEE GAVE AN EXPLANATION THAT THE BREAK UP AS DESIRED CANNOT BE GIVEN AND WITH REGARD TO ALL PAYMENTS. IT IS POINTED OUT THAT AT TIMES, ASSESSEE RECEIVES FEES DIRECTLY FROM THE CLIENTS OR FROM THE INSTRUCTING ADVOCATES OR CHARTERED ACCOUNTANTS IF SUCH PROFESSIONALS HAVE COLLECTED THE AMOUNTS FROM THE CLIENTS. 3. UNDER THESE CIRCUMSTANCES, THE BREAK UP AS DESIRED CANNOT BE PLACED ON RECORD. AN EXPLANATION WHICH HAS BEEN GIVEN BY THE ASSESSEE AND ACCEPTED IN THE PAST HAS BEEN NOW ACCEPTED BY THE TRIBUNAL ONCE AGAIN. SINCE IT IS ACCEPTED FOR THE ASSESSMENT YEAR 2006 07, IN THE PECULIAR FACTS, IN RELATION TO THE PRESENT ASSESSEE, WE ARE OF THE VIEW THAT THIS APPEAL DOES NOT DESERVE TO BE ENTERTAINED. IT DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTIO N OF LAW. 4. APPEAL IS ACCORDINGLY DISMISSED. 9. 6 . IN VIEW OF THE AFORESAID FINDINGS, FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS, WE DIRECT THE LD. AO TO DELETE THE ADDITION MADE IN THE SUM OF RS.8,25 ,869/ - . ACCORDINGLY, GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED. ITA NOS.1156/MUM/2015 & 1187/MUM/2015 M/S. LINTAS INDIA PRIVATE LIMITED 20 10 . THE GROUND NO.4 RAISED BY THE ASSESSEE IS WITH REGARD TO CHARGEABILITY OF INTEREST U/S.234D OF THE ACT, WHICH IS CONSEQUENTIAL IN NATURE. WE ALSO DIRECT THE LD. AO TO VERIFY WHETHER AT ALL ANY REFUND WAS ACTUALLY GRANTED TO THE ASSESSEE OR ADJUSTED WITH TAX ARREARS WITH DUE INTIMATION TO THE ASSESSEE BEFORE DECIDING THE LEVY OF INTEREST U/S.234D OF THE ACT. ACCORDINGLY, THE GROUND NO.4 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 1 1 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 / 06 /201 9 SD / - ( AMARJIT SINGH ) SD/ - ( M.BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 12 / 06 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//
