DCIT, CHENNAI V. Parryware Roca Pvt. Ltd., CHENNAI

ITA 1169/CHNY/2014

• Counselvise Citation: 116921714 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR MILIND MADHUKAR BHUSARI
• Keywords: Transfer pricing; Retrospective amendment; Non-deduction of tax
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.586/MDS/2014 & ./ ITA NO.610/MDS/2015 ( )( / ASSESSMENT YEARS : 2009-10 & 2010-11 M/S ROCA BATHROOM PRODUCTS PVT. LTD., (FORMERLY PARRYWARE ROCA PVT. LTD.), KGN TOWERS, 4 TH FLOOR, ETHIRAJ SALAI, EGMORE, CHENNAI - 600 105. PAN : AAACE 9982 E V. (1) THE JOINT COMMISSIONER OF INCOME TAX, COMPANY RANGE V, CHENNAI - 600 034. (2) THE ASSISTANT COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT I, CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENTS) ./ ITA NO.1169/MDS/2014 & C.O. NO. 55/MDS/2014 ( )( / ASSESSMENT YEAR : 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(4), CHENNAI - 600 034. V. M/S PARRYWARE ROCA PVT. LTD., DARE HOUSE, NO.234, NSC BOSE ROAD, CHENNAI - 600 034 (+,/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) +, / 0 / APPELLANT BY : SHRI RAGHUNATHAN SAMPATH, ADVOCATE -.+, / 0 / RESPONDENT BY : DR. MILIND MADHUKAR BHUSARI, CIT 1 / 2% / DATE OF HEARING : 13.10.2015 3') / 2% / DATE OF PRONOUNCEMENT : 18.12.2015 2 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH ASSESSEE AND REVENUE HAVE FILED APPEALS AGA INST THE ORDER OF THE ASSESSING OFFICER DATED 16.01.2014. T HE ASSESSEE HAS ALSO FILED A CROSS-OBJECTION. THEREFORE, WE HEARD THESE APPEALS AND THE CROSS-OBJECTION TOGETHER AND DISPOSING OF THE S AME BY THIS COMMON ORDER. 2. LETS FIRST TAKE THE ASSESSEES APPEALS IN I.T.A . NO.586/MDS/2014 AND I.T.A. NO.610/MDS/2015. 3. SHRI RAGHUNATHAN SAMPATH, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE-COMPANY IS ES TABLISHED BY ROCA SANITARIA S.A. SPAIN AND EID PARRY LIMITED IN JUNE, 2006, AS A JOINT VENTURE COMPANY. IN FACT, ROCA SANITARIA S .A. SPAIN AND EID PARRY LIMITED WERE HAVING EQUAL SHARES IN THE ASSES SEE-COMPANY. DURING THE ASSESSMENT YEAR 2009-10, ROCA INVESTMENT S.L. PURCHASED 47% OF STAKE IN THE ASSESSEE-COMPANY FROM EID PARRY LIMITED, THEREBY ROCA GROUPS STAKE IN THE ASSESSEE -COMPANY INCREASED TO 97%. ACCORDING TO THE LD. COUNSEL, TH E ASSESSEE- COMPANY ENGAGED ITSELF IN THE BUSINESS OF MANUFACTU RING AND 3 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 DISTRIBUTION OF PARRYWARE AND ROCA SANITARY WARE AN D TAPS. THE ASSESSEE, IN FACT, IMPORTED FINISHED GOODS FROM ITS ASSOCIATE ENTERPRISE FOR RESALE IN INDIA. ACCORDING TO THE L D. COUNSEL, TO DETERMINE THE ARM'S LENGTH PRICE OF IMPORTED FINISH ED GOODS, THE ASSESSEE ADOPTED RESALE PRICE METHOD AS MOST APPROP RIATE METHOD. THE TRANSFER PRICING OFFICER, HOWEVER, ADO PTED TRANSACTION NET MARGIN METHOD USING BERRY RATIO AS PROFIT LEVEL INDICATOR. ACCORDING TO THE LD. COUNSEL, IN THE AS SESSMENT YEAR 2008-09, RESALE PRICE METHOD WAS ACCEPTED BY THE TR ANSFER PRICING OFFICER AS MOST APPROPRIATE METHOD. A COPY OF THE ORDER IS AVAILABLE AT PAGES 285 TO 287 OF THE PAPER-BOOK. T HE BUSINESS MODEL CONTINUED IN THE YEARS UNDER CONSIDERATION AL SO. INSPITE OF THAT THE TPO DETERMINED THE ARM'S LENGTH PRICE IN R ESPECT OF THE PURCHASE OF FINISHED GOODS FROM ASSOCIATE ENTERPRIS E BY ADOPTING TRANSACTION NET MARGIN METHOD. THE LD.COUNSEL FURT HER SUBMITTED THAT THE ASSESSEE INCURRED SUBSTANTIAL SALES AND DI STRIBUTION COST AND THE MAJOR PART OF SUCH AMOUNT REIMBURSED BY ROC A SANITARIA S.A. SPAIN. 4 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 4. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSEE IS AN EXCLUSIVE DISTRIBUTOR OF ROCA GROUP PRODUCTS. THE ASSESSEE PROCURES FINISHED GOODS ON PRINCIPAL TO PR INCIPAL BASIS, PERFORMING ALL SALES AND MARKETING FUNCTIONS ON ITS OWN. THE ASSESSEE NEGOTIATES AND ENTERS INTO CONTRACT WITH T HIRD PARTY CUSTOMERS ON ITS OWN ACCOUNT. THE INVENTORY RISK A NALYSIS OF THE ASSESSEE IS EXPLAINED IN THE NOTE FILED AT PAGES 22 4 TO 227 OF THE PAPER-BOOK. ACCORDING TO THE LD. COUNSEL, THE ASSE SSEE IS A FULL- FLEDGED RISK BEARING DISTRIBUTOR. 5. INSPITE OF THE CLEAR AND CATEGORICAL FUNCTION PE RFORMED BY THE ASSESSEE, ACCORDING TO THE LD.COUNSEL FOR THE ASSES SEE, THE TRANSFER PRICING OFFICER OBSERVED IN THE TRANSFER P RICING ORDER AS IF THE ASSESSEE IS A CAPTIVE, ROUTINE, FULL-FLEDGE D DISTRIBUTOR AT PARA 6.1.3. REFERRING TO PARA 6.2 OF THE TRANSFER PRICI NG ORDER, THE LD.COUNSEL SUBMITTED THAT THE ASSESSING OFFICER AGA IN CLASSIFIED THE ASSESSEE AS ROUTINE DISTRIBUTOR AND ALSO A SERVIC E PROVIDER. AGAIN IN PARA 6.2.2, THE TRANSFER PRICING OFFICER CLASSIF IED THE ASSESSEE AS AN AGENT. FURTHER, REFERRING TO PARA 6.2.4 OF THE TRANSFER PRICING 5 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 ORDER, THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE W AS CLASSIFIED AS CAPTIVE DISTRIBUTOR AND AGENT FOR THE ASSOCIA TE ENTERPRISE. 6. REFERRING TO THE OBSERVATION MADE IN THE ORDER O F DISPUTE RESOLUTION PANEL AT PAGE 8, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DRP OBSERVED THAT THE ASSESSEE-C OMPANY PERFORMED ALL THE VALUABLE FUNCTIONS WITH RISKS AS AN INDEPENDENT ENTITY. THEREFORE, ACCORDING TO THE LD. COUNSEL, B OTH TPO AND DISPUTE RESOLUTION PANEL COULD ASCERTAIN THE EXACT FUNCTIONS OF THE ASSESSEE AND THEY HAVE ASSIGNED MULTIPLE CHARACTERI ZATION. DUE TO MISUNDERSTANDING OF THE FUNCTIONS AND RISKS INVOLVE D, THE TRANSFER PRICING OFFICER AND THE DISPUTE RESOLUTION PANEL PR OCEEDED TO CHANGE TRANSFER PRICING METHOD AND PROFIT LEVEL IND ICATOR TO DETERMINE THE ARM'S LENGTH PRICE OF THE PURCHASES M ADE BY THE ASSESSEE FROM THE ASSOCIATE ENTERPRISE. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE TRANSACTION NET MARGIN METHOD ADOPTED BY THE DISPUTE RESOLUTION PANEL CANNOT BE A CORRECT METHOD . ACCORDING TO THE LD. COUNSEL, THE RESALE PRICE METHOD IS THE MOS T APPROPRIATE METHOD IN VIEW OF THE FUNCTIONS PERFORMED BY THE AS SESSEE- COMPANY. 6 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 7. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSING OFFICER ADOPTED BERRY RATIO AS PROFIT LEV EL INDICATOR. UNDER THE TRANSACTION NET MARGIN METHOD, BY REFERRI NG TO PARA 2.30 OF THE OECD GUIDELINES, THE TRANSFER PRICING OFFICE R SELECTIVELY REFERRED TO THE OECD GUIDELINES WITHOUT COMPLETELY READING PARA 2.30 OF THE OECD GUIDELINES. REFERRING TO PARA 2.3 0 OF THE OECD GUIDELINES, THE LD.COUNSEL SUBMITTED THAT THE RESAL E PRICE MARGIN IS MORE APPROPRIATE WHERE IT IS REALIZED WITHIN A SHOR T TIME OF THE RESELLERS PURCHASE OF THE GOODS. ACCORDING TO THE LD. COUNSEL, AS PER THE OECD GUIDELINES, FOR APPLICATION OF RESALE PRICE METHOD, THE TESTED PARTY SHOULD HAVE MINIMAL TIME BETWEEN O RIGINAL PURCHASE AND RESALE. ACCORDING TO THE LD. COUNSEL, THE YEAR UNDER CONSIDERATION IS JUST SECOND YEAR OF OPERATION OF T HE ASSESSEES DISTRIBUTION. THEREFORE, THE SALES/STOCK TURNOVER OF THE GOODS WERE SO LOW. SUBSEQUENTLY, IN FUTURE YEARS THE STOCK PO SITION WAS SIGNIFICANTLY IMPROVED. 8. REFERRING TO PAGE 10 OF THE TRANSFER PRICING ORD ER, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRAN SFER PRICING OFFICER PLACED RELIANCE AT PARA 2.31 OF THE OECD GU IDELINES. THE 7 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 ASSESSING OFFICER HAS TAKEN THE SELECTIVE ROUTINE O ECD GUIDELINES WITHOUT CONSIDERING PARA 2.31. REFERRING TO PARA 2 .31 OF THE OECD GUIDELINES, THE LD.COUNSEL SUBMITTED THAT IN CASE A DISTRIBUTOR ENGAGES IN COMMERCIAL ACTIVITY, THE GROSS PROFIT EA RNED BY IT WOULD NEED TO BE COMPARED TO DISTRIBUTORS PERFORMING MIN IMAL FUNCTION. THE TRANSFER PRICING OFFICER ACCEPTED THE COMPARABL ES SELECTED BY THE ASSESSEE IN THE TRANSFER PRICING STUDY AND USED THE SAME COMPARABLES TO MAKE TRANSFER PRICING ADJUSTMENT. 9. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSING OFFICER HAS ALSO REFERRED TO THE DECISION OF DU PONT CASE. ACCORDING TO THE LD. COUNSEL, DU PONT IS A COMPANY IN SWITZERLAND. THE TRANSFER PRICING OFFICER QUOTED THAT THIS SWITZ ERLAND COMPANY BY TAKING POSSESSION OF INVENTORY HAD ACTED AS FULL -FLEDGED DISTRIBUTOR FOR ITS UNITED STATES PARENT COMPANY. ACCORDING TO THE LD. COUNSEL, DU PONT WAS THE WORLDS LARGEST CHEMIC AL COMPANY AND INTENDED TO ESTABLISH A MARKET IN EUROPE. DU PONT DE NEMOURS INTERNATIONAL S.A. WAS ESTABLISHED INTENTIONALLY LO CATED IN A LOW TAX JURISDICTION IN SWITZERLAND, SHELTERED FROM US INCO ME-TAX, TO FINANCE ITS EUROPEAN EXPANSION. DR. CHARLES BERRY ARGUING FOR THE US 8 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 REVENUE, USED BERRY RATIO TO DEMONSTRATE THAT THE O PERATING EXPENSES OF THE DU PONT COMPANY WAS SO LOW THAT IT DID NOT HAVE TO SPEND AS MANY DOLLARS TO PROVIDE SERVICE AND OTHERW ISE OPERATE ITS BUSINESS AS DISTRIBUTORS WHO BOUGHT AND SOLD PRODUC TS AND SERVICES AT PRICES DETERMINED BY FREE MARKET FORCES. THE LD .COUNSEL FURTHER CLARIFIED THAT BERRY RATIO IS AN APPROPRIATE PROFIT INDICATOR TO TEST THE TRANSFER PRICING RATE OF LIMITED RISK DISTRIBUTOR W ITH GUARANTEED OPERATIONAL PERFORMANCE. IN THE CASE BEFORE US, AC CORDING TO THE LD. COUNSEL, ROCA INDIA OPERATES AS A FULL-FLEDGED DISTRIBUTOR PERFORMING ALL FUNCTIONS AND BEARS ALL RISKS RELATI NG TO THE DISTRIBUTION FUNCTION. IN SUCH A SCENARIO, THE APPLICATION OF B ERRY RATIO IS INAPPROPRIATE IN THE PRESENT CASE. REFERRING TO TH E DECISION OF DELHI BENCH OF THIS TRIBUNAL IN GAP INTERNATIONAL SOURCIN G (INDIA) LTD. V. ACIT (2012) 25 TAXMANN.COM 414, THE LD.COUNSEL SUBM ITTED THAT THE TRANSFER PRICING OFFICER PLACED RELIANCE ON THE DECISION OF DELHI BENCH OF THIS TRIBUNAL FOR APPLICATION OF BERRY RAT IO. ACCORDING TO THE LD. COUNSEL, IN THE CASE BEFORE DELHI BENCH, TH E SERVICE PROVIDER DID NOT HAVE TITLE TO THE GOODS. THEREFOR E, THE DELHI BENCH OF THE TRIBUNAL FOUND THAT BERRY RATIO IS A CORRECT METHOD TO DETERMINE THE PROFIT INDICATOR. IN THE CASE BEFORE US, THE TITLE TO THE 9 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 GOODS REST WITH THE ASSESSEE. THEREFORE, BERRY RAT IO CANNOT BE APPLIED IN RESPECT OF FUNCTIONS PERFORMED BY THE AS SESSEE- COMPANY. 10. ON THE CONTRARY, DR. MILIND MADHUKAR BHUSARI, T HE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT ADMITTE DLY THE ASSESSEE-COMPANY IS A JOINT VENTURE OF ROCA SANITAR IA S.A. SPAIN AND EID PARRY LIMITED. INITIALLY, EID PARRY LIMITE D HAD 50% SHARES. HOWEVER, ON 16 TH JULY, 2008, ROCA INVESTMENT S.L. PURCHASED 47% OF THE SHARES FROM EID PARRY LIMITED. ACCORDINGLY, ROCA INVESTMENT S.L. BECAME 97% SHAREHOLDER IN THE ASSES SEE- COMPANY. THE ASSESSEE-COMPANY CLAIMS THAT IT IS A DISTRIBUTOR FOR ROCA PRODUCTS. REFERRING TO THE AGREEMENT BETWEEN ROCA SANITARIA S.A. SPAIN AND THE ASSESSEE, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS TO PURCHASE THE GOODS AT THE PRICE AND CONDITION QUOTED BY ROCA SANITARIA S.A. SPAIN. REFERRING TO THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE IS NEGOTIATING WITH THIRD PARTY CUSTOMERS, THE LD. D.R. POINTED OUT THAT ROCA IS A BRAND PRODUCT WHICH HAS ITS OWN TAG PRICE AND THE DISTRIBUTOR IS GUIDED BY THE SELLERS MANUAL PROVIDED BY THE MANUFACTURER. THIS IS EVIDENT FROM 10 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND ROCA SANITARIA S.A. SPAIN. THERE IS NO CREDIT RISK ASSO CIATED WITH ASSESSEE-COMPANY. THE ASSESSEE-COMPANY IN FACT PRO VIDES AN EXTENSIVE MARKET SUPPORT FUNCTION BY UTILIZING THE MANPOWER RESOURCES AVAILABLE WITH THE ASSESSEE. THE MARKET SUPPORT SERVICE INCLUDED ADVERTISEMENT, BRAND PROMOTION ACTIVITY OF ROCA GROUP. IN FACT, ROCA GROUP HAS REIMBURSED THE EXPENSES WITHOU T ANY MARKER. THE GOODS WERE SUPPLIED AT THE CONVENIENCE OF ROCA SANITARIA S.A. SPAIN AND NOT AT THE REQUIREMENT OF THE ASSESSEE. THE ASSESSEE- COMPANY HAS NO SAY IN THE PURCHASE PRICE. THEREFOR E, ACCORDING TO THE LD. D.R., RESALE PRICE METHOD WOULD NOT GIVE CO RRECT ARM'S LENGTH PRICE. 11. REFERRING TO OECD GUIDELINES, MORE PARTICULARLY PARA 2.31, THE LD. D.R. POINTED OUT THAT TRANSACTION NET MARGI N METHOD WOULD BE THE MOST APPROPRIATE METHOD TO DETERMINE THE ARM 'S LENGTH PRICE OF THE GOODS PURCHASED BY THE ASSESSEE FROM A SSOCIATE ENTERPRISE. REFERRING TO BERRY RATIO, THE LD. D.R. POINTED OUT THAT THE FUNCTIONS CARRIED OUT BY THE ASSESSEE-COMPANY A RE NOT PROPORTIONATE TO THE SALE. ACCORDING TO THE LD. D. R., THE MOST 11 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 APPROPRIATE METHOD HAS TO BE DETERMINED ON THE FACT S OF THE CASE ON YEAR TO YEAR BASIS. THEREFORE, MERELY BECAUSE THE TRANSFER PRICING OFFICER ACCEPTED THE METHOD ADOPTED BY THE ASSESSEE FOR EARLIER ASSESSMENT YEAR THAT DOES NOT MEAN THAT THE SAME HAS TO BE ADOPTED FOR THE YEAR UNDER CONSIDERATION ALSO. ACC ORDING TO THE LD. D.R., THE ASSESSEE INCURRED EXPENSES IN ADVERTISEME NT, MARKETING, SALES PROMOTION WHICH WERE SUBSEQUENTLY REIMBURSED BY ROCA SANITARIA S.A. SPAIN. THE LD. D.R. FURTHER SUBMITT ED THAT THE ASSESSEE USED THE TANGIBLE ASSETS FOR THE PURPOSE O F CARRYING OUT THE DISTRIBUTION APART FROM THE INTANGIBLE ASSETS S UCH AS TRAINED MANPOWER AND MANAGERIAL POWER AND HAD HUMAN RESOURC ES. THESE ARE ALL ECONOMIC FACTORS WHICH NEED TO BE TAK EN INTO CONSIDERATION. ACCORDING TO THE LD. D.R., AN INDEP ENDENT ENTREPRENEUR WOULD DO EVERYTHING IN A LIMIT SO THAT GROSS PROFIT IS ENOUGH TO TAKE CARE OF THESE EXPENDITURES AND ALSO LEAVE SOME RESIDUAL AMOUNT AS PROFIT. ACCORDING TO THE LD. D. R., THE GROSS PROFIT IS NOT ENOUGH TO TAKE CARE OF EVEN THE EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF SALE OF ROCA PRODUCTS. 12 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 12. REFERRING TO THE ORDER OF THE DISPUTE RESOLUTIO N PANEL, MORE PARTICULARLY PAGE 9, THE LD. D.R. SUBMITTED THAT TH E TABLE PRODUCED BY THE DISPUTE RESOLUTION PANEL CLEARLY INDICATES T HAT THE GROSS PROFIT EARNED BY THE ASSESSEE IS NOT SUFFICIENT TO MEET THE EXPENDITURE FOR DISTRIBUTING THE ROCA PRODUCTS. TH E ROCA PRODUCT, BEING A PREMIUM BRAND, THE ASSESSEE HAS NO LEVERAGE IN THE RESALE. THOUGH THE ASSESSEE CLAIMS THAT IT IS DOING BUSINES S INDEPENDENTLY, THERE IS NO INDEPENDENCE IN THE AFFAIRS OF THE ASSE SSEE. THE ASSESSEE IS FAIRLY DEPENDENT ON ASSOCIATE ENTERPRIS E TO CARRY OUT ITS BUSINESS. THEREFORE, THE DISPUTE RESOLUTION PANEL HAS RIGHTLY UPHELD THE TRANSACTION NET MARGIN METHOD AS MOST AP PROPRIATE METHOD. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FOR THE PURPOSE OF DETERMINING THE MOST APPROPRIATE METHOD, ONE OF THE FACTORS TO BE TAKEN INTO CONSIDERATION IS THE FUNCTION PERFORMED BY THE PARTIES. OTHER THAN THE FUNCTION PERFORMED, ASSETS EMPLOYED ARE TO BE INCLUDED, RISKS ASSUMED BY THE ENTERPRISES ARE ALSO NEED TO BE TAKEN INTO CONSIDERATION. IN THE CASE BEFORE US, T HE ASSESSEE 13 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 CLAIMS THAT IT IS AN INDEPENDENT DISTRIBUTOR, ASSUM ING RISKS IN THE DISTRIBUTION BUSINESS. IF IT IS AN INDEPENDENT DIS TRIBUTOR, IT IS NOT KNOWN WHY ROCA SANITARIA S.A. SPAIN REIMBURSED SUBS TANTIAL SALES DISTRIBUTION AND ADVERTISEMENT COST TO THE ASSESSEE -COMPANY. ADMITTEDLY, ROCA SANITARIA S.A. SPAIN REIMBURSED MA JOR PART OF THE COST INVOLVED BY THE ASSESSEE. AS RIGHTLY SUBMITTE D BY THE LD.COUNSEL FOR THE ASSESSEE, THE TRANSFER PRICING O FFICER CONFUSED HIMSELF IN CHARACTERIZATION OF THE ASSESSEES FUNCT IONS AS CAPTIVE, ROUTINE, FULL-FLEDGED DISTRIBUTOR AT ONE PLACE AND ROUTINE DISTRIBUTOR IN ANOTHER PLACE. THE TRANSFER PRICING OFFICER IS ALS O CHARACTERIZING THE ASSESSEE AS AN AGENT IN ONE PLACE AND CAPTIVE D ISTRIBUTOR AND AGENT IN ANOTHER PLACE. FOR THE PURPOSE OF DETERMI NING MOST APPROPRIATE METHOD FOR DETERMINING ARM'S LENGTH PRI CE, THE FUNCTIONS PERFORMED BY THE ASSESSEE NEED TO BE ASCE RTAINED. IN OTHER WORDS, WHETHER THE ASSESSEE IS AN INDEPENDENT DISTRIBUTOR OR IT ACTS ONLY AS AN AGENT WITHOUT ANY RISK HAS TO BE ASCERTAINED. IF ASSESSEE IS AN INDEPENDENT DISTRIBUTOR HAVING ALL T HE RISKS, THEN THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT RESALE P RICE METHOD WOULD BE THE MOST APPROPRIATE METHOD. HOWEVER, THE AUTHORITIES BELOW COULD NOT DETERMINE THE ACTUAL FUNCTIONS PERF ORMED BY THE 14 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 ASSESSEE. IN VIEW OF THE MISUNDERSTANDING OF THE F ACTS BY THE TRANSFER PRICING OFFICER AND DISPUTE RESOLUTION PAN EL, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE DISPUTE RESOLUTION PANEL ONCE A GAIN ON THE BASIS OF THE AGREEMENT ENTERED INTO BETWEEN THE ASS ESSEE AND ROCA SANITARIA S.A. SPAIN. IN OTHER WORDS, THE D ISPUTE RESOLUTION PANEL SHALL RE-EXAMINE THE ISSUE AFRESH ON THE BASI S OF THE AGREEMENT ENTERED INTO BETWEEN THE PARTIES AND DETE RMINE THE ACTUAL FUNCTION PERFORMED BY THE ASSESSEE. THE DIS PUTE RESOLUTION PANEL HAS TO FIND OUT WHETHER THE ASSESSEE FUNCTION S ONLY AS AN INDEPENDENT DISTRIBUTOR OR AS AGENT OF ROCA SANITAR IA S.A. SPAIN. SINCE THESE FACTS WERE NOT CONSIDERED BY THE TRANSF ER PRICING OFFICER OR DISPUTE RESOLUTION PANEL, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED. ACCORDINGLY, THE ORDERS OF THE ASSESSING OFFICER AR E SET ASIDE AND THE ASSESSING OFFICER SHALL REFER THE MATTER AGAIN TO THE DISPUTE RESOLUTION PANEL. THE DISPUTE RESOLUTION PANEL SHA LL EXAMINE THE AGREEMENT BETWEEN THE PARTIES AND OTHER TRANSACTION S BETWEEN THE ASSESSEE AND ROCA SANITARIA S.A. SPAIN AND THEREAFT ER DETERMINE THE ACTUAL FUNCTION PERFORMED BY THE ASSESSEE APART FROM THE ASSETS 15 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 EMPLOYED IN THE TRANSACTION, INCLUDING THE RISKS AS SUMED BY THE ASSESSEE, AND THEREAFTER DECIDE THE MATTER IN ACCOR DANCE WITH LAW. THE DISPUTE RESOLUTION PANEL SHALL GIVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE BEFORE GIVING DIRECTION TO THE ASSESSING O FFICER UNDER SECTION 144C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 14. NOW COMING TO REVENUES APPEAL IN I.T.A. NO.1169/MDS/2014, THE ONLY ISSUE ARISES FOR CONSIDE RATION IS WITH REGARD TO DISALLOWANCE UNDER SECTION 40(A)(IA) OF T HE ACT FOR SHORT DEDUCTION OF TAX AT SOURCE. 15. DR. MILIND MADHUKAR BHUSARI, THE LD. DEPARTMENT AL REPRESENTATIVE, SUBMITTED THAT THE DISPUTE RESOLUTI ON PANEL DIRECTED THE ASSESSING OFFICER NOT TO MAKE ANY DISA LLOWANCE IN RESPECT OF BANDWIDTH CHARGES PAID TO BSNL AND TULIP TELECOM LTD. THE ASSESSEE DEDUCTED TAX UNDER SECTION 194C OF THE ACT. HOWEVER, THE ASSESSING OFFICER FOUND THAT THE PAYME NT MADE BY THE ASSESSEE IS FOR THE USE OF COMMERCIAL EQUIPMENT , THEREFORE, TAX HAS TO BE DEDUCTED UNDER SECTION 194J OF THE ACT AN D NOT UNDER SECTION 194C OF THE ACT. THE DISPUTE RESOLUTION PA NEL DIRECTED THE ASSESSING OFFICER ON THE BASIS OF THE JUDGMENT OF C ALCUTTA HIGH 16 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 COURT IN S.K. TEKRIWAL V. ITO (48 SOT 515). REFERR ING TO THE JUDGMENT OF MADRAS HIGH COURT IN VISWAS PROMOTERS P . LTD. (323 ITR 114), THE LD. D.R. SUBMITTED THAT THE JUDGMENT OF CALCUTTA HIGH COURT IS NOT BINDING. THEREFORE, EVEN FOR SHORT DE DUCTION OF TDS, THE ASSESSING OFFICER HAS TO DISALLOW THE PAYMENT U NDER SECTION 40(A)(IA) OF THE ACT. 16. WE HAVE HEARD SHRI RAGHUNATHAN SAMPATH, THE LD. COUNSEL FOR THE ASSESSEE ALSO. WE HAVE ALSO PERUSED THE RE LEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER FOUND TH AT THE PAYMENT MADE TO BSNL AND TULIP TELECOM LTD. IS FOR THE USE OF THE COMMERCIAL EQUIPMENT, THEREFORE, TAX HAS TO BE DEDU CTED UNDER SECTION 194J OF THE ACT. IT IS AN ADMITTED FACT TH AT THE ASSESSEE HAS DEDUCTED TAX UNDER SECTION 194C OF THE ACT. THEREF ORE, IT IS NOT A CASE OF NON-DEDUCTION OF TAX BUT, IT IS A CASE OF S HORT DEDUCTION. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT. SECTION 40(A)(IA) OF THE ACT CLEARLY SAYS THAT DISALLOWANCE HAS TO BE MADE ON THE FAILURE OF THE ASSESSEE TO DE DUCT TAX IN RESPECT OF THE PAYMENT WHICH IS OTHERWISE TO BE DED UCTED UNDER THE PROVISIONS OF INCOME-TAX ACT. IN THIS CASE, IN FAC T, THE ASSESSEE HAS 17 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 DEDUCTED TAX UNDER SECTION 194C OF THE ACT. THE AS SESSING OFFICER FOUND THAT THE TAX HAS TO BE DEDUCTED UNDER SECTION 194J OF THE ACT. THEREFORE, THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSESSEE MADE A TDS UNDER SECTION 194C OF THE ACT I NSTEAD OF SECTION 194J OF THE ACT, WHETHER ANY DISALLOWANCE C AN BE MADE UNDER SECTION 40(A)(IA) OF THE ACT FOR SHORT DEDUCT ION OF TAX? AN IDENTICAL ISSUE WAS CONSIDERED BY THE COCHIN BENCH OF THIS TRIBUNAL IN APOLLO TYRES LTD. V. DCIT IN I.T.A. NO.31 & 74/C OCH/2010 DATED 29 TH MAY, 2013. THE COCHIN BENCH FOUND THAT FOR SHORT DEDUCTION OF TAX, THERE CANNOT BE ANY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. IN FACT, THE COCHIN BENCH FURTHER OBSERVED AS FOLLOWS:- 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT, WHICH READS AS FOLLOWS: (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICA L SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONT RACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT AN Y WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII -B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SU B-SECTION (1) OF SECTION 139: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DAT E 18 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 SPECIFIED IN SUB-SECTION (1) OF SECTION 139, SUCH SU M SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF T HE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION.- FOR THE PURPOSES OF THIS SUB-CLAUSE.- (I) COMMISSION OR BROKERAGE SHALL HAVE THE SAME MEANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTI ON 194H; (II) FEES FOR TECHNICAL SERVICES SHALL HAVE THE S AME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUBSECTION (1 ) OF SECTION 9; (III) PROFESSIONAL SERVICES SHALL HAVE THE SAME M EANING AS IN CLAUSE (A) OF THE EXPLANATION TO SECTION 194J; (IV) WORK SHALL HAVE THE SAME MEANING AS IN EXPLAN ATION III TO SECTION 194C; (V) RENT SHALL HAVE THE SAME MEANING AS IN CLAUSE (I) TO THE EXPLANATION TO SECTION 194-I; (VI) ROYALTY SHALL HAVE THE SAME MEANING AS IN EXP LANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9; THEREFORE, SECTION 40(A)(IA) ENABLES THE ASSESSING O FFICER TO DISALLOW ANY PAYMENT TOWARDS INTEREST, COMMISSION O R BROKERAGE, FEE FOR PROFESSIONAL SERVICE, FEES FOR T ECHNICAL SERVICE ETC. ON WHICH TAX IS DEDUCTIBLE AT SOURCE UN DER CHAPTER XVIIB AND IF SUCH TAX HAS NOT BEEN DEDUCTED O R AFTER DEDUCTION HAS NOT BEEN PAID. 9. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISION S OF SECTION 201(1A) WHICH READS AS FOLLOWS: (1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SE CTION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUB-SECTION DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LI ABLE TO PAY SIMPLE INTEREST,- (I) AT ONE PER CENT FOR EVERY MONTH OR PART OF A MO NTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WA S DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS DEDUCTED ; AND (II) AT ONE AND ONE-HALF PER CENT FOR EVERY MONTH O R PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHI CH SUCH TAX WAS DEDUCTED TO THE DATE ON WHICH SUCH TAX IS ACT UALLY 19 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 PAID, AND SUCH INTEREST SHALL BE PAID BEFORE FURNIS HING THE STATEMENT IN ACCORDANCE WITH THE PROVISIONS OF SUBS ECTION (3) OF SECTION 200.) SECTION 201(1A) ENABLES THE ASSESSING OFFICER TO LEVY INTEREST IN CASE THE TAX WAS NOT DEDUCTED EITHER WHO LLY OR PARTLY OR AFTER DEDUCTION IT WAS NOT PAID AS REQUIR ED UNDER THE ACT. IN FACT, THE PROVISIONS OF SECTION 201(1A) W AS AMENDED BY FINANCE ACT, 2001 WITH RETROSPECTIVE EFFECT FROM 01-04-1962 AFTER THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN P.V. RAJAGOPAL (SUPRA) 10. AS RIGHTLY POINTED OUT BY THE LD.SENIOR COUNSEL FOR THE ASSESSEE IN SECTION 201(1A) THE LEGISLATURE INTENDED TO LEVY INTEREST EVEN IN CASE OF SHORT DEDUCTION OF TAX. IN OTHER WORDS, IF ANY PART OF THE TAX WHICH REQUIRED TO BE DEDUCTED WAS FOUND TO BE NOT DEDUCTED THEN INTEREST U/S 201(1A ) CAN BE LEVIED IN RESPECT OF THAT PART OF THE AMOUNT WHI CH WAS NOT DEDUCTED. WHEREAS THE LANGUAGE OF SECTION 40(A)(IA) D OES NOT SAY THAT EVEN FOR SHORT DEDUCTION DISALLOWANCE HAS TO BE MADE PROPORTIONATELY. THEREFORE, THE LEGISLATURE HA S CLEARLY ENVISAGED IN SECTION 201(1A) FOR LEVY OF INTEREST ON THE AMOUNT ON WHICH TAX WAS NOT DEDUCTED WHEREAS THE LEGISLATURE HAS OMITTED TO DO SO IN SECTION 40(A)(IA) OF THE ACT. IN OTHER WORDS, THE PROVISIONS OF SECTION 40(A)( IA) DOES NOT ENABLE THE ASSESSING OFFICER TO DISALLOW ANY PR OPORTIONATE AMOUNT FOR SHORT DEDUCTION OR LESSER DEDUCTION. 11. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF P.V. RAJAG OPAL (SUPRA). WHILE CONSIDERING THE PROVISIONS OF SECTIO N 201 WHICH STOOD FOR THE ASSESSMENT YEARS 1989-90 TO 1993-94, THE ANDHRA PRADESH HIGH COURT FOUND THAT THERE IS NOTHI NG IN THE SECTION TO TREAT THE EMPLOYER AS THE DEFAULTER WHER E THERE IS A SHORTFALL IN THE DEDUCTION OF TAX AT SOURCE. FOR T HE PURPOSE OF CONVENIENCE, WE ARE REPRODUCING BELOW PARAGRAPHS 34 AND 35 OF THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT: 34. .. WE MAY NOW READ THE PROVISIONS OF SECTIO N 201. 20 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 CONSEQUENCES OF FAILURE TO DEDUCT OR PAY.- (1) IF ANY SUCH PERSON AND IN THE CASES REFERRED TO IN SECTION 194, T HE PRINCIPAL OFFICER AND THE COMPANY OF WHICH HE IS TH E PRINCIPAL OFFICER DOES NOT DEDUCT OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL , WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE OR IT MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT O F THE TAX: PROVIDED THAT NO PENALTY SHALL BE CHARGED UNDER SEC TION 221 FROM SUCH PERSON, PRINCIPAL, OFFICER OR COMPANY UNL ESS THE ASSESSING OFFICER IS SATISFIED THAT SUCH PERSON OR PRINCIPAL OFFICER OR COMPANY, AS THE CASE MAY BE, HAS WITHOUT GOOD AND SUFFICIENT REASONS FAILED TO DEDUCT AND PAY THE TAX. (1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPA NY AS IS REFERRED TO IN THAT SUB-SECTION DOES NOT DEDUCT OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UND ER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTERES T AT FIFTEEN PER CENT PER ANNUM ON THE AMOUNT OF SUCH TAX WAS DED UCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. (2) WHERE THE TAX HAS NOT BEEN PAID AS AFORESAID AFTE R IT IS DEDUCTED, THE AMOUNT OF THE TAX TOGETHER WITH THE AM OUNT OF SIMPLE INTEREST THEREON REFERRED TO IN SUBSECTION (1A) SHALL BE A CHARGE UPON ALL THE ASSETS OF THE PERSON, OR THE COMPANY, AS THE CASE MAY BE, REFERRE D TO IN SUB-SECTION (1). 35. THIS SECTION HAS TWO LIMBS, ONE IS WHERE THE EMPL OYER DOES NOT DEDUCT THE TAX AND THE SECOND WHERE AFTER DEDUCTING THE TAX FAILS TO REMIT IT TO THE GOVERNMEN T. THERE IS NOTHING IN THIS SECTION TO TREAT THE EMPLOYER AS THE DEFAULTER WHERE THERE IS A SHORTFALL IN THE DEDUCTI ON. THE DEPARTMENT ASSUMES THAT WHERE THE DEDUCTION IS NOT AS REQUIRED BY OR UNDER THIS ACT, THERE IS A DEFAULT. BUT THE FACT IS THAT THIS EXPRESSION AS REQUIRED BY OR UNDER THI S ACT GRAMMATICALLY REFERS ONLY TO THE DUTY TO PAY THE TA X THAT IS DEDUCTED AND CANNOT REFER TO THE DUTY TO DEDUCT THE TAX. SINCE THIS IS A PENAL SECTION, IT HAS TO BE STRICTL Y CONSTRUED AND IT CANNOT BE ASSUMED THAT THERE IS A DUTY TO DE DUCT THE 21 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 TAX STRICTLY IN ACCORDANCE WITH THE COMPUTATION UNDE R THE ACT AND IF THERE IS ANY SHORTFALL DUE TO ANY DIFFER ENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM THE EMPLOY ER CAN BE DECLARED TO BE AN ASSESSEE IN DEFAULT. 12. AFTER CONSIDERING THE PROVISIONS OF SECTION 201(1A ) BEFORE AMENDMENT BY FINANCE ACT, 2001, THE ANDHRA PRAD ESH HIGH COURT FOUND THAT AS REQUIRED UNDER THIS ACT DOES NOT REFER TO MEAN TO DEDUCT TAX IN ACCORDANCE WITH COMPU TATION UNDER THE ACT. IN FACT, THE PARLIAMENT AMENDED THE SECTION 201(1A) AFTER THIS JUDGMENT OF ANDHRA PRADESH HIGH CO URT BY INCORPORATING THE WORDS THE WHOLE OR ANY PART O F TAX BY FINANCE ACT, 2001. THE DIVISION BENCH OF THE MUMBAI BENC H OF THIS TRIBUNAL IN THE CASE OF CHANDABHOY AND JASS OBHOY (SUPRA) HAD AN OCCASION TO CONSIDER AN IDENTICAL IS SUE. THE MUMBAI BENCH FOUND THAT SHORT DEDUCTION OF TDS, IF A NY, COULD HAVE BEEN CONSIDERED AS LIABILITY UNDER THE I NCOME-TAX ACT AS DUE FROM THE ASSESSEE. THEREFORE, THE DISALL OWANCE OF THE ENTIRE EXPENDITURE, WHOSE GENUINENESS WAS NOT DO UBTED BY THE ASSESSING OFFICER IS NOT JUSTIFIED. A SIMILA R VIEW WAS ALSO TAKEN BY THE KOKATTA BENCH OF THIS TRIBUNAL IN THE CASE OF CIT VS M/S S.K. TEKRIWAL (SUPRA). IN THIS CASE, ON APPEAL BY THE REVENUE, THE CALCUTTA HIGH COURT CONFIRMED T HE ORDER OF THE KOLKATTA BENCH OF THE TRIBUNAL. 13. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT SECTION 40(A)(IA) DOES NOT ENVISAGE A SI TUATION WHERE THERE WAS SHORT DEDUCTION / LESSER DEDUCTION AS IN CASE OF SECTION 201(1A) OF THE ACT. THERE IS AN OBVIO US OMISSION TO INCLUDE SHORT DEDUCTION / LESSER DEDUCT ION IN SECTION 40(A)(IA) OF THE ACT. THEREFORE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT IN CASE OF SHORT / LESS ER DEDUCTION OF TAX, THE ENTIRE EXPENDITURE WHOSE GENUIN ENESS WAS NOT DOUBTED BY THE ASSESSING OFFICER, CANNOT BE DISALLOWED. ACCORDINGLY, THE ORDERS OF LOWER AUTHOR ITIES ARE SET SIDE AND THE ENTIRE DISALLOWANCE IS DELETED. 22 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 IN VIEW OF THE ABOVE DECISION OF THE COCHIN BENCH O F THIS TRIBUNAL, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE DISPUTE RESOLUTION PANEL AND ACCORDINGLY THE SAME I S CONFIRMED. 17. THE ASSESSEE HAS ALSO FILED A CROSS-OBJECTION. THE ASSESSEE HAS FILED THE CROSS-OBJECTION IN SUPPORT O F THE ORDER OF THE DISPUTE RESOLUTION PANEL. THE CROSS-OBJECTION IS F ILED ONLY TO SUPPORT THE FINDING OF DISPUTE RESOLUTION PANEL IN RESPECT OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT, TH IS TRIBUNAL IS OF THE CONSIDERED OPINION, THE CROSS-OBJECTION FILED B Y THE ASSESSEE IS NOT MAINTAINABLE. ACCORDINGLY, THE SAME IS DISMISS ED AS NOT MAINTAINABLE. 18. IN THE RESULT, I.T.A. NOS.586/MDS/2015 & 610/MD S/2015 ARE ALLOWED FOR STATISTICAL PURPOSES. HOWEVER, THE REV ENUES APPEAL IN I.T.A. NO.1169/MDS/2014 AND C.O. NO.55/MDS/2014 ARE DISMISSED. ORDER PRONOUNCED ON 18 TH DECEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER 23 I.T.A. NO.586/MDS/14 I.T.A. NO.1169/MDS/14 I.T.A. NO.610/MDS/15 C.O. NO.55/MDS/14 /CHENNAI, 5 /DATED, THE 18 TH DECEMBER, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A) 4. 1 92 /CIT, 5. 7: -2 /DR 6. ( ; /GF.