Deputy Commissioner of Income-tax, Pune V. M/s. Atlas Copco (India) Ltd., Pune

ITA 1353/PUN/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7865 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 12-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANGRAM GAIKWAD
• Assessee Lawyers: R MURALIDHAR
• Keywords: Depreciation; Transfer pricing; International transaction; Rule of consistency; Retrospective amendment; Question of law; Onus to prove; Revenue expenditure; Capital expenditure
• Section: 92C; 143(3); 14A; 13; 22; 92CA; 92

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM ITA NO.1353/PUN/2015 / ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 8, PUNE. . / APPELLANT V/S M/S. ATLAS COPCO (INDIA) LTD., SEVANAGAR, MUMBAI PUNE ROAD, DAOPODI, PUNE. PAN : AAACA4074D. . / RESPONDENT ASSESSEE BY : SHRI R. MURALIDHAR. REVENUE BY : SHRI SANGRAM GAIKWAD. / DATE OF HEARING : 30.08.2021 / DATE OF PRONOUNCEMENT : 02.09.2021 / ORDER PER INTURI RAMA RAO, AM: THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 13, PUNE DAT ED 27.07.2015 FOR THE ASSESSMENT YEAR 2010-11. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT ONLY A COMPLETELY UNCONTROLLED TRAN SACTION CAN BE USED FOR BENCHMARKING WHEN THERE ARE NO LIMITS IDENTIFIED IN THE I.T.ACT, 1961 FOR SUCH . A CATEGORIZATION OF THE INTERNATIONAL TRANSACTIO N AND FURTHER THE OECD 2 GUIDELINES IN PARA 1.70 CLEARLY SUGGESTS THAT 'AN A TTEMPT SHOULD BE MADE TO REACH A REASONABLE ACCOMMODATION KEEPING IN MIND TH E IMPRECISION OF THE VARIOUS METHODS AND THE PREFERENCE FOR HIGHER DEGRE ES OF COMPARABILITY ANDA MORE DIRECT AND CLOSER RELATIONSHIP TO THE TRANSACT ION? 2. WHETHER, THE LD.CIT(A)-IT/TP, PUNE HAS ERRED ON FACTS AND IN LAW, WHILE ALLOWING THE ADJUSTMENT MADE ON ACCOUNT OF SALES CO MMISSION, WHEN PERFECTLY COMPARABLE INTERNAL SEGMENT WAS AVAILABLE AND DISREGARDING THE FACT THAT ALL INTERNATIONAL TRANSACTIONS SHOULD HAVE BEE N SEPARATELY BENCHMARKED BY ACIL? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS JUSTIFIED IN ALLOWING THE SOFTWARE EXPENSES OF RS. 1,26,000/- WHEN THE ONUS TO PROVE THE GENUINENESS OF THE EXPENSES WAS NOT DISCHARGED BY T HE ASSESSEE INSPITE OF OPPORTUNITY ALLOWED BY THE A.O AND ALSO WHEN IN FAC T THE CIT(A) HAS NOT GIVEN A FINDING ON THE GENUINENESS OF THE CLAIM? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS JUSTIFIED IN ALLOWING EXPENDITURE INCURRED ON ACCOUNT OF REPA IR AND MAINTENANCE FOR WHICH NO DOCUMENTARY EVIDENCE WAS PRODUCED OF RS. 9 6,776/-, WHEN IN FACT THE CIT(A) HAS NOT GIVEN A FINDING ON THE GENUINENE SS OF THE CLAIM? 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION MADE OUT OF MISCELLANEO US EXPENDITURE OF RS. 2,59,407/- TO RS. 1 LAC ON ADHOC BASIS, WHEN THE ON US TO PROVE THE GENUINENESS OF THE EXPENSES WAS NOT DISCHARGED BY T HE ASSESSEE INSPITE OF OPPORTUNITY ALLOWED BY THE A.O AND ALSO WHEN NO FIN DING ON THE GENUINENESS OF THE CLAIM HAS BEEN BROUGHT OUT BY THE CIT(A)? 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) WAS JUSTIFIED IN ALLOWING COMMISSION EXPENSES OF RS.3,96,0335/- E VEN WHEN ASSESSEE FAILED TO DISCHARGE ITS ONUS IN SUBMITTING EVIDENCES CALLE D FOR BY THE AO WHEN THE LAW SPECIFICALLY REQUIRES SUCH ONUS TO BE DISCHARGED BE FORE ALLOWING SUCH EXPENSES ?' 3. THE REVENUE HAS FILED THE FOLLOWING REVISED GROUNDS IN SUBSTITUTION OF GROUND NO.1. 1. THE CIT(A) ERRED IN HOLDING THAT THE COMPARISON OF TWO CONTROLLED TRANSACTIONS CANNOT BE MADE FOR BENCHMARKING OF THE ROYALTY PAID BY THE ASSESSEE TO ITS ASSOCIATED ENTERPRISE BY COMPARING IT WITH THE RATE OF ROYALTY AGREED BETWEEN TWO ASSOCIATED ENTERPRISES WHEN NO S UCH LIMITS OF CATEGORIZATION OF INTERNATIONAL TRANSACTIONS ARE SP ECIFIED IN THE I.T.ACT, 1961. 2. THE CIT(A) ERRED IN ALLOWING THE ADJUSTMENT MADE ON ACCOUNT OF RECEIPT OF SALES COMMISSION BY HOLDING THAT THE PROFIT EARNED I N INDEPENDENT MARKETING FUNCTION CANNOT BE COMPARED WITH THE INTEGRATED MAR KETING FUNCTION OF A FULLY INTEGRATED MANUFACTURER AND BY REJECTING THE APPROA CH OF THE TPO USING INTERNAL SEGMENT, THOUGH IT IS AN ACCEPTABLE METHOD OF BENCH MARKING THE INTERNATIONAL TRANSACTION. 3 4. THE BRIEF FACTS OF THE CASE ARE THAT THE RESPONDENT / ASSESSEE IS A PUBLIC LIMITED COMPANY AND A PART OF SWEDISH MULTINATIONAL GROUP OF COMPANIES I.E., ATLAS COPCO AB. IT IS ENGAGED IN THE BUSINESS OF MANU FACTURING AND SALE OF AIR & GAS COMPRESSORS, CONSTRUCTION AND MINING EQUIPMEN T & INDUSTRIAL TOOLS. THE RETURN OF INCOME FOR A.Y. 2010-11 WAS FILED ON 01.10.2010 DISCLOSING TOTAL RETURN OF INCOME OF RS.159,80,27,928/-. THE S AID RETURN OF INCOME WAS SELECTED FOR SCRUTINY ASSESSMENT. ON NOTICING THAT THE RESPONDENT / ASSESSEE HAS REPORTED THE INTERNATIONAL T RANSACTIONS IN FORM NO.3CB, THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 8, PUNE (HEREINAFTER REFERRED AS THE ASSESSING OFFICER) MADE A REFERENCE T O THE ADDL.COMMISSIONER OF INCOME TAX, PUNE, (HEREINAFTER REFERRED AS THE TRANSFER PRICING OFFICER (TPO)) U/S 92CA(3) OF THE ACT FOR THE PURPOSE OF DETERMINATION OF ARMS LENGTH PRICE (HEREINAFTER REFERRED AS ALP) IN RELATION TO THE FOLLOWING INTERNATIONAL TRANSACTIONS : SL.NO. DESCRIPTION AMOUNT (RS) METHOD 1 IMPORT OF RAW MATERIAL AND COMPONENTS 1,86,70,42,829 TNMM 2 IMPORT OF FINISHED GOODS 1,74,70,85,852 TNMM 3 EXPORT OF FINISHED GOODS 1,13,75,17,625 TNMM 4 IMPORT OF CAPITAL GOODS 87,61,495 5 PAYMENT OF ROYALTY 6,41,38,716 TNMM 6 RECEIPT OF SALES COMMISSION 34,30,50,057 TNMM 7 PAYMENT OF COMMISSION 1,33,97,434 TNMM 8 PAYMENT OF CONSULTANCY FEES 20,45,414 TNMM 9 PAYMENT OF MANAGEMENT FEES 1,89,14,290 TNMM 10 PROVISION OF ADMINISTRATIVE SUPPORT SERVICES 4,91,75,419 TNMM 11 PROVISION OF IT ENABLED DESIGN ENGINEERING SERVICES 32,58,75,250 TNMM 12 RECOVERY OF WARRANTY EXPENSES 3,00,54,240 TNMM 4 T THE TPO VIDE ORDER DT.10.01.2014 PASSED U/S 92CA(3) OF THE ACT SUGGESTED THE T.P. ADJUSTMENTS OF RS.11,32,00,000/- IN RESP ECT OF FOLLOWING INTERNATIONAL TRANSACTIONS : A) PAYMENT OF ROYALTY AT RS.3,62,00,000/-. B) COMMISSION TOWARDS THE PROVISION OF MARKETING SUPPORT SER VICES AT RS.7.23 CRORES. C) SALE OF PRODUCTS TO A.E. AT RS.47,00,000/- 13 AMOUNTS WRITTEN BACK 3,09,485 TNMM SUB TOTAL A 5,60,73,68,106 ALLOCATION OF COMMON COSTS 14 CERTIFICATION FEES PAID 8,67,511 TNMM 15 COMMUNICATION EXPENSES 4,50,13,073 TNMM 16 INFORMATION TECHNOLOGY RELATED EXPENSES 2,66,07,182 TNMM SUB TOTAL B 7,24,87,766 REIMBURSEMENT OF EXPENSES 17 MEDICAL INSURANCE OF EXPATS 2,31,966 TNMM 18 MEMBERSHIP AND SUBSCRIPTION 3,09,983 TNMM 19 MISCELLANEOUS EXPENSES 25,56,618 TNMM 20 PRINTING & STATIONERY 5,26,484 TNMM 21 TRAVELLING & HOTEL EXPENSES 52,90,553 TNMM 22 WARRANTY CHARGES 1,01,46,330 TNMM 23 STAFF WELFARE 26,59,894 TNMM 24 SALES PROMOTION 28,37,280 TNMM SUB TOTAL C 2,45,59,108 TOTAL A+B+C 570,44,14,980 5 FINALLY, THE ASSESSMENT WAS COMPLETED BY THE ASSESSING O FFICER AT A TOTAL INCOME OF RS.171,64,57,875/- U/S 143(3) R.W.S. 144C(3) O F THE ACT ON 26.05.2014 AFTER MAKING FOLLOWING DISALLOWANCES : (A) SOFTWARE DEVELOPMENT EXPENSES AT RS.1,26,000/- (B) EXPENSES ON REPAIRS AND MAINTENANCE AT RS.96,776/- (C) OTHER MISCELLANEOUS EXPENSES AT RS.2,59,407/- (D) COMMISSION PAYMENT AT RS.39,60,335/- (E) DISALLOWANCE U/S 14A OF THE ACT AT RS.7,87,426/- (F) T.P. ADJUSTMENT. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, AN APPEAL WA S PREFERRED BY THE RESPONDENT / ASSESSEE BEFORE THE LD.CIT(A), WHO VIDE IM PUGNED ORDER DELETED THE T.P. ADJUSTMENT ON ACCOUNT OF PAYMENT OF ROY ALTY AT RS.3,62,00,000/- FOLLOWING HIS ORDER IN RESPONDENT / ASSESSE ES OWN CASE FOR THE EARLIER ASSESSMENT YEARS I.E., A.Y. 2008-09 AND 2009-10 . SIMILARLY, AS REGARDS TO THE T.P. ADJUSTMENT ON ACCOUNT OF RECEIPT OF COMMISSION PAYMENT OF RS.7.23 CRORES, THE LD.CIT(A) FOLLOWING HIS ORDER IN RESPOND ENT / ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS FOR A.Y. 2008-0 9 AND 2009-10 DELETED THE T.P. ADJUSTMENT. AS REGARDS TO THE DISALLOWAN CE OF RS.47 LAKHS I.E., DIFFERENCE IN PRICES OF THE PRODUCTS SOLD IN AE AND NON-A E, LD.CIT(A) REMITTED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER. AS REGARDS TO THE ADDITION ON ACCOUNT OF SOFTWARE DEVELOPMENT EXPENSES OF R S.1.26 LAKHS, LD.CIT(A) HAD DIRECTED THE ASSESSING OFFICER TO ALLOW THE SAM E AS REVENUE EXPENDITURE BY FOLLOWING DECISIONS : I. CIT VS. SOUTHERN ROADWAY LTD (2008) 304 ITR 84 (MAD). II. CIT VS. ASASHI INDIA SAFETY GLASS LTD (2011) 203 TAXMAN 277. 6 III. CIT VS. RENUGA TEXTILES MILLS LTD (2012) 254 CTR (MAD) 423. 6. AS REGARDS TO THE DISALLOWANCE OF REPAIRS AND MAINTENA NCE EXPENSES OF RS.1,01,869/-, THE LD.CIT(A) FOLLOWING HIS ORDER IN ASSESSEES OWN CASE FOR EARLIER YEARS I.E., A.YS. 2009-10 HAD DIRECTED THE ASSESSING OFFICER FOR THE DELETION OF THE SAME. AS REGARDS TO THE DISALLOWANCE OF MISCELLANEOUS EXPENDITURE OF RS.2,59,407/-, LD.CIT(A) OUT OF THE DISALLOWANCE OF RS.2,59,407/-, CONFIRMED THE DISALLOWANCE ONLY TO THE EXTE NT OF RS.1,00,000/-. REGARDING TO THE DISALLOWANCE OF COMMISSION EXPENDITURE OF RS.39,60,335, LD.CIT(A) FOLLOWING HIS OWN ORDER IN RESPONDENT / A SSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR 2008-09 HAD DELETED THE ADDITION. 7. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US . 8. IN GROUND NO.1, THE REVENUE CHALLENGES THE DECISION OF LD.CIT(A) DELETING THE ARMS LENGTH PRICE ADJUSTMENT ON ACCOUN T OF PAYMENT OF ROYALTY. THE BRIEF FACTUAL MATRIX OF THE ISSUE IN GROUND NO.1 AS UNDER : DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT Y EAR UNDER CONSIDERATION, THE RESPONDENT / ASSESSEE MADE A PAYMEN T OF ROYALTY TO ITS ASSOCIATED ENTERPRISE (HEREINAFTER REFERRED AS A.E.) I.E., A TLAS COPCO AIR POWER NV IN CONSIDERATION OF RECEIPT OF TECHNOLOGY IN THE FO RM OF KNOW-HOW, TECHNICAL TRAINING AND TECHNICAL ASSISTANCE. IN TERMS OF TH E AGREEMENT WITH ATLAS COPCO POWER NV BELGIUM, ROYALTY IS PAYABLE AT 5% OF D OMESTIC SALES AND 8% ON EXPORT SALES. IN THE T.P. STUDY, THE RESPON DENT / ASSESSEE SOUGHT TO JUSTIFY THE TRANSACTION OF PAYMENT OF ROYALTY IN ALP B Y ADOPTING 7 TRANSACTIONAL NET MARGIN METHOD (HEREINAFTER REFERRED A S TNMM) BY AGGREGATING WITH THE OTHER INTERNATIONAL TRANSACTIONS. HO WEVER, THE TPO DID NOT ACCEPT THE AGGREGATION OF TRANSACTIONS AND CONSIDER ED THE TRANSACTION OF PAYMENT OF ROYALTY SEPARATELY UNDER CUP METHOD. THE R ESPONDENT / ASSESSEE COMPANY ALSO ACCEPTED THIS. 9. THE TPO COMPUTED THE ALP ADJUSTMENT IN RESPECT OF T HE PAYMENT OF ROYALTY BY ADOPTING ROYALTY PAID BY OTHER GROUP COMPANY I.E., WUXI-ATLAS COPCO COMPRESSOR CO. LTD., WHICH PAID THE ROYALTY AT 3% ON THE NET SALES PRICE. THE TPO CONSIDERED IT AS A COMPARABLE TRANSACTIO N AND HELD THAT ALP OF THE ROYALTY IS DETERMINED AT 3% OF THE DOMESTIC SALES A ND 8% OF THE EXPORT SALES AND THE BALANCE OF WHICH IS DETERMINED AT RS.2.97 CR ORES. CONSEQUENTLY THE DIFFERENCE BETWEEN THE ACTUAL PAYMENT OF RS.6.41 CROR ES AND ALP OF RS.2.79 LAC BEING RS.3.62 LAC WAS SUGGESTED AS TP ADJUST MENT ON ACCOUNT OF ROYALTY PAYMENT. 10. ON APPEAL BEFORE THE LD.CIT(A), THE LD.CIT(A) DELETED THE AD DITION BY HOLDING THAT THE METHODOLOGY ADOPTED BY THE TPO IN COMP ARING THE CONTROLLED TRANSACTION WITH ANOTHER CONTROLLED TRANSACTION IS FLAWED BY PLACING RELIANCE ON HIS ORDER IN ASSESSEES OWN CASE FOR THE EARLIER A.YS . 2008-09 AND 2009-10. 11. BEFORE US, THE LD.CIT DR HAD VEHEMENTLY CONTESTED TH AT THE LD.CIT(A) OUGHT NOT HAVE GRANTED RELIEF TO RESPONDENT / ASSESSE E ON THE GROUND THAT COMPARISON OF TWO CONTROLLED TRANSACTIONS CANNOT BE MADE WHEN NO SUCH METHOD IS BARRED BY LAW. 8 12. ON THE OTHER HAND, SHRI R. MURALIDHAR, LEARNED COUNS EL FOR ASSESSEE CONTENDED THAT THE TRANSACTION OF PAYMENT OF ROYALTY IS AT ALP. IT IS IN ACCORDANCE WITH THE POLICY OF THE GOVERNMENT OF INDIA ON PAYMENT OF ROYALTY UNDER FOREIGN TECHNOLOGY COLLABORATION AGREEMENT. HE ALSO FILED A COPY OF THE PRESS NOTE NO.8 DT. L6.12.2009 IN TERMS OF WHICH PAYME NT OF ROYALTY @ 5% DOMESTIC SALES AND 8% OF EXPORTS IS PERMITTED UNDER AUTO MATIC APPROVAL. HE ALSO RELIED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. SGS INDIA PVT LTD., REPORTED IN (2015) 94 CCH 0 338 (BOMBAY HIGH COURT) WHEREIN IT IS HELD THAT THE ROYALTY PAID AT 3% OF THE SALES TO ARRIVE AT THE ALP IS MUCH BELOW THE ROYALTY FOR TRADE MARK AND WH ICH IS ALLOWED TO BE PAID. HE ALSO PLACED RELIANCE ON THE ORDERS OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS WHEREIN THE TRIBUNAL HA D DELETED THE SIMILAR ADDITION BY HOLDING THAT COMPARISON OF ONE CONTROLLED TRANSACTION CANNOT BE MADE WITH ANOTHER CONTROLLED TRANSACTION. 13. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND OF APPEAL RELATES TO THE DETERMINATION OF ALP OF THE TRANSACTION OF PAYMENT OF ROYALTY. ADMITTEDLY, THE ROYALTY WAS PAID @ 5% OF DOMESTIC SALES AND 8% OF THE EXPORT SALES IN CONS IDERATION OF RECEIPT OF TECHNOLOGY IN THE FORM OF KNOW-HOW, TECHNICAL TRAINING AN D TECHNICAL ASSISTANCE FOR THE PURPOSE OF MANUFACTURING THE COMPRESS ORS. THE TPO DETERMINED THE ALP OF THE ROYALTY PAYMENT AT 3% OF THE SALES BY TAKING IT AS APPROPRIATE BENCHMARK. THE TPO ADOPTED THIS BENCHMARK CONSIDERING THE TRANSACTION OF PAYMENT OF ROYALTY BY ITS A.E. I.E., WUXI ATLAS COPCO COMPRESSOR CO LTD., WHICH IS UNDISPUTEDLY CONTROLLED TRA NSACTIONS, AND THE DIFFERENCE BETWEEN TWO AND THE ACTUAL PRICE WAS SUGGEST ED AS TP ADJUSTMENT 9 U/S 92CA OF THE ACT WITHOUT EVEN GOING INTO THE ISSUE W HETHER THE APPROVAL OF PAYMENT OF RBI WILL CONSTITUTE A CUP METHOD OR NOT. THE PRESENT ISSUE CAN BE DECIDED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT COMP ARISON IN ORDER TO DETERMINE IF THE ALP CANNOT BE DONE BY COMPARING THE PR ICES CHARGED TO BY A.E., WHICH IS CONTROLLED TRANSACTION, AS THE PROVISIONS OF I. T. ACT, MANDATES THAT THE DETERMINATION OF ALP HAS TO BE DONE BY COMPAR ISON BETWEEN CONTROLLED AND UN-CONTROLLED TRANSACTIONS. AN IDENTICAL ISS UE HAS BEEN DEALT BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PCIT VS . AUDCO INDIA LIMITED REPORTED IN (2019) 104 TAXMANN.COM 386 (BOM) WHERE IN THE HON'BLE HIGH COURT ON IDENTICAL FACTS HAD CONFIRMED THE DECISION OF T RIBUNAL BY DISMISSING THE APPEAL FILED BY THE REVENUE BY HOLDING THAT T PO HAS TO ARRIVE AT ALP OF THE TRANSACTION ONLY COMPARING IT WITH UNCONT ROLLED TRANSACTIONS AND THE HON'BLE HIGH COURT HAD FOUND FAULT WITH THE APPR OACH OF THE TPO BY HOLDING THAT IT IS CONTRARY TO THE CLEAR PROVISIONS OF THE ACT AS PER RULE 10A(D) OF THE RULES. HONBLE BOMBAY HIGH COURT DISMISSED THE APPEAL OF REVE NUE ON THE FOLLOWING QUESTION OF LAW BY HOLDING AS UNDER : (D) WE NOTE THAT CHAPTER X OF THE ACT IS A SPECIAL P R O V IS I ON R ELAT I N G T O A V OI DA NCE O F TAX . SEC TI ON 92 DEA L S WITH CO M P U TATIO N O F INC O ME FR O M INTERNA TIO NAL TRA N SACT I O N HAVING REGA R D T O A LP . IT PR OV ID ES ANY INCOME A R ISING FR O M THE I N T E R NAT I ONA L T RANSACT I O N SHAL L BE CO M P UTE D H AV I NG REG ARD T O THE A LP . THE AL P IS DEFINED UNDER SECTION 92F( I I) OF THE ACT TO MEA N A PR I CE W HI CH I S A P P LI ED O R PROPOSED TO BE APPLIED IN TRANSACTIONS BETWEEN PERS ONS OTHER TH A N A E ' S IN UNCONTROLLED TRANSACTIONS . THIS IS FURTHE R SUPPORTED BY R U LE 10 A (D) W H E RE UNCONT R OL L ED T RA N SACT I ON H AS BE EN DE FIN ED AS A TRAN S AC T I O N BET WE EN ENTERPRISES OTHER THAN W I TH A . E 'S . W HETHER R ESID E NT OR NON - RES I DENT . IN VIEW O F THE ABOVE CLEA R POS I TIO N I N LAW , T HE TPO OUGHT TO HAVE ARRIVED A T THE ALP OF THE RE SPONDE NT' S SA LE TO IT S A . E . VI Z . FL OW SERVE B Y ONL Y COM PA RIN G IT W I T H UNCONTROLLED TRANSACTION OF SALE TO IN USA . THUS THE APPROACH OF THE T PO IS CONTRARY TO THE CLEAR PROVISIONS OF LAW . BESIDES AS HELD BY THE TR I BUNAL THE COMPARISON HAS TO BE REGION/COUNTRY SPECIFIC , WHICH IN THIS CASE , THE TPO HAS COMPLETELY IGNORED. 10 (E) THEREFORE, THE VIEW TAKEN BY THE TRIBUNAL DOES NOT CALL FOR ANY INTERFERENCE AS IT IS IN ACCORDANCE WITH THE SELF-EVIDENT PROVIS IONS OF LAW. THUS, THIS QUESTION AS PROPOSED DOES NOT GIVE RISE TO ANY SUBS TANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. 14. WE FOUND THAT THE DECISION REFERRED BY THE CO-ORDINAT E BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT Y EARS I.E., 2005-06, 2007-08 AND 2008-09 ARE IN CONSONANCE WITH THE ABOVE PRINCIPLE OF LAW AND THEREFORE, THE LD.CIT(A) MERELY FOLLOWED THE ORDER OF TRIBUNAL IN EARLIER ORDERS. IN THESE CIRCUMSTANCES, WE DO NOT SEE ANY REASON TO IN TERFERE WITH THE ORDER OF LD.CIT(A). ACCORDINGLY, THE GROUND NO.1 OF APPEAL FILED BY TH E REVENUE STANDS DISMISSED. 15. IN GROUND NO.2 OF APPEAL, THE REVENUE CHALLENGES TH E DECISION OF LD.CIT(A) DELETING THE ADDITION ON ALP ADJUSTMENT ON ACCOUNT OF RECEIPT OF COMMISSION FOR MARKETING SERVICES AT RS.7.23 CRO RES. THE BRIEF FACTUAL MATRIX OF THE ISSUE IN GROUND NO.2 IS AS UNDER : DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT Y EAR UNDER CONSIDERATION, THE APPELLANT RECEIVED INDENTING COMMISSION FOR THE SERVICES RENDERED TO ITS A.E. THE FUNCTIONS PERFORMED BY THE APPELLANT ARE DESCRIBED IN THE T.P. STUDY REPORT AT PARA 8 READS AS UNDER : 8. THE SALES TEAM OF ACIL IN THE COURSE OF MARKET ING THE GOODS MANUFACTURED BY ACIL MAY COME ACROSS A PROSPECTIVE/ EXISTING CUSTOMER HAVING REQUIREMENT FOR A PRODUCT WHICH IS NOT BEING MANUFACTURED BY ACIL. BUR WHICH IS MANUFACTURED BY ITS AES, IN SUCH A SITUATION, THE SALES TEAM INFORMS THE PROSPE CTIVE/EXISTING CUSTOMER ABOUT THE AVAILABILITY OF THE, REQUISITE P RODUCT WITH THEIR AES, OBTAINS FROM THE CUSTOMER THE TECHNICAL SPECIFICATI ONS OF THE PRODUCTS DESIRED, AND COMMUNICATES THE SAME TO THE CONCERNED AE IT SHOULD BE NOTED THAT ACIL 'S INVOLVEMENT IS RESTRICTED TO PRO VIDING THE AES WITH THE LEAD AND IN PROVIDING ROUTINE ADMINISTRATIVE SUPPOR T WHENEVER REQUIRED ACIL DOES NOT CONCLUDE CONTRACTS ON BEHALF OF THE A ES, NOR DOES IT HOLD 11 ANY INVENTORY OF PRODUCTS ON BEHALF OF THE AES, THE CONSIDERATION DUE TO ACIL IS MUTUALLY AGREED BETWEEN ACIL AND THE TRANSACTING AE , AND GENERALLY DEPENDS ON THE SIZE OF THE ORDER PROCURED AS WELL AS THE PRICE WHICH THE AE IS ABLE TO NEGOTIATE WITH THE CUSTOMER, THE CONSIDERAT ION DUE TO ACIL IS MUTUALLY AGREED BETWEEN ACIL AND THE TRANSACTING AE, AND GENERALLY DEPENDS ON THE SIZE OF THE ORDER PROC URED AS WELL AS THE PRICE WHICH THE AE IS ABLE [Q NEGOTIATE WITH THE CUSTOMER. THE APPELLANT RECEIVED COMMISSION OF RS.34.52 CRORES FOR REN DERING THE INDENTING / MARKETING SERVICES TO ITS A.E. THE RESPONDENT / ASSESSEE APPLIED THE TNMM METHOD IN RESPECT OF THIS INTERNATIONAL TRANSA CTIONS AND SOUGHT TO JUSTIFY THE TRANSACTION OF RECEIPT OF COMMISSION IS AT ALP BY APPLYING THE TNMM SEPARATELY. THERE IS NO DISPUTE AS TO THE COMPUT ATION OF THE TOTAL PROFIT ARRIVED AT RS.143.54 CRORES ATTRIBUTED TO BOTH T HE MANUFACTURING FUNCTIONS AND MARKETING FUNCTIONS. HOWEVER FOR THE PURPOS E OF ALLOCATION OF PROFITS SO ARRIVED AT RS.143.54 CORES BETWEEN TWO SEGMEN TS I.E., MANUFACTURING AND MARKETING FUNCTION, THE DEPRECIATION AND COST OF MATERIAL CONSUMED WERE EXCLUDED FROM TOTAL COST AND THE COST HA S BEEN TAKEN AS KEY FOR ALLOCATION OF NET PROFIT EARNED BY THE ENTITY. 16. THE TPO OF THE VIEW THAT SINCE THE COST OF MATERIAL CO NSUMPTION AND DEPRECIATION DOES NOT CONTRIBUTE TO THE PROFITS, THE SAME SHOULD NOT BE INCLUDED AS A PART OF TOTAL COST INCURRED BY THE ENTITY. ON THIS BASIS, THE TPO WAS OF THE OPINION THAT FOR THE PURPOSE OF CALCULATING THE PERCENTAGE OF MARKETING COST TO THE TOTAL COST, THE COST OF MATERIAL AN D DEPRECIATION SHOULD BE EXCLUDED AS RESULT OF WHICH PERCENTAGE OF MARKETING C OST TO TOTAL COST WAS ARRIVED AT 41.36%. THEN TPO PROCEEDED TO ALLOCATE THE TOTAL PROFITS EARNED BY THE RESPONDENT / ASSESSEE IN TERMS OF PERCENTAGE O F COST BETWEEN TWO SEGMENTS. ACCORDINGLY, THE TPO ATTRIBUTED PROFITS TO MAR KETING FUNCTIONS IN THE PROPORTION OF PERCENTAGE COST AT 59.36 CRORES. WHE N THE PROFIT IS 12 CONVERTED INTO PERCENTAGE OF SALES, IT WORKED OUT TO 4.58 %. THEN THE TPO CALCULATED THE PROFIT ATTRIBUTABLE TO MARKETING FUNCTIONS ON SALES OF 354.56 CRORES @ 16.24 CRORES. THEN AFTER INCLUDING THE COST INCU RRED ON MARKETING A.E. PRODUCTS OF RS.26.11 CRORES, THE TPO ARRIVED AT 42.35 CRORES AS THE AMOUNT OUGHT TO HAVE BEEN RECEIVED ON MARKETING SERVIC ES FROM A.E. AS AGAINST THE ACTUAL RECEIPT OF RS.34.52 CRORES AND THE DIFFER ENCE WAS PROPOSED AS T.P. ADJUSTMENT. 17. ON APPEAL BEFORE THE LD.CIT(A), THE LD.CIT(A) FOLLOWING HIS DECISION IN ASSESSEES OWN CASE IN EARLIER YEARS DELETED THE ADJUSTMENTS. 18. BEING AGGRIEVED WITH THE ORDER OF LD.CIT(A), REVENUE IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. 19. THE LD. CIT DR HAD VEHEMENTLY CONTESTED THAT THE LD .CIT(A) OUGHT NOT HAVE DELETED THE ALP ADJUSTMENT MADE BY THE TPO ON A CCOUNT OF RECEIPT OF SALES COMMISSION BY REJECTING THE APPROACH OF THE TPO US ING THE INTERNAL SEGMENT RESULTS. 20. ON THE OTHER HAND, LEARNED COUNSEL FOR THE RESPONDE NT / ASSESSEE SUBMITTED THAT THE METHODOLOGY ADOPTED BY THE ASSESSE E HAS BEEN UPHELD IN THE EARLIER YEAR I.E., A.Y. 2005-06 BY THIS TRIBUNAL VIDE ITA NO.736/PU N/2011 DATED 05.08.2019. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THIS GROUND OF APPEAL RELATES TO TH E DETERMINATION OF ALP 13 IN RESPECT OF THE TRANSACTION OF RECEIPT OF COMMISSION. THE MAIN CONT ENTION OF THE APPELLANT IS THAT THE FUNCTIONS UNDERTAKEN BY THE AS SESSEE FOR SELLING THE PRODUCT IS SIGNIFICANTLY DIFFERENT FROM WHAT IS UNDERTAKEN FOR THE PURPOSE OF EARNING THE COMMISSION INCOME FROM A.E. THE PROFIT EARNED FR OM INDEPENDENT ACTIVITY OF MARKETING FUNCTION CANNOT BE COMP ARED WITH THE INTEGRATED MARKETING FUNCTION OF A FULLY INTEGRATED MANUFAC TURER. BUT THE TPO HAD AGGREGATED BOTH THE FUNCTIONS, HOWEVER PROCEED ED TO BENCHMARK THE MARKETING FUNCTION SEPARATELY. WE NEED NOT EXAMINE PROP RIETY OF AGGREGATING BOTH THE FUNCTIONS AS THE RESPONDENT / ASS ESSEE IS NOT OBJECTING THE SAME. THE ONLY BONE OF CONTENTION BETWEEN THE D EPARTMENT AND THE ASSESSEE IS EXCLUSION OF THE COST OF MATERIAL CONSUMED AND THE DEPRECIATION OF THE TOTAL COST FOR THE PURPOSE OF DETERMINING THE PERCEN TAGE OF MARKETING COST TO THE TOTAL COST. THE REASONING GIVEN BY THE TPO THAT THESE TWO SEGMENTS OF THE COST DOES NOT CONTRIBUTE TO PROFIT AND DOES NOT ST AND TO ANY REASON, IN AS MUCH AS THE DEPRECIATION AND THE MATERIAL ACTUALLY CON TRIBUTES TO THE PROFITS IN THE MANUFACTURING SEGMENT. THE IDENTICAL ISSUE WAS EXA MINED BY THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE (I TA NO.736/PUN/2011 DT.05.08.2019) FOR A.Y. 2005-06 WHEREIN IT W AS HELD AS UNDER : 14.AS THE TRANSACTION IS THAT OF EARNING COMMISSI ON, IDEALLY, THE BENCHMARKING SHOULD ALSO HAVE BEEN DONE WITH REFERE NCE TO AN UNCONTROLLED TRANSACTION OF EARNING COMMISSION ONLY. NOTWITHSTAN DING THE FACT THAT THE TPO WAS REQUIRED TO TAKE THE COMPARABLE UNCONTROLLED TR ANSACTION AS THAT OF RENDERING OF MARKETING SERVICES ALONE, HE STARTED W ITH THE ENTITY LEVEL FIGURES OF THE ASSESSEE WHICH ALSO INCLUDE SALE OF SELF GOODS OSTENSIBLY INVOLVING ALTOGETHER DIFFERENT FUNCTIONS, ASSETS AND RISKS VI S--VIS EARNING COMMISSION ON SALE FOR AES. THEREAFTER AGAIN, HE WENT OFF THE MAR K BY EXCLUDING THE AMOUNT OF RAW MATERIAL COSTS ETC. AND DEPRECIATION FROM THE B ASE OF TOTAL COSTS BY OVERLOOKING THE FACT THAT THE FIGURE OF PROFIT TAKE N UP BY HIM ALSO INCLUDED PROFIT FROM SALE OF MANUFACTURED GOODS. THE LD. DR WAS FAI R ENOUGH TO ACCEPT THAT THE AMOUNT OF DEPRECIATION OUGHT TO HAVE BEEN INCLUDED. EVEN IF WE PRESUME THE INITIAL STEP OF ADOPTION OF THE ENTITY LEVEL PROFIT OF THE ASSESSEE, INCLUDING THAT FROM SALE OF SELF GOODS AS CORRECT, WITH WHICH WE D O NOT OTHERWISE AGREE, THEN 14 ALSO THE TOTAL COSTS CONTRIBUTING TO THE MANUFACTUR ING PROFIT SHOULD HAVE BEEN CONSIDERED, WHICH OBVIOUSLY INCLUDE RAW MATERIAL CO ST AND DEPRECIATION, AS HAS BEEN HELD IN THE FIRST APPEAL. ON CONSIDERING THE P OSITION IN THIS MANNER, THE LD. CIT(A), ON PAGES 27 AND 28 OF THE IMPUGNED ORDER, H AS FOUND THE ALP OF COMMISSION INCOME AT RS.13.79 CRORE AS AGAINST THE TRANSACTED VALUE OF COMMISSION INCOME AT RS.13.38 CORE, WHICH IS WITHIN PLUS MINUS 5% RANGE, NOT CALLING FOR ANY TRANSFER PRICING ADDITION. WE, THER EFORE, ACCORD OUR IMPRIMATUR TO THE VIEW TAKEN BY THE LD. CIT(A) ON THIS SCORE. THI S GROUND IS NOT ALLOWED. 15. GROUND NO.1 OF THE ASSESSEES APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE U/S.35DD OF THE ACT AT RS.2,10,000/-, BEING, 1/5TH OF THE FEES PAID TO REGISTRAR OF COMPANIES FOR INCREASING THE A UTHORIZED CAPITAL ON AMALGAMATION. THUS, WE ARE OF THE CONSIDERED OPINION THAT THE TPO WAS NOT JUSTIFIED IN EXCLUDING THE DEPRECIATION AND COST OF THE MATERIAL CONSUM ED IN DENOMINATOR OF TOTAL COSTS. FURTHER, WE FIND THAT THE METHODOLOGY ADO PTED BY THE TPO DOES NOT FALL INTO ANY OF THE APPROPRIATE METHODS PRESCRIB ED UNDER RULE 10(B) OF THE I.T. RULES, 1962. WE MUST ALSO MENTION THAT CLAUSE (F) OF CLAUSE (1) OF RULE 10(B) PRESCRIBING ANY OTHER METHOD WAS INSERTED WITH RETROSPECTIVE EFFECT FROM 01.04.2013 IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDE RATION. THEREFORE, THE RATIO OF THE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. KODAK INDIA (P) LTD., REPORTED IN (2017) 79 TAXMANN.C OM 362 (BOMBAY) IS APPLICABLE IN THE PRESENT SET OF FACTS. IN THE CASE OF CIT VS. KODAK INDIA (P) LTD. (SUPRA), THE HONBLE BOMBAY HIGH COUR T HAS HELD AS UNDER : 10. WE MUST ALSO RECORD THE FACT THAT THE ALP WAS ARRI VED AT BY THE TRANSFER PRICING OFFICER (TPO) BY NOT ADOPTING ANY OF THE ME THODS PRESCRIBED UNDER SECTION 92C OF THE ACT. THE METHOD TO DETERMINE THE ALP ADOPTED WAS NOT ONE OF THE PRESCRIBED METHODS FOR COMPUTING THE ALP. IT WAS NOT EVEN ANY METHOD PRESCRIBED BY THE BOARD. AT THE RELEVANT TIME, I.E. FOR A.Y. 2008-09 SECTION 92C OF THE ACT DID NOT PROVIDE FOR OTHER METHOD AS PROV IDED IN SECTION 92C(1)(F) OF THE ACT. THE IMPUGNED ORDER OF THE TRIBUNAL HOLDS THAT THE METHOD ADOPTED BY THE REVENUE TO DETERMINE THE ALP WAS ALIEN TO THE METHO DS PRESCRIBED UNDER SECTION 92C OF THE ACT. IN THE ABOVE CIRCUMSTANCES, THE TRIBUNAL DECLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR RE-D ETERMINING THE ALP BY ADOPTING ONE OF THE METHODS AS LISTED OUT IN SECTION 92C OF THE ACT. THIS FINDING OF THE TRIBUNAL HAS ALSO NOT BEEN CHALLENGED BY THE REVENU E. 11. IN VIEW OF THE FACT THAT THE REVENUE HAS ACCEPTED THE ORDER OF THE TRIBUNAL ON ITS FINDING ON FACTS ON THE TWO ISSUES AS POINTE D OUT HEREINABOVE AS WELL AS 15 THE REFUSAL OF THE TRIBUNAL TO RESTORE THE ISSUE OF DETERMINATION OF ALP TO THE TPO BY FOLLOWING ONE OF THE METHODS PRESCRIBED UNDE R SECTION 92C OF THE ACT. THUS, THE QUESTIONS AS FORMULATED FOR OUR CONSIDERA TION EVEN IF ANSWERED IN FAVOUR OF THE REVENUE WOULD BECOME ACADEMIC IN THE PRESENT FACTS. THUS, WE SEE NO REASON TO ENTERTAIN THIS APPEAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUES OF LAW WHICH HAS BEEN RAISED IN THE PRESENT APPEAL ARE LEFT OPEN FOR CONSIDERATION IN AN APPROPRIATE CASE. THE RATIO THAT CAN BE CULLED OUT FROM THE ABOVE DECISION IS THAT WHEN THE TPO HAD NOT ADOPTED ANY OF METHODS PRESCRIBED U/ S 92CA OF THE I.T. ACT, NO ADJUSTMENT ON ACCOUNT OF ALP CAN BE MADE BY TPO. THEREFORE, THE ORDER OF THE LD.CIT(A) THOUGH DOES NOT CONTAIN INDEPENDENT REAS ONING, KEEPING IN VIEW OF THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS ON IDEN TICAL ISSUE IN ASSESSEES OWN CASE ON THE PRINCIPLE OF CONSISTENCY AN D RATIO OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KODAK INDIA (P) LTD. (SUPRA), WE UPHOLD THE ORDER OF LD.CIT(A). THUS, THE GROUND NO.2 OF THE APPEAL FILED BY THE REVENUE IS DISMISSED. 22. IN GROUND NO.3, THE REVENUE CHALLENGES THE DECISIO N OF LD.CIT(A) DELETING ADDITION ON ACCOUNT OF SOFTWARE DEVELOPMEN T EXPENSES AT RS.1,26,000/-. THE BRIEF FACTUAL MATRIX OF THE ISSUE IN GROUND NO.3 IS AS UNDER : 23. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER FOUND THAT THE ASSESSEE HAD INCURRED AN EXPENDITURE O F RS.1,80,000/- FOR DEVELOPMENT ON SOFTWARE. IT IS SUBMITTED THAT THE EXPEN DITURE WAS INCURRED FOR BETTER DEVELOPMENT OF THE UP-GRADATION OF APPLICATION SOFTWARE IN ORDER TO ACHIEVE HIGHER EFFICIENCY OF THE SOFTWARE. HOWEVER, THE ASS ESSING OFFICER WAS OF THE OPINION THAT THE EXPENDITURE HAD RESULTED IN ENDUR ING BENEFIT TO THE ASSESSEE AND THEREFORE HELD TO BE CAPITAL IN NATURE AN D ALLOWED THE 16 DEPRECIATION THEREON AND THE BALANCE OF RS.1,26,000/- WAS DISALLOWED BY THE ASSESSING OFFICER. 24. ON APPEAL, THE LD.CIT(A) DELETED THE ADDITION BY HOLDIN G THAT THERE IS NO CUSTOMIZED SOFTWARE. MERE UP-GRADATION OF THE SOFTWAR E DOES NOT RESULT IN ANY ENDURING BENEFIT WHEN THE LIFE OF SOFTWARE IS LESS THA N TWO YEARS AND PLACING RELIANCE ON THE DECISIONS OF CIT VS. SOUTHERN ROADW AY LTD. (2008) 304 ITR 84 (MAD), CIT VS. ASASHI INDIA SAFETY GLASS LTD (201 1) 203 TAXMAN 277 AND CIT VS. RENUGA TEXTILES MILLS LTD (2012) 254 CTR (MA D) 423, HAD DELETED THE ADDITION. 25. BEING AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 26. BEFORE US, THE LD. CIT DR PLACED RELIANCE ON THE ORDE R OF ASSESSING OFFICER. 27. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE RESP ONDENT / ASSESSEE SUBMITTED THAT THE EXPENDITURE WAS INCURRED ONLY AS UP -GRADATION OF SOFTWARE AND IN VIEW OF THE FAST CHANGES IN TECHNOLOGY, IT CANNOT BE SAID THAT THERE IS ENDURING BENEFIT ACCRUED TO THE ASSESSEE. HE ALSO PLACED RELIANCE ON THE DECISIONS OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2 001-02 AND THE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. GE OFFREY MANNERS & CO., LTD., REPORTED IN 49 TAXMANN.COM 320. 28. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL A VAILABLE ON RECORD. THE ISSUE IN THE PRESENT GROUND OF APPEAL RELATES TO THE A LLOWABILITY OF 17 THE EXPENDITURE INCURRED FOR UP-GRADATION OF THE SOFTWARE . THE DETAILS OF EXPENDITURE WAS PLACED AT PAGE NOS.532 TO 537 OF THE PA PER BOOK. FROM DETAILS ON RECORD, IT IS EVIDENT THAT THE EXPENDITURE WAS PAID TO M/S RADIX BUSINESS MODELS PVT. LTD., IN ORDER TO UPGRADE THE APPLICA TION SOFTWARE ON CONTRACT BASIS FOR LOTUS NOTES DEVELOPER. THE HON'BLE HIGH COU RT IN THE CASE OF CIT VS. GEOFFREY MANNERS & CO., LTD., REPORTED IN 49 TAX MANN.COM 320 HELD VIDE PARA 12 THAT IN VIEW OF THE RAPID ADVANCEMENT IN THE RECENT TECHNOLOGY, IT CANNOT BE SAID THAT THERE IS ANY ENDURING BENEFIT TO THE ASSESSEE. SINCE THE DECISION OF THE LD.CIT(A) IS IN LINE WITH THE DECISION OF JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY REASON TO I NTERFERE WITH THE DECISION OF LD.CIT(A). ACCORDINGLY, GROUND NO.3 OF THE REVENU E STANDS DISMISSED. 29. IN GROUND NO.4 THE REVENUE CHALLENGES THE DECISION OF LD.CIT(A) HOLDING THAT THE EXPENDITURE INCURRED ON THE RENOVA TION OF LEASE PREMISES OF RS.1,01,869/- IS REVENUE IN NATURE. THE BRIEF FACTUAL MATRIX OF THE ISSUE IN GROUND NO.4 IS AS UNDER : DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YE AR UNDER CONSIDERATION, THE RESPONDENT / ASSESSEE INCURRED AN EX PENDITURE OF RS.1,01,869/- ON RENOVATING THE LEASE PREMISES WHICH ARE USED FOR THE BUSINESS PURPOSE OF THE RESPONDENT / ASSESSEE AT BANG ALORE. FROM DETAILS OF EXPENDITURE, IT IS EVIDENT THAT THE EXPENDITURE IS INCURRED ON INTERIOR WORK, ELECTRICAL WORK AND PAINTING ETC. THE ASSESSING OFFICER C APITALIZED THIS 18 EXPENDITURE AND ALLOWED THE DEPRECIATION AT 5% AND THE B ALANCE AMOUNT OF RS.96,776/- WAS DISALLOWED. 30. ON APPEAL BEFORE LD.CIT(A), THE LD.CIT(A) DELETED THE ADDITION BY HOLDING THAT NO NEW ASSET WAS BROUGHT INTO EXISTENCE AND NO ENDURING BENEFIT WAS ACCRUED TO THE ASSESSEE AS A RESULT OF THIS EXPENDITURE. 31. BEING AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 32. BEFORE US, THE LD. CIT DR VEHEMENTLY CONTESTED THAT THE DECISION OF THE LD.CIT(A) HOLDING THE EXPENDITURE INCURRED ON RENTED PREMISE S AS REVENUE IN NATURE IS CONTRARY TO THE EXPLANATION 1 OF SEC.32 OF THE I.T. ACT AND SUBMITTED THAT IN VIEW OF THE PLAIN PROVISIONS OF THE ACT, THE EXPENDITURE CANNOT HELD TO BE REVENUE IN NATURE. 33. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT NO NEW ASSET CAME INTO EXISTENCE AS A RESULT OF TH IS EXPENDITURE AND THE EXPENDITURE INCURRED IS ONLY REVENUE IN NATURE AND EXPLA NATION 1 TO SEC.32(1) WAS INSERTED BY THE FINANCE ACT HAS NO APPLICAT ION TO THE EXPENDITURE AS IT WAS INCURRED ONLY ON REVENUE ITEMS LIK E PAINTING, FLOORING ETC. 34. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND OF APPEAL RELATES TO THE ALLOWABILITY OF EXPENDITURE INCURRED ON ITEMS LIKE PAINTING AND FLOORING ET C ON THE RENTED 19 PREMISES WHICH ARE USED FOR THE BUSINESS PURPOSE OF THE ASSESSEE. THE PROVISIONS OF EXPLANATION 1 TO SEC.32(1) OF THE ACT READS AS UNDER : 'WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE I S CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RESPECT OF WHICH T HE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL E XPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PROFESSION ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO, AND BY WAY OF RENOVATION OR EXTENSION OF, OR IMPROVEMEN T TO, THE BUILDING, THEN, THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDING OWNED BY THE ASSESSEE.' 35. THE IDENTICAL ISSUE HAD COME UP BEFORE THE HONBLE MAD RAS HIGH COURT IN THE CASES OF CIT VS. ETA TRAVEL AGENCY PVT. LTD., REPOR TED IN (2019) 109 TAXMANN.COM 66 (MADRAS) AND CIT VS. VISWAMS REPORTED IN (2019) 105 TAXMANN.COM 289 (MADRAS). IN THE CASE OF CIT VS. VISWA MS (SUPRA) THE HONBLE MADRAS HIGH COURT HELD AS UNDER : 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL ARGUMENTS AD VANCED. 15. THE PRIMARY BASIS ON WHICH THE TRIBUNAL HAD ANSWERE D THE ISSUES IN FAVOUR OF THE ASSESSEE WAS THAT THIS COURT IN HARI VIGNESH MOTOR (P.) LTD., CITED SUPRA, FOLLOWING THE EARLIER JUDGMENT OF THE HON'BL E SUPREME COURT IN MADRAS AUTO SERVICES (P.) LTD., CITED SUPRA HAD HELD THAT EXPENDITURE INCURRED IN THE NATURE AS INCURRED BY THE ASSESSEE HEREIN CANNOT BE CONSIDERED AS CAPITAL EXPENDITURE. HOWEVER, AS POINTED OUT BY MR. M. SWAM INATHAN, LEARNED SENIOR STANDING COUNSEL FOR THE REVENUE, MADRAS AUTO SERVI CE (P.) LTD. (SUPRA), RELATED TO THE ASSESSMENT YEAR 1968-1969. THEREAFTER, SECTI ON 32(1A) HAD BEEN INSERTED WITH EFFECT FROM 01.04.1970 AND THIS PROVI SION HAD BEEN CLARIFIED BY EXPLANATION 1 WITH EFFECT FROM 01.04.1988. CONSEQUE NTLY, THE CORRECT PROVISION WHICH IS APPLICABLE TO THESE CASES ARE EXPLANATION 1 TO SECTION 32(1) OF THE ACT. 16. IT IS NOT IN DISPUTE THAT THE ASSESSEES HAD TAKEN O N LEASE THE PREMISES AND HAD PUT UP FURTHER ADDITIONAL CONSTRUCTION AND HAD ALSO RENOVATED AND INCURRED EXPENSES FOR IMPROVEMENT OF THE BUILDING. THE CONTE NTION OF MR. M. P.SENTHIL KUMAR, LEARNED COUNSEL PLACED ONLY IN THE WRITTEN S UBMISSIONS AND NOT ADVANCED DURING ORAL ARGUMENTS THAT THE COURT CANNO T EXAMINE THE LEASE AGREEMENTS SINCE THEY WERE NOT REGISTERED HAS TO BE REJECTED BECAUSE, THE LEASE DOCUMENTS ARE BEING EXAMINED ONLY TO DETERMINE A CO LLATERAL TRANSACTION VIZ., NATURE OF EXPENDITURE INCURRED BY ASSESSEE. IT IS A FACT THAT THE ASSESSEE HAD TAKEN ON LEASE THE PREMISES IN CONSIDERATION. THEY ARE NOT THE OWNERS. THEY ALWAYS CLAIMED TO BE LESSEES ONLY. CONSEQUENTLY, TH IS SUBMISSION, RAISED BY WAY OF WRITTEN SUBMISSION HAS TO BE REJECTED. IT HA D BEEN AN ADMITTED STAND BEFORE THE ASSESSING OFFICER AND BEFORE THE CIT (AP PEALS) AND BEFORE THE TRIBUNAL THAT THE ASSESSEE IS ONLY A LESSEE OF THE PREMISES IN QUESTION. THIS BEING A FACT WHICH HAD BEEN SETTLED, CANNOT BE RE-E XAMINED ON THE BASIS OF THE SPECIOUS ARGUMENT ADVANCED. 20 17. A FURTHER EXAMINATION OF THE FACTS OF THE CASE SHOW S THAT THE ASSESSEES HAVE ACTUALLY PUT UP SUBSTANTIAL CONSTRUCTION OF EN DURING BENEFIT AND ALSO RENOVATED THE BUILDING FOR THE PURPOSE OF THEIR BUS INESS. EXPLANATION 1 TO SECTION 32(1) IS AS FOLLOWS: '[EXPLANATION 1.- WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE IS CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RESPECT OF WH ICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL E XPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PROFES SION ON THE CONSTRUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATIO N TO, AND BY WAY OF RENOVATION OR EXTENSION OF, OR IMPROVEMENT TO, THE BUILDING, T HEN, THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDING OWNED BY THE ASSESSEE.' 18. THIS EXPLANATION HAD BEEN INSERTED BY THE TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT 1986 WITH EFFECT FROM 01.04.1988. THE JUDGEMENT HEAVILY RELIED ON BY THE LEARNED COUNSEL FOR THE AS SESSEES, NAMELY, MADRAS AUTO SERVICES (P.) LTD., CITED SUPRA RELATED TO THE ASSESSMENT YEAR 1968- 1969 BEFORE THE ABOVE PROVISION WAS BROUGHT INTO EFFECT. THE FURTHER JUDGEMENT RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEES IN HARI VIGNESH MOTORS (P.) LTD., CITED SUPRA IN THE COURSE OF THE SAID JUDGEMENT DID NOT CONSIDER THE SAID EXPLANATION. THE OTHER JUDGEMENT RELIED ON BY THE L EARNED COUNSEL IN TVS LEAN LOGISTICS LTD., CITED SUPRA RELATED TO TOTALLY DIST INGUISHABLE SET OF FACTS. IN THAT CASE, THE ASSESSEE HAD PUT UP CONSTRUCTION OF A BUI LDING ON A LEASE HOLD LAND. THE BUILDING WAS NOT TAKEN ON LEASE. CONSEQUENTLY, IT WAS HELD AS FOLLOWS: '4.1 IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD PUT UP THE IMPUGNED CONSTRUCTION OF BUILDING ONLY ON THE LEASEHOLD LAND AND NO BUILD ING WAS TAKEN ON LEASE BY THE ASSESSEE. THEREFORE, THE FICTION CREATED BY EXP LN. 1 THAT THE BUILDING PUT UP BY HIM IN THE LEASEHOLD LAND OR STRUCTURE OR WORK S HALL BE CONSTRUED AS IF THE SAME IS OWNED BY THE ASSESSEE, IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AND THE EXPLN. 1 TO S.32(1) OF THE ACT IS NOT ATTRA CTED TO THE INSTANT CASE OF THE ASSESSEE AT ALL.' THE AFORESAID JUDGEMENT CITED BY THE LEARNED COUNSE L FOR THE ASSESSEE ARE THEREFORE NOT APPLICABLE TO THE FACTS OF THE PRESEN T CASE IN VIEW OF AMENDED LAW. 19. IN SILVER SCREEN ENTERPRISES V. CIT [1972] 85 ITR 578 (PUNJ. & HAR.) , WHILE EXAMINING WHETHER EXPENDITURE INCURRED ON REPAIRS T O CHAIRS, RENOVATION OF BUILDING AND MODERNISATION OF CINEMA HOUSE TAKEN ON LEASE BY THE ASSESSEE, IT WAS HELD THAT THEY ARE CAPITAL EXPENDITURE SINCE IT BROUGHT AN ENDURING BENEFIT. THE RELEVANT DISCUSSION ON THIS ASPECT IS QUOTED BE LOW: 'IT CANNOT BE DENIED THAT THE AMOUNT SPENT FOR THE CONSTRUCTION OF THE VERANDH, OFFICE ROOM, SIDE ROOM AND BATH ROOMS BROUGHT INTO EXISTENCE AN ASSET OF AN ENDURING NATURE. IT IS NO ONE'S CASE THAT ONLY THE EXISTING VERANDAH, OFFICE, SIDE ROOM OR BATH ROOMS WERE REPAIRED. WHAT APPEARS IS T HAT THESE CONSTRUCTIONS WERE BROUGHT INTO BEING FOR THE PURPOSE OF MODERNIS ING THE CINEMA HALL. THEREFORE, THE CONSTRUCTION OF VERANDAH, OFFICE, SI DE ROOM, ETC., FOR THE PURPOSE OF MODERNISING THE CINEMA HALL BROUGHT INTO EXISTENCE A RE ASSET OF ENDURING NATURE IN THE TRUE SENSE OF THE WORD. THE OBJECT OF THE AS SESSEE IN REPLACING THE OLD WOODEN CHAIRS BY STEEL CHAIRS WAS TO ATTRACT LARGER AND BETTER CUSTOMERS. THIS WAS IN FACT AN OUTLAY FOR THE PURPOSE OF EARNING PR OFITS OR, IN OTHER WORDS FOR THE PURPOSE OF BETTER BUSINESS. IT WAS NOT AN EXPENSE W HICH WAS OF A RECURRING NATURE, AND THEREFORE, IT CAN BE SAFELY SAID THAT T HE LESSEE BROUGHT INTO BEING AN ASSET OF AN ENDURING NATURE. UNDOUBTEDLY, IT WAS AN IMPROVEMENT. THE WOODEN CHAIRS WERE REPLACED. NO EVIDENCE HAD BEEN LED TO S HOW THAT THE WOODEN CHAIRS HAD BEEN USELESS AND COULD NOT BE USED FOR SEATING THE CINEMA-GOERS. ON THE OTHER HAND, THE STAND TAKEN WAS THAT THE WHOLE OBJE CT WAS TO MODERNISE THE 21 CINEMA HOUSE TO BRING IT IN LINE WITH THE MODERN SH OW BUSINESS. THE REPLACEMENT WAS AN IMPROVEMENT OF AN ENDURING NATUR E AND NOT MERE REPLACEMENT. CAPITAL EXPENSE WITH REGARD TO A SHORT -TERM VENTURE, SUCH AS A LEASE FOR A PERIOD, HAD TO BE VIEWED IN THE CONTEXT OF THAT LEASE, NAMELY, ITS PURPOSE COUPLED WITH ITS DURATION. EXPENDITURE INCU RRED BY THE ASSESSEE IS AN EXPENDITURE OF A CAPITAL NATURE AND IT BROUGHT INTO BEING AN ADVANTAGE OF AN ENDURING NATURE AND THUS IT HAD BEEN RIGHTLY TREATE D AS SUCH BY THE TRIBUNAL, EXCEPT TO THE EXTENT OF THE AMOUNT FOUND BY THE TRI BUNAL BEING ON ACCOUNT OF REPAIRS.' 20. IN VIEW OF THE ABOVE PROPOSITIONS, WE ARE OF THE C ONSIDERED VIEW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IN THE PRESENT CASE ARE CAPITAL IN NATURE AND COME WITHIN THE MISCHIEF OF EXPLANATION 1 TO SE CTION 32(1) OF THE ACT. THE ALTERNATE SUBMISSION ADVANCED BY MR. M.P. SENTHIL K UMAR THAT THE REPAIRS TO THE PREMISES CANNOT BE CAPITALISED IN VIEW OF SECTI ON 30(A)(I) OF THE ACT IS REJECTED SINCE THE RENOVATIONS MADE ARE CAPITAL IN NATURE IN THE FIRST ASSESSMENT YEAR AND ONLY FURTHER REPAIRS MAY ATTRAC T THE PROVISIONS UNDER SECTION 30(A)(I) OF THE ACT. SECTION 30(A)(I) OF TH E ACT IS AS FOLLOWS: '30. IN RESPECT OF RENT, RATES, TAXES, REPAIRS AND INSURANCE FOR PREMISES, USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOL LOWING DEDUCTIONS SHALL BE ALLOWED- (A) WHERE THE PREMISES ARE OCCUPIED BY THE ASSESSEE (I) AS A TENANT, THE RENT PAID FOR SUCH PREMISES; A ND FURTHER IF HE HAS UNDERTAKEN TO BEAR THE COST OF REPAIRS TO THE PREMISES, THE AM OUNT PAID ON ACCOUNT OF SUCH REPAIRS.' 21. IN THE PRESENT CASE, THE ASSESSES HAD INCURRED SUB STANTIAL EXPENDITURE TOWARDS RENOVATION LEADING TO ENDURING BENEFIT. THE Y ARE NOT MERELY REPAIRS. THE ASSESSEES HAD ALSO INCURRED EXPENDITURES TOWARD S IMPROVEMENT AND CONSTRUCTION OF THE BUILDING. THESE CANNOT BE TERME D AS 'REPAIRS'. CONSEQUENTLY, THIS ALTERNATE SUBMISSION IS REJECTED BY US. THE SE COND ALTERNATE SUBMISSION ADVANCED BY MR. M.P. SENTHIL KUMAR THAT THE CASE SH OULD BE REMITTED BACK TO THE ASSESSING OFFICER IS ALSO REJECTED SINCE THE FA CT HAVE BEEN ADDRESSED AND SETTLED BY THE AUTHORITIES BELOW AND IT HAD BEEN CO NCURRENTLY FOUND THAT THE EXPENDITURE WERE CAPITAL IN NATURE. THE ISSUE OF BI FURCATING THE SAID EXPENSES AS CAPITAL AND REVENUE WOULD THEREFORE NOT ARISE. 22. IN VIEW OF THE ABOVE REASONS, WE HOLD THAT THE SUBS TANTIAL QUESTIONS OF LAW HAVE TO BE ANSWERED IN FAVOUR OF THE REVENUE AND AG AINST THE ASSESSEE AND THE APPEALS FILED BY THE REVENUE HAVE TO BE ALLOWED . ACCORDINGLY, THE APPEALS ARE ALLOWED. NO COSTS. 36. THUS, IN VIEW OF THE ABOVE LEGAL POSITION, THE EXPENDITU RE INCURRED ON RENTED PREMISES CANNOT BE TREATED AS REVENUE IN VIEW O F THE PLAIN PROVISIONS OF EXPLANATION 1 TO SEC.32 OF THE ACT. THE LD.CIT(A) IS IN TOT AL IGNORANCE OF THE PROVISIONS OF EXPLANATION 1 OF SEC.32 OF THE ACT HELD IT TO BE REVENUE IN NATURE. THE DECISION RELIED UPON BY THE LEARNED COUNSEL HAS NO APPLICATION AFTER INSERTION OF EXPLANATION 1 OF SEC.32 OF THE ACT. IN THE ABOVE 22 CIRCUMSTANCES, WE REVERSE THE ORDER OF LD.CIT(A) AND RE STORE THE ISSUE IN THIS GROUND TO THE FILE OF ASSESSING OFFICER. THUS, THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 37. IN GROUND NO.5, THE REVENUE CHALLENGES THE DECISIO N OF LD.CIT(A) RESTRICTING THE DISALLOWANCE OF THE MINIMUM EXPEND ITURE FROM RS.2,59,407/- TO RS.1,00,000/-. THE BRIEF FACTUAL MATRIX OF THE ISSUE IN GROUND NO.5 IS AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS ING OFFICER FOUND THAT OUT OF THE MISCELLANEOUS EXPENSES, THE ASSE SSEE COULD NOT PRODUCE SUPPORTING DOCUMENTS, DETAILS, VOUCHERS TO THE E XTENT OF RS.2,59,407/-, THEREFORE DISALLOWED THE SAME. 38. ON APPEAL BEFORE LD.CIT(A), LD.CIT(A) FOLLOWING HIS ORDER IN ASS ESSEES OWN CASE IN THE EARLIER YEARS IN A.YS. 2008-09 AND 2009- 10, RESTRICTED THE DISALLOWANCE TO RS.1,00,000/-. 39. BEING AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE I S IN APPEAL BEFORE US. 40. BEFORE US, THE LEARNED CIT DR VEHEMENTLY CONTESTED THAT THERE IS NO BASIS TO RESTRICT THE DISALLOWANCE TO RS.1,00,000/-. 41. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE RESP ONDENT / ASSESSEE CONTESTED THAT NO DISALLOWANCE CAN BE MADE ON ADHOC B ASIS WITHOUT REJECTING THE BOOKS OF ACCOUNTS. 23 42. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATER IAL ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE RESPON DENT / ASSESSEE COMPANY COULD NOT FURNISH THE EVIDENCE, BILLS, VOUCHERS ETC TO THE EXTENT OF RS.2,59,407/- OUT OF THE TOTAL MISCELLANEOUS EXPENDITURE. ON APPEAL BEFORE LD.CIT(A), LD.CIT(A) RESTRICTED THE DISALLOWANCE TO RS.1,00,000/- W HICH IS IN ACCORDANCE WITH THE DECISION OF HIS ORDER IN ASSESSEES O WN CASE FOR THE EARLIER ASSESSMENT YEARS. ON THE PRINCIPLE OF CONSISTENCY, WE UPHOLD THE ORDER OF LD.CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL STANDS DISMISSED. 43. IN GROUND NO.6, THE REVENUE CHALLENGES THE DECISIO N OF LD.CIT(A) DELETING THE ADDITION OF COMMISSION EXPENDITURE OF RS.39,60,335/-. THE BRIEF FACTUAL MATRIX OF THE ISSUE IN GROUND NO.6 IS AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R HAD CALLED FOR DETAILS OF TOTAL COMMISSION EXPENDITURE OF RS.17,65,7 4,867/-. OUT OF WHICH, THE ASSESSEE COULD NOT FURNISH THE CONFIRMATIONS FR OM THE PARTIES TO THE EXTENT OF RS.39,60,335/-. THEREFORE, THE ASSESSING OFFIC ER DISMISSED THE SAME. 44. ON APPEAL BEFORE LD.CIT(A), LD.CIT(A) FOLLOWING HIS EARLIER DECISIO N FOR THE ASSESSMENT YEAR 2008-09 DELETED THE SAME ON THE GROUND THAT THE LD.CIT(A) HAD NOT CONDUCTED ANY FRESH VERIFICATION TO PROVE THE GENUINENESS OF THE TRANSACTION OR OTHERWISE OF THE CASE. 45. BEING AGGRIEVE BY THE ORDER OF LD.CIT(A), REVENUE IS IN APPEAL BEFORE U S. 24 46. BEFORE US, THE LEARNED CIT DR HAS PRAYED THAT THE M ATTER MAY BE REMITTED BACK FOR FURTHER ENQUIRY. 47. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE RESPO NDENT / ASSESSEE SUBMITTED THAT THE SIMILAR DISALLOWANCE WAS DELETED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2002-03 TO 2007-08 AND S IMILARLY, THE HONBLE BOMBAY HIGH COURT ALSO CONFIRMED THE ORDER OF THE TRIBUNA L DELETING THE ADDITION ON ACCOUNT OF COMMISSION EXPENDITURE IN ASSESSEES OWN CAS E. 48. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL RELATES TO THE ALLOWANCE OF COMMISSION EXPENDITURE OF RS.39,60,335/-. ADMITTEDLY, THE APPELLANT HAD FILED THE PRIMARY DETAILS SUCH AS NAME, ADDRESS, INVOICE, PAYMENT MAD E ETC. HOWEVER, THE ASSESSEE COULD NOT FURNISH THE CONFIRMATIONS FROM PAY EES AND FOR WANT OF THE CONFIRMATIONS, ASSESSING OFFICER MADE DISALLOWANCE. THE LD.C IT(A) FOLLOWING THE DECISION OF HIS ORDER IN ASSESSEES OWN CASE IN EARLIER YEARS HAS DELETED THE ADDITION. FROM THE MATERIAL ON RECORD, IT IS C LEAR THAT THE RESPONDENT / ASSESSEE HAD DISCHARGED THE ONUS CAST U PON IT BY FILING THE PRIMARY DETAILS. MERE INABILITY TO FURNISH THE CONFIRMATION LETT ERS FROM THE RECIPIENTS CANNOT BE THE REASON TO DISALLOW THE COMMISSION EXPENDITURE WITHOUT CAUSING ANY FURTHER ENQUIRIES BY THE ASSESSING OFFIC ER AS TO THE GENUINENESS OR OTHERWISE OF THE EXPENDITURE. ADMITTEDLY, THERE IS NO MATERIAL ON RECORD EXHIBITING THE NON-GENUINENESS OF THE EXPENDITU RE. HENCE, RESPECTFULLY FOLLOWING THE DECISIONS OF THIS TRIBUNAL AND HON BLE BOMBAY HIGH COURT IN RESPONDENT / ASSESSEES OWN CASE, WE HOLD T HAT LD.CIT(A) IS JUSTIFIED 25 IN DELETING THE COMMISSION EXPENDITURE AND ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 49. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 2 ND DAY OF SEPTEMBER, 2021. SD/- SD/- (S. S. VISWANETHRA RAVI) (IN TURI RAMA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 2 ND SEPTEMBER, 2021. YAMINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-13, PUNE. 4. THE PR.CIT-5, PUNE. 5. , , , / DR, ITAT, C BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.