Appeal details
Counselvise Citation
[2012] 140 COUNSELVISE.COM (IT) 57424 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 1 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
05-01-2012
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
05-01-2012
Assessment Year
2004-2005
Appeal Filed On
07-11-2008
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO.1358/BANG/2008 ASSESSMENT YEAR : 2004-05 TOYOTA KIRLOSKAR AUTO PARTS PVT. LTD., PLOT NO.21, BIDADI INDUSTRIAL AREA, RAMNAGAR TALUK, BANGALORE 562 109. PAN : AABCT 5590Q VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, LTU, BANGALORE. APPELLANT RESPONDENT ITA NO.1455/BANG/2008 ASSESSMENT YEAR : 2004-05 THE ADDITIONAL COMMISSIONER OF INCOME TAX, LTU, BANGALORE. VS. TOYOTA KIRLOSKAR AUTO PARTS PVT. LTD., PLOT NO.21, BIDADI INDUSTRIAL AREA, RAMNAGAR TALUK, BANGALORE 562 109. PAN : AABCT 5590Q APPELLANT RESPONDENT ASSESSEE BY : SHRI K.R. SEKAR, C.A. REVENUE BY : SHRI ETWA MUNDA, CIT-III(DR) DATE OF HEARING : 05.01.2012 DATE OF PRONOUNCEMENT : 05.01.2012 ITA NOS.1358 & 1455/BANG08 PAGE 2 OF 18 O R D E R PER BENCH THESE CROSS APPEALS BY THE DEPARTMENT AND THE ASS ESSEE ARE ARISING OUT OF THE ORDER DATED 29.8.2008 OF THE CIT (APPEALS)-IV, BANGALORE FOR THE ASSESSMENT YEAR 2004-05. 2. IN THE ASSESSEES APPEAL, THE FOLLOWING GROUNDS HAVE BEEN RAISED: I. INCOME ASSESSED AS MENTIONED IN THE APPELLATE ORDER : THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [ CIT (A)] HAD ERRONEOUSLY MENTIONED THE ASSESSED LOSS AS RS.L62,190,210 WHEREAS THE LOSS AS PER THE ASSESSME NT ORDER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1 961 (THE ACT) WAS RS.166,540,744. HOWEVER, THE LEARNED ASSESSING OFFICER (AO) WHILE PASSING THE ORDER GIVING EFFECT TO THE CIT(A)'S ORD ER DATED OCTOBER 21, 2010 HAS CONSIDERED THE CORRECT AMOUNT OF ASSESSED LOSS. THEREFORE, THE ABOVE GROUND IS NOT PRESSED. 2. TRANSFER PRICING ADJUSTMENT: THE APPELLANT WISHES TO STATE THAT WITH RESPECT TO THE INTERNATIONAL TRANSACTION PERTAINING TO THE PROVISI ON OF TECHNICAL ASSISTANCE AND ENGINEERING FEE TO ITS AES , THERE IS AN EXISTENCE OF SIMILAR ARRANGEMENT BETWEEN TOYOTA MOTOR CORPORATION (TMC) AND KIRLOSKAR SYSTEMS LIMIT ED (KSL) ENTERED ON APRIL 01, 1999. THE SAME CAN BE COMPARED WITH THE INTERNATIONAL TRANSACTION ENTERED BY THE APPELLANT WITH TMC. GIVEN THE SIMILAR NATURE OF TEC HNICAL ASSISTANCE BETWEEN TMC AND KSL, THIS TRANSACTION CA N BE USED AS AN INTERNAL CUP FOR BENCHMARKING THE INTERNATIONAL TRANSACTION BETWEEN TMC AND THE APPEL LANT FOR THE USE OF LATTER'S TECHNICAL ASSISTANCE AS THE PER DIEM RATES CHARGED ARE ALMOST IDENTICAL. ITA NOS.1358 & 1455/BANG08 PAGE 3 OF 18 THE LEARNED CIT(A) ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT THE FINANCIAL YEAR COMMENCING APRIL 1 ST 2003 AND CONCLUDING 31 ST MARCH 2004 REPRESENTED A NASCENT STAGE IN THE OPERATIONS OF THE APPELLANT AND THAT THE LOSS I NCURRED BY THE APPELLANT WAS SOLELY ON ACCOUNT OF INITIAL S TAGES OF OPERATION. THE LEARNED CIT(A) ALSO ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT COMPANY HA D ONLY ONE OPERATIONAL UNIT IN THE FINANCIAL YEAR 2003-04 THAT IS THE DOMESTIC TARIFF AREA (DTA) UNIT AND WAS IN THE PROCESS OF SETTING UP THE EOU AND HAD NOT YET COMME NCED COMMERCIAL PRODUCTION IN RESPECT OF ITS EOU AS ON 31.03.2004. THE LEARNED CIT (A) HAS ERRED IN STATING THAT THE B ASIS OF ALLOCATION OF FEES FOR TECHNICAL ASSISTANCE FEES, E NGINEERING FEES AND PROCUREMENT OF RAW MATERIALS BETWEEN THE E OU AND DTA UNITS IS INCORRECT THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT PURCHASE OF RAW MATERIAL IS ACCOUNTED ON ACTUAL PURCHASE FOR EACH UNIT AND SINC E THE EOU HAD NOT COMMENCED COMMERCIAL PRODUCTION, THE SAME WAS ACCOUNTED UNDER INCIDENTAL EXPENDITURE INC URRED DURING THE CONSTRUCTION PERIOD AND THE PURCHASE FOR THE DTA WAS ACCOUNTED IN THE PROFIT AND LOSS ACCOUNT. THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE DISCOUNT RATES OF RETURN PROVIDED BY THE ASSESSEE T O JUSTIFY THE PROJECTED PROFIT MARGINS. ECONOMIC THEORY SUGGE STS THAT ANY INVESTOR WILL EVALUATE THE VARIOUS OPTIONS AVAILABLE BEFORE FINALIZING ON THE INVESTMENT PORTF OLIO; HENCE, PUBLICLY AVAILABLE FINANCIAL INSTRUMENTS ARE EQUALLY VIABLE ALTERNATIVES THAT SHOULD BE CONSIDERED. FURT HER, THE LEARNED CIT(A) HAS ALSO ERRED IN STATING THAT THERE WAS SIGNIFICANT VARIANCE BETWEEN THE PROJECTED INCOME V IS-A- VIS THE ACTUAL INCOME AS PER AUDITED FINANCIAL STAT EMENTS AVAILABLE UP TO MARCH 2008. THE LEARNED CIT(A) HAS ERRED IN NOT TAKING INTO CONSIDERATION THE FACT THAT THE LEARNED TRANSFER PR ICING OFFICER ERRED IN DISREGARDING THE TRANSFER PRICING STUDY FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2004. THE LEARN ED CIT(A) OUGHT TO HAVE RECOGNIZED THE FACT THAT THE O RDER PASSED BY THE LEARNED TRANSFER PRICING OFFICER WAS 'WITH AN INTENTION TO MAKE A TRANSFER PRICING ADJUSTMENT AND ENHANCE THE INCOME OF THE APPELLANT. THE LEARNED CI T(A) HAS ERRED IN NOT ADJUDICATING UPON THE ERRONEOUS DETERMINATION OF THE COSTS BY THE LEARNED TPO AT RS . 448,501,274/- AS AGAINST RS.446,981,647/-. ITA NOS.1358 & 1455/BANG08 PAGE 4 OF 18 3. ASSETS COSTING LESS THAN RS. 5,000 AMOUNTING TO RS. 2,847,328: THE LEARNED AO IN THE ORDER GIVING EFFECT TO THE CI T(A)S ORDER HAS AFTER VERIFICATION OF FACTS ALLOWED THE A BOVE AMOUNT OF RS.2,847,328, BEING THE AMOUNT DOUBLY DISALLOWED TOWARDS THE FIXED ASSETS COSTING LESS TH AN RS. 5,000 FULLY DEPRECIATED IN THE BOOKS OF ACCOUNTS. THEREFORE, THE ABOVE GROUND IS NOT PRESSED. 4. PRIOR PERIOD EXPENDITURE - INFORMATION TECHNOLO GY SUPPORT & SYSTEM IMPLEMENTATION CHARGES DEBITED TO PROFIT AND LOSS ACCOUNT: THE LEARNED CIT(A) HAS ERRED IN NOT ADJUDICATING TH E DOUBLE DISALLOWANCE OF THE PRIOR PERIOD EXPENDITURE WHILE UPHOLDING THE DISALLOWANCE OF SYSTEM IMPLEMENTATION CHARGES DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE S YSTEM IMPLEMENTATION CHARGES WERE INCURRED FOR THE PURPOS E OF ADMINISTRATIVE FUNCTIONING OF THE BUSINESS AND DID NOT BRING INTO EXISTENCE ANY ASSET OR ADVANTAGE OF ENDU RING NATURE. THE LEARNED CITCA) HAS FURTHER NOT TAKEN COGNIZANCE OF THE APPELLANT'S ALTERNATIVE SUBMISSION THAT NOTWITH STANDING THAT THE SAID EXPENDITURE IS REVENUE IN NATURE, SHO ULD THE SAID EXPENDITURE BE DISALLOWED AS BEING CAPITAL IN NATURE, THEN THE SAID EXPENDITURE SHOULD BE ALLOWED TO BE CAPITALIZED AND THE APPELLANT BE GRANTED DEPRECIATI ON ON THE SAME. 5. INCOME EARNED DURING CONSTRUCTION PERIOD AMOUNT ING TO RS. 26,219,000: THE LEARNED CIT(A) HAS ERRED IN CONSIDERING INCOME EARNED DURING CONSTRUCTION PERIOD AS INCOME FROM OT HER SOURCES. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE SAID RECEIPTS ARE FROM FUNDS EMPLOYED ATTRIBUTABLE TO TH E EOU WHICH WAS IN THE CONSTRUCTION PERIOD. 6. REPAIRS AND MAINTENANCE CHARGES AMOUNTING RS. 2,288,388: THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF REPAIRS AND MAINTENANCE CHARGES. TH E LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THAT THE ITA NOS.1358 & 1455/BANG08 PAGE 5 OF 18 APPELLANT HAD CAPITALIZED THE ENTIRE COST OF CONSTR UCTION AND CLAIMED ONLY THE DISMANTLING AND REPAIR CHARGES AS REVENUE EXPENDITURE. THE LEARNED CIT (A) HAS FURTHER NOT TAKEN COGNIZANC E OF THE SUBMISSION BY THE APPELLANT THAT SHOULD THE SAM E BE DISALLOWED AS NOT BEING REVENUE IN NATURE, THE APPE LLANT BE GRANTED DEPRECIATION ON THE SAME. 7. R&D CESS RELATING TO THE EXPORT ORIENTED UNIT (E OU) AMOUNTING TO RS. 9,675,812: THE LEARNED CIT (A) HAS ERRED IN DISALLOWING R & D CESS AND IN STATING THAT R & D CESS IS NOT AN ALLOWABLE EXPENDITURE UNDER THE ACT. THE LEARNED CIT (A) OUGH T TO HAVE APPRECIATED THAT R&D CESS IS KIND OF IMPOST BY A STATE IN ITS SOVEREIGN POWER OF TAXATION TO RAISE T HE REVENUE FOR THE STATE AND IS AN ALLOWABLE EXPENDITU RE UNDER SECTION 43B OF THE ACT. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THAT THE R&D CESS IS NOT IN THE NATURE OF TAX ON INCOME OR W EALTH WHICH ARE SPECIFICALLY REQUIRED TO BE DISALLOWED UN DER THE PROVISIONS OF SECTION 40( A) OF THE ACT. THE LEARNED CIT (A) HAS NOT TAKEN COGNIZANCE OF THE SUBMISSION BY THE APPELLANT THAT SHOULD THE SAME BE TREATED AS CAPITAL IN NATURE, THE APPELLANT BE GRAN TED DEPRECIATION ON THE SAME. 8. THE LEARNED CIT (A) HAS ERRED IN NOT ADJUDICATI NG ON THE SHORT GRANT OF TDS REFUND AMOUNTING TO RS.638,425 AS PER THE REVISED RETURN OF INCOME FILED BY THE APPELLANT. 9. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ALL OR ANY OF THE AFORE-STATED GROUNDS OF APPEAL. 3. IN THE DEPARTMENTS APPEAL, GROUNDS RAISED READ AS UNDER: 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION OF RS 19,99,86,000 UNDER TECHNICAL ASSISTANCE FEES BY HOL DING THAT PRO-RATA BREAK UP OF ARM LENGTH PRICE BY THE T RANSFER PRICING OFFICER INTO CAPITAL AND REVENUE EXPENDITUR E IS ITA NOS.1358 & 1455/BANG08 PAGE 6 OF 18 UNWARRANTED WITHOUT APPRECIATING THE FACT THAT THE EXPENSES INCURRED WERE IN RELATION TO EOU AND THAT THE EOU HAD NOT COMMENCED THE OPERATION DURING THE YEAR . 3. THE LEARNED CIT(APPEALS) ERRED IN DELETING THE ADDI TION MADE ON ACCOUNT OF TRAVELING AND CONVEYANCE EXPENSE S FORMING PART OF TECHNICAL ASSISTANCE FEE AMOUNTING TO RS. 1,14,96,326, WITHOUT APPRECIATING THE FACT THAT THE EXPENSES INCURRED WERE IN RELATION TO EOU AND THAT THE EOU HAD NOT COMMENCED THE OPERATION DURING THE YEAR . 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, IT IS PRAYED THAT TH E ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED . 5. THE APPELLANT CRAVES TO LEAVE/TO ADD/ALTER/AMEND AN D/OR DELETE ANY OF THE GROUNDS ON OR BEFORE THE HEARING OF THE APPEAL. 4. FROM THE ABOVE GROUNDS IT IS GATHERED THAT THE M AIN GRIEVANCE OF BOTH THE PARTIES RELATES TO TRANSFER PRICING ADJUST MENTS. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED I TS RETURN OF INCOME ON 29.10.2004 DECLARING A LOSS OF RS.43,27,88,670, WHI CH WAS PROCESSED U/S. 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REF ERRED TO AS THE ACT IN SHORT] ON 14.3.2005. SUBSEQUENTLY THE CASE WAS SE LECTED FOR SCRUTINY. AS THE ASSESSEE OPTED TO JOIN LARGE TAXPAYERS UNIT (LT U) AND SUBMITTED THE CONSENT BEFORE THE CHIEF COMMISSIONER OF LTU, THE C ASE WAS TRANSFERRED U/S. 127 OF THE ACT TO LTU. 6. THE ASSESSING OFFICER AFTER OBTAINING APPROVAL F ROM CIT-III, BANGALORE MADE A REFERENCE DATED 30.5.2006 U/S. 92C A OF THE ACT FOR DETERMINATION OF THE ARMS LENGTH PRICE OF INTERNAT IONAL TRANSACTIONS. THE TPO PASSED THE ORDER DATED 22.12.06 U/S. 92CA OF TH E ACT AND WORKED OUT ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTIONS AT RS.1,64,66,723 AS AGAINST ITA NOS.1358 & 1455/BANG08 PAGE 7 OF 18 THE TOTAL COST OF INTERNATIONAL TRANSACTIONS AT RS. 32,78,66,000 TOWARDS PURCHASE OF RAW MATERIAL, TECHNICAL FEES AND ENGINE ERING FESS. ACCORDINGLY EXCESS OF COST OF INTERNATIONAL TRANSACTIONS ON THE SE ITEMS AS COMPARED TO ARMS LENGTH COST OF INTERNATIONAL TRANSACTIONS HAD BEEN WORKED OUT AT RS.16,31,38,677. THE AO ALLOWED AN OPPORTUNITY TO THE ASSESSEE TO SUBMIT ITS OBJECTIONS. THE ASSESSEE SUBMITTED OBJE CTIONS IN DETAIL WHICH HAS BEEN DISCUSSED BY THE AO IN PARAS 3.3 TO 10 OF THE ASSESSMENT ORDER DATED 28.12.2006. THE AO FRAMED THE ASSESSMENT AT A LOSS OF RS.16,65,40,744 BY MAKING VARIOUS ADDITIONS MENTIONED IN PARA 11 OF THE ASSESSMENT ORDER DATED 28.12.2006. 7. AGAINST THE SAID ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL TO THE LD. CIT(A) AND CHALLENGED VARIOUS ADD ITIONS MADE BY THE AO. THE LD. CIT(A) ALLOWED PARTIAL RELIEF TO THE ASSESS EE. NOW BOTH THE PARTIES ARE IN APPEAL, I.E., THE DEPARTMENT IS IN APPEAL AG AINST THE RELIEF ALLOWED BY THE CIT(A), WHILE THE ASSESSEE IS IN APPEAL AGAINST THE SUSTENANCE OF ADDITIONS. 8. THE ASSESSEE FURNISHED AN APPLICATION FOR ADMISS ION OF ADDITIONAL EVIDENCE VIDE APPLICATION FILED ON 28.7.2009 AND ST ATED THEREIN AS UNDER: SUB: FILING OF ADDITIONAL EVIDENCE IN RESPECT OF ITA NO. : 1358 & 1455/B/08 FOR AY 2004-05 WE WISH TO SUBMIT THAT THE MAJOR ISSUE IN RESPECT O F THE ABOVE APPEAL BEFORE THE HONORABLE BENCH IS JUSTIFICATION OF PAYMENT OF TECHNICAL ASSISTANCE FEES AND ENGINEERING FEES PAYA BLE BY THE APPELLANT COMPANY TO TOYOTA MOTOR CORPORATION (TMC) . THE LEARNED TRANSFER PRICING OFFICER HAS DISALLOWED THE SAID TRANSACTION ON THE REASONING THAT THE VALUE OF THE TRANSACTION IS NOT AT ARM'S LENGTH PRICE (ALP). ITA NOS.1358 & 1455/BANG08 PAGE 8 OF 18 THE APPELLANT HAD JUSTIFIED THE TRANSACTION IN THE TRANSFER PRICING DOCUMENTATION REPORT USING THE TRANSACTIONAL NET MA RGIN METHOD (TNMM) IN ACCORDANCE WITH RULE L0A TO 10D OF THE INCOME TAX RULES, 1962. THE METHOD USED WAS FURTHER JUSTIFIED DURING THE COURSE OF ASSESSMENT AND APPEAL PROCEEDI NGS. DURING THE COURSE OF FACT FINDING FOR THE PURPOSE O F THIS APPEAL, THE APPELLANT NOTED THE EXISTENCE OF SIMILAR TRANSA CTIONS BETWEEN TMC AND KIRLOSKAR SYSTEMS LIMITED (KSL) ENTERED INT O ON APRIL 01, 1999. SINCE THE TRANSACTION BETWEEN TMC AND KS L CAN BE CONSIDERED AS COMPARABLE WITH THE APPELLANT'S TRANS ACTION, IT IS IMPERATIVE THAT THE SAME BE BROUGHT TO THE ATTENTIO N OF THE HONORABLE TRIBUNAL, THE HONORABLE TRIBUNAL BEING TH E LAST FACT FINDING AUTHORITY. IN THIS REGARD, THE APPELLANT WI SHES TO PLACE BEFORE THE HONORABLE TRIBUNAL THE FOLLOWING DOCUMEN TS: 1. TECHNICAL ASSISTANCE AGREEMENT BETWEEN TMC/AISIN TAKAOKA CO.,LTD. (LICENSOR) AND KSL(LICENSEE) DATED APRIL 01, 1999. 2. LETTER FROM TMC DATED JULY 27, 2001 FOR AMENDING ANNEXURES F-2-1, G-2-2 (TRAINING FEE PAID TO TMC) A ND H-2-1 (DISPATCHING INSTRUCTOR OF TMC) TO THE AGREEMENT ME NTIONED IN 1 ABOVE. 3. ASSIGNMENT AGREEMENT FOR TECHNICAL ASSISTANCE DATED JUNE 26, 2002 - FOR ASSIGNMENT OF ORIGINAL AGREEMENT (ME NTIONED IN 1 ABOVE) IN THE NAME OF THE APPELLANT. 4. LETTER FROM TMC DATED OCTOBER 30, 2002 TO TOYOTA OV ERSEAS AFFILIATES INDICATING THE TECHNICAL ASSISTANCE RATE TO THE SAID AFFILIATES WE KINDLY REQUEST THE HONORABLE TRIBUNAL TO EXERCIS E THE POWER VESTED IN IT UNDER RULE 29 OF THE INCOME TAX APPELL ATE TRIBUNAL RULES AND ADMIT THE ADDITIONAL EVIDENCES AS IT HAS CRUCIAL BEARING ON THE ISSUES THAT ARISE IN THESE APPEALS. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FIRST ADDITIONAL EVIDENCE RELATES TO THE TECHNICAL ASSISTANCE FEES A ND ENGINEERING FEES AGREEMENT ENTERED INTO BETWEEN TOYOTA MOTOR CORPORA TION (TMC)/AISIN TAKAOKA CO. LTD. (ATC) [LICENSOR] AND KIRLOSKAR SYS TEMS LIMITED (KSL) ITA NOS.1358 & 1455/BANG08 PAGE 9 OF 18 [LICENSEE]. IT WAS STATED THAT THE LICENSOR AND TH E LICENSEE HAD ENTERED INTO A TECHNICAL ASSISTANCE AGREEMENT EFFECTIVE FRO M 1.4.99. THE SAID TECHNICAL ASSISTANCE AGREEMENT WAS AMENDED BY TMC B Y LETTER DATED 27.7.2001. IT WAS FURTHER STATED THAT THE ASSESSEE COMPANY WAS INCORPORATED IN APRIL, 2002 AND ACQUIRED THE BUSINE SS OF AUTO COMPONENT DIVISION OF KSL. IT WAS SUBMITTED THAT THIS FACT T HAT TMC AND KSL ENTERED INTO AGREEMENT ON 1.4.99 ONLY CAME TO THE KNOWLEDGE OF THE ASSESSEE DURING THE COURSE OF FACT FINDING PREPARATION FOR T HE PURPOSE OF THIS APPEAL, SO THIS DOCUMENT COULD NOT BE FURNISHED BEFORE THE AO OR THE TPO, BUT THIS IS A VITAL DOCUMENT IN ORDER TO JUSTIFY THE ARMS L ENGTH PRICE OF THE TRANSACTION. 10. IT WAS FURTHER SUBMITTED THAT THE 2 ND ADDITIONAL EVIDENCE IS IN THE SHAPE OF ORDER DATED 25.3.2010 FOR THE SUCCEEDING F INANCIAL YEAR 2006-07 WHEREIN IT HAS BEEN CONCLUDED THAT THE INTERNATIONA L TRANSACTIONS OF THE ASSESSEE COMPANY WITH TMC PERTAINING TO THE PAYMENT OF TECHNICAL ASSISTANCE AND ENGINEERING SERVICE FEE IS AT ARMS LENGTH. IT IS SUBMITTED THAT THIS ORDER IS DATED 25.3.2010 I.E., AFTER THE ORDER DATED 28.12.2006 PASSED BY THE AO, SO, IT WAS NOT AVAILABLE TO THE A O. HOWEVER THE SAID ORDER OF THE TPO IS RELEVANT TO DECIDE THE PRESENT CONTROVERSY, THEREFORE IT IS TO BE ADMITTED AS NEW EVIDENCE. 11. AS REGARDS TO THE THIRD DOCUMENT RELATING TO IN TEREST INCOME AND EXCHANGE GAIN DURING THE CONSTRUCTION PERIOD OF THE EXPORT ORIENTED UNIT (EOU). IT WAS STATED THAT THE ASSESSEE WAS IN THE PROCESS OF SETTING UP 100% EOU DURING THE FINANCIAL YEAR 2002-03 AND 2003 -04 TOWARDS WHICH IT HAD RECEIVED ADDITIONAL SHARE CAPITAL INFUSION FROM TMC AND TOYOTO ITA NOS.1358 & 1455/BANG08 PAGE 10 OF 18 INDUSTRIES CORPORATION (TICO). THE SAID ADDITIONAL SHARE CAPITAL WAS DEPOSITED IN THE BANK OF TOKYO-MITSUBISHI LTD. (BOT M), CHENNAI AND NAGOYA AND THE ASSESSEE HAD EARNED INTEREST INCOME AS WELL AS EXCHANGE GAIN FROM THE MONEY DEPOSITED, SO IT IS HAVING CRIT ICAL BEARING TO DEMONSTRATE THAT THERE WAS A DIRECT NEXUS BETWEEN T HE INTEREST INCOME AND EXCHANGE GAIN EARNED ON THE DEPLOYMENT OF FUNDS IN THE EOU. 12. THE LD. COUNSEL FOR THE ASSESSEE REQUESTED THAT THE AFORESAID ADDITIONAL EVIDENCES MAY BE ADMITTED UNDER RULE 29 OF THE INCOME-TAX APPELLATE RULES, 1963 BECAUSE THESE NEW EVIDENCES A RE GERMANE FOR THE PURPOSE OF DETERMINING THE TAX LIABILITY. 13. THE LD. DR OPPOSED THE ADMISSION OF ADDITIONAL EVIDENCES AND SUBMITTED THAT THE ASSESSEE OUGHT TO HAVE FILED THO SE DOCUMENTS EITHER BEFORE THE AO OR THE LD. CIT(A) AND SINCE THOSE DOC UMENTS WERE NOT FURNISHED EARLIER, THEY SHALL NOT BE ADMITTED. ALT ERNATIVELY, IT WAS STATED THAT IF THESE ARE TO BE ADMITTED, THEN AN OPPORTUNI TY NEEDS TO BE GIVEN TO THE ASSESSING OFFICER. 14. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN OUR OPINION, THE NEW EVIDENCES ALTHOUGH FURNISHED BY THE ASSESSEE FO R THE FIRST TIME BEFORE THE TRIBUNAL ARE RELEVANT AND GO TO THE ROOT OF THE PRESENT CONTROVERSY, PARTICULARLY WHEN THE TPO WHILE PASSING THE ORDER F OR THE A.Y. 2007-08 CONCLUDED THAT THE INTERNATIONAL TRANSACTION OF THE ASSESSEE WITH TMC PERTAINING TO PAYMENT OF TECHNICAL ASSISTANCE AND E NGINEERING SERVICES FEE IS AT ARMS LENGTH. THE SAID DOCUMENT WAS NOT AVAI LABLE BEFORE THE AO BECAUSE IT RELATES TO THE SUBSEQUENT YEAR. HOWEVER, IT IS RELEVANT TO DECIDE ITA NOS.1358 & 1455/BANG08 PAGE 11 OF 18 THE PRESENT CONTROVERSY. SIMILARLY, THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE RELATING TO AGREEMENT FOR TECHNICAL ASSIST ANCE FEE AND ENGINEERING SERVICES FEE ENTERED INTO BETWEEN TMC/A TC AND KSL IS IMPORTANT AS WELL AS RELEVANT. THE ASSESSEE COULD NOT PRODUCE THE SAID DOCUMENT BEFORE THE AO BECAUSE IT WAS EFFECTIVE FRO M 1.4.1999 AND WAS ENTERED INTO BETWEEN TMC/ATC AND KSL WHILE THE ASSE SSEE COMPANY WAS INCORPORATED IN APRIL, 2002. HOWEVER, SUBSEQUENT T O THE INCORPORATION, THE ASSESSEE ACQUIRED THE BUSINESS OF AUTO COMPONENT DI VISION OF KSL AND AS A PART OF THIS ACQUISITION, TECHNICAL ASSISTANCE FE E AGREEMENT WAS ALSO TRANSFERRED TO THE ASSESSEE FROM KSL. SO THIS DOCU MENT IS ALSO RELEVANT TO DECIDE THE PRESENT CONTROVERSY. WE, THEREFORE, AR E OF THE VIEW THAT THESE DOCUMENTS SHALL BE ADMITTED. 15. AS PER THE PROVISIONS CONTAINED IN RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, THE PARTIES TO TH E APPEAL SHALL NOT BE ENTITLED TO PRODUCE ADDITIONAL EVIDENCE EITHER ORAL OR DOCUMENTARY BEFORE THE TRIBUNAL. THE PROVISIONS CONTAINED IN THE SAID RULE ARE PARI MATERIA WITH THE ORDER 41 RULE 27 OF THE CODE OF CIVIL PROCEDURE , 1908, WHICH ALSO DOES NOT ALLOW THE PARTY TO THE APPEAL TO ADDUCE ANY ADD ITIONAL EVIDENCE UNLESS AND UNTIL SUCH EXCEPTIONAL CIRCUMSTANCES ARE SET OU T. 16. IN THE PRESENT CASE, THE ASSESSEE HAD MOVED AN APPLICATION UNDER RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE S, 1963 FOR ADMISSION OF ADDITIONAL EVIDENCE. IN THE INSTANT CASE, THE A SSESSEE COULD NOT FURNISH THESE DOCUMENTS BEFORE THE LOWER AUTHORITIES. IN O UR OPINION, THE MISTAKE OF THE ASSESSEE WAS NOT DELIBERATE OR WITH MALAFIDE INTENTION, THEREFORE THE NEW EVIDENCE NOW FURNISHED AS ADDITIONAL EVIDENCE S HALL BE ADMITTED BY ITA NOS.1358 & 1455/BANG08 PAGE 12 OF 18 KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE, BUT AT THE SAME TIME, OPPORTUNITY IS TO BE GIVEN FOR REBUTTAL TO ANOTHER PARTY. 17. AS REGARDS TO THE ADMISSION OF THE ADDITIONAL E VIDENCE, THE HONBLE MADRAS HIGH COURT IN THE CASE OF ANAIKAR TRADE AND ESTATES (P) LTD (NO.2) VS. CIT, 186 ITR 313 HAS HELD AS UNDER: THE TRIBUNAL HAS DISCRETION TO ALLOW THE PRODUCTIO N OF ADDITIONAL EVIDENCE UNDER RULE 29 OF THE ITAT RULES, 1963 IF T HE TRIBUNAL REQUIRES ANY DOCUMENT TO BE PRODUCED OR AFFIDAVIT T O BE FILED TO ENABLE IT TO PASS ORDERS OR FOR ANY OTHER SUBSTANTI AL CAUSE, IT MAY ALLOW THE DOCUMENT TO BE PRODUCED OR THE AFFIDAVITS TO BE FILED. EVEN IF THERE WAS A FAILURE TO PRODUCE THE DOCUMENT S BEFORE THE ITO AND THE A.A.C, THE TRIBUNAL HAS THE JURISDICTIO N IN THE INTERESTS OF JUSTICE TO ALLOW THE PRODUCTION OF SUC H VITAL DOCUMENTS. 18. IN THE PRESENT CASE ALSO, THE DOCUMENTS FURNISH ED BY THE ASSESSEE ARE VITAL WHICH GO TO THE ROOT OF THE PRESENT CONTR OVERSY, SO THESE ARE TO BE ADMITTED IN THE INTEREST OF NATURAL JUSTICE BUT THE SE DOCUMENTS ARE REQUIRED TO BE EXAMINED AND CONSIDERED AT THE LEVEL OF THE A O. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMAND THE PRESENT ISS UE BACK TO THE FILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 19. FOR THE AFORESAID VIEW, WE ARE ALSO FORTIFIED BY THE DECISION OF THE ITAT DELHI BENCH F IN THE CASE OF UOP LIC V ADDIT IONAL DIRECTOR OF INCOME-TAX, INTERNATIONAL TAXATION, CIRCLE 2(2) NEW DELHI (2007) 108 LTD 186 WHEREIN RELEVANT FINDINGS GIVEN IN PARAS NO, 30 , 31 33, 48, 52 READ AS UNDER: 30. IT IS A SETTLED POSITION THAT PRODUCTION OF ADDITIONAL EVIDENCE AT THE APPELLATE STAGE IS NOT A MATTER OF RIGHT TO LITIGATING ITA NOS.1358 & 1455/BANG08 PAGE 13 OF 18 PUBLIC AND ALLOWING OF PRODUCTION OF ADDITIONAL EVI DENCE IS IN THE DISCRETION OF THE TRIBUNAL. THE SAID DISCRETION, H OWEVER, IS TO BE EXERCISED JUDICIALLY AND NOT ARBITRARILY. AS HELD B Y HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT V. KUM . SATYA SETIA (1983) 143 ITR 486, IT IS WITHIN THE DISCRETI ON OF THE APPELLATE AUTHORITY TO ALLOW PRODUCTION OF ADDITION AL EVIDENCE IF THE SAID AUTHORITY REQUIRES ANY DOCUMENT TO ENABLE IT TO PASS ORDERS OR FOR ANY OTHER SUBSTANTIAL CAUSE. THE TRIB UNAL IS THE FINAL FACT FINDING BODY UNDER THE SCHEME OF THE INCOME TA X ACT , 1961 AND POWERS, THEREFORE, HAVE NECESSARILY TO BE EXERC ISED BY IT FOR DECIDING THE QUESTIONS OF FACT. WHILE EXERCISING IT S POWERS, IF THE TRIBUNAL IS OF THE OPINION THAT ADDITIONAL EVIDENCE IS MATERIAL IN THE INTEREST OF JUSTICE FOR DECIDING A PARTICULAR I SSUE, ITS DISCRETION CANNOT BE INTERFERED WITH UNLESS IT HAS BEEN EXERCI SED ON NON EXISTING OR IMAGINARY GROUNDS. IN THE CASE OR MAHAV IR SINGH (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE IT WAS HELD THAT SECTION 107 OF CPC ENABLES AN APPELLATE COURT TO TA KE ADDITIONAL EVIDENCE OR TO REQUIRE SUCH OTHER EVIDENCE TO BE TA KEN SUBJECT TO SUCH CONDITIONS AND LIMITATIONS AS ARE PRESCRIBED U NDER ORDER 41 OF RULE 27 OF CPC. IT WAS ALSO HELD THAT THE PARTIE S ARE NOT ENTITLED, AS OF RIGHT, TO THE ADMISSION OF SUCH EVI DENCE AND THE MATTER IS ENTIRELY IN THE DISCRETION OF THE COURT W HICH IS OF COURSE TO BE EXERCISED JUDICIALLY AND SPARINGLY. IT WAS OBSER VED THAT ORDER 41 RULE 27 OF CPC ENVISAGES CERTAIN CIRCUMSTA NCES WHEN ADDITIONAL EVIDENCE CAN BE ADDUCED AND ONE OF SUCH CIRCUMSTANCES IS WHERE THE APPELLATE COURT REQUIRES ANY DOCUMENT TO BE PRODUCED OR ANY WITNESS TO BE EXAMINED TO ENA BLE IT TO PRONOUNCE JUDGMENT OR FOR ANY OTHER SUBSTANTIAL CAU SE. IT WAS ALSO CLARIFIED THAT THE EXPRESSION TO ENABLE IT TO PRONOUNCE JUDGMENT CONTEMPLATES A SITUATION WHEN THE APPELLA TE COURT FINDS ITSELF UNABLE TO PRONOUNCE JUDGMENT OWING TO A LACUNA OR DEFECT IN THE EVIDENCE AS IT STANDS. IN THE CONT EXT, IT WAS FURTHER CLARIFIED THAT THE ABILITY TO PRONOUNCE A JUDGMENT IS TO BE UNDERSTOOD AS THE ABILITY TO PRON OUNCE A JUDGMENT SATISFACTORY TO THE IT MIND OF COURT DEL IVERING IT. THIS POSITION WAS REITERATED AGAIN BY THE HONBLE SUPREME COURT IN THE CASE OF SYED ABDUL KHADER VS. RAMI REDDY AIR, 1979 S.C. 553 CITED BY THE LD. COUNSEL FOR THE ASSESSEE. IN THE CASE OF MUNICIPAL CORP. OF GREATER BOMBAY VS. LALA PANCHAN AIR 1965 S.C. 1008 CITED BY THE LD. COUNSEL FOR THE ASSESSEE , IT WAS OBSERVED BY THE HONBLE SUPREME COURT THAT THE POWER TO ADMIT ADDITIONAL EVIDENCE DOES NOT ENTITLE THE APPELLATE COURT TO LET IN FRESH EVIDENCE ONLY FOR T HE PURPOSE OF PRONOUNCING JUDGMENT IN A PARTICULAR WAY AND IT IS ONLY FOR REMOVING A LACUNA IN THE EVIDENC E THAT ITA NOS.1358 & 1455/BANG08 PAGE 14 OF 18 THE APPELLATE COURT IS EMPOWERED TO ADMIT ADDITIONA L EVIDENCE. IN THE CASE OF ARJAN SINGH V. KARTAR SING H AIR 1951 S.C. 193, IT WAS HELD THAT THE DISCRETION GIVEN TO THE APPELLATE COURT BY ORDER 41, RULE 27 OF CPC TO RECEIVE AND ADMIT ADDITIONAL EVIDENCE IS NOT AN ARB ITRARY ONE BUT IS A JUDICIAL ONE CIRCUMSCRIBED BY THE LIMI TATIONS SPECIFIED IN THAT RULE. IT WAS ALSO HELD THAT THE L EGITIMATE OCCASION FOR THE APPLICATION OF THE SAID RULE IS WH EN ON EXAMINING THE EVIDENCE AS IT STANDS SOME INHERENT LACUNA OR DEFECT BECOMES APPARENT. TO THE SIMILAR EFFECT IS ANOTHER DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATHA SINGH VS. FINANCIAL COMMISSIONER TAXATION ALR 1976 S.C. 1053. 31. AS PER RULE 29 OF THE APPELLATE TRIBUNAL RULES , 1963, THE TRIBUNAL HAS THE POWER TO ALLOW ADDITIONA L EVIDENCE NOT ONLY IF IT REQUIRES SUCH EVIDENCE TO ENABLE IT TO PRONOUNCE JUDGMENT BUT ALSO FOR ANY OTHER SUBSTANTIAL CAUSE. THERE MAY BE CASES WHERE EVEN THOUGH THE TRIBUNAL FINDS THAT IT IS ABLE TO PRONOU NCE JUDGMENT ON THE STAGE OF RECORD AS IT I S AND SO IT CANNOT STRICTLY SAY THAT IT REQUIRES ADDITIONAL EVIDENCE T O ENABLE IT TO PRONOUNCE JUDGMENT IT STILL CONSIDERS THAT IN THE INTEREST OF JUSTICE, SOMETHING WHICH REMAINS OBSCURE, SHOULD BE FILED UP SO THAT IT CAN PRONOUNCE THE JUDGMENT IN A MORE SATISF ACTORY MANNER. SUCH REQUIREMENT OF THE TRIBUNAL IS LIKELY TO ARISE ORDINARILY WHEN SOME INHERENT LACUNA OR DEFECT BECOMES APPARE NT UPON ITS APPRECIATION OF THE EVIDENCE. THE POWER OF THE TRIB UNAL TO ADMIT ADDITION EVIDENCE IN SUPPORT OF THE CLAIM IN APPEAL IS DISCRETIONARY AND NO FETTERS CAN BE IMPOS ED ON THE EXERCISE OF SUCH POWER. HOWEVER, AS HELD BY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RAM PRA SAD SHARMA VS. CIT (1979) 119 ITR 867 AND BY THE HONBLE ANDHR A PRADESH HIGH COURT IN THE CASE OF A. K. BABU KHAN VS. CWT ( 1976) 102 ITR 756 IT IS NOT AN ARBITRARY POWER BUT IT IS A JU DICIAL ONE CIRCUMSCRIBED BY THE LIMITATIONS GIVEN IN RULE 29 O F THE APPELLATE TRIBUNAL RULES, 1963. THE CONDITIONS PREC EDENT FOR THE EXERCISE OF POWER UNDER RULE 29 MUST, THEREFORE, BE FOUND TO HAVE BEEN ESTABLISHED. HOWEVER, WHERE THERE IS NO L ACK OF EVIDENCE BUT YET THE PLEA IN SUPPORT OF ADMITTIN G THE EVIDENCE IS SO DECISIVE AND OF CLINCHING VALUE WITH REFERENCE TO THE POINTS AT ISSUE, IT IS OPEN TO THE TRIBUNAL TO INVOKE ITS POWER OF ALLOWING ADDITIONAL EVIDENCE TO RENDER SUBSTANTI AL JUSTICE AND NOT TO DEPRIVE THE PARTY OF SUCH JUSTICE ON TECHNIC AL GROUNDS. FURTHER AS HELD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF ITA NOS.1358 & 1455/BANG08 PAGE 15 OF 18 VELJI DOORAJ & CO. VS. CIT (1968) 68 ITR 708, WHEN THE EVIDENCE WAS AVAILABLE TO THE PARTY AT THE INITIAL STAGE AND HAD NOT BEEN PRODUCED BY HIM, THE MERE FACT THAT EVIDENCE SOUGHT TO BE PRODUCED IS VITAL AND IMPORTANT DOES N OT PROVIDE A SUBSTANTIAL CAUSE TO ALLOW ITS ADMISSION AT THE APPELLATE STAGE. THE ADMISSIBILITY OF ADDITIONAL EV IDENCE DEPENDS ON WHETHER OR NOT THE SUBSTANTIAL CAUSE AND NOT TO ENABLE THE ASSESSEE OR THE DEPARTMENT TO TENDER FRESH EVIDENCE TO SUPPORT A NEW POINT OR TO MAKE OU T A NEW CASE. IN THE CASE OF N. KAMALAM (SUPRA) IT WAS HELD THAT THE PROVISIONS OF RULE 27 OF ORDER 41 OF CPC, 1908 ARE NOT DESIGNED TO HELP PARTIES TO PATCH UP W EAK POINTS AND MAKE UP FOR OMISSIONS EARLIER MADE. 33. IT IS ALSO WELL SETTLED THAT ONCE ADDITIONAL EV IDENCE IS TAKEN INTO CONSIDERATION, IT HAS TO BE READ AS P ART OR THE RECORD AND BEFORE DRAWING ANY INFERENCE ON THE BASIS OF CONTENTS OF THAT DOCUMENT ADMITTED AS ADDITIONAL EVIDENCE, AN OPPORTUNITY HAS TO BE GIVEN TO THE OTHER SIDE TO EXPLAIN OR REBUT THE SAME. AS HELD BY HONBLE MADRAS HIGH COURT IN THE CASE OF RSS SHANMUGAM PILLAI & SONS (SUPRA), IF THE TRIBUNAL FI NDS THAT THE DOCUMENTS FILED ARE QUITE RELEVANT AND FOR THE PURPOSE OF DECIDING THE ISSUE BEFORE IT, IT WOULD B E WELL WITHIN ITS POWERS TO ADMIT THE EVIDENCE, CONSIDER T HE SAME ON MERITS OR REMIT THE MATTER TO THE LOWER AUTHORITIES FOR EXAMINING THE SAME. IN THE CASE OF SMT. URMILA RATILAL (SUPRA), HONBLE GUJARAT HIGH COURT HAS HELD THAT WHEN THE ADDITIONAL EVIDENCE FIELD BY THE REVENUE WAS ADMITTED BY THE TRIBUNAL OVERRULING THE OBJECTION RAISED BY THE ASSESSEE, INTEREST OF JUSTI CE DEMANDED THAT THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO EXPLAIN OR REBUT THE ADDITIONAL EVIDENCE BEFORE RELYING ON THE SAME. IN THE CASE OF CHARBHAI BIRI WORKS VS. ASSTT CIT (2003) 87 ITO 189, CITED BY THE LD. COUNSEL FOR THE ASSESSEE, IT WAS HELD BY THE PUNE BENCH OF ITAT IN IT THIRD MEMBER DECISION THAT WHEN THE DOCUMENTS WHICH WERE NOT AVAILABLE BEFORE THE ASSESSING OFFIC ER WERE PRODUCED BEFORE THE TRIBUNAL FOR THE FIRST TIM E AND THE SAME WERE ADMITTED AS ADDITIONAL EVIDENCE BEING MATERIAL TO BE RESTORED TO THE FILE OF THE ASSESSIN G OFFICER TO VERIFY CORRECTNESS AND AUTHENTICITY OF S UCH DOCUMENTS AND TO ADJUDICATE THE MATTER AFRESH AFTER ITA NOS.1358 & 1455/BANG08 PAGE 16 OF 18 PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE OF B EING HEARD. 48. AS ALREADY NOTED, THE ADDITIONAL EVIDENCE WOULD BE RELEVANT TO CONSIDER AND DECIDE THE CASE ALREADY MADE OUT BY THE REVENUE AND IT IS, THEREFORE NOT A CASE OF TENDERING OF FRESH EVIDENCE BY THE DEPARTMENT TO SUPPORT A NEW POINT OR TO MAKE OUT A NEW CASE. ACCORDING TO US, THE ADDITIONAL EVIDENCE FILED BY T HE REVENUE IS QUITE RELEVANT FOR THE PURPOSE OF DECIDI NG THE ISSUE BEFORE US AND THE SAME, THEREFORE, CAN BE ADMITTED AS PER RULE 29 OF APPELLATE TRIBUNAL RULES, 1963 AS HELD BY HONBL E MADRAS HIGH COURT IN THE CASE OF RSS SHANMUGAM PI1LAI & SONS (SUPRA). THE SAID ADDITIONAL EVIDENCE ALSO NEEDS TO BE TAKEN INTO CONSIDERATION IN THE INTEREST OF JUSTICE FOR DECIDI NG THE ISSUE RELATING TO THE PE. 52. AS ALREADY NOTED THE ASSESSEE WAS GIVEN AN OPPO RTUNITY DURING THE COURSE OF HEARING TO ADVANCE THE ARGUMEN TS ON THE ADMISSION OF ADDITIONAL EVIDENCE AS WELL AS ON MERI TS OF THE ISSUE TAKING INTO CONSIDERATION THE SAID ADDITIONAL EVIDE NCE AND AVAILING THIS OPPORTUNITY, LD. COUNSEL FOR THE ASSESSEE HAS NOT ONLY RAISED ELABORATE ARGUMENTS ON BOTH THESE ASPEC TS BUT HAS ALSO FILED, A DETAILED WRITTEN SUBMISSION. IN THE S AID WRITTEN SUBMISSION AN ATTEMPT HAS BEEN MADE BY HIM TO EXPLA IN EACH AND EVERY DOCUMENT SOUGHT TO BE FILED BY THE REVENUE AS ADDITIONAL EVIDENCE IN ORDER TO REBUT THE CASE SOUGHT TO BE MADE OUT BY THE REVENUE RELYING ON THE SAME ON MERITS. KEEPING IN V IEW THE FACT THAT THE ADDITIONAL EVIDENCE SO PRODUCED BY THE REV ENUE AS WELL AS ELABORATE EXPLANATION OFFERED BY HIM ASSESSEE TO RE BUT THE SAME IS VOLUMINOUS RUNNING INTO SEVERAL PAGES, WHICH REQUIR ES IN-DEPTH EXAMINATION, WE FIND THAT IT WOULD BE FAIR AND PROP ER AND IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUE RELATING T O PE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER EXAMINING THE ADDITIONAL EVIDENCE AS WELL AS EXPLAN ATION OFFERED BY THE ASSESSEE WHILE REBUTTING THE SAME. THE ASSES SEE SHALL ALSO BE AT LIBERTY TO ADDUCE FURTHER EVIDENCE TO SUPPORT ITS CASE BEFORE THE ASSESSING OFFICER WHO SHALL TAKE INTO CONSIDERA TION THE SAME IN ACCORDANCE WITH LAW. SINCE THE OTHER ISSUES RAISED IN THIS APPEAL RELATED TO THE MAIN ISSUE OF PE, WE DEEM IT APPROPRIATE TO RESTORE THESE ISSUES ALSO TO THE FILE OF THE ASSESS ING OFFICER FOR FRESH DECISION ALONG WITH THE MAIN ISSUE. IN SO FA R AS THE ISSUE RELATING TO THE LEVY OF INTEREST U/S 234B IS CONCER NED, THE LD. ITA NOS.1358 & 1455/BANG08 PAGE 17 OF 18 COUNSEL FOR THE ASSESSEE HAS CONTENDED BEFORE US THAT THE SAME IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF DELHI SPECIAL BENCH OF ITAT IN THE CASE OF MOTOROLA INC. VS. DY. CIT (2005) 95 ITD 269. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO DECIDE T HE ISSUE RELATING TO LEVY OF INTEREST U/S 234B IN THE LIGHT OF THE DECISION OF SPECIAL BENCH IN THE CASE OF MOTOROLA INC (SUPRA). THE IMPUGNED ORDER OF THE LD. CIT(A) O N ALL THE ISSUES INVOLVED IN THE PRESENT APPEAL IS ACCORD INGLY SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION AS PER THE DIRECTIONS GIVEN HEREINABOVE. 20. IN VIEW OF THE ABOVE, THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) IS SET ASIDE AND THE ISSUE IS REMANDED BACK TO THE FIL E OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW, AFTER PROVIDIN G DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 21. SINCE WE HAVE SET ASIDE THE IMPUGNED ORDER PASS ED BY THE LD. CIT(A) AND CASE IS REMANDED BACK TO THE AO, THEREFO RE OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER WHILE DECIDING THE ASSESSEES APPEAL IN ITA NO.1358/BANG/2008, SHALL APPLY MUTATIS MUTANDIS TO THE APPEAL FILED BY THE DEPARTMENT IN ITA NO.1455/BANG/2008. 22. IN THE RESULT, THE APPEAL BY THE ASSESSEE AS WE LL AS BY THE DEPARTMENT ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JANUARY, 2012. SD/- SD/- ( GEORGE GEORGE K. ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 5 TH JANUARY, 2012. DS/- ITA NOS.1358 & 1455/BANG08 PAGE 18 OF 18 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.
