M/s. Tetra Pak India Private Limited, Pune V. Deputy Commissioner of Income-tax, Circle -7, Pune

ITA 136/PUN/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7025 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 15-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Transfer pricing; International transaction; TDS; Set aside
• Section: 92C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 1 3 6 /P U N/201 8 / ASSESSMENT YEAR : 20 1 3 - 1 4 TETRA PAK INDIA PRIVATE LIMITED, PLOT NO.53, MIDC CHAKAN PHASE 2, VILLAGE VASULI, TAL KHED, PUNE 410501 . / APPELLANT PAN: AA AC T3467B VS. THE DY . COMMISSIONE R OF INCOME TAX , CIRCLE 7 , PUNE . / RESPONDENT ASSESSEE BY : S HRI NIKHIL PATHAK REVENUE BY : SHRI A.K. MODI , CIT / DATE OF HEARING : 06 . 0 5 . 201 9 / DATE OF PRONOUNCEMENT: 31 . 0 7 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF D CIT , CIRCLE - 7 , PUNE , DATED 1 7 . 11 .201 7 RELATING TO ASSESSMENT YEAR 20 1 3 - 1 4 PASSED UNDER SECTION 143(3) R.W.S. 144C(1 3 ) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - THE GROUNDS STATED HEREUNDER ARE INDEPENDENT OF, AND WITHOUT PREJUDICE TO ONE ANOTHER: ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 2 ON FACTS AND IN LAW, 1] THE LEARNED A.O. / DRP ERRED IN MAKING AN ADDITION OF RS.77,33,52,433/ - U/S 92C ON THE BASIS OF THE ORDER OF THE TPO U/S 92CA(3) DATED OCTOBER 24, 2016 IN THE CASE OF THE APPELLANT COMPANY. 2] THE LEARNED A.O. / DRP ERRED IN MAKING AN ADDITION OF RS . 3,5 0 ,87,856/ - ON ACCOUNT OF THE INTERNATIONAL TRANSACTION OF IMPORT OF STRAWS FROM THE AE AND OF RS.73,82,64 ,577/ - ON ACCOUNT OF THE INTERNATIONAL TRANSACTION OF EXPORT OF PACKAGING MATERIAL TO THE AES AND THEREBY ERRED IN MAKING A TOTAL ADDITION OF RS.77,33,52,433/ - WITHOUT APPRECIATING THAT BOTH THESE TRANSACTIONS ENTERED INTO BY THE APPELLA NT COMPANY WITH ITS AES WERE AT ARM'S LENGTH PRICE (ALP) AND HENCE, NO ADDITION WAS WARRANTED AT ALL. 3] THE LEARNED A.O / DRP ERRED IN REJECTING THE AGGREGATION APPROACH FOLLOWED BY THE APPELLANT COMPANY FOR BENCHMARKING ALL THE INTERNATIONAL TRANSACTION S RELATING TO THE PACKAGING SOLUTION SEGMENT AND THEREBY ERRED IN SEPARATELY BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF IMPORT OF STRAWS AND EXPORT OF PACKAGING MATERIAL AND THEREBY ERRED IN MAKING A TOTAL ADDITION OF RS.77,33,52,433/ - . 3.1] THE LEARN ED DRP ERRED IN NOT APPRECIATING THE THAT THE VARIOUS INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE APPELLANT COMPANY WITH ITS AES IN THE PACKAGING SOLUTION SEGMENT WERE INTERRELATED AND ACCORDINGLY, THE APPELLANT WAS JUSTIFIED IN ADOPTING THE AGGREGATION APPROACH FOR BENCHMARKING THE SAID TRANSACTIONS AND SINCE THE AGGREGATION APPROACH WAS ALSO ACCEPTED BY THE LEARNED DRP IN THE EARLIER YEARS ON THE SAME FACTS, THERE WAS NO REASON TO REJECT THE SAME IN THIS YEAR AND ACCORDINGLY, THE ENTIRE ADDITION MADE O F RS.77,33,52,433 / - OUGHT TO BE DELETED. 3.2] THE LEARNED A.O. / DRP ERRED IN NOT APPRECIATING THAT THE OPERATING MARGIN EARNED BY THE APPELLANT COMPANY IN THE PACKAGING SOLUTION SEGMENT WAS MUCH HIGHER THAN THAT OF THE COMPARABLE COMPANIES AND ACCORDINGL Y, BY CONSIDERING THE AGGREGATION APPROACH FOLLOWED BY THE APPELLANT COMPANY, NO ADDITION WAS WARRANTED AT ALL. 4] WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LEARNED A.O. / DRP ERRED IN SELECTING F.K. BAGASRAWALA EXPORTS PVT. LTD. AS COMPARABLE COMPANY TO BE NCHMARK THE INTERNATIONAL TRANSACTION OF IMPORT OF STRAWS FOR TRADING WITHOUT APPRECIATING THAT THE SAID COMPANY WAS NOT COMPARABLE WITH THE APPELLANT COMPANY ON ACCOUNT OF THE FAR ANALYSIS AND HENCE, THE ADDITION MADE OF RS.3,50,87,856/ - IN RESPECT OF THE TRANSACTION OF IMPORT OF STRAWS SHOULD BE DELETED. 5] THE LEARNED A.O. / DRP ERRED IN ADOPTING INTERNAL TRANSACTIONAL NET MARGIN METHOD ('TNMM') TO DETERMINE THE ALP OF THE INTERNATIONAL TRANSACTION OF EXPORT OF PACKAGING MATERIAL AND THEREBY ERRED IN MA KING AN ADDITION OF RS.73,82,64,577/ - IN THE HANDS OF THE APPELLANT COMPANY WITHOUT APPRECIATING THAT EVEN IN THE EARLIER YEARS WHEN THE AGGREGATION APPROACH ADOPTED BY THE APPELLANT COMPANY WAS NOT ACCEPTED BY THE LEARNED TPO, STILL, THIS INTERNATIONAL TR ANSACTION OF EXPORT OF PACKAGING MATERIAL WAS ACCEPTED BY THE LEARNED TPO TO BE INEXTRICABLY LINKED TO THE ACTIVITY OF MANUFACTURING OF PACKAGING MATERIAL AND HENCE, THERE WAS NO REASON TO DEVIATE FROM THE ACCEPTED APPROACH FOLLOWED IN THE EARLIER YEARS. ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 3 5.1] THE LEARNED A.O. / DRP FAILED TO APPRECIATE THAT THE WHILE APPLYING THE INTERNAL TNMM TO DETERMINE THE ALP OF EXPORT OF PACKAGING MATERIAL, THE EXPORT SEGMENT WAS COMPARED WITH THE DOMESTIC SEGMENT, WHICH WAS ALSO A CONTROLLED SEGMENT, HAVING SUBSTANT IAL IMPORTS FROM ASSOCIATED ENTERPRISES AND THEREFORE, THE SAME COULD NOT BE CONSIDERED AS AN UNCONTROLLED TRANSACTION AND HENCE, THE ADDITION MADE BY APPLYING INTERNAL TNMM WAS NOT JUSTIFIED AT ALL. 5.2] THE LEARNED A.O. / DRP ERRED IN NOT APPRECIATING T HAT THERE ARE INHERENT DIFFERENCES BETWEEN THE TWO SEGMENTS FOR WHICH RELIABLE AND ACCURATE ADJUSTMENTS COULD NOT BE MADE TO ARRIVE AT ALP AND THEREFORE, THE ENTIRE ADDITION MADE OF RS.73,82,64,577/ - BY APPLYING INTERNAL TNMM SHOULD BE DELETED. 5.3] WITHO UT PREJUDICE TO THE ABOVE GROUNDS, THE APPELLANT COMPANY SUBMITS THAT IN CASE, THE ALP OF THE INTERNATIONAL TRANSACTION OF EXPORT OF PACKAGING MATERIAL IS TO BE DETERMINED BY APPLYING INTERNAL TNMM, IN THAT EVENT, RELIABLY AND ACCURATE ADJUSTMENTS FOR DIFF ERENCES IN FUNCTIONS AND RISKS (SUCH AS DIFFERENCE IN VALUE CHAIN, MARKETING FUNCTION, CREDIT RISK, WORKING CAPITAL, USE OF INTANGIBLES, ETC. ETC) OUGHT TO HAVE BEEN MADE. 6] WITHOUT PREJUDICE TO THE APPEAL FILED BY THE APPELLANT AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR AY 2011 - 12 CHALLENGING THE DISALLOWANCE MADE U/S. 40(A)(I), THE APPELLANT SUBMITS THAT APPROPRIATE DEDUCTION OUGHT TO BE ALLOWED FOR THE EXPENSES DISALLOWED IN A.Y. 2011 - 12 WHILE COMPUTING THE INCOME OF THE CURRENT ASSES SMENT YEAR IN ACCORDANCE WITH SECTION 40(A)(I), SINCE, THE APPELLANT HAS DEPOSITED THE WITHHOLDING TAX ON THE SAID EXPENSES DURING THE CURRENT ASSESSMENT YEAR. 7] THE LD. AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) OF THE ACT. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST TRANSFER PRICING ADJUSTMENT MADE ON ACCOUNT OF IMPORT OF STRAWS FROM ASSOCIATED ENTERPRISES AT 3,50,87,956/ - AND ON ACCOUNT OF EXPORT OF PACKING MATERIAL TO ASSOCIATED ENTERPRISES AT 73,82,64,577/ - , I.E. TOTAL ADJUSTMENT OF 77,33,52,433/ - . 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS A SUBSIDIARY OF TETRA LAVAL HOLDING AND FINANCE S A, SWITZERLAND. THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE AND SUPPLY OF PACKAGES BASED ON ASEPTIC TECHNOLOGY, WHICH HELPS KEEPING PERISHABLE LIQUID FOODS FRESH FOR MONTHS WITHOUT REFRIGERATION OR ADDED PRESERVATIVES. THE ASSESSEE COMPANY ALSO DESIGNS, MANUFACTURES AND SUPPLIES MODULAR EQUIPMENT FOR CONTINUOUS PROCESSING AND PACKAGING OF LIQUID ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 4 FOOD IN THE DAIRY, CHEESE MAKING AND PREPARED FOOD INDUSTRIES. THE TETRA PACK GROUP WAS GLOBALLY ENGAGED IN THE DEVELOPMENT, MANUFACTURE, SALE AND INSTALLATION A ND SERVICING OF PROCESSING, PACKAGING AND DISTRIBUTION SYSTEMS FOR LIQUID FOOD PRODUCTS. THE ASSESSEE WAS NOT MANUFACTURING THE ENTIRE RANGE OF PROCESSING EQUIPMENT ; IT SUPPORTED ITS CUSTOMERS IN INDIA BY IMPORTING SUCH EQUIPMENTS FROM ITS OVERSEAS GROUP ENTITIES. THE ASSESSEE HAD TWO MAIN DIVISIONS I.E. PACKAGING DIVISION AND PROCESSING DIVISION. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ENTERED INTO VARIOUS INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES, WHICH ARE ENLISTED AT PAGE 3 OF ORDER OF TPO TOTALING 1343.40 CRORES. THE ASSESSING OFFICER MADE REFERENCE UNDER SECTION 92CA(1) OF THE ACT TO TRANSFER PRICING OFFICER (TPO) TO DETERMINE THE ARM'S LENGTH PRICE IN RELATION TO INTERNATIONAL TRANSACTIONS UNDERTAKEN BY ASSESSEE. THE ASSESSEE HAD BENCHMARKED THE INTERNATIONAL TRANSACTIONS PERTAINING TO PACKAGING SOLUTIONS SEGMENT USING COMBINED TRANSACTION APPROACH. THE ASSESSEE IN THE TP STUDY REPORT HAD TREATED THE IMPORT OF PACKAGING MATERIAL , IMPORT OF STRAWS, IMPORT OF CAPITAL E QUIPMENT, ETC. AS INEXTRICABLY LINKED TO THE CORE ACTIVITY OF PROVIDING PACKAGING SOLUTIONS AND WAS OF THE VIEW THAT SEPARATE ANALYSIS FOR THE SAME WAS NOT APPROPRIATE. THE TPO IN THE TP PROCEEDINGS NOTED THAT COMBINED TRANSACTION APPROACH OF ASSESSEE WAS NOT ACCEPTED DURING THE TP PROCEEDINGS FOR ASSESSMENT YEAR 2012 - 13 AND HENCE, THE ASSESSEE WAS ASKED TO SUBMIT SEGMENTAL PROFITABILITY. THE TPO NOTED THAT THE ASSESSEE WAS INCURRING LOSSES IN THE STRAWS (TRADING SEGMENT). FROM THE ANALYSIS OF DATA, THE TPO ALSO NOTED THAT IN RESPECT OF SIMILAR PRODUCTS SOLD TO THIRD PARTIES AS WELL AS ASSOCIATED ENTERPRISES, THE ASSESSEE HAD INCURRED LOSS EVEN IN THE MANUFACTURING SEGMENT, FROM WHICH IT WAS SUPPOSED TO EARN PROFITS. THE ASSESSEE WAS THUS, INSTRUCTED TO BENCHMARK ITS TRANSACTIONS PERTAINING TO ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 5 EXPORT OF PACKAGING MATERIAL WITH THE DOMESTIC SEGMENT OF SALES OF PACKAGING MATERIAL USING INTERNAL TNMM METHOD AS MOST APPROPRIATE METHOD. THE TPO ALSO SHOW CAUSED THE ASSESSEE AS TO WHY TP ADJUSTMENT ON SIMILAR GROUND AS IN ASSESSMENT YEAR 2012 - 13 BE NOT ADOPTED FOR THE YEAR UNDER CONSIDERATION ALSO. FROM THE REPLY SUBMITTED BY ASSESSEE, THE TPO NOTED THAT IT HAD PLACED RELIANCE ON THE SUBMISSIONS MADE IN EARLIER YEAR AND NO NEW GROUNDS WERE SUBMITTED. AFTER TA KING INTO CONSIDERATION THE SUBMISSIONS MADE BY ASSESSEE, THE TPO OBSERVED THAT AGGREGATION APPROACH NEEDS TO BE REJECTED, FOLLOWING THE APPROACH APPLIED IN PRECEDING ASSESSMENT YEAR. THE TPO ALSO NOTED THAT TRANSACTIONS UNDER PACKING SEGMENT WERE ENTERED INTO BY ASSESSEE WITH DIFFERENT ASSOCIATED ENTERPRISES. IN VIEW OF THE SAID ASPECTS, THE ASSESSEES APPROACH OF AGGREGATING ITS TRANSACTIONS ON THE PRETEXT THAT IT WAS PROVIDING COMPLETE PACKAGING MATERIAL WAS NOT ACCEPTED BY THE TPO AND ARM'S LENGTH PRI CE OF INTERNATIONAL TRANSACTIONS WAS COMPARED BY ADOPTING SEGMENTAL APPROACH. IN THE SEGMENT OF EXPORT OF FINISHED GOODS TO ASSOCIATED ENTERPRISES I.E. PACKAGING SEGMENT, THE ASSESSEE HAD INCURRED LOSS. ON COMPARISON OF THE PRICE AT WHICH SIMILAR PRODUCT S WERE SOLD TO ASSOCIATED ENTERPRISES AND THIRD PARTIES, IT WAS OBSERVED BY THE TPO THAT THE ASSESSEE HAD INCURRED SIGNIFICANT LOSS ON THE TOTAL EXPORTS OF PACKAGING MATERIAL EXPORTED TO ITS ASSOCIATED ENTERPRISES WHEN COMPARED TO THE SALE IN DOMESTIC MARK ET. THE ASSESSEE RAISED STRONG OBJECTIONS AGAINST INTERNAL TNMM METHOD TO BE APPLIED BUT REJECTING THE SAME, THE TPO MADE AN ADJUSTMENT OF 73.82 CRORES TO THE INTERNATIONAL TRANSACTIONS PERTAINING TO EXPORTS OF PACKAGING MATERIAL AS THE ASSESSEE WAS EAR NING PROFIT IN THE DOMESTIC MARKET. THE TPO OBSERVED THAT IT DID NOT JUSTIFY THE LOSSES ON ITS INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES. IN RESPECT OF SECOND SEGMENT I.E. STRAWS SEGMENT, WHERE THE ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 6 ASSESSEE IN THE SEGMENTAL HAD SHOWN LOSS OF 2.05 CRORES AT GROSS LEVEL AND 3.12 CRORES AT NET LEVEL, THE SUBMISSIONS MADE BY ASSESSEE FOR INCURRING AFORESAID LOSSES WERE NOT ACCEPTED. WHERE, AS PER THE TPO, THE ASSESSEE HAS NOT BEEN ABLE TO RECOVER EVEN THE COST OF IMPORTED STRAWS, DOWNWARD AD JUSTMENT OF 3.50 CRORES WAS MADE TO THE VALUE OF IMPORTS OF STRAWS MADE BY THE ASSESSEE. THE ASSESSING OFFICER ISSUED DRAFT ASSESSMENT ORDER PROPOSING THE AFORESAID ADJUSTMENT, AGAINST WHICH THE ASSESSEE FILED OBJECTIONS BEFORE THE DISPUTE RESOLUTION PA NEL (DRP). THE DRP GAVE SOME FINDINGS, WHICH WERE COMMUNICATED TO THE TPO BY THE ASSESSING OFFICER, WHO IN TURN, FURNISHED HIS COMMENTS ON THE ORDER OF DRP AND CONSEQUENT THERETO, ENTIRE PROPOSED ADDITION OF 77,33,52,433/ - ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT WAS MADE TO THE TOTAL INCOME OF ASSESSEE. 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF ASSESSING OFFICER/TPO/DRP. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAD TWO DIVISIONS I.E. PACKAGING SO LUTIONS DIVISION AND PROCESSING SOLUTIONS DIVISION. THE MARGINS OF PROCESSING SOLUTIONS DIVISION HAVE BEEN ACCEPTED AND THERE IS NO ADDITION MADE THEREIN. HOWEVER, UNDER THE PACKAGING SOLUTIONS DIVISION, WHERE THE ASSESSEE WAS IMPORTING RAW MATERIAL AND AFTER MANUFACTURING WAS SELLING TO ITS ASSOCIATED ENTERPRISES AND ALSO MAKING SALES IN THE DOMESTIC MARKET. THERE WERE FOUR COMPONENTS OF SAID PACKAGING SOLUTIONS DIVISION I.E. (A) IMPORT OF RAW MATERIAL, (B) SALE OF PACKAGING MATERIAL, (C) IMPORT OF CAPI TAL EQUIPMENT FOR FILLING PURPOSE SALE IN DOMESTIC MARKET AND (D) IMPORT OF STRAWS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 7 POINTED OUT THAT THE ISSUE WITH REGARD TO PACKAGING SOLUTIONS DIVISION HAD ARISEN IN SEVERAL YEARS BEFORE THE TRIBUN AL. IN ASSESSMENT YEAR 2008 - 09, AGGREGATE APPROACH ADOPTED BY ASSESSEE UNDER THE AFORESAID DIVISION WAS ACCEPTED BY REVENUE. HOWEVER, IN ASSESSMENT YEAR 2009 - 10, THE REVENUE AUTHORITIES SEGREGATED THE STRAWS SEGMENT AND CAPITAL SEGMENT AND BENCHMARKED TH EM SEPARATELY. SIMILAR WAS THE PROPOSITION IN ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 AND FURTHER IN ASSESSMENT YEAR 2011 - 12, THE FINISHED GOODS WERE ALSO BENCHMARKED SEPARATELY APPLYING CUP METHOD . IN ASSESSMENT YEAR 2012 - 13, STRAWS SEGMENT WAS BENCHMARKED SEPARATELY AND FINISHED GOODS UNDER THE PRODUCTS SEGMENT. THE MARGINS OF DOMESTIC SALES AND THE MARGINS OF ASSOCIATED ENTERPRISES WERE COMPARED. HOWEVER, NO ADJUSTMENT WAS MADE ON ACCOUNT OF CAPITAL GOODS. IN ASSESSMENT YEAR 2013 - 14 I.E. THE YEAR UNDER APPEAL, IDENTICAL APPROACH WAS APPLIED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AGGREGATION APPROACH HAS BEEN ALLOWED BY THE DRP IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10. HOWEVER, WHILE PASSING THE ORDER FOR THE YEAR UNDER CONSIDERATION, THE DRP IN PARA 3.8 AT PAGE 12 ADMITS THAT NO APPEAL AGAINST ORDER OF DRP AS IN EARLIER YEARS , HENCE ADDITION . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ORDER OF TRIBUNAL IN THE APPEAL FILED BY REVENUE REL ATING TO ASSESSMENT YEAR 2011 - 12 IN PARA 13 AT PAGE 16 DECIDES THE ISSUE OF AGGREGATION AND IN PARA 14 REFERS TO THE APPLICATION OF CUP METHOD FOR FINISHED GOODS. FURTHER, IN ASSESSMENT YEAR 2012 - 13, THE TRIBUNAL ALLOWED AGGREGATION APPROACH AND ALSO DECI DED THE ISSUE THAT INTERNAL TNMM METHOD WAS NOT RIGHT METHOD TO BE APPLIED. REFERRING TO GROUNDS OF APPEAL NO.1 TO 5.3, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE IS WITH REGARD TO TP ADJUSTMENT. HOWEVER, IN GROUND OF APPEAL NO.6, THE ISSUE RAISED ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 8 IS AGAINST DISALLOWANCE MADE UNDER SECTION 40(A)(I) IN ASSESSMENT YEAR 2011 - 12. SINCE IN THIS YEAR, THE TDS WAS DEPOSITED, HENCE THE EXPENDITURE WAS CLAIMED AS DEDUCTION, BUT MATTER HAS BEEN SET ASIDE TO THE FILE OF ASSESS ING OFFICER IN ASSESSMENT YEAR 2011 - 12 AND IF THE ISSUE GETS SETTLED IN THAT YEAR, THEN THE PRESENT GROUND WOULD BECOME ACADEMIC. HE POINTED OUT THAT GROUND OF APPEAL NO.7 IS CONSEQUENTIAL. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAI RLY STATED THAT THE ISSUE OF AGGREGATION APPROACH HAS BEEN DECIDED BY TRIBUNAL. HOWEVER, IN RESPECT OF GROUND OF APPEAL NO.6, IT WAS STATED THAT THE SAME WAS PREMATURE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISE S VIDE GROUNDS OF APPEAL NO.1 TO 5.3 IS AGAINST TRANSFER PRICING ADJUSTMENT MADE IN THE HANDS OF ASSESSEE. THE ASSESSEE IN THE PACKAGING SOLUTIONS DIVISION HA D BEEN CARRYING ON VARIOUS CLOSELY LINKED TRANSACTIONS AND THE ISSUE IS WHETHER SUCH TRANSACTIONS NEED TO BE AGGREGATED FOR TRANSFER PRICING ANALYSIS. THE ASSESSEE HAD AGGREGATED THE SAID TRANSACTIONS UNDER THE UMBRELLA OF PACKAGING SOLUTIONS DIVISION AND APPLIED TNMM METHOD AS MOST APPROPRIATE METHOD AND HAD DECLARED THAT ITS MARGINS WERE AT ARM'S L ENGTH PRICE TO THE MEAN MARGINS OF COMPARABLES SELECTED BY IT. HOWEVER, THIS APPROACH OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER / TPO, IN TURN, RELYING ON ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2012 - 13. 9. WE FIND THAT THIS ISSUE OF AGGREGA TION AROSE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2009 - 10 FOR THE FIRST TIME AND THE TRIBUNAL IN ITA ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 9 NO.359/PUN/2014 WITH CROSS APPEAL IN ITA NO.537/PUN/2014 VIDE ORDER DATED 20.09.2017 HAD HELD THAT AGGREGATION APPROACH NEEDS TO BE APPLIED. THIS WAS THE ISSUE RAISED BY REVENUE AS DRP HAD ALLOWED AGGREGATION APPROACH AND THE GROUNDS OF APPEAL RAISED BY REVENUE WERE THUS, DISMISSED. 10. IN ASSESSMENT YEAR 2010 - 11, THE TRIBUNAL FURTHER IN ITA NO.282/PUN/2015 WITH CROSS APPEAL IN ITA NO.412/PUN/2015, VIDE OR DER DATED 27.10.2017 ALSO DISMISSED THE APPEAL OF REVENUE ON AGGREGATION APPROACH RELYING ON THE DECISION OF TRIBUNAL IN ASSESSMENT YEAR 2009 - 10. 11. FURTHER, THE TRIBUNAL IN CROSS APPEALS IN ASSESSMENT YEAR 2011 - 12 AND APPEAL OF ASSESSEE IN ASSESSMENT YE AR 2012 - 13 IN ITA NOS.635/PUN/2016, 665/PUN/2016 AND 521/PUN/2017 VIDE ORDER DATED 23.03.2018 APPLIED AGGREGATION APPROACH, WHICH WAS ACCEPTED BY THE CIT(A) AND THE REVENUE WAS IN APPEAL. THE SECOND ISSUE WHICH WAS TAKEN UP BY THE TRIBUNAL VIDE PARA 14 WI TH REGARD TO BENCHMARKING OF INTERNATIONAL TRANSACTIONS IN EXPORT OF PACKAGING MATERIAL SEGMENT. THE TPO HAD APPLIED CUP METHOD FOR DETERMINING ARM'S LENGTH PRICE OF SMALL SEGMENT OF TRANSACTION OF PACKAGING SOLUTIONS, WHICH WAS NOT UPHELD BY TRIBUNAL VID E PARA 14 AND ALLOWED THE CLAIM OF ASSESSEE. 12. THE TRIBUNAL WHILE DECIDING THE ISSUE IN ASSESSMENT YEAR 200 9 - 1 0 , ORDER DATED 20.09.2017 HAD NOTED THE FACT THAT AS PART OF ITS PACKAGING ACTIVITY , AS BUSINESS STRATEGY, IT WAS IDENTIFYING THE CUSTOMERS AND MARKETING ITS PRODUCTS TO THEM. IN ADDITION, THE ASSESSEE WAS ALSO SUPPLYING PACKAGING MATERIAL AND ALSO STRAWS WERE SOLD TO THE CUSTOMERS AS BUSINESS STRATEGY. THE SAID STRAWS ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 10 WERE IMPORTED FROM ASSOCIATED ENTERPRISES FOR SALE TO THE CUSTOMERS. SO, TH IS WAS BUSINESS STRATEGY APPLIED BY ASSESSEE AND THE TRANSACTION OF SALE OF STRAWS CANNOT BE BENCHMARKED SEPARATELY, ONCE THE AGGREGATION APPROACH IS TO BE APPLIED. ACCORDINGLY, WE FIND NO MERIT IN THE ORDER PASSED BY ASSESSING OFFICER/TPO IN THIS REGARD. THE ISSUE STANDS SETTLED BY THE ORDER OF TRIBUNAL IN ASSESSMENT YEAR 200 9 - 1 0 ONWARDS. IN THE ORDER DATED 20.09.2017 RELATING TO ASSESSMENT YEAR 200 9 - 1 0 VIDE PARAS 14 TO 24 HAD DECIDED THE SAID ISSUE AND HAD APPLIED AGGREGATION APPROACH AND ALSO INCLUDED THE SALE OF STRAWS AS PART OF INTERNATIONAL TRANSACTIONS UNDER THE UMBRELLA OF PACKAGING SOLUTIONS DIVISION. THE SAID FINDINGS ARE BEING REFERRED TO BUT ARE NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. FOLLOWING THE SAME PARITY OF REASONING, WE ALLOW THE CLAIM OF ASSESSEE AND DELETE THE TRANSFER PRICING ADJUSTMENT MADE IN THE HANDS OF ASSESSEE AS BY APPLYING TNMM METHOD, IT WAS HELD THAT AGGREGATION OF TRANSACTIONS UNDERTAKEN BY IT WERE AT ARM'S LENGTH PRICE WITH THE MARGINS OF COMPARABLES FINALLY SELECTED. THERE IS NO DISPUTE ABOUT SELECTION OF COMPARABLES. CONSEQUENTLY, GROUNDS OF APPEAL NO.1 TO 5.3 ARE ALLOWED. 13. NOW, COMING TO THE LAST GROUND OF APPEAL I.E. GROUND OF APPEAL NO.6, WHICH IS DEPENDENT ON THE FATE OF SIMILAR ISSUE IN ASSESSMENT YEAR 2011 - 12. IN THE FACTS RELATING TO THE ISSUE, THE ASSESSEE HAD NOT DEPOSITED TDS IN ASSESSMENT YEAR 2011 - 12 AND CONSEQUENTLY, DISALLOWANCE WAS MADE UNDER SECTION 40(A)(I) OF THE ACT. IN THE YEAR UNDER CONSIDERATION, THE SAID TDS WAS DEPOSITED AND THE ASSESSEE CLAIMED THE SAID EXPENDITURE AS ALLOWABLE IN ITS HANDS. HOWEVER, THE ISSUE OF DEDUCTIBILITY OF TDS IN ASSESSMENT YEAR 2011 - 12 HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE ASSESSING OFFICER AND CONSEQUENT TO ITS BEING SETTLED, IN CASE NO DISALLOWANCE IS MADE IN ASSESSMENT YEAR 2011 - 12, ITA NO. 1 3 6 /P U N/20 1 8 TETRA PAK INDIA PVT. LTD. 11 THEN THE ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.6 WOULD BECOME ACADEMIC ; OTHERWISE, THE SAME NEEDS TO BE ALLOWED IN THE HANDS OF ASSESSEE. THE ASSESSING OFFICER SHALL DECIDE THE SAME IN LINE WITH THE DECISION IN ASSESSMENT YEAR 2011 - 12 ON THIS ISSUE. 14. THE GROUND OF APPEAL NO.7 IS PREMATURE AND THUS, DISMISSED. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, A LLOWED. 1 5 . IN THE RESULT, THE APPE AL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF JU LY , 201 9 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST JU LY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELL ANT ; 2. THE RESPONDENT; 3. THE DRP - 3, MUMBAI ; 4. THE PR. CIT - 4 , PUNE ; 5. THE DR C , ITAT, PUNE; 6. GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE