Ascendas Services India Private Limited, Bangalore V. DCIT, Bangalore

ITA 1396/BANG/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7391 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: SAMPATHI RAGHUNATHAN
• Keywords: Rejection of books of accounts; Business income; Transfer pricing; Reason to believe
• Section: 143(3); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B, BANGALORE BEFORE SHRI GEORGE GEORGE K, JM & SHRI JASON P.BOAZ , AM ITA NO.1396/BANG/2015 : ASST.YEAR 2009-2010 M/S.ASCENDAS SERVICES INDIA PRIVATE LIMITED 1 ST FLOOR, INOVATOR BUILDING WHITEFIELD ROAD, INTERNATIONAL TECH PARK BANGALORE 560 066. PAN : AAACT7290C. DY.COMMISSIONER OF INCOME-TAX, CIRCLE 1(1)(1) BANGALORE. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI SAMPATHI RAGHUNATHAN, ADVOCATE RESPONDENT BY : SHRI PADMAMEENAKSHI, JCIT DATE OF HEARING : 24.10.2017 DATE OF PRONOUNCEMENT : 27.10.2017 O R D E R PER GEORGE GEORGE K, JM THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIR ECTED AGAINST CIT(A)S ORDER DATED 28.09.2015. THE RELEVA NT ASSESSMENT YEAR IS 2009-2010. 2. THE GROUNDS ARGUED BY THE LEARNED AR READ AS FOL LOWS:- 3. SHIFTING OF PROFITS OF OTHER GROUP ENTITIES. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT TAKING COGNIZANCE OF THE SUBMISSIONS FILED BY THE APPELLANT, THE LD.CIT(A) ERRED IN LAW AND IN FACTS BY UPHOLDING THE RE-ASSESSMENT PROCEEDINGS AS VALID AN D PROPER. A) THERE HAS BEEN SHIFTING OF PROFITS BY THE APPELL ANT TO OTHER GROUP COMPANIES AND THAT THERE IS AN ARRANGEM ENT ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 2 OF SHIFTING PROFITS FROM NON-TAX EXEMPT UNITS TO TH E UNITS ENJOYING TAX BENEFITS; B) THE SERVICES PROVIDED BY THE APPELLANT TO ITS CL IENTS ARE BELOW THE MARKET RATES AND HENCE THE APPELLANT HAS INCURRED LOSSES; AND C) THE PROPERTY MANAGEMENT AGREEMENT IS NOT BASED ON ANY BUSINESS OBJECTIVES BUT BASED ON OTHER EXTRANEO US FACTORS. 4. REJECTION OF BOOKS OF ACCOUNTS AND BEST JUDGMENT ASSESSMENT. 4.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND WITHOUT TAKING COGNIZANCE OF THE SUBMISSIONS FI LED BY THE APPELLANT, THE LD.CIT(A) ERRED IN LAW AND IN FA CTS IN HOLDING THAT THE DCIT WAS JUSTIFIED IN PROCEEDING W ITH THE BEST JUDGMENT ASSESSMENT. 4.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) ERRED IN LAW AND IN FACTS IN NOT APPR ECIATING THE FACT THAT A DETAILED VERIFICATION OF THE BOOKS OF ACCOUNTS AND OTHER DETAILS HAS BEEN MADE DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT AND THE SAME HAVE BEEN ACCEPTED BY THE DCIT IN THE ASSESSMENT ORDER. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS : 3.1 THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINE SS OF RENDERING TECHNICAL AND MANAGEMENT CONSULTANCY SERV ICES TO PRIMARILY TO COMPANIES OPERATING INDUSTRIAL PARK / SEZ. FOR ASSESSMENT YEAR 2009-2010, THE RETURN OF INCOME WAS FILED ON 30.09.2009 DECLARING A LOSS OF RS.8,44,00,514. T HE ASSESSMENT U/S 143(3) WAS COMPLETED VIDE ORDER DATE D 12.09.2011 ACCEPTING THE LOSS RETURNED. THEREAFTER NOTICE U/S 148 WAS ISSUED ON 13.03.2013. THE REASONS STATED FO R ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 3 REOPENING THE ASSESSMENT WAS THAT IN THE ASSESSMENT COMPLETED FOR ASSESSMENT YEAR 2010-2011, THE A.O. H AD CONCLUDED THAT THE ASSESSEE WAS SHIFTING PROFITS TO OTHER GROUP ENTITIES, WHICH WERE ENTITLED TO THE BENEFIT OF DEDUCTION UNDER CHAPTER VI-A OF THE INCOME-TAX ACT, 1961 AND THE SAME SITUATION WAS PREVAILING IN THE CURRENT ASSESSMENT YEAR, NAMELY ASSESSMENT YEAR 2009-2010. THE REASSESSMENT WAS COMPLETED U/S 143 READ WITH SECTION 147 OF THE ACT VIDE ORDER DATED 31.01.2014 DETERMINING THE TAXABLE INCOME AT RS.5,11,54,010. WHILE COMPLETING THE RE-ASSESSMENT, THE FOLLOWING ADDITIONS WERE MADE:- (I) BUSINESS INCOME RS.3,01,30,178 (II) PROFIT FROM BUS FACILITY RS.1,76,74,0 67 (III) INTEREST AND MISCELLANEOUS INCOME RS.33,49, 765 3.2 THE ASSESSING OFFICER HAD REJECTED THE BOOKS OF ACCOUNT AND MADE A BEST JUDGMENT ASSESSMENT BY ESTIMATING T HE PROFITS OF THE BUSINESS AT THE RATE OF 8% OF THE TU RNOVER, WHICH WORKS OUT TO RS.3,01,30,178. THE REASONING OF THE A .O. FOR REJECTING THE BOOKS OF ACCOUNT WAS THAT LIKE IN THE ASSESSMENT YEAR 2010-2011, THE ASSESSEE FOR THE CURRENT ASSESS MENT YEAR WAS SHIFTING THE PROFITS TO OTHER GROUP ENTITIES WH ICH WAS ENJOYING THE BENEFIT OF DEDUCTION UNDER CHAPTER VI- A OF THE ACT. 3.3 AGGRIEVED BY THE ORDER OF REASSESSMENT, THE ASS ESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORIT Y. ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 4 3.4 THE CIT(A) CONFIRMED THE ACTION OF A.O., IN REJ ECTING THE BOOKS OF ACCOUNT OF ASSESSEE AND ESTIMATION OF BUSI NESS PROFITS AT 8% OF TURNOVER. THE RELEVANT FINDING OF THE CIT(A) IN AFFIRMING THE ASSESSMENT ORDER FOR REJECTING THE BO OKS OF ACCOUNT AND ESTIMATING AVERAGE PROFIT AT THE RATE O F 8% FOR SERVICE BUSINESS READS AS FOLLOW:- 8. THE AO HAS RELIED ON THE HONBLE SUPREME COURT JUDGMENT OF MCDOWELL AND CO. LTD. TO STATE THAT IT IS A FIT CASE WHERE THE CORPORATE VEIL HAS TO BE PIERCED AND ALMOST ALL THE CORE FUNCTIONS OF THE CLIENTS ARE PE RFORMED BY THE ASSESSEE. THE ASSESSEE IS IN CHARGE OF ALMOS T EVERYTHING CONNECTED TO THE BUSINESS OF THE FINANCE , UNDER VALUED PRICE. THE ACTUAL CONTROL OF THE ASSESSEE AS WELL AS ITS CLIENTS RESTS WITH THE ULTIMATE HOLDING COMPANY . THE FUNCTIONS OF THE ASSESSEE FORM THE BEDROCK OF THE W HOLE STRUCTURE THAT MANAGES THE BUSINESS OF INFOTECH PAR KS IN INDIA, BUT THE INCOME GENERATED DOES NOT LEAVE ANYT HING MUCH FOR THE ASSESSEE, EVERY RS.100 EARNED BRING LOS S OF RS.38. IN THESE CIRCUMSTANCES, THE AO WAS FULLY JUSTI FIED IN PROCEED WITH THE BEST JUDGED ASSESSMENT AS PER SECTION 144 R.W.S. 145(3) OF THE INCOME-TAX ACT. 8.1 GOING BY ALL THE ABOVE, THIS IS A CLEAR CASE O F A MEGALITH TRYING TO SHIFT PROFITS AMONG ITS CROSSLY- HELD SMALLER ENTITIES WITH A PURPOSE OF AVOIDING HIGHER TAX OUTFLOW AND CLAIMING UNDUE TAX BENEFITS. THIS WAS A FIT CASE TO REJECT THE PROFIT COMPUTATIONS MADE BY THE ASSESSEE AND ESTIMATE THE BUSINESS PROFITS AFRESH. THE AO HAS ADOPTED THE CORRECT APPROACH. 9. BASIS FOR CONSIDERING AN AVERAGE PROFIT RATE OF 8% FOR SERVICE BUSINESS: THE AO HAS ANALYSED CERTAIN INDUSTRY COMPARABLES L IKE ELNET TECHNOLOGIES LTD. AND L&T INFOCITY LTD AND HA S COME TO THE CONCLUSION THAT THE BASE LEVEL PROFITS OF THE COMPANY SHOULD BE 15% OF SALES, KEEPING IN VIEW THA T THERE CAN BE INDIVIDUAL DIFFERENCES IN VARIOUS CASE S. HE ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 5 HAS CALCULATED MARGINS AT 35%, REDUCED TO15% AND IN TURN ESTIMATED ONLY AT 8%. CONSIDERING THE CIRCUMST ANCES AND FACTS OF THE CASE AND THE NATURE OF THE BUSINES S STRUCTURE OF THE ASSESSEE, THE AO IS FULLY JUSTIFIED IN ESTIMATING THE PROFIT AT RS.3,01,30,178/- AT 8% OF T HE SERVICES. 3.5 AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 3.6 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT WAS REOPENED FOR THE CURRENT ASSESSMENT YEAR, NAMELY ASSESSMENT YEAR 2009-2010, ON THE BASIS OF T HE ASSESSMENT CONCLUDED FOR ASSESSMENT YEAR 2010-2011. IT WAS SUBMITTED BY THE LEARNED AR THAT THE ASSESSMENT FOR ASSESSMENT YEAR 2010-2011 WAS TAKEN IN APPEAL BY TH E ASSESSEE AND THE HONBLE TRIBUNAL HAD DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, IT WAS SUBMITT ED THAT THE MATTER IS SQUARELY COVERED IN FAVOUR OF THE ASSESSE E BY THE ORDER OF THE TRIBUNAL IN ITA NO.3/BANG/2014 DATED 04.12.2015 (COPY OF THE ORDER OF TRIBUNAL IS PRODUC ED AT PAGE 345 TO OF THE PAPER BOOK FILED BY THE ASSESSEE). 3.7 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORT ED THE ORDERS OF THE INCOME-TAX AUTHORITIES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSMENT FOR THE CURRENT ASSESSMENT YEAR, VIZ., THE ASSESSMENT YEAR 2009-201 0 WAS REOPENED BASED ON THE ASSESSMENT ORDER FOR ASSESSME NT YEAR ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 6 2010-2011. THE REASONS STATED FOR REOPENING THE ASS ESSMENT FOR THE RELEVANT ASSESSMENT YEAR IS REPRODUCED BELO W:- DURING THE ASSESSMENT PROCEEDINGS FOR THE AY 2010-1 1 IT WAS ESTABLISHED IN THE 29-PAGE ORDER, BASED ON STRO NG FACTS AND DETAILED REASONING, THAT THE ASSESSEE IS UNDER- VALUING ITS EARNINGS. THIS WAS DONE BY A COMPLEX GR OUP STRUCTURE WHEREIN THE PROFITS OF THE ASSESSEE COMPA NY ARE SHIFTED TO OTHER GROUP COMPANIES THAT CLAIM VARIOUS TAX EXEMPTIONS. DUE TO THIS, THE CONGLOMERATE AS A WHOL E WAS ABLE TO SAVE ON ITS TAX OUTFLOW. BROADLY THE SAME F ACTS ARE APPLICABLE FOR THE AY 2009-10 AND I HAVE A REASON TO BELIEVE THAT THERE IS AN ESCAPEMENT OF INCOME CHARG EABLE TO TAX. 4.1 THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSM ENT YEAR 2010-2011 IN ITA NO.3/BANG/2014 HAD DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE. THE TRIBUNAL HELD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE MERELY ON THE GROUND THAT ASSESSEE HAD INC URRED LOSS FOR THE ASSESSMENT YEAR 2010-2011. THE TRIBUNA L FURTHER OBSERVED THAT WHEN RECEIPTS ARE UNDER-INVOICED FOR THE SERVICES RENDERED BY THE ASSESSEE TO ITS GROUP CONC ERNS, THE ASSESSING OFFICER OUGHT TO HAVE DETERMINED THE ARM S LENGTH PRICE. THE TRIBUNAL WAS OF THE VIEW HAVING NOT DETE RMINED THE ARMS LENGTH PRICE OF THE SERVICES TO THE RELATED P ARTIES, REJECTION OF THE BOOKS OF ACCOUNT WITHOUT FINDING A NY DEFECT IN THE SAME IS UNCALLED FOR, AND THEREFORE, THE ESTIMA TION OF BUSINESS PROFIT AT 8% WAS UNJUSTIFIED. THE RELEVANT FINDING OF THE TRIBUNAL READS AS FOLLOW:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. WE HAVE GIVEN OUR DEEP ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 7 THOUGHT TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE FINDINGS OF THE ASSESSING OFFICER AND THE CIT (APPEALS). THE ASSESSING OFFICER PROCEEDED TO REJE CT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ON THE REASON THA T THE ASSESSEE HAS REPORTED A HUGE LOSS OF RS.10,37.79,25 4 FROM THE ACTIVITY OF PROVIDING SERVICES TO THE RELA TED PARTIES. IT IS PERTINENT TO NOTE THAT THE SERVICE CHARGES BY THE ASSESSEE ARE AGREED BETWEEN THE PARTIES AS PER THE MASTER AGREEMENT APART FROM THE RESPECTIVE AGREEMENT BETWEEN THE PARTIES. THERE IS NO DOUBT THAT REPORTI NG AN ABNORMAL LOSS CAN TRIGGER AN ENQUIRY AND INVESTIGAT ION ON THE PART OF THE ASSESSING OFFICER TO FIND OUT THE PR OPER AND ACTUAL REASON FOR SUCH LOSS. HOWEVER, THE LOSS IT SELF DOES NOT BE A REASON OR GROUND FOR REJECTING THE BOOKS O F ACCOUNTS OR MAKING ANY ADDITION ON ESTIMATION OF IN COME. THE ASSESSING OFFICER HAS DOUBTED THE PRICE CHARGED BY THE ASSESSEE TO THE RELATED PARTIES AND CONCLUDED T HAT THE ASSESSEE HAS UNDERVALUED THE CHARGE FROM THE RELATE D PARTIES IN RESPECT OF VARIOUS TECHNICAL AND MANAGER IAL SERVICES LIKE PROPERTY MANAGEMENT, PROJECT MANAGEME NT RENDERED TO THE RELATED PARTIES. THUS, WHAT WAS DOU BTED BY THE ASSESSING OFFICER AND SUBJECT MATTER OF INVESTIGATION AND ENQUIRY WAS THE PRICE CHARGED BY THE ASSESSEE IN RESPECT OF THE SERVICE RENDERED AND NOT ANY INCORRECT INFORMATION OR DATA RECORDED IN THE BOOKS OF ACCOUNTS. IN A CASE THE ASSESSING OFFICER HAS THE R EASON TO BELIEVE THAT THE ASSESSEE HAS UNDERVALUED THE PR ICE CHARGED TO THE RELATED PARTIES, THEN THE PROPER COU RSE OF ACTION AS PER THE PROVISIONS OF THE ACT SHOULD HAVE BEEN TO DETERMINE THE ARMS LENGTH PRICE. IN RESPECT OF TH E SERVICES RENDERED BY THE ASSESSEE TO ITS RELATED P ARTIES. THERE IS NO DISPUTE THAT THE ASSESSEE RECEIVED THE SERVICES CHARGES FROM THE RELATED PARTIES AS PER TH E PRICE AGREED BETWEEN THE PARTIES UNDER RESPECTIVE AGREEME NTS AS WELL AS MASTERS AGREEMENT. IT IS ALSO NOT IN DI SPUTE THAT WHATEVER RECORDED IN THE BOOKS OF ACCOUNTS IS THE ACTUAL PRICE RECEIVED BY THE ASSESSEE FROM ITS RELA TED PARTIES TO WHOM THE SERVICES WERE RENDERED. THEREFO RE IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE AS SESSEE HAS RECORDED INCORRECT PRICE IN THE BOOKS OF ACCOUN TS AND RECEIVED SOMETHING ELSE FROM THE RELATED PARTIES. ONCE THE AMOUNT REDUCED BY THE ASSESSEE TOWARDS SERVICES ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 8 CHARGES FROM THE RELATED PARTIES IS CORRECTLY RECOR DED IN THE BOOKS OF ACCOUNTS, THEN WHATEVER WAS DOUBTED B Y THE ASSESSING OFFICER IS NOT FOUND ANY DEFECT IN THE BOO KS OF ACCOUNTS BUT IT MAY BE A CASE OF UNDERVALUATION OF THE SERVICE CHARGES AGREED BETWEEN THE PARTIES AS PER T HE AGREEMENTS. THEREFORE, THE DIFFERENCE IF ANY, COULD HAVE BEEN ONLY IN THE SERVICES CHARGES AGREED BETWEEN TH E PARTIES AND NOT IN THE BOOKS OF ACCOUNTS. THE ASSES SING OFFICER HAS CITED THE REASONS FOR INVOKING THE PROV ISIONS OF SECTION 145(3) AS UNDER VALUING THE SERVICE CHARGE S AS PER THE AGREEMENT AND THEREBY SHIFTING THE PROFIT T O THE RELATED PARTIES SOME OF WHOM ARE ELIGIBLE DEDUC TION UNDER CHAPTER VIA OF THE ACT. IN ORDER TO INVOKE T HE PROVISIONS OF SECTION 145(2), THE ASSESSING OFFICER HAS TO POINT OUT DISCREPANCIES AND DEFECTS IN THE BOOKS OF ACCOUNTS. IN THE CASE ON HAND, THE ASSESSING OFFICE R HAS NOT POINTED OUT ANY DEFECT OR DEFICIENCY IN THE BOO KS OF ACCOUNTS BUT IT PROCEEDED ONLY ON THE GROUND THAT T HE ASSESSEE HAS CHARGED THE PRICE WHICH IS UNDERVALUED FROM ITS RELATED PARTIES. THEREFORE, INSTEAD OF P ROCEEDING TO DETERMINE THE ALP IN RESPECT OF THE SERVICES REN DER BY THE ASSESSEE TO ITS RELATED PARTIES, THE ASSESSING O FFICER CHOSE TO PROCEED UNDER SECTION 145(3) WHICH IS N OT PERMISSIBLE IN THE FACTS OF THE PRESENT CASE WHEN THE ASSESSING OFFICER WAS NOT ABLE TO FIND OUT ANY DEFEC T OR DEFICIENCY IN THE BOOKS OF ACCOUNTS. THUS WE DO NO T FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT ( APPEALS) SO FAR AS IT RELATES TO THE FINDING THAT THE BOOKS OF ACCOUNTS REJECTED BY THE ASSESSING OFFICER UNDER SEC TION 145(3) ARE NOT PROPER AND JUSTIFIED. 6. THE NEXT QUESTION ARISES REGARDING THE ESTIMATIO N OF THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE INCOME OF THE ASSES SEE BY TAKING INTO CONSIDERATION THE PROFIT OF THE ENTITIE S CHOSEN BY THE ASSESSING OFFICER. THEREFORE INSTEAD OF DETE RMINING THE ALP OF THE SERVICES RENDERED BY THE ASSESSEE TO ITS AE, THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE INCO ME OF THE ASSESSEE ON THE BASIS OF PROFITS OF SOME SELECT ED PARTIES. IN THE CASE WHEN THE ASSESSING OFFICER HAS A REASON TO BELIEVE THAT THE ASSESSEE HAS NOT CHARGE D THE PRICE FROM THE RELATED PARTIES AT ARMS LENGTH , THEN ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 9 THE ASSESSING OFFICER COULD HAVE PROCEED TO DETERMIN E THE ALP BY SELECTING THE INDEPENDENT TRANSACTIONS BETWEE N THE UNREJECTED PARTIES. BUT INSTEAD OF DETERMININ G ALP THE ASSESSING OFFICER HAS ESTIMATED THE INCOME WHIC H IS NOT PERMISSIBLE WHEN THE ACCOUNTS OF THE ASSESSEE W ERE NOT FOUND IN ANY DEFICIENCY OR SUFFERING FROM ANY D EFECT. IT IS PERTINENT TO NOTE THAT THE PROFIT OF AN ENTIT Y IS EFFECTED BY VARIOUS FACTORS INCLUDING THE FIXED COST, THE CA PACITY AT WHICH THE PARTICULAR ENTITY FUNCTIONS IN COMPARISON TO ITS TOTAL CAPACITY AND FURTHER THE STAGE OF THE BUSINE SS OF A PARTICULAR ENTITY WHETHER IT IS THE INITIAL STAGE O R AFTER STABILIZATION OF THE BUSINESS ACTIVITY. IN THE CAS E ON HAND, THE ASSESSING OFFICER HAS ACCEPTED THE SERVICE CHARG ES CHARGED BY THE ASSESSEE TO ITS AES, IN THE SUBSEQUEN T ASSESSMENT YEARS. IT IS REPRODUCED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER THAT THE ASSESSEE HAS EARNED THE PROFITS IN THE SUBSEQUENT ASSESSMENT YEARS. THE REVENUE HAS NOT DISPUTED T HE FACT THAT THE EARLIER ASSESSMENT YEAR AS WELL AS SUBSEQUENT ASSESSMENT YEAR, THE PRICE CHARGED BY TH E ASSESSEE TO ITS PARTIES THE SERVICES RENDERED BY TH E ASSESSEE ARE ACCEPTED BY THE ASSESSING OFFICER. IT IS ALSO NOT IN DISPUTE THAT THE PRICE CHARGED BY THE ASSESS EE TO ITS RELATED PARTIES ARE UNDER THE SAME SERVICE AGREEME NT IN THE EARLIER ASSESSMENT YEAR, THE ASSESSMENT YEAR UND ER CONSIDERATION AND SUBSEQUENT ASSESSMENT YEAR. FURT HER, EXCEPT THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSING OFFICER HAS NOT DOUBTED THE SERVICE CHARGE S RECEIVED BY THE ASSESSEE UNDER THE SAME AGREEMENT A ND ONLY IN THE ASSESSMENT YEAR UNDER CONSIDERATION, TH E ASSESSING OFFICER CONCLUDED THAT THE PRICE CHARGED B Y THE ASSESSEE IS UNDERVALUED. THOUGH THE DOCTRINE OF RES JUDICATE IS NOT APPLICABLE IN THE MATTER OF TAXATIO N HOWEVER, WHEN THE FACTS AND CIRCUMSTANCES ARE IDEN TICAL AND THERE IS NO CHANGE EVEN IN THE PRICE CHARGED DU RING THE YEAR UNDER CONSIDERATION IN COMPARISON TO THE EARLIER ASSESSMENT YEAR AS WELL AS SUBSEQUENT ASSESSM ENT YEAR THE ASSESSING OFFICER IS NOT PERMISSIBLE TO TAKE A DIFFERENT A VIEW BY PICKING AND CHOOSING A PARTIC ULAR ASSESSMENT YEAR. THEREFORE, THE RULE OF CONS ISTENCY DEMAND, THAT THE ASSESSING OFFICER CANNOT TAKE A DIFFERENT VIEW IN A PARTICULAR ASSESSMENT YEAR WITH OUT ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 10 POINTING OUT ANY CHANGE IN THE FACTS AND CIRCUMSTAN CES FOR THAT PARTICULAR ASSESSMENT YEAR. THUS WHEN THE ASSESSING OFFICER HAS ALREADY ACCEPTED THAT THIS PRI CE CHARGED BY THE ASSESSEE TO THE RELATED PARTIES UNDE R THE SAME AGREEMENT IN THE EARLIER ASSESSMENT YEARS AS W ELL AS IN THE SUBSEQUENT YEARS THEN PICKING UP ONLY ONE ASSESSMENT YEAR ON THE GROUND THAT THE ASSESSEE HAS INCURRED A HUGE LOSS IS NOT PERMISSIBLE TO REJECT THE BOOKS OF ACCOUNTS AND ESTIMATE THE INCOME BY THE ASSESSING OFFICER. THE REVENUE HAS ALSO NOT DISPUTED THAT T HE PRICE CHARGED BY THE ASSESSEE IN THE EARLIER ASSESSMENT Y EAR FOR THE YEAR UNDER CONSIDERATION UNDER AND SUBSEQU ENT ASSESSMENT YEAR THE SAME AGREEMENT, THEN THE ACTION OF THE ASSESSING OFFICER IS NOT WARRANTED TO REJECT TH E BOOKS OF ACCOUNTS. IN VIEW OF THE ABOVE FACTS AND CIRCUMS TANCES OF THE CASE, WE DO NOT FIND ANY MERIT OR SUBSTANCE IN THE APPEAL OF THE REVENUE, THE SAME DESERVES DISMISSAL. 4.2 IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-2011 (SUPRA), WHI CH IS IDENTICAL TO THE FACTS OF THE INSTANT CASE, WE FOLL OW THE COORDINATE BENCHS ORDER OF THE TRIBUNAL AND HOLD T HAT THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING A.O.S ACTION IN REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE BUSINESS IN COME AT THE RATE OF 8%. IT IS ORDERED ACCORDINGLY. 5. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF OCTOBER , 2017. SD/- SD/- (JASON P.BOAZ) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE ; DATED : 27 TH OCTOBER, 2017. DEVDAS* ITA NO.1396/BANG/2015. M/S.ASCENDAS SERVICES INDIA PVT.LTD. 11 COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER, (ASSTT. REGISTRAR) ITAT, BANGALORE 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, BENGALURU. 4. CIT(A)-1, BENGALURU 5. DR, ITAT, BANGALORE 6. GUARD FILE.