Tavanappa Padanabh Kemble [HUF], Sangli V. DCIT, Sangli

ITA 1399/PUN/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7022 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Working capital adjustments
• Section: 92C; 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! , $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM . / ITA NO.2567/PUN/2012 & & / ASSESSMENT YEAR : 2008-09 ENDURANCE SYSTEMS (INDIA) PVT. LTD., (NOW MERGED WITH ENDURANCE TECHNOLOGIES PVT. LTD.), K-228, MIDC INDUSTRIAL AREA, WALUJ, AURANGABAD - 431136 . APPELLANT PAN: AAACE0819Q VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD . RESPONDENT / APPELLANT BY : S/SHRI NIKHIL PATHAK AND ABHAY AVCHAT / RESPONDENT BY : SHRI RAJEEV KUMAR, CIT DATE OF HEARING : 21.12.2016 / DATE OF PRONOUNCEMENT: 15.02.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF ACIT, CIRCLE-1, AURANGABAD, DATED 02.11.2012 RELATING TO ASSESSMENT YEAR 2008-09 PASSED UNDER SECTION 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1, AURA NGABAD / DISPUTE RESOLUTION PANEL-I, MUMBAI (HEREIN AFTER REFERRED A S 'THE ASSESSING OFFICER') HAS ERRED IN MAKING AGGREGATE ADDITION OF RS.2,76,62,100/-. 2. WITHOUT CONSIDERING PROVISIONS OF SECTION 92C OF THE INCOME TAX ACT, 1961, THE ASSESSING OFFICER HAS ERRED IN MAKING ADD ITIONS OF RS.2,76,62,100/- . 3. WITHOUT PREJUDICE TO THE FOREGOING, IN SPITE OF INTERNAL COMPARABLE FIGURES BEING AVAILABLE, THE ASSESSING OFFICER HAS ERRED IN IGNORING THE PROFITABILITY OF INTERNAL COMPARABLES BEING SALE TO AE NOT AT ARM'S LENGTH. 4. WITHOUT PREJUDICE TO THE FOREGOING, THE ASSESSIN G OFFICER HAS ERRED IN SELECTING THE COMPARABLES UNDER TNMM AND REJECTING THE COMPARABLES SELECTED BY THE COMPANY WITHOUT GIVING JUSTIFIABLE REASONS FOR THE SAME. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, PROP OSED ADDITION OF RS.2,70, 22,100/- IN RESPECT OF PURCHASE/SALE OF TR ADED/ FINISHED GOODS FROM/TO THE ASSOCIATE ENTERPRISES IS BAD IN LAW. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, ADDITION OF RS.6,40,000/- IN RESPECT OF ISSUE OF GUARANTEE TO T HE ASSOCIATE ENTERPRISE IS BAD IN LAW. 7. WITHOUT PREJUDICE TO THE FOREGOING, AN ADDITION OF RS.6,40,000/- IN RESPECT OF ISSUE OF GUARANTEE TO THE ASSOCIATE ENTE RPRISE IS EXCESSIVE AND UNREASONABLE. 8. WITHOUT PREJUDICE TO THE FOREGOING, THE ADDITION OF RS.6,40,000/- IN RESPECT OF ISSUE OF GUARANTEE TO THE ASSOCIATE ENTE RPRISE IS DOUBLE ADDITION, AS THE ANOTHER PROPOSED ADDITION OF RS.2, 70,22,100/- IS IN RESPECT, OF THE ENTIRE BUSINESS OF THE ASSESSEE COM PANY AND THEREFORE, THIS ADDITION IS OVER AND ABOVE THE AFORESAID ADDIT ION. 9. ALLOWANCE UNDER SECTION 43B OF RS.11,14,602/- IS NOT ALLOWED AND IS NOT IN KEEPING WITH THE LAW. 10. THE ASSESSING OFFICER HAS ERRED IN NOT GRANTING RELIEF DUE TO THE ASSESSEE, IN SPITE OF DUTY BOUND TO ASSESS CORRECT INCOME UNDER THE ACT FOR THE FOLLOWING EXPENSES: SR. NO. PARTICULARS AMOUNT RS. 1. EXCISE DUTY 1,11,309.00 6,081.00 2. BONUS PAID 1,79,647.00 3. SALES TAX DUES PAID 11,14,602 3. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND O F APPEAL : 1. THE ASSESSEE COMPANY SUBMITS THAT WITHOUT PREJU DICE TO ITS CONTENTION THAT THE COMPARABLE UNCONTROLLED PRICE M ETHOD IS THE MOST APPROPRIATE METHOD FOR DETERMINING THE ARMS LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION ENTERED INTO WITH THE AE, IN THE EVENT, THE TRANSACTIONAL NET MARGIN METHOD IS TO BE ADOPTED AS THE MOST ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 3 APPROPRIATE METHOD, THE ADJUSTMENT ON ACCOUNT OF WO RKING CAPITAL SHOULD BE GRANTED. 4. BRIEFLY IN THE FACTS OF THE CASE THE ASSESSEE WA S ENGAGED IN THE BUSINESS OF DESIGN, MANUFACTURING, DEVELOPMENT, MARKETING AN D DISTRIBUTION OF AUTOMOTIVE PRODUCTS. FOR THE YEAR UNDER CONSIDERATION, THE AS SESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,83, 738/-. THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTIONS OVER RS.15 CRORES. THE ASSESSING OFFICER MADE A REFERENCE TO THE TRANSFER PRICING OFFICER (I N SHORT THE TPO) TO BENCHMARK THE INTERNATIONAL TRANSACTION OF THE ASSE SSEE. THE TPO NOTED THAT THE ASSESSEE HAD MERGED WITH ENDURANCE TECHNOLOGIES PVT. LTD. (IN SHORT ETPL) W.E.F. 01-04-2008. ETPL HAD ACQUIRED 40% OW NERSHIP STAKE IN PAIOLIMECCANICA S.P.A, WHICH WAS A COMPANY INCORPOR ATED IN ITALY AND WAS ENGAGED IN MANUFACTURING OF SUSPENSION PARTS FOR TW O AND THREE WHEELERS. THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTION MAINLY WITH PAIOLIMECCANICA S.P.A. THE ASSESSEE HAD AGGREGATED THE TRANSACTION S AND HAD BENCHMARKED THE SAME FOLLOWING INTERNAL CUP METHOD. THE TOTAL PROCEEDINGS BEFORE THE TPO WERE WHETHER CUP METHOD IS TO BE APPLIED OR TNM M IS THE MOST APPROPRIATE METHOD TO BE APPLIED. THE TPO REJECTED THE APPLICATION OF CUP METHOD AND SELECTED COMPARABLES TO BENCHMARK THE IN TERNATIONAL TRANSACTION OF THE ASSESSEE. THE PLI OF THE ASSESSEE WAS 2.85% WH EREAS THE PLI OF THE 8 COMPARABLES SELECTED BY THE TPO WORKED OUT TO 7.93% AND HE PROPOSED AN ADJUSTMENT OF RS.25,56,49,000/-. THE ASSESSING OFF ICER PASSED THE DRAFT ASSESSMENT ORDER AGAINST WHICH THE ASSESSEE FILED O BJECTIONS BEFORE THE DRP. HOWEVER, THE OBJECTIONS OF THE ASSESSEE WERE REJECT ED BUT THE DRP DIRECTED THE ASSESSING OFFICER TO CALCULATE THE ARMS LENGTH PRICE WITH RESPECT TO TRANSACTIONS WITH ASSOCIATE ENTERPRISE AND NOT THE ENTIRE TURNOVER. ACCORDINGLY, THE ASSESSING OFFICER IN THE FINAL ASSESSMENT ORDER MADE AN ADJUSTMENT OF RS.2,76,62,100/- ON ACCOUNT OF INTERNATIONAL TRANSA CTION RELATING TO ITS EXPORT OF ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 4 SPARES AND ON ACCOUNT OF GUARANTEE OF RS.6,40,000/- . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER. 5. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE FAIRLY ADMITTED BEFORE US THAT THE LIMITED ISSUE WHICH NEEDS ADJUDI CATION IN THE CASE IS THAT IN CASE TNMM IS HELD TO BE MOST APPROPRIATE METHOD, TH EN THE CONCERN BOSCH CHASSIS SYSTEM INDIA LTD. IS TO BE EXCLUDED FROM TH E FINAL SET OF COMPARABLES HAVING DIFFERENT FINANCIAL YEAR ENDING. HE FURTHER POINTED OUT THAT EVEN M/S. ESCORTS LTD. HAS DIFFERENT FINANCIAL YEAR AND FOLLO WING THE RATIO LAID DOWN IN DOVER INDIA (P) LTD. VS. DY.CIT REPORTED IN (2015) 59 TAXMANN.COM 53 (PUNE TRIBUNAL) THE TWO CONCERNS ARE TO BE EXCLUDED. HE FAIRLY ADMITTED THAT THE ASSESSEE WAS SEEKING THAT ESCORTS LTD. SHOULD BE IN CLUDED IN THE FINAL SET OF COMPARABLES WHICH WAS REJECTED BY THE ASSESSING OFF ICER/TRANSFER PRICING OFFICER ON TURNOVER BASIS BUT THE TURNOVER OF THE S EGMENTAL DIVISION WAS WITHIN LIMITS. HE ALSO POINTED OUT THAT BY WAY OF ADDITIO NAL GROUND OF APPEAL WORKING CAPITAL ADJUSTMENT IS SOUGHT FOR, BUT, IN CASE, IF BOSCH CHASSIS SYSTEM INDIA LTD. IS EXCLUDED, THEN THE ASSESSEE IS WITHIN +/-5% RANG E, THEN NO NEED FOR EVEN THE WORKING CAPITAL ADJUSTMENTS. 6. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE ON THE OTHER HAND PLACING RELIANCE ON THE ORDERS OF THE ASSESSING OFF ICER/TRANSFER PRICING OFFICER AND THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL POINTED OUT THAT AS THE ASSESSEE HAD NOT RAISED ANY ISSUE OF WORKING CAPITA L ADJUSTMENT EITHER BEFORE THE ASSESSING OFFICER/ TRANSFER PRICING OFFICER, TH E SAME COULD NOT BE RAISED BY WAY OF ADDITIONAL GROUNDS OF APPEAL. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS A SUBSIDIARY COMPANY OF ENDURANCE TECHN OLOGIES PVT. LTD. AND IS ENGAGED IN MANUFACTURING OF AUTO-COMPONENTS AND SPE CIALIZED IN THE FIELD OF ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 5 MACHINING OF AUTO COMPONENTS. THE ASSESSEE HAD MER GED WITH ENDURANCE TECHNOLOGIES PVT. LTD., W.E.F. 01-04-2008, WHICH IS THE YEAR UNDER CONSIDERATION, WHO IN TURN HAD ACQUIRED 40% EQUITY STAKE IN PAIOLIMECCANICA S.P.A. THE SAID COMPANY WAS INCORPORATED IN ITALY AND WAS ENGAGED IN THE MANUFACTURE OF SUSPENSION PARTS OF TWO AND THREE WH EELERS AND THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTION MAINLY W ITH PAIOLIMECCANICA S.P.A. THE ASSESSEE HAD APPLIED INTERNAL CUP METHOD IN ORD ER TO BENCHMARK ITS INTERNATIONAL TRANSACTION AND THE WHOLE PROCEEDINGS BEFORE THE TRANSFER PRICING OFFICER AND DISPUTE RESOLUTION PANEL AND THE ASSESS ING OFFICER WAS IN RESPECT OF THE METHOD TO BE APPLIED FOR BENCHMARKING THE IN TERNATIONAL TRANSACTION, WHEREIN THE CASE OF THE ASSESSEE WAS THAT INTERNAL CUP METHOD IS TO BE APPLIED. ON THE OTHER HAND TRANSFER PRICING OFFICE R WAS OF THE VIEW THAT TNMM WAS THE MOST APPROPRIATE METHOD TO BE APPLIED. IN THE FINAL ANALYSIS THE TRANSFER PRICING OFFICER APPLIED TNMM METHOD BY SEL ECTING CERTAIN COMPANIES AS COMPARABLES WHICH ARE ENLISTED AT PAGE 10 OF THE TRANSFER PRICING OFFICERS ORDER. 8. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE BEFORE US FAIRLY ADMITTED THAT IN CASE THE CONCERN BOSCH CHASSIS SYS TEM INDIA LTD. IS EXCLUDED FROM THE FINAL LIST OF COMPARABLES, WHILE APPLYING TNMM METHOD, THEN THE MARGINS SHOWN BY THE ASSESSEE IN THE MEAN MARGINS O F THE COMPARABLES WERE WITHIN THE +/-5% RANGE AND NO ADJUSTMENT IS TO BE M ADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF TRANSFER PRICING PROVISIONS. HE FAIRLY AGREED TO ADOPTION OF TNMM FOR BENCHMARKING INTERNATIONAL TRA NSACTION OF THE ASSESSEE. 9. THE GROUNDS OF APPEAL NO.1 AND 2 RAISED BY THE A SSESSEE ARE GENERAL IN RESPECT OF THE ENTIRE TRANSFER PRICING ADJUSTMENT A ND THE SAME ARE DISMISSED. ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 6 10. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.3 IS FOR APPLICATION OF CUP METHOD WHICH IS ALSO DISMISSED BECAUSE OF THE ADMIS SION OF THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE. 11. THE ISSUE RAISED BY WAY OF GROUND OF APPEAL NO. 4 IS AGAINST EXCLUSION OF BOSCH CHASSIS SYSTEM INDIA LTD. AND NON-INCLUSION O F ESCORTS LTD. THE ASSESSEE HAS PLACED ON RECORD THE FINANCIALS OF BOS CH CHASSIS SYSTEM INDIA LTD. WHEREIN AT PAGE 404 OF THE PAPER BOOK, THE CAL ENDAR YEAR HAS BEEN ADOPTED BY THE SAID CONCERN AS ITS ACCOUNTING PERIO D, I.E. YEAR OF CLOSING ON 31-12-2007/31-12-2008. THE ASSESSEE IS FOLLOWING FINANCIAL YEAR FOR ACCOUNTING ITS INCOME. SINCE THE ACCOUNTING YEAR A DOPTED BY THE SAID CONCERN IS AT VARIANCE, THEN WHILE APPLYING THE TRANSFER PR ICING PROVISIONS, IT HAS BEEN HELD THAT SUCH CONCERNS HAVING DIFFERENT ACCOUNTING YEARS BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES, IN ORDER TO BENCHMARK TH E INTERNATIONAL TRANSACTIONS UNDERTAKEN. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DOVER INDIA PVT. LTD. (SUPRA) HELD THAT CONCERNS WITH DIFFERENT YEAR ENDI NG BE EXCLUDED FROM THE FINAL SET OF COMPARABLES BEFORE BENCHMARKING THE INTERNAT IONAL TRANSACTION UNDERTAKEN BY ANY CONCERN. ANOTHER CONCERN AGAINST WHICH THE ASSESSEE HAS RAISED THE ISSUE OF ITS INCLUSION, THE LD. AUTHORIS ED REPRESENTATIVE FOR THE ASSESSEE, FAIRLY POINTED OUT THAT THE SAID CONCERN ESCORTS LTD. HAS A DIFFERENT FINANCIAL YEAR ENDING, I.E. SEPTEMBER 2007 WHICH IS EVIDENT FROM THE COPY OF THE BALANCE SHEET PLACED AT PAGE 497 OF THE PAPER BOOK. HE POINTED OUT THAT THE ASSESSING OFFICER/TRANSFER PRICING OFFICER HAD REJE CTED THE SAID CONCERN ON TURNOVER BASIS BUT SINCE THE SEGMENTAL PROFITS OF T HE ANCILLARY UNIT ENGAGED IN THE SIMILAR BUSINESS AS THAT OF THE ASSESSEE WERE A VAILABLE AND THE SAME REFLECTED TURNOVER OF ONLY RS.96 CRORES WHICH WAS W ITHIN THE RANGE OF THE ASSESSEE, THE SAME HAD TO BE CONSIDERED. HENCE THE REJECTION BY THE ASSESSING OFFICER/TRANSFER PRICING OFFICER WAS NOT CORRECT. HOWEVER, BECAUSE ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 7 OF THE SAID CONCERN HAVING A DIFFERENT ACCOUNTING Y EAR, THE RESULTS OF THE SAID CONCERN COULD NOT BE INCLUDED IN THE FINAL SET OF C OMPARABLES. IN VIEW OF THE ADMISSION OF THE ASSESSEE AND IN VIEW OF THE PRESEN T FACTS AND CIRCUMSTANCES, WE HOLD THAT BOTH BOSCH CHASSIS SYSTEM INDIA LTD. A ND ESCORTS LTD. HAVING DIFFERENT ACCOUNTING YEAR ENDING ARE NOT TO BE INCL UDED IN THE FINAL SET OF COMPARABLES IN ORDER TO BENCHMARK THE INTERNATIONAL TRANSACTION OF THE ASSESSEE, WHILE APPLYING TNMM METHOD. WE DIRECT SO . THE ASSESSING OFFICER/TRANSFER PRICING OFFICER IS DIRECTED THEREF ORE TO RECOMPUTE THE ADJUSTMENT, IF ANY, IN THE HANDS OF THE ASSESSEE IN THIS REGARD. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN CASE IF BOSCH CHASSIS SYSTEM INDIA LTD. IS EXCLUDED FROM THE FINA L SET OF COMPARABLES, ITS MARGIN WOULD BE WITHIN +/-5% AND NO ADJUSTMENT IS T O BE MADE ON ACCOUNT OF ARMS LENGTH PROVISIONS. ACCORDINGLY, WE DIRECT TH E ASSESSING OFFICER TO WORK OUT THE MARGINS OF THE COMPARABLES AND COMPARE IT W ITH THE PLI OF THE ASSESSEE. THE GROUND OF APPEAL NO.4 RAISED BY THE A SSESSEE IS THUS PARTLY ALLOWED. 12. THE GROUND OF APPEAL NO.5 RAISED BY THE ASSESSE E IS GENERAL IN NATURE IS DISMISSED. 13. THE ADDITIONAL GROUND OF APPEAL RAISED BY THE A SSESSEE IS AGAINST DISALLOWANCE OF WORKING CAPITAL ADJUSTMENT WHILE AP PLYING THE TRANSFER PRICING PROVISIONS. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT COMPLETE FINANCIAL DATA OF THE ASSESSEE AND AL SO THE COMPARABLES PICKED UP BY THE TRANSFER PRICING OFFICER APPLIED FOR BENC HMARKING THE INTERNATIONAL TRANSACTION ARE AVAILABLE ON RECORD AND IN VIEW OF THE VARIOUS DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL THE SAID PLEA OF THE ASS ESSEE MAY BE ACCEPTED. ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 8 14. WE FIND MERIT IN THE PLEA OF THE ASSESSEE WHERE IN COMPLETE FACTS ARE AVAILABLE ON RECORD AND THE ASSESSING OFFICER/TRANS FER PRICING OFFICER NEED TO VERIFY THE SAME. ACCORDINGLY, WE ADMIT THE ADDITION AL GROUND OF APPEAL RAISED BY THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO DE CIDE THE ISSUE OF ALLOWABILITY OF WORKING CAPITAL ADJUSTMENT IN ACCORDANCE WITH LA W AND SETTLED LEGAL POSITION ON THE SAME. ACCORDINGLY, THE GROUNDS OF APPEAL RAI SED BY THE ASSESSEE IS ALLOWED. 15. NOW COMING TO THE ISSUE OF CORPORATE GUARANTEE ADJUSTMENT MADE IN THE HANDS OF THE ASSESSEE OF RS.6,40,000/-. THE ASSESS EE BY WAY OF GROUNDS OF APPEAL NO.6 TO 8 HAS RAISED THE SAID ISSUE. 16. BRIEFLY IN THE FACTS OF THE CASE RELATING TO TH E ISSUE ARE THAT THE ASSESSEE HAD REPORTED THE SAID TRANSACTION IN FORM 3CEB UNDE R WHICH IT HAD PROVIDED FINANCIAL SERVICES AND HAD INCURRED A RISK FOR WHIC H COMPENSATION WAS DUE. THE ASSOCIATE ENTERPRISE NOT BEING VERY CREDIT WORTHY H AD BEEN UNABLE TO AVAIL FINANCING FROM BANK OF INDIA, BUT ON THE STRENGTH O F CORPORATE GUARANTEE ISSUED BY THE ASSESSEE, TO THE BANK, THE SAID GUARANTEE WA S AVAILED. THE TRANSFER PRICING OFFICER WAS OF THE VIEW THAT ONE MEASURE OF THE VALUE OF THIS SERVICE WAS THE DIFFERENCE IN INTEREST RATE. HOWEVER, SINCE TH E INFORMATION WAS NOT AVAILABLE, EXTERNAL CUP WAS APPLIED. THE TRANSFER PRICING OFF ICER HELD THAT WHERE THE BANKS IN INDIA CHARGE 1% AS GUARANTEE FEE ON SUCH T RANSACTION, ADJUSTMENT OF US$ 16000 OR APPROXIMATELY RS.6,40,000/- IS TO BE MADE IN RESPECT OF THE SAID TRANSACTION. 17. THE DISPUTE RESOLUTION PANEL DISMISSED THE OBJE CTIONS RAISED BY THE ASSESSEE AND THE ASSESSING OFFICER IN THE FINAL ASS ESSMENT YEAR MADE AN ADDITION OF RS.6,40,000/-, AGAINST WHICH THE ASSESS EE IS IN APPEAL. ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 9 18. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT THE ASSESSEE HAD GIVEN CORPORATE GUARANTEE TO A SUBSIDI ARY IN THAILAND AGAINST WHICH SERVICES THE TRANSFER PRICING OFFICER SAYS SO METHING SHOULD BE CHARGED AND 1% WAS CHARGED. HE FURTHER POINTED OUT THAT TH E TRANSFER PRICING OFFICER SETTLED IT AS INTERNATIONAL TRANSACTION. HE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN MANUGRAPH IN DIA LTD. VS. DCIT REPORTED IN (2015) 62 TAXMANN.COM 347 (MUMBAI TRIBUNAL) WHER EIN THE ISSUE WAS DECIDED BY TAKING THE RATE OF 0.5% FOR ASSESSMENT Y EARS 2008-09 AND 2009-10. HE ALSO REFERRED TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. EVEREST KENTO CYLINDERS LTD. REPORTED IN (2015) 58 TAXMANN.COM 254 (BOMBAY) 19. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE RE VENUE PLACED RELIANCE ON THE ORDERS OF THE ASSESSING OFFICER/ TRANSFER PRICI NG OFFICER. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS WITH REGARD T O THE FACILITY PROVIDED BY THE ASSESSEE TO ITS AE UNDER WHICH CORPORATE GUARANTEE WAS GIVEN BY THE ASSESSEE ON BEHALF OF THE SUBSIDIARY. THE TRANSFER PRICING OFFICER WHILE BENCHMARKING THE INTERNATIONAL TRANSACTION OF THE A SSESSEE WAS OF THE VIEW THAT AGAINST THE PROVISION OF BANK GUARANTEE, THE ASSESS EE SHOULD HAVE CHARGED SOME AMOUNT AS GUARANTEE FEE AND HE WORKED OUT THE ABOVE IN THE HANDS OF THE ASSESSEE BY ADOPTING THE GUARANTEE FEE @1%, I.E . RESULTING IN ADDITION OF RS.6,40,000/-. THE ASSESSEE IS IN APPEAL AGAINST TH E ORDER OF THE ASSESSING OFFICER/ TRANSFER PRICING OFFICER. THE LD. AUTHORI SED REPRESENTATIVE FOR THE ASSESSEE HAS PLACED RELIANCE ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL WHEREIN VIDE PARA 11 AFTER REFERRING T O THE DECISION OF HONBLE BOMBAY HIGH COURT, THE TRIBUNAL HAD HELD THAT RATE OF 0.5% IS JUSTIFIED. APPLYING THE SAME RATIO, WE DIRECT THE ASSESSING OF FICER TO APPLY THE RATE OF 0.5% AS CHARGES FOR PROVIDING BANK GUARANTEE TO THE ASSOCIATE ENTERPRISE AND ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 10 RESTRICT THE ADDITION ACCORDINGLY. GROUNDS OF APPE AL NO.6 TO 8 RAISED BY THE ASSESSEE ARE THUS PARTLY ALLOWED. 21. THE LAST ISSUE RAISED BY WAY OF GROUNDS OF APPE AL NO.9 AND 10 BY THE ASSESSEE ARE AGAINST THE DEDUCTION ALLOWABLE IN VIE W OF THE PROVISIONS OF SECTION 43B OF THE ACT. 22. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESS EE POINTED OUT THAT THE ASSESSING OFFICER HAD ERRED IN NOT GRANTING RELIEF WHICH WAS DUE TO THE ASSESSEE ON ACCOUNT OF EXCISE DUTY TO BE PAID, BONUS PAID AN D SALES TAX DUES PAID. THE CLAIM WAS MADE TOTALING RS.11,14,602/- IN VIEW OF T HE PROVISIONS OF SECTION 43B OF THE ACT ON THE GROUND THAT ALL THE ABOVE SAID AM OUNTS WERE PAID WITHIN THE DUE DATE STIPULATED IN THE AFORESAID SECTION. 23. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT NO SUCH CLAIM WAS MADE IN THE RETURN OF INCOME, HOWEVE R, THE CLAIM WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT BO TH THE ASSESSING OFFICER AND THE DISPUTE RESOLUTION PANEL DISMISSED THE CLAI M OF THE ASSESSEE AS NOT ENTERTAINABLE IN VIEW OF THE RATIO LAID DOWN IN GOE TZE INDIA LTD. VS. CIT (2006) 284 ITR 323 (SC). THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE CLAIM OF THE ASSESSEE IS ENTERTAINABLE IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. REPORTED IN 349 ITR 336 (BOM.) AND THE MA TTER BE VERIFIED AND RELIEF BE ALLOWED TO THE ASSESSEE. THE LD. AUTHORISED REPRES ENTATIVE FOR THE ASSESSEE REFERRED TO THE SUBMISSIONS MADE BEFORE THE ASSESSI NG OFFICER DATED 13-12- 2011 WHEREIN IT WAS POINTED OUT THAT CERTAIN DEDUCT IONS ON ACCOUNT OF EXCISE DUTY PROVISION, BONUS PAYABLE AND SALES TAX PAID RE LATING TO THE EARLIER YEAR, BUT PAID DURING THE CURRENT YEAR WERE NOT CLAIMED IN TH E RETURN OF INCOME BUT SINCE THE AMOUNTS WERE ADDED IN THE HANDS OF THE ASSESSEE , THEN THE SAME WERE ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 11 ALLOWABLE IN VIEW OF PROVISIONS OF SECTION 43B OF T HE ACT. THE SAID PLEA OF THE ASSESSEE WAS NOT CONSIDERED BY THE ASSESSING OFFICE R. BEFORE THE DISPUTE RESOLUTION PANEL, OBJECTIONS WERE RAISED, COPY OF W HICH ARE PLACED AT PAGES 783 TO 785 OF THE PAPER BOOK. THE LD. AUTHORISED R EPRESENTATIVE FOR THE ASSESSEE PLEADED THAT FOLLOWING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SH AREHOLDERS PVT. LTD. (SUPRA) THE SAID ISSUE IS TO BE ALLOWED. 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PLEA OF THE ASSESSEE BEFORE US IS REGARDING ALLOWANCE OF CE RTAIN DEDUCTIONS ON PAYMENT BASIS UNDER SECTION 43B OF THE ACT, WHICH W ERE NOT CLAIMED IN THE RETURN OF INCOME. THE ASSESSEE HAD CLAIMED THAT IT HAD DEPOSITED THE EXCISE DUTY, BONUS AND SALES TAX RELATING TO ASSESSMENT YE AR 2007-08, DURING THE CURRENT FINANCIAL YEAR AND IN VIEW OF THE PROVISION S OF SECTION 43B OF THE ACT THE ASSESSEE WAS ENTITLED TO CLAIM THE SAID DEDUCTION S INCE THEY WERE INADVERTENTLY DISALLOWED IN THE EARLIER YEAR. THE TOTAL DEDUCTIO N WHICH ARE CLAIMED BY THE ASSESSEE ARE RS.11,24,602/-. UNDER THE PROVISIONS OF SECTION 43B OF THE ACT, IT IS PROVIDED THAT IN CASE THE ASSESSEE DOES NOT DEPO SIT CERTAIN SUMS WITHIN THE STIPULATED PERIOD, THEN THE SAID AMOUNT IS TO BE DI SALLOWED IN THE HANDS OF THE ASSESSEE BUT THE ASSESSEE IS ENTITLED TO CLAIM THE SAME AS DEDUCTION IN THE YEAR OF PAYMENT. THE ASSESSEE CLAIMS THAT THE PROVI SIONS MADE ON ACCOUNT OF EXCISE DUTY, BONUS AND SALES TAX WERE OFFERED TO TA X IN ASSESSMENT YEAR 2007- 08 SINCE THE AMOUNTS WERE NOT DEPOSITED, HOWEVER, THE SAID AMOUNTS HAVE BEEN PAID IN THE YEAR UNDER CONSIDERATION BUT BY AN INADVERTENT ERROR, WHILE FILING THE RETURN OF INCOME, THE SAID DEDUCTIONS WE RE NOT CLAIMED. FOLLOWING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (SUPRA) WE HOLD THAT THE ASSESSEE CAN RAISE SUCH A PLEA BEFORE THE AUTHORITIES, I.E. DURING THE COURSE OF ASSESSMENT OR ITA NO.2567/PUN/2012 ENDURANCE SYSTEMS (INDIA) PVT. LTD. 12 APPEAL PROCEEDINGS. ACCORDINGLY, WE FIND NO MERIT IN THE OBSERVATIONS OF THE DISPUTE RESOLUTION PANEL IN REJECTING THE CLAIM OF THE ASSESSEE RELYING ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. VS. CIT (2006) 284 ITR 323 (SC). REVERSING THE SAM E, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE AND ALL OW THE SAME IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUNDS OF APPEAL NO.9 AND 10 ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON THIS 15 TH DAY OF FEBRUARY, 2017. SD/- SD/- ( ANIL CHATURVEDI ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; DATED : 15 TH FEBRUARY, 2017 SATISH ( )*+ ,+ / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT ; THE RESPONDENT; THE CIT(A) - IT/TP, PUNE ; THE DIT (TP/IT), PUNE ; THE DR A , ITAT, PUNE; GUARD FILE . / BY ORDER ! ' // TRUE COPY // / ASSISTANT REGISTRAR, & , ITAT, PUNE