DCIT, Tiruppur V. M/s Flow Link Systems P. Ltd., Coimbatore

ITA 1471/CHNY/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73620 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 18-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: K RAGH UFCA
• Keywords: Depreciation; Transfer pricing; International transaction
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI (BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ) .. I.T.A. NO. 1471 & 1472/MDS/2009 ASSESSMENT YEARS :2004-05 & 2005-06 DY. COMMISSIONER OF INCOME TAX ,COMPANY CIRCLE, 121, SIXTY FEET ROAD, TIRUPUR 641 602. (APPELLANT) V. M/S.FLOW LINK SYSTEMS P. LTD., 189/1A-AC,UTHUPALAYAM, AVINASHI ROAD, ARASUR, COIMBATORE 641 047. PAN : AAACF 3239 K (RESPONDENT) APPELLANT BY : SHRI S.DAS GUPTA, JCIT D.R RESPONDENT BY : SHRI K.RAGH U,FCA DATE OF HEARING : 09.12.13 DATE OF PRONOUNCEMENT : 09.01.14 O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THESE TWO APPEALS ARE FILED BY THE REVENUE, AGG RIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) DATED ITA NO.1471/MDS/09 2 05.06.2009 IN ITA NO.61.07-08- ITA TR. NO.414/06-07 FOR THE ASSESSMENT YEAR 2004-05 AND ITA NO.15/08-09 DATED 0 5.06.2009 FOR THE A.Y. 2005-06 PASSED U/S 14 3(3 ) READ WITH SEC TION 92CA(3) & SEC.250 OF THE ACT 2. THE REVENUE HAS RAISED ELEVEN ELABORATE GROUN DS IN ITS APPEAL FOR THE A.Y.2004-05, AND TEN ELABORATE GROU NDS FOR THE A.Y.2005-06, HOWEVER, BOTH THE PARTIES AGREED THAT THE CRUX OF THE ISSUE CENTERS AROUND GROUND NO.2, WHICH IS IDENTICA L FOR BOTH THE ASSESSMENT YEARS, AND GROUND NO.7 FOR A.Y.2004-05, WHICH ARE REPRODUCED BELOW FOR ADJUDICATION:-. GROUND NOS.2 FOR A.YS 2004-05 & 2005-06: LD. CIT(A) ERRED IN ALLOWING THE COST PLUS METHOD FOLLOWED BY THE ASSESSEE IN DETERMINING THE ARMS LENGTH PRICE AS AGAINST THE PROFIT MARGIN METHOD FOLLOWED BY THE LD. ASSESS ING OFFICER. GROUND NO.7 FOR A.Y.2004-05: LD. CIT(A) ERRED BY EXCLUDING PROFIT ON SALE OF DE PB LICENCE FOR COMPUTING DEDUCTION U/S. 80HHC OF THE ACT. ITA NO.1471/MDS/09 3 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY, ENGA GED IN THE BUSINESS OF MANUFACTURING AND EXPORTING OF INDUSTRI AL VALVES MADE OF STEEL CASTING, FILED ITS RETURN OF INCOME FOR THE A SSESSMENT YEAR 2004-05 ON 29.10.2004 AND FOR THE ASSESSMENT YEAR 2 005-06 ON 17.10.2005 ADMITTING AN INCOME OF ` .60,46,100/- AND RS NIL RESPECTIVELY. SUBSEQUENTLY THE CASE WAS TAKEN FOR SCRUTINY AND ASSESSMENT WAS FINALIZED ON 28.12.2006 AND 19.11.20 08 RESPECTIVELY WHEREIN ADDITIONS MADE ON THE INCREASE INCOME ON TH E BASIS OF DETERMINING OF ARMS LENGTH PRICE (ALP) FOR ` .72,95,381/- FOR THE ASSESSMENT YEAR 2004-05 AND RS.3,94,00,000/- FOR TH E ASSESSMENT YEAR 2005-06 AND THE INCREASE IN PROFIT AS PER THE THIRD PROVISO TO SECTION 80HHC(3) FOR COMPUTING DEDUCTION U/S. 80HH C WAS DENIED FOR THE ASSESSMENT YEAR 2004-05. 4. GROUND NO.2:- FOR A.Y. 2004-05 COMPUTATION OF I NCOME FROM INTERNATIONAL TRANSACTION BY DETERMINING THE ARMS LENGTH PRICE. THE LD. ASSESSING OFFICER MADE REFERENCE TO THE L D. TRANSFER PRICING OFFICER (TPO) U/S. 92CA OF THE ACT IN ORDER TO DETERMINE THE ITA NO.1471/MDS/09 4 ARMS LENGTH PRICE (ALP) SINCE THE ASSESSEE HAD EAR NED INCOME FROM INTERNATIONAL TRANSACTION DURING THE RELEVANT PREVIOUS YEARS. THE LD. TPO VIDE HIS ORDER U/S 92CA(3) OF THE ACT DATED 20.12.2006 DETERMINED THE ALP AT ` .1,78,39,0381/- AND THEREBY ADJUSTED THE TOTAL INCOME UPWARDLY BY A SUM OF ` .72,95,381/-. THE REFERENCE TO TPO WAS NOT OBJECTED BY THE ASSESSEES COMPANY SINC E THE ASSESSEE COMPANY HAD MADE EXPORT SALE TO ITS ASSOCI ATE ENTERPRISES ABROAD. IN THE TRANSFER PRICING DOCUMENT, THE ASSE SSEE COMPANY HAD ADOPTED COST PLUS METHOD CONSIDERING IT TO BE THE M OST APPROPRIATE METHOD. HOWEVER, THE ASSESSEE COMPANY COULD NOT ES TABLISH ITS STAND FOR ADOPTING COST PLUS METHOD BEFORE THE REVE NUE. THE LD.TPO WAS OF THE VIEW THAT TRANSACTION NET MARGIN METHOD (TNMM) WAS THE MOST APPROPRIATE IN THE CASE OF THE ASSESSE E AND FOR NECESSARY COMPARISON, PROFIT & LOSS ACCOUNT OF M/S. AUDCO INDIA LTD., WAS ADOPTED. THE ASSESSEE OBJECTED TO THE SAME CIT ING THE FOLLOWING REASONS IN ITS REPLY DATED 15.12.2006:- 1. THERE IS NO OTHER COMPANY IN INDIA PRODUCING THE SAME PRODUCT AS THAT OF THE ASSESSEE COMPANYS PRODUCT. ITA NO.1471/MDS/09 5 2. THE PRODUCTS ARE USED IN PETROLEUM INDUSTRY AND HAVE A LIMITED MARKET. ONCE THE ORDER IS PLACED AND ACCEPTED, GREAT RISK I S ATTACHED TO THE MANUFACTURER IF IT FAILS TO MEET THE STRICT QUALITY . FURTHER THE PRODUCT MANUFACTURED CANNOT BE SOLD IT TO ANOTHER CUSTOMER. THEREFORE, THE MARGIN IS VERY THIN AND COMPARISON CANNOT BE MADE W ITH ANY OTHER PRODUCT MANUFACTURED FOR DIFFERENT APPLICATIONS BY OTHERS ENTITIES. 3. THE ASSESSEE COMPANY DOES NOT HAVE LONG EXPERIEN CE AS COMPARED TO OTHER ESTABLISHED MANUFACTURER COMPARED BY THE LD.T PO. 4. M/S.AUDCO INDIA LTD IS NOT COMPARABLE SINCE THE ASSESSEE COMPANY HAVE FOUNDRY PRODUCING 150 METRIC TONNES OF CASTING S PER MONTH USING INDUCTION FURNACE. M/S.AUDCO INDIA LTD ON THE OTHE R HAND DOES NOT HAVE FOUNDRY AND ANY OTHER POWER INTENSIVE PROCESS OF MA NUFACTURE. THEY ONLY ASSEMBLING THE CASTINGS/PARTS OUTSOURCED AND T HEN SELL THE SAME. DUE TO THIS REASON THE COST OF POWER AND LABOUR INC URRED BY M/SAUDCO IS VERY LOW WHEN COMPARED TO THE ASSESSEE COMPANY. THE LD.TPO REJECTED THE ABOVE SUBMISSIONS OF THE A SSESSEE BASED ON THE INFORMATION OBTAINED BY SURFING THE INTERNET WHEREIN THE FOLLOWING FACTS EMERGED:- (I) THE BASIC PROFILE AND PRODUCT DESCRIPTION OF BO TH THE ASSESSEE COMPANY AND M/S.AUDCO INDIA LTD., SHOWED THAT THEY WERE MANUFACTURERS OF STEEL CASTINGS, VARIOUS KINDS OF V ALVES, CARBON STEEL, STAINLESS STEEL, ALLOYS STEEL ETC. ITA NO.1471/MDS/09 6 (II) BOTHE THE COMPANIES WERE IN THE SAME BUSINESS PERFORMING SIMILAR FUNCTIONS. (III) BOTH THE COMPANIES UTILIZED SAME TYPE OF ASSE TS AND UNDERTOOK THE SIMILAR RISKS. (IV) THE PRODUCTS MANUFACTURED BY BOTH THE COMPANIE S ARE USED IN THE PETROLEUM INDUSTRY FOR SIMILAR PURPOSE. (V) THE ASSESSEE COMPANY WAS OPERATIONAL FROM YEAR 1992 WHEREAS M/S.AUDCO INDIA LTD. WAS OPERATIONAL FROM Y EAR 1962. THOUGH M/S.AUDCO INDIA LTD. HAD MORE EXPER IENCED THAN THE ASSESSEE COMPANY, YET THE ASSESSEE COMPANY WAS ALSO AN EXPERIENCED ENTITY. (VI) BOTH THE COMPANIES HAD MODERN HEAT TREATMENT FACILITIES, THOUGH M/S.AUDCO INDIA LTD DID NOT HAVE FOUNDRY. 5. FOR THE AFORESAID REASONS, THE LD. TPO COMPARED THE FINANCIAL STATEMENTS OF BOTH THE COMPANIES, WHICH WERE ALMOST IDENTICAL AND ARRIVED AT THE OPERATIONAL PROFIT TO COST RATIO OF M/S.AUDCO INDIA LTD AT 12.16% AND THE ASSESSEE COMPANY AT 7.04%. THE DIFFERENCE BETWEEN THESE RATIOS OF 5.12%, WAS CONSIDERED FOR D ETERMINING THE ITA NO.1471/MDS/09 7 ALP ADJUSTMENT AND ACCORDINGLY, UPWARD REVISION OF INCOME WAS MADE FOR `. 72,95,381/-. 6. ON APPEAL, LD. CIT(A) AFTER EXAMINING THE ISSUE ARRIVED AT THE CONCLUSION THAT WITHOUT ASSIGNING ANY REASONS THE L D. TPO HAD REJECTED THE COST PLUS METHOD ADOPTED BY THE ASSES SEE AND FOLLOWED TNMM METHOD AND COMPARED THE NET PROFIT OF THE ASS ESSEE COMPANY WITH M/S.AUDCO INDIA LTD., FOR DETERMINING THE ALP. FURTHER FOR THE FOLLOWING REASONS, LD. CIT(A) OPINED THAT THE LD.TPO HAD WRONGLY ADOPTED THE TNMM METHOD WHEREAS THE CORRECT METHOD WAS COST PLUS METHOD AS ADOPTED BY THE ASSESSEE:- (I) FROM THE DOCUMENTS OF THE COMPARABLE COMPANY, IT WAS NOTICED THAT THE COMPANY WAS A FULL-FLEDGED MANUFAC TURING ENTITY WHEREAS THE APPELLANT COMPANY WAS A MANUFACT URING ENTITY WORKING ON CONTRACT BASIS. (II) THE APPELLANT COMPANY BEING A CONTRACT MAN UFACTURER HAS A LIMITED AND TYPICAL KNOW-HOW PERTAINING ONLY TO THE MANUFACTURING PROCESS OF THE PRODUCT MANUFACTURE. ITA NO.1471/MDS/09 8 (III) THE APPELLANT COMPANY BEING A CONTRACT MANUFA CTURER PERFORMS LESSER FUNCTIONS AND ASSUMES LESSER RISKS THAN A FULL-FLEDGED MANUFACTURING COMPANY AND THEREFORE, W OULD EARN A LOWER RATE OF RETURN. (IV) THE APPELLANT COMPANY BEING A CONTRACT MANUFAC TURER WOULD HAVE AN ASSURED INCOME AND THEREBY EARNED A LOWER R ATE OF RETURN. (V) IN THE CASE OF THE ASSESSEE, THE ASSOCIATE ENTERPRISES WERE PROVIDING DESIGNS AND ALSO SCRAP STEEL. (VI) THE MANUFACTURING PROCESS OF THE APPELLANT COM PANY IS DIFFERENT AS THAT OF THE COMPARABLE COMPANY. (VII) IN THE CASE OF THE APPELLANT COMPANY MOSTLY S TEEL IS USED FOR THE MANUFACTURING PROCESS WHILE AS IN THE COMPARABL E COMPANY OTHER RAW MATERIALS ARE ALSO USED. (VIII) THE COMPARABLE COMPANY IS A WELL ESTABLISHED COMPANY AND A VERY BIG CONCERN AND IT CANNOT BE COMPARED WI TH THE APPELLANT COMPANY. ITA NO.1471/MDS/09 9 (IX) THE LD. TPO FOR THE A.Y 2005-06 HAD ACCEPTED T HAT M/S.AUDCO INDIA LTD. IS NOT A COMPARABLE COMPANY FO R THE A.Y.2005-06. 7. BEFORE US THE LD. D.R ARGUED STATING THAT THE LD . TPO AND LD. ASSESSING OFFICER HAD CONSIDERED ALL THESE FACTORS BEFORE ARRIVING AT THE CONCLUSION AND FOR REASONS SUBSTANTIATED IN THE IR RESPECTIVE ORDER HAD ADOPTED TNMM METHOD AND THEREFORE PRAYED THAT T HE ORDER OF THE LD. ASSESSING OFFICER MAY BE UPHELD. LD. A.R. ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS A ND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD.TPO HAS JUDICIOUSLY A RRIVED AT A CONCLUSION FOR ADOPTING A TNMM METHOD AND COMPARED THE FINANCIAL RESULTS OF THE ASSESSEE COMPANY AND THE COMPARABLE COMPANY M/S.AUDCO INDIA LTD., THOUGH THERE ARE CERTAIN DISS IMILARITIES AS OBSERVED BY THE LD. CIT(A). ON PERUSING THE FACTS OF THE CASE WE FIND THAT THE PRODUCTS MANUFACTURED BY BOTH THE COM PANIES ARE ITA NO.1471/MDS/09 10 SIMILAR THOUGH NOT IDENTICAL. THERE IS NOTHING ON R ECORD TO SUGGEST THAT THE NATURE OF BUSINESS OF BOTH THE COMPANIES I S DIFFERENT. FURTHER IT IS PERTINENT TO NOTE THAT THAT THERE WERE NO OTH ER COMPANIES WHICH WERE COMPARABLE OTHER THAN THE ONE POINTED OUT BY T HE LD.TPO. MOREOVER THOUGH VARIOUS ARGUMENTS WERE MADE BY THE ASSESSEE IT APPEARS THAT THEY HAD NOT BROUGHT OUT ADEQUATE MATE RIALS ON RECORD FOR ADOPTING COST PLUS METHOD. THE LD. CIT(A) HAS ALSO NOT VERIFIED THE COMPUTATION ADOPTED BY THE ASSESSEE BY COST PLU S METHOD AND WITHOUT ANY FINDING ON THE SAME SIMPLY DELETED THE ADDITION MADE ON THE BASIS OF TNMM METHOD. ON THE OTHER HAND, THE L D.TPO HAD COMPARED THE FINANCIAL RESULTS OF THE ASSESSEE COMP ANY AND THE COMPARABLE COMPANY WHICH IS REPRODUCED HERE BELOW F OR REFERENCE:- MAR.04 EXPRESSION AUDCO INDIA LTD. % OF SALES F LOW LINK SYSTEMS PVT LTD . P&L A/C SUMMARY /MFG COS. INCOME RS.CRORE EXPORT SALES RS.CRORE 26.28 SALES 370.93 0.86 OTHER INCOME 2.59 2.34 TOTAL INCOME 373.52 TOTAL INCOME 29.48 EXPENDITURE EXPENDITURE(AS PER P&L) RAW MATERIALS, 234.47 63.21 RAW MATERIAL & 14.49 53.39 ITA NO.1471/MDS/09 11 STORES, ETC. CONSUMABLES WAGES & SALARIES 29.36 7.92 DIR. WAGES & LABOUR CHARGES 1.69 6.23 ENERGY (POWER & FUEL) 4.94 1.33 POWER & FUEL 2.16 7.96 CHANGE IN STOCKS 2.43 STOCK -1.03 REPAIRS & MAINT.(MACH) 0.41 OTHER MFG. EXP. 1.14 MACHINING CHARGES 2.96 MANUFACTURING EXPENSES 271.12 73.11 MFG. EXPENSES 21.81 80.36 INDIRECT TAXES(EXCISE ETC.) 21.9 ADMN. EXP 3.88 ADVERTISING & MARKETING EXPENSES 6.77 BANK CHARGES 0.11 DISTRIBUTION EXPENSES 4.94 INTEREST UNDER HIRE PURCHASE SCHEME 0.01 OTHERS 21.98 DEPRECIATION 6.22 DEPRECIATION 1.73 TOTAL COST 333.01 TOTAL COST 27.54 OPERATING PROFIT 40.51 OPERATING PROFIT 1.94 OP/COST 12.16 OP/COST 7.04 9. HOWEVER, ON PERUSING THE COMPUTATION MADE BY T HE LD. ASSESSING OFFICER, WE FIND THAT THE LD. ASSESSING O FFICER HAS EXCLUDED THE RESEARCH AND DEVELOPMENT EXPENDITURE O F ` .6.05 CRORES WHILE ARRIVING AT THE OPERATIONAL PROFIT OF M/S.AUD CO INDIA LTD. SINCE BOTH THE COMPANIES ARE MANUFACTURING IDENTICAL TYPE OF PRODUCTS, IT ITA NO.1471/MDS/09 12 CANNOT BE PRESUMED THAT THE ASSESSEE COMPANY HAS NO T INCURRED ANY EXPENDITURE ON RESEARCH AND DEVELOPMENT. IF THI S AMOUNT IS ALSO CONSIDERED, THE OPERATION PROFIT TO RATIO COST TO M /S.AUDCO INDIA LTD. WOULD WORK OUT AS FOLLOWS:- (A) TOTAL COST 333.01 (+) 6.05 R&D EXPENDITURE = 339.06 (B) OPERATING PROFIT 40.51 ( - ) R&D EXPENDITURE 6.05 = 34.46 (C) O/P / COST = {34.46 ( ) 100} 339.06 = 10.1 6 THUS O/P TO COST RATIO OF M/S.AUDCO INDIA LTD WOULD FALL FROM 12.16 TO 10.16. FURTHER, GIVING LEVERAGE OF 5% DUE TO THE S ECOND PROVISO OF SEC.92C(2) OF THE ACT, THE DIFFERENCE IN PROFIT MAR GIN BETWEEN BOTH THE COMPANIES WILL BE NIL [10.16 (-) 7.04 (-) 5 = (-)1.88 INSTEAD OF 5.12% DETERMINED BY THE LD.TPO AND THE LD. ASSESSIN G OFFICER . IN VIEW OF OUR ABOVE OBSERVATION, WE HEREBY HOLD THAT THE COMPUTATION OF THE ALP IN THE CASE OF THE ASSESSEE SHALL BE REWORKED, BY TREATING THE DIFFERENCE IN PROFIT MARG IN AS NIL AND ACCORDINGLY, ANY UPWARD REVISION CANNOT BE SUSTAINE D FOR ITA NO.1471/MDS/09 13 MAKING ADDITION TOWARDS INCREASE IN INCOME BASED ON DETERMINATION OF ALP. 10. GROUND NO.2 FOR A.Y. 2005-06:- FOR THE SIMILAR REASONS CITED FOR THE EARLIER ASS ESSMENT YEAR, THE LD. TPO COMPUTED THE ALP OF THE ASSESSEE FOLLO WING THE TNMM METHOD, HOWEVER ADOPTED TWO OTHER COMPANIES M/S.ORS ON HOLDINGS CO. LTD AND M/S.SAKTHI AUTO ANCILLARY P LTD, AS COMPARABLE COMPANIES AND THEREBY ARRIVED AT THE ARITHMETIC MEA N OF GROSS PROFIT TO COST OF BOTH THE COMPANIES AT 29.71% & THAT OF THE ASSESSEE COMPANY AT 15.20% AND ON THE BASIS OF THE DIFFERENC E BETWEEN THE TWO BEING 14.51% UPWARD REVISION TO THE TUNE OF `. 3.94 LAKHS WAS MADE TO THE INCOME OF THE ASSESSEE. THE LD. CIT( A) FOR THE IDENTICAL REASONS CITED FOR THE EARLIER ASSESSMENT YEAR DELETED THE ADDITION. 11. BOTH THE LD. D.R. AND LD. A.R RELIED ON THE OR DERS OF THE LD.TPO/AO AND THE LD. CIT(A) RESPECTIVELY AND ARGU ED IN SUPPORT OF THE SAME. ITA NO.1471/MDS/09 14 12. AFTER HEARING THE BOTH SIDES AND PERUSING THE ORDER OF THE LD.TPO, WE DID NOT FIND AS TO WHY THE LD.TPO HAD NO T ADOPTED THE COMPARABLE COMPANY M/S.AUDCO INDIA LTD., FOR THE SU BSEQUENT ASSESSMENT YEAR. INSTEAD LD. TPO HAS ADOPTED TWO D IFFERENT COMPANIES M/S.ORSON HOLDINGS CO. LTD AND M/S.SAKTHI AUTO ANCILLARY P LTD, AS COMPARABLE COMPANIES. FURTHER, WE FIND T HAT THE LD. TPO WITHOUT EXAMINING THE INTRICACIES OF THE ASSESSEE C OMPANY AND COMPARABLE COMPANIES CRYPTICALLY ARRIVED AT THE FOL LOWING CONCLUSION:- 5.4.1. WITH REFERENCE TO THE OTHER TWO COMPANIES M /S.ORSON HOLDINGS CO. LTD AND M/S.SAKTHI AUTO ANCILLARY P LTD, A DETAILED SEA RCH WAS MADE IN THE WEBSITE OF BOTH THESE COMPANIES. HTTP:/WWW.ORSONHOLDINGS.COM/ HTTP:/WWW.SAAP.NET/ AND IT IS EVIDENT FROM THE DETAILS GIVEN IN THE ABO VE REFERRED WEBSITES THAT BOTH THE COMPANIES ARE INTO MANUFACTURE OF INDUSTRIAL VA LVES AS PER THE CUSTOMERS SPECIFICATION AND HENCE THEY ARE CONSIDERED AS COMP ARABLE COMPANIES. THE ASSESSEE COMPANY OUGHT TO HAVE MAINTAINED A RECORD OF COMPARABLE UNCONTROLLED TRANSACTIONS AND SHOULD HAVE DETERMINE D THE ALP FOR ITS INTERNATIONAL TRANSACTIONS. AS THE ASSESSEE COMPANY HAS FAILED TO DO THE ITA NO.1471/MDS/09 15 EXERCISE, THE TPO IS REQUIRED TO UNDERTAKE THE COMP ARATIVE ANALYSIS AND HAD FINALLY DETERMINED THE TWO COMPANIES M/S.ORSON HOLDINGS CO. LTD AND M/S.SAKTHI AUTO ANCILLARY P LTD , AS COMPARABLE COMPANIES. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE N EEDS TO BE RE-EXAMINED BY THE LD.TPO AND LD. ASSESSING OFFI CER AFRESH. ACCORDINGLY WE HEREBY REMIT BACK THE MATTE R TO THE FILE OF LD. ASSESSING OFFICER FOR DE-NOVO CONSIDERA TION. 13. GROUND NO.7: LD. CIT(A) ERRED BY EXCLUDIN G PROFIT ON SALE OF DEPB LICENSE FOR COMPUTING DEDUCTION U/S. 80HHC OF THE ACT. ON THIS ISSUE BOTH THE PARTIES AGREED THAT THE DE CISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF M/S.TOP MAN EXPORT VS. CIT REPORTED IN 342 ITR 49 WOULD BE APPLICABLE. AC CORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FILE OF LD. ASSESSING OFFICER TO BE DECIDED AFRESH IN THE LIGHT OF THE DECISION RENDERE D BY THE HONBLE APEX COURT IN THE CASE OF M/S.TOPMAN EXPORT (SUPRA) . ITA NO.1471/MDS/09 16 14. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED FOR THE ASSESSMENT YEAR 2004-05, AND ALLOWED FOR STATISTICA L PURPOSES FOR THE ASSESSMENT YEAR 2005-06. ORDER PRONOUNCED ON 9 TH JANUARY, 2014 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD ) (A.MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 9 TH JANUARY, 2014. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE