Sealed Air (India) Private Limited, Bangalore V. ACIT, Bangalore

ITA 1472/BANG/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9314 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHYTANYA K K
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; International transaction

Judgement Text

ITA.1472/BANG/2010 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'A', BENGALURU BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T(TP).A NO.1472/BANG/2010 (ASSESSMENT YEAR : 2006-07) M/S. SEALED AIR (INDIA) P. LTD, NO.245, 8 TH MAIN, 3 RD PHASE, PEENYA INDUSTRIAL AREA, PEENYA, BENGALURU 560 058 .. APPELLANT PAN : AABCC1597Q V. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE -12(3), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. CHYTANYA K.K., ADVOCATE REVENUE BY : SMT. PRISCILLA SINGSIT, CIT, DR - I HEARD ON : 25.07.2016 PRONOUNCED ON : 21.10.2016 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE ACIT , CIRCLE 12(3) , BENGALURU , DT.22.09.2010 FOR THE ASSESSMENT YEAR 2006-07 SUBSEQUENT TO THE DRP DIRECTION . 02. THE ASSESSEE COMPANY IS A DEALER IN PACKAGING M ATERIALS, BAGS, FILMS, TRAYS, CONTAINERS, CARTONS, CANS, SYSTEMS AN D EQUIPMENT OF ALL KINDS FOR PACKING OF FOODSTUFF, PHARMACEUTICAL, COS METICS, ELECTRONIC ITA.1472/BANG/2010 PAGE - 2 AND OTHER ITEMS. DURING THE PREVIOUS YEAR 2005-06 RELEVANT TO THE ASSESSMENT YEAR 2006-07, IT HAD INTERNATIONAL TRAN SACTIONS WITH ASSOCIATED ENTERPRISES TO CARRY OUT BUSINESS LIKE I . T. ENABLES SERVICES. THE TRANSFER PRICING AUTHORITY I.E., THE DY. DIRECTOR OF INCOME TAX (TRANSFER PRICING) V, BENGALURU, SUGGES TED IN HIS ORDER DT.30.10.2009, A DIFFERENCE IN ARMS LENGTH PRICE A T RS.1,48,77,053/- U/S.92CA. THEREAFTER, THE A O PASSED A DRAFT ASSESS MENT ORDER DT 14.12.2009 MAKING THE ARMS LENGTH PRICE ADJUSTMENT OF RS.1,48,77,053/- AND ,INTER ALIA, MADE THE FOLLOWIN G CORPORATE TAX DISALLOWANCES : (I) DISALLOWANCE OF RS. 16,61,150/-, BEING AMOUNT PAYABLE UNDER COST SHARING AGREEMENT (II) DISALLOWANCE OF AMORTISED COMPENSATION COST AT RS.6,86,025/-. AGGRIEVED AGAINST THAT DRAFT ORDER, THE ASSESSEE FI LED AN APPEAL BEFORE THE DRP ON 20.01.2010 CHALLENGING ELABORATEL Y ON THE ADDITIONS PROPOSED UNDER TRANSFER PRICING ADJUSTMEN TS ALONE. THE DRP ISSUED ITS DIRECTIONS DT 22.09.2010 WHEREIN IT UPHELD THE ADJUSTMENTS PROPOSED BY THE AO , IN PART, AT RS.1,1 9,60,773/- AS AGAINST RS.1,48,77,053/-. CONSEQUENTLY, THE AO PASS ED THE FINAL ORDER DT. 18.10.2010. AGGRIEVED, THE ASSESSEE FIL ED THIS APPEAL. THE EFFECTIVE GROUNDS OF THE APPEAL ARE EXTRACTED AS UN DER : ITA.1472/BANG/2010 PAGE - 3 ITA.1472/BANG/2010 PAGE - 4 03. THE ADDITIONAL GROUNDS OF APPEAL FILED BY THE A SSESSEE ARE EXTRACTED AS UNDER : ITA.1472/BANG/2010 PAGE - 5 04. THE AR TOOK US TO THE OPERATIVE PORTION OF THE DRP ORDER WHICH IS EXTRACTED AS UNDER : WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE. SINCE THE MAIN GRIEVANCE OF THE ASSESSEE WAS THAT IT HAD NOT BEEN PROVIDED WITH PROPER OPPORTUNITY OF BEING HEARD BY THE TPO, THE MATTER WAS REFERRED TO THE TPO FOR HIS COMMENTS. THE TPO HAS E XAMINED THE SUBMISSIONS MADE BY THE ASSESSEE AND SUBMITTED HIS COMMENTS VIDE LETTER NO. TP-3751TPV/10-11 DT. 13-09-2010. THE REL EVANT PORTION FROM THE REPORT OF THE TPO IS BEING REPRODUCED BELOW. 2. PURSUANT TO YOUR DIRECTIONS, THE TAXPAYER HAS FI LED A COPY OF ITS SUBMISSION DATED 20-012010 AND A LETTER DATED 06-09 -2010. IN THE LETTER DATED 06-09-2010, THE TAXPAYER HAS FURNISHED A LIST OF THOSE COMPARABLES OF THE TPO WHICH IT HAS FOUND FUNCTIONALLY COMPARAB LE TO ITS OWN FUNCTIONS. 3. THE IMPORTANT POINTS RELATING TO THE CASE ARE AS UNDER: (I) THE TAXPAYER IS A MANUFACTURER OF PLASTIC PACKA GING GOODS AND TRADER OF PACKAGING GOODS AND MACHINERY. THUS, IT H AD TWO BUSINESS SEGMENTS OF MANUFACTURING AND TRADING. (II) DURING THE YEAR, THE TAXPAYER HAD TRANSAC TIONS RELATING TO BOTH THE SEGMENTS : ITA.1472/BANG/2010 PAGE - 6 (III) LN ITS TP STUDY, THE TAXPAYER DID NOT CONSIDE R THE TWO SEGMENTS SEPARATELY FOR TP ANALYSIS. THE TAXPAYER COMBINED THE TWO SEGMENTS FOR TP ANALY SIS SAYING THAT THE TRANSACTIONS OF THESE TWO SEGMENTS WERE CL OSELY LINKED . HOWEVER, THE TPO WAS OF THE VIEW THAT MANUFACTURING TRADING ARE DIFFERENT ACTIVITIES AND CONSIDERING THEIR DIFFEREN T FAR ANALYSIS, THEY SHOULD BE ANALYSED SEPARATELY. FOR MANUFACTURING TH E TAXPAYER USES PLANT & MACHINERY WHICH IS NOT USED FOR TRADING ACT IVITY THUS, THE ASSETS USED ARE DIFFERENT FOR MANUFACTURING ACTIVIT Y RISKS ARE ALSO DIFFERENT. IF A DEFECTIVE PIECE OF ITEM MANUFACTURE D BY THE TAXPAYER IS BROUGHT BACK BY THE CUSTOMER, THE TAXPAYER ITSELF I S RESPONSIBLE FOR REPLACING IT. FURTHER CONSIDERING THE RISK ANGLE, I N CASE OF RETURN OF ANY DEFECTIVE ITEM SOLD OUT OF SOCK OF TRADED GOODS , THE TAXPAYER MAY GET A REPLACEMENT FROM THE AE FROM WHOM THE PURCHAS ES OF SUCH ITA.1472/BANG/2010 PAGE - 7 GOODS ARE MADE BY THE TAXPAYER. THUS, THERE IS GREA TER RISK OF QUALITY IN RESPECT OF MANUFACTURING ACTIVITY . THUS, THE FA R ANALYSIS OF THE TWO ACTIVITIES OF TRADING AND MANUFACTURING ARE QUI TE DIFFERENT. IT MAY ALSO BE POINTED OUT THAT EVEN WHERE TWO TRANSACTION S ARE CLOSELY LINKED THERE IS NO BAR ON ANALYZING THEM SEPARATELY IN FACT, THE REAL AIM BEHIND THE TAXPAYER'S ARGUMENT FOR CLUBBIN G THE TWO SEGMENTS IS TO COVER UP THE LOSS IN THE MANUFACTURI NG SEGMENT WITH THE HELP OF HIGHER PROFIT MARGIN OF THE TRADING SEG MENT THE TAXPAYER DID NOT MAINTAIN SEPARATE ACCOUNTS FOR THE SE TWO DIFFERENT BUSINESS ACTIVITIES INTENTIONALLY AND THE N SAYS THAT SEGMENTAL DETAILS ARE NOT AVAILABLE THE TAXPAYER HAS CONTENDED IN THE SUBMISSION BEFORE YOUR GOOD SELF THAT THE TECHNICAL ASSISTANCE FEE AND RECEIPTS OF COMMISSION HAVE BEEN CLUBBED BY THE TPO FOR ANALYSIS AS THE SA ME ARE CLOSELY RELATED TRANSACTIONS. IT MAY BE POINTED OUT THAT TE CH FEE PAID IS AN EXPENDITURE DEBITABTE TO THE P&L ACCOUNT BUT IT HAS BEEN CONSIDERED SEPARATELY ALSO AS IS EVIDENT FROM THE NOTICE ISSUE D BY THE TPO WHICH STANDS REPRODUCED IN THE ORDER. COMMISSION HAS NOT BEEN ANALYSED SEPARATELY AS THE AMOUNT IS LESS THAN ONE CRORE AND THE TPO HAS USED FILTER OF EXCLUDING COMPANIES HAVING TURNOVER < ONE CRORE, IT WAS NOT POSSIBLE TO FIND COMPARABLES COMPANIES HAVI NG TURNOVER < ONE CRORE ARE NOT CONSIDERED BECAUSE EITHER THESE A RE START-UP COMPANIES OR THEY ARE VERY SMALL COMPANIES WHOSE FI NANCIALS ARE VERY ITA.1472/BANG/2010 PAGE - 8 VOLATILE. MOSTLY IN SUCH COMPANIES, THE PROMOTERS O F THE COMPANY HAPPEN TO BE EMPLOYEES AND RPTS ARE VERY HIGH EVEN MINOR CHANGES IN FINANCIALS RESULT INTO SIGNIFICANT CHANGES IN PR OFIT MARGIN. HENCE, DATA OF SUCH COMPANIES IF AVAILABLE IN PUBLIC DOMAI N, ARE NOT VERY RELIABLE (IV) THE TAXPAYER CLUBBED THE TWO SEGMENTS AND THEN PICKED UP COMMON CORNPARABLES FOR ANALYSIS . THE COMPARABLES SEARCHED BY THE TAXPAYER WERE, THEREFORE, NOT ACCEPTED AS THE S EARCH ITSELF WAS AB INITIO BASED ON CLUBBING OF TWO DIFFERENT BUSINESS ACTIVIT IES. IN FACT, THE TAXPAYER CONSIDERED THE SAME COMPARABLES AS IT HAD CONSIDERED FOR THE IMMEDIATELY PRECEDING YEAR (AY 0 5-06) .THUS, IT DID NOT MAKE ANY NEW SEARCH AND THERE WAS NO FRESH TP S TUDY FOR THIS YEAR . THE TAXPAYER DID NOT FURNISH THE COMPUTATION S OF PL1S AND THE SEARCH PROCESS (ACCEPT/REJECT MATRIX ETC.) FOR THIS YEAR AS POINTED OUT IN THE NOTICE, THUS, THE TAXPAYER DID N OT DISCHARGE ITS ONUS FULLY. UNDER THE BACKDROP OF THESE FACTS, THE TAXPA YER WAS REQUIRED TO FURNISH THE SEGMENTAL DETAILS. THE TAXPAYER FURNISH ED THESE DETAILS AS UNDER: ITA.1472/BANG/2010 PAGE - 9 THUS, THE TAXPAYER SHOWED LOSS IN THE MANUFACTURING SEGMENT. IN THESE SEGMENTAL DETAILS, ALLOCATION OF COSTS, OTHER THAN THE COSTS OF MATERIALS, WAS NOT BASED ON THE 'ACTUAL' BUT IN PROPORTION TO THE TURNOVER. FURTHER, THE TPO FOUND THAT EVEN THE ALLOCATION ON THE BASIS OF TURNOVER WAS NOT CORRECT AS THE DEPRECIATION OF PLANT & MACHINERY HA D ALSO BEEN ALLOCATED ON THIS BASIS THOUGH THE DEPRECIATION ON PLANT & MA CHINERY SHOULD HAVE BEEN ALLOCATED ENTIRELY TO THE MANUFACTURING SEGMEN T. HENCE, THE TPO REALLOCATED THE COSTS AS SHOWN IN THE ORDER. TRANSACTIONS OF THE TRADING SEGMENT WERE HELD TO BE AT ARM'S LENGTH WHILE AN ADJUSTMENT WAS MADE IN RESPECT OF TRANSACT IONS PERTAINING TO MFG. SEGMENT, THAT IS, THE TRANSACTIONS OF PURCH ASE OF MATERIAL FOR MANUFACTURING AND PAYMENT OF TECHNICAL FEE. ITA.1472/BANG/2010 PAGE - 10 4. NOW BEFORE THE HON'BLE DRP, THE TAXPAYER HAS FIL ED SOME MATERIAL OBJECTING TO THE COMPARABLES OF THE TPO. T HE SAME HAS BEEN EXAMINED AS DIRECTED. TAXPAYER'S OBJECTIONS RE GARDING COMPUTATIONS OF PLIS OF THE COMPARABLES HAVE ALSO B EEN EXAMINED IN THE LIGHT OF EXTRACTS OF ARS AND DATABASES FILED BY IT. THE TAXPAYER HAS LAID SPECIAL EMPHASIS ON THE ASPECT OF THE FUNCTION ALITY OF THE TPOS COMPARABLES. IT MAY BE SUBMITTED THAT THE TPO HAD A DOPTED A BROAD SEARCH CRITERION OF FUNCTIONALITY BY CONSIDERING AL L THOSE COMPANIES AS COMPARABLE WHICH WERE INTO MANUFACTURING OF PLASTIC PACKAGING MATERIAL . ONLY THOSE COMPANIES WHICH WERE PREDOMIN ANTLY INTO MANUFACTURING OF THESE MATERIALS (MANUFACTURING TUR NOVER>75%) WERE CONSIDERED. THE TAXPAYER HAS PICKED UP ONLY TH OSE COMPANIES OUT OF TPO'S COMPARABLE COMPANIES AS COMP ARABLE WHICH ARE NEAREST TO ITS ACTIVITY IN TERMS OF MANUF ACTURED ITEMS THESE COMPANIES ARE AS UNDER AS PER TAXPAYERS SUBMI SSION DATED 06- 09-2010 FILED BEFORE THE TPO: ITA.1472/BANG/2010 PAGE - 11 THE TAXPAYER'S PLIS OF COMPARABLES AS COMPUTED BY I T HAVE ALSO BEEN EXAMINED AFRESH ON THE BASIS OF INFORMATION AVAILAB LE IN PUBLIC DOMAIN AND THAT FILED BY THE TAXPAYER. AS A RESULT, THE CO MPANY NAMED ORIENT PRESS LTD. CANNOT BE ACCEPTED AS A COMPARABLE AS IT IS A SICK COMPANY AND ITS BUSINESS CONDITIONS SET IT APART FROM A NOR MALLY FUNCTIONING COMPANY . IN PARA 6.10.6 OF ITS SUBMISSION BEFORE T HE HON'BLE DRP, THE TAXPAYER HAS ALSO PLEADED FOR APPLICATION OF A TURNOVER FILTER WHICH IT DID NOT APPLY TO ITS OWN COMPARABLES IN TH E STUDY FILED FOR THIS YEAR. IT IS SEEN THAT IF A FILTER OF +1-100% OF THE TAXPAYERS TURNOVER IS APPLIED , THAT IS, ONLY THE COMPANIES H AVING TURNOVER BETWEEN THE DOUBLE THE TURNOVER OF THE TAXPAYER AND RS. ONE CRORE ARE SELECTED, ONLY THREE COMPANIES REMAIN AS COMPARABLE THE TAXPAYER'S TURNOVER OF RS, 8.78 CRORES AND SO T HE COMPANIES HAVING TURNOVERS BETWEEN ONE CRORE AND 18 CRORES CO ME UNDER THE ITA.1472/BANG/2010 PAGE - 12 TURNOVER RANGE. THE PLIS OF THESE COMPANIES ARE AS UNDER AS PER THE DATABASES AVAILABLE CONSIDERING THIS PLI THE COMPUTATION OF THE ADJUSTM ENT IN RESPECT OF MANUFACTURING SEGMENT IS AS UNDER: AFTER GOING THROUGH THE REPORTS SUBMITTED BY THE TP O IT IS CLEAR THAT ALL THE ISSUES RAISED BY THE ASSESSEE HAVE BEEN CON SIDERED IN THIS REPORT. THE TPO HAS GIVEN REASONS FOR CONSIDERING T HE MANUFACTURING SEGMENT AND THE TRADING SEGMENT SEPARATELY. HE HAS ANALYSED THE DIFFERENCE IN FAR FOR THESE TWO SEGMENTS AND CONCLU DED THAT THE FAR ANALYSIS OF THE TWO ACTIVITIES OF TRADING AND MANUF ACTURING WERE QUITE DIFFERENT. THE TPO ALSO POINTED OUT THAT EVEN WHERE TWO ITA.1472/BANG/2010 PAGE - 13 TRANSACTIONS WERE CLOSELY LINKED, THERE WAS NO BAR ON ANALYZING THEM SEPARATELY. WE FIND OURSELVES IN AGREEMENT WIT H THE CONCLUSION OF THE TPO. THE TPO HAS POINTED OUT THAT THE REAL AIM IN CLUBBING THE TWO SEGMENTS WAS TO COVER UP THE LOSS IN THE MANUFACTURING SEGMENT WITH THE HELP OF HIGHER PROFI T MARGIN OF THE TRADING SEGMENT. THE TPO HAS ALSO GIVEN REASONS AS TO WHY THE TECHNICAL ASSISTANCE FEE AND RECEIPTS OF COMMISSION HAD BEEN CLUBBED BY THE TPO FOR ANALYSIS. THE TPO OBSERVED THAT THE COMPARABLES SEARCHED BY THE TAX PAYER COULD NOT BE ACCEPTED AS THE SEARCH ITSELF WAS AB INITIO BASED ON CLUBBING OF TWO DIFFERENT BU SINESS ACTIVITIES, THE TPO FOR THE REASONS GIVEN IN HIS REPORT HAD ALL OCATED THE COSTS BETWEEN THE MANUFACTURING SEGMENT AND THE TRADING S EGMENT FOR DETERMINING THE CORRECT PU. THE TRO HAS DEALT WITH THE OBJECTIONS RAISED REGARDING THE COMPARABLES. THE TPO HAS RECAL CULATED THE ALP ON THE BASIS OF THREE COMPARABLES. THESE COMPARABLE S ARE OUT OF THE SIX COMPARABLES CHOSEN BY THE ASSESSEE ITSELF. THE REMAINING THREE COMPANIES HAVE BEEN REJECTED ON ACCOUNT OF CE RTAIN FILTERS APPLIED. WE FIND THAT THE FILTERS APPLIED BY THE TP O ARE PROPER AND HAVE BEEN CORRECTLY APPLIED UNDER THE FACTS AND CIR CUMSTANCES OF THE CASE. ONE OF THE COMPANY HAS BEEN REJECTED BEING A SICK COMPANY. AFTER GOING THROUGH THE DISCUSSION MADE IN THE REPO RT OF THE TPO WE FIND THAT ALL THE ISSUED RAISED BY THE ASSESSEE IN ITS GROUNDS OF OBJECTION HAVE BEEN DEALT WITH BY THE TPO IN ITS RE PORT IN A PROPER AND SATISFACTORY MANNER. WE FIND OURSELVES IN AGREEMENT WITH THE ITA.1472/BANG/2010 PAGE - 14 COMPUTATION MADE BY THE TPO IN THIS REPORT. 05. THE AR PLEADED THAT THE ASSESSEE IS NOT A FULL FLEDGED MANUFACTURER, AS AGAINST THE VALUE OF MATERIAL CON SUMPTION AT RS.7,24,27,173/- ITS ENTIRE LABOUR CHARGES WERE JUS T AT RS.5,90,767/- ONLY, THE BOOK VALUE OF ITS PLANT AND MACHINERIES A RE JUST AT RS.1.35 CRORES AND HENCE IT IS ESSENTIALLY A TRADER. THE TP O APPLIED ALP ON ENTIRE TURNOVER WITHOUT RESTRICTING TO THE SO CALLE D MANUFACTURING SEGMENT AND HE ARTIFICIALLY SPLITTED THE TRANSACTI ONS ETC. HE SOUGHT OUR ATTENTION TO ITS LETTER DT 19.6.2009 FILED BEFO RE THE TPO DURING THE REMAND PROCEEDINGS WHEREIN, INTER ALIA, IT REQUESTE D AS UNDER : IN CASE YOUR GOOD SELF PROPOSES TO DETERMINE THE ARMS LENGTH PRICE FOR THE INTERNATIONAL TRANSACTIONS OF THE COMPANY WHICH IS DIFFERENT FROM THE PRICE DETERMINE D BY THE COMPANY AS THE ARMS LENGTH PRICE , WE REQUEST YOUR GOOD SELF TO PROVIDE AS WITH AN OPPORTUNITY TO MAKE FURTHER SUBMISSIONS IN SUPPORT OF THE ARMS LENGTH PRICE AD OPTED BY THE COMPANY. 06. THE AR FURTHER SUBMITTED THAT THE TPO REJECTED THE ALP DETERMINED BY IT UNDER TNMM AT ENTERPRISE LEVEL AND DETERMINED SEPARATE ALP UNDER TNMM IN RESPECT OF MANUFACTURING SEGMENT AND TRADING SEGMENT . WHEN THE TPO REJECTED ITS ALP , H E OUGHT TO HAVE GIVEN AN OPPORTUNITY OF BEING PERSONALLY HEARD TO T HE APPELLANT ITA.1472/BANG/2010 PAGE - 15 DESPITE THE ASSESSEE HAVING SPECIFICALLY SOUGHT IN THE ABOVE LETTER. FURTHER, IT WAS SUBMITTED THAT THE ASSESSEE MADE SP ECIFIC OBJECTIONS ON FOLLOWING ASPECTS: (I) THE TECHNICAL FEE PAID IS REIMBURSEMENT OF SAL ARY COST (II) THE TPO COMMITTED ERROR WHILE COMPUTING THE AL P (III) THE TPO FAILED TO MAKE ECONOMIC ADJUSTMENTS T O IMPROVE DEGREE OF COMPARABILITY IE THE TPO ERRED IN NOT MAK ING ADJUSTMENTS FOR THE DIFFERENCES IN FUNCTIONS PERFOR MED, RISKS ASSUMED AND ASSETS EMPLOYED BY THE COMPARABLES AS COMPARED TO THE APPELLANT (IV) THE TPO HAS NOT DISCLOSED THE SEARCH PROCESS C ARRIED OUT TO IDENTIFY COMPARABLE ETC AND THE DRP MERELY RELIE D ON THE REMAND REPORT GIVEN BY THE TPO WITHOUT DISPOSING OF F THE OBJECTIONS RAISED BY THE ASSESSEE AND HENCE PLEADED THAT THE ADDITIONS MAY BE QUASHED. ON THE OTHER HAND, THE DR SUPPORTED THE ORDERS OF THE TPO AND THE DRP. 07. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, GONE THROUGH RELEVANT MATERIALS AND ORDERS. IT IS CLEAR FROM TH E TPOS ORDER U/S 92CA THAT THE ACIT, C-12(3) , BENGALURU , AFTER OBT AINING DUE APPROVAL FROM THE CIT-1, BENGALURU HAS REFERRED THI S CASE TO THE TPO. HENCE, THE ASSESSEES ADDITIONAL GROUNDS OF APPEAL ARE UNTENABLE. FROM THE PASSAGE EXTRACTED FROM THE DRP ORDER, SUPR A, AND FROM THE ITA.1472/BANG/2010 PAGE - 16 ABOVE SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION THAT THE TP ISSUES ARE REQUIRED TO BE EXAMINED BY THE TPO AFRES H AND ACCORDINGLY WE REMIT THE TP ISSUES TO HIM. THE TPO SHALL ADJUD ICATE THE MATTER AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE. 08. IN RESPECT OF THE CORPORATE TAX DISALLOWANCE IS SUES VIZ., (I) DISALLOWANCE OF RS. 16,61,150/-, BEING AMOUNT P AYABLE UNDER COST SHARING AGREEMENT AND (II) DISALLOWANCE OF AMORTISED COMPENSATION COST AT RS.6,86,025/-, IT IS SEEN THAT THE AO PASSED THE D RAFT ASSESSMENT ORDER ON 14.12.2009 . THE ASSESSEE FILED ITS OBJECTIONS BEFORE THE DRP IN FORM NO 35A ON 20.01. 2009. FROM THE GROUND OF OBJECTIONS BEFORE THE DRP, IT IS SEEN THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTION ON T HESE ISSUES AND HENCE THEY WERE NOT DEALT BY THE DRP . THUS, THESE ISSUES ATTAINED FINALITY AT THAT STAGE ITSELF . IN VIEW OF SUCH FACTS, THEY ARE NOT DEALT BY US. ITA.1472/BANG/2010 PAGE - 17 09. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST DAY OF OCTOBER, 2016. SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) (S. JA YARAMAN) JUDICIAL MEMBER ACCOU NTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME TAX 4. THE COMMISSIONER OF INCOME TAX (A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR