DCIT, New Delhi V. M/s. Mitsubishi Corporation India Pvt. Ltd., New Delhi

ITA 1558/DEL/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4644 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 23-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Keywords: Transfer pricing; Double taxation relief; International transaction; Permanent establishment; Non-deduction of tax; TDS; Rule 8D; Set aside
• Section: 14A; 40(a)(ia); 195; 144C; 92

Judgement Text

1 ITA NO. 1558/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-1 : NEW DELHI) BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1558/DEL./2016 (ASSESSMENT YEAR : 2011-12) DCIT VS. M /S. MITSUBISHI CORPORATION CIRCLE-16(2), IN DIA P. LTD. ROOM NO. 308, 2 ND FLOOR, VIJAYA BUILDING, C.R.BUILDING, 17, BARAKHAMBA ROAD, NEW DELHI NEW DELHI (PAN : AAACM4764G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TARANDEEP SINGH, CA REVENUE BY : SHRI SANJAY I. BARA, CIT-DR DATE OF HEARING : 22.10.2019 DATE OF ORDER : 25.11.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER THE APPELLANT, DY. COMMISSIONER OF INCOME TAX (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILIN G THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 27.11.2015 PASSED BY THE ASSESSING OFFICER (AO) IN CONSONANCE WITH THE ORDERS PASSED BY THE LD. DRP/TPO UNDER SECTION 254/ 143 (3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTE R ALIA THAT :- 2 ITA NO. 1558/DEL/2016 1. WHETHER ON THE FACTS AND CIRCUMSTANCE OF THE CASE A ND IN LAW THE DISPUTE RESOLUTION PANEL (DRP) IS JUSTIF IED IN DISAGREEING WITH THE DESCRIPTION OF THE ACTIVITY CA RRIED OUT BY THE ASSESSEE AS THAT OF BEING AKIN TO TRADING WHEN ISSU E WAS ALREADY DECIDED BY ITS COORDINATE BENCH (MITSUBISHI CORPORA TION INDIA PVT. LTD. VS ACIT, RANGE-6, NEW DELHI ON 23 RD AUGUST 2013/ITA NO. 5147/DEL/2010) AND ALSO AFFIRMED BY THE HIGH CO URT AND ALSO WHEN THE FUNCTIONS AS PER ASSESSEES SUBMISSIO N REMAIN THE SAME IN ALL ITS BUSINESS SEGMENTS. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN REJECTING THE FUNCTI ONAL ANALYSIS CARRIED OUT BY THE TPO BASED ON THE TP STUDY AND SU BMISSIONS MADE IN THIS CASE. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN LAW IN REJECTING THE PRIMACY OF FUNCTIONS CARRIED OUT BY THE ASSESSEE AND BASING IT S DECISION ON THE GROUND THAT RISKS WERE MINIMAL IN THE CASE OF T HE ASSESSEE. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN STATING THAT NO INTA NGIBLES WERE CREATED OF THE SUPPLY CHAIN AND HUMAN INTANGIBLES W HEN THESE INTANGIBLES HAVE BEEN SPECIFICALLY ACKNOWLEDGED BY THEIR INCORPORATION IN THE EXPLANATION (II) TO SECTION 92 B OF THE INCOME TAX ACT. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN REJECTING THE TPOS ANALYSIS WITHOUT GOING INTO THE AGREEMENTS THE ASSESSEE HAS ENTERED INTO WITH ITS AE BEING THE FINAL FACT FINDING AUTHORITY. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN REJECTING THE USE OF FOB IN THE COST BASE WHEN IT IS THE RELEVANT COST BASE FOR DETERMIN ING THE ALP OF THE INTERNATIONAL TRANSACTION OF THE ASSESSEE WITH ITS AES. 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN RESTORING THE MATTER TO THE FILE OF THE TPO BY ALREADY DECIDING THAT BERRY RATIO BE APP LIED. 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN LAW IN DIRECTING ACC EPTANCE OF A PLI THAT DOES NOT INCLUDE COST OF GOODS AMONG EXPEN SES, WHEN ALL THE FUNCTIONS PERFORMED, ASSETS UTILIZED AND RI SK UNDERTAKEN WERE IN THAT CONTEXT ONLY. 9. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN APPLYING THE RATIO L AID DOWN BY THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF LI AND FUNG INDIA PVT. LTD. VS. COMMISSIONER OF INCOME TAX ON 1 6 DECEMBER, 2013/ITA 306/2012 TO THE FACTS OF THIS CA SE WHEN THE ASSESSEE IS A SOGO SOSHA COMPANY AND LI & FUNG IS N OT. 10. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE DRP IS JUSTIFIED IN ACCEPTING THE FUNCTI ONAL ANALYSIS OF THE ASSESSEE WHEN THE ASSESSEE HAD NOT SUBMITTED TH E INFORMATION REGARDING ITS AGREEMENTS TO THE TPO. 3 ITA NO. 1558/DEL/2016 11. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO FOR NON DEDUCTION OF TDS AMOUNTING TO RS. 42,78,87,278/- WITHOUT APPRECIATING THE FACTS OF TH E CASE. 12. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN NOT UPHOLDIN G DISALLOWANCE OF RS. 1,01,049/- MADE BY THE ASSESSING OFFICER U/S 14A OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING PROVISIONS OF SECTION 14A OF THE ACT WHICH DO NOT PRESCRIBE THE MAIN OR D OMINANT OBJECT OF EARNING INCOME AS A CONDITION FOR OPERATI ON OF SECTION 14A OF THE ACT? 13. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN IGNORING THE LEGISLATIVE INTENT OF SECTION 14A WHICH ALLOWS ONLY THAT EXPEND ITURE WHICH IS RELATABLE TO EARNING OF INCOME AND THEREFORE FOLLOW S THAT EXPENSES WHICH ARE RELATABLE TO EARNING OF EXEMPT I NCOME HAVE TO BE CONSIDERED FOR DISALLOWANCE, IRRESPECTIVE OF THE FACT WHETHER ANY SUCH INCOME HAS BEEN EARNED DURING THE FINANCIA L YEAR OR NOT? 14. WHETHER, ON FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ITAT IS JUSTIFIED IN NOT UPHOLDING DISALLO WANCE OF RS. 1,01,049/- U/S 14A OF INCOME TAX ACT 1961 WITHOUT C ONSIDERING LEGISLATIVE INTEND OF INTRODUCING SECTION 14A BY TH E FINANCE ACT 2001 AS CLARIFIED BY THE CBDT CIRCULAR NO. 5/2014 D ATED 10.02.2014? 15. WHETHER ON FACTS AND ON CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT IS JUSTIFIED IS NOT UPHOLDING DISA LLOWANCE OF RS. 1,01,049/- U/S 14A OF THE ACT WITHOUT CONSIDER A LE GAL PRINCIPLES THAT ALLOWABILITY OF EXPENDITURE UNDER THE ACT IS N OT CONDITIONAL UPON THE EARNING OF THE INCOME AS UPHELD BY HON'BLE SUPREME COURT IN CASE OF CIT VS. RAJENDRA PRASAD MOODY [197 8] 115 ITR 519? 16. THAT THE ORDER OF THE LD. DRP IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW? 17. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT T HE TIME OF HEARING OF THE APPEAL? 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : (M/S. MITSUBISHI CORPORAT ION INDIA PVT. LTD.) MCI IS A COMPANY INCORPORATED IN 1996 UNDER T HE PROVISION OF INDIAN COMPANIES ACT, 1956. MCI IS A SUBSIDIARY OF MITSUBISHI CORPORATION, JAPAN (MC JAPAN), WHICH IS ONE OF JAPA NS LEADING 4 ITA NO. 1558/DEL/2016 GENERAL TRADING (SOGO SHOSHA COMPANY). THESE SOGO S HOSHA COMPANIES ARE UNIQUE IN THE WORLD OF COMMERCE, AND PLAY AN IMPORTANT ROLE IN LINKING BUYERS AND SELLERS FOR PR ODUCTS RANGING FROM BULK COMMODITIES TO SPECIALIZED EQUIPMENT. FO R LARGERLY HISTORIC REASONS, GENERAL TRADING COMPANIES LIKE MC JAPAN ARE UNIQUE TO JAPAN, WITH NO REAL EQUIVALENT ANYWHERE I N THE WORLD. THE CONVENTIONAL FUNCTION OF THE SOGO SHOSHA COMPAN IES HAS BEEN TO OPERATE AS A TRADE INTERMEDIARY BY PROVIDING SER VICES AND NOT ASSUMING THE SIGNIFICANT RISK OF THE PRODUCTS. THE MAIN FUNCTION PERFORMED BY MCI IS ALSO RELATED TO THESE CONVENTIO NAL TRADE INTERMEDIARIES AND IS TO PROVIDE COORDINATION SUPPO RT TO MC JAPAN BY GATHERING INFORMATION OF THE INDIAN MARKET AND K EEPING CONTACTS WITH BUYERS OR SELLERS OF PRODUCTS IN INDI A. MCI ALSO UNDERTAKES BUSINESS ACTIVITY WITH THIRD PARTIES. 3. DURING THE YEAR UNDER ASSESSMENT TAXPAYER ENTERE D INTO INTERNATIONAL TRANSACTION WITH ITS AES ASSOCIATED ENTERPRISES (AES) AS UNDER :- S. NO. NATURE OF TRANSACTION VALUE OF TRANSACTION 1. IMPORT OF GOODS 31,119,074,777 2. EXPORT OF GOODS 50,536,099 3. SERVICE FEE RECEIVED 57,302,008 4. COMMISSION PAID 32,365,508 5. MARKET RESEARCH FEE RECEIVED 117,369,312 6. PROFESSIONAL SERVICES RELATED WITH HR, IT, ACCOUNTING AND OTHER 12,281,555 5 ITA NO. 1558/DEL/2016 ADMINISTRATIVE SERVICES ADMINISTRATIVE & PROFESSIONAL FEE RECEIVED 7. ADMINISTRATION SUPPORT SERVICES TO PROJECT OFFICE 1,982,477 8. MISCELLANEOUS INCOME 8,514,247 9. REIMBURSEMENT OF EXPENSES BY AES 2,451,167 10. REIMBURSEMENT OF EXPENSES TO AES 22,841,461 4. HOWEVER, DURING THE YEAR UNDER ASSESSMENT, TPO D ISPUTED ONLY SERVICE / COMMISSION INCOME SEGMENT. TAXPAYER IN ORDER TO BENCHMARK INTERNATIONAL TRANSACTION APPLIED TRANSA CTIONAL NET MARGIN METHOD (TNMM) WITH BERRY RATIO AS PROFIT LE VEL INDICATOR (PLI) AS MOST APPROPRIATE METHOD (MAM). T AXPAYER COMPUTED ITS BERRY RATIO AT 22.50%, SELECTED 12 COM PARABLES USING MULTIPLE YEAR DATA WITH BERRY RATIO OF 11.47% AND FOUND ITS INTERNATIONAL TRANSACTIONS AT ARMS LENGTH. TAXPAYE R HAS ALSO MADE A CORROBORATIVE ANALYSIS BY APPLYING TNMM AS T HE MOST APPROPRIATE METHOD AND OP/OR AS THE PLI SUGGESTING THAT THOUGH THE VALUE ADDITION OF MCI IS CLOSER TO THE VALUE AD DITION OF A SERVICE PROVIDER AND IT TAKES FAR LESS FUNCTIONS AN D RISKS AS A TRADER, MCIS MARGINS HAVE BEEN COMPARED TO TRADERS ON A CO NSERVATIVE APPROACH. CONSEQUENTLY, TAXPAYER CONCLUDED THAT ITS COMPARING MARGIN (OP/OR) IS 0.31% AS AGAINST 4 COMPARABLES US ING MULTIPLE 6 ITA NO. 1558/DEL/2016 YEARS DATA OF 0.85% AND BY APPLYING THE SAFE HARBOR RULES FOUND ITS INTERNATIONAL TRANSACTION AT ARMS LENGTH. 5. TPO HOWEVER REJECTED THE TP ANALYSIS MADE BY THE TAXPAYER AND CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WH Y THE SERVICE/ COMMISSION INCOME BE NOT TREATED AS TRADING BUSINES S IN SUBSTANCE AS WAS DONE IN ITS CASE IN THE PRECEDING YEAR. TPO PRECEDED TO PROPOSE ADJUSTMENT ONLY QUA SERVICE/COMMISSION INCO ME SEGMENT BY HOLDING THAT FOB VALUE OF GOODS SOURCED FROM IND IA TO THE TUNE OF RS. 4,26,43,50,877/- SHALL BE INCLUDED AS COST O F GOOD SOLD IN THE COMBINED AE SEGMENT AND THEREBY MADE ADJUSTMENT OF RS. 5,87,70,531/-. 6. THE TAXPAYER CARRIED THE MATTER BEFORE LD. DRP B Y WAY OF FILING OBJECTIONS WHO HAS DIRECTED THE TPO TO DELET E THIS NOTIONAL COST FROM ASSESSEES COST BASE AND COMPARE THE ASSE SSEE WITH SERVICE COMPANIES HAVING SIMILAR FUNCTIONS AND RISK PROFILE BY PARTLY ALLOWING THE OBJECTIONS. FEELING AGGRIEVED T HE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PR ESENT APPEAL. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7 ITA NO. 1558/DEL/2016 GROUND NOS. 1 TO 10 8. AT THE VERY OUTSET, THE LD. AR FOR THE TAXPAYER BROUGHT TO NOTICE OF THE BENCH THAT IDENTICAL ISSUE HAS BEEN D ECIDED BY THE TRIBUNAL IN FAVOUR OF THE TAXPAYER VIDE ORDERS DATE D 21.10.2014 PASSED BY CO-ORDINATE BENCH OF TRIBUNAL IN A.Y. 200 7-08 IN ITA NO. 5042/DEL/2011, IN A.Y. 2008-09 IN ITA NO. 5885/ DEL/2012, IN A.Y. 2009-10 IN ITA NO. 803/DEL/2014 , IN A.Y. 2010-11 IN ITA NO. 945/DEL/2015 WHICH HAVE BEEN UPHELD BY THE HONBLE HIGH COURT. 9. LD. DRP FOLLOWING THE ORDER PASSED BY TRIBUNAL I N ASSESSEES OWN CASE IN THE EARLIER YEARS DIRECTED T HE TPO TO DELETE THE NOTIONAL COST OF RS. 4,26,43,50,877/- FROM TAXP AYERS COST BASE AND THEREAFTER TO COMPUTE THE ARMS LENGTH SERVICES FOR THE INDENT SEGMENT USING APPROPRIATE SERVICE COMPARABLES. THIS FACTUAL POSITION HAS NOT BEEN CONTROVERTED BY LD. DRP FOR T HE REVENUE. 10. PARA 6.1(B) OF THE TP ORDER SHOWS THAT THE LD. TPO PREFERRED NOT TO FOLLOW THE DECISIONS RELIED UPON BY THE TAXP AYER PASSED BY THE APPELLATE AUTHORITIES ON THE SOLE GROUND THAT T HE DEPARTMENT IS IN PROCESS OF FILING APPEAL AGAINST THE AFORESAID D ECISIONS AND THAT SLP FILED BY THE DEPARTMENT AGAINST THE ORDER PASSE D BY THE HONBLE HIGH COURT IN CASE OF LI & FUNG HAS BEEN AD MITTED BY THE HONBLE SUPREME COURT. CO-ORDINATE BENCH OF TRIBUNA L IN 8 ITA NO. 1558/DEL/2016 ASSESSEES OWN CASE FOR A.Y. 2007-08 DECIDED THE ID ENTICAL ISSUE IN ITA NO. 5042/DEL/2011 BY RETURNING FOLLOWING FINDIN GS :- 80. COMING TO THE SERVICE FEE/ COMMISSION SEGMENT, WE HAVE NOTED THAT AS REGARDS THE SERVICE FEE/ COMMISSION S EGMENT, THE TPO HAS RE-CHARACTERIZED THE SAME AS TRADING ACTIVI TIES AS HE WAS OF THE VIEW THAT THE RIGHT COURSE OF ACTION WILL BE TO TREAT THE SAME AS EQUIVALENT TO TRADING SEGMENT, BECAUSE WHAT THE ASSESSEE HAS DISCLOSED AS SERVICE/ COMMISSION INCOME IS INFACT T RADING INCOME. ACCORDINGLY, THE COST OF GOODS SOLD BY THE AES, WHI CH WAS RS 2927,92,05,406, WAS ALSO TO BE INCLUDED IN COST BAS E OF THE SERVICE/COMMISSION SEGMENT AND THEN ALP WAS RECOMPU TED. SO FAR AS THIS ASPECT OF THE MATTER IS CONCERNED, THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY HONBLE JURISD ICTIONAL HIGH COURT'S DECISION IN THE CASE OF LI & FUNG WHEREIN T HEIR LORDSHIPS HAVE, INTER ALIA, OBSERVED AS FOLLOWS: ..THIS COURT IS OF OPINION THAT TO APPLY THE TNMM , THE ASSESSEE'S NET PROFIT MARGIN REALIZED FROM INTE RNATIONAL TRANSACTIONS HAD TO BE CALCULATED ONLY WITH REFEREN CE TO COST INCURRED BY IT, AND NOT BY ANY OTHER ENTITY, E ITHER THIRD PARTY VENDORS OR THE AE. TEXTUALLY, AND WITHIN THE BOUNDS OF THE TEXT MUST THE AO/TPO OPERATE, RULE 10B(L)(E) DOES NOT ENABLE CONSIDERATION OR IMPUTATION OF COST INCU RRED BY THIRD PARTIES OR UNRELATED ENTERPRISES TO COMPUTE T HE ASSESSEES NET PROFIT MARGIN FOR APPLICATION OF THE TNMM. RULE 10B(L)(E) RECOGNIZES THAT 'THE NET PROFIT MARG IN REALIZED BY THE ENTERPRISE FROM AN INTERNATIONAL TRANSACTION ENTERED INTO WITH AN ASSOCIATED ENTERPR ISE IS COMPUTED IN RELATION TO COSTS INCURRED OR SALES EFF ECTED OR ASSETS EMPLOYED OR TO BE EMPLOYED BY THE ENTERPRISE ...' (EMPHASIS SUPPLIED). IT THUS CONTEMPLATES A DETERMI NATION OF ALP WITH REFERENCE TO THE RELEVANT FACTORS (COST , ASSETS, SALES ETC.) OF THE ENTERPRISE IN QUESTION, I.E. THE ASSESSEE, AS OPPOSED TO THE AE OR ANY THIRD PARTY. THE TEXTUAL M ANDATE, THUS, IS UNAMBIGUOUSLY CLEAR. 40. THE TPOS REASONING TO ENHANCE THE ASSESSEE'S C OST BASE BY CONSIDERING THE COST OF MANUFACTURE AND EXP ORT OF FINISHED GOODS, I.E., READY-MADE GARMENTS BY THE TH IRD PARTY VENDERS (WHICH COST IS CERTAINLY NOT THE COST INCURRED BY THE ASSESSEE), IS NOWHERE SUPPORTED BY THE TNMM 9 ITA NO. 1558/DEL/2016 UNDER RULE 10B(L)(E) OF THE RULES. HAVING DETERMINE D THAT (TNMM) TO BE THE MOST APPROPRIATE METHOD, THE ONLY RULES AND NORMS PRESCRIBED IN THAT REGARD COULD HAVE BEEN APPLIED TO DETERMINE WHETHER THE EXERCISE INDICATED BY THE ASSESSEE YIELDED AN ALP. 81. CLEARLY, THEREFORE, IT IS IMPERMISSIBLE TO MAKE NOTIONAL ADDITIONS IN THE COST BASE AND THUS TAKE INTO ACCOU NT THE COSTS WHICH ARE NOT BORNE BY THE ASSESSEE. IT IS SO OPINED BY HONBLE JURISDICTIONAL HIGH COURT ON A CAREFUL ANAL YSIS OF RULE 10B(L)(E)(I). IT IS, THEREFORE, NO LONGER OPEN TO THE REVENUE AUTHORITIES TO RECONSTRUCT THE FINANCIAL ST ATEMENTS OF THE ASSESSEE BY INCLUDING THE COST OF PRODUCTS I NCURRED BY THE AES, IN RESPECT OF WHICH SERVICES ARE RENDER ED, IN ITS RECONSTRUCTED FINANCIAL STATEMENTS, AND THEN PUTTIN G THE HYPOTHETICAL TRADING PROFITS, SO ARRIVED AT IN THES E RECONSTRUCTED FINANCIAL STATEMENTS, TO THE TESTS FO R DETERMINING ARMS LENGTH PRICE. RESPECTFULLY FOLLOW ING THE ESTEEMED VIEWS OF THEIR LORDSHIPS, WE HOLD THAT THE ADJUSTMENTS CARRIED OUT IN THE COST BASE OF ALP COMPUTATION, IN RESPECT OF SERVICE FEE/ COMMISSION SEGMENT, ARE INDEED DEVOID OF LEGALLY SUSTAINABLE M ERITS. WE DIRECT THE ASSESSING OFFICER TO DELETE THESE ADJ USTMENTS. ONCE THIS NOTIONAL ADJUSTMENT IS DELETED, THE ALP DETERMINATION IS TO BE DONE ON THE BASIS OF THE COM MISSION/ SERVICE FEES. AS WE HAVE STATED EARLIER IN THIS ORD ER AS WELL, IN THE COURSE OF PROCEEDINGS BEFORE US, THE ASSESSE E HAS FILED FRESH COMPUTATION OF THE ALP WHICH ATTEMPTS T O DEMONSTRATE THAT, IF NOTIONAL ADJUSTMENTS MADE BY T HE TPO ARE DELETED, NO ALP ADJUSTMENT WILL BE WARRANTED. HOWEVER, WE ARE NOT INCLINED TO GO INTO VERIFICATIO NS WHICH MUST TAKE PLACE AT THE ASSESSMENT STAGE. CONCLUSION ON COMMISSION /SERVICE FEES SEGMENT OF ASSESSEE'S ACTIVITIES 82. ACCORDINGLY, WE DEEM IT APPROPRIATE TO UPHOLD THE GRIEVANCES OF THE ASSESSEE IN PRINCIPLE, AS THE TER MS ABOVE, DELETE THE NOTIONAL ADJUSTMENTS BY TPOS ADOPTING C OST BASE OF THE AES IN ASSESSEES ALP DETERMINATION, AN D REMIT THE MATTER TO THE FILE OF THE TPO FOR THE NEC ESSARY FACTUAL VERIFICATIONS ON IMPACT OF THIS CORRECTIONS . ACCORDINGLY, THE MATTER STANDS RESTORED TO THE FILE OF THE TPO IN THIS RESPECT ALSO. 11. AFORESAID ORDER PASSED BY THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE HIGH COURT VIDE ORDER DATED 22.03.2017 PASSED IN ITA NO. 159/2017, CM APPL. 6427/2017. 10 ITA NO. 1558/DEL/2016 12. MOREOVER, PERUSAL OF ORDER PASSED BY DRP SHOWS THAT ITS FINDINGS ARE ALSO BASED UPON DECISION PASSED BY THE CO-ORDINATE BENCH OF TRIBUNAL IN MARUBENI INDIA P. LTD. AND DEC ISION RENDERED BY HONBLE HIGH COURT IN CASE OF LI & FUNG. IN LI- FUNG CASE, REVENUE HAD APPLIED A COMMISSION MODEL WHEREIN THE COMPENSATION WAS LINKED WITH THE FOB VALUE OF GOODS SOURCED FROM INDIA ON ACCOUNT OF SERVICES PROVIDED BY LI & FUNG INDIA, WHICH APPROACH HAS BEEN REJECTED BY THE HONBLE HIG H COURT ON THE GROUND THAT RETURN ON COSTS WAS PROPER MODEL TO TEST THE PROFITABILITY. SINCE THESE CASES ARE APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. DRP HAS RIGHTLY D ECIDED THE ISSUE IN FAVOUR OF THE TAXPAYER. 13. SO, FOLLOWING THE DECISION RENDERED BY CO-ORDIN ATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-0 8, A.Y. 2008- 09 AND A.Y. 2009-10 WHICH HAVE BEEN UPHELD BY THE H ONBLE HIGH COURT. WE ARE OF THE CONSIDERED VIEW THAT LD. DRP H AS RIGHTLY DELETED THE NOTIONAL COST OF RS. 4,26,43,50,877/- F ROM THE TAXPAYERS COST BASE AND THEREAFTER DIRECTING THE D RP TO COMPUTE THE ARMS LENGTH SERVICES FOR THE INDENT SEGMENT USI NG APPROPRIATE SERVICE COMPARABLES AND DETERMINE THE ALP ACCORDING LY AFTER A FACTUAL VERIFICATION ON IMPACT OF THIS CORRECTIONS. CONSEQUENTLY, GROUND NOS. 1 TO 10 RAISED BY THE REVENUE ARE DISMI SSED. 11 ITA NO. 1558/DEL/2016 GROUND NO. 11 14. THE ASSESSING OFFICER NOTICED FROM THE ACCOUNTS OF THE TAXPAYER THAT THE TAXPAYER HAS MADE PURCHASES FROM ITS ASSOCIATED ENTERPRISES WITHOUT DEDUCTION OF TAX AT SOURCE IN A CCORDANCE WITH PROVISIONS CONTAINED U/S 195 OF THE ACT WHICH ARE A S UNDER :- S. NO NAME AND ADDRESS OF THE AE DESCRIPTION OF TRANSACTION AMOUNT OF PURCHASES 1. ASIA MODIFIED STARCH CO. LTD. 130-132 SINDHORN BUILDING, 2 ND FLOOR, TOWER 1, WIRELESS ROAD, LUMPINI PATHUMWAN, BANGKOK-10330, THAILAND IMPORT OF GOODS 2,55,94,266 2. MITSUBISHI CORPORATION, JAPAN (INCLUDING OVERSEAS BRANCHES) HEAD OFFICE, 3-1, MARUNOUCHI 2- CHOME, CHIYODA- KU, TOKYO, JAPAN IMPORT OF GOODS 30,76,87,72,124 3. PETRO DIAMOND JAPAN CORPORATION 4 TH FLOOR, MITSUBISHI CORP. BUILDING, 6-3, MARUNOUCHI 2- CHOME, CHIYODA- KU, TOKYO 100- 0005 IMPORT OF GOODS 10,83,16,915 4. MC ENERGY, INC 4 TH FLOOR, MITSUBISHI CORP. BUILDING, 6- 3, MARUNOUCHI 2- CHOME, CHIYODA- KU, TOKYO 100- 0005 IMPORT OF GOODS 18,67,08,783 5. MITSUBISHI INTERNATIONAL IMPORT OF GOODS 19,82,951 12 ITA NO. 1558/DEL/2016 GMBH, GERMANY HAMBURG BRANCH, MAATTENWIETE 5, HAMBURG 6. MITSUBISHI SHOJI CHEMICAL CORPORATION 6-1, KYOBASHI, 1- CHOME, CHUO-KU, TOKYO 104-0031 IMPORT OF GOODS 2,53,72,689 7. MITSUBISHI AUSTRALIA LTD. LEVEL 36,120 COLLINS STREET, MELBORUNE, VICTORIA 3000, AUSTRALIA IMPORT OF GOODS 23,27,050 TOTAL 31,11,90,74778 15. DECLINING THE CONTENTION RAISED BY THE TAXPAYER , AO MADE DISALLOWANCE OF RS. 42,78,87,278/- ON THE GROUND TH AT SINCE ALL THE AFORESAID COMPANIES ARE HAVING PES IN INDIA, THE TA XPAYER WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THE BUSINESS PR OFITS OF THESE COMPANIES IN ACCORDANCE WITH PROVISIONS CONTAINED U /S 195 OF THE INCOME TAX ACT. 16. LD. DRP, HOWEVER, DELETED DISALLOWANCE BY FOLLO WING THE DECISION RENDERED BY TRIBUNAL IN ASSESSEES OWN CAS E FOR A.Y. 2006-07 TO A.Y. 2009-10. ON THE GROUND THAT THE PUR CHASES MADE BY THE TAXPAYER FROM THE AFORESAID GROUP ENTITIES S HOULD NOT BE SUBJECTED TO DISALLOWANCE U/S 40(A)(I) OF THE ACT B Y THRASHING THE FACTS AT LENGTH. OPERATING PART OF DRP FINDING IS A S UNDER :- 13 ITA NO. 1558/DEL/2016 THE HON'BLE DELHI ITAT IN ASSESSEE'S OWN CASE FOR AY 2006-07 TO AY 2009-10 HAS DELETED THE DISALLOWANCE ON ACCOUNT OF NON- DEDUCTION OF TAXES AT SOURCE ON PAYMENTS MADE TO NO N-RESIDENT SUPPLIERS. THE RELEVANT FINDINGS OF THE HON'BLE DEL HI ITAT IN ITS VARIOUS ORDERS ARE SUMMARIZED BELOW:- A) NON-DISCRIMINATION CLAUSE: THE HON'BLE ITAT DELETED THE DISALLOWANCE BY UPHOLDING THE ASSESSEE'S CONTENTION CONCERNING THE NON-DISCRIMINATION ARGUMENT IN RELATION TO INDIA-JA PAN DTAA AND OTHER SIMILAR DTAA (PARA 9.3 & 9.4 AT PAGE 15-18 OF ITAT ORDER FOR AY 2006-07). THIS POSITION WAS NOT DISPUTED IN SUBSEQUENT YEARS' ITAT ORDER FROM AY 2007-08 TO 2009-10. IN FACT, REL IEF WAS GRANTED ON ANOTHER SIMILAR .ARGUMENT; B) NO-PE OF THE RELATED ENTITIES OTHER THAN MCJ: THE H ON'BLE ITAT FURTHER HELD THAT SINCE THE GROUP ENTITIES (OTHER T HAN MG) DID NOT HAVE A PERMANENT ESTABLISHMENT (PE) IN INDIA, THE P ROVISIONS OF SECTION 195 OF THE ACT WERE NOT APPLICABLE AND CONS EQUENTLY DISALLOWANCE U/S 40(A)(I) WAS BAD IN LAW (PARA 9.7 AT PAGE 20 OF ITAT ORDER FOR AY 2006-07).THIS POSITION WAS NOT DI SPUTED IN SUBSEQUENT YEARS ITAT ORDER FROM AY 2007-08 TO 2009 -10. WHILE DISPOSING OFF THE SIMILAR OBJECTION FOR AY 20 10-11, THE DRP RELYING ON THE ORDER OF A.Y. 2008-09 HELD AS UNDER: - THE ABOVE GROUNDS OF OBJECTIONS ARE INTERRELATED AN D TAKEN UP TOGETHER FOR CONSIDERATION. THE FACTS OF THE PRESENT CASE ARE SI MILAR TO THE FACTS AS IN A. Y, 2008-09. IN A. Y. 2008-09, THE DRP HAS HELD AS UNDER : THE DRP HAS EXAMINED THE MATTER OF DISALLOWANCE OF PURCHASES MADE FROM NON RESIDENT GROUP COMPANIES U/ S 40(A)(IA) IN THE DRAF T ORDER. PERUSAL OF THE CASE HISTORY AND THE DR P'S ORDER FO R A Y 2006-07 AND A Y 2007-08 INDICATE THAT THIS ISSUE IS A MATTER OF DISPUTE BET WEEN THE ASSESSEE AND THE DEPARTMENT IN THE PAST AND THAT THE APPEALS ARE NOW BEFORE THE ITAT'. THE OBJECTIONS OF THE ASSESSEE IN THIS YEAR ARE SIMILAR TO THE ONE IT HAD MADE IN THE PAST YEARS. AS THE ISSUES ARE IDENTICAL, THE DRP'S VIEW WILL REMAIN THE SAME FOR THE PURPOSES OF CONSISTENCY. THEREFORE, THE AO'S ORDER IS UPHELD. THUS, IN DRP PLACING RELIANCE ON ITS OWN ORDER FOR A.Y, 2008-09 UPHELD THE DISALLOWANCE MADE BY THE AO, HOWEVER, DU RING THE COURSE OF HEARING, THE ASSESSEE RELIED ON THE ITAT' S ORDERS OF AY 14 ITA NO. 1558/DEL/2016 2006-07 TO AY 2010-11 WHEREIN THE HON'BLE HAT HAD D ELETED THE SAID DISALLOWANCE MADE U/S 40(A)(I) OF THE IT ACT, 1961. HOWEVER, THE PANEL UPON AN EXAMINATION AND DELIBERATION OF T HE EVIDENCE FILED BY THE A' DURING THE CURRENT PROCEEDINGS IN T HE FORM OF THE ORDERS OF THE HON'BLE ITAT NO. I.T.A NOS 5042/DEL/1 1 FOR AY 2007- 08, 5885/DEL/12 FOR AY 2008-09, 803/DEL/14 FOR AY 2 009-10 DATED 21 ST OCT 2014 AND 945/DEL/2915 FOR AY 2010-11 DATED 26 TH MAY 2015 NOTICED THAFTHE DECISION FORMED BY THE ERSTWHILE DR P IN RESPECT OF THIS LITIGATED ISSUE WAS FLAWED. THE MATTER NOW BEI NG RES-INTEGRA PROVIDES US NO ROOM TO DIVAGATE FROM THE JUDGMENT P RONOUNCED BY THE HON'BLE COURTS ON THE ABOVE ISSUES SPECIFICALLY . JUDICIAL DISCIPLINE DEMANDS THAT THE AECISIONS OF SUPERIOR C OURTS BE HONOURED WHERE THERE ARE INSTANCES OF STARE-DECISIS ESPECIAL LY. THEREFORE IN VIEW OF PRINCIPLE LAID DOWN BY THE EEAFOREMENTIONED ITAT RULING FOR AY 2006-07 TO AY2009-10 IN ASSESSEE'S OWN CASE, PUR CHASES MADE FROM ABOVE MENTIONED GROUP ENTITIES SHOULD NOT BE S UBJECTED TO DISALLOWANCE UNDER SECTION 40(A)(I) OF THE ACT AS P ER THE FACTS AND LEGAL POSITION DISCUSSED BELOW:- IN RELATION TO MITSUBISHI CORPORATION, JAPAN (MCJ): IT IS AN ADMITTED POSITION NOW THAT IN THE ASSESSMENT ORDER OF MG FOR AY 2009-10 AND AY 2010-11, IT WAS HELD BY THE AO THAT SALES TO MCI WERE NOT TAXABLE IN THE HANDS OF MG. ASIA MODIFIED STARCH CO., LTD. (AMS): IT IS AN UNDI SPUTED FACT THAT IT IS A COMPANY INCORPORATED IN THAILAND WHICH DID NOT HAVE ANY PRESENCE JP INDIA. THE ASSESSEE PURCHASED GOODS DIR ECTLY FROM AMS FROM OUTSIDE INDIA MC ENERGY INC, JAPAN (MEI) (FORMERLY KNOWN AS PETRO DIAMOND CORPORATION, JAPAN (PDC)): IT IS AN UNDISPUTED FACT THAT IT IS A COMPANY INCOR PORATED IN JAPAN WHICH DID NOT HAVE ANY PRESENCE IN INDIA. THE ASSES SEE PURCHASED GOODS DIRECTLY FROM MEI FROM OUTSIDE INDIA. MITSUBISHI AUSTRALIA LTD (MALV IT IS AN UNDISPUTED FACT THAT IT IS A COMPANY INCORPORATED IN AUSTRALIA WHICH DID NOT HAV E ANY PRESENCE IN INDIA. THE ASSESSEE PURCHASED GOODS DIRECTLY FRO M MAL FROM OUTSIDE INDIA. MITSUBISHI INTERNATIONAL GMBH, GERMANY (MIG): IT IS AN ADMITTED FACT THAT IT IS A COMPANY INCORPORATED IN GERMANY W HICH DID NOT 15 ITA NO. 1558/DEL/2016 HAVE ANY PRESENCE IN INDIA. THE ASSESSEE PURCHASED GOODS DIRECTLY FROM MIG FROM OUTSIDE INDIA. MITSUBISHI SHOJI CHEMICAL CORPORATION, JAPAN (MSCC) : IT IS ADMITTED POSITION THAT IT IS A COMPANY INCORPORATED IN JAPAN WHICH DID NOT HAVE ANY PRESENCE IN INDIA. THE ASSESSEE PU RCHASED GOODS DIRECTLY FROM MSCC FROM OUTSIDE INDIA. THE ABOVE ENTITIES WERE NON-RESIDENT OF INDIA UNDER THE ACT AND AS PER DTAA BETWEEN RESPECTIVE COUNTRIES AND EXCEPT MC J, NONE OF THE ENTITIES HAD PRESENCE IN INDIA DURING THE YEAR. FURTHER, THE ASSESSEE PURCHASED GOODS FROM THESE ENTITIES DIRECT LY FROM OUTSIDE INDIA AND THESE ENTITIES DID NOT PERFORM ANY FUNCTI ON IN INDIA IN CONNECTION WITH SALE TO THE ASSESSEE, FROM THE ABOVE, IT WAS CLEAR THAT ALL PURCHASES MAD E BY THE ASSESSEE WERE DIRECTLY OUTSIDE FROM INDIA FROM MO (WITHOUT I NVOLVEMENT OF ITS OFFICES IN INDIA) AND OTHER GROUP ENTITIES, AND ACCORDINGLY, NOT LIABLE TO TAX IN INDIA, HENCE, NO PART OF PURCHASE AMOUNT PAID TO NON-RESID ENT SUPPLIERS WAS TAXABLE IN INDIA. FURTHER, IT WAS INFORMED TO T HE AO THAT THE ASSESSEE WAS DEALING DIRECTLY WITH ALL THE NON-RESI DENT SUPPLIERS AND THEIR INDIAN OFFICES, IF ANY, WERE NOT INVOLVED IN PURCHASE OF GOODS, WHICH WERE PATENT FROM THE DETAILS FILED WITH PAPER BOOK 1 AND FORM 35A. THEREFORE, NO TAX IS DEDUCTIBLE FROM THE PAYMENTS M ADE FOR PURCHASE OF GOODS FROM THESE NON-RESIDENTS IN THE L IGHT OF PROVISIONS OF SECTION 40(A)(I) (HELD TO BE READ WITH SECTION 1 95 AND APPLICABLE DTAA). WHILE HOLDING AS ABOVE, THE PANEL CONSIDERS IT PERTINENT TO REFER TO THE RELEVANT FINDINGS RECORDED BY THE HON' BIE ITAT ON IDENTICAL FACTS. WHILE DELETING THE ADDITIONS MADE IN LATEST ORDER FOR AY 2010-11, THE HONTILE ITAT BY BIFURCATING THE NON -RESIDENT SUPPLIERS INTO TWO CATEGORIES I.E. ENTITIES HAVING A PE IN INDIA I.E. MG AND ENTITIES NOT HAVING A PE IN INDIA I.E. NON-M G ENTITIES. IN RESPECT OF THE SAID CATEGORIES OF COMPANIES AS UNDE R:- '11. FIRST WE ESPOUSE THE CATEGORY OF PURCHASES MAD E FROM SIX FOREIGN AES, FOR WHICH THE ID. AR CLAIMED THAT THEY DID NOT HAVE A P E IN INDIA AND MADE OFFSHORE SALES TO THE ASSESSEE, NOT LEADING TO GENERATION OF ANY INCOME CHARGEABLE TO TAX UNDER THE ACT IN THEIR HANDS. 14. REVERTING TO THE FACTS OF THE INSTANT CASE, WE FIN D THAT OUT OF THE ASSESSEE'S IMPORT TRANSACTIONS WITH SIX AES, THREE ARE WITH MITSUBISH I SHOJI LIGHT METAI, JAPAN, THAI MC COMPANY LTD., THAILAND AND PETRO DIAMOND CORPORA TION, JAPAN. THE ASSESSEE 16 ITA NO. 1558/DEL/2016 MADE PURCHASES FROM THESE THREE AES IN THE IMMEDIAT ELY PRECEDING ASSESSMENT YEAR AND THE TRIBUNAL WAS PLEASED TO HOLD THAT IN THE AB SENCE OF ANY PE OF THESE THREE ENTERPRISES IN INDIA, THE PROVISIONS OF SECTION 40( A)(I) WERE NOT ATTRACTED. THE AO, WHILE FINALIZING THE ASSESSMENT FOR THE CURRENT YEA R, HAS NOTICED ON PAGES 52 AND 54 OF HIS ORDER THAT THE ASSESSEE MADE IDENTICAL REPLY WH ICH WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2009 -10...... ... THE CRUX OF THE MATTER IS THAT SINCE THESE SIX AES DID NOT HAVE ANY PE IN INDIA, THE OFFSHORE SALES MADE BY THEM TO THE ASSESSEE IN INDI A WOULD NOT GENERATE ANY INCOME CHARGEABLE UNDER THE ACT TO THE AES FROM SUCH SALE TRANSACTIONS. 15. NOW WE TAKE UP THE SECOND CATEGORY OF PURCHASES MADE FROM MO, FOR WHICH THE ID. AR CIAIMEA THE BENEFIT OF NON -DISCRIMINATION CLAUSE OF THE DTAA TO BOLSTER HIS SUBMISSION OF NON -APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT. THE SUM AND SUBSTANCE OF HIS ARGUMENT IS THAT TOTAL PURCHASES AMOUNTING T O RS. 214.78 CRORE WERE MADE BY THE ASSESSEE FROM MO INCLUDING I TS OVERSEAS BRANCH OFFICE AND NON-DISCRIMINATION CLAUSE UNDER A RTICLE 24 OF THE DTAA APPLIES WARRANTING NON-DEDUCTION OF TAX AT SOU RCE. ON CONTRARY, THE LD. DR PUT FORTH THAT THE CASE OF THE ASSESSEE IS COVERED UNDER ARTICLE 9 OF THE DTAA AND FOR THAT RE ASON, THE APPLICATION OF ARTICLE 24 IS OUTSET. 20...., REVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE IS SEEKING BENEFIT OF ARTICLE 24 QUA THE DISALLOWANCE U/S 40(A )(I) AND NOT IN RESPECT OF ANY TRANSFER PRICING ADJUSTMENT MADE BY BRINGING TRANSACTIONS BE TWEEN TWO AES AT ARMS' LENGTH PRICE. DISALLOWANCE U/S 40(A)(I) IS AN INDEPENDENT COMPONENT OF THE COMPUTATION WHICH IS DISTINCT FROM ANY TRANSFER PRICING ADJUSTM ENT... AS DISALLOWANCE U/S 40(A)(I) IS IN RESPECT OF PURCHASES MADE FROM THE AES, WHICH IS IN NO MANNER CONNECTED WITH THE COMMISSIONER SEGMENT, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT PROVIDED BY ARTICLE 24 OF THE DTAA AND CANNOT BE VISITED WIT H DISALLOWANCE U/S 40(A)(I) OF THE ACT, 21. THE FOREGOING DISCUSSION DIVUIGES THAT THERE EX ISTED NO LIABILITY OF THE ASSESSEE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE BY IT T O THE ABOVE LISTED SEVEN FOREIGN AES, EITHER BECAUSE OF NON- CHARGEABILITY OF INCOME UNDER THE ACT FROM SALE OF SUCH GOODS TO THE ASSESSEE OR BECAUSE OF THE APPLICATION OF NON-DISCRIMINATION CLAUSE. THE NATURAL COROLLARY WHICH FOLLOWS IS THAT THE PROVISI ON OF SECTION 195 CANNOT APPLY, AND RESULTANTLY, THERE CAN BE NO DISALLOWANCE U/S 40(A) (1) OF THE ACT. WE, THEREFORE, ORDER FOR DELETION OF THIS DISALLOWANCE. THIS GROUND IS A LLOWED. RESPECTFULLY FOLLOWING THE CONSISTENT HON'BLE ITAT ORDER UPTO AY 2010-11, WE ARE OF THE VIEW THAT NO DISALLOWANCE IS CALLED FOR UNDER SECTION 40(A)(I). ACCORDINGLY GROUND & SUB GROUNDS ARE ALLOWED. 17 ITA NO. 1558/DEL/2016 17. SO, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO SCOPE TO INTERFERE INTO THE FINDINGS RETURNED BY LD. DRP WHI CH ARE ON FACTS BY FOLLOWING THE DECISION RENDERED BY TRIBUNAL IN A SSESSEES OWN CASE FOR A.Y. 2006-07 TO A.Y. 2009-10, HENCE, GROUN D NO. 11 IS DECIDED AGAINST THE REVENUE. GROUND NOS. 12 TO 15 18. THE ASSESSING OFFICER BY INVOKING THE PROVISION S CONTAINED U/S 14A READ WITH RULE 8D MADE DISALLOWANCE OF RS. 1,01,049/- ON THE GROUND THAT THE TAXPAYER HAS MADE INVESTMENT OF RS. 20,00,00,000/- BUT HAS NOT MADE ANY DISALLOWANCE U/ S 14A READ WITH RULE 8D. 19. HOWEVER, LD. DRP BY NOTING THE FACT THAT NO DIV IDEND INCOME HAS BEEN EARNED BY THE TAXPAYER DURING THE Y EAR UNDER ASSESSMENT DELETED THE DISALLOWANCE MADE BY THE AO. 20. MOREOVER, CO-ORDINATE BENCH OF TRIBUNAL IN ASSE SSEES OWN CASE IN A.Y. 2009-10 AND 2010-11 DELETED THE IDENTI CAL ADDITIONS BY FOLLOWING DECISION RENDERED BY HONBLE DELHI HIG H COURT IN CASE OF CIT-IV VS. HOLCIM INDIA P. LTD. (2014) (IT A NO. 486/2014 & ITA NO. 299/2014). 21. WHEN THE TAXPAYER HAS NOT EARNED ANY DIVIDEND I NCOME DURING THE YEAR UNDER ASSESSMENT AND HAS SPECIFICAL LY COME UP WITH THE PLEA THAT NO EXPENDITURE HAS BEEN INCURRED QUA THE ITA NO.1558/DEL/2016 18 INVESTMENT IN QUESTION, THE LD. DRP HAS RIGHTLY DEL ETED THE ADDITION U/S 14A OF THE ACT. HENCE, WE FIND NO GROU ND TO INTERFERE INTO THE DELETION MADE BY THE LD. DRP MADE BY THE A O U/S 14A READ WITH RULE 8D OF THE ACT. CONSEQUENTLY, THIS GR OUND IS ALSO DECIDED AGAINST THE REVENUE. 22. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, FINDI NG NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASS ED BY DRP, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 2 5 TH NOVEMBER, 2019. SD/- SD/- (N.K.BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 25 TH DAY OF NOVEMBER , 2019 BINITA COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI. DATE OF DICTATION : 15.11.2019 & 19.11.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER: 19.11.2019 DATE ON WHICH THE APPROVED DRAFT COME TO SR.PS/PS : DATE ON WHICH FAIR ORDER SENT TO MEMBER FOR SIGNATU RE : DATE ON WHICH THE FAIR ORDER COMES BACK AFTER PRONO UNCEMENT TO THE SR.PS/PS : DATE ON WHICH ORDER IS UPLOADED : ITA NO.1558/DEL/2016 19 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE AR FOR SIGNA TURE ON THE ORDER DATE OF DESPATCH OF THE ORDER