I.P.Rings Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1670/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7357 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 21-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. DURAI PANDIAN
• Keywords: Depreciation; Additional evidence; Revenue expenditure; Capital expenditure
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , ! ' .. # $!% , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ! ./ ITA NO.1670/MDS/2014 * +* /ASSESSMENT YEAR: 2009-10 M/S.I.P.RINGS LTD., ARJEY APEX CENTRE, NO.24, COLLEGE ROAD, CHENNAI-600 006. VS. THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(3), CHENNAI-600 034. [PAN: AAAC I 0908 C ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ! ./ ITA NO.2022/MDS/2014 * +* /ASSESSMENT YEAR: 2009-10 THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(3), CHENNAI-600 034. VS. M/S.I.P.RINGS LTD., ARJEY APEX CENTRE, NO.24, COLLEGE ROAD, CHENNAI-600 006. [PAN: AAACI 0908 C ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.R.VIJAYARAGHAVAN, ADV. ./,- 0 1 /RESPONDENT BY : MR.R.DURAIPANDIAN, JCIT # 0 2' /DATE OF HEARING : 21.02.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 31.03.2017 ITA NOS.1670 & 2022/MDS/2014 :- 2 -: / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THESE CROSS APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER DATED 11.02.2014 OF COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI, IN ITA NO.1669/2013-14 FOR T HE AY 2009-10. SINCE THE COMMON ISSUES ARE INVOLVED BOTH THE APPEALS ARE HEARD TOGETHER AND A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENC E. ITA NO.1670/MDS/2014 ASSESSEES APPEAL: THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN IT S APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN C ONFIRMING 25% OF THE ROYALTY EXPENDITURE AS CAPITAL EXPENDITURE AND THE REMAININ G 75% AS REVENUE EXPENDITURE. 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO H AVE APPRECIATED THAT THE PAYMENT OF ROYALTY WAS TOWARDS ONLY USE OF TECHNICA L INFORMATION PROVIDED BY THE FOREIGN COMPANY AND HAS NOT RESULTED IN ACQUISITION OF ANY ASSETS OF ENDURING AND EXCLUSIVE ADVANTAGE TO THE APPELLANTS BUSINESS. 2.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGT TO HA VE APPRECIATED THAT THE APPELLANT HAS NOT ACQUIRED ANY OWNERSHIP RIGHT IN T HE TECHNOLOGY AND LICENSE BUT ONLY RIGHT TO USE. THE PAYMENT FOR MERE RIGHT TO U SE IS ONLY REVENUE IN NATURE. HENCE, THE ENTIRE ROYALTY EXPENDITURE CLAIMED BY TH E APPELLANT SHOULD BE ALLOWED AS REVENUE EXPENDITURE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN C ONFIRMING THE DISALLOWANCE OF THE MARKETING SERVICE FEES OF RS.1,22,54,729/- PAID TO INDIA PISTON LIMITED (IPL). 3.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO H AVE APPRECIATED THAT THE ABOVE SERVICE FEE WAS PAID TO THE IPL, THE PROMOTER OF THE APPELLANT COMPANY TOWARDS PROMOTING AND MARKETING OF APPELLANTS PROD UCTS. IPL GUIDE THE APPELLANT IN PROMOTING AND SECURING ORDER ON BEHALF OF THE AP PELLANT. THE ABOVE AMOUNT PAID IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BU SINESS HENCE, SHOULD BE ALLOWED AS A DEDUCTION. 4. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GROUN DS AT THE TIME OF HEARING. 2.0 GROUND NO.1 AND 4 ARE GENERAL IN NATURE WHICH DO NOT REQUIRE SPECIFIC ADJUDICATION: ITA NOS.1670 & 2022/MDS/2014 :- 3 -: 3.0 DISALLOWANCE OF ROYALTY PAYMENT OF RS.53,47,801/-: THIS ISSUE IS COMMON GROUND OF APPEAL FOR BOTH THE ASSESSEE AND T HE REVENUE. GROUND NOS.2.0 TO 2.2 OF THE ASSESSEES APPEAL IS R ELATED TO THE ISSUE OF ROYALTY PAYMENT. THE REVENUES APPEAL IN ITA NO.2022/MDS/2014 IS RELATED TO THE SAME ISSUE OF ROYALTY . 4.0 THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS. 53,47,801/- REPRESENTING THE ROYALTY PAYMENT MADE BY THE ASSESS EE TO M/S.NIPPON PISTON RING CO. LTD. DURING THE ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER (IN SHORT AO) FOUND THAT THE ASSESSEE DEB ITED A SUM OF RS.71,30,401/- TOWARDS THE PAYMENT OF ROYALTY TO M/ S.NIPPON PISTON RING CO. LTD. THE AO CALLED FOR DETAILS AND THE AGREEM ENTS FOR THE PAYMENT OF ROYALTY AND AFTER VERIFICATION OF THE AGREEMENTS IT WAS OBSERVED BY THE AO THAT THE ROYALTY PAYMENTS ARE IN LIEU OF EXCLUSIVE LICENSE FROM FOREIGN COMPANY TO MANUFACTURE THE PRODUCTS IN INDIA AND A NON-EXCLUSIVE LICENSE TO SELL THE PRODUCTS AND TREATED THE ROYALTY PAYMEN T AS CAPITAL EXPENDITURE AND ACCORDINGLY DISALLOWED THE ENTIRE E XPENDITURE AND ALLOWED THE DEPRECIATION @25% ON THE TOTAL PAYMENT. FOR THE SAKE OF CONVENIENCE WE EXTRACT THE RELEVANT PARAGRAPH NO.3.2 OF THE ASS ESSMENT ORDER AS UNDER: ON GOING THROUGH THE AGREEMENTS, IT IS NOTICED THAT THE ROYALTY PAYMENTS ARE IN LIEU OF EXCLUSIVE LICENCE FROM FOREIGN COMPANY TO MANUFACTU RE THE PRODUCTS IN INDIA AND A NON- EXCLUSIVE LICENCE TO SELL THE PRODUCTS. THE ROYALTY HAS BEEN PAID AS PER THE AGREEMENT, BY VIRTUE OF WHICH, THE ASSESSEE ENJOYS EXCLUSIVE RIGH T TO MANUFACTURE AND SELL THE PRODUCTS IN INDIA USING THE LICENSED TECHNOLOGY PROVIDED AND SU CH ROYALTY IS PAID ON A FIXED PERCENTAGE OF SALES. IN OTHER WORDS, AN EXCLUSIVE RIGHT HAS BE EN CONFERRED ON THE ASSESSEE FOR MANUFACTURING AND SELLING THE PRODUCTS IN INDIA AND THE ASSESSEE IS ENJOYING AN ENDURING BENEFIT OUT OF IT. THEREFORE, THE PAYMENT OF ROYALT Y, TOWARDS TECHNICAL INFORMATION PROVIDED BY THE FOREIGN COMPANY IN RESPECT OF MANUFACTURING METHODS OF THE PRODUCTS AND THE ITA NOS.1670 & 2022/MDS/2014 :- 4 -: LICENSE GRANTED TO THE ASSESSEE COMPANY, IS A CAPIT AL EXPENDITURE. THE DECISION OF THE HONBLE SUPREME COURT, IN THE CASE OF SOUTHERN SWIT CH GEAR VS. CIT, REPORTED IN 232 ITR 359, IS SQUARELY APPLICABLE IN THIS CASE. THE DEPRE CIATION SCHEDULE PROVIDES FOR 25% DEPRECIATION ON INTANGIBLE ASSETS LIKE KNOW-HOW, PA TENTS, COPYRIGHTS, TRADEMARK, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR NATURE. IN VIEW OF THE ABOVE, THE CLAIM OF EXPENSE OF RS.71,30,401/- UNDER THE HEAD ROYALTY IS DISALLOWED AND DEPRECIATION ON THE SAME IS ALLOWED @25% WHICH COME S TO RS.17,82,600/-. THUS THE DISALLOWANCE UNDER THIS HEAD COMES TO RS.53,47,801/ - (RS.71,30,401/- MINUS RS.17,82,600/-). 4.1 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WEN T ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) (IN SHORT LD.CIT(A)). THE LD.CIT(A) FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NOS.1716 TO 1719/MDS/200 3 DATED 25.02.2011 FOR THE AYS 1999-2000 TO 2005-06 HELD 75% OF THE RO YALTY PAYMENTS AS REVENUE EXPENDITURE AND THE BALANCE AMOUNT OF 25% W AS HELD TO BE CAPITAL EXPENDITURE AND ENTITLED FOR DEPRECIATION. 4.2 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSES SEE AND THE REVENUE HAVE FILED THE APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE IN ITS APPEAL AGITATING THE DIRECTION OF THE LD.CIT(A) TO TREAT 75% OF EXPENDITURE AS REVENUE INSTEAD OF 100%. THE REVENUE IN ITS AP PEAL OBJECTING THE DIRECTION OF LD.CIT(A) TO TREAT 25% OF THE EXPENDIT URE AS CAPITAL EXPENDITURE INSTEAD OF 100%. 4.3 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. IN THE ASSESSEES OWN CASE ON IDENTICAL FACTS IN T HE ORDER CITED SUPRA AND IN ITA NO.729/MDS/2014 FOR THE AY 2008-09, THIS TRIBUNAL DIRECTED THE AO TO TREAT 3/4 TH OF ROYALTY PAYMENT AS REVENUE EXPENDITURE AND THE REMAINING 1/4 TH OF EXPENDITURE AS CAPITAL EXPENDITURE AND ALLOWED THE ITA NOS.1670 & 2022/MDS/2014 :- 5 -: DEPRECIATION ON THE CAPITAL EXPENDITURE. FOR READY REFERENCE, WE REPRODUCE THE RELEVANT PARAGRAPHS OF THIS TRIBUNAL ORDER DATED 25.02.2011 7. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AS WELL AS CASE LAW DISCUSSED BY THE LD. CIT(A) IN HIS ORDER AND CITED BY THE RIVAL SIDES IN THE LIGHT OF RELEVANT CLAUSES OF AGREEMENT AND FIND THAT THE LD. CIT(A), WHILE RELYING UPON THE DECISION OF THE HONBLE SUPREME COURTS DECISION IN THE CASE OF SOU THERN SWITCHGEAR LTD. (SUPRA) (ORDER DATED 11.12.1997), HAS DIRECTED THE ASSESSING OFFICE R TO TREAT 25% OF THE ROYALTY PAYMENT AS CAPITAL EXPENDITURE AND THE BALANCE 75% AS REVEN UE EXPENDITURE AND THE ASSESSING OFFICER HAS FURTHER BEEN DIRECTED TO ALLOW APPROPRIA TE DEPRECIATION ON THE 25% CAPITAL EXPENDITURE IN ACCORDANCE WITH LAW AND WHILE DOING SO, THE LD. CIT(A) HAS PREFERRED TO FOLLOW THE ABOVE DECISION, WHICH WAS PRONOUNCED LAT ER TO THAT OF CIT V. IAEC (PUMPS) LTD. 232 ITR 316 (SC) ( ORDER DATED 03.04.1997), WHICH A CCORDING TO HIM WOULD PREVAIL. 7.1 WE HAVE CONSIDERED THE ARGUMENTS OF RIVAL SIDES AND MATERIALS ON RECORD IN THE LIGHT OF PRECEDENT RELIED UPON. WE HAVE ALSO CONSIDERED THE BASIS AND REASONING AS GIVEN BY THE LD. CIT(A) IN GIVING PART RELIEF TO THE ASSESSEE. SO FA R AS THE FACTS OF THE CASE IN HAND AND POINT AT ISSUE DECIDED BY THE HONBLE MADRAS HIGH COURT I N THE CASE OF SOUTHERN SWITCHGEARS LTD. (SUPRA) IS CONCERNED, IT IS ALMOST IDENTICAL AND SU CH DECISION OF THE HONBLE MADRAS HIGH COURT HAS FURTHER BEEN AFFIRMED BY THE HONBLE SUPR EME COURT IN THE SAID CASE OF SOUTHERN SWITCHGEARS LTD. (SUPRA) AND THE LD. CIT(A) HAS FOL LOWED SUCH DECISION TO GIVE PART RELIEF TO THE ASSESSEE AND NO DISTINGUISHING FEATURE HAS BEEN POINTED BY THE LD. DR IN THIS REGARD. THEREFORE, WHILE CONCURRING WITH THE FINDING AND TH E CONCLUSION OF THE LD. CIT(A) IN THIS REGARD, WE UPHOLD HIS ACTION AND DISMISS THIS GROUN D IN ALL THE APPEALS OF THE REVENUE AS WELL AS OF ASSESSEE. 4.4 SINCE THE FACTS ARE IDENTICAL FOLLOWING THE ORDER OF THIS TRIBUNAL CITED (SUPRA) WE FIND NO REASON TO INTERFERE WITH THE ORD ER OF THE LD.CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. THE APPEAL OF THE ASSESSEE ON THIS GROUND AND REVENUE APPEAL IN ITA NO.2022/MDS/2014 A RE DISMISSED. 5.0 GROUND NOS.3 TO 3.1 ARE RELATED TO THE DISALLOWANC E OF MARKETING SERVICE FEE OF RS.1,22,54,729/- PAID TO M/S.INDIA P ISTON RINGS LTD., (IN SHORT M/S.IPL). DURING THE ASSESSMENT PROCEEDING S, THE AO FOUND THAT THE ASSESSEE COMPANY PAID A SUM OF RS.1,22,54,729/- TOWARDS SERVICE FEE TO M/S.IPL AND CLAIMED TO BE TOWARDS PROMOTING ASSE SSEES PRODUCTS. THE ASSESSEE CLAIMED THAT M/S.IPL GUIDE THE ASSESSEE IN MARKETING, PROMOTING AND SECURING THE ORDERS ON BEHALF OF THE ASSESSEE A ND THE CONSIDERATION OF ITA NOS.1670 & 2022/MDS/2014 :- 6 -: THE SERVICE FEE OF 3% OF THE NET TURNOVER IS PAID T O M/S.IPL AS PER THE AGREEMENT. THE ASSESSING OFFICER BEING NOT CONVINCE D WITH THE EXPLANATION EXAMINED THE AGREEMENTS AND DISALLOWED THE EXPENDIT URE HOLDING THAT THE SAME IS NOT A GENUINE EXPENDITURE. FOR THE SAKE OF CONVENIENCE WE EXTRACT THE RELEVANT PARAGRAPH OF THE AOS ORDER IN 5.1 AND 5.2 AS UNDER: 5.1 COPY OF THE AGREEMENT BETWEEN ASSESSEE AND IPL IS FILED AND GONE THROUGH. AS PER THE AGREEMENT OF IPL OFFERS THE FOLLOWING SERVICES- - MARKETING THE PRODUCTS - CANVASS BUSINESS - HANDLE PUBLICITY AND ADVERTISEMENT - ASSIST IN DESIGN, DRAWINGS ETC., - ASSIST IN R & D ACTIVITIES - IDENTIFY DIVERSIFICATION AND EXPANSION ETC 5.2 THE ASSESSEE M/S. I P RINGS WAS ESTABLISHED 2 0 YEARS BACK BY IPL ITS PROMOTER IN COLLABORATION WITH NIPPON PISTON RING COMPANY LTD, JAPAN. IT IS STATED THAT IT HAS A MODEL MANUFACTURING UNIT, WITH THE STATE OF THE ART TECHN OLOGIES AND A SOPHISTICATED UNIT. ITS CUSTOMERS INCLUDE TATA MOTORS, ASHOK LEYLAND, MARUT HI, HYUNDAI MOTORS, HINDUSTAN MOTORS, SIMPSONS, EICHER MOTORS, MAHINDRA, TVS MOTO RS, TAFE AND INDIA PISTONS. SOME OF THE CUSTOMERS ARE ITS OWN PROMOTER GROUP. THE ASSES SEE ITSELF CLAIMS THAT THE COMPANY IS THE MOST PREFERRED SUPPLIER. THE ASSESSEE HAS NOT G IVEN ANY EVIDENCE OF ITS DEPENDABILITY FOR THE SERVICES MENTIONED IN THE AGREEMENT WITH IT S PROMOTER NOR IT WAS CONCLUSIVELY PROVED THAT MARKETING SERVICE FOR PAYMENT IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS AND BY MAKING SUCH PAYMENT THE ASSESSEE IN CREASED ITS SALES. THE ASSESSEE BY MERELY CREATING AN AGREEMENT TO PAY 3% OF ITS SALES TO ITS PROMOTION A SERVICE FOR WHICH IN MY OPINION IS NOT ALLOWABLE. HENCE, MARKETING SERVI CE FEE PAID OF RS.1,22,54,729/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. 5.1 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WEN T ON APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) CONFIRMED THE ADDITION OBSERVING THAT THE SERVICES MENTIONED IN THE AGREEMENT ARE GE NERAL IN NATURE AND THE EXACT NATURE OF SERVICES RENDERED BY M/S.IPL AR E NOT FURNISHED BY THE ASSESSEE. THE LD.CIT(A) FURTHER OBSERVED THAT THOUG H THE ASSESSEE CLAIMED THAT THE PAYMENTS WERE WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE, THE ASSESSEE HAS NOT FURN ISHED THE EVIDENCES REGARDING THE NATURE OF SERVICES ACTUALLY RENDERED TO THE ASSESSEE. THE CIT(A) WAS OF THE VIEW THAT MERE PAYMENT AND THE RE CEIPT ARE NOT ITA NOS.1670 & 2022/MDS/2014 :- 7 -: CONCLUSIVE PROOF OF EVIDENCE FOR RENDERING THE SERV ICES AND FOR THE PURPOSE OF ALLOWING THE EXPENSES AND ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE. 5.2 AGGRIEVED BY THE LD.CIT(A)S ORDER, THE ASSESSEE F ILED APPEAL BEFORE US. APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED THAT M/S.IPL IS A PROMOTER OF THE ASSESSEE COMPANY RENDERING SERVICES RELATED TO CANVASSING, HANDLING, PUBLICITY AND ADVERTISEMENT, ASSISTING IN DESIGNING AND DRAWINGS, ASSISTING IN R&D ACTIVITIES AND IDENT IFYING DIVERSIFICATION AND EXPANSION ETC. THE PAYMENT IS MADE AS PER THE TERM S AND CONDITIONS OF THE AGREEMENT ENTERED INTO WITH M/S.IPL @3% AND THE SAME IS EVIDENCED BY BANKING TRANSACTION. IN THE EARLIER YEARS ALSO, THE ASSESSEE CLAIMED SUCH EXPENDITURE AND THE AO HAS ALLOWED THE EXPENDI TURE. ON THE SAME SET OF FACTS, THE AO CANNOT TURN AROUND TAKE DIFFER ENT STAND. ON THE OTHER HAND, THE LD.DR ARGUED THAT THE ASSESSEE HAS NOT PR ODUCED ANY EVIDENCE TO SHOW THAT M/S.IPL WAS RENDERING ANY SERVICE TO T HE ASSESSEE COMPANY. AS STATED BY THE AO, IN THE ASSESSMENT ORDER, THE C OMPANY IS 20 YEARS OLD COMPANY HAVING ITS OWN DIVISIONS FOR MARKETING, PUBLICITY, CANVASSING, ETC., AND THERE IS NO NEED TO MAKE ANY PAYMENT TO M /S.IPL. 5.3 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. ITA NOS.1670 & 2022/MDS/2014 :- 8 -: THE CONTENTION OF THE ASSESSEE WAS THAT M/S.IPL IS RENDERING MARKETING, CANVASSING, PUBLICITY, R&D, DESIGNING AN D DRAWINGS, ETC. SERVICES, FOR WHICH THE SERVICE FEE @3% ON TOTAL TU RNOVER WAS PAID BY THE ASSESSEE. BOTH THE COMPANIES ARE ADMITTING THE INC OME AND EXPENDITURE AND THE SAME ARE ASSESSED TO TAX IN THE RESPECTIVE HANDS. THEREFORE, THERE IS NO REASON TO DOUBT THE GENUINENESS OF THE EXPENDITURE. HOWEVER, THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO PROVE THAT THE M/S.IPL IS RENDERING SERVICES AS DISCUSSED ABOVE. THE COMPANY IS IN NEED OF THE SERVICES OF M/S.IPL BUT NEITHER BEFORE THE AO NOR B EFORE THE LD.CIT(A) THE ASSESSEE HAS PRODUCED ANY EVIDENCE TO PROVE THE GEN UINENESS OF EXPENDITURE. IN INCOME TAX PROCEEDINGS, EACH YEAR I S INDEPENDENT YEAR AND THE ASSESSEE HAS TO PROVE THAT THE EXPENDITURE WAS GENUINELY INCURRED FOR THE PURPOSE OF BUSINESS. BEFORE THIS TRIBUNAL THE ASSESSEE HAS FURNISHED A PAPER BOOK AND IN PAGE NOS.37 TO 16 0 THE ASSESSEE HAS SUBMITTED VARIOUS SERVICES OF TECHNICAL NATURE, PUR PORTED TO BE RENDERED BY M/S.IPL. THESE EVIDENCES WERE NOT PLACED BEFORE THE AO AND THE LD.CIT(A). AT THE TIME OF HEARING, THE LD.AR ARGUE D THAT THE ADDITIONAL EVIDENCE MAY BE SENT BACK TO THE FILE OF THE AO FOR VERIFICATION. WE CONSIDERED THE ADDITIONAL EVIDENCES AND SUBMISSIONS MADE BY THE ASSESSEE BEFORE US REGARDING VARIOUS TECHNICAL HELP EXTENDED BY M/S.IPL TO THE ASSESSEE. THE GENUINENESS AND CORRECTNESS O F THE EVIDENCES AND THE ACTUAL SERVICES RENDERED BY M/S.IPL REQUIRE FUR THER VERIFICATION. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E CASE SHOULD BE REMITTED BACK TO THE FILE OF THE AO TO VERIFY THE E VIDENCES FURNISHED BY THE ITA NOS.1670 & 2022/MDS/2014 :- 9 -: ASSESSEE IN SUPPORT OF ITS CLAIM FOR SERVICES TAKEN FROM M/S.IPL AND DECIDE THE ISSUE A FRESH ON MERITS. ACCORDINGLY, WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH DIRECTIONS TO VERIFY THE SERVIC ES RENDERED BY M/S.IPL AND DECIDE THE ALLOWABILITY OF THE EXPENDITURE AFRE SH AFTER ON MERITS. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSE. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ' . . # $!% ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5! /DATED: 31 ST MARCH, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 6 9 .2 /DR 3. # 82 ( ) /CIT(A) 6. * < /GF