VIHI, LLC (Formerly known as Visteon International Holdings Inc), V. Addl. DIT, CHENNAI

ITA 17/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4702 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 05-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 05-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VASANTHA KU MAR IRS
• Assessee Lawyers: S E DA STUL SR
• Keywords: Gift; Transfer pricing; International transaction; Rule of consistency; Competent authority
• Section: 92C; 143(3); 234B; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 17(MDS)/2012 ASSESSMENT YEAR : 2007-08 M/S VIHI, LLC (FORMERLY KNOWN AS VISTEON INTERNATIONAL HOLDINGS INC.), ONE VILLAGE CENTRE DRIVE VAN BUREN TOWNSHIP, MICHIGAN, USA 48111. PAN : AACCV 5659 B V. THE ADDL. DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.E. DA STUL, SR. COUNSEL & SHRI NEERAJ SHETH, ADVOCATE RESPONDENT BY : SHRI VASANTHA KU MAR, IRS, CIT DATE OF HEARING : 5 TH NOVEMBER, 2013 DATE OF PRONOUNCEMENT : 12 TH NOVEMBER, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2007-08. THE ASSESSEE IS A US C OMPANY. - - I.T.A. NO. 17/MDS/12 2 2. THIS APPEAL IS DIRECTED AGAINST THE ASSESSMENT O RDER PASSED UNDER SECTION 143(3) R/W SECTION 144C(13) OF THE INCOME-TAX ACT, 1961. 3. THE ASSESSEE, WHICH IS A FOREIGN COMPANY, REGIST ERED IN USA, HELD 91% OF THE SHARES IN THE CAPITAL OF M/S V ISTEON POWERTRAIN CONTROL SYSTEMS INDIA PVT. LTD. (VPCSI). M/S VPCSI IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF I NDIAN COMPANIES ACT, 1956. IT IS AN INDIAN COMPANY. 4. THE ASSESSEE-COMPANY HAD TRANSFERRED ITS ENTIRE SHAREHOLDING OF 91% IN VPCSI ON MARCH 30, 2007. TH E SHARES WERE SOLD TO M/S VISTEON INTERNATIONAL HOLDINGS SIN GAPORE PTE LTD. (VIHS) AND TO M/S VISTEON INTERNATIONAL HOLDIN GS MAURITIUS LTD. (VIHM). THE FACE VALUE OF THE SHARES SOLD BY THE ASSESSEE IS ` 10 PER SHARE. THE ASSESSEE-COMPANY TRANSFERRED TH E SHARES AT ` 10.32 PER SHARE. THE ASSESSEE HAD OBTAINED A VALUATION CERTIFICATE ISSUED BY M/S DELOITTE HASKIN S & SELLS, CHARTERED ACCOUNTANTS. THE VALUATION OF THE SHARES HAS BEEN MADE IN THE LIGHT OF THE GUIDELINES ISSUED BY THE O FFICE OF CONTROLLER OF CAPITAL ISSUES, INDIA. [THE SAID OFFI CE HAS SINCE - - I.T.A. NO. 17/MDS/12 3 BEEN ABOLISHED AND ITS FUNCTIONS HAVE BEEN TAKEN OV ER BY SECURITIES EXCHANGE BOARD OF INDIA (SEBI)]. THE GU IDELINES WERE ISSUED BY THE ERSTWHILE CONTROLLER OF CAPITAL ISSUES, AS REQUIRED UNDER FOREIGN EXCHANGE MANAGEMENT REGULATI ONS, 2000. THE VALUE DETERMINED BY THE INDEPENDENT VALU ER HAS BEEN TAKEN AS A COMPARABLE PRICE UNDER COMPARABLE UNCONTROLLED PRICE (CUP) METHOD. THE CUP METHOD IS ONE OF THE METHODS PRESCRIBED FOR THE PURPOSE OF COMPUTING THE ARMS LENGTH PRICE (ALP) UNDER SECTION 92C OF THE INCOME- TAX ACT, 1961. THE PRICE WAS COMPUTED TAKING THE WEIGHTED A VERAGE OF NET ASSET VALUE (NAV) DETERMINED AT ` 15.05 PER SHARE AND THE PROFIT EARNING CAPACITY VALUE (PECV) DETERMINED AT ` 9.23 PER SHARE. THE WEIGHTED AVERAGE VALUE WAS FURTHER DISC OUNTED BY 15%. THE VALUE HAS BEEN DISCOUNTED FOR THE REASON THAT THE SHARES OF THE COMPANY ARE UNLISTED. 5. THE SALE OF SHARES BEING IN THE NATURE OF TRANSA CTION ENTERED INTO BETWEEN ASSOCIATE ENTERPRISES (AES), T HE QUESTION OF FIXING THE ALP IN THE MATTER OF SELLING THE SHAR ES WAS REFERRED UNDER SECTION 92CA(1), TO THE TRANSFER PRICING OFFI CER (TPO). THE TPO, AFTER EXAMINING THE FACTS OF THE CASE IN A VERY DETAILED - - I.T.A. NO. 17/MDS/12 4 MANNER, HELD THAT THE TRANSFER PRICE OF ` 10.32 DETERMINED BY THE ASSESSEE CANNOT BE ACCEPTED FOR THE REASON THAT THE METHOD OF AVERAGING PECV AND NAV IS NOT AN ACCEPTED METHOD OF SHARE VALUATION AND THE GUIDELINES ISSUED BY THE ERSTWHIL E CONTROLLER OF CAPITAL ISSUES ARE NO MORE RELEVANT IN THE MATTER O F VALUING THE SHARES AND SO PARTICULARLY, THOSE GUIDELINES WERE I SSUED IN A DIFFERENT CONTEXT TO ENSURE A MINIMUM VALUE THAT TH E SALE OF A SHARE OUGHT HAVE FETCHED. 6. THE TPO, ON THE OTHER HAND, APPLIED DISCOUNTED C ASH FLOW (DCF) METHOD TO MEASURE THE VALUE OF SHARES SO LD BY THE ASSESSEE. ON THE BASIS OF COMPUTATION MADE BY THE TPO APPLYING DCF METHOD, THE PRICE HAS COME TO ` 36.31 PER SHARE. 7. ON RECEIPT OF THE ORDER OF TPO, FIXING THE ALP A T ` 36.31 PER SHARE, AS AGAINST THE PRICE OF ` 10.32 DETERMINED BY THE ASSESSEE-COMPANY, DRAFT ASSESSMENT ORDER WAS FRAMED . THE ASSESSING OFFICER APPLIED THE ALP OF ` 36.31 PER SHARE, DETERMINED BY THE TPO, CALCULATED UNDER DCF METHOD. AS THE ASSESSEE HAD SERIOUS OBJECTIONS AGAINST THE DRAFT A SSESSMENT ORDER PROPOSED BY THE ASSESSING AUTHORITY, THE ASSE SSEE WENT - - I.T.A. NO. 17/MDS/12 5 BEFORE THE DISPUTE RESOLUTION PANEL (DRP) AT CHENNA I, UNDER SECTION 144C OF THE INCOME-TAX ACT, 1961. THE DRP, IN ITS TURN, CONSIDERED THE CASE IN A VERY DETAILED MANNER AND F INALLY DISMISSED THE REFERENCE MADE BY THE ASSESSEE. THER EAFTER, THE ASSESSING OFFICER CRYSTALLIZED THE ORDERS OF TPO AN D THE DRP IN THE MATTER OF DETERMINING THE ALP BY PASSING A FINA L ASSESSMENT ORDER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1 961. 8. THE ASSESSEE IS AGGRIEVED AND THEREFORE, IN APPE AL BEFORE US. 9. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THE PRESENT TRANSFER PRICING CASE, PLACED BEFORE US. T HEY ARE AS FOLLOWS:- (1) THE LEARNED ASSESSING OFFICER (AO') AND THE LEARNED TRANSFER PRICING OFFICER (TPO) HAVE GROSS LY ERRED IN LAW AND FACTS OF THE CASE IN DETERMINING T HE ARM'S LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION OF THE APPELLANT WITH RESPECT TO FULL V ALUE OF CONSIDERATION ACCRUING TO THE ASSESSEE IN TERMS OF SECTION 48 READ WITH SECTION 92(C)(4) OF THE INCOME TAX ACT. (2) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LEARNED AO AND THE LEARNED TPO HAVE ERRED IN REJECTING THE TRANSFER PRICING (TP) DOCUMENTATION WITHOUT ASSIGINING COGENT OR CONCRETE REASONS AND N OT APPRECIATING THE CONTENTIONS, ARGUMENTS, AND - - I.T.A. NO. 17/MDS/12 6 EVIDENTIARY DATA PUT FORWARD BY THE APPELLANT DURIN G THE COURSE OF THE PROCEEDINGS BEFORE THEM. (3) THAT THE LEARNED AO AND THE LEARNED TPO HAVE GROSSLY ERRED IN MAKING ADJUSTMENT TO THE INTERNATI ONAL TRANSACTION OF SALE OF SHARES BY VISTEON INTERNATIO NAL HOLDINGS INC. (HEREINAFTER REFERRED TO AS VIHI) I N VISTEON POWERTRAIN CONTROL SYSTEMS INDIA PRIVATE LIMITED (HEREINAFTER REFERRED TO AS VPCSI). (4) THAT THE LEARNED AO AND THE LEARNED TPO HAVE GROSSLY ERRED IN CONCLUDING THAT THE VALUATION OF S HARES CERTIFIED BY AN INDEPENDENT VALUER BASED ON THE GUIDELINES ISSUED BY UNDER THE ERSTWHILE COMPTROLLE R OF CAPITAL ISSUES (HEREINAFTER REFERRED TO AS CCI) W AS NOT APPROPRIATE FOR THE PURPOSES OF TRANSFER PRICING REGULATIONS (HEREINAFTER REFERRED TO AS THE TPR) (4.1) THE LEARNED AO AND THE LEARNED TPO HAVE GROSSLY ERRED IN NOT ACCEPTING THE VALUATION O F AN INDEPENDENT VALUER IN THE ABSENCE OF GUIDELINES ON VALUATION FOR THE PURPOSE OF DETERMINING THE ARM'S LENGTH PRICE (HEREINAFTER REFERRED TO AS ALP) FOR THE VALUATION OF SHARES IN THE INDIAN TRANSFER PRICING REGULATIONS (HEREINAFTER REFERRED TO AS TPR); (4.2) THAT THE LEARNED AO AND THE LEARNED TPO HAVE GROSSLY ERRED IN NOT APPRECIATING THE FACT THA T IN VIEW OF THE PREVAILING LAWS IN FORCE AT THE TIME TH E TRANSACTION WAS ENTERED INTO, THE AVERAGE OF THE NE T ASSET VALUE (HEREINAFTER REFERRED TO AS NAV) METH OD AND THE PROFIT EARNING CAPACITY VALUE (HEREINAFTER REFERRED TO AS PECV) METHOD PER THE ERSTWHILE CCI GUIDELINES WAS MOST APPROPRIATE METHOD. (4.3) THAT THE LEARNED AO AND THE LEARNED TPO OUGHT TO HAVE OBSERVED THAT THE NAV METHOD OF VALUATION OF SHARES, PER THE CCI GUIDELINES, IS AN ACCEPTABLE METHOD UNDER SEVERAL ENACTMENTS SUCH AS THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT), WEALTH TAX ACT, 1957 (HEREINAFTER REFERRED TO AS THE WT ACT) ETC. AND ALSO THAT THE SAME HAS BEEN ACCORDED RECOGNITION AS AN APPROPRIATE METHOD BY TH E HONOURABLE SUPREME COURT IN THE CASE OF HINDUSTAN LEVER UNION V. HINDUSTAN LEVER LIMITED. - - I.T.A. NO. 17/MDS/12 7 (4.4) THE LEARNED AO AND THE LEARNED TPO HAVE GROSSLY ERRED IN NOT APPRECIATING THE FACT THA T CCI GUIDELINES ARE BASED ON PAST PERFORMANCE AND THE VALUE DETERMINED, AND THE METHOD OF VALUATION AND HENCE CANNOT BE REJECTED AS INAPPROPRIATE. (5) THE LEARNED AO AND THE LEARNED TPO HAVE GROSSLY ERRED IN ARBITRARILY CHOOSING A DIFFERENT M ETHOD OR A COMBINATION OF METHODS SUCH AS DISCOUNTED CASH FLOW (DCF) METHOD AND MARKET BASED APPROACH FOR VALUATION OF SHARES AS THE MOST APPROPRIATE METHOD AS THESE METHODS ARE MOST SUITED TO LISTED COMPANIES A ND NOT TO UNLISTED COMPANY LIKE THE APPELLANT. (5.1) THAT LEARNED AO AND THE LEARNED TPO OUGHT TO HAVE OBSERVED THAT THE DCF METHOD OF VALUATION ADOPTED FOR DETERMINING THE TRANSFER VALU E HAS BEEN MADE EFFECTIVE ONLY FROM APRIL 21, 2010 VIDE NOTIFICATION FEMA 205 / 2010 AND THEREFORE AT THE T IME OF THE TRANSACTION THE ONLY AVAILABLE GUIDELINE WAS THE CCI METHOD WHICH PRESCRIBED NAV METHOD FOR VALUATIO N OF SHARES OF UNLISTED COMPANIES. (5.2) THAT THE LEARNED AO AND THE LEARNED TPO HAVE GROSSLY ERRED IN NOT APPRECIATING THAT THE ABO VE STATED MODIFICATION SHOULD BE CONSIDERED AS A SUBSTANTIVE LEGISLATURE AND ONLY USED PROSPECTIVELY AND SHOULD NOT BE APPLIED ARBITRARILY TO SOME TRANSACTI ON HAPPENED IN THE PAST; (5.3) THAT THE LEARNED AO AND THE LEARNED TPO HAVE ERRED IN NOT CONSIDERING THE FACT THAT VALUATI ON PER DCF METHOD IS PARTICULARLY SENSITIVE TO ASSUMPTIONS LIKE PERPETUITY GROWTH RATES, FUTURE CASH FLOWS AND DISC OUNT RATES. (5.4) NOTWITHSTANDING THE AFOREMENTIONED GRIEVANCES, THE LEARNED AO AND THE LEARNED TPO HAVE ERRED MAKING CERTAIN INAPPROPRIATE ASSUMPTIONS RELA TING TO REVENUE, EXPENSES AND THE WEIGHTED AVERAGE COST OF CAPITAL WHILE ADOPTING DCF METHOD FOR VALUATION OF SHARES. (5.5) THE LEARNED AO AND THE LEARNED TPO HAVE ERRED IN BEING INCONSISTENT IN APPLICATION OF THE ASSUMPTIONS IN THE TP ORDER. - - I.T.A. NO. 17/MDS/12 8 (6) THAT THE LEARNED AO AND THE LEARNED TPO HAVE ERRED IN COMPUTATION OF INTEREST UNDER SECTION 234A OF THE INCOME-TAX ACT, 1961 EVEN THOUGH THE COMPANY HA S FILED ITS RETURN OF INCOME WELL WITHIN THE DUE DATE UNDER SECTION 139(1) OF THE INCOME-TAX ACT, 1961. 10. IN ADDITION TO THE ABOVE GROUNDS OF APPEAL, THE ASSESSEE- COMPANY HAS ALSO RAISED ADDITIONAL GROUNDS SUPPORTE D BY AN EXPLANATION IN THE FORM OF MEMORANDUM OF ADDITIONAL OBJECTIONS. 11. THE MEMORANDUM OF ADDITIONAL OBJECTIONS FILED B Y THE ASSESSEE-COMPANY ARE REPRODUCED BELOW:- THE APPELLANT IS AN INVESTMENT COMPANY AND HAD MADE INVESTMENTS IN VISTEON POWERTRAIN CONTROL SYSTEMS INDIA PRIVATE LIMITED (VPSCI). DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007-08, THE APPELLANT TRANSFERRED ITS SHAREHOLDING IN VPSCI TO AND IN FAVOUR OF VISTEON INTERNATIONAL HOLDING MAUR IUS LTD. AND VISTEON INTERNATIONAL HOLDING SINGAPORE LIMITED. FOR THE PURPOSE OF BENCHMARKING THE SHARE TRANSFER FROM INDIAN TRANSFER PRICING PERSPECTIVE, THE APPELLANT HAD ADOPTED/UNDERTAKEN VALUATION AS PER CCI GUIDELINES I.E. COMBINATION OF NET ASSET VALUE (NAV) AND PROFIT EARNING CAPACITY VALUE (PECV) METHODS AND CONCLUDED IN ITS TRANSFER PRICING DOCUMENTATION THAT THE INTERNATIONAL TRANSACTION OF SHARE TRANSFER WAS AT ARMS LENGTH. THE ASSESSING OFFICER HAD REFERRED THE INTERNATION AL TRANSACTIONS TO THE TRANSFER PRINCING OFFICER (TPO ) FOR DETERMINATION OF ARMS LENGTH PRICE OF SHARE TRANSFER. THE TPO WHILE DETERMINING THE ARMS LENG TH PRICE OF THE INTERNATIONAL TRANSACTION VIZ., SHARE TRANSFER BY THE APPELLANT IN VPSCI HELD THAT VALUAT ION SHOULD BE DONE AS PER DISCOUNTED CASH FLOW (DCF) METHOD AND HAS CONSEQUENTLY MADE AN ADJUSTMENT. - - I.T.A. NO. 17/MDS/12 9 BEFORE THIS HONBLE TRIBUNAL, AMONG OTHER GROUNDS OF APPEAL, THE APPELLANT HAS CHALLENGED THAT DCF METHOD IS NOT AN APPROPRIATE METHOD. HOWEVER, IT H AS INADVERTENTLY OMITTED TO RAISE SPECIFIC GROUNDS IN RELATION TO ABSENCE OF APPROVAL BY COMMISSIONER OF INCOME TAX, INACCURACIES IN THE DCF METHOD EMPLOYED BY THE TPO AND ALTERNATIVE GROUND ON APPLICABILITY OF YIELD METHOD FOR DETERMINATION OF ALP. THESE ARE PURELY LEGAL GROUNDS WHICH DO NOT REQUIR E INVESTIGATION OF ADDITIONAL FACTS. IT IS THEREFORE PRAYED THAT THESE ADDITIONAL GROUNDS MAY BE ADMITTED AND DECIDED ON MERITS. THE ASSESSEE RELIES ON THE FOLLOWING DECISIONS FOR ADMISSION OF ADDITIONAL OBJECTIONS: CIT V. ASSOCIATED STONE INDUSTRIES (224 ITR 560 (SC ) CIT V. M.K.YASHWANT SINGH (231 ITR 145 (DEL) NATIONAL THERMAL POWER CO. LTD. (229 ITR 383 (SC) 12. IN THE LIGHT OF THE ABOVE EXPLANATION, THE ADDI TIONAL GROUNDS RAISED BY THE ASSESSEE-COMPANY ARE AS FOLLO WS: (1) THE LEARNED ASSESSING OFFICER (AO) AND THE LEARNED TRANSFER PRICING OFFICER (TPO) FAILED TO APPRECIATE THAT SINCE THEY DID NOT OBTAIN SPECIFIC APPROVAL FROM THE COMMISSIONER OF INCOME TAX PRIOR TO DETERMINATION OF ARMS LENGTH PRICE (ALP) OF SHA RE TRANSFER THE DETERMINATION OF ALP BY THEM WAS WITHO UT JURISDICTION. (2) WITHOUT PREJUDICE TO THE ABOVE GROUNDS AND OUR GROUND THAT VALUATION AS PER CCI GUIDELINES IS MORE APPROPRIATE THAN DCF METHOD, THE LEARNED AO AND THE LEARNED TPO OUGHT TO HAVE APPRECIATED THAT YIELD METHOD IS THE MOST APPROPRIATE METHOD FOR VALUATION OF SHARES. (3) WITHOUT PREJUDICE TO OUR CONTENTION THAT DCF METHOD IS NOT AN APPROPRIATE METHOD FOR DETERMINATI ON OF ALP OF SHARE TRANSFER, THE FOLLOWING ASSUMPTIONS OF THE AO/TPO WHILE ADOPTING DCF METHOD ARE ERRONEOUS: - - I.T.A. NO. 17/MDS/12 10 (3.1) THE LEARNED AO AND THE LEARNED TPO HAVE GROSSLY ERRED IN ADOPTING AN ARBITRARY WEIGHTED AVERAGE COST OF CAPITAL (WACC) PERCENTAGE OF 14.5 PERCENT. THE LEARNED AO/ TPO OUGHT TO HAVE ADOPTED WACC AT 16.34 PERCENT WHICH IS BASED ON THE INDUSTRY PEERS DATA AND SALIENT ASSUMPTIONS. (3.2) THE LEARNED AO AND THE LEARNED TPO HAVE GROSS ERRED IN ASSUMING ILLIQUIDITY DISCOUNT OF 20 PERCENT AS THE SAME OUGHT TO HAVE BEEN CONSIDERED A T 25 PERCENT BASED ON THE GLOBAL LITERATURE ON VALUAT ION OF PRIVATE COMPANIES. (3.3) THE LEARNED AO AND THE LEARNED TPO OUGHT TO HAVE STRAIGHTAWAY FORECASTED THE PROFIT BEFORE TAX (PBT) FOR THE PURPOSE OF DCF VALUATION INSTEAD OF ASSUMING EACH ITEM OF INCOME AND EXPENDITURE TO REDUCE SUBJECTIVITY IN THE ASSUMPTIONS. (3.4) THE LEARNED TPO AND THE LEARNED AO ERRED IN NOT BEING CONSISTENT WITH THE ASSUMPTIONS POSTULATE D IN THEIR ORDER WITH RESPECT TO THE WORKING CAPITAL CHANGES AND THE WACC COMPUTATION. (3.5) THE LEARNED AO AND THE LEARNED TPO IN VALUING THE SHARES AS PER THE DCF METHOD HAVE GROSSLY ERRED CONSIDERING THE REVENUES OF THE SERVI CE SEGMENT WITHOUT APPRECIATING THAT THE SAID SEGMENT WAS HIVED OFF IN THE FINANCIAL YEAR ENDED MARCH 31, 2007 AND THEREFORE ITS REVENUES CANNOT BE TAKEN INT O ACCOUNT IN FORECASTING THE FUTURE INFLOWS. (4) THE LEARNED AO ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT WITHOUT APPRECIATING THAT T HE APPELLANT BEING A NON-RESIDENT IT IS NOT OBLIGATED TO PAY ADVANCE TAX. 13. AS THE ADDITIONAL GROUNDS RAISED BY THE ASSESSE E- COMPANY ARE LEGAL IN NATURE, AND ALSO FURTHER VERIF ICATION OF FACTS ARE NOT REQUIRED, THE ADDITIONAL GROUNDS ARE TREATE D AS PART OF THE - - I.T.A. NO. 17/MDS/12 11 GROUNDS RAISED IN THE PRESENT APPEAL, PLACED BEFORE US. THE ADDITIONAL GROUNDS ARE THUS ADMITTED. 14. SHRI S.E. DASTUL, THE LEARNED SENIOR COUNSEL, A PPEARED FOR THE ASSESSEE AND ARGUED THE CASE ALONG WITH SHRI NE ERAJ SHETH, THE ADVOCATE ON RECORD. SHRI VASANTHA KUMAR, THE L EARNED COMMISSIONER OF INCOME TAX, APPEARED FOR THE REVENU E AND ARGUED THE CASE EQUALLY IN DETAIL. 15. SHRI S.E. DASTUL, THE LEARNED SENIOR COUNSEL, A T THE FIRST INSTANCE, ARGUED ON THE APPLICABILITY OF SECTION 92 C ITSELF. THE LEARNED SENIOR COUNSEL EXPLAINED THAT SECTION 92C H AS PROVIDED DIFFERENT METHODS TO COMPUTE ARM'S LENGTH PRICE. TH OSE METHODS ARE PROVIDED UNDER SIX CATEGORIES, RUNNING FROM (A) TO (F). THE FIRST ONE, COMPARABLE UNCONTROLLED PRICE METHOD (CUP) IS NOT APPLICABLE TO THE PRESENT CASE AS NO COMPARA BLE CASE IS AVAILABLE SIMILAR TO THE SHARE TRANSACTION MADE BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R UNDER APPEAL. QUESTION OF RESALE PRICE METHOD (RPM) DOES NOT APPLY AS THERE IS NO SUCH A SITUATION, WHERE SHARES ARE S OLD WHOLESALE OR RETAIL. COST PLUS METHOD (CPM) IS ALSO NOT APPL ICABLE AS NO - - I.T.A. NO. 17/MDS/12 12 COST CAN BE ASCERTAINED IN THE CASE OF SHARES OF A COMPANY. IT IS ALSO EQUALLY NOT POSSIBLE TO APPLY PROFIT SPLIT MET HOD (PSM). THE TRANSACTIONAL NET MARGIN METHOD (TNMM) IS ALSO NOT APPLICABLE AS THERE IS NO CONCEPT OF NET MARGIN IN THE SALE OF SHARES. THE LEARNED SENIOR COUNSEL EXPLAINED THAT THE ONLY REMA INING CATEGORY AVAILABLE IN THE PRESENT CASE IS SUCH OTH ER METHOD AS MAY BE PRESCRIBED BY THE BOARD. 16. THE LEARNED SENIOR COUNSEL EXPLAINED THAT AS FA R AS IMPUGNED ASSESSMENT YEAR IS CONCERNED, THE BOARD HA S NOT PRESCRIBED ANY SUCH METHOD TO VALUE THE SHARES TR ANSFERRED IN SIMILAR CIRCUMSTANCES. HE, THEREFORE, ARGUED THAT THE COMPUTATION PROVISIONS WITH REFERENCE TO ALP HAVE F AILED AND AS SUCH, SECTION 92C CANNOT BE APPLIED TO ASSESSEES C ASE. THE LEARNED SENIOR COUNSEL HAS RELIED ON THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF CIT V. B.C. SRINIVASA SETTY (128 ITR 294), WHEREIN THE HONBLE SUPREME COURT HAS HEL D AS UNDER:- THE CHARGING SECTION AND THE COMPUTATION PROVISIONS TOGETHER CONSTITUTE AN INTEGRATED CODE. WHEN THERE IS A CASE TO WHICH THE - - I.T.A. NO. 17/MDS/12 13 COMPUTATION PROVISIONS CANNOT APPLY AT ALL, IT IS EVIDENT THAT SUCH A CASE WAS NOT INTENDED TO FALL WITHIN THE CHARGING SECTION. 17. THE LEARNED SENIOR COUNSEL, THEREFORE, CONTENDE D THAT THE COMPUTATION PROVISIONS PROVIDED UNDER SECTION 92C C ANNOT BE APPLIED IN THE PRESENT CASE AND AS SUCH, REVENUE IS NOT JUSTIFIED IN HOLDING THAT THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE- COMPANY IS UNACCEPTABLE. ON THE OTHER HAND, THE LE ARNED SENIOR COUNSEL SUBMITTED THAT THE TRANSFER PRICE OF ` 10.32 PER SHARE, COMPUTED BY THE ASSESSEE-COMPANY SHOULD BE ACCEPTED . 18. THE LEARNED SENIOR COUNSEL FURTHER CONTENDED TH AT THE HONBLE SUPREME COURT HAS LAID DOWN THE LAW RELATIN G TO VALUATION OF PRIVATELY HELD SHARES. IN SUCH CONTEX T, THE COURT HAS HELD THAT YIELD METHOD IS THE MOST APPROPRIATE ME THOD FOR VALUING THE SHARES OF CLOSELY HELD COMPANIES. THE LEARNED SENIOR COUNSEL REFERRED TO THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF WEALTH-TAX V. MAHADEO JALAN (1972) (86 ITR 621). IN THE SAID DECISION, T HE HONBLE SUPREME COURT HAS HELD THAT LEAVING ASIDE ANY DISTR ESS SALES, THE FACTORS, WHICH ARE LIKELY TO DETERMINE THE FIXA TION OF VALUE OF A - - I.T.A. NO. 17/MDS/12 14 SHARE ON ANY PARTICULAR DATE OR AT ANY PARTICULAR T IME ARE, FIRSTLY, THE PROFIT-EARNING CAPACITY OF THE COMPANY ON A REA SONABLE COMMERCIAL BASIS; SECONDLY, ITS CAPACITY TO MAINTAI N THOSE PROFITS/A REASONABLE RETURN. THE LEARNED SENIOR CO UNSEL FURTHER REFERRED TO THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF COMMISSIONER OF GIFT-TAX V. SMT. KUSUMBEN D. MAHADE VIA (1980) 3 TAXMAN 16 (SC). IN THE SAID DECISION, THE HONBLE SUPREME COURT HAS REFERRED TO ITS EARLIER DECISION IN THE CASE OF MAHADEO JALAN AND OBSERVED THAT THE JUDGMENT IN MAH ADEO JALANS CASE RENDERED UNDER THE WEALTH-TAX ACT, CLE ARLY LAID DOWN, INTER ALIA, THAT THE PROPER METHOD OF VALUATI ON OF SHARES HELD IN A PRIVATE LIMITED COMPANY, THAT WAS A GOING CONCERN, WOULD BE THE YIELD METHOD AND NOT THE BREAK-UP M ETHOD. THE COURT FURTHER OBSERVED THAT THE PROFIT-EARNING MET HOD TAKES INTO ACCOUNT THE PROFITS WHICH THE COMPANY HAS BEEN MAKI NG AND SHOULD BE CAPABLE OF MAKING AND THE VALUATION IS BA SED ON THE AVERAGE MAINTAINABLE PROFITS SUBJECT TO NECESSARY A DJUSTMENTS. THE LEARNED SENIOR COUNSEL AGAIN BROUGHT TO OUR NOT ICE THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF HI NDUSTAN LEVER EMPLOYEES UNION V. HINDUSTAN LEVER LIMITED A ND OTHERS - - I.T.A. NO. 17/MDS/12 15 IN SLP (CIVIL) 11006 OF 1994, DELIVERED ON 24 TH OCTOBER, 1994. THE LEARNED SENIOR COUNSEL HAS ALSO RELIED ON THE J UDGMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF COMMISSI ONER OF WEALTH-TAX V. BALBHADRADAS BANGUR (1984) 148 ITR 14 9 (CAL.). 19. IN THE LIGHT OF THE ABOVE JUDICIAL PRONOUNCEMEN TS, THE LEARNED SENIOR COUNSEL CONTENDED THAT IN A CASE WHE RE THE COMPUTATION PROVISIONS PROVIDED IN SECTION 92C FAIL , THE MOST APPROPRIATE METHOD FOR VALUATION OF SHARES IS YIEL D METHOD. 20. IN THE PRESENT CASE, THE LEARNED SENIOR COUNSEL CONTENDED THAT THE ASSESSEE HAS VALUED THE SHARES N OT CONFINING TO YIELD METHOD ALONE; BUT FURTHER WENT TO ENLARG E THE COMPUTATION OF THE ALP BY ADOPTING THE INTEGRATED M ETHOD SUGGESTED IN THE GUIDELINES ISSUED BY THE ERSTWHILE CONTROLLER OF CAPITAL ISSUES. THEREBY THE COMPANY HAS NOT ONLY C ONSIDERED THE YIELD OF THE ASSESSEE-COMPANY BUT ALSO THE NET ASSET VALUE. THE YIELD OF THE ASSESSEE-COMPANY, AS CERTIFIED BY AN INDEPENDENT CHARTERED ACCOUNTANT, IS ` 9.23 PER SHARE. THE NET ASSET VALUE IS ` 15.05 PER SHARE. THE AVERAGE OF THE TWO WORKS OUT TO ` 12.14 PER SHARE. AFTER PROVIDING FOR DISCOUNTING AT 15% - - I.T.A. NO. 17/MDS/12 16 ( ` 1.82 PER SHARE), THE ASSESSEE HAS DETERMINED THE A LP AT ` 10.32 PER SHARE. IF THE ASSESSEE HAD ADOPTED ONLY THE YIELD METHOD, THE ALP WOULD HAVE BEEN ` 9.23 AS AGAINST ` 10.32 PER SHARE, ADOPTED BY THE ASSESSEE. 21. THE LEARNED SENIOR COUNSEL FURTHER HIGHLIGHTED THE ALTERNATIVE GROUNDS RAISED BY THE ASSESSEE-COMPANY. HE EXPLAINED THAT THE ASSESSEE-COMPANY HAS NOT FURNISH ED ANY MODEL COMPUTATION OF THE ALP UNDER DCF METHOD. WHE N THE TPO PROPOSED TO ADOPT DCF METHOD TO WORK OUT THE AL P, THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO PROVIDE ITS WO RKING OF THE DCF VALUE. BUT, THE ASSESSEE-COMPANY COULD NOT FUR NISH SUCH A COMPUTATION BEFORE THE TPO. WHEN THE MATTER WAS PR ESENTED BEFORE THE DRP, THE ASSESSEE-COMPANY HAD SOUGHT AN OPPORTUNITY SO THAT AS AN ALTERNATE COURSE, THE ASS ESSEE- COMPANY ITSELF COULD FURNISH THE COMPUTATION OF ALP UNDER DCF METHOD. THIS PRAYER MADE BY THE ASSESSEE BEFORE TH E DRP WAS TURNED DOWN ON THE GROUND THAT INSPITE OF AN OPPORT UNITY GIVEN, ASSESSEE-COMPANY DID NOT RESPOND TO THE PROPOSAL MA DE BY THE TPO BY FILING ANY SUCH COMPUTATION FROM ITS SIDE. IN THE ABOVE CIRCUMSTANCES, IT IS THE CASE OF THE LEARNED SENIOR COUNSEL THAT - - I.T.A. NO. 17/MDS/12 17 THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY OF PRESENT ING ITS COMPUTATION UNDER DCF METHOD TO WORK OUT THE ALP. 22. THE LEARNED SENIOR COUNSEL FURTHER EXPLAINED TH AT THIS PRAYER OF THE ASSESSEE HAS TO BE ALLOWED BY THE TRI BUNAL FOR THE REASON THAT THE COMPUTATION OF ALP FOR THE SUBSEQUE NT ASSESSMENT YEAR 2008-09 HAS BEEN MADE UNDER DCF MET HOD AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSEE-COMP ANY AS WELL AS THE TPO AND DRP. IN THE DCF COMPUTATION PR OPOSED BY THE TPO, THE ASSESSEE HAD RAISED CERTAIN OBJECTIONS UNDER SIX HEADS. THE TPO HERSELF HAS ACCEPTED FOUR OF THE OB JECTIONS AND ACCORDINGLY MODIFIED HER PROPOSAL. THE REMAINING T WO OBJECTIONS HAVE BEEN ACCEPTED BY THE DRP AND AS SUCH, AS THE F INAL PICTURE EMERGES OUT, THE REVENUE HAS ACCEPTED ALL THE OBJEC TIONS RAISED BY THE ASSESSEE ON THE DCF VALUE COMPUTED BY THE TP O. THIS HAS BEEN ACCEPTED BY THE ASSESSEE-COMPANY. THEREFO RE, WHEN THE ALP FOR THE SUBSEQUENT ASSESSMENT YEAR 2008-09 HAS BEEN DETERMINED UNDER THE METHOD OF DCF, IT IS ALWAYS DE SIRABLE THAT THE SAME METHOD MAY BE ADOPTED FOR THE IMPUGNED ASS ESSMENT YEAR 2007-08, SUBJECT TO ACCEPTING THE OBJECTIONS O F THE ASSESSEE-COMPANY. THEREFORE, IN THESE CIRCUMSTANCE S, THERE IS - - I.T.A. NO. 17/MDS/12 18 NO JUSTIFICATION FOR NOT GIVING AN OPPORTUNITY TO T HE ASSESSEE- COMPANY TO PROVIDE THE WORKING OF ALP UNDER DCF MET HOD JUST FOR THE REASON THAT THE WORK-OUT WAS NOT FURNISHED BY THE ASSESSEE IN THE FIRST INSTANCE, BEFORE THE TPO. 23. APART FROM THE TP ISSUE, ANOTHER GROUND RAISED BY THE ASSESSEE-COMPANY IS REGARDING THE LEVY OF INTEREST UNDER SECTION 234B OF THE INCOME-TAX ACT, 1961. THE LEAR NED SENIOR COUNSEL EXPLAINED THAT IN THE PRESENT CASE, IT WAS THE DUTY OF THE INDIAN COMPANY TO DEDUCT TAX AT THE TIME OF SALE OF SHARES AND THEREFORE, THE ASSESSEE HAD NO OBLIGATION TO PAY AD VANCE TAX AND IN SUCH CIRCUMSTANCES, INTEREST UNDER SECTION 2 34B CANNOT BE LEVIED ON THE ASSESSEE. THE LEARNED SENIOR COUN SEL HAS RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH CO URT IN THE CASE OF DIRECTOR OF INCOME TAX V. JACABS CIVIL INCO RPORATED (330 ITR 578). 24. SHRI VASANTHA KUMAR, LEARNED COMMISSIONER OF IN COME TAX, APPEARING FOR THE REVENUE, ON THE OTHER HAND, EXPLAINED THAT THE YIELD METHOD IS NOT A POPULAR METHOD USE D BY COMPANIES IN THE PRESENT SCENARIO. UNDER THE YIELD METHOD, THE - - I.T.A. NO. 17/MDS/12 19 VALUE IS COMPUTED AFTER CONSIDERING THE RETURN ON C APITAL EMPLOYED BY THE ASSESSEE. THIS METHOD IS USUALLY A PPLIED WHERE THE ASSESSEE HAS AN ESTABLISHED FAST-TRACK RE CORD. BUT, THIS METHOD FAILS TO CAPTURE THE FUTURE CAPITAL EXP ENDITURE OR WORKING CAPITAL NEEDS AND OTHER VITAL ASPECTS OF TH E BUSINESS CARRIED ON BY THE ASSESSEE. 25. THE LEARNED COMMISSIONER OF INCOME TAX CONTENDE D THAT THE ARGUMENT OF THE LEARNED SENIOR COUNSEL REGARDIN G THE NON- APPLICABILITY OF SECTION 92C IS NOT TENABLE IN LAW. THE LEARNED COMMISSIONER OF INCOME TAX RELIED ON A RECENT ORDER OF ITAT, CHENNAI, C BENCH, RENDERED IN THE CASE OF ASCENDA S (INDIA) PRIVATE LTD. V. DEPUTY COMMISSIONER OF INCOME TAX, PASSED IN ITA NO. 1736/MDS/2011 ON 2 ND JANUARY, 2013. THE ARGUMENT THAT THE BOARD HAS NOT PRESCRIBED ANY OTHER METHOD FOR COMPUTING THE ALP, WAS CONSIDERED BY THE TRIBUNAL I N THE SAID CASE IN A DETAILED MANNER. HE SUBMITTED THAT THAT THE TRIBUNAL HAS HELD THAT IN FINDING THE MOST APPROPRIATE METHO D, IT IS NOT THAT MODERN VALUATION METHODS FITTING THE TYPE OF UNDERL YING SERVICE OR COMMODITIES HAVE TO BE IGNORED. ENDEAVOUR IS O NLY TO ARRIVE AT A VALUE WHICH WOULD GIVE A COMPARABLE UNCONTROLL ED PRICE FOR - - I.T.A. NO. 17/MDS/12 20 THE SHARES SOLD. THEREFORE, ANY ACCEPTABLE METHOD MAY BE APPLIED FOR COMPUTING THE ALP IN SIMILAR CIRCUMSTAN CES. 26. THE LEARNED COMMISSIONER OF INCOME TAX FURTHER EXPLAINED THAT THE TRIBUNAL IN THE SAID ORDER HAS A LSO CONSIDERED THE RELEVANCE OF DCF METHOD IN WORKING OUT THE ALP. THE TRIBUNAL HAS CLEARLY STATED THAT DISCOUNTED CASH FL OW METHOD ADOPTED BY THE TPO CANNOT BE HELD TO BE NOT IN ACCO RDANCE WITH SECTION 92C(1). 27. THE LEARNED COMMISSIONER OF INCOME TAX ALSO SUB MITTED THAT THE TRIBUNAL HAS NOT AGREED TO THE ADOPTION OF GUIDELINES ISSUED BY CCI FOR WORKING OUT THE ALP OF SHARE TRAN SFER. THE TRIBUNAL HAS HELD THAT CCI GUIDELINES WERE ISSUED F OR A TOTALLY DIFFERENT PURPOSE AND COULD NOT BE APPLIED IN THE P RICING METHODOLOGY FOR FIXING ALP. 28. THE LEARNED COMMISSIONER OF INCOME TAX, THEREFO RE, SUBMITTED THAT THE ALP COMPUTED BY THE TRANSFER PRI CING OFFICER AND CONFIRMED BY THE DRP IS CORRECT AND BE CONFIRME D. - - I.T.A. NO. 17/MDS/12 21 29. REGARDING THE ALTERNATE CONTENTION OF THE ASSES SEE THAT THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO PRESENT ITS COMPUTATION OF ALP UNDER DCF METHOD, BEFORE THE TPO , THE LEARNED COMMISSIONER OF INCOME TAX SUBMITTED THAT I T IS TOO LATE AND ALSO THE PARAMETERS LAID DOWN BY THE TPO TO COM PUTE THE DCF VALUE FOR THE IMPUGNED ASSESSMENT YEAR ARE CORR ECT AND PROPER AND THERE IS NO NEED OF ANY REVIEW OF THE VA LUE ARRIVED AT BY THE TPO. 30. REGARDING OTHER GROUNDS AND SUPPORTING SUBMISSI ONS, THE LEARNED COMMISSIONER OF INCOME TAX RELIED ON THE OR DER OF THE DRP. 31. WE HEARD BOTH SIDES IN DETAIL. 32. REGARDING THE CONTENTION OF THE LEARNED SENIOR COUNSEL THAT THE COMPUTATION PROVISIONS OF SECTION 92C FAIL IN THE PRESENT CASE, WOULD NOT BE ACCEPTABLE. THIS IS BECAUSE THE JURISDICTIONAL TRIBUNAL, ITAT, CHENNAI C BENCH IN THE CASE OF A SCENDAS (INDIA) PRIVATE LTD. V. DCIT, VIDE THEIR ORDER DATE D 2 ND JANUARY, 2013 IN I.T.A. NO. 1736/MDS/2011, HAS CONSIDERED TH E ISSUE IN PARAGRAPHS 15, 16 AND 17. THEY HAD CONSIDERED THE QUESTION - - I.T.A. NO. 17/MDS/12 22 WHETHER TO IGNORE ALL THE METHODS PRESCRIBED UNDER SECTION 92C(1). IT HAS BEEN HELD THAT IT IS NOT NECESSARY TO IGNORE THE METHODS BECAUSE THESE METHODS ARE NOT WATER-TIGHT COMPARTMENTS AND REFLECT THE ACCEPTABILITY OF PERMI SSIBLE METHODS. 33. REGARDING THE ARGUMENT OF THE LEARNED SENIOR CO UNSEL IN CONNECTION WITH THE ACCEPTABILITY OF GUIDELINES ISS UED BY ERSTWHILE CONTROLLER OF CAPITAL ISSUES, WE FIND THA T THE TRIBUNAL IN THE ABOVE STATED ORDER HAS HELD OTHERWISE. IN FACT , THE LEARNED SENIOR COUNSEL HAS ARGUED BEFORE US THAT AS THE GUI DELINES FOR VALUATION OF EQUITY SHARES ISSUED BY CONTROLLER OF CAPITAL ISSUES, NEEDS TO BE CONSIDERED AS GUIDELINES ISSUED BY A PU BLIC AUTHORITY AND THEREFORE, IN SUCH CIRCUMSTANCES, WHE RE NOTHING IS AVAILABLE UNDER SECTION 92C, SUCH GUIDELINES ISSUED BY THE COMPETENT AUTHORITY NEEDS TO BE CONSIDERED. THE LE ARNED SENIOR COUNSEL HAS SUBMITTED BEFORE US THAT THE GUIDELINES WERE ISSUED BY MINISTRY OF FINANCE, DEPARTMENT OF ECONOMIC AFFA IRS, ON 13.7.1990 TO DEAL WITH SIMILAR ISSUE OF VALUATION O F SHARES. BUT, IT IS TO BE SEEN THAT THE TRIBUNAL IN THE DECISION OF ASCENDAS (INDIA) PRIVATE LTD. V. DCIT HAS HELD IN PARAGRAPH 18 OF TH EIR ORDER THAT - - I.T.A. NO. 17/MDS/12 23 THE GUIDELINES ISSUED BY CCI ARE NOT ACCEPTABLE FOR THE PURPOSE OF COMPUTATION OF ALP UNDER SECTION 92C(1) OF THE I NCOME-TAX ACT, 1961. 34. THE TRIBUNAL HAS ALSO HELD IN THE ABOVE DECISIO N THAT DCF METHOD IS AN ACCEPTED METHOD OF COMPUTING THE A LP IN THE CONTEXT OF SALE OF SHARES. 35. INSPITE OF THE ABOVE, THERE IS A PECULIAR CIRCU MSTANCE PREVAILING IN THE PRESENT CASE, WHICH IS VERY IMPOR TANT FOR US TO COME TO A FINDING. THE ASSESSEE HAS NOT FILED ITS OWN COMPUTATION UNDER DCF METHOD BEFORE THE TPO. WHEN SUCH AN OPPORTUNITY WAS PRAYED FOR BY THE ASSESSEE BEFORE T HE DRP, ITS PRAYER WAS DECLINED FOR THE REASON THAT ASSESSEE HA D NOT FILED SUCH A COMPUTATION BEFORE THE TPO. BUT, AT THE SAM E TIME, IT IS ON RECORD THAT FOR THE SUCCEEDING ASSESSMENT YEAR 2 008-09, THE ALP HAS BEEN WORKED OUT UNDER DCF METHOD AND THE OB JECTIONS RAISED BY THE ASSESSEE HAVE BEEN ACCEPTED EITHER BY TPO OR BY DRP AND THE ISSUE HAS BECOME FINAL AS FAR AS BOTH S IDES ARE CONCERNED. THEREFORE, IT IS TO BE SEEN THAT WHEN A SSESSEE'S OWN CASE IS SETTLED ON ACCEPTING THE DCF METHOD, WE DO NOT FIND ANY - - I.T.A. NO. 17/MDS/12 24 REASON TO GO FOR ANOTHER METHOD FOR THE IMPUGNED AS SESSMENT YEAR 2007-08. FIRST OF ALL, IT IS VERY IMPORTANT T O KEEP THE PRINCIPLE OF CONSISTENCY ALIVE AND ACTIVE ON FACTUA L MATTERS. IF THE CONSISTENCY RULE IS NOT APPLIED IN SUCH CIRCUMSTANC ES, THE LOGIC OF ARGUMENTS MAY LEAD TO OPPOSITE FINDINGS FOR DIFF ERENT ASSESSMENT YEARS ON SAME SET OF FACTS. SUCH A SITU ATION MAY ALSO LEAD US TO UNENDING ACADEMIC DISCUSSION. 36. THEREFORE, WHEN THE DCF METHOD HAS BEEN ADOPTED TO WORK OUT THE ALP OF SHARE TRANSFER IN ASSESSEE'S OW N CASE FOR ASSESSMENT YEAR 2008-09, THE SAME METHOD SHOULD BE ADOPTED FOR THE IMPUGNED ASSESSMENT YEAR 2007-08 AS WELL. THIS METHOD IS NOT IMPOSED AT THE COST OF ANYBODYS PREJ UDICE. IT IS TO BE SEEN THAT THE REVENUE AS WELL AS THE ASSESSEE HA VE ULTIMATELY AGREED TO COMPUTE THE ALP UNDER DCF METH OD. WHEN THAT METHOD IS MUTUALLY AGREED AND APPLIED FOR THE SUCCEEDING ASSESSMENT YEAR 2008-09, TAKING A DEVIAN T APPROACH AND LOOKING OUT FOR ANOTHER METHOD IS NOTH ING BUT PEDANTIC. - - I.T.A. NO. 17/MDS/12 25 37. THEREFORE, IN THE PECULIAR FACTS AND CIRCUMSTAN CES GOVERNING THE PRESENT CASE, WE UPHOLD THE DCF METHO D ADOPTED BY THE TPO AND THE DRP. BUT, THIS IS NOT AN UNCOND ITIONAL DIRECTION. THE ASSESSEE IS GIVEN AN OPPORTUNITY TO PRESENT BEFORE THE TPO ITS COMPUTATION OF ALP UNDER DCF MET HOD. IN THE LIGHT OF THAT COMPUTATION TO BE PRESENTED BY TH E ASSESSEE, THE TPO IS DIRECTED TO RE-VISIT THE EARLIER COMPUTA TION OF ALP. IT IS TO BE SEEN THAT THE SIX OBJECTIONS RAISED BY THE ASSESSEE FOR THE SUBSEQUENT ASSESSMENT YEAR 2008-09 HAVE BEEN FA IRLY ACCEPTED BY THE TPO AND THE DRP. FOUR OF THE OBJEC TIONS HAVE BEEN ACCEPTED BY THE TPO AND REMAINING TWO OBJECTIO NS HAVE BEEN ACCEPTED BY THE DRP. FOR EXAMPLE, THE LIQUIDI TY DISCOUNT ASSUMED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE DR P FOR ASSESSMENT YEAR 2008-09. THE TPO HAS ACCEPTED THE WACC AT 16.34% AS ASSUMED BY THE ASSESSEE-COMPANY, FOR ASSE SSMENT YEAR 2008-09. LIKEWISE, THE RATE OF REVENUE GROWTH OF MANUFACTURING, THE RATE OF PBT BASED ON INDUSTRY TR END, ESTIMATE OF EBITDA, ETC. ALL HAVE TO BE ACCEPTED BY THE TPO AS REFLECTED IN THE FINAL ORDER FOR THE ASSESSMENT YEAR 2008-09. IN FACT, THE - - I.T.A. NO. 17/MDS/12 26 TPO HAS ACCEPTED THE PBT RESTRICTED TO 5% OF THE SA LES FOR ASSESSMENT YEAR 2008-09. 38. TO SUMMARISE OUR DIRECTION, WE STATE THAT THE T PO SHALL RE-VISIT THE COMPUTATION OF ALP IN THE LIGHT OF THE ALP COMPUTATION TO BE PRESENTED BY THE ASSESSEE UNDER D CF METHOD. WHILE RE-VISITING SO, THE TPO SHALL FOLLOW THE SAME PATTERN AND PARAMETERS ADOPTED FOR THE SUBSEQUENT A SSESSMENT YEAR 2008-09, AS ACCEPTED BY TPO AND DRP. 39. WHEN WE HAVE FINALLY ZEROED DOWN TO THE DCF MET HOD, OUR OBSERVATION AND DISCUSSION ON OTHER ARGUMENTS A DVANCED BY THE ASSESSEE MAY LOOK ACADEMIC. FOR THAT INHERENT REASON, WE LEAVE ALL THOSE ISSUES RAISED BY THE LEARNED SENIOR COUNSEL, OPEN. 40. WE ACCEPT THE CONTENTION OF THE ASSESSEE ON THE QUESTION OF LEVY OF INTEREST UNDER SECTION 234B IN THE LIGHT OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX V. JACABS CIVIL INCORPORATED (330 ITR 578). ACCORDI NGLY, THE ASSESSING AUTHORITY IS DIRECTED TO DELETE THE LEVY OF INTEREST UNDER SECTION 234B. - - I.T.A. NO. 17/MDS/12 27 41. IN THE RESULT, AS FAR AS THE TPO MATTER IS CONC ERNED, IT IS REMITTED BACK TO THE ASSESSING OFFICER FOR FURTHER TRANSMISSION TO THE TPO AND THEREAFTER FOR THE PURPOSE OF FINALLY C ONCLUDING THE ASSESSMENT IN ACCORDANCE WITH LAW. 42. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 12 TH OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR . O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 12 TH NOVEMBER, 2013. KRI. COPY TO: 1. APPELLANT 2. RESPONDENT 3. SECRETARY, DRP, CHENNAI 4. TPO-III, C HENNAI-34 5. DR 6. GF.