Kirby Building Systems India Limited, Medak Dist V. JCIT, Range-8, Hyderabad

ITA 1759/HYD/2012

• Counselvise Citation: 175922514 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Business expenditure; International transaction; Wholly owned subsidiary; Commercial expediency
• Section: 234B; 37(1); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1759/H/2012 ASSESSMENT YEAR 2008-2009 M/S KIRBY BUILDING SYSTEMS INDIA LTD., PASHMYLARAM, MEDAK DIST. 502 307 PAN AABCK-0239-M VS. ACIT, CIRCLE 8(1) HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.262/HYD/2014 ASSESSMENT YEAR 2009-2010 M/S KIRBY BUILDING SYSTEMS INDIA LTD., PASHMYLARAM, MEDAK DIST. 502 307 PAN AABCK-0239-M VS. ACIT, CIRCLE 8(1) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE MR. FARROKH V. IRANI FOR REVENUE MR. D. SUDHAKAR RAO DATE OF HEARING 22.10.2014 DATE OF PRONOUNCEMENT 19.11.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE TWO APPEALS ARE BY ASSESSEE AGAINST THE RESPECTIVE ORDERS OF A.O. PASSED UNDER SECTION 143( 3) READ WITH SECTION 144C(1) OF THE I.T. ACT, 1961 MAKING ADDITI ONS UNDER SECTION 92CA OF THE I.T. ACT. SINCE, COMMON ISSUES ARE INVOLVED IN THESE ASSESSMENT YEARS, THESE ARE HEARD TOGETHER 2 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. AND DECIDED BY THIS ORDER. FOR THE SAKE OF REFERENC E, THE FACTS IN APPEAL FOR A.Y. 2008-09 ARE DISCUSSED ELABORATEL Y. 2. WE HAVE HEARD THE LD. COUNSEL AND LEARNED D.R. IN DETAIL AND PERUSED PAPER BOOKS CONTAINING PAGES 445. LD. COUNSEL ALSO PLACED ON RECORD A SEPARATE CASE LAW P APER BOOK AND ALSO BROCHURE CONTAINING ACTIVITIES OF THE ASSE SSEE COMPANY FOR EXPLAINING VARIOUS TECHNICAL ACTIVITIES OF THE ASSESSEE. ITA.NO.1759/HYD/2012 A.Y. 2008-09 : 3. THE ASSESSEE HAS RAISED 14 GROUNDS IN THIS APPE AL ON THREE ISSUES VIZ., (A) ROYALTY AND TECHNICAL SER VICE FEE GROUND NOS. 1 TO 9 AND 12, (B) REIMBURSEMENTS GRO UND NOS. 10 AND 11, (C) OTHER GROUNDS GROUND NO.13 IMPOSING INTEREST UNDER SECTION 234B OF THE ACT ON TRANSFER PRICING ADJUSTMENTS AND GROUND NO.14 PERTAIN TO INITIATING THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. 4. GROUND NOS. 1 TO 9, 12 PERTAIN TO THE DISALLOWA NCE OF PAYMENT OF ROYALTY AND TECHNICAL SERVICE FEE TO M/S. KIRBY BUILDING SYSTEMS, KUWAIT ANALYSED UNDER THE PROVISI ONS OF TRANSFER PRICING. BRIEFLY STATED, ASSESSEE M/S. KIR BY BUILDING SYSTEMS INDIA LTD., IS ENGAGED IN THE BUSINESS OF M ANUFACTURE OF PRE-ENGINEERED STEEL BUILDING SYSTEM (PEB) PRODU CTS. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.33,16,30,670 ON 30.09. 2008. THE A.O. VIDE HIS DRAFT ORDER HAS DETERMINED THE TOTAL INCOME OF ASSESSEE AT RS.52,68,21,950. THE FOLLOWING ARE THE DETAILS OF 3 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. INTERNATIONAL TRANSACTIONS ENTERED INTO BY AND BETW EEN THE TAXPAYER AND THE AE : NAME OF THE AE NATURE OF TRANSACTION AMOUNT IN RS. A.Y.2008-09 AMOUNT IN RS. A.Y.2009- 10 KIRBY BUILDING SYSTEMS, KUWAIT PAYMENT OF ROYALTY 15,75,43,616 29,57,17,205 -DO- PAYMENT OF TECHNICAL KNOW HOW 39,45,744 48,92,000 -DO- AMOUNT RECEIVED FOR DATA CENTER MAINTENANCE ---- 71,30,625 -DO- PROVISION OF TECHNOLOGY ENABLED ENGINEERING DESIGN SERVICES 2,48,56,799 3,45,67,468 -DO- REIMBURSEMENT BY/TO AE 6,30,86,794 2,15,46,650 -DO- INTEREST ON LOAN 27,60,143 13,86,298 RAS AL- KHAIMA, KUWAIT 71,30,625 -DO- 2,64,11,410 YUSUF A. ALGHANIN & SONS. 54,85,096 -DO- REIMBURSEMENT BY AE 2,29,85,550 KIRBY SOUTH EAST ASIA CO. LTD., SALE OF PEBS 6,63,35,185 -DO- 10,15,898 ALGHANIN INDUSTRIES (MAURITIUS) PAYMENT OF INTEREST. 9,08,864 4 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. LTD., KUWAIT INSULATING MATERIAL MFG. CO. S.A.K. KUWAIT. PURCHASE OF RAW MATERIALS 1,45,19,857 TOTAL 26,67,12,953 49,55,12,878 5. EVEN THOUGH THE TPO PROPOSED VARIOUS ADJUSTMENTS, DRP HOWEVER CONFIRMED THE DISALLOWANCE / ADJUSTMENT OF TECHNICAL SERVICE FEE AND ROYALTY AND MARK UP ON REIMBURSEMENT COSTS. WITH REFERENCE TO ISSUE OF ROYALTY AND TECHNICAL SERVICE FEE, THE ISSUE IS COVERED BY THE ORDERS OF ITAT IN EARLIER YEARS WHEREIN ENTIRE GAMUT OF TECHN ICAL FEE WAS CONSIDERED FROM EARLIER YEARS TO LATER YEARS ALSO, BEFORE ADJUDICATING THE ISSUE. THE ISSUE WAS DECIDED IN ITA.NO.1651/HYD/2010 AND ITA.NO.1975/HYD/2011 FOR A .YS. 2006-07 AND 2007-08 VIDE PARA 17 TO 21 AS UNDER : 17. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND EXAMINED THE ORDERS OF THE AUTHORITIES, DOCUMENTS P LACED ON RECORD AND RELEVANT CASE LAW RELIED UPON. KIRBY BUILDING SYSTEMS INDIA P. LTD., IS A WHOLLY OWNED SUBSIDIARY OF ALGHANIM INDUSTRIES, A KUWAIT BASED MULTI-BILLION CONGLOMERATE. IT IS ONE OF THE WORLDS LARGEST PROD UCERS OF PRE-ENGINEERED STEEL BUILDINGS (IN SHORT PEB) AND HAS BEEN OPERATIONAL FOR MORE THAN 38 YEARS SINCE 1976. TO PIONEER THE PEB CONCEPT, IT HAS SET UP A PLANT IN I NDIA IN THE YEAR 1999 WITH A MANUFACTURING FACILITY WITH A CAPACITY OF 60,000 MT PER ANNUM AT HYDERABAD. IT WAS SUBMITT ED THAT KIRBY KUWAIT HAS EXTREMELY TALENTED POOL OF S KILLED STRUCTURAL ENGINEERS, DESIGNERS AND DETAILERS CONVE RSANT WITH INDIAN AND INTERNATIONALLY ACCLAIMED CODES AND ENGINEERING PRACTICES. ALL THE BUILDINGS DESIGNED B Y KIRBY ARE CUSTOM DESIGNED USING LATEST DOMESTIC/INTERNATI ONAL CODES AND STANDARDS SUCH AS IS, MBMA, AISC, AISI AN D AWS. PEB TECHNOLOGY HAS VARIOUS ADVANTAGES BEING FLEXIBILITY IN EXPANSION, FASTER INSTALLATION, ENER GY EFFICIENT AND PRACTICALLY MAINTENANCE FREE WITH SUPERB QUALIT Y AND ALSO EARTHQUAKE RESISTANT. IT HAS APPLICATIONS STAR TING FROM 5 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. FACTORIES AND WAREHOUSE TO AIR-CRAFT HANGERS, STATI ONS, SHIP YARDS, WORK-SHOPS, STADIUMS ETC. ASSESSEE INDEED PIONEERED A NEW CONCEPT OF PRE-ENGINEERING STEEL BU ILDING WITH THE TECHNICAL HELP OF ITS AE. 18. THERE IS NO DISPUTE WITH REFERENCE TO THE FACT THAT ASSESSEE WAS PROMOTED BY THE KIRBY BUILDING SYSTEMS, KUWAIT AND ITS ORIGINAL TECHNICAL SERVICE AGREEMENT FOR PAYMENT OF LUMP SUM AMOUNT OF $ 2 MIL LION DOLLARS AS TECHNICAL KNOWHOW FEE AND ROYALTY OF 2.5 % IN THE FIRST YEAR AND 5% FROM SECOND YEAR ONWARDS UP T O MARCH 31, 2007 WAS APPROVED BY THE RBI AND MINISTRY OF INDUSTRIES. IT IS ALSO A FACT THAT ASSESSEE DID NOT REMIT ANY OF THOSE AMOUNTS IN THOSE YEARS AND THE AGREEMENT W AS AMENDED PERIODICALLY. AS STATED ABOVE IN THE FACTS OF THE CASE, IN THE IMPUGNED YEAR ASSESSEE HAS PAID $ 1 LA KH DOLLARS AS TECHNICAL KNOWHOW FEE AND ROYALTY AT 7.5 % ON DOMESTIC SALES AS PER THE AGREEMENTS ENTERED INTO A ND APPROVED BY THE AUTHORITIES. 19. IN THE GUISE OF EXAMINING THE PAYMENTS UNDER T.P. PROVISIONS, IT IS NOTICED THAT THE TPO HAS NOT ANALYSED THESE PAYMENTS EITHER UNDER TNMM METHOD OR UNDER AN Y OTHER METHOD WHICH REQUIRE TO BE ANALYSED AS PER TH E PROVISIONS. HOWEVER, THE TPO HAS EXAMINED THE BUSIN ESS NECESSITY OF PAYMENT OF TECHNICAL KNOWHOW FEE AND R OYALTY UNDER THE PROVISIONS OF SECTION 37(1) RATHER THAN U NDER THE PROVISIONS OF T.P. HIS DECISION OF NOT ALLOWING ANY ROYALTY PAYMENT OR TECHNICAL KNOWHOW PAYMENT AND DETERMININ G THE ALP AT NIL CANNOT BE SUSTAINED IN VIEW OF THE F ACT THAT THIS TECHNICAL KNOWHOW FEE AND ROYALTY WERE AGREED UPON WHEN THE ASSESSEE HAS ORIGINALLY ENTERED INTO AGREE MENT AS ON 01.04.2000 MUCH BEFORE THE T.P. PROVISIONS CA ME ON STATUTE. IT MAY BE ANOTHER REASON THAT ASSESSEE HAS REVISED THE AGREEMENT AND PAID SUBSEQUENTLY, PARTLY IN THE IMPUGNED YEAR, BUT THAT DOES NOT PREVENT ASSESSEE CLAIMING EXPENDITURE WHICH WAS NECESSARY FOR ITS BU SINESS OPERATIONS IN VIEW OF THE AGREEMENT ENTERED AT THE TIME OF ESTABLISHING THE UNIT IN INDIA. HAD THERE BEEN NO R EVISION OF THE AGREEMENT, THE PAYMENT OF TECHNICAL KNOWHOW FEE WOULD HAVE BEEN OVER BY THE YEAR 2002 ITSELF. ASSES SEE PAID IN A SENSE BELATEDLY THE SAME AMOUNT WHICH WAS PAYBLE ORIGINALLY DUE TO RESCHEDULING IN PAYMENT PE RIOD. NO EXTRA AMOUNT WAS REQUIRED TO BE PAID. MOREOVER, ON THE ENTIRE TURNOVER IN THE INTERVENING YEARS, ASSESSEE ALSO 6 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. WOULD HAVE PAID ROYALTY. HOWEVER, DUE TO BUSINESS REQUIREMENTS, BOTH THE PARTIES AGREED TO REVISE THE ROYALTIES. TP PROVISIONS DOES NOT EMPOWER THE TPO TO DECIDE ABOUT THE COMMERCIAL DECISIONS AND DETERMINI NG THE ALP AT NIL THEREBY, DENYING THE ENTIRE CLAIM INSTEA D OF ALLOWING THE AMOUNT ON THE BASIS OF ALP TO BE DETER MINED UNDER THE PROVISIONS. 20. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. EKL APPLIANCES ITA.NO.1068 OF 2011 AND 1070 OF 2011 DATED 29 TH MARCH, 2012 CONSIDERED SIMILAR ISSUE WHETHER THE TPO HAS POWER TO RESTRICT IN DETERMININ G THE ALP AT NIL UNDER THE PROVISIONS OF T.P. WHEN HE WAS SUPPOSED TO HAVE DETERMINED THE ARMS LENGTH PRICE O F THE INTERNATIONAL TRANSACTION. THE HONBLE DELHI HIGH C OURT AFTER EXAMINING THE FACTS OF THE CASE HELD UNDER : 19. THERE IS NO REASON WHY THE OECD GUIDELINES SH OULD NOT BE TAKEN AS A VALID INPUT IN THE PRESENT CASE I N JUDGING THE ACTION OF THE TPO. IN FACT, THE CIT (AP PEALS) HAS REFERRED TO AND APPLIED THEM AND HIS DECISION H AS BEEN AFFIRMED BY THE TRIBUNAL. THESE GUIDELINES, IN A DIFFERENT FORM, HAVE BEEN RECOGNIZED IN THE TAX JURISPRUDENCE OF OUR COUNTRY EARLIER. IT HAS BEEN H ELD BY OUR COURTS THAT IT IS NOT FOR THE REVENUE AUTHORITI ES TO DICTATE TO THE ASSESSEE AS TO HOW HE SHOULD CONDUCT HIS BUSINESS AND IT IS NOT FOR THEM TO TELL THE ASSESSE E AS TO WHAT EXPENDITURE THE ASSESSEE CAN INCUR. WE MAY REF ER TO A FEW OF THESE AUTHORITIES TO ELUCIDATE THE POINT. IN EASTERN INVESTMENT LTD. V. CIT, (1951) 20 ITR 1, IT WAS HELD BY THE SUPREME COURT THAT THERE ARE USUALLY M ANY WAYS IN WHICH A GIVEN THING CAN BE BROUGHT ABOUT IN BUSINESS CIRCLES BUT IT IS NOT FOR THE COURT TO DEC IDE WHICH OF THEM SHOULD HAVE BEEN EMPLOYED WHEN THE COURT IS DECIDING A QUESTION UNDER SECTION 12(2) OF THE INCO ME TAX ACT. IT WAS FURTHER HELD IN THIS CASE THAT IT IS NOT NECESSARY TO SHOW THAT THE EXPENDITURE WAS A PROFIT ABLE ONE OR THAT IN FACT ANY PROFIT WAS EARNED. IN CIT V. WALCHAND & CO. ETC., (1967) 65 ITR 381, IT WAS HELD BY THE SUPREME COURT THAT IN APPLYING THE TEST OF COMM ERCIAL EXPEDIENCY FOR DETERMINING WHETHER THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS, REASONABLENESS OF THE EXPENDITURE HAS TO BE JUDGED FROM THE POINT OF VIEW OF THE BUSINESSMAN AN D NOT OF THE REVENUE. IT WAS FURTHER OBSERVED THAT THE RU LE THAT 7 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. EXPENDITURE CAN ONLY BE JUSTIFIED IF THERE IS CORRE SPONDING INCREASE IN THE PROFITS WAS ERRONEOUS. IT HAS BEEN CLASSICALLY OBSERVED BY LORD THANKERTON IN HUGHES V . BANK OF NEW ZEALAND, (1938) 6 ITR 636 THAT EXPENDI TURE IN THE COURSE OF THE TRADE WHICH IS UNREMUNERATIVE IS NONE THE LESS A PROPER DEDUCTION IF WHOLLY AND EXCLUSIVE LY MADE FOR THE PURPOSES OF TRADE. IT DOES NOT REQUIRE THE PRESENCE OF A RECEIPT ON THE CREDIT SIDE TO JUSTIFY THE DEDUCTION OF AN EXPENSE. THE QUESTION WHETHER AN EXPENDITURE CAN BE ALLOWED AS A DEDUCTION ONLY IF I T HAS RESULTED IN ANY INCOME OR PROFITS CAME TO BE CONSID ERED BY THE SUPREME COURT AGAIN IN CIT V. RAJENDRA PRASAD MOODY, (1978) 115 ITR 519, AND IT WAS OBSERVED AS UNDER: - WE FAIL TO APPRECIATE HOW EXPENDITURE WHICH IS OTHERWISE A PROPER EXPENDITURE CAN CEASE TO BE SUCH MERELY BECAUSE THERE IS NO RECEIPT OF INCOME. WHATE VER IS A PROPER OUTGOING BY WAY OF EXPENDITURE MUST BE DEB ITED IRRESPECTIVE OF WHETHER THERE IS RECEIPT OF INCOME OR NOT. THAT IS THE PLAIN REQUIREMENT OF PROPER ACCOUNTING AND THE INTERPRETATION OF SECTION 57(III) CANNOT BE DIF FERENT. THE DEDUCTION OF THE EXPENDITURE CANNOT, IN THE CIRCUMSTANCES, BE HELD TO BE CONDITIONAL UPON THE MAKING OR EARNING OF THE INCOME. IT IS NOTEWORTHY THAT THE ABOVE OBSERVATIONS WERE M ADE IN THE CONTEXT OF SECTION 57(III) OF THE ACT WHERE THE LANGUAGE IS SOMEWHAT NARROWER THAN THE LANGUAGE EMPLOYED IN SECTION 37(1) OF THE ACT. THIS FACT IS RECOGNISED IN THE JUDGMENT ITSELF. THE FACT THAT THE LANGUAGE EMPLOYE D IN SECTION 37(1) OF THE ACT IS BROADER THAN SECTION 57 (III) OF THE ACT MAKES THE POSITION STRONGER. 20. IN THE CASE OF SASSOON J. DAVID & CO. PVT. LTD . V. CIT, (1979) 118 ITR 261 (SC), THE SUPREME COURT REF ERRED TO THE LEGISLATIVE HISTORY AND NOTED THAT WHEN THE INCOME TAX BILL OF 1961 WAS INTRODUCED, SECTION 37(1) REQU IRED THAT THE EXPENDITURE SHOULD HAVE BEEN INCURRED WHO LLY, NECESSARILY AND EXCLUSIVELY FOR THE PURPOSES OF BU SINESS IN ORDER TO MERIT DEDUCTION. PURSUANT TO PUBLIC PRO TEST, THE WORD NECESSARILY WAS OMITTED FROM THE SECTION. 8 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. 21. THE POSITION EMERGING FROM THE ABOVE DECISIO NS IS THAT IT IS NOT NECESSARY FOR ASSESSEE TO SHOW THAT ANY LEGITIMATE EXPENDITURE INCURRED BY HIM WAS ALSO INC URRED OUT OF NECESSITY. IT IS ALSO NOT NECESSARY FOR ASSE SSEE TO SHOW THAT ANY EXPENDITURE INCURRED BY HIM FOR THE PURPOSE OF BUSINESS CARRIED ON BY HIM HAS ACTUALLY RESULTED IN PROFIT OR INCOME EITHER IN THE SAME YEA R OR IN ANY OF THE SUBSEQUENT YEARS. THE ONLY CONDITION IS THAT THE EXPENDITURE SHOULD HAVE BEEN INCURRED 'WHOLLY A ND EXCLUSIVEL Y' FOR THE PURPOSE OF BUSINESS AND NOTHING MORE. IT IS THIS PRINCIPLE THAT INTER ALIA FINDS EXPRESSI ON IN THE OECD GUIDELINES, IN THE PARAGRAPHS WHICH WE HAVE QUOTED ABOVE. 22. EVEN RULE IOB(L)(A) DOES NOT AUTHORISE DISALLO WANCE OF ANY EXPENDITURE ON THE GROUND THAT IT WAS NOT NECESSARY OR PRUDENT FOR ASSESSEE TO HAVE INCURRED THE SAME OR THAT IN THE VIEW OF THE REVENUE THE EXPENDI TURE WAS UN-REMUNERATIVE OR THAT IN VIEW OF THE CONTINUE D LOSSES SUFFERED BY ASSESSEE IN HIS BUSINESS, HE COU LD HAVE FARED BETTER HAD HE NOT INCURRED SUCH EXPENDIT URE. THESE ARE IRRELEVANT CONSIDERATIONS FOR THE PURPOSE OF RULE 10B. WHETHER OR NOT TO ENTER INTO THE TRANSACTION I S FOR ASSESSEE TO DECIDE. THE QUANTUM OF EXPENDITURE CAN NO DOUBT BE EXAMINED BY THE TPO AS PER LAW BUT IN JUDG ING THE ALLOWABILITY THEREOF AS BUSINESS EXPENDITURE, H E HAS NO AUTHORITY TO DISALLOW THE ENTIRE EXPENDITURE OR A PART THEREOF ON THE GROUND THAT ASSESSEE HAS SUFFERED CONTINUOUS LOSSES. THE FINANCIAL HEALTH OF ASSESSEE CAN NEVER BE A CRITERION TO JUDGE ALLOWABILITY OF AN EX PENSE; THERE IS CERTAINLY NO AUTHORITY FOR THAT. WHAT THE TPO HAS DONE IN THE PRESENT CASE IS TO HOLD THAT ASSESSEE O UGHT NOT TO HAVE ENTERED INTO THE AGREEMENT TO PAY ROYALTY/BRAND FEE, BECAUSE IT HAS BEEN SUFFERING LO SSES CONTINUOUSLY. SO LONG AS THE EXPENDITURE OR PAYMENT HAS BEEN DEMONSTRATED TO HAVE BEEN INCURRED OR LAID OUT FOR THE PURPOSES OF BUSINESS, IT IS NO CONCERN OF THE T PO TO DISALLOW THE SAME ON ANY EXTRANEOUS REASONING. AS PROVIDED IN THE OECD GUIDELINES, HE IS EXPECTED TO EXAMINE THE INTERNATIONAL TRANSACTION AS HE ACTUALL Y FINDS THE SAME AND THEN MAKE SUITABLE ADJUSTMENT BUT A WHOLESALE DISALLOWANCE OF THE EXPENDITURE, PARTICUL ARLY ON THE GROUNDS WHICH HAVE BEEN GIVEN BY THE TPO IS NOT CONTEMPLATED OR AUTHORISED. 9 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. 23. APART FROM THE LEGAL POSITION STATED ABOVE, EV EN ON MERITS THE DISALLOWANCE OF THE ENTIRE BRAND FEE / R OYALTY PAYMENT WAS NOT WARRANTED. ASSESSEE HAS FURNISHED COPIOUS MATERIAL AND VALID REASONS AS TO WHY IT WAS SUFFERING LOSSES CONTINUOUSLY AND THESE HAVE BEEN REFERRED TO BY US EARLIER. FULL JUSTIFICATION SUPPO RTED BY FACTS AND FIGURES HAVE BEEN GIVEN TO DEMONSTRATE THAT THE INCREASE IN THE EMPLOYEES COST, FINANCE CHARGES, ADMINISTRATIVE EXPENSES, DEPRECIATION COST AND CAPA CITY INCREASE HAVE CONTRIBUTED TO THE CONTINUOUS LOSSES. THE COMPARATIVE POSITION OVER A PERIOD OF 5 YEARS FROM 1998 TO 2003 WITH RELEVANT FIGURES HAVE BEEN GIVEN BEFORE T HE CIT (APPEALS) AND THEY ARE REFERRED TO IN A TABULAR FOR M IN HIS ORDER IN PARAGRAPH 5.5.1. IN FACT THERE ARE FOUR TA BULAR STATEMENTS FURNISHED BY ASSESSEE BEFORE THE CIT (APPEALS) IN SUPPORT OF THE REASONS FOR THE CONTINU OUS LOSSES. THERE IS NO MATERIAL BROUGHT BY THE REVENUE EITHER BEFORE THE CIT (APPEALS) OR BEFORE THE TRIBUNAL OR EVEN BEFORE US TO SHOW THAT THESE ARE INCORRECT FIGURES OR THAT EVEN ON MERITS THE REASONS FOR THE LOSSES ARE NOT G ENUINE. 24. WE ARE, THEREFORE, UNABLE TO HOLD THAT THE TRI BUNAL COMMITTED ANY ERROR IN CONFIRMING THE ORDER OF THE CIT (APPEALS) FOR BOTH THE YEARS DELETING THE DISALLOWA NCE OF THE BRAND FEE L ROYALTY PAYMENT WHILE DETERMINING THE ALP. ACCORDINGLY, THE SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED IN THE AFFIRMATIVE AND IN FAVOUR OF ASSESS EE AND AGAINST THE REVENUE. THE APPEALS ARE ACCORDINGL Y DISMISSED WITH NO ORDER AS TO COSTS. 20.1. THE PRINCIPLES LAID DOWN BY THE HONBLE DELH I HIGH COURT IN THE ABOVE SAID CASE EQUALLY APPLIES T O THE FACTS OF THE CASE. WHAT TPO HAS DONE IN THE PRESENT CASE IS TO HOLD THAT ASSESSEE NEED NOT PAY ANY ROYALTY OR T ECHNICAL KNOWHOW FEE TO THE AE. EVEN THOUGH DRP HAS PARTLY MODIFIED THE PAYMENT OF ROYALTY, WHAT WE NOTICED IS THAT THEY ALSO MADE A MISTAKE IN ALLOWING ONLY 3.5% OF R OYALTY WHEN IN FACT, THERE IS NO SUCH CLAIM IN ANY OF THE EARLIER YEARS. AS SUBMITTED BY THE LD. COUNSEL IN THE COURS E OF ARGUMENTS/PRESENTATION BEFORE US ASSESSEE CLAIMED A T 7.5% IN EARLIER YEAR WHICH WAS ALSO ALLOWED. 20.2. MOREOVER, THE PAYMENT OF ROYALTY OVER THE PERIOD UP TO A.Y. 2009-10 AND TECHNICAL KNOWHOW FEE WAS SUMMARIZED BY THE ASSESSEE IN THE FOLLOWING TABLE W HICH 10 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. WAS FILED DURING THE COURSE OF HEARING BEFORE US IN ORDER TO SUBSTANTIATE THE ARGUMENTS THAT THE CUMULATIVE ROYA LTY AS PERCENTAGE OF CUMULATIVE SALES IS MUCH LESS AT 3.08 % UP TO THE IMPUGNED YEAR WHICH IS STILL LESS THAN WHAT THE DRP ALLOWED. A.Y. NET SALES OF PEBS (EXCLUDING EXCISE DUTY) RS. CR. PBIT RS. CR. ROYALTY PAYMENT RS. CR. TECHNICAL FEE PAYMENT RS. CR. ROYALTY (AS % OF SALES) CUMULATIVE ROYALTY AS % OF CUMULATIVE SALES. 2001-02 47.15 -1.69 --- 0.02 0.05% 0.05% 2002-03 76.32 5.66 --- 0.11 0.14% 0.11% 2003-04 85.81 6.17 --- 0.64 0.74% 0.37% 2004-05 100.68 8.78 --- 1.03 1.02% 0.58% 2005-06 193.34 17.46 5.36 1.78 3.69% 1.78% 2006-07 231.69 13.05 13.26 0.45 5.92% 3.08% 2007-08 292.78 23.01 15.82 0.44 5.56% 3.79% 2008-09 390.54 29.33 15.75 0.39 4.14% 3.88% 2009-10 816.69 54.08 33.06 0.49 4.11% 3.96% 20.3. FURTHER AS THERE WAS A MISMATCH OF PERCENTAGES IN THE ROYALTY CLAIMED, CLARIFICATION W AS SOUGHT IN THE COURSE OF ARGUMENT AND LD. COUNSEL EXPLAINED THAT EVEN THOUGH ROYALTY HAD A FIXED PERCENTAGE OF 7.5% AGREED, IT WAS NOT ON GROSS SALES BUT ON NET SALES, AS RBI HAS EXCLUDED VARIOUS AMOUNTS. IT WAS ALSO SUBMITTED THA T DRP WITHOUT STUDYING THE TERMS AND CONDITIONS OF PAYMEN T OF ROYALTY AS APPROVED, ALLOWED ROYALTY AT 3.5% ON GRO SS SALES WHICH TECHNICALLY IS ALSO ALMOST EQUIVALENT T O THE ROYALTY CLAIMED BY THE ASSESSEE ON NET SALES BASIS. IT WAS SUBMITTED THAT AS PERCENTAGE OF SALES, ROYALTY PAYM ENT IN THE IMPUGNED YEAR WAS ONLY 5.92%. BE THAT AS IT MAY , WE ARE NOT IN A POSITION TO APPROVE THE ACTION OF THE A.O. / DRP IN RESTRICTING THE ROYALTY AND TOTAL DENIAL OF TECH NICAL SERVICES FEE WITHOUT ANY BASIS AT NIL UNDER THE GUI SE OF 11 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. T.P. PROVISIONS. IN VIEW OF THIS, WE ARE NOT IN AGR EEMENT WITH THE ACTION OF THE TPO / DRP. 20.4. IN THE COURSE OF ARGUMENTS, LD. COUNSEL MADE VARIOUS PROPOSITIONS ON PAYMENTS OF ROYALTY AN D TECHNICAL SERVICES FEE AND CITED THE DECISIONS OF T HE COORDINATE BENCHES OF THE TRIBUNAL IN THE CASE OF S C ENVIRO AGRO INDIA LTD., MUMBAI VS. DCIT 3(3), MUMBA I ITA.NO.2057 & 2058/MUM/2009 DATED 07.11.2012, M/S. THYSSEN KRUPP INDUSTRIES INDIA P. LTD., MUMBAI VS. ACIT, CC 3(3),M MUMBAI IN ITA.NO.7032/MUM/2011 DT. 27.11.2012, AIR LIQUID INDIA P. LTD., VS. DCIT, CIR CLE 1(1), HYDERABAD ITA.NO.1159/HYD/2011 ETC., DT. 13.02.2014 AND HOST OF OTHER DECISIONS AS STATED IN THE SUBMIS SIONS ABOVE TO SUBSTANTIATE VARIOUS PROPOSITIONS. SUFFICE TO SAY THAT WE HAVE CONSIDERED VARIOUS LEGAL PRINCIPLES ON THE ISSUE. WE ARE OF THE OPINION THAT APART FROM LEGAL POSITION, EVEN ON MERITS THE DISALLOWANCE OF ENTIRE TECHNICAL KNOWHOW PAYMENT AND PART DISALLOWANCE OF ROYALTY PAYMENT TO AE WAS NOT WARRANTED. 21. THERE IS ONE MORE ASPECT TO THE ABOVE ISSUE. THE AGREEMENTS WERE PERIODICALLY APPROVED BY RBI AN D BY MINISTRY OF INDUSTRY AND ASSESSEE WAS PAYING THE AM OUNTS AS PER THE AGREEMENTS. EVEN THOUGH APPROVAL BY THE OTHER GOVERNMENTAL AUTHORITIES DOES NOT PREVENT TPO IN EXAMINING THE ALP AS PER THE PROVISIONS OF THE ACT, WHAT WE NOTICED WAS THAT TPO DID NOT EXAMINE THE ISSUE U NDER THE T.P. PROVISIONS AT ALL BUT TOOK UPON THE ROLE O F AN A.O. IN ANALYZING THE COMMERCIAL EXPEDIENCY OF PAYMENT OF R OYALTY AND TECHNICAL KNOWHOW UNDER THE PROVISIONS OF SECTI ON 37(1). SINCE THE AGREEMENTS WERE APPROVED BY THE AUTHORITIES AND CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THE ROYALTY FEE AND TECHNICAL KNOW HOW ARE AT ARMS LENGTH AND THAT ASSESSEES CLAIM SHOULD BE ALLOWED AS SUCH. THERE IS NO INFORMATION BROUGHT ON RECORD BY THE TPO THAT THE PAYMENT AT 7.5% ON THE NET SALE S IS NOT AT ARMS LENGTH AS THERE WAS NO OTHER COMPARABLE CA SE BROUGHT ON RECORD. GENERALLY, THE GOVERNMENT OF IND IA IS APPROVING THE ROYALTY PAYMENTS AT 7.5% OF THE SALES AND THIS APPROVAL GIVEN BY THE RBI AND MINISTRY OF INDU STRY IS AT PAR WITH SIMILAR AGREEMENTS BEING APPROVED IN OT HER CONTRACTS/AGREEMENTS. CONSIDERING THESE ASPECTS, WE ARE OF THE OPINION THAT ROYALTY AND TECHNICAL KNOWHOW PAYMENTS MADE BY THE ASSESSEE TO ITS AE ARE CONSIDE RED 12 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. AT ARMS LENGTH AND THEREBY, THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED. A.O. IS DIRECTE D TO ALLOW THE AMOUNTS AS CLAIMED. 6. SINCE THE A.OS ORDER IS SIMILAR TO EARLIER YEA RS AND ISSUE IS SAME, WE ARE OF THE OPINION THAT ASSESSEE S CLAIM OF ROYALTY AND TECHNICAL SERVICE FEE IS TO BE ALLOWED ON SIMILAR LINES. ACCORDINGLY, ISSUE NO.1 VIDE GROUNDS 1 TO 9 FOR A.Y. 2008-09 ARE CONSIDERED AS ALLOWED. GROUND NO 12 BEC OMES ACADEMIC IN NATURE. 7. ISSUE NO.2 IS ON REIMBURSEMENT COSTS. ASSESSEE HAS MAINTAINED I.T. DATA CENTRE FOR MAINTAINING ITS I.T. NET WORK. THE DATA CENTRE IS LOCATED IN HYDERABAD AND A SSESSEE HAS INCURRED COST OF MAINTENANCE OF THE DATA CENTRE . ASSESSEE HAS USED SAP ERP ENTERPRISE SERVICES ACROSS THE GRO UP FOR WHICH IT ENGAGED SAP INDIA P. LTD., AND PIONEER ONL INE INDIA P. LTD., THE COST OF IMPLEMENTATION WAS INITIALLY PAID BY ASSESSEE AND THEREAFTER, CROSS CHARGED AND RECOVERED FROM TH E RESPECTIVE GROUP COMPANIES. ASSESSEE HAS NOT CHARGE D ANY ADDITIONAL AMOUNT OTHER THAN THE COST OF ACTUAL EXP ENDITURE AND IT WAS CONSIDERED AS REIMBURSEMENT OF COST. THE DATA CENTRE CHARGES WERE APPORTIONED BASED ON THE ACTUAL MANPOWER DEPLOYED FOR THE IMPLEMENTATION. THE TPO N OTICED THAT AMOUNT OF RS.6.31 CRORES WAS RECOVERED FROM IT S AES TOWARDS SAP IMPLEMENTATION AND DATA CENTRE CHARGES. SINCE, THESE TRANSACTIONS ARE CONSIDERED AS INTERNATIONAL TRANSACTIONS, TPO WAS OF THE OPINION THAT THE SERVI CES PROVIDED BY KIRBY INDIA IN IMPLEMENTATION OF SAP COMES UNDER SUPPORT SERVICES WHICH ARE REQUIRED TO BE MARKED-UP. HE REL IED ON THE COORDINATE BENCH DECISION IN THE CASE OF EXXON MOBI LE COMPANIES INDIA P. LTD. IN ITA NO 8311/MUM/2010 WHE REIN IT 13 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. WAS HELD THAT REIMBURSEMENT IS OF COST WITHOUT ANY MARKUP IS NOT JUSTIFIABLE AND THEREFORE, TAX PAYER WOULD NOT HAVE RENDERED SIMILAR SERVICES TO ANY THIRD PARTY WITHOU T CHARGING MARKUP. CONSIDERING THAT TPO MADE A MARKUP OF 20% W HICH IS REASONABLE AND THEN ADDED TO THE COST OF REIMBUR SEMENT RECEIVED BY ASSESSEE, HE MADE A SHORTFALL OF ASSESS MENT OF RS.1,83,41,171. ASSESSEE CONTESTED THE SAME BEFORE DRP WITHOUT SUCCESS. 7.1. IT WAS SUBMITTED THAT KIRBY AS A GROUP WANTED TO IMPLEMENT ERP SOLUTIONS AND SINCE COST AS QUOTED BY SAP INDIA IS REASONABLE WHEN COMPARED TO THE INTERNATIO NAL PRICE, KIRBY ASKED INDIAN ASSESSEE TO PLACE THE ORDER ON B EHALF OF THE GROUP. KIRBY INDIA RAISED INVOICE AND THE AMOUNTS W ERE REIMBURSED WITHOUT ANY MARKUP. SINCE THIS IS REIMBU RSEMENT OF EXPENDITURE, IT IS THE CONTENTION THAT NO MARKUP IS REQUIRED. WITHOUT PREJUDICE, IT WAS SUBMITTED THAT 20% OF THE MARKUP IS ON HIGHER SIDE AND IN VARIOUS OTHER CASES LIKE ZYDU S 5% MARKUP WAS DONE WHICH WAS ACCEPTED. IN THE CASE OF EXXON MOBILE COMPANIES INDIA P. LTD., THERE WAS CLEAR IDE NTIFICATION OF THE SERVICES RENDERED. THEREFORE, UNLESS THE SER VICES ARE IDENTIFIABLE NO MARKUP CAN BE DONE. 8. LD. D.R. HOWEVER, RELIED ON THE ORDERS OF AUTHORITIES. 9. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE ORDER OF TPO ASSESSEE ALLOCATED COSTS ON MAN-MONTH BASIS FOR IMPLEMENTATION EXPENSES AND MAN-HOUR BASIS FOR LICE NSE COST. HOWEVER, THERE IS NO DENIAL OF EXECUTING THE WORK B Y ASSESSEE. MOREOVER, AS SEEN FROM THE ORDER OF TPO ASSESSEE AL SO 14 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. EXTENDED CREDIT TO AES AND TPO CHARGED INTEREST FOR THE CREDIT PERIOD. DRP HOWEVER DELETED THE CHARGE OF INTEREST AS MARKUP WAS UPHELD. THEREFORE WE ARE OF THE OPINION THAT TH IS IS NOT A PURE REIMBURSEMENT OF COST BUT COST SHARING EXERCIS E IN IMPLEMENTING ERP SYSTEMS IN THE GROUP. IT CERTAINLY INVOLVES SERVICES BY ASSESSEE COMPANY. THEREFORE, WE ARE OF THE OPINION THAT MARK UP IS WARRANTED UNDER THE TP PROVISIONS. 10. NOW COMING TO THE RATE OF MARKUP, TPO HAS ARBITRARILY CONSIDERED 20% MARKUP ON THE COST. IT W AS THE CONTENTION THAT DATA CENTRE CHARGES ARE SEPARATELY MARKED UP, BUT THESE ARE NOT MARKED UP AS THEY ARE COSTS INCUR RED IN IMPLEMENTING THE ERP PACKAGE. CONSIDERING THE FACT THAT SOME SERVICES ARE CERTAINLY REQUIRED AND ASSESSEE HAS TO INCUR COST IN THE BEGINNING THERE BY EXTENDING SOME CREDIT FAC ILITY, WE ARE OF THE OPINION A MARKUP OF 5% ON THE ABOVE REIMBURS EMENT COST WOULD JUSTIFY THE FACTS OF THE CASE. WE ARE SU PPORTED BY THE DECISION OF M/S ZYDUS ATLANTA HEALTHCARE P.LTD IN ITA NO. 3311,3312/MUM/2008 DT. 22.04.2010 FOR THE ABOVE. AO /TPO IS DIRECTED TO RE-WORKOUT ACCORDINGLY. 11. GROUND NO.13 IS CONSEQUENTIAL IN NATURE AND GROUND NO.14 IS PREMATURE. 12. IN THE RESULT, ITA.NO.1759/HYD/2012 FOR A.Y. 2008-09 IS PARTLY ALLOWED. ITA.NO.262/HYD/2014 A.Y. 2009-2010 13. ASSESSEE HAS RAISED 13 GROUNDS IN THIS APPEAL OUT OF WHICH, GROUND NOS.1 TO 8 PERTAIN TO T.P. ADJUSTM ENTS. GROUND NOS. 9 AND 10 ARE ON DETERMINATION OF ALP FO R 15 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. REIMBURSEMENT OF EXPENSES RECEIVED FROM AES. GROUND NOS. 11(A) AND (B) PERTAINS TO APPLICABILITY OF PROVISIO NS OF SECTION 92C(2) AND GROUND NOS. 12(A) (B) PERTAINS TO IMPOSI NG INTEREST UNDER SECTION 234B AND 234C OF THE ACT AND GROUND N O.13 PERTAINS TO INITIATING THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT IN A.Y. 2009-10 VIDE 14. GROUND NOS. 1 TO 8 PERTAIN TO THE DISALLOW ANCE OF PAYMENT OF ROYALTY AND TECHNICAL SERVICE FEE TO M/S . KIRBY BUILDING SYSTEMS, KUWAIT ANALYSED UNDER THE PROVISI ONS OF TRANSFER PRICING. BRIEFLY STATED, ASSESSEE M/S. KIR BY BUILDING SYSTEMS INDIA LTD., IS ENGAGED IN THE BUSINESS OF M ANUFACTURE OF PRE-ENGINEERED STEEL BUILDING SYSTEM (PEB) PRODU CTS. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.48,14,37,010 ON 30.09. 2009 THE A.O. VIDE HIS DRAFT ORDER HAS DETERMINED THE TOTAL INCOME OF ASSESSEE AT RS.89,07,98,468. THE A.O. FURTHER NOTIC ED THAT IT HAD INTERNATIONAL TRANSACTIONS EXCEEDING RS. 15 CRO RES. THE INTERNATIONAL TRANSACTIONS ENTERED INTO BY AND BETW EEN THE TAXPAYER AND THE AE ARE EXTRACTED IN PARA-5 OF THE ORDER HEREINABOVE. 15. SINCE, THE FACTS ARE SIMILAR AND THE A.OS ORD ERS ARE SIMILAR TO EARLIER YEARS AND ISSUE BEING SAME, WE ARE OF THE OPINION THAT ASSESSEES CLAIM OF ROYALTY AND TECHNI CAL SERVICE FEE IS TO BE ALLOWED ON SIMILAR LINES. ACCORDINGLY, ISSUE NO.1 VIDE GROUNDS 1 TO 8 FOR A.Y. 2009-2010 ARE CONSIDER ED AS ALLOWED. 16. WITH RESPECT TO DETERMINATION OF ALP ON REIMBURSEMENT OF COST VIDE GROUND NOS. 9 AND 10, TH E FACTS ARE 16 ITA.NO.1759/H/2012 & 262/HYD/2014 KIRBY BUILDING SYSTEMS INDIA LIMITED, PASHAMYLARAM, MEDAK DISTRICT. SIMILAR AS IN A.Y. 2008-09 WHICH ISSUE, WE HAVE DIS CUSSED ELABORATELY FROM PARA 7 TO 10 HEREINABOVE. FOR THE DETAILED REASONS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THERE COULD BE MARKUP BUT AT 5%. AO/ TPO IS DIRECTED TO REWORK ACCORDINGLY. 17. WITH RESPECT TO GROUND NO.11, SINCE THIS IS L EGAL GROUND, A.O. IS DIRECTED TO KEEP IN MIND THE PROVIS IONS OF SECTION 92C(2) AND ITS PROVISO WHILE ARRIVING AT TH E ARMS LENGTH PRICE. THIS GROUND DOES NOT REQUIRE ANY SEPARATE AD JUDICATION. 18. GROUND NO.12 IS CONSEQUENTIAL IN NATURE AND GROUND NO.13 IS PREMATURE. 19. IN THE RESULT, ITA.NO.262/HYD/2014 OF THE ASSESSEE IS PARTLY ALLOWED. 20. TO SUM-UP, APPEALS OF ASSESSEE ARE PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.11.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 19 TH NOVEMBER, 2014 VBP/- COPY TO 1. KIRBY BUILDING SYSTEM INDIA LTD., PLOT NO.8-15, IDA, PHASE-III, PASHMYLARAM, MEDAK DISTRICT -502 307. 2. THE JCIT, RANGE-8, I.T. TOWERS, MASAB TANK, HYDE RABAD 3. DISPUTES RESOLUTION PANEL, 2 ND FLOOR, I.T. TOWERS, 10-2-3, A.C. GUARDS, HYDERABAD. 4. CIT-I, HYDERABAD 5. D.R. ITAT B BENCH, HYDERABAD.