Zuari Cement Limited, Kadapa V. Asst. Commissioner of Income Tax, Circle-1(1), Kadapa

ITA 181/Hyd/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4950 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 25-03-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJALA SAHU
• Keywords: Transfer pricing; International transaction; Period of limitation; Wholly owned subsidiary; Commercial expediency; Time period of passing order; Set aside
• Section: 143(3); 92CA

Judgement Text

ITA NO.181/HYD /2018 1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.181/HYD/2018 ASSESSMENT YEAR: 2009-10 ZUARI CEMENT LIMITED, KRSIHNA NAGAR, YERRAGUNTLA, KADAPA DISTRICT 416 311. PAN NO.AAACZ1270E. VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), KADAPA. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI DEEPAK CHOPRA - AR REVENUE BY : SMT. ANJALA SAHU - DR DATE OF HEARING: 25/03/2021 DATE OF PRONOUNCEMENT: 24/09/2021 O R D E R PER S. S. GODARA, J.M. THIS ASSESSEES APPEAL FOR A.Y. 2009-10 ARISES AGAI NST THE ASSTT. COMMISSIONER OF INCOME TAX-1 (1), KADAPAS A SSESSMENT DT.30.11.2017 FRAMED IN FURTHERANCE TO THE DISPUTE RESOLUTION PANEL DRP, BANGALORE-1S DIRECTIONS DT.22.09.20 17 INVOLVING PROCEEDINGS U/S 143(3) R.W.S. 254 R.W.S 92CA AND 14 4C OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEE PLEADS THE FOLLOWING SUBSTANTIVE GR OUNDS IN THE INSTANT APPEAL. ITA NO.181/HYD /2018 2 I. TRANSFER PRICING 1. THE HON'BLE DISPUTE RESOLUTION PANEL, BANGALORE (DRP') / LEARNED ASSESSING OFFICER (AO') / LEARNED TRANSFER PRICING OFFICER (TPO') ERRED IN NOT ACCEPTING THE TRANSFER PRICING ANALYSIS UNDERTAKEN BY THE APPELLANT IN ACCORDANCE WITH PROVISIONS OF THE INCOME-TAX ACT, 1 961 THE ACT') READ WITH INCOME-TAX RU LES, 1962 (THE RULES) 2. THE HON'BLE DRP/AO/TPO ERRED IN MAKING AN ADDITI ON OF RS.50,53,45,718/TO THE TOTAL INCOME OF THE APPELLAN T ON ACCOUNT OF ADJUSTMENT IN THE ARM'S LENGTH PRICE CALP') OF THE INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES CAES'). 3. THE HON'BLE DRP / LEARNED AO ERRED IN UPHOLDING THE TRANSFER PRICING ADJUSTMENT CTP') MADE BY THE LEARNED TPO PERTAINING TO THE INTERNATIONAL TRANSACTIONS AND FURTHER ERRED IN: 3.1 HOLDING THAT THE INTERNATIONAL TRANSACTIONS CAN NOT BE AGGREGATED WITH THE APPLICATION OF TRANSACTIONAL NET MARGIN METHOD (TNMM') FOR THE TRANSFER PRICING ANALYSIS WITHOUT APPRECIATING THE FACT THAT THE PRINCIPLE OF AGGREGATION OF CLOSELY LINKED TRANSACTIONS IS A WEL L-ESTABLISHED RULE PRESCRIBED BY THE ORGANIZATION FOR ECONOMIC CO-OPER ATION AND DEVELOPMENT GUIDELINES (OECD GUIDELINES') AND REFERRED TO FOR G UIDANCE IN VARIOUS RULINGS OF INCOME TAX APPELLATE TRIBUNALS (ITAT); AND 3.2 CONCLUDING THAT THE INTERNATIONAL TRANSACTIONS FORM A SEPARATE CLASS OF TRANSACTIONS AND REQUIRE A DIFFERENT KIND OF ANALYS IS, WITHOUT APPRECIATING THE FACT THAT THE INTERNATIONAL TRANSACTIONS CANNOT BE TESTED IN ISOLATION AS THE SAME ARE CLOSELY INTERLINKED TO THE MANUFACTURI NG OPERATIONS OF THE APPELLANT. 4. THE HON'BLE DRP / LEARNED AO ERRED IN ACCEPTING THE CONTENTIONS OF THE LEARNED TPO THAT THE COMPARABLE UNCONTROLLED PRICE CCUP') METHOD IS THE MOST APPROPRIATE METHOD FOR DETERMINING THE ALP OF INTERNATIONAL TRANSACTIONS OF THE APPELLANT AND THEREBY ERRED IN UPHOLDING THE ALP OF THE INTERNATIONAL TRANSACTIONS AS 'NIL' ON APPLICATION OF THE CUP METHOD FOR THE FOLLOWING INTERNATIONAL TRANSACTIONS: A. PAYMENT OF SUB-LICENSE FEE FOR THE USE OF TRADEM ARK; B. PAYMENT OF PROCUREMENT ERVICES FEE; C. PAYMENT OF CONSULTANCY FEE IN CONNECTION WITH EA SY SUPPLY PORTAL; AND D. PAYMENT OF CONSULTANCY FEE IN CONNECTION WITH TH E CONSTRUCTION OF A NEW MANUFACTURING FACILITY 5. THE HON'BLE DRP/ LEARNED AO / LEARNED TPO ERRED IN NOT FOLLOWING THE OBSERVATIONS MADE BY THE ITAT IN APPELLANT'S OWN CA SE IN AY 2009-10 BY HOLDING THAT ENTIRE ORDER OF THE TPO WAS BASED ON W RONG PRESUMPTIONS AND PROPOSITIONS AND WAS INCORRECT. THE LEARNED TPO IN THE REVISED ORDER MERELY REITERATED THE EARLIER FACTS AND DID NOT GIVE COGNI ZANCE TO THE OBSERVATIONS MADE BY THE ITAT. ITA NO.181/HYD /2018 3 6. PAYMENT OF SUB-LICENSE FEE FOR THE USE OF TRADEMA RK OF ITALCEMENTI - RS. 6,26,62,000/- 6.1. THE HON'BLE DRP / LEARNED AO / LEARNED TPO ERR ED IN REJECTING THE APPELLANT'S CONTENTION THAT THE TRANSACTION RELATED TO THE PAYMENT OF SUBLICENSE FEE FOR THE USE OF TRADEMARK IS AT ARM'S LENGTH BY APPLYING THE TNMM. 6.2. THE HON'BLE DRP / LEARNED AO / LEARNED TPO ERR ED IN QUESTIONING THE COMMERCIAL EXPEDIENCY OF THE APPELLANT IN MAKING SU CH PAYMENT BY CONTENDING THAT THE APPELLANT FAILED TO EXPLAIN WHY THE APPELLANT WOULD USE ITALCEMENTI LOGO WHEN ITS OWN TRADEMARK WAS ESTABLI SHED. THE HON'BLE DRP / LEARNED AO / LEARNED TPO FURTHER ERRED BY INAPPRO PRIATE APPLICATION OF CUP METHOD, WITHOUT FURNISHING DETAILS OF ANY CUP T RANSACTIONS. 6.3. THE HON'BLE DRP / LEARNED AO/ ERRED IN UPHOLDI NG THE CONTENTION OF THE LEARNED TPO THAT THERE WAS NO TANGIBLE BENEFIT AND NO CORRESPONDING ECONOMIC OR COMMERCIAL VALUE WAS DERIVED BY THE APP ELLANT FROM PAYING A SUB-LICENSE FEE OF RS. 6,26,62,000 FOR THE USE OF T RADEMARK OF THE AE AND THEREBY ERRED IN DETERMINING THE ALP FOR THE PAYMEN T OF SUB-LICENSE FEE AS 'NIL'. 6.4. THE HON'BLE DRP / LEARNED AO / LEARNED TPO ERR ED IN NOT APPRECIATING THE EVIDENCE FILED BY THE APPELLANT TO DEMONSTRATE THE BENEFITS RECEIVED BY IT FROM THE USE OF TRADEMARK OF THE AE. 6.5. THE HON'BLE DRP / LEARNED AO / LEARNED TPO ERR ED IN DISREGARDING THE EXTERNAL COMPARABLE UNCONTROLLED TRANSACTION ('CUT' ) SEARCH PERFORMED BY THE APPELLANT TO JUSTIFY THE ALP OF THE INTERNATION AL TRANSACTION PERTAINING TO THE PAYMENT OF SUB-LICENSE FEE WITHOUT GIVING ANY C OGENT REASONS. 6.6. THE HON'BLE DRP / LEARNED AO / LEARNED TPO ERR ED IN NOT FOLLOWING THE HON'BLE ITAT RULING ON SUBLICENSE FEE WHEREBY HON'B LE ITAT IN THE ORDER FOR AY 2009-10 HELD THAT REJECTING THE ENTIRE PAYMENT O F SUBLICENSE FEE WITHOUT THERE BEING ANY ANALYSIS ON THE CUP METHOD CANNOT B E ACCEPTED. HOWEVER THE HON'BLE DRP / LEARNED AO / LEARNED TPO DID NOT GIVE COGNIZANCE TO SUCH OBSERVATIONS MADE BY THE ITAT. 7. PAYMENT OF PROCUREMENT SERVICES FEE AMOUNTING TO INR 1,77,79,817 /- 7.1. THE HON'BLE DRP / LEARNED AO / LEARNED TPO ERR ED IN REJECTING THE APPELLANT'S CONTENTION THAT THE PAYMENT TOWARDS PR OCUREMENT SERVICE FEE IS AT ARM'S LENGTH BY APPLYING TRANSACTIONAL NET MARGI N METHOD ('TNMM'). 7.2. THE HON'BLE DRP 1 LEARNED AA 1 LEARNED TPO ERR ED IN QUESTIONING THE COMMERCIAL EXPEDIENCY OF THE APPELLANT IN MAKING SU CH PAYMENT. 7.3. THE HON'BLE DRP 1 LEARNED AA 1 LEARNED TPO ERR ED IN CONCLUDING THAT THE PROCUREMENT SERVICES AVAILED FROM AE IS EXTENSI ON OF TECHNICAL KNOW- HOW AND RESEARCH AND OTHER SERVICES FEE PAID AND TH E SAME IS NOTHING BUT A SHAREHOLDER'S ACTIVITY. ITA NO.181/HYD /2018 4 7.4. THE HON'BLE DRP 1 LEARNED AA ERRED IN UPHOLDIN G THE CONTENTION OF THE LEARNED TPO THAT THERE WAS NO TANGIBLE BENEFIT FOR PAYING PROCUREMENT SERVICE FEE TO AE AS THERE WAS NO SCOPE FOR AE TO P ROVIDE THE SERVICES WHICH THE APPELLANT WAS ALREADY PERFORMING OR WAS CAPABLE OF PERFORMING AND THEREBY ERRED IN DETERMINING THE ALP FOR THE PAYMEN T OF PROCUREMENT SERVICE FEE AMOUNTING TO INR 1,77,79,817/- AS NIL. 7.5. THE HON'BLE DRP 1 LEARNED TPO / LEARNED AO ERR ED IN DISREGARDING THE EVIDENCE SUBMITTED BY THE APPELLANT TO PROVE THAT I T WAS IN NEED OF SERVICES, SERVICES WERE ACTUALLY RENDERED AND THE BENEFIT WAS DERIVED FROM THE PROCUREMENT SERVICES OBTAINED FROM THE AE. 7.6. THE LEARNED TPALAA FURTHER ERRED IN NOT FOLLOW ING THE DIRECTIONS ISSUED BY THE HON'BLE DISPUTE RESOLUTION PANEL WHEREBY DRP HAD DIRECTED ASSESSING OFFICER/ TPO MAY EXAMINE WHETHER PAYMENT TOWARDS PROCUREMENT SERVICES FEE FORMED PART OF THE CAPITAL WORK-IN PROGRESS FOR THE RELEVANT YEAR AND IF YES QUESTION OF MAKING ADJUSTM ENT BASED ON ALP DOES NOT ARISE. 8. PAYMENT OF CONSULTANCY FEE TO CTG AMOUNTING TO I NR 421,094,000 8.1. THE HON'BLE DRP 1 LEARNED AA 1 LEARNED TPO ERR ED IN REJECTING THE APPELLANT'S CONTENTION THAT THE PAYMENT OF CONSULTA NCY FEE IN CONNECTION WITH THE CONSTRUCTION OF A NEW MANUFACTURING FACILI TY IS AT ARM'S LENGTH BY APPLYING TRANSACTIONAL NET MARGIN METHOD ('TNMM'). 8.2. THE HON'BLE DRP 1 LEARNED AA 1 LEARNED TPO ERR ED IN QUESTIONING THE COMMERCIAL EXPEDIENCY OF THE APPELLANT IN MAKING SU CH PAYMENT. 8.3. THE HON'BLE DRP 1 LEARNED AA 1 LEARNED TPO ERR ED IN CONCLUDING THAT THE SERVICES RENDERED BY AE WERE ROUTINE IN NATURE AND THE SAME WERE RENDERED BECAUSE OF THE OWNERSHIP INTEREST IN THE A PPELLANT. 8.4. THE HON'BLE DRP 1 LEARNED AA ERRED IN UPHOLDIN G THE CONTENTION OF THE LEARNED TPO THAT THERE WAS NO TANGIBLE BENEFIT AND NO CORRESPONDING ECONOMIC OR COMMERCIAL VALUE WAS DERIVED BY THE APP ELLANT FROM PAYING THE CONSULTANCY FEE IN CONNECTION WITH CONSTRUCTION OF A NEW MANUFACTURING 'FACILITY TO THE AE AND THEREBY ERRED IN DETERMININ G THE ALP FOR THE PAYMENT OF CONSULTANCY FEE AS 'NIL'. 8.5. THE HON'BLE DRP 1 LEARNED AA 1 LEARNED TPO ERR ED IN DISREGARDING THE EVIDENCES SUBMITTED BY THE APPELLANT TO PROVE THAT 'IT WAS IN NEED OF SERVICES, SERVICES WERE ACTUALLY RENDERED AND THE B ENEFIT WAS DERIVED FROM THE CONSULTANCY SERVICES OBTAINED FROM THE AE. 8.6. THE HON'BLE DRP FAILED TO TAKE COGNIZANCE OF T HE FACT THAT THE PAYMENT OF CONSULTANCY FEE WAS ASSOCIATED WITH CONSTRUCTION OF A NEW MANUFACTURING FACILITY AND NOT AN EXTENSION OF THE TECHNICAL KNOW -HOW AND RESEARCH AND OTHER SERVICE FEE PAID, FOR WHICH NO SEPARATE CHARG E WAS WARRANTED. 8.7. THE LEARNED TPO/AO FURTHER ERRED IN NOT FOLLOW ING THE DIRECTIONS ISSUED BY THE HON'BLE DISPUTE RESOLUTION PANEL WHEREBY DRP HAD DIRECTED AO/TPO MAY EXAMINE WHETHER PAYMENT TOWARDS CONSULTANCY SER VICES FEE FORMED ITA NO.181/HYD /2018 5 PART OF THE CAPITAL WORK-IN PROGRESS FOR THE RELEVA NT YEAR AND IF YES QUESTION OF MAKING ADJUSTMENT BASED ON ALP DOES NOT ARISE. 9. PAYMENT OF CONSULTANCY FEE FOR USING EASY SUPPLY P ORTAL - RS. 38,10,000 9.1. THE HON'BLE DRP / LEARNED AO / LEARNED TPO ERR ED IN REJECTING THE APPELLANT'S CONTENTION THAT THE PAYMENT OF CONSULTA NCY FEE FOR USING EASY SUPPLY PORTAL IS AT ARM'S LENGTH BY APPLYING TRANSA CTIONAL NET MARGIN METHOD ('TNMM'). 9.2. THE HON'BLE DRP / LEARNED AO / LEARNED TPO ERR ED IN QUESTIONING THE COMMERCIAL EXPEDIENCY OF THE APPELLANT IN MAKING SU CH PAYMENT. 9.3. THE HON'BLE 'DRP / LEARNED AO / LEARNED TPO ER RED IN CONCLUDING THAT THE CONSULTANCY SERVICES IN CONNECTION WITH THE EAS Y SUPPLY PORTAL AVAILED FROM AE ARE ROUTINE IN NATURE AND THE SAME IS NOTHI NG BUT A SHAREHOLDER'S ACTIVITY. 9.4. THE HON'BLE DRP / LEARNED AO ERRED IN UPHOLDIN G THE CONTENTION OF THE LEARNED TPO THAT THERE WAS NO TANGIBLE BENEFIT AND NO CORRESPONDING ECONOMIC OR COMMERCIAL VALUE WAS DERIVED BY THE APP ELLANT FROM PAYING THE CONSULTANCY FEE FOR USING EASY SUPPLY PORTAL TO THE AE AND THEREBY ERRED IN DETERMINING THE ALP FOR THE PAYMENT OF CONSULTANCY FEE AS 'NIL'. 9.5. THE HON'BLE DRP / LEARNED AO ERRED IN UPHOLDIN G THE CONTENTION OF THE LEARNED TPO THAT THE APPELLANT FAILED TO FURNISH AN Y EVIDENCE IN SUPPORT OF ACTUAL SERVICES RENDERED BY AE. 9.6. THE HON'BLE DRP / LEARNED AO/ LEARNED TPO ERRE D IN DISREGARDING THE EVIDENCES SUBMITTED FOR USING EASY SUPPLY PORTAL BY THE APPELLANT TO PROVE THAT THE APPELLANT WAS IN NEED OF SERVICES, SERVICE S WERE ACTUALLY RENDERED AND THE BENEFIT WAS DERIVED FROM THE CONSULTANCY SE RVICES OBTAINED FROM THE AE. 10. LEVY OF PENALTY 10.1 THE LEARNED AO HAS ERRED ON FACTS AND LAW TO I NITIATE PENALTY PROCEEDINGS AGAINST THE APPELLANT UNDER SECTION 271 (1)(C) OF THE ACT AS THERE WAS NO CONCEALMENT OF FACTS AND NO WILLFUL MISSTATE MENT. 3. IT IS CLEAR IN NUTSHELL THAT THE ASSESSEES FOUR FOLDED SUBSTANTIVE GROUNDS CHALLENGE CORRECTNESS OF THE LO WER AUTHORITIES ACTION INTERALIA MAKING ARMS LENGTH PRICE ALP AD JUSTMENTS PERTAINING TO PAYMENT(S) OF SUB-LICENSE FEE FOR USE OF TRADE MARK OF ITALCEMENTI OF RS.6,26,62,000/-, PROCUREMENT SERV ICES FEE OF RS.1,77,79,817/-, CONSULTANCY SERVICE FEE INVOLVING A SUM OF ITA NO.181/HYD /2018 6 RS.42,10,94,000/- AND PAYMENT OF CONSULTANCY FEE FO R USING EASY SUPPLY PORTAL OF RS.38,10,000/-; RESPECTIVELY. 4. WE NEXT NOTE WITH THE ABLE ASSISTANCE COMING FRO M BOTH THE PARTIES THAT THE ASSESSEES FIRST AND FOREMOST ARGUMENT IN PRINCIPLE IS QUA AGGREGATION OF THE FOREGOING TRANS ACTIONS FOLLOWED BY ADOPTION OF THE TRANSACTIONAL NET MARGIN METHOD (TN MM) AS THE MOST APPROPRIATE METHOD MAM; WHICH IN TURN, STAND S DECLINED IN THE LEARNED LOWER AUTHORITIES RESPECTIVE ORDERS BY TAKING COMPARABLE UNCONTROLLED PRICE CUP METHOD. IT FURTHER TRANSP IRES FROM A PERUSAL OF THE CASE FILE THAT NEITHER OF THE FOREGO ING TWIN ISSUES REQUIRE ANY DETAILED ADJUDICATION AS WELL SINCE WE ARE DEALING WITH CONSEQUENTIAL SECOND ROUND OF REMAND PROCEEDINGS W HEREIN THE LEARNED CO-ORDINATE BENCHS ORDER DT.17.04.2015 IN ASSESSEES APPEAL ITSELF HAD REJECTED THE REVENUES CORRESPON DING ARGUMENTS AS UNDER : TRANSFER PRICING ISSUES: 7. ASSESSEE BEING A WHOLLY OWNED SUBSIDIARY OF A FO REIGN COMPANY, HAS VARIOUS TRANSACTIONS WITH ITS AES WHICH WERE REPORT ED AS THE INTERNATIONAL TRANSACTIONS IN 3CEB REPORT. THE TPO NOTED THEM IN PAGE 2 OF THE ORDER AND AFTER EXCLUDING NON-OPERATING ITEMS, BOTH REVEN UE AND EXPENDITURE, ARRIVED AT (OPERATING COST / OPERATING REVENUES) AT 27.12%, WHEREAS (OPERATING PROFITS / OPERATING COST) WAS ARRIVED AT 33.37%. ASSESSEE IN ITS 3CEB REPORT CLAIMED TRANSACTION NET MARGIN METHOD [ TNMM] AS THE MOST APPROPRIATE METHOD, ANALYSED ITS TRANSACTIONS AND C OMPARED TWO SETS OF COMPARABLE COMPANIES. UNDER THE FIRST SET OF COMPAR ABLES AS NOTED DOWN BY TPO IN PAGE 4 OF THE ORDER, IT COMPARED 11 COMPA NIES WHICH ARE IN CEMENT BUSINESS WHOSE AVERAGE OPERATING PROFIT/OPER ATING COST WAS AT 18.59% AS AGAINST ASSESSEE'S OPERATING MARGIN 29.36 %. IT ALSO HAD ANOTHER SET OF COMPARABLES WHEREIN THE IAVERAGE NET MARGIN ON SALE WAS AT 21.67% AS AGAINST ASSESSEE'S MARGIN OF 29.36%. A SSESSEE'S TP STUDY WAS REJECTED BY TPO STATING THAT JUST BECAUSE THE O PERATING MARGIN OF THE TAXPAYER IS COMPARABLE WITH THE OPERATING MARGIN OF CERTAIN COMPARABLES, IT CANNOT BE SAID THAT ALL THE TRANSACTIONS WERE TR ANSACTED AT ARM'S LENGTH. RELYING ON THE PRINCIPLE OF 'SUBSTANCE OVER FORM' A S HELD BY HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. GOS ALIA SHIPPING P. LTD., [113 ITR 307 (SC)], AO REJECTED THE METHOD OF TNMM, CONSEQUENTLY, THE TP STUDY CONDUCTED BY THE TAXPAYER. HE ALSO HELD THAT AGGREGATION OF TRANSACTIONS WERE NOT ALLOWED AND RELIED ON THE DEC ISIONS OF THE CO- ORDINATE BENCH IN THE CASE OF STAR INDIA P. LTD., V S. ACIT [2008-TIOL-426- ITAT-MUM] AND ALSO UCB INDIA PVT. LTD., [317 ITR 29 2 (AT) (MUM)], TO COME ITA NO.181/HYD /2018 7 TO A CONCLUSION THAT ANY TRANSACTION THAT HAS BEARI NG ON PROFITS CAN BE ANALYSED SEPARATELY. THEREAFTER, HE ANALYSED VARIOU S INTERNATIONAL TRANSACTIONS, MOSTLY UNDER THE COMPARABLE UNCONTROL LED PRICE (CUP) METHOD FOR ANALYZING THE ARM'S LENGTH NATURE OF PAY MENTS TO ITS AES. HE FURTHER HELD THAT FEES FOR TECHNICAL KNOW-HOW, FEES FOR USE OF TRADE MARK AND FEES FOR PROCUREMENT ETC., ARE A SEPARATE CLASS OF TRANSACTIONS, THEREFORE, THEY HAVE TO BE ANALYSED SEPARATELY, AS EACH TRANSACTION HAS A BEARING ON PROFITS. ACCORDINGLY, THE TRANSACTIONS E NTERED INTO BY AND BETWEEN THE TAXPAYER AND ITS AES ARE CONSIDERED SEP ARATELY FOR THE PURPOSE OF TRANSFER PRICING ANALYSIS. LD.TPO NOTICE D THAT ASSESSEE PAID AN AMOUNT OF RS.12,53,26,000/- TO CIMENTS FRANCAIS S.A ., AS TECHNICAL KNOW- HOW AND RESEARCH AND OTHER SERVICE FEE. THIS PAYMEN T WAS PAID ON AN AGREEMENT DT.02-08-2000 FOR GETTING TECHNICAL KNOW- HOW FOR A PERIOD OF THREE CALENDAR YEARS FROM THAT EFFECT DATE. AS PER RENEWAL OF CLAUSE AT 12.2 IT IS MENTIONED THAT AGREEMENT WAS AUTOMATICALLY BE RENEWED SUBJECT TO GOVERNMENT/STATUTORY APPROVAL FOR A PERIOD OF ONE C ALENDAR YEAR AT A TIME IN SUPPORT OF THE TRANSACTION. ASSESSEE HAS FURNISH ED A COPY OF AGREEMENT DT.06-06-2007 EFFECTIVE FROM 01-01-2007 FOR PAYMENT OF ROYALTY @ 2% ON SALES MADE TO OUTSIDE PARTIES AND 1% ON SALE TO GRO UP COMPANIES. EVEN THOUGH ASSESSEE JUSTIFIED THE PAYMENT, LD.TPO HOWEV ER, CONSIDERED THAT THERE IS NO ADDITION OF NEW TECHNICAL KNOW-HOW AND COMPARED WITH FINANCIAL RESULTS OF SRI VISHNU CEMENTS LTD., UNDER THE CUP METHOD, TO HOLD THAT THERE IS NO JUSTIFICATION FOR PAYMENT OF ROYAL TY. ACCORDINGLY HE CAME TO THE CONCLUSION THAT THERE IS NO NEED TO PAY ANY AMO UNT. NOT ONLY THAT, HE ALSO COMPARED SOME EXTERNAL COMPARABLES AND CAME TO THE CONCLUSION THAT AVERAGE PAY OUT ON ACCOUNT OF TECHNICAL SERVICES BY THOSE COMPARABLE COMPANIES WAS AT 0.91% OF NET SALES. THEREFORE, BAS ED ON THESE TWO INTERNAL AND EXTERNAL CUP ANALYSIS, TPO DETERMINED THE PAYABLE ROYALTY AT 0.91% WHICH COMES TO RS.10.87 CRORES. THE ADDITIONA L AMOUNT OF RS.1,65,64,219/- WAS DISALLOWED AS AN EXCESS PAYMEN T AND WAS ADJUSTED U/S.92CA. 8. NEXT ITEM ANALYSED BY TPO WAS WITH REFERENCE TO PAYMENT OF RS.6,26,62,000/- TO CIMENTS FRANCAIS S.A., TOWARDS SUB-LICENSE AGREEMENT. CIMENTS FRANCAIS S.A., AN AFFILIATED COM PANY OF ITALCEMENTI GROUP IS HAVING SUB-LICENSE AGREEMENT TO USE THE TR ADE MARK. AS PER THE AGREEMENT, ROYALTY AT 1% OF NET SALES OF LICENSED P RODUCTS HAS TO BE PAID TO CIMENTS FRANCAIS S.A., ON QUARTERLY BASIS. AO ANALY SED THE SAME UNDER THE CUP METHOD AND NOTICED THAT THERE IS NO NEED FO R PAYING ANY AMOUNT TO ITALCEMENTI GROUP FOR USE OF TRADE MARK AS ASSES SEE'S OWN TRADE MARK OF ZCL WAS WELL ESTABLISHED. HE ANALYSED THE EVOLUT ION OF ZCL BRAND EQUITY AND NOTICED THAT ASSESSEE ITSELF HAD ENTERED INTO AN AGREEMENT WITH M/S. JINDAL VIJAYANAGAR LTD., FOR A FIXED LICENSE O F RS.1,00/- PER METRIC TONNE FOR USING THE TRADE MARK AND ACCORDINGLY, ASS ESSEE HAS RECEIVED AMOUNTS. THEREFORE, COMMERCIAL EXPLOITATION OF THE TRADE MARK AIDED BY THE MARKETING AND ADVERTISING EFFORTS OF ZCL, RESULTED IN CREATION OF VALUABLE INTANGIBLE ASSETS IN INDIA. THEREAFTER, ANALYZING T HE BENEFIT TEST, THE TPO CAME TO THE THAT NEW TRADE MARK LICENSED TO THE TAX PAYER DOES NOT HAVE ANY VALUE AND THEREFORE NO LICENSE FEE SHOULD BE CH ARGEABLE FOR ITS USE. THEREAFTER, HE HAS DISALLOWED THE ENTIRE AMOUNT OF SUB-LICENSE FEE PAID UNDER THE PROVISIONS OF SECTION 92CA. NOT ONLY THAT HE FURTHER ANALYSED THE COBRANDING OF ZCL AND 'ITALCEMENTI' GROUP AND CAME TO THE CONCLUSION THAT ITALCEMENTI GROUP GOT BENEFIT BY PIGGY RIDING ON ZC L BRAND, WHICH HAS TREMENDOUS VALUE IN THE MARKET AND THEREFORE, THE S AME REQUIRES TO BE ITA NO.181/HYD /2018 8 COMPENSATED AT ARM'S LENGTH. HE TOOK THE 10% OF ALP EXPENSES BETWEEN 2001 AND 2008 AND ARRIVED AT THE COMPENSATION PAYAB LE TO ZCL, FOR USE OF ITS TRADE MARK AT RS.41,60,00,000/- AND MADE THE AD JUSTMENT OF THE ABOVE IN THE IMPUGNED YEAR. 9. IN ADDITION, TPO ALSO ANALYSED THE PAYMENTS FROM THE INTRA GROUP SERVICES OF PROCUREMENT FEE OF RS.7,11,82,000/-. CO NSIDERING THAT THERE IS NO NEED FOR ANY SERVICES, HE DISALLOWED THE ENTIRE AMOUNT. LIKEWISE, CONSULTANCY FEES PAID OF RS.38,10,000/- TO BRAVO CO NSULTANCY SPA AND RS.42,10,94,000/- TO CTG SPA WERE ALSO CONSIDERED A ND DISALLOWED THE SAME REASON AND ON THE BASIS OF THE BENEFIT TEST, I N ITS ENTIRETY. ASSESSEE'S OBJECTIONS WERE REJECTED AND THE ABOVE AMOUNTS WERE DISALLOWED. ANOTHER DISALLOWANCE MADE BY THE AO WAS WITH REFERENCE TO R EIMBURSEMENT OF EXPENSES UNDER VARIOUS HEADS TOTALING TO RS.51,72,9 95/-. THUS, IN ALL, AN AMOUNT OF RS.99,64,85,214/- WAS TREATED AS ADJUSTME NT U/S. 92CA. ASSESSEE FILED VARIOUS OBJECTIONS BEFORE THE DRP BU T MORE OR LESS CONCURRED WITH TPO VIDE ITS ORDER DT.25- 11-2013. A SSESSEE IS AGGRIEVED. 10. ASSESSEE'S OBJECTIONS ARE MULTI-FOLD. GROUND NO .1 & 2 ARE GENERAL IN NATURE. GROUND NO.3 & 4, IS THE METHOD ADOPTED BY T HE TPO AND GROUND NO.5 TO 12 ARE ON VARIOUS DISALLOWANCES MADE BY THE TPO OUT OF VARIOUS PAYMENTS MADE TO AE. EACH GROUND HAS SUB GROUNDS WH ICH ARE MORE OR LESS IN THE FORM OF SUBMISSIONS. 11. LD.AR SUBMITTED THAT TPO ERRED IN REJECTING THE TRANSFER PRICING DOCUMENTATION AS WELL AS TNMM AS MOST APPROPRIATE M ETHOD. IT WAS THE OBJECTION THAT THERE IS NO PUBLICLY AVAILABLE INFOR MATION ON PRICES CHARGED IN INDEPENDENT TRANSACTIONS WHICH ARE SIMILAR OR ID ENTICAL IN NATURE THAT REFLECTS THE CHARACTERISTICS OF THE SERVICES PROVID ED BY THE AES TO THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT NEITHER ASS ESSEE NOR AES PROVIDE SIMILAR SERVICES UNDER COMPARABLE CIRCUMSTANCES TO ANY INDEPENDENT THIRD PARTY. THEREFORE, APPLICATION OF CUP METHOD IS NOT TENABLE AND GIVEN THE FACTS OF THE CASE WILL NOT GIVE RELIABLE RESULTS. A SSESSEE RELIED ON THE ORDERS OF THE ITAT IN AIR LIQAUIDE ENGINEERING INDIA PVT. LTD., IN ITA NO.1040/H/2011 AND LUMAX INDUSTRIES IN ITA NO.7408 AND 7641/MUM/2010. WITH REFERENCE TO THE T.P. ADJUSTMEN T OF RS.1,65,64,219/- RELATING TO FEE PAID FOR TECHNICAL SERVICES, IT WAS CONTENDED THAT SVCL I.E., SRI VISHNU CEMENTS LTD., WAS A SUBSIDIARY OF ASSESSEE, AS A PART OF BIFR PACKAGE FROM FY.2002-03 . BEFORE THAT, IT WAS INDEPENDENT SICK COMPANY AND HAVING ACQUIRED BY THE COMPANY, BEING SICK, NO ROYALTY WAS CHARGED TO SVCL DURING THE PER IOD 2002-03 TO 2006- 07 W.E.F. JANUARY 2007. THE SAID SVCL WAS MERGED WI TH ASSESSEECOMPANY UNDER THE ORDER OF HON'BLE HIGH COU RT OF AP. THEREFORE, COMPARING WITH COSTS OCCURRED ABOUT THREE YEARS PRI OR TO THE IMPUGNED PERIOD, WAS ALSO NOT CORRECT. FURTHER, IT WAS CONTE NDED THAT TPO HAS TAKEN A WRONG INFORMATION AND IGNORED CERTAIN DATA IN BET WEEN WHICH COMPARING ANNUAL EARNINGS AS CAN BE SEEN FROM THE TABLE ITSEL F EXTRACTED IN THE ORDER. SINCE TPO HAS NOT BASED HIS ULTIMATE DECISION OF SV CL, LD.COUNSEL ALSO REFERRED TO THE THREE COMPANIES TAKEN AS EXTERNAL C OMPARABLES, IN ARRIVING AT 0.91% OF ROYALTY RATE. IT WAS SUBMITTED THAT THE TECHNICAL FEE PAID INCLUDED IN THEIR ANNUAL REPORT IS NOT THE ROYALTY ON SALES, BUT EXPENSES LIKE ROYALTY ON LIME STONE, OTHER FEES PAID TO GOVE RNMENT AUTHORITIES WHICH CANNOT BE CONSIDERED AS ROYALTY PAYMENT ON SALES. H E REFERRED TO THE ORDER OF THE TPO AND BALANCE SHEET OF VARIOUS COMPANIES T O SUBMIT THAT THE BASIS ITSELF IS NOT CORRECT. WITH REFERENCE TO SUB- LICENSE FEE OF ITA NO.181/HYD /2018 9 RS.6,26,62,000/-, IT WAS SUBMITTED THAT THIS AGREEM ENT WAS ENTERED IN THE YEAR 2007 AND OBJECTED TO THE METHOD ADOPTED BY THE TPO STATING THAT THE TRANSACTION IS INEXTRICABLY LINKED WITH THE MANUFAC TURING OPERATION, THEREBY AGGREGATION OF TRANSACTION WITH APPLICATION OF TNMM AS A MAM CANNOT BE IGNORED. IT WAS FURTHER CONTENDED THAT TH ERE WERE NO COGENT REASONS AS TO WHY CUP SHOULD BE ADOPTED AND BOTH TP O AND DRP ERRED IN DETERMINING THE ALP AT NIL. IT WAS THE SUBMISSION T HAT USE OF TRADE MARK IS A BUSINESS DECISION AND THERE ARE BENEFITS TO AS SESSEE FOR USE OF ITALCEMENTI GROUP TRADE MARK AND DEMONSTRATED BY TH E SUPPORT OF GROWTH IN SALES VOLUME OVER A FIVE YEAR PERIOD AND INCREAS E IN CUSTOMER BASE IN THE FIVE YEARS AND FURNISHED THE COPIES OF EVIDENCE S FURNISHED TO THE TPO, IN SUPPORT OF THE SUBMISSIONS. IT WAS FURTHER SUBMI TTED THAT A PUBLICLY AVAILABLE INFORMATION ANALYSIS WAS UNDERTAKEN BY AS SESSEE ON THE RATE OF ROYALTY BEING CHARGED BY LICENSOR TO A LICENSEE AND THAT ANALYSIS CAME TO THE RANGE OF 1.93%. THEREFORE, THE PAYMENT MADE BY ZCL @ 1% ON SALE WAS TO BE CONSIDERED AS ARM'S LENGTH AND TPO'S DETE RMINATION AT NIL CANNOT BE SUPPORTED, IN VIEW OF THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. EKL APPLIANCES LTD., 11.1 COMING TO THE ALLEGED TRANSFER OF ECONOMIC VAL UE OF ZUARI TRADE MARK TO ITALCEMENTI GROUP TRADE MARK, IT WAS CONTENDED T HAT THERE WAS NO MIGRATION OF ECONOMIC VALUE AS THE ZUARI BRAND WAS OWNED BY THE COMPANY AND IS BEING USED IN ALL THE SALES. IT WAS FURTHER CONTENDED THAT AE HAS NOT USED 'ZUARI' BRAND ANYWHERE IN THE WORLD FOR ITS OPERATIONS TO GET ANY BENEFIT AS ALLEGED BY THE TPO. FURTHER, IT WAS CONTENDED THAT ITALCEMENTI GROUP TRADE MARK WAS BEING USED FROM AY .2006-07 ONWARDS AND THEREFORE, AO WAS WRONG IN TAKING THE MARKET EX PENSES AFTER THAT PERIOD ALSO. WITH REFERENCE TO THE INCORRECT METHOD OLOGY FOR VALUATION OF ZUARI TRADE MARK, IT WAS FURTHER CONTENDED THAT TRA NSFER OF TRADE MARK WILL NOT HAPPEN YEAR AFTER YEAR AND TPO/ DRP HAS MADE A SIMILAR APPROACH IN AY.2008-09 AND MADE THE ADJUSTMENT OF RS.31.74 CROR ES AND IN AY.2009- 10, THE ADJUSTMENT WAS RS.41.60 CRORES. THEREFORE, THE ACTION OF THE TPO/DRP IS IRRATIONAL ON THE REASON THAT PROPOSING THE TRANSFER PRICING ADJUSTMENT FOR TRANSFER OF ZUARI TRADE MARK YEAR AF TER HAS NO BASIS, WITHOUT APPRECIATING THE FACT THAT THE TRANSFER CAN TAKE PLACE ONLY ONCE. WITH REFERENCE TO THE CONSULTANCY FEES FOR MANUFACT URING A NEW PLANT, FIRST OBJECTION WAS THAT THE AMOUNT WAS NOT CLAIMED AS EX PENDITURE IN THE P&L A/C AND WAS CAPITALIZED. WHILE SUPPORTING THE PAYME NT BY WAY OF SERVICES BEING PROVIDED BY THE AE IN PROCURING THE EQUIPMENT FOR THE NEW PLANT AND ALSO THE NECESSITY FOR TAKING VARIOUS PROCUREMENT S ERVICES FOR A FEE, IT WAS THE SUBMISSION THAT TPO ERRED IN IGNORING THE EVIDE NCES AND DETERMINING THE ALP AT NIL. LIKEWISE, PAYMENT OF CONSULTANCY FE E TO BRAVO CONSULTANCY SPA FOR USE OF 'EASY SUPPLY' PORTAL AND THE EVIDENC ES FURNISHED IN THIS REGARD WERE TOTALLY IGNORED AND WRONGLY DETERMINED THE ALP AT NIL. LIKEWISE, THE LD.COUNSEL MADE DETAILED SUBMISSIONS ON REIMBURSEMENT OF EXPENSES AND OTHER VARIOUS DISALLOWANCES MADE BY TH E TPO. DETAILED SUBMISSIONS WERE FILED ISSUE- WISE. 12. LD.DR FURTHER REFERRED TO VARIOUS OBSERVATIONS OF THE TPO AND FINDINGS OF THE DRP TO SUBMIT THAT THE ADJUSTMENTS MADE ARE WARRANTED ON THE FACTS OF THE CASES. HE SUPPORTED THE ORDERS OF THE TPO/DRP. 13. WE HAVE CONSIDERED THE ISSUE AND PURSUED THE EV IDENCES ON RECORD, INCLUDING THE DOCUMENTS PLACED ON THE PAPER BOOKS. WE ARE OF THE OPINION THAT THE APPROACH OF THE TPO IS NOT CORRECT. EVEN T HOUGH THE PAYMENTS ITA NO.181/HYD /2018 10 MADE BY ASSESSEE TO THE AES ARE JUST A FRACTION OF THE TOTAL TURNOVER OF ASSESSEE, THESE TRANSACTIONS ARE INVARIABLY INTER-L INKED TO THE MANUFACTURING AND TRADING OF CEMENT BY THE ASSESSEE -COMPANY. THEREFORE, THE APPROACH OF THE TPO IN CONSIDERING THE CUP METH OD FOR ANALYZING INDEPENDENT TRANSACTIONS IS NOT FULLY JUSTIFIABLE. APART FROM THAT, THE METHODOLOGY USED IN VARIOUS ANALYSIS IS ALSO FAULTY . AS FAR AS THE ROYALTY PAYMENT ON SALES IS CONCERNED, AS RIGHTLY POINTED O UT BY THE LD.COUNSEL, THERE ARE NO COMPARABLE COMPANIES WHICH ARE OFFERIN G SIMILAR SERVICES. THE TPO'S COMPARISON ON TRANSACTIONS OF ASSESSEE SUBSID IARY COMPANY MUCH PRIOR TO THE YEAR UNDER CONSIDERATION CANNOT BE JUS TIFIED. THEREFORE, ON THAT BASIS ITSELF, THE COMPARISON CANNOT BE CONSIDERED A S AN INTERNAL CUP. MOREOVER, THE NEED FOR NOT CHARGING ROYALTY FROM SV CL WAS ALSO EXPLAINED AS THE SUBSIDIARY COMPANY WAS A SICK COMPANY AND IN THE PROCESS OF REVIVING THE COMPANY, ASSESSEE HAS NOT CHARGED ANY ROYALTY TO ITS SUBSIDIARY COMPANY. THEREFORE, ON FAR ANALYSIS, SVS L'S PAST RECORD WITH THAT OF PRESENT TRANSACTIONS OF ASSESSEE-COMPANY IS NOT CORRECT. THEN, COMING TO EXTERNAL COMPARABLES, WE WERE SURPRISED T O NOTE THAT THE TPO CONSIDERED THE TECHNICAL FEE PAYMENTS WITHOUT ANALY ZING THE NATURE OF THE PAYMENTS. IN SOME CASES, IT IS ROYALTY FOR ACQUIRIN G THE LIME STONE FROM GOVT., WHICH IS NOT A 'ROYALTY' FOR GETTING THE TEC HNOLOGY FROM FOREIGN AE. THERE IS FOREIGN EXCHANGE EXPENDITURE ALSO CONSIDER ED AS 'TECHNICAL KNOW- HOW FEE'. A DETAILED OBJECTIONS OF THE ASSESSEE WER E NOT EVEN CONSIDERED OR DISCUSSED EITHER BY THE TPO OR BY THE DRP. THEREFOR E, ON THE BASIS OF AN EXTERNAL CUP ALP OF 0.91% ITSELF IS NOT CORRECT. TH EREFORE, THE ENTIRE EXERCISE UNDERTAKEN BY THE TPO ON THIS ISSUE IS ERR ONEOUS AND CANNOT BE JUSTIFIED. 14. LEAVE ALONE THAT AMOUNT, EVEN THE SUB LICENSE F EE FOR THE USE OF TRADE MARK IS ALSO FAULTY. UNDER THE GUISE OF TPO PROVISI ONS, THE TPO CANNOT DETERMINE THE ALP AT NIL AS HELD BY THE HON'BLE DEL HI HIGH COURT IN THE CASE OF CIT VS. EKL APPLICANCES LTD., (SUPRA). THER EFORE, REJECTING THE ENTIRE PAYMENT WITHOUT THERE BEING ANY ANALYSIS ON THE CUP METHOD CANNOT BE ACCEPTED. IN THE GUISE OF ANALYZING THE T RANSACTIONS IN THE CUP METHOD, THE TPO HAS NOT BROUGHT ANY EVIDENCE ON REC ORD TO REJECT THE 1% PAYMENT MADE TO ITALCEMENTI GROUP. MOREOVER, WHILE DETERMINING THE PRICE AT NIL ON THE ISSUE, THE TPO SURPRISINGLY HOLDS THA T ASSESSEE HAS TRANSFERRED ITS 'ZUARI BRAND' TO 'ITALCEMENTI GROUP '. WE ARE UNABLE TO UNDERSTAND THIS LOGIC. ITALCEMENTI GROUP NEVER OBTA INED, ACQUIRED OR USED ZUARI BRAND ANYWHERE IN THE WORLD, SO THAT THIS CAN NOT BE CONSIDERED FOR TRANSFER PRICING ANALYSIS. IT IS THE ITALCEMENTI GR OUP BRAND WHICH IS USED BY ASSESSEE-COMPANY. THE TPO'S ANALYSIS OF AMP EXPE NSES ARE ALSO NOT CORRECT. EVEN THOUGH ITALCEMENTI GROUP WAS BEING US ED FROM EARLIER YEARS, AMP EXPENSES OF CURRENT YEAR ALSO INCLUDED IN THIS, WHICH IS NOT CORRECT. MOREOVER, ITALCEMENTI GROUP ITSELF IS A 50% SHAREHO LDER IN THE ASSESSEE- COMPANY FROM THE BEGINNING. THEREFORE, IT CANNOT BE STATED THAT 'ZUARI CEMENTS' IS EXCLUSIVE BRAND OWNER OF THE BIRLA GROU P IN EXCLUSION OF ITALCEMENTI GROUP. THE ENTIRE APPROACH BY THE TPO I S BIASED AND CANNOT BE JUSTIFIED ON THE FACTS OF THE CASE. THEREFORE, WE A RE NOT IN A POSITION TO UPHOLD ANY OF THE CONTENTIONS RAISED BY TPO IN HIS ORDER. LIKEWISE, THE DISALLOWANCE OF VARIOUS SERVICE FEES INCLUDING REIM BURSEMENTS MADE BY ASSESSEE TO AE. SINCE WE DO NOT FIND ANY VALID REAS ON FOR TPO TO DISALLOW THESE EXPENDITURES, WE HAVE NO OTHER GO THAN TO SET ASIDE THE ENTIRE ORDER OF THE TPO WHICH IS BASED ON WRONG PRESUMPTIONS AND PROPOSITIONS. DRP ITA NO.181/HYD /2018 11 UNFORTUNATELY, EVEN THOUGH CONSISTED OF THREE SENIO R OFFICERS, DID NOT APPLY ITS MIND TO THE VALID OBJECTIONS RAISED BY ASSESSEE . IN VIEW OF THIS, WITHOUT DECIDING THE MERITS OF VARIOUS ISSUES, WE SET ASIDE THE ORDERS AND DIRECT THE TPO TO RE-CONSIDER THE ENTIRE ORDER AND ANALYSE THEM IN FRESH, FIRST BY DETERMINING THE MOST APPROPRIATE METHOD AND THEN AN ALYZING THE TRANSACTIONS UNDER THE PROVISIONS OF THE TP. THE OR DERS OF THE TPO/DRP ON THE TP ISSUES ARE THEREFORE SET ASIDE AND THE ENTIR E ISSUE ON TP ANALYSIS IS RESTORED TO THE FILE OF AO FOR FRESH CONSIDERATION. THE GROUNDS RAISED ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 5. THE REVENUE VEHEMENTLY CONTENDED THAT THE LEARNE D LOWER AUTHORITIES HAVE RIGHTLY ADOPTED A DIRECT MET HOD I.E., CUP WHICH CARRIES PRECEDENCE OVER ALL OTHER INDIRECT ME THODS; INCLUDING TNMM, AS PER SERDIA PHARMACEUTICAL INDIA PVT. LTD V S. ACIT (2011) 44 SOT 391 (MUM). WE FIND NO REASON TO ACCEPT THE R EVENUES INSTANT ARGUMENT MORE PARTICULARLY IN VIEW OF THE F ACT THAT THIS IS SECOND ROUND OF CONSEQUENTIAL PROCEEDINGS WHEREIN T HE EARLIER LEARNED CO-ORDINATE BENCH HAD ALREADY REJECTED THE VERY CONTENTIONS SEEKING TO DECLINE BOTH AGGREGATION AS WELL AS TNMM ; AS THE CASE MAY BE (SUPRA). 6. THE REVENUES NEXT VEHEMENT CONTENTION BEFORE US IS THAT THE ASSESSEE HAD NOT EVEN FURNISHED THE RELEVA NT DETAILS HAVING ADOPTED AGGREGATION AS WELL AS TNMM METHOD IN THE C ONSEQUENTIAL PROCEEDINGS. WE FIND NO SUBSTANCE IN THE REVENUES INSTANT LAST ARGUMENT AS WELL SINCE THIS IS ONCE AGAIN A SECOND ROUND OF ASSESSMENT WHEREIN NO SUCH OBJECTIONS HAD BEEN PUT FORTH FROM THE DEPARTMENTAL SIDE IN THE FORMER ROUND. BE THAT AS IT MAY, WE THEREFORE ACCEPT THE ASSESSEES CONTENTIONS SEEKING TO IMPLY AGGREGATION AS WELL AS TNMM METHOD AND LEAVE IT O PEN FOR THE TPO TO FINALIZE THE CONSEQUENTIAL COMPUTATION AS PER LAW. WE FURTHER MAKE IT CLEAR THAT IT SHALL BE VERY MUCH OP EN FOR THE ASSESSEE TO FILE ON RECORD ALL THE NECESSARY DETAILS PERTAIN ING TO THE COMPARABLE(S) LIST SUBMITTED IN TNMM IN THE CONSE QUENTIAL COMPUTATION. ORDERED ACCORDINGLY. ITA NO.181/HYD /2018 12 7. WE LASTLY ACKNOWLEDGE THAT ALTHOUGH THE INSTANT APPEAL IS BEING DECIDED AFTER A PERIOD OF 90 DAYS F ROM THE DATE OF HEARING AS PER RULE 34(5) OF THE IT(AT) RULES 1963, THE SAME HOWEVER, DOES NOT APPLY IN THE COVID LOCKDOWN SITUA TION AS PER HON'BLE APEX COURT'S RECENT DIRECTIONS DATED 27-04- 2021 IN M.A.NO.665/2021 IN SM(W)C NO.3/2020 'IN RE COGNIZAN CE FOR EXTENSION OF LIMITATION' MAKING IT CLEAR THAT IN SU CH CASES WHERE THE LIMITATION PERIOD (INCLUDING THAT PRESCRIBED FO R INSTITUTION AS WELL AS TERMINATION) SHALL STAND EXCLUDED FROM 14 TH OF MARCH, 2021 TILL FURTHER ORDERS. 8. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2021. SD/- SD/- SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER ( S.S. GODARA) JUDICIAL MEMBER HYDERABAD, DATED 24 TH SEPTEMBER, 2021. TYNM/SPS COPY TO: S.NO ADDRESSES 1 ZUARI CEMENT LIMITED, KRSIHNA NAGAR, YERRAGUNTLA, KADAPA DISTRICT 416 311. 2 THE ACIT, CIRCLE 1( 1 ), KADAPA . 3 ITO (OSD) & SECRETARY, DRP - 1, BENGALURU 4 DR, ITAT HYDERABAD BENCHES 5 GUARD FILE BY ORDER