M/s Tecumesh Products India Private Limited, Hyderabad V. Dy.CIT, Cir-2(3), Hyderabad

ITA 1863/HYD/2012

• Counselvise Citation: 186322514 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Keywords: Gift; Transfer pricing; Search and seizure; International transaction; Additional evidence; Wholly owned subsidiary; Arm length price; Revised return; Reassessment proceedings
• Section: 92C; 143(3); 92D; 92B; 92F; 92A; 37(1); 139(5); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.2228/HYD/2011 ASSESSMENT YEAR 2007-2008 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD PAN AABCT 6893J VS. ACIT, CIRCLE 2(3) HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.1863/HYD/2012 ASSESSMENT YEAR 2008-2009 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD PAN AABCT 6893J VS. DCIT, CIRCLE 2(3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. KANCHUN KAUSHAL FOR REVENUE : MR. P. SOMASEKHAR REDDY DATE OF HEARING : 02.04.2014 DATE OF PRONOUNCEMENT: 28.05.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE TWO APPEALS ARE PREFERRED BY ASSESSEE AGAINST THE ORDER OF THE DISPUTE RESOLUTION PLANE ( DRP), HYDERABAD U/S 143(3) READ WITH SECTION 144C(13) OF THE IT ACT, DATED 22-09-2011/03.08.12 RESPECTIVELY. THE MAIN ISSUE IN THESE APPEALS IS ON TRANSFER PRICING ADJUSTMENTS MADE BY AO. 2 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. 2. WE HAVE HEARD LEARNED COUNSEL MR. KANCHAN KAUSHAL AND THE LEARNED CIT-DR MR. SOMASEKHAR REDDY. 3. BRIEFLY STATED, ASSESSEE COMPANY IS A WHOLLY OWNED SUBSIDIARY OF TECUMSEH PRODUCTS COMPANY, USA (IN SHORT TPC USA) AND COLLECTIVELY WITH ITS AFFI LIATES REFERRED TO AS TECUMSEH GROUP OR AES). ASSESSEE IS PRIMARILY ENGAGED IN THE MANUFACTURE, MARKETING, SERVICE AND REPAIR OF HERMETICALLY SEALED COMPRESSO RS IN DOMESTIC AS WELL AS INTERNATIONAL MARKET. ASSESSEE HAS TWO MANUFACTURING FACILITIES AT BALANAGAR (AP) AND BALLABGARH (HARYANA). THE BALANAGAR FACILITY PREDOMINANTLY MANUFACTURES COMPRESSORS FOR AIR CONDITIONING EQUIPMENTS WHEREAS THE BALLABGARH FACI LITY MAKES COMPRESSORS MEANT FOR REFRIGERATION EQUIPMENT S. IN ADDITION, ASSESSEE MANUFACTURES SUB-ASSEMBLY AND COMPONENTS (PUMP KITS, CRANKSHAFTS ETC.) FROM ITS EXPORT ORIENTED MANUFACTURING UNIT (EOU UNIT) IN BALANAGAR AND EXPORTS THEM TO TPC USA. ALL THE COMPRESSOR SUB-ASSEMBLY & COMPONENTS PRODUCED FROM EOU UNIT IS EXPORTED ONLY TO TPC USA, IN ORDER TO MANUFACTURE COMPRESSOR FOR SALE IN USA MARKET. THE ANNUAL REQUIREMENTS AND THE SPECIFICATIONS OF THE COMPONENTS ARE PROVIDED BY TPC USA. ASSESSEE DOES NOT SELL SIMILAR COMPONENTS TO ANY OTHER CUSTOMER I N INDIA OR OUTSIDE INDIA AND THEREFORE ACTS AS A CONT RACT MANUFACTURER FOR TPC USA WITH RESPECT TO SALE OF COMPRESSOR SUB-ASSEMBLY AND COMPONENTS. 3 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. ITA.NO.2228/HYD/2011- AY 2007-08 4. ASSESSEE HAS RAISED 6 GROUNDS IN ITA.NO.2228/HYD/2011 FOR THE A.Y. 2007-08 OUT OF WHICH, GROUND NO.1 IS GENERAL IN NATURE AND THEREFO RE DOES NOT REQUIRE ADJUDICATION. GROUND NO. 2.2, 2.5 AND 2.6 ARE NOT PRESSED AND ACCORDINGLY, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. ASSESSEE ALSO PLACED ON RECORD VOLUMINOUS PAPER BOOKS IN VOLUMES, FROM PAGE S 1 TO 160 AND ANOTHER PAPER BOOK FROM PAGES 161 TO 576. 5. ASSESSEE FILED ITS ORIGINAL RETURN OF INC OME FOR THE AY 2007-08 ON OCTOBER 25, 2007 DECLARING THE TO TAL LOSS AS INR 30,49,68,581. THE RETURN OF INCOME WAS SUBSEQUENTLY REVISED U/S 139(5) OF THE ACT BY OFFER ING SUO-MOTO TRANSFER PRICING ADJUSTMENT OF INR 3,21,69,098, THEREBY REDUCING THE TOTAL LOSS TO INR 27,27,99,483. DURING THE FINANCIAL YEAR 2006-07, ASSESSEE HAS ENTERED INTO THE FOLLOWING INTERNATION AL TRANSACTIONS WITH ITS AES: 1. PURCHASE OF HARDWARE 2. PURCHASE OF DRAWING AND DESIGN SERVICES 3. PURCHASE OF COMPONENTS, TOOLS, SPARES AND ACCESSORIES 4. SALE OF SOFTWARE TOOLS, COMPRESSOR, PARTS OF COMPRESSORS, COMPRESSOR SUB-ASSEMBLY AND COMPONENTS 5. SOFTWARE ENGINEERING SERVICES CADEM SEGMENT 6. INTEREST ON ECB LOAN; AND 7. REIMBURSEMENT OF EXPENSES. 4 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. THE TOTAL VALUE OF SALE OF COMPRESSOR SUB-ASSEMBLY AND COMPONENTS CONSTITUTE ONLY 5% OF TOTAL TURNOVER OF ASSESSEE. THE PURCHASES MADE FROM AES AMOUNTED TO RS. 2.09 CRORES OF TOTAL PURCHASES. LIKEWISE SERVIC E TO AE WAS PROVIDED AT RS 0.42 CRORES, JUST ABOUT 13.82 % AS PER TPO. AS PER THE TRANSFER PRICING (TP) DOCUMENTATION PREPARED BY ASSESSEE, IT WAS SUBMITTE D THAT ALL THE ABOVE INTERNATIONAL TRANSACTIONS HAVE MET THE ARMS LENGTH STANDARD AS PRESCRIBED IN THE INDI AN TRANSFER PRICING REGULATIONS CONTAINED IN SECTION 9 2, 92A THROUGH 92F OF THE IT ACT, 1961 READ WITH RULES 10A TO 10E OF IT RULES, 1962, EXCEPT THE TRANSACTIO NS IN RELATION TO SALE OF COMPRESSOR SUB-ASSEMBLY AND COMPONENTS IN THE EOU UNIT AT BALANAGAR. ACCORDINGL Y, ASSESSEE HAS OFFERED INR 32,169,098 AS A SUO-MOTO TRANSFER PRICING ADJUSTMENT IN ITS RETURN OF INCOME FOR AY 2007-08 TO MEET THE ARMS LENGTH STANDARD. 6. A REFERENCE U/S 92CA OF THE ACT WAS MADE TO ADDL. COMMISSIONER OF INCOME-TAX (TPO) IN ORDER TO DETERMINE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS OF ASSESSEE. THERE IS NO DISPUTE WITH REFERENCE TO METHOD ACCEPTED BEING TNMM. THE TPO AFTER ANALYZING THE TRANSACTIONS MADE ADJUSTMENTS U /S 92CA OF RS.5,00,68,125/- TO THE SALE OF SUB-ASSEMBL Y COMPONENTS TO ITS AE. FURTHER TPO PROPOSED ADJUSTMENT OF RS 1,07,59,077 TO THE CADEM SEGMENT, THUS PROPOSING TOTAL ADJUSTMENT OF RS.6,08,27,202. ASSESSEE RAISED VARIOUS OBJECTIONS BEFORE THE DRP A ND THE DRP, HOWEVER, REJECTED THE OBJECTIONS AND ACCORDINGLY, THE AO PASSED CONSEQUENTIAL ORDER MAKI NG 5 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. THE ADJUSTMENTS TO THE INCOME RETURNED, ALONG WITH OTHER CORPORATE ADJUSTMENTS IN COMPUTATION. 7. THE LEARNED COUNSEL REFERRING TO THE ORDERS OF T HE AUTHORITIES AND THE PAPER BOOKS FILED SUBMITTED THA T ORDERS OF THE TPO/DRP SUFFERS CERTAIN FACTUAL ERROR S AS WELL AS THE ISSUES ON COMPARABILITY. ON GROUND 2.1, REFERRING TO THE ADJUSTMENTS MADE WITH REFERENCE TO SALES MADE TO AE OF COMPRESSOR SUB-ASSEMBLY AND COMPONENTS, IT WAS SUBMITTED THAT ASSESSEE OPERATES 100% EOU AND EXPORTS TO TPC USA. ASSESSEE ARRIVED A T THE COST, WHICH IS IDENTIFIABLE FROM THE SEPARATE B OOKS OF ACCOUNT MAINTAINED FOR THE EOU AT 16,38,68,871/- . HOWEVER, THE AO WITHOUT ANY SHOW CAUSE NOTICE TO ASSESSEE, RE-WORKED OUT THE PROPORTIONATE OPERATING COST, IGNORING THE SEPARATE DETAILS FURNISHED IN TH IS REGARD, AT OPERATING COST AT A HIGHER FIGURE OF RS. 20.02 CRORES. REFERRING TO TPOS ORDER, THE LEARNED COUNS EL SUBMITTED THAT ON A TOTAL COST OF RS. 459.63 CRORES OF ASSESSEE COMPANY, THE AO ARRIVED AT THE PROPORTIONA TE COST ATTRIBUTABLE, ON THE BASIS OF SALES TURNOVER, AT RS. 20.02 CRORES. IT IS THE SUBMISSION THAT WHEN ASSESS EE HAS MAINTAINED SEGMENTAL INFORMATION, PARTICULARLY 100% EOU UNIT ACCOUNTS ARE MAINTAINED AS SUCH, THER E IS NO NEED TO ADOPT PROPORTIONATE TURNOVER AT A HIG HER FIGURE THAN WHAT WAS SPENT BY ASSESSEE AS OPERATING COST. 8. THE NEXT OBJECTION OF THE LEARNED COUNSEL (GROUND NO 2.4 AND 2.2) IS WITH REFERENCE TO THE AD DITION MADE AFTER ARRIVING AT THE PLI TAKING COMPARABLES. 6 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. RESERVING HIS SUBMISSIONS ON THE COMPARABLES, IT W AS SUBMITTED THAT ASSESSEE ITSELF HAS MADE SUO-MOTO ADJUSTMENTS AT THE TIME OF FILING RETURN ALONG WITH TP REPORT AND THIS ADJUSTMENT OF RS. 2,82,69,298/- MAD E BY ASSESSEE SUO-MOTO WAS IGNORED AND MADE THE ADDITION AT A HIGHER AMOUNT. IT WAS HIS CONTENTION THAT IF SUO-MOTO ADJUSTMENT IS CONSIDERED, THE ADJUSTMEN T SO ARRIVED AT BY THE TPO IS WITHIN THE (+) OR (-) 5 % THRESHOLD LIMIT SO, NO FURTHER ADJUSTMENT WAS CALLE D FOR. THE LEARNED TPO IGNORING THE FACT THAT REFERENCE WA S MADE ON THE SAME RETURN ALONG WITH REPORT ENCLOSED TO THE RETURN, CAME TO THE CONCLUSION THAT ASSESSEE CA NNOT FILE REVISED RETURN ON THE REASON THAT THERE IS NO OMISSION OR WRONG STATEMENT, THEREFORE, THE REVISED RETURN WAS IGNORED AND SUO-MOTO ADJUSTMENT WAS ALSO CONSEQUENTIALLY IGNORED. REFERRING TO THE PROVISION S OF THE ACT OF SECTION 92C(4) AND PROVISOS ALONG WITH R ULE 10B(E), IT WAS HIS SUBMISSION THAT SUO-MOTO ADJUSTMENTS ARE TO BE TAKEN INTO CONSIDERATION WHIL E DETERMINING THE ALP. HE REFERRED TO THE ORDERS OF I TAT, DELHI BENCH IN THE CASE OF HAWORTH (INDIA) PVT. LTD . (ITA NO. 5341/DEL/2010 FOR AY 2006-07, ORDER DATED 29-04 - 11) TO SUBMIT THAT SUO-MOTO ADJUSTMENTS ARE TO BE CONSIDERED. 9. APART FROM SUO-MOTO ADJUSTMENT ISSUE, ASSESSEE ALSO CONTESTED THE COMPARABLES ON TWO FILT ERS, VIZ., I) BEING THE DATA PERTAINING TO AN ASSESSEE, WHICH HAS DIFFERENT ACCOUNTING PERIOD THAN THAT OF ASSESS EE. IT WAS SUBMITTED THAT EVEN THOUGH NO OBJECTION WAS TAK EN IN THE COURSE OF TP PROCEEDINGS, THE TPO HIMSELF 7 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. EXCLUDED CERTAIN COMPANIES ON THE SAME FILTER IN TH E LATER YEAR. THE OTHER FILTER, WHICH THE ASSESSEE RA ISED IS FUNCTIONALITY OF THE COMPANIES SELECTED ITSELF. I T WAS SUBMITTED THAT ASSESSEE IS NOT ONLY MANUFACTURING COMPRESSORS BUT ALSO COMPONENTS FOR COMPRESSORS AND THE ADJUSTMENTS MADE ARE WITH REFERENCE TO SALE OF PARTS OF COMPRESSORS, THEREFORE, SELECTION OF COMPA NIES, WHICH ARE IN THE COMPRESSOR MANUFACTURING IS NOT CORRECT. REFERRING TO VARIOUS COPIES OF PRODUCTS PL ACED ON RECORD, IT WAS SUBMITTED THAT ASSESSEE IS NOT SE LLING COMPRESSORS TO THE AE BUT ONLY COMPONENTS PERTAININ G TO THE COMPRESSOR FOR WHICH SEPARATE 100% EOU IS ESTABLISHED. THEREFORE, SELECTING COMPANIES, WHICH ARE DEALING IN COMPRESSORS IS NOT CORRECT. IN VIEW OF T HIS, ASSESSEE IS OBJECTING TO INCLUSION OF VARIOUS COMPARABLES BY THE TPO IN THE TRANSFER PRICING ANAL YSIS AND ARRIVING AT THE ARITHMETIC MEAN OF PLI AT 9.79% . IT WAS FAIRLY ADMITTED THAT ADJUDICATION ON THE BASIS OF COMPARABLES WILL ARISE ONLY IF THE SUO-MOTO ADJUSTM ENT MADE BY ASSESSEE WAS IGNORED. IF IT IS TAKEN INTO CONSIDERATION THE ADJUSTMENT PROPOSED BY THE TPO ON THE BASIS OF PLI AT 9.79% IS WITHIN THE (+)/(-) 5% THRESHOLD LIMIT PROVIDED UNDER THE ACT. 10. THE LEARNED DR, HOWEVER, REFERRED VARIOUS FACTS AND SUBMITTED THAT TPO IS CORRECT IN ARRIVING AT THE OPERATING COST ON PROPORTIONATE BASIS AND CORRE CT IN REJECTING REVISED RETURN, WHICH WAS FILED AFTER FIL ING ORIGINAL RETURN AND IN SELECTION OF COMPARABLES WHI CH WERE NOT OBJECTED TO BY ASSESSEE. HE SUPPORTED THE ORDERS OF TPO/DRP. 8 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. 11. WE HAVE CONSIDERED RIVAL CONTENTIONS AND EXAMINED THE RECORD. THERE ARE FIVE ISSUES FOR ADJUDICATION IN THIS APPEAL UNDER THE TRANSFER PRIC ING PROVISIONS, WHICH ARE AS UNDER: A) WHETHER ASSESSEES RETURN FILED ALONG WITH TP REPORT IS TO BE CONSIDERED OR NOT ? B) WHETHER ADJUSTMENT MADE BY THE AO IGNORING SUO-MOTO ADJUSTMENT MADE BY THE ASSESSEE IS CORRECT OR NOT ? C) WHETHER OPERATING COST ADOPTED BY TPO IS CORRECT OR NOT D) WHETHER THE COMPARABLES SELECTED BY THE TPO IS CORRECT E) WHETHER (+)/(-) 5% THRESHOLD LIMIT AVAILABLE UNDER THE ACT CAN BE INVOKED IN THIS CASE. THESE ISSUES WERE SIMILARLY CONSIDERED IN A.Y. 2006 -07 IN ASSESSEES OWN CASE IN ITA.NO.1686/HYD/2010 DATE D 13.11.2013. THESE ISSUES ARE CONSIDERED IN DETAIL A ND DECIDED AS UNDER: A) WHETHER ASSESSEES RETURN FILED ALONG WITH TP REPORT IS TO BE CONSIDERED OR NOT ? AS BRIEFLY STATED, ASSESSEE FILED RETURN OF I NCOME ON 25 TH OCTOBER, 2007 DECLARING LOSS OF RS. 30,49,68,581/- WITHOUT TP REPORT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. SUBSEQUENTLY AFTER THE INTERNATIONAL TRANSACTIONS WERE ANALYSED AND ON THE BASIS OF TRAN SFER PRICING DOCUMENTATION PREPARED BY THE CONSULTANT, 9 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. ASSESSEE REALIZED THAT SOME OF THE TRANSACTIONS REQ UIRE SUO-MOTO ADJUSTMENT. ACCORDINGLY, ASSESSEE MADE ADJUSTMENT OF RS. 3,21,69,098/- THEREBY REVISING TO TAL LOSS TO RS. 27,27,99,483/-. THIS INDICATES THAT THE RE IS A REDUCTION OF LOSS IN THE ULTIMATE CLAIM MADE BY ASSESSEE. WE WERE SURPRISED ABOUT THE FINDING BY TH E TPO AND DRP FOR IGNORING THE RETURN FILED BY ASSESS EE REDUCING LOSS. WHEN ASSESSEE FILES A REVISED LOSS R ETURN REDUCING CLAIM OF LOSS, THE RETURN CAN CERTAINLY BE CONSIDERED AS A REVISED RETURN UNDER THE PROVISIONS OF SECTION 139(5) OF THE ACT. FIRST OF ALL, THE RETURN FILED ORIGINALLY ON 25-10-2007 CANNOT BE CONSIDERED AS A VALID RETURN AS IT DID NOT INCLUDE STATUTORILY PRES CRIBED TP DOCUMENTATION AND ASSESSEE DECLARED THE VALUE OF INTERNATIONAL TRANSACTION AS PER ITS ACCOUNTS BOOKS . THEREFORE, THE OTHER/REVISED RETURN FILED ENCLOSING TP DOCUMENTATION AND DECLARATION OF HIGHER VALUE OF INTERNATIONAL TRANSACTION BY MAKING SUO-MOTO ADJUSTMENT UNDER THE PROVISIONS OF THE ACT CANNOT B E REJECTED AS THE SAME WAS A VALID RETURN, EVEN THOUG H, STATED TO BE FILED U/S 139(5) OF THE ACT. IN FACT, TO THE EXTENT OF DECLARATION OF INTERNATIONAL TRANSACTION AND ADJUSTMENTS, IT CAN BE CERTAINLY BE STATED AS OMISS ION ON THE PART OF ASSESSEE OR IN A WORSE SITUATION A W RONG STATEMENT IN THE ORIGINAL RETURN, AS PROVIDED U/S 139(5). THE PROVISIONS OF SECTION 139(5) ARE AS UND ER: 139(5): IF ANY PERSON, HAVING FURNISHED A RETURN UN DER SUB-SECTION (1), OR IN PURSUANCE OF A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142, DISCOVERS ANY OMISSION OR ANY WRONG STATEMENT THEREIN , HE MAY FURNISH A 10 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. REVISED RETURN AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEF ORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER. AS CAN BE SEEN FROM THE ABOVE PROVISION OF THE ACT, WE ARE OF THE OPINION THAT THE RETURN FILED SUBSEQUENTLY IS A VALID RETURN, WHICH IS TO BE CONSIDERED AS CORRECT. SINCE BOTH T HE TPO AND DRP ERRED IN NOT CONSIDERED THE SAME, WE DIRECT THE AO TO CONSIDER THE REVISED RETURN AS A VALID RETURN. IN T HESE CIRCUMSTANCES, GROUNDS OF ASSESSEE ON THIS ISSUE AR E ALLOWED . B) WHETHER ADJUSTMENT MADE BY THE AO IGNORING SUO- MOTO ADJUSTMENT MADE BY THE ASSESSEE IS CORRECT OR NOT ? THIS ISSUE WAS DECIDED IN EARLIER YEAR IN ASSESSEE OWN CASE IN ITA NO 1686/HYD/2010 DT 13-11-2013. IT WAS DECIDED AS UNDER: THERE IS NO DISPUTE WITH REFERENCE TO ARRIVING AT T HE ARMS LENGTH PRICE UNDER THE PROVISIONS OF THE ACT AS PRESCRIBED UNDER THE RULES AND MAKING ADJUSTMENT WITH REFERENCE TO THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY ASSESSEE. RULE 10B(E) PERTAINING TO TNMM METHOD, IS AS UNDER: 10B(E) TRANSACTIONAL NET MARGIN METHOD, BY WHICH, (I) THE NET PROFIT MARGIN REALISED BY THE ENTERP RISE FROM [AN INTERNATIONAL TRANSACTION OR A SPECIFIED DOMESTIC TRANSACTION] ENTERED INTO WITH AN ASSOCIATED ENTERP RISE IS COMPUTED IN RELATION TO COSTS INCURRED OR SALES EFF ECTED OR ASSETS EMPLOYED OR TO BE EMPLOYED BY THE ENTERPRISE OR HAVING REGARD TO ANY OTHER RELEVANT BASE; (II) THE NET PROFIT MARGIN REALISED BY THE ENTERP RISE OR BY AN UNRELATED ENTERPRISE FROM A COMPARABLE UNCONTROLLED 11 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. TRANSACTION OR A NUMBER OF SUCH TRANSACTIONS IS COM PUTED HAVING REGARD TO THE SAME BASE; (III) THE NET PROFIT MARGIN REFERRED TO IN SUB-CLA USE (II) ARISING IN COMPARABLE UNCONTROLLED TRANSACTIONS IS ADJUSTED TO TAKE INTO ACCOUNT THE DIFFERENCES, IF ANY, BETWEEN [THE INTERNATIONAL TRANSACTION OR THE SPECIFIED DOMESTIC TRANSACTION] AND THE COMPARABLE UNCONTROLLED TRANSA CTIONS, OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANS ACTIONS, WHICH COULD MATERIALLY AFFECT THE AMOUNT OF NET PRO FIT MARGIN IN THE OPEN MARKET; (IV) THE NET PROFIT MARGIN REALISED BY THE ENTERPR ISE AND REFERRED TO IN SUB-CLAUSE (I) IS ESTABLISHED TO BE THE SAME AS THE NET PROFIT MARGIN REFERRED TO IN SUB-CLAUSE (II I); (V) THE NET PROFIT MARGIN THUS ESTABLISHED IS THE N TAKEN INTO ACCOUNT TO ARRIVE AT AN ARM'S LENGTH PRICE IN RELAT ION TO [THE INTERNATIONAL TRANSACTION OR THE SPECIFIED DOMESTIC TRANSACTION]. AS CAN BE SEEN UNDER 10B(E)(I), THE NET PROFIT MAR GIN REALIZED BY THE ENTERPRISE FROM AN INTERNATIONAL TRANSACTION IS TO BE COMPUTED IN RELATION TO COST INCURRED OR SALES EFFECTED OR ASSETS EMPLOYED OR TO BE EMPLOYED BY THE ENTERPRISE OR HAVING REGARD TO ANY OTHER RELEVANT BASE. HERE IT IS NOT PRESCRIBED THAT THE VALUE OF INTERNATIONAL TRANSACTION SHOUL D BE CONSIDERED AS SUCH. WHAT IS REQUIRED TO BE DONE IS NET PROFIT MARGIN REALIZED BY THE ENTERPRISE F ROM AN INTERNATIONAL TRANSACTION, IF ASSESSEE MAKES SUO - MOTO ADJUSTMENTS TO THE NET PROFIT MARGIN AS REALIZED BY THE ENTERPRISE, THE SAME HAS TO BE CONSIDERED UNDER (E)(I) OF SECTION 10B. IN THIS CONNECTION, WE REFER TO THE FINDINGS OF THE COORDIN ATE 12 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. BENCH OF ITAT, DELHI IN THE CASE OF HAWORTH (INDIA) PVT. LTD. (SUPRA), WHICH ARE AS UNDER: 66. IT CAN BE SEEN FROM THE ABOVE TABLE THAT THE MAJOR COMPONENT OF RECEIPT OF INTERNATIONAL TRANSACTION OF THE ASSESSEE IS COMMISSION INCOME AS IT CONSTITUTE RS. 15,39,33,769/- OF THE TOTAL OPERATING INCOME OF RS. 17,73,98,197/-. THEREFORE, IT CANNOT BE SAID THAT COMMISSION EXPENSES WHICH HAVE BEEN SUOMOTO DISALLOWED BY THE ASSESSEE WERE NOT CLAIMED AS OPERATING EXPENSES WHILE COMPUTING THE ARM LENGTH PRICE. IF THEY ARE SUBSEQUENTLY DISALLOWED SUOMOTO BY THE ASSESSEE IN THE REVISE RETURN, THEY ARE REQUIRED TO BE EXCLUDED FROM THE OPERATING COST AND THE CALCULATION OF THE ASSESSEE SHOULD HAVE BEEN ACCEPTED THAT ITS PROFIT MARGIN SHOULD HAVE BEEN TAKEN ACCORDING TO THE INCOME COMPUTED IN THE REVISE RETURN FOR WHICH THE ASSESSE E HAS ALSO PAID THE DUE TAXES. IN THIS MANNER, FINDI NG FORCE IN THE CONTENTIONS OF LD. AR, WE ARE OF THE OPINION THAT GROUND NO. 2 OF THE ASSESSEE IS TO BE ALLOWED AND ACCORDINGLY ALLOWED. GROUND NO. 3 IS THE ALTERNATIVE ARGUMENT AND AS THE MAIN ARGUMENT OF THE ASSESSEE IS ACCEPTED WE NEED NOT REQUIRED TO GO IN THE ALTERNATIVE CLAIM MADE BY THE ASSESSEE. THEREFORE, THE TPO/DRP ARE NOT CORRECT IN NOT CONSIDERING SUO-MOTO ADJUSTMENTS MADE BY ASSESSEE. FOR ARRIVING AT THE PROFIT MARGINS REALIZED BY THE ENTERPRISE, SUO-MOTO ADJUSTMENT HAS TO BE TAKEN INT O ACCOUNT IN ARRIVING AT THE DIFFERENCE TO BE ADDED S O AS TO MAKE THE NET PROFIT REALISED TO ARRIVE AT THE ARMS LENGTH PRICE IN RELATION TO THE INTERNATIONAL TRANS ACTION AS PROVIDED UNDER 10B(E)(V). THE AO IS DIRECTED TO CONSIDER SUO-MOTO ADJUSTMENT MADE BY ASSESSEE ACCORDINGLY. 13 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. C) WHETHER OPERATING COST ADOPTED BY TPO IS CORRECT OR NOT WHILE CALCULATING THE NET PROFIT MARGIN FROM THE INTERNATIONAL TRANSACTION ON SUB-ASSEMBLY AND COMPONENTS SUPPLIED TO THE TPC USA, THE AO HAS CONSIDERED THE OPERATING COST AT RS. 20.02 CRORES. THIS HE HAS ARRIVED AT ON THE BASIS OF THE PROPORTIONATE TURNOVER IGNORING THE SEGMENTAL REPORTS PREPARED BY ASSESSEE. IN FACT, THE SALE OF SUB-ASSEMBLY AND COMPONENTS ARE ONLY 5% OF THE TURNOVER OF ASSESSEE AND THESE SUB-ASSEMBLY AND COMPONENTS ARE MANUFACTURED AT 100% EOU ESTABLISHED FOR THIS PURPOSES AT BALANAGAR. AS PER THE PROVISIONS OF THE ACT, THIS 1 00% EOU IS MAINTAINING SEPARATE BOOKS OF ACCOUNT AS ASSESSEE IS ALSO ELIGIBLE FOR DEDUCTION U/S 10A/10B . ASSESSEE REPORTED RS.16,38,68,871 AS THE COST IN TH IS UNIT, BUT RESULTED IN A LOSS AS PER THE BOOKS OF AC COUNT. CONSEQUENT TO THE TP DOCUMENTATION UNDERTAKEN BY ASSESSEE, ARMS LENGTH PRICE OF THE SALE PRICE WAS SHOWN AT RS. 19,60,37,969/- AS AGAINST RS. 16,38,68,871/- , WHICH WERE ACTUAL SALES. SINCE ACTUAL SALES IN THE BOOKS RESULTED IN OP/TC AT (-) 13.07%, ASSESSEE MADE ADJUSTMENT ON THE BASIS OF TP DOCUMENTATION WHERE OP/TC WAS AT 4%. THIS HAS RESULTED IN ADDITION OF T HE ABOVE AMOUNT OF RS. 3,21,69,698/- U/S 92 SU-MOTO ADJUSTMENT MADE BY ASSESSEE. WITHOUT CONSIDERING TH E OBJECTIONS OF ASSESSEE, TPO, SURPRISINGLY, DETERMIN ED THE OPERATING COST AT RS. 20.02 CRORES BASED ON THE PROPORTIONATE COST ON THE RATIO OF SALES IN VARIOUS SEGMENTS. THIS ACTION OF THE TPO WAS NOT JUSTIFIED AT ALL 14 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. WHEN ASSESSEE HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT, WHICH WAS ALSO ACCEPTED UNDER THE PROVISIO NS OF THE ACT AND, THEREFORE, THERE IS NO REASON FOR REJECTING THE SAME AND ESTIMATING THE OPERATING COS T ON THE BASIS OF THE PROPORTIONATE TURNOVER. IN FACT, ASSESSEE HAS INCURRED LOSS IN THESE TRANSACTIONS, W HERE AS THERE WAS PROFIT IN OTHER ACTIVITY, WHICH CONSTI TUTE 95% OF ASSESSEES TURNOVER. TAKING SALES AS BASIS AND ARRIVING AT THE OP COST DOES NOT RESULT IN CORRECT APPRECIATION OF ASSESSEES TRANSACTIONS. THEREFORE, SINCE SEGMENTAL WORKING IS AVAILABLE ON THE BASIS O F SEPARATE BOOKS OF ACCOUNT MAINTAINED FOR EOU UNIT, WE ARE OF THE OPINION THAT OPERATING COST HAS TO BE TA KEN AT RS. 16,38,68,871/- AND THE TPO/AO IS DIRECTED TO TA KE OPERATING COST WITH THE ABOVE FIGURE. ACCORDINGLY, THIS CONTENTION OF ASSESSEE IS ALLOWED. D) WHETHER THE COMPARABLES SELECTED BY THE TPO IS CORRECT ? THERE ARE TWO SETS OF OBJECTIONS ON THE COMPARABLES SELECTED BY TPO; ONE BEING DATA PERTAIN ING TO COMPANIES WHICH HAVE DIFFERENT ACCOUNTING PERIOD THAN THAT OF ASSESSEE AND THE SECOND ONE BEING THE FUNCTIONAL COMPARABILITY OF SELECTED COMPANIES, BEI NG IN BUSINESS OF COMPRESSOR MANUFACTURING WHEREAS ADJUSTMENTS WERE DONE IN THE SEGMENTED RESULTS OF SUPPLY OF COMPONENTS (TO THE COMPRESSORS). AS SELEC TION OF COMPARABLES BY TPO SUFFERS FROM THESE BASIC DEFICIENCIES, WE ARE OF THE OPINION THAT THIS ISSUE REQUIRES RE-EXAMINATION BY TPO BY SELECTING PROPER COMPARABLES AND THEN DETERMINE THE ALP. IN THE 15 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. INTEREST OF JUSTICE, WE RESTORE THIS ISSUE OF ARRIV ING AT ALP TO THE FILE OF TPO/AO FOR FRESH CONSIDERATION B Y TAKING OBJECTIONS FROM ASSESSEE AND ALSO ON THE BAS IS OF TP PROCEEDINGS OF EARLIER YEAR. THEREFORE, FOR DETERMINATION OF ALP, THE ISSUE IS SET ASIDE TO THE FILE OF THE TPO/AO TO DO THE SAME AFRESH AS PER THE PROVISI ONS OF THE ACT. E) WHETHER (+)/(-) 5% THRESHOLD LIMIT AVAILABLE UND ER THE ACT CAN BE INVOKED IN THIS CASE. THIS ISSUE WAS DECIDED IN EARLIER YEAR IN ASSESSEE OWN CASE IN ITA NO 1686/HYD/2010 DT 13-11-2013. IT WAS DECIDED AS UNDER: I)BEFORE ADVERTING TO THE COMPARABLES AND ARRIVING AT THE ALP UNDER THE TRANSACTION NET MARGIN METHOD, IT IS NECESSARY TO CONSIDER THE ARGUMENTS OF ASSESSEE VIS-A-VIS THE PROVISIONS OF THE ACT WITH REFERENCE TO (+)/(-) 5% OF THRESHOLD LIMIT AVAILABLE IN THE IMPUGNED ASSESSMENT YEAR. FOR THIS, ONE HAS TO CONSIDER THE PROVISIONS OF SECTION 92(1), WHICH IS AS UNDER: 92. (1) ANY INCOME ARISING FROM AN INTERNATIONAL TRANSACTION SHALL BE COMPUTED HAVING REGARD TO THE ARM'S LENGTH PRICE. EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y CLARIFIED THAT THE ALLOWANCE FOR ANY EXPENSE OR INT EREST ARISING FROM AN INTERNATIONAL TRANSACTION SHALL ALS O BE DETERMINED HAVING REGARD TO THE ARM'S LENGTH PRICE. 16 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. II) INTERNATIONAL TRANSACTION REFERRED TO ABOVE WERE DEFINED IN SECTION 92B(1) IS AS UNDER: 92B (1) FOR THE PURPOSES OF THIS SECTION AND SECTIONS 9 2, 92C, 92D AND 92E, 'INTERNATIONAL TRANSACTION' MEANS A TRANSACTION BETWEEN TWO OR MORE ASSOCIATED ENTERPRI SES, EITHER OR BOTH OF WHOM ARE NON-RESIDENTS, IN THE NA TURE OF PURCHASE, SALE OR LEASE OF TANGIBLE OR INTANGIBLE P ROPERTY, OR PROVISION OF SERVICES, OR LENDING OR BORROWING MONE Y, OR ANY OTHER TRANSACTION HAVING A BEARING ON THE PROFITS, INCOME, LOSSES OR ASSETS OF SUCH ENTERPRISES, AND SHALL INC LUDE A MUTUAL AGREEMENT OR ARRANGEMENT BETWEEN TWO OR MORE ASSOCIATED ENTERPRISES FOR THE ALLOCATION OR APPORT IONMENT OF, OR ANY CONTRIBUTION TO, ANY COST OR EXPENSE INC URRED OR TO BE INCURRED IN CONNECTION WITH A BENEFIT, SERVICE O R FACILITY PROVIDED OR TO BE PROVIDED TO ANY ONE OR MORE OF SU CH ENTERPRISES. EXPLANATION PROVIDED RETROSPECTIVELY THERE IN ALSO CLARIFIES THE EXPRESSION INTERNATIONAL TRANSACTION . INTERNATIONAL TRANSACTION MEANS A TRANSACTION BETWEEN TWO OR MORE AES. THIS DOES NOT TAKE INTO CONSIDERATION ADJUSTMENTS MADE TO ALP AT THIS STAGE AT ALL. III) SECTION 92C, WHICH IS COMPUTATION OF ARMS LENGTH PRICE IS AS UNDER: 92C. (1) THE ARMS LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION SHALL BE DETERMINED BY AN Y OF THE FOLLOWING METHODS, BEING THE MOST APPROPRIATE METHO D, HAVING REGARD TO THE NATURE OF TRANSACTION OR CLASS OF TRANSACTION OR CLASS OF ASSOCIATED PERSONS OR FUNCT IONS PERFORMED BY SUCH PERSONS OR SUCH OTHER RELEVANT FA CTORS AS THE BOARD MAY PRESCRIBE, NAMELY : (A) COMPARABLE UNCONTROLLED PRICE METHOD; (B) RESALE PRICE METHOD; 17 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. (C)COST PLUS METHOD; (D) PROFIT SPLIT METHOD; (E)TRANSACTIONAL NET MARGIN METHOD; (F)SUCH OTHER METHOD AS MAY BE PRESCRIBED BY THE B OARD. (2) THE MOST APPROPRIATE METHOD REFERRED TO IN SUB -SECTION (1) SHALL BE APPLIED, FOR DETERMINATION OF ARMS LE NGTH PRICE, IN THE MANNER AS MAY BE PRESCRIBED : [PROVIDED THAT WHERE MORE THAN ONE PRICE IS DETER MINED BY THE MOST APPROPRIATE METHOD, THE ARMS LENGTH PR ICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES, OR, AT THE OPTION OF THE ASSESSEE, A PRICE WHICH MA Y VARY FROM THE ARITHMETICAL MEAN BY AN AMOUNT NOT EXCEEDI NG FIVE PER CENT OF SUCH ARITHMETICAL MEAN.] (3) .. (4) . IV) THE NEXT STEP IS TO DETERMINE THE ALP IN ONE OF THE METHODS. AS CAN BE SEEN FROM THE PROVISIONS, INTERNATIONAL TRANSACTION REFERS TO A TRANSACTION ACTUALLY BEEN UNDERTAKEN BETWEEN TWO OR MORE AES. SHORT OF OTHER DETAILS, IT REFERS ONLY TO TRANSACTI ONS ACTUALLY UNDERTAKEN BY ASSESSEE WITH AE. AFTER DETERMINING THE ARMS LENGTH PRICE IN ANY ONE OF TH E METHODS PRESCRIBED, WHAT IS REQUIRED TO BE COMPARED UNDER PROVISO IS THE VARIATION BETWEEN ARMS LENGTH PRICE SO DETERMINED AND THE PRICE AT WHICH THE INTERNATIONAL TRANSACTION HAS BEEN UNDERTAKEN. THEREFORE, IF THE VARIATION BETWEEN THE ARMS LENGTH PRICE SO DETERMINED AND THE TRANSACTIO N ACTUALLY UNDERTAKEN DOES NOT EXCEED (+)/(-) 5% AS 18 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. PROVIDED, THIS DIFFERENCE HAS TO BE CONSIDERED IN ARRIVING AT ALP. IN THIS CASE, WHAT ASSESSEE CONTENDED IS THAT IF THE SUO-MOTO ADJUSTMENT MADE BY ASSESSEE IS ALSO CONSIDERED, THEN, THE ULTIMATE ALP DETERMINED WILL BE WITHIN THE THRESHOLD LIMIT A S PROVIDED ABOVE. WE ARE AFRAID THAT THIS CONTENTION OF ASSESSEE IS NOT CORRECT FOR THE REASON THAT WHAT THE ACT PROVIDES IS THAT IF THE VARIATION BETWEEN A LP SO DETERMINED AND VALUE AT WHICH THE INTERNATIONAL TRANSACTION HAS BEEN UNDERTAKEN DOES NOT EXCEED SUCH PERCENTAGE THEN THE PRICE AT WHICH THE INTERNATIONAL TRANSACTION HAS ACTUALLY BEEN UNDERTAKEN SHALL BE DEEMED TO BE THE ARMS LENGTH PRICE. V) THE SUBSEQUENT AMENDMENT TO PROVISO MAKES THIS ISSUE VERY CLEAR. THE PRESENT SECTION 92C IS AS UNDER: 92C. (1) THE ARM'S LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION [OR SPECIFIED DOMESTIC TR ANSACTION] SHALL BE DETERMINED BY ANY OF THE FOLLOWING METHODS , BEING THE MOST APPROPRIATE METHOD, HAVING REGARD TO THE N ATURE OF TRANSACTION OR CLASS OF TRANSACTION OR CLASS OF ASSOCIATED PERSONS OR FUNCTIONS PERFORMED BY SUCH PERSONS OR S UCH OTHER RELEVANT FACTORS AS THE BOARD MAY PRESCRIBE, NAMELY : (A) COMPARABLE UNCONTROLLED PRICE METHOD; (B) RESALE PRICE METHOD; (C) COST PLUS METHOD; (D) PROFIT SPLIT METHOD; (E) TRANSACTIONAL NET MARGIN METHOD; (F) SUCH OTHER METHOD AS MAY BE PRESCRIBED BY THE BOARD. 19 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. (2) THE MOST APPROPRIATE METHOD REFERRED TO IN SUB- SECTION (1) SHALL BE APPLIED, FOR DETERMINATION OF ARM'S LE NGTH PRICE, IN THE MANNER AS MAY BE PRESCRIBED : [ PROVIDED THAT WHERE MORE THAN ONE PRICE IS DETERMINED BY THE MOST APPROPRIATE METHOD, THE ARM'S LENGTH PR ICE SHALL BE TAKEN TO BE THE ARITHMETICAL MEAN OF SUCH PRICES: PROVIDED FURTHER THAT IF THE VARIATION BETWEEN THE ARM'S LENGTH PRICE SO DETERMINED AND PRICE AT WHICH THE INTERNATIONAL TRANSACTION [OR SPECIFIED DOMESTIC TR ANSACTION] HAS ACTUALLY BEEN UNDERTAKEN DOES NOT EXCEED [SUCH PERCENTAGE [NOT EXCEEDING THREE PER CENT] OF THE LA TTER, AS MAY BE NOTIFIED BY THE CENTRAL GOVERNMENT IN THE OF FICIAL GAZETTE IN THIS BEHALF], THE PRICE AT WHICH THE INT ERNATIONAL TRANSACTION [OR SPECIFIED DOMESTIC TRANSACTION] HAS ACTUALLY BEEN UNDERTAKEN SHALL BE DEEMED TO BE THE ARM'S LEN GTH PRICE.] [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THE SECOND PROVISO SHALL ALSO BE APPLICABLE TO ALL ASSESSMENT OR REASSESSMENT PROCEEDINGS PENDING BEFORE AN ASSESSING OFFICER AS ON THE 1ST DAY OF OCTOBER, 2009.] THE INTENTION OF THE LEGISLATURE IS CLEAR. THE PRES ENT PROVISO MAKES IT ABSOLUTE THAT COMPARISON IS WITH ACTUAL TRANSACTION ONLY AND NO ADJUSTMENT NEED BE REQUIRED IF THE VARIATION AS COMPARED TO THE ACTUA L TRANSACTION UNDERTAKEN BY ASSESSEE IS WITH IN THE THRESH HOLD PROVIDED. IN THIS CASE, THE ACTUAL TRANSACTION UNDERTAKEN BY ASSESSEE AS REPORTED IS THE SALE AT RS. 17,17,79,149/-. IF THE ALP DETERMINED BY THE AO/TPO IS (+)/(-) 5% OF THIS TRANSACTION ON ACTUAL SALES REPORTED, THEN NO ADJUSTMENT IS REQUIRED. WHILE MAKING ANY ADJUSTMENT, FIRST STEP IS TO VERIFY WHETHER THIS (+ )/(-) 5% THRESHOLD HAS EXCEEDED WHEN COMPARED TO ACTUAL TRANSACTION UNDERTAKEN BY ASSESSEE, IF YES, 20 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. ADJUSTMENT IS REQUIRED UNDER THE PROVISIONS OF THE ACT. THE NEXT STEP IS THE QUANTIFICATION OF ADJUSTM ENT WHICH IS TO BE MADE UNDER RULE 10B(E). WHILE DOING SO, SUO-MOTO ADJUSTMENT MADE BY ASSESSEE CANNOT BE IGNORED AND IF ANY ADJUSTMENT IS REQUIRED OVER AND ABOVE SUO-MOTO ADJUSTMENT MADE BY ASSESSEE, DIFFERENCE ONLY CAN BE CONSIDERED AND, THEREFORE, I N OUR VIEW THERE ARE TWO SORTS OF CHECKS PROVIDED IN THE ACT., I.E., I) NO ADJUSTMENT IS REQUIRED IF THE VARIATION BETWEEN ALP DETERMINED AND THE ACTUAL TRANSACTION IS WITHIN THRESHOLD LIMIT AND, IF NOT, II) THE ADJUSTMENT IS REQUIRED PROVIDED SUO-MOTO ADJUSTMENT MADE BY ASSESSEE IS ALSO CONSIDERED WHILE ARRIVING AT THE FURTHER ADJUSTMENT, IF ANY, REQUIRED. THEREFORE, WHILE EXAMINING THE THRESHOLD LIMIT OF (+)/(-) 5%, WE ARE OF THE OPINION THAT THE ACTUAL TRANSACTION UNDERTAKEN BY ASSESSEE SHOULD BE THE BASE AND NOT REVISED TRANSACTION REPORTED BY MAKING SUO-MOTO ADJUSTMENT. VI) THERE IS ONE MORE ASPECT TO THE CONTENTION MADE. AS BRIEFLY STATED, ASSESSEE INCURRED LOSS IN INTERNATIONAL TRANSACTION AND SUO-MOTO ADJUSTMENT OF RS.2,82,69,298 ON THE BASIS OF TRANSFER PRICING DOCUMENTATION. THIS INDICATES THAT THE ASSESSEE EXERCISED OPTION PROVIDED U/S 92C PARTICULARLY OF PROVISO OF (+) OR (-) 5% THRESHOLD AND DID NOT TRE AT THE ACTUAL SALE TRANSACTION AS ALP. HAVING EXERCISE D THE OPTION AND TREATING THE DIFFERENT (ENHANCED) AMOUNT AS ALP, IN OUR VIEW, ASSESSEE CANNOT CONTEND THAT THE THRESHOLD OF (-) OR (+) 5% IS 21 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. AVAILABLE AGAIN, IF TPO ACTION RESULTS IN FURTHER ADDITION. ON THIS REASON ALSO THE CLAIM FAILS. THIS CONTENTION OF ASSESSEE IS CONSIDERED AS REJECTED. RESPECTFULLY FOLLOWING THE ABOVE, WE REJECT THIS CONTENTION OF ASSESSEE. 12. GROUND NO 2 IS ACCORDINGLY CONSIDERED PARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. GROUND NO.3 PERTAINS TO THE ADDITION OF AMOUNT OF RS.1,07,59,077/- TO THE CADEM SEGMENT IN THE TRANSFER PRICING REPORT OF THE A.O. THE TPO/DRP DETERMINED THE ARMS LENGTH MARK-UP FOR PROVISION OF SOFTWARE ENGINEERING SERVICES TO BE AT 24.35%. IT W AS THE CONTENTION THAT TPO REJECTED THE COMPARABILITY ANALYSIS CARRIED IN THE T.P. DOCUMENTATION AND ALSO OBTAINED INFORMATION SELECTIVELY FROM VARIOUS COMPA NIES UNDER SECTION 133(C) AND ADOPTED VARIOUS FILTERS. T HE TPOS/A.O. DRAFT ORDER IS HOWEVER APPROVED BY THE DR P REJECTING THE ASSESSEES OBJECTIONS ON VARIOUS FILT ERS COMPARABILITY OF THE CASES, RISK ADJUSTMENTS, WORKI NG CAPITAL ADJUSTMENTS ETC., HENCE, ASSESSEE HAS RAISE D DETAILED GROUNDS BEFORE US VIDE GROUND NO.3. 14. IT WAS INFORMED THAT AFTER THE DRP ORDER THERE ARE ABOUT 26 COMPARABLES WHICH ARE FINALLY SELECTED TO ARRIVE AT THE MARGIN OF PROFIT AT 24.35 %. APART FROM OBJECTING TO SOME OF THE COMPARABLES, IT WAS THE SUBMISSION OF THE LD. COUNSEL THAT TPO HAS CONSIDERED THE OPERATING COST OF BOTH AE SEGMENT AN D NON-AE SEGMENT AND ACCORDINGLY MADE THE ADDITION ON 22 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. THE ENTIRE TURNOVER OF THE ASSESSEE WITHOUT RESTRIC TING TO THE AE SEGMENT. IT WAS THE SUBMISSION THAT IF TH E COST PERTAINING TO ONLY AE SEGMENT IS CONSIDERED TH EN THE ADDITION WOULD BE LESS. EVEN IF ALL THE COMPARA BLES WERE ACCEPTED AT THE ADJUSTMENT WOULD BE ONLY RS.27,70,699/- AS AGAINST RS.1.07 CRORES ADDED BY T HE TPO. LD. COUNSEL PLACED ON RECORD A CHART INDICATIN G THE PROPORTIONATE OPERATING COST FOR A.E SEGMENT AN D NON-AE SEGMENT BASED ON THE SALES RATIO TO DETERMIN E THE OPERATING COST AT RS.84,77,135/- AS AGAINST RS.3,29,12,391/- ADOPTED BY THE TPO FOR THE ENTIRE SEGMENT. IT WAS FURTHER CONTENDED THAT MANAGING MARKETING DIRECTOR WAS APPOINTED AT THE END OF THE YEAR AND HIS SERVICES WERE NOT UTILIZED FOR OPERATIONS I N INDIA. THEREFORE, IF HIS SALARY IS EXCLUDED, THEN T HE OPERATING COST WOULD BE ONLY RS.63,82,004/- AND IF THE ADJUSTMENT IS CALCULATED ON THIS COST, IT WOULD BE WITHIN THE PLUS OR MINUS 5% RANGE. SINCE, THESE FAC TUAL ASPECTS ARE NOT EXAMINED BY THE TPO/DRP IN SPITE OF MAKING SPECIFIC OBJECTIONS, IT WAS THE CONTENTION O F THE LEARNED COUNSEL THAT THE WORKING OF THE ADDITION IT SELF IS NOT CORRECT. 15. APART FROM THAT, ASSESSEE IS ALSO OBJECTING T O THE COMPARABLES WHICH ARE AS UNDER : (1) ACCEL TRANSMATIC LTD. (SEG.) (2) AVANI CIMCON TECHNOLOGIES LTD., (3) FLEXTRONICS SOFTWARE SYSTEMS LTD., (4) INFOSYS TECHNOLOGIES LTD., (5) KALS INFORMATION SYSTEMS LTD. 23 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. (6) LUCID SOFTWARE LTD., (7) MEGASOFT LTD., (8) TATA ELXSI LTD., (9) THIRDWARE SOFTWARE SOLUTIONS LTD., (10) WIPRO LTD., 16. IN ALL THE CASES ABOVE, LD. COUNSEL RELIED ON THE COORDINATE BENCH DECISION IN THE CASE OF INTOTO SOFTWARE P. LTD. IN ITA.NO.2102/HYD/2011 FOR EXCLUS ION OF THE ABOVE COMPARABLES, EXCEPT ONE IN CASE OF TAT A ELXSI LMITED WHICH WAS OBJECTED RELYING ON THE CO- ORDIANTE BENCH DECISION IN THE CASE OF N/S. CONEXAN T SYSTEMS INDIA PRIVATE LIMITED ITA.NO.1429/HYD/2010 AND ITA.NO.1978/HYD/2011 DATED 22.03.2013. 17. AFTER HEARING RIVAL CONTENTIONS, WE AGREE THAT THE FOLLOWING COMPARABLES WERE EXCLUDED BY THE COORDINATE BENCH CONSIDERING THE SIMILAR FACTS IN T HE CASE OF INTOTO SOFTWARE INDIA LTD. IN ITA.NO. 1196/HYD/2010, 1197/HYD/2010 & 2102/HYD/2011 DATED 24.05.2013. THE FINDINGS IN INTOTO AND ALSO IN THE CASE OF M/S. CONEXANT SYSTEMS INDIA PRIVATE LIMITED IN ITA.NO.1429/HYD/2010 AND ITA.NO. 1978/HYD/2011 DATED 22.03.2013 SOFTWARE INDIA WITH REFERENCE TO EACH OF THE COMPARABLES AND ARE AS UND ER : AVANI CINCOM TECHNOLOGIES LTD. (AVANI CINCOM): HERE IN THIS CASE ALSO THE SEGMENTAL DETAILS OF OPE RATING INCOME OF IT SERVICES AND SALE OF SOFTWARE PRODUCTS HAVE NOT BEEN PROVIDED SO AS TO SEE WHETHER THE PROFIT R ATIO OF THIS COMPANY CAN BE TAKEN INTO CONSIDERATION FOR COMPARING THE CASE THAT OF ASSESSEE. IN ABSENCE OF ANY KIND OF DETAILS PROVIDED BY THE TPO, WE ARE UNABLE TO 24 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. PERSUADE OURSELVES TO INCLUDE IT AS COMPARABLE PART Y. LEARNED CIT DR HAS PROVIDED A COPY OF PROFIT LOSS A CCOUNT WHICH SHOWS THAT MAINLY ITS EARNING IS FROM SOFTWAR E EXPORTS, HOWEVER, THE DETAILS OF PERCENTAGE OF EXPO RT OF PRODUCTS OR SERVICES HAVE NOT BEEN GIVEN. WE, THERE FORE, REJECT THIS COMPANY ALSO FROM TAKING INTO CONSIDERA TION FOR COMPARABILITY ANALYSIS. ACCEL TRANSMATIC LTD. ON CAREFUL PERUSAL OF THE BUSINESS ACTIVITIES OF A CCEL TRANSMATIC LTD. DRP AGREED WITH THE ASSESSEE THAT T HE COMPANY WAS FUNCTIONALLY DIFFERENT FROM THE ASSESSE E COMPANY AS IT WAS ENGAGED IN THE SERVICES IN THE FO RM OF ACCEL IT AND ACCEL ANIMATION SERVICES FOR 2D AND 3D ANIMATION AND THEREFORE ASSESSEES CLAIM THAT THIS COMPANY WAS FUNCTIONALLY DIFFERENT WAS ACCEPTED. DR P THEREFORE DIRECTED THE ASSESSING OFFICER TO EXCLUDE ACCEL TRANSMATIC LTD. FROM THE FINAL LIST OF COMPARABLES FOR THE PURPOSE OF DETERMINING TNMM MARGIN. FLEXITRONICS SOFTWARE LIMITED : AS FAR AS FLEXITRONICS SOFTWARE LIMITED IS CONCER NED, WE FIND THAT AT PAGE 90 OF HIS ORDER, THE TPO HAS ALSO OBSERVED THAT THE SAID COMPANY HAS INCURRED EXPENDI TURE FOR SELLING OF PRODUCTS AND HAS INCURRED R & D EXPE NDITURE FOR DEVELOPMENT OF THE PRODUCTS. THE ABOVE FACTS CL EARLY DEMONSTRATE THAT THERE IS FUNCTIONAL DISSIMILARITY BETWEEN THE ASSESSEE AND THESE COMPANIES AND WITHOUT MAKING ADJUSTMENT FOR THE DISSIMILARITIES BROUGHT OUT BY T HE TPO HIMSELF, THESE COMPANIES CANNOT BE TAKEN AS COMPARA BLE COMPANIES. THE METHOD ADOPTED BY THE TPO TO ALLOCAT E EXPENDITURE PROPORTIONATELY TO THE SOFTWARE DEVELOP MENT SERVICES AND SOFTWARE PRODUCT ACTIVITY CANNOT BE SA ID TO BE CORRECT AND REASONABLE. WHEREVER, THE ASSESSING OFFICER/TPO CANNOT MAKE SUITABLE ADJUSTMENT TO THE FINANCIAL RESULTS OF THE COMPARABLE COMPANIES WITH THE ASSESSEE-COMPANY TO BRING THEM ON PAR WITH THE ASSESSEE, THESE COMPANIES ARE TO BE EXCLUDED FROM T HE LIST OF COMPARABLES. THEREFORE, WE DIRECT THE ASSES SING 25 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. OFFICER/TPO TO EXCLUDE THESE THREE COMPANIES FROM T HE LIST OF COMPARABLES. INFOSYS TECHNOLOGIES LTD. : WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT INFO SYS TECHNOLOGIES LTD., THOUGH, IS INTO THE SIMILAR BUSI NESS OF THE ASSESSEE AS SOFTWARE DEVELOPMENT, CANNOT BE CONSIDERED AS A COMPARABLE TO ANY OTHER COMPANIES WHICH ARE ALSO INVOLVED IN SIMILAR ACTIVITIES. IT I S NOT ONLY A GIANT COMPANY BUT IS ALSO ENGAGED IN DEVELOPMENT OF VARIOUS NICHE PRODUCTS. IT CANNOT BE COMPARED TO TH E ASSESSEE IN ANY MANNER. SIMILAR DIRECTIONS HAVE BEE N GIVEN BY THE TRIBUNAL AT DELHI AND HYDERABAD BENCHE S IN THE CASES CITED (SUPRA). KALS INFORMATION SYSTEMS LTD : . WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE SUBMISSION MADE ON BEHALF OF THE ASSESSEE. WE FIND THAT THE TPO HAS DRAWN CONCLUSIONS ON THE BASIS OF INFORMATION OBTAINED BY ISSUE OF NOTICE U/S.133(6) OF THE ACT. THIS INFORMATION WHICH WAS NOT AVAILABLE IN PU BLIC DOMAIN COULD NOT HAVE BEEN USED BY THE TPO, WHEN TH E SAME IS CONTRARY TO THE ANNUAL REPORT OF THIS COMPA NY AS HIGHLIGHTED BY THE ASSESSEE IN ITS LETTER DATED 21. 6.2010 TO THE TPO. WE ALSO FIND THAT IN THE DECISION REFER RED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE MUMBAI BE NCH OF ITAT HAS HELD THAT THIS COMPANY WAS DEVELOPING SOFTWARE PRODUCTS AND NOT PURELY OR MAINLY SOFTWARE DEVELOPMENT SERVICE PROVIDER. WE THEREFORE ACCEPT T HE PLEA OF THE ASSESSEE THAT THIS COMPANY IS NOT COMPARABLE. LUCID SOFTWARE LIMITED : THE OBJECTIONS RAISED BY THE ASSESSEE FOR INCLUSIO N OF LUCID SOFTWARE LTD. AS A COMPARABLE IS PLACED AT PA GES 244 TO 248 OF THE PAPER BOOK FILED BY THE ASSESSEE. WE FIND IDENTICAL OBJECTION HAS BEEN RAISED AGAINST TH E INCLUSION OF LUCID SOFTWARE IN CASE OF TELCORDIA TECHNOLOGIES. SINCE THE FACTS AND THE ASSESSMENT YE AR ARE 26 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. IDENTICAL, FOLLOWING THE ORDER OF THE TRIBUNAL IN T HE CASE OF TELCORDIA TECHNOLOGIES PVT. LTD. V. ACIT (SUPRA), W E DIRECT THE ASSESSING OFFICER/TPO NOT TO INCLUDE LUCID SOFT WARE LIMITED AS A COMPARABLE. MEGA SOFT : AS FAR AS MEGA-SOFT IS CONCERNED, THE LEARNED COUN SEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE FACT TH AT THE SEGMENTAL MARGIN OF THIS COMPANYS SOFTWARE DEVELOPMENT SERVICES IS ONLY 23.11%. WHEREAS, THE ASSESSING OFFICER/TPO HAS TAKEN THE COMBINED RESULT OF 60.23%. HE SUBMITTED THAT THE TRIBUNAL AT BANGALORE IN THE CASE OF M/S. TRILOGY E-BUSINESS SOFTWARE INDIA PRIVATE LIMITED HAS DIRECTED THE ASSESSING OFFICER/TPO TO T AKE ONLY THE SEGMENTAL MARGIN INTO CONSIDERATION WHILE COMPUTING THE ALP OF THAT COMPANY I.E., M/S. TRILOG Y E- BUSINESS SOFTWARE INDIA PRIVATE LIMITED. THE LEARNE D COUNSEL FOR THE ASSESSEE HAS SOUGHT SIMILAR DIRECTI ON IN THIS CASE ALSO. HAVING GONE THROUGH THE DECISION OF THE TRIBUNAL AT BANGALORE BENCH IN THE CASE OF M/S. TRI LOGY E- BUSINESS SOFTWARE INDIA PRIVATE LIMITED VS. DCIT IN ITA.NO.1054/BANG/2011 AT PARAS 24 TO 26, WE DIRECT THE ASSESSING OFFICER/TPO TO TAKE ONLY THE SEGMENTAL MA RGIN OF THIS COMPANY FOR THE RELEVANT PREVIOUS YEAR INTO CONSIDERATION FOR COMPUTING THE ALP OF THE ASSESSEE . TATA ELXSI LIMITED : AS REGARDS THIS COMPANY, THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE, FILED BEFORE U S THE REPLY OF TATA ELXSI LIMITED TO THE ADDL. CIT (TRANS FER PRICING), HYDERABAD, WHEREIN THE CONCERNED OFFICER HAS BEEN INFORMED THAT TATA ELXSI LIMITED IS SPECIALISE D EMBEDDED SOFTWARE DEVELOPMENT SERVICE PROVIDER AND THAT IT CANNOT BE COMPARED WITH ANY OTHER SOFTWARE DEVELOPMENT COMPANY. IT WAS SUBMITTED THAT BECAUSE OF THE SPECIALISATION AND ALSO BECAUSEOF DIVERSE NATUR E OF ITS BUSINESS, IT IS VERY DIFFICULT TO SCALE-UP THE OPER ATIONS OF TATA ELXSI LIMITED. IN VIEW OF THIS, TATA ELXSI LIM ITED HAS INFORMED THAT IT IS NOT FAIR TO USE ITS FINANCIAL N UMBERS TO 27 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. COMPARE IT WITH ANY OTHER COMPANY. THE COMMUNICATIO N DATED 25 TH AUGUST, 2009 TO THE TPO IS PLACED BEFORE US. AS THIS COMMUNICATION WAS NOT BEFORE THE TPO AT THE TIME OF TRANSFER PRICING ADJUSTMENT WE DEEM IT FIT AND P ROPER TO REMAND THIS ISSUE ALSO TO THE FILE OF THE TPO TO RE CONSIDER ADOPTING THIS COMPANY AS THE COMPARABLE IN THE LIGH T OF OBSERVATIONS OF THIS COMPANY TO THE TPO IN THE CASE OF ANOTHER ASSESSEE. IN THE RESULT, THE ASSESSING OFFI CER/TPO IS DIRECTED TO RECONSIDER THE ISSUE IN ACCORDANCE W ITH LAW, AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. THIRDWARE SOFTRWARE SOLUTION LIMITED : AS FAR AS THIRDWARE SOFTWARE SOLUTION LIMITED IS CONCERNED, WE FIND FROM THE INFORMATION FURNISHED B Y THE SAID COMPANY THAT THOUGH THE SAID COMPANY IS ALSO I NTO PRODUCT DEVELOPMENT, THERE ARE NO SOFTRWARE PRODUCT S THAT THE COMPANY INVOICED DURING THE RELEVANT FINANCIAL YEAR AND THE FINANCIAL RESULTS ARE IN RESPECT OF SERVICE S ONLY. THUS, IT IS CLEAR THAT THERE IS NO SALE OF SOFTWARE PRODUCTS DURING THE YEAR BUT THE SAID COMPANY MIGHT HAVE INC URRED EXPENDITURE TOWARDS THE DEVELOPMENT OF THE SOFTWARE PRODUCTS. WIPRO LIMITED : . AS FAR AS (INFOSYS TECHNOLOGIES LIMITED AND) WI PRO LIMITED ARE CONCERNED, WE FIND THAT BOTH ARE GIANT COMPANIES AND ARE INTO DIVERSIFIED ACTIVITIES AND F OR THE DETAILED REASONS GIVEN BY US IN ASSESSEES OWN CASE FOR THE A.Y. 2005-06 EVEN DATED, WE DIRECT THAT THESE T WO COMPANIES ARE TO BE EXCLUDED FROM THE LIST OF COMPARABLES. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, WE DIRECT THAT TH ESE COMPANIES SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES. 28 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. 18. RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION IN THE ABOVE CASES, WE DIRECT THAT THESE C OMPARABLES COMPANIES SHOULD BE EXCLUDED FROM THE COMPUTATION O F PLI. IT WAS SUBMITTED THAT THE MEAN PLI OF THE REST OF THE COMPARABLES SELECTED BY THE TPO WOULD COME TO 18.19 % AND THIS IS WITHIN THE MARGIN AS ARRIVED AT BY THE ASSE SSEE, AFTER MAKING ADJUSTMENTS TO THE WORKING OF THE TPO AS SUG GESTED ABOVE. HOWEVER, THESE ASPECTS REQUIRE EXAMINATION B Y THE TPO. THEREFORE, WE DIRECT THE TPO TO CONSIDER EXCLUSION OF THE ABOVE 10 COMPARABLES AND TO RESTRICT THE ADDITION TO THE AE TRANSACTIONS ONLY. AO/TPO IS FREE TO CONSIDER WHET HER PROPORTIONATE COST OF MARKETING DIRECTOR SALARY IS TO BE INCLUDED IN OPERATING COST OR NOT, DEPENDING ON THE NATURE OF HIS EMPLOYMENT AND ALSO TO EXAMINE WHETHER ASSESSEE S CONTENTION THAT HE WAS EMPLOYED AT THE END OF THE Y EAR HAS ANY BEARING ON ISSUE SO THE COST SHOULD NOT BE INCL UDED FOR THE WORKING OF THIS YEAR. THEREFORE, TO THE EXTENT OF ADDITION MADE ON CADEM SEGMENT, THE ORDERS OF THE TPO AND DR P ARE SET ASIDE. THE ISSUE IS RESTORED TO THE FILE OF THE TPO/A.O. TO DO THE NEEDFUL. ASSESSEE SHOULD BE GIVEN DUE OPPORTUNI TY AND HIS OBJECTIONS SHOULD BE CONSIDERED IN DETAIL AND SHOUL D NOT BE REJECTED WITHOUT CONSIDERATION. ACCORDINGLY, GROUND NO.3 OF THE ASSESSEE IS CONSIDERED AS ALLOWED FOR STATISTIC AL PURPOSES. 19. GROUND NOS. 4 AND 5 PERTAIN TO DISALLOWANCE OF THE PROVISIONS OF SECTION 40(A)(IA) ON THE REASON THAT ASSESSEE HAS NOT FURNISHED EVIDENCE OF DEDUCTION CLAIMED UNDER S ECTION 40(A)(IA). THE A.O. VIDE PARA 6 OF HIS ORDER, DISAL LOWED AN AMOUNT OF RS.13,27,123/-. ASSESSEE SUBMITTED BEFORE THE DRP THAT AN AMOUNT OF RS.7.67 LAKHS WAS DEDUCTED AND PA ID DURING THE YEAR AND AMOUNT OF RS.5,50,000/- WAS REV ERSED, 29 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. THEREFORE, A.O. SHOULD NOT HAVE DISALLOWED THE AMOU NT. THE DRP HOWEVER, RELIED ON THE ORDERS OF THE A.O. BUT D IRECTED THAT ASSESSEE CAN FURNISH CHALLAN AND A.O. MAY CONSIDER THE SAME IN ACCORDANCE WITH LAW. IT WAS THE CONTENTION THAT A.O. DID NOT GIVE ANY OPPORTUNITY IN ORDER TO REDUCE THE AMOUNT. 20. WE ARE OF THE OPINION THAT THIS ISSUE IS TO BE RESTORED TO THE FILE OF A.O. FOR EXAMINATION OF THE FACTS AND IF ASSESSEE HAS ALREADY PAID THE AMOUNT OR AMOUNT WAS DISALLOWED IN EARLIER YEAR, THE DISALLOWANCE TO THA T EXTENT SHOULD NOT BE MADE. IN CASE, ASSESSEE REVERSED THE AMOUNTS PROVIDED IN EARLIER YEAR ALSO AND TO THAT EXTENT, A .O. IS DIRECTED TO EXAMINE THE FACTS AND DECIDE THE ISSUE ACCORDING LY. ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY BEFORE DEC IDING THE ISSUE. WITH THESE DIRECTIONS, GROUND NOS. 4 AND 5 O F THE ASSESSEE ARE CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. 21. GROUND NO.6 PERTAINS TO DISALLOWANCE OF AN AMOUNT OF EXPENDITURE PAID ON ACCOUNT OF DAUGHTERS MARRIAGE BENEFIT FUND. ASSESSEE CLAIMED AN AMOUNT OF RS.4,10 ,000/- ON PAYMENT BASIS WHILE DISALLOWING THE AMOUNT OF RS.5, 76,000/- IN THE COMPUTATION AS PER THE CONSTANT ACCOUNTING P OLICY ADOPTED BY THE ASSESSEE. A.O. HAS DISALLOWED THE AM OUNT OF RS.4,10,000/- WHILE ADMITTING THAT THIS AMOUNT WAS PAID OUT OF EARLIER YEARS DISALLOWANCES. IT WAS THE CONTENT ION OF THE ASSESSEE BEFORE THE TPO AS WELL AS DRP THAT THIS AM OUNT IS MADE FOR THE BENEFIT OF EMPLOYEES AS PART OF MEMORA NDUM OF SETTLEMENT WITH THE EMPLOYEES AND THE AMOUNT IS TO BE CONSIDERED AS A DEDUCTION UNDER SECTION 37(1) RELYI NG ON VARIOUS PRINCIPLES LAID DOWN ON THIS ISSUE. HOWEVER , BOTH THE A.O. AND DRP REJECTED AND MADE THE DISALLOWANCE. IT WAS THE 30 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. CONTENTION THAT THE ASSESSEE WAS MAKING PROVISION O F FUND AS PER THE SETTLEMENT REACHED WITH THE EMPLOYEES BY ME DIATION OF DEPUTY LABOUR COMMISSIONER, FARIDABAD AND ORIGINAL SETTLEMENT UNDER INDUSTRIAL DISPUTES ACT WAS FROM THE PERIOD SEPTEMBER 2001 TO 31 ST AUGUST, 2004 WHICH WAS FURTHER EXTENDED BY ANOTHER THREE YEARS FROM 1 ST SEPTEMBER, 2004 TO 31 ST AUGUST, 2007 AND THIS SETTLEMENT WAS STILL IN FORC E. SUBSEQUENTLY ALSO, AS PER THE SETTLEMENT VIDE PARA G IN PAGE 9 DAUGHTERS MARRIAGE BENEFIT FUND HAS BEEN INCREASED FROM RS.20,000/- TO RS.30,000/- AND THE PROVISION OF AMO UNT IS FROM MANAGEMENT AND EMPLOYEES WILL BE 50% EACH. ACCORDINGLY, IT WAS THE SUBMISSION THAT ASSESSEE MA DE THE PROVISION TO THE DAUGHTERS MARRIAGE BENEFIT FUND A S PER THE REQUIREMENTS AND SINCE IT IS A PROVISION, ASSESSEE WAS CONSISTENTLY DISALLOWING, FOLLOWING THE ACCOUNTING PRINCIPLES. IT CLAIMED ONLY THE ACTUAL AMOUNT PAID OUT OF THE FUND DURING THE YEAR. SINCE THE AMOUNT WAS PAID FOR THE BENEFIT OF THE EMPLOYEES, THIS DOES NOT GET ATTRACTED UNDER SECTIO N 40A(9) OF THE ACT AND THE SAME IS ALLOWABLE UNDER SECTION 37( 1). ASSESSEE ALSO RELIED ON THE DECISION OF ITAT BENCH IN THE CASE OF BATA INDIA LTD. VS. DCIT 85 ITD 257 AND DECISION OF INDIA PISTONS REPCO LTD. 26 ITD 413 AND RASI CEMENTS LTD. 45 ITD 233. 22. CONSIDERING THE FACTS OF THE CASE AND THE SUBMISSIONS MADE ON THIS BEHALF, WE ARE OF THE OPIN ION THAT THE AMOUNT IS AN ALLOWABLE DEDUCTION UNDER SECTION 37(1) OF THE I.T. ACT. IN FACT, ASSESSEE IS ADDING BACK THE PROVISION AND CLAIMING ONLY THE ACTUAL AMOUNT. SINCE, INDUSTRIAL DISPUTE ACT PERMITS THIS SORT OF BENEFIT FOR THE EMPLOYEES AND ASSESSEE HAS BEEN MAKING MATCHING CONTRIBUTION, ALLOWABILITY OF THIS 31 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. AMOUNT DOES NOT ATTRACT THE PROVISIONS OF SECTION 4 0A(9). THEREFORE, WE ARE OF THE OPINION THAT BOTH A.O. AND DRP ARE WRONGLY DISALLOWED THE AMOUNT. WE DIRECT THE A.O. T O ALLOW THE AMOUNT, AS CLAIMED. 23. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ITA.NO.1863/HYD/2012 A.Y. 2008-2009 : 24. IN THIS APPEAL THE ASSESSEE HAS RAISED 12 GROUNDS WHICH ARE AS UNDER : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ASSESSMENT ORDER (ORDER) PASSED BY THE LEARNED ASSESSING OFFICER (A.O.) / LD. TRANSFER PRICING OFFICER (TPO) AND HONBLE DISPUTES RESOLUTION PANEL (DRP) UNDER SECTION 143(3) READ WITH SECTION 144C OF THE INCOME TAX ACT, 1961 (ACT) IS BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. A.O. /LD. TPO AND THE HONBLE DRP HAVE ERRED IN MAKING AN ADJUSTMENT TO THE ARMS LENGTH PRICE OF THE APPELLANTS INTERNATIONAL TRANSACTIONS IN THE NATURE OF SALE OF COMPRESSOR SUB-ASSEMBLY AND COMPONENTS WITH ASSOCIATED ENTERPRISES BY RS.4,62,00,000. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. A.O. /LD. TPO ERRED IN REJECTING THE TRANSFER PRICING DOCUMENTATION (TP DOCUMENTATION) MAINTAINED BY THE APPELLANT BY INVOKING PROVISIONS OF SUB-SECTION 3 OF 92C OF THE ACT AND CONTENDING THAT THE INFORMATION OR DATA USED IN THE COMPUTATION OF THE ARMS LENGTH PRICE IS NOT RELIABLE OR CORRECT. 4. THAT THE LD. A.O./LD. TPO AND THE HONBLE DRP HAVE ERRED IN DISREGARDING THE (AUDITED) FINANCIAL STATEMENTS OF THE EXPORT ORIENTED MANUFACTURING UNIT USED BY THE APPELLANT IN THE 32 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. TRANSFER PRICING DOCUMENTATION AND ARBITRARILY DETERMINING THE OPERATING COST FOR THE PURPOSE OF COMPUTING THE ADJUSTMENT UNDER SECTION 92CA OF THE ACT. 5. PURSUANT TO GROUND 4 ABOVE, THE LD. A.O./LD. TPO HAVE ERRED IN NOT CONSIDERING THE SUO MOTO ADDITION MADE BY THE APPELLANT ON ACCOUNT OF THE DIFFERENCE BETWEEN THE DISPUTED INTERNATIONAL TRANSACTION AND THE ARMS LENGTH PRICE IN THE INCOME TAX RETURN AND THEREBY SUBJECTING THE APPELLANT TO DOUBLE TAXATION. 6. THAT THE LD. A.O. AND THE HONBLE DRP HAVE GROSSLY ERRED IN REJECTING THE COMPARABILITY ANALYSIS CARRIED IN THE TP DOCUMENTATION AND IN CARRYING OUT A FRESH COMPARABILITY ANALYSIS WITHOUT SHARE THE SEARCH PROCESS AND THE METHODOLOGY WITH THE APPELLANT, THEREBY ARRIVING AT REVISED ARMS LENGTH MARGIN OF 8.8% ON INCORRECT OPERATING COST. 7. THAT THE LD. TPO/LD. DRP ERRED IN LAW AND FACTS BY MAKING AN ADJUSTMENT TO THE ARMS LENGTH PRICE OF THE APPELLANT WHEREBY THE APPELLANT TRANSFER PRICE POST SUO-MOTO ADJUSTMENT IN THE INCOME TAX RETURN IS WITHIN THE RANGE OF +/-5% AS CONTEMPLATED IN PROVISO TO SECTION 92C(2) OF THE ACT. 8. THAT THE LD. A.O./LD. TPO AND THE HONBLE DRP HAVE ERRED, WHILE DETERMINING THE ARMS LENGTH PRICE, IN USING DATA AVAILABLE ONLY AT THE TIME OF ASSESSMENT PROCEEDINGS, INSTEAD OF USING DATA AVAILABLE AS ON THE DATE OF PREPARING THE TP DOCUMENTATION FOR COMPARABLE COMPANIES. 9. THAT THE LD. A.O. AND THE HONBLE DRP ERRED, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN NOT ALLOWING THE CLAIM FOR DEDUCTION FOR THE FOLLOWING PAYMENTS. 33 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. S.NO. PARTICULARS OF DISALLOWANCES AMOUNT (RS.) 1. GRATUITY 27,64,234 2. BONUS 36,26,552 3. LEAVE PAY 21,75,463 4. SERVICE REWARDS 7,14,326 TOTAL 92,80,575 10. THAT THE LD. A.O. AND THE HONBLE DRP HAVE ERRED, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DISALLOWING THE PAYMENT OF RS.4,80,000/- MADE ON ACCOUNT OF DAUGHTERS MARRIAGE BENEFIT. 11. THAT THE LD. A.O. AND THE HONBLE DRP HAVE ERRED, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN NOT ALLOWING THE CLAIM FOR DEDUCTION OF PROVISION FOR COMMISSION OF RS.3,09,033/- MADE DURING THE YEAR. 12. THAT THE LD. A.O. AND THE HONBLE DRP HAVE ERRED, IN INCLUDING THE INTEREST INCOME OF RS.5,37,000/- TWICE IN COMPUTING THE TOTAL INCOME. 25. IN THIS YEAR, RETURN OF INCOME WAS FILED ORIGI NALLY ON SEPTEMBER 30, 2008 DECLARING TOTAL INCOME OF RS.37,15,14,613/- AND SUBSEQUENTLY REVISED RETURN W AS FILED DECLARING INCOME OF RS.30,26,79,341/- AFTER SETTING OFF EARLIER YEAR LOSSES THEREBY, ARRIVING AT TOTAL INCOME AT IN R NIL. IN THE T.P. DOCUMENTATION, ASSESSEE MADE SUO MOTU ADJUSTME NT OF AN AMOUNT OF RS.2,32,09,835/- IN ORDER TO MADE THE ARM S LENGTH STANDARD. IN THE T.P. STUDY, A.O. CONSIDERED AMONGS T VARIOUS INTERNATIONAL TRANSACTIONS, THE TRANSACTIONS IN TH E NATURE OF SALE OF PROCESSOR AND SUB-ASSEMBLY OF COMPONENTS FO R A.ES BY MAKING ADDITION OF RS.4,62,00,000/-. ASSESSEE RAISE D VARIOUS OBJECTIONS BEFORE THE DRP AND THE DRP, HOWEVER, REJECTED THE OBJECTIONS AND ACCORDINGLY, T HE AO PASSED CONSEQUENTIAL ORDER MAKING THE ADJUSTMENT S 34 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. TO THE INCOME RETURNED, ALONG WITH OTHER CORPORATE ADJUSTMENTS IN COMPUTATION. 26. GROUND NO 1 IS GENERAL IN NATURE. GROUND NO 2 TO 7 ARE ON THE ISSUE OF TRANSFER PRICING ADJUSTM ENT OF RS. 4,62,00,000/ MADE BY TPO IGNORING THE SUO-MOTTO ADJUSTMENT MADE BY ASSESSEE AND ADOPTING DIFFERENT COST AND COMPARABLES. THE ISSUES RAISED ARE SIMILAR TO THE ISSUES CONSIDERED EARLIER IN ASSESSMENT YEARS 2006- 07 AND A.Y. 2007-08. THESE WERE ELABORATELY DISCUSSED IN P ARA 11 OF THIS ORDER EARLIER IN ITA.NO.2228/2011. SINCE THES E ISSUES ARE COVERED BY THE ORDERS OF ITAT IN EARLIER YEARS, A.O. IS DIRECTED TO FOLLOW THE SAME AND REWORK OUT THE SAME IN THIS YEAR AS WELL. ACCORDINGLY, GROUNDS 2 TO 7 ARE PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 27. GROUND NO. 8 ALSO PERTAINING TO TRANSFER PRICI NG ISSUE IS ABOUT THE OBJECTION IN USING DATA AVAILABL E AT THE TIME OF ASSESSMENT PROCEEDINGS. THIS OBJECTION WAS NOT P RESSED. ACCORDINGLY, THE SAME WAS REJECTED. 28. GROUND NO. 9 IS WITH REFERENCE TO DISALLOWANCE OF VARIOUS CLAIMS OF PAYMENTS TO THE EXTENT OF RS. 92, 80,575/-. THE DETAILS OF PAYMENTS DISALLOWED ARE AS UNDER : S.NO. PARTICULARS OF DISALLOWANCES AMOUNT (RS.) 1. GRATUITY 27,64,234 2. BONUS 36,26,552 3. LEAVE PAY 21,75,463 4. SERVICE REWARDS 7,14,326 28.1. GRATUITY AMOUNT OF RS.27,64,234/-: ASSESSEE CLAIMED THE ABOVE AMOUNT ON THE REASON THAT THE AMO UNT WAS 35 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. PAID TO LIC TOWARDS PREMIUM OF GRATUITY PAID FOR IT S EMPLOYEES OF BALLADHAR UNIT. A.O. ON THE REASON THAT EVEN THO UGH THE SAME WAS MENTIONED IN THE TAX AUDIT REPORT, OPINED THAT ASSESSEE COULD NOT BRING ANYTHING ON RECORD FOR SUB STANTIATING THE CLAIM OF PAYMENT AND ACCORDINGLY AMOUNT OF RS.27,64,534/- WAS DECIDED TO BE DISALLOWED. HOWEVE R, HE MADE AN ADDITION OF RS.32,87,949/- IN THE COMPUTATI ON OF INCOME. IT WAS THE SUBMISSION BEFORE THE DRP THAT A .O. WRONGLY ADDED AMOUNT OF RS.32,87,949/- WHEREAS THE DISALLOWANCE PROPOSED WAS ONLY RS.27,64,234/-, THUS MAKING EXCESS DISALLOWANCE OF RS.5,23,715/-. WITH REFERENC E TO EVIDENCE FOR PAYMENT OF GRATUITY ASSESSEE SUBMITTED THAT THE SAID EVIDENCE WAS ALREADY FURNISHED AND ALSO ENCLOS ED AS ATTACHMENT-7 TO ANNEXURE-1 TO FORM 3CD. DRP WAS REQ UESTED TO ADMIT ADDITIONAL EVIDENCE WHICH WAS FILED ALONG WITH THE APPLICATION. UNFORTUNATELY, DRP DID NOT DECIDE EITH ER OF THE ISSUES. IT ONLY DIRECTED THE A.O. TO ALLOW THE SAME AS PER THE PROVISIONS OF THE ACT. A.O. DID NOT MAKE ANY VERIFI CATION. 28.2 ON PERUSING THE FACTS ON RECORD, WE ARE OF TH E OPINION THAT BOTH A.O. AND DRP WRONGLY CONSIDERED T HE ABOVE AMOUNTS. AS FAR AS DISALLOWANCE OF RS.5,23,715/- IS CONCERNED, IT IS SIMPLY IN HIGHER DISALLOWANCE THAN REQUIRED WHICH SHOULD BE EXCLUDED. AS REGARDS AMOUNT OF RS.27,64,234/- IT IS ALSO A DIRECTION BY DRP TO EXA MINE AND ALLOW THE AMOUNT. IT IS THE DUTY OF THE A.O. TO EXA MINE AND ALLOW THE AMOUNT. SINCE HE HAS NOT COMPLIED WITH TH E DIRECTIONS OF THE DRP, WE DIRECT THE A.O. TO AGAIN VERIFY THE PAYMENT AND ALLOW THE SAME. GROUND NO.9 IS ACCORDIN GLY ALLOWED FOR STATISTICAL PURPOSES. 36 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. 28.3 BONUS, LEAVE PAY AND SERVICE REWARDS : SIMI LAR DISALLOWANCE WITH REFERENCE TO BONUS, LEAVE PAY AND SERVICE REWARDS WAS MADE. EVEN THOUGH, THE DRP DIRECTED TH E A.O. TO VERIFY AND ALLOW THE AMOUNTS, A.O. DID NOT ALLOW TH E AMOUNT ON THE REASON THAT THIRD PARTY EVIDENCES WERE NOT F URNISHED. WE ARE UNABLE TO UNDERSTAND WHAT SORT OF THIRD PART Y EVIDENCES ARE REQUIRED TO ALLOW THE AMOUNTS. THEREF ORE, WE DIRECT THE A.O. TO EXAMINE THE VOUCHERS FURNISHED B Y THE ASSESSEE AND ALLOW THE AMOUNTS. EVEN THOUGH A.O. ME NTIONS THE EVIDENCES FURNISHED, WE ARE UNABLE TO EXAMINE H OW THE AMOUNT OF DISALLOWANCE FOR LEAVE PAY WAS ARRIVED AT AS THERE SEEMS TO BE SOME CALCULATION MISTAKES AS WELL. WITH REFERENCE TO SERVICE REWARDS ALSO, IT SEEMS TO BE A GIFT IN K IND LIKE FRIDGE. THIS ALSO REQUIRES TO BE EXAMINED BY THE A.O. THERE FORE, WE DIRECT THE A.O. TO GIVE OPPORTUNITY TO THE ASSESSEE AND ALLOW THE AMOUNTS AFTER DUE EXAMINATION. 29. GROUND NO.10 PERTAINS TO THE ISSUE OF PAYMENT OF RS.4,80,000/- MADE ON ACCOUNT OF DAUGHTERS MARRIA GE BENIFIT FUND. FOR THE REASONS STATED IN A.Y. 2007-08 VIDE P ARA NO. 21 AND 22 THE ISSUE BEING SIMILAR, WE DIRECT THE A.O. TO ALLOW THE AMOUNT. 30. GROUND NO.11 PERTAINS TO THE CLAIM OF DEDUCTIO N FOR PROVISION OF COMMISSION OF RS.3,09,033/- MADE D URING THE YEAR. ASSESSEE CLAIMED AN AMOUNT OF RS.3,09,033/- B EING PROVISION MADE TOWARDS COMMISSION WHEREAS, A.O. ON THE REASON THAT IT WAS A PROVISION, DISALLOWED THE AMOU NT OF RS.3,09,033/-. IT WAS SUBMITTED THAT THE COMMISSION LIABILITY HAS ACCRUED TO THE ASSESSEE BASED ON SALES INCOME B OOKED AND WAS IN CONSISTENCE WITH ACCOUNTING STANDARD-I UNDER SECTION 37 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. 145 OF IT ACT 1961 WHEREIN ACCRUAL CONCEPT IS REQUI RED TO BE FOLLOWED. WITHOUT VERIFYING THE FACTUAL POSITION, I T WAS SUBMITTED THAT A.O. DISALLOWED THE EXPENDITURE CLAI MED AS A PROVISION. ASSESSEE REQUESTED DRP TO ALLOW THE COMM ISSION. DRP DIRECTED THE A.O. TO EXAMINE AND ALLOW THE SAME AS PER THE PROVISIONS OF THE I.T. ACT. IT WAS SUBMITTED TH AT ASSESSEE HAS PAID A TOTAL AMOUNT OF RS. 22 LAKHS AND SOMETIM ES PROVISIONS ARE REVERSED IN LATER YEAR AND CLAIMED O N ACTUAL BASIS. DRP DID NOT CONSIDER. SINCE THIS ISSUE WAS N OT EXAMINED IN DETAIL BY THE A.O. WE DIRECT THE A.O. T O EXAMINE THE SALES MADE OUTSIDE INDIA ON WHICH PROVISION WAS MADE AND THE AMOUNTS PAID CONSIDERING THE ADJUSTMENTS MADE I N THE COMPUTATION OF INCOME. A.O. IS DIRECTED TO EXAMINE THE AMOUNT ON FACTUAL POSITION AND CONSIDER ALLOWING THE AMOUN T ACCRUED DURING THE YEAR. WITH THIS DIRECTION, GROUND NO.11 IS RESTORED TO THE FILE OF A.O. AND CONSIDERED AS ALLOWED FOR S TATISTICAL PURPOSES. 31. GROUND NO.12 PERTAINS TO THE ISSUE OF INTEREST INCOME OF RS.5,37,000/- ADDED TWICE IN THE COMPUTAT ION. IT WAS THE SUBMISSION THAT INTEREST WAS ACCRUED AND SH OWN IN THE INCOME ACCOUNT AND ALSO IN THE BALANCE SHEET VI DE SCHEDULE-9 IN PAGE 5 OF THE BALANCE SHEET. IT WAS S UBMITTED THAT RELEVANT VOUCHER WAS ALSO FURNISHED TO THE A.O . / DRP, BUT THIS DOUBLE ADDITION WAS NOT DELETED. IT WAS TH E SUBMISSION THAT ASSESSEE HAS ALREADY ACCOUNTED THE INCOME AND ADDITION AGAIN DOES NOT REQUIRE. CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE, WE DIRECT THE A.O. TO EXAMINE THIS ASPECT FACTUALLY AND ALLOW THE AMOUNT. WITH THIS DI RECTION, GROUND NO.12 IS ALLOWED FOR STATISTICAL PURPOSES. 38 ITA.NO.2228 & 1863/H/2011 M/S. TECUMSEH PRODUCTS INDIA P. LTD. HYDERABAD. 32. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 33. BEFORE PARTING WITH THIS ORDER, WE WOULD LIKE TO PLACE ON RECORD THAT A.O. DID NOT EXAMINE MANY OF T HE ASPECTS FACTUALLY, MAY BE BECAUSE OF VOLUMINOUS DOCUMENTATI ON GIVEN BY THE ASSESSEE WITHOUT PRESENTING THE FACTS IN VER IFIABLE MANNER. EVEN WE HAVE DIFFICULTY IN FINDING OUT THE ACTUAL AMOUNTS IN THE VOLUMINOUS PAPERS FILED BEFORE US, W ITHOUT SPECIFYING/CRYSTALLIZING THE ISSUES. MANY A TIME TH E CONTENTIONS ON CORPORATE ISSUES COULD NOT BE VERIFI ED BY US SO AS TO GIVE FINDINGS. WE ADVISE THE ASSESSEE TO FURN ISH THE RELEVANT DATA IN A SIMPLE AND CONCISE MANNER SO THA T OFFICER CAN EXAMINE THESE ISSUES. WITH THESE OBSERVATIONS, APPEALS ARE CONSIDERED AS PARTLY ALLOWED FOR STATISTICAL PU RPOSES. 34. TO SUM-UP, ITA.NO.2228/HYD/2011 AND ITA.NO.1863/HYD/2012 OF THE ASSESSEE ARE PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.05.2 014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 28 TH MAY, 2014 VBP/- COPY TO : 1.M/S. TECUMSEH PRODUCTS INDIA P. LTD. 9-40, BALANA GAR TOWNSHIP, HYDERABAD 500 003. 2. ACIT, CIRCLE 2(3), HYDERABAD 3. DISPUTES RESOLUTION PANEL, HYDERABAD 4. ADDL. CIT (TRANSFER PRICING), HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.