Nokia India Pvt. Ltd., Gurgaon V. Addl. CIT, New Delhi

ITA 1883/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9372 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARAMITA M BISWAS
• Keywords: Capital asset; Depreciation; Transfer pricing; Business expenditure; Double taxation relief; International transaction; Permanent establishment; Bad and doubtful debts; Commercial expediency; Revenue expenditure; Capital expenditure; TDS; Set aside
• Section: 143(3); 92B; 133A; 40(a)(ia); 37(1); 195; 144C; 142(2A); 194J; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.1883/DEL/2017 (ASSESSMENT YEAR-2011-12) NOKIA INDIA PVT. LTD., TEC, LEVEL 18, DLF CYBER CITY, PHASE-III, BUILDING NO.5, TOWER A, GURGAON-122 002 PAN:AAACN 2170R VS. ADD. CIT, SPECIAL RANGE-6, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. DEEPAK CHOPRA, ADV. SH. ANKUL GOEL, ADV. RESPONDENT BY MS. PARAMITA M. BISWAS, CIT-DR DATE OF HEARING 02.07.2020 DATE OF PRONOUNCEMENT 17.08.2020 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE FINAL ASSESSMENT ORDER DATED 28.08.2015 PASSED U/S 144C READ WITH SECTION143(3) OF THE INCOME TAX ACT, 1961 (HERE INAFTER CALLED AS THE ACT) FOR ASSESSMENT YEAR: 2011-12. 2 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY WAS INCORPORATED IN 1995 AND IS A WHOLLY OWNED SUBSIDI ARY OF NOKIA CORPORATION, FINLAND. THE COMPANY IS PRIMARILY ENGA GED IN THE BUSINESS OF TRADING AND MANUFACTURING OF MOBILE HAN DSETS, SPARE PARTS AND ACCESSORIES. IN ADDITION TO THIS, THE COM PANY ALSO UNDERTAKES CONTRACT SOFTWARE DEVELOPMENT FOR ITS ASS OCIATED ENTERPRISES. 2.1 THE RETURN OF INCOME FOR THE YEAR UNDER CONSID ERATION WAS FILED DECLARING A TOTAL INCOME OF RS. 6,94,99,29 ,995/-. SUBSEQUENTLY, THE RETURN WAS REVISED DUE TO ASSESSEE CLAIMING ADDITIONAL TDS CREDIT. THE CASE WAS SELECTED FOR SCR UTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS DIRECTED VIDE ORDER DATED 28.03.2014 TO GET ITS ACC OUNT AUDITED U/S 142(2A) OF THE ACT (SPECIAL AUDIT). THE ASSESSEES CASE WAS ALSO REFERRED TO THE TRANSFER PRICING OFFICER (TPO) TO D ETERMINE THE ARMS LENGTH PRICE IN RESPECT OF THE INTERNATIONAL TRANSA CTIONS ENTERED INTO BY THE ASSESSEE DURING THE YEAR UNDER CONSIDER ATION. THE DRAFT ASSESSMENT ORDER WAS PASSED WHEREIN THE ASSESSEES INCOME WAS 3 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT PROPOSED TO BE ASSESSED AT RS.97,87,82,85,371/- AS AGAINST THE RETURNED INCOME OF RS.6,94,99,29,995/-. AGAINST THE DRAFT ASSESSMENT ORDER, THE ASSESSEE FILED OBJECTIONS BEF ORE THE LD. DISPUTES RESOLUTION PANEL (DRP) AND SUBSEQUENT TO T HE DIRECTIONS OF THE LD. DRP THE FINAL ASSESSMENT ORDER WAS PASSED AGAINST WHICH THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 2.2 IT IS ALSO TO BE NOTED THAT A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON THE ASSESSEE AT THE GURGAON CORPORA TE OFFICE AND THE CHENNAI FACTORY PREMISES ON 08.01.2013 AND IT WA S NOTED DURING THE COURSE OF SURVEY THAT EVER SINCE THE COM MENCEMENT OF OPERATIONS AT THE MANUFACTURING FACILITY IN CHENNAI I.E. IN THE PERIOD FROM ASSESSMENT YEAR: 2007-08 TO ASSESSMENT YEAR: 2010- 11, THE ASSESSEE HAD BEEN INCURRING EXPENDITURE ON ACCOUNT OF SOFTWARE AND HAD BEEN MAKING PAYMENTS FOR THE SAME T O NOKIA CORPORATION, FINLAND TOTALING TO USD 3,362,631,484/ - (APPROXIMATELY RS.18,495 CRORES) FOR USE IN MANUFAC TURING OPERATIONS. THE DEPARTMENT WAS OF THE OPINION THAT T HE PAYMENT TOWARDS SOFTWARE WAS IN THE NATURE OF ROYALTY ON WHICH THE ASSESSEE WAS LIABLE TO DEDUCT WITHHOLDING TAX AS PER THE PROVI SIONS OF THE 4 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT INCOME TAX ACT, 1961. ON THE BASIS OF THE SURVEY RE PORT, THE JURISDICTIONAL TDS ASSESSING OFFICER PASSED AN ORDE R U/S 201(1)/201(1A) OF THE ACT HOLDING THAT THE SOFTWARE REMITTANCES WERE IN THE NATURE TO ROYALTY AND THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE AT THE TIME OF REMITTANCE AS P ER SEC.9 (I)(VI) READ WITH SECTION 195 OF THE ACT AND INDIA FINLAND D OUBLE TAXATION AVOIDANCE AGREEMENT (DTAA). THE ASSESSING OFFICER, VIDE ORDER DATED 31.03.32014, HELD THE ASSESEE TO BE PERMANENT ESTABLISHMENT (PE) OF THE NOKIA CORPORATION, FINLAN D AND FURTHER IT WAS HELD THAT REMITTANCE ON ACCOUNT OF SOFTWARE PAYME NTS WERE TAXABLE IN INDIA AS ROYALTY INCOME IN THE HANDS OF NOKIA CORPORATION, FINLAND BOTH U/S 9(I)(VI) OF THE ACT A ND UNDER ARTICLE 12(3) OF THE INDIA FINLAND DTAA. 2.3 THE GROUNDS RAISED BY THE ASSESSEE IN THE PRES ENT APPEAL ARE AS UNDER: 1. THE ORDER DATED JANUARY 31, 2017, PASSED BY THE LEARNED ASSESSING OFFICER (LD. AO) UNDER SECTION 143(3) READ WITH SECTION 144C OF THE ACT PURSUANT TO THE D IRECTIONS OF THE HON'BLE DRP DATED DECEMBER 2, 2016, IS BAD I N LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SAME IS LIABLE TO BE SET ASIDE. 5 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT 2. THE LD. AO AND HONBLE DRP HAVE ERRED IN RELYING UPON EVIDENCE COLLECTED DURING ILLEGAL SURVEY AND S UMMONS PROCEEDINGS; AND IN NOT RELYING UPON THE VTT REPORT AND THE SOFTWARE SUPPLY AGREEMENT DATED JANUARY 1, 2006. 3. THE LD. AO AND HON'BLE DRP HAVE ERRED IN DISALLOWING EXPENSES AMOUNTING TO INR 35,20,87,23,000/- INCURRED BY THE APPELLANT, FOR P URCHASE OF SOFTWARE FROM NOKIA CORPORATION (NOKIA CORP) , UNDER SECTION 40(A)(I) OF THE ACT. 4. THE LD. AO AND HON'BLE DRP HAVE ERRED IN DISALLOWING EXPENSES AMOUNTING TO INR 25,43,20,06,000 INCURRED BY THE APPELLANT, FOR PURC HASE OF MOBILE PHONES AND ACCESSORIES FROM NOKIA CORP, UNDE R SECTION 40(A)(I) OF THE ACT. 5. THE LD. TPO / LD. AO/ HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN ENHANCING THE INCOME OF THE APP ELLANT BY INR 2,88,12,58,598 BY MAKING A TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF ALLEGED EXCESSIVE / NON -ROUTINE ADVERTISING, MARKETING AND PROMOTION (AMP) EXPENSES INCURRED BY THE APPELLANT. THE SUB-GROUNDS IN THIS RESPECT ARE AS UNDER: 5.1 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN NO T ACCEPTING THE ARMS LENGTH ANALYSIS CARRIED OUT BY THE APPELLANT, FOR THE NMP SALES SEGMENT AS A WHOLE, BY APPLYING TRANSACTIONAL NET MARGIN METHOD (TNMM) AND CARRYING OUT SEPARATE BENCHMARKING IN RESPECT OF AM P EXPENSES. 5.2 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN CONCLUDING THAT THE AMP EXPENSES INCURRED BY THE APPELLANT AMOUNT TO INTERNATIONAL TRANSACTION UNDER SECTION 92B OF THE ACT. 6 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT 5.3 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN PRESUMING THE EXISTENCE OF AN AGREEMENT BETWEEN THE APPELLANT AND ITS ASSOCIATED ENTERPRISE (AE), NOKIA CORP, IN RESPECT OF AMP EXPENDITURE INCURRED BY THE APPELLANT. 5.4 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN RE-CHARACTERIZING THE AMP EXPEN DITURE INCURRED BY THE APPELLANT FOR ITS OWN BUSINESS AS EXPENDITURE INCURRED FOR PROVIDING BRAND PROMOTION SERVICES TO ITS AE, NOKIA CORP, THEREBY WARRANTING SEPARATE COMPENSATION. 5.5 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN INFERRING THE EXISTENCE OF AN INTERNATIONAL TRANSACTION OF BRAND PROMOTION SERVIC ES BY HOLDING THAT THE AMP EXPENSES INCURRED BY THE APPEL LANT ARE HIGH, WITHOUT ANY VALID BASIS. 5.6 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN IMPUTING A VALUE TO THE ALLEGED BRAND PROMOTION SER VICES BY ARBITRARILY CLASSIFYING CERTAIN AMP EXPENSES (AMOUNTING TO INR 2,74,40,55,808/-), OUT OF TOTAL A MP EXPENSES OF INR 4,166,867,176/- INCURRED BY THE APPELLANT, AS NON-ROUTINE, WITHOUT ANY BASIS. 5.7 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACT THAT DUE TO ITS COMPENSATION MODEL, THE APPELLANT HAS ALREADY BEEN REIMBURSED IN RESPECT OF THE ALLEGED NON-ROUTINE AM P EXPENSES ALONG WITH A MARK-UP OF 3.77% AND THEREFOR E THE ADDITIONS, IF ANY, SHOULD BE RESTRICTED TO SHOR TFALL IN ACTUAL RETURN AS COMPARED TO ARMS LENGTH RETURN. 5.8 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN N OT MAKING ANY ADJUSTMENT FOR ROYALTY FREE USE OF BRAND BY 7 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT THE APPELLANT, WHILE MAKING ADJUSTMENT ON ACCOUNT O F ALLEGED BRAND PROMOTION SERVICES. 5.9 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN CARRYING OUT BENCHMARKING OF AMP EXPENSES BY USING AN UNLAWFUL APPROACH WHICH IS NOT IN ACCORDANCE WITH A NY OF THE METHODS PRESCRIBED UNDER SECTION 92C(1) OF THE ACT. 5.10 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN IGNORING SIGNIFICANT LEGAL PRINCIPLES LAID DOWN IN RECENT JUDICIAL DECISIONS REGARDING AMP EXPENSES, ESPECIAL LY THE DECISION OF THE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF MARUTI SUZUKI INDIA LTD. 1, BAUSCH AND LAUMB EYECARE (INDIA) (P) LTD. 2 AND WHIRLPOOL OF INDIA LTD. 5.11 THE HONBLE DRP HAS ERRED IN REJECTING THE ALTERNA TE APPROACH TO BENCHMARK AMP EXPENSES BY ERRONEOUSLY CONCLUDING THAT THERE IS A LACK OF COMPARABLES FOR BENCHMARKING AMP SEGMENT, DESPITE MAKING A DETAILED ANALYSIS IN FAVOUR OF SUCH ALTERNATE APPROACH. 5.12 THE LD. TPO / LD. AO HAVE ERRED IN PASSING ORDERS WHICH ARE IN VIOLATION OF DRP DIRECTIONS SUCH AS DI RECTIONS WITH REGARD TO NOT USING BRIGHT LINE METHOD, ADOPTI NG ALTERNATE APPROACH (I.E. CARVING OUT A SEPARATE AMP SEGMENT TO BENCHMARK AMP EXPENDITURE) AND COMPUTATI ON OF MARK-UP. 6. THE LD. TPO/ LD. AO/ HONBLE DRP HAVE ERRED IN DISALLOWING A PORTION OF THE EXPENSE INCURRED BY TH E APPELLANT AMOUNTING TO INR 450,259,687/- IN RESPECT OF SOFTWARE PURCHASED FROM NOKIA CORP. BY TREATING IT TO BE EXCESSIVE UNDER THE TRANSFER PRICING REGULATIONS. T HE SUB- GROUNDS IN THIS RESPECT ARE AS UNDER: 6.1 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN NO T ACCEPTING THE ARMS LENGTH ANALYSIS UNDERTAKEN BY T HE APPELLANT, FOR THE NMP SALES SEGMENT AS A WHOLE, BY 8 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT APPLYING TNMM AND IN SEPARATELY BENCHMARKING THE PURCHASE PRICE OF SOFTWARE 6.2 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT DUE TO IT S COMPENSATION MODEL, THE APPELLANT HAS ALREADY BEEN REIMBURSED IN RESPECT OF THE ALLEGED EXCESSIVE SOFT WARE EXPENSES, IF ANY, ALONG WITH AN ARMS LENGTH MARK U P. 6.3 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN MAKING AN ADJUSTMENT ON THE BAS IS OF THE ASSUMPTION THAT SOFTWARE PAYMENTS MADE BY THE APPELLANT WERE A TOOL TO SHIFT PROFITS OUTSIDE INDI A USING INFORMATION OBTAINED BY THE TAX AUTHORITIES DURING SURVEY PROCEEDINGS WHICH PROVIDED INFORMATION / DATA PERTA INING TO A DIFFERENT YEAR I.E. FINANCIAL YEAR 2011-12. 6.4 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN DETERMINING THE ARMS LENGTH PR ICE (ALP) IN RESPECT OF SOFTWARE BY ADOPTING A METHOD WHICH IS NOT PRESCRIBED UNDER SECTION 92C(1) OF THE ACT. 6.5 THE LD. TPO /LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN MAKING ADDITIONS BY SELECTIVELY CONSIDERING TRANSACTION OF ONLY THOSE MONTHS WHERE TRANSACTION VALUE IS HIGHER THAN THE ALP. 6.6. THE HONBLE DRP HAS ERRED IN DISPOSING OFF THE VARIOUS OBJECTIONS RAISED BY THE APPELLANT IN A SUMMARY MAN NER, WITHOUT PROVIDING ANY REASONS. 7. THE LD. TPO/ LD. AO/ HONBLE DRP HAVE ERRED IN MAKING TRANSFER PRICING ADJUSTMENT AMOUNTING TO INR 570,000,000/- IN RELATION TO PROVISION OF CONTRACT SOFTWARE DEVELOPMENT SERVICES BY THE APPELLANT TO ITS AE. TH E SUB- GROUNDS IN THIS RESPECT ARE AS UNDER: 9 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT 7.1 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN REJECTING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE APPELLANT IN ITS TRANSFER PRICING DOCUMENTATION, TO DETERMINE THE ALP. 7.2 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN REJECTING CERTAIN QUANTITATIVE FILTERS ADOPTED BY T HE APPELLANT WHILE CARRYING OUT ECONOMIC ANALYSIS IN I TS TRANSFER PRICING DOCUMENTATION, TO DETERMINE ALP. 7.3 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN INTRODUCING CERTAIN INAPPROPRIATE QUANTITATIVE FILT ERS TO CARRY OUT ECONOMIC ANALYSIS, FOR DETERMINING ALP. 7.4 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN NOT REJECTING COMPARABLES HAVIN G TURNOVER IN EXCESS OF FIVE TIMES THE TURNOVER OF TH E APPELLANT, DESPITE A RULING IN FAVOUR OF THE APPELL ANT FOR AY 2002-03 BY HONBLE ITAT, WHICH HAS ALSO BEEN CONFIRMED BY THE JURISDICTIONAL HIGH COURT OF DELHI . 7.5 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN APPLYING THE QUANTITATIVE FILTE RS PROPOSED BY THE LD. TPO OVER THE FINAL SET OF COMPA RABLES CHOSEN BY THE APPELLANT INSTEAD OF THE INITIAL SET OF POTENTIAL COMPARABLES / FULL POPULATION OF POTENTIA L COMPARABLES. 7.6 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN RESORTING TO CHERRY PICKING O F COMPARABLES BY ARBITRARILY SELECTING COMPARABLES FR OM THE LIST OF COMPANIES REJECTED BY THE APPELLANT WITHOUT ANALYSING ALL THE COMPANIES REJECTED BY THE APPELLA NT. 7.7 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN REJECTING THE COMPARABLES, CHOS EN BY THE APPELLANT, ON THE BASIS OF INCORRECT REASONS AN D 10 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT INTRODUCING CERTAIN ADDITIONAL, INAPPROPRIATE, COMP ARABLES WHILE DETERMINING THE ALP. 7.8 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN ACCEPTING COMPARABLES ENGAGED I N DIVERSE ACTIVITIES EVEN THOUGH SUFFICIENT SEGMENTAL INFORMATION IS NOT AVAILABLE. 7.9 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN NOT MAKING AN ADJUSTMENT TO ACC OUNT FOR DIFFERENCES BETWEEN THE RISK PROFILE OF THE APP ELLANT AND COMPARABLES, WHILE DETERMINING THE ALP. 7.10 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED ON FACTS AND IN LAW IN NOT MAKING AN ADJUSTMENT TO ACC OUNT FOR DIFFERENCE IN DEPRECIATION RATES CHARGED BY THE APPELLANT VIS-A-VIS THE COMPARABLES, WHILE DETERMIN ING THE ALP. 7.11 THE LD. TPO / LD. AO / HONBLE DRP HAVE ERRED IN TREATING 3 LINE ITEMS IN THE FINANCIALS OF COMPARAB LES (I.E. FOREIGN EXCHANGE GAIN AND LOSS, PROVISION FOR BAD A ND DOUBTFUL DEBTS AND BANK CHARGES) AS NON-OPERATING W HILE COMPUTING OPERATING MARGINS OF THE COMPARABLES, FOR DETERMINING ALP. 7.12 HONBLE DRP HAS ERRED IN DISPOSING OFF THE VARIOUS OBJECTIONS RAISED BY THE APPELLANT IN A SUMMARY MAN NER, WITHOUT PROVIDING ANY REASONS. 8. THE LD. AO AND HON'BLE DRP HAVE ERRED IN DISA LLOWING EXPENSES AMOUNTING TO INR 7,16,24,39,495 INCURRED B Y THE APPELLANT ON TRADE OFFERS PROVIDED BY IT TO ITS DIS TRIBUTORS (HCL INFOSYSTEMS LTD. AS WELL AS OTHER DISTRIBUTORS ), UNDER SECTION 40(A)(IA) OF THE ACT. 9. THE LD. AO AND HON'BLE DRP HAVE ERRED IN DISALLOWING AN AMOUNT OF INR 61,00,11,882 INCURRED BY THE 11 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT APPELLANT ON ACCOUNT OF TRADE PRICE PROTECTION PAID TO DISTRIBUTORS (HCL INFOSYSTEMS LTD. AS WELL AS OTHER DISTRIBUTORS) AS COMPENSATION FOR REDUCTION IN PRIC ES OF THE HANDSETS, AND IN IGNORING A THE EVIDENCE (INCLUDING CONFIRMATIONS FROM DEALERS) SUBMITTED BY THE APPELL ANT IN THIS REGARD. 10. THE LD. AO AND HON'BLE DRP HAVE ERRED IN DISALL OWING MARKETING EXPENDITURE INCURRED BY THE APPELLANT AMO UNTING TO INR 37,54,59,000 BY WAY OF ISSUANCE OF HANDSETS ON A FREE OF COST (FOC) BASIS TO EMPLOYEES, DEALERS A ND AFTER MARKETING SERVICE CENTRES (AMSCS) ON THE GROUND THAT ITS SAME WOULD GIVE ENDURING BENEFIT AND CANNOT BE CLAI MED AS REVENUE EXPENDITURE. 11. THE LD. AO AND THE HON'BLE DRP HAVE ERRED IN DISALLOWING EXPENDITURE INCURRED BY THE APPELLANT B Y WAY OF ISSUANCE OF FOC HANDSETS WHEN THE LD. TPO HAS ALREA DY MADE AN ADJUSTMENT ON ACCOUNT ALLEGED EXCESSIVE A MP EXPENSES, WHICH INCLUDES THE HANDSETS ISSUED ON FOC BASIS AND THIS HAS RESULTED IN DOUBLE DISALLOWANCE OF THE SAME AMOUNT. 12 THE LD. AO AND THE HON'BLE DRP HAVE ERRED IN NOT ALLOWING CURRENT YEAR DEPRECIATION IN RESPECT OF TH E FOC PHONES GIVEN TO AMSCS FOR WARRANTY PURPOSES AND TO DEALERS FOR PROMOTIONAL PURPOSES EVEN THOUGH THESE EXPENSES WERE TREATED AS CAPITAL EXPENSES. THE LD. AO HAS ALSO ERRED IN NOT ALLOWED EARLIER YEARS DEPRECIATI ON IN RESPECT OF THE FOC PHONES, DESPITE THE HONBLE DRP S DIRECTIONS IN THIS REGARD. 13 THE LD. AO, LD. TPO AND THE HONBLE DRP HAVE ERR ED IN DISALLOWING THE PART OF THE EXPENSE INCURRED BY THE APPELLANT FOR PURCHASE OF SOFTWARE UNDER TRANSFER PRICING RE GULATIONS, AND IN SIMULTANEOUSLY DISALLOWING THE ENTIRE EXPEN SE UNDER SECTION 40(A)(I), RESULTING IN DOUBLE DISALLOWANCE OF THE SAME AMOUNT. 12 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT 14 THE ABOVE GROUNDS OF APPEALS ARE INDEPEND ENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 15. THE APPELLANT CRAVES LEAVE TO ADD / WITHD RAW OR AMEND ANY GROUND OF APPEAL AT THE TIME OF HEARING. 3.0 AT THE TIME OF HEARING, IT WAS BROUGHT TO NOTIC E OF THE BENCH BY THE LD. AR THAT IN ADDITION TO FILING THE APPEAL BEFORE THIS TRIBUNAL, THE ASSESSEE HAD ALSO FILED AN APPLI CATION UNDER ARTICLE-24 OF THE INDIA FINLAND DOUBLE TAXATION AVO IDANCE AGREEMENT FOR INITIATION OF MUTUAL AGREEMENT PROCED URE (MAP) BEFORE THE INDIAN AND FINNISH COMPETENT AUTHORITIES ON THE FOLLOWING ISSUES: (I) DISALLOWANCE U/S 40(A)(I) OF THE ACT ON THE ISS UE OF WITHHOLDING TAX ON PAYMENTS MADE TO NOKIA CORPORATIO N TOWARDS PURCHASE OF END USER OPERATING SOFTWARE AND PURCHASE OF FINISHED MOBILE PHONES. (II) TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF CONT RACT RESEARCH AND DEVELOPMENT ACTIVITIES, ADVERTISING MA RKETING AND PROMOTION EXPENDITURE (AMP) AND EXCESSIVE SOFTWA RE PURCHASE PRICE. 13 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT 3.1 THE LD. AR SUBMITTED THAT A RESOLUTION HAS BEE N ARRIVED AT BETWEEN INDIAN AND FINNISH COMPETENT AUT HORITY ON THESE ISSUES WHICH WERE ALSO BEFORE THE TRIBUNAL IN T HE PRESENT APPEAL. IT WAS ALSO SUBMITTED THAT THE RESOLUTION UN DER ARTICLE - 24 OF INDIA FINLAND DTAA HAS BEEN ACCEPTED BY THE A SSESSEE VIDE LETTER DATED 28 TH FEBRUARY, 2018. IT WAS ALSO SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE THAT AS PER RULE- 44H OF THE INCOME TAX RULES, 1962 (THE RULES), THE ORDER GIVEN EFFECT TO THE MAP RESOLUTION HAS TO BE PASSED BY THE ASSESSING OF FICER ONCE ALL APPEALS ARE WITHDRAWN BY THE ASSESSEE ON THE ISS UES SO RESOLVED UNDER MAP. THE LD. AR SUBMITTED THAT IN LI NE WITH THE CONDITION PRECEDENT AS PRESCRIBED UNDER RULE-44H OF THE RULES, THE ASSESSEE SEEKS PERMISSION TO WITHDRAW GROUND NOS. 2, 3, 4, 5, 5.1 TO 5.12, 6, 6.1 TO 6.6, 7, 7.1 TO 7.12, 11 & 13 IN THE CAPTIONED APPEAL. THE LD. AR ALSO SUBMITTED THAT RE VISED FORM- 36B HAS BEEN FILED. 4.0 THE LD. CIT-DR HAD NO OBJECTION TO THE ASSESSE E IN WITHDRAWING THE ABOVE SAID GROUNDS OF APPEAL. KEEPING IN VIEW 14 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT THE SUBMISSIONS OF THE LD. AR, WE PERMIT THE WITHDRA WAL OF THE ABOVE MENTIONED GROUNDS IN THE ORIGINAL FORM-36B. 5.0 THE REMAINING GROUNDS NOW SURVIVING BEFORE US, AS CONTAINED IN THE REVISED FORM-36B, ARE AS UNDER: 1. THE ORDER DATED JANUARY 31, 2017, PASSED BY THE LEARNED ASSESSING OFFICER (LD. AO) UNDER SECTION 143(3) READ WITH SECTION 144C OF THE ACT PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP DATED DECEMBER 2,2016 , IS BAD IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND THE SAME IS LIABLE TO BE SET ASIDE. 2. THE LD. AO AND HON'BLE DRP HAVE ERRED IN DISALLOWING EXPENSES AMOUNTING TO INR 7,16,24,39,49 5 INCURRED BY THE APPELLANT ON TRADE OFFERS PROVIDED BY IT TO ITS DISTRIBUTORS (HCL, INFOSYSTEMS LTD. AS WELL AS OTHER DISTRIBUTORS), UNDER SECTION 40(A)(IA) OF THE ACT, 3. THE LD. AO AND HON'BLE DRP HAVE ERRED HI DISALLOWING AN AMOUNT OF INR 61,00,11,882 INCURRED BY THE APPELLANT ON ACCOUNT OF TRADE PRICE PROTECTION PAID TO DISTRIBUTORS (HCL. INFOSYSTEMS LTD. AS WELL AS OTHE R DISTRIBUTORS) AS COMPENSATION FOR REDUCTION IN PRIC ES OF THE HANDSETS, AND IN IGNORING ALL THE EVIDENCE (INCLUDI NG CONFIRMATIONS FROM DEALERS) SUBMITTED BY THE APPELL ANT IN THIS REGARD. 4. THE LD. AO AND HON'BLE DRP HAVE ERRED IN DISALLOWING MARKETING EXPENDITURE INCURRED BY THE APPELLANT AMOUNTING TO INR 37,54,59,000 BY WAY OF ISSUANCE OF HANDSETS ON A FREE OF COST (FOC) BASI S TO 15 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT EMPLOYEES, DEALERS AND AFTER MARKETING SERVICE CENT RES (AMSCS) ON THE GROUND THAT THE SAME WOULD GIVE ENDURING BENEFIT AND CANNOT BE CLAIMED AS REVENUE EXPENDITURE. 5. THE LD. AO AND THE HON'BLE DRP HAVE ERRED IN NO T ALLOWING CURRENT YEAR DEPRECIATION IN RESPECT OF TH E FOC PHONES GIVEN TO AMSCS FOR WARRANTY PURPOSES AND TO DEALERS FOR PROMOTIONAL PURPOSES EVEN THOUGH THESE EXPENSES WERE TREATED AS CAPITAL EXPENSES. THE LD. AO LIAS ALSO ERRED IN NOT ALLOWED EARLIER YEARS DEPRE CIATION IN RESPECT OF THE FOC PHONES, DESPITE THE HONBLE DRP S DIRECTIONS IN THIS REGARD. 6. THE ABOVE GROUNDS OF APPEALS ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 7. THE APPELLANT CRAVES LEAVE TO ADD/WITHDRAW OR AMEND ANY GROUND OF APPEAL AS THE TIME HEARING. 6.0 ARGUING FOR THE SURVIVING GROUNDS AFTER THE MA P PROCEEDINGS, IT WAS SUBMITTED BY THE LD. AR THAT GR OUND NO.2 CHALLENGES THE DISALLOWANCE MADE U/S 40(A)(IA) OF T HE ACT ON ACCOUNT OF TRADE OFFERS AMOUNTING TO RS.7,16,24,39, 495/- PROVIDED TO THE DISTRIBUTORS. THE LD. AR SUBMITTED THAT DEPARTMENT HAD HELD THESE TRADE OFFERS TO BE LIABLE TO THE PROVISIONS OF WITHHOLDING TAX U/S 194H OF THE ACT ON THE GROUND THAT THEY WERE IN THE NATURE OF COMMISSION. THE LD. AR 16 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT SUBMITTED THAT, HOWEVER, THIS DISALLOWANCE WAS IDENTI CAL TO THE DISALLOWANCE MADE IN ASSESSMENT YEAR: 2010-11 WHICH H AS SINCE BEEN DELETED BY THE ITAT IN ASSESSEES OWN CAS E IN ITA NO.5791/DEL/2015 IN ORDER DATED 20.02.2020. OUR ATT ENTION WAS DRAWN TO THE RELEVANT PARAGRAPHS OF THE SAID ORDE R PLACED ON RECORD AND IT WAS SUBMITTED THAT IN VIEW OF THE IT AT RULING IN ASSESSMENT YEAR: 2010-11 IN ASSESSEES OWN CASE IN A SSESSEES FAVOUR, ON SIMILAR FACTS, THIS DISALLOWANCE ALSO DES ERVES DELETION. 6.1 ARGUING FOR GROUND NO.3 CHALLENGING THE DISALL OWANCE ON ACCOUNT OF TRADE PRICE PROTECTION EXTENDED TO TH E DISTRIBUTORS AGAINST REDUCTION IN PRICES OF HANDSETS TO THE TUNE OF RS.61,00,11,882/-, THE LD. AR SUBMITTED THAT THIS D ISALLOWANCE HAD BEEN MADE ON THE GROUND THAT THE ASSESSEE HAD F AILED TO JUSTIFY THE COMMERCIAL EXPEDIENCY OF THE EXPENDITU RE. THE LD. FURTHER SUBMITTED THAT THIS DISALLOWANCE HAS ALSO BE EN MADE ON THE SAME GROUND AS IN ASSESSMENT YEAR 2010-11 WHICH WAS ALSO DELETED BY THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 20.02.2020 IN ITA NO.5791/DEL/2015. OUR ATTENTION WA S DRAWN TO THE RELEVANT PARAGRAPHS OF THE SAID ORDER AND IT WAS PRAYED 17 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT THAT ON IDENTICAL FACTS, THIS YEARS DISALLOWANCE AL SO NEEDS TO BE DELETED. 6.2 COMING TO GROUND NO.4 CHALLENGING THE DISALLOWANCE OF MARKETING EXPENDITURE INCURRED ON AC COUNT OF ISSUANCE OF HANDSETS ON FREE OF COSTS BASIS, THE LD . AR SUBMITTED THAT THIS DISALLOWANCE HAD BEEN MADE ON TH E GROUND THAT HANDSETS GIVEN AS FREE COSTS WERE IN THE NATURE OF CAPITAL ASSETS AND THE SAME COULD NOT BE TREATED AS REVENUE EXPENDITURE. THE LD. AR SUBMITTED THAT THIS DISALLO WANCE HAS ALSO BEEN DELETED BY THE ITAT IN ASSESSEES OWN CAS E IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2010-11 VIDE ORDER DATED 20.02.2020 IN ITA NO.5791/DEL/2015 AS AFORESA ID AND IT WAS SUBMITTED THAT ON IDENTICAL FACTS THE DISALLOWANC E IN THIS YEAR ALSO REQUIRED TO BE DELETED. 6.3 THE LD. AR ALSO SUBMITTED THAT GROUND NO.5 O F THE ASSESSEES APPEAL CHALLENGED THE ACTION OF THE LOWE R AUTHORITIES IN NOT ALLOWING CURRENT YEAR DEPRECIATION IN RESPECT OF FREE OF COSTS PHONES GIVEN TO THE DISTRIBUTORS AND DEALERS EVEN THOUGH THE EXPENDITURE WAS TREATED AS CAPITAL EXPENDITURE. THE LD. AR 18 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT SUBMITTED THAT IF GROUND NO.4 OF THE ASSESSEES APP EAL IS ALLOWED, THIS GROUND WILL NOT SURVIVE. 7.0 PER CONTRA, THE LD. CIT-DR PLACED EXTENSIVE RELIANCE ON THE DIRECTIONS OF THE LD. DRP AND VEHEMENTLY ARG UED THAT THE LD. DRP HAD GIVE ITS DIRECTIONS AFTER DUE CONSIDERA TION OF ALL THE RELEVANT FACTS AND THE LAW AND, THEREFORE, THESE DIR ECTION COULD NOT SIMPLY BE BRUSHED ASIDE. THE LD. CIT-DR, HOWEVER , COULD NOT CONTROVERT THE FACT THAT THESE ISSUES HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN T HE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2010-11 BY TH IS TRIBUNAL. 8.0 WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO PERUSE D THE ORDER OF THE TRIBUNAL IN THE IMMEDIATELY PRECEDING YEAR I N THE ASSESSEES OWN CASE FOR ASST. YEAR: 2010-11 IN ITA NO.5791/DEL/2015 VIDE ORDER 20.02.2020 AND WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. AR THAT THE ISSUES ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE ON THE I SSUES NOW SURVIVING BEFORE US BY THE SAID ORDER OF THE TRIBUN AL. WITH 19 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT RESPECT TO GROUND NO.2 RELATING TO DISALLOWANCE 40(A )(IA) ON ACCOUNT OF TRADE OFFERS AMOUNTING TO RS.7,16,24,39, 495/-, WE FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPH 8 OF THE SAID ORDER AND THE SAME IS REPRODUCED HEREIN UNDER FOR A READY REFERENCE: 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT CAN BE SE EN FROM CLAUSE 2, 7, 8, 9, 14 AND 19 OF THE AGREEMENT FOR THE SUPPLY OF CELLULAR MOBILE PHONES BETWEEN HCL AND T HE ASSESSEE THAT RELATIONSHIP BETWEEN THE ASSESSEE AND HCL IS THAT OF PRINCIPAL TO PRINCIPAL AND NOT THAT OF P RINCIPAL TO AGENT. THE DISCOUNT WHICH WAS OFFERED TO DISTRIBUTO RS IS GIVEN FOR PROMOTION OF SALES. THIS ELEMENT CANNOT B E TREATED AS COMMISSION. THERE IS ABSENCE OF A PRINCI PAL- AGENT RELATIONSHIP AND BENEFIT EXTENDED TO DISTRIBU TORS CANNOT BE TREATED AS COMMISSION UNDER SECTION 194H OF THE ACT. AS REGARDS TO APPLICABILITY OF SECTION 194 J OF THE ACT, THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON ING OR FINDING TO THE EXTENT THAT THERE IS PAYMENT FOR TEC HNICAL SERVICE LIABLE FOR WITHHOLDING UNDER SECTION 194J. MARKETING ACTIVITIES HAVE BEEN UNDERTAKEN BY HCL ON ITS OWN. MERELY MAKING AN ADDITION UNDER SECTION 194J WITHOUT THE ACTUAL BASIS FOR THE SAME ON PART OF TH E ASSESSING OFFICER IS NOT JUST AND PROPER. THE LD. D RS CONTENTION THAT DISCOUNTS WERE GIVEN BY WAY OF DEBI T NOTES AND THE SAME WERE NOT ADJUSTED OR MENTIONED IN THE INVOICE GENERATED UPON ORIGINAL SALES MADE BY THE ASSESSEE, DOES NOT SEEM TENABLE AFTER GOING THROUGH THE INVOICE AND THE DEBIT NOTES. IN FACT, THERE IS CLEA R 20 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT MENTIONED ABOUT THE DISCOUNT FOR SALES PROMOTION. T HUS, ON BOTH THE ACCOUNT THE ADDITION MADE BY THE ASSESS ING OFFICER DOES NOT SUSTAIN. GROUND NO. 2 IS ALLOWED. 8.0.1 RESPECTFULLY FOLLOWING THE ORDER OF THE CO-OR DINATE BENCH IN ASSESSEES OWN CASE IN THE IMMEDIATELY PREC EDING YEAR, ON IDENTICAL FACTS, WE DELETE THE IMPUGNED DISALLOWAN CE. THUS, GROUND NO.2 STANDS ALLOWED. 8.1 REGARDING GROUND NO.3 RELATING TO DISALLOWANCE ON ACCOUNT OF TRADE PRICE PROTECTION EXTENDED TO DISTR IBUTORS AGAINST REDUCTION IN PRICES OF HANDS AMOUNTING TO 61,00,11, 882/-, WE NOTE THIS ISSUE HAS ALSO BEEN DECIDED IN FAOUVR OF THE A SSESSEE IN ASSESSEES OWN CASE FOR ASST. YEAR: 2010-11 BY THIS TRIBUNAL. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE CONTAINED IN PARAGRAPH 11 OF THE SAID ORDER WHICH IS REPRODUCED HEREIN UNDER F OR A READY REFERENCE: 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS MARKET PRACTICE THAT IF THERE IS ANY CHANGE IN PRICES OF HANDSETS B Y COMPETITORS, CHANGE IN LIFE OF MOBILE MODEL, CHANGE IN MARKET DEMAND OF PARTICULAR MODEL WHICH AFFECTS THE SALES, THE DISTRIBUTOR IS PROTECTED BY THE TRADE PRICE PROTECT ION. THIS IS ACTUALLY A COMMERCIAL EXPEDIENCY IN MODERN DAY TECHNOLOGICAL CHANGES WHICH ARE VERY FAST AND VAST. BESIDES, TRADE PRICE PROTECTION IS OFFERED TO DISTRIBUTORS O N HANDSETS 21 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT WHICH HAVE NOT BEEN SUBJECT TO TRADE OFFERS/DISCOUN TS. THIS IS EVIDENCED BY SPECIFIC CLAUSE IN THE TRADE SCHEME S FILED BEFORE THE ASSESSING OFFICER VIDE SUBMISSION DATED 10.03.2014 TRADE SCHEME. IN-FACT, IT WAS POINTED OU T DURING THE COURSE OF HEARING THAT IN ASSESSMENT YEAR 2008- 09, EVEN THE ASSESSING OFFICER HAS ALLOWED THE DEDUCTION FOR THE INSTANT LIKE EXPENDITURE. IN ASSESSMENT YEAR 2008-0 9, THE MATTER WAS REMANDED BACK TO THE FILE OF THE ASSESSI NG OFFICER, WHO HAS ALLOWED THE DEDUCTION WITH RESPECT TO THE EXPENDITURE, WHERE CONFIRMATIONS HAVE BEEN OBTAINED FROM THE RECIPIENTS. IN ANY CASE, SO FAR AS THE INSTANT YEAR IS CONCERNED, WE HAVE ALREADY NOTED IN THE EARLIER PAR AGRAPH THAT THE REQUISITE CONFIRMATIONS WERE FILED BEFORE THE ASSESSING OFFICER. THUS, THIS EXPENDITURE IS ALLOWA BLE AS REVENUE EXPENDITURE UNDER SECTION 37(1) OF THE ACT SINCE IT HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINE SS AND SAME CANNOT BE QUESTIONED BY THE ASSESSING OFFICER. GROUND NO. 3 IS ALLOWED. 8.1.1 RESPECTFULLY THE FOLLOWING THE TRIBUNALS ORD ER FOR ASST. YEAR: 2010-11 IN ASSESSEES OWN CASE, WE DELET E THIS DISALLOWANCE ALSO. 8.2 GROUND NO.4 RELATES TO THE DISALLOWANCE OF MARK ETING EXPENDITURE INCURRED ON ACCOUNT OF ISSUANCE OF HAND SETS ON 22 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT FREE OF COST BASIS AND GROUND NO.5 RELATES TO DEPRE CIATION TO BE ALLOWED ON SUCH HANDSETS AS AN ALTERNATE PLEA IF TH E FREE OF COST HANDSETS ARE HELD TO BE IN THE NATURE OF CAPITAL EX PENDITURE. THIS ISSUE HAS ALSO BEEN DECIDED IN FAVOUR OF THE A SSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASST. YEAR: 2010 -11. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE CONTAINED IN PARAGRAPHS 17 OF THE SAID ORDER: 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN THE PRESE NT ASSESSMENT YEAR, THE ASSESSEE IS ENGAGED IN MANUFAC TURE, IMPORT AND SALE OF MOBILE HANDSETS. THE ASSESSEE HA S GIVEN MOBILE HANDSETS TO ITS EMPLOYEES, DEALERS, SA LE PERSONNEL ETC. FOR FREE OF COST AND THUS NO LONGER OWNED THE SAID HANDSETS. THUS, THE SAID COST WAS RIGHTLY TAKE N AS BUSINESS EXPENDITURE BY THE ASSESSEE AND WAS RIGHTL Y REDUCED FROM THE INVENTORY. THIS ISSUE IS DECIDED I N FAVOUR OF THE ASSESSEE FOR A.YS. 2003-04 BY THE TRIBUNAL I N ITA NO. 2445/DEL/2010 ORDER DATED 30.01.2018 WHICH WAS ALSO AFFIRMED BY THE HONBLE HIGH COURT IN ITA NO. 955/2018 ORDER DATED 31.08.2018. THUS, GROUND NO. 5 IS ALLOWED. SINCE WE HELD THAT IT IS BUSINESS EXPENDIT URE GROUND NO. 6 BECOMES INFRUCTUOUS, HENCE GROUND NO. 6 IS DISMISSED. 8.2.1 ON SIMILAR FACTS, RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE AS AFORESAI D, WE DIRECT THE DELETION OF THIS DISALLOWANCE, THUS GROUND NO.4 STANDS ALLOWED. 23 ITA NO.1883/DEL/2017 NOKIA INDIA PVT. LTD. VS. ACIT 8.3 SINCE, WE HAVE ALLOWED GROUND NO.4 AND HAVE HELD THE IMPUGNED EXPENDITURE TO BE REVENUE IN NATURE, G ROUND NO.5 BECOMES IN FRUCTUOUS AND IS DISMISSED AS SUCH. 8.4 GROUND NOS.1, 6 & 7 DO NOT REQUIRE ANY SEPARAT E ADJUDICATION. 9.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESSE E STANDS PARTLY ALLOWED. ORDER PRONOUNCED ON 17/08/2020. SD/- SD/- (G.S.PANNU) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: 17/08/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI