M/s. LINTAS INDIA PVT. LTD., MUMBAI V. ACIT-3(2), MUMBAI

ITA 2024/MUM/2007

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8388 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 25-10-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 08-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJEET KUMAR JAIN; PRAVIN KUMAR CIT DRS
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Capital asset; Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Earning of tax free income; Period of limitation; Time period of passing order; Revenue expenditure; Capital expenditure
• Section: 92C; 14A; 37(1); 37

Judgement Text

ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 1 OF 22 IN THE INCOME TAX APPELLATE TRIBUNAL 'K' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.2024/MUM/2007 (ASSESSMENT YEAR: 2002-03) LINTAS INDIA PVT. LTD., 15 TH FLOOR, EXPRESS TOWER, NARIMAN POINT, MUMBAI 400021 PAN: AAACL 0124 F VS. ACIT-3(2), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI PRAKASH K. JOTWANI DEPARTMENT BY: SHRI AJEET KUMAR JAIN & PRAVIN KUMAR CIT (DRS) DATE OF HEARING: 25/10/2012 DATE OF PRONOUNCEMENT: 09/11/2012 O R D E R PER BENCH. THIS IS AN ASSESSEES APPEAL AGAINST THE ORDERS OF THE CIT(A)- 3 MUMBAI, DATED 02.01.2007. ASSESSEE HAS RAISED FIV E GROUNDS WHICH ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING A SUM OF ` 32,50,141/- SPENT ON REPAIRS AS 'CAPITAL EXPENDITURE'. WITHOUT PREJUDICE, THE LD . CIT(A) ERRED IN NOT ALLOWING DEPRECIATION ON THE SA ME. 2. THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF A SUM OF ` 17,71,244/ - SPENT ON COMPUTER SOFTWARE. 3. THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE UND ER SECTION 14A A SUM OF ` 1,00,000/ - AS AD-HOC ESTIMATED EXPENSES ON EXEMPT INCOME. 4. THE LEARNED CIT (A) ERRED IN CONFIRMING ADD BACK OF A SUM OF ` .7,81,80,823/- IN RESPECT OF UNCLAIMED LIABILITIES. THE LEARNED CIT (A) ERRED IN DISREGARD ING ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 2 OF 22 THE ITAT ORDER FOR THE EARLIER YEARS IN THE APPELLA NTS OWN CASE. 5(A)THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF ` .25,13,808/- UNDER SECTION 92CA(3). (B)THE LEARNED CIT (A) ERRED IN HOLDING THAT THERE WAS NO REQUIREMENT T BRING MATERIAL ON RECORD BEFORE FORMING AN OPINION AND BEFORE MAKING A REFERENCE T THE TPO THAT THE ARMS LENGTH PRICE WAS NOT CORRECT . 2. WE HAVE HEARD THE LEARNED COUNSEL AND THE LEARNED D R IN DETAIL AND THEIR ARGUMENTS ARE CONSIDERED WHEREVER NECESSARY. 3. GROUND NO.1 IS WITH REFERENCE TO TREATING THE EXPEN DITURE CLAIMED AS REPAIRS AS CAPITAL IN NATURE. 4. THE FACTS OF THE CASE ARE THAT DURING THE YEAR UNDE R CONSIDERATION ASSESSEE HAD INCURRED EXPENDITURE OF ` .95,54,601/- ON REPAIRS AND MAINTENANCE OF VARIOUS RESIDENTIAL F LATS AND OFFICE BUILDINGS OWNED BY IT. DURING THE ASSESSMENT PROCEE DINGS AO EXAMINED THE NATURE OF THESE EXPENSES. AFTER EXAMIN ATION, HE CAME TO THE CONCLUSION THAT THE EXPENSES OF ` .33,12,482/- WERE OF CAPITAL NATURE. THE DETAILS OF THE EXPENSES TREATED BY AO A S CAPITAL EXPENDITURE HAVE BEEN GIVEN AT PAGE 3 AND 4 OF THE ASSESSMENT ORDER. 5. BEFORE THE CIT (A), IT WAS SUBMITTED THAT ASSESSEE IS A LEADING ADVERTISING AGENCY IN INDIA. IT IS A PART OF THE IN TERNATIONAL LOWE LINTAS GROUP. EVERY YEAR, IT HAS TO INCUR SUBSTANTI AL EXPENDITURE ON THE UPKEEP OF ITS PREMISES SINCE ASSESSEE BEING AN ADVERTISING AGENCY, HAS TO KEEP THE PREMISES UPDATED REGULARLY. ACCORDING TO ASSESSEE THESE EXPENSES ARE DAY TO DAY EXPENSES NEE DED FOR THE UPKEEP AND REGULAR MAINTENANCE OF THE PREMISES. NO NEW ASSET HAS COME INTO EXISTENCE. THE EXPENSES INCURRED RELATE T O PAINING, PLUMBING, ELECTRICAL REPAIRS AND CARPENTRY WORK. TH ESE EXPENSES ARE REQUIRED TO BE TREATED AS REVENUE EXPENSES. IT WAS SUBMITTED THAT SIMILAR ISSUE HAD COME UP FOR HEARING BEFORE THE HO N'BLE ITAT IN THE ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 3 OF 22 CASE OF ASSESSEE FOR ASSESSMENT YEAR 1993-94 TO 199 5-96 AND AFTER DETAILED DISCUSSION IT WAS HELD THAT SUCH EXPENSES WERE OF REVENUE IN NATURE. EVEN THE CIT (A) FOR ASSESSMENT YEAR 199 6-97 TO 1999- 2000 HAS DECIDED THE APPEALS IN FAVOUR OF ASSESSEE. THEREFORE, IT WAS CONTENDED THAT THE ENTIRE EXPENSES AMOUNTING TO ` .95,54,601/- ARE REQUIRED TO BE TREATED AS REVENUE EXPENDITURE. 6. THE LEARNED CIT (A) HOWEVER, WENT INTO THE DETAILS OF THE EXPENDITURE AND DISCUSSED THE ISSUE ITEM-WISE TO CO ME TO A CONCLUSION THAT ONLY AN AMOUNT OF ` .62,341/- WAS REVENUE IN NATURE, WHEREAS THE BALANCE EXPENDITURE IS CAPITAL IN NATURE. HOWEVER, THERE IS NO DIRECTION FOR ALLOWANCE OF DEP RECIATION ON THE CAPITALIZED AMOUNT EITHER BY AO OR BY THE CIT (A). 7. AFTER CONSIDERING THE NATURE OF EXPENDITURE AND THE DETAILED ARGUMENTS BY BOTH THE COUNSELS, WE ARE OF THE VIEW THAT MOST OF THE EXPENDITURE IS INCURRED ON THE EXISTING BUILDINGS O R STRUCTURES IN THE NATURE OF REPAIRS FOR MAINTENANCE OF THE ASSET AS SUCH, EXCEPT THE EXPENDITURE INCURRED ON MOHANDEV BUILDING, ITEM NO.8, 9 AND 10 LISTED IN THE CIT (A)S ORDER. AS SEEN FROM THE DETAILS THE AMOUNT OF ` .11.00 LAKHS AND ` .4,85,970/- WERE INCURRED IN CONNECTION WITH THE SOFA, RECREATION CENTRAL TABLE ETC., WHICH SEEM S TO BE FOR CREATION OF NEW ASSETS AND CANNOT BE CONSIDERED AS REPAIRS O F THE EXISTING ASSETS. LIKEWISE THE AMOUNT OF ` .3.00 LAKHS WAS SPENT ON ELECTRICAL FITTINGS AND ` .1.00 LAKHS WAS SPENT FOR DESIGN CONSULTANCY AND SUPERVISION CHARGES. THEREFORE, IN OUR VIEW THIS EX PENDITURE IS IN THE NATURE OF CAPITAL EXPENDITURE AND THEREFORE, WE UPHOLD THE DISALLOWANCE TO THAT EXTENT. AO IS HOWEVER, DIRECTE D TO ALLOW DEPRECIATION AS PER THE RULES BY CAPITALIZING THIS EXPENDITURE TO THE ASSETS. BALANCE OF THE EXPENDITURE IN OUR VIEW IS R EVENUE IN NATURE AS THIS IS FOR MAINTENANCE/REPAIRS OF THE EXISTING ASSETS. THE FINDINGS OF THE ITAT IN EARLIER YEARS ON THE SAME I SSUE ARE EQUALLY APPLICABLE TO THE YEAR WHICH ARE AS UNDER: ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 4 OF 22 9.7 WE FURTHER FIND IDENTICAL ISSUE HAD COME UP BE FORE THE TRIBUNAL IN ASSESSEE'S OWN CASE IN THE PRECEDING YE ARS. WE FIND THE TRIBUNAL VIDE ITA NOS.2041/MUM /98, 2042/MUM/98 AND 3256/MUM / 99 FOR AYS 1993-94 TO 1995-96RESPECTIVEL Y VIDE ORDER DATED 19.1.2005 AT PARAS 12 & 13 OF THE ORDER HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS U NDER: '12 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE FACTS AND MATERIALS ON RECORD INCLUDING THE DECISIO NS CITED BEFORE US BY BOTH THE PARTIES, EVEN THOUGH, WE ARE MENTION ING ONLY THOSE DECISIONS WHICH ARE RELEVANT TO OUR FINDING, WHICH WE ARE GIVING IN THE SUCCEEDING SENTENCES. AS REGARDS, THE EXPENS ES INCURRED ON LEASED PROPERTY, THE HON'BLE SUPREME COURT IN TH E CASE OF CIT VS. MADRAS AUTO SERVICE P LTD., CITED SUPRA HAS HEL D THAT BY SPENDING MONEY ON CONSTRUCTING THE NEW BUILDINGS ON THE LEASED PREMISES, THE ASSESSEE DID NOT ACQUIRE ANY CAPITAL ASSET AND THE ONLY ADVANTAGE WHICH THE ASSESSEE DERIVED BY SPENDI NG MONEY WAS THAT IT GOT THE LEASE OF A NEW BUILDING AT LOW RENT AND FROM THE BUSINESS POINT OF VIEW, THE ASSESSEE GOT THE BE NEFIT OF REDUCED RENT AND THE EXPENDITURE IS TO BE TREAD AS REVENUE EXPENDITURE. IN THAT CASE, THE ASSESSEE WAS CARRYIN G ON THE BUSINESS OF SALE OF MOTOR PARTS. ITS HEAD OFFICE WA S AT MADRAS AND IT HAD BRANCH AT BANGALORE. UNDER AN AGREEMENT OF LEASE, THE ASSESSEE OBTAINED CERTAIN PREMISES FOR A PERIOD OF 39 YEARS UNDER CERTAIN TERMS AND CONDITIONS OF THE LEASE, TH E LESSEE (ASSESSEE) HAD THE RIGHT TO DEMOLISH EXISTING PREMI SES AT ITS OWN COST AND APPROPRIATE TO ITSELF ALL THE MATERIAL THE REOF, WITHOUT PAYING TO THE LESSORS OF ANY COMPENSATION AND CONST RUCT A NEW BUILDING THEREOF TO SUIT THE PURPOSE OF THEIR BUSIN ESS AS PER THE PLAN APPROVED BY THE LESSORS. THE LEASE AGREEMENT F URTHER PROVIDED THAT THE NEW CONSTRUCTION SHALL, RIGHT FRO M THE COMMENCEMENT OF THE WORK BE THE PROPERTY OF THE LES SORS; AND UPON COMPLETION OF THE WORK OF CONSTRUCTION, THE LE SSEE WOULD HAVE ONLY RIGHT TO BE A TENANT FOR A PERIOD OF 39 Y EARS UNDER THE EXISTING LEASE, SUBJECT TO THE PAYMENT OF RENT AND OBSERVATION OF OTHER TERMS AND CONDITIONS OF THE LEASE. ON THE ABO VE FACTS, THE HON'BLE SUPREME COURT HELD THE EXPENDITURE INCURRED BY THE ASSESSEE ON CONSTRUCTION OF NEW BUILDING ON LEASED PREMISES AS REVENUE EXPENDITURE. 13. IN THE FACTS OF THE CASE ON HAND ALSO, THE ASSE SSEE HAD SPENT HUGE SUMS ON MAJOR REPAIRS, IT IS ALSO FOUND FROM T HE RECORD THAT LEASE RENT WAS FIXED ONLY AT `26 PER SQ FT AS THE P REMISES WAS IN A HIGHLY DILAPIDATED CONDITION. THE ASSESSEE HAS CO NVERTED THE PREMISES INTO A MODERN OFFICE PREMISES BY MAKING TH E ENTIRE STRUCTURAL CHARGES, RE-PLASTERING, PAINING, RETILIN G, REWIRING, RE- PARTITIONING AND REPAIRING OF SANITARY FITTINGS, EQ UIPPING WITH FURNITURE AND VARIOUS OFFICE APPLICATIONS. THUS, WE FIND IN THE ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 5 OF 22 CASE DEALT WITH BY THE HON'BLE SUPREME COURT, THE E NTIRE BUILDING WAS RECONSTRUCTED WHICH WAS TREATED AS REVENUE EXPE NDITURE AND ON SIMILAR FACTS AND CIRCUMSTANCES, IN THE PRES ENT CASE ON HAND, THE RENT WAS FIXED AT `26 PER SFT. IN VIEW OF THE DILAPIDATED CONDITION OF THE BUILDING AND THE ASSESSEE HAD SENT HUGE SUMS ON THE RENOVATION OF THE BUILDING TO SUIT THE PURPOSE OF THE ASSESSEE'S BUSINESS. THUS, IN THIS CASE ON HAND, THE ASSET DID NOT GET ANY OWNERSHIP OF THE BUILDING AND THEREFORE, BY SPENDIN G THE MONEY, THE ASSESSEE DID NOT ACQUIRE ANY CAPITAL ASSET AS H ELD BY THE HON'BLE SUPREME COURT IN THE CASE OF MADRAS AUTO SE RVICES P LTD (SUPRA) FROM THE BUSINESS POINT OF VIEW, THEREFORE, THE ASSESSEE GOT THE BENEFIT OF REDUCED RENT AND THE ASSESSEE OB TAINED BUSINESS ADVANTAGE. THEREFORE, THE EXPENDITURE IS T O BE TREATED AS REVENUE EXPENDITURE BY APPLYING THE RATIO DECIDE NDI IN THE CASE OF MADRAS AUTO SERVICES P LTD (SUPRA).WHEN THE HON'BLE SUPREME COURT HAS HELD SO, IN OUR VIEW, THE DECISIO N OF THE TRIBUNAL IN THE CASE OF M/S VAMS FORT MOTOR PVT. LT D MAY NOT ADVANCE ANY SUPPORT TO THE CASE OF THE REVENUE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HEDE CONSU LTANCY P LTD AND ANOTHER, ON SIMILAR FACTS HELD THAT SINCE ASSET S CREATED BY THE SAID AMOUNTS DID NOT BELONG TO THE ASSESSEE BUT THE ASSESSEE GOT THE BUSINESS ADVANTAGE OF USING MODERN BUSINESS PREMISES ON LOW RENT, THUS SAVING CONSIDERABLE REVENUE EXPEN DITURE FOR A CONSIDERABLY LONG PERIOD, THE TRIBUNAL WAS PERFECTL Y JUSTIFIED IN COMING TO THE CONCLUSION THAT THE EXPENDITURE SHOUL D BE LOOKED UPON AS REVENUE EXPENDITURE. IN THIS CASE ALSO, THE ASSESSEE HAD SPENT `.9,20,436/- FOR CONVERTING GO-DOWN PREMISES INTO OFFICE BY RENOVATING IT BY INCURRING EXPENSES ON INTERIOR DEC ORATION, PLASTERING OF WALLS AND CONSTRUCTION OF BATHROOMS A ND WCS ETC. THUS, THE HON'BLE JURISDICTIONAL HIGH COURT ALSO HA D LAID DOWN THE PRINCIPLE THAT THE SUMS SPENT ON LEASED PREMISES FO R RENOVATION ARE TO BE TREATED AS REVENUE EXPENDITURE. THUS, WHE THER EXPENDITURE INCURRED ON RENOVATION OF BUILDING ON L EASED LAND IS REVENUE OR CAPITAL IS SETTLED BY THE APEX COURT AND THE HON'BLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE BY HOLDING THAT SUCH EXPENDITURE IS REVENUE IN CHARACTER. ONCE IT IS REVENUE I CHARACTER AS DISCUSSED ABOVE AND IT IS PURELY BUSIN ESS EXPENDITURE (NOT PERSONAL EXPENDITURE), AS PER SECT ION 37 THIS EXPENDITURE IS ALLOWABLE TO THE ASSESSEE, EVEN FOR ARGUMENT SAKE, IT IS ALSO ALLOWABLE U/S 32(1) EXPLANATION (1). FUR THER, THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF HEDE CO NSULTANCY P LTD, DEALT WITH ASSESSMENT YEAR 88-89, WHEN THE EXP LANATION WAS INTRODUCED TO SEC. 32(1). THUS, WE FIND THAT EV EN WHEN THE EXPLANATION WAS PART OF THE STATUTE, THE HON'BLE BO MBAY HIGH COURT HAS LAID SUCH EXPENDITURE AS REVENUE EXPENDIT URE U/S 37 OF THE ACT. IN THAT CASE ALSO IT HAS BEEN NOTED ON PAG E 382 OF THE REPORT (R) THAT THE EXPENDITURE WAS DISALLOWED BY T HE ASSESSING OFFICER U/S 32. IN THIS VIEW OF THE MATTER, IT CAN BE SAID THAT ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 6 OF 22 HON'BLE JURISDICTIONAL HIGH COURT WAS AWARE OF THE EXPLANATION 1 OF THE SECTION 32(1). THUS, THIS TRIBUNAL IS BOUND BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. HENCE, FO LLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT R EPORTED IN 250 ITR 380, IN TURN APPLYING THE RATIO OF APEX COURT 2 33 ITR438(SC), WE ARE INCLINED TO ALLOW THE CLAIM OF THE ASSESSEE. THUS, THIS GROUND OF THE ASSESSEE SUCCEEDS.' GROUND NO.1 IS PARTLY ALLOWED. 8. GROUND NO.2 IS WITH REFERENCE TO THE CLAIM OF SOFTW ARE EXPENSES. 9. IT WAS FAIRLY ADMITTED THAT THIS MATTER SHOULD BE R EFERRED TO AO FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECIS ION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF AMWAY INDIA EN TERPRISES V DCIT, 301 ITR (AT), AS WAS DONE IN THE EARLIER YEAR S. ACCORDINGLY THIS ISSUE IS RESTORED TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW AND THE PRINCIPLES GOVERNIN G THIS ISSUE AND AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO ASSE SSEE. 10. GROUND NO.3 IS REGARDING DISALLOWANCE UNDER SECTION 14A WHICH WAS NOT PRESSED, HENCE TREATED AS WITHDRAWN. 11. GROUND NO.4 PERTAIN TO THE ISSUE OF TAXING AN AMOUN T OF ` .9,81,80,823/- IN RESPECT OF UNCLAIMED LIABILITY IN ADDITION TO THE AMOUNT OF ` .2,99,14,525/- OFFERED BY ASSESSEE IN THE RETURN OF INCOME. 12. THE FACTS OF THE CASE ARE THAT IN SCHEDULE 13 TO TH E PROFIT & LOSS A/C ASSESSEE HAD SHOWN INCOME ON ACCOUNT OF U NCLAIMED LIABILITIES NO LONGER REQUIRED AT ` .4,67,40,197/-. THE SAID AMOUNT CONSISTED OF THE FOLLOWING: RATES & SIZES WRITTEN BACK ` .2,99,14,525 PRICE WATER CO PAYABLE WRITTEN BACK ` . 22,98,496 INDIAN CLIENT MONEY WRITTEN BACK ` . 19,00,000 SUNDRY BALANCES OF VARIOUS JOB WRITTEN BACK ` .43,53,000 OUT OF DATE CHEQUES WRITTEN BACK ` . 9,90,775 SUNDRY CREDIT BALANCES OF VARIOUS CLIENTS ` . 72,83,402 ` 4,67,40,198 =========== ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 7 OF 22 AO FURTHER FOUND THAT THE RATES & SIZES ACCOUNT O UT OF WHICH AN AMOUNT OF ` .2,99,14,525/- WAS WRITTEN BACK, APPEARED IN ASSESSEES BOOKS AS UNDER: OPENING BALANCE (7,83,32,994) ADD: CREDITED DURING YEAR (ADDITIONS DURING (3,24,51,84 1) THE YEAR) LESS: CREDITED TO CLIENT ----------------- CREDIT BACK TO SUPPLIER 25,27,487 WRITTEN BACK TO INCOME (>2 YRS. OLD) 2,99,14,525 CLOSING BALANCE (7,81,80,823) 13. DURING THE ASSESSMENT PROCEEDINGS, AO ASKED ASSESSE E TO EXPLAIN AS TO WHY ONLY AN AMOUNT OF ` .2,99,14,525/- HAS BEEN WRITTEN BACK OUT OF THE AMOUNT OUTSTANDING IN RATE S AND SIZES ACCOUNT LEAVING BEHIND THE CLOSING BALANCE OF ` .7,81,80,823/-. IT WAS SUBMITTED BY ASSESSEE THAT IN SOME CASES, THE P RESS OVER BILLS WRONGLY FOR AN ADVERTISEMENT PLACED WITH THEM BY AS SESSEE. THEY MAY BILL ASSESSEE WRONGLY FOR THE SIZE OF ADVERTISE MENT OR FOR THE RATE. ASSESSEE ASKS THE PRESS PUBLICATION FOR A COR RECTION AND MAKES PAYMENT ONLY IN RESPECT OF THE CORRECT AMOUNT LEAVING SOME EXCESS WITH ASSESSEE OUT OF THE AMOUNT RECOVERED FR OM THE ADVERTISERS. IN CASE THE CLIENT MAKES CLAIM, THE AM OUNT IS PAID BACK BY ASSESSEE. SIMILARLY, SOMETIMES THE PRESS PUBLICA TION UNDERCHARGES ASSESSEE. ASSESSEE MAKES PROVISION IN THE BOOKS SO AS TO MAKE PAYMENT TO THE PUBLICATION IN CASE THE U NDER CHARGING IS NOTICED BY THE PUBLICATION. SUCH PROVISIONS ARE RET AINED FOR 2 YEARS AND IF NO CLAIM IS MADE WITHIN THAT TIME, THE PROVI SION IS WRITTEN BACK AS OTHER INCOME AND OFFERED TO TAX AFTER 2 YEA RS. HOWEVER, AO DID NOT ACCEPT THE CONTENTION OF ASSESSEE. ACCORDIN G TO HIM THE METHOD ADOPTED BY ASSESSEE BY CREATING ARTIFICIAL L IABILITY SHIFTED ASSESSEES LIABILITY OF INCOME TAX TO THE LATER YEA RS. ACCORDINGLY HE ADDED BACK THE AMOUNT OF ` .7,81,80,823/- TO THE INCOME OF ASSESSEE. ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 8 OF 22 14. BEFORE THE CIT (A) ASSESSEE REITERATED THE SUBMISSI ONS MADE BEFORE AO. IT WAS FURTHER SUBMITTED THAT THE LIABIL ITIES OUTSTANDING UNDER THE HEAD RATES AND SIZES RELATE TO VARIOUS CUSTOMERS/PRESS. THEY WERE SHOWN IN THE BALANCE SHEET SINCE THE CONC ERNED PARTIES COULD MAKE THE CLAIM ON ASSESSEE. IF THE CLIENTS OR THE PRESS MADE CLAIM, ASSESSEE WAS BOUND TO MAKE PAYMENT TO THEM. IT WAS STATED THAT IF THESE LIABILITIES ARE NOT CLAIMED WITHIN TH E PERIOD OF 2 YEARS, THEY ARE WRITTEN BACK TO THE PROFIT & LOSS A/C AND OFFERED AS INCOME. THE METHOD OF WRITE BACK IS BASED ON THE LA W OF LIMITATION AS PER WHICH THE LIABILITY TO MAKE A PAYMENT EXISTS FOR 3 YEARS I.E. THE CURRENT YEAR PLUS 2 MORE YEARS. IT HAS FURTHER BEEN STATED THAT THE OPENING BALANCE OF ` .7,83,32,994/- HAS EITHER BEEN WRITTEN BACK IN THE BOOKS IN THE SUCCEEDING YEARS OR CREDITED TO THE ACCOUNTS OF THE CLIENTS AND SUPPLIERS. OUT OF THE SAID AMOUNT, AN AMOUNT OF ` .27.00 LAKHS APPROX. HAS BEEN CREDITED TO THE ACCOU NTS OF CLIENTS AND SUPPLIERS. ACCORDING TO ASSESSEE, AO HAS NOT GI VEN ANY CONVINCING REASON FOR NOT ACCEPTING THE METHOD FOLL OWED BY ASSESSEE. 15. THE CIT (A) CONSIDERED THE ISSUE AND UPHELD THE ADD ITION BY STATING AS UNDER:- 6.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE APPELLANT. IT IS THE CLAIM OF THE APPELLANT THAT TH E AMOUNT OF ` .7,81,80,823/- REPRESENTS THE AMOUNT EITHER EXCESS CHARGED FROM THE CLIENTS OR LESS PAID TO THE MEDIA IN RESPECT OF ADVERTISEMENTS. IT IS ITS CLAIM THAT THE SAID LIABILITY HAS BEEN KEPT ALIVE SINCE THE CLIENTS OR THE MEDIA MIGHT MAKE CLAIM OF THE AMOUNT EXCESS CHARGED OR LOWER PAID TO THEM. TO UNDERSTAND THE EX ACT NATURE OF THE LIABILITY, THE FIGURES APPEARING IN THE RATES AND SIZES ACCOUNT FOR VARIOUS YEARS ARE REPRODUCED AS UNDER: A.Y 2001-02 A.Y 2002-03 AY 2003-04 A.Y 2004-05 A.Y 2005-06 OPENING BALANCE 56,774,935 -78,443,994 -78,180,823 -49,943,146 -32,433,667 ADD: CREDITED DURING THE YEAR 48,377,561 -32,451,841 -17,491,265 -14,942,402 -10, 526,883 LESS: CREDITED 1,689,369 2,689,487 277,476 175,273 183,342 ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 9 OF 22 TO CLIENT WRITTEN BACK TO INCOME 25,130,133 29,914,425 45,451,466 32,276,608 17,307, 923 CLOSING BALANCE -78,332,994 -78,180,823 -49,943,146 -32,433,667 -25 ,469,285 THE PERCENTAGE OF AMOUNTS LYING IN THE RATES AND SI ZES ACCOUNT OF THE APPELLANT AS CLAIMED BY THE CLIENTS OR THE SUPP LIERS I VARIOUS YEARS IS AS UNDER : AMOUNT LYING IN RATES AND SIZES ACCOUNT A.Y 2001 - 02 A.Y 2002- 03 AY 2003- 04 A.Y 2004- 05 A.Y 2005- 06 OPENING BALANCE _ CREDITS DURING THE YEAR 10.51 CRORE 11.07 CRORE 9.56 CRORE 6.48 CRORE 4.29 CRORE AMT. PAID BACK DURING THE YEAR 16.89 LACS 26.89 LACS 2.77 LACS 2.77 LACS 1.83 LACS PERCENTAGE OF AMOUNTS PAID BACK 1.60% 2.42% 0.28% 0.27% 0.42% 6.3 FROM THE ABOVE, IT IS VERY CLEAR THAT IN ALL TH E YEARS, ONLY A VERY SMALL PART OF THE AMOUNT OUTSTANDING UNDER THE HEAD 'RATES AND SIZES' ACCOUNT HAS BEEN PAID BACK TO THE CLIENTS OR TO THE SUPPLIERS. HAD THE PROVISION CREATED BY THE APPELLANT UNDER TH E HEAD 'RATES AND SIZES' ACCOUNT BEEN GENUINE AND REASONABLE, A M AJOR PART OF THE SAME WOULD HAVE BEEN PAID BACK BY THE APPELLANT TO THE CLIENTS OR THE SUPPLIERS. THE APPELLANT APPEARS TO HAVE ADOPTED THE MODUS OPERANDI OF CREDITING A PART OF THE RECEIPTS TO THE 'RATES AND SIZES' ACCOUNT WITH A VIEW TO POSTPONE ITS TAX LIAB ILITY. IN THE CASE OF NEW HOLLAND TRACTORS (I) PVT. LTD. V S. JCIT 83 ITD 137 (DEL), IT HAS BEEN HELD AS UNDER: 'IN THE INCOME-TAX PROCEEDINGS, EACH ASSESSMENT YEA R IS AN INDEPENDENT ASSESSABLE UNIT AND THE REAL INCOME OF EACH ASSESSMENT YEAR SHALL BE ASCERTAINED AND TAXED . EVEN POSTPONEMENT OF TAX LIABILITY FROM ONE YEAR TO ANOTHER YEAR IS NOT PERMISSIBLE. THE ASSESSEE HAS M ADE AN ATTEMPT TO POSTPONE THE TAX LIABILITY. THE ASSES SEE IS LIABLE TO COMPUTE THE PROFITS AND GAINS OF BUSINESS IN ACCORDANCE WITH THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. IF THE METHOD OF ACCOUNTI NG EMPLOYED BY THE ASSESSEE DOES NOT REFLECT THE TRUE PICTURE OR REAL PROFIT OF THE ASSESSEE AND THE PROPER PROFI T CANNOT BE DEDUCED FROM THAT ACCOUNT AND ACCOUNT IS NOT COM PLETE ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 10 OF 22 TO THE SATISFACTION OF THE A 0, THE A 0 HAS THE LIBERTY TO COMPUTE THE PROFIT. ' THE APPELLANT HAS WRITTEN BACK THE UNCLAIMED LIABIL ITY IN ITS BOOKS AND OFFERED THE SAME TO TAX AFTER 2 YEARS FRO M THE END OF THE YEAR IN WHICH THE LIABILITY WAS CREATED. IT IS A SETTLED LEGAL POSITION THAT ACCOUNTING ENTRIES DO NOT DETERMINE T HE CHARACTER OF THE RECEIPT. IF THE INCOME HAS ACCRUED IN A YEAR , IT HAS TO BE TAXED IN THAT YEAR ONLY. TAXABILITY CANNOT BE PO STPONED ON THE BASIS OF ENTRIES MADE IN THE BOOKS OF ACCOUNTS. SINCE THE LIABILITY AMOUNTING TO ` . 7,81,80,823/- OUTSTANDING IN THE BOOKS IS NOT THE REAL LIABILITY, AO WAS JUSTIFIED IN BRIN GING THE SAME TO TAX IN ASSESSMENT YEAR 2002-03 (ADDITION CONFIRMED ` .7,81,80,823/-). ACCORDINGLY THE ACTION OF AO IS UP HELD. THEREFORE, THE FIFTH GROUND IS REJECTED 16. THE LEARNED COUNSEL OBJECTED TO THE ABOVE ORDER ON THREE REASONS. THE FIRST ONE IS THAT THE OPENING BALANCE FOR THIS ASSESSMENT YEAR IS ` .7,83,32,994/- WHEREAS THE CLOSING BALANCE IS ` .7,81,80,823/- WHICH INDICATES THAT THE ENTIRE CLOS ING BALANCE WHICH WAS BROUGHT TO TAX DURING THIS YEAR DOES NOT PERTAIN TO THIS ASSESSMENT YEAR AT ALL. THE SECOND REASON IS THAT A SSESSEE IS CONSISTENTLY FOLLOWING THE SAME METHOD OF ACCOUNTIN G FOR ITS LIABILITIES AND WAITING FOR PERIOD OF TWO YEARS AFT ER THE CLOSURE OF THE FINANCIAL YEAR AND THEN ADDING BACK THE AMOUNT WHIC H WAS NOT CLAIMED. HE REFERRED TO THE TABLE AS STATED IN CIT (A) ORDER TO SUBMIT THAT ASSESSEE IS WRITING BACK THE INCOME EVE RY YEAR AS CAN BE SEEN FROM THE TABLE ON A CONSISTENT ACCOUNTING M ETHOD BEING FOLLOWED WHICH WAS ACCEPTED IN EARLIER YEARS. THERE FORE, ON PRINCIPLES OF CONSISTENCY ALONE THE METHOD OF ACCOU NTING BEING FOLLOWED BY ASSESSEE SHOULD BE ACCEPTED. THE THIRD REASON STATED IS THAT THERE IS NO DIFFERENCE IN TAX RATES OVER A PER IOD OF TIME AND ASSESSEE IS CONSISTENTLY OFFERING THE AMOUNT WHICH IS AT 33 TO 35% OF THE TAX RATES INCLUDING THE VARIOUS SUR-TAXES ET C AND SUBMITTED A TABLE TO INDICATE THAT THE ADJUSTMENT SO MADE BY TH E DEPARTMENT IN FACT WOULD RESULT IN REFUND TO ASSESSEE IN RESPECTI VE ASSESSMENT YEARS AS MADE OUT IN THE TABLE. THEREFORE, THE ARGU MENT OF AO AND ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 11 OF 22 THE CIT (A) THAT ASSESSEE IS POSTPONING THE TAX LIA BILITY IS NOT CORRECT. IN THE ALTERNATE, IT WAS SUBMITTED THAT TH E AMOUNTS WHICH ARE BROUGHT TO TAX IN THIS YEAR OFFERED BY ASSESSEE SHOULD BE EXCLUDED AND THE AMOUNT WHICH WERE OFFERED IN NEXT YEAR SHOULD ALSO BE EXCLUDED IF CONSISTENT PRACTICE IS TO BE FO LLOWED AS PER AO. 17. THE LEARNED DR HOWEVER, SUPPORTED THE ORDER OF THE CIT (A). 18. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE FACTS . AS SEEN FROM THE TABLE EXTRACTED BY THE CIT (A) IN PAR A 6.2 OF THE ORDER THE OPENING BALANCE IN ASSESSEES BOOKS OF ACCOUNT OF THE UNCLAIMED LIABILITIES WAS TO AN EXTENT OF ` .7,83,32,994/- WHICH IS IN FACT MORE THAN THE CLOSING BALANCE AFTER WRITING BA CK THE AMOUNT OF ` ,2,99,14,525/- AS INCOME DURING THE YEAR AND ` .26,89,487/- CREDITED TO THE CLIENTS ACCOUNTS. THEREFORE, WHAT A O HAS BROUGHT TO TAX IS THE OPENING BALANCE I.E. LAST YEARS CLOSING BALANCE WHICH CANNOT BE BROUGHT TO TAX DURING THIS YEAR AS THERE IS NO ACCRUAL OF LIABILITY OR CESSATION OF LIABILITY DURING THE YEAR . AS RIGHTLY POINTED OUT BY THE CIT (A) IN PARA 6.3, IT IS A SETTLED POS ITION THAT THE ACCOUNTING ENTRIES DO NOT DETERMINE THE CORRECT INC OME AND IF THE INCOME HAS ACCRUED IN THE YEAR IT HAS TO BE TAXED I N THAT YEAR ONLY. AS SEEN FROM THE TABLE ITSELF THE AMOUNT OF ` .3,24,51,841/- WAS ONLY CREDITED TO THIS YEAR OUT OF WHICH ASSESSEE HAS ALR EADY OFFERED ` .2,99,14,525/- (MAY PERTAIN TO EARLIER YEAR BUT OFF ERED AS INCOME OF THIS YEAR WHICH MAY HAVE BE TO BE EXCLUDED IF AOS OPINION IS TO BE ACCEPTED) AND AMOUNT OF ` .26,89,487/- CREDITED TO THE CLIENTS ACCOUNTS. SINCE WHATEVER HAS ACCRUED DURING THE YEA R HAS ALREADY BEEN OFFERED/ADJUSTED, ON THE SAME PRINCIPLES AS LA ID DOWN BY THE CIT (A), NO FURTHER AMOUNT CAN BE BROUGHT TO TAX. I N ADDITION ASSESSEE IS CONSISTENTLY FOLLOWING THE SAME ACCOUNT ING PRINCIPLES AND THERE IS NO ESCAPEMENT OF INCOME, NOR THERE IS ANY POSTPONEMENT OF TAX LIABILITY. IN FACT RECOGNIZING OR NOT RECOGNIZING OF A PARTICULAR AMOUNT AS INCOME DEPENDS ON THE CON TRACT AND WORK DONE. AS RIGHTLY POINTED OUT BY ASSESSEE, THESE DIS PUTES ARISE ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 12 OF 22 BECAUSE OF THE SIZE OF ADVERTISEMENT PLACED AND SHO RT OR EXCESS CHARGING THAN WHAT WAS DUE. AS AND WHEN THE PARTIES SEEK THE AMOUNT WHICH CANNOT BE RECOGNIZED AS INCOME, ASSESS EE IS REFUNDING THE AMOUNT AND ONCE CLIENT DOES NOT SEEK ANY ADJUSTMENT THE SAME IS ACCEPTED AS INCOME OF THE YEAR AFTER TH E END OF THREE YEARS LIMITATION PERIOD AS PER ASSESSEES OWN ACCOU NTING METHOD. IN VIEW OF THIS, WE DO NOT SEE ANY REASON FOR SUPPORTI NG THE ACTION OF AO IN BRINGING TO TAX THE ENTIRE CREDIT IN THE ACCO UNT AS INCOME OF THE YEAR WITHOUT EXAMINING THE PRINCIPLES GOVERNING THE METHOD OF ACCOUNTING FOLLOWED BY ASSESSEE AND ACCRUAL OF INCO ME. AS EXPLAINED ABOVE, THERE IS NO NEED FOR BRINGING TO T AX ANY AMOUNT. AO IS DIRECTED TO DELETE THE ABOVE AMOUNT. SINCE TH E MAIN ADDITION IS DELETED, THE ALTERNATE CONTENTION FOR EXCLUDING THE AMOUNTS WHICH WERE ALREADY OFFERED IN THIS YEAR OR IN LATER YEARS DOES NOT ARISE. ASSESSEES GROUND IS ALLOWED. 19. GROUND NO.5 IS AGAINST THE ACTION OF AO IN MAKING A DDITION OF ` .25,13,808/- UNDER SECTION 92CA(3). THE FACTS OF TH E CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAD E NTERED INTO INTERNATIONAL TRANSACTIONS WITH SOME OF ITS ASSOCIA TE ENTERPRISES INCLUDING M/S INITIATIVE GMBH GERMANY AND M/S INITI ATIVE MEDIA TECHNOLOGIES, PARIS. AO REFERRED THESE TWO INTERNAT IONAL TRANSACTIONS TO THE TPO WHO PASSED ORDER U/S 92CA(3) ON 30.04.2000 IN RESPECT OF THE TWO TRANSACTIONS. THE ORDER PASSED BY THE TRO I.E. ADDL.CIT, TRANSFER PRICING I, MUMBAI O N THE TWO ISSUES IS DISCUSSED HEREUNDER: (I) TRANSACTIONS WITH INITIATIVE MEDIA GMBH (I M HAMBUR G) ASSESSEE HAD RENDERED SERVICES OF MEDIA BUYING TO I M HAMBURG GERMANY FOR THEIR CLIENT ALLIANZ GROUP. ALL IANZ AND THEIR AFFILIATES HAD LAUNCHED INTERNATIONAL IMAGE CAMPAIG N TO ESTABLISH THE ALLIANZ GROUP AS THE LARGEST INSURANCE GROUP WO RLD WIDE. THE CONTRACT WITH ALLIANZ INTERNATIONAL WAS NEGOTIATED CENTRALLY BY INITIATIVE MEDIA, GERMANY. THIS CONTRACT WAS EXECUT ED WORLD WIDE ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 13 OF 22 WITH THE HELP OF INITIATIVE MEDIA NETWORK. INITIATI VE MEDIA INDIA (I M INDIA), A DIVISION OF LINTAS, RELEASED PRINT ADVERT ISEMENTS OF ALLIANZ IN VARIOUS PUBLICATIONS ACROSS INDIA ON BEHALF OF I M HAMBURG. ASSESSEE RECEIVED COMMISSION FOR THE RENDERING OF T HESE SERVICES. IT RAISED DEBIT NOTES OF ` 5,22,40,873/- FOR MEDIA PAYMENTS, FOR ` 18,43,796/- AS COMMISSION @ 3% ON NET PAYMENT, ` 92,1901- FOR SERVICE TAX ON COMMISSION. ASSESSEE COMPUTED THE AR M'S LENGTH PRICE OF THE TRANSACTIONS BY CALCULATING COMMISSION AT ` 13,82,847 /- BY APPLYING COMMISSION RATE OF 2.25% ON THE NET PAY MENTS. AFTER ADDING THE MEDIA PAYMENTS OF ` 5,22,40,873/- , THE TOTAL ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION WITH I M HAMBURG WAS COMPUTED AT ` 5,36,23,720/- . ASSESSEE CLAIMED THAT SINCE THE COMMISSION EARNED BY ASSESSEE WAS MORE THAN THE IND USTRY AVERAGE, ASSESSEE QUALIFIES THE TEST OF ARM'S LENGT H PRINCIPLE. BEFORE THE TPO, THE APPELLANT ALSO SUBMITTED A COPY OF MIN UTES OF THE ELEVENTH MEETING OF THE EXECUTIVE COMMITTEE OF ADVE RTISING AGENCIES ASSOCIATION OF INDIA HELD ON 03.08.98 WHIC H DEALS WITH THE REMUNERATION POLICY OF THE ASSOCIATION WITH REG ARD TO ADVERTISING SERVICES. IT PROVIDES THAT, FOR THE SER VICES RENDERED IN THE AREAS OF MEDIA BUYING AND MEDIA RELEASE, THE AG ENCY WILL EARN 2.5% MEDIA COMMISSION ON RELEASES MADE BY IT FOR BR ANDS WHICH ARE HANDLED BY OTHER ADVERTISING AGENCIES OF THE AD VERTISERS. THE OTHER ADVERTISING AGENCY WILL EARN 12.5% COMMISSION . THE TPO ASKED ASSESSEE TO SUBMIT THE DETAILS OF FOREIGN AS WELL AS INDIAN CLIENTS TO WHOM SERVICES OF MEDIA BUYING WERE RENDE RED BY THE APPELLANT. IT WAS SUBMITTED BY ASSESSEE THAT SIMILA R SERVICES WERE NOT RENDERED TO ANY FOREIGN CLIENT. HOWEVER, IT WAS STATED THAT SUC H SERVICES WERE RENDERED TO INDIAN CLIENTS NAMELY APT ECH LTD., PANTALOON RETAIL INDIA LTD, SIEMENS TELECOM LTD, EV ER READY INDUSTRIES (INDIA) ) LTD ETC. COPIES OF AGREEMENTS WITH THESE PARTIES WERE FILED BY ASSESSEE BEFORE THE TPO. ASSESSEE HAD ADOPTED THE CUP (COMPARABLE UNCONTROLLED PRICE) METHOD FOR DETERMINING THE ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 14 OF 22 ARMS LENGTH PRICE. THE TPO COMPARED THE COMMISSION OF 3% RECEIVED BY ASSESSEE FROM IM HAMBURG WITH CONTROLLE D TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH INDIAN CLIENTS. H E FOUND THAT ASSESSEE HAD RECEIVED FOLLOWING COMMISSIONS FROM VA RIOUS CLIENTS: CLIENT NAME % OF COMMISSION APTECH LTD 2.25% GM PENS INTL 2.5% PANTALOON (I) LTD 3.5% SIEMENS INDIA LTD 2.5% SIMENS TELECOM LTD 2.5% EVEREADY INDUSTRIES (I) LTD 7% AVERAGE OF THE ABOVE COMMISSION 3.375% 20. FOR WORKING OUT THE ARMS LENGTH PRICE OF THE TRANS ACTIONS WITH IM HAMBURG, THE TPO APPLIED THE RATE OF 3.375% TO THE NET PAYMENTS RECEIVED FROM IM HAMBURG. ACCORDINGLY, THE ARMS LENGTH PRICE OF THE TRANSACTION WAS COMPUTED BY THE TPO AT ` .20,74,270/-. FURTHER THE TPO OBSERVED THAT THE AGREEMENT OF ASSE SSEE WITH IM HAMBURG PROVIDED FOR PAYMENT OF TAX WITHIN 30 DAYS FROM THE DATE OF THE BILL. SIMILAR AGREEMENTS WITH INDIAN ADVERTI SERS ALSO PROVIDED FOR A CREDIT OF 30 DAYS FROM THE DATE OF DEBIT NOTE . HOWEVER, AO NOTICED THAT ASSESSEE HAD ALLOWED AVERAGE CREDIT PE RIOD OF 97 DAYS TO THE INDIAN CLIENTS. IN THE CASE OF IM HAMBURG, T HE DUES REMAINED UNREALIZED FOR MORE THAN 97 DAYS AND IN SOME CASES OF PAYMENTS, THE DUES WERE REALIZED AFTER A PERIOD OF 225 DAYS. CONSIDERING THESE FACTS, THE TPO WORKED OUT THE OPPORTUNITY COST OF N OT REALIZING THE RECEIVABLES FROM IM HAMBURG AFTER PROVIDING BENEFIT OF CREDIT PERIOD OF 97 DAYS. APPLYING THE INTEREST RATE OF 18% SUCH OPPORTUNITY COST WAS WORKED OUT AT ` .13,22,632/-. ACCORDINGLY THE TPO WORKED OUT THE ARMS LENGTH PRICE IN RESPECT OF THE COMMISSION RECEIVED BY ASSESSEE FROM IM HAMBURG AT ` .33,96,902/- AS UNDER: A)COMMISSION AMOUNT @ 3.375% OF ` .6,41,59,850 - 20,74,270 B)DIFFERENCE ON A/C OF PROVIDING EXCESS CREDIT PERI OD- 13,22,632 33,96,902 ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 15 OF 22 THE DIFFERENCE BETWEEN THE TRANSACTION VALUE ( ` .18,43,796/-) AND THE ARMS LENGTH PRICE ( ` .33,96,902/-) AMOUNTED TO ` .15,53,105/- WAS ADDED BY AO TO THE INCOME OF ASSESSEE. II. INTERNATIONAL TRANSACTIONS WITH INITIATIVE MEDI A TECHNOLOGIES PARIS FOR CUSTOMIZED SOFTWARE PROGRAMME: 21. ASSESSEE HAD PAID AN AMOUNT OF ` .9,60,703/- TO INITIATIVE MEDIA TECHNOLOGIES, PARIS. IN SUPPORT OF THE PAYMEN T, ASSESSEE HAD SUBMITTED COPY OF INVOICE DATED 06.09.2001 ISSUED B Y INITIATIVE MEDIA FRANCE. THE TPO ASKED ASSESSEE TO FILE THE SU PPORTING EVIDENCE TO PROVE THE BENEFIT RECEIVED BY IT FROM T HE SAID PAYMENT. HOWEVER, ASSESSEE EXPRESSED ITS INABILITY IN PRODUC ING ANY DOCUMENT OTHER THAN THE INVOICE RELATING TO ` .9,60,703/-. IN ABSENCE OF ANY DOCUMENT EVIDENCING RECEIPT OF ANY S ERVICES, THE TPO HELD THAT NO SERVICES WERE RENDERED BY INITIATI VE MEDIA PARIS TO ASSESSEE AND ACCORDINGLY HE COMPUTE THE ALP OF THE TRANSACTION AT NIL. THE DIFFERENCE BETWEEN THE TRANSACTION VALUE A ND ITS ALP COMPUTED AT ` .9,60,703/- WAS ADDED BY AO TO THE INCOME OF ASSESSEE. 22. BEFORE THE CIT (A) ASSESSEE OBJECTED TO THE ACTION OF THE TPO AND THAT OF AO IN MAKING ADDITION OF ` .25,13,808/- UNDER SECTION 92CA(3) ON THE FOLLOWING GROUNDS: I) AO HAS TO HAVE MATERIAL ON RECORD ON THE BASIS OF W HICH HE COMES TO AN OPINION THAT THE MATTER HAS TO BE REFERRED TO THE TPO. NO SUCH MATERIAL HAS BEEN BROU GHT ON RECORD BY AO AND ACCORDINGLY THE REFERENCE TO TH E TPO WAS NOT VALID. II) A SHOW CAUSE NOTICE IS REQUIRED TO BE ISSUED BY AO TO ASSESSEE BEFORE A MATTER CAN BE REFERRED TO THE TPO . NO SUCH SHOW CAUSE NOTICE WAS ISSUED BY AO TO ASSESSEE AND HENCE THE ORDER PASSED BY THE TPO UNDER SECTION 92CA(3) WAS NOT IN ORDER. ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 16 OF 22 III) BEFORE REFERRING THE MATTER TO TPO, AO HAS TO OBTAI N APPROVAL FROM THE CIT. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT AO HAD TAKEN THE APPROVAL OF TH E CIT BEFORE MAKING THE REFERENCE TO THE TPO. FURTHER , AO CAN REFER ANY INTERNATIONAL TRANSACTION TO THE T PO ONLY IF THE TRANSACTION WAS NOT BONAFIDE. NO OPPORT UNITY WAS GIVEN BY AO TO PROVE THAT THE TRANSACTION WAS BONAFIDE. IV) ASSESSEE AND THE TPO HAVE ADOPTED CUP METHOD FOR COMPUTING THE ARMS LENGTH PRICE. THE CUP METHOD COMPARES THE PRICE CHARGED FOR SERVICES TRANSFERRED IN A COMPARABLE UNCONTROLLED TRANSACTION IN COMPARABLE CIRCUMSTANCES. THE TRANSACTIONS ENTERED INTO BETWEE N ASSESSEE AND THE TWO ASSOCIATE ENTERPRISES WERE THE ONLY TRANSACTIONS WITH FOREIGN CLIENTS. THE TPO HAS COMPARED THE INTERNATIONAL TRANSACTIONS WITH THE DOMESTIC TRANSACTIONS WHICH CANNOT BE SAID TO BE COMPARABLE. THE TPO HAS ALSO NOT BROUGHT ON RECORD ANY OTHER COMPARABLE TRANSACTION WHERE A HIGHER INCOME HAS BEEN EARNED. V) THE TPO HAS TAKEN THE MEAN VALUE OF ALL THE TRANSACTIONS ENTERED INTO BY ASSESSEE WITH THE INDI AN COMPANIES TO WORK OUT THE COMMISSION RATE OF 3.375% . THE TRANSACTION WITH EVEREADY INDUSTRIES (I) LTD WA S ON THE BASIS OF FIXED MONTHLY FEE OF ` .1,45,000/- AND NOT ON THE BASIS OF ANY PERCENTAGE. THE TPO SHOULD HAVE EXCLUDED THE SAID TRANSACTION FOR WORKING OUT THE M EAN OF COMMISSION PAID TO INDIAN CLIENTS. 23. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF AS SESSEE HAS CONFIRMED THE ADDITIONS BY STATING AS UNDER: 7.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE APPELLANT. AS PER SECTION 92CA(1) OF THE I.T .ACT, ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 17 OF 22 WHERE ANY ASSESSEE HAS ENTERED INTO AN INTERNATIONA L TRANSACTION IN ANY PREVIOUS YEAR AND THE AO CONSIDE RS IT NECESSARY OR EXPEDIENT TO DO SO, HE MAY, WITH THE PREVIOUS APPROVAL OF THE COMMISSIONER, REFER THE COMPUTATION OF THE ARM'S LENGTH PRICE IN RELATION T O THE SAID INTERNATIONAL TRANSACTION U/S 92C TO THE TRANS FER PRICING OFFICER. ON RECEIVING SUCH REFERENCE, THE T PO IS REQUIRED TO DETERMINE THE ARM'S LENGTH PRICE IN REL ATION TO THE SAID INTERNATIONAL TRANSACTION IN ACCORDANCE WI TH SUB-SECTION (3) OF SECTION 92C. THE SAID ORDER IS B INDING ON THE AO AS PER SECTION 92CA(4). THERE IS NO REQUIREMENT IN SECTION 92CA(1) THAT AO MUST BRING A NY MATERIAL ON RECORD TO FORM AN OPINION THAT THE MATT ER IS REQUIRED TO BE REFERRED TO THE TPO. HE IS ALSO NOT REQUIRED TO ISSUE ANY SHOW CAUSE NOTICE TO ASSESSEE BEFORE MAKING REFERENCE TO THE TPO. FURTHER, THE REFERENCE UNDER SECTION 92CA IS MADE TO THE TPO TO FIND THE A RMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION. IT I S NOT THAT ONLY NON-BONAFIDE TRANSACTIONS CAN BE REFERRED TO T HE TPO FOR FINDING OUT THE ARMS LENGTH PRICE. THE ONLY REQUIREMENT IN SECTION 92CA(1) IS THAT AO SHOULD GE T THE PREVIOUS APPROVAL OF THE COMMISSIONER BEFORE MAKING REFERENCE TO THE TPO. IN THE INSTANT CASE, AO OBTAI NED THE APPROVAL OF THE CIT 3 MUMBAI VIDE LETTER NO.CIT III/SCRU/03-04 DATED 25.09.2003. THEREFORE, THE OBJECTIONS TAKEN BY THE APPELLANT AT SR.NO.(1) TO ( III) ABOVE ARE REJECTED. 7.2.1 IN THIS CASE, THE APPELLANT HAD RENDERED SERV ICES OF MEDIA BUYING TO I M HAMBURG, GERMANY. NO SUCH SERVICES WERE RENDERED TO ANY OTHER FOREIGN ENTERPR ISE. HOWEVER, THE APPELLANT HAD RENDERED SIMILAR SERVICE S TO SOME OF THE INDIAN CLIENTS. THE NATURE OF SERVICES PROVIDED BY THE APPELLANT TO I M HAMBURG AND THE INDIAN CLIENTS WAS THE SAME. THEREFORE, BOTH THE TRANSACTI ONS WERE COMPARABLE. THE TRANSACTIONS ENTERED INTO BY T HE APPELLANT WITH I M HAMBURG WAS A CONTROLLED TRANSACTION AND THE TRANSACTIONS ENTERED INTO BY IT WITH INDIAN ENTERPRISES WERE UNCONTROLLED. THE APPELLANT HAD ADOPTED THE CUP METHOD FOR COMPUTING THE ARM'S LENG TH PRICE. UNDER THE SAID METHOD, THE ARM'S LENGTH PRIC E OF A CONTROLLED SALE IS EQUAL TO THE PRICE PAID IN COMPA RABLE UNCONTROLLED SALE. CONTROLLED SALES ARE THE SALES I N WHICH THE SELLER AND BUYER ARE THE MEMBERS OF THE SAME CONTROLLED GROUP. IN THE CASE OF UNCONTROLLED SALES , THE SELLER AND BUYER ARE NOT MEMBERS OF THE SAME GROUP. UNCONTROLLED SALES ARE CONSIDERED COMPARABLE TO CONTROLLED SALES IF THE PHYSICAL PROPERTY AND ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 18 OF 22 CIRCUMSTANCES INVOLVED IN THE CONTROLLED SALES ARE COMPARABLE TO THE UNCONTROLLED TRANSACTIONS. SINCE THE NATURE OF SERVICES RENDERED BY THE APPELLANT TO IND IAN CLIENTS WAS SIMILAR TO THE NATURE OF SERVICES PROVI DED TO I M HAMBURG, THE TPO WAS JUSTIFIED IN DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT WITH I M HAMBURG BY COMPARING THE SAME WITH THE SIMILAR TRANSACTIONS ENTERED INTO BY THE APPELLANT WITH INDIAN ENTERPRIS ES. FURTHER, THE TPO HAS CONVERTED THE MONTHLY PAYMENTS MADE BY EVERREADY INDUSTRIES (I) LTD TO THE APPELLA NT IN THE PERCENTAGE FORM BEFORE TAKING IT AS ONE OF THE COMPARABLES. THEREFORE, THE ACTION OF THE AO IN APP LYING THE COMMISSION RATE OF 3.375% TO THE AMOUNT RECEIVE D FROM IM HAMBURG IS UPHELD. ACCORDINGLY, THE ADDITIO N OF ` 15,53,105/ ON THIS ACCOUNT IS UPHELD. AS REGARDS THE ARM'S LENGTH PRICE IN RESPECT OF THE PAYMENT OF ` 9,60,703/- MADE TO (INITIATIVE MEDIA TECHNOLOGIES, PARIS, IT HAS BEEN CLAIMED BY THE APP ELLANT THAT IT REPRESENTS THE PAYMENT FOR CUSTOMIZED SOFTW ARE PROGRAMME OBTAINED FROM THE SAID ENTERPRISE. HOWEVE R, NO EVIDENCE WAS TILED BY THE APPELLANT BEFORE THE A O TO PROVE THE BENEFIT DERIVED BY IT FROM THE SAID PAYME NT. EVEN BEFORE ME, NO SUCH EVIDENCE HAS BEEN FILED. IN CASE ANY ASSESSEE CLAIMS ANY EXPENDITURE, ONUS LIES ON H IM TO PROVE ITS NATURE AND THE BENEFIT DERIVED BY HIM FROM THE SAID EXPENDITURE SINCE THE APPELLANT HAS FAILED TO FILE ANY EVIDENCE IN SUPPORT OF THE EXPENDITURE OF ` 9,60,703/- THE TPO WAS JUSTIFIED IN TAKING ITS ARM'S LENGTH PRICE AT NIL. ACCORDINGLY THE ADDITION OF ` 9,60,703/- MADE BY AO ON THIS ACCOUNT IS CONFIRMED . 24. THE LEARNED COUNSEL MADE HIS ARGUMENTS ELABORATELY ON THE ISSUE OF COMMISSION RECEIVED FROM THE INITIATIVE ME DIA IM HAMBURG. IT WAS HIS SUBMISSION THAT THE COMMISSION REPORTED AGAINST EVEREADY INDUSTRIES LTD IS NOT A COMMISSION AGREEME NT, WHEREAS IT IS A FIXED REMUNERATION AGREEMENT. HE REFERRED TO T HE SUBMISSIONS MADE BEFORE THE TPO REPRODUCED IN PAGE 8 OF THE ORD ER VIDE PARA 4.1.5 TO SUBMIT THAT ASSESSEE IS RECEIVING ITS MONT HLY FIXED FEE OF ` .1.45 LAKHS. THIS AMOUNT COULD NOT BE CONVERTED TO PERCENTAGE COMMISSION AS THE COMMISSION WAS NOT INVOLVED IN TH E TRANSACTIONS WITH THE EVEREADY INDUSTRIES AS THE SERVICES ARE RE NDERED ON FIXED ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 19 OF 22 FEE BASIS. IT WAS HIS SUBMISSION THAT THE ADOPTION OF THE COMMISSION OF 7% IS NOT CORRECT AND THAT SHOULD BE EXCLUDED. IF THE SAME IS EXCLUDED THE AVERAGE OF THE ABOVE COMMISSIO N COMES TO 2.65% WHEREAS ASSESSEE HAS EARNED THE COMMISSION AT 3%. THEREFORE, THERE IS NO NEED TO ADJUST ANY AMOUNT AS ALP ON THIS ISSUE. 25. THE LEARNED DR HOWEVER, SUPPORTED THE ORDERS OF THE TPO AND THE CIT TO SUBMIT THAT THE AVERAGE RATE OF COMMISSI ON IS TO BE FIXED AT 3.375%. 26. WE HAVE CONSIDERED THIS ISSUE. AS SEEN FROM THE ORD ER OF THE TPO AS WELL AS THE ORDERS OF THE CIT (A), THERE IS NO DISPUTE WITH REFERENCE TO THE FIXED MONTHLY FEE RECEIVED FROM EV EREADY INDUSTRIES LTD. ASSESSEE IS NOT CHARGING ANY COMMISSION AS IT HAS ENTERED INTO FIXED FEES ARRANGEMENT WITH EVEREADY INDUSTRIES LTD . THE NATURE OF THE SERVICE AND THE FEES BEING CHARGED TO THE EVERE ADY INDUSTRIES ARE ENTIRELY DIFFERENT WHEN COMPARED TO THE OTHER C LIENTS WHICH ARE CONSIDERED AS COMPARABLE. THEREFORE, IN OUR VIEW, T HE FIXED FEE RECEIVED FROM EVEREADY INDUSTRIES CANNOT BE USED FO R COMPARISON IN THIS METHOD AS IT IS NOT COMPARABLE TO THE TRANSACT IONS OF COMMISSION UNDERTAKEN BY ASSESSEE WITH THE OTHER CL IENTS. NOT ONLY THAT THE WORKING GIVEN BY THE TPO SHOWS THAT IT IS EARNING 7% COMMISSION, WHEREAS AS PER THE INDUSTRY POLICY AS D ECIDED BY THE AAAI THE SERVICE ON MEDIA AGENCY EARNS COMMISSION O F 2.5%. ON THAT REASON ALSO, SINCE IT IS AN EXTREME CASE OF EA RNING 7% COMMISSION (IN OUR VIEW IT IS WRONGLY CONSIDERED), ON THE PRINCIPLES THAT THE EXTREME PROFIT COMPANIES ARE TO BE EXCLUDE D, THIS COMPANY CANNOT BE CONSIDERED AS COMPARABLE FOR THE PURPOSE OF ARRIVING AT THE AVERAGE MEAN. THEREFORE, WE DIRECT AO/TPO TO EX CLUDE THE ABOVE COMPARABLE I.E. EVEREADY INDUSTRIES LTD AND W ORK OUT THE MEAN OF THE COMMISSION ON THE OTHER COMPANIES TAKEN AS COMPARABLES. IF THE MEAN OF THE ABOVE IS LESS THAN THE COMMISSION ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 20 OF 22 CHARGED FOR IM HAMBURG, THEN THERE IS NO NEED FOR M AKING ANY ADJUSTMENT ON THESE TRANSACTIONS. 27. WITH REFERENCE TO THE CALCULATION OF INTEREST ON TH E SO CALLED CREDIT PERIOD MADE AVAILABLE TO THE FOREIGN COMPANY , AFTER CONSIDERING THE RIVAL CONTENTIONS, IN OUR VIEW THER E IS NO NEED FOR CHARGING ANY INTEREST ON THE SO CALLED CREDIT MADE AVAILABLE. FIRST OF ALL ASSESSEE IS NOT CHARGING ANY INTEREST TO ANY CL IENTS FOR THE SERVICES RENDERED/ DEBIT NOTES PROVIDED FOR DELAY I N PAYMENTS AS A POLICY. AS SEEN FROM THE CHART FOR WORKING OUT THE AVERAGE CREDIT PERIOD AT 97 DAYS, THE AVERAGE DEBIT NOTE PERIOD FO R APTECH LTD IS ABOUT 155 DAYS. ON SEEING THE DETAILS FURNISHED IN THE PAPER BOOK, WHAT WE NOTICE IS THAT SOME OF THE TRANSACTIONS WIT H THE APTECH LTD HAS CREDIT PERIOD RANGING FROM 5 DAYS TO 476 DAYS, WHICH INDICATE THAT THE CLIENTS WILL NOT PAY AMOUNT UNLESS THEY VE RIFY THE BILLS AND SERVICES RENDERED. THIS NATURALLY INVOLVE SUBSTANTI AL TIME EVEN THOUGH A STANDARD BILL IS GIVEN TO THE CLIENTS THAT INTEREST AT 18% WILL BE CHARGED. SINCE ASSESSEE IS NOT CHARGING INT EREST TO ANY CLIENT ON THE TRANSACTIONS FOR THE CREDIT PERIOD AVAILABLE , IN OUR VIEW THE FACTS DOES NOT REQUIRE CHARGING OF INTEREST ON THE CREDIT PERIOD MADE AVAILABLE TO AE. SINCE IT IS A PRACTICE OF ASSESSEE NOT TO CHARGE INTEREST TO ANY CLIENT, THIS ASPECT SHOULD NOT BE C ONSIDERED AS AN INTERNATIONAL TRANSACTION EXCLUSIVELY IN THE CASE O F AE AS IT IS NOT A POLICY TO PROVIDE TO ANY CREDIT TO ANY CLIENT SPECI FICALLY. MOREOVER, ASSESSEE, WITH PROTEST, HAS SUBMITTED THAT THE RATE OF INTEREST THAT WOULD BE CHARGED AT 18% WAS NOT THE MARKET RATE AND FURTHER BEING A FOREIGN COMPANY THE RATE OF INTEREST CAN BE CONSI DERED AT LIBOR RATE OR +2% TO LIBOR RATE AS IS BEING DONE FOR LOA NS AND ADVANCES GIVEN BY FOREIGN COMPANY. THIS ASPECT WAS NOT AT AL L CONSIDERED BY THE TPO OR BY THE CIT (A). AS ASSESSEE AS AN ALTERN ATIVE CONTENTION SUBMITTED THAT THE INTEREST CAN BE WORKED OUT AT 7% AS PER THE EUROPEAN STANDARD WHICH WOULD COME TO ` .5,14,357/-. WITHOUT DISCUSSING THIS ISSUE AT ALL AND WITHOUT CONSIDERIN G THE FACT THAT ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 21 OF 22 ASSESSEE HAS NOT CHARGED ANY INTEREST TO ANY CLIENT , IN OUR VIEW BOTH THE TPO AS WELL AS THE CIT (A) WRONGLY CONSIDERED T HE ISSUE OF MAKING AVAILABLE CREDIT TO THE FOREIGN COMPANY. WE ARE NOT IN AGREEMENT WITH THE ACTION OF AO ON THE FACTS OF THI S CASE. WE AGREE WITH ASSESSEES CONTENTIONS THAT ASSESSEE IS NOT CH ARGING ANY INTEREST TO ANY CLIENT WHETHER INDIAN OR FOREIGN, N OR THERE IS ANY CREDIT EXTENDED TO THE FOREIGN COMPANY IN THE GUISE OF DEBIT NOTES RAISED. IN VIEW OF THIS, WE ARE OF THE OPINION THAT NO INTEREST CAN BE CHARGED. ACCORDINGLY WE DIRECT AO TO DELETE THE ADD ITION MADE ON ACCOUNT OF INTERESTS AT ` .13,27,623/-. 28. THE THIRD ISSUE UNDER THE TRANSFER PRICING PROVISIO NS IS WITH REFERENCE TO THE PAYMENTS MADE TO INITIATIVE MEDIA TECHNOLOGY, PARIS FOR CUSTOMIZED SOFTWARE PROGRAMME OF ` .9,60,703/- WHICH IS AN ASSOCIATE CONCERN. ASSESSEE SUBMITTED AN INVOICE DATED 6.9.2001 IN SUPPORT OF THE PAYMENTS MADE. ON THE REASON THAT ASSESSEE DOES NOT HAVE ANY EVIDENCE OF SERVICE RENDERED SAID PAYM ENT WAS DISALLOWED FULLY TREATING THE ALP AT NIL. THE CIT ( A) ALSO CONFIRMED THE SAME. 29. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND SEEING THE NATURE OF THE PAYMENT, WE ARE OF THE OPINION THAT THIS MAT TER REQUIRES FRESH EXAMINATION BY THE TPO. THIS PAYMENT WAS MADE FOR P URCHASE OF SOFTWARE FOR USE IN THE BUSINESS OF ADVERTISING AND MEDIA SERVICES. ASSESSEE CLAIMED DEDUCTION UNDER SECTION 37(1) FOR PURCHASE OF SOFTWARE AND REPORTED IT AS RELATED INTERNATIONAL T RANSACTIONS. THE TPO UNDER THE PROVISIONS OF TRANSFER PRICING CANNOT DETERMINE THE ALP AT NIL WAS AS HELD BY THE HON'BLE DELHI HIGH CO URT IN THE CASE OF EKL APPLIANCES LTD 2012 TII-I (SC) (DEL)TP DATED 29.03.2012. THEREFORE, WE ARE OF THE OPINION THAT DETERMINATION OF ALP AT NIL CANNOT BE SUSTAINED. HOWEVER, SINCE THE TPO ALSO OB SERVED THAT ASSESSEE COULD NOT FURNISH NECESSARY DOCUMENTS EVID ENCING SERVICE(SIC), IN THE INTEREST OF JUSTICE WE RESTORE THE ISSUE TO THE FILE OF TPO TO EXAMINE THE SAID PAYMENT FOR CUSTOMIZED S OFTWARE AFRESH ITA NO.2024 OF 2007 LINTAS INDIA PVT LTD MUMBAI PAGE 22 OF 22 AND DETERMINE THE APPROPRIATE METHOD FOR ARRIVING A T THE ALP AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. WITH THESE DIRE CTIONS, THE THIRD ISSUE IS RESTORED TO THE FILE OF THE TPO FOR CONSID ERING IT AFRESH. FOR THIS PURPOSE THE ORDER OF AO AND THE CIT (A) ON THI S ISSUE ARE SET ASIDE WITH A DIRECTION TO RE-EXAMINE THE INTERNATIO NAL TRANSACTION TO THE EXTENT OF PAYMENT TO INITIATIVE MEDIA TECHNOLOG Y, PARIS FOR CUSTOMIZED SOFTWARE OF ` .9,60,703. THIS GROUND IS CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. 30. IN THE RESULT THE APPEAL FILED BY ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2012. SD/- SD/- (AMIT SHUKLA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 9 TH NOVEMBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, K BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI