M/s. Saint Gobain Glass India Private Limited, Kancheepuram V. DCIT, CHENNAI

ITA 2096/CHNY/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8939 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 22-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: R VIJAYARAGHAVAN; S P CHIDAMBARAM S
• Keywords: Depreciation; Transfer pricing; International transaction; Earning of tax free income; Deemed to accrue or arise in india; Bad and doubtful debts
• Section: 143(3); 14A; 115JB; 12; 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' # . $ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO.2096/MDS/2011 ( / ASSESSMENT YEAR: 2007-08) M/S. SAINT GOBAIN GLASS INDIA PVT.LTD. PLOT NO.A-1, SIPCOT INDUSTRIAL PARK, SRIPERUMBUDUR-602 105. KANCHIPURAM DIST. VS THE DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT, CHENNAI. PAN: AABCS4338M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.R.VIJAYARAGHAVAN & S.P.CHIDAMBARAM, ADVOCATES /RESPONDENT BY : DR.B.NISCHAL, JCIT /DATE OF HEARING : 28 TH APRIL, 2016 /DATE OF PRONOUNCEMENT : 13 TH JULY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT, CHENNAI DATED 19.10.2011 PAS SED UNDER SECTION 143(3) R.W.S. 144C(13) OF THE ACT PUR SUANT TO THE ORDER OF DISPUTE RESOLUTION PANEL DATED 30.12. 2010 PASSED UNDER SECTION 144C(5) R.W.S 144C(8) OF THE A CT. 2. THE ASSESSEE HAS RAISED IN ITS APPEAL SEVERAL EL ABORATE GROUNDS, HOWEVER THE CRUXES OF THE ISSUES ARE AS FO LLOWS:- 2 ITA NO.2096/MDS/2011 I) THE LEARNED DRP AS WELL AS THE LEARNED ASSESSING OFFICER HAS ERRED IN DISALLOWING AN ESTIMATED AMOUNT OF ` 1,55,27,938/- AS EXPENDITURE ATTRIBUTABLE FOR EARNING EXEMPT DIVIDEND INCOME UNDER SECTION 14A R.W.R.8D OF THE RULES UNDER NORMAL COMPUTATION AS WELL AS IN COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT. II) THE LEARNED DRP AS WELL AS THE LEARNED ASSESSING OFFICER HAS ERRED IN DISALLOWING AN AMOUNT OF ` 65,90,076/- AS ALLOWABLE DEDUCTION BEING FOREIGN EXCHANGE LOSS RELATING TO THE INTEREST ON LOAN FOR ACQUIRING ASSETS BY TREATING IT TO BE CAPITALIZED UNDER NORMAL COMPUTATION AS WELL AS IN COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. III) THE LEARNED DRP AS WELL AS THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF ` 3,04,15,010/- IN RELATION TO INTEREST ON LOAN FOR ACQUIRING FIXED ASSETS BY TREATING IT TO BE CAPITALIZED UNDER NORMAL COMPUTATION AS WELL AS IN COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. IV) THE LEARNED DRP AS WELL AS LEARNED ASSESSING OFFICER ERRED IN CONFIRMING THE ORDER OF THE LEARNE D ASSESSING OFFICER IN MAKING ADDITION OF ` 1,54,19,582/- IN RELATION TO PROVISION FOR DOUBTFU L DEBTS WHILE ARRIVING AT THE BOOKS PROFITS UNDER SECTION 115JB OF THE ACT. V) THE LEARNED ASSESSING OFFICER HAS ERRED IN DETERMINING THE ARMS LENGTH PRICE WITH RESPECT TO THE INTERNATIONAL TRANSACTION RELATING TO THE COMMISSION PAID BY THE ASSESSEE TO M/S. SAINT- 3 ITA NO.2096/MDS/2011 GOBAIN EXPROOVER OF ` 5,02,99,206/- TOWARDS AVAILING MARKETING SERVICES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRA DING OF FLOAT GLASS AND MIRROR FILED ITS RETURN OF INCOME F OR THE ASSESSMENT YEAR 2007-08 ON 15.11.2007. THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY UNDER SECTION 143(3) OF THE ACT AND FINALLY ORDER WAS PASSED BY THE LEARNED ASS ESSING OFFICER UNDER SECTION 143(3) R.W.S 143C(13) OF THE ACT AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE US. GROUND NO.1 DISALLOWANCE OF ` 1,55,27,938/- UNDER SECTION 14A R.W.R.8D OF THE RULES UNDER NORMAL COMPUTATION AS WELL AS IN COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT: 4.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IT WAS NOTICED THAT THE ASSESSEE HAS EARNED RS. 27,44,155/ - AS DIVIDEND INCOME WHICH IS EXEMPT FROM TAX BY VIRTUE OF SECTION 10(23D) OF THE ACT. IT WAS FURTHER NOTICED THAT T HE ASSESSEE HAD BORROWED FUNDS FOR MAKING THESE INVESTMENTS. THEREFORE, THE REVENUE INVOKED THE PROVISIONS OF SE CTION 14A R.W.R.8D OF THE RULES AND ACCORDINGLY COMPUTED DISALLOWANCE OF RS.1,55,27,938/-. THIS AMOUNT WAS 4 ITA NO.2096/MDS/2011 DISALLOWED WHILE COMPUTING THE PROFIT AND LOSS OF T HE ASSESSEE UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS UNDER SECTION 115JB OF THE ACT. THIS ISSUE IS DOUBLE FO LD AND THEY ARE DISCUSSED AND ADJUDICATED AS FOLLOWS:- DISALLOWANCE UNDER SECTION 14A OF THE ACT R.W.R.8D OF THE RULES UNDER NORMAL COMPUTATION OF PROFIT & LOSS:- 4.2 SINCE THIS ISSUE IS RELATING TO THE ASSESSMENT YEAR 2007-08, THE PROVISIONS OF RULE 8D WILL NOT BE APPL ICABLE IN THE CASE OF THE ASSESSEE AS IT CAME INTO EFFECT F ROM 24.03.2008. ON EARLIER OCCASION, IN THE CASE OF M/S . HYUNDAI MOTOR INDIA LTD. VS. DCIT IN ITA NO.2157/MDS/2011 VIDE ORDER DATED 28.08.2015 THIS BENCH OF THE TRIBUNAL H AD OBSERVED THAT DISALLOWANCE OF 2% TO 5% OF THE DIVI DEND INCOME EARNED WOULD SUFFICE FOR MEETING THE REQUIRE MENT OF SECTION 14A OF THE ACT. ACCORDINGLY, WE HEREBY DIRE CT THE ASSESSING OFFICER TO DISALLOW 5% OF DIVIDEND INCOME AS ALLOWABLE EXPENDITURE INVOKING THE PROVISIONS OF SE CTION 14A OF THE ACT WHILE COMPUTING THE PROFIT AND LOSS UNDE R NORMAL COMPUTATION. 5 ITA NO.2096/MDS/2011 DISALLOWANCE UNDER SECTION 14A OF THE ACT R.W.R.8D OF THE RULES UNDER SECTION 115 JB OF THE ACT: 4.3 ON THIS ISSUE, THIS BENCH OF THE TRIBUNAL IN THE CASE OF M/S. BEACH MINERALS COMPANY P.LTD. VS. ACIT REPORT ED IN 64 TAXMANN.COM 218 HAS HELD THAT DISALLOWANCE UNDER SECTION 14A CANNOT BE MADE WHILE COMPUTING PROFIT A ND LOSS OF THE ASSESSEE UNDER SECTION 115JB OF THE ACT BECA USE A SECTION WITH LEGAL FICTION CANNOT BE IMPOSED ON ANO THER SECTION WITH LEGAL FICTION. UNDOUBTEDLY BOTH SECTIO NS 14A & 115JB OF THE ACT ARE PROVISIONS WITH LEGAL FICTIONS . FOR THE AFORESAID REASONS, THIS BENCH OF THE TRIBUNAL IN TH E CASE CITED SUPRA HAS DECIDED THAT WHILE COMPUTING PROFIT AND LOSS UNDER SECTION 115JB OF THE ACT DISALLOWANCE UNDER S ECTION 14A OF THE ACT CANNOT BE MADE. THE RELEVANT PORTION OF THE ORDER IN THE CASE OF M/S. BEACH MINERALS COMPANY P. LTD (SUPRA) IS EXTRACTED HEREIN BELOW FOR REFERENCE. 8.1. GROUND NO.5.(A) COMPUTATION OF BOOK PROFIT U/S.115JB OF THE ACT BY GIVING EFFECT TO THE DISALLOWANCE OF EXP ENDITURE MADE INVOKING THE PROVISIONS OF THE SECTION-14A OF THE ACT FOR ` 3,11,34,630/- AND ALSO THE DISALLOWANCE OF EXPENDIT URE UNDER THE NORMAL PROVISIONS OF THE ACT. 8.1.1 THE LD. ASSESSING OFFICER WHILE COMPUTING T HE TAX AS PER PROVISIONS OF SECTION 115JB OF THE ACT MADE ADD ITIONS TO THE BOOK PROFIT WITH RESPECT TO THE DISALLOWANCE MADE U /S.14A OF THE ACT READ WITH RULES-8D OF THE INCOME TAX RULES. ON APPEAL, THE LD. CIT (A) CITING THE PROVISIONS OF CLAUSE (F) OF EXPLANATION-1 TO 6 ITA NO.2096/MDS/2011 SECTION-115JB, CONFIRMED THE ORDER OF THE LD. ASSES SING OFFICER. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT (A ) IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 10.2 I HAVE GONE THROUGH THE FACTS AND CIRCUMSTAN CES OF THE CASE. THE ASSESSING OFFICER HAS TAXED THE INCOME U/S.115J B SINCE THE TAX ON BOOK PROFITS IS MORE THAN THE TAX UNDER NORM AL COMPUTATION. WHILE DOING SO, SHE MADE DISALLOWANCE OF THE AMOUNT RELATABLE TO EXEMPT INCOME ON THE BASIS OF THE AMOUNT WORKED OUT U/S.14A R.W.RULE 8D UNDER NORMAL COMPUTATION. THE PROVISION S OF CLAUSE (F) OF EXPLANATION-1 TO S.115JB MAKES IT ABUNDANTLY CLE AR THAT THE AMOUNT OF EXPENDITURE RELATABLE TO ANY EXEMPT IN COME, OTHER THAN S.10(38), IS LIABLE TO BE ADDED BACK TO THE AMOUNT OF NET PROFIT AS SHOWN IN THE P&L A/C. RELIANCE IS PLACED ON THE LA TEST DECISION OF THE ITAT MUMBAI IN THE CASE OF DABUR INDIA LTD., 37 TAXMANN.COM 289. RELIANCE IS ALSO PLACED ON THE LATEST DECISIO N OF THE ITAT MUMBAI IN THE CASE OF RBK SHARE BROKING P. LTD IN I TA NO.6678 & 7546/MUM/2011 DATED 24.7.2013 WHEREIN IT WAS HELD T HAT THE AMOUNT DISALLOWABLE U/S.14A CAN BE ADDED BACK WHILE COMPUTING BOOK PROFIT UNDER EXPLANATION-1 TO S. 115JB(PARA 6) . RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, I UPHOLD THE ADDITIO N MADE BY THE ASSESSING OFFICER. THIS GROUND IS DISMISSED. HOWEVER, ON PERUSING THE EXPLANATION-1(F) OF SECTIO N-115JB(2) OF THE ACT, WE DO NOT FIND MERIT IN THE CONTENTION OF THE LD. CIT (A). THE RELEVANT PROVISION OF THE ACT IS EXTRACTED HERE IN BELOW FOR REFERENCE:- SECTION.115JB EXPLANATION-[1] FOR THE PURPOSES OF THIS SECTION, BOOK PROFIT MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOS S ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UNDER SUB-SECTI ON(2), AS INCREASED BY (A) TO (E) --------------------------------------- ------------- (F) THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO A NY INCOME TO WHICH [SECTION-10 (OTHER THAN THE PROVISI ONS CONTAINED IN CLAUSE (38) THEREOF] OR SECTION 11 OR SECTION 1 2 APPLY; (G) TO (J) --------------------------------------- -------------- FROM THE ABOVE IT IS APPARENT THAT THE AFORESAID PR OVISION OF THE ACT DOES NOT REFER TO ANY DISALLOWANCE MADE U/S.14A OF THE ACT WHILE ARRIVING AT THE BOOK PROFIT FOR THE PURPOSE O F SECTION- 115JB(2) OF THE ACT. FURTHER SECTION 14A OF THE ACT IS A PROVISION WITH FICTION DISALLOWING THE DEEMED EXPENDITURE ATT RIBUTABLE TO EXEMPT INCOME VIZ., DIVIDEND INCOME U/S. 10 OF THE ACT AND SECTION 115JB OF THE ACT IS ALSO A PROVISION WITH F ICTION FOR 7 ITA NO.2096/MDS/2011 PAYMENT OF TAX IN RESPECT OF DEEMED INCOME. THEREFO RE WHILE COMPUTING THE PROFIT FOR THE PURPOSE OF SECTION 115 JB OF THE ACT ANOTHER PROVISION WITH FICTION CANNOT BE SUPERIMPOS ED. HENCE THE QUESTION OF INCREASING THE BOOK PROFIT DUE TO THE DISALLOWANCE U/S.14A OF THE ACT WILL NOT ARISE. HOWEVER, IN THE INSTANT CASE OF THE ASSESSEE, SINCE WE HAVE ALREADY DELETED THE ADD ITION MADE U/S.14A, INCREASING THE BOOK PROFIT WILL NOT ARISE. FURTHER THE DECISION OF HONBLE APEX COURT CITED BY THE ASSESSE E IN THE CASE M/S.APOLLO TYRES LTD. VS. CIT REPORTED IN 255 ITR 2 73 IS ALSO SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. TH E GIST OF THE SAME IS REPRODUCED HEREIN BELOW FOR REFERENCE:- THE ASSESSING OFFICER, WHILE COMPUTING THE BOOK PR OFITS OF A COMPANY UNDER SECTION 115J OF THE INCOME-TAX ACT, 1 961, HAS ONLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES ACT AS HAVING B EEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT. TH E ASSESSING OFFICER, THEREAFTER, HAS THE LIMITED POWER OF MAKIN G INCREASES AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO SE CTION 115J . THE ASSESSING OFFICER DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFITS SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLANATION. THE USE OF THE WORDS IN ACCORDANCE WITH THE PROVISIONS OF PARTS II AND III OF SCHEDULE VI T O THE COMPANIES ACT IN SECTION 115J WAS MADE FOR THE LIMITED PURPOSE OF EMPOWERING THE ASSESSING OFFICER TO RELY UPON THE AUTHENTIC STATEM ENT OF ACCOUNTS OF THE COMPANY. WHILE SO LOOKING INTO THE ACCOUNTS OF THE COMPANY, THE ASSESSING OFFICER HAS TO ACCEPT THE AUTHENTICITY OF THE ACCOUNTS WITH REFERENCE TO THE PROVISIONS OF THE COMPANIES ACT, W HICH OBLIGATE THE COMPANY TO MAINTAIN ITS ACCOUNTS IN A MANNER PROVID ED BY THAT ACT AND THE SAME TO BE SCRUTINIZED AND CERTIFIED BY STA TUTORY AUDITORS AND APPROVED BY THE COMPANY IN GENERAL MEETING AND THER EAFTER TO BE FILED BEFORE THE REGISTRAR OF COMPANIES WHO HAS A S TATUTORY OBLIGATION ALSO TO EXAMINE AND BE SATISFIED THAT TH E ACCOUNTS OF THE COMPANY ARE MAINTAINED IN ACCORDANCE WITH THE REQUI REMENTS OF THE COMPANIES ACT. SUB-SECTION (1A) OF SECTION 115J DOE S NOT EMPOWER THE ASSESSING OFFICER TO EMBARK UPON A FRESH ENQUIR Y IN REGARD TO THE ENTRIES MADE IN THE BOOKS OF ACCOUNT OF THE COMPANY . FROM THE ABOVE DECISION IT IS CLEAR THAT WHILE COMP UTING THE BOOK PROFIT OF THE COMPANY UNDER THE PROVISIONS OF SECT ION 115JB OF THE ACT; ANY DISALLOWANCE MADE UNDER THE NORMAL PROVISI ONS OF THE ACT ALSO CANNOT BE GIVEN EFFECT TO FOR ARRIVING AT THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB OF THE ACT. ACCORDINGLY, THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED IN ITS FAVOUR . ACCORDINGLY WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO COMPUTE THE PROFIT AND LOSS OF THE ASSESSEE UNDER S ECTION 8 ITA NO.2096/MDS/2011 115JB OF THE ACT WITHOUT MAKING DISALLOWANCE OF EXP ENDITURE UNDER SECTION 14A OF THE ACT. GROUND NO.2 ADDITION OF FOREIGN EXCHANGE LOSS REL ATING TO INTEREST ON LOAN FOR ACQUISITION OF FIXED ASSET S UNDER NORMAL PROVISIONS AS WELL AS UNDER SECTION 115JB OF THE ACT:- UNDER NORMAL PROVISIONS 5.1 IT WAS OBSERVED BY THE REVENUE THAT THE ASSES SEE HAD DEBITED TO ITS PROFIT & LOSS ACCOUNT NET FOREIGN EX CHANGE LOSS RELATED TO INTEREST ON THE LOAN OBTAINED FOR ACQUIR ING ASSETS. THEREFORE, THE LEARNED ASSESSING OFFICER ADDED THE SAME TO THE PROFIT OF THE ASSESSEE BY CAPITALIZING THE INTE REST AND ADDED THE SAME TO THE COST OF THE ASSET BY VIRTUE O F SECTION 43A OF THE ACT, BUT HOWEVER GAVE THE BENEFIT OF DEP RECIATION @ 15%. WE DO NOT FIND ANY INFIRMITY IN THE ORDERS O F THE REVENUE ON THIS ISSUE BECAUSE SECTION 43A OF THE AC T PROVIDES THAT SUCH EXPENSE HAS TO BE CAPITALIZED. A CCORDINGLY THE LEARNED ASSESSING OFFICER HAS CAPITALIZE THE LO SS AND GRANTED THE BENEFIT OF DEPRECIATION. HENCE THE ORDE R OF THE REVENUE IS HEREBY CONFIRMED ON THIS ISSUE. 9 ITA NO.2096/MDS/2011 UNDER SECTION 115JB OF THE ACT 5.2 AS REGARDS ADDITION OF FOREIGN EXCHANGE LOSS RELAT ING TO INTEREST ON LOAN FOR ACQUIRING FIXED ASSETS, UNDER SECTION 115JB OF THE ACT, THE SAME RATIO MENTIONED HEREIN A BOVE IN PARA 4.3 WILL BE APPLICABLE BECAUSE SECTION 43A OF THE ACT AND SECTION 115JB OF THE ACT BOTH HAS A LEGAL FICTI ON AND THEREFORE SECTION 43A OF THE ACT CANNOT BE IMPOSED WHILE MAKING COMPUTATION UNDER SECTION 115JB OF THE ACT. HENCE, THE INTEREST EXPENSE CANNOT BE EXCLUDED FROM THE BO OK PROFIT UNDER SECTION 115JB OF THE ACT. GROUND NO.3 : ADDITION OF ` 3,04,15,010/- IN RELATION TO INTEREST ON LOAN FOR ACQUIRING FIXED ASSETS UNDER N ORMAL COMPUTATION AS WELL AS IN COMPUTING BOOK PROFIT UND ER SECTION 115JB OF THE ACT. 6.1 SINCE WE HAVE ALREADY HELD THAT FOREIGN EXCHANG E LOSS RELATING TO INTEREST ON LOAN FOR ACQUISITION OF FIX ED ASSETS UNDER NORMAL COMPUTATION CANNOT BE TREATED AS AN AL LOWABLE DEDUCTION UNDER THE NORMAL PROVISIONS OF THE ACT A S THE SAME HAS TO BE CAPITALIZED BY VIRTUE OF SECTION 43 A OF THE ACT, HOWEVER, THE BENEFIT OF DEPRECIATION IS ALLOWA BLE AS DEDUCTION AND AT THE SAME TIME SUCH LOSS CANNOT BE 10 ITA NO.2096/MDS/2011 EXCLUDED FROM THE BOOK PROFIT UNDER COMPUTATION OF PROFIT AND LOSS UNDER SECTION 115JB OF THE ACT BECAUSE A PROVI SION WITH FICTION CANNOT BE IMPOSED ON ANOTHER PROVISION WITH FICTION, THE SAME TREATMENT WILL ALSO BE APPLICABLE IN THE C ASE OF INTEREST PAYMENT OF ` 3,04,15,010/-. HOWEVER, SINCE THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED BEFORE US THAT THE ASSESSEE WAS NOT GRANTED THE BENEFIT OF DEPRECI ATION, WE HEREBY REMIT BACK THE ISSUE WITH RESPECT TO DEPRECI ATION TO THE FILE OF THE LEARNED ASSESSING OFFICER IN ORDER TO GRANT THE BENEFIT OF DEPRECIATION IN ACCORDANCE WITH LAW, IF THE SAME IS NOT ALREADY GRANTED BY THE REVENUE. GROUND NO.4: A DDITION OF ` 1,54,19,582/- IN RELATION TO PROVISION FOR DOUBTFUL DEBTS WHILE ARRIVING AT BOOK S PROFITS UNDER SECTION 115JB OF THE ACT:- 7. THE REVENUE HAS DISALLOWED PROVISION FOR DOUBTFU L DEBTS AMOUNTING TO RS.1,54,19,582/- WHILE COMPUTING THE INCOME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS OF THE ACT AS WELL AS UNDER SECTION 115JB OF THE ACT. WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF THE REVENUE BECAUSE T HERE IS NO SECTION IN THE ACT FOR GRANTING DEDUCTION TOWARDS P ROVISION MADE FOR BAD AND DOUBTFUL DEBTS. FURTHER EXPLANA TION I(C )& 11 ITA NO.2096/MDS/2011 (I) TO SECTION 115JB OF THE ACT CLEARLY PROVIDES T HAT THE BOOK PROFIT HAS TO BE INCREASED BY (C) THE AMOUNT OR AMO UNTS SET ASIDE TO PROVISIONS MADE FOR MEETING LIABILITIES, O THER THAN ASCERTAINED LIABILITIES (I) THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FOR DIMINISHING IN THE VALUE OF ANY ASSET . ACCORDINGLY THIS ISSUE IS DECIDED AGAINST THE ASSES SEE. GROUND NO.5: DETERMINING THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION RELATING TO THE COMMISSIO N PAID BY THE ASSESSEE TO SAINT-GOBAIN EXPROOVER OF ` 5,02,99,206/- TOWARDS AVAILING MARKETING SERVICES. 8.1 THE ASSESSEE HAD MADE EXPORT SALES THROUGH ITS TWO AES OUTSIDE INDIA. FOR THE SALES MADE THROUGH ITS A E SAINT GOBAIN EXPROVER, THE ASSESSEE HAD PAID COMMISSION O F RS.5,02,99,206/- FOR AVAILING MARKET SERVICES. HOW EVER, FOR THE SALES MADE THROUGH ITS AE SAINT GOBAIN AUTOVER, THE ASSESSEE HAD NOT PAID ANY COMMISSION. THE LEARNED T PO OPINED THAT THE TRANSACTION OF THE ASSESSEE WITH IT S TWO AES IS ESSENTIALLY COMPARABLE. THE ASSESSING OFFICER TH EREFORE ADOPTING THE INTERNAL CUP METHOD DISALLOWED THE COM MISSION PAID TO ITS AES SAINT GROVER EXPROVER. AT THE OUTSE T, LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE SCOPE OF TRANSACTIONS BETWEEN BOTH THE AES IS ALTOGETHER DIF FERENT. 12 ITA NO.2096/MDS/2011 THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMI TTED THAT FOR THE SALE MADE THROUGH SAINT GOBIN EXPROVER, THE AE SAINT GOBAIN EXPROVER ONLY ACTED AS A COMMISSION AGENT AN D PRODUCTS WERE DIRECTLY SOLD BY THE ASSESSEE TO THE PURCHASER. HOWEVER, WITH REGARD TO TRANSACTION WITH RESPECT TO SAINT GOBAIN AUTOVER THE ASSESSEE HAD MADE OUTRIGHT SALE TO ITS AE . SINCE THERE IS A BASIC MISTAKE IN UNDERSTANDIN G THE TRANSACTION BETWEEN THE ASSESSEE AND ITS AE BY THE REVENUE, THE LEARNED AUTHORIZED REPRESENTATIVE REQU ESTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE LEARNED TPO FOR FRESH CONSIDERATION. 8.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY OPPOSED TO THE SUBMISSIONS OF THE LEARNED AUTHORIZE D REPRESENTATIVE. 8.3 HOWEVER, AFTER HEARING BOTH THE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT IN THE INTEREST OF JUSTICE, TH E MATTER NEEDS TO BE REMITTED BACK TO THE FILE OF THE LEARNE D TPO FOR DE NOVO CONSIDERATION. ACCORDINGLY, WE HEREBY REMIT THE 13 ITA NO.2096/MDS/2011 MATTER BACK TO THE FILE OF THE LEARNED TPO FOR HEAR ING THE ISSUE AFRESH. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 13 TH JULY, 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 13 TH JULY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF