M/s Carrier Air-Conditioning & Refrigeration Ltd., Gurgaon V. ACIT, Gurgaon

ITA 2140/DEL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7054 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 19-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Assessee Lawyers: SANDEEP KARHAIL S
• Keywords: Depreciation; Transfer pricing; Principle of natural justice; International transaction; Retrospective amendment; Additional evidence; Question of law; Wholly owned subsidiary; Revenue expenditure; Capital expenditure
• Section: 143(3); 92B; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I-1 : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.5244/DEL/2015 ASSESSMENT YEAR : 2005-06 ITA NO.1126/DEL/2014 ASSESSMENT YEAR : 2009-10 ITA NO.728/DEL/2015 ASSESSMENT YEAR 2010-11 ITA NO.2140/DEL/2016 ASSESSMENT YEAR 2011-12 ITA NO.7312/DEL/2017 ASSESSMENT YEAR 2013-14 CARRIER AIR-CONDITIONING & REFRIGERATION LTD., KHERKI DAULA POST, NARSINGHPUR, GURGAON. PAN: AAACC8414B VS. ACIT, CIRCLE-1(1), GURGAON. (APPELLANT) (RESPONDENT) ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 2 ASSESSEE BY : SHRI NAGESHWAR RAO & SHRI SANDEEP KARHAIL, ADVOCATES DEPARTMENT BY : SHRI SANJAY I BARA, CIT, DR DATE OF HEARING : 11.07.2018 DATE OF PRONOUNCEMENT : 13.07.2018 ORDER PER R.S. SYAL, VP: THIS BATCH OF FIVE APPEALS RELATES TO THE ASSESSME NT YEARS 2005-06, 2009-10, 2010-11, 2011-12 AND 2013-14. SOME COMMON POINTS HAVE BEEN RAISED IN THESE APPEALS. WE ARE, THEREFORE, PROCEED ING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. ASSESSMENT YEAR 2005-06 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION BY THE LD. CIT(A) VIDE HIS ORDER DATED 02. 06.2015 ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT AMOUNTING TO RS.5,14,02 ,502/- MADE BY THE ASSESSING OFFICER IN THE TRANSPORT SEGMENT. 3. THE FACTS OF THE CASE, IN A NUTSHELL ARE THAT T HE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF CARRIER CORPORATION, USA AND IS ENGAGED IN THE MANUFACTURE, ASSEMBLY AND TRADING OF COMMERCIAL REF RIGERATION EQUIPMENTS. ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 3 A RETURN WAS FILED DECLARING LOSS OF RS.6.35 CRORE. FORM NO. 3CEB WAS FURNISHED REPORTING FOUR INTERNATIONAL TRANSACTIONS . THE ASSESSING OFFICER (AO) MADE A REFERENCE TO THE TRANSFER PRICING OFFIC ER (TPO) FOR DETERMINING THE ARMS LENGTH PRICE (ALP) OF THESE T RANSACTIONS. THE TPO, DURING THE COURSE OF PROCEEDINGS, OBSERVED THAT THE REPORTED INTERNATIONAL TRANSACTIONS INCLUDED `IMPORT OF RAW MATERIALS AND COMPONENTS; `IMPORT OF FINISHED GOODS; AND `EXPORT OF FINISHED GOODS. THE ASSESSEE APPLIED TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD WITH PROFIT LEVEL INDICATOR (PLI) OF OPERATI NG PROFIT TO OPERATING REVENUE/COST FOR DEMONSTRATING THAT THESE TRANSACTI ONS WERE AT ALP. THE TRANSACTIONS WERE REPORTED IN FOUR SEGMENTS, VIZ., SEGMENT A [TRADING AND ASSEMBLY OF TRANSPORT AND BUS REFRIGERATION SYSTEMS ]; SEGMENT B [MANUFACTURING AND EXPORT OF FINISHED GOODS FOR ASS OCIATED ENTERPRISES (AES)]; AND SEGMENT-C [MANUFACTURING FOR UNRELATED PARTIES]. THERE IS NO DISPUTE AS REGARDS THE SEGMENT-D RELATING TO MARKET ING SUPPORT SERVICES. THE TPO TOOK UP TRANSACTIONS RELATING TO IMPORT OF RAW MATERIAL AND COMPONENTS, IMPORT OF FINISHED GOODS AND EXPORT OF MANUFACTURED FINISHED GOODS FOR CONSIDERATION. HE ACCEPTED TRANSACTIONS G IVEN IN SEGMENT-B, ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 4 NAMELY, REFRIGERATION TRANSACTIONS RELATING TO AES, AT ALP. FOR DEMONSTRATING THAT THE INTERNATIONAL TRANSACTIONS U NDER SEGMENT-A, BEING, TRANSPORT, WERE AT ALP, THE ASSESSEE CONSIDERED SEG MENT-C, NAMELY, REFRIGERATION (NON-AES) ONLY AS INTERNAL COMPARABLE AND ITS PLI AS A BENCHMARK. THE TPO HELD THAT THE NATURE OF WORK CAR RIED OUT BY THE ASSESSEE IN SEGMENT-A WAS DIFFERENT FROM THAT DONE UNDER SEGMENT-C AND HENCE THE FUNCTIONS RELATING TO TRANSPORT COULD NOT BE COMPARED WITH THE FUNCTIONS CARRIED OUT IN REFRIGERATION (NON-AES) SE GMENT. IT WAS SO OPINED, INTER ALIA, ON THE BASIS OF THE ASSESSEE ITSELF DIFFERENTIATING ITS LINE OF BUSINESS UNDER THE TRANSPORT AND REFRIGERATION (NON -AES) SEGMENTS BY TREATING THEM SEPARATELY. THE TPO FURTHER DID NOT ACCEPT THE COMPARABILITY OF REFRIGERATION (NON-AE) SEGMENT WITH TRANSPORT SE GMENT BY NOTICING THAT THE TRANSPORT SEGMENT CONSISTED OF TRUCK REFRIGERAT ION SYSTEMS AND BUS AIR- CONDITIONING SYSTEMS, WHEREAS REFRIGERATION DIVISIO N COMPRISED OF COMMERCIAL REFRIGERATION. HE, THEREFORE, REFUSED T O ACCEPT SEGMENTC AS COMPARABLE. THEREAFTER, HE CARRIED OUT A SEARCH PRO CESS HIMSELF AND FOUND OUT ONE COMPARABLE, NAMELY, SUBROS LTD. THE ASSESSE E WAS SHOW-CAUSED ON THIS COMPARABLE. IN REPLY, THE ASSESSEE SUBMITTED THAT SUBROS LTD. WAS ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 5 FUNCTIONALLY NOT COMPARABLE WITH THE ASSESSEES BUS INESS IN SEGMENT-A. NOT CONVINCED, THE TPO APPLIED THE OP/OR OF SUBORS LTD. AT 5.57% AS BENCHMARK AND COMPUTED TRANSFER PRICING ADJUSTMENT AMOUNTING TO RS.5.14 CRORE. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL, AGAINST WHICH THE ASSESSEE HAS APPROACHED THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSEES CASE FOR THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR, NAMELY, 2006-07 CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL. VIDE ORDER DATED 12.02.2016 I N ITA NO.5123/DEL/2010, THE TRIBUNAL FOUND THAT THE MAIN ISSUE WAS OF COMPARABILITY OF THE REFRIGERATION (NON-AE) SEGMENT WITH THE TRANSPORT SEGMENT. IT NOTICED THAT THE TRANSPORT SEGMENT DEA LT WITH COOLING OF ALL MOVABLE SYSTEMS, SUCH AS, BUS, TRUCKS AND CONTAINER S; WHEREAS REFRIGERATION SEGMENT DEALT WITH COOLING OF IMMOVAB LE PROPERTIES, SUCH AS, COLD ROOMS, BREEZERS AND VIZI COOLERS. IT FURTHER NOTICED THAT THE PRODUCTS IN SEGMENT-C WERE ASSEMBLED/MANUFACTURED FROM RAW M ATERIALS AND COMPONENTS PROCURED FROM UNRELATED PARTIES. IT ALS O CONSIDERED THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 6 FINDINGS RETURNED BY THE TPO WHO FOUND THAT THERE W AS NO INTERNAL COMPARABLE UNDER SEGMENT-A, BEING, TRANSPORT SEGME NT AND THE ASSESSEES APPLICATION OF PLI GIVEN IN SEGMENT-C RELATING TO R EFRIGERATION (NON-AE) SEGMENT WAS NOT ACCEPTABLE. IN THE ABSENCE OF SUFF ICIENT DISCUSSION IN THE ORDER OF THE TPO ABOUT THE FUNCTIONAL PROFILE OF TH E RELEVANT TWO SEGMENTS, THE TRIBUNAL RESTORED THE MATTER TO THE AO/TPO WITH A DIRECTION TO HAVE OPINION OF SOME TECHNICAL EXPERTS ON THE FUNCTIONS PERFORMED BY THE ASSESSEE UNDER THESE TWO SEGMENTS FOR FINDING OUT S IMILARITY/DISSIMILARITY BETWEEN THEM. THE LD. AR SUBMITTED THAT PURSUANT T O SUCH AN ORDER PASSED BY THE TRIBUNAL, THE ASSESSEE FILED EXPERT TECHNICA L OPINION OF SHRI PAWANEXH KOHLI IN SUPPORT OF ITS CONTENTION THAT TH ERE WAS NO FUNCTIONAL DIFFERENCE BETWEEN THE TWO SEGMENTS AND, CONTRARY T O THAT, THE OFFICER SOUGHT REPORT FROM VALUATION OFFICER, WHICH HELD OT HERWISE. IT WAS SUBMITTED THAT THE ASSESSING OFFICER/TPO HAVE HELD THE TWO SEGMENTS DIFFERENT BY RELYING ON THE REPORT OF THE VALUATIO N OFFICER. 5. IN SO FAR AS THE FACTS OF THE INSTANT YEAR AR E CONCERNED, WE, AGAIN, FIND THAT THE PRIMARY CONTROVERSY REMAINS THE SAME AS TO WHETHER REFRIGERATION ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 7 (NON-AE) SEGMENT IS COMPARABLE WITH TRANSPORT SEGME NT. AGAIN, WE FIND THAT THERE IS NOT MUCH DISCUSSION IN THE ASSESSMENT ORDER ON THE FUNCTIONS, ASSETS AND RISKS IN THE TWO SEGMENTS OF THE ASSESSE E. THE LD. AR SUBMITTED THAT THE ADDITIONAL EVIDENCE SHOULD BE CONSIDERED A ND THE MATTER SHOULD BE DECIDED BY THE TRIBUNAL. THE LD. DR STRONGLY OPPOSE D THE SUBMISSION MADE ON BEHALF OF THE ASSESSEE BY URGING THAT IT WAS NOT CLEAR IF THE FACTS FOR THE ASSESSMENT YEAR 2006-07 WERE SIMILAR OR DIFFERENT F ROM THOSE FOR THE YEAR UNDER CONSIDERATION. HE FURTHER STATED THAT THE REP ORTS SUBMITTED BY THE EXPERTS NEED TO BE EXAMINED BY THE AO/TPO ON THE T OUCHSTONE OF THE FACTS PREVAILING FOR THE ASSESSMENT YEAR IN QUESTION. 6. IN THE GIVEN FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ASSESSEES APPLICATION FOR ADDITIONAL EVIDENCE INCL UDING EXPERT TECHNICAL OPINION PROVIDED BY THE ASSESSEE AND THE REPORT OF THE VALUATION OFFICER NEED TO BE EXAMINED AT THE END OF THE TPO/AO ON THE FACTS RELEVANT FOR THE YEAR UNDER CONSIDERATION. EVEN IF THE AO/TPO HAS FO UND THE ADDITIONAL EVIDENCE AS SUPPORTING THE DEPARTMENTAL VIEW FOR TH E A.Y. 2006-07, THAT DOES NOT PER SE OPERATE AS RES JUDICATA FOR OTHER YEARS. THE FACTS OF EACH ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 8 YEAR NEED TO BE SEPARATELY EXAMINED IN THE LIGHT OF THE ADDITIONAL EVIDENCE BEFORE JUMPING TO ANY CONCLUSION. RELIANCE OF THE L D. AR ON THE DECISION OF THE TRIBUNAL IN THE CASE OF ZUARI LEASING AND FINANCE CORPN. LTD. (2008) 112 ITD 205(DEL) (TM) FOR THE PROPOSITION THAT THE TRIBUNAL SHOULD NOT SEND THE MATTER BACK AND DECIDE THE ISSUE ITSELF, I S MISPLACED. IN THAT CASE, THE RESTORATION WAS HELD TO BE NOT JUSTIFIED ON THE STRENGTH OF MATERIAL WHICH WAS ALREADY AVAILABLE ON RECORD AT THE ASSESSMENT S TAGE. EXTANTLY, WE ARE CONCERNED WITH ADDITIONAL EVIDENCE WHICH HAS NOT BE EN EXAMINED BY THE AO/TPO IN THE LIGHT OF THE FACTS FOR THE RELEVANT Y EAR. OUR VIEW IN RESTORING THAT MATTER TO THE AO/TPO FOR A FRESH ADJ UDICATION OF THIS ISSUE IS FORTIFIED BY THE JUDGMENT OF THE HON'BLE CALCUTTA H IGH COURT IN CIT VS. TRIMLINE VYAPAAR LTD. (2015) 370 ITR 373 (CAL) IN WHICH IT HAS BEEN HELD THAT ADDITIONAL EVIDENCE CANNOT BE PERMITTED TO BE ADDUCED WITHOUT MAKING AN OPPORTUNITY TO THE AO. IN THAT CASE, THE TRIBUN AL DECIDED THE ISSUE IN ASSESSEES FAVOUR BY RELYING ON ADDITIONAL EVIDENCE WITHOUT CONFRONTING IT TO THE AO. THE TRIBUNAL ORDER WAS SET ASIDE BY HOL DING THAT CONSIDERATION OF ADDITIONAL EVIDENCE, WITHOUT GIVING ANY OPPORTUN ITY TO THE AO TO EXAMINE THE SAME, IS GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 9 SLP FILED BY THE ASSESSEE AGAINST THE JUDGMENT OF T HE HON'BLE CALCUTTA HIGH COURT HAS BEEN DISMISSED BY THE HON'BLE SUPREME COU RT, SINCE REPORTED AT (2015) 378 ITR 34 (ST.) . TAKING A HOLISTIC VIEW OF THE MATTER, WE SET AS IDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO/TPO FOR DECIDING THIS ISSUE AFRESH IN THE LIGHT OF THE ADDITIONAL EV IDENCE WHICH THE ASSESSEE HAS FILED BEFORE THE TRIBUNAL. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ASSESSMENT YEAR 2009-10 8. THE ASSAIL IN THIS APPEAL IS TO THE LEGAL TENABI LITY OF THE FINAL ASSESSMENT ORDER DATED 19.12.2013 PASSED BY THE ASS ESSING OFFICER U/S 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ACT , 1961 (HEREINAFTER ALSO CALLED `THE ACT). THE FIRST ISSUE IS AGAINST THE TRANSFER PRICING ADDITION AMOUNTING TO RS.7,56,79,236/-. 9. SUCCINCTLY, THE FACTUAL SCENARIO IS THAT THE ASS ESSEE FILED ITS RETURN DECLARING INCOME OF RS. 54.20 CRORE. THE ASSESSEE A LSO FURNISHED FORM NO. 3CEB REPORTING CERTAIN INTERNATIONAL TRANSACTIONS. THE ASSESSING OFFICER MADE A REFERENCE TO THE TPO FOR DETERMINING THE ALP OF SUCH TRANSACTIONS. ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 10 THE TPO NOTICED THAT THE ASSESSEE COMPANY CARRIED ON ITS BUSINESS THROUGH CERTAIN SEGMENTS, VIZ., TRANSPORT, REFRIGERATION AN D AIR-CONDITIONING. IT ALSO RENDERED MARKETING SUPPORT SERVICES. THE DISP UTE IN THE INSTANT APPEAL IS ONLY IN RESPECT OF TRANSFER PRICING ADDITION MAD E IN TRANSPORT SEGMENT. THE ASSESSEE EMPLOYED THE TNMM AS THE MOST APPROPRI ATE METHOD WITH PLI OF OPERATING PROFIT/OPERATING REVENUE. THE ASSE SSEE SEGREGATED ITS REVENUE AND OPERATING COSTS IN DIFFERENT SEGMENTS A ND THUS DEDUCED SEGMENT-WISE OPERATING PROFITS. THAT IS HOW, IT COM PUTED OP/OR IN TRANSPORT SEGMENT AT (-)12.81%. FOR DEMONSTRATING THAT THE INTERNATIONAL TRANSACTION OF TRANSPORT SEGMENT WAS AT ARMS LENGT H PRICE, THE ASSESSEE CONSIDERED OP/OR OF REFRIGERATION (NON-AE) SEGMENT AT (-)15.48% AS A SOLE INTERNAL COMPARABLE. THE TPO DID NOT ACCEPT THE ASSESSEES TRANSFER PRICING ANALYSIS. HE HELD THAT THE REFRIGERATION S EGMENT WAS FUNCTIONALLY DISTINCT FROM THE TRANSPORT SEGMENT, AS WERE SEGRE GATED BY THE ASSESSEE ITSELF IN ITS TRANSFER PRICING STUDY REPORT. HE FU RTHER FOUND OUT CERTAIN FUNCTIONAL DIFFERENCES BETWEEN THE TWO SEGMENTS. IN ADDITION, RISKS IN TRANSPORT AND REFRIGERATION (NON-AE) SEGMENTS WERE ALSO FOUND TO BE DIFFERENT. THE TPO ALSO HELD THAT THE BIFURCATION OF OPERATING EXPENSES ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 11 BETWEEN AE AND NON-AE SEGMENTS OF REFRIGERATION WAS NOT RELIABLE. HE, THEREFORE, REFUSED TO ACCEPT THE ASSESSEES BENCHMA RKING APPROACH. A FRESH SEARCH PROCESS WAS CARRIED OUT BY THE TPO, WHO FOUN D FIVE COMPANIES AS COMPARABLE, NAMELY, FRICK INDIA LTD., PATELS AIRTEM P (INDIA) LTD., SANDEN VIKAS (INDIA) LTD., SUBROS LTD. AND VOLTAS LTD. ME AN OP/SALES RATIO OF SUCH FIVE COMPARABLES WAS DETERMINED AT 6.75%, WHI CH WAS CONSIDERED AS ARMS LENGTH MARGIN. APPLYING THIS PLI TO THE REVE NUES OF RS.43.47 CRORE IN THE ASSESSEES TRANSPORT SEGMENT, THE TPO WORKED OUT TRANSFER PRICING ADJUSTMENT OF RS.8,50,26,705/-. THE ASSESSEE OBJEC TED TO THE DRAFT ORDER PROPOSED BY THE ASSESSING OFFICER INCORPORATING THE TRANSFER PRICING ADJUSTMENT BEFORE THE DISPUTE RESOLUTION PANEL (DRP ). THE PANEL HELD THAT THE TPO WAS RIGHT IN IGNORING REFRIGERATION (NON-AE ) SEGMENT FOR BENCHMARKING THE INTERNATIONAL TRANSACTION OF THE T RANSPORT SEGMENT. OUT OF FIVE COMPARABLES CHOSEN BY THE TPO, THE DRP DIRE CTED TO EXCLUDE PATELS AIRTEMP (INDIA) LTD. FROM THE LIST OF COMPARABLES. THE ASSESSING OFFICER EVENTUALLY MADE TRANSFER PRICING ADDITION OF RS.7,5 6,79,236/- IN THE INTERNATIONAL TRANSACTION OF TRANSPORT SEGMENT, AGA INST WHICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 12 10. THE ASSESSEE HAS FILED AN APPLICATION UNDER RULE 29 OF THE INCOMETAX APPELLATE TRIBUNAL RULES, 1963 FOR THIS YEAR AS WEL L REQUESTING TO ADMIT ADDITIONAL EVIDENCE, NAMELY, EXPERT TECHNICAL OPINI ON OF MR. PAWANEXH KOHLI, REPORT SUBMITTED BY THE VALUATION OFFICER AN D ORDER PASSED BY THE TPO FOR THE ASSESSMENT YEAR 2006-07 (POST-REMAND PR OCEEDINGS) ETC. THE LD. AR CONTENDED THAT THE EXPERT TECHNICAL OPINION GIVEN BY SHRI PAWANEXH KOHLI AMPLY BRINGS OUT THAT THERE IS NO FUNCTIONAL DIFFERENCE BETWEEN THE ASSESSEES TRANSPORT SEGMENT AND REFRIGERATION (NON -AE) SEGMENT. HE INSISTED THAT THE TRIBUNAL SHOULD DECIDE THE ISSUE AT ITS OWN WITHOUT REMITTING THE MATTER TO THE AO/TPO. IT WAS EMPHASI ZED THAT THE SITUATION FOR THE A.YS. 2009-10 ONWARDS WAS DIFFERENT FROM TH AT FOR THE A.YS. 2005- 06 AND 2006-07 INASMUCH AS THE TPO DID NOT DISCUSS THE FUNCTIONAL PROFILE OF THE ASSESSEE UNDER THE TRANSPORT AND REFRIGERATI ON (NON-AE) SEGMENTS AT GREAT LENGTH AND SIMPLY REFUSED TO ACCEPT THE IN TERNAL COMPARABLE, BEING REFRIGERATION (NON-AE) SEGMENT AT THE THRESHOLD, FO R THE A.Y. 2005-06 AND 2006-07, BUT HE CARRIED OUT FULL FUNCTIONAL AND RIS K ANALYSIS OF BOTH THE SEGMENTS FOR THE A.YS. 2009-10 ONWARDS AND THEREAFT ER REACHED THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 13 CONCLUSION THAT THE REFRIGERATION (NON-AE) SEGMENT WAS NOT A FIT COMPARABLE FOR THE TRANSPORT SEGMENT. 11. AU CONTRAIRE, THE LD. DR SUBMITTED THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE FOR THE FIRST TIME CANT BE TAKEN N OTE OF BY THE TRIBUNAL WITHOUT CONFRONTING IT TO THE AO/TPO AND HENCE THE MATTER SHOULD BE SENT BACK, AS HAS BEEN DONE BY THE TRIBUNAL FOR THE A.Y. 2006-07, WHICH ORDER HAS ATTAINED FINALITY. 12. THE LD. AR WAS ADVISED THAT IN CASE HE WANT ED THE TRIBUNAL TO DECIDE THE MATTER AT ITS OWN, OBSERVING DEPARTURE FROM THE VIEW TAKEN BY IT FOR THE A.Y. 2006-07, THEN HE SHOULD NOT PRESS FOR CONSIDER ATION OF THE ADDITIONAL EVIDENCE AS IT AMOUNTS TO VIOLATION OF THE PRINCIPL ES OF NATURAL JUSTICE QUA THE REVENUE. HE NOT ONLY INSISTED ON GOING AHEAD WI TH THE MATTER ON MERITS INDEPENDENTLY, BUT ALSO REFUSED TO TAKE BACK HIS AP PLICATION FOR ADDITIONAL EVIDENCE, THEREBY TAKING CONFLICTING STANDS. THOUG H INITIALLY WE WERE NOT IN FAVOUR OF RENDERING ANY FINDING ON MERITS AT THI S STAGE, WHICH MAY INFLUENCE THE DECISION OF THE AUTHORITIES BELOW FOR OTHER YEARS, BUT IT WAS ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 14 DUE TO THE LD. ARS INSISTENCE, THAT WE TOOK UP TH E MATTER ON MERITS. THIS IS HOW, WE EXAMINED THE RELEVANT MATERIAL IN THE LIGHT OF ARGUMENTS ADVANCED. 13. THE ASSESSEE HAS DRAWN A COMBINED PROFIT & LOSS ACCOUNT, A COPY OF WHICH IS AVAILABLE ON PAGE 157 OF THE PAPER BOOK. I T CAN BE SEEN FROM SUCH PROFIT & LOSS ACCOUNT THAT THE INCOME AS WELL AS TH E EXPENSES OF ALL THE SEGMENTS ARE SHOWN IN COMMON. PAGE 173 OF THE PAPE R BOOK IS CONTINUATION OF THE ANNUAL REPORT, WHICH CONTAINS S EGMENTAL REPORTING. THOUGH THE REVENUES IN RESPECT OF REFRIGERATION, TR ANSPORT AND AIR- CONDITIONING SEGMENTS HAVE BEEN SHOWN DISTINCTLY, B UT ALL THE OPERATING AND OTHER EXPENSES ARE COMMON UNDER THE HEAD TOTAL, W HICH FIGURES HAVE BEEN TAKEN FROM THE PROFIT AND LOSS ACCOUNT. IN OTH ER WORDS, THE ASSESSEE HAS MAINTAINED ACCOUNTS ON ENTITY LEVEL AND NOT ON SEGMENT LEVEL. PAGE 87 OF THE PAPER BOOK IS A SUMMARY OF SEGMENT-WISE OPER ATING MARGINS DRAWN BY THE ASSESSEE FOR THE YEAR, WHICH HAS BEEN PREPAR ED BY ALLOCATING EXPENSES IN CERTAIN RATIOS. THERE IS NO REFERENCE TO ANY SUCH RATIOS IN SUCH COMPUTATION. A SUMMARY OF THE SO-CALLED SEGMENT-W ISE OPERATING INCOME ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 15 AND OPERATING COSTS ETC. WAS GIVEN BY THE ASSESSEE TO THE TPO, WHICH HAS BEEN CAPTURED ON PAGE 3 OF HIS ORDER, AS UNDER:- PARTICULARS AIR- CONDITIONING DIVISION MARKETING SUPPORT SERVICES TRANSPORT SEGMENTA REFRIGERATION DIVISION AE SEGMENT B NON-AE SEGMENT TOTAL INCOME 6306528 413420 434766 206479 651565 TOTAL OPERATING COST 5898233 242532 490446 129330 752427 OPERATING PROFIT 408295 170888 -55680 77149 -100862 OPERATING PROFIT/OPERATING REVENUE 6.47% -12.81% 37.36% -15.48% 14. IT CAN BE SEEN FROM THE ABOVE THAT THE ASSESSEE HAS SEGREGATED REFRIGERATION SEGMENT IN TWO PARTS, NAMELY, AE AND NON-AE SEGMENTS. THE ASSESSEE HAS SOUGHT TO BENCHMARK ITS OP/OR OF ( -) 12.81% IN TRANSPORT SEGMENT WITH THE OP/OR OF (-) 15.48% IN R EFRIGERATION (NON- AE) SEGMENT FOR DEMONSTRATING THAT THE NEGATIVE OP/ OR IN TRANSPORT SEGMENT, BEING, LESS THAN THAT OF REFRIGERATION (N ON-AE) SEGMENT, IS AN ARMS LENGTH MARGIN. WHEN THE NATURE OF ACTIVITY IN REFRIGERATION (AE AND NON-AE) SEGMENTS IS SAME, IT IS NOT UNDERSTAND ABLE AS TO HOW OP/OR IN REFRIGERATION (AE SEGMENT) IS 37.36% AND THERE IS LOSS IN REFRIGERATION (NON-AE SEGMENT) AT (-)15.48%, WHICH LATER FIGURE T HE ASSESSEE HAS ADOPTED ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 16 AS A SOLITARY COMPARABLE FOR BENCHMARKING THE INTER NATIONAL TRANSACTION OF TRANSPORT SEGMENT IN DISPUTE. THE TPO HAS ALSO DOU BTED THE CORRECTNESS OF ALLOCATION OF EXPENSES BETWEEN THESE SEGMENTS FOR W ORKING OUT DRASTICALLY VARYING OP/ORS. HE HAS RECORDED ON PAGE 22 OF HIS ORDER : THAT EVEN AE AND NON-AE SEGMENT OF REFRIGERATION SEGMENT HAS NOT BEEN DONE ON THE BASIS OF ACTUAL ACCOUNTS AND HAS BEEN DONE ON THE BASIS OF ALLOCATION KEY OF SALES RATIO. THE AFORESAID DIVISION BETWEEN THE AE AND NON-AE SEGMENTS IS, THEREFORE, NOT RELIABLE. 15. ONE CAN UNDERSTAND BENCHMARKING OF AE TRANSACTI ONS IN TRANSPORT SEGMENT WITH THE NON-AE TRANSACTIONS IN THE TRANSPO RT SEGMENT ITSELF. HOW THE REFRIGERATION (NON-AE) SEGMENT CAN BE COMPARED WITH TRANSPORT SEGMENT IS ANYBODYS GUESS. IT IS MORE SO, WHEN TH E ASSESSEE HAS ITSELF SEGREGATED TRANSPORT SEGMENT FROM REFRIGERATION SEG MENT, THEREBY INDICATING THAT BOTH THE SEGMENTS ARE MUTUALLY EXCL USIVE AND CANNOT BE COMPARED WITH EACH OTHER. IF THE ASSESSEE HAS TO B ENCHMARK INTERNATIONAL TRANSACTIONS OF TRANSPORT SEGMENT, IT NEEDS TO FIND OUT NON-AE TRANSACTIONS UNDER THE TRANSPORT SEGMENT ITSELF AND NOT THE REFR IGERATION SEGMENT, ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 17 UNLESS IT GETS ESTABLISHED THAT THE FUNCTIONS PERFO RMED, ASSETS EMPLOYED AND RISKS INVOLVED IN TRANSPORT AND REFRIGERATION SEGME NTS ARE SIMILAR. TURNING TO THE FACTS OF THE INSTANT CASE, WE FIND T HAT SUCH A POSITION DOES NOT PRIMA FACIE APPEAR TO HAVE BEEN ESTABLISHED. 16. THE ASSESSEE CATEGORICALLY ADMITTED BEFORE THE AUTHORITIES THAT THE TRANSPORT SEGMENT DEALS WITH: TRADING AND ASSEMBLI NG OF REFRIGERATION AND COOLING PRODUCTS FOR MOVABLE SYSTEMS IN WHICH THE A SSESSEE IMPORTS TRUCK REFRIGERATION SYSTEM AND BUS AIR-CONDITIONING SYSTE M AS KITS/COMPLETELY BUILT UNITS FOR ASSEMBLY AND SALE IN INDIA. IN THI S SEGMENT, THE ASSESSEE ALSO TRADES IN SPARE PARTS OF TRUCK, BUS AND CONTAI NER REFRIGERATION. IN CONTRAST, IN THE REFRIGERATION SEGMENT, THE ASSESSE E IS ENGAGED IN MANUFACTURE AND SUPPLY OF COMPLETELY DIFFERENT LINE OF PRODUCTS, NAMELY, BREEZERS, VIZI COOLERS AND BOTTLE COOLERS AND COLD ROOMS ETC. TWO THINGS EMERGE FROM IT. FIRST, WHEREAS IN TRANSPORT SEGMENT , THE ASSESSEE IS UNDERTAKING REFRIGERATION OF MOVABLE ITEMS, SUCH AS BUS AND TRUCKS, IN REFRIGERATION SEGMENT, IT IS UNDERTAKING THE REFRIG ERATION OF IMMOVABLE ITEMS, SUCH AS, COLD ROOMS. IT IS AXIOMATIC THAT B OTH THESE ACTIVITIES ARE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 18 DIFFERENT IN NATURE. ANOTHER IMPORTANT FEATURE WHIC H EX FACIE MAKES THE TWO SEGMENTS DIFFERENT FROM EACH OTHER IS THAT THE ASSE SSEE IS ENGAGED IN MANUFACTURING ACTIVITY IN REFRIGERATION SEGMENT, WH EREAS IT IS AN ADMITTED POSITION THAT THE ASSESSEE DOES NOT CARRY OUT ANY M ANUFACTURING ACTIVITY IN THE TRANSPORT SEGMENT. IT GOES WITHOUT SAYING THAT THE FUNCTIONS, RISKS AND ASSETS IN A MANUFACTURING ACTIVITY ARE COMPLETELY D IFFERENT FROM THOSE IN A TRADING ACTIVITY. WHEN THIS POSITION WAS CONFRONTED TO THE LD. AR, HE SUBMITTED THAT THE MANUFACTURING ACTIVITY IN REFRIG ERATION SEGMENT WAS MINIMAL. ON A POINTED QUERY, HE FAILED TO INVITE O UR ATTENTION TOWARDS ANY MATERIAL INDICATING THE EXTENT OF MANUFACTURING ACT IVITY OR REVENUE FROM IT IN THE OVERALL REFRIGERATION (NON-AE) SEGMENT. 17. IT IS FURTHER OBSERVED THAT RISKS IN THE TRANSP ORT SEGMENT ARE DIFFERENT FROM THOSE IN THE REFRIGERATION SEGMENT. IN THE CAS E OF REFRIGERATION SEGMENT, THE ASSESSEE NEEDS TO PURCHASE RAW MATERIA L AND COMPONENTS FOR MANUFACTURING PANELS AND REFRIGERATION UNITS, WHICH ARE PROCURED FROM UNRELATED THIRD PARTY VENDORS HAVING RISK OF POOR Q UALITY OR DIFFERENCE IN SPECIFICATIONS ETC. HOWEVER, IN THE CASE OF TRANSP ORT SEGMENT, SUCH A RISK ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 19 IS VERY LIMITED AS THE RAW MATERIALS ARE SUPPLIED B Y GROUP CONCERNS AND IN CASE OF ANY DEFECTIVE GOODS, THE SAME CAN BE EASILY REPLACED. FOREIGN EXCHANGE RISK ALSO VARIES IN THE TWO SEGMENTS. WHE REAS IN THE TRANSPORT SEGMENT, THE AES INVOICE THE ASSESSEE FOR PURCHASES IN US DOLLARS, BUT, IN THE CASE OF NON-AE SEGMENT OF REFRIGERATION, THE AS SESSEE MAKES PURCHASES THROUGH THIRD PARTIES AND PAYS IN INDIAN RUPEES, TH EREBY LEADING TO DIFFERENCE IN FOREIGN EXCHANGE RISK IN THE TWO SEGM ENTS. FURTHER, THE TPO HAS REFERRED TO SEVERAL OTHER DIFFERENCES IN RISKS INVOLVED IN THE TWO SEGMENTS AT PAGE 22 OF HIS ORDER, WHICH ARE NOT REP RODUCED FOR THE SAKE OF BREVITY. THE ABOVE DISCUSSION EXPLICITLY MANIFESTS THAT THERE IS A DIFFERENCE IN THE FAR ANALYSIS OF TRANSPORT AND REFRIGERATION (NON-AE) SEGMENTS. 18. HAVING SEEN THAT THE ASSESSEE DID NOT CORRECTLY BENCHMARK ITS INTERNATIONAL TRANSACTION OF TRANSPORT SEGMENT BY C OMPARING IT WITH THE REFRIGERATION (NON-AE) SEGMENT, WE NEED TO EXAMINE AS TO WHETHER THE COMPARABLES CHOSEN BY THE TPO ARE REALLY COMPARABLE . 19. THE LD. AR SUBMITTED THAT THE TPO WAS NOT CO RRECT IN SELECTING THE COMPARABLES, ALL OF WHICH ARE INVOLVED IN THE MANUF ACTURING ACTIVITY, AS ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 20 AGAINST THE ASSESSEE NOT DOING ANY MANUFACTURING AC TIVITY UNDER THE TRANSPORT SEGMENT. THE DRP HAS DISCUSSED THE FUNCTI ONAL PROFILE OF THE COMPARABLES CHOSEN BY THE TPO ON PAGES 2 TO 4 OF I TS DIRECTION. IT HAS BEEN CLEARLY SET OUT THAT THESE COMPANIES ARE INVOLVED I N MANUFACTURING ACTIVITY. SUCH A POSITION HAS ALSO BEEN RIGHTLY CONCEDED BY T HE LD. DR. 20. IT IS PERTINENT TO MENTION THAT THE LD. AR H AS CONTESTED THE COMPARABILITY OF THE COMPANIES CHOSEN BY THE TPO AN D RETAINED BY THE DRP ON THE PREMISE THAT ALL OF THEM ARE ENGAGED IN MANUFACTURING ACTIVITY WHEREAS ITS TRANSPORT SEGMENT IS NOT INTO ANY MANUF ACTURING ACTIVITY. THERE IS AN APPARENT INCONSISTENCY IN THE STAND OF THE AS SESSEE IN SO FAR AS THE SELECTION OF COMPARABLE COMPANIES BY THE TPO IS CON CERNED. POR UNA PARTE , THE ASSESSEE IS SEEKING TO BENCHMARK ITS TRANSPOR T SEGMENT BY TREATING ITS REFRIGERATION (NON-AE SEGMENT) AS COMP ARABLE, WHICH IS ADMITTEDLY, ENGAGED IN MANUFACTURING ACTIVITY. POR OTRA PARTE, THE ASSESSEE IS SEEKING EXCLUSION OF THE COMPANIES CHOSEN BY THE TPO ON THE RAISON DETRE THAT THEY ARE INTO MANUFACTURING ACTIVITY, WHICH I S ABSENT IN THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 21 TRANSPORT SEGMENT. THESE ARE TWO DIAGONALLY OPPOSIT E AND IRRECONCILABLE STANDS, HAVING NO MEETING GROUND. 21. ALBEIT, EX FACIE IT APPEARS THAT THE REFRIGERATION (NON-AE) SEGMENT IS NOT COMPARABLE WITH THE TRANSPORT SEGMENT DUE TO TH E REASONS SET OUT IN THE EARLIER PARAS OF THIS ORDER, THE ASSESSEE IS STILL SEEKING TO RELY ON CERTAIN ADDITIONAL EVIDENCE UNDER RULE 29 OF ITAT RULES WIT H AN ATTEMPT TO DEMONSTRATE THAT THE TWO SEGMENTS ARE SIMILAR. AS ADMITTEDLY, SUCH AN ADDITIONAL EVIDENCE HAS NOT BEEN CONSIDERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERA TION, RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER FOR THE ASSESSMENT YEA R 2006-07 IN THE ASSESSEES OWN CASE, WE SET ASIDE THE IMPUGNED ORDE R AND REMIT THE MATTER TO THE FILE OF ASSESSING OFFICER/TPO FOR DECIDING T HIS ISSUE AFRESH AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. IT IS MADE CLEAR THAT THE ASSESSEE WILL BE AT LIBER TY TO FILE ANY FRESH EVIDENCE IN ITS SUPPORT IN SUCH FRESH PROCEEDINGS. IT IS FUR THER MADE CLEAR THAT THE TRANSFER PRICING ADJUSTMENT, IF WARRANTED, SHOULD B E CONFINED ONLY TO THE INTERNATIONAL TRANSACTIONS. THIS GROUND IS THUS DIS POSED OF ACCORDINGLY. ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 22 22. THE ONLY OTHER ISSUE RAISED IN THIS APPEAL IS A GAINST TREATING LEASEHOLD IMPROVEMENT OF RS.55,10,000/- AS CAPITAL EXPENDITUR E. THE FACTUAL PANORAMA OF THIS ISSUE IS THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.55,10,000/- ON ACCOUNT OF IMPROVEMENTS ON LEASEH OLD PREMISES. ON PERUSAL OF THE DETAILS AND SUPPORTING BILLS, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT SUCH EXPENDITURE WAS INCURRED FOR FLOO RING, CONSTRUCTION OF CUBICLES, WORKSTATIONS, WIRING AND OTHER INTERIOR W ORKS AND FOR PURCHASE OF OFFICE FURNITURE. THE ASSESSING OFFICER TREATED THI S AMOUNT AS CAPITAL EXPENDITURE IN TERMS OF EXPLANATION 1 TO SECTION 32 (1). AFTER ALLOWING DEPRECIATION @ 10%, HE MADE AN ADDITION FOR THE REM AINING SUM. HAVING NOT SUCCEEDED BEFORE THE DRP, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL AGAINST THE CONFIRMATION OF SUCH AN ADDITI ON. 23. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RE LEVANT MATERIAL ON RECORD. THE ASSESSMENT YEAR UNDER CONSIDERATION I NVOLVES FINANCIAL YEAR 2008-09, COMPRISING OF THE PERIOD FROM 1.4.2008 TO 31.3.2009. THE ASSESSEE HAS PLACED ON RECORD COPIES OF LEAVE AND L ICENCE AGREEMENTS IN RESPECT OF WHICH THE ABOVE EXPENSES WERE INCURRED, WHICH WERE ALSO FILED ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 23 BEFORE THE AO VIDE ITS LETTER DATED 29.7.2013. FI RST AGREEMENT IS DATED 19 TH AUGUST, 2008 IN RESPECT OF LUCKNOW PREMISES. THE S ECOND AGREEMENT IS DATED 1.7.2007 BUT WITH THE EFFECTIVE DATE OF 1. 2.2008. THE THIRD AGREEMENT IS DATED 31 ST DECEMBER, 2007 IN RESPECT OF GURGAON PROPERTY BUT WITH THE EFFECTIVE DATE OF 1.2.2008. THERE IS ONE MORE AGREEMENT DATED 13 TH MAY, 2008 IN RESPECT OF LEASING OF HYDERABAD PROPER TY. THERE IS STILL ANOTHER LEASE AGREEMENT DATED 25 TH MARCH, 2008 IN RESPECT OF BANGALORE PROPERTY. THE ASSESSEE STATED THROUGH THE ABOVE LET TER TO THE AO THAT THE SUM OF RS.55.10 LAC WAS INCURRED IN RESPECT OF THE ABOVE LEASED PREMISES. A COMMON FILAMENT RUNNING THROUGH THESE LEASE AGREEME NTS IS THAT ALL THE PROPERTIES IN QUESTION WERE TAKEN ON LEASE EITHER D URING THE FINANCIAL YEAR UNDER CONSIDERATION ITSELF OR NEAR TO THE CLOSE OF THE PRECEDING YEAR. WHEN WE EXAMINE THE NATURE OF WORK CARRIED OUT IN RESPEC T OF THE ABOVE PREMISES TAKEN ON LEASE BY THE ASSESSEE, BEING, FLOORING, CO NSTRUCTION OF CUBICLES, WORKSTATIONS, WIRING AND OTHER INTERIOR WORKS AND A LSO PURCHASE OF FURNITURE, IT BECOMES VIVID THAT SUCH PREMISES WERE RENOVATED TO MAKE THEM FIT FOR USE IN ITS BUSINESS. IN OTHER WORDS, THE AM OUNT WAS SPENT ON COMPLETE RENOVATION OF SUCH PREMISES. THE HONBLE SUPREME CO URT IN BALLIMAL ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 24 NAVAL KISHORE VS. CIT 1997 224 ITR 414 (SC) HAS HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON TOTAL RENOVATION OF CIN EMA THEATRE BY INSTALLING NEW MACHINERY, NEW FURNITURE, NEW SANITARY FITTING AND NEW ELECTRICAL INSTALLATION BESIDES EXTENSIVE REPAIR OF STRUCTURE OF BUILDING, TO BE CAPITAL EXPENDITURE AND NOT ALLOWABLE AS CURRENT REPAIRS. T HIS JUDGMENT INDICATES THAT ANY CAPITAL EXPENDITURE ON TOTAL RENOVATION IS LIABLE TO BE CONSIDERED AS CAPITAL EXPENDITURE. THE HONBLE JURISDICTIONAL HIG H COURT IN BIGJOS INDIA LTD. VS. CIT (2007) 293 ITR 170 (DEL) CONSIDERED ALMOST A SIMILAR SITUATION AS IS OBTAINING BEFORE US IN THE PRESENT APPEAL. I N THAT CASE, THE ASSESSEE, A LICENSEE OF THE SHOWROOM, ERECTED NEW COUNTERS AND BUILT A NEW LIFT SHAFT AT A NEW SITE. IT WAS HELD THAT SUCH AMOUNT WAS NOT IN THE NATURE OF CURRENT REPAIRS BUT A CAPITAL EXPENDITURE, NOT DEDUCTIBLE I N FULL. ERGO, WE FIND THAT THE PRESENT FACTS ARE ON ALL FOURS WITH THOSE CONSI DERED BY THE HONBLE HIGH COURT IN BIGJOS (SUPRA) . IT IS EVIDENT FROM THE DESCRIPTION OF THE ITEMS O N WHICH THE ABOVE REFERRED EXPENDITURE HAS BEEN INCUR RED THAT IT IS A CASE OF RENOVATION OF PREMISES IMMEDIATELY AFTER TAKING THE M ON LEASE. AS SUCH, THERE CAN BE NO QUESTION OF REPLACEMENT. WE, THEREF ORE, HOLD THAT THE AUTHORITIES BELOW HAVE TAKEN AN UNIMPEACHABLE VIEW IN TREATING THE INSTANT ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 25 AMOUNT AS A CAPITAL EXPENDITURE. RELIANCE OF THE L D. AR ON CERTAIN DECISIONS TO BRING HOME THE DEDUCTIBILITY OF SUCH E XPENSES IS MISPLACED. IN NONE OF THESE CASES, THE PREMISES WERE TAKEN ON LEA SE AND THE EXPENSES WERE INCURRED IMMEDIATELY THEREAFTER ON RENOVATION FOR MAKING THEM FIT FOR USE. 24. AT THIS STAGE, IT IS RELEVANT TO NOTE THAT THE TAX LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986 INSERTED EX PLANATION 1 TO SECTION 32 W.E.F. 1.4.1988, READING AS UNDER : - EXPLANATION-1. WHERE THE BUSINESS OR PROFESSION OF THE ASSESSEE IS CARRIED ON IN A BUILDING NOT OWNED BY HIM BUT IN RESPECT OF WHICH THE ASSESSEE HOLDS A LEASE OR OTHER RIGHT OF OCCUPANCY AND ANY CAPITAL EXPENDITURE IS INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PROFESSION ON THE CONST RUCTION OF ANY STRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO AND BY WAY OF RENOVATION OR EXTENSION OF, OR IMPROVEMENT TO THE B UILDING, THEN, THE PROVISIONS OF THIS CLAUSE SHALL APPLY AS IF THE SAID STRUCTURE OR WORK IS A BUILDING OWNED BY THE ASSESSEE. 25. A CIRCUMSPECTION OF THE ABOVE EXPLANATION REV EALS THAT WHERE A BUSINESS IS CARRIED ON IN A BUILDING NOT OWNED BY T HE ASSESSEE BUT IN RESPECT OF WHICH IT HOLDS A LEASE OR EITHER OCCUPANCY RIGHT S, THEN THE EXPENDITURE ON I) THE CONSTRUCTION OF A STRUCTURE; OR II) DOING OF ANY WORK IN OR IN RELATION TO AND BY WAY OF RENOVATION OR EXTENSION OF, OR IMPROVEMEN T TO THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 26 BUILDING, SHALL BE CONSIDERED AS STRUCTURE OR WORK IN THE N ATURE OF BUILDING OWNED BY THE ASSESSEE FOR THE PURPOSE OF DEPRECIATI ON. SPIRIT AND TEXT OF EXPLANATION 1 TO SECTION 32 IS THAT ANY CAPITAL EXP ENDITURE BY THE ASSESSEE ON A BUILDING NOT OWNED BY HIM, IN WHICH HE CARRIES ON THE BUSINESS, SHALL BE CONSIDERED AS BUILDING OWNED BY HIM FOR THE PURP OSES OF SECTION 32, TO THE EXTENT OF THE AMOUNTS SPENT ON THE CONSTRUCTION OF STRUCTURE OR DOING OF ANY WORK IN OR IN RELATION TO AND BY WAY OF RENOVAT ION OR EXTENSION OR IMPROVEMENT TO THE BUILDING. IT THEREFORE, FOLLOWS THAT IN ORDER TO BRING ANY AMOUNT WITHIN THE AMBIT OF EXPLANATION 1 TO SECTION 32, IT IS PARAMOUNT THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON TH E PREMISES IN THE CAPACITY OF NON-OWNER SHOULD FIRSTLY BE IN THE NATURE OF CAP ITAL EXPENDITURE AND THEN IT SHOULD FALL WITHIN ANY OF THE CLAUSES AS DISCUSS ED ABOVE. IF THESE CONDITIONS GET SATISFIED, AS IS THE CASE UNDER CONS IDERATION, THEN THE AMOUNT INCURRED FOR SUCH WORKS FALLS UNDER EXPLANATION 1 T O SECTION 32. IN OTHER WORDS, THE AMOUNT SO INCURRED WOULD BE CAPITALIZED ENTITLING THE ASSESSEE TO DEPRECIATION AS PER THE ELIGIBLE RATE. THE FACTS O F THE INSTANT CASE PRECISELY FALL WITHIN THE AMBIT OF EXPLANATION 1 TO SECTION 3 2. IN VIEW OF THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 27 FOREGOING DISCUSSION, WE UPHOLD THE IMPUGNED ORDER TREATING SUCH AMOUNT AS CAPITAL EXPENDITURE, ELIGIBLE FOR DEPRECIATION. 26. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ASSESSMENT YEAR 2010-11 27. THE ASSESSEE HAS CHALLENGED THE FINAL ASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) READ WITH SECTION 144C OF THE ACT. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT IN THE TRANSPORT SEGMENT. 28. BOTH THE SIDES ARE IN AGREEMENT THAT THE FA CTS AND CIRCUMSTANCES OF THIS GROUND ARE SIMILAR TO THOSE OF THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2009-10. FOR THIS YEAR ALSO, THE ASSESSEE HAS FILED AN APPLICATION UNDER RULE 29 REQUESTING FOR THE ADMISSION OF ADDITIONAL EVIDENCE. IN FACT, BOTH THE SIDES ADOPTED THEIR RESPECTIVE ARGUMENTS MADE F OR THE IMMEDIATELY PRECEDING YEAR. FOLLOWING THE VIEW TAKEN HEREINABO VE, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO/TPO TO DECIDE THIS ISSUE AFRESH IN ACCORDANCE WITH OUR DIRECTIONS GIVE N FOR THE ASSESSMENT YEAR 2009-10. ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 28 29. GROUND NO. 2 IS AGAINST NOT ALLOWING DEPRECIATI ON ON LEASEHOLD IMPROVEMENTS. 30. THE LD. AR SUBMITTED THAT THOUGH THE ASSESSING OFFICER TREATED RS.55.10 LAC AS CAPITAL EXPENDITURE AS AGAINST THE ASSESSEES CLAIM OF THE SAME BEING OF REVENUE NATURE FOR THE IMMEDIATELY PR ECEDING YEAR, BUT HE DID NOT ALLOW ANY DEPRECIATION ON ITS OPENING WRITT EN DOWN VALUE IN THE COMPUTATION OF INCOME FOR THE INSTANT YEAR. THE LD . AR CONTENDED THAT IF THE ASSESSEES CONTENTION OF SUCH AN AMOUNT BEING A REVENUE EXPENDITURE IS NOT ACCEPTED, THEN DEPRECIATION SHOULD BE ALLOWED O N IT. 31. WHILE DEALING WITH THIS ISSUE FOR THE IMMEDI ATELY PRECEDING ASSESSMENT YEAR, WE HAVE UPHELD THE VIEW OF THE AUT HORITIES BELOW THAT THE EXPENDITURE OF RS.55.10 LAC IS CAPITAL IN NATURE AN D ELIGIBLE FOR DEPRECIATION U/S 32 OF THE ACT. EX CONSEQUENTI, THE AO IS DIRECTED TO GRANT DEPRECIATION ON SUCH AMOUNT AS PER LAW FOR THE YEAR UNDER CONSID ERATION. 32. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 29 ASSESSMENT YEAR 2011-12 33. THE ASSESSEE HAS ASSAILED THE CORRECTNESS OF TH E FINAL ASSESSMENT ORDER DATED 15.2.2016 PASSED BY THE ASSESSING OFFICER U/ S 143(3) READ WITH SECTION 144C OF THE ACT. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT IN THE TRANSPORT SEGMENT. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE SIMILAR TO THOSE OF THE IMMEDIAT ELY PRECEDING ASSESSMENT YEARS, NAMELY, 2009-10 & 2010-11. FOR THIS YEAR ALSO, THE ASSESSEE HAS FILED AN APPLICATION UNDER RULE 29 REQUESTING FOR T HE ADMISSION OF ADDITIONAL EVIDENCE. IN FACT, BOTH THE SIDES ADOPT ED THEIR RESPECTIVE ARGUMENTS MADE FOR THE A.Y. 2009-10. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE SET ASIDE THE IMPUGNED ORDER AND RE MIT THE MATTER TO THE FILE OF AO/TPO TO DECIDE THIS ISSUE AFRESH IN ACCOR DANCE WITH OUR DIRECTIONS GIVEN FOR THE ASSESSMENT YEAR 2009-10. 34. THE ONLY OTHER ISSUE RAISED IN THIS APPEAL IS AGAINST THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT AMOUNTING TO RS.38,31,848/- IN THE INTERNATIONAL TRANSACTION OF `INTEREST ON OUTSTANDI NG RECEIVABLES FROM THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 30 AE. THE FACTUAL MATRIX OF THIS GROUND IS THAT THE TPO OBSERVED DURING THE COURSE OF PROCEEDINGS BEFORE HIM THAT THE ASSESSEE HAD NOT CHARGED INTEREST ON RECEIVABLES FROM ITS AES. CONSIDERING THE NECESS ARY ASPECTS OF THE MATTER AND TAKING INTO CONSIDERATION THE REPLIES FI LED BY THE ASSESSEE, HE ALLOWED 60 DAYS AS A NORMAL PERIOD OF REALIZATION. APPLYING THE INTEREST RATE OF 9.34%, BEING, THE RATE OF RETURN ASSOCIATED WIT H BB RATED BONDS AND PLR OF SBI, THE TPO WORKED OUT TRANSFER PRICING ADJ USTMENT OF RS.38,31,848/- ON THIS COUNT. THE ASSESSEE REMAINED UNSUCCESSFUL BEFORE THE DRP, WHICH LED TO THE MAKING OF TRANSFER PRICIN G ADDITION OF THIS MAGNITUDE AS INTEREST ON RECEIVABLES IN THE FINAL A SSESSMENT ORDER. 35. RELYING ON THE JUDGMENT OF THE HONBLE DEL HI HIGH COURT IN PR. CIT VS. KUSUM HEALTH CARE PVT. LTD. (2017) 398 ITR 66 ( DEL) , THE LD. AR CONTENDED THAT NO INTEREST COULD HAVE BEEN CHARGED AS THERE WAS NO INTERNATIONAL TRANSACTION ON THIS SCORE. 36. SOUNDING A CONTRA NOTE, THE LD. DR SUBMITTE D THAT INTEREST ON RECEIVABLES IS AN INTERNATIONAL TRANSACTION AND THE TPO HAS RIGHTLY DETERMINED ITS ALP. TO BUTTRESS THE CONTENTION OF R IGHTLY TREATING THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 31 INTEREST ON RECEIVABLES AS AN INTERNATIONAL TRANSAC TION, HE READ OUT THE RELEVANT PARTS OF THE DRPS DIRECTION, IN WHICH THE PANEL HAS RELIED ON THE DELHI TRIBUNAL ORDER IN AMERIPRISE INDIA PVT. LTD. VS. ACIT (2015- TII-347- ITAT-DEL-TP) FOR HOLDING THAT INTEREST ON RECEIVABLES IS AN IN TERNATIONAL TRANSACTION AND THE TRANSFER PRICING ADJUSTMENT IS WARRANTED. HE STATED THAT THE FINANCE ACT, 2012 HAS INSERTED EXPLANATION TO S ECTION 92B WITH RETROSPECTIVE EFFECT FROM 1.4.2002 AND SUB-CLAUSE ( C) OF CLAUSE (I) OF THIS EXPLANATION PROVIDES THAT (I) THE EXPRESSION 'INTER NATIONAL TRANSACTION' SHALL INCLUDE (C) CAPITAL FINANCING, INCLUDING ANY TYPE OF LONG- TERM OR SHORT-TERM BORROWING, LENDING OR GUARANTEE, PURCHAS E OR SALE OF MARKETABLE SECURITIES OR ANY TYPE OF ADVANCE, PAYMENTS OR DEFE RRED PAYMENT OR RECEIVABLE OR ANY OTHER DEBT ARISING DURING THE COURSE OF BUSINES S ;. . HE ACCENTUATED THAT THE EXPRESSION DEBT ARISING DURING THE COURSE OF BUSINESS REFERS TO TRADING DEBT ARISING FROM THE SALE OF GOODS OR SERVICES RENDERED IN THE COURSE OF CARRYING ON THE BUSINESS. ONCE ANY DE BT ARISING DURING THE COURSE OF BUSINESS IS AN INTERNATIONAL TRANSACTION, HE SUBMITTED THAT ANY DELAY IN THE REALIZATION OF SUCH DEBT IS LIABLE TO BE VISITED WITH THE TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF INTEREST INCOME SH ORT CHARGED OR ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 32 UNCHARGED. IT WAS ARGUED THAT INSERTION OF THE EX PLANATION WITH RETROSPECTIVE EFFECT COVERS THE ASSESSMENT YEAR UND ER CONSIDERATION AND HENCE UNDER/NON-PAYMENT OF INTEREST BY THE AES ON T HE DEBT ARISING DURING THE COURSE OF BUSINESS ALSO BECOMES INTERNATIONAL T RANSACTIONS, REQUIRING THE DETERMINATION OF ITS ALP. HE REFERRED TO THE DECISI ON OF THE DELHI TRIBUNAL IN AMERIPRISE (SUPRA) IN WHICH THIS ISSUE HAS BEEN THOROUGHLY DISCUSSED AND EVENTUALLY INTEREST ON TRADE RECEIVABLES HAS BE EN HELD TO BE AN INTERNATIONAL TRANSACTION. REFERRING TO THE DISCUSS ION IN THE SAID ORDER, IT WAS STATED THAT THE DELHI BENCH IN THIS CASE HAS AL SO NOTED A DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PATNI COMPUTER SYSTEMS LTD., (2013) 215 TAXMANN 108 (BOM.), WHICH DEALT WITH QUESTION OF LAW : (C) `WHETHER ON THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW, THE TRIBUNAL DID NOT ERR IN HOLDING THAT THE LOSS SUFFERED BY THE ASSESSEE BY ALLOWING EXCESS PERIOD OF CREDIT TO THE ASSOCIATED ENTERPRISES WITHOUT CHARGING AN INTEREST DURING SUCH CREDIT PERIOD WOULD NOT AMOUNT TO INTERNATIONAL TRANSACTION WHEREAS SECTION 92B(1) OF THE INCOME-TAX ACT, 1961 REFERS TO ANY OTHER TRANSACTION HAVING A BEARI NG ON THE PROFITS, INCOME, LOSSES OR ASSETS OF SUCH ENTERPRISES? HE POINTED O UT THAT WHILE ANSWERING ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 33 THE ABOVE QUESTION, THE HONBLE HIGH COURT NOTICED THAT AN AMENDMENT TO SECTION 92B HAS BEEN CARRIED OUT BY THE FINANCE ACT , 2012 WITH RETROSPECTIVE EFFECT FROM 1.4.2002. SETTING ASIDE THE VIEW TAKEN BY THE TRIBUNAL, THE HONBLE HIGH COURT RESTORED THIS ISSU E TO THE FILE OF THE TRIBUNAL FOR FRESH DECISION IN THE LIGHT OF THE LEG ISLATIVE AMENDMENT. IT WAS THUS ARGUED THAT THE NON/UNDER-CHARGING OF INTEREST ON THE EXCESS PERIOD OF CREDIT ALLOWED TO THE AES FOR THE REALIZATION OF IN VOICES AMOUNTS TO AN INTERNATIONAL TRANSACTION AND THE ALP OF SUCH AN IN TERNATIONAL TRANSACTION HAS BEEN RIGHTLY DETERMINED BY THE TPO. IN SO FAR A S THE CHARGING OF THE RATE OF INTEREST IS CONCERNED, HE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CIT VS. COTTON NATURALS (I) PVT. LTD (2015) 276 CTR 445 (DEL) HOLDING THAT THE CURRENCY IN WHICH THE LOAN IS TO B E RE-PAID DETERMINES THE RATE OF INTEREST. HE, THEREFORE, CONCLUDED BY SUMM ING UP THAT INTEREST ON OUTSTANDING TRADE RECEIVABLES IS AN INTERNATIONAL T RANSACTION AND ITS ALP HAS BEEN CORRECTLY DETERMINED. 37. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE HONBLE DELHI HIGH COURT I N PR. CIT VS. KUSUM HEALTH CARE PVT. LTD. ( SUPRA ) FOUND THAT THE ENTIRE FOCUS OF THE AO WAS ON ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 34 JUST ONE ASSESSMENT YEAR AND THE FIGURE OF RECEIVAB LES IN RELATION TO THAT ASSESSMENT YEAR COULD HARDLY REFLECT A PATTERN THAT WOULD JUSTIFY A TPO CONCLUDING THAT THE FIGURE OF RECEIVABLES BEYOND PA RTICULAR NUMBER OF DAYS CONSTITUTED AN INTERNATIONAL TRANSACTION BY ITSELF. IT OBSERVED THAT THERE MAY BE A DELAY IN COLLECTION OF MONIES FOR SUPPLIES MADE, EVEN BEYOND THE AGREED LIMIT, DUE TO A VARIETY OF FACTORS WHICH WOU LD HAVE TO BE INVESTIGATED ON A CASE TO CASE BASIS. IMPORTANTLY, THE IMPACT TH IS WOULD HAVE ON THE WORKING CAPITAL OF THE ASSESSEE WOULD HAVE TO BE ST UDIED. IT WENT ON TO HOLD THAT, THERE HAS TO BE A PROPER INQUIRY BY THE TPO BY ANALYSING THE STATISTICS OVER A PERIOD OF TIME TO DISCERN A PATTERN WHICH WO ULD INDICATE THAT VIS-- VIS THE RECEIVABLES FOR THE SUPPLIES MADE TO AN AE, TH E ARRANGEMENT REFLECTED AN INTERNATIONAL TRANSACTION INTENDED TO BENEFIT THE AE IN SOME WAY. SIMILAR MATTER ONCE AGAIN CAME UP FOR CONSIDE RATION BEFORE THE HONBLE DELHI HIGH COURT IN AVENUE ASIA ADVISORS PVT. LTD. VS. DCIT (2017) 398 ITR 120 (DEL) . FOLLOWING THE EARLIER DECISION IN KUSUM HEALTHCARE (SUPRA) , IT WAS OBSERVED THAT THERE ARE SEVERAL FACTORS WH ICH NEED TO BE CONSIDERED BEFORE HOLDING THAT EVERY REC EIVABLE IS AN INTERNATIONAL TRANSACTION AND IT REQUIRES AN ASSESS MENT ON THE WORKING ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 35 CAPITAL OF THE ASSESSEE. APPLYING THE DECISION IN KUSUM HEALTH CARE (SUPRA) , THE HONBLE HIGH COURT DIRECTED THE TPO TO STUDY THE IMPACT OF THE RECEIVABLES APPEARING IN THE ACCOUNTS OF THE AS SESSEE; LOOKING INTO THE VARIOUS FACTORS AS TO THE REASONS WHY THE SAME ARE SHOWN AS RECEIVABLES AND ALSO AS TO WHETHER THE SAID TRANSACTIONS CAN BE CHA RACTERIZED AS INTERNATIONAL TRANSACTIONS. IN VIEW OF THE ABOVE DECISION IN AVENUE ASIA ADVISORS (SUPRA) , WE DEEM IT APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND REMIT THE MATTER TO THE FILE OF THE ASSES SING OFFICER/TPO FOR DECIDING IT IN CONFORMITY WITH THE ABOVE REFERRED J UDGMENT. NEEDLESS TO SAY, THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPO RTUNITY OF BEING HEARD IN SUCH FRESH PROCEEDINGS. SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF THE TRIBUNAL IN ORANGE BUSINESS SERVICES INDIA SOLUTIONS PVT. LTD. VS. DCIT IN ITA NO. 6570/DEL/2016 VIDE ITS ORDER DATED 15.2. 2018. 38. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ASSESSMENT YEAR 2013-14 39. THE ASSESSEE HAS ASSAILED THE FINAL ASSESSMENT ORDER DATED 25.10.2017 PASSED BY THE ASSESSING OFFICER U/S 143(3) READ WIT H SECTION 144C OF THE ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 36 ACT. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINS T THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT IN THE TRANSPORT SEG MENT. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF TH IS GROUND ARE SIMILAR TO THOSE OF THE EARLIER YEARS INCLUDING THE ASSESSMENT YEAR 2009-10. FOR THIS YEAR ALSO, THE ASSESSEE HAS FILED AN APPLICATION UN DER RULE 29 REQUESTING FOR THE ADMISSION OF ADDITIONAL EVIDENCE. IN FACT, BOT H THE SIDES ADOPTED THE ARGUMENTS MADE BY THEM FOR THE A.Y. 2009-10. FOLLO WING THE VIEW TAKEN HEREINABOVE, WE SET ASIDE THE IMPUGNED ORDER AND RE MIT THE MATTER TO THE FILE OF AO/TPO TO DECIDE THIS ISSUE AFRESH IN ACCOR DANCE WITH OUR DIRECTIONS GIVEN FOR ASSESSMENT YEAR 2009-10. 40. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.07.201 8. SD/- SD/- [BEENA A. PILLAI] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 13 TH JULY, 2018. DK ITA NOS.5244/DEL/2015, 1126/DEL/2014, 728/DEL/2015, 2140/DEL/2016, 7312/DEL/2017 37 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.