INDIA MEDTRONIC P.LTD, MUMBAI V. DCIT (OSD) 8(2), MUMBAI

ITA 2168/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1793 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: K
• Next Hearing Date: 28-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2014
• Court: TRIBUNAL
• Department Lawyers: N K CHAND; RUPINDER BRAR
• Assessee Lawyers: R R VORA
• Keywords: Depreciation; Transfer pricing; International transaction; Rule of consistency; Wholly owned subsidiary
• Section: 115JB

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER I.T.A. NO. 2168/M/2014 (ASSESSMENT YEAR : 2009 - 2010 ) C.O. NO.213/M/2014 (ARISING OUT OF ITA NO.2121/M/2014) (AY 2009 - 2010) INDIA MEDTRONIC PRIVATE LIMITED, 1241, SOLITAIRE CORPORATE PARK, BUILDING NO.12, 4 TH FLOOR, ANDHERI GHATKOPAR LINK ROAD, ANDHERI (E), MUMBAI 400093. / VS. DCIT (OSD) - 8(2), MUMBAI. ./ PAN : AAAC14227Q ( / APPELLANT) .. ( / RESPONDENT ) I.T.A. NO. 2121 /M/2014 (ASSESSMENT YEAR : 2009 - 2010 ) DCIT (OSD) - 8(2), MUMBAI. / VS. INDIA MEDTRONIC PRIVATE LIMITED, 1241, SOLITAIRE CORPORATE PARK, BUILDING NO.12, 4 TH FLOOR, ANDHERI GHATKOPAR LINK ROAD, ANDHERI (E), MUMBAI 400093. ./ PAN : AAAC14227Q ( / APPELLANT) .. ( / RESPONDENT ) / A SSESSEE BY : SHRI R.R. VORA & SHRI NIKHIL TIWARI / REVENUE BY : MS. RUPINDER BRAR, CIT & SHRI N.K. CHAND, CIT / DATE OF HEARING : 29 .10.2015 / DATE OF PRONOUNCEMENT : 31 .12.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION WHICH INCLUDE CROSS OBJECTION BY THE ASSESSEE AND THE REST OF THE TWO APPEALS ARE CROSS APPEALS INVOLVING THE AY 2009 - 2010. THESE APPEALS ARE FILED AGAINST THE ORDERS OF THE DRP / TPO / AO. SINCE, THE ISSUES RAISED IN ALL THESE APPEA LS ARE INTER - CONNECTED, THEREFORE, THEY ARE 2 CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2. BEFORE GOING TO THE ISSUES RAISED IN THE GROUNDS IN ALL THE A PPEALS, WE SHALL TAKE UP THE RELEVANT PRELIMINARY FACTS OF THIS CASE. BRIEFLY STATED, ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN LIFE SAVING DEVICES. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME UNDER THE NORMAL PROVISIONS OF LOS S OF RS. 2.59 CRS (ROUNDED OF) AND THE BOOK PROFITS U/S 115JB OF THE ACT WAS SHOWN AT RS. 21.40 CRS (ROUNDED OF). DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED MANY INTERNATIONAL TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES (AES) ABROAD. ASSESSEE IS THE 100% SUBSIDIARY OF MEDTRONIC INTERNATIONAL LTD, HONG KONG, WHICH IN TURN IS SUBSIDIARY OF MEDTRONIC USA. ASSESSEE PURCHASED FINISHED GOODS FOR RESALE AND THE NATURE OF THE ACTIVITY IS THE SUBJECT MATTER OF DISPUTE BEFORE US. ASSESSEE BOOKED HUGE AMP EXPE NSES IN THE P & L ACCOUNT. IN THE TP STUDY FILED BY THE ASSESSEE, APPLYING THE TNMM METHOD THE PLI (OP/OR) IS DETERMINED AT 13.12% . IN THE TP STUDY, ASSESSEE BENCHMARKED THE PLI AT 5.37%. CONSIDERING THE ASSESSEES PLI OF 13.12%, ASSESSEE HELD THAT THE INTERNATIONAL TRANSACTIONS WITH AE ARE AT ARMS LENGTH PRICE (ALP). ASSESSEES TP STUDY ALSO INCLUDES ALP ANALYSIS OF THE AMP EXPENSES. DURING THE PROCEEDINGS BEFORE THE TPO, THE TP ANALYSIS OF THE ASSESSEE WAS CONSIDERED AND THEY WERE REJECTED BY THE TP O. WHILE ACCEPTING THE FACT THAT THE INTERNATIONAL TRANSACTIONS ENTERED INTO WITH THE AE ARE AT ARMS LENGTH, THE TPO PROCEEDED TO BENCHMARK THE AMP EXPENDITURE OF THE ASSESSEE. IN THIS REGARD, TPO REJECTED THE COMPARABLE COMPANIES ADOPTED BY THE ASSESSE E IN BENCHMARKING THE AMP EXPENDITURE AND APPLIED BRIGHT LINE TEST (BLT) AND OBSERVED THAT THE EXCESS AMP EXPENDITURE ARE REQUIRED TO BE REIMBURSED BY THE AE TO THE ASSESSEE. AS PER THE TP STUDY , THE AMP EXPENDITURE TO THE SALES RATIO IS 11.29%. AFTER PICKING UP THE COMPARABLES AND THEIR STUDY, THE COMPARABLES AMP IS PEGGED AT 5.42% AGAINST THE ASSESSEES RATIO OF 11.29%. IN THE TP STUDIES, THE TPO CONSIDERED 80 % : 20% OF THE TOTAL TRAVELLING AN D PERSONAL COST AFTER EXCLUDING NON - BUSINESS EMPLOYEES RELATED EXPENSES. AFTER REJECTING THE ASSESSEES COMPARABLES, TPO SELECTED FIVE NEW COMPARABLE COMPANIES. TPO SUGGESTED THE ADJUSTMENT IN THIS REGARD AMOUNTING TO RS. 19.45 CRS (ROUNDED OF). 3 3. DURIN G THE PROCEEDINGS BEFORE THE DRP, DESPITE THE ASSESSEES SUBMISSIONS, THE DRP GAVE CERTAIN DIRECTIONS TO THE AO TO RE - COMPUTE THE AMP EXPENSES AS PER THE APPROACH ADOPTED IN AY 2008 - 2009. IN THE SAID AY, ONLY 50% OF THE TOTAL PERSONAL AND TRAVELLING COST WAS CONSIDERED INSTEAD OF 80% BY THE TPO FOR COMPUTING THE AMP EXPENSES. WITH THE SAID MODIFICATIONS, AO QUANTIFIED THE ADJUSTMENTS ON THIS ACCOUNT OF AMP EXPENSES OF RS. 20.02 CRS (ROUNDED OF) WITH THE SAID 50% CONSIDERATION OF TOTAL PERSONAL AND TRAVELL ING COST. ASSESSEES AMP TO SALES IS REWORKED OUT TO ARRIVE AT 9.49% INSTEAD OF 11.29%. WHEREAS, THE COMPARABLE COMPANIES AMP TOOK SALES AVERAGE AT 4.34% AS AGAINST 5.42%. EVENTUALLY, AO MADE ADDITION ON ACCOUNT OF THIS TP ADJUSTMENT OF AMP EXPENDITURE OF RS. 20,01,91,810/ - . AO ASSESSEED THE SAME VIDE ASSESSMENT ORDER DATED 29.1.2014. THE CONTENTS OF PARA 5.3 OF THE ASSESSMENT ORDER ARE RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 5.3. IN VIEW OF THE ABOVE DISCUSSION, THE TRANSFER PRICING ADJUSTMENT OF RS. 20,01,91,810/ - IS HEREBY ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IN VIEW OF THE DIRECTIONS OF THE DRP. 4. AGGRIEVED WITH THE ABOVE TP ADJUSTMENT, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. AS WELL, PART LY AGGRIEVED WITH THE DILUTION OF THE TPOS ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. BEFORE THE TRIBUNAL ON TP ADJUSTMENT 5. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TPO AND THE DRP APPLIED THE BLT IN BENCHMARKING THE AMP IN VIEW OF THE SPECIAL BENCH DECISION IN THE CASE OF LG ELECTRONICS INDIA LIMITED 152 TTJ 273. FURTHER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID SPECIAL BENCH DECISION IN THE CASE OF LG ELECTRONICS INDIA PVT LTD (SUPRA) WA S OVERRULED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA PRIVATE LIMITED (374 ITR 118), DATED 16.3.2015, COPY OF WHICH IS PLACED AT PAGE 313 TO 454 OF THE PAPER BOOK. REFERRING TO PARA 121 OF THE SAID HIGH COUR T JUDGMENT (SUPRA), LD COUNSEL FOR THE ASSESSEE READ OUT STATING THAT THERE IS NOTHING IN THE ACT OR THE RULES TO HOLD THAT IT IS OBLIGATORY THAT THE AMP EXPENSES MUST AND NECESSARILY SHOULD BE SUBJECTED TO BRIGHT LINE TEST AND THE NON - ROUTINE AMP EXPEN SES AS A SEPARATE 4 TRANSACTION TO BE COMPUTED N THE MANNER AS STIPULATED. REFERRING TO VARIOUS OTHER PARAS OF THE SAID DELHI HIGH COURT JUDGMENT (SUPRA), LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BLT HAS NOT STATUTORY MANDATE AND A BROAD BASH APPROA CH IS NOT MANDATED OR PRESCRIBED. HE ALSO SUBMITTED THAT THE HONBLE HIGH COURT IS IN FAVOUR OF ADOPTING THE BUNDLED APPROACH. EXPLAINING THE BUNDLED APPROACH, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT SO LONG AS MOST APPROPRIATE METHOD IS APPLIED AND THE TRANSACTIONS WITH AE ARE HELD TO BE CONSIDERED AT ARMS LENGTH, NO ADJUSTMENT IS WARRANTED. THE ATTEMPT TO SEGREGATE AMP TRANSACTIONS FROM THE BUNDLED APPROACH PRINCIPLE WAS NOT RECOMMENDED BY THE HONBLE HIGH COURT, SO LONG AS ALL THESE ALL THE SE PARAMETERS ARE ALSO FALL WITHIN THE ALP STATUS. IN OTHER WORDS, WHILE PICKING UP THE COMPARABLES IN THE TP STUDY, IF THE ASSESSEE HAS CO NSIDERED THE COMPARABLES WHERE THE AMP EXPENSES OF THE ASSESSEE ARE AT ARMS LENGTH QUA THE COMPARABLES, IF THE BUNDLED APPROACH PRINCIPLE IS CLEAR ED SUCCESSFULLY BY THE ASSESSEE, NO ADJUSTMENTS ARE WARRANTED. IN SUPPORT OF THE APPLICATION OF THE BUNDLED APPROACH, IE BENCHMARKING OF THE ASSESSEES AMP TO SALES RATIO IS AT ARMS LENGTH, AFTER CONSIDERING THE AMP R ATIO OF THE COMPARABLE IN TNM METHOD , ASSESSEE PLACED RELIANCE ON THE UN PRACTICAL MANUAL ON TRANSFER PRICING WHICH WAS DISCUSSED IN PARA 101 OF THE SAID JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON (SUPRA). THE RELEVANT LINES FROM TH E SAID PARA 101 READ THAT HOWEVER, ONE THE ASSESSING OFFICER / TPO ACCEPTS AND ADOPTS TNM METHOD, BUT THEN CHOOSES TO TREAT A PARTICULAR EXPENDITURE LIKE AMP AS A SEPARATE INTERNATIONAL TRANSACTION WITHOUT BIFURCATION / SEGREGATION, IT WOULD AS NOTICED AB OVE, LEAD TO UNUSUAL AND INCONGRUOUS RESULTS AS AMP EXPENSES IS THE COST OR EXPENSE AND IS NOT DIVERSE. IT IS FACTORED IN THE NET PROFIT OF THE INTER - LINKED TRANSACTION......... FURTHER, HE REFERRED TO PARA 194(V) OF THE SAID DELHI HIGH COURT JUDGMENT ( SUPRA) AND THE SAME READS AS FOLLOWS: 194(V): - WHERE THE ASSESSING OFFICER / TPO ACCEPTED THE COMPARABLES ADOPTED BY THE ASSESSEE , WITH OR WITHOUT MAKING ADJUSTMENTS, AS A BUNDLED TRANSACTION, IT WOULD BE ILLOGICAL AND IMPROPER TO TREAT AMP EXPENSES AS A SEPARATE INTERNATIONAL TRANSACTIONS , FOR THE SIMPLE REASON THAT IF THE FUNCTIONS PERFORMED BY THE TESTED PARTIES AND THE COMPARABLES MATCH, WITH OR WITHOUT ADJUSTMENTS, AMP EXPENSES ARE DULY ACCOUNTED FOR. IT WOULD BE INCONGRUOUS TO ACCEPT THE COMPARABLES AND DETERMINE OR ACCEPT THE TRANSFER PRICE AND STILL SEGREGATE AMP EXPENSES AS AN INTERNATIONAL TRANSACTION. 6. FURTHER, LD COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE PARA 120 OF THE SAID DELHI HIGH COURT JUDGMENT (SUPRA) AND SUBMITTED THAT THE HONBLE HIGH COURT HAS 5 REJECTED THE BLT AS A METHOD FOR BENCHMARKING THE AMP EXPENDITURE NOTWITHSTANDING THE BUNDLED APPROACH. FURTHER, ON THE SELLING EXPENSES, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT BY NO STRETCH OF IMAGINATION, SELLING EXPENSES SHALL CO NTRIBUTE TO THE BRAND BUILDING OF THE AE ABROAD. THEREFORE, LD COUNSEL FOR THE ASSESSEE RELIED ON PARA 176 OF THE SAID DELHI HIGH COURT JUDGMENT IN THE CASE OF SONY ERICSSON (SUPRA) AND SUBMITTED THAT THE SELLING EXPENSES OF ALL KINDS IE TRADE DISCOUNTS, SALES COMMISSION, VOLUME DISCOUNTS ETC PAID TO THE SUB - DISTRIBUTORS / RETAILERS SINCE UNCONNECTED TO THE BRAND PROMOTION, SHOULD BE EXCLUDED FROM THE SCOPE OF AMP EXPENDITURE BEFORE BENCHMARKING BY THE TPO. IT IS THE SUBMISSION OF THE LD COUNSEL FOR THE A SSESSEE THAT TPO IS REQUIRED TO CONSIDER THE BUNDLED APPROACH IN ALP ANALYSIS WHILE UPHOLDING THE REQUIREMENT OF BENCHMARKING THE AMP TRANSACTIONS SIMULTANEOUSLY. IF THE BUNDLED APPROACH GIVES RISE TO THE CONCLUSIONS THAT THE INTERNATIONAL TRANSACTIONS ARE AT ARM S LENGTH AS PER THE PRINCIPLES ENSHRINED IN THE TNM METHOD, THE ADJUSTMENTS ARE UNWARRANTED. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE FINDINGS OF THE HONBLE DELHI HIGH COURT ENLISTED AT PAGES 236 TO 238 ITR 374. 7. ON THE OTHER HAND, L D DR FOR THE REVENUE HEAVILY RELIED ON THE SPECIAL BENCH DECISION IN THE CASE 9OF L.G. ELECTRONICS (SUPRA) AND MENTIONED THAT AMP EXPENSES ARE REQUIRED TO BE BENCHMARKED SEPARATELY EVEN IF ASSESSEE CLEARS THE TEST BY BUNDLED APPROACH. LD DR ERRONEOUSLY MENTIONED THAT THE ASSESSEE HAS NOT DONE ANY TP ADJUSTMENT ON AMP EXPENSES BY BRINGING COMPARABLES, WHICH WAS SUBSEQUENTLY CLARIFIED BY THE LD COUNSEL FOR THE ASSESSEE, DEMONSTRATING THE FACT OF BENCHMARKING OF THE AMP EXPENSES DURING THE TP STUDIES BY THE ASSESSEE. FURTHER, LD DR FOR THE REVENUE HEAVILY RELIED ON VARIOUS DECISIONS TO DEMONSTRATE THAT THE SAID JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON (SUPRA) WAS NOT AVAILABLE TO THE BENEFIT OF THE OFFICERS BELOW. IN SUCH CIRCUM STANCES, IN ALL THE CASES CITED BY HIM, THE MATTERS WERE REMANDED TO THE FILE OF THE TPO / AO FOR DE NOVO TP STUDIES. DURING THE REBUTTAL TIME, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THEY HAVE NO OBJECTION IF THE CASE IS REMANDED FOR THE PURPOSE OF VERIFICATION OF FIGURES AND CALCULATIONS. HE FURTHER ARGUED VEHEMENTLY FOR KEEPING THE ISSUES OPEN AND AGAINST THE DIRECTION OF THE DE NOVO PROCEEDINGS BEFORE THE 6 TPO / AO. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CASES CITED BY TH E LD DR ARE THE ONES WHERE THE AMP RELATED TP STUDIES WERE NOT PART OF THE TP STUDIES OF THE ASSESSEE, WHEREAS, IN THE INSTANT CASE, ASSESSEE BENCHMARKED THE AMP EXPENDITURE DURING THE TP STUDIES AND THE TPO BENCHMARKED THE SAID AMP EXPENDITURE AFTER DUE D ELIBERATIONS. IN SUCH CASES, NO REMANDING CAN BE ORDERED WITHOUT FETTERS. REFERRING TO THE FETTERS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS THE CASE WHERE THE ASSESSEES TP STUDY INCLUDES BENCHMARKING OF THE AMP TRANSACTIONS AND HELD THAT THE TRANSACTIONS ARE AT ARMS LENGTH. THESE CONCLUSIONS WERE REJECTED BY THE TPO AND INCLUDED FIVE OF HIS COMPARABLES, WHICH LETS TO THE ADDITION OF THE IMPUGNED ADJUSTMENTS. ON THESE FACTS, WHERE THE ASSESSEE AS WELL AS THE TPO HAVE ALREADY APPLIED MINED ON THE COMPARABLES AND BENCHMARKING OF THE TRANSACTIONS ONLY AND THE REMANDING PROCEEDINGS SHOULD BE RESTRICTED ONLY TO THE VERIFICATIONS, IF ANY, IN THE LIGHT OF THE CITED HONBLE HIGH COURT JUDGMENT IN THE CASE OF SONY ERICSSON (SUPRA). HE FURTHER SUBMITT ED THAT THE MATTER MAY BE REMANDED FOR DE NOVO TP STUDIES. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE DECISIONS VIZ., (I) DECISION OF THE ITAT IN THE C ASE OF TOSHIBA INDIA (P) LTD VS. DCIT [2015] 59 TAXMANN.COM 169 (DELHI.TRIB); (II) CASIO INDIA CO. (P) LTD VS. DCIT [2015] 58 TAXMANN.COM 375 (DELHI. TRIB); (III) VALVOLINE CIMMINS (P) LTD VS. DCIT [2015] 58 TAXMANN.COM 285 (DELHI. TRIB) AND (IV) REEBOK INDIA COMPANY VS. DCIT [2015] 58 TAXMANN.COM 326 (DELHI.TRIB). REFERRING TO THE ABOVE SAID DECISION S OF THE TRIBUNAL, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THESE CASES, THE TRIBUNAL ORDERED FOR DE NOVO TP STUDY ON THE AMP ISSUES BUT THERE ARE NO DETAILS OF COMPARABLES RELATING TO THE BENCHMARKING OF THE AMP EXPENSES. THESE DECISIONS WERE CITED BY THE LD DR IN SUPPORT OF REMANDING THE MATTER FOR EXAMINING THE ISSUE OF BENCHMARKING THE AMP EXPENSES WITHOUT ANY FETTERS. WHEREAS, IN ASSESSEES CASE, NO SUCH REMANDING IS WARRANTED CONSIDERING THE UNDISPUTED FACT OF BENCHMARKING OF THE AMP EXPENSES B OTH BY THE ASSESSEE IN THE TP STUDIES AND ALSO BY THE TPO DURING THE PROCEEDINGS U/S 92CA(3) OF THE ACT. THEREFORE, LD COUNSEL FOR THE ASSESSEE SEEKS TO REMAND THIS ISSUE TO AO AND RESTRICT HIM TO VERIFY THE MARGINS, COMPARABLE COMPANIES IN THE TP STUDY. TPO SHOULD NOT VERIFY ANY OTHER TRANSACTIONS WITH THE AE, WHICH WERE ALREADY BEEN ACCEPTED BY THE TPO. 7 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES IE DRP / TPO / AO AND PERUSED THE VOLUMINOUS PAPER BOOKS FILED BEFOR E US. THE UNDISPUTED FACTS OF THE CASE INCLUDE THE BENCHMARKING ANALYSIS OF THE CORE INTERNATIONAL TRANSACTIONS WERE FOUND TO BE AT ARMS LENGTH. TPO DID NOT SUGGEST ANY ADDITION ON ACCOUNT OF THE IMPORT OF THE FINISHED GOODS. THERE IS NO DISTURBANCE IS CALLED FOR TO THE METHOD OF ACCOUNTING IE TNM METHOD ADOPTED BY THE ASSESSEE. IT IS A LEGALLY DECIDED ISSUE NOW BY VIRTUE OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON (SUPRA), THE SPECIAL BENCH DECISION IN THE CASE OF L.G. ELECTRONICS (SUPRA) STANDS REVERSED ON MANY ISSUES SUCH AS ADOPTING THE BRIGHT LINE METHOD IN MATTERS OF BENCHMARKING THE AMP TRANSACTIONS. THE RELEVANT PARAS OF THE HONBLE DELHI HIGH COURT (SUPRA) WERE ALREADY EXTRACTED / CITED IN THE PRECED ING PARAGR APHS OF THIS ORDER. FACTUALLY, T HE SAID JUDGMENT OF THE DELHI HIGH COURT BEING DATED 16.3.2015, WAS NOT AVAILABLE DURING THE PROCEEDINGS BEFORE THE ASSESSING OFFICER DATED 29.1.2014. THEREFORE, WE FIND THAT IT IS FAIR TO GIVE AN OPPORTUNITY TO THE TPO / AO TO APPLY THE RATIO OF THE SAID JUDGMENT AND OTHERS, IF ANY, AND REMAND THIS ISSUE TO THE FILE OF THE AO CONSIDERING THE PLETHORA OF ORDERS OF THE TRIBUNAL REFERRED ABOVE IE THE CASE OF TOSHIBA INDIA (P) LTD VS. DCIT (SUPRA); (II) CASIO INDIA CO. (P) LTD VS. DCIT (SUPRA); (III) VALVOLINE CIMMINS (P) LTD VS. DCIT (SUPRA)AND (IV) REEBOK INDIA COMPANY VS. DCIT (SUPRA). IT IS ALSO LEGALLY SETTLED ISSUE THAT THE TPO / AO ARE REQUIRED TO ADOPT BUNDLED APPROACH IN BENCHMARKING THE AMP EXPENSES AS W ELL. NO CONTRARY DECISIONS ARE BROUGHT TO OUR NOTICE BY THE LD DR. THEY SHOULD NOT UNFAIRLY SEGREGATE AMP EXPENSES WHILE BENCHMARKING, WHEN THE TPO ACCEPTS THE COMPARABLES ADOPTED BY THE ASSESSEE AS A BUNDLED TRANSACTION, TREATING THE AMP EXPENSES AS A SEPAR ATE INTERNATIONAL TRANSACTION, IS NOT PROPER. BECAUSE, THE SAID COMPARABLES ARE ACCEPTED AFTER COMPARING THE VARIOUS FUNCTIONS PERFORMED BY THE TESTED PARTY AND THE AMP EXPENSES ARE DULY ACCOUNTED FOR IN SUCH COMPARING ANALYSIS. MAKING ADJUSTMENTS TO AMP EXPENSES SEGREGATED FROM THE BUNDLED TRANSACTIONS WILL ONLY LEAD TO THE SITUATION OF MAKING ADDITIONS THEREBY INCREASING PLI UNFAIRLY. REGARDING THE FETTERS TO THE AO, WE FIND THAT THE ASSESSEE HAS CONSIDERED THE BENCHMARKING OF THE AMP TRANSACTIONS IN HIS TP STUDIES. THE TPOS ORDER IS SELF - EXPLANATORY REGARDING THE REJECTION OF THE SAID COMPARABLES AND THRUSTING OF HIS FIVE COMPARABLES. ON THESE FACTS, WE FIND THAT IN THE REMANDING PROCEEDINGS, AO / TPO 8 SHALL CONSIDER THE SAME COMPARABLES WHEN RESOR TING TO ANY SEARCH IN THIS REGARD. THE QUESTION OF BENCHMARKING OTHER INTERNATIONAL TRANSACTIONS, WHICH WERE ACCEPTED BY THE TPO AND THE AO SHOULD NOT ARISE IN THE REMANDING PROCEEDINGS AS THEY SHOULD NOT BE GIVEN SECOND CHANCE MERELY BECAUSE OF THE HONB LE DELHI HIGH COURT JUDGMENT IN THE CASE OF SONY ERICSSON (SUPRA). HOWEVER, TPO IS FREE TO RE - USE HIS DATA, WHICH IS ALREADY ON RECORD SO FAR AS BENCHMARKING OF THE AMP TRANSACTIONS CONSIDERING THE REJECTION OF THE BLT, BY THE DELHI HIGH COURT. FURTHER, TPO IS DIRECTED TO APPLY ALL THE PRINCIPLES LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF MARUTI SUZIKI INDIA LIMITED VS. CIT IN ITA NO. 110/ 2014 AND ITA 710/2015, DATED 11 TH DECEMBER, 2015 IN THE REMAND PROC EEDINGS IN THE MATTERS OF THE REQUIR EMENT OF BENCHMARKING THE AMP TRANSACTIONS. WITH THESE DIRECTIONS, WE REMAND THE ISSUE RELATING TO THE TP ADJUSTMENTS RAISED BY THE ASSESSEE AND THE REVENUE IN THEIR CROSS APPEALS AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE. THUS, ALL THE RELEVANT GROU NDS RAISED BY THE ASSESSEE AS WELL AS THE REVENUE IN THEIR RESPECTIVE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. CORPORATE ISSUES 9. GROUND NO.13 RELATES TO THE DISALLOWANCE OF DEPRECIATION ON THE PLANT & MACHINERY AND BUILDING AMOUNTING TO RS. 3,94,404 / - . BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN BOTH MANUFACTURING AND TRADING IN LIFE SAVING DEVICES SINCE 1993 TO 2002. THE MANUFACTURING ACTIVITIES OF THE ASSESSEE WERE DISCONTINUED SINCE 2002. THEREFORE, THE RELEVAN T PLANT AND MACHINERY, WHICH IS PART OF THE GROSS BLOCK OF PLANT & MACHINERY, WAS NOT USED SINCE 2002. CONSIDERING THE NON - USE OF THE ASSETS, THE ASSESSING OFFICER DENIED THE BENEFIT OF DEPRECIATION ON SUCH ASSETS WHICH AMOUNTS TO SPLITTING OF THE PLAN T & MACHINERY AGAINST THE PRINCIPLES OF LAW RELATING TO THE BLOCK OF ASSETS. SAME IS THE CASE WITH THE PLANT AND MACHINERY. IN THE ASSESSMENT PROCEEDINGS, AO RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF ALLIED PHOTOGRAPHICS INDIA LTD VS. ITO ( 8 SOT 318) AND THE DECISION OF THE SPECIAL BENCH IN THE CASE OF GULATI SAREE CENTRE VS. ACIT REPORTED IN 61 ITD 73 (CHD) (SB). THE DRP REJECTED THE OBJECTION RAISED BY THE ASSESSEE AND CONFIRMED THE DISALLOWANCE. BEFORE US, LD COUNSEL FOR THE ASSESSEE DEM ONSTRATED THAT THE BLOCK OF ASSETS CANNOT BE DISTURBED SO FAR AS THE CLAIM OF DEPRECIATION IS ONCE THE 9 ASSET IS FIND PLACED IN BLOCK. THE ASSETS ARE INSEPARABLE FROM THE BLOCK. IN THIS REGARD, HE RELIED ON THE PROVISIONS OF SECTION 2(11) OF THE ACT THAT DEFINES THE BLOCK OF ASSETS W.E.F. 1.4.1988. AS PER THE LD COUNSEL FOR THE ASSESSEE, ONCE AN ASSET IS ENTERED INTO BLOCK OF ASSETS, THE SAME IS ACCEPTED BY THE AO IN THE SUBSEQUENT YEARS THE SAME CANNOT BE DISTURBED. FOR THIS PROPOSITION, HE REL IED ON VARIOUS DECISIONS IN THE CASES OF SICOM LIMITED VS. JCIT (26 ITR 706) ; GR SHIPPING LTD (ITA NO.822/MUM/05) DATED 17.7.2008. HE ALSO RELIED ON THE CBDT CIRCULAR NO.469, DATED 23.9.1986 TO SUPPORT HIS CLAIM. ADDRESSING THE DEPARTMENTAL STAND IN THE EARLIER YEARS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT (A) ALLOWED THE SAID GROUND IN THE AY 2007 - 2008 IN FAVOUR OF THE ASSESSEE RELYING ON THE JUDGMENT IN THE CASE OF CIT VS. OSWAL AGRO MILLS LTD. (197 TAXMAN 25) (DELHI) AND THE DECISION OF THE TRIBUNAL IN THE CASE OF SWATY SYNTHETICS LTD VS. ITO ( 38 SOT 208) (MUMBAI ITAT) AND THE ALLIED PHOTOGRAPHICS (SUPRA). 10. ON THE OTHER HAND, LD DR FOR THE REVENUE HEAVILY RELIED ON THE ORDER OF THE AO AND THE DRP. 11. ON HEARING BO TH THE PARTIES ON THIS ISSUE, WE FIND THE ISSUE WAS DECIDED BY THE CIT (A) IN FAVOUR OF THE ASSESSEE FOR THE AY 2007 - 2008 AND THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE SAID DECISION OF THE CIT (A) BEFORE THE TRIBUNAL. IT IS NOT CLEAR, WHETHER THE L D DR IS AWARE OF THE REASONS FOR NOT THE FILING OF THE APPEAL BEFORE THE TRIBUNAL FOR THE AY 2007 - 2008. CONSIDERING THE SAME, WE ARE OF THE OPINION, WHEN THE PLANT AND MACHINERY RELATING TO THE MANUFACTURING ACTIVITY IS ONE AND THE SAME. THE DEPARTMENT I S ACCEPTED TO FOLLOW THAT THE SET PRINCIPLE OF CONSISTENCY IN MATTERS RELATING TO THE CLAIM OF DEPRECIATION ON THE PLANT & MACHINERY, WHICH IS THE PART OF THE BLOCK OF ASSETS OF PLANT & MACHINERY. THEREFORE, AFTER VERIFYING THE RECORDS PERTAINING TO T HE ASSESSMENT YEAR PRIOR TO THE AY 2009 - 2010, AND ALSO AFTER CONSIDERING THE ABOVE CITED BINDING COORDINATE BENCH DECISION AS WELL AS THE JUDGMENTS OF THE HONBLE HIGH COURT ON THE ISSUE, WE ARE OF THE OPINION THAT IS THE SAME IS ALLOWED IN EARLIER YEARS. WE ORDER ACCORDINGLY. 12. GROUND NO.18 AND 19 RELATING TO THE DISALLOWANCE OF PROVISION FOR COMMISSION AMOUNTING TO RS. 30,02,672/ - . IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE FAIRLY MENTIONED THAT THE SAID GROUNDS ARE NOT PRESSED AS THE AO ALLOWED TH E CLAIM OF THE 10 ASSESSEE ON PAYMENT / REVERSAL BASIS. AFTER HEARING BOTH THE PARTIES ON THIS ISSUE, WE DISMISS THE SAID GROUNDS AS NOT PRESSED. 13 . IN THE RESULT, CROSS APPEALS OF THE ASSESSEE AND THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T DECEMBER, 2015. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 3 1 /12/2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI