Sami Labs Limited, Bangalore V. DCIT, Bangalore

ITA 248/BANG/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7857 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 25-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHERIAN K BA
• Keywords: Depreciation; Transfer pricing; Rectification of order; International transaction; Set aside
• Section: 143(3); 144C; 143(2); 13; 22; 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI A.K GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 ASSESSMENT YEAR : 2011-12 M/S SAMI LABS LIMITED, NO.19/1 & 19/2, 1 ST MAIN, 2 ND PHASE, PEENYA INDUSTRIAL AREA, BENGALURU-560 058. PAN AADCS 2549 E VS. THE DY. COMMISSIONER OF INCOME- TAX, CIRCLE-6(1)(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI PRADEEP KUMAR, CIT REVENUE BY : CHERIAN K BABY, C.A DATE OF HEARING : 20-08-2020 DATE OF PRONOUNCEMENT : 25-08-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEALS HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 30/12/2015 PASSED BY LD.AO UNDER SECTIO N 143(3) R.W.S 144C(13) OF THE ACT. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. IT HAS BEEN SUBMITTED THAT, ASSESSEE IS A COMPAN Y ENGAGED IN EXPORT OF STANDARDISED HERBAL EXTRACTS, FINE CHEMICALS, SPECIALTY CHEMICALS, COSMECEUTICALS, FIG HT OR NUTRIENTS AND PROBIOTICS. IT CARRIES ITS ACTIVITIES FROM SEVERAL PAGE 2 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 UNITS INCLUDING TWO UNIT WHICH ARE 100% EOU. ASSESS EE ALSO HOLDS SEVERAL REGISTERED PATENTS TO ITS CREDITS, AN D IS ONE OF THE FEW INDIAN COMPANIES THAT MANUFACTURE PRODUCTS IN INDIA, USING AGRICULTURAL PRODUCE AS INGREDIENTS, A ND SELLS IT INTERNATIONALLY, THROUGH SUBSIDIARIES AND ASSOCIATE S. 2.1. FOR YEAR UNDER CONSIDERATION, ASSESSEE FILED I TS RETURN OF INCOME ON 29/09/2011 DECLARING LOSS OF RS.2,34,7 2,710/- LATER ON, RETURN WAS REVISED ON 13/12/2012 DECLARIN G LOSS OF RS.2,28,25,845/-. NOTICE UNDER SECTION 143(2) WA S ISSUED ON 03/08/2012, IN RESPONSE TO WHICH, REPRESENTATIVE OF ASSESSEE APPEARED AND FILED VARIOUS DETAILS. LD.AO OBSERVED THAT, ASSESSEE HAS INTERNATIONAL TRANSACTION WITH I TS ASSOCIATED ENTERPRISES EXCEEDING RS.15CRORES, AND ACCORDINGLY, REFERENCE WAS MADE TO TRANSFER PRICING OFFICER. 2.2. ON RECEIPT OF REFERENCE UNDER 92CA, LD.TPO CAL LED UPON ASSESSEE TO FILE ECONOMIC DETAILS OF INTERNATI ONAL TRANSACTION IN FORM 3 CEB. LD.TPO PASSED ORDER PROP OSING ADJUSTMENT OF RS.19,25,91,246/-AND CORPORATE TAX ADJUSTMENT OF RS.96,250/-. 3. AGGRIEVED BY ADDITIONS PROPOSED, ASSESSEE RAISED OBJECTIONS BEFORE DRP. DRP VIDE DIRECTION DATED 20/11/2015 PARTIALLY DELETED ADJUSTMENT PROPOSED BY LD.TPO, AND DIRECTED LD.AO TO GIVE FOLLOWING EFFECT : TO RESTRICT ALP ADJUSTMENT TO INTERNATIONAL TRANSAC TION WITH ASSOCIATED ENTERPRISES ONLY; PAGE 3 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 TO CONSIDER STOCK WRITE-OFF RS.545 LACS AS EXTRAORDINARY EXPENSES, AND NOT TO INCLUDE AS PART OF OPERATING EXPENSES FOR COMPUTING PLI; TO EXCLUDE EXCISE DUTY FROM OPERATING EXPENSES IN T HE COMPUTATION OF PLI OF COMPARABLES SELECTED BY TPO; AND TO APPLY 75% FILTER FOR EXPORT TURNOVER INSTEAD OF 25% ADOPTED BY THE TPO. 3.1. ON THE BASIS OF DRP DIRECTIONS, LD.TPO PASSED ORDER DATED 15/12/2015, ACCORDING TO WHICH, ADJUSTMENT WA S INCREASED TO RS.19,99,97,862/-. LD.AO WHILE PASSING ORDER DATED 30/12/2015, DID NOT CONSIDER THE ADJUSTMENT REWORKED BY LD. TPO. 4. AGAINST FINAL ASSESSMENT ORDER DATED 30/12/2015, ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL BEING ITA NO. 248/B/2016 4.1. LD.AR SUBMITTED THAT, ON 01/06/2016 RECTIFICAT ION ORDER UNDER SECTION 154 WAS PASSED, REVERSING TOTAL INCOME TO RS.17,72,68,2067/-. AGAINST THIS ORDER, ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL BEING ITA NO. 2960/BANG/2018 ALONG WITH APPLICATION FOR CONDONATION OF DELAY. 4.2. LD.AR, AT THE OUTSET, SUBMITTED THAT ISSUES AL LEGED IN IT(A)NO.2960/BANG/2018, HAS BEEN RECTIFIED VIDE ORD ER PASSED BY LD.TPO DATED 07/05/2019, AND ACCORDINGLY, NO GRIEVANCE ARISES OUT OF THIS APPEAL. HE ACCORDINGLY SUBMITTED FOR WITHDRAWAL OF IT(A)NO.2960/BANG/2018. PAGE 4 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 4.3. LD.CIT.DR DID NOT OBJECT FOR THE APPEAL BEING WITHDRAWN. ON THE BASIS OF SUBMISSIONS MADE BY BOTH SIDES HEREUNDER, APPEAL BEING ITA NO.2960/BANG/2018 STAND S DISMISSED AS WITHDRAWN. ITA NO.248/BANG/2016 5. LD.AR SUBMITTED THAT, DEMAND ARISING OUT OF IMPU GNED ORDER STANDS RECTIFIED TO RS.8,74,57,770/- BY ORDER PASSED BY LD.AO UNDER SECTION 154 OF THE ACT, DATED 07/05/ 2019. GROUNDS RAISED BY ASSESSEE IN THIS APPEAL ARE AS UN DER: THE GROUNDS OF APPEAL ARE AS GIVEN BELOW. ALL THE FOLLOWING GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 1. THE LEARNED AO HAS ACTED IN GROSS VIOLATION OF T HE SECTION 144C READ WITH SECTION 143 BY COMPLETING THE ASSESSMENT WITHOUT GIVING EFFECT TO THE SPECIFIC DIRECTIONS OF THE DRP. THE F OLLOWING DIRECTIONS GIVEN BY THE DRP HAS NOT BEEN GIVEN EFFECT TO: A. TO RESTRICT ALP ADJUSTMENT TO INTERNATIONAL TRAN SACTIONS WITH ASSOCIATED\ENTERPRISES ONLY - PARA 7 OF THE DIRECTI ONS. B. TO CONSIDER STOCK WRITE OFF OF RS.5.35 CRORES AS EXTRA ORDINARY EXPENSES AND NOT INCLUDE THE SAME AS PART OF OPERAT ING EXPENSES FOR COMPUTATION OF PLI OF YOUR APPELLANT. - PARA 8. 3 OF THE DIRECTION. C. TO EXCLUDE EXCISE DUTY FROM OPERATING REVENUES I N THE COMPUTATION OF PLI OF COMPARABLES SELECTED BY TPO. PARA 9.2(U) OF THE DIRECTION. D. TO APPLY 75% FILTER FOR EXPORT TURNOVER INSTEAD OF 25% ADOPTED BY THE TPO. PARA 9.2(III) OF THE DIRECTION 2. THE TPO HAS GRIEVOUSLY ERRED IN MAKING TRANSFER PRICING ADJUSTMENT OF RS.18,61,90,843/- TO PRICES CHARGED B Y YOUR APPELLANT. 3. THE TPO HAS ERRED IN REJECTING THE COST PLUS MET HOD ADOPTED BY YOUR APPELLANT AS THE MOST APPROPRIATE METHOD (MAM) FOR THE DETERMINATION OF THE ARM'S LENGTH PRICE (ALP) AND W RONGLY ADOPTING TRANSACTION NET MARGIN METHOD (TNMM).THE DRIP HAS E RRED IN UPHOLDING THE SAME. 4. THE DRP AND TPO HAS ERRED IN NOT ALLOWING ANY AD JUSTMENT FOR IDLE COSTS OF EXCESS CAPACITY OF YOUR APPELLANT DUR ING THE YEAR. 5. THE DRIP HAS ERRED IN NOT ALLOWING FOR ANY ADJUS TMENTS FOR THE DIFFERENCES IN THE FUNCTIONS AND RISKS WHICH ARE NO T UNDERTAKEN BY YOUR APPELLANT BUT UNDERTAKEN BY THE COMPARABLE COM PANIES PAGE 5 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 CONSIDERING THE FACT THAT YOUR APPELLANT DOES NOT U NDERTAKE MARKETING ACTIVITIES IN RESPECT OF TRANSACTIONS WIT H AES. 6. THE TPO HAS ERRED IN REJECTING THE COMPANIES SEL ECTED AS COMPARABLE BY YOUR APPELLANT. 7. THE TPO HAS ERRED IN SELECTION OF COMPANIES THAT ARE FUNCTIONALLY DIFFERENT FROM YOUR APPELLANT AS COMPARABLES, IN OR DER TO DETERMINE THE ALP. THE TPO HAS WRONGLY SELECTED 22 COMPANIES AS COMPARABLE WHOSE BUSINESSES AND OPERATIONS HAVE NOT HING IN, COMMON WITH THAT OF YOUR APPELLANT. 8. THE TPO HAS ERRED IN MAKING APPARENT ERRORS IN M ARGIN COMPUTATION OF COMPARABLES SELECTED BY HIMSELF, DES PITE THESE BEING POINTED OUT BY YOUR APPELLANT. 9. IN THE LIGHT OF THE BINDING LEGAL PROVISIONS THA T PROHIBIT CHARGING COMMISSION ON GUARANTEES OF THE NATURE EXTENDED BY YOUR APPELLANT, THE DRP HAS ERRED IN UPHOLDING GUARANTEE COMMISSION OF RS.64,00,403/- CHARGED BY THE LEARNED TPC IN HIS OR DER ON THE CONTENTION THAT THE GUARANTEE COULD NOT BE CONSIDER ED TO BE AT ARM'S LENGTH SINCE NO COMMISSION WAS CHARGED. 10. YOUR APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTE R, VARY AND/ OR WITHDRAW ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL. 11. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT MAY BE DIRECTED THAT THE ORDER OF THE L EARNED ASSESSING OFFICER AS UPHELD BY THE HON'BLE DRP BE MODIFIED TO THE EXTENT APPEALED AGAINST. 5.1. AT THE OUTSET, LD.AR SUBMITTED THAT, ALL ISSUE S RAISED IN THIS APPEAL STANDS COVERED BY ORDERS PASSED BY COOR DINATE BENCHES OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11. 6. LD.AR SUBMITTED THAT, GROUND NO. 1 IS NOT PRESSED AS RECTIFICATION ORDER HAS BEEN PASSED ON THESE ISSUES BY LD.AO. ACCORDINGLY, GROUND NO.1 RAISED BY ASSESSEE STANDS DISMISSED. GROUND NO. 2 IS SUBMITTED TO BE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. 7. GROUND NO.3 IS RAISED AGAINST MOST APPROPRIATE METHOD TO BE ADOPTED FOR DETERMINING ALP OF INTERNATIONAL TRANSACTION. PAGE 6 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 7.1. LD.AR SUBMITTED THAT, THIS ISSUE STANDS AGAINS T ASSESSEE BY ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 IN IT(TP)A NO.1197/BANG/201 2, BY ORDER DATED 08/05/2015. HE REFERRED TO PARA 15 O F ORDER, WHEREIN TNMM HAS BEEN UPHELD AS MOST APPROPRIATE METHOD AS UNDER: 15. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. WE FIND THAT ASSESSEE IN ITS LETTER DA TED 21/10/2011 ADDRESSED TO THE TPO, PLAYS AS ANNEXURE J OF THE PAPER BOOK, HAD ITSELF STATED AT PAGE 3 THAT EXPEND ITURE LIKE DEPRECIATION AND REPAIR COST WERE NOT CONSIDERED BY IT IN THE MARGIN ANALYSIS. EVEN IN THE TP STUDY FURNISHED BY ASSESSEE, ANALYSIS BASED ON GROSS PROFIT MARGINS ALONE HAS BE EN DONE AND PAGE 27 OF ANNEXURE G OF PAPER BOOK CLEARLY BEI NG BRINGS OUT THIS. ASSESSEE HAD CONSIDERED THIS GP RATIO OF 23.36% AND COMPARED IT WITH GP MARGIN OF COMPANIES SELECTED BY IT AS COMPARABLES, NAMELY, VIVIMAD LABS LTD, ANUH PHARMA LTD., AND SYNTHITE INDUSTRIAL CHEMICALS LTD., ASSESSEE IT SELF AS MENTIONED THEREIN THAT NONE OF THESE 3 COMPANIES WE RE FULLY COMPARABLE TO THE BUSINESS OF ASSESSEE. VIVMED LABS LTD WAS MANUFACTURING CHEMICALS AND FORMULATIONS AND NOT HE RBAL EXTRACTS. ANUH PHARMA LTD WAS MANUFACTURE OF ANTIBI OTICS AND SYMTHITE INDUSTRIAL CHEMICALS LTD WAS MANUFACTURING ESSENTIAL OILS, OLEORESINES AND SPICES. WHEN ASSESSEE ITSELF AS STATED IN ITS TP STUDY THAT THE COMPANIES SELECTED BY IT FOR COMPARISON WERE NOT IN THE SAME MANUFACTURING LINE AND WHEN RU LE 10 B OF THE ACT CLEARLY SPECIFIES DEDUCTION OF BOTH DIRECT AND INDIRECT EXPENDITURE FOR CPM, WE ARE OF THE OPINION THAT LOW ER AUTHORITIES WERE RIGHT IN REJECTING THE METHODOLOGY ADOPTED BY ASSESSEE AND SUBSTITUTING IT WITH TNMM. GROUND 11 O F ASSESSEE THEREFORE STANDS DISMISSED. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD TNMM AS MOST APPROPRIATE METHOD FOR YEAR UNDER CONSIDERATION, ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE STANDS DISMISSED. 8. GROUND NO. 4 IS RAISED BY ASSESSEE FOR NOT ALLOWING ADJUSTMENT FOR IDLE COST OF EXCESS CAPACITY. PAGE 7 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 8.1. LD.AR SUBMITTED THAT, THIS ISSUE STANDS SETTLE D BY ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 IN IT(TP)A NO.1197/BANG/2012, BY ORDER DATED 08/05/2015. HE REFERRED TO PARA 25 OF ORDER T HAT READS AS UNDER: 25. THERE ALSO IS MUCH STRENGTH IN THE ARGUMENT OF ASSESSEE THAT THE MARGINS OF THE COMPARABLES WORKED OUT BY THE AU REQUIRED TO BE ADJUSTED FOR DISCREPANCY IN STOCK, EXCESSIVE R & D EXPENDITURE ETC., SIMILARLY, COORDINATE BENCH OF THIS TRIBUNAL HAS HELD IN THE CASE OF TRILOGY B BUSINESS SOFTWARE INDIA P. LTD., V. DCIT (2013) 140 LTD 540, THAT FOREX GAIN RELATING TO EXPORT BUS INESS WERE PART OF THE OPERATING REVENUES AND HAD TO BE CONSIDERED WHILE WORKING OUT THE ALP OF THE INTERNATIONAL TRANSACTIONS UNDER TAKEN BY IT. LOWER AUTHORITIES HAVE ALSO NOT VERIFIED THE CLAIM OF ASSESSEE THAT NON-OPERATING EXPENDITURES WERE NOT EXCLUDED WHILE WORKING OUT THE OPERATING EXPENDITURE. SIMILARLY ITS CLAIM THAT TP ADJUSTMENT HAS TO BE CONFINED TO THE INTERNATIONAL TRANSACTION WITH AE IS ALSO JUSTIFIED IN VIEW OF THE DECISION OF THE COORDINATE BENCH IN THE CASE OF KIRLOSKAR TOYOTA TEXTILES MACHINERY P. LTD. V. A CIT [IT(TP)A NO.4O1/BANG/2010, DT 14.11.20 14]. ON THE OTHER HAN D, WE FIND THAT THE WORKING OUT OF IDLE COST DONE BY ASSESSEE WAS NOT BASED ON ANY SCIENTIFIC PRINCIPLES. IT TOOK A PRESUMPTION THAT FIXED COSTS VARIES WITH TURNOVER. REDUCTION IN TURNOVER CAN BE DUE REDUCTION IN PRICE S AND NEED NOT ALWAYS BE DUE TO REDUCTION IN PRODUCTION. IDLE CAP ACITY CAN BE WORKED OUT ONLY BASED ON MACHINE CAPACITIES AND UTI LISATION OF THE MACHINES IN MANUFACTURING SECTOR. EXERCISES DON E BY THE ASSESSEE FOR WORKING OUT THE FIXED COST ATTRIBUTABL E TO IDLE CAPACITY AT 31% WAS INCORRECT. HOWEVER, IF ASSESSEE IS ABLE TO SHOW THAT THERE WAS ANY IDLE CAPACITY, THEN PROPER ADJUSTMENT HAS TO BE CARRIED OUT FOR IT, IN ACCORDANCE WITH RU LE 1 OB OF THE ACT. THEREFORE, EVEN WHILE ACCEPTING TNNM ADOPTED B Y THE TPO, WE ARE OF THE OPINION THAT ANALYSIS OF THE TRANSFER PRICING OF THE INTERNATIONAL TRANSACTIONS REQUIRES A FRESH LOOK BY THE TPO / AO BY CONSIDERING ALL THE AVERMENTS TAKEN BY ASSESSEE IN DETAIL. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE ISSUE WITH REGARD TO FIXING OF ALP OF THE INTER NATIONAL TRANSACTIONS, BACK TO THE FILE OF TPO / AO FOR CONS IDERATION AFRESH IN ACCORDANCE WITH THE DIRECTIONS GIVEN ABOVE. NO D OUBT, IF THE STUDY MADE AFRESH SHOW THAT THE MARGIN OF THE ASSES SEE ON THE COST WAS WITHIN + / - 5% OF THE ARITHMETIC MEAN, TH E AO SHALL NOT MAKE ANY ADJUSTMENT. PAGE 8 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 8.2. LD.CIT.DR PLACED RELIANCE ON ORDERS PASSED BY AUTHORITIES BELOW. WE HAVE PERUSED SUBMISSIONS FILED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 8.3. NOTHING HAS BEEN BROUGHT ON RECORD BY REVENUE TO ESTABLISH ANY FACTUAL CHANGES. THEREFORE WE DO NOT FIND ANY REASON TO DEVIATE FROM CONSISTENT VIEW TAKEN BY THI S TRIBUNAL IN ASSESSEES OWN CASE. 8.4. RESPECTFULLY FOLLOWING THE SAME, WE REMAND THE ISSUE BACK TO LD.TPO FOR CONSIDERING IT AFRESH, IN LIGHT OF OBSERVATIONS MADE BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 (SUPRA), IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT PROPER OPPORTUNITY OF BEI NG HEARD IS TO BE GRANTED TO ASSESSEE. ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES 9. GROUND NO. 5 IS RAISED FOR NOT ALLOWING ADJUSTMENT FOR DIFFERENCES IN FUNCTIONS AND RISKS THAT ARE NOT UND ERTAKEN BY ASSESSEE BUT UNDERTAKEN BY COMPARABLE COMPANIES. 9.1. LD.AR SUBMITTED THAT, THIS ISSUE HAS BEEN DECI DED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 IN IT(TP)A NO.1197/BANG/2012, BY ORDER DATE D 08/05/2015. HE REFERRED TO PARA 15 OF ORDER, THAT R EADS AS UNDER: 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARAS 17 AND 18 FROM THE TRIBUNAL ORDER W HICH IS AVAILABLE ON PAGE NO. 353 OF PAPER BOOK. THE SAME R EADS AS UNDER. '17. GROUND NO.6 IS REGARDING RISK ADJUSTMENT. PAGE 9 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 18. WE HAVE HEARD THE LEARNED A. R. AS WELL AS LEAR NED D, R. AND CONSIDERED THE RELEVANT MATERIAL ON RECORD THE ASSE SSEE IS CLAIMING THE RISK ADJUSTMENT BECAUSE OF THE MAJORITY OF THE SALE TO THE AE IN COMPARISON TO THE COMPARABLES MAKING SALES TO THE T HIRD PARTY. THE ID. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSES SEE HAS FURNISHED ALL THE REQUISITE DETAILS. RISK ADJUSTMEN T IS ONE OF THE COMPONENT TO BE TAKEN INTO ACCOUNT FOR FAR ANALYSIS . THEREFORE THE TPO/A.O./A.O IS DIRECTED TO CONSIDER THE CLAIM OF R ISK ADJUSTMENT ON THE BASIS OF THE DETAILS TO BE FURNISHED BY THE ASS ESSEE.' 16. FROM THE ABOVE PARES REPRODUCED FROM THE TRIBUN AL ORDER, IT IS SEEN THAT IN THE AO/TPO WERE DIRECTED TO CONSIDER T HE CLAIM OF RISK ADJUSTMENTS OF THE DETAILS TO BE FURNISHED BY THE A SSESSEE. HENCE IN THE PRESENT YEAR ALSO, WE RESTORE THIS MATTER BACK TO AOJJPO WITH SIMILAR DIRECTIONS. GROUND NO. 8 IS ALSO ALLOWED F OR STATISTICAL PURPOSES. 9.2. HE SUBMITTED THAT, THIS TRIBUNAL RELIED ON OBSERVATIONS OF COORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSE SSMENT YEAR 2009-10, WHICH IS PLACED AT PAGE 148-165 OF PA PER BOOK VOLUME 1. 9.3. LD.CIT.DR PLACED RELIANCE ON ORDERS PASSED BY AUTHORITIES BELOW. HOWEVER, HE ALSO COULD NOT PLACE ON RECORD, ANY DISTINGUISHING FEATURE FOR YEAR UNDER CONSIDERATION ON FACTS. 9.4. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT LD. AO/TPO TO CONSIDER CLAIM OF RISK ADJUSTMENT ON THE BASIS OF D ETAILS FURNISHED BY ASSESSEE, AS DIRECTED BY THIS TRIBUNAL IN EARLIER YEARS IN ASSESSEES OWN CASE. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.6 IS IN RESPECT OF REJECTING ONE COMPARABLE ALLEGED BY ASSESSEE FOR INCLUSION. 10.1. WE NOTE THAT THERE IS NO SPECIFIC COMPARABLE THAT HAS BEEN RAISED IN THE GROUND. HOWEVER, LD.AR RELIED ON WRITTEN PAGE 10 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 SUBMISSIONS FILED BEFORE US, WHEREIN, ASSESSEE ALLE GES EXCLUSION OF INDFRAG LTD. HE SUBMITTED THAT, OBJECT ION WAS RAISED BEFORE DRP, HOWEVER, DRP PASSED CRYPTIC ORDE R WITHOUT GIVING ANY SPECIFIC REASON UPHOLDING ITS EX CLUSION. 10.2. LD.CIT.DR RELIED ON ORDERS PASSED BY AUTHORIT IES BELOW. WE HAVE PERUSED ORDER PASSED BY DRP. WE NOTE THAT, DRP DID NOT GIVE ANY SPECIFIC REASON UPHOLDING EXCLUSIO N OF THIS COMPARABLE BY LD.TPO. WE ALSO NOTE THAT SUBMISSIONS MADE BY ASSESSEE HAVE NOT BEEN CONSIDERED. 10.3. IN THE LIGHT OF SUCH SITUATION, WE DEEM IT FI T TO REMAND THIS COMPARABLE BACK TO DRP TO ADJUDICATE IT AFRESH . DRP IS DIRECTED TO PASS A REASON ORDER IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT PROPER OPPORTUNITY OF BEING HE ARD MUST BE GRANTED TO ASSESSEE. ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.7-8 IS IN RESPECT OF CERTAIN COMPARAB LES FOR EXCLUSION. 11.1. LD.AR SUBMITTED THAT, OBJECTION WAS RAISED IN RESPECT OF CERTAIN COMPARABLES FOR EXCLUSION BEFORE DRP, HO WEVER, DRP FAILED TO ADJUDICATE OBJECTION E, MORE PARTIC ULARLY MENTIONED IN DRP DIRECTION. 11.2. LD.CIT.DR RELIED ON ORDERS PASSED BY AUTHORIT IES BELOW. WE HAVE PERUSED ORDER PASSED BY DRP AND NOTED THE MANNER IN WHICH THE ISSUE HAS BEEN DEALT WITH. WE N OTE PAGE 11 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 THAT, THERE IS NO COMPARABLE SPECIFIC GROUND, RAISE D BY ASSESSEE ALLEGING EXCLUSION. HOWEVER, LD.AR RELIED ON WRITTEN SUBMISSIONS FILED BEFORE US, WHEREIN, ASSES SEE ALLEGES EXCLUSION OF AVT NATURAL LTD., SHILPA MEDIC ARE LTD., VINATI ORGANICS LTD., GLENMARK GENERIC LTD. WE NOTE THAT DRP DID NOT DEAL WITH ANY OF THESE COMPARABLES OBJE CTED BY ASSESSEE. 11.3. IN THE LIGHT OF SUCH SITUATION, WE DEEM IT FI T TO REMAND THIS COMPARABLE BACK TO DRP TO ADJUDICATE IT AFRESH . DRP IS DIRECTED TO PASS A REASONED ORDER, IN ACCORDANCE WI TH LAW. NEEDLESS TO SAY THAT, PROPER OPPORTUNITY OF BEING H EARD MUST BE GRANTED TO ASSESSEE. ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 12. GROUND NO.9 IS REGARDING ADDITION OF GUARANTEE COMMISSION AT 3%. 12.1. IT HAS BEEN SUBMITTED BY LD.AR THAT THIS ISSU E STANDS SETTLED BY ORDERS OF THIS TRIBUNAL IN EARLIER ASSESSMENT YEARS. HE REFERRED TO ORDER PASSED BY THIS TRIBUNAL IN ASSESSMENT YEAR 2010-11(SUPRA), WHEREIN, THIS TRIBUNAL FOLLOWED VIEW TAKEN IN AY 2009-10, AND HELD AS UNDER: 17. REGARDING GROUND NO. 9 ALSO, IT WAS SUBMITTED THAT PARA NO. 20 OF THE SAME TRIBUNAL ORDER IN ASSESSEE'S OWN CAS E FOR ASSESSMENT YEAR 200910 IS RELEVANT AND IN THAT YEAR , THE AO/TPO WERE DIRECTED TO ADOPT THE ARM'S LENGTH COMM ISSION OF CORPORATE GUARANTEE AT 0.5%. THE ID. DR OF REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS IN THE PRESENT YE AR. HENCE RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER IN ASSES SEE'S OWN CASE, WE DIRECT THE AO/TPO TO ADOPT THE ARM'S LENGTH COMM ISSION OF CORPORATE GUARANTEE AT 0.5%. GROUND NO. 9 IS ALLOWE D. PAGE 12 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 12.2. LD.CIT.DR PLACED RELIANCE ON ORDERS PASSED BY AUTHORITIES BELOW. WE HAVE PERUSED SUBMISSIONS FILED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 12.3. NOTHING HAS BEEN BROUGHT ON RECORD BY REVENUE TO ESTABLISH ANY FACTUAL CHANGES. THEREFORE WE DO NOT FIND ANY REASON TO DEVIATE FROM CONSISTANT VIEW TAKEN BY THI S TRIBUNAL IN ASSESSEES OWN CASE. BASED ON THE ABOVE OBSERVAT IONS BY THIS TRIBUNAL IN ASSESSEES OWN CASE, WE DIRECT LD.AO/TPO TO ADOPT ARMS LENGTH COMMISSION AT 0.5%. ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED. 13. GROUND NO.11 IS GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. IN THE RESULT, IT(TP)A NO.248/BANG/2016 STANDS PART LY ALLOWED AS INDICATED HEREINABOVE, AND IT(TP)A NO.2960/BANG/2018, STANDS DISMISSED AS WITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH AUG, 2020. SD/- SD/- (A.K GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 25 TH AUG, 2020. /VMS/ PAGE 13 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE PAGE 14 OF 14 IT(TP)A NO.248/BANG/2016 IT(TP)A NO.2960/BANG/2018 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -08-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -08-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -08-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -08-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -08-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -08-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -08-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS