M/s Rittal India Pvt Ltd , Doddaballapur V. Deputy Commissioner of Income TAx Circle-1 , Bangalore

ITA 2494/BANG/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5008 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 24-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S RAMASUBRAMANYAM
• Keywords: Depreciation; Transfer pricing; International transaction; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER IT(TP)A NO.2494/BANG/2017 ASSESSMENT YEAR : 2013-14 M/S RITTAL INDIA PVT. LTD., NO.23 & 24, KIADB INDUSTRIAL AREA, VEERAPURA, DODDABALLAPUR-561 203. PAN AAACB 7927 A VS. THE DY. COMMISSIONER OF INCOME- TAX, CIRCLE-1, LTU, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S RAMASUBRAMANYAM, C.A RESPONDENT BY : SHRI PRADEEP KUMAR, CIT (DR) DATE OF HEARING : 25.02.2019 DATE OF PRONOUNCEMENT : 17.05.2019 O R D E R PER SHRI B.R BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ASSESSMENT ORDER PASSED BY THE AO FOR ASSESSMENT YEAR 2013-14 U/S 143(3) R.W.S. 144C OF THE ACT IN PURSUANCE OF DIRECTIONS G IVEN BY THE LD DISPUTE RESOLUTION PANEL (DRP). 2. GROUND NO.1 IS GENERAL IN NATURE. AT THE TIME OF HEARING, THE LD A.R DID NOT PRESS GROUND NO.4. THE GROUND NO.2 AND 3 RELATE TO IT(TP)A NO.2494/BANG/2017 PAGE 2 OF 12 THE TRANSFER PRICING ADJUSTMENT OF RS.580.00 LAKHS MADE BY THE TPO. THE ASSESSEE HAS ALSO RAISED TWO ADDITIONAL G ROUNDS SEEKING CONSEQUENTIAL RELIEF IN PURSUANCE OF ORDER PASSED F OR ASSESSMENT YEAR 2012-13. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MA NUFACTURE AND SALE OF ENCLOSURES, HEAT EXCHANGERS, INDUSTRIAL COO LING EQUIPMENT AND POWER DISTRIBUTION EQUIPMENT. 4. WE SHALL FIRST TAKE UP THE GROUNDS RELATING TO T.P ADJUSTMENTS. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS ADOPTED TNMM METHOD FOR BENCHMARKING ITS INTERNATIONAL TRANSACTIONS AND ADOPTED OPERATING CASH PROFIT/OPERATING REVENUE (OP/OR) AS PROFIT LEVEL INDICATOR (PLI). IN THIS APPEAL, THE ASSESSEE IS D ISPUTING EXCLUSION OF ONE COMPARABLE NAMED SCHNEIDER ELECTRIC PRESIDEN T SYSTEMS LTD (FORMERLY CALLED APW PRESIDENT SYSTEMS LTD) AND IS ALSO DISPUTING INCLUSION OF FOLLOWING TWO COMPARABLE COMPANIES:- (A) LLOYD ELECRTRIC & ENGG LTD (B) UNIVERSAL HEAT EXCHANGERS LTD. 5. WITH REGARD TO EXCLUSION OF M/S SCHNEIDER ELEC TRIC PRESIDENT SYSTEMS LTD, THE LD A.R SUBMITTED THAT THE TPO HAS EXCLUDED THE SAME ONLY FOR THE REASON THAT IT IS A CONSISTENTLY LOSS MAKING COMPANY. THE LD A.R SUBMITTED THAT THE ASSESSEE HA S COMPARED THE CASH PROFIT ( I.E., EXCLUDING DEPRECIATION) EAR NED BY IT WITH THE CASH PROFIT EARNED BY THE COMPARABLE COMPANIES. TH E LD A.R SUBMITTED THAT THE M/S SCHNEIDER ELECTRIC PRESIDENT SYSTEMS LTD HAS ACTUALLY MADE CASH PROFIT DURING THE YEAR ENDIN G 31.3.2011 AND 31.3.2015 TO 31.3.2017. IT HAS INCURRED CASH L OSS ONLY DURING IT(TP)A NO.2494/BANG/2017 PAGE 3 OF 12 THE YEAR ENDING 31.3.2012 TO 31.3.2014. ACCORDINGL Y, THE LD A.R CONTENDED THAT THIS COMPANY CANNOT BE CONSIDERED AS CONSISTENTLY LOSS MAKING COMPANY. 6. ON THE CONTRARY, THE LD D.R SUBMITTED THAT TH E YEAR UNDER CONSIDERATION IS AY 2013-14 AND HENCE THE FINANCIAL RESULTS SUBSEQUENT TO THE YEAR UNDER CONSIDERATION SHOULD N OT BE CONSIDERED. 7. WE HEARD RIVAL CONTENTIONS AND PERUSED THE R ECORD. WE NOTICE THAT THE TPO HAS EXCLUDED THIS COMPANY ONLY FOR THE REASON THAT IT IS CONSISTENTLY LOSS MAKING COMPANY. WE NOTICE THAT THE LD DRP HAS NOT DISCUSSED/DECIDED ON THIS COMPARABLE. IN A NY CASE, IT IS THE CONTENTION OF THE ASSESSEE THAT ONLY CASH PROFI T SHOULD BE COMPARED. THE ASSESSEE HAS ALSO FURNISHED A STATEM ENT SHOWING CASH PROFIT/LOSS OF THIS COMPANY FOR THE YEAR ENDIN G 31.3.2011 TO 31.3.2017. WE NOTICE THAT THIS COMPANY HAS EARNED CASH PROFIT DURING THE YEAR ENDING 31.3.2011 AND INCURRED LOSS DURING THE YEAR ENDING 31.3.12 AND 31.3.13. BEFORE US, THE LD D.R CONTENDED THAT THE OPERATIONAL RESULTS OF THE YEARS SUBSEQUENT TO THE YEAR UNDER CONSIDERATION SHOULD NOT BE TAKEN INTO ACCOUNT. WE AGREE WITH THE SAID CONTENTIONS OF LD D.R. ACCORDINGLY, WE ARE OF THE VIEW THAT THE FINANCIAL RESULTS OF THIS COMPANY FOR THE YEAR ENDI NG 31.3.2013 AND EARLIER YEARS ALONE SHOULD BE EXAMINED IN ORDER TO DECIDE THE QUESTION AS TO WHETHER THIS IS CONSISTENTLY LOSS MA KING COMPANY OR NOT? IT(TP)A NO.2494/BANG/2017 PAGE 4 OF 12 8. THE LD A.R PLACED HIS RELIANCE ON THE DECISI ON RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF CHRYSCAPITA L INVESTMENT ADVISORS VS. DCIT (376 ITR 183)(DELHI) AND CONTENDE D THAT THE LOSS MAKING COMPANIES SHOULD NOT BE EXCLUDED, UNLESS IT WAS SHOWN THAT THE LOSS HAS BEEN INCURRED DUE TO ABNORMAL CIR CUMSTANCES. THE LD A.R INVITED OUR ATTENTION PARAGRAPH 29 OF TH E ORDER, WHEREIN THE GUIDELINES ISSUED BY OECD (MORE PARTICULARLY PA RAGRAPH 3.65 OF OECD GUIDELINES) ARE EXTRACTED. HE ALSO TOOK SUPPO RT OF THE DECISION RENDERED BY THE CO-ORDINATE BENCH IN THE C ASE OF TRILOGY E- BUSINESS SOFTWARE INDIA P LTD VS. DCIT (2013)(23 IT R (TRIB) 464)(BANG-ITAT). 9. WE NOTICE THAT THE CO-ORDINATE BENCH IN THE ABOVE SAID CASE HAS EXPRESSED THE VIEW THAT THERE IS NO BAR IN CONS IDERING COMPANIES WITH EITHER ABNORMAL PROFITS OR ABNORMAL LOSSES AS COMPARABLE TO THE TESTED PARTY, AS LONG AS THEY ARE FUNCTIONALLY COMPARABLE. IT WAS FURTHER HELD THAT IT IS FOR THE ASSESSEE TO DEMONSTRATE EXISTENCE OF ABNORMAL FACTORS WHICH WOU LD WARRANT EXCLUSION OF THE SAME. THE MUMBAI BENCH OF TRIBUNAL HAS ALSO HELD IN THE CASE OF CAPGEMINI INDIA P LTD VS. ACIT (2013 )(27 ITR (TRIB.) 74 (MUM-ITAT) THAT COMPARABLES SHOULD NOT BE REJECT ED MERELY ON ACCOUNT OF HIGH PROFIT OR LOSS. 10. IN THE INSTANT CASE, THE TPO HAS REJECTED M /S SCHNEIDER ELECTRIC PRESIDENT SYSTEMS LTD ONLY FOR THE REASON THAT IT WAS CONSISTENTLY MAKING LOSSES. WHAT IS REQUIRED TO BE SHOWN BY THE TPO, AS PER THE VIEW TAKEN BY THE ABOVE CITED CASES , IS THAT THERE EXISTED ABNORMAL CONDITIONS WHICH HAS RESULTED IN L OSSES IN THE IT(TP)A NO.2494/BANG/2017 PAGE 5 OF 12 HANDS OF M/S SCHNEIDER ELECTRIC PRESIDENT SYSTEMS L TD, WHICH WOULD WARRANT EXCLUSION OF THE SAME. ACCORDINGLY, WE ARE OF THE VIEW THAT THIS COMPARABLE REQUIRES FRESH EXAMINATIO N AT THE END OF AO/TPO. IN ANY CASE, THE LD DRP HAS NOT DISCUSSED ABOUT THIS COMPARABLE. ACCORDINGLY WE SET ASIDE THE ORDER PAS SED BY THE AO ON THIS COMPARABLE AND RESTORE THE SAME TO HIS FILE TO EXAMINE IT AFRESH. 11. WITH REGARD TO THE CONTENTION OF THE ASSESSE E THAT THE CASH PROFIT (PROFIT BEFORE DEPRECIATION) SHOULD BE CONSI DERED AS PLI, WE NOTICE THAT THE SAME FINDS SUPPORT FROM THE DECISIO N RENDERED BY THE CO-ORDINATE BENCH IN THE CASE OF DCIT VS. M/S C ENTUM RAKON INDIA P LTD (IT(TP)A NO.472/BANG/2016 DATED 20-07-2 018), WHEREIN THE CO-ORDINATE BENCH HAS FOLLOWED THE DECISIONS RE NDERED IN THE CASE OF HONEYWELL TECHNOLOGY SOLUTIONS LAB VS. DCIT (61 SOT 61)(URO)(BANG.); 24/7 CUSTOMER.COM (P) LTD VS. DY C IT (2013)(140 ITD 344) AND BA CONTINUM INDIA P LTD VS. ACIT (2013 )(28 ITR (TRIB.) 445 (HYD). WE NOTICE THAT THE CO-ORDINATE BENCH HAS EXPRESSED THE VIEW THAT THE PROFIT BEFORE DEPRECIAT ION CAN BE TAKEN AS PLI, IF THERE IS SUBSTANTIAL VARIATION IN THE MA NNER OF CHARGING DEPRECIATION BY THE ASSESSEE AND COMPARABLE COMPANI ES. ACCORDINGLY WE DIRECT THE AO TO TAKE INTO CONSIDERA TION THE ABOVE SAID CONTENTION OF THE ASSESSEE ALSO. WE ALSO DIREC T THE ASSESSEE TO FURNISH THE DETAILS TO PROVE THAT THERE IS SUBSTANT IAL VARIATION IN THE MANNER OF CHARGING DEPRECIATION. 12. THE LD A.R ALSO SUBMITTED THAT THE AO/TPO H AS NOT GIVEN THE METHODOLOGY OF COMPUTATION OF OPERATING PROFIT/ OPERATING IT(TP)A NO.2494/BANG/2017 PAGE 6 OF 12 REVENUE. WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SAID PRAYER OF THE ASSESSEE. UNLESS THE MANNER OF COMPUTATION OF OR/OC IS GIVEN, IT MAY NOT BE POSSIBLE FOR THE ASSESSEE TO E XPLAIN THE MISTAKES/VARIATION IN THE COMPUTATION. ACCORDINGLY WE DIRECT THE AO TO CONFRONT THE WORKINGS OF OP/OR WITH THE ASSES SEE BEFORE TAKING ANY DECISION. 13. WE SHALL NOW EXAMINE THE CLAIM OF THE ASSESS EE FOR EXCLUSION OF TWO COMPARABLES SELECTED BY THE TPO. THE FIRST COMPARABLE IS M/S LLOYD ELECTRICAL AND ENGINEERING LTD. THE LD A .R SUBMITTED THAT THE TOTAL TURNOVER OF THE ASSESSEE COMPANY IS AROUND RS.300 CRORES, OUT OF WHICH THE TURNOVER RELATING TO COOLI NG UNITS & ACCESSORIES IS ONLY AROUND RS.25.44 CRORES. HE FUR THER SUBMITTED THAT THE TURNOVER OF M/S LLOYD ELECTRICAL AND ENGIN EERING LTD IS AROUND 1169 CRORES, OUT OF WHICH THE TURNOVER OF AI R CONDITIONERS DIVISION IS AROUND 823 CRORES. ACCORDINGLY HE SUBM ITTED THAT THE TURNOVER AIR-CONDITIONER DIVISION OF M/S LLOYDS IS MORE THAN 10 TIMES OF THE TURNOVER OF THE ASSESSEE FROM COOLING UNITS DIVISION. BY PLACING RELIANCE ON THE DECISION RENDERED BY HON BLE KARNATAKA HIGH COURT IN THE CASE OF ACUSIS SOFTWARE INDIA (P) LTD VS. ITO (2018)(98 TAXMANN.COM 183)(KAR), THE LD A.R SUBMITT ED THAT THE ABOVE SAID COMPARABLE WOULD FAIL THE TURNOVER FILTE R OF 1 TO 10 TIMES OF TURNOVER OF THE ASSESSEE. 14. HE FURTHER SUBMITTED THAT THE COOLING UNITS MANUFACTURED BY THE ASSESSEE ARE FOR INDUSTRIAL PURPOSES AND HENCE THE SAME CANNOT BE COMPARED WITH THE COMFORT AIR-CONDITIONERS MANUF ACTURED BY M/S LLOYDS ELECTRICAL AND ENGINEERING LTD. HE FURT HER SUBMITTED IT(TP)A NO.2494/BANG/2017 PAGE 7 OF 12 THAT THE ABOVE SAID COMPANY HAS NOT GIVEN SEGMENTAL RESULTS FOR VARIOUS DIVISIONS. HE FURTHER SUBMITTED THAT THERE WAS A DEMERGER OF HEAT EXCHANGE BUSINESS IN APRIL, 2011. HE SUBMI TTED THAT THE APPOINTED DATE FOR DE-MERGER WAS APRIL, 2011 AND TH E EFFECTIVE DATE WAS DETERMINED AS JUNE, 2013. ACCORDINGLY HE SUBMI TTED THAT THE LD DRP WAS NOT JUSTIFIED IN HOLDING THAT THE DE-MER GER SHALL HAVE IMPACT ONLY FROM JUNE, 2013 AND ACCORDINGLY REJECTI NG THIS CONTENTION OF THE ASSESSEE. ACCORDINGLY HE SUBMITT ED THAT THIS COMPARABLE SHOULD BE DIRECTED TO BE EXCLUDED. 15. WE HEARD LD D.R AND PERUSED THE RECORD. TH E BUSINESS PROFILE OF THE ASSESSEE COMPANY IS STATED AS MANUF ACTURE AND SALE OF ENCLOSURES, HEAT EXCHANGERS, INDUSTRIAL COOLING EQUIPMENT AND POWER DISTRIBUTION EQUIPMENT. WE NOTICE THAT THE BU SINESS PROFILE OF M/S LLOYD ELECTRIC AND ENGINEERING LTD HAS BEEN DIS CUSSED AS UNDER IN THE MANAGEMENT DISCUSSION & ANALYSIS (PAGE 235 OF PAPER BOOK):- LLOYD ELECTRIC & ENGINEERING LTD IS AN ESTABLISHED DIVERSIFIED ENGINEERING CORPORATION WITH A HISTORY IN BUSINESS EXCELLENCE. IT IS AN ACKNOWLEDGED NAME IN HEATING VENTILATION A IR CONDITIONING AND REFRIGERATION (HVAC&R) INDUSTRY AN D CONSUMER DURABLE GOODS SEGMENT. LLOYD IS A LEADING MANUFACTURER OF HEAT EXCHANGER AND EVAPORATOR COILS SERVING THE ENTIRE SPECTRUM OF HVAC&R INDUSTRY. THE COMPAN Y IS AN ORIGINAL EQUIPMENT MANUFACTURER (OEM) TO MAJOR AC G IANTS IN INDIA AND EXPORTERS TO LEADING BRANDS IN THE RAPIDL Y GROWING MARKETS OF AFRICA AND MIDDLE EAST. THE COMPANY ALS O PROVIDES CUSTOMISED AC SOLUTIONS FOR INSTITUTIONAL CLIENTS LIKE IT(TP)A NO.2494/BANG/2017 PAGE 8 OF 12 RAILWAYS, DEFENSE AND METRO RAILS AND HAS ALSO SUST AINED IN THE TRANSPORT SEGMENT. LLOYD IS A PREMIER NAME IN THE AIRCONDITIONING AND CONSUMER DURABLES GOODS SEGMENT . YOUR COMPANY HAS FURTHER EXPANDED ITS HORIZONS BY ACQUIR ING THE HEAT EXCHANGER BUSINESS OF PERFECT RADIATORS AND OI L COOLERS PRIVATE LTD PURSUANT TO THE APPROVAL OF SCHEME OF ARRANGEMENT BY THE HONBLE HIGH COURT OF DELHI AND RAJASTHAN THEREBY ADDING SIGNIFICANT VALUE BY INTEG RATING AND CONSOLIDATING THE HEAT EXCHANGER BUSINESS OF LLOYD GLOBALLY. THE EXTENSIVE PRODUCT RANGE OF HEAT EXCHANGER BUSIN ESS INCLUDES COPPER AND BRASS HEAT EXCHANGERS, SHELL & TUBE HEAT EXCHANGER FOR INDUSTRIAL APPLICATION, OIL COOLERS F OR RAILWAYS, AND HEAVY AUTOMOBILE AND TUBE MILL FOR MB RADIATORS FOR ITS EXISTING AND NEW CUSTOMERS. FROM THE PERUSAL OF THE BUSINESS PROFILE OF M/S LLO YDS ELECTRIC & ENGINEERING LTD, WE NOTICE THAT THE AIR-CONDITIONIN G BUSINESS DOES NOT CONFINE TO COMFORT AIR CONDITIONERS AS PROJECTE D BY LD A.R. HENCE WE REJECT THE SAID CONTENTIONS OF LD A.R. 16. THE LD A.R FURTHER SUBMITTED THAT THERE WAS AN EXTRA- ORDINARY EVENT OF DE-MERGER. HOWEVER, WE NOTICE TH AT M/S LLOYDS ELECTRIC & ENGINEERING LTD HAS ACQUIRED TWO COMPANI ES VIZ., M/S PERFECT RADIATORS AND M/S OIL COOLERS P LTD, I.E., IT HAS MERGED TWO COMPANIES WITH ITSELF AND HENCE THERE WAS NO DE-MER GER AS PROJECTED BY LD A.R. WE ALSO NOTICE THAT THE MERGE R HAS TAKEN PLACE WITH EFFECT FROM 01-04-2011. HENCE THE EXTRA -ORDINARY EVENT CAN BE ATTRIBUTED TO FY 2011-12 PERTAINING TO AY 20 12-13 ONLY. WE IT(TP)A NO.2494/BANG/2017 PAGE 9 OF 12 ARE CONCERNED WITH AY 2013-14 AND HENCE NO EXTRA-OR DINARY EVENT HAS TAKEN PLACE DURING THE YEAR UNDER CONSIDERATION . 17. THE LD A.R SUBMITTED THAT M/S LLOYD ELECTRIC & ENGINEERING LTD DOES NOT HAVE ENCLOSURES BUSINESS AND HENCE T HE TURNOVER OF AIR-CONDITIONING SEGMENT ALONE SHOULD BE COMPARED . ACCORDINGLY HE SUBMITTED THAT THE TURNOVER OF AIR-CONDITIONER B USINESS OF M/S LLOYDS IS MORE THAN 10 TIMES OF THE TURNOVER OF THE ASSESSEE FROM COOLING UNITS. FIRST OF ALL, IT WAS NOT SHOWN TO U S THAT THE ENCLOSURE BUSINESS IS NOT RELATED TO AIR-CONDITIO NING OR COOLING UNITS OF THE ASSESSEE. THE NATURE OF ENCLOSURE BU SINESS WAS NOT EXPLAINED ANYWHERE. IF THE ENCLOSURES ARE USED F OR COOLING SYSTEMS/HEAT MANAGEMENT SYSTEMS, IN OUR VIEW, THE S AME SHOULD BE CONSIDERED AS PART AND PARCEL OF COOLING UNITS B USINESS OF THE ASSESSEE. HENCE, THERE IS LACK OF CLARITY ON THIS ASPECT AND ACCORDINGLY WE ARE UNABLE TO APPRECIATE THE CONTENT IONS OF LD A.R IN THIS REGARD. IF THE ASSESSEE IS ABLE TO SHOW THAT THE ENCLOSURES BUSINESS IS NOT RELATED TO THE ACTIVITY OF HEAT MAN AGEMENT SYSTEMS, THEN THERE MAY BE MERIT IN THE CONTENTIONS OF THE A SSESSEE. IN VIEW OF THE LACK OF CLARITY, WE ARE OF THE VIEW THAT THI S CONTENTION OF THE ASSESSEE REQUIRES FRESH EXAMINATION. THE QUESTION O F APPLYING TURNOVER FILTER WOULD ARISE ONLY IF IT IS SHOWN THA T THE ENCLOSURES BUSINESS IS ALTOGETHER DIFFERENT FROM HEAT MANAGEME NT SYSTEMS. ACCORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF AO /TPO FOR EXAMINING THIS CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW BY DULY CONSIDERING THE DISCUSSIONS MADE SUPRA. 18. THE NEXT COMPARABLE, WHICH THE ASSESSEE SEE KS TO BE EXCLUDED, IS M/S UNIVERSAL HEAT EXCHANGERS LTD. TH E LD A.R IT(TP)A NO.2494/BANG/2017 PAGE 10 OF 12 SUBMITTED THAT THE TURNOVER OF THIS COMPANY INCLUDE D TURNOVER FROM FABRICATED ITEMS AND THE SAME CONSTITUTED AB OUT 40% OF THE TOTAL TURNOVER. FURTHER, THERE WAS NO SEGMENTAL RE SULTS AVAILABLE AND HENCE THE PROFIT FROM HEAT EXCHANGERS AND OIL COOLERS COULD NOT BE ASCERTAINED FOR THE PURPOSE OF COMPARING THE SAME WITH THE ASSESSEE COMPANY. HE SUBMITTED THAT THE LD DRP HAS RETAINED THIS COMPARABLE WITHOUT CITING ANY REASON. 19. WE HEARD LD D.R AND PERUSED THE RECORD. FROM THE PERUSAL OF THE TURNOVER DETAILS GIVEN BY M/S UNIVERSAL HEAT EX CHANGERS LTD IN PAGE 307 OF THE PAPER BOOK, WE NOTICE THAT THE TURN OVER FROM FABRICATED ITEMS CONSTITUTE 40% OF THE TOTAL TURNOV ER OF THE ABOVE SAID COMPANY. WE NOTICE THAT THE ASSESSEE HAS NOT FURNISHED THE COPIES OF DIRECTORS REPORT, MANAGEMENT DISCUSSION E TC OF THIS COMPANY. HENCE THE MEANING ATTRIBUTED TO FABRICAT ED ITEMS BY M/S UNIVERSAL HEAT EXCHANGERS LTD COULD NOT BE APPR ECIATED. THE TERMINOLOGY FABRICATED ITEMS IS A GENERALISED ONE AND IT MAY NOT BE CORRECT TO PRESUME THAT THE SAME DOES NOT RELATE TO THE HEAT MANAGEMENT SYSTEM. IN THE ABSENCE OF SPECIFIC DET AILS AS TO WHAT IS MEANT BY FABRICATED ITEMS, WE ARE UNABLE TO AP PRECIATE THE CONTENTIONS OF THE ASSESSEE. AS DISCUSSED BY US IN THE PRECEDING PARAGRAPHS WHILE DEALING WITH THE CASE OF ENCLOSUR ES, WHAT IS REQUIRED TO BE EXAMINED IS AS TO WHETHER THE FABRI CATED ITEMS ARE RELATED TO THE HEAT MANAGEMENT SYSTEM OR NOT. IF IT IS RELATED, THEN THIS COMPARABLE SHOULD BE CONSIDERED FOR THE P URPOSE OF T.P ANALYSIS. OTHERWISE IT MAY BE EXCLUDED. IN VIEW O F LACK OF CLARITY, WE ARE OF THE VIEW THAT THIS COMPARABLE ALSO REQUIR ES FRESH EXAMINATION. ACCORDINGLY WE RESTORE THIS COMPARABL E ALSO TO THE FILE IT(TP)A NO.2494/BANG/2017 PAGE 11 OF 12 OF AO/TPO FOR EXAMINING IT AFRESH BY DULY TAKING IN TO ACCOUNT THE MEANING OF FABRICATED ITEMS MENTIONED BY THIS COM PARABLE. 20. THE ASSESSEE HAS TAKEN TWO ADDITIONAL GROUN DS. THE LD A.R SUBMITTED THAT THE DECISION RENDERED BY THE TRIBUNA L FOR ASSESSMENT YEAR 2012-13 IN RESPECT OF TWO ISSUES, V IZ., RAW MATERIAL IN TRANSIT AND STOCK OBSOLESCENCE SHALL HAVE CONSEQUENTIAL EFFECT IN THE PRESENT ASSESSMENT YEAR UNDER CONSIDERATION. ACCORDINGLY HE PRAYED THAT THE AO M AY BE DIRECTED TO TAKE INTO ACCOUNT THE CONSEQUENTIAL EFFECTS. WE FIND MERIT IN THE PRAYER OF THE ASSESSEE. ACCORDINGLY WE DIRECT THE AO TO TAKE INTO ACCOUNT THE CONSEQUENTIAL EFFECT IN RESPECT OF ABOV E SAID TWO ISSUES DURING THE YEAR UNDER CONSIDERATION. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY, 2019. SD/ (PAVAN KUMAR GADALE) JUDICIAL MEMBER SD/- (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 17 TH MAY, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. IT(TP)A NO.2494/BANG/2017 PAGE 12 OF 12 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SECTION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..