ADDL CIT RG 1(1), MUMBAI V. COLOUR CHEM LTD, THANE

ITA 2606/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5808 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Next Hearing Date: 11-02-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 05-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: F V IRANI
• Keywords: Capital asset; Transfer pricing; Business expenditure; International transaction; Fair market value; Valuation report; Revised return; Revenue expenditure
• Section: 37(1); 6

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL K B ENCH, MUMBAI . . , , !'# , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLAI YA, AM ./ I.T.A. NO.2606/MUM/2011 ( & & & & / ASSESSMENT YEAR : 2004-05 THE DCIT01(1), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. COLOUR CHEM LTD., P.O. SANDOZ BAUG, KOLSHET ROAD, THANE-400 607 ' $ ./ () ./ PAN/GIR NO. : AAACC 5602P ( '* / APPELLANT ) .. ( +,'* / RESPONDENT ) '* - / APPELLANT BY: SHRI ABHINAY KUMBHAR +,'* . - / RESPONDENT BY: SHRI F.V. IRANI . /0$ / DATE OF HEARING :11.02.2014 12& . /0$ / DATE OF PRONOUNCEMENT :11.02.2014 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-15, MUMBAI DT.3.1.2011 PERTAINING TO A.Y. 2 004-05. 2. THE GRIEVANCE OF THE REVENUE READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE DISALL OWANCE OF EX-GRATIA PAYMENT U/S. 37(1) OF RS. 71,43,000/- ITA NO. 2606/M/2011 2 2. THE LD. CIT(A) HAS FURTHER ERRED IN DELETING THE DISALLOWANCE OF ENTRANCE FEES PAID TO CLUBS OF RS. 1,73,085/- 3. THE LD. CIT(A) HAS FURTHER ERRED IN DELETING THE ADDITION MADE BY THE AO ESTIMATING THE VALUE OF LAN D @ RS. 200/- SQ. MT. 3.1. THE CIT(A) OUGHT TO HAVE REFERRED THE MATTER T O THE VALUATION CELL (DVO) OR ADOPTED THE CIRCLE RATE. 4. THE LD. CIT(A) HAS FURTHER ERRED IN DELETING THE ADDITION OF RS. 30,10,523/- MADE BY THE AO IN RESPE CT OF TRANSFER PRICING ADJUSTMENTS. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING AND TRADING OF VARIOUS KINDS OF DYES AND PIGMENTS FOR P AINT, INK, PLASTIC, RUBBER, LEATHER, AGROCHEMICALS, PHARMACEUTICALS ETC . 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN THE BALANCE-SHEET , THERE IS EX-GRATIA GRATUITY PAYABLE TO THE TUNE OF RS. 71.43 LACS . THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. THE ASSESSEE EXPLAINED THAT DURI NG THE YEAR, THE COMPANY HAS PROVIDED RETIREMENT BENEFIT RS. 71.43 L ACS TOWARDS EX-GRATIA GRATUITY PAYABLE TO CERTAIN EMPLOYEES WHO RETIRE OR DIE AFTER PUTTING IN MINIMUM 15 YEARS OF SERVICE. IT WAS EXPLAINED THAT THE SAME HAS BEEN WORKED OUT ON THE BASIS OF ACTUARIAL VALUATION AS O N 31.3.2004. IT WAS FURTHER EXPLAINED THAT THE SAID PAYMENT IS IN NATUR E OF EX-GRATIA/STAFF WELFARE PAYMENT WHICH IS OVER AND ABOVE NORMAL GRAT UITY PAYMENT AND THE SAME ARISES OUT OF CONTRACTUAL OBLIGATION WITH EMPLOYEES. THE ASSESSEE ALSO FURNISHED A CERTIFICATE FROM CA IN TH IS RESPECT. THE REPLY FILED BY THE ASSESSEE DID NOT FIND FAVOUR FROM THE AO WHO WAS OF THE OPINION THAT IT IS IN THE NATURE OF UNASCERTAINED L IABILITY BECAUSE THERE ITA NO. 2606/M/2011 3 CANNOT BE ANY SCIENTIFIC METHOD OF WORKING OUT OF S UCH PAYMENT AND DISALLOWED THE SAME. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED WHAT HAS BEEN STATED BEFORE THE AO. THE LD. CIT(A) WAS CONVINCED THAT THERE WAS AN ACTUARIAL VALUATION AND THEREFORE IT CAN BE SAID THAT RELIABLE ESTIMATE HAS BEEN MADE. THE LD. CIT(A) WENT ON TO RELY UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ROTAK CONTROL INDIA PVT. LTD. 314 ITR 62 AND DELETED TH E SAID ADDITION. 6. AGGRIEVED BY THIS REVENUE IS BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF T HE AO. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES AND FURTHER RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F METAL BOX COMPANY OF INDIA LTD. 73 ITR 53. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE DECISION RELIED UPON BY THE LD. COUNSEL. WE FI ND FORCE IN THE SUBMISSION OF THE LD. COUNSEL. THE HONBLE SUPREME COURT IN THE CASE OF METAL BOX CO. OF INDIA (SUPRA) HAS THUS HELD AS UNDER: AN ESTIMATED LIABILITY UNDER A SCHEME OF GRATUITY, IF PROPERLY ASCERTAINABLE AND ITS PRESENT VALUE IS DIS COUNTED, IS DEDUCTIBLE FROM THE GROSS RECEIPTS WHILE PREPARING THE PROFIT AND LOSS ACCOUNT. THIS IS RECOGNISED IN TRADE CIRCLES A ND THERE IS NOTHING IN THE BONUS ACT WHICH PROHIBITS SUCH A PRA CTICE. SUCH A PROVISION PROVIDES FOR A KNOWN LIABILITY OF WHICH T HE AMOUNT CAN BE DETERMINED WITH SUBSTANTIAL ACCURACY. THEREFORE, THE ESTIMATED LIABILITY FOR THE YEAR ON ACCOUNT OF SCHEME OF GRAT UITY SHOULD BE ITA NO. 2606/M/2011 4 ALLOWED TO BE DEDUCTED FROM THE GROSS PROFITS. THE ALLOWANCE IS NOT RESTRICTED TO THE ACTUAL PAYMENT OF GRATUITY DURING THE YEAR. RESPECTFULLY FOLLOWING THE AFOREMENTIONED FINDINGS OF THE HONBLE SUPREME COURT, GROUND NO. 1 IS DISMISSED. 9. GROUND NO. 2 RELATES TO THE DELETION OF THE DISA LLOWANCE OF ENTRANCE FEES PAID TO CLUBS. 10. THE AO NOTICED THAT THE ASSESSEE HAS INCURRED R S. 1,73,085/- AS CLUB ENTRANCE AND SUBSCRIPTION FEE. THE AO CALLED FOR AN EXPLANATION FROM THE ASSESSEE WHICH WAS DULY FILED. THE AO WA S OF THE OPINION THAT SINCE THIS IS THE EXPENDITURE INCURRED AS ENTRANCE FEE THOUGH IT MAY NOT BE A LIFE MEMBERSHIP FEES BUT IT IS NOT THE ANNUAL FEE S BUT FEES WHICH IS NOT INCURRED EVERY YEAR. THE AO ACCORDINGLY HELD THE S AME TO BE NOT ALLOWABLE AS REVENUE EXPENDITURE. 11. BEFORE THE LD. CIT(A), IT WAS EXPLAINED THAT TH E SUBSCRIPTIONS WERE PAID FOR ANNUAL CORPORATE MEMBERSHIP FEES AND THE SENIOR MANAGEMENT EXECUTIVE WERE NOMINATED FOR USING THE F ACILITY OF THE CLUB. THE LD. CIT(A) RELYING UPON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF OTIS ELEVATOR CO. (INDIA) LTD VS CIT 195 ITR 682 DELETED THE ADDITION. 12. BEFORE US, THE LD. DR COULD NOT BRING ANY DISTI NGUISHING FACTS/CASE LAWS TO SUPPORT THE FINDINGS OF THE AO. SINCE THE LD. CIT(A) HAS DELETED THE ADDITION RELYING UPON THE DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME. ITA NO. 2606/M/2011 5 13. BEFORE PARTING, THE HONBLE SUPREME COURT IN TH E CASE OF CIT VS UNITED GLASS MGF LTD IN CIVIL APPEAL NO. 6447 OF 20 12 DT. 12.9.2012 HAS HELD THAT THE CLUB MEMBERSHIP PAID IS IN THE NO RMAL COURSE OF BUSINESS AND IS PURELY BUSINESS EXPENSES DEDUCTIBLE U/S. 37(1) OF THE ACT. GROUND NO. 2 IS ACCORDINGLY DISMISSED. 14. GROUND NO. 3 RELATES TO THE DELETION OF THE ADD ITION MADE BY THE AO ESTIMATING THE VALUE OF LAND AT RS. 200/- PER SQ . MT. 15. THE AO OBSERVED THAT IN THE REVISED RETURN, THE ASSESSEE HAS FURNISHED WORKING OF LONG TERM CAPITAL GAIN ON SALE OF LAND. THE ORIGINAL COST OF LAND WAS RS. 3,34,300. THE ASSESSEE ADOPTE D FAIR MARKET VALUE OF LAND AS ON 1.4.1981 AT RS. 2,16,94,140/-. IN SUPPO RT, THE ASSESSEE FURNISHED A REPORT OF REGISTERED VALUER. THE COMP UTATION OF LONG TERM CAPITAL GAIN IS EXHIBITED AT PARA-8 OF THE ASSESSM ENT ORDER. THE AO NOTICED THAT THE REGISTERED VALUER HAS ADOPTED RS. 260/- PER SQ. MT AS FMV AS ON 1.4.1981. THE AO FURTHER OBSERVED THAT T HE VALUE ADOPTED BY THE REGISTERED VALUER IS PURELY ON ESTIMATED BASIS. THE AO WENT ON TO ESTIMATE THE VALUE OF LAND AS ON 1.4.1981 AND ESTIM ATED THE VALUE OF LAND AT THE RATE OF RS. 200/- PER SQ. MTR AND RECOMPUTED THE LONG TERM CAPITAL GAIN AS EXHIBITED ON PAGE-5 OF THE ASSESSMENT ORDE R. 16. THE ASSESSEE STRONGLY AGITATED THIS MATTER BEFO RE THE LD. CIT(A). AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) AT PARA- 7.4 OBSERVED AS UNDER: I HAVE PERUSED THE ASSESSMENT ORDER AND THE WRITTE N SUBMISSION. THERE IS MERIT IN APPELLANTS SUBMISSI ONS. THE APPELLANT HAD FILED VALUATION REPORT AND SO THAT AO IN CASE HE HAD ANY RESERVATIONS, SHOULD HAVE REFERRED THE M ATTER TO ITA NO. 2606/M/2011 6 THE DVO U/S. 55A. INSTEAD HE TOOK AN ARBITRARY FIG URE BASED ON HIS WHIMS. SUCH ADDITIONS CANNOT BE SUSTAINED. IN ANY CASE THIS ISSUE HAS BECOME ACADEMIC IN VIEW OF THE RELIEF GRANTED IN THE IMMEDIATELY PRECEDING GRO UND NO. 4 WHEREIN IT HAS BEEN HELD THAT LOSS IN RESPECT OF SH ORT TERM CAPITAL ASSET CAN BE SET OFF AGAINST THE CAPITAL GA INS FROM ANY OTHER CAPITAL ASSET. 17. AGGRIEVED, REVENUE IS BEFORE US. THE LD. DR ST RONGLY SUPPORTED THE FINDINGS OF THE AO. 18. PER CONTRA, THE LD. AR REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 19. AFTER CAREFULLY PERUSING THE ORDER OF THE LOWER AUTHORITIES, WE FIND THAT THE ASSESSEE HAS RELIED UPON THE VALUATION REP ORT OF THE REGISTERED VALUER IN ADOPTING FAIR MARKET VALUE AS ON 1.4.1981 WHEREAS THE AO HAS SIMPLY ESTIMATED THE SAME WITHOUT ANY BASIS. FURTH ER, AS MENTIONED HEREINABOVE, THE LD. CIT(A) HAS ALSO GIVEN ONE OTHE R REASON OF DELETING THE ADDITION AS THE ISSUE HAS BECOME ACADEMIC. CONS IDERING ALL THESE FACTS IN TOTALITY, WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 3 WITH ITS SUB-GROUND I S DISMISSED. 20. GROUND NO. 4 RELATES TO THE DELETION OF THE TP ADJUSTMENTS OF RS. 30,10,523/-. 21. DURING THE YEAR THE ASSESSEE ENTERED INTO THE F OLLOWING INTERNATIONAL TRANSACTIONS: SL. NO. DETAILS OF TRANSACTIONS AMOUNT (RS) METHOD USED 1. PURCHASE OF RAW MATERIALS RS.1076.34 LAKHS TNMM ITA NO. 2606/M/2011 7 2. EXPORT OF MANUFACTURED GOODS RS.4702.69 LAKHS TNMM 3. EXPORT OF FINISHED GOODS(TRADING) RS. 2802.83 LAKHS COST PLUS 4. PURCHASE OF FINISHED GOODS FOR TRADING RS. 1781.41 LAKHS TNMM 5. RECEIPT OF INDENTING COMMISSION RS. 164.58 LAKHS TNMM 6. PAYMENT OF INDENTING COMMISSION RS. 100.31 LAKHS TNMM 7. FEE FOR RESEARCH & DEVELOPMENT RECEIVED RS. 87.58 LAKHS TNMM 8. MISCELLANEOUS PAYMENT RS. 125.39 LAKHS TNMM 9. RECEIPT OF SOURCING FEES RS. 41.56 LAKHS COS T PLUS 10. RECOVERY OF EXPORT EXPENSES RS. 279.72 LAKHS TNMM 22. DURING THE COURSE OF THE TRANSFER PRICING PROCE EDINGS, THE ASSESSEE SUBMITTED A COPY OF TRANSFER PRICING DOCUMENT DEA LING WITH FUNCTIONAL AND ECONOMIC ANALYSIS OF THE INTERNATIONAL TRANSAC TIONS AND THE DETAILS OF DOCUMENTS MAINTAINED AS PER RULE 10D OF I.T. RULES, 1962. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE PRO DUCT-WISE ANALYSIS AND COMPUTATION OF ARMS LENGTH PRICE WAS DONE AS UNDER : THE PRODUCT-WISE ANALYSIS AND COMPUTATION OF ARMS LENGTH PRICE ARE GIVEN BELOW: (I) FOR THE PRODUCTS HOSTAPERM BLUE CBR, HOSTAPERM GREEN G-IN, PERMANENT YELLOW PG, PERMANENT ORANGE G-IN, PERMANENT RED F4R-IN AND PERMANENT RUBINECA-E MAJORITY OF THE SALES TO AES AND NON-AES ARE IN DIFFERENT COUNTRIES. IN THE ANALYSI S, LIKE LAST YEAR, ALL THE SALES ARE TAKEN TOGETHER, IRRESPECTIVE OF T HE COUNTRY OF SALE AND QUANTITY SOLD TO INDIVIDUAL ENTITIES. FURTHER, AFTER APPLYING 5% RANGE TO THE WAP OF SALES MADE TO UNRELATED PARTIES , AS MENTIONED UNDER SECTION 92C(2) OF THE INCOME TAX ACT, 1961 IT IS OBSERVED THAT THE WAP CHARGED TO RELATED PARTIES IS AT ARMS LENGTH AND ITA NO. 2606/M/2011 8 THEREFORE NO ADJUSTMENT IS MADE IN CASE OF THE ABOV E MENTIONED PRODUCTS. (II) FOR THE FOLLOWING PRODUCTS WAP CHARGED TO UNRE LATED PARTIES IS NOT WITHIN 5% RANGE OF THE WAP CHARGED T O UNRELATED PARTIES I.E. AVERAGE REALISATION IN CASE OF RELATED PARTIES IS LOWER THAN THAT IN CASE OF UNRELATED PARTIES A. PV FASTGREEN GNX B. PERMANENT YELLOW DHG SPL (II) FOR THE PRODUCT PV FAST GREEN GNX THE SALE TO RELATED PARTIES IS 139,130 KG AT A WAP OF RS. 285.57 PER KG . 38550 KG IS SOLD TO UNRELATED PARTIES AT WAP OF RS. 307.20. THE ASSESSEE HAS CONTENDED THAT CONSIDERING THE HUG E DIFFERENCE IN QUANTITY SOLD TO RELATED AND UNRELATE D PARTIES, SALES MADE TO RELATED PARTIES SHOULD BE ACCEPTED TO BE AT ARMS LENGTH. HOWEVER, IT IS SEEN THAT THE DIFFERENCE OF RS. 21.6 3 PER KG IS NOT SMALL EITHER. CONSIDERING THE WAP IS BEING USED , NO FURTHER ADJUSTMENTS ARE REQUIRED IN RESPECT OF THE PRICES. THUS CONSIDERING THE WAP CHARGED TO RELATED PARTY A ND THE UNRELATED PARTY, IT IS OBSERVED THAT SALES MADE TO RELATED PARTY IS UNDER-PRICED TO THE EXTENT OF RS. 21 .63 PER KG. THIS RESULTS INTO AN ADJUSTMENT OF RS.3,009,382/- ( RS. 21.63 X 139,130 KGS) (IV) FOR THE PRODUCT PERMANENT YELLOW DHG SP , THE SALE TO RELATED PARTY IN INDONESIA IS 40 KGS AT A WAP OF RS. 253.58 PER KG. 20 KG IS SOLD TO UNRELATED PARTY IN SRI LANKA AT WA P OF RS. 282.10. THUS CONSIDERING THE WAP CHARGED TO RELATED PARTY A ND THE UNRELATED PARTY, IT I OBSERVED THAT SALES MADE TO R ELATED PARTY IS UNDER-PRICED TO THE EXTENT OF RS 28.53 PER KG. ITA NO. 2606/M/2011 9 THIS RESULTS INTO AN ADJUSTMENT OF RS. 1,141/- (RS. 28.53 X 40 KQS). ACCORDINGLY, AN ADJUSTMENT OF RS. 30,10,523/- WAS MADE. 23. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS EXPLAINED THAT THE ASSESSEE HAD EXPORTED MANUFACTUR ED GOODS OF RS. 47.03 CRORES TO ITS ASSOCIATED ENTERPRISES BEING CLARIANT GROUP ENTITIES IN VARIOUS COUNTRIES. THE ASSESSEE HAD AGGREGATED INTERNATION AL TRANSACTION OF EXPORT OF MANUFACTURED GOODS, PURCHASE OF RAW MATE RIALS, LOTUS NOTES CHARGES AND PAYMENT OF INDENTING COMMISSION AS A P ART OF ITS MANUFACTURING ACTIVITY AND BENCHMARKED THE MANUFACT URING ACTIVITY APPLYING TRANSACTION NET MARGIN METHOD (TNMM) AS TH E MOST APPROPRIATE METHOD (MAP). THE ASSESSEE PROVIDED A PRODUCT-WISE ANALYSIS IN RESPECT OF PRODUCTS PV FAST GREEN GNX A ND PERMANENT YELLOW DHG SPL TO THE LD. CIT(A). IT WAS EXPLAINE D THAT ONE OF THE MAIN DIFFERENCES WAS THAT OF VOLUME DISCOUNT. THE ASSESSEE CLAIMED A VOLUME DISCOUNT @ 20% BASED ON THE DECISION OF THE TRIBUNAL MUMBAI BENCH IN THE CASE OF INTERVET INDIA PVT. LTD . 24. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) OBSERVED THAT THE TPO PROCEEDED TO MAKE AN ADJUSTMENT USING CUP METHOD WITHOUT CONSIDERING THE VARIOUS FA CTORS THAT MAY AFFECT THE CUP. THE LD. CIT(A) FURTHER OBSERVED TH AT SINCE THERE IS A HUGE DIFFERENCE IN THE VOLUMES IN RESPECT OF SALES MADE TO AES AND NON AES, VOLUME DISCOUNT IS REQUIRED TO BE PROVIDED S O AS TO MAKE THE TRANSACTION COMPARABLE. THE LD. CIT(A) FURTHER OBS ERVED THAT SINCE VOLUME DISCOUNT OF 5% WAS PROVIDED IN A.Y. 2002-03 AND 2003-04, THE SAME SHOULD BE PROVIDED DURING THE YEAR UNDER CONSI DERATION ALSO. THE ITA NO. 2606/M/2011 10 LD. CIT(A) FURTHER OBSERVED THAT THE CIRCULAR NO. 0 5/2010 DT. 3.6.2010 BEING EXPLANATORY NOTES TO FINANCE (NO.2) ACT 2009 ISSUED BY CBDT CLARIFIED THAT THE AMENDMENT TO PROVISO TO SEC. 9 2C(2) IS W.E.F. A.Y. 2009-10. CONSIDERING THE AMENDMENT, THE CIRCULAR AND THE CORRIGENDUM, THE BENEFIT OF +/-5% RANGE IS GRANTED TO THE TAXPA YER. THEREAFTER THE LD. CIT(A) COMPUTED THE REVISED ALP AS EXHIBITED AT PA RA 10.14 OF HIS ORDER AND DELETED THE ADDITION ON ACCOUNT OF TRANSF ER PRICING ADJUSTMENTS. 25. AGGRIEVED BY THIS, REVENUE IS BEFORE US. THE L D. DR STRONGLY RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 26. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 2 393 & 2328/M/2011 AND SUBMITTED THAT IN A.Y. 2003-04 THE RATIO OF EXP ORTS TO ASSOCIATED ENTERPRISES AS COMPARED TO INDEPENDENT THIRD PARTIE S RANGED FROM 95:5 TO 99:1. FURTHER THE LD. COUNSEL FOR THE ASSESSEE PO INTED OUT THAT THE TRIBUNAL HAS ALLOWED A VOLUME DISCOUNT OF 20% ON TH E SALES MADE BY IT TO ITS ASSOCIATED ENTERPRISES. IT IS THE SAY OF THE L D. COUNSEL THAT THE LD. CIT(A) HAS RECOMPUTED THE TP ADJUSTMENTS BY ALLOWI NG VOLUME DISCOUNT OF ONLY 5%. THEREFORE, FINDINGS OF THE LD. CIT(A) DESERVES TO BE CONFIRMED. 27. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHORI TIES AND THE RELEVANT MATERIAL PLACED BEFORE US. IT IS AN UNDIS PUTED FACT THAT IN THE EARLIER YEARS VOLUME DISCOUNT AT THE RATE OF 20% WA S ALLOWED TO THE ASSESSEE. IT IS A SETTLED POSITION OF LAW THAT 5% PERMISSIBLE BANDWIDTH IS ALLOWABLE TO THE ASSESSEE. WE HAVE CAREFULLY PERUS ED THE RECOMPUTATION OF ALP BY THE LD. CIT(A). AFTER ALLOWING 5% VOLUME DISCOUNT AND 5% ITA NO. 2606/M/2011 11 PERMISSIBLE BANDWIDTH, WE FIND THAT THE FINDINGS OF THE LD. CIT(A) ARE AS PER THE PROVISIONS OF LAW THEREFORE NO INTERFERENCE IS CALLED FOR. GROUND NO. 4 IS ACCORDINGLY DISMISSED. 28. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY, 2014 . 3 . 2& $ 4 56 11.2.2014 2 . 7 SD/- SD/- (I.P. BANSAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 5 DATED 11.2.2014 . . ./ RJ , SR. PS 3 3 3 3 . .. . +/ +/ +/ +/ 8 &/ 8 &/ 8 &/ 8 &/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. 3 3 3 3 / BY ORDER, , / +/ //TRUE COPY// = == = / > > > > ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI