A.T. Kearney India Pvt. Ltd. (India Branch Office), Gurgaon V. ACIT, New Delhi

ITA 2623/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2509 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Related party transaction; Transfer pricing; Rectification of order; Question of law; Notional interest; Revised return
• Section: 271(1)(c); 92C; 143(3); 234B; 80IB; 10B; 143(1); 154; 15; 92

Judgement Text

ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2 NEW DELHI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMB ER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO 2623/DEL/2015 ASSESSMENT YEAR: 2010-11 A.T. KEARNEY INDIA PVT. LTD. (INDIA BRANCH OFFICE), 6 TH FLOOR, TOWER D, GLOBAL BUSINESS PARK, GURGAON-122002 (PAN: AADCA1436G) VS ACIT, CIRCLE 1(1), NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY: SHRI HIMANSHU SINHA, ADV. MS VRINDA TULSIYAN, ADV. DEPARTMENT BY: SHRI H.K. CHOUDHARY, CI T DR MS SAWETA NAKRA, SR. DR DATE OF HEARING : 14.06.2019 DATE OF PRONOUNCEMENT : 21.06.2019 O R D E R PER SUDHANSHU SRIVASTAVA, JM THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE FINAL ASSESSMENT ORDER PASSED SUBSEQUENT TO THE DIRECTION S OF THE LD. DISPUTES RESOLUTION PANEL-1, NEW DELHI (DRP) FOR AS SESSMENT YEAR 2010-11. 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY WAS INCORPORATED IN JUNE 2001. IT IS A SOFTWARE TECHNO LOGY PARK UNIT ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 2 WHICH IS ENGAGED IN THE BUSINESS OF PROVIDING INFOR MATION TECHNOLOGY RELATED SERVICES TO ITS OVERSEAS GROUP E NTITIES AND IS ELIGIBLE FOR CLAIMING DEDUCTION U/S 10A OF THE INCO ME TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT'). IT HAS BEEN C LAIMING DEDUCTION U/S 10A IN THE IMMEDIATELY PRECEDING EIGHT ASSESSME NT YEARS AND THE YEAR UNDER CONSIDERATION IS THE NINTH YEAR FOR THE CLAIM OF DEDUCTION U/S 10A OF THE ACT. THE RETURN OF INCOME FOR THE CAPTIONED YEAR WAS FILED DECLARING AN INCOME OF RS. 66,39,988/- WHICH WAS INITIALLY PROCESSED U/S 143(1) AND WAS LA TER SELECTED FOR SCRUTINY IN TERMS OF CASS GUIDELINES. THE ASSES SEE ALSO CLAIMED DEDUCTION OF RS. 1,69,61,565/- U/S 10A OF T HE ACT. 2.1 THE ASSESSEE HAD ALSO ENTERED INTO INTERNATIONA L TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES (AES) AND, THEREFORE, IN ACCORDANCE WITH PROVISIONS OF SECTION 92CA OF TH E ACT, A REFERENCE WAS MADE TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINING THE ARMS LENGTH PRICE (ALP) OF THE INT ERNATIONAL TRANSACTION. 2.2 SINCE, WHILE FILING THE RETURN OF INCOME, THE A SSESSEE HAD MADE A VOLUNTARY TRANSFER PRICING ADJUSTMENT AMOUNT ING TO RS. 1,96,45,478/- AND, THEREAFTER, HAD CLAIMED A DEDUCT ION OF RS. 1,69,61,565/- U/S 10A OF THE ACT, THE ASSESSING OFF ICER, IN HIS ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 3 DRAFT ASSESSMENT ORDER, HELD THAT THE ASSESSEE HAD CARRIED OUT A FAULTY CALCULATION OF THE DEDUCTION U/S 10A OF THE ACT. THE ASSESSING OFFICER WAS OF THE OPINION THAT SUO MOTO TRANSFER PRICING ADJUSTMENT OF RS. 1,96,45,478/- COULD NOT B E INCLUDED AS PART OF THE TOTAL TURNOVER OF THE UNDERTAKING AND RESULTANTLY COULD NOT ALSO FORM PART OF THE TOTAL PROFIT OF THE UNDERTAKING. THE ASSESSING OFFICER (AO) PROCEEDED TO REDUCE THE QUANTUM OF DEDUCTION CLAIMED U/S 10A FROM RS. 1,69,61,565/- TO RS. 76,12,562/-. THE ASSESSING OFFICER WAS OF THE OPIN ION THAT THE FIGURES OF TURNOVER AND PROFIT APPEARING IN THE AUD ITED BOOKS OF ACCOUNT COULD NOT BE ALTERED BY ADJUSTMENTS MADE UN DER THE PROVISIONS OF THE INCOME TAX ACT. 2.3 APART FROM THIS, THE TPO ALSO MADE A TRANSFER P RICING ADJUSTMENT WITH RESPECT TO INTEREST ON RECEIVABLES TO THE TUNE OF RS. 45,36,868/- BY APPLYING THE SBI PRIME LENDING R ATE OF 14.88% TO IMPUTE NOTIONAL INTEREST ON OUTSTANDING R ECEIVABLES OVER AND ABOVE 30 DAYS DURING THE YEAR. THE TRANSF ER PRICING OFFICER MADE A TOTAL UPWARD ADJUSTMENT OF RS. 60,84 ,687/- TO THE INCOME OF THE ASSESSEE. 2.4 THE ASSESSEE TOOK THE MATTER BEFORE THE LD. DRP WHO UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER IN RESPECT ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 4 OF THE 10A DEDUCTION. THE LD. DRP HELD THAT SUO MOTO ADJUSTMENT MADE BY THE ASSESSEE DID NOT BEAR THE CH ARACTER OF INCOME AND, THEREFORE, COULD NOT BE CONSIDERED AS B EING DERIVED FROM ACTIVITY OF IT ENABLED SERVICES ELIGIBLE FOR DEDUCTION U/S 10A OF THE ACT. THE LD. DRP FURTHER OBSERVED THAT ADDI TIONAL INCOME OFFERED BY THE ASSESSEE BY WAY OF SUO MOTO ADJUSTMENT IN THE COMPUTATION OF INCOME REPRESENTED A NOTIONAL FIGURE AND NOT THE REAL INCOME OF THE ASSESSEE AND, THEREFORE, IT COUL D NOT BE TREATED AS PROFITS AND GAINS DERIVED BY AN UNDERTAKING. 2.5 THE LD. DRP ALSO UPHELD THE TRANSFER PRICING AD JUSTMENT IN RESPECT OF INTEREST ON DELAYED PAYMENT OF RECEIVABL ES. 2.6 AGGRIEVED WITH THE DIRECTIONS OF THE LD. DRP, T HE ASSESSEE IS NOW BEFORE THIS TRIBUNAL (ITAT) AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- A. GENERAL GROUNDS BASED ON THE FACTS CIRCUMSTANCES OF THE CASE AND IN LAW, THE FINAL ORDER ISSUED BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1 (1), NEW DELHI (LD. AO) UNDER SECTION 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (THE ACT) IS BAD IN LAW. B. TRANSFER PRICING GROUNDS ADDITION ON ACCOUNT OF TRANSFER PRICING - PROVISION OF IT ENABLED SERVICES ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 5 1. ON FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO AND HONBLE DRP ERRED IN ENHANCING THE INCOME OF THE APPELLANT BY INR 943,747 HOLDING THAT THE INTERNATIONAL RELATED PARTY TRANSACTION PERTAINING TO PROVISION OF IT ENABLED SERVICES (ITES) DO NOT SATISFY THE ARMS LENGTH PRINCIPLE AND ALSO BY NOT ALLOWING THE BENEFIT OF (+/-) 5% AS PROVIDED IN THE PROVISO TO SECTION 92C(2) OF THE ACT. 2. ON FACTS AND IN LAW, THE HONBLE DRP AND LD. AO ERRED IN DISREGARDING THE APPELLANTS USE OF MULTIPLE YEAR/ PRIOR YEARS DATA IN CONTRAVENTION OF THE PROVISION OF SECTION 92C OF THE ACT READ WIT H RULE 10B AND RULE 10D OF THE INCOME TAX RULES, 1962 (THE RULES). ADDITION ON ACCOUNT OF TRANSFER PRICING - INTEREST ON OUTSTANDING RECEIVABLES 3. ON FACTS AND IN LAW, THE HONBLE DRP / LD. AO HAVE ERRED IN MAKING AN ADDITION OF INR 4,536,868 TO THE INCOME OF THE APPELLANT, BY MAKING AN IMPUGNED ADJUSTMENT IN LIEU OF INTEREST ON ACCOUNT OF DELAYED PAYMENTS FROM AE DURING THE YEAR. C. CORPORATE TAX GROUNDS B.1 DEDUCTION U/S 10A IS TO BE COMPUTED ON TAXABLE INCOME DETERMINED UNDER NORMAL PROVISIONS OF THE ACT AND NOT ON PROFITS AS PER BOOKS OF ACCOUNTS. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED IN PROPOSING AND THE HON'BLE DRP HAS FURTHER ERRED IN CONFIRMING THE COMPUTATION OF DEDUCTION U/S 10A OF THE ACT ON THE PROFITS AS PER BOOKS OF ACCOUNTS INSTEAD OF INCOME UNDER THE ACT, AND HOLDING THAT FOR THE PURPOSE OF SECTION 10A OF THE ACT, THE FIGURES OF TURNOVER AND PROFIT ARE MEANT TO BE FIGURES AS ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 6 APPEARING IN THE AUDITED BOOKS OF ACCOUNTS AND CANNOT BE ALTERED BY THE ADJUSTMENTS STEMMING FROM, THE INCOME TAX PROVISIONS. 1.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED IN PROPOSING AND THE HON'BLE DRP HAVE ERRED IN CONFIRMING THE DISALLOWANCE OF THE DEDUCTION CLAIMED BY THE APPELLANT U/S 10A OF THE ACT ON THE AMOUNT OF TRANSFER PRICING ADJUSTMENT VOLUNTARILY MADE BY THE APPELLANT IN ITS RETURN OF INCOME OF INCOME FOR THE SUBJECT ASSESSMENT YEAR. 1.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED AND THE HON'BLE DRP HAS FURTHER ERRED IN NOT APPRECIATING THE SUBMISSIONS MADE BY THE APPELLANT REGARDING ALLOWABILITY OF DEDUCTION U/S 10A ON VOLUNTARY TRANSFER PRICING ADJUSTMENT MADE BY THE APPELLANT. B.2 SET OFF OF BROUGHT FORWARD LOSS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED AND THE HON'BLE DRP HAS FURTHER ERRED IN CONFIRMING THE ACTION OF THE AO IN NOT ALLOWING SET OFF OF BROUGHT FORWARD LOSS OF RS. 5,389,388 AS CLAIMED BY THE APPELLANT IN ITS RETURN OF INCOME OF THE SUBJECT ASSESSMENT YEAR. B.3 SET OFF OF MINIMUM ALTERNATE TAX (MAT) CREDIT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED AND THE HON'BLE DRP HAS FURTHER ERRED IN CONFIRMING THE ACTION OF THE AO IN NOT ALLOWING SET OFF OF AVAILABLE MAT CREDIT. B.4 LEVY OF INTEREST UNDER SECTION 234B AND 234D. ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 7 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN CHARGING INTEREST UNDER SECTION 234B OF THE ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN LEVYING INTEREST UNDER SECTION 234D OF THE ACT. B.5 INITIATION OF PENALTY PROVISIONS U/S PROCEEDINGS U/S 271(1)(C). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED IN PROPOSING AND THE HON'BLE DRP HAS FURTHER ERRED IN CONFIRMING THE INITIATING THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, WITHDRAW, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL ' BEFORE OR AT THE TIME OF HEARING. 3.0 AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIV E (AR) SUBMITTED THAT GROUNDS B1 AND B2 WERE NOT BEING PRE SSED BECAUSE THE ISSUE ALREADY STOOD RESOLVED IN FAVOUR OF THE ASSESSEE OF VIRTUE OF THE RECTIFICATION ORDER PASSED U/S 154 BY THE ASSESSING OFFICER VIDE ORDER DATED 16.7.2015. 3.1 WITH RESPECT TO GROUND NO. C PERTAINING TO DISA LLOWANCE IN THE DEDUCTION U/S 10A OF THE ACT, THE LD. AR SUBMIT TED THAT THE LD. DRP WHILE UPHOLDING THE DISALLOWANCE HAD HELD T HAT PROVISO TO SECTION 92C(4) IS APPLICABLE BECAUSE IT HAS ORDE RED CERTAIN ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 8 ADJUSTMENT TO THE ALP OF THE MAIN ITES TRANSACTION IN PARA 7 OF ITS DIRECTIONS. IT WAS SUBMITTED THAT SUBSEQUENTLY NO ADJUSTMENT TO THE ALP HAD SURVIVED AS THERE WAS A COMPUTATIONA L ERROR IN THIS RESPECT AND THE TPO HAD PASSED AN ORDER U/S 15 4 ON 16.7.2015 DELETING THE ADJUSTMENT ORDERED BY THE LD . DRP. OUR ATTENTION WAS DRAWN TO THE SAID RECTIFICATION ORDER U/S 154 OF THE ACT WHICH WAS PLACED AT PAPER BOOK PAGES 346 AND 34 7. THE LD. AR FURTHER SUBMITTED THAT VARIOUS HIGH COURTS AND T HE DIFFERENT BENCHES OF THE ITAT ON VARIOUS OCCASIONS HAD HELD T HAT PROVISIONS OF SECTION 92C (4) OF THE ACT WOULD NOT BE ATTRACTED ON THE VOLUNTARY TRANSFER PRICING ADJUSTMENT MADE BY T HE ASSESSEE AND THE PROVISIONS WERE TO APPLY ONLY IN CASES WHER E THE ADJUSTMENTS HAD BEEN MADE BY THE TPO/ASSESSING OFFI CER. IT WAS SUBMITTED THAT SINCE NO TRANSFER PRICING ADJUST MENT HAS SURVIVED, THE DEDUCTION U/S 10A OF THE ACT COULD NO T BE DENIED ON THE VOLUNTARY TRANSFER PRICING ADJUSTMENT MADE B Y THE ASSESSEE. THE LD. AR PLACED RELIANCE ON THE FOLLOW ING JUDICIAL PRECEDENTS IN THIS REGARD:- I) I GATE GLOBAL SOLUTIONS LTD. VS ACIT (2007) 112 TT J 1002 IN ITA NO. 453/2008 OF THE HONBLE KARNATAKA H IGH COURT. ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 9 II) G.S. ENGINEERING & CONSTRUCTION INDIA OF THE ITAT D ELHI BENCH REPORTED IN 93 TAXMANN.COM 154 (DELHI TRIBUNA L) III) QX KPO SERVICES PVT. LTD. VS. ITO OF THE AHMEDABAD TRIBUNAL IN ITA NO.2043/AHD/2014 IV) APPROVA SYSTEMS PVT. LTD. VS DCIT OF THE PUNE BENCH OF ITAT IN ITA NO.1051/PUNE/2015 V) SUMTOTAL SYSTEMS INDIA (P) LTD. VS DCIT OF THE HYDE RABAD TRIBUNAL REPORTED IN 88 TAXMANN.COM 897 3.2 THE LD. AR EMPHASISED THAT THE FIRST PROVISO TO SECTION 92C(4) WAS APPLICABLE ONLY TO SITUATIONS WHERE THE A DJUSTMENT TO ALP WAS MADE BY THE ASSESSING OFFICER/TPO/LD. DRP A ND NOT TO THE VOLUNTARY ADJUSTMENTS MADE BY THE ASSESSEE ITSE LF IN THE RETURN OF INCOME. 3.3 THE LD. AR ALSO SUBMITTED THAT THE ASSESSING OF FICER, WHILE COMPUTING ELIGIBLE DEDUCTION U/S 10A OF THE ACT, HA S CONSIDERED THE PROFIT AS PER THE BOOKS OF ACCOUNTS INSTEAD OF THE PROFIT AS COMPUTED UNDER THE ACT UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND EVEN THE LD. DRP UPHELD THE ASS ESSING OFFICERS FINDING THAT DEDUCTION U/S 10A NEEDS TO B E COMPUTED BASED ON BOOK PROFIT. IT WAS SUBMITTED THAT IF THE ASSESSING ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 10 OFFICERS VIEW IS TO BE TAKEN AS CORRECT, THIS WOUL D LEAD TO INCLUSION OF EVEN THE PROFITS OF NON-10A UNITS IN A CASE WHERE THE ASSESSEE HAS PROFITS FROM NON-EXPORT UNDERTAKING AS WELL WHICH COULD NOT BE THE INTENTION OF THE LEGISLATURE. THE LD. AR ARGUED THAT THE VARIOUS HONBLE HIGH COURTS AND THE CO-ORD INATE BENCHES OF THE TRIBUNAL HAVE ALLOWED REVISED ENHANC ED DEDUCTION U/S 10A OF THE ACT ON THE ADDITIONS TO TH E INCOME MADE DURING THE REVISED RETURN/COURSE OF ASSESSMENT . IT WAS ARGUED THAT IF THE DEDUCTION U/S 10A OF THE ACT WER E TO BE ONLY RESTRICTED TO BOOK PROFIT, NO REVISION OF DEDUCTION U/S 10A WOULD EVER BE POSSIBLE. FOR THIS PROPOSITION, THE LD. AR PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRECEDENTS:- I) PCIT VS. ORACLE (OFSS) BPO SERVICES LTD. OF THE HON BLE HIGH COURT REPORTED IN 102 TAXMANN.COM 396 II) C.I.T. VS. GEM PLUS JEWELLERY INDIA LTD. OF THE HON BLE BOMBAY HIGH COURT REPORTED IN 194 TAXMAN 192 III) PCIT VS. LIONBRIDGE TECHNOLOGIES PVT. LTD. OF HONB LE BOMBAY HIGH COURT REPORTED IN 86 TAXMANN.COM 101 IV) ITO VS. CERNER HEALTHCARE SOLUTIONS PVT. LTD. OF TH E BANGALORE TRIBUNAL 83 TAXMANN.COM 62 ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 11 3.4 THE LD. AR FURTHER ARGUED THAT THE VOLUNTARY TR ANSFER PRICING ADJUSTMENT MADE BY THE ASSESSEE WILL ESSENTIALLY HA VE TO FORM PART OF THE PROFITS OF THE BUSINESS FOR THE PURPOSE S OF CLAIMING DEDUCTION U/S 10 OF THE INCOME TAX ACT. IT WAS SUB MITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDIN G INFORMATION TECHNOLOGY ENABLED SERVICES TO ITS OVERSEAS GROUP E NTITIES AND THE VERY BASIS OF THE VOLUNTARY TRANSFER PRICING ADJUST MENT WAS THE FACT THAT THE PROFIT LEVEL MARGINS OF THE ASSESSEE S BUSINESS WERE DEEMED BELOW THE ACCEPTED PROFIT MARGIN UNDER THE P ROVISIONS OF SECTION 92 AND, THEREFORE, VOLUNTARY ADJUSTMENT WAS MADE TO REVISE THE PROFIT MARGIN UPWARDS TO MEET THE PROVIS IONS OF SECTION 92. IT WAS SUBMITTED THAT IN NUMEROUS CASES, THE D EDUCTION U/S 10A HAD BEEN ALLOWED EVEN ON ANCILLARY INCOME. IN T HIS REGARD, FOLLOWING JUDICIAL PRECEDENTS WERE BROUGHT TO OUR N OTICE:- I) C.I.T. VS. MOTOROLA INDIA ELECTRONICS PVT. LTD. HON BLE KARNATAKA HIGH COURT REPORTED IN 265 CTR 94 II) MERCER CONSULTING (INDIA) PVT. LTD. VS. DCIT (2014) OF ITAT DELHI BENCH REPORTED IN 150 ITD 1 III) MARAL OVERSEAS LTD. VS. ADDL. C.I.T. OF INDORE TRIB UNAL SPECIAL BENCH IN ITA NOS. 777 AND 900/IND/2004 ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 12 IV) HRITNIK EXPORTS OF THE HONBLE DELHI HIGH COURT IN ITA 219/2014 AND 239/2014 3.5 LD. AR ALSO SUBMITTED THAT IS NOT THE DEPARTMEN TS CASE THAT THERE IS NO DISCLOSURE MADE BY THE ASSESSEE IN THIS REGARD AND THAT THE DISCLOSURE HAS DULY BEEN MADE IN FORM 3CEB BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT EVEN AFTER CLAIMING THIS DEDUCTION ON THE TRANSFER PRICING ADJUSTMENT, THE A SSESSEE HAD, IN EFFECT, PAID MORE TAXES AND THIS ALSO CANNOT BE THE DEPARTMENTS CASE THAT THE ASSESSEE WAS TRYING TO E VADE TAXES BY MAKING THIS KIND OF TRANSFER PRICING ADJUSTMENT. I T WAS FURTHER SUBMITTED THAT THE CONCEPT OF TRANSFER PRICING ADJU STMENT IS IN ITSELF NOTIONAL AND, THEREFORE, THE OBSERVATIONS OF THE LOWER AUTHORITIES THAT DEDUCTION U/S 10A COULD NOT BE ALL OWED ON NOTIONAL ADJUSTMENT IS ALSO NOT CORRECT. THE LD. A R VEHEMENTLY ARGUED THAT IF A VOLUNTARY ADJUSTMENT TO THE PRICE ON NOTIONAL TRANSACTION IS TO BE TREATED AT PAR WITH THE ADJUST MENT MADE BY THE ASSESSING OFFICER BY RELYING ON THE PROVISIONS OF SECTION 10A, THEN THE FIRST PROVISO TO SECTION 92C (4) OF THE AC T WILL BE RENDERED REDUNDANT WHICH WOULD CLEARLY NOT BE PERMISSIBLE UN DER THE SCHEME OF THE ACT. IT WAS FURTHER SUBMITTED THAT TH E LD. DRPS RELIANCE ON THE JUDGMENT OF THE HONBLE APEX COURT IN LIBERTY ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 13 INDIA AND STERLING FOODS WAS ERRONEOUS INASMUCH AS IN THESE TWO CASES, THE HONBLE APEX COURT WAS EXAMINING THE INTERPRETATION OF TERM PROFITS DERIVED FROM IN TH E CONTEXT OF SECTION 80HH AND 80IB WHEREAS THE SCHEME OF SECTION 10A WAS ENTIRELY DIFFERENT ON ACCOUNT OF SUB-SECTION 4 OF S ECTION 10A. LD. AR SUBMITTED THAT THIS DISTINCTION HAS BEEN DEALT I N GREAT DETAIL BY THE HONBLE DELHI HIGH COURT AND OTHER HIGH COUR TS IN VARIOUS DECISIONS LIKE HRITNIK EXPORTS (SUPRA) AND RIVIERA HOME FURNISHINGS VS. ACIT OF THE HONBLE DELHI HIGH COUR T REPORTED IN 237 TAXMAN 520. 3.6 WITH RESPECT TO GROUND NO. B2, CHALLENGING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING THE SET OFF OF BR OUGHT FORWARD LOSS OF RS. 53,89,388/-, IT WAS SUBMITTED THAT SUIT ABLE DIRECTIONS MAY BE GIVEN IN THIS REGARD. 3.7 SIMILARLY WITH RESPECT TO GROUND NO. B3 CHALLEN GING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING THE SET OFF OF AVAILABLE MAT CREDIT, IT WAS PRAYED THAT SUITABLE D IRECTIONS MAY BE GIVEN IN THIS REGARD. 3.8 ON THE TRANSFER PRICING GROUND B3 CHALLENGING T HE UPWARD ADDITION OF RS. 45,36,868/- ON ACCOUNT OF NOTIONAL INTEREST ON DELAYED PAYMENTS FROM THE AE, THE LD. AR SUBMITTED THAT DURING ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 14 THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD COMP ARED ITS OPERATING MARGIN (OP/OC) WITH ITS COMPARABLE COMPAN IES. IT WAS SUBMITTED THAT THE TPO MADE AN ADJUSTMENT ON AC COUNT OF DELAYED PAYMENT OF OUTSTANDING RECEIVABLES BY ALLOW ING A CREDIT PERIOD OF 30 DAYS WHEREAS IT WAS THE ASSESSEES POL ICY TO ALLOW 90 DAYS CREDIT PERIOD. FOR THIS, OUR ATTENTION WAS DR AWN TO COPY OF INVOICES RAISED BY THE ASSESSEE WHICH WAS PART OF T HE PAPER BOOK IN PAGES 450-453. THE LD. AR ALSO SUBMITTED THAT T HE TPO HAD APPLIED INTEREST RATE OF 14.88% BY TAKING SBI PLR P LUS 300 POINTS WHEREAS THE INTEREST RATE OF LIBOR AND 150 P OINTS SHOULD HAVE BEEN TAKEN. IT WAS FURTHER SUBMITTED THAT BOT H THE TPO AND THE LD. DRP HAD FAILED TO APPRECIATE THAT THE ADJUS TMENT, IF ANY, SHOULD HAVE BEEN WORKED OUT ON NET OUTSTANDING RECE IVABLES BALANCE I.E. AFTER MAKING ADJUSTMENT FOR THE OUTSTA NDING PAYABLES TO THE AE. THE LD. AR ALSO ARGUED THAT SI NCE THE ASSESSEE WAS A DEBT FREE CAPTIVE SERVICE PROVIDER T O THE AE, NO ADJUSTMENTS SHOULD BE MADE AS IT COULD NOT BE PRESU MED THAT BORROWED FUNDS HAVE BEEN UTILISED TO PASS ON THE CR EDIT FACILITY TO THE AES. ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 15 3.9 WITH RESPECT TO THE LEVY OF INTEREST U/S 234B A ND 234D AS TAKEN IN GROUND NO.B.4 THE LD. AR SUBMITTED THAT TH IS GROUND WAS CONSEQUENTIAL. 4.0 IN RESPONSE, THE LD. SENIOR DEPARTMENTAL REPRES ENTATIVE (SR. DR) SUBMITTED THAT IT WAS FACT OF THE MATTER T HAT THE ASSESSEE HAD ACTUALLY EARNED FOREIGN EXCHANGE OF RS. 8,05,76 ,197/- ONLY AGAINST THE DECLARED TURNOVER OF RS. 8,65,33,094/- WHICH WAS INCREASED BY THE ASSESSEE DUE TO VOLUNTARY TRANSFER PRICING ADJUSTMENT. THE LD. SR. DR EMPHASISED THAT THIS IN COME DOES NOT FORM PART EITHER OF THE PROFIT AND LOSS ACCOUNT OR THE BALANCE SHEET AND IT IS ONLY A NOTIONAL FIGURE USED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF INCOME AND DEDUCTION U/S 10A. IT WAS SUBMITTED THAT THIS AMOUNT REPRESENTED BY THE V OLUNTARY ADJUSTMENT WAS NEITHER ACTUALLY RECEIVED IN INDIA N OR IS THE ACTUAL PROFIT OF THE UNDERTAKING. IT WAS FURTHER S UBMITTED THAT THE DEDUCTION U/S 10A IS ALLOWED TO A TAXPAYER FOR EARNING INCOME FROM EXPORT OF ELIGIBLE SERVICES ONLY AND NO T SUO MOTO ADJUSTMENT MADE BY THE ASSESSEE AND WOULD NOT BEAR THE CHARACTER OF INCOME. WHILE MAKING REFERENCE TO PRO VISIONS OF SECTION 92C, THE LD. SR. DR SUBMITTED THAT THE ACT DOES NOT EMPOWER ADJUSTMENTS U/S 92C(4) AND SINCE THIS ADJUS TMENT HAS ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 16 BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS, IT CANNOT BE TAKEN AS BEING PART OF THE TURNOVER. THE LD. SR. DR RE-EMPH ASISED THAT THE ASSESSEE OR THE DEPARTMENT CANNOT GO BEYOND THE BOOKS OF ACCOUNTS. WITH RESPECT TO THE CASE LAWS RELIED UPO N BY THE ASSESSEE, LD. SR. DR SUBMITTED THAT ALL THESE CASES WERE DISTINGUISHABLE ON THE FACTS AS THE FACTS WERE NOT IDENTICAL IN ANY OF THE CASES. 4.1 WITH RESPECT TO THE ASSESSEES GROUND CHALLENGI NG TRANSFER PRICING ADJUSTMENT PERTAINING TO INTEREST ON DELAYE D PAYMENTS, RELIANCE WAS PLACED ON THE FINDINGS AND OBSERVATION S OF THE ASSESSING OFFICER/TPO IN THIS REGARD. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRST ISSUE FOR DETERMINATION BEFORE US IS WHETHER THE ASSESSEE WILL BE ELIGIBLE FOR CLAIM OF DEDUCTION U/S 10A OF THE ACT WITH RESPECT TO SUO MOTO TRANSFER PRICING ADJUSTMENT MADE BY THE ASSESSEE. BOTH THE PARTIES HAVE ARGUED AT LENGTH ON THE ISSUE. ON ONE HAND, IT IS THE ASSESSEES CONTENTION THAT PROVISIONS OF SECTION 92(4) WILL NO T BE APPLICABLE IN THIS CASE AS THE TRANSFER PRICING ADJUSTMENT HAS BEEN MADE VOLUNTARILY BY THE ASSESSEE AND ONCE THE INCOME HAS BEEN OFFERED TO TAX, IT FORMS PART OF THE PROFIT OF THE BUSINESS AND THE ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 17 DEDUCTION U/S 10A CANNOT BE DENIED. THE LD. AR HAS ALSO CITED A NUMBER OF JUDICIAL PRECEDENTS IN SUPPORT OF HIS CON TENTION. ON THE OTHER HAND, LD. SR. DR HAS TAKEN A STAND THAT T HE ACT DOES NOT EMPOWER THE ASSESSEE TO ENHANCE THE ARMS LENGT H PRICE AND THAT ONLY THE ASSESSING OFFICER IS EMPOWERED TO MAK E ADJUSTMENTS U/S 92C(4) OF THE ACT. THE FACTS LEADI NG TO THIS CONTROVERSY ARE THAT WHILE FILING ITS INCOME TAX RE TURN, THE ASSESSEE HAD COMPARED ITS OPERATING MARGIN WITH THE COMPARABLE COMPANIES AND SINCE THE OPERATING MARGIN EARNED BY THE ASSESSEE WAS LOWER THAN THE OPERATING MARGIN EARNED BY THE COMPARABLE COMPANIES, THE ASSESSEE MADE A VOLUNTARY TRANSFER PRICING ADJUSTMENT AMOUNTING TO RS. 1,96,45,478/-. AFTER THIS VOLUNTARY ADJUSTMENT, OPERATING PROFIT MARGIN OF TH E ASSESSEE CAME TO 25% WHICH WAS HIGHER THAN THE THREE YEARS A VERAGE OPERATING PROFIT MARGIN OF THE COMPARABLES. THEREAF TER, THE RETURN OF INCOME WAS FILED WHICH INCLUDED THE VOLUNTARY TR ANSFER PRICING ADJUSTMENT AND THE GROSS TAXABLE INCOME BEFORE DEDU CTION U/S 10A WAS DETERMINED AT RS. 2,23,50,953/-. THEREAFTE R, THE ASSESSEE PROCEEDED TO CLAIM DEDUCTION OF RS. 1,69,6 1,565/- U/S 10A WHICH WAS DENIED BY THE ASSESSING OFFICER AND LATER ON CONFIRMED BY THE LD. DRP. ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 18 5.1 AS PER THE PROVISO TO SECTION 92C(4), NO DEDUC TION U/S 10A OR 10B OR CHAPTER VIA IS TO BE ALLOWED IN RESPECT O F AMOUNT OF INCOME BY WHICH THE TOTAL INCOME OF THE ASSESSEE IS ENHANCED AFTER COMPUTATION OF INCOME UNDER THE SUB-SECTION. THE DEPARTMENT HAS DISALLOWED THE ASSESSEES CLAIM BY R ELYING ON THIS PROVISO. AN IDENTICAL CASE CAME UP FOR HEARING BEF ORE THE ITAT BANGALORE BENCH IN THE CASE OF I-GATE GLOBAL SOLUTI ONS LIMITED VS. ACIT (SUPRA) AND THE ITAT BANGALORE BENCH RETUR NED A FINDING THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 10A IN RESPECT OF INCOME DECLARED IN THE RETURN OF INCOME ON THE BASIS OF COMPUTATION OF ALP. THE RELEVANT PORTION OF THE IT ATS ORDER IS REPRODUCED HERE IN UNDER:- THE LAST GRIEVANCE IS IN RESPECT OF NOT ALLOWING D EDUCTION UNDER S. 10A ON THE ADJUSTMENT MADE BY THE ASSESSEE TO THE ARM'S LENGTH PRICE. IN THE INSTANT CASE, THE ASSESSEE COMPANY ENTERED I NTO TRANSACTION WITH ASSOCIATED ENTERPRISE. THE ASSESSE E COMPANY DETERMINED ARM'S LENGTH PRICE AND ACCORDING LY MADE ADJUSTMENT TO THE INCOME BECAUSE ARM'S LENGTH PRICE DETERMINED WAS MORE THAN THE CONSIDERATION, AT WHIC H THE TRANSACTIONS WERE SHOWN IN THE BOOKS OF ACCOUNT. TH E DEDUCTION UNDER S. 10A HAS NOT BEEN ALLOWED AS PER PROVISO TO S. 92C(4). AS PER THIS PROVISO, NO DEDUCTION UND ER S. 10A OR 10B OR UNDER CHAPTER VI-A IS TO BE ALLOWED IN RE SPECT OF ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 19 AMOUNT OF INCOME, BY WHICH THE TOTAL INCOME OF THE ASSESSEE IS ENHANCED AFTER COMPUTATION OF INCOME UN DER THE SUB-SECTION. THE LEARNED AUTHORIZED REPRESENTAT IVE DURING THE COURSE OF PROCEEDINGS HAS REFERRED TO TH E WORD 'ENHANCED'. IN CASE THE INCOME IS ENHANCED, THEN DE DUCTION IS NOT PERMISSIBLE. HOWEVER, IN THE INSTANT CASE, I NCOME HAS NOT BEEN ENHANCED BECAUSE THE SAME WAS ALREADY RETU RNED BY THE ASSESSEE. IN THE MEMO EXPLAINING THE PROVIS IONS OF FINANCE BILL, 2006, IT HAS BEEN MENTIONED AS UNDER: UNDER SUB-S. (4), IT HAS BEEN PROVIDED THAT ON THE BASIS OF ARM'S LENGTH PRICE SO DETERMINED, THE A.O. MAY COMPUTE THE TOTAL INCOME OF AN ASSESSEE. THE FIRST PROVISO TO SUB-S. (4) PROVIDES THAT WHERE THE TOTAL INCOME OF THE ASSESSEE AS COMPUTED BY AO IS HIGHER THAN THE INCOME DECLARED BY THE ASSESSEE, NO DEDUCTION UNDER S. 10A OR S. 10B OR UNDER CHAPTER VI-A WILL BE ALLOWED IN RESPECT OF THE AMOUNT OF INCOME, BY WHICH THE TOTAL INCOME OF THE ASSESSEE IS ENHANCED AFTER COMPUTATION OF INCOME UNDER SUB- SECTION.' FROM THE MEMO EXPLAINING THE PROVISIONS OF FINANCE BILL, 2006 AS WELL AS FROM THE LITERAL MEANING OF THE WOR D 'ENHANCED 1 , IT IS CLEAR THAT IF INCOME INCREASED, AS A RESULT OF COMPUTATION OF ARMS LENGTH PRICE, THEN S UCH INCREASE IS NOT TO BE CONSIDERED FOR DEDUCTION UNDE R S. 10A. IN THE INSTANT CASE, THE ASSESSEE HIMSELF HAS COMPUTED THE ARM'S LENGTH PRICES AND HAS DISCLOSED THE INCOME ON THE BASIS OF ARM'S LENGTH PRICES. IT IS N OT A CASE, WHERE THERE IS AN ENHANCEMENT OF INCOME DUE T O DETERMINATION OF ARM'S LENGTH PRICE. HENCE, IT IS H ELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTIO N 10A IN RESPECT OF INCOME DECLARED IN THE RETURN OF INCOME ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 20 ON THE BASIS OF COMPUTATION OF ARMS LENGTH PRICE. IN THE RESULT, BOTH APPEALS ARE PARTLY ALLOWED. 5.2 THIS ORDER OF THE ITAT BANGALORE BENCH WAS UPH ELD BY THE HONBLE KARNATAKA HIGH COURT IN ITA 453/2008 WH EREIN VIDE JUDGMENT DATED 17.6.2014, THE HONBLE KARNATAKA HIG H COURT ANSWERED THE SUBSTANTIAL QUESTION OF LAW NO. 4 AGAI NST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. WE FURTHER NOTE THAT ITAT AHMEDABAD BENCH IN THE CASE OF QX KPO SERVICES PVT. LTD. VS. ITO (SUPRA) HAD FOLLOWED THE ORDER OF THE ITAT BANG ALORE TRIBUNAL IN THE CASE OF I-GATE GLOBAL SOLUTIONS LTD. VS ACIT (SUPRA) AND HAD ACCORDINGLY ALLOWED THE DEDUCTION U/S 10A OF TH E ACT ON THE VOLUNTARY TP ADJUSTMENTS MADE BY THE ASSESSEE. SIM ILARLY, THE ITAT PUNE BENCH IN THE CASE OF APPROVA SYSTEMS PVT. LTD. VS. DCIT (SUPRA) ALSO FOLLOWED THE DECISION OF ITAT BAN GALORE BENCH IN THE CASE OF I-GATE GLOBAL SOLUTIONS LTD. VS ACIT (SUPRA) AND ALLOWED DEDUCTION U/S 10A OF THE ACT ON THE VOLUNTA RY TRANSFER PRICING ADJUSTMENT MADE BY THE ASSESSEE BY NOTING T HAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 10A OF THE A CT ON ADDITIONAL INCOME OFFERED ON ACCOUNT OF SUO MOTO ADJUSTMENT ON ACCOUNT OF TRANSFER PRICING PROVISIONS AND THAT THE PROVISIONS OF SECTION 92C(4) OF THE ACT WERE NOT ATTRACTED. SIMI LARLY, ITAT ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 21 HYDERABAD BENCH IN THE CASE OF SUMTOTAL SYSTEMS PVT . LTD. VS. DCIT REPORTED IN 88 TAXMANN.COM 897 ALSO RELIED ON THE ORDER OF THE ITAT BANGALORE BENCH IN THE CASE OF I-GATE GLOB AL SOLUTIONS LTD. VS ACIT (SUPRA) AND ALLOWED DEDUCTION U/S 10A OF THE ACT ON VOLUNTARY TRANSFER PRICING ADJUSTMENT MADE BY THE A SSESSEE. THUS, THE RATIO OF THE AFORESAID ORDERS OF THE TRIB UNAL, WHICH WE ARE BOUND TO FOLLOW, IS THAT THE FIRST PROVISO TO S ECTION 92C(4) OF THE ACT IS EVIDENTLY APPLICABLE ONLY TO SITUATIONS WHERE ADJUSTMENT TO THE ALP IS MADE BY THE ASSESSING OFFI CER/TPO/LD. DRP AND NOT TO THE VOLUNTARY ADJUSTMENT MADE BY THE ASSESSEE ITSELF. IF THE LEGISLATIVE INTENT WAS TO TREAT THE ADJUSTMENTS MADE BY THE ASSESSING OFFICER AT PAR WITH THE VOLUNTARY ADJUSTMENT MADE BY THE ASSESSEE, THE LEGISLATIVE INTENT WOULD HAVE BEEN EXPRESSED IN DIFFERENT WORDS AND SECTION 92C(4) WOU LD NOT HAVE REFERRED TO COMPUTATION OF INCOME MADE BY THE ASSES SING OFFICER IN TERMS OF THE ALP DETERMINED U/S 92C(3) BASED EN HANCED INCOME. WE ALSO NOTE THAT THE LD. SR. DR HAS PLACE D RELIANCE ON THE RATIO LAID DOWN IN THE CASE OF DELOITTE CONSULT ING INDIA (P) LTD.(2012) 22 TAXMANN.COM 107 (MUMBAI). HOWEVER, T HE SAME DOES NOT STAND BECAUSE OF THE RATIO OF THE JUDGMENT OF THE HONBLE HIGH COURT OF KARNATAKA ON THE SAME ISSUE. THOUGH THE ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 22 SAID JUDGMENT IS OF THE NON-JURISDICTIONAL HIGH COU RT, THE SAME IS BINDING ON THIS TRIBUNAL IN ABSENCE OF ANY CONTRARY DECISION OF THE JURISDICTIONAL HIGH COURT. THEREFORE, RESPECTF ULLY FOLLOWING THE RATIO OF THE DECISION OF THE COORDINATE BENCHES AS MENTIONED IN THE PRECEDING PARAGRAPHS AS WELL AS THE HONBLE HIGH COURT OF KARNATAKA, WE ALLOW ASSESSEES GROUND NOS. B.1, 1.1 , 1.2 AND 1.3 AND WE DIRECT THE ASSESSING OFFICER TO DELETE THIS DISALLOWANCE AND GRANT BENEFIT OF DEDUCTION U/S 10A ON THE AMOUN T OF VOLUNTARY TP ADJUSTMENT MADE BY THE ASSESSEE. 5.3 COMING TO THE GROUND RELATING TO TRANSFER PRICI NG ADJUSTMENT IN RESPECT OF NOTIONAL INTEREST ON OUTST ANDING RECEIVABLES, IT IS SEEN THAT THE DEPARTMENT HAS MAD E TRANSFER PRICING ADJUSTMENT BASED ON CREDIT PERIOD OF 30 DAY S WHEREAS IT IS THE CONTENTION OF THE ASSESSEE THAT IT ALLOWS CR EDIT PERIOD OF 90 DAYS AND FOR THIS, THE ASSESSEE HAS ALSO PLACED REL IANCE ON INVOICES RAISED BY IT WHEREIN CREDIT PERIOD OF 90 D AYS HAS BEEN MENTIONED. ANOTHER GRIEVANCE OF THE ASSESSEE IN TH IS REGARD IS THAT THE DEPARTMENT HAS NOT MADE ANY ADJUSTMENT IN RESPECT OF OUTSTANDINGS PAYABLE TO THE ASSOCIATED ENTERPRISES AND HAS MADE THE TRANSFER PRICING ADJUSTMENT ONLY ON THE OUTSTAN DING ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 23 RECEIVABLES. THE ASSESSEE HAS PRAYED THAT THE TRAN SFER PRICING ADJUSTMENT, IF ANY, HAS TO BE MADE ON NET OUTSTANDI NG RECEIVABLES. THE THIRD GRIEVANCE OF THE ASSESSEE ON THIS ISSUE IS THAT THE TPO HAS MADE THE ADJUSTMENT BASED ON SBI P LUS 300 BASIS POINTS WHEREAS THE ADJUSTMENT SHOULD HAVE BEE N MADE ON LIBOR PLUS 150 BASIS POINTS. THE ASSESSEE HAS ALSO RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF C.I.T. VS. M/S COTTON NATURALS INDIA PVT. LTD. IN ITA 233/2014 WHEREIN THE HONBLE HIGH COURT HAS HELD THAT THE INTEREST RATE SHOULD BE MARKET DETERMINED INTEREST RATE APPLICABLE TO THE C URRENCY CONCERNED IN WHICH THE LOAN HAS TO BE REPAID AND TH AT THE INTEREST RATE SHOULD NOT BE COMPUTED ON THE BASIS O F INTEREST PAYABLE ON THE CURRENCY OR LEGAL TENDER OF THE PLAC E OR THE COUNTRY OF RESIDENCE OF EITHER PARTY. A PERUSAL OF THE ORDER OF THE TPO AS WELL AS THE DIRECTIONS OF THE LD. DRP SHOWS THAT THESE ASPECTS HAVE NOT BEEN DULY CONSIDERED BY EITHER OF THE AUTHORITIES BELOW AND THEY HAVE SIMPLY PROCEEDED TO MAKE THE TR ANSFER PRICING ADJUSTMENT ON A CERTAIN NOTION WITHOUT LOOK ING INTO THE SPECIFIC FACTS OF THIS CASE. THEREFORE, IN VIEW OF AFOREMENTIONED ANOMALIES, AS POINTED OUT BY THE LD. AR, WITH WHICH WE ARE IN COMPLETE AGREEMENT, WE DEEM IT APPROPRIATE TO RESTO RE THIS ISSUE ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 24 TO THE FILE OF THE TPO FOR ADJUDICATING THE ISSUE A FRESH AFTER DULY CONSIDERING OUR OBSERVATIONS AS WELL AS AFTER GIVIN G DUE OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE. A CCORDINGLY, GROUND NO. B.3 STANDS ALLOWED FOR STATISTICAL PURPO SES. 5.4 AS FAR AS GROUND NO. B.2 REGARDING NOT ALLOWING SET OFF OF BROUGHT FORWARD LOSS IS CONCERNED, THE ASSESSING OF FICER IS DIRECTED TO ALLOW THE SAME AFTER DUE VERIFICATION. 5.5 SIMILARLY WITH RESPECT TO GROUND NO. B.3 REGARD ING SET OFF OF AVAILABLE MAT CREDIT, THE ASSESSING OFFICER IS DIRE CTED TO DO THE NEEDFUL AS PER LAW. 5.6 GROUND NO. B.4 IS CONSEQUENTIAL AND NO SPECIFIC ADJUDICATION IS REQUIRED. 5.7 GROUND NO. B.5 CHALLENGING THE INITIATION OF PE NALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS AGAIN CONSE QUENTIAL AND NEEDS NO SPECIFIC ADJUDICATION. ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 25 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED IN TERMS OF OUR OBSERVATIONS AS CONTAINED IN THE PRECE DING PARAGRAPHS. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2019. SD/- SD/- (N.S. SAINI) (SUDH ANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST JUNE, 2019 GS COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR BY ORDER ASSTT. REGISTRAR ITA 2623/DEL/2015 ASSESSMENT YEAR 2010-11 26 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER