DCIT, New Delhi V. M/s. Expeditors International India Pvt. Ltd., New Delhi

ITA 2639/DEL/2012

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2233 (ITAT-DELHI)
• Duration Of Justice: 9 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I2
• Next Hearing Date: 12-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Business expenditure; Double taxation relief; Principle of natural justice; International transaction; Additional evidence; TDS; Set aside
• Section: 92C; 234B; 10B; 144C; 208; 13; 22; 90; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-2 : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.5598/DEL./2010 (ASSESSMENT YEAR : 2006-07) M/S. EXPEDITORS INTERNATIONAL (INDIA) PVT. LTD., VS . DCIT, 6, CSC, GROUND FLOOR, SECTOR C 8, CIRCLE 11(1) , VASANT KUNJ, NEW DELHI 110070. NEW DELHI. (PAN : AAACE1795K) ITA NO.16/DEL./2021 (ASSESSMENT YEAR : 2007-08) M/S. EXPEDITORS INTERNATIONAL (INDIA) PVT. LTD., VS . DCIT, ROOM 7B, 1 ST FLOOR, IMPORT BUILDING NO.3, CIRCLE 7(1), INTERNATIONAL CARGO TERMINAL, NEW DELHI. INDRA GANDHI INTERNATIONAL AIRPORT, NEW DELHI 110 037. (PAN : AAACE1795K) ITA NO.2639/DEL./2012 (ASSESSMENT YEAR : 2007-08) DCIT, VS. M/S. EXPEDITORS INTERNATIONAL (INDIA) PV T. LTD., CIRCLE 11(1), 6, CSC, GROUND FLOOR, SECTOR C 8, NEW DELHI. VASANT KUNJ, NEW DELHI 110070. (PAN : AAACE1795K) CO NO.260/DEL/2012 (IN ITA NO.2639/DEL./2012) (ASSESSMENT YEAR : 2007-08) M/S. EXPEDITORS INTERNATIONAL (INDIA) PVT. LTD., VS . DCIT, 6, CSC, GROUND FLOOR, SECTOR C 8, CIRCLE 11(1) , VASANT KUNJ, NEW DELHI 110070. NEW DELHI. (PAN : AAACE1795K) ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 2 ITA NO.2231/DEL./2014 (ASSESSMENT YEAR : 2008-09) DCIT, VS. M/S. EXPEDITORS INTERNATIONAL (INDIA) PV T. LTD., CIRCLE 11(1), 6, CSC, GROUND FLOOR, SECTOR C 8, NEW DELHI. VASANT KUNJ, NEW DELHI 110070. (PAN : AAACE1795K) ITA NO.1854/DEL./2014 (ASSESSMENT YEAR : 2008-09) M/S. EXPEDITORS INTERNATIONAL (INDIA) PVT. LTD., VS . DCIT, 6, CSC, GROUND FLOOR, SECTOR C 8, CIRCLE 11(1) , VASANT KUNJ, NEW DELHI 110070. NEW DELHI. (PAN : AAACE1795K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPAK CHOPRA, ADVOCATE SHRI HARPREET S. AJMANI, ADVOCATE SHRI ROHAN KHARE, ADVOCATE REVENUE BY : SHRI SHASHI BHUSHAN SHUKLA, CIT DR DATE OF HEARING : 09.06.2021 DATE OF ORDER : 30.06.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : AFORESAID APPEALS FILED BY EXPEDITORS INTERNATIONA L (INDIA) PVT. LTD. (HEREINAFTER REFERRED TO AS THE TAXPAYE R), APPEALS FILED BY THE DCIT, CIRCLE 11 (1), NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) AND CROSS APPEAL/CROSS OBJECTIONS FI LED THERETO ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 3 BEARING IDENTICAL GROUNDS ARE BEING DISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID THE REPETITION OF DISCUSSI ON. 2. APPELLANT, EXPEDITORS INTERNATIONAL (INDIA) PVT. LTD., THE TAXPAYER BY FILING THE PRESENT APPEAL SOUGHT TO SE T ASIDE THE IMPUGNED ORDER DATED 30.09.2010 PASSED BY THE ASSES SING OFFICER (AO) IN CONSONANCE WITH THE ORDERS PASSED BY THE LD . DRP/TPO UNDER SECTION 143 (3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2006-07 ON THE GROUNDS INTER ALIA THAT :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ORDER PASSED BY THE LD. ASSESSING O FFICER ('AO') IS BAD IN LAW AND VOID AB-INITIO. 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE REFERENCE MADE BY THE LD. AO SUFFERS. FROM JURI SDICTIONAL ERROR AS THE LD. AO DID NOT RECORD ANY REASONS IN T HE DRAFT ASSESSMENT ORDER BASED ON WHICH HE REACHED THE CONC LUSION THAT IT WAS 'EXPEDIENT AND NECESSARY' TO REFER THE MATTER TO THE LD. TRANSFER PRICING OFFICER ('TPO') FOR COMPUTATIO N OF THE ARM'S LENGTH PRICE, AS IS REQUIRED UNDER SECTION 92 CA(I) OF THE INCOME TAX ACT, 1961 ('ACT'). 3. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO ERRED IN MAKING AN ADDITION OF RS. 18,11 ,13,059/- TO THE RETURNED INCOME OF THE APPELLANT BY RE-COMPUTIN G THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION S UNDER SECTION 92 OF THE ACT. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. AO/ LD. TPO/ LD. DISPUTE RESOLU TION PANEL ('DRP') ERRED ON FACTS AND IN LAW IN DETERMIN ING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF ROYALTY OF THE APPELLANT BY : ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 4 (A) BY NOT CONSIDERING AND THEREBY ARBITRARILY REJECTING THE TRANSACTIONAL NET MARGIN METHOD ANALYSIS ADOPTED BY THE APPELLANT AND BY RE- COMPUTING THE ARM'S LENGTH PRICE WITHOUT USING ANY OF THE METHODS SPECIFIED IN RULE 10B OF THE INCOME TAX RULES, 1962; (B) BY NOT CORRECTLY APPRECIATING THE SPECIAL CHARACTERISTICS OF THE BUSINESS AND FUNCTIONAL AND RISK PROFILE OF THE APPELLANT AND ITS RELATIONSHIP WITH ITS VARIOUS ASSOCIATED ENTERPRISES; (C) BASED ON CONJECTURES AND SURMISES, TREATING TH E ROYALTY PAYMENT TO THE US BASED HOLDING COMPANY AS UNJUSTIFIED, WITHOUT CONSIDERING THE EVIDENCE OF BENEFITS DERIVED BY THE APPELLANT FROM THE SERVICES AVAILED BY IT IN LIEU OF THE ROYALTY; (D) BY NOT APPRECIATING THAT THE ROYALTY PAYMENT WAS TO THE US BASED HOLDING COMPANY AND NOT A PART OF THE OTHER INTERNATIONAL LOGISTICS TRANSACTIONS WITH OTHER ASSOCIATED ENTERPRISES AND (E) BY NOT APPRECIATING THAT THE ENTIRE TRANSACTIO N OF ROYALTY PAYMENT HAS BEEN VERIFIED AND PERMITTED BY THE RESERVE BANK OF INDIA AND THE FOREIGN INVESTMENT PROMOTION BOARD AND HENCE IS A PAYMENT FOR A BONOFIDE TRANSACTION. 5 THE ADVERSE FINDINGS GIVEN T I THE LD. TPO/ UPHE LD BY THE LD. DRP ARE CONTRARY TO THE EVIDENCE ON RECORD AND THEIR CONCLUSIONS ARE BASED ON SURMISES. 6 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP HAS ERRED IN STATING THAT THE APPE LLANT FAILED TO CONTROVERT THE FINDINGS OF THE LD. TPO AND THE L D. AO, WHEN IN FACT THE I J. DRP HAS NOT DULY CONSIDERED T HE SUBMISSIONS MADE BY THE APPELLANT IN THIS REGARD. 7 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. AO/LD. DRP ERRED IN DISALLOWING THE ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 5 GLOBAL ACCOUNT MANAGEMENT ('GAM') CHARGES OF RS.7,921,416 PAID BY THE APPELLANT TO ITS US BASED HOLDING COMPANY U/S 40(A)(III) OF THE ACT. 8 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. AO/LD. DRP ERRED IN DISALLOWING THE VSAT UPLINKING CHARGES OF RS. 3,418,286 PAID BY THE APPELLANT TO ITS US BASED HOLDING COMPANY U/S 40(A) (I) OF THE ACT. 9. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. AO/LD. DRP ERRED IN ALLOWING DE PRECIATION ON UPS AND PRINTERS @15% INSTEAD OF 60%, AS UPS AND PRINTERS ARE INTEGRATED IN TO THE COMPUTER SYSTEM. 10 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. DRP HAS ERRED IN NOT EXAMINING THE VALIDITY OF INITIATI ON OF PENALTY PROCEEDINGS U/S 271(1)(C). 3. APPELLANT, EXPEDITORS INTERNATIONAL (INDIA) PVT. LTD. THE TAXPAYER BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 28.03.2012 PASSED BY THE LD. CIT (APPEALS)-XX, NEW DELHI QUA THE ASSESSMENT YEAR 200 7-08 ON THE GROUND THAT :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THAT THE EDUCATION CESS PAID ON THE INCOME TAX WAS AN ALLOWA BLE DEDUCTION FOR COMPUTING TOTAL INCOME GIVEN THE FACT THAT THE SAME WAS NOT HIT BY THE PROVISIONS OF SECTION 40(A} (II) OF THE ACT. 4. APPELLANT, DCIT, CIRCLE 11 (1), NEW DELHI, THE R EVENUE BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE I MPUGNED ORDER ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 6 DATED 28.03.2012 PASSED BY THE LD. CIT (APPEALS)-XX , NEW DELHI QUA THE ASSESSMENT YEAR 2007-08 ON THE GROUNDS INT ER ALIA THAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.21,33,75,753/- MADE ON ACCOUNT OF ARM'S LENGTH P RICE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.1,59,89,104/- MADE ON ACCOUNT OF NON DEDUCTION O F .TDS ON GLOBAL ACCOUNT MANAGEMENT AND LEASE LINE EXPENSES. 5. THE OBJECTOR, EXPEDITORS INTERNATIONAL (INDIA) P VT. LTD., BY FILING THE PRESENT CROSS OBJECTIONS CHALLENGED IMPU GNED ORDER DATED 28.03.2012 PASSED BY THE LD. CIT (APPEALS)-XX, NEW DELHI QUA THE ASSESSMENT YEAR 2007-08 ON THE GROUND THAT :- 'THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.TPO ERRED IN COMING TO THE CONCLUSION THAT THE A RM' PRICE OF THE ROYALTY PAYABLE BY THE ASSESSEE TO ITS ASSOC IATE ENTERPRISE IS 'NIL'. PURPORTEDLY APPLYING 'CUP' METHOD IN UTTE R DISREGARD OF THE STATUTORY PROVISIONS OF RULE (1) 10B OF THE I.T RULES, 1962 READ WITH SECTION 92C OF THE ACT' 6. APPELLANT, DCIT, CIRCLE 11 (1), NEW DELHI, THE R EVENUE BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE I MPUGNED ORDER DATED 23.01.2014 PASSED BY THE LD. CIT (APPEALS)-XX , NEW DELHI QUA THE ASSESSMENT YEAR 2008-09 ON THE GROUNDS INT ER ALIA THAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.20,38,24,930/- MADE ON ACCOUNT OF ARM'S LENGTH P RICE. ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 7 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .87,18,175/- MADE ON ACCOUNT OF NON DEDUCTION OF TDS ON ACCOUNT OF PAYMENT MADE TOWARDS GLOBAL ACCOUNT MANAGEMENT CHARGES. 7. APPELLANT, EXPEDITORS INTERNATIONAL (INDIA) PVT. LTD. (HEREINAFTER REFERRED TO AS THE TAXPAYER) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 23.01.2014 PASSED BY THE LD. CIT (APPEALS)-XX, NEW DELHI QUA T HE ASSESSMENT YEAR 2008-09 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ORDER PASSED BY THE LD CIT(A) IS BA D IN LAW AND VOID AB-INITIO. 2. DISALLOWANCE OF LEASE LINE CONNECTIVITY CHARGES (VSAT UPLINKING CHARGES) AMOUNTING TO RS.25,50,215/- PAID BY THE APPELLANT. 2.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT(A) HAS ERRED IN NOT PROVIDING AN AD EQUATE OPPORTUNITY TO THE APPELLANT OF BEING HEARD AND EXP LAINED BEFORE TREATING THE LEASE LINE CHARGES AS ROYALTY L IABLE TO TAX, THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE . 2.2 (A) WITHOUT PREJUDICE TO THE ABOVE, THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN TREATING THE LEASE LINE CONNECTIVITY CHARGES (VS AT UPLINKING CHARGES) AMOUNTING TO RS 25,50,215/- AS ROYALTY IN VIEW OF EXPLANATION 6 TO SECTION 9(L)(VI) OF THE INCOME TAX ACT, 1961 ('THE ACT') WITHOUT PROVIDING ANY REASONS AND WITHO UT APPRECIATING THAT THE AMENDMENTS IN THE ACT CANNOT BE READ INTO THE INDO-US DTAA. 2.2 (B) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN TREATING THE PAYMEN T OF LEASE ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 8 LINE CONNECTIVITY CHARGES AS LIABLE FOR TAX AND THE REFORE DISALLOWING THE EXPENSE U/S 40(A)(I) OF THE INCOME- TAX ACT, 1961('ACT'). 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN NOT CONSIDE RING THE PROVISIONS OF ARTICLE 12 (3) OF INDIA-USA DOUBLE TA XATION AVOIDANCE AGREEMENT ('THE TREATY') IN ACCORDANCE WI TH SECTION 90 OF THE ACT. 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 234B OF THE ACT MADE BY THE AO. 5. GENERAL A. THE ABOVE GROUNDS OF APPEAL ARE ALL INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. B. THE APPELLANT CRAVES LEAVE TO SUPPLEMENT, TO CANCEL, TO AMEND, TO ADD AND/OR OTHERWISE TO ALTER/MODIFY ANY OR ALL THE GROUND(S) OF APPEAL STA TED HEREIN ABOVE ON OR BEFORE ITS HEARING BEFORE YOUR HONOUR. 8. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE GROUNDS RAISED IN ALL THE AFORESAID APPEALS/CROSS O BJECTIONS, TAKEN FROM ITA NO.5598/DEL/2010 FOR ASSESSMENT YEAR 2006- 07 ARE : THE TAXPAYER IS INTO PROVIDING LOGISTIC SERVICES IN THE INDIAN REGION INVOLVING THE TRANSPORTATION OF CONSIGNMENTS FROM T HE CONSIGNEE (OR INDIAN PORTS/AIRPORTS) TO THE INDIAN PORTS/AIRP ORTS (OR CONSIGNEE), WHILE ANOTHER GROUP MEMBER TYPICALLY HANDLES THE OT HER END OF THE CONSIGNMENT IN THEIR RESPECTIVE REGION. THE LOGIST IC SERVICES PROVIDED CONSISTED OF PACKAGING, LOADING/UNLOADING, TRUCKING, ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 9 CONTAINERIZATION, CUSTOM CLEARANCE AND OTHER CARGO HANDLING ACTIVITIES BESIDES MOVING THE GOODS VIA AIR/SEA. T HE TAXPAYER IS ALSO REGISTERED WITH THE INTERNATIONAL AIR TRANSPOR T ASSOCIATION (IATA) HAVING OPERATIONS IN FOUR CITIES, NAMELY, DE LHI, MUMBAI, BANGALORE & CHENNAI APART FROM 16 SATELLITE OFFICES IN INDIA. PURSUANT TO THE REFERENCE MADE BY THE AO UNDER SECT ION 92CA(3) OF THE ACT, LD. TPO BENCHMARKED THE INTERNATIONAL T RANSACTIONS AT RS.18,11,13,059/-, RS.21,33,75,753/- & RS.20,38,24, 930/- FOR ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09 RESPECT IVELY AND CONSEQUENTLY DIRECTED THE AO TO ENHANCE THE INCOME OF THE TAXPAYER. AO, APART FROM MAKING ADDITION ON ACCOUN T OF ARMS LENGTH PRICE (ALP) ADJUSTMENT PROPOSED BY THE LD. T PO, ALSO PROCEEDED TO MAKE ADDITION ON ACCOUNT OF GLOBAL ACC OUNT MANAGEMENT & LEASE LINE EXPENSES TO THE TUNE OF RS. 1,13,39,702/-, RS.1,59,89,104/- & RS.87,18,175/- FOR ASSESSMENT YE ARS 2006-07, 2007-08 & 2008-09 RESPECTIVELY AND ALSO MADE ADDITI ON ON ACCOUNT OF DEPRECIATION OF COMPUTERS FOR AY 2006-07 . 8.1 THE TAXPAYER ALSO BY RAISING ADDITIONAL GROUND SOUGHT CLAIM OF EDUCATION CESS AS AN ALLOWABLE DEDUCTION. CONSE QUENTLY, AO ASSESSED TOTAL INCOME OF THE TAXPAYER AT RS.36,88,9 3,100/-, ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 10 RS.55,24,85,671/- & RS.49,19,15,805/- FOR ASSESSMEN T YEARS 2006-07, 2007-08 & 2008-09 RESPECTIVELY. 9. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. D RP BY WAY OF FILING OBJECTIONS FOR AY 2006-07 WHICH HAVE NOT BEEN ACCEPTED AND UPHELD THE ORDER PASSED BY TPO. THE TAXPAYER I N AYS 2007- 08 & 2008-09 CARRIED THE MATTER BEFORE THE LD. CIT (A) BY FILING THE APPEALS WHICH HAVE BEEN PARTLY ALLOWED. FEELIN G AGGRIEVED, THE TAXPAYER AS WELL AS THE REVENUE HAVE COME UP BE FORE THE TRIBUNAL BY WAY OF FILING APPEALS/CROSS OBJECTIONS. 10. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE S OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUNDS NO.1 & 2 OF ITA NO.5598/DEL/2010 (AY 2006-07) FILED BY THE TAXPAYER GROUND NO.1 & 5 OF ITA NO.1854/DEL/2014 (AY 2008-09) FILED BY THE TAXPAYER 11. GROUNDS NO.1 & 2 OF ITA NO.5598/DEL/2010 FOR ASSESSMENT YEAR 2006-07 AND GROUNDS NO.1 & 5 OF ITA NO.1854/DEL/2014 FOR ASSESSMENT YEAR 2008-09 NEED N O FINDINGS ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 11 BEING GENERAL IN NATURE AND HAVING NOT BEEN PRESSED BY THE LD. AR FOR THE TAXPAYER. GROUNDS NO.3 TO 6 OF ITA NO.5598/DEL/2010 (AY 2006-07) FILED BY THE TAXPAYER GROUND NO.1 OF ITA NO.2639/DEL/2012 (AY 2007-08) FILED BY THE REVENUE GROUND NO.1 OF CO NO.260/DEL/2012 (AY 2007-08) FILED BY THE TAXPAYER GROUND NO.1 OF ITA NO.2231/DEL/2014 (AY 2008-09) FILED BY THE REVENUE 12. UNDISPUTEDLY, THE TAXPAYER MADE PAYMENT OF RS.18,11,13,059/-, RS.21,33,75,753/- & RS.20,38,24, 930/- FOR ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09 RESPECT IVELY ON ACCOUNT OF ROYALTY TO THE ASSOCIATED ENTERPRISES (A E). PERUSAL OF THE ORDER PASSED BY THE LD. TPO SHOWS THAT HE HAS P ROCEEDED TO HOLD THAT PAYMENT ON ACCOUNT OF ROYALTY TO THE AE W AS FOR INCIDENTAL BENEFIT AND NOT FOR INTRA GROUP SERVICES AND SINCE NO INTRA GROUP SERVICES WERE FOUND TO EXIST AND AS SUCH, THE ARRANGEMENTS WERE NOT SUBJECTED TO ALP, HENCE ARMS LENGTH PRICE (ALP) OF THE ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 12 SERVICES HAS BEEN HELD TO BE NIL. LD. TPO HAS ARRI VED AT AFORESAID FINDINGS BY APPLYING THE BENEFIT TEST ON THE GROUND THAT ONCE THE REVENUE WAS SPLIT IN TERMS OF THE PROFIT SPLIT METH OD, THERE WAS NO JUSTIFICATION FOR MAKING ANY ADDITIONAL PAYMENT ON ACCOUNT OF ROYALTY. 13. IN AY 2006-07, LD. DRP UPHELD THE FINDINGS RETU RNED BY LD. TPO WHO HAS TREATED THE TRANSACTION ON ACCOUNT OF R OYALTY AT NIL. HOWEVER, IN AYS 2007-08 & 2008-09, LD. CIT (A) IN A PPEALS PREFERRED BY THE TAXPAYER REVERSED THE FINDINGS RET URNED BY LD. TPO BY FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2005-06 VIDE ORDER DATED 17.12.2020 IN ITA NO.2128/DEL/2011 . 14. LD. AR FOR THE TAXPAYER CHALLENGING THE IMPUGNE D FINDINGS RETURNED BY THE AO/DRP IN AY 2006-07 CONTENDED THAT THIS ISSUE IS NO LONGER RES INTEGRA AS THE SAME HAS ALREADY BE EN DECIDED IN FAVOUR OF THE TAXPAYER BY THE COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2005-06 (SUPRA), WHEREBY THE TRIBUNAL UPHELD THE BENCHMARKING OF INTERNATIONAL T RANSACTION BY APPLYING TRANSACTIONAL NET MARGIN METHOD (TNMM) IN ITS TP STUDY. LD. COUNSEL FOR THE TAXPAYER FURTHER CONTEN DED THAT THE ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 13 TRIBUNAL HAS ALSO REJECTED THE OBSERVATION MADE BY THE TPO THAT, ONCE THE REVENUE WAS SPLIT IN TERMS OF PROFIT SPLI T METHOD, THERE WAS NO JUSTIFICATION FOR MAKING ANY ADDITIONAL PAYM ENT ON ACCOUNT OF ROYALTY . 15. ON THE OTHER HAND, LD. DR FOR THE REVENUE BY RE LYING UPON THE ORDER PASSED BY THE TPO/DRP IN AY 2006-07 CONTE NDED THAT SINCE NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE TAXPAYER TO RENDER THE ALLEGED SERVICES IN LIEU OF COST RECHARG E OR REIMBURSEMENT WERE ACTUALLY REQUIRED AND DREW OUR A TTENTION TOWARDS PARA 6.3 (A), AVAILABLE AT PAGE 349 OF THE PAPER BOOK VOLUME 2 OF AY 2006-07. HE HAS FURTHER CONTENDED T HAT SINCE THERE IS NO EVIDENCE ON RECORD FOR RENDITION OF SER VICES AS ALLEGED BY THE TAXPAYER, LD.TPO/DRP IN AY 2006-07 HAS RIGHT LY DETERMINED THE ALP OF INTERNATIONAL TRANSACTIONS AT NIL. LD. DR FOR THE REVENUE FURTHER CONTENDED THAT LD. CIT (A)S HAV E ERRED IN DELETING THE ADDITION MADE BY THE LD. TPO IN AYS 2 007-08 & 2008-09. 16. WE HAVE PERUSED THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2005- 06 (SUPRA) IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASES AT HAND, ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 14 WHICH GOES TO PROVE THAT FACTS AND THE GROUNDS RAIS ED BY THE TAXPAYER AS WELL AS THE REVENUE IN THEIR RESPECTIVE APPEALS ARE IDENTICAL TO THE FACTS OF TAXPAYERS OWN CASE DECIDED IN AY 2005- 06 (SUPRA) AND SINCE THEN THE TAXPAYER HAS NOT UNDERG ONE ANY CHANGE IN THE BUSINESS MODEL. COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2005-06 (SUPRA) HAS UPHELD THE FINDINGS RETURNED BY THE LD. CIT (A) THAT TPO/DRP W AS NOT JUSTIFIED IN MAKING ADDITION BY RETURNING FOLLOWING FINDINGS :- 9. TPO NOTED THAT ASSESSEE HAD PAID ROYALTY OF RS.13,59,65,489 TO EXPEDITORS INTERNATIONAL OF WASH INGTON INC. IT WAS STATED BY THE ASSESSEE THAT IT WAS IN THE NATUR E OF TECHNICAL KNOWHOW FROM ITS ASSOCIATED ENTERPRISE AND HAS HELP ED THE ASSESSEE IN GENERATING GOOD BUSINESS AND TURNOVER. THE JUSTIFICATION MADE BY THE ASSESSEE FOR THE ROYALTY PAYMENT WAS NOT FOUND ACCEPTABLE TO TPO. TPO NOTED THAT WHEN THE RE VENUE FROM LOGISTICS SERVICES WAS SPLIT ON THE BASIS OF FAR AN ALYSIS THEN NO FURTHER PAYMENT OF ROYALTY WAS REQUIRED TO BE MADE BY THE ASSESSEE. TPO ALSO CONCLUDED THAT WITH THE PAYMENT OF ROYALTY, THE PROFITABILITY OF THE ASSESSEE HAS REDUCED IN CO MPARISON TO ITS PEER GROUP COMPANIES. THE TPO THUS HELD THE ALP OF THE INTERNATIONAL TRANSACTION ON ACCOUNT OF ROYALTY PAY MENT TO BE NIL AND ACCORDINGLY THE INCOME OF THE ASSESSEE WAS ENHA NCED BY RS.13,59,65,489/-. 10. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING A S UNDER: I HAVE CONSIDERED THE ABOVE SUBMISSIONS MADE BY TH E APPELLANT WITH REGARD TO THE PAYMENT FOR ROYALTY. D URING THE YEAR, EXPEDITORS INDIA HAS PROVIDED/RECEIVED LO GISTICS SERVICES TO GROUP COMPANIES AS WELL AS INDEPENDENT AGENTS. THE PRICING BASIS IN BOTH CASES HAS REMAINE D THE SAME. ALSO, FROM THE FORM 3CEB, IT IS EVIDENT THAT DURING THE YEAR. EXPEDITERS INDIA RENDERED/RECEIVED THESE LOGISTICS SERVICES TO/FROM MORE THAN 100 ENTITIES. HOWEVER, ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 15 THE SERVICES, FOR WHICH THE ROYALTY WAS PAID, WERE ONLY RECEIVED FROM THE US PARENT COMPANY. THIS FACT HAS NOT BEEN DISPUTED BY THE TPO. HE HAS ALSO NOT DISPUTED THAT THE LOGISTICS SERVICES TRANSACTIONS WAS WITH MULTIP LE GROUP ENTITIES. HE HAS ALSO NOT DISPUTED THAT THE 50/50 G ROSS PROFIT SPILT WAS AN ARMS LENGTH REMUNERATION FOR T HE LOGISTICS SERVICES. IN THE TP ORDER, ON PAGE 6, THE TPO HAS MENTIONED T HAT WHEN THE REVENUE WAS SPLIT ON THE BASIS OF FAR ANA LYSIS, THEN NO FURTHER PAYMENT WOULD HAVE BEEN MADE BY THE ASSESSES. THEREFORE, I AM HOLDING THAT ALP OF ROYAL TY PAYMENT AS NIL THE TPO HAS NOT ELABORATED ON THIS STATEMENT AND HAS NOT BROUGHT FORTH ANY ANALYSIS OR BASIS FOR ARRIVING AT THE CONCLUSIONS IN THE ORDER. CONSEQUENTLY, 1 DO NOT FIND ANY EVIDENCE/ANALYSIS T O HOLD THAT THE ARMS LENGTH PRICE FOR THE ROYALTY TRANSAC TION STANDS SUBSUMED BY THE GROSS PROFIT SPLIT ON REVENU E RECEIVED FROM LOGISTICS SERVICES ON A PREDETERMINED BASIS. BASED ON THE SUBMISSIONS AND THE FACTS PRESENTED BY THE APPELLANT, I AM OF THE VIEW THAT THE SERVICES RECEI VED BY THE APPELLANT FROM THE PARENT COMPANY IN LIEU OF RO YALTY ARE NOT COVERED WITHIN THE REVENUE SPLIT FOR THE LO GISTICS SERVICES WITH MULTIPLE GROUP COMPANIES. I HAVE BEEN THROUGH ALL THE SUBMISSIONS MADE BY THE APPELLANT AS WELL AS THE TP ORDER IN DETAIL. THE TP O HAS NOT PROVIDED ANY ANALYSIS OR EVIDENCE IN SUPPORT OF HIS FINDING THAT NO MATERIAL BENEFIT HAS BEEN RECEIVED BY THE APPELLANT. THE TPO HAS NOT ANALYZED THE OPERATIONS AND THE FINANCIALS OF THE APPELLANT TO SUBSTANTIATE HIS CONCLUSION THAT THE APPELLANTS BUSINESS CAN BE MAN AGED AND OPERATED IN EXCLUSION OF THE VARIOUS TECHNICAL, OPERATING AND STRATEGIC SERVICES EXTENDED BY THE US PARENT OR TO SHOW THAT THIS EXPENSE WAS NOT IN THE NATURE OF EXPENDITURE ENTITLED TO BE TREATED AS BUSINESS EXPENDITURE. THE TPO HAS NOT DISPUTED THE BUSINESS MODEL OF THE APPELLANT. THE TPO HAS ALSO NOT CONTROVERTED THAT T HIS SAME ARRANGEMENT WAS BEING FOLLOWED BY THE APPELLAN T SINCE FY 2001, UNDER A SPECIFIC APPROVAL FROM RBI. THE TPO HAS ALSO NOT DISCUSSED THAT THE SAME ARRANGEMEN T, UNDER THE SAME BUSINESS MODEL, HAD BEEN FOUND TO BE ON AN ARM S LENGTH BASIS FOR LAST YEAR BY THE TPO. ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 16 FURTHER, THE TPO HAS NOT PROVIDED ANY EVIDENCE TO SUPPORT HIS FOLLOWING REASONING: I HAVE NOT COME ACROSS ANY COMPANY WHICH WAS PAYIN G ROYALTY RELATING TO KNOW HOW AND USING THE SAME BUS INESS MODEL THE PAYMENT MADE BY THE APPELLANT HAD REDUCED THE PROFITABILITY OF THE COMPANY IN COMPARISON TO I TS PEER GROUP COMPANIES. THE APPELLANT, ON THE OTHER HAND, HAS PROVIDED DETA ILED SUBMISSIONS (INCLUDING EVIDENCE) ON THE BENEFITS AN D THE NEED OF THE ROYALTY EXPENSE IN THE GLOBAL LOGISTICS BUSINESS OPERATIONS. THE APPELLANT HAS SUPPORTED THESE WITH DETAILED DOCUMENTARY EVIDENCE, INCLUDING EVIDENCE O F SIMILAR PAYMENTS MADE BY OTHER INDUSTRY PLAYERS. A SUPPLEMENTARY TNMM ANALYSIS CARRIED OUT BY THE APPELLANT AT MY BEHEST TO CHECK THE IMPACT OF ROYAL TY PAYMENT ON THE APPELLANTS PROFIT MARGIN VIS-A-VIS THAT OF INDEPENDENT COMPARABLE COMPANIES ALSO SHOWS THAT TH E RATIO OF OPERATING PROFIT TO COSTS AND SALES OF THE APPELLANT IS COMPARABLE TO THAT OF UNCONTROLLED ENTITIES. I HAVE BEEN THROUGH THE MATERIAL PLACED ON RECORD A ND GIVEN THE GLOBAL NATURE OF THE LOGISTICS BUSINESS O F THE APPELLANT, I AGREE WITH THE BENEFICIAL NATURE OF TH E SERVICES RECEIVED. BASED ON THE DISCUSSION HEREINABOVE, IT IS FAIR TO CONCLUDE THAT THERE IS NO MEANINGFUL ANALYSIS/EVIDENCE PROVI DED BY THE TPO TO HOLD THAT THE ENTIRE ROYALTY PAYMENT SHO ULD BE REDUCED TO ZERO. THE APPELLANT HAS BEEN ABLE TO DEMONSTRATE THAT THE TECHNICAL, OPERATIONS AND STRA TEGIC SERVICES RECEIVED BY THE APPELLANT IN LIEU OF ROYAL TY PAYMENT HAVE A DIRECT BUSINESS NEXUS AND NO INDEPEN DENT COMPANY WILL PROVIDE SUCH SERVICES FREE OF CHARGE. THE BENEFITS DERIVED BY THE APPELLANT FROM THE TECHNICA L, OPERATIONS AND STRATEGIC SERVICES AVAILED ARE CRITI CAL TO THE SMOOTH FUNCTIONING OF ITS BUSINESS. THE ADEQUACY OR QUANTUM OF THE ROYALTY PAYMENT FROM ARMS LENGTH PERSPECTIVE STANDS JUSTIFIED BY THE SUPPLEMENTARY T NMM ANALYSIS CARRIED OUT WHICH SHOWS THAT COMPARABLE UNCONTROLLED ENTITIES PROFIT MARGINS ARE COMPARABL E TO THAT OF THE APPELLANT. IT IS ALSO EVIDENT FROM THE ORDER OF THE TPO, THAT HE HAS NOT FOLLOWED THE STATUTORY PRI NCIPLES TO DETERMINE THE ARMS LENGTH PRICE. THE ORDER DOES NOT ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 17 CONTAIN ANY ANALYSIS ON THE FAR, TESTED PARTY SELEC TION OR METHODS SELECTED. IN VIEW OF THE FOREGOING, I UPHOLD THE ARMS LENGTH NATURE OF THE ROYALTY PAYMENT MADE BY EXPEDITORS INDIA TO EXPEDITORS INTERNATIONAL INC. THIS ISSUE IS DECIDED IN FAVOUR THE APPELLANT. THE ADDITION MADE BY THE AO O N THIS ACCOUNT, IS ACCORDINGLY, DELETED. 11. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NO W BEFORE US. 12. REVENUE IS AGGRIEVED BY THE DELETION OF ADDITI ON MADE BY THE AO AND IN THE ADDITIONAL GROUND THE GRIEVANCE O F THE REVENUE IS THAT THE TRANSFER PRICING DOCUMENTATION AND OTHE R ADDITIONAL EVIDENCES FILED BEFORE THE CIT(A) BY ASSESSEE WERE NEVER REFERRED TO AO/ TPO WHICH IS A VIOLATION OF PROVISION OF RUL E 46A OF THE I.T. RULES, 1962. 13. BEFORE US, LEARNED DR SUBMITTED THAT CIT(A) WHI LE DECIDING THE ISSUE HAS CONSIDERED THE SUPPLEMENTARY TNMM ANA LYSIS SUBMITTED BY THE ASSESSEE TO HIM AND THAT CIT(A) DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING ON THE S UPPLEMENTARY TNMM ANALYSIS SUBMITTED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE AFORESAID SUPPLEMENTARY ANALYSIS WAS IN TH E NATURE OF ADDITIONAL EVIDENCE AND AS PER THE PROVISIONS OF RU LE 46A OF THE I.T. RULES, THE CIT(A) SHOULD HAVE CONFRONTED THE S AME TO THE AO/TPO. HE FURTHER SUBMITTED THAT SUPPLEMENTARY TNM M WAS ANALYSIS BY THE ASSESSEE AT THE BEHEST OF CIT(A) TO CHECK THE IMPACT OF ROYALTY PAYMENT ON ASSESSEES PROFIT MARG IN VIS--VIS THAT OF INDEPENDENT COMPARABLE COMPANIES. HE SUBMIT TED THAT NOT GIVING A CHANCE TO AO/TPO TO CONFRONT WITH THE MATERIAL PLACED BEFORE CIT(A) AS AN ADDITIONAL EVIDENCE WAS IN VIOLATION OF RULE 46A OF THE I.T. RULES. HE THEREFORE, SUBMITTED THAT THE MATTER BE DECIDED IN FAVOUR OF THE REVENUE OR IN TH E ALTERNATE MATTER BE REMITTED BACK TO AO/ TPO SO THAT THE ADDI TIONAL EVIDENCE SUBMITTED BEFORE CIT(A) CAN BE COMMENTED U PON BY REVENUE. 14. LD AR ON THE OTHER HAND SUBMITTED THAT ROYALTY PAYMENT HAS BEEN MADE PURSUANT TO THE AGREEMENT WHICH WAS E NTERED INTO BETWEEN THE PARTIES IN F.Y. 2001, THE AGREEMENT HAS BEEN APPROVED BY RESERVE BANK OF INDIA (RBI) AND THE PAY MENT OF ROYALTY HAS BEEN ACCEPTED BY THE REVENUE IN ALL THE EARLIER YEARS AND NO ADJUSTMENT HAS BEEN MADE TO THE ALP TRANSACT ION ON ACCOUNT OF ROYALTY. HE FURTHER SUBMITTED THAT CIT(A ) APART FROM THE SUPPLEMENTARY TNMM ANALYSIS HAD CONSIDERED VARI OUS OTHER ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 18 FACTORS TO DELETE THE ADDITION AND THUS THERE WAS N O VIOLATION OF RULE 46A. HE THUS SUPPORTED THE ORDER OF CIT(A). 15. WITH RESPECT TO ADDITIONAL GROUND RAISED BY TH E REVENUE, HE SUBMITTED THAT THE CO-ORDINATE BENCH OF TRIBUNAL VIDE INTERIM ORDER DATED 26.07.2018 IN ITA NO.2128/DEL/2011 HAD HELD THE ADDITIONAL GROUND TO BE NOT ADMISSIBLE AND AGAINST THE ORDER OF TRIBUNAL, REVENUE HAD CARRIED THE MATTER BEFORE HON BLE DELHI HIGH COURT. THE HONBLE HIGH COURT IN ORDER DATED 0 4.12.2019 IN ITA NO.88/2019 DECLINED TO INTERFERE WITH THE ORDER OF TRIBUNAL WHICH ACCORDING TO LD. AR WOULD MEAN THAT THE ORDER OF TRIBUNAL ON THAT GROUND HAS ATTAINED FINALITY. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D ALL THE MATERIALS AVAILABLE ON RECORD. THE GRIEVANCE OF THE REVENUE IS THAT CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY CONSIDERING THE SUPPLEMENTARY TNMM ANALYSIS AND OTH ER DOCUMENTS FILED BEFORE HER AND THOSE DOCUMENTS WERE NOT MADE AVAILABLE TO AO AND SECONDLY ON MERITS, THE ORDER O F TPO SHOULD HAVE BEEN UPHELD BY CIT(A). 17. WE FIND THAT CIT(A) WHILE DECIDING THE ISSUE I N FAVOUR OF THE ASSESSEE HAS GIVEN A FINDING THAT ASSESSEE HAD RECEIVED THE SERVICES RECEIVED FROM ITS US PARENT COMPANY TO WHO M THE ROYALTY WAS PAID BY THE ASSESSEE. SHE HAS FURTHER G IVEN A FINDING THAT THE TPOS CONCLUSION THAT WHEN THE REVENUE WA S SPLIT ON THE BASIS OF FAR ANALYSIS, THEN NO FURTHER PAYMENT WOULD HAVE BEEN MADE BY THE ASSESSEE. THEREFORE, I AM HOLDING THAT ALP OF ROYALTY PAYMENT AS NIL WAS WITHOUT ANY BASIS OR AN ALYSIS ON RECORD. SHE HAS FURTHER GIVEN A FINDING THAT NO EVI DENCE OR ANALYSIS WAS MADE BY TPO TO HOLD THAT THE ARMS LEN GTH PRICE FOR ROYALTY TRANSACTION STANDS SUBSUMED BY THE GROSS PR OFIT SPLIT ON REVENUE RECEIVED FROM LOGISTICS SERVICES ON A PREDE TERMINED BASIS. SHE HAS FURTHER GIVEN A FINDING THAT TPO HAS NOT PR OVIDING ANY ANALYSIS OR EVIDENCE TO SUPPORT HIS FINDINGS THAT N O MATERIAL BENEFIT HAS BEEN RECEIVED BY THE ASSESSEE AND NO EV IDENCE HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE THAT ASSESSEE S BUSINESS COULD BE MANAGED AND OPERATED BY EXCLUSION OF VARIO US TECHNICAL, OPERATING AND STRATEGIC SERVICES EXTENDED BY THE AE TO THE ASSESSEE. SHE HAS FURTHER NOTED THAT ASSESSEE WAS F OLLOWING THE SAME BUSINESS MODEL, THE ROYALTY PAID SINCE 2001 HA S BEEN FOUND TO BE ON AN ARMS LENGTH BASIS AND NO ADJUSTMENTS W ERE MADE IN THE PAST BY TPO. IT IS A FACT THAT CIT(A) HAS ALSO CONSIDERED THE SUPPLEMENTARY TNMM ANALYSIS TO CHECK THE IMPACT OF ROYALTY PAYMENT ON ASSESSEES PROFIT MARGIN THAT OF INDEPEN DENT COMPARABLE COMPANIES TO COME TO A CONCLUSION THAT T HE RATIO OF ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 19 OPERATING PROFIT TO COST AT SALES OF THE ASSESSEE I S COMPARABLE TO THAT OF UNCONTROLLED ENTITIES BUT WE ARE OF THE VIE W THAT HER DECISION TO GRANT RELIEF IS NOT BASED SOLELY ON THE AFORESAID SUPPLEMENTARY ANALYSIS FURNISHED BY THE ASSESSEE AT THE BEHEST OF CIT(A). WE FIND THAT CIT(A) HAS TAKEN INTO CONSIDER ATION VARIOUS OTHER FACTORS (WHICH ARE EXTRACTED HEREIN ABOVE) TO COME TO THE CONCLUSION THAT THE AO/TPO WAS NOT JUSTIFIED IN MAK ING THE ADDITION. CONSIDERING THE TOTALITY OF AFORESAID FAC TS, WE ARE OF THE VIEW THAT AS FAR AS MERITS OF THE DELETION OF ADDIT ION IS CONCERNED, NO FALLACY IN THE FINDINGS OF CIT(A) HAS BEEN POINT ED BY THE REVENUE. EVEN ON THE ISSUE OF ALLEGED VIOLATION OF PROVISIONS OF RULE 46A OF I.T. RULES, WE ARE OF THE VIEW THAT DEL ETION OF ADDITION WAS NOT BASED SOLELY ON THE BASIS OF THE ALLEGED AD DITIONAL EVIDENCE FILED BY THE ASSESSEE BUT VARIOUS OTHER MA TERIAL FACTORS AS NOTED IN THE ORDER. WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A) AND THUS THE GROUNDS OF REVENUE ARE DISMISSE D. 17. SO FAR AS CONTENTION RAISED BY THE LD. DR FOR T HE REVENUE BASED UPON THE FINDINGS RETURNED BY THE LD. TPO/DRP IN ASSESSMENT YEAR 2006-07 THAT NO EVIDENCE HAS BEEN B ROUGHT ON RECORD BY THE TAXPAYER TO PROVE RENDITION OF SERVIC ES IS CONCERNED, IT IS FACTUALLY INCORRECT BECAUSE LD. AR FOR THE TA XPAYER DREW OUR ATTENTION TOWARDS PAGES 202 TO 208 OF THE PAPER BOO K VOLUME 2 OF AY 2006-07, WHICH IS A LETTER DATED JULY 2, 2009 AD DRESSED TO LD. TPO CONTAINING THE DESIRED EVIDENCE. FURTHERMORE, WHEN WE EXAMINE LETTER DATED 04.09.2009 ISSUED BY THE LD. T PO TO THE TAXPAYER, AVAILABLE AT PAGE 210 OF THE PAPER BOOK V OLUME 2 OF AY 2006-07, IT GOES TO SPECIFICALLY PROVE THAT THE LD. TPO HAS ENTIRELY BASED HIS QUERIES/BENCHMARKING OF INTERNATIONAL TRA NSACTIONS BY ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 20 RELYING UPON HIS OWN ORDER FOR AY 2005-06. IN RESP ONSE TO THIS LETTER DATED 04.09.2009, THE TAXPAYER HAS EXPLAINED ALL THE FACTS VIDE ITS LETTER DATED SEPTEMBER 22, 2009, AVAILABLE AT PAGES 211 TO 227 OF PAPER BOOK VOLUME 2 OF AY 2006-07. SO, THE FINDINGS RETURNED BY TPO/DRP AND THE CONSEQUENT CONTENTION R AISED BY THE LD. DR FOR THE REVENUE THAT NO EVIDENCE HAS BEEN BR OUGHT ON RECORD BY THE TAXPAYER TO PROVE THE RENDITION OF SE RVICES, IS NOT TENABLE. 18. FURTHERMORE, WHEN WE PERUSE PAGE 411 OF THE PAP ER BOOK VOLUME 3 OF AY 2006-07 WHICH IS PART OF THE SUBMISS IONS MADE BY THE TAXPAYER BEFORE THE LD. DRP, IT HAS COME ON REC ORD THAT ALL THE SERVICES AND ACTIVITIES RENDERED BY THE TAXPAYER HA VE BEEN DULY EXPLAINED. SO, THE CONTENTION RAISED BY THE LD. DR FOR THE REVENUE IS NOT SUSTAINABLE. 19. WHEN WE PERUSE THE ORDERS PASSED BY THE LD. CIT (A) FOR AYS 2007-08 & 2008-09 PARTICULARLY PARAS 4.5 TO 4.1 0 OF AY 2007-08, IT IS PROVED ON RECORD THAT LD. CIT (A) BY ANALYZING THE ENTIRE EVIDENCE BROUGHT ON RECORD BY THE TAXPAYER, BY FOLLOWING THE ORDER PASSED BY HIS PREDECESSOR IN AY 2005-06 WHICH HAS FURTHER BEEN UPHELD BY THE TRIBUNAL, HAS DELETED THE IMPUGN ED ADDITION. ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 21 20. SO, FOLLOWING THE ORDER PASSED BY THE COORDINAT E BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2005-06 (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT LD. TPO/DRP HAVE ER RED IN TREATING THE VALUE OF THE TRANSACTION AT NIL BY IGNORING THE ENTIRE EVIDENCE BROUGHT ON RECORD BY THE TAXPAYER WITHOUT MAKING AN Y ANALYSIS OR BRINGING ON RECORD EVIDENCE TO SUPPORT THEIR FINDIN GS THAT NO MATERIAL BENEFIT HAS BEEN RECEIVED BY THE TAXPAYER AND ORDER IS ALSO NOT SUPPORTED WITH ANY EVIDENCE TO PROVE THAT TAXPA YERS BUSINESS COULD BE MANAGED AND OPERATED BY EXCLUSION OF VARIO US TECHNICAL OPERATING AND STRATEGIC SERVICES EXTENDED BY THE AE TO THE TAXPAYER. SO, IN THESE CIRCUMSTANCES, ADDITION MAD E BY THE TPO AND CONFIRMED BY THE LD. DRP FOR AY 2006-07 IS ORDE RED TO BE DELETED. 21. AT THE SAME TIME, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) IN AYS 2007-08 & 2008-09 BY FOLLOWING THE OR DER PASSED BY HIS PREDECESSOR IN AY 2005-06 WHICH HAS BEEN UPH ELD BY THE COORDINATE BENCH OF THE TRIBUNAL HAS THRASHED THE F ACTS AND LAW APPLICABLE THERETO BY EXAMINING THE ENTIRE EVIDENCE ON RECORD DELETED THE ADDITION. SO, FINDING NO ILLEGALLY OR PERVERSITY IN THE ORDER PASSED BY THE LD. CIT (A), GROUND NO.1 OF ITA ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 22 NO.2639/DEL/2012 FOR AY 2007-08 & GROUND NO.1 OF IT A NO.2231/DEL/2014 FOR AY 2008-09 IN APPEALS FILED BY THE REVENUE ARE HEREBY DETERMINED AGAINST THE REVENUE. GROUNDS NO.3 TO 6 OF ITA NO.5598/DEL/2010 FOR AY 2006-07 FILED BY THE TA XPAYER ARE DETERMINED IN FAVOUR OF THE TAXPAYER. CONSEQUENTLY , CROSS OBJECTION NO.1 OF CO NO.260/DEL/2012 FOR AY 2007-08 FILED BY THE TAXPAYER SUPPORTING THE ORDER PASSED BY THE LD. CIT (A) IS ALSO ALLOWED. GROUNDS NO.7 & 8 OF ITA NO.5598/DEL/2010 (AY 2006-07) FILED BY THE TAXPAYER GROUND NO.2 OF ITA NO.2639/DEL/2012 (AY 2007-08) FILED BY THE REVENUE GROUND NO.2 OF ITA NO.2231/DEL/2014 (AY 2008-09) FILED BY THE REVENUE GROUNDS NO.2 & 3 OF ITA NO.1854/DEL/2014 (AY 2008-09) FILED BY THE TAXPAYER 22. AO NOTICED THAT THE TAXPAYER HAS PAID AN AMOUNT OF RS.1,13,39,702/-, RS.1,59,89,104/- & RS.87,18,175/- FOR ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09 RESPECT IVELY TO M/S. EXPEDITORS INTERNATIONAL OF WASHINGTON INC. IN FOREIGN ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 23 CURRENCY ON ACCOUNT OF GLOBAL ACCOUNT MANAGEMENT EX PENSES & LEASE LINE EXPENSES (VSAT EXPENSES). AOS IN ALL TH E THREE ASSESSMENT YEARS BY FOLLOWING THE ORDER PASSED BY T HEIR PREDECESSORS IN AYS 2001-02 & 2003-04 TREATED THE S AME IN THE NATURE OF CONSULTANCY CHARGES/TECHNICAL FEE HAVING BEEN REMITTED OUT OF INDIA WITHOUT DEDUCTING TAX ON SOURCE AND TH EREBY MADE DISALLOWANCE OF RS.1,13,39,702/-, RS.1,59,89,104/- & RS.87,18,175/- FOR ASSESSMENT YEARS 2006-07, 2007-0 8 & 2008-09 RESPECTIVELY. DISALLOWANCE MADE BY THE AO FOR AY 2 006-07 HAS BEEN CONFIRMED BY THE LD. DRP ON THE GROUND THAT RE VENUES SLP WAS PENDING BEFORE THE HONBLE SUPREME COURT. 22.1 HOWEVER, IN AYS 2007-08 & 2008-09, LD. CIT (A) BY FOLLOWING THE ORDER PASSED BY THE TRIBUNAL AND CONF IRMED BY HONBLE DELHI HIGH COURT FOR AYS 2001-02 & 2003-04 IN TAXPAYERS OWN CASE DELETED THE ADDITION ON ACCOUNT OF GLOBAL ACCOUNT MANAGEMENT EXPENSES & LEASE LINE EXPENSES. 23. EXCEPT FOR THE FACT THAT REVENUE HAS CHALLENGED THE ORDER PASSED BY HONBLE DELHI HIGH COURT IN FAVOUR OF THE TAXPAYER BY WAY OF SLP BEFORE HONBLE SUPREME COURT, THE LD. DR FOR THE REVENUE HAS NOTHING TO SAY ON THIS ISSUE. WE ARE O F THE CONSIDERED ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 24 VIEW THAT MERELY BECAUSE OF THE FACT THAT DECISION RENDERED BY HONBLE HIGH COURT HAS BEEN PENDING ADJUDICATION BE FORE HONBLE SUPREME COURT BY WAY OF SLP, THE ORDER PASSED BY HO NBLE HIGH COURT CONFIRMING THE ORDER OF THE TRIBUNAL CANNOT B E IGNORED. 24. COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2005-06 (SUPRA) UPHELD THE ORDER PASSED BY THE LD. CIT (A) BY FOLLOWING THE ORDER PASSED BY THE COORDINATE BEN CH OF THE TRIBUNAL CONFIRMED BY HONBLE DELHI HIGH COURT BY R ETURNING FOLLOWING FINDINGS :- 23. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED ALL THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE ISSUE I N THE PRESENT GROUND IS WITH RESPECT TO DISALLOWANCE OF GAM EXPEN SES BY INVOKING THE PROVISION OF SECTION 40(A) OF THE ACT. WE FIND THAT CIT(A) WHILE DECIDING THE ISSUE IN ASSESSEES FAVOU R HAS GIVEN A FINDING THAT THE PAYMENTS MADE BY THE ASSESSEE AS G AM CHARGES CANNOT BE TREATED AS PAYMENT OF SALARY TO NON-RESID ENT BUT WERE IN THE NATURE OF REIMBURSEMENT OF EXPENSES AND THER EFORE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS ON SUCH PAY MENTS. WE FURTHER FIND THAT IN A.Y. 2001-02 & 2004-05 IDENTIC AL ISSUE AROSE IN ASSESSEES OWN CASE AND THE ISSUE WAS DECIDED IN ASSESSEES FAVOUR BY THE CO-ORDINATE BENCH OF TRIBUNAL AND THE ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE DELHI HIGH COURT. BEFORE US, NO DISTINGUISHING FEATURE IN THE FACTS O F THE CASE IN THE YEAR UNDER CONSIDERATION AND THAT OF A.Y. 2001-02 & 2004-05 HAS BEEN POINTED OUT BY THE REVENUE. FURTHER NO FAL LACY IN THE FINDINGS HAS BEEN POINTED OUT BY THE REVENUE BEFORE US. REVENUE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO DEMON STRATE THAT THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS HAS BEEN SET ASIDE/OVERRULED OR STAYED BY HIGHER JU DICIAL FORUM. IN SUCH A SITUATION, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A). THUS THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. . ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 25 28. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED ALL THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE PRE SENT GROUND IS WITH RESPECT TO THE DISALLOWANCE OF VSAT EXPENSES B Y INVOKING THE PROVISION OF SECTION 40(A) OF THE ACT. WE FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2001-02 & 2004-05 WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSE SSEE BY THE CO-ORDINATE BENCH OF TRIBUNAL. WE FURTHER FIND THAT THE ORDER OF TRIBUNAL IN FAVOUR OF THE ASSESSEE WAS UPHELD BY TH E HONBLE DELHI HIGH COURT. BEFORE US, NO DISTINGUISHING FEAT URE IN THE FACTS OF THE CASE AND THAT OF A.Y. 2001-02 & 2004-0 5 HAS BEEN POINTED OUT BY THE REVENUE. FURTHER NO FALLACY IN T HE FINDINGS OF CIT(A) HAS BEEN POINTED BEFORE US BY THE REVENUE. R EVENUE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRA TE THAT THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EAR LIER YEARS HAS BEEN SET ASIDE/OVERRULED OR STAYED BY HIGHER JUDICI AL FORUM. IN SUCH A SITUATION, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A). THUS THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 25. SO, FOLLOWING THE ORDER PASSED BY THE COORDINAT E BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2005-06 (SUPRA) AND BY FOLLOWING THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN AYS 2001-02 & 2003-04 CONFIRMED BY HON BLE DELHI HIGH COURT, WE ARE OF THE CONSIDERED VIEW THAT THE AMOUNT PAID BY THE TAXPAYER TO M/S. EXPEDITORS INTERNATION AL OF WASHINGTON INC. ON ACCOUNT OF GLOBAL ACCOUNT MANAGE MENT EXPENSES CANNOT BE TREATED AS PAYMENT OF SALARY TO NON-RESIDENT BUT IT WAS IN THE NATURE OF REIMBURSEMENT OF EXPENSES W HICH CANNOT BE SUBJECTED TO DEDUCTION FOR TDS, PROVISION U/S 40(A) OF THE ACT BEING NOT APPLICABLE. ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 26 25.1 LIKEWISE, WE ARE OF THE CONSIDERED VIEW THAT A MOUNT OF EXPENSES INCURRED BY THE TAXPAYER ON ACCOUNT OF VSA T CHARGES CANNOT BE TREATED AS CHARGES FOR CONSULTANCY OR TEC HNICAL SERVICES AND AS SUCH, CANNOT BE SUBJECTED TO DEDUCTION OF TA X UNDER SECTION 40(A) OF THE ACT. CONSEQUENTLY, ORDER PASSED BY TH E AO/DRP IN AY 2006-07 IS NOT SUSTAINABLE, HENCE ORDERED TO BE SET ASIDE AND ADDITION MADE ON ACCOUNT OF GLOBAL ACCOUNT MANAGEME NT CHARGES AND VSAT CHARGES ARE ORDERED TO BE DELETED. 25.2 AT THE SAME TIME, WE FIND NO ILLEGALITY OR PER VERSITY IN THE ORDER PASSED BY THE LD. CIT (A) IN AYS 2007-08 & 20 08-09 AND THEREBY UPHELD THE IMPUGNED ORDER CHALLENGED BY THE REVENUE. SO, GROUNDS NO.7 & 8 OF ITA NO.5598/DEL/2010 FOR AY 2006-07 FILED BY THE TAXPAYER ARE DETERMINED IN FAVOUR OF T HE TAXPAYER. GROUND NO.2 OF ITA NO.2639/DEL/2012 FOR AY 2007-08 & GROUND NO.2 OF ITA NO.2231/DEL/2014 FOR AY 2008-09 FILED B Y THE REVENUE ARE DETERMINED AGAINST THE REVENUE. 26. WITHOUT PREJUDICE, THE TAXPAYER HAS CHALLENGED THE ORDER PASSED BY THE LD. CIT (A) THAT HE HAS ERRED IN DISA LLOWING THE LEASE LINE UPLINKING CHARGES (VSAT CHARGES) AMOUNTING TO RS.25,50,215/- AS ROYALTY IN VIEW OF THE EXPLANATIO N 6 TO SECTION ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 27 9(1)(VI) WITHOUT APPRECIATING THE FACT THAT AMENDME NT IN THE ACT CANNOT BE READ INTO INDO US DTAA. 27. LD. CIT (A) BY INVOKING THE EXPLANATION 6 TO SE CTION 9(1)(VI) CONFIRMED THE ADDITION OF RS.25,50,215/- U /S 40(A) OF THE ACT ON ACCOUNT OF VSAT CHARGES SIMPLY ON THE GROUND THAT, THE ASSESSEE DID NOT FURNISH ANY EXPLANATION AS TO WHY VSAT UPLINKING CHARGES SHOULD NOT BE TREATED AS ROYALTY . 28. IN VIEW OF THE DECISION RENDERED BY HONBLE SUP REME COURT IN CASE OF ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PVT. LTD. VS. CIT (2021) 432 ITR 472 (SC) WHEREIN IT IS HELD THAT UNILATERAL AMENDMENT AS MADE IN THE DOMESTIC LAW CANNOT BE REA D INTO TREATY. HONBLE APEX COURT DECIDED THAT EXPLANATIO N 6 TO SECTION 9(1)(VI) IS NOT APPLICABLE TO THE FACTS AND CIRCUMS TANCES OF THE CASE. IT IS ALSO BROUGHT ON RECORD BY THE TAXPAYER THAT I N AYS 2010-11 & 2012-13 IN TAXPAYERS OWN CASE, THE LD. CIT (A) HAS DELETED THIS ADDITION BY FOLLOWING THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN DIT VS. INFRASOFT LTD. (2013) 220 TAX MAN 273 (DEL.) BY APPLYING THE SAME PRINCIPLE ENUNCIATED BY HONBLE APEX COURT IN CASE OF ENGINEERING ANALYSIS CENTRE OF EXC ELLENCE PVT. LTD. VS. CIT (SUPRA) THAT A UNILATERAL AMENDMENT IN ACT CANNOT BE ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 28 READ IN AS DTAA. CONSEQUENTLY, ADDITION OF RS.25,5 0,215/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) IN AY 20 08-09 IS ORDERED TO BE DELETED AND GROUNDS NO.2 & 3 OF ITA NO.1854/DEL/2014 FOR AY 2008-09 FILED BY THE TAXPAY ER ARE DETERMINED IN ITS FAVOUR. GROUND NO.9 OF ITA NO.5598/DEL/2010 (AY 2006-07) FILED BY THE TAXPAYER 29. AO HAS ALLOWED DEPRECIATION ON COMPUTER ACCESSO RIES @15% AS AGAINST 60% CLAIMED BY THE TAXPAYER BY DISA LLOWING THE EXCESS DEPRECIATION CLAIMED BY THE TAXPAYER ON UPS, PRINTER, ETC. THIS ISSUE IS ALSO NO LONGER RES INTEGRA BECAUSE IN TAXPAYERS OWN CASE FOR AY 2005-06 (SUPRA) IT HAS BEEN DECIDED IN FAVOUR OF THE TAXPAYER BY RETURNING FOLLOWING FINDINGS :- 39. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D ALL THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE PRE SENT GROUND IS WITH RESPECT TO DELETING THE ADDITION OF RS.3,32,63 4/- ON ACCOUNT OF EXCESS CLAIM OF DEPRECIATION ON COMPUTER ACCESSO RIES. WE FIND THAT IDENTICAL ISSUE OF EXCESS CLAIM OF DEPRECIATIO N AROSE IN ASSESSEES OWN CASE IN A.Y. 2001-02, 2003-04 & 2004 -05, WHEREIN THE CO-ORDINATE BENCH OF TRIBUNAL HAS DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE. BEFORE US, NO DISTINGUIS HING FEATURES IN THE FACTS OF THE CASE AND THAT OF THE EARLIER YEARS HAS BEEN POINTED OUT BY THE REVENUE. REVENUE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE ORDER OF THE TRIBUNA L IN ASSESSEES OWN CASE IN EARLIER YEARS HAS BEEN SET ASIDE/OVERRU LED OR STAYED BY HIGHER JUDICIAL FORUM. IN SUCH A SITUATION, WE F IND NO REASON ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 29 TO INTERFERE IN THE ORDER OF CIT(A). THUS THE GROUN D OF APPEAL OF THE REVENUE IS DISMISSED. 30. SINCE FACTS OF THE CASE AT HAND ARE IDENTICAL T O AYS 2001-02, 2003-04 & 2004-05 AND FOLLOWING THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2005-06 (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT TAXPAY ER IS ENTITLED FOR DEPRECIATION @ 60% BECAUSE COMPUTERS C ANNOT BE RUN WITHOUT ITS ACCESSORIES I.E. UPS, PRINTER, ETC.. C ONSEQUENTLY, GROUND NO.9 OF ITA NO.5598/DEL/2010 FOR AY 2006-07 FILED BY THE TAXPAYER IS DETERMINED IN ITS FAVOUR. GROUND NO.10 OF ITA NO.5598/DEL/2010 (AY 2006-07) FILED BY THE TAXPAYER 31. GROUND NO.10 OF ITA NO.5598/DEL/2010 FOR AY 200 6-07 FILED BY THE TAXPAYER BEING CONSEQUENTIAL IN NATURE NEEDS NO SPECIFIC FINDINGS. GROUND NO.4 OF ITA NO.1854/DEL/2014 (AY 2008-09) FILED BY THE TAXPAYER 32. GROUND NO.4 OF ITA NO.1854/DEL/2014 FOR AY 2008 -09 QUA LEVY OF INTEREST U/S OF THE ACT NEED NO SPECIFIC FI NDING BEING CONSEQUENTIAL IN NATURE. ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 30 ADDITIONAL GROUND NO.11 OF ITA NO.5598/DEL/2010 (AY 2006-07) FILED BY THE TAXPAYER GROUND NO.1 OF ITA NO.16/DEL/2021 FILED BY THE TAXPAYER ADDITIONAL GROUND NO.6 OF ITA NO.1854/DEL/2014 (AY 2008-09) FILED BY THE TAXPAYER 33. BY MOVING A SEPARATE APPLICATION, THE TAXPAYER SOUGHT TO RAISE ADDITIONAL GROUND NO.11 & GROUND NO.6 IN ITA NOS.5598/DEL/2010 & 1854/DEL/2014 FOR AYS 2006-07 & 2008-09 RESPECTIVELY ON THE GROUND THAT THE SAME GO TO THE ROOT OF THE CASE WHICH ARE AS UNDER :- ADDITIONAL GROUND NO.11 OF ITA NO.5598/DEL/2010 (AY 2006-07) 11. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THAT THE EDUCATION CESS PAID ON THE INCOME TAX WAS AN ALLOWA BLE DEDUCTION FOR COMPUTING TOTAL INCOME GIVEN THE FACT THAT THE SAME WAS NOT HIT BY THE PROVISIONS OF SECTION 40(A) (II) OF THE INCOME-TAX ACT, 1961. ADDITIONAL GROUND NO.6 OF ITA NO.1854/DEL/2014 (AY 2008-09) 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THAT THE EDUCATION CESS (EC) AND SECONDARY AND HIGHER EDUCAT ION CESS (SHEC) PAID ON THE INCOME TAX WAS AN ALLOWABLE DEDU CTION FOR COMPUTING TOTAL INCOME GIVEN THE FACT THAT THE SAME WAS NOT HIT ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 31 BY THE PROVISIONS OF SECTION 40(A)(II) OF THE INCOM E-TAX ACT, 1961. 34. KEEPING IN VIEW THE FACT THAT THE ADDITIONAL GR OUND SOUGHT TO BE RAISED BY THE TAXPAYER, WHICH IS A LEGAL GROUND AND CAN BE RAISED AT ANY STAGE OF THE PROCEEDINGS AND IS OTHERWISE NE CESSARY FOR COMPLETE ADJUDICATION OF THE CONTROVERSY AT HAND, T HE APPLICATION FOR ADDITIONAL GROUND IS HEREBY ALLOWED. 35. THE TAXPAYER CHALLENGED THE FINDINGS OF THE AO IN NOT CONSIDERING THE EDUCATION CESS (EC) AND SECONDARY & HIGHER EDUCATION CESS (SHEC) PAID ON INCOME-TAX AS ALLOWAB LE DEDUCTION FOR COMPUTING THE TOTAL INCOME BY IGNORING THE FACT THAT THE SAME WAS NOT HIT BY THE PROVISIONS OF SECTION 40(A)(II) OF THE ACT AND RELIED UPON THE JUDGMENT PASSED BY HONBLE BOMBAY HIGH COURT IN CASE OF SESA GOA LTD. VS. JCIT 117 TAXMAN.COM 96 (BOMBAY) . 35.1 HONBLE HIGH COURT IN SESA GOA LTD. CASE (SUPRA) HELD THAT EDUCATION CESS OR ANY OTHER CESS IS NOT INCLUDED IN CLAUSE (II) OF SECTION 40(A) OF THE ACT SO THERE IS NO PROHIBITION IN CLAIMING DEDUCTION OF SUCH AMOUNTS WHILE COMPUTING THE INCOM E OF THE ASSESSEE UNDER THE HEAD PROFITS & GAINS OF BUSINES S OR PROFESSION. ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 32 OPERATIVE PART OF THE AFORESAID DECISION RENDERED B Y HONBLE BOMBAY HIGH COURT IS EXTRACTED FOR READY PERUSAL AS UNDER :- 27. THE CBDT CIRCULAR, IS BINDING UPON THE AUTHORI TIES UNDER THE IT ACT LIKE ASSESSING OFFICER AND THE APPELLATE AUTHOR ITY. THE CBDT CIRCULAR IS QUITE CONSISTENT WITH THE PRINCIPLES OF INTERPRETATION OF TAXING STATUTE. THIS, ACCORDING TO US, IS AN ADDITI ONAL REASON AS TO WHY THE EXPRESSION 'CESS' OUGHT NOT TO BE READ OR INCLU DED IN THE EXPRESSION 'ANY RATE OR TAX LEVIED' AS APPEARING IN SECTION 40(A)(II) OF THE IT ACT. 28. IN THE INCOME-TAX ACT, 1922, SECTION 10(4) HAD BANNED ALLOWANCE OF ANY SUM PAID ON ACCOUNT OF 'ANY CESS, RATE OR TA X LEVIED ON THE PROFITS OR GAINS OF ANY BUSINESS OR PROFESSION'. IN THE CORRESPONDING SECTION 40(A)(II) OF THE IT ACT, 1961 THE EXPRESSIO N 'CESS' IS QUITE CONSPICUOUS BY ITS ABSENCE. IN FACT, LEGISLATIVE HI STORY BEARS OUT THAT THIS EXPRESSION WAS IN FACT TO BE FOUND IN THE INCO ME-TAX BILL, 1961 WHICH WAS INTRODUCED IN THE PARLIAMENT. HOWEVER, TH E SELECT COMMITTEE RECOMMENDED THE OMISSION OF EXPRESSION 'C ESS' AND CONSEQUENTLY, THIS EXPRESSION FINDS NO PLACE IN THE FINAL TEXT OF THE PROVISION IN SECTION 40(A)(II) OF THE IT ACT, 1961. THE EFFECT OF SUCH OMISSION IS THAT THE PROVISION IN SECTION 40(A)(II) DOES NOT INCLUDE, 'CESS' AND CONSEQUENTLY, 'CESS' WHENEVER PAID IN RE LATION TO BUSINESS, IS ALLOWABLE AS DEDUCTABLE EXPENDITURE. 36. COORDINATE BENCH OF THE TRIBUNAL IN CASE OF SICPA INDIA PRIVATE LTD. VS. ADDL.CIT IN ITA NOS.704/KOL/2015, 1586/KOL/2016 & 7048/KOL/2017 ALSO DECIDED THE IDENTICAL ISSUE BY HOLDING THAT EDUCATION CESS ON INCOME-TAX, DIVID END DISTRIBUTION TAX AND FRINGE BENEFIT TAX IS NOT A DISALLOWABLE EX PENDITURE UNDER SECTION 40(A)(II) OF THE ACT HAVING BEEN EXPRESSLY EXCLUDED FROM SECTION 40(A)(II) OF THE ACT. 37. SO, FOLLOWING THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN CASE OF SESA GOA LTD. (SUPRA) AND ORDER PASSED BY ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 33 THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF SICPA INDIA PVT. LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT EDUCAT ION CESS AND SECONDARY & HIGHER EDUCATION CESS IS AN ALLOWABLE D EDUCTION BEING NOT HIT BY THE PROVISIONS OF SECTION 40(A)(II) OF T HE ACT. WE DIRECT THE AO ACCORDINGLY. CONSEQUENTLY, ADDITIONAL GROUN D NO.11 OF ITA NO.5598/DEL/2010 FOR AY 2006-07, GROUND NO.1 OF ITA NO.16/DEL/2021 & ADDITIONAL GROUND NO.6 OF ITA NO.1854/DEL/2014 FOR AY 2008-09 FILED BY THE TAXPAY ER ARE DETERMINED IN FAVOUR OF THE TAXPAYER. 38. TO SUM UP : ITA NO.5598/DEL/2010, ITA NO.16/DEL /2021, CO NO.260/DEL/2012 & ITA NO.1854/DEL/2014 FOR AYS 2 006-07, 2007-08, 2007-08 & 2008-09 RESPECTIVELY FILED BY TH E TAXPAYER ARE ALLOWED AND ITA NOS.2639/DEL/2012 & 2231/DEL/2014 F OR AYS 2007-08 & 2008-09 FILED BY THE REVENUE ARE DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF JUNE , 2021. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF JUNE, 2021 TS ITA NO.5598/DEL/2010 ITA NO.16/DEL/2021 ITA NO.2639/DEL/2012 CO NO.260/DEL/2012 ITA NO.2231/DEL/2014 ITA NO.1854/DEL/2014 34 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.DRP 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.