M/s. Corbus (India) Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2745/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3509 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Sham transactions; Rule 8D
• Section: 92B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1 NEW DLEHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 2745/DEL/2015 ASSESSMENT YEAR: 2009-10 M/S. CORBUS (INDIA) PVT. LTD., VS. DCIT, CIRCLE 3 (1), (NOW CORBUS (INDIA) LLP), NEW DELHI. 164, KAILASH HILLS, EAST OF KAILASH, NEW DELHI. PAN : AAACM2026B (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHUTOSH MOHAN RASTOGI, A DV. SH. M.K. JUNEJA, AR MS. ANCHAL KESARI, ADVOCATE RESPONDENT BY: SH. KUMAR PRANAV, SR. DR DATE OF HEARING: 27/02/2020 DATE OF ORDER : 05/03/2020 ORDER PER K. NARASIMHA CHARY, J.M. CHALLENGING THE ORDER DATED 25/02/2015 IN APPEAL N O. 86/2014- 15/CIT(A)-44, PASSED BY LD. COMMISSIONER OF INCOME- TAX (APPEALS)-44, NEW DELHI (LD. CIT(A)), FOR ASSESSMENT YEAR 2009-10, M/S. CORBUS (INDIA) PVT. LTD. (THE ASSESSEE) FILED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY WAS INCORPORATED IN 1994 AS A SUBSIDIARY OF GLOBAL TECH NOLOGIES INTERNATIONAL CORPORATION LTD. (GTICL), WHICH IN TURN WAS THE SUB SIDIARY OF SOIN 2 INTERNATIONAL LLC. FOR ASSESSMENT YEAR 2009-10, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.10,04,84,944/- AND SINCE THE ASSESSEE HAD ENTERED INTO AN INTERNATIONAL TRANSACTION WITH ITS ASSOCIATED ENTERPRISES(AE) IN RESPECT OF PROVISION OF INFORMAT ION TECHNOLOGY SERVICES AND RELATED SERVICES (E-SOURCING SERVICES), LD. ASS ESSING OFFICER REFERRED THE DETERMINATION OF ARMS LENGTH PRICES (ALP) OF INTER NATIONAL TRANSACTION TO THE LD. TPO U/S. 92CA(1) OF THE INCOME-TAX ACT (TH E ACT). LEARNED TPO DID NOT DRAW ANY ADVERSE INFERENCE IN RESPECT OF THE PR ICING OF THE INTERNATIONAL TRANSACTIONS BUT PROPOSED TO MAKE AN UPWARD ADJUSTM ENT OF INCOME OF THE ASSESSEE ON ACCOUNT OF OUTSTANDING RECEIVABLES. LD. TPO RE-CHARACTERIZED THE DEBIT BALANCES, I.E., OUTSTANDING RECEIVABLES IN EX CESS OF 45 DAYS AS LOANS ADVANCED TO AE AND APPLYING AN ADHOC INTEREST RATE OF 17.77%, PROPOSED AN ADDITION OF RS.69,73,350/-. 3. LD. ASSESSING OFFICER FURTHER FOUND THAT THE ASS ESSEE HAD CLAIMED DIVIDEND INCOME OF RS.2,44,356/- AND WHILE INVOKING THE PROVISIONS OF SECTION 14A READ WITH RULES 8D OF THE RULES, DISALLOWED A S UM OF RS.26,223/-. LD. ASSESSING OFFICER, THEREFORE, MADE AN ADDITION OF R S.69,73,350/- ON ACCOUNT OF ARMS LENGTH ADJUSTMENT IN RESPECT OF OUTSTANDIN G RECEIVABLES AND A SUM OF RS.26,223/- BY INVOKING SECTION 14A READ WITH RU LE 8D OF THE RULES. 4. CHALLENGING THE SAME, THE ASSESSEE PREFERRED APP EAL BEFORE THE CIT(A). LD. CIT(A), AFTER CONSIDERING THE SUBMISSIO NS MADE ON BEHALF OF THE ASSESSEE, OBSERVED THAT ITES SEGMENT RELATES TO E-S OURCING FOR PROCUREMENT OF GOODS AND THERE WAS DELAY VARYING FROM 271 TO 55 DAYS FOR 10 INVOICES AND IN SOFTWARE DEVELOPMENT SEGMENT, THE DELAY VARIED F ROM 237 TO 50 DAYS FOR 27 INVOICES AND THEREFORE, HELD THAT SUCH A TRANSAC TION WAS LIABLE FOR ARMS LENGTH ADJUSTMENT. LD. CIT(A), HOWEVER, DIRECTED TH E ASSESSING OFFICER TO 3 CHARGE INTEREST @ LIBOR + 1.5% INSTEAD OF INTEREST @ 17.77% ON THE DELAYED PAYMENT FROM AE IN BOTH ITES AND SOFTWARE DEVELOPME NT SEGMENTS. 5. LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HA D FAILED TO EXPLAIN WHY THE PROVISIONS OF SECTION 14A READ WITH RULE 8D SHO ULD NOT BE APPLICABLE TO THE CASE AND HELD THAT LD. ASSESSING OFFICER CORREC TLY DETERMINED THE DISALLOWANCE U/S. 14A READ WITH RULE 8D. 6. AGGRIEVED BY BOTH THE FINDINGS OF LD. CIT(A), AS SESSEE PREFERRED THIS APPEAL BEFORE US CHALLENGING THE ARMS LENGTH ADJUS TMENT IN RESPECT OF OUTSTANDING RECEIVABLES AND ALSO THE DISALLOWANCE U /S. 14A READ WITH RULE 8D OF THE RULES. 7. IT IS THE ARGUMENT OF THE LD. AR THAT THE RECEIV ABLES ARE NOT INDEPENDENT TRANSACTIONS SEPARATE FROM THE TRANSACT ION OF SALE; THAT RECEIVABLES ARE MERELY AN OFFSHOOT OF COMMERCIAL TR ANSACTIONS AND CANNOT BE VIEWED ON STANDALONE BASIS; THAT THE RECEIVABLES IS AN INTEGRAL PART OF THE RETURN ON THE UNDERLYING COMMERCIAL TRANSACTIONS; A ND THAT THEREFORE, THERE IS NO CONCRETE REASON AS TO WHY AND HOW THE OUTSTAN DING RECEIVABLES SHOULD BE TREATED AS LOANS. HE FURTHER SUBMITTED THAT THE RECEIVABLES ARE NOT SHAM TRANSACTIONS, BUT GENUINELY SOURCED FROM THE BUSINE SS OPERATIONS AS THE AMOUNTS OVERDUE FROM THE CUSTOMERS AND SHOULD BE CO NSTRUED AS SUCH AND THEREFORE, THE INTEREST CHARGED ON SUCH TRANSACTION S IS NOT DEFINED AND CONTRARY TO THE LEGISLATIVE INTENT AND JUDICIAL VIE W EXPRESSED IN A NUMBER OF DECISIONS LIKE, THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. BC MANAGEMENT SERVICES PVT. LTD. (ITA NO. 1064/ 2017), DECISION OF ITAT DELHI BENCH IN THE CASE OF TERRADATA INDIA LTD. VS. ACIT (ITA NO. 7885/DEL/2017) AND MOTHERSON SUMI INFOTECH & DESIGN S LTD. VS. DCIT (ITA NO. 6331/DEL/2016). 4 8. NEXT CONTENTION OF THE ASSESSEE IS THAT THE OPER ATING PROFIT MARGIN FROM SERVICES RENDERED TO AES IS 45.88% WHICH IS SI GNIFICANTLY HIGHER THAN THE WORKING CAPITAL ADJUSTED RESULTS FOR COMPARABLES, I .E., 22.07% AND THEREFORE, THE WORKING CAPITAL ADJUSTMENT IF APPROPRIATELY TAK EN INTO ACCOUNT, THE RETURN THAT WAS EARNED BY ASSESSEE WOULD ADEQUATELY COMPENSATE IT FOR OUTSTANDING RECEIVABLES AND SINCE THE PRICING PRO FITABILITY OF THE ASSESSEE IS MORE THAN THE WORKING CAPITAL ADJUSTED, THE ARMS L ENGTH ADJUSTMENT ON THE OUTSTANDING RECEIVABLES IS NOT WARRANTED. 9. LD. AR WHILE DRAWING OUR ATTENTION TO THE STATEM ENT ON THE COMPANYS CREDIT POLICY SUBMITTED THAT THE ASSESSEE FOLLOWS UNIFORM POLICY OF NOT CHARGING ANY INTEREST ON OUTSTANDING RECEIVA BLES BOTH FROM AES AND NON-AES AND THEREFORE, A COMPARISON OF THE CASE OF AES AND NON-AES CLEARLY SUGGESTS THAT ACCORDING TO SUCH CREDIT POLICY, NO A DJUSTMENT IS WARRANTED ON THE OUTSTANDING RECEIVABLES. 10. THE NEXT LIMB OF ARGUMENTS OF LD. AR IS THAT TH E ASSESSEE IS A DEBT FREE COMPANY AS IT HAS NEITHER RECEIVED ANY INTEREST FRO M ANY CREDITORS NOR PAID INTEREST TO ANY DEBTOR, AS IS REFLECTED IN THE PROF IT AND LOSS ACCOUNT SHOWING A SURPLUS OF RS.9.6 CRORES WITH A MEAGRE INTEREST CHA RGE OF RS.30,278/- AND THEREFORE, IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. BC MANAGEMENT SERVICES PVT. LTD. (SUPRA) A ND NUMBER OF DECISIONS OF CO-ORDINATE BENCHES OF DELHI TRIBUNAL, THE DELAY ED PAYMENTS MADE BY AE CANNOT BE TREATED AS PART OF ASSESSEES INCOME. 11. IN RESPECT OF DISALLOWANCE U/S. 14A, THE CASE O F THE ASSESSEE HAS BEEN THAT THE INVESTMENT IN MUTUAL FUNDS WAS MADE IN EAR LIER YEARS AND BY WAY OF THE POLICY OF AUTOMATIC REINVESTMENT OF DIVIDEND WI THOUT ANY EFFORTS OF THE ASSESSEE, SUCH INVESTMENTS ACCRUE FURTHER DIVIDENDS AND THEREFORE, THERE IS 5 NEITHER ANY DIRECT EXPENSES NOR INTEREST EXPENSE NO R ANY ADMINISTRATIVE EXPENSE INVOLVED IN EARNING OF DIVIDEND. HE FURTHER SUBMITTED THAT A SIMILAR QUESTION HAD ARISEN IN IMMEDIATELY PRECEDING YEAR 2 008-09 UNDER IDENTICAL CIRCUMSTANCES AND THE CIT(A), CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, DELETED THE ADDITION. 12. PER CONTRA, LD. DR PLACES HEAVY RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND DREW OUR ATTENTION TO THE REL EVANT OBSERVATIONS OF THE AUTHORITIES IN SUCH ORDERS. 13. WE HAVE GONE THROUGH THE RECORDS IN THE LIGHT O F SUBMISSIONS MADE ON EITHER SIDE. THERE IS NO DENIAL OF THE FACT THAT OPERATING PROFIT MARGIN EARNED BY THE ASSESSEE FROM THE SERVICES RENDERED T O AES IS 45.88% AND THE SAME IS SIGNIFICANTLY HIGHER THAN THE WORKING CAPIT AL ADJUSTED RESULTS FOR COMPARABLES AT 22.07%. WORKING CAPITAL ADJUSTMENT I S AN ADJUSTMENT FOR THE OPPORTUNITY COST OF CAPITAL FOR INVESTMENTS MADE IN WORKING CAPITAL, WHICH REQUIRE CAPITAL AND OPERATING ASSETS AND AN UNCONTR OLLED ENTITY IS EXPECTED TO EARN A MARKET RATE OF RETURN ON THAT REQUIRED CA PITAL INDEPENDENT OF THE SERVICES THAT IT PROVIDES. THE AMOUNT OF CAPITAL RE QUIRED TO SUPPORT THE SERVICES IS DEPENDENT UPON THE LEVEL OF INVENTORY, DEBTORS AND CREDITORS MEASURED AT A PARTICULAR PERCENTAGE OF THE TOTAL CO ST AND HAD IMPACT ON THE PROFITS FROM INVESTING AT DIFFERENT LEVELS OF WORKI NG CAPITAL DUE TO THE DIFFERENCES IN THE CASH COLLECTION CYCLE WHICH IMPL Y DIFFERENCES IN CREDITS GRANTED TO THE CUSTOMERS WHICH ACTIVITY IS SIMILAR TO AN ADDITIONAL SERVICE FOR WHICH THE MARKETS WOULD PAY. 14. IN KUSUM HEALTHCARE PRIVATE LTD. VS. ACIT (2015 )170 TTJ-411, THE COORDINATE BENCH OF TRIBUNAL HELD - 6 7 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AN UNCONTROLLED ENTITY WILL EXPECT TO EARN A M ARKET RATE OF RETURN ON ITS WORKING CAPITAL INVESTMENT INDEPENDEN T OF THE FUNCTIONS IT PERFORMS OR PRODUCTS IT PROVIDES. HOWEVER, THE AM OUNT OF CAPITAL REQUIRED TO SUPPORT THESE FUNCTIONS VARIES GREATLY, B ECAUSE THE LEVEL OF INVENTORIES, DEBTORS AND CREDITORS VARIES. HIGH LEVELS OF WORKING CAPITAL CREATE COSTS EITHER IN THE FORM OF INCURRED INTERES T OR IN THE FORM OF OPPORTUNITY COSTS. WORKING CAPITAL YIELDS A RETURN RES ULTING FROM A) HIGHER SALES PRICE OR B) LOWER COST OF GOODS SOLD WHICH WOULD HAVE A POSITIVE IMPACT ON THE OPERATIONAL RESULT. HIGHER SAL ES PRICES ACTS AS A RETURN FOR THE LONGER CREDIT PERIOD GRANTED TO CUSTOME RS. SIMILARLY IN RETURN FOR LONGER CREDIT PERIOD GRANTED, A FIRM SHOULD BE WILLING TO PAY HIGHER PURCHASE PRICE WHICH ADDS TO THE COST OF GOODS SOLD. THEREFORE, HIGH LEVELS ACCOUNTS RECEIVABLE AND INVENTORY TEND TO OVERSTATE THE OPERATING RESULTS WHILE HIGH LEVELS OF ACCOUNTS PAYA BLE TEND TO UNDERSTATE THEM THEREBY NECESSITATING APPROPRIATE A DJUSTMENT. THE APPROPRIATE ADJUSTMENTS NEED TO BE CONSIDERED TO BRING PARITY IN THE WORKING CAPITAL INVESTMENT OF THE ASSESSEE AND THE COMPARABLES RATHER THAN LOOKING AT THE RECEIVABLE INDEPENDENTLY . SUCH WORKING CAPITAL ADJUSTMENT TAKES INTO ACCOUNT THE IMPACT OF OU TSTANDING RECEIVABLES ON THE PROFITABILITY. 15. THIS ORDER OF TRIBUNAL WAS AFFIRMED BY HONBLE JURISDICTIONAL HIGH COURT IN ITA NO. 765/2016 (REVENUES APPEAL) VIDE O RDER DATED 25.04.2017 AND THE HONBLE HIGH COURT UNEQUIVOCALLY HELD THAT WORKING CAPITAL ADJUSTMENT TAKES INTO ACCOUNT THE IMPACT OF OUTSTAN DING RECEIVABLES ON THE PROFITABILITY. 16. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE IS A DEBT FREE COMPANY AS IS REFLECTED IN THE PROFIT AND LOSS ACCOUNT WHEREIN TH E INTEREST CHARGES ARE ONLY RS.30,278/-. IT IS, THEREFORE, CLEAR THAT THE ASSES SEE DOES NOT HAVE ANY INTEREST WHERE BORROWED FUNDS WERE UTILIZED FOR EXT ENDING ANY KIND OF LOAN TO ITS AES, SO THAT TRANSFER PRICING ADJUSTMENT COU LD BE MADE. IN THE CASE OF 7 BC MANAGEMENT SERVICES PVT. LTD. (SUPRA), HONBLE J URISDICTIONAL HIGH COURT HELD THAT NOTIONAL INCOME ON ACCOUNT OF DELAYED PAY MENT CANNOT BE TREATED AS PART OF INCOME AND BE MADE SUBJECT MATTER OF ADJ USTMENT. 17. IN INDO AMERICAN JEWELLERY LIMITED (ITA NO. 587 2/MUM/2009), THE MUMBAI TRIBUNAL HELD A CLOSE READING OF SECTION 92B TRANSPIRES THAT THE TRANSACTIONS OF SALE AND LENDING...MONEY HAVE BEEN DISTINCTLY SE T OUT. TRANSACTION OF SALE RESULTS INTO PROFIT AND THAT OF LENDING MONEY GIVES INTEREST INCOME. THUS IT IS EVIDENT THAT INTEREST INCOME IS A SSOCIATED ONLY WITH THE LENDING OR BORROWING OF MONEY AND NOT WITH SALE. SO IF THE INTERNATIONAL TRANSACTION IS THAT OF SALE, THE ARM S LENGTH PRICE IS DETERMINED QUA THE SALE PRICE. OF COURSE, WHILE DE TERMINING THE ALP IN A SALE TRANSACTION, ALL THE RELEVANT ASPECTS INC LUDING THE CREDIT PERIOD ALLOWED ARE TAKEN INTO VIEW. ON THE OTHER HAND , IF THE INTERNATIONAL TRANSACTION IS THAT OF 'LENDING OR BOR ROWING MONEY, THE ARMS LENGTH PRICE IS GAUGED QUA THE 'INTEREST. WH EN THE INTERNATIONAL TRANSACTION IS THAT OF 'SALE, THE INTEREST ASPECT I S EMBEDDED IN IT. THERE CAN BE NO SEPARATE INTERNATIONAL TRANSACTION OF 'INTE REST IN THE INTERNATIONAL TRANSACTION OF 'SALE. EARLY OR LATE RE ALIZATION OF SALE PROCEEDS IS ONLY INCIDENTAL TO THE TRANSACTION OF SALE, BUT NOT A SEPARATE TRANSACTION IN ITSELF. IF THE ALP IN RESPE CT OF AN INTERNATIONAL TRANSACTION OF 'SALE IS DETERMINED, THEN THERE CAN BE NO QUESTION OF TREATING THE NON-RECEIPT OF INTEREST IN SUCH SALE T RANSACTION AS A SEPARATE INTERNATIONAL TRANSACTION WARRANTING ANY FU RTHER ADJUSTMENT. ONE MAY ALSO CONTEND THAT THE EXPRESSION 'ANY OTHER TRANSACTION HAVING A BEARING ON THE PROFITS, INCOME, LOSSES AS EMPLOYED IN SEC. 92B DEFINING INTERNATIONAL TRANSACTION WOULD ENCOMPAS S SUCH INTEREST FROM SALE AS THE NON-RECEIPT OF DUE INTEREST WOULD H AVE THE EFFECT ON PROFITS OR INCOME. THIS CONTENTION ALSO DOES NOT MERIT AC CEPTANCE BECAUSE WHEN 'SALE AND 'LENDING MONEY HAVE BEEN S PECIFICALLY INCLUDED IN DEFINITION OF 'INTERNATIONAL TRANSACTION U/S 92B, THEN THE EXPRESSION 'ANY OTHER TRANSACTION USED IN THE LATER P ART OF THIS 8 PROVISION WILL EXCLUDE ALL THE ITEMS SEPARATELY COVE RED. IN THIS VIEW OF THE MATTER, IT BECOMES MANIFEST THAT THERE CAN BE NO SEPARATE INTERNATIONAL TRANSACTION OF INTEREST INCOME WHICH IS PART OF THE TRANSACTION OF SALE. ONCE ALP IS DETERMINED IN RESPE CT OF THE SALE TRANSACTION, IT WOULD BE DEEMED TO BE COVERING ALL TH E ELEMENTS AND CONSEQUENCES OF THE TRANSACTION OF SALE. HAVING DET ERMINED ALP IN A SALE TRANSACTION, IT CANNOT BE ACCEPTED THAT SEPARA TE ADJUSTMENT DE HORS SUCH DETERMINATION IS REQUIRED IN RESPECT OF IN TEREST. 18. SIMILAR VIEW IS TAKEN IN NIMBUS COMMUNICATION I N ITA NO. 6597/MUM/2009 AND BHARTI AIRTEL LIMITED VS. ACIT (I TA NO. 5816/DEL/2012. IT IS, THEREFORE, CLEAR THAT RE-CHARACTERISATION OF THE OUTSTANDING RECEIVABLES AS LOAN IS IMPERMISSIBLE UNLESS THE TRANSACTIONS AR E FOUND TO BE SUBSTANTIALLY AT VARIANCE WITH THE STATED FORM. 19. LASTLY, THERE IS NO DENIAL OF THE FACT THAT IN THE ASSESSMENT YEAR 2012- 13, THIS QUESTION OF ADJUSTMENT ON ACCOUNT OF RECEI VABLES WAS DEALT BY THE CIT(A) AND BY REFERRING TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KUSUM HEALTHCARE PRIVATE LTD.(SUPRA), D ELETED THE ENTIRE ADJUSTMENT SUGGESTED BY LD. TPO ON ACCOUNT OF INTER EST ON OUTSTANDING RECEIVABLES. WE, AGREE WITH THE SUBMISSION OF THE L D. AR THAT BECAUSE THE LD. CIT(A) DID NOT HAVE THE BENEFIT OF DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KUSUM HEALTHCARE PVT. LTD. (SU PRA), THE ISSUE WAS HELD OTHERWISE FOR THE ASSESSMENT YEAR 2009-10. 20. VIEWING FROM ANY ANGLE, WE ARE OF THE CONSIDERE D OPINION THAT THE ADDITION MADE ON ACCOUNT OF ARMS LENGTH PRICE ADJU STMENT IN RESPECT OF OUTSTANDING RECEIVABLES CANNOT BE SUSTAINED AND WE, THEREFORE, WHILE ALLOWING GROUNDS NOS. 1 TO 3, DIRECT THE LD. ASSESS ING OFFICER TO DELETE THE ADDITION. 9 21. GROUNDS NOS. 1, 4 & 5 ARE ACADEMIC IN NATURE IN VIEW OF OUR FINDINGS IN GROUND NOS. 1 TO 3. 22. NOW, TURNING TO GROUND NO. 6 IN RESPECT OF DISA LLOWANCE OF EXPENDITURE U/S. 14A. ON A READING OF THE ORDER DAT ED 17.07.2019 IN ITA NO. 5723/DEL/2016 FOR ASSESSMENT YEAR 2011-12 IN ASSESS EES OWN CASE, WE FIND THAT THIS ISSUE STANDS COVERED AND IN THE ABSENCE O F ANY REASON TO SHOW WHY THE VIEW TAKEN BY THE TRIBUNAL IN ASSESSEES OWN CA SE ON IDENTICAL FACTS AND CIRCUMSTANCES SHOULD NOT BE FOLLOWED, WE FIND THAT MECHANICAL APPLICATION OF RULE 8D IS NOT TENABLE AND THE ADDITION MADE ON THI S ACCOUNT HAS TO BE DELETED. WE ORDER SO. 23. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH, 2020 SD/- SD/- (R.K. PANDA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 05/03/2020 AKS