ACIT CIR 1, THANE V. LANXESS INDIA P.LTD, THANE

ITA 2788/MUM/2014

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6062 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Transfer pricing; Income from undisclosed sources; International transaction; Additional evidence; Corroborative evidences; Set aside
• Section: 68; 69; 144; 69C; 143(3); 133(6); 144C; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “K” MUMBAI BEFORE SHRI ABY T VARKEY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 2628/MUM/2014 Assessment Year: 2009-10 Lanxess India Private Limited, Lanxess House, Plot No. 162-164, Road No. 27, Wagle Estate, Opp. ITI College, MIDC, Thane-(West)-400604. Vs. Asst. Commissioner of Income-tax, Circle 1, 6 th floor, Asher IT Park, Road No. 16-Z, Wagle Industrial Estate, Thane. PAN No. AACCB 3880 A Appellant Respondent ITA No. 2788/MUM/2014 Assessment Year: 2009-10 Asst. Commissioner of Income-tax, Circle 1, 6 th floor, Asher IT Park, Road No. 16- Z, Wagle Industrial Estate, Thane. Vs. Lanxess India Private Limited, Lanxess House, Plot No. 162-164, Road No. 27, Wagle Estate, Opp. ITI College, MIDC, Thane-(West)-400604 PAN No. AACCB 3880 A Appellant Respondent Assessee by : Mr. Pratik Shah/ Mr. Pinnal Chandramaniya, AR Revenue by : Mr. V.K. Agarwal, CIT-DR Date of Hearing : 14/06/2022 Date of pronouncement : 18/07/2022 PER OM PRAKASH KANT, AM These cross appeals by the assessee and the directed against final assessment order dated 26/02/2014 passed by the Assistant Commissioner o (hereinafter shall be referred as section 143(3) read with section 144C(13) of the 1961 (in short ‘the Act the direction dated 20/12/2013 of the (DRP). 2. The grounds raised by the assessee in its appeal in IT 2628/Mum/2014 are reproduced as under: “1. On the facts and circumstances of the case and in law, the learned Asstt. Commissioner of Income Tax, Circle AO'Y/Addl. Commissioner of Income Tax, transfer pricing officer I(5) (the TPO") erred in making an adjustment of Rs.5,96,53,388/ in relation to the international transaction in respect o finished goods (Manufacturing segment). Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 ORDER PER OM PRAKASH KANT, AM These cross appeals by the assessee and the directed against final assessment order dated 26/02/2014 passed Commissioner of Income-tax, Circle hereinafter shall be referred as ‘the Assessing Officer section 143(3) read with section 144C(13) of the Act’) for assessment year 2009-10 the direction dated 20/12/2013 of the Ld. Dispute Resolution Panel The grounds raised by the assessee in its appeal in IT 2628/Mum/2014 are reproduced as under: On the facts and circumstances of the case and in law, the learned Asstt. Commissioner of Income Tax, Circle - 1, Thane ("the AO'Y/Addl. Commissioner of Income Tax, transfer pricing officer I(5) (the TPO") erred in making an adjustment of Rs.5,96,53,388/ in relation to the international transaction in respect of export of finished goods (Manufacturing segment). Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 2 These cross appeals by the assessee and the Revenue are directed against final assessment order dated 26/02/2014 passed tax, Circle-1, Thane Assessing Officer’) in terms of section 143(3) read with section 144C(13) of the Income-tax Act, 10, in pursuant to Dispute Resolution Panel The grounds raised by the assessee in its appeal in ITA No. On the facts and circumstances of the case and in law, the 1, Thane ("the AO'Y/Addl. Commissioner of Income Tax, transfer pricing officer - I(5) (the TPO") erred in making an adjustment of Rs.5,96,53,388/- f export of The Appellant prays that the aforesaid adjustment be deleted. 2. Without prejudice to Ground no. 1, on the facts and in the circumstances of the case and in adjustment on uncontrolled) instead of applying only to the controlled transactions of the Appellant. The Appellant prays that the AO be directed to restrict the adjustment to the controlled 3. Without prejudice to Ground no. 1 & 2, on the facts and in the circumstances of the case two methods (Transaction Net Margin Method place and then Comparable Uncontrolled Price Method ('CUP') an alternate) for calculating Arms' Length Price of international transactions and making methods followed whereas the law specifically Most Appropriate Method. The Appellant prays that the afo 4. Without prejudice to Ground no. 3, on the facts and circumstances of the case and in law, Transfer Pricing adjustment based on (using CUP method) for th third parties. The Appellant prays that the aforesaid additions be deleted Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 The Appellant prays that the aforesaid adjustment be deleted. 2. Without prejudice to Ground no. 1, on the facts and in the circumstances of the case and in law, the AO/PO erred in making an adjustment on the total turnover (i.e. controlled as well uncontrolled) instead of applying only to the controlled transactions of the Appellant. The Appellant prays that the AO be directed to restrict the adjustment to the controlled transactions of the Appellant. 3. Without prejudice to Ground no. 1 & 2, on the facts and in the circumstances of the case and in law, the AO/TO erred in applying two methods (Transaction Net Margin Method (TNMM') in the first place and then Comparable Uncontrolled Price Method ('CUP') alternate) for calculating Arms' Length Price of international transactions and making adjustment based on the higher of two methods followed whereas the law specifically requires selection of Most Appropriate Method. The Appellant prays that the aforesaid additions be deleted. 4. Without prejudice to Ground no. 3, on the facts and circumstances of the case and in law, the AO/PO erred in computing an alternative Transfer Pricing adjustment based on comparison of export prices (using CUP method) for the product sold to group companies The Appellant prays that the aforesaid additions be deleted Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 3 The Appellant prays that the aforesaid adjustment be deleted. 2. Without prejudice to Ground no. 1, on the facts and in the law, the AO/PO erred in making an the total turnover (i.e. controlled as well as uncontrolled) instead of applying only to the controlled The Appellant prays that the AO be directed to restrict the transactions of the Appellant. 3. Without prejudice to Ground no. 1 & 2, on the facts and in the and in law, the AO/TO erred in applying (TNMM') in the first place and then Comparable Uncontrolled Price Method ('CUP') as alternate) for calculating Arms' Length Price of international adjustment based on the higher of two requires selection of resaid additions be deleted. 4. Without prejudice to Ground no. 3, on the facts and circumstances the AO/PO erred in computing an alternative comparison of export prices e product sold to group companies and The Appellant prays that the aforesaid additions be deleted 5. Without prejudice to Ground no. 4, on the facts and in the circumstances of the case and in revised calculation of adjustment in the assessment the directions of Dispute Resolution Panel allowing relief for market level adjustment to calculate alternative transfer pricing adjustment. The Appellant prays that the aforesaid additions be deleted. 6. On the facts and in the circumstances of the case and in law, the AO erred in making of the Act. The Appellant prays that the aforesaid additions be deleted. 7 Without prejudice to Ground 6 above, on the fa circumstances of the case and section 69C of the Act in respect of addition of On the facts and circumstances of the case and in law, the AO erred in not allowing set off against Long Term Capital Gain of Rs The Appellant prays that the aforesaid adjustment of short term loss against long term 9. On the facts and circumstances of the case and in law, the AO erred in not granting credit withheld by Lanxess Pte. Ltd. Singapore from remittance provision of IT services. The Appellant prays that the credit for withholding tax be granted. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 5. Without prejudice to Ground no. 4, on the facts and in the circumstances of the case and in law, the AO/TO erred in not giving lation of adjustment in the assessment order based on the directions of Dispute Resolution Panel allowing relief for market adjustment to calculate alternative transfer pricing The Appellant prays that the aforesaid additions be deleted. 6. On the facts and in the circumstances of the case and in law, the AO erred in making additions of Rs. 55,44,990/- under section 69C The Appellant prays that the aforesaid additions be deleted. Without prejudice to Ground 6 above, on the facts and in the circumstances of the case and in law, the AO erred in invoking section 69C of the Act in respect of addition of Rs.55,44,990/ On the facts and circumstances of the case and in law, the AO erred in not allowing set off of short term capital loss of Rs 55,25,462/ against Long Term Capital Gain of Rs 5.27.20.000/-. The Appellant prays that the aforesaid adjustment of short term loss against long term capital gain be allowed. 9. On the facts and circumstances of the case and in law, the AO d in not granting credit for tax deducted of Rs 762,232/ withheld by Lanxess Pte. Ltd. Singapore from remittance provision of IT services. The Appellant prays that the credit for withholding tax be granted. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 4 5. Without prejudice to Ground no. 4, on the facts and in the law, the AO/TO erred in not giving order based on the directions of Dispute Resolution Panel allowing relief for market adjustment to calculate alternative transfer pricing The Appellant prays that the aforesaid additions be deleted. 6. On the facts and in the circumstances of the case and in law, the under section 69C The Appellant prays that the aforesaid additions be deleted. cts and in the in law, the AO erred in invoking Rs.55,44,990/- On the facts and circumstances of the case and in law, the AO erred loss of Rs 55,25,462/- The Appellant prays that the aforesaid adjustment of short term 9. On the facts and circumstances of the case and in law, the AO for tax deducted of Rs 762,232/- withheld by Lanxess Pte. Ltd. Singapore from remittance towards The Appellant prays that the credit for withholding tax be granted. 10. On the facts and in the circumstance in law, the AO erred in not application letters with respect to Ground no. 8 & 9 while the order under section 143(3) r.w.s. 144C(13) of the Act. 2.1 The grounds raised by the 2788/Mum/2014 are reproduced as under: 1. The Ld. DRP without appreciating the fact that the AO has rightly made the disallowance, since the assessee failed to prove the genuin the transactions in respect of negative difference of Rs. 66,90,600/ and parties who confirm with positive 2. The Ld. DRP without any supporting evidence to prove transaction disallowed by the AO. 3. Before us the assessee also preferred an additional ground letter dated 01/09/2021, which was filed on 11/11/2021 before the Registry of the Tribunal as under: “11. On the facts, in law and in circumstances of the present case, the draft assessment order dated 2009-10 under section 143(3) read with 144C(1) of the Income Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 10. On the facts and in the circumstances of the case and in law and in law, the AO erred in not giving effect to the rectification application letters with respect to Ground no. 8 & 9 while the order under section 143(3) r.w.s. 144C(13) of the Act.” grounds raised by the Revenue in its appeal 2788/Mum/2014 are reproduced as under: The Ld. DRP-III, Mumbai has allowed relief to the assessee without appreciating the fact that the AO has rightly made the disallowance, since the assessee failed to prove the genuin the transactions in respect of negative difference of Rs. 66,90,600/ and parties who confirm with positive difference of Rs.4,18,31,261/ 2. The Ld. DRP-Ill, Mumbai erred in allowing relief to the assessee without any supporting evidence to prove the genuineness of the transaction disallowed by the AO. us the assessee also preferred an additional ground letter dated 01/09/2021, which was filed on 11/11/2021 before the Tribunal. The said additional ground is reproduce On the facts, in law and in circumstances of the present case, the draft assessment order dated 28 March 2013 passed for AY 10 under section 143(3) read with 144C(1) of the Income Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 5 s of the case and in law and giving effect to the rectification application letters with respect to Ground no. 8 & 9 while passing ” in its appeal in ITA No. III, Mumbai has allowed relief to the assessee without appreciating the fact that the AO has rightly made the disallowance, since the assessee failed to prove the genuineness of the transactions in respect of negative difference of Rs. 66,90,600/- difference of Rs.4,18,31,261/- Ill, Mumbai erred in allowing relief to the assessee the genuineness of the us the assessee also preferred an additional ground vide letter dated 01/09/2021, which was filed on 11/11/2021 before the . The said additional ground is reproduced On the facts, in law and in circumstances of the present case, 28 March 2013 passed for AY 10 under section 143(3) read with 144C(1) of the Income-tax Act, 1961 (Act') and all proceedings consequent to assessment order including final 143(3) read with 144C(13) of the Act dated 26 February 2014 are void-ab-initio, illegal and bad in law since the provisions of section 144C were applicable only from AY It is the humble prayer of the Appellant that the assessment order framed without following the due 12. On the facts, in law and in circumstances of the present case, the assessment order dated 26 of the time limit prescribed under 153 of the Act and is time barred and is liable to be quashed. 3.1 As regard to the admissibility of the additional ground Counsel of the assessee submitted that legal in nature and no investigation of the fresh facts is required therefore same might Departmental Representative ground after delay of five years after filing the appe 4. We have heard rival submission of the parties on the issue of the admissibility of the additional ground. We agree with the contention of the Ld. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 Act, 1961 (Act') and all proceedings consequent to such draft assessment order including final assessment order passed u/s 143(3) read with 144C(13) of the Act dated 26 February 2014 are initio, illegal and bad in law since the provisions of section 144C were applicable only from AY 2010-11 and onwards It is the humble prayer of the Appellant that the assessment order framed without following the due procedure under law, be quashed. 12. On the facts, in law and in circumstances of the present case, the assessment order dated 26 February 2014 is passed after the expiry of the time limit prescribed under 153 of the Act and is time barred and is liable to be quashed.” regard to the admissibility of the additional ground of the assessee submitted that ground raised be legal in nature and no investigation of the fresh facts is required might be admitted for adjudication. The Departmental Representative objected for filing the additional ground after delay of five years after filing the appeal. We have heard rival submission of the parties on the issue of the admissibility of the additional ground. We agree with the Counsel of the assessee that additional ground Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 6 such draft assessment order passed u/s 143(3) read with 144C(13) of the Act dated 26 February 2014 are initio, illegal and bad in law since the provisions of section It is the humble prayer of the Appellant that the assessment order procedure under law, be quashed. 12. On the facts, in law and in circumstances of the present case, the sed after the expiry therefore, regard to the admissibility of the additional grounds, the Ld. raised being purely legal in nature and no investigation of the fresh facts is required, admitted for adjudication. The Ld. objected for filing the additional al. We have heard rival submission of the parties on the issue of the admissibility of the additional ground. We agree with the assessee that additional ground is purely of legal nature and no investigation of the fresh facts is required and therefore same decision of the Hon’ble Supreme Court in the case of CIT (1998) 229 ITR 383 (SC) DR of delay in raising the additional ground ground has been raised before hearing of the case and copy of the same was supplied to the the case, therefore we do not find any vi natural justice and, accordingly DR. We admit the additional ground for adjudication. 5. Briefly stated facts of the case are that assessee was engaged in the busin of chemical and chemical intermediaries of income for the year under consideration i.e. AY 2009 29/09/2009 declaring total income income filed by the assesse Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 purely of legal nature and no investigation of the fresh facts is required and therefore same is eligible for admission in view of the decision of the Hon’ble Supreme Court in the case of CIT (1998) 229 ITR 383 (SC). As regard to the objectio of delay in raising the additional ground, we find that additional ground has been raised before hearing of the case and copy of the supplied to the Ld. DR well in advance before hearing of therefore we do not find any violation of the principle of accordingly, we reject objection raised by the We admit the additional ground for adjudication. Briefly stated facts of the case are that during relevant year assessee was engaged in the business of manufacturing and trading cal and chemical intermediaries. The assessee f of income for the year under consideration i.e. AY 2009 29/09/2009 declaring total income at ₹9,56,52,080/ income filed by the assessee was selected for the scrutiny Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 7 purely of legal nature and no investigation of the fresh facts is eligible for admission in view of the decision of the Hon’ble Supreme Court in the case of NTPC Ltd. V. . As regard to the objection of the Ld. , we find that additional ground has been raised before hearing of the case and copy of the ce before hearing of olation of the principle of we reject objection raised by the Ld. We admit the additional ground for adjudication. during relevant year the ess of manufacturing and trading . The assessee filed return of income for the year under consideration i.e. AY 2009-10 on 080/-. The return of e was selected for the scrutiny assessment and statutory notices under the complied with. During scrutiny proceedings, the noted the international transactions carried out by the assessee company and therefore determin international transactions was referred to the Officer (TPO). The Ld. a transfer pricing adjustment of order of the Ld. TPO, the order on 28/03/2013 adjustment, the Assessing Officer of un-verified purchases amounting to filed objection against the draft assessment order before the DRP. The Ld. DRP, after taking into consideration remand report from the AO/TPO on the additional evidence assessee, issued direction to the 20/12/2013. Pursuant to the direction of the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 assessment and statutory notices under the Act were issued and complied with. During scrutiny proceedings, the Assessing Officer noted the international transactions carried out by the assessee company and therefore determination of arms length price of said international transactions was referred to the Ld. Transfer Pricing Ld. TPO in his order dated 28/01/2013 proposed a transfer pricing adjustment of ₹5,96,53,388/-. After receipt of the TPO, the Assessing Officer issued a draft assessment order on 28/03/2013, wherein in addition to the transfer pricing Assessing Officer also proposed addition in respect verified purchases amounting to ₹5,62,65,098/ led objection against the draft assessment order before the , after taking into consideration remand report from the AO/TPO on the additional evidences submitted by the assessee, issued direction to the Assessing Officer vide 20/12/2013. Pursuant to the direction of the Ld. DRP, the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 8 were issued and Assessing Officer noted the international transactions carried out by the assessee ation of arms length price of said Transfer Pricing TPO in his order dated 28/01/2013 proposed . After receipt of the issued a draft assessment , wherein in addition to the transfer pricing also proposed addition in respect 98/-. The assessee led objection against the draft assessment order before the Ld. , after taking into consideration remand report submitted by the vide order dated DRP, the Assessing Officer has passed the impugned assessment order after making transfer pricing adjustment of unexplained expenditure of assessee and the Revenue the grounds as reproduced 5. The assessee has filed pages 1 to 677. 6. In respect of the additional ground, the assessee submitted that draft assessment order dated 28/03/2013 under section 143(3) read with section 144C(1) and final assessment order dated 26/02/2014 under section 143(3) read with section 144C(13) of the provisions of section 144C are applicable only from assessment year 2010-11 and onwards. He submitted that in view of non applicability of section 14 Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 has passed the impugned assessment order after making transfer pricing adjustment of ₹5,96,53,388/-and disallowance of unexplained expenditure of ₹55,44,990/-. Aggrieved both the Revenue are before the Tribunal by way of raising reproduced above. The assessee has filed a paperbook in two volumes containing In respect of the additional ground, the Ld. submitted that draft assessment order dated 28/03/2013 under section 143(3) read with section 144C(1) and final assessment order dated 26/02/2014 under section 143(3) read with section 144C(13) of the Act are void ab initio provisions of section 144C are applicable only from assessment year 11 and onwards. He submitted that in view of non of section 144C, the assessment was to be completed Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 9 has passed the impugned assessment order after making and disallowance of . Aggrieved both the by way of raising paperbook in two volumes containing Counsel of the submitted that draft assessment order dated 28/03/2013 under section 143(3) read with section 144C(1) and final assessment order dated 26/02/2014 under section 143(3) read void ab initio, because provisions of section 144C are applicable only from assessment year 11 and onwards. He submitted that in view of non- , the assessment was to be completed within the limitation provided for scrutiny cases under section 143(3) of the Act, whereas the assessment has been completed after the said limitation provided under section 153 of the assessments are time Counsel referred to 03/06/2010, wherein i shall apply from assessment year 2010 referred to decision of Hon’ble Vedanta Ltd Vs ACIT in writ Petition No. 1729 of 2011 submitted that provisions of section 14 applicable from assessment year 2010 Court. 7. The Ld. DR on the other hand submitted that the section 144C has provided change in procedure of assessment in case of c category of assessees. The section has not created any obligation tax liability and therefore Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 within the limitation provided for scrutiny cases under section , whereas the assessment has been completed after the said limitation provided under section 153 of the assessments are time-barred and liable to be quashed. The para 45.5 of the Circular No. 5/2010 dated wherein it was explained that section 14 shall apply from assessment year 2010-11. The Ld. referred to decision of Hon’ble Madras High Court in the case of Vedanta Ltd Vs ACIT in writ Petition No. 1729 of 2011 provisions of section 144C have been held to be om assessment year 2010-11 only by the Hon’ble High DR on the other hand submitted that the section 144C has provided change in procedure of assessment in case of c category of assessees. The section has not created any obligation tax liability and therefore, the amendment was in the nature of Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 10 within the limitation provided for scrutiny cases under section , whereas the assessment has been completed after the said limitation provided under section 153 of the Act, therefore barred and liable to be quashed. The Ld. No. 5/2010 dated t was explained that section 144C of the Act Ld. Counsel also High Court in the case of Vedanta Ltd Vs ACIT in writ Petition No. 1729 of 2011 and 4C have been held to be 11 only by the Hon’ble High DR on the other hand submitted that the section 144C has provided change in procedure of assessment in case of certain category of assessees. The section has not created any obligation of , the amendment was in the nature of only a procedural change. specifically lays down that changed procedure assessment order for eligible assessee income or loss returned, October 2009. Further he submitted that Hon’ble in Writ Petition No. Television Private Limited Hon’ble Andhra Pradesh High Court in the case of Limited Vs Asst Commissioner of Income of 5557 of 2012 dated 21.02.2 referring to memorandum explaining the Finance Bill section 144C would take effect from 01/10/2009. Therefore according to the Ld. in the case of Vijay Television Pri law clearly and same should be followed and the subsequent decision in Vedanta Ltd. (supra), cited by assessee, the Hon’ble High Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 procedural change. He submitted that section 144C(1) of the specifically lays down that changed procedure of forwarding draft assessment order for eligible assessee in case of variation in the income or loss returned, is to be followed on after the first day of October 2009. Further he submitted that Hon’ble Madras No. 1526 and 1527 of 2014 in the case of Vijay Television Private Limited has affirmed the decision of the Hon’ble Andhra Pradesh High Court in the case of Limited Vs Asst Commissioner of Income-tax Circle 2(1) in WP of 5557 of 2012 dated 21.02.2013. The Hon’ble High Court referring to memorandum explaining the Finance Bill section 144C would take effect from 01/10/2009. Therefore DR, the decision of Hon’ble Madras Television Private Limited has laid down the d same should be followed and the subsequent decision in Vedanta Ltd. (supra), cited by assessee, the Hon’ble High Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 11 He submitted that section 144C(1) of the Act of forwarding draft in case of variation in the on after the first day of Madras High Court 1526 and 1527 of 2014 in the case of Vijay has affirmed the decision of the Hon’ble Andhra Pradesh High Court in the case of Zuari Cement Circle 2(1) in WP The Hon’ble High Court referring to memorandum explaining the Finance Bill, has held that section 144C would take effect from 01/10/2009. Therefore, Madras High Court has laid down the d same should be followed and the subsequent decision in Vedanta Ltd. (supra), cited by assessee, the Hon’ble High Court of Madras has not taken into consideration the decision in the case of Vijay Television Pv case of Vedanta Ltd. might be ignored. 8. We have heard rival submission dispute and perused the relevant material on record. The only dispute raised in ground assessment for certain category of ass 144C would be applicable from 01/10/2009 or from assessment year 2010-11. By way of section 144 mechanism has been specific conditions. Those assessees have been categori eligible assessees. Under this mechanism assessees, if there is a variation in assessed income or loss as compared to the returned income or loss of the assessee, then instead of p provided under section 143(3) of the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 Court of Madras has not taken into consideration the decision in the case of Vijay Television Pvt. Ltd. (supra), therefore, finding in the case of Vedanta Ltd. might be ignored. We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. The only dispute raised in ground before us is whether procedure of assessment for certain category of assessees specified in section 4C would be applicable from 01/10/2009 or from assessment By way of section 144C, alternative dispute resolution has been introduced for certain assessees, wh . Those assessees have been categori eligible assessees. Under this mechanism, in case of eligible , if there is a variation in assessed income or loss as compared to the returned income or loss prejudicial of the assessee, then instead of passing final assessment order [ provided under section 143(3) of the Act], the Assessing Officer Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 12 Court of Madras has not taken into consideration the decision in the t. Ltd. (supra), therefore, finding in the of the parties on the issue in dispute and perused the relevant material on record. The only whether procedure of essees specified in section 4C would be applicable from 01/10/2009 or from assessment C, alternative dispute resolution n assessees, who satisfied . Those assessees have been categorized as , in case of eligible , if there is a variation in assessed income or loss as prejudicial to the interest assing final assessment order [as Assessing Officer is required to pass a draft assessment order. Against said draft assessment order, the assessee objections before Dispute Resolution Panel three officers of the rank of Commissioner of DRP is required to dispose off said objections within specified period. Thus, by way of procedure of assessment has been modified for cert the assessees. For ready reference, the said section 144C(1) reproduced as under: “144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forwards a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible as or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee.” 8.1 Thus, according to the section, notwithstanding anything contrary in the Act, the the procedure of forwarding draft assessment order Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 required to pass a draft assessment order. Against said draft the assessee has been given the option to file Dispute Resolution Panel (DRP) (which consist of three officers of the rank of Commissioner of Income Tax DRP is required to dispose off said objections within specified period. Thus, by way of this provision under section 144C procedure of assessment has been modified for cert For ready reference, the said section 144C(1) reproduced as under: 144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forwards a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such according to the section, notwithstanding anything the Assessing Officer has been directed to follow the procedure of forwarding draft assessment order Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 13 required to pass a draft assessment order. Against said draft has been given the option to file which consist of Income Tax). The Ld. DRP is required to dispose off said objections within specified is provision under section 144C, procedure of assessment has been modified for certain category of For ready reference, the said section 144C(1) is 144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forwards a draft of the proposed order of assessment (hereafter in this section referred to if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such according to the section, notwithstanding anything has been directed to follow the procedure of forwarding draft assessment order in case of certain category of assessees, who have been defined as eligible assessee, if the Assessing Officer day of October 2009 to very prejudicial to the interest of such assessee (No.2), 2009, the legislat change of assessment with effect fr 8.2 However, the Central Board of Circular No. 5/2010 dated 03/06/2010 issued explanatory notes to the provisions of the Finance (No. 2) mentioned the applicability of said provision, wh 45.5 Applicability with effect from 1 relation to assessment year 2010 years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958(E) dated 20* November, 2009. 8.3 However subsequently, the CBDT issued clarification circular No. 9/ 2013 dated 19 Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 certain category of assessees, who have been defined as eligible Assessing Officer proposes on or after the first day of October 2009 to very returned income or loss, prejudicial to the interest of such assessee. By the Finance Act the legislature has introduced above change of assessment with effect from 01/10/2009. However, the Central Board of Direct Taxes No. 5/2010 dated 03/06/2010 issued explanatory notes to the provisions of the Finance (No. 2) Act, 2009, wherein para 45.5 mentioned the applicability of said provision, which reads as under: Applicability - These amendments have been made applicable with effect from 1 st October, 2009, and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958(E) dated 20* November, 2009. subsequently, the CBDT issued clarification circular No. 9/ 2013 dated 19 th No. 2013 wherein withdrawn th Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 14 certain category of assessees, who have been defined as eligible proposes on or after the first returned income or loss, which is By the Finance Act above procedural Direct Taxes (CBDT) vide No. 5/2010 dated 03/06/2010 issued explanatory notes to , wherein para 45.5 ich reads as under: These amendments have been made applicable will accordingly apply in and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. subsequently, the CBDT issued clarification vide No. 2013 wherein withdrawn this para 45.5 of circular No. 5/2010 dated 03/06/2010. For ready reference, said circular is reproduced as under: 45.5 Applicability: These amendments have been made applicable with effect from 1s October, 2009 and will accordingly apply in relation to assessment year 2010 Dispute Resolution Panel Rules have been notified by S.O. No. 2958 (E) dated 20th November, 2009." In the above extracted Para 45.5 there has been an inadvertent error in stating the applicability of vide Finance (No.2) Act, 2009 that amendments will apply in relation to the assessment year 2010 Accordingly, para 45.5 is replaced with the following: "45.5. Applicability: Secti 1st April, 2009. Accordingly, the Assessing Officer is required to forward a draft proposes to make, on or after in the income or loss returned which such assessee. In other words section 144C is which proposes to make variation in income or loss eligible assessee, on or after 1st October, 2009 irrespec assessment year to which it pertains. Amendments to other sections of the Income-tax Act referred to in para 45.3 of the circular 5/2010 dated 3rd June, Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 para 45.5 of circular No. 5/2010 dated 03/06/2010. For ready reference, said circular is reproduced as under: 45.5 Applicability: These amendments have been made applicable with effect from 1s October, 2009 and will accordingly apply in relation to ssment year 2010-11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958 (E) dated 20th November, 2009." In the above extracted Para 45.5 there has been an inadvertent error in stating the applicability of the provisions of section 144C inserted vide Finance (No.2) Act, 2009 that amendments will apply in relation to the assessment year 2010-11 and subsequent assessment years. Accordingly, para 45.5 is replaced with the following: "45.5. Applicability: Section 144C has been inserted with effect from 2009. Accordingly, the Assessing Officer is required to forward a draft assessment order to the eligible assessee, if he proposes to make, on or after the Is day of October, 2009, any variation ncome or loss returned which is prejudicial to the interest of such assessee. In other words section 144C is applicable to any order which proposes to make variation in income or loss returned by an eligible assessee, on or after 1st October, 2009 irrespec assessment year to which it pertains. Amendments to other sections of tax Act referred to in para 45.3 of the circular 5/2010 dated 3rd June, 2010 shall also apply from 1st October, 2009" Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 15 para 45.5 of circular No. 5/2010 dated 03/06/2010. For ready 45.5 Applicability: These amendments have been made applicable with effect from 1s October, 2009 and will accordingly apply in relation to 11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958 (E) In the above extracted Para 45.5 there has been an inadvertent error the provisions of section 144C inserted vide Finance (No.2) Act, 2009 that amendments will apply in relation 11 and subsequent assessment years. on 144C has been inserted with effect from 2009. Accordingly, the Assessing Officer is required to assessment order to the eligible assessee, if he the Is day of October, 2009, any variation is prejudicial to the interest of applicable to any order returned by an eligible assessee, on or after 1st October, 2009 irrespective of the assessment year to which it pertains. Amendments to other sections of tax Act referred to in para 45.3 of the circular 5/2010 2010 shall also apply from 1st October, 2009" 8.4 In the case before the Hon’ble Andhra Pra the case of Zuari Cement Ltd versus Asst Commissioner of Tax (supra), the Assessing Officer down under section 144C of the assessment order, straightway issued a f 22/12/2011. The assessee filed writ petition before the Hon’ble division bench of Andhra Pradesh High Court challenging the final assessment order passed by the Hon’ble High Court, on behalf of the view of CBDT Circular 144C was to apply only from the assessment year 2010 years. The Hon’ble High Court rejected the contention of the is not tenable. The Hon’ble High Court referred to the memorandum explaining the Finance Bill in the notes and clauses accompanying the Finance Bill and held that amendment relating to section 144C of Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 the case before the Hon’ble Andhra Pradesh High Court in the case of Zuari Cement Ltd versus Asst Commissioner of Assessing Officer did not comply the procedure laid down under section 144C of the Act and instead of issuing draft assessment order, straightway issued a final assessment order on 22/12/2011. The assessee filed writ petition before the Hon’ble division bench of Andhra Pradesh High Court challenging the final assessment order passed by the Assessing Officer Hon’ble High Court, on behalf of the Revenue it was argued that in Circular No. 5/2010, the procedure under section 4C was to apply only from the assessment year 2010 years. The Hon’ble High Court vide decision dated 21.03.2013 the contention of the Revenue and held that said argument is not tenable. The Hon’ble High Court referred to the memorandum explaining the Finance Bill in the notes and clauses accompanying the Finance Bill and held that amendment relating to section 144C of Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 16 desh High Court in the case of Zuari Cement Ltd versus Asst Commissioner of Income did not comply the procedure laid and instead of issuing draft inal assessment order on 22/12/2011. The assessee filed writ petition before the Hon’ble division bench of Andhra Pradesh High Court challenging the final Assessing Officer. Before the it was argued that in the procedure under section 4C was to apply only from the assessment year 2010-11 and later decision dated 21.03.2013 and held that said argument is not tenable. The Hon’ble High Court referred to the memorandum explaining the Finance Bill in the notes and clauses accompanying the Finance Bill and held that amendment relating to section 144C of the Act would take effect f Hon’ble High Court held the assessment order to the mandatory provisi finding of the Hon’ble High Court is reproduced as under: “A reading of the above section proposes to make, on or after 01.10.2009, any variation in the income or loss returned by an assessee, then, notwithstanding anything to the contrary contained in the Act, he shall first pass a draft assessment order, forward it to the assessee and after the assessee files his objections, if any, the assessing officer shall complete assessment within one month. The assessee is also given an option to file objections before the Dispute Resolution Panel in which event the l directions for the guidance of the Assessing Officer to enable him to complete the assessment. In the case of the petitioner, admittedly the TPO suggested an adjustment of Rs.52.14 crores u/s.92CA of the Act on 20.09.2011 and forwarded it t section (3) thereof. The assessing officer accepted the variation submitted by the TPO without giving the petitioner any opportunity to object to it and passed the impugned assessment order. As this has occurred after 01.10.2009, the cut off date prescribed in sub (1) of S.144C, the Assessing Officer is mandated to first pass a draft assessment order, communicate it to the assessee, hear his objections and then complete assessment. Admittedly, th Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 would take effect from 01/10/2009. Accordingly Hon’ble High Court held the assessment order issued was to the mandatory provision of section 144C of the Act finding of the Hon’ble High Court is reproduced as under: A reading of the above section shows that if the assessing officer proposes to make, on or after 01.10.2009, any variation in the income or loss returned by an assessee, then, notwithstanding anything to the contrary contained in the Act, he shall first pass a draft assessment rward it to the assessee and after the assessee files his objections, if any, the assessing officer shall complete assessment within one month. The assessee is also given an option to file objections before the Dispute Resolution Panel in which event the latter can issue directions for the guidance of the Assessing Officer to enable him to complete the assessment. In the case of the petitioner, admittedly the TPO suggested an adjustment of Rs.52.14 crores u/s.92CA of the Act on 20.09.2011 and forwarded it to the Assessing Officer and to the assessee under sub section (3) thereof. The assessing officer accepted the variation submitted by the TPO without giving the petitioner any opportunity to object to it and passed the impugned assessment order. As this has occurred after 01.10.2009, the cut off date prescribed in sub (1) of S.144C, the Assessing Officer is mandated to first pass a draft assessment order, communicate it to the assessee, hear his objections and then complete assessment. Admittedly, this has not been done and Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 17 rom 01/10/2009. Accordingly, the issued was contrary on of section 144C of the Act. The relevant finding of the Hon’ble High Court is reproduced as under: shows that if the assessing officer proposes to make, on or after 01.10.2009, any variation in the income or loss returned by an assessee, then, notwithstanding anything to the contrary contained in the Act, he shall first pass a draft assessment rward it to the assessee and after the assessee files his objections, if any, the assessing officer shall complete assessment within one month. The assessee is also given an option to file objections atter can issue directions for the guidance of the Assessing Officer to enable him to In the case of the petitioner, admittedly the TPO suggested an adjustment of Rs.52.14 crores u/s.92CA of the Act on 20.09.2011 and o the Assessing Officer and to the assessee under sub- section (3) thereof. The assessing officer accepted the variation submitted by the TPO without giving the petitioner any opportunity to object to it and passed the impugned assessment order. As this has occurred after 01.10.2009, the cut off date prescribed in sub-section (1) of S.144C, the Assessing Officer is mandated to first pass a draft assessment order, communicate it to the assessee, hear his objections is has not been done and the respondent has passed a final assessment order dated 22.12.2011 straight away. Therefore, the impugned order of assessment is clearly contrary to S.144C of the Act and is without jurisdiction, null and void. The contention of t has clarified that the provisions of S.144C shall not apply for the assessment year 2008 year 2010-2011 and later years is not tenable in as much as the language of Sub date of 01.10.2009 indicates an intention of the legislature to make it applicable, if there is a proposal by the Assessing Officer to make a variation in the income or loss returned by the assessee which is prejudicial to the assessee, after 01.10.2009. Therefore, this particular provision introduced by above condition is satisfied and other provisions, in which similar contrary intention is not indicated, which were introduced by the said enactment, would apply from 01.04.2009 i.e., from the assessment year 2010-2011. It is not disputed that the memo and the Notes and clauses accompanying the Finance Bill which preceded the Finance (No.2) Act amendments relating to S.144C would take ef our view, the circular No.5/2010 issued byt he CBDT stating that S.144C(1) would apply only from the assessment year 2010 subsequent years and not for the assessment year 2008 to the express language in S.14 is unacceptable. The circular may represent only the understanding of the Board/Central Government of the statutory provisions, but it will Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 the respondent has passed a final assessment order dated 22.12.2011 straight away. Therefore, the impugned order of assessment is clearly contrary to S.144C of the Act and is without jurisdiction, null and void. The contention of the Revenue that the circular No.5/2010 of the CBDT has clarified that the provisions of S.144C shall not apply for the assessment year 2008-09 and would apply only from the assessment 2011 and later years is not tenable in as much as the of Sub-section (1) of Section 144C referring to the cut off date of 01.10.2009 indicates an intention of the legislature to make it applicable, if there is a proposal by the Assessing Officer to make a riation in the income or loss returned by the assessee which is prejudicial to the assessee, after 01.10.2009. Therefore, this particular provision introduced by Finance (No.2) Act, 2009, would apply if above condition is satisfied and other provisions, in which similar contrary intention is not indicated, which were introduced by the said enactment, would apply from 01.04.2009 i.e., from the assessment year It is not disputed that the memorandum explaining the Finance Bill and the Notes and clauses accompanying the Finance Bill which Finance (No.2) Act, 2009 clearly indicated that the amendments relating to S.144C would take effect from 01.10.2009. In our view, the circular No.5/2010 issued byt he CBDT stating that S.144C(1) would apply only from the assessment year 2010 subsequent years and not for the assessment year 2008-09 is contrary to the express language in S.144C(1) and the said view of the Revenue is unacceptable. The circular may represent only the understanding of the Board/Central Government of the statutory provisions, but it will Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 18 the respondent has passed a final assessment order dated 22.12.2011 straight away. Therefore, the impugned order of assessment is clearly contrary to S.144C of the Act and is without jurisdiction, null and void. he Revenue that the circular No.5/2010 of the CBDT has clarified that the provisions of S.144C shall not apply for the 09 and would apply only from the assessment 2011 and later years is not tenable in as much as the referring to the cut off date of 01.10.2009 indicates an intention of the legislature to make it applicable, if there is a proposal by the Assessing Officer to make a riation in the income or loss returned by the assessee which is prejudicial to the assessee, after 01.10.2009. Therefore, this particular , 2009, would apply if the above condition is satisfied and other provisions, in which similar contrary intention is not indicated, which were introduced by the said enactment, would apply from 01.04.2009 i.e., from the assessment year randum explaining the Finance Bill and the Notes and clauses accompanying the Finance Bill which , 2009 clearly indicated that the fect from 01.10.2009. In our view, the circular No.5/2010 issued byt he CBDT stating that S.144C(1) would apply only from the assessment year 2010-2011 and 09 is contrary 4C(1) and the said view of the Revenue is unacceptable. The circular may represent only the understanding of the Board/Central Government of the statutory provisions, but it will not bind this Court or the Supreme Court. It cannot interfere with the jurisdiction and power of this Court to declare what the legislature says and take a view contrary to that declared in the circular of the CBDT (Ratan Melting and Wire Industries Case (1 Supra), Indra Industries (2 supra). The Revenue has not been able to pursua take a contra view by citing any authority. In this view of the matter, we are of the view that the impugned order of assessment dated 23.12.2011 passed by the respondent is contrary to the mandatory provisions of S.144C of the Act and is passed i violation thereof. Therefore, it is declared as one without jurisdiction, null and void and unenforceable. Consequently, the demand notice dated 23.12.2011 issued by the respondent is set aside. 8.5 Subsequently, identical issue of non procedure laid down under section 144C of the the single bench judge of Hon’ble Vijay Television private Limited (supra), wherein the Hon’ble High Court vide decision dated 29.04.2014 case of Zuari cement Ltd (supra) and held as under: “32. As against this order of the Division Bench of the Andhra Pradesh High Court, the Revenue went on appeal before the Honourable Supreme Court. The record of proceedings of the Supreme Court indicate that the Special Leave Petition was dismissed on 27.09.2013. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 not bind this Court or the Supreme Court. It cannot interfere with the iction and power of this Court to declare what the legislature says and take a view contrary to that declared in the circular of the CBDT (Ratan Melting and Wire Industries Case (1 Supra), Indra Industries (2 supra). The Revenue has not been able to pursua take a contra view by citing any authority. In this view of the matter, we are of the view that the impugned order of assessment dated 23.12.2011 passed by the respondent is contrary to the mandatory provisions of S.144C of the Act and is passed i violation thereof. Therefore, it is declared as one without jurisdiction, null and void and unenforceable. Consequently, the demand notice dated 23.12.2011 issued by the respondent is set aside.” Subsequently, identical issue of non-compliance of the procedure laid down under section 144C of the Act the single bench judge of Hon’ble Madras High Court in the case of Vijay Television private Limited (supra), wherein the Hon’ble High decision dated 29.04.2014, followed the findi case of Zuari cement Ltd (supra) and held as under: 32. As against this order of the Division Bench of the Andhra Pradesh High Court, the Revenue went on appeal before the Honourable Supreme Court. The record of proceedings of the Supreme Court indicate that the Special Leave Petition was dismissed on 27.09.2013. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 19 not bind this Court or the Supreme Court. It cannot interfere with the iction and power of this Court to declare what the legislature says and take a view contrary to that declared in the circular of the CBDT (Ratan Melting and Wire Industries Case (1 Supra), Indra Industries (2 supra). The Revenue has not been able to pursuade us to In this view of the matter, we are of the view that the impugned order of assessment dated 23.12.2011 passed by the respondent is contrary to the mandatory provisions of S.144C of the Act and is passed in violation thereof. Therefore, it is declared as one without jurisdiction, null and void and unenforceable. Consequently, the demand notice compliance of the Act came up before High Court in the case of Vijay Television private Limited (supra), wherein the Hon’ble High , followed the finding in the 32. As against this order of the Division Bench of the Andhra Pradesh High Court, the Revenue went on appeal before the Honourable Supreme Court. The record of proceedings of the Supreme Court indicate that the Special Leave Petition was dismissed on 27.09.2013. 33. The decision of the Division Bench of the Andhra Pradesh High Court deals with an identical issue as that of the present case. In this case, against the order passed by the second re the petitioner filed objections before the DRP, the first respondent herein and the first respondent refused to entertain it by stating that the order passed by the second respondent is a final order and it had jurisdiction to enter order. While so, the order dated 26.03.2013 of the second respondent can only be termed as a final order and in such event it is contrary to Section 144C dated 26.03.2013, the second respondent determined the taxable amount and also imposed penalty payable by the petitioner. According to the learned senior counsel for the petitioners, even as on this date, the website of the department indicate the amount determined by the second respondent payable by the company inspite of issuance of the corrigendum on 15.04.2013 as a tax due amount. Thus, while issuing the corrigendum, the second respondent did not even wi taxable amount determined by him or updated the status in the website. In any event, such an order dated 26.03.2013 passed by the second respondent can only be construed as a final order passed in violation of the statutory provisions of the Act 15.04.2013 is also beyond the period prescribed for limitation. Such a defect or failure on the part of the second respondent to adhere to the statutory provisions is not a curable defect by virtue of the corrigendum dated 15.04.201 respondents cannot be allowed to develop their own case. Therefore, following the order passed by the Division Bench of the Andhra Pradesh High Court, which was also affirmed by the Honourable Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 33. The decision of the Division Bench of the Andhra Pradesh High Court deals with an identical issue as that of the present case. In this case, against the order passed by the second respondent on 26.03.2013, the petitioner filed objections before the DRP, the first respondent herein and the first respondent refused to entertain it by stating that the order passed by the second respondent is a final order and it had jurisdiction to entertain objections only if it is a draft assessment order. While so, the order dated 26.03.2013 of the second respondent can only be termed as a final order and in such event it is contrary Section 144C of the Act. As mentioned supra, in and by the order dated 26.03.2013, the second respondent determined the taxable amount and also imposed penalty payable by the petitioner. According to the learned senior counsel for the petitioners, even as on this date, he website of the department indicate the amount determined by the second respondent payable by the company inspite of issuance of the corrigendum on 15.04.2013 as a tax due amount. Thus, while issuing the corrigendum, the second respondent did not even wi taxable amount determined by him or updated the status in the website. In any event, such an order dated 26.03.2013 passed by the second respondent can only be construed as a final order passed in violation of the statutory provisions of the Act. The corrigendum dated 15.04.2013 is also beyond the period prescribed for limitation. Such a defect or failure on the part of the second respondent to adhere to the statutory provisions is not a curable defect by virtue of the corrigendum dated 15.04.2013. By issuing the corrigendum, the respondents cannot be allowed to develop their own case. Therefore, following the order passed by the Division Bench of the Andhra Pradesh High Court, which was also affirmed by the Honourable Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 20 33. The decision of the Division Bench of the Andhra Pradesh High Court deals with an identical issue as that of the present case. In this spondent on 26.03.2013, the petitioner filed objections before the DRP, the first respondent herein and the first respondent refused to entertain it by stating that the order passed by the second respondent is a final order and it had tain objections only if it is a draft assessment order. While so, the order dated 26.03.2013 of the second respondent can only be termed as a final order and in such event it is contrary the Act. As mentioned supra, in and by the order dated 26.03.2013, the second respondent determined the taxable amount and also imposed penalty payable by the petitioner. According to the learned senior counsel for the petitioners, even as on this date, he website of the department indicate the amount determined by the second respondent payable by the company inspite of issuance of the corrigendum on 15.04.2013 as a tax due amount. Thus, while issuing the corrigendum, the second respondent did not even withdraw the taxable amount determined by him or updated the status in the website. In any event, such an order dated 26.03.2013 passed by the second respondent can only be construed as a final order passed in . The corrigendum dated 15.04.2013 is also beyond the period prescribed for limitation. Such a defect or failure on the part of the second respondent to adhere to the statutory provisions is not a curable defect by virtue of the 3. By issuing the corrigendum, the respondents cannot be allowed to develop their own case. Therefore, following the order passed by the Division Bench of the Andhra Pradesh High Court, which was also affirmed by the Honourable Supreme Court by dismissing on 27.09.2013, the orders, which are impugned in these writ petitions are liable to be set aside. 8.6 Subsequent to the above decisions, Hon’ble single of Madras High Court in the case of M/s Vedanta Ltd (supra) on 22/10/2019, held that section 14 year 2010-11 only. The relevant finding of the Hon’ble High Court is reproduced as under: “20. The Dispute Resolution Panel (DRP) was const alternate dispute resolution mechanism, to provide a specialized forum for expeditious disposal of disputes. An assessment involving transfer pricing disputes, is thus taken out of regular track and a fast track dispute mechanism evolved befor Commissioners. The Explanatory Circular makes it clear that the scheme of assessment under A.Y.2010-11 and subsequent assessment years only. Court is not bound by the Explanatory Circular, though necessary weightage will have to be accorded to the explanation set forth by the Board, immediate and proximate to the insertion of the provision itself, in order to understand the appl inserted provision. 21. Even otherwise, the settled position of law as set out in the case of Karimtharuvi (supra) is to the effect that Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 Supreme Court by dismissing the Special Leave Petition filed thereof, on 27.09.2013, the orders, which are impugned in these writ petitions are liable to be set aside.” to the above decisions, Hon’ble single High Court in the case of M/s Vedanta Ltd (supra) on held that section 144C is effective from assessment 11 only. The relevant finding of the Hon’ble High Court is reproduced as under: 20. The Dispute Resolution Panel (DRP) was constituted as an alternate dispute resolution mechanism, to provide a specialized forum for expeditious disposal of disputes. An assessment involving transfer pricing disputes, is thus taken out of regular track and a fast track dispute mechanism evolved before a panel of three Senior Commissioners. The Explanatory Circular makes it clear that the scheme of assessment under Section 144C will apply in relation to 11 and subsequent assessment years only. No doubt, this Court is not bound by the Explanatory Circular, though necessary weightage will have to be accorded to the explanation set forth by the Board, immediate and proximate to the insertion of the provision itself, in order to understand the applicability, scope and width of the newly inserted provision. 21. Even otherwise, the settled position of law as set out in the case of Karimtharuvi (supra) is to the effect that Income Tax Act Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 21 the Special Leave Petition filed thereof, on 27.09.2013, the orders, which are impugned in these writ petitions to the above decisions, Hon’ble single Bench Judge High Court in the case of M/s Vedanta Ltd (supra) on 4C is effective from assessment 11 only. The relevant finding of the Hon’ble High Court is ituted as an alternate dispute resolution mechanism, to provide a specialized forum for expeditious disposal of disputes. An assessment involving transfer pricing disputes, is thus taken out of regular track and a fast e a panel of three Senior Commissioners. The Explanatory Circular makes it clear that the will apply in relation to No doubt, this Court is not bound by the Explanatory Circular, though necessary weightage will have to be accorded to the explanation set forth by the Board, immediate and proximate to the insertion of the provision itself, icability, scope and width of the newly 21. Even otherwise, the settled position of law as set out in the case of Income Tax Act, as it stands amended on the first day of April of any financial year, must apply to the assessments of that year. Any amendment in the Act which comes into force after the first day of April of a financial year would not apply to an assessment for that year, even if t finalized subsequent to the coming into force of the amendment. (see paragrah 6 of Karimtharuvi (supra)). 22. Section 144 C is extracted below to the extent to which it is relevant. 'Reference to dispute resolution panel. 144C (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if h after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee.' 23. Sub-section (2) states that on receipt of the draft order, the assessee shall, within 30 objections to the same before DRP. Sub Assessing Officer shall complete the assessment on the basis of the draft order, if the assessee intimates acceptance of the variations to him or if no objections are received within 30 days. Sub states that, in any event, the Assessing Officer shall complete the assessment by way of final order of assessment to be passed within one month from the end of the month in which either a assessee is received, or the period of filing of objections expires. Sub section (5) onwards deal with the hearing of the objections before the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 amended on the first day of April of any financial year, must apply to the assessments of that year. Any amendment in the Act which comes into force after the first day of April of a financial year would not apply to an assessment for that year, even if the assessment were to be finalized subsequent to the coming into force of the amendment. (see paragrah 6 of Karimtharuvi (supra)). 22. Section 144 C is extracted below to the extent to which it is 'Reference to dispute resolution panel. The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee.' section (2) states that on receipt of the draft order, the assessee shall, within 30 days either file acceptance of the variations or objections to the same before DRP. Sub-section (3) states that the Assessing Officer shall complete the assessment on the basis of the draft order, if the assessee intimates acceptance of the variations to im or if no objections are received within 30 days. Sub states that, in any event, the Assessing Officer shall complete the assessment by way of final order of assessment to be passed within one month from the end of the month in which either acceptance from the assessee is received, or the period of filing of objections expires. Sub section (5) onwards deal with the hearing of the objections before the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 22 amended on the first day of April of any financial year, must apply to the assessments of that year. Any amendment in the Act which comes into force after the first day of April of a financial year would not apply he assessment were to be finalized subsequent to the coming into force of the amendment. (see 22. Section 144 C is extracted below to the extent to which it is The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to e proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee.' section (2) states that on receipt of the draft order, the days either file acceptance of the variations or section (3) states that the Assessing Officer shall complete the assessment on the basis of the draft order, if the assessee intimates acceptance of the variations to im or if no objections are received within 30 days. Sub-section (4) states that, in any event, the Assessing Officer shall complete the assessment by way of final order of assessment to be passed within one cceptance from the assessee is received, or the period of filing of objections expires. Sub- section (5) onwards deal with the hearing of the objections before the DRP and sub-section (10), states that every direction issued by the DRP shall be binding on t states that upon receipt of the directions of the DRP, the Assessing Authority shall pass an order of assessment in conformity with the directions issued. Thus by virtue of insertion of legislature has put in place a distinct, new scheme of assessment in regard to a specified class of assessees. 24. The question as to whether the amendment or change brought about by Section 144C answered by the narration of the Scheme o noticed above. No doubt, assessment. But can it be called a mere shift in procedure? I believe not as that would be an oversimplification of the matter. The procedure inserted is substantive, in that it offers a new scheme of assessment to a distinct class of ass involve the issues of Transfer Pricing and determination of Arms Length Price. The provisions of prescribe procedure but a 25. The Supreme Court in the case of R.Sharadamma (supra) after considering an earlier judgment of the Supreme Court in the case of Commissioner of Income Tax V. Dhadi follows: '5. The assessee filed appeals before the Tribunal contending that by virtue of the amendment effect by 1970, the Inspecting Assistant proceed with the said penalty proceedings with effect from April 1, 1971 inasmuch as in the said cases, the amount of income in respect of Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 section (10), states that every direction issued by the DRP shall be binding on the Assessing Officer. Sub-section (13) thereafter states that upon receipt of the directions of the DRP, the Assessing Authority shall pass an order of assessment in conformity with the directions issued. Thus by virtue of insertion of Section 144C legislature has put in place a distinct, new scheme of assessment in regard to a specified class of assessees. 24. The question as to whether the amendment or change brought Section 144C is merely procedural or substantive would stand answered by the narration of the Scheme of assessment, as I have above. No doubt, Section 144C prescribes a new procedure for assessment. But can it be called a mere shift in procedure? I believe not as that would be an oversimplification of the matter. The procedure inserted is substantive, in that it offers a new scheme of assessment to a distinct class of assessees, that is, those assessee whose assessments involve the issues of Transfer Pricing and determination of Arms Length Price. The provisions of Section 144C do not, thus merely prescribe procedure but a substantive exercise in assessment. 25. The Supreme Court in the case of R.Sharadamma (supra) after considering an earlier judgment of the Supreme Court in the case Commissioner of Income Tax V. Dhadi Sahu (199 ITR 610), states as '5. The assessee filed appeals before the Tribunal contending that by virtue of the amendment effect by Taxation Laws (Amendment) Act 1970, the Inspecting Assistant Commissioner lost jurisdiction to proceed with the said penalty proceedings with effect from April 1, 1971 inasmuch as in the said cases, the amount of income in respect of Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 23 section (10), states that every direction issued by the DRP section (13) thereafter states that upon receipt of the directions of the DRP, the Assessing Authority shall pass an order of assessment in conformity with the Section 144C, the legislature has put in place a distinct, new scheme of assessment in 24. The question as to whether the amendment or change brought is merely procedural or substantive would stand f assessment, as I have new procedure for assessment. But can it be called a mere shift in procedure? I believe not as that would be an oversimplification of the matter. The procedure inserted is substantive, in that it offers a new scheme of assessment to essees, that is, those assessee whose assessments involve the issues of Transfer Pricing and determination of Arms do not, thus merely substantive exercise in assessment. 25. The Supreme Court in the case of R.Sharadamma (supra) after considering an earlier judgment of the Supreme Court in the case (199 ITR 610), states as '5. The assessee filed appeals before the Tribunal contending that by Taxation Laws (Amendment) Act, Commissioner lost jurisdiction to proceed with the said penalty proceedings with effect from April 1, 1971 inasmuch as in the said cases, the amount of income in respect of which the particulars have been concealed, was less than Rupees twenty five thousa 274 as amended in 1970 with effect from April 1, 1971. The contention was that penalty proceedings cannot continue before the Inspecting Assistant Comm Sub-section (2) was not satisfied. The Tribunal accepted the said plea and allowed the appeal. At the instance of the Revenue, the Tribunal stated the following question for the opinion of the Orissa Hi under Section 256(1) Whether, on the facts and circumstances of the case and on a true interpretation of (Amendment) Act whom the case was referred prior to April 1, 1971, had jurisdiction to impose penalty. 6. The High Court answered the que whereupon the matter was brought to this Court. This Court at the outset stated the general principle applicable in this behalf in the following words: It may be stated at the outset the general principle is that a law which brings about a change in the forum does not affect pending actions unless an intention to the contrary is clearly shown. One of the modes by which such an intention is shown is by making a provision for change over of proceedings from the court or the Tri the court or the Tribunal which, under the new law, gets jurisdiction to try them. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 which the particulars have been concealed, was less than Rupees twenty five thousand, within the meaning of Sub-section (2) of as amended in 1970 with effect from April 1, 1971. The contention was that penalty proceedings cannot continue before the Inspecting Assistant Commissioner because the essential requirement of amended section (2) was not satisfied. The Tribunal accepted the said plea and allowed the appeal. At the instance of the Revenue, the Tribunal stated the following question for the opinion of the Orissa Hi Section 256(1) of the Act : Whether, on the facts and circumstances of the case and on a true interpretation of Section 274, as amended by the Taxation Laws (Amendment) Act, 1970 the Inspecting Assistant Commissioner to whom the case was referred prior to April 1, 1971, had jurisdiction to impose penalty. 6. The High Court answered the question in favour of the assessee whereupon the matter was brought to this Court. This Court at the outset stated the general principle applicable in this behalf in the following words: It may be stated at the outset the general principle is that a law which brings about a change in the forum does not affect pending actions unless an intention to the contrary is clearly shown. One of the modes by which such an intention is shown is by making a provision for change over of proceedings from the court or the Tribunal where they are pending to the court or the Tribunal which, under the new law, gets jurisdiction to Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 24 which the particulars have been concealed, was less than Rupees section (2) of Section as amended in 1970 with effect from April 1, 1971. The contention was that penalty proceedings cannot continue before the Inspecting issioner because the essential requirement of amended section (2) was not satisfied. The Tribunal accepted the said plea and allowed the appeal. At the instance of the Revenue, the Tribunal stated the following question for the opinion of the Orissa High Court Whether, on the facts and circumstances of the case and on a true Taxation Laws , 1970 the Inspecting Assistant Commissioner to whom the case was referred prior to April 1, 1971, had jurisdiction to stion in favour of the assessee whereupon the matter was brought to this Court. This Court at the outset stated the general principle applicable in this behalf in the It may be stated at the outset the general principle is that a law which brings about a change in the forum does not affect pending actions unless an intention to the contrary is clearly shown. One of the modes by which such an intention is shown is by making a provision for bunal where they are pending to the court or the Tribunal which, under the new law, gets jurisdiction to 7. The Court then observed that once a reference was validly made to the Inspecting Assistant Commissioner he did not lose the jurisdiction to deal with the matter on account of the aforesaid pointed out that the provision that the Assistant Commissioner should be returned without passing any final order if the amount of income in respect of which the particulars have been concealed did not exceed Rupees twenty five thousand. The said circumstance, it held, supported the inference drawn by the Court that the Inspecting Assistant Commissioner continued to have jurisdiction to impose penalty. The Court observed : It is also true that no litigant has any vested right in the matter of procedural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested whe initiated in the Tribunal or the court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue inspite of the change of jurisdiction of the 26. Thus, where there is a change in the form of assessment itself, such change is not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured to the parties by virtue of the introduction of bearing in mind the settled position that the law applicable on the first day of assessment year be reckoned as the applicable law for assessment for that year, leads one to the inescapable conclusion that Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 7. The Court then observed that once a reference was validly made to the Inspecting Assistant Commissioner he did not lose the jurisdiction to deal with the matter on account of the aforesaid Amendment Act pointed out that the Amending Act does not does not contain any provision that the references validly pending before the Inspecting Assistant Commissioner should be returned without passing any final order if the amount of income in respect of which the particulars have been concealed did not exceed Rupees twenty five thousand. The said circumstance, it held, supported the inference drawn by the Court that the Inspecting Assistant Commissioner continued to have jurisdiction to impose penalty. The Court observed : It is also true that no litigant has any vested right in the matter of edural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue inspite of the change of jurisdiction of the different Tribunals or forums.' 26. Thus, where there is a change in the form of assessment itself, such change is not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured ies by virtue of the introduction of Section 144C bearing in mind the settled position that the law applicable on the first day of assessment year be reckoned as the applicable law for r that year, leads one to the inescapable conclusion that Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 25 7. The Court then observed that once a reference was validly made to the Inspecting Assistant Commissioner he did not lose the jurisdiction Amendment Act. It does not does not contain any references validly pending before the Inspecting Assistant Commissioner should be returned without passing any final order if the amount of income in respect of which the particulars have been concealed did not exceed Rupees twenty five thousand. The said circumstance, it held, supported the inference drawn by the Court that the Inspecting Assistant Commissioner continued to have jurisdiction It is also true that no litigant has any vested right in the matter of edural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a n the proceedings are initiated in the Tribunal or the court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue inspite of the change of 26. Thus, where there is a change in the form of assessment itself, such change is not a mere deviation in procedure but a substantive shift in the manner of framing an assessment. A substantive right has enured Section 144C, that, bearing in mind the settled position that the law applicable on the first day of assessment year be reckoned as the applicable law for r that year, leads one to the inescapable conclusion that the provisions of prospectively, from AY 2011 27. In J.K.Synthetics Ltd., (supra), the Benc follows: '........... The Board is not competent to give directions regarding the exercise of the any judicial power by its subordinates. The opinions expressed in those communications pertain to the exercise of powers by the taxing authorities, as it is for those authorities to determine as to the year in which the undertaking began to "manufacture or to produce articles" within the meaning of Act, 1961. The communications sent by the Board and impugned in the Writ Petition are replies sent by the Board to the letters written by the appellant. They cannot bind the taxing authorities who have to decide the question in issue on its own merits, uninfluen considerations. The question in issue is a question of fact.' 28. In the case of Prasad Productions (P) Ltd. (supra), a Division Bench of this Court has also clarified the position that where a Circular has explained a provision to be app year, the benefit of such Circular cannot be withdrawn at a later date, so as to deny the assessee the benefit extended earlier. Though in the present case there is no benefit as such that is in question, there is a substantively procedural right that has enured to both parties as on 01.04.2009 that relates to assessments for A.Y.2010 relevant portion of the 2013 Circular reads thus: Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 the provisions of Section 144C can be held to be applicable only prospectively, from AY 2011-12 only. 27. In J.K.Synthetics Ltd., (supra), the Bench states categorically as '........... The Board is not competent to give directions regarding the exercise of the any judicial power by its subordinates. The opinions expressed in those communications pertain to the exercise of powers ing authorities, as it is for those authorities to determine as to the year in which the undertaking began to "manufacture or to produce articles" within the meaning of Section 80J of the Income tax 961. The communications sent by the Board and impugned in the Writ Petition are replies sent by the Board to the letters written by the They cannot bind the taxing authorities who have to decide the question in issue on its own merits, uninfluenced by extraneous considerations. The question in issue is a question of fact.' 28. In the case of Prasad Productions (P) Ltd. (supra), a Division Bench of this Court has also clarified the position that where a Circular has explained a provision to be applicable qua a particular assessment year, the benefit of such Circular cannot be withdrawn at a later date, so as to deny the assessee the benefit extended earlier. Though in the present case there is no benefit as such that is in question, there is a tantively procedural right that has enured to both parties as on 01.04.2009 that relates to assessments for A.Y.2010-11 onwards. The relevant portion of the 2013 Circular reads thus: Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 26 can be held to be applicable only h states categorically as '........... The Board is not competent to give directions regarding the exercise of the any judicial power by its subordinates. The opinions expressed in those communications pertain to the exercise of powers ing authorities, as it is for those authorities to determine as to the year in which the undertaking began to "manufacture or to of the Income tax 961. The communications sent by the Board and impugned in the Writ Petition are replies sent by the Board to the letters written by the They cannot bind the taxing authorities who have to decide the ced by extraneous 28. In the case of Prasad Productions (P) Ltd. (supra), a Division Bench of this Court has also clarified the position that where a Circular has licable qua a particular assessment year, the benefit of such Circular cannot be withdrawn at a later date, so as to deny the assessee the benefit extended earlier. Though in the present case there is no benefit as such that is in question, there is a tantively procedural right that has enured to both parties as on 11 onwards. The 'Para 45.5 of the Circular No.5/2010 dated 03.06.2010 reads as under: “45.5 Applicability: These amendments have been made applicable with effect from 1st October, 2009 and will accordingly apply in relation to assessment year 2010 The Dispute Resolution Panel Rules have been notified by S.O. (E) dated 20th November, 2009.” In the above extracted Para 45.5 there has been an inadvertent error in stating the applicability of the provisions of section 144C amendments will apply in relation to the assessment year 2010 and subsequent assessment years. Accordingly, para 45.5 is replaced with the following: “45.5. Applicability: April, 2009. Accordingly, the Assessing Officer is required to forward a draft assessment order to the eligible assessee, if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. In other words section 144C make variation in income or loss returned by an eligible assessee, on or after 1st October, 2009 irrespective of the assessment year to which it pertains. Amendments to other sections of the para 45.3 of the circular 5/2010 dated 3rd June, 2010 shall also apply from 1st October, 2009” The right that has enured to the parties in 2009 cannot be modified by a Clarification issued by the Board, three years thereafter. It appears the Board followed by the sudden Clarification issued in 2013 might itself be inspired by challenges similar to the one before me now, Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 'Para 45.5 of the Circular No.5/2010 dated 03.06.2010 reads as under: .5 Applicability: These amendments have been made applicable with effect from 1st October, 2009 and will accordingly apply in relation to assessment year 2010-11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. (E) dated 20th November, 2009.” In the above extracted Para 45.5 there has been an inadvertent error in stating the applicability of the section 144C inserted vide Finance (No.2) Act amendments will apply in relation to the assessment year 2010 and subsequent assessment years. Accordingly, para 45.5 is replaced with the following: “45.5. Applicability: Section 144C has been inserted with effect from 1st April, 2009. Accordingly, the Assessing Officer is required to forward a draft assessment order to the eligible assessee, if he proposes to make, ter the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. In section 144C is applicable to any order which proposes make variation in income or loss returned by an eligible assessee, on or after 1st October, 2009 irrespective of the assessment year to which it Amendments to other sections of the Income-tax Act referred to in para 45.3 of the circular 5/2010 dated 3rd June, 2010 shall also apply from 1st October, 2009” The right that has enured to the parties in 2009 cannot be modified by a Clarification issued by the Board, three years thereafter. It appears to me quite possible that the long silence of the Board followed by the sudden Clarification issued in 2013 might itself be inspired by challenges similar to the one before me now, Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 27 'Para 45.5 of the Circular No.5/2010 dated 03.06.2010 reads as under: .5 Applicability: These amendments have been made applicable with effect from 1st October, 2009 and will accordingly apply in 11 and subsequent assessment years. The Dispute Resolution Panel Rules have been notified by S.O. No. 2958 (E) dated 20th November, 2009.” In the above extracted Para 45.5 there has been an inadvertent error in stating the applicability of the Finance (No.2) Act, 2009 that amendments will apply in relation to the assessment year 2010- 11 and subsequent assessment years. Accordingly, para 45.5 is replaced has been inserted with effect from 1st April, 2009. Accordingly, the Assessing Officer is required to forward a draft assessment order to the eligible assessee, if he proposes to make, ter the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. In is applicable to any order which proposes to make variation in income or loss returned by an eligible assessee, on or after 1st October, 2009 irrespective of the assessment year to which it referred to in para 45.3 of the circular 5/2010 dated 3rd June, 2010 shall also apply from 1st October, 2009” The right that has enured to the parties in 2009 cannot be modified by a Clarification issued by the Board, three to me quite possible that the long silence of the Board followed by the sudden Clarification issued in 2013 might itself be inspired by challenges similar to the one before me now, perhaps, even the present one. Though the Clarificatory Circular has not been challenged, in the light of the detailed discussion as above, I am of the view that this Circular will not bind the Assessing Officer, particularly when it does not lay down the correct position of law. 29. Reference by the learned Senior Standing Coun Departmen to the judgment of the Supreme Court in the case of Commissioner of Central Excise, Bolpur Vs. Ratan Melting & Wire Industries (231 E.L.T.22) will only serve to support the conclusion that I have arrived at above and the decision of t the case of Commissioner of Income Tax, Vadodara (India) (P.) Ltd. (398 ITR 182) referred to by the learned Standing Counsel also does not support his case. 8.7 We find that both Pradesh High Court and Court in the case of Vedanta Limited so the issue before us is which findings should be followed. We find that there is no decision on the issue of the juris The judicial discipline demand that decision of the higher forum should be followed. Since the decision of the Hon’ble Andhra Pradesh High Court is of the division bench whereas the decision of the Hon’ble Madras High Court in the cas Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 perhaps, even the present one. Though the Clarificatory Circular has een challenged, in the light of the detailed discussion as above, I am of the view that this Circular will not bind the Assessing Officer, particularly when it does not lay down the correct position of law. 29. Reference by the learned Senior Standing Coun Departmen to the judgment of the Supreme Court in the case of Commissioner of Central Excise, Bolpur Vs. Ratan Melting & Wire Industries (231 E.L.T.22) will only serve to support the conclusion that I have arrived at above and the decision of the Gujarat High Court in the case of Commissioner of Income Tax, Vadodara – (India) (P.) Ltd. (398 ITR 182) referred to by the learned Standing Counsel also does not support his case.” We find that both, the Division Bench of the Hon’ble And Pradesh High Court and Single Bench of the Hon’ble Vedanta Limited, has given contrary finding and so the issue before us is which findings should be followed. We find that there is no decision on the issue of the jurisdictional High Court. The judicial discipline demand that decision of the higher forum should be followed. Since the decision of the Hon’ble Andhra Pradesh High Court is of the division bench whereas the decision of High Court in the case of Vedanta Ltd (supra) is Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 28 perhaps, even the present one. Though the Clarificatory Circular has een challenged, in the light of the detailed discussion as above, I am of the view that this Circular will not bind the Assessing Officer, particularly when it does not lay down the correct position of law. 29. Reference by the learned Senior Standing Counsel for the Departmen to the judgment of the Supreme Court in the case of Commissioner of Central Excise, Bolpur Vs. Ratan Melting & Wire Industries (231 E.L.T.22) will only serve to support the conclusion that he Gujarat High Court in – 2 V. C-Sam (India) (P.) Ltd. (398 ITR 182) referred to by the learned Standing of the Hon’ble Andhra of the Hon’ble Madras High has given contrary finding and so the issue before us is which findings should be followed. We find dictional High Court. The judicial discipline demand that decision of the higher forum should be followed. Since the decision of the Hon’ble Andhra Pradesh High Court is of the division bench whereas the decision of e of Vedanta Ltd (supra) is of the single bench, and therefore we are inclined to follow the decision of the Hon’ble Andhra Pradesh High Court in the case of Zuari Cement Ltd (supra), wherein it is held that procedure of issuing draft assessment ord followed with effect from 01/10/2009. In the instant case, though the assessment year involve has been issued on 28/03/2013, much after the specified date of 01/10/2009 and therefore by the Assessing Officer 28/03/2013 and passing of the final 26/02/2014 by the assessment order passed by the limitation provided in law. Thus the assessee are accordingly dismissed. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 of the single bench, and therefore we are inclined to follow the decision of the Hon’ble Andhra Pradesh High Court in the case of Zuari Cement Ltd (supra), wherein it is held that procedure of issuing draft assessment order laid down in the section 14 followed with effect from 01/10/2009. In the instant case, though the assessment year involve is 2009-10, the draft assessment order has been issued on 28/03/2013, much after the specified date of 01/10/2009 and therefore we do not find any violation of the law Assessing Officer in issuing the draft assessment order on 28/03/2013 and passing of the final assessment order dated 26/02/2014 by the Assessing Officer. Therefore assessment order passed by the Assessing Officer is well within the limitation provided in law. Thus, the additional grounds raised by the assessee are accordingly dismissed. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 29 of the single bench, and therefore we are inclined to follow the decision of the Hon’ble Andhra Pradesh High Court in the case of Zuari Cement Ltd (supra), wherein it is held that procedure of down in the section 144C is to be followed with effect from 01/10/2009. In the instant case, though 10, the draft assessment order has been issued on 28/03/2013, much after the specified date of we do not find any violation of the law in issuing the draft assessment order on assessment order dated . Therefore, the final is well within the the additional grounds raised by 8.8 The ground in 1 (one) general in nature and therefore we are not re upon specifically. 9. In ground No. 2 Ld. AO in making manufacturing turnover of the assessee. 10. The facts of the issue in dispute are that as various international transactions as under: Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 1 (one) raised by the assessee in the appeal is general in nature and therefore we are not required to adjudicate 2, the assessee has challenged the finding of the AO in making transfer pricing adjustment on the total manufacturing turnover of the assessee. the issue in dispute are that assessee reported various international transactions as under: Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 30 raised by the assessee in the appeal is quired to adjudicate , the assessee has challenged the finding of the adjustment on the total sessee reported 10.1 According to the assessee, transactions relating to purchase of raw materials, payment of royalty, payment of indenting commission etc. are closely linked to the primary transactions of ‘export of products’ and therefore those transactions had not been evaluated separately from the transfer pricing prospective and considered to be combined transactions and evaluated by applying the Transactional Net Margin Method (TNMM) profit/sales as profit level indicator. The assessee in its search process for comparable companies included companies engaged in manufacturing of chemicals arithmetic mean (OP/Sales) of 5.73% using multiple year data Ld. TPO directed the assessee to use single year data and profit level indicator as operating profit/total cost (OP/TC), bec to him the arm’s length price of sales i.e. export of finished goods was under determination and therefore same numerator for profit level indicator. The Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 to the assessee, transactions relating to purchase of raw materials, payment of royalty, payment of indenting are closely linked to the primary transactions of and therefore those transactions had not been evaluated separately from the transfer pricing prospective and considered to be combined transactions and evaluated by applying Transactional Net Margin Method (TNMM), by taking operatin profit/sales as profit level indicator. The assessee in its search for comparable companies included companies engaged in manufacturing of chemicals and identified 10 comparable mean (OP/Sales) of 5.73% using multiple year data TPO directed the assessee to use single year data and profit level operating profit/total cost (OP/TC), bec length price of sales i.e. export of finished goods was under determination and therefore same cannot be taken as numerator for profit level indicator. The Ld. TPO retained the list of Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 31 to the assessee, transactions relating to purchase of raw materials, payment of royalty, payment of indenting are closely linked to the primary transactions of and therefore those transactions had not been evaluated separately from the transfer pricing prospective and considered to be combined transactions and evaluated by applying by taking operating profit/sales as profit level indicator. The assessee in its search for comparable companies included companies engaged in identified 10 comparables having mean (OP/Sales) of 5.73% using multiple year data. The TPO directed the assessee to use single year data and profit level operating profit/total cost (OP/TC), because according length price of sales i.e. export of finished goods cannot be taken as TPO retained the list of the comparables of the assessee, however after updating the margins of the assessee as well as of the company using financial data for financial year 2008 comparables at 9.78%, as under: S. No. Company Name 1. Alkyl Amines Chemicals Ltd. 2. Balaji Amines Ltd. 3. Deepak Nitrite Ltd. 4. Haryana Leather Chemicals 5. Laffans Petrochemicals Ltd. 6. Nocil Ltd. 7. S I Group-India Ltd. 8. Sadhana Nitro Chem Ltd. 9. Amines & Plasticizers Ltd. 10. Indofil Organic Inds. Mean 10.2 The Ld. TPO revised the margin of the manufacturing segment of the assessee on the sales and on the cost Operating Income (A) Less : COGS (B) Operating Expenses (C) Total Operating Expenses (E=A Operating Profit/(Loss)(F=A OP/Net Sales (F/A) OP/Total Cost (F/E) 10.3 Thereafter the ₹5,96,53,388/- to the international transaction as under: Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 the comparables of the assessee, however after updating the margins of the assessee as well as of the company using financial data for financial year 2008-09, computed mean margin of comparables at 9.78%, as under: Segment Name OP/Sales Alkyl Amines Chemicals Ltd. 12.98% 12.80% 12.01% Haryana Leather Chemicals Ltd. 5.50% Laffans Petrochemicals Ltd. 7.89% 11.59% -1.19% Sadhana Nitro Chem Ltd. 8.59% Amines & Plasticizers Ltd. Chemical 6.09% Indofil Organic Inds. Ltd. Spcd 11.00% 8.73% revised the margin of the manufacturing segment of the assessee on the sales and on the cost, as under: Particulars Amount ( 1,87,48,36,650/ 1,519,452,806/ Operating Expenses (C) Total Operating Expenses (E=A-B-C) 1,762,151,611/ Operating Profit/(Loss)(F=A-E) the Ld. TPO, computed adjustment of to the international transaction as under: Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 32 the comparables of the assessee, however after updating the margins of the assessee as well as of the company using financial ed mean margin of OP/TC 12.98% 14.92% 12.80% 14.67% 12.01% 13.65% 5.50% 5.82% 7.89% 8.56% 11.59% 13.11% 1.19% -1.18% 8.59% 9.40% 6.09% 6.49% 11.00% 12.36% 8.73% 9.78% revised the margin of the manufacturing segment as under: Amount (₹) 1,87,48,36,650/- 1,519,452,806/- 242,698,805/- 1,762,151,611/- 11,26,85,039/- 6.39% 6.01% TPO, computed adjustment of to the international transaction as under: Operating Income (A) Total Operating Expenses (B) Operating Profit/(Loss)(C=A OP/Total Cost (F/E) Arm’s Length Margin (G) Arm’s Length Price (H=G*B) Difference between the arm’s length price and the transfer price (I) Transaction value of the Assessee (J) 5% of Transfer Price (K=J*5%) Adjustment Value 10.4 The Ld. TPO alternatively also computed adjustment of ₹3,98,23,060/- applying CUP method, however finally did not consider the same for making adjustment. 11. Before the Ld. DRP, the assessee submitted that manufacturing segment consist of local sales as well as export transactions to the AE, and therefore for the purpose of transfer pricing adjustment, only the international transactions with AE should be considered and not entire manufacturing turnover. assessee filed data of local and export segment, was not audited. The of applying adjustment only to the transactions of the export of th goods observing as under: Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 Particulars Assessee’s Margin 1,87,48,36,650/ Total Operating Expenses (B) 1,762,151,611/ Operating Profit/(Loss)(C=A-B) Arm’s Length Margin (G) Arm’s Length Price (H=G*B) 1,934,490,038/ Difference between the arm’s length price and the Transaction value of the Assessee (J) Price (K=J*5%) TPO alternatively also computed adjustment of applying CUP method, however finally did not consider the same for making adjustment. DRP, the assessee submitted that manufacturing segment consist of local sales as well as export transactions to the AE, and therefore for the purpose of transfer pricing adjustment, only the international transactions with AE should be considered entire manufacturing turnover. Before the assessee filed data of local and export segment, though was not audited. The Ld. DRP rejected the contention of the assessee of applying adjustment only to the transactions of the export of th goods observing as under: Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 33 Assessee’s Margin 1,87,48,36,650/- 1,762,151,611/- 11,26,85,039/- 6.39% 9.78% 1,934,490,038/- 5,96,53,388/- 416,006,359/- 20,800,318/- 5,96,53,388/- TPO alternatively also computed adjustment of applying CUP method, however finally did not DRP, the assessee submitted that manufacturing segment consist of local sales as well as export transactions to the AE, and therefore for the purpose of transfer pricing adjustment, only the international transactions with AE should be considered Before the Ld. DRP, the though the same DRP rejected the contention of the assessee of applying adjustment only to the transactions of the export of the “2.5.6 The assessee has contended regarding the proportionate adjustment only to the extent of international transactions of export of finished goods to the AEs. In this regard the assessee also has relied on the certain decisio contentions of IT. Rules, 1962 prescribe five different methods for computation of arm's length price of the international transaction of the assessee. Each of the method has to be applied as per the provisions given in the rules. After the rules are applied and the consequent adjustment is arrived at, there is no further scope to alter such figure based on any consideration of turnover of AE and non AE t 2.5.7 If in the facts of the case, income arising from international transaction can be arrived at on a singular or standalone basis and the comparable or the comparable uncontrolled transaction is searched keeping in view the FAR of the benchmarking obviously would not require adjustment after arriving at the adjustment as per rules. Even if income arising from the international transaction cannot be computed on a singular or individua assessee/ tested party is computed either at segmental or entity level and the comparables are searched having regard to the FAR of the segment or the entity of the assessee, the consequent benchmarking done and adjustment arrived also is not open to be subjected to any alteration on any interpretation. The very concept of applying the aggregate quantum of adjustment arrived to the international transaction, connotes the fact that it is because of the internationa transaction of the assessee that either at the transaction level or at the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 2.5.6 The assessee has contended regarding the proportionate only to the extent of international transactions of export of goods to the AEs. In this regard the assessee also has relied on certain decisions of the Hon ble ITAT. In respect of such contentions of the assessee, it is stated that rule 10B(1)(a) to (e) of the 1962 prescribe five different methods for computation of price of the international transaction of the assessee. method has to be applied as per the provisions given in the After the rules are applied and the consequent adjustment is at, there is no further scope to alter such figure based on any consideration of turnover of AE and non AE transactions. 2.5.7 If in the facts of the case, income arising from international transaction can be arrived at on a singular or standalone basis and the comparable or the comparable uncontrolled transaction is searched keeping in view the FAR of the international transaction, then such benchmarking obviously would not require any proportional adjustment after arriving at the adjustment as per rules. Even if income arising from the international transaction cannot be computed on a singular or individual/separate basis and the margin of the assessee/ tested party is computed either at segmental or entity level and the comparables are searched having regard to the FAR of the segment or the entity of the assessee, the consequent benchmarking adjustment arrived also is not open to be subjected to any alteration on any interpretation. The very concept of applying the aggregate quantum of adjustment arrived to the international transaction, connotes the fact that it is because of the internationa transaction of the assessee that either at the transaction level or at the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 34 2.5.6 The assessee has contended regarding the proportionate only to the extent of international transactions of export of goods to the AEs. In this regard the assessee also has relied on ns of the Hon ble ITAT. In respect of such the assessee, it is stated that rule 10B(1)(a) to (e) of the 1962 prescribe five different methods for computation of price of the international transaction of the assessee. method has to be applied as per the provisions given in the After the rules are applied and the consequent adjustment is at, there is no further scope to alter such figure based on any 2.5.7 If in the facts of the case, income arising from international transaction can be arrived at on a singular or standalone basis and the comparable or the comparable uncontrolled transaction is searched international transaction, then such any proportional adjustment after arriving at the adjustment as per rules. Even if income arising from the international transaction cannot be computed l/separate basis and the margin of the assessee/ tested party is computed either at segmental or entity level and the comparables are searched having regard to the FAR of the segment or the entity of the assessee, the consequent benchmarking adjustment arrived also is not open to be subjected to any alteration on any interpretation. The very concept of applying the aggregate quantum of adjustment arrived to the international transaction, connotes the fact that it is because of the international transaction of the assessee that either at the transaction level or at the entity level, the margin earned by the assessee is less compared to the margins of the comparables. 2.5.8 The argument regarding the proportionate adjustment would in any case pre-suppose the condition that the margin earned by the assessee from the international transaction and also from the third party transaction are at same levels and still the margins earned from the international proportionate basis. If the basic presumption of proportionate application or computation of the adjustment in proportion to the international transaction is that the assessee has earned margin from the international transaction and from the third party tran par, then in the first place there would be no requirement of any adjustment to be made. In the facts of the assessee's case it cannot be said that it has earned margin from the international transaction at the same level that it earned from thi Accordingly, contentions of the assessee regarding adjustment to be computed having regard to the proportion of volume of AE's transaction, to the total transaction is not found to be acceptable. In respect of the reliance on decisio in such decisions, the primary concept acknowledged is that in TNMM proportionate adjustment is warranted and that in of such proportionate adjustment, the margins of the transactions w case of the assessee no such fact has been the contention of the assessee regarding not found to be acceptable. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 entity level, the margin earned by the assessee is less compared to the margins of the comparables. 2.5.8 The argument regarding the proportionate adjustment would in suppose the condition that the margin earned by the from the international transaction and also from the third transaction are at same levels and still the margins earned from international transactions are required to be adjusted on oportionate basis. If the basic presumption of proportionate application or computation of the adjustment in proportion to the international transaction is that the assessee has earned margin from the international transaction and from the third party tran par, then in the first place there would be no requirement of any adjustment to be made. In the facts of the assessee's case it cannot be said that it has earned margin from the international transaction at same level that it earned from third party transactions. Accordingly, contentions of the assessee regarding adjustment to be computed having regard to the proportion of volume of AE's transaction, to the total transaction is not found to be acceptable. In respect of the reliance on decisions of the Honble ITAT, it is stated in such decisions, the primary concept acknowledged is that in TNMM proportionate adjustment is warranted and that in of such proportionate adjustment, the margins of the assessee from transactions with AE and with third parties are same. However, in the case of the assessee no such fact has been demonstrated. Accordingly the contention of the assessee regarding proportionate adjustment is not found to be acceptable.” Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 35 entity level, the margin earned by the assessee is less compared to the 2.5.8 The argument regarding the proportionate adjustment would in suppose the condition that the margin earned by the from the international transaction and also from the third transaction are at same levels and still the margins earned from transactions are required to be adjusted on oportionate basis. If the basic presumption of proportionate application or computation of the adjustment in proportion to the international transaction is that the assessee has earned margin from the international transaction and from the third party transaction at par, then in the first place there would be no requirement of any adjustment to be made. In the facts of the assessee's case it cannot be said that it has earned margin from the international transaction at rd party transactions. Accordingly, contentions of the assessee regarding adjustment to be computed having regard to the proportion of volume of AE's transaction, to the total transaction is not found to be acceptable. In ns of the Honble ITAT, it is stated that in such decisions, the primary concept acknowledged is that in the TNMM proportionate adjustment is warranted and that in application assessee from However, in the demonstrated. Accordingly proportionate adjustment is 12. Before us, the Ld. of the Tribunal in the case of the assessee for assessment year 2008 09 in ITA No. 7202/Mum/2012 and submitted that already adjudicated direction to make adju the AE. 13. The Ld. DR on the other hand relied on the order of the lower authorities. 14. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The dispute is whether the transfer pric on the entire manufacturing international transactions carried out by the assessee with the Associated Enterprises determination of arm’s Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 Ld. Counsel of the assessee referred to the order in the case of the assessee for assessment year 2008 09 in ITA No. 7202/Mum/2012 and submitted that this issue in favour of the assessee with the direction to make adjustment only in relation to transactions with DR on the other hand relied on the order of the lower We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The dispute is whether the transfer pricing adjustment should be made manufacturing turnover of the assessee or in respect of international transactions carried out by the assessee with the Associated Enterprises. In our opinion, the entire exercise of determination of arm’s-length price is in respect of the international Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 36 of the assessee referred to the order in the case of the assessee for assessment year 2008- 09 in ITA No. 7202/Mum/2012 and submitted that Tribunal has this issue in favour of the assessee with the stment only in relation to transactions with DR on the other hand relied on the order of the lower We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in ing adjustment should be made turnover of the assessee or in respect of international transactions carried out by the assessee with the tire exercise of length price is in respect of the international transactions carried out by the assessee with the Enterprises and therefore adjustment is also should be limited to the international transactions carried ou Enterprises and cannot be applied over the transactions with unrelated party or domestic parties unless covered under Transfer Pricing Provisions issue has been decided in favour of the assessee by the assessment year 2008 “7.3 Before us, the learned AR for the assessee submitted that the assessee had no dispute either in re comparables or in relation to computation of mean margin of comparable or the margin computed by TPO/AO in case of the assessee. The assessee was disputing only the method of computation of TP adjustment. It was pointed out that adjustment to the entire revenue which was not correct as adjustment is required to be made only with respect to transactions with AE. The learned AR placed reliance on the decision of Tribunal in case of THYSSENKRUPP INDUSTRIES INDIA P 7032/Mum/2011 and the decision of Tribunal in case of TARA JEWELS EXPORTS P. LTD Vs. ACIT in ITA 6972/mum/2010 for the said proposition. The learned CIT(D)R on the other hand placed reliance on the order of AO/TPO. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 transactions carried out by the assessee with the and therefore adjustment is also should be limited to the international transactions carried out with the and cannot be applied over the transactions with unrelated party or domestic parties unless covered under Transfer Pricing Provisions. In the case of the assessee identical issue has been decided in favour of the assessee by the assessment year 2008-09, observing as under: 7.3 Before us, the learned AR for the assessee submitted that the assessee had no dispute either in relation to the selection of comparables or in relation to computation of mean margin of comparable or the margin computed by TPO/AO in case of the assessee. The assessee was disputing only the method of computation of TP adjustment. It was pointed out that the AO had made the adjustment to the entire revenue which was not correct as adjustment is required to be made only with respect to transactions with AE. The learned AR placed reliance on the decision of Tribunal in case of THYSSENKRUPP INDUSTRIES INDIA P. LTD Vs. ACIT in ITA No. 7032/Mum/2011 and the decision of Tribunal in case of TARA JEWELS EXPORTS P. LTD Vs. ACIT in ITA 6972/mum/2010 for the said proposition. The learned CIT(D)R on the other hand placed reliance on the order of AO/TPO. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 37 transactions carried out by the assessee with the Associated and therefore adjustment is also should be limited to t with the Associated and cannot be applied over the transactions with unrelated party or domestic parties unless covered under Domestic . In the case of the assessee identical issue has been decided in favour of the assessee by the Tribunal in 7.3 Before us, the learned AR for the assessee submitted that the lation to the selection of comparables or in relation to computation of mean margin of comparable or the margin computed by TPO/AO in case of the assessee. The assessee was disputing only the method of computation the AO had made the adjustment to the entire revenue which was not correct as adjustment is required to be made only with respect to transactions with AE. The learned AR placed reliance on the decision of Tribunal in case of . LTD Vs. ACIT in ITA No. 7032/Mum/2011 and the decision of Tribunal in case of TARA JEWELS EXPORTS P. LTD Vs. ACIT in ITA 6972/mum/2010 for the said proposition. The learned CIT(D)R on the other hand placed reliance on 7.4 We have pe dispute is regarding TP adjustment made by AO/TPO on account of transactions with associate enterprises (AEs) in relation to the manufacturing segment. The AO/TPO have applied TNMM for bench marking the transaction and seven comparable have been selected which gave arithmetic mean margin of 5.42%. The margin of the assessee has been computed at 1.73%. The assessee had computed the margin at 9.04% after making adjustment for under capacity which has not been accepted by the AO/TPO. The learned AR for the assessee has not disputed before us either the comparables or the arithmetic mean margin of the comparables or the margin of the assessee computed by AO/TPO at 1.73%. Only limited dispute r that AO had made the adjustment with respect to entire revenue of manufacturing segment whereas the adjustment is required only in relation to transaction with associated enterprises. The plea raised by the learned AR for the assessee is quite rea the several decisions of the Tribunal as mentioned in para 7.3 of order. We, therefore, direct the AO to make the adjustment only in relation transactions with the AE. 14.1 Since identical issue in dispute is involved in t before us, respectfully following the finding of the we set aside the finding of the dispute and restore the matter back to him for segment of the assessee with the e Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 7.4 We have perused the records and considered matter carefully. The dispute is regarding TP adjustment made by AO/TPO on account of transactions with associate enterprises (AEs) in relation to the manufacturing segment. The AO/TPO have applied TNMM for bench e transaction and seven comparable have been selected which gave arithmetic mean margin of 5.42%. The margin of the assessee has been computed at 1.73%. The assessee had computed the margin at 9.04% after making adjustment for under-utilization of which has not been accepted by the AO/TPO. The learned AR for the assessee has not disputed before us either the comparables or the arithmetic mean margin of the comparables or the margin of the assessee computed by AO/TPO at 1.73%. Only limited dispute r that AO had made the adjustment with respect to entire revenue of manufacturing segment whereas the adjustment is required only in relation to transaction with associated enterprises. The plea raised by the learned AR for the assessee is quite reasonable and is supported by the several decisions of the Tribunal as mentioned in para 7.3 of order. We, therefore, direct the AO to make the adjustment only in relation transactions with the AE.” identical issue in dispute is involved in the ground raised before us, respectfully following the finding of the Tribunal we set aside the finding of the Assessing Officer dispute and restore the matter back to him for comparison of export segment of the assessee with the export segment of comparable Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 38 rused the records and considered matter carefully. The dispute is regarding TP adjustment made by AO/TPO on account of transactions with associate enterprises (AEs) in relation to the manufacturing segment. The AO/TPO have applied TNMM for bench e transaction and seven comparable have been selected which gave arithmetic mean margin of 5.42%. The margin of the assessee has been computed at 1.73%. The assessee had computed the utilization of which has not been accepted by the AO/TPO. The learned AR for the assessee has not disputed before us either the comparables or the arithmetic mean margin of the comparables or the margin of the assessee computed by AO/TPO at 1.73%. Only limited dispute raised is that AO had made the adjustment with respect to entire revenue of manufacturing segment whereas the adjustment is required only in relation to transaction with associated enterprises. The plea raised by sonable and is supported by the several decisions of the Tribunal as mentioned in para 7.3 of this order. We, therefore, direct the AO to make the adjustment only in he ground raised Tribunal (supra), on the issue in comparison of export xport segment of comparable companies and then determine the arm’s international transactions with AE applying the mean margin of the comparables. The ground No. accordingly allowed for statistical pur 15. The ground No. 3 only subject to relief on ground the ground No. 2 in favour of the assessee, the ground No. 3 to 5 are rendered merely academic and therefore we ar those grounds. Same are dismissed as infructuous. 16. The ground No. ground No. one and two of the appeal of the issue of additions made in respect of the purchase Officer. 17. The facts in brief qua the issue in dispute are that assessment order for verification of the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 and then determine the arm’s-length price of the international transactions with AE applying the mean margin of the comparables. The ground No. 2 of the appeal of the assessee is accordingly allowed for statistical purposes. The ground No. 3 to 5 have been raised on alternative basis only subject to relief on ground No. 2. Since we have already allowed in favour of the assessee, the ground No. 3 to 5 are rendered merely academic and therefore we are not those grounds. Same are dismissed as infructuous. The ground No. 6 and 7 of the appeal of the assessee and ground No. one and two of the appeal of the Revenue issue of additions made in respect of the purchases by the brief qua the issue in dispute are that for verification of the genuineness Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 39 length price of the international transactions with AE applying the mean margin of the of the appeal of the assessee is n alternative basis . Since we have already allowed in favour of the assessee, the ground No. 3 to 5 are e not adjuciating of the appeal of the assessee and Revenue relate to the by the Assessing brief qua the issue in dispute are that in the draft genuineness of the purchases the Ld. AO and on the basis of outcome of said enq the Ld. Assessing Officer under four categories. Under fir ₹22,08,487/-was made where section 133(6) was received. According to the those cases identity of the purchaser and genuineness of the transactions was not established. Under second category, disallowance of ₹55, under section 133(6) disallowance of ₹4,18,31, company has ‘shown more amount of the purchase amount confirmed by the party category purchase expenses ha as compared to the concerned party, for which the Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 the Ld. AO issued notice under section 133(6) of the and on the basis of outcome of said enquiry under section 133(6), Assessing Officer proposed disallowance of under four categories. Under first category disallowance of was made where ‘no reply’ of notice issued under section 133(6) was received. According to the Assessing Officer se cases identity of the purchaser and genuineness of the transactions was not established. Under second category, 55,34,750/-was made where the under section 133(6) ‘returned back’. In third category 4,18,31,261/- has been made where assessee shown more amount of the purchase amount confirmed by the party’ i.e. positive difference. In fourth category purchase expenses have been reported less by the assessee as compared to the concerned party, for which the Assessing Officer Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 40 issued notice under section 133(6) of the Act uiry under section 133(6), proposed disallowance of ₹5,62,65,098/- st category disallowance of of notice issued under Assessing Officer, in se cases identity of the purchaser and genuineness of the transactions was not established. Under second category, was made where the notice issued . In third category, has been made where assessee shown more amount of the purchases then the positive difference. In fourth been reported less by the assessee Assessing Officer has made addition of income. 18. Before the Ld. confirmation of the parties as additional evidence. The Ld. DRP obtained remand report from the report the Ld. Assessing Officer assessee except in respect of amount of Ashok chemical industry and Industries (Madras) Private Limited. DRP reproduced as under: “3.5.1 It is seen from the assessment order that the AO has made addition u/s. 69C of Rs. 4,95,74,488/ 66,99,600/- as income from undisclosed sources. It is seen that such addition made by the AO are in respect of the purchases made by the assessee from various parties to whom notice us. 133(6) wer In the remand proceedings, the AO has found all the other transactions to be in order except transaction with two parties viz. Arihant Industries (Madras) P. Ltd. and Ashok Chemicals Industry. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 has made addition of ₹66,90,600/- treating the same as undisclosed Dispute Resolution Panel, the assessee filed confirmation of the parties as additional evidence. The Ld. DRP obtained remand report from the Assessing Officer Assessing Officer accepted the contention of the assessee except in respect of amount of ₹10,240/- in the case of M/s Ashok chemical industry and ₹55,34,750/-in the case of Arihant Madras) Private Limited. The relevant finding of the DRP reproduced as under: 3.5.1 It is seen from the assessment order that the AO has made u/s. 69C of Rs. 4,95,74,488/- and further addition of Rs. as income from undisclosed sources. It is seen that such made by the AO are in respect of the purchases made by the from various parties to whom notice us. 133(6) wer remand proceedings, the AO has found all the other transactions in order except transaction with two parties viz. Arihant (Madras) P. Ltd. and Ashok Chemicals Industry. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 41 the same as undisclosed , the assessee filed confirmation of the parties as additional evidence. The Ld. DRP Assessing Officer. In the remand accepted the contention of the in the case of M/s he case of Arihant The relevant finding of the Ld. 3.5.1 It is seen from the assessment order that the AO has made and further addition of Rs. as income from undisclosed sources. It is seen that such made by the AO are in respect of the purchases made by the from various parties to whom notice us. 133(6) were issued. remand proceedings, the AO has found all the other transactions in order except transaction with two parties viz. Arihant (Madras) P. Ltd. and Ashok Chemicals Industry. 3.5.2 In the remand report the AO has reported that i Ashok Chemicals Industry, an amount of Rs. 10,240/ been paid on 31.03.2009 is not seen in the bank statement of the assessee and to that extent this amount remain un assessee in its submission subsequent to not been able to reconcile the same. Accordingly, the addition to the extent of Rs. 10,240/ found to be justifiable. 3.5.3 In the case of Arihant Industries (Madras) P. Ltd., the A made an addition of Rs. 55,34,750/ of the Act was returned back. The assessee had submitted zero copies of the bills from this party and contended that party's address had changed. In the additional evidence, Anne assessee was only a bank statement of Citi Bank. The AO observed that in the absence of ledger account from the party, the purpose for which payment has been made cannot be ascertained. He further observed that though on going thr Arihant Intermediates (Madras) P. Ltd. appears to have been made, but the purpose of these payments cannot be established. Even during the proceedings before the panel subsequent to the remand report of the AO, the assessee could not produce the reconciliation and the copy of ledger account of the assessee in the books of Arihant Industries (Madras) P. Ltd. to arrive at the conclusion that the purchases made the assessee from these parties were genuine. Accordingly of the AO in making the addition of Rs. 55,34,750/ party is found to be justifiable. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 3.5.2 In the remand report the AO has reported that in the case of Chemicals Industry, an amount of Rs. 10,240/- reflected to have paid on 31.03.2009 is not seen in the bank statement of the and to that extent this amount remain un-reconciled. The its submission subsequent to the remand proceedings has able to reconcile the same. Accordingly, the addition to the Rs. 10,240/- made in the case of Ashok Chemicals Industry is to be justifiable. 3.5.3 In the case of Arihant Industries (Madras) P. Ltd., the A addition of Rs. 55,34,750/-. In this case, a notice u/s. 133(6) Act was returned back. The assessee had submitted zero copies bills from this party and contended that party's address had In the additional evidence, Annexure - C submitted by the was only a bank statement of Citi Bank. The AO observed that absence of ledger account from the party, the purpose for which payment has been made cannot be ascertained. He further observed that though on going through the bank statement, the payment to Arihant Intermediates (Madras) P. Ltd. appears to have been made, the purpose of these payments cannot be established. Even during proceedings before the panel subsequent to the remand report of ssessee could not produce the reconciliation and the copy ledger account of the assessee in the books of Arihant Industries (Madras) P. Ltd. to arrive at the conclusion that the purchases made the assessee from these parties were genuine. Accordingly of the AO in making the addition of Rs. 55,34,750/- in respect party is found to be justifiable. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 42 n the case of reflected to have paid on 31.03.2009 is not seen in the bank statement of the reconciled. The the remand proceedings has able to reconcile the same. Accordingly, the addition to the made in the case of Ashok Chemicals Industry is 3.5.3 In the case of Arihant Industries (Madras) P. Ltd., the AO has . In this case, a notice u/s. 133(6) Act was returned back. The assessee had submitted zero copies bills from this party and contended that party's address had C submitted by the was only a bank statement of Citi Bank. The AO observed that absence of ledger account from the party, the purpose for which payment has been made cannot be ascertained. He further observed ough the bank statement, the payment to Arihant Intermediates (Madras) P. Ltd. appears to have been made, the purpose of these payments cannot be established. Even during proceedings before the panel subsequent to the remand report of ssessee could not produce the reconciliation and the copy ledger account of the assessee in the books of Arihant Industries (Madras) P. Ltd. to arrive at the conclusion that the purchases made by the assessee from these parties were genuine. Accordingly, the action in respect of this 3.5.4 In the facts of the case and in view of the remand report of the AO except for the aforesaid 2 amounts, the AO is directed not to ma addition of the balance amount as proposed in the assessment order under the head disallowance of unexplained expenditure. We direct accordingly.” 19. Before us the identical issue in the assessment year 2008 the Tribunal to the file of the examination in the light of the observation of the 20. The Ld. DR on the other h order and submitted that without proper verification. 21. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The dispute is regarding purchase expenses debited in th loss account. In the draft assessment order the made addition on the basis of the response Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 3.5.4 In the facts of the case and in view of the remand report of the AO except for the aforesaid 2 amounts, the AO is directed not to ma addition of the balance amount as proposed in the assessment order under the head disallowance of unexplained expenditure. We direct us the Ld. Counsel of the assessee submitted that identical issue in the assessment year 2008-09 has been set aside by to the file of the Assessing Officer examination in the light of the observation of the Tribunal DR on the other hand relied on the draft assessment order and submitted that Ld. DRP has allowed relief to the assessee without proper verification. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The dispute is regarding purchase expenses debited in th . In the draft assessment order the Assessing Officer made addition on the basis of the response of the notice under Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 43 3.5.4 In the facts of the case and in view of the remand report of the AO except for the aforesaid 2 amounts, the AO is directed not to make the addition of the balance amount as proposed in the assessment order under the head disallowance of unexplained expenditure. We direct of the assessee submitted that 09 has been set aside by Assessing Officer for necessary Tribunal. and relied on the draft assessment DRP has allowed relief to the assessee We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute is regarding purchase expenses debited in the profit and Assessing Officer has of the notice under section 133(6) issued before the Ld. DRP, the submitted by the assessee and concluded that except t addition was not required Counsel of the assessee is concerned assessment year 2008 Assessing Officer observing as under “8.4 We have perused the records and considered the rival contentions carefully. The dispute is regarding addition made by AO on account of creditors, purchases and other expenses u/s 69 C of the IT Act. The AO had issued notices u/s 133(6) to the parties w the genuineness of the transactions which had been returned in many cases or no reply had been received. In cases where reply had been received, there were discrepancies and amounts confirmed was more in some cases while less in som by AO is Rs. 53521277/ in para 8.2 of this order. The learned AR for the assessee has argued that addition u/s 69C could be made only when the expenditure is accounted. The entire transaction in relation to the category in which replies were not received or the notices were returned back had been unaccounted in the books and, therefore, no addition could be made u/s 69C and accordingly it has been requested that the add Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 d to those purchase parties. During proceeding DRP, the Assessing Officer again verified the evidence submitted by the assessee and concluded that except t addition was not required. As far as the contention of the of the assessee is concerned, the Tribunal assessment year 2008-09 has restored the issue to the file of the observing as under: 8.4 We have perused the records and considered the rival contentions carefully. The dispute is regarding addition made by AO on account of creditors, purchases and other expenses u/s 69 C of the IT Act. The AO had issued notices u/s 133(6) to the parties with a view to ascertain the genuineness of the transactions which had been returned in many cases or no reply had been received. In cases where reply had been received, there were discrepancies and amounts confirmed was more in some cases while less in some other cases. The total addition made by AO is Rs. 53521277/- on account of these factors as per details given in para 8.2 of this order. The learned AR for the assessee has argued that addition u/s 69C could be made only when the expenditure is . The entire transaction in relation to the category in which replies were not received or the notices were returned back had been unaccounted in the books and, therefore, no addition could be made u/s 69C and accordingly it has been requested that the add Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 44 During proceeding again verified the evidence submitted by the assessee and concluded that except two parties, . As far as the contention of the Ld. Tribunal (supra) in 09 has restored the issue to the file of the 8.4 We have perused the records and considered the rival contentions carefully. The dispute is regarding addition made by AO on account of creditors, purchases and other expenses u/s 69 C of the IT Act. The AO ith a view to ascertain the genuineness of the transactions which had been returned in many cases or no reply had been received. In cases where reply had been received, there were discrepancies and amounts confirmed was more e other cases. The total addition made on account of these factors as per details given in para 8.2 of this order. The learned AR for the assessee has argued that addition u/s 69C could be made only when the expenditure is . The entire transaction in relation to the category in which replies were not received or the notices were returned back had been unaccounted in the books and, therefore, no addition could be made u/s 69C and accordingly it has been requested that the addition made on this account may be deleted. We are however unable to accept the arguments advanced. Merely because the AO has used the wrong section it does not make the addition legally invalid if the addition could be justified based on some other provisi cases the addition could always be made u/s 68 of the IT Act and, therefore, we reject the arguments advanced. However, we find, substance in the argument of learned AR that the AO/TPO had asked for almost entire details of transact which was voluminous. The assessee before the DRP had filed further material on sample basis covering 89.43% of cases in which replies had not been received and 69.57% cases in which the notices had been returned back. It having full details and, therefore, in case further details are required the assessee could submit the same before the AO. Similarly in case of discrepancies it has been pointed out that the assessee had given explanation in respect of differences positive or negative pointed out by the parties in the cases in which reply had been received and these explanation had been duly noted by AO at pages 25 to 31 of the assessment order and again at pages 36 to 42 of as explanation given had not been examined and the entire difference had not been added. In our view matter requires fresh examination at the level of AO by specifically considering each explanation by the assessee in respect of difference given further opportunity to provide details and evidence in respect of cases in which no reply had been received or the notices had been returned back because disallowing the entire amount considering the voluminous na the order of AO and restore the matter back to him for passing a fresh Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 on this account may be deleted. We are however unable to accept the arguments advanced. Merely because the AO has used the wrong section it does not make the addition legally invalid if the addition could be justified based on some other provisions of the Act. In such cases the addition could always be made u/s 68 of the IT Act and, therefore, we reject the arguments advanced. However, we find, substance in the argument of learned AR that the AO/TPO had asked for almost entire details of transactions entered into by the assessee which was voluminous. The assessee before the DRP had filed further material on sample basis covering 89.43% of cases in which replies had not been received and 69.57% cases in which the notices had been returned back. It has been pointed out that the assessee was now having full details and, therefore, in case further details are required the assessee could submit the same before the AO. Similarly in case of discrepancies it has been pointed out that the assessee had given explanation in respect of differences positive or negative pointed out by the parties in the cases in which reply had been received and these explanation had been duly noted by AO at pages 25 to 31 of the assessment order and again at pages 36 to 42 of assessment order. The explanation given had not been examined and the entire difference had not been added. In our view matter requires fresh examination at the level of AO by specifically considering each explanation by the assessee in respect of differences found and the assessee may also be given further opportunity to provide details and evidence in respect of cases in which no reply had been received or the notices had been returned back because disallowing the entire amount considering the voluminous nature of details is not justified. We, therefore, set aside the order of AO and restore the matter back to him for passing a fresh Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 45 on this account may be deleted. We are however unable to accept the arguments advanced. Merely because the AO has used the wrong section it does not make the addition legally invalid if the addition ons of the Act. In such cases the addition could always be made u/s 68 of the IT Act and, therefore, we reject the arguments advanced. However, we find, substance in the argument of learned AR that the AO/TPO had asked ions entered into by the assessee which was voluminous. The assessee before the DRP had filed further material on sample basis covering 89.43% of cases in which replies had not been received and 69.57% cases in which the notices had been has been pointed out that the assessee was now having full details and, therefore, in case further details are required the assessee could submit the same before the AO. Similarly in case of discrepancies it has been pointed out that the assessee had given explanation in respect of differences positive or negative pointed out by the parties in the cases in which reply had been received and these explanation had been duly noted by AO at pages 25 to 31 of the sessment order. The explanation given had not been examined and the entire difference had not been added. In our view matter requires fresh examination at the level of AO by specifically considering each explanation by the s found and the assessee may also be given further opportunity to provide details and evidence in respect of cases in which no reply had been received or the notices had been returned back because disallowing the entire amount considering the ture of details is not justified. We, therefore, set aside the order of AO and restore the matter back to him for passing a fresh order after necessary examination in the light of observations made in this order and after allowing opportunity of hearing to 21. Thus, we find that, in the case matter parties and the Ld. DRP has provided opportunity after taking into consideration the additional evidence submitted by the assessee and calling for remand r sustained addition in respect of the two parties only, particularly where the assessee failed to substantiate purchase amount recorded in its books of accounts. In our opinion, the exercise of the verification has already been d DRP. The assessee has not provided any justified reasons for restoring the matter back to the file of the DRP has duly considered the submission of the assessee wherever the assessee has f that case only additional and 7 of the appeal of assessee are dismissed. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 order after necessary examination in the light of observations made in this order and after allowing opportunity of hearing to the assessee. we find that, in the case matter is of verification of the DRP has provided opportunity after taking into consideration the additional evidence submitted by the assessee and calling for remand report from the assessee has sustained addition in respect of the two parties only, particularly where the assessee failed to substantiate purchase amount recorded in its books of accounts. In our opinion, the exercise of the verification has already been done during the proceeding before the . The assessee has not provided any justified reasons for restoring the matter back to the file of the Assessing Officer DRP has duly considered the submission of the assessee wherever the assessee has failed to substantiate with evidence in se only additional is sustained. Therefore, the ground No. 6 and 7 of the appeal of assessee are dismissed. Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 46 order after necessary examination in the light of observations made in the assessee.” verification of the to assessee and after taking into consideration the additional evidence submitted by eport from the assessee has sustained addition in respect of the two parties only, particularly where the assessee failed to substantiate purchase amount recorded in its books of accounts. In our opinion, the exercise of the g the proceeding before the . The assessee has not provided any justified reasons for Assessing Officer. The Ld. DRP has duly considered the submission of the assessee and ailed to substantiate with evidence in the ground No. 6 22. As far as ground during proceeding before the DRP, the matter remanded to the Ld. Assessing Officer only additions on the issue in di above. In such circumstances, we do not find any justified reasons for the Revenue agitate recommended to the DRP for not making additions in respect of the amount, which has now be has been brought which could show that any malafide was observed by the Department in the action of the AO in remand proceeding i.e. report of which is normally sent through range head. In such circumstances, the remand report has been a bonafide action by the Ld. AO. The Ld. DR also could not explain as what is the error in direction of the Ld. DRP the ground Nos. 1 and Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 As far as grounds of the Revenue are concerned, we find that during proceeding before the DRP, the matter of verification was Assessing Officer and on the report of the only, the Ld. DRP has directed to delete additions on the issue in dispute except the two amounts mentioned above. In such circumstances, we do not find any justified reasons agitate when the same Assessing Officer recommended to the DRP for not making additions in respect of the amount, which has now been contested before us. Before us, nothing has been brought which could show that any malafide was observed by the Department in the action of the AO in remand proceeding i.e. report of which is normally sent through range head. In such remand report has been a bonafide action by the DR also could not explain as what is the error in DRP. In view of the above discussion, we dismiss and 2 of the appeal of the Revenue Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 47 concerned, we find that verification was and on the report of the Ld. , the Ld. DRP has directed to delete part of the spute except the two amounts mentioned above. In such circumstances, we do not find any justified reasons Assessing Officer has recommended to the DRP for not making additions in respect of the Before us, nothing has been brought which could show that any malafide was observed by the Department in the action of the AO in remand proceeding i.e. report of which is normally sent through range head. In such remand report has been a bonafide action by the DR also could not explain as what is the error in view of the above discussion, we dismiss Revenue. 23. In ground No. allowing set off of certain capital loss of term capital gain of assessee is seeking credit of tax deducted at source of In ground No. 10, the assessee Officer for considering the rectification application of the assessee in respect of ground No. 24. Before us both the agreed that issue involved in ground No. of verification at the end might be restored to the file of the both the ground No Assessing Officer for deciding a record. Since, we have already therefore, the ground No. 10 is accordingly rendered infructuous Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 . 8, the assessee has raised the issue of not allowing set off of certain capital loss of ₹55,25,462/ term capital gain of ₹5,27,20,000/-. In ground No. 9 ( seeking credit of tax deducted at source of the assessee is seeking direction to the for considering the rectification application of the assessee in respect of ground No. 8 and 9 before us. Before us both the Ld. Counsel of the assessee as well as that issue involved in ground No. 8 and 9 are subject matter end of the Assessing Officer and therefore same might be restored to the file of the Assessing Officer both the ground Nos. 8 and 9, are restored to the file of the for deciding afresh after verification from the we have already restored the ground N ground No. 10 is accordingly rendered infructuous Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 48 the assessee has raised the issue of not 462/- against long No. 9 (nine), the seeking credit of tax deducted at source of ₹7,62,232/-. seeking direction to the Assessing for considering the rectification application of the assessee in of the assessee as well as Ld. DR are subject matter and therefore same Assessing Officer. Accordingly are restored to the file of the fresh after verification from the the ground No. 8 and 9, ground No. 10 is accordingly rendered infructuous. 25. In the result, the appe statistical purposes where as the appeal of the Order pronounced in the Court on Sd/- (ABY T VARKEY JUDICIAL MEMBER Mumbai; Dated: 18/07/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 he result, the appeal of the assessee is allowed partly for statistical purposes where as the appeal of the Revenue ounced in the Court on 18/07/2022. Sd/- ABY T VARKEY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Lanxess India Pvt. Ltd. ITA Nos. 2628 & 2788/M/2014 49 al of the assessee is allowed partly for Revenue is dismissed. - OM PRAKASH KANT) MEMBER (Sr. Private Secretary) ITAT, Mumbai