Claas India Private Limited, New Delhi V. DCIT, New Delhi

ITA 3883/DEL/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1737 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 10-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR; AMRENDRA KUMAR
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Capital expenditure
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.3883/DEL/2010 ASSESSMENT YEAR : 2006-07 CLAAS INDIA PVT. LTD., A-39, FIRST FLOOR, NEW FRIENDS COLONY, NEW DELHI. PAN: AAACE0762A VS. DCIT, CIRCLE-3(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.P. SINGH, CA, SHRI MANOMEET DALAL, ADVOCATE & SHRI VISHNU GOEL, ADVOCATE DEPARTMENT BY : SHRI AMRENDRA KUMAR, CIT, DR & MS Y. KAKKAR, SR.DR DATE OF HEARING : 10.08.2015 DATE OF PRONOUNCEMENT : 12.08.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE FINA L ORDER DATED 15.6.2010 PASSED BY THE ASSESSING OFFICER (AO) U/S 143(3) READ WITH ITA NO.3883/DEL/2010 2 SECTION 144C OF THE INCOME-TAX ACT, 1961 (HEREINAFT ER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2006-07. 2. THE FIRST TWO GROUNDS ARE GENERAL WHICH DO NOT R EQUIRE ANY SPECIFIC ADJUDICATION. THE LD. AR DID NOT PRESS THESE GROUN DS AS WELL. THESE GROUNDS, THEREFORE, STAND DISMISSED. 3. GROUND NO. 3 HAS THREE PARTS. THE FIRST PART IS AGAINST SOME OF THE ASPECTS RELATING TO THE COMPUTATION OF THE PROFIT L EVEL INDICATOR (PLI), BEING, THE OPERATING PROFIT/TOTAL COST (OP/TC) OF T HE ASSESSEE. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE WAS ESTABLISHED AS AN INDIAN COMPANY IN 1990 AS A WHOLL Y OWNED SUBSIDIARY OF A CLAAS KGAA MBH, GERMANY. UNTIL 31.8.2002, THE ASSESSEE WAS KNOWN AS ESCORTS CLAAS LTD., WITH 60:40 JOINT VENTU RE BETWEEN ESCORTS INDIA LTD., AND CLAAS, GERMANY. THEREAFTER, THE EN TIRE SHAREHOLDING WAS ACQUIRED BY CLAAS, GERMANY. THE ASSESSEES MAIN ACT IVITY IS MANUFACTURE AND SALE OF HARVESTER COMBINES IN INDIA AND EXPORT OF HARVESTER COMBINES AND ENGINE HARVESTER COMBINES AN D ENGINE RELATED PRODUCTS, LICENSED BY CLAAS GROUP. THE ASSESSEE M ANUFACTURES TWO ITA NO.3883/DEL/2010 3 TYPES OF HARVESTER COMBINES, NAMELY, WHEEL BASED AN D TRACK BASED. CERTAIN INTERNATIONAL TRANSACTIONS WERE REPORTED BY THE ASSESSEE INCLUDING PURCHASE OF RAW MATERIALS AND COMPONENTS; SALE OF HARVESTERS AND SPARE PARTS; IMPORT OF COMPUTER; PAYMENT FOR SE RVICES; AND ALLOCATION OF COST. TO DEMONSTRATE THAT ITS INTERN ATIONAL TRANSACTIONS WERE AT ARMS LENGTH PRICE (ALP), THE ASSESSEE APP LIED THE TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE ME THOD WITH THE PROFIT LEVEL INDICATOR (PLI) OF OPERATING PROFIT/TO TAL COST (OP/TC). ALL THE INTERNATIONAL TRANSACTIONS WERE AGGREGATED AND A COMBINED OP/TC WAS COMPUTED. THE FIRST DISPUTE IS AGAINST THE ADVA NCES WRITTEN OFF, FIXED ASSETS WRITTEN OFF AND LOSS ON FOREIGN EXCHAN GE, TREATED BY THE TPO AS OPERATING COSTS AS AGAINST NON-OPERATING CO STS CLAIMED BY THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FIRST ITEM IS ADVANCES WR ITTEN OFF AMOUNTING TO RS.1,56,007/-. THIS AMOUNT FINDS PLACE UNDER SCH EDULE-B (ADMINISTRATIVE AND OTHER EXPENSES) IN THE ASSESSEE S PROFIT AND LOSS ITA NO.3883/DEL/2010 4 ACCOUNT. THE ASSESSEE TREATED THIS AMOUNT AS NON-O PERATING IN THE CALCULATION OF ITS OP/TC. THE TPO HELD IT TO BE AN OPERATING COST. ON A PERTINENT QUERY, IT WAS ADMITTED BY THE LD. AR THAT THE ADVANCES SO WRITTEN OFF WERE GIVEN IN RELATION TO TRADING ITEMS . LIKE DEBTS BECOMING BAD FROM THE SALE OF GOODS ASSUMING THE CHARACTER O F OPERATING COST, THE ADVANCES GIVEN IN RELATION TO TRADING ITEMS, BECOM ING NON-RECOVERABLE, ALSO CANNOT BE CONSIDERED AS ANYTHING OTHER THAN AN ITEM OF OPERATING COST. IN OUR CONSIDERED OPINION, SUCH AMOUNT HAS R IGHTLY BEEN CONSIDERED AS AN OPERATING COST. 6. IN SO FAR AS THE FIXED ASSETS WRITTEN OFF ARE CO NCERNED, WE FIND THAT THE AMOUNT OF RS.3,84,196/- IS DISTINCT FROM THE AM OUNT OF DEPRECIATION CLAIMED BY THE ASSESSEE AT RS.1.45 CRORE. THIS REP RESENTS A LOSS ON THE FIXED ASSETS WHICH HAS BEEN WRITTEN OFF. THE PURCH ASE OF FIXED ASSETS IS CAPITAL EXPENDITURE. AS SUCH, THE AMOUNT OF FIXED A SSETS WHEN WRITTEN OFF, OTHERWISE THAN BY DEPRECIATION, FALLS FOR CONS IDERATION AS AN ITEM OF NON-OPERATING COST. WE, THEREFORE, ACCEPT THE ASSES SEES CONTENTION FOR TREATING THIS SUM OF RS.3,84,196/- AS NON-OPERATING . ITA NO.3883/DEL/2010 5 7. THE THIRD ITEM IS LOSS ON FOREIGN EXCHANGE AMOUN TING TO RS.31,22,119/-. ON A PERTINENT QUERY, IT WAS ADMIT TED BY THE LD. AR THAT THIS LOSS RELATES TO TRADING TRANSACTIONS. 8. WE FIND MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE ABOUT THE INCLUSION OF FOREIGN EXCHANGE GAIN/LOSS I N THE OPERATING REVENUE/COSTS OF THE ASSESSEE AS WELL AS THAT OF TH E COMPARABLES. WHEN WE ADVERT TO THE NATURE OF SUCH FOREIGN EXCHANGE GA IN EARNED BY THE ASSESSEE, IT HAS BEEN ADMITTED BY THE LD. AR THAT THE SAME IS IN RELATION TO THE TRADING ITEMS EMANATING FROM THE INTERNATION AL TRANSACTIONS. WHEN THE FOREIGN EXCHANGE LOSS DIRECTLY RESULTS FROM THE TRADING ITEMS, WE FAIL TO APPRECIATE AS TO HOW SUCH FOREIGN EXCHANGE FLUCT UATION LOSS CAN BE CONSIDERED AS NON-OPERATING. 9. THE SPECIAL BENCH OF THE TRIBUNAL IN ACIT VS PRAKASH I. SHAH (2008) 115 ITD 167 (MUM)(SB) HAS HELD THAT THE GAIN DUE TO FLUCTUATIONS IN THE FOREIGN EXCHANGE RATE EMANATING FROM EXPORT IS ITS INTEGRAL PART AND CANNOT BE DIFFERENTIATED FROM THE EXPORT PROCEE DS SIMPLY ON THE GROUND THAT THE FOREIGN CURRENCY RATE HAS INCREASED SUBSEQUENT TO SALE ITA NO.3883/DEL/2010 6 BUT PRIOR TO REALIZATION. IT WENT ON TO ADD THAT WH EN GOODS ARE EXPORTED AND INVOICE IS RAISED IN CURRENCY OF THE COUNTRY WH ERE SUCH GOODS ARE SOLD AND SUBSEQUENTLY WHEN THE AMOUNT IS REALIZED I N THAT FOREIGN CURRENCY AND THEN CONVERTED INTO INDIAN RUPEES, THE ENTIRE AMOUNT IS RELATABLE TO THE EXPORTS. IN FACT, IT IS ONLY THE T RANSLATION OF INVOICE VALUE FROM THE FOREIGN CURRENCY TO THE INDIAN RUPEES. THE SPECIAL BENCH HELD THAT THE EXCHANGE RATE GAIN OR LOSS CANNOT HAVE A D IFFERENT CHARACTER FROM THE TRANSACTION TO WHICH IT PERTAINS. THE BENCH FOU ND FALLACY IN THE SUBMISSION MADE ON BEHALF OF THE REVENUE THAT THE E XCHANGE RATE DIFFERENCE SHOULD BE DETACHED FROM THE EXPORTS AND BE CONSIDERED AS AN INDEPENDENT TRANSACTION. EVENTUALLY, THE SPECIAL BE NCH HELD THAT SUCH EXCHANGE RATE FLUCTUATION GAIN/LOSS ARISING FROM EX PORTS CANNOT BE VIEWED DIFFERENTLY FROM SALE PROCEEDS. 10. IN THE CONTEXT OF TRANSFER PRICING, THE BAN GALORE BENCH OF THE TRIBUNAL IN SAP LABS INDIA PVT. LTD. VS ACIT (2011) 44 SOT 156 (BANGALORE) HAS HELD THAT FOREIGN EXCHANGE FLUCTUATION GAIN IS PART OF OPERATING PROFIT OF THE COMPANY AND SHOULD BE INCLU DED IN THE OPERATING ITA NO.3883/DEL/2010 7 REVENUE. SIMILAR VIEW HAS BEEN TAKEN IN TRILOGY E BUSINESS SOFTWARE INDIA (P) LTD. VS DCIT (2011) 47 SOT 45 (URO) (BANG ALORE) . THE MUMBAI BENCH OF THE TRIBUNAL IN S. NARENDRA VS ADDTL. CIT (2013) 32 TAXMAN.COM 196 HAS ALSO LAID DOWN TO THIS EXTENT. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED OPIN ION THAT THE AMOUNT OF FOREIGN EXCHANGE GAIN/LOSS ARISING OUT OF REVENU E TRANSACTIONS IS REQUIRED TO BE CONSIDERED AS AN ITEM OF OPERATING R EVENUE/COST, BOTH OF THE ASSESSEE AS WELL AS COMPARABLES. WE, THEREFORE , HOLD THAT THE AO WAS JUSTIFIED IN CONSIDERING FOREX LOSS AS OPERATIN G COST AS AGAINST THE ASSESSEES CLAIM OF NON-OPERATING COST. 11. THE SECOND COMPONENT OF THE FIRST GROUND IS AGA INST THE COMPUTATION OF TRANSFER PRICING ADJUSTMENT IN RESPE CT OF TRANSACTION WITH ASSOCIATED ENTERPRISES (AES) AND NON-AES. COMPUTAT ION OF THE ARMS LENGTH PRICE (ALP) BY THE TPO ON THE PENULTIMATE PA GE OF HIS ORDER DIVULGES THAT HE TOOK TOTAL COSTS AT RS.54,72,86,62 9/-. BY APPLYING ARITHMETIC MEAN OF THE COMPARABLES AT 12.25%, HE PR OPOSED A TRANSFER PRICING ADJUSTMENT OF RS.3,12,57,833/-. THE LD. AR CONTENDED THAT NO ITA NO.3883/DEL/2010 8 TRANSFER PRICING ADJUSTMENT IS POSSIBLE IN RESPECT OF TRANSACTIONS WITH NON-AES. 12. IT IS UNCONTROVERTED, AS IS ALSO APPARENT F ROM THE TPOS ORDER, THAT THE TRANSFER PRICING ADJUSTMENT HAS BEEN MADE BY CO NSIDERING THE TOTAL COSTS INCURRED BY THE ASSESSEE IN RESPECT OF TRANSA CTIONS WITH THE ASSOCIATED ENTERPRISES (AE) AND NON-AES. AN ADDITI ON TOWARDS TRANSFER PRICING ADJUSTMENT IS MADE BY COMPARING THE ASSESSE ES PROFIT RATE FROM THE INTERNATIONAL TRANSACTION WITH THAT OF COMPARAB LE UNCONTROLLED TRANSACTIONS. UNDER THE TNMM, THE PROCESS IS SIMPLE IN INITIALLY FINDING OUT THE OPERATING PROFIT MARGIN OF THE ASSESSEE AND THEN THE AVERAGE ADJUSTED OPERATING PROFIT MARGIN OF COMPARABLE CASE S. SUCH ADJUSTED PROFIT MARGIN OF THE COMPARABLES CONSTITUTES BENCHM ARK MARGIN, WHICH IS THEN COMPARED WITH THE OPERATING PROFIT MARGIN F ROM THE ASSESSEES INTERNATIONAL TRANSACTIONS WITH ITS AE. IT IS NOT PERMISSIBLE TO MAKE TRANSFER PRICING ADJUSTMENT, BY APPLYING THE AVERA GE OPERATING PROFIT MARGIN OF THE COMPARABLES, ON THE ASSESSEES UNIVER SAL TRANSACTIONS ENTERED INTO WITH BOTH THE AES AND NON-AES. AS THE ENTIRE EXERCISE ITA NO.3883/DEL/2010 9 UNDER CHAPTER-X IS CONFINED TO COMPUTING TOTAL INCO ME OF THE ASSESSEE FROM INTERNATIONAL TRANSACTIONS HAVING REGARD TO THE ARMS LENGTH PRICE, THERE IS NO SCOPE FOR COMPUTING INCOME FROM NON-INT ERNATIONAL TRANSACTIONS HAVING REGARD TO THE ALP. AS THE TPO HAS COMPUTED THE TRANSFER PRICING ADJUSTMENT QUA ALL THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE WITH REFERENCE TO THE BASE OF TOTAL COSTS , ALSO INCLUSIVE OF COSTS RELEVANT FOR TRANSACTIONS WITH NON-AES, WE VA CATE THE IMPUGNED ORDER ON THIS ISSUE AND RESTORE THE MATTER TO THE F ILE OF THE TPO/AO FOR RECALCULATING THE AMOUNT OF ADDITION OF TRANSFER PR ICING ADJUSTMENT BY TAKING INTO CONSIDERATION THE INTERNATIONAL TRANSAC TIONS ONLY UNDER THIS SEGMENT, TO THE EXCLUSION OF TRANSACTIONS WITH NON -AES. NEEDLESS TO SAY THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNI TY OF BEING HEARD. 13. THE THIRD COMPONENT OF THIS GROUND IS AGAINST N OT CONSIDERING OPERATING PROFIT MARGIN FROM INTERNAL COMPARABLES I N COMPUTING THE ALP OF INTERNATIONAL TRANSACTIONS. THE LD. AR WAS FAIR ENOUGH TO CONCEDE THAT THIS ISSUE WAS NOT TAKEN UP BEFORE THE TPO. HOWEVER, OUR ATTENTION WAS DRAWN TOWARDS THE OBJECTIONS TAKEN BE FORE THE DISPUTE ITA NO.3883/DEL/2010 10 RESOLUTION PANEL, RELEVANT PART OF WHICH IS AVAILAB LE ON PAGE 82 OF THE PAPER BOOK, CONTENDING THAT THE INTERNAL COMPARABLE S BE ALSO TAKEN INTO CONSIDERATION. THE DIRECTION GIVEN BY THE DRP IS S ILENT ON THIS ISSUE. 14. CLAUSE (I) OF RULE 10B(1)(E) STIPULATES THAT THE NET PROFIT MARGIN FROM AN INTERNATIONAL TRANSACTION WITH AN AE IS COM PUTED IN RELATION TO COST INCURRED OR SALES EFFECTED OR ASSETS EMPLOYED ETC. CLAUSE (II) IS MATERIAL FOR THE PRESENT PURPOSE. IT PROVIDES THAT THE NET PROFIT MARGIN REALIZED BY THE ENTERPRISE OR BY AN UNRELATED ENTER PRISE FROM A COMPARABLE UNCONTROLLED TRANSACTION OR A NUMBER OF SUCH TRANSACTIONS IS COMPUTED HAVING REGARD TO THE SAME BASE. ON SPLITTI NG CLAUSE (II) INTO TWO PARTS, IT DIVULGES THAT THE REFERENCE IS MADE T O INTERNAL AND EXTERNAL COMPARABLES. ONE PART OF CLAUSE (II) REFERS TO 'THE NET PROFIT MARGIN REALISED BY THE ENTERPRISE .... FROM A COMPARABLE U NCONTROLLED TRANSACTION' AND THE OTHER PART TALKS OF 'THE NET PROFIT MARGIN REALISED .... BY AN UNCONTROLLED ENTERPRISE FROM A COMPARABLE UNCONTROL LED TRANSACTION'. IT TRANSPIRES THAT WHEREAS THE FIRST PART REFERS TO TH E PROFIT MARGIN FROM INTERNAL COMPARABLE UNCONTROLLED TRANSACTIONS, THE SECOND PART REFERS TO ITA NO.3883/DEL/2010 11 PROFIT MARGIN FROM AN EXTERNAL COMPARABLE UNCONTROL LED TRANSACTION. THUS IT IS DISCERNIBLE THAT WHAT IS TO BE COMPARED UNDER THIS METHOD IS THE PROFIT FROM A COMPARABLE UNCONTROLLED TRANSACTI ON. THE WORD 'COMPARABLE' MAY ENCOMPASS INTERNAL COMPARABLE AS W ELL AS EXTERNAL COMPARABLE. THERE IS A SIGNAL IN THE RULE ITSELF AS TO PREFERENCE TO BE GIVEN TO INTERNAL COMPARABLE UNCONTROLLED TRANSACTI ONS VIS--VIS EXTERNAL COMPARABLE UNCONTROLLED TRANSACTIONS. IT IS BECAUSE THE DELEGATED LEGISLATURE HAS FIRSTLY REFERRED TO THE NET PROFIT MARGIN REALIZED BY THE ENTERPRISE (INTERNAL) FROM A COMPARABLE UNCONTROLLE D TRANSACTION AND, THEREAFTER, IT POINTS OUT TOWARDS THE NET PROFIT MA RGIN REALIZED BY AN UNRELATED ENTERPRISE (EXTERNAL) FROM COMPARABLE UNC ONTROLLED TRANSACTION. THUS WHERE A POTENTIAL COMPARABLE IS A VAILABLE IN THE SHAPE OF AN UNCONTROLLED TRANSACTION OF THE SAME ASSESSEE , IT IS LIKELY TO HAVE HIGHER DEGREE OF COMPARABILITY VIS-A-VIS THE COMPARABLES IDENTIFIED AMONGST THE UNCONTROLLED TRANSACTIONS OF THIRD PART IES. THE UNDERLYING OBJECT BEHIND THE COMPUTATION OF THE ALP OF AN INTE RNATIONAL TRANSACTION IS TO FIND OUT THE PROFIT WHICH SUCH ENTERPRISE WOU LD HAVE EARNED IF THE TRANSACTION HAD BEEN WITH SOME THIRD PARTY INSTEAD OF RELATED PARTY. ITA NO.3883/DEL/2010 12 WHEN THE DATA IS AVAILABLE SHOWING PROFIT MARGIN OF THAT ENTERPRISE ITSELF REALIZED FROM A THIRD PARTY, IT IS ADVISABLE TO HAV E RECOURSE TO AN INTERNALLY COMPARABLE UNCONTROLLED TRANSACTION. TH E REASON IS PATENT THAT THE VARIOUS FACTORS HAVING BEARING ON THE QUALITY O F OUTPUT, ASSETS EMPLOYED, INPUT COST ETC. CONTINUE TO REMAIN, BY AN D LARGE, SAME IN CASE OF AN INTERNAL COMPARABLE. THE EFFECT OF DIFFERENCE DUE TO SUCH INHERENT FACTORS ON COMPARISON MADE WITH THE THIRD PARTIES, GETS NEUTRALIZED WHEN COMPARISON IS MADE WITH INTERNAL COMPARABLE. EX CONSEQUENTI , IT FOLLOWS THAT AN INTERNAL COMPARABLE UNCONTROLLED TRANSACTIO N IS MORE NOTEWORTHY VIS-A-VIS ITS COUNTERPART I.E. EXTERNAL COMPARABLE. HOWEVER, THE CAVEAT IS THAT THE INTERNAL TRANSACTION SOUGHT TO BE COMPARED WITH SHOULD, IN FACT, BE COMPARABLE IN A PROPER MANNER. VARIOUS BENCHES O F THE TRIBUNAL HAVE REPEATEDLY HELD THAT INTERNAL COMPARABLES SHOU LD BE PREFERRED OVER EXTERNAL COMPARABLES, IF THESE ARE ACTUALLY COMPARA BLES. THE MUMBAI BENCH OF THE TRIBUNAL IN GHARDA CHEMICALS LTD. VS. DCIT (2010) 130 TTJ (MUMBAI) 556 HAS HELD THAT INTERNAL COMPARABLES SHOULD BE PREFERRED OVER THE EXTERNAL COMPARABLES. SIMILAR VI EW HAS BEEN TAKEN BY THE PUNE BENCH OF THE TRIBUNAL IN ACIT VS. MSS INDIA (P) LTD. (2009) ITA NO.3883/DEL/2010 13 123 TTJ PUNE 657. SINCE THIS ISSUE WAS NOT TAKEN UP BEFORE THE TPO AND THE DRP HAS NOT GIVEN ANY FINDING ON SPECIFIC O BJECTION TAKEN BEFORE IT IN THIS REGARD, WE ARE OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER ON THIS SCORE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE TPO/AO WITH A DIRECTION TO DECIDE THIS ISSUE AFRESH, AS PER LAW, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 15. THE ONLY OTHER GROUND WHICH SURVIVES IN THIS AP PEAL IS AGAINST CONFIRMATION OF DISALLOWANCE OF RS.72,92,082/- ON A CCOUNT OF EXPENSES INCURRED FOR IMPROVING THE EXISTING PRODUCT. 16. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE MUTATIS MUTANDIS SIMILAR TO GROUND NO. 3 OF THE ASSESSEES APPEAL FOR THE AY 2005-06. VIDE OUR SEP ARATE ORDER PASSED FOR THE SAID EARLIER YEAR, WE HAVE ACCEPTED THE ASS ESSEES CLAIM IN THIS REGARD BY RELYING ON AN EARLIER ORDER PASSED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2007-08. THIS GROUN D IS, THEREFORE, ALLOWED. IN VIEW OF OUR DECISION ON GROUND NO. 3 IN FAVOUR OF THE ITA NO.3883/DEL/2010 14 ASSESSEE, GROUND NO. 4 TAKEN UP IN THE MEMORANDUM OF APPEAL, HAS BECOME INFRUCTUOUS. THE SAME IS THEREFORE, DISMISSE D. 17. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.08.201 5. SD/- SD/- [A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 12 TH AUGUST, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.