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

ITA 3981/DEL/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8770 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHA KANT SAHU SENIOR
• Keywords: Related party transaction; Transfer pricing; Principle of natural justice; International transaction; Question of law; Tax effect; Set aside
• Section: 92C; 92D; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-1 : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3901/DEL./2015 (ASSESSMENT YEAR : 2008-09) M/S. HONEYWELL INTERNATIONAL (INDIA) VS. ACIT, CIR CLE 12 (1), PRIVATE LIMITED, NEW DELHI. 17, GROUND FLOOR, AMRIT HOUSE, SANT NAGAR, NEW DELHI 110 065. (PAN : AABCA7954K) ITA NO.3981/DEL./2015 (ASSESSMENT YEAR : 2008-09) ACIT, CIRCLE 12 (1), VS. M/S. HONEYWELL INTERNATION AL (INDIA) NEW DELHI. PRIVATE LIMITED, 17, GROUND FLOOR, AMRIT HOUSE, SANT NAGAR, NEW DELHI 110 065. (PAN : AABCA7954K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAMAL SAWHNEY, ADVOCATE SHRI PRASHANT MEHARCHANDANI, ADVOCATE REVENUE BY : SHRI SUBHA KANT SAHU, SENIOR DR DATE OF HEARING : 07.11.2019 DATE OF ORDER : 20.11.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 2 PRESENT CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE ARE BEING DISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID REPETITION OF DISCUSSION. ITA NO.3901/DEL/2015 (TAXPAYERS APPEAL) 2. THE APPELLANT, M/S. HONEYWELL INTERNATIONAL (IND IA) PVT. LTD. (HEREINAFTER REFERRED TO AS THE TAXPAYER) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 10.03.2015 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- 44, NEW DELHI IN AN APPEAL CHALLENGING THE ORDERS PASSED BY THE LD. TPO/AO QUA THE ASSESSMENT YEAR 2008-09 ON THE GROUN DS INTER ALIA THAT :- TRANSFER PRICING MATTER - PROVISION O(IT ENABLED S ERVICES 1. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE E RRED IN REJECTING AND THE LD. CIT(A) HAS ERRED IN CONFIRMIN G THE ACTION OF LD. AO / LD. TPO IN REJECTING THE COMPARABILITY ANALYSIS CARRIED OUT IN THE TRANSFER PRICING ('TP') DOCUMENT ATION MAINTAINED BY THE APPELLANT UNDER SECTION 92D OF TH E ACT, READ WITH RULE 100 OF THE RULES, AND IN CARRYING OUT A F RESH COMPARABLE SEARCH ANALYSIS BY USING INAPPROPRIATE F ILTERS, THEREBY, MAKING AN ADJUSTMENT TO THE AFORESAID INTE RNATIONAL TRANSACTION. 2. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE E RRED IN VIOLATING AND THE LD. CIT(A) HAS ERRED IN CONFIRMIN G THE ACTION OF LD. AO / TPO IN VIOLATING THE PROVISIONS OF RULE 10B(2) OF THE RULES BY REJECTING FOLLOWING COMPARABLE COMPANIES ( REFER BELOW) AS IDENTIFIED BY THE APPELLANT. ALLSEC TECHNOLOGIES LTD SHREEJAL INFO HUBS LTD 3. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE E RRED IN VIOLATING AND THE LD. CIT(A) HAS ERRED IN CONFIRMIN G THE ACTION OF LD. AO / TPO IN VIOLATING THE PROVISION OF RULE 10B(2) OF THE RULES BY ADDING FOLLOWING NEW COMPANIES AS COM PARA BLES TO THE APPELLANT. ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 3 CROSSDOMAIN SOLUTIONS PRIVATE LTD CORAL HUB LTD (EARLIER KNOWN AS VISHAL INFORMATIO N TECHNOLOGIES LTD) DATAMATICS FINANCIAL SERVICES LTD -IT ENABLED SER VICES SEGMENT E4E HEALTHCARE BUSINESS SERVICES PRIVATE LTD (EAR LIER KNOWN NITANNY OUTSOURCING SERVICES PRIVATE LTD) HCL COM NET SYSTEMS & SERVICES LTD - IT ENABLED SERVICES SEGMENT INFOSYS BPO LTD WIPRO LTD - BPO SEGMENT 4. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE E RRED IN CONSIDERING AND THE LD. CIT(A) HAS ERRED IN CONFIRM ING THE ACTION OF LD. AO / LD. TPO IN CONSIDERING ERRONEOUS NET OPERATING PROFIT MARGINS FOR SOME OF THE COMPANIES CONSIDERED AS COMPARABLE IN THE TP ORDER, IN ORDER TO DETERMIN E THE ALP OF THE AFORESAID INTERNATIONAL TRANSACTION. 5. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE E RRED IN CONSIDERING AND THE LD. CIT(A) HAS ERRED IN CONFIRM ING THE ACTION OF LD. AO / LD. TPO IN CONSIDERING AN ER RONEOUS FIGURE OF INR 175,632,798 AS OPERATING REVENUE IN THE IT ENABLED SERVICES SEGMENT OF THE APPELLANT FOR THE P URPOSE OF MAKING THE SAID TP ADJUSTMENT INSTEAD OF CORRECT FI GURE OF INR 187,013,618, THEREBY LEADING TO AN ADDITIONAL TP AD JUSTMENT OF INR 11,380,820. TRANSFER PRICING MATTER - PROVISION OF MARKET SUPPO RT SERVICES 6. ON FACTS AND IN LAW, THE LD. TPO HAVE ERRED IN R EJECTING AND THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LD. AO / LD. TPO OF REJECTING THE COMPARABILITY ANALYSIS C ARRIED OUT IN THE TP DOCUMENTATION MAINTAINED BY THE APPELLANT U/ S 92D OF THE ACT, READ WITH RULE 92D OF THE RULES AND IN CAR RYING OUT A FRESH SEARCH FOR COMPARABLE COMPANIES BY USING INAP PROPRIATE FILTERS, THEREBY, MAKING AN ADJUSTMENT TO THE AFORE SAID INTERNATIONAL TRANSACTION. 7. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE E RRED IN VIOLATING AND THE LD. CIT(A) HAS ERRED IN CONFIRMIN G THE ACTION OF LD. AO / LD. TPO OF VIOLATING THE PROVISIONS OF RULE 10B(2) OF ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 4 THE RULES BY REJECTING FOLLOWING COMPARABLE COMPANI ES IDENTIFIED BY THE APPELLANT. INDIACORN LTD INTERADS LTD REDIFF.CORN INDIA LTD TIMES INNOVATIVE MEDIA LTD (EVENTS MANAGEMENT SEGMENT) 8. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE E RRED IN VIOLATING AND THE LD. CIT(A) HAS ERRED IN CONFIRMIN G THE ACTION OF LD. AO / LD. TPO IN VIOLATING THE PROVISION OF R ULE 10B(2) OF THE RULES BY ADDING FOLLOWING NEW COMPANIES AS COMP ARABLES TO THE APPELLANT. APITCO LTD VAPI WASTE & EFFLUENT MANAGEMENT CO. LTD CHOKSI LABORATORIES LTD 9. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE E RRED IN CONSIDERING AND THE LD. CIT(A) HAS ERRED IN CONFIRM ING THE ACTION OF LD. AO / LD. TPO IN CONSIDERING ERRONEOUS NET OPERATING PROFIT MARGINS FOR SOME OF THE COMPANIES CONSIDERED AS COMPARABLE IN THE TP ORDER, IN ORDER TO DETERMIN E THE ALP OF THE AFORESAID INTERNATIONAL TRANSACTION. TRANSFER PRICING MATTER - COMMON 10. ON FACTS AND IN LAW THE LD. AO / LD. TPO HAVE E RRED IN VIOLATING AND THE LD. CIT(A) HAS ERRED IN CONFIRMIN G THE ACTION OF LD. AO / LD. TPO IN VIOLATING THE PROVISIONS OF RULE 10B(1)(E)(III) AND RULE 10B(3) OF THE RULES BY DENY ING THE BENEFIT OF WORKING CAPITAL ADJUSTMENT. 11. ON FACTS AND IN LAW THE LD. AO / LD. TPO HAVE ERRED IN VIOLATING AND THE LD. CIT(A) HAS ERRED IN CONFIRMIN G THE ACTION OF LD. AO / LD. TPO IN VIOLATING THE PROVISIONS OF RULE 10B(1)(E)(III) AND RULE 10B(3) OF THE RULES BY DENY ING THE BENEFIT OF RISK ADJUSTMENT. 12. ON FACTS AND IN LAW THE LD. AO / LD. TPO HAVE ERRED IN NOT GRANTING AND THE LD. CIT(A) HAS ERRED IN CONFIR MING THE ACTION OF LD. AO / LD. TPO OF NOT GRANTING THE BENE FIT OF THE 5% VARIATION AS PER THE PROVISO TO SECTION 92C (2) OF THE ACT TO THE APPELLANT. 13. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE ERRED IN IGNORING AND THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO / TPO OF IGNORING THE FACT THAT THE APPEL LANT WAS ENTITLED TO TAX HOLIDAY UNDER SECTION 10A OF THE AC T ON ITS PROFITS FROM PROVISION OF SERVICES TO FOREIGN ASSOCIATED EN TERPRISES AND ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 5 THEREFORE, WOULD NOT HAVE GOT ANY INCENTIVE TO MANI PULATE THE TRANSFER PRICES OF ITS INTERNATIONAL RELATED PARTY TRANSACTIONS. 14. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE ERRED IN EXERCISING AND THE LD. CIT(A) HAS ERRED IN CONFIRMI NG THE ACTION OF LD. AO / TPO OF EXERCISING THE POWERS UNDER SECT ION 133(6) OF THE ACT FOR COLLECTING INFORMATION AND RELYING ON T HE SAME FOR COMPARABILITY PURPOSES FOR COMPANIES BY DISREGARDIN G THE FACT THAT THE SAME WAS NOT AVAILABLE IN THE PUBLIC DOMAI N. 15. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE ERRED IN DISREGARDING AND THE LD. CIT(A) HAS ERRED IN CONFIR MING THE ACTION OF LD. AO / LD. TPO OF DISREGARDING PRIOR YE ARS' DATA USED BY THE APPELLANT TO BENCHMARK ITS INTERNATIONAL TRA NSACTIONS, IN ITS TP DOCUMENTATION FOR THE YEAR AND HOLDING THAT CURRENT YEAR (I.E. FY 2007-08) DATA FOR COMPARABLE COMPANIES SHO ULD BE USED DESPITE THE FACT THAT THE SAME WAS NOT NECESSARILY AVAILABLE TO THE APPELLANT AT THE TIME OF PREPARING ITS TP DOCUMENTA TION, AND GROSSLY MISINTERPRETING THE REQUIREMENT OF 'CONTEMP ORANEOUS' DATA IN THE RULES TO NECESSARILY IMPLY CURRENT YEAR DATA, THEREBY BREACHING THE PRINCIPLES OF NATURAL JUSTICE AND 'IM POSSIBILITY OF PERFORMANCE'. 16. ON FACTS AND IN LAW, THE LD. AO / LD. TPO HAVE ERRED IN NOT DISCHARGING AND THE LD. CIT(A) HAS ERRED IN CON FIRMING THE ACTION OF LD. AO / LD. TPO IN NOT DISCHARGING THE S TATUTORY ONUS TO ESTABLISH THAT ANY OF THE CONDITIONS SPECIFIED I N. CLAUSE (A) TO (D) OF SECTION 92C(3) OF THE ACT HAVE BEEN SATISFIE D BEFORE DISREGARDING THE ALP DETERMINED BY THE APPELLANT AN D PROCEEDING TO DETERMINE THE ALP AFRESH. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. HONEYWELL INTERNATIO NAL (INDIA) PRIVATE LIMITED, THE TAXPAYER IS A SUBSIDIARY OF HO NEYWELL INTERNATIONAL INC., USA AND IS INTO THE BUSINESS OF DISTRIBUTION AND ASSEMBLY OF LIFE SAFETY EQUIPMENTS THAT INCLUDE FIR E AND SMOKE DETECTORS. THE TAXPAYER HAS BEEN CHARACTERIZED AS PROVIDING MARKETING SUPPORT SERVICES TO ITS ASSOCIATED ENTERP RISES (AE). ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 6 DURING THE YEAR UNDER ASSESSMENT, THE TAXPAYER ENTE RED INTO INTERNATIONAL TRANSACTIONS AS RETURNED IN FORM NO.3 CEB AS UNDER :- S.NO. NATURE OF INTERNATIONAL TRANSACTION AMOUNT (IN INR) 1 PURCHASE OF RAW MATERIALS 144,481,646 2 PURCHASE OF FINISHED GOODS 228,884,744 3 SALE OF GOODS 21,112,933 4 PURCHASE OF FIXED ASSETS 2,940,906 5 CALL CENTRE SERVICES 175,632,798 6 SUPPORT SERVICES 259,180,671 7 COMMISSION 1,704,345 8 COST-SHARING 10,145,647 9 REIMBURSEMENT OF EXPENSES 20,069,991 4. LD. TRANSFER PRICING OFFICER (TPO) ONLY DISPUTED THE INTERNATIONAL TRANSACTIONS QUA MARKETING SUPPORT SE RVICES SEGMENT. THE TAXPAYER IN ITS TP STUDY APPLIED TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD (MAM) TO BENCHMARK THE INTERNATIONAL TRANSACTIONS QUA MARKET ING SUPPORT SERVICES SEGMENT AND CALCULATED ITS OWN MARGIN AT 9 .92%, SELECTED FIVE COMPARABLES BY USING MULTIPLE YEARS DATA AND C ALCULATED MARGIN OF THE COMPARABLES AT 5.30% ON COST AND FOUN D ITS INTERNATIONAL TRANSACTIONS AT ARMS LENGTH. HOWEVE R, LD. TPO REJECTED THE TAXPAYERS TP STUDY AND SELECTED 10 CO MPARABLES BY HOWEVER ACCEPTING TNMM AS MAM WITH PBIT/COST AS PRO FIT LEVEL INDICATOR (PLI) AND CALCULATED THE MEAN MARGI N AT 21.76% AND THEREBY COMPUTED THE ARMS LENGTH PRICE (ALP) O F THE INTERNATIONAL TRANSACTIONS AS UNDER :- ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 7 ARITHMETIC MEAN PLI : 21.76% ARMS LENGTH PRICE : 21.76% OPERATING COST RS.177,294,607 ARMS LENGTH MARGIN 21.76% OF THE OPERATING COST ARMS LENGTH PRICE (ALP) RS.215,873,913 PRICE SHOWN IN THE INTERNATIONAL TRANSACTIONS RS.194,889, 312 SHORTFALL BEING ADJUSTMENT U/S 92CA RS.20,984,601 THE ABOVE SHORTFALL OF RS.20,984,601 IS TREATED AS TRANSFER PRICING ADJUSTMENT U/S 92CA. 14. SUMMARY OF ADJUSTMENTS THE SUMMARY OF ADJUSTMENTS U/S 92CAR IS AS UNDER :- SEGMENT ADJUSTMENT IT ENABL ED SERVICES RS.41,456,233 MARKET SUPPORT SERVICES RS.20,984,601 TOTAL RS.62,440,834 THUS THE ABOVE AMOUNT OF RS.62,440,834 IS TREATED A S TRANSFER PRICING ADJUSTMENT FOR THE FY 2007-08. 5. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. C IT (A) BY WAY OF FILING APPEALS, WHICH HAS BEEN PARTLY ACCEPT ED BY ORDERING EXCLUSION OF TWO COMPARABLES QUA PROVISIONS OF MARK ETING SUPPORT SERVICES SEGMENT. 6. AFTER GIVING EFFECT TO THE ORDER PASSED BY THE L D. CIT (A) WHO HAS EXCLUDED TWO COMPARABLES, MEAN MARGIN OF TH E COMPARABLE COMES DOWN TO 18.10% AND CONSEQUENTLY, L D. TPO PROPOSED THE ADJUSTMENT FOR MARKETING SUPPORT SERVI CES AT RS.1,44,95,619/-. ASSESSEE CARRIED THE MATTER BY W AY OF AN APPEAL ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 8 BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE A PPEAL. FEELING AGGRIEVED, THE ASSESSEE AS WELL AS REVENUE HAVE COM E UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. UNDISPUTEDLY, LD. TPO HAS ACCEPTED THE TNMM AS T HE MAM APPLIED BY THE TAXPAYER TO BENCHMARK THE INTENTIONA L TRANSACTIONS QUA PROVISION OF MARKETING SUPPORT SERVICES WITH PB IT/COST AS PLI. AFTER GIVING EFFECT TO THE ORDER PASSED BY TH E LD. CIT (A), FINAL SET OF COMPARABLES TO BENCHMARK THE INTERNATI ONAL TRANSACTIONS QUA MARKETING SUPPORT SERVICES ARE AS UNDER :- SR. NO. NAME OF THE COMPANY CORRECTED NCP MARGIN 1 APITCO LTD. 49.35% 2 BEST MULYANKYAN CONSULTANTS LTD. 12.85% 3 CHOKSI LABORATORIES LTD. 29.20% 4 ICRA MANAGEMENT CONSULTING SERVICES LTD. 4.18% 5 IDC LTD. 14.82% 6 VAPI WASTE AND EFFLUENT MANAGEMENT CO. 17.87% 7 INDUS TECHNICAL AND FINANCIAL CONSULTANTS LTD. 12.60% 8 TECHNICOM CHEMIE LTD. 3.96% TOTAL 18.10% ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 9 9. AT THE VERY OUTSET, LD. AR FOR THE TAXPAYER CONT ENDED THAT AT THIS STAGE, THE ONLY DISPUTE IS QUA INCLUSION OF TH REE COMPARABLES VIZ. APITCO LTD., VAPI WASTE & EFFLUENT MANAGEMENT CO. L TD. AND CHOKSI LABORATORIES LTD. BY AO/TPO/CIT (A) WHICH ARE NOT SUITABLE COMPARABLES VIS--VIS THE TAXPAYER TO BENC HMARK THE INTERNATIONAL TRANSACTION. THE TAXPAYER SOUGHT EXC LUSION OF AFORESAID THREE COMPARABLES FORM THE FINAL LIST TO BENCHMARK THE INTERNATIONAL TRANSACTIONS. WE WOULD EXAMINE THE S UITABILITY OF ALL THE THREE COMPARABLES VIS--VIS THE TAXPAYER ONE BY ONE. GROUNDS NO.1 TO 5 10. LD. AR FOR THE TAXPAYER BROUGHT TO THE NOTICE O F THE BENCH THAT GROUNDS NO.1 TO 5 QUA PROVISIONS OF ITES SEGME NT HAVE BECOME INFRUCTUOUS AS RELIEF HAS ALREADY BEEN GRANT ED BY THE LD. CIT (A). IN VIEW OF THE MATTER, GROUNDS NO.1 TO 5 ARE DISMISSED HAVING BEEN BECOME INFRUCTUOUS. GROUNDS NO.6, 8 & 9 11. THE TAXPAYER SOUGHT EXCLUSION OF APITCO LTD., VAPI WASTE & EFFLUENT MANAGEMENT CO. LTD. AND CHOKSI LABORATORIE S LTD. FROM THE FINAL SET OF COMPARABLES TO BENCHMARK THE INTERNATIONAL TRANSACTIONS QUA PROVISION OF MARKETING SUPPORT SER VICES SEGMENT. ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 10 APITCO LTD. (APTICO) 12. THE TAXPAYER SOUGHT EXCLUSION OF APITCO AS CO MPARABLE VIS--VIS THE TAXPAYER ON THE GROUNDS INTER ALIA TH AT IT IS A GOVERNMENT COMPANY; THAT APITCO IS FUNCTIONALLY DIS SIMILAR; THAT APITCO HAS BEEN EXCLUDED AS A COMPARABLE BY THE TRI BUNAL IN TAXPAYERS OWN CASE FOR AY 2010-11. 13. LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELI ED ON THE ORDERS OF THE LOWER AUTHORITIES BELOW. 14. WHEN WE EXAMINE ANNUAL REPORT OF APITCO, AVAILA BLE AT PAGES 950 AND 951 OF THE PAPER BOOK, APART FROM API TCO BEING A GOVERNMENT COMPANY OPERATING UNDER CONTROLLED REGUL ATION, SOCIAL ECONOMIC PLATFORM MODEL, IT IS INTO DIVERSIFIED FUN CTIONS VIZ. PROVIDING CONSULTANCY SERVICES IN AREAS LIKE DEVELO PMENT OF INDUSTRY CLUSTERS, ENERGY MANAGEMENT, ENVIRONMENT M ANAGEMENT, INFRASTRUCTURE PLANNING, MICRO ENTERPRISE DEVELOPME NT PROJECT PLANNING ETC. WHEREAS ITS FINANCIAL SEGMENTAL ARE N OT AVAILABLE. 15. MOREOVER, SUITABILITY OF APITCO AS A COMPARABLE HAS BEEN EXAMINED BY THE CIT (A) IN TAXPAYERS OWN CASE FOR AY 2010-11 WHEN THERE IS NO CHANGE IN THE BUSINESS MODEL AND H AS ORDERED TO EXCLUDE THE SAME AS A COMPARABLE BY RELYING UPON TH E DECISIONS RENDERED BY THE TRIBUNAL IN VEDARIS TECHNOLOGY (P) LTD. 2010- TII-10-ITAT-DEL-TP AND HONBLE MUMBAI HIGH COURT IN M/S. ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 11 THYSSEN KRUPP INDUSTRIES INDIA PVT. LTD. 2016-TII -18-HC- MUM-TP . 16. HONBLE BOMBAY HIGH COURT IN M/S. THYSSEN KRUPP INDUSTRIES INDIA PVT. LTD. (SUPRA) EXAMINED THE SUITABILITY OF A GOVERNMENT COMPANY AS COMPARABLE AND ORDERED TO EXC LUDE THE SAME FROM THE FINAL LIST OF COMPARABLES BY RETURNIN G FOLLOWING FINDINGS :- A) THE GRIEVANCE OF THE RESPONDENT ASSESSEE BEFOR E THE TRIBUNAL WAS THAT M/S. ENGINEERS INDIA LTD. HAS BEE N ERRONEOUSLY INTRODUCED AS A COMPARABLE BY THE TPO F OR DETERMINING THE ALP OF THE RESPONDENT ASSESSEE'S IN TERNATIONAL TRANSACTIONS. THE IMPUGNED ORDER OF THE TRIBUNAL RE CORDS THE FACT THAT THE ENGINEERING INDIA LTD. IS A GOVERNMEN T COMPANY AND ITS ANNUAL REPORT INDICATES THAT A SUBSTANTIAL PART OF ITS REVENUE IN EXECUTION OF TURNKEY PROJECTS AROSE OUT OF EXECUTING PROJECTS OF PUBLIC SECTOR UNDERTAKINGS. IN THE CIRC UMSTANCES, THE IMPUGNED ORDER OF THE TRIBUNAL HOLDS THAT THE ENGIN EERS INDIA LTD. COULD NOT BE CONSIDERED TO BE COMPARABLE FOR T HE REASON THAT CONTRACTS BETWEEN PUBLIC SECTOR UNDERTAKINGS ARE NO T DRIVEN BY PROFIT MOTIVE ALONE, BUT OTHER CONSIDERATION ALSO W EIGH IN SUCH AS DISCHARGE OF SOCIAL OBLIGATIONS ETC. THUS, IT IS N OT COMPARABLE. 17. COORDINATE BENCH OF THE TRIBUNAL IN CIENA INDIA PVT. LTD. VS. DCIT IN ITA NO.3324/DEL/2013 & 2948/DEL/2013 EXAMINE THE SUITABILITY OF APITCO VIS--VIS MARKETING SUPPORT S ERVICES PROVIDER AND ORDERED TO EXCLUDE THE SAME BY RETURNING FOLLOW ING FINDINGS :- 17.1. THE REVENUE IS AGGRIEVED AGAINST THE EXCLUSI ON BY THE LD. CIT(A) OF APITCO LTD. THIS COMPANY WAS CONSIDERED A S COMPARABLE BY THE TPO. THE ID CIT(A) NOTICED THAT T HIS COMPANY TO BE ENGAGED IN PROVIDING TECHNICAL AND EN GINEERING SERVICES AND ALSO EXECUTING PROJECTS ON TURNOVER BA SIS. HE, THEREFORE, HELD THIS COMPANY TO BE NOT COMPARABLE. ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 12 17.2. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD, WE FIND FROM THE ANNUA L REPORT OF THIS COMPANY THAT IT IS ENGAGED IN PROVIDING SEVERA L SERVICES, VIZ., MICRO ENTERPRISES DEVELOPMENT, SKILL DEVELOPMENT, ENTREPRENEURSHIP DEVELOPMENT, RESEARCH STUDIES, PRO JECT RELATED SERVICES, INFRASTRUCTURE PLANNING & DEVELOP MENT, ENVIRONMENT MANAGEMENT, ENERGY RELATED SERVICES, CL USTER DEVELOPMENT, TECHNOLOGY FACILITATION, ASSET RECONST RUCTION & MANAGEMENT SERVICES, EMERGING AREAS. IT CAN BE SEEN FROM THE NATURE OF OPERATIONS CARRIED OUT BY THIS COMPANY TH AT THE SAME IS TOWARDS MICRO ENTERPRISES DEVELOPMENT, SKILL DEVELO PMENT AND PROJECT RELATED SERVICES, ETC., ALSO INCLUDING INFR ASTRUCTURE PLANNING AND DEVELOPMENT ALONG WITH ENERGY RELATED SERVICE AND CLUSTER DEVELOPMENT. A PART OF ITS ACTIVITIES HAS G OT SOME RESEMBLANCE WITH THE NATURE OF SERVICE PROVIDED BY THE ASSESSEE UNDER THIS SEGMENT. THE LD. CIT(A) HAS RECORDED THA T ONLY 12% OF TOTAL INCOME OF THIS COMPANY IS FROM RESEARCH ST UDIES WHICH IS AKIN TO THE NATURE OF SERVICES PROVIDED BY THE ASSE SSEE COMPANY.' THIS CONTENTION HAS NOT BEEN CONTROVERTED BY THE LD . DR WITH ANY CLINCHING EVIDENCE. WHEN WE CONSIDER THE OPERATIONS OF THIS COMPANY AS ENUMERATED ABOVE AND THE FACT THAT THIS COMPANY HAS MAINTAINED ACCOUNTS ON ENTITY LEVEL AND THERE I S NO BIFURCATION AVAILABLE IN RESPECT OF THE SERVICES SI MILAR TO THOSE PROVIDED BY TIRE ASSESSEE UNDER THIS SEGMENT, THIS COMPANY ON ENTITY LEVEL CANNOT BE CONSIDERED AS COMPARABLE. WE , THEREFORE, HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN CONSIDERI NG THIS COMPANY AS NOT COMPARABLE. 18. SO, THE APITCO BEING A GOVERNMENT COMPANY OPERA TING IN DIFFERENT REGULATORY, SOCIAL ECONOMIC PLATFORM MODE L AND BEING INTO DIVERSIFIED SERVICES, OF WHICH SEGMENTAL FINAN CIALS ARE NOT AVAILABLE, IS NOT A SUITABLE COMPARABLE VIS--VIS T HE TAXPAYER. MOREOVER, REVENUE ITSELF HAS REJECTED THE APITCO AS A SUITABLE COMPARABLE VIS--VIS THE TAXPAYER IN TAXPAYERS OWN CASE FOR AY 2010-11, HENCE WE ORDER TO EXCLUDE APITCO AS A SUIT ABLE COMPARABLE FROM THE FINAL SET OF COMPARABLES. ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 13 CHOKSI LABORATORIES LTD. (CHOKSI) 19. THE TAXPAYER SOUGHT EXCLUSION OF CHOKSI FROM TH E FINAL SET OF COMPARABLES FOR BENCHMARKING THE INTERNATIONAL T RANSACTIONS ON THE GROUNDS INTER ALIA THAT IT IS FUNCTIONALLY DISS IMILAR; THAT CHOKSI HAS BEEN ORDERED TO BE EXCLUDED BY LD. CIT (A) IN T AXPAYERS OWN CASE FOR AY 2009-10 AND EXCLUSION HAS NOT BEEN CHAL LENGED IN THE APPEAL FILED BEFORE THE TRIBUNAL. 20. LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELI ED ON THE ORDERS OF THE LOWER AUTHORITIES BELOW. 21. WHEN WE EXAMINE THE ANNUAL REPORT OF CHOKSI, AV AILABLE AT PAGES 1000 TO 1005 OF THE PAPER BOOK, IT HAS COME O N RECORD THAT CHOKSI IS INTO PROVIDING COMPLETE SOLUTIONS FOR IMP ROVING QUALITY IN PROCESSES, PRODUCTS AND SERVICES WHICH INCLUDE P ROVIDING SERVICES AS PHARMACEUTICAL ANALYSIS, FOOD & BEVERAG ES ANALYSIS, WATER ANALYSIS AND CONSTRUCTION MATERIAL ANALYSIS. IT IS ALSO PROVIDING INSTRUMENT CALIBRATION & VALIDATION SERVI CES, ENVIRONMENT MANAGEMENT SERVICES, CLINICAL RESEARCH, CONSULTANCY SERVICES AND ITS CONSULTANCY SERVICES ALSO INCLUDE TRAINING ON QUALITY CONTROL TECHNIQUES, THIRD-PARTY INSPECTION, TRAINING, AUDITING & CONSULTANCY ETC. AND IT IS ALSO INTO ASSAYING AND HALLMARKING. 22. COMPARABILITY OF CHOKSI HAS BEEN EXAMINED BY TH E TRIBUNAL VIS--VIS ROUTINE MARKETING SUPPORT SERVICES PROVID ER IN CIENA ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 14 INDIA PVT. LTD. (SUPRA) AND EXCLUDED THE SAME BY RETURNING FOLLOWING FINDINGS :- 15. THE TPO VISITED THE WEBSITE OF THIS COMPANY AN D NOTICED THAT IT WAS ENGAGED IN PROVIDING ANALYSIS, CALIBRAT IONS, POLLUTION CONTROL AND CONSULTANCY SERVICES' TO A BROAD SPECTR UM OF INDUSTRIES. BY CONSIDERING SUCH NATURE OF SERVICES PROVIDED BY THIS COMPANY, THE TPO HELD THAT THESE WERE SIMILAR TO THE SERVICES PROVIDED BY THE ASSESSEE TO ITS AE. WE HAV E GONE THROUGH THE ANNUAL REPORT OF THIS COMPANY, WHICH IS AVAILABLE ON PAGES 2370 ONWARDS OF THE PAPER BOOK. NOTE NO. 8 TO PART B - 'NOTES FORMING PART OF THE ACCOUNTS' - PROVIDES THA T THIS COMPANY IS A COMMERCIAL TESTING HOUSE ENGAGED IN TESTING OF VARIOUS PRODUCTS AND ALSO OFFERS SERVICES IN THE FIELD OF P OLLUTION CONTROL AS ALLIED ACTIVITY. PARA 2 OF THE ANNEXURE TO THE A UDITOR'S REPORT ALSO CLARIFIES THAT THIS IS A COMPANY ENGAGED IN RE NDERING SERVICES 'FOR TESTING PURPOSES. FROM THE ABOVE DESC RIPTION OF THE NATURE OF SERVICES CARRIED ON BY THIS COMPANY, IT I S EVIDENT THAT IT IS BASICALLY ENGAGED IN PROVIDING TESTING SERVICES FOR VARIOUS PRODUCTS AND ALSO OFFERS SERVICES IN THE FIELD OF P OLLUTION CONTROL. AS AGAINST THIS, THE SERVICES PROVIDED BY THE ASSES SEE ARE PURELY IN THE NATURE OF IDENTIFYING CUSTOMERS FOR ITS AES AND PROVIDING TECHNICAL SUPPORT SERVICES TO THEIR CUSTOMERS. WE F AIL TO APPRECIATE AS TO HOW MARKETING SUPPORT SERVICES CAN BE EQUATED WITH TESTING SERVICES. WHEN WE PERUSE SCHEDULE OF F IXED ASSETS OF THIS COMPANY, IT CAN BE SEEN THAT THE MAJOR ASSET I S 'INSTRUMENTS.' IT IS WITH THE HELP OF THESE INSTRUMENTS THAT THE C OMPANY IS PROVIDING SERVICES IN THE NATURE OF TESTING OF VARI OUS PRODUCTS. BY NO STANDARD, THIS COMPANY CAN BE CONSIDERED AS COMP ARABLE WITH THE ASSESSEE COMPANY. WE, THEREFORE, DIRECT THE EXC LUSION OF THIS COMPANY FROM THE LIST OF COMPARABLE. 23. SIMILARLY, IN THE CASE OF FUJITSU INDIA LTD. VS. DCIT IN ITA NO.6280/DEL/2012 , THE TRIBUNAL ORDERED TO EXCLUDE CHOKSI AS A COMPARABLE VIS--VIS MARKETING SUPPORT SERVICES PRO VIDER BY RETURNING FOLLOWING FINDINGS :- 21.1. THE TPO INCLUDED THIS COMPANY IN THE LIST OF COMPARABLES DESPITE THE ASSESSEE'S OBJECTION THAT IT WAS FUNCTI ONALLY DIFFERENT. 21.2. WE HAVE GONE THROUGH THE ANNUAL REPORT OF THI S COMPANY, WHICH IS AVAILABLE IN THE PAPER BOOK. NOTE NO. 8 TO PART B - 'NOTES FORMING PART OF THE ACCOUNTS' - PROVIDES THA T THIS COMPANY ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 15 IS A COMMERCIAL TESTING HOUSE ENGAGED IN TESTING OF VARIOUS PRODUCTS AND ALSO OFFERS SERVICES IN THE FIELD OF P OLLUTION CONTROL AS ALLIED ACTIVITY. FROM THE ABOVE DESCRIPTION OF T HE NATURE OF SERVICES CARRIED ON BY THIS COMPANY, IT BECOMES EVI DENT THAT IT IS BASICALLY ENGAGED IN PROVIDING TESTING SERVICES FOR VARIOUS PRODUCTS AND ALSO OFFERS SERVICES IN THE FIELD OF P OLLUTION CONTROL. AS AGAINST THIS, THE SERVICES PROVIDED BY THE ASSES SEE ARE PURELY IN THE NATURE OF MARKETING SUPPORT TO ITS AES. WE FAIL TO APPRECIATE AS TO HOW MARKETING SUPPORT SERVICES CAN BE EQUATED WITH TESTING SERVICES. WHEN WE PERUSE SCHEDULE OF FIXED ASSETS O F THIS COMPANY, IT CAN BE SEEN AT THE MAJOR ASSET IS 'INST RUMENTS.' IT IS WITH THE HELP OF THESE INSTRUMENTS THAT THE COMPANY IS PROVIDING SERVICES IN THE NATURE OF TESTING OF VARIOUS PRODUC TS. BY NO STANDARD, THIS COMPANY CAN BE CONSIDERED AS COMPARA BLE WITH THE ASSESSEE COMPANY. WE, THEREFORE, DIRECT THE EXC LUSION OF THIS COMPANY FROM THE LIST OF COMPARABLES.' 24. SO, KEEPING IN VIEW THE FUNCTIONAL PROFILE OF C HOKSI AND THE FACT THAT REVENUE ITSELF HAS EXCLUDED THE SAME AS A COMPARABLE IN TAXPAYERS OWN CASE FOR AY 2009-10 WHEN THERE IS NO CHANGE IN THE BUSINESS MODEL DURING THE YEAR UNDER ASSESSMENT AND FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH OF TH E TRIBUNAL, WE ARE OF THE CONSIDERED VIEW THAT CHOKSI IS NOT A SUI TABLE COMPARABLE VIS--VIS THE TAXPAYER, HENCE ORDERED TO BE EXCLUDE D. VAPI WASTE & EFFLUENT MANAGEMENT CO. LIMITED (VAPI) 25. THE TAXPAYER SOUGHT EXCLUSION OF VAPI ON THE GR OUNDS INTER ALIA THAT IT IS A GOVERNMENT COMPANY AND ITS CAPITA L IS CONTRIBUTED BY THE GOVERNMENT; THAT IT IS FUNCTIONALLY DISSIMIL AR AS IT IS ENGAGED IN EFFLUENT TREATMENT AND COMMON SOLID WAST E ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 16 MANAGEMENT; AND THAT ITS REPORTED INCOME IS BASICAL LY FROM MEMBERSHIP FEE COLLECTED FROM THE MEMBERS. 26. APART FROM THE FACT THAT VAPI IS A GOVERNMENT C OMPANY, AS PER ANNUAL REPORT, AVAILABLE AT PAGE 1020 OF THE PA PER BOOK, IT HAS RECEIVED ITS SUBSTANTIAL CAPITAL FROM GOVERNMENT. MOREOVER, IT IS ENGAGED INTO EFFLUENT TREATMENT AND COMMON SOLID WA STE MANAGEMENT BUSINESS, AS IS EVIDENT FROM PAGE 1006 O F THE PAPER BOOK, AND AS SUCH, CANNOT BE A VALID COMPARABLE VIS --VIS THE TAXPAYER WHICH IS A ROUTINE MARKETING SUPPORT SERVI CES PROVIDER. FURTHERMORE, WHEN WE EXAMINE THE FINANCIALS OF VAPI AT PAGE 1021 OF THE PAPER BOOK, IT HAS RECEIVED INCOME AS MEMBER SHIP FEE FROM THE MEMBERS TO THE TUNE OF RS.178,953,573/-. 27. COORDINATE BENCH OF THE TRIBUNAL IN INTERCONTINENTAL HOTELS GROUP (INDIA) PVT. LTD. TS-894-ITAT-2018(DEL)-TP ORDERED TO EXCLUDE VAPI AS A COMPARABLE VIS--VIS ROUTINE MARK ETING SUPPORT SERVICES PROVIDER BY RETURNING FOLLOWING FINDINGS : - 16. WE FURTHER FIND THAT IN THE CASE OF VAPI WASTE EFFLUENT CO., CAPITAL IS CONTRIBUTED BY ITS MEMBERS AND GOVE RNMENT. MAJOR PORTION OF ITS INCOME COMES FROM MEMBERS IN F ORM OF CHARGES FOR DEPOSITION WHICH MEANS THAT THE CONTRIB UTORS ARE BENEFICIARIES. THEREFORE, THE PRICE OF THIS COMPANY CANNOT BE TREATED AS AN INDEPENDENT AND UNCONTROLLED PRICE WH EN THE MAJORITY OF THE REVENUE IS EARNED FROM THE MEMBERS WHO HAVE CONTRIBUTED TO THE CAPITAL OF THE COMPANY. 17. WE FURTHER FIND THAT ALMOST 64% OF THE ASSETS E MPLOYED BY THIS COMPANY ARE PLANT AND MACHINERY AND FOR A SERV ICE COMPANY TO HAVE SUCH HEAVY CAPITALIZATION IN PLANT AND MACH INERY IS ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 17 UNIQUE WHEREAS ASSETS OF THE ASSESSEE COMPANY ARE O F ROUTINE NATURE, NAMELY COMPUTER AND OFFICE EQUIPMENT. 18. THE COORDINATE BENCH IN THE CASE OF ACTIS ADVIS ERS PVT LTD IN ITA NO. 6390/DELL2012 HAS HELD AS UNDER: 'COMING BACK TO THE ISSUE OF COMPARABILITY THE INCL USION! EXCLUSION OF VAPI AND WAPCOS, THE ITAT IN THE CASES OF M/S MCI COM INDIA P. LTD. AND M/S VERIZON INDIA P. LTD. (SUPRA) HAS HELD THAT COMPANIES LIKE EIL, RITES, WA PSOS AND TCE ARE ENGINEERING COMPANIES AND PROVIDE END T O END SOLUTIONS AND THEREFORE THEY CANNOT BE COMPARED WITH THOSE ASSESSEE WHO WERE INTO PROVIDING MARKETING SU PPORT SERVICES TO THE PARENT COMPANY. THEY WERE HELD TO B E FUNCTIONALLY NOT COMPARABLE WITH THESE ENGINEERING COMPANIES. THE CASE OF VAPI ALSO FALLS ON THE SAME FOOTING. THEREFORE, RESPECTFULLY FOLLOWING THE ORDE R OF THE IT A T IN THE CASES OF M/S MCI COM INDIA P. LTD. AN D M/S VERIZON INDIA P. LTD. (SUPRA) AND ESTEL IN ITA NO. 584/BANG/06 WE ARE OF THE VIEW THAT VAPI AND WAPCOS ARE FUNCTIONALLY NOT COMPARABLE TO THE ASSESSEE.' 19. THE ORDER OF THE COORDINATE BENCH WAS AFFIRMED BY THE HON'BLE DELHI HIGH COURT IN TAX APPEAL NO. 952/2015 WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER: '6. AS FAR AS ISSUE (I) IS CONCERNED, THE COURT FIN DS THAT WHILE THE ASSESSEE PROVIDES MARKETING SUPPORT SERVICES, THE FIRST EXCLUDED COMPANY WASCOS, AS A COMPARABLY/ PROVIDES ENGINEERING CONSULTANCY SERVIC ES AND THE SECOND EXCLUDED COMPANY VAPI PROVIDES CONSULTANCY FOR WATER RESOURCE MANAGEMENT. THE REAS ONS GIVEN BY THE ITAT FOR EXCLUSION OF THOSE TWO ENTITI ES AS COMPARABLES APPEARS, THEREFORE, TO BE FULLY JUSTIFI ED ON FACTS AS WELL AS IN LAW. NO SUBSTANTIAL QUESTION OF LAW ARISES' 20. AS DISCUSSED ELSE.PWHERE, VAPI WASTE & EFFLUENT MGMT. CO. LTD IS FUNCTIONALLY DIFFERENT FROM THE ASSESSEE COMPANY AND FOLLOWING THE FINDINGS OF THE COORDINATE BENCH [SUP RA), WE ARE OF THE CONSIDERED VIEW THAT THIS COMPANY IS NOT A GOOD COMPARABLE AND SHOULD BE EXCLUDED FROM THE FINAL LIST OF COM P ARABLES. 28. FURTHERMORE, HONBLE DELHI HIGH COURT CONFIRMED THE EXCLUSION OF VAPI IN CASE OF CIT-I VS. ACTIS ADVISERS PVT. LTD. IN ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 18 TS-535-HC-2015(DEL)-TP AS COMPARABLE VIS--VIS MARKETING SUPPORT SERVICES PROVIDER BY RETURNING FOLLOWING FI NDINGS :- 6. AS FAR AS ISSUE (I) IS CONCERNED, THE COURT FIN DS THAT WHILE THE ASSESSEE PROVIDES MARKETING SUPPORT SERVICES, THE FIRST EXCLUDED COMPANY WASCOS, AS A COMPARABLE, PROVIDES ENGINEERING CONSULTANCY SERVIC ES AND THE SECOND EXCLUDED COMPANY VAPI PROVIDES CONSULTANCY FOR WATER RESOURCE MANAGEMENT. THE REASONS GIVEN BY THE ITAT FOR EXCLUSION OF THOSE TW O ENTITIES AS COMPARABLES APPEARS, THEREFORE, TO BE F ULLY JUSTIFIED ON FACTS AS WELL AS IN LAW. NO SUBSTANTI AL QUESTION OF LAW ARISES. 29. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT VAPI BEING INTO PROVIDING DIFF ERENT FUNCTIONS VIS--VIS THE TAXPAYER AND HAS DERIVED SUBSTANTIAL REVENUES FROM ITS MEMBERS ON ACCOUNT OF MEMBERSHIP FEE CANNOT BE CONS IDERED AS AN UNCONTROLLED ENTITY, HENCE ORDERED TO BE EXCLUDED A S COMPARABLE VIS--VIS THE TAXPAYER. GROUND NO.7 30. THE TAXPAYER SOUGHT INCLUSION OF TIMES INNOVATIVE LTD., INTERADS LIMITED, REDIFF.COM INDIA LTD. AND INDIACO M LIMITED AS COMPARABLES TO BENCHMARK ITS INTERNATIONAL TRANSACT IONS QUA MARKETING SUPPORT SERVICES. HOWEVER, DURING THE CO URSE OF ARGUMENTS, THE SAME HAS NOT BEEN PRESSED BY THE TAX PAYER, HENCE DISMISSED. ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 19 GROUNDS NO.10 & 11 31. GROUNDS NO.10 & 11 ARE NOT PRESSED BY THE LD. A R FOR THE TAXPAYER ON THE GROUND THAT IN CASE, APITCO LTD., VAPI WASTE & EFFLUENT MANAGEMENT CO. LTD. AND CHOKSI LABORATORIE S LTD. ARE EXCLUDED, THESE GROUNDS HAVE BECOME ACADEMIC. GROUND NO.12 32. THIS GROUND NEEDS NO ADJUDICATION AS AO/TPO ARE REQUIRED TO PROVIDE THE BENEFIT OF 5% VARIATION AS PER STATU TORY PROVISIONS. GROUNDS NO.13, 14 & 15 33. GROUNDS NO.13, 14 & 15 ARE DISMISSED HAVING NOT BEEN PRESSED DURING THE COURSE OF ARGUMENTS. GROUND NO.16 34. GROUND NO.16 NEEDS NO FINDING BEING GENERAL IN NATURE. 35. RESULTANTLY, THE APPEAL FILED BY THE TAXPAYER B EING ITA NO.3901/DEL/2015 IS PARTLY ALLOWED. ITA NO.3981/DEL./2015 (REVENUES APPEAL) 36. SINCE THE TAX EFFECT IN THE APPEAL FILED BY THE REVENUE IS LOW I.E. LESS THAN RS.50,00,000/-, IN VIEW OF THE CBDT CIRCULAR ITA NO.3901/DEL/2015 ITA NO.3981/DEL/2015 20 NO.17/2019 DATED 8 TH AUGUST, 2019 WHICH IS APPLICABLE RETROSPECTIVELY IN VIEW OF THE DECISION RENDERED BY COORDINATE BENCH OF THE TRIBUNAL IN CASE OF DINESH MADHAVLAL PATEL [TS-469- ITAT-2019(AHD)] 2019-TIOL-1556-ITAT-AHM DATED 14 TH AUGUST, 2019, THE APPEAL OF THE REVENUE BEING ITA NO.3981/DEL/2015 IS DISMISSED ON ACCOUNT OF LOW TAX EFFECT. ORDER PRONOUNCED IN OPEN COURT ON THIS 20 TH DAY OF NOVEMBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 20 TH DAY OF NOVEMBER , 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-44, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.