Deputy Commissioner of Income-tax, Bangalore V. M/s. Wipro GE Medical Systems Pvt, Lytd, Bangalore

ITA 40/BANG/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5509 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 13-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K R PRADEEP
• Keywords: Transfer pricing; Principle of natural justice; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE S HRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I.T . (T.P) A. NO S . 40/BANG/2011 & 1647 /BANG/20 13 (ASSESSMENT YEAR S : 20 05 - 06 & 2006 - 07 ) DY. COMMISSIONER OF INCOME TAX, CIRCLE 12(5), BANGALORE. . APPELLANT. VS. M/S. WIPRO GE MEDICAL SYSTEMS PVT. LTD., PLOT NO.4, KADUGODI INDL. AREA, SADARMANGALA, B ANGALORE - 560 067 . .. RESPONDENT. APPELLANT BY : MS. NEERA MALHOTRA, CIT (DR) (ITAT) - 2, BENGALURU. R E SPONDENT BY : SHRI K.R. PRADEEP, C.A. DATE OF HEARING : 28.03.2017. DATE OF P RONOUNCEMENT : 21 .04 .201 7 . O R D E R PER SHRI VIJAY P AL RAO, J .M . : THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) - IV, BANGALORE DT. 26. 10 .2010 & 16.9.2013 FOR THE ASSESSMENT YEARS 2005 - 06 & 2006 - 07 RESPECTIVELY. IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 2 2. FOR THE ASSESSMENT YEAR 2005 - 06, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 3 3. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDI CATION. 4. GROUND NO.2 IS REGARDING THE ALLOCATION OF EXPENSES TO THE 10A UNIT BY THE ASSESSING OFFICER RESULTING REDUCTION OF DEDUCTION UNDER SECTION 10A OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 4 5. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AS WELL AS LEARNED AUTHORISED REPRESENTATIVE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 2002 - 03 TO 2004 - 05 VIDE ORDER DT.16.5.2008 IN ITA NOS.810 TO 812/BANG/2007 IN PARA 10(III) AS UNDER : 10(III) WE HAVE HEARD THE SUBMISSIONS MAD EBY BOTH SIDES ONTHIS ISSUE AND PERUSED THE RECORDS AND THE EARLIER ORDER OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE. WE FIND TH AT THE LD. CIT (APPEALS) HAD DELETED THE ALLOCATION FOLLOWING THE DECISIONS OF THE TRIBUNAL IN ASSESSEE'S OWN CASE AND THE SUPREME COURT, WHILE CONCLUDING THE ISSUE, AS EXTRACTED ABOVE. IN VIEW OF THE ABOVE FACTS, LAW AND CIRCUMSTANCES, THE ISSUE STANDS C OVERED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF TRIBUNAL AND SUPREME COURT AND HENCE WE ARE NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE LD. CIT (APPEALS) ON THIS ISSUE AND ACCORDINGLY WE DISMISS THE GROUNDS. WE FURTHER NOTE THAT THE CIT (APPEALS) HAS DECIDED THIS ISSUE BY FOLLOWING ORDER OF THIS TRIBUNAL. THE CASE OF THE REVENUE IS THAT THE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2002 - 03 TO 2004 - 05 AND CHALLENGE THE SAME BEFORE THE HON'BLE HIGH COURT. SINC E THE ORDER OF THE TRIBUNAL HAS NOT BEEN REVERSED OR SET ASIDE BY THE HON'BLE HIGH COURT THEREFORE THE SAME IS BINDING. ACCORDINGLY, BY FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL, WE IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 5 DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE CIT (APPEALS) QUA THIS ISSUE. 6. GROUND NO.3 IS REGARDING DISALLOWANCE OF COMMISSION EXPENSES. 7. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED THE COMMISSION PAID TO THE SALES AGENTS OF RS.2,85,57,375. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE COMMISSION DEBITED TO THE PROFIT AND LOSS ACCOUNT AND DETAILS OF THE PAYMENT MADE DURING THE F.Y. RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER FOUND FROM THE DETAILS FILED BY THE ASSESSEE THAT THE A SSESSEE HAS NOT FURNISHED THE NAMES OF THE CUSTOMERS AMOUNTING TO RS.2,42,33,641. ACCORDINGLY, THE ASSESSING OFFICER HAS DISALLOWED THE SAID EXPENDITURE BY HOLDING THAT IT HAS NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASS ESSEE. ON APPEAL, THE CIT (APPEALS) HAS RESTRICTED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO 20% OF RS.2,42,33,641 AMOUNTING TO RS.48,46,728. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS CONTENDED THAT THE ASSESSING OFFICER HAS DISALLOWED THE COMMISSION PAYMENT MADE TO THE EXTENT THE ASSESSEE FAILED TO PRODUCE THE DETAILS OF THE CUSTOMERS HOWEVER THE CIT (APPEALS) HAS ESTIMATED THE DISALLOWANCE ONLY TO 20% OF IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 6 THE AMOUNT WHICH WAS DISALLO WED BY THE ASSESSING OFFICER. H E HAS FURTHER CONTEND ED THAT THE CIT (APPEALS) HAS NOT GIVEN ANY BASIS OF ESTIMATION OF DISALLOWANCE. 9. ON THE OTHER HAND, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT WHEN THE PAYMENT IN QUESTION WAS MADE THROUGH CHEQUES AND IT RELATES TO TH E SALES OF THE ASSESSEE THEN EXPENDITURE CANNOT BE DISPUTED. HENCE HE HAS CONTENDED THAT WHEN THE CLAIM OF THE ASSESSEE IS NOT FOUND TO BE EXCESSIVE THEN THE SAME CANNOT BE DISALLOWED. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF COMMISSION PAYMENT TO THE EXTENT OF RS.2,42,33,641 IN RESPECT OF WHICH THE ASSESSEE DID NOT FURNISH THE DETAILS OF THE CLIENTS TO WHOM THE COMMISSION WAS PAID. ON APPEAL, THE CIT (AP PEALS) HAS FOLLOWED THE ORDERS OF THE CIT (APPEALS) FOR THE ASSESSMENT YEAR 2004 - 05 AND THEN RESTRICTED THE DISALLOWANCE TO RS.48,46,728 BEING 20% OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. IT IS PERTINENT TO NOTE THAT FOR THE ASSESSMENT YEAR 2004 - 05, THE CIT (APPEALS) HAS OBSERVED THAT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE SUBJECT TO THE IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 7 VERIFICATION OF NAMES OR ASCERTAIN MORE DETAILS RELATING TO THESE PAYMENTS BEING FURNISHED BY THE ASSESSEE. THUS THE EARLIER YEAR S ORDER DO ES NOT GIVE ANY GUIDANCE OF RESTRICTING THE DISALLOWANCE TO 20%. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE HAS NOT PRODUCED COMPLETE DETAILS AND THERE IS NO BASIS OF ESTIMATION OF RESTRICTING THE DISALLOWANCE BY THE CIT (A PPEALS), WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR RECON SIDERATION AND ADJUDICATION AFTER VERIFICATION AND EXAMINATION OF THE COMPLETE DETAILS TO BE FILED BY THE ASSESSEE. 11. GROUND NOS.4 TO 8 ARE REGARDING TRANSFER PRICIN G ADJUSTMENT. 12. THERE ARE VARIOUS INTERNATIONAL TRANSACTIONS DURING THE YEAR UNDER CONSIDERATION AS REPORTED IN THE 3CB REPORT. THE TPO ACCEPTED THE OTHER TRANSA C TIONS AT ARM S LENGTH EXCEPT THE TRADING SEGMENT AND DISTRIBUTION SEGMENT WHICH WAS MAINLY IMPORTING MEDICAL EQUIPMENTS SUCH AS CT SCANNER, MRI SCANNER, CATH LAB SYSTEM, ETC FROM ITS AE BEING GE MEDICAL SYSTEMS GROUP. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE IMPORTS SOME EQUIPMENTS FROM OTHER MANUFACTURERS AND SOME ITEMS ARE PROCUR ED FRO M DOMESTIC MARKET. HOWEVER THE ASSESSEE HAS NOT MADE ANY SEPARATE ANALYSIS FOR THE PURPOSE OF DETERMINING THE ALP IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 8 FOR TRADING SEGMENT. THE TPO WAS OF THE VIEW THAT THE MAM FOR ARRIVING AT ALP COULD BE THE RESALE PRICE METHOD (RPM) FOR THE TRADING S EGMENT. THE TPO CONDUCTED A SEARCH OF DATA BASE PRO CESS AND CAPITALINE AND COULD FIND ONLY ONE COMPANY NAMELY M/S. ADVANCED MICRONIC DEVICES LTD. (AMDL) WHICH IS ALSO IN THE BUSINESS OF T R ADING MEDICAL DEVICES EQUIPMENTS LIKE IMPLANTABLE PACE MAKERS, OP ERATING D - 5 ETC. THE TPO COMPUTED THE GROSS PROFIT OF M/S. AMDL AT 3 5% IN COMPARISON TO THE GROSS PROFIT MARGIN OF THE ASSESSEE IN TRADING SEGMENT AT 18.04% AND ACCORDINGLY PROPOSED AN ADJUSTMENT UNDER SECTION 92CA OF THE ACT OF RS.54,07,95,988. THE ASS ESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE CIT (APPEALS). THE CIT (APPEALS) HAS UNDERTAKEN THE EXERCISE OF RECOMPUTING AND DETERMINING THE ALP BY OBTAINING THE RELEVANT FINANCIAL DETAILS OF AMDL . ACCORDINGLY, THE CIT (APPEALS) HAS DELETED THE ADDITION MADE ON ACCOUNT OF TRANSFER PRICING BY COMPUTING THE GROSS PROFIT MARGIN OF AMDL AT 16.64% IN COMPARISON TO THE ASSESSEE'S MARGIN AT 20.89% OF SALE AND 26.40% ON PURCHASES. 13. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE H AS REFERRED TO THE IMPUGNED ORDER OF THE CIT (APPEALS) AND SUBMITTED THAT THE CIT (APPEALS) HAS CONDUCTED A FRESH EXERCISE OF DETERMINING THE ARM S LENGTH IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 9 AS WELL AS RECOMPUTATION OF THE MARGINS OF THE COMPARABLE COMPANIES AND ASSESSEE COMPANY AS WELL. S HE HAS FORCEFULLY CONTENDED THAT THE CIT (APPEALS) HAS TAKEN THIS DECISION OF REWORKING OF MARGIN OF THE ASSESSEE AS WELL AS COMPARABLE COMPANY BY OBTAINING THE RECORDS WITHOUT GIVING AN OPPORTUNITY TO THE TPO/A.O. TO SUBMIT THEIR OBJECTIONS OR COMMENTS ON THIS ISSUE. THUS THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ENTIRE EXERCISE UNDERTAKEN BY THE CIT (APPEALS) IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND THEREFORE IT IS A CLEAR CASE OF VIOLATION OF RULE 46A OF THE I.T. RULES. 14. ON THE OTHER HAND, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS CONTENDED THAT THE POWERS OF CIT (A) AND ASSESSING OFFICER ARE CO - TERMINUS AND THEREFORE THE CIT (APPEALS) IS FULLY EMPOWERED TO ENQUIRE AND DO WHATEVER THE ASSESSING OFFI CER COULD HAVE DONE. HE HAS FURTHER CONTENDED THAT THE CIT (APPEALS) HAS EXAMINED THE RECORD AND THEN HAS GIVEN FINDING OF FACT. HE HAS SUPPORTED THE ORDER OF THE CIT (APPEALS). 15. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT M ATERIAL ON RECORD, WE FIND THAT THE TPO WHILE COMPUTING THE ALP HAS APPARENTLY TAKEN THE GROSS PROFIT MARGIN OF THE AMDL AT ENTITY LEVEL BY IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 10 ASSUMING THAT THE ENTIRE ACTIVITY OF AMDL IS ONLY TRADING IN THE MEDICAL EQUIPMENTS. SO FAR AS THE ISSUE OF CONSID ERING THE SEGMENTAL DETAILS OF THE COMPARABLE COMPANIES, ON PRINCIPLE WE DO NOT FIND ANY ERROR ON THIS POINT AS THE COMPARABILITY OF THE ASSESSEE'S TRADING SEGMENT IN MEDICAL EQUIPMENT HAS TO BE DETERMINED BY CONSIDERING THE SAME SEGMENT OF THE COMPARABLE COMPANIES IN THE SAME ACTIVITY. THEREFORE IF THE COMPARABLE COMPANY IS HAVING MORE THAN ONE SEGMENT AS CONSIDERED BY THE CIT (APPEALS) THEN ONLY THE TRADING SEGMENT OF THE SAID COMPANY HAS TO BE COMPARED WITH THE ASSESSEE. FUR T HER THE CIT (APPEALS) HAS A LSO RECOMPUTED THE GROSS MARGIN OF THE ASSESSEE AND AGAIN HELD THAT THE ADJUSTMENT IS REQUIRED TO BE MADE ONLY IN RESPECT OF PURCHASES MADE FROM THE AE AND NOT ON THE ENTIRE TRANSACTION IN THE TRADING SEGMENT. THERE IS NO QUARREL ON THIS ISSUE THAT THE AD JUSTMENT ON ACCOUNT OF TRANSFER PRICING CAN BE MADE ONLY IN RESPECT OF THE INTERNATIONAL TRANSACTIONS. IN THE CASE ON HAND, THE INTERNATIONAL TRANSACTIONS IN TRADING SEGMENT IS CONFINED ONLY TO THE PURCHASES MADE FROM THE AE. SINCE THERE ARE OTHER TRANS ACTIONS OF IMPORT AND PROCUREMENT FROM DOMESTIC MARKET THEREFORE THE ADJUSTMENT CANNOT BE MADE BY CONSIDERING THE ENTIRE TRADING SEGMENT OF THE ASSESSEE. THUS ON IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 11 PRINCIPLE, WE DO NOT FIND ANY ERROR ON THESE POINTS HOWEVER , THE CIT (APPEA LS) HAS UNDERTAKEN TO RECOMPUTE THE MARGINS OF THE COMPARABLE AS WELL AS ASSESSEE BY CONSIDERING THE FRESH MATERIAL WHICH WAS NOT AVAILABLE WITH THE TPO/A.O. WHICH IT IS NOT PERMISSIBLE TO THE CIT (APPEALS) TO DO THIS EXERCISE OF RECOMPUTATION WITHOUT GIVING AN OPPORTUNITY TO THE TPO/A.O. THE PROPER COURSE OF ACTION ON THE PART OF CIT (APPEALS) WOULD HAVE BEEN TO ASK THE TPO/A.O. FOR REMAND REPORT BY CONSIDERING ALL THE RELEVANT MATERIAL . H OWEVER , THE CIT (APPEALS) DID NOT CH O OSE TO ISSUE ANY REMAND ORDER BUT UNDERTAKEN T HE ENTIRE EXERCISE ON HIS OWN. THUS IT IS CLEAR THAT THE TPO/A.O. WAS NOT GIVEN AN OPPORTUNITY IN THIS PROCESS OF RECOMPUTING THE MARGINS OF THE COMPARABLE AS WELL AS ASSESSEE. ACCORDINGLY IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE TPO/A.O. TO CONSIDER AND VERIFY RELEVANT RECORD AND THEN DETERMINE THE ALP IN THE LIGHT OF OUR ABOVE OBSERVATIONS. 16. GROUND NO.9 IS REGARDING PAYMENT OF ROYALTY. THE ASSESSEE HAS PAID THE ROYALTY TO ITS AE @ 2% ON SALE. THE ASSESSING OFFICER / TPO HELD THAT NONE OF THE COMPARABLE COMPANY HAS PAID ROYALTY FOR TRADING SEGMENT. THE TPO/A.O. HAS CONSIDERED THE CASE OF AMDL AND HELD THAT IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 12 WHEN THE COMPARABLE COMPANY HAS NOT PAID THE ROYALTY THEN THE PAYMENT OF ROYALT Y IS NOT JUSTIFIED AND ACCORDINGLY MADE ADJUSTMENT OF THE ENTIRE AMOUNT. ON APPEAL, THE CIT (APPEALS) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ROYALTY BY FOLLOWING THE DECISION OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2002 - 03. 1 7. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AS WELL AS LEARNED AUTHORISED REPRESENTATIVE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THE TRIBUNAL VIDE ORDER DT.16.05.2008 IN ASSESSEE'S OWN CASE FOR THE ASS ESSMENT YEARS 2002 - 03 TO 2004 - 05 HAS CONSIDERED THIS ISSUE WHEREBY THIS ISSUE WAS REMANDED TO TPO/A.O. FOR CONSIDERING THE COMPARABLES AND THEN DETERMINE THE ALP. THE CIT (APPEALS) HAS DEALT THIS ISSUE IN PARAS 7.3 AND 7.4 AS UNDER : 7.3 ON THIS VE RY SAME ISSUE, CIT (APPEALS VI IN HIS ORDER DT.29.03.2007 FOR A.Y. 2002 - 03 HAS HELD AS UNDER : - IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 13 7.4 THIS DIRECTION OF THE CIT (APPEALS) HAS BEEN CONFIRMED BY THE HON'BLE ITAT IN PAGE NO.43, ITA NO.810 TO 812/(BANG)/2007 DT.16.05.2008. SINCE THE ISSUE DURING A.Y. 2005 - 06 IS ALSO THE SAME, THE A.O. IS DIRECTED TO FOLLOW THE SAME DIRECTIONS OF THE CIT (APPEALS) AS HELD FOR A.Y. 2002 - 03 IN THE APPELLATE ORDER REFERRED TO ABOVE. THE LD. AR HAS ALSO SUBMITTED THAT IN CASE NO COMPARABLE IS FOUND TO DETERMI NE THE ALP OF ROYALTY THEN IN VIEW OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF TOYOTA KIRLOSKAR MOTOR (P) LTD. VS. ACIT 166 TTJ 189 THE ROYALTY PAYMENT SHOULD BE CLUBBED WITH THE OTHER INTERNATIONAL TRANSACTIONS OF THE TRADING SEGMENT AND THE ARM S LE NGTH MAY BE IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 14 DETERMINED ON THE COMPOSITE TRANSACTION OF TRADING OF MEDICAL EQUIPMENT. 18. SINCE THE ISSUE WAS ALREADY SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR CHOOSING THE PROPER COMPARABLE THEREFORE IN VIEW OF THE EARLIER ORDER OF THIS TRIBUN AL, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE TPO/A.O. FOR RECONSIDERATION OF THE SAME IN THE LIGHT OF DIRECTIONS OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2002 - 03 TO 2004 - 05 (SUPRA). FURTHER IN CASE NO COMPARABLE IS FOUND IN RESPECT OF THE ROYALTY PAYM ENT BY THE ASSESSEE THEN THE TPO/A.O. MAY CONSIDER THE ROYALTY PAYMENT AS PART OF THE INTERNATIONAL TRANSACTIONS UNDER TRADING SEGMENT AND THEN DETERMINE THE ALP BY CONSIDERING THE ROYALTY AS PART OF THE OPERATING COST FOR THE PURPOSE OF COMPUTING THE MARG IN IN THE TRADING SEGMENT. 1 9 . FOR THE ASSESSMENT YEAR 2006 - 07, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 15 20 . GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 2 1 . GROUND NO.2 IS REGARDING ADJUSTMENT OF ROYALTY PAYMENT MADE BY THE ASSESSING OFFICER AND THE CIT (APPEALS) HAS DELETED THE SAME. SINCE THIS ISSUE IS COMMON TO THE ISSUE INVOLVED IN THE A SST. YEAR 2005 - 06 . IN IT(TP)A NOS.40/BANG/2011 & 1647/BANG/2013 PAGE 16 VIEW OF OUR FINDING ON THIS ISSUE FOR THE ASSESSMENT YEAR 2005 - 06 THIS ISSU E STAND S SET ASIDE TO THE RECORD OF THE TPO/A.O. ON SAME TERMS. 21. IN THE RESULT, THE APPEALS OF REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 21ST DAY OF APRIL, 201 7 . SD/ - ( INTURI RAMA RAO ) ACCOUNTANT MEMBER SD/ - ( VIJAY PAL RAO ) JUDICIAL MEMBER BANGALORE, DT. 21 .04.2017. *REDDY GP COPY TO : 1 . APPELLANT 2 . RESPONDENT 3 . C.I.T. 4 . CIT(A) 5 . D R, ITAT, BANGALORE. 6 . GUARD FILE. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE.