Bisazza India Limited, Dist. Mehsana V. The DY.CIT., (OSD) Range-1, Ahmedabad

ITA 404/AHD/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6886 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-04-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 25-01-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Retrospective amendment
• Section: 92C; 43B; 80HHC; 234B; 10B; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G. D. AGARWAL, V P AND BHAVNESH SAIN I, J M) ITA NO.404 AND 3055/AHD/2007 A. Y. : 2003-04 AND 2004-05 BISAZA INDIA PVT. LTD., 372/2, B/H. GAIL OFFICE, GIDC, KADI 382 715, NORTH GUJARAT, DIST. MEHSANA PA NO. VS. THE DCIT (OSD), RANGE-1 AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S. N. SOPARKAR, AR RESPONDENT BY: SHRI R. K. DHANISTA, SR. D R O R D E R PER BHAVNESH SAINI: THIS ORDER SHALL DISPOSE OF BOTH THE APPEALS OF THE SAME ASSESSEE FILED AGAINST DIFFEREN T ORDERS OF LEARNED CIT (A)-V, AHMEDABAD DATED 6-11-2006 AND 03-04-2007 FOR ASSESSMENT YEARS 2003-04 AND 2004-05 SINCE THE ISSU ES ARE COMMON IN BOTH THE APPEALS. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES AND CONSIDERE D THE MATERIAL AVAILABLE ON RECORD AND SHALL DISPOSE OF THE APPEAL S AS UNDER. ITA NO.404/AHD/2004:A Y 2003-04 3. GROUND NO.1 OF THE APPEAL READS AS UNDER: ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 2 1. THE LD. CIT (APPEALS) ERRED IN EXCLUDING DFRC INCOME OF RS.1,25,51,860/- FROM PROFITS OF THE BUSINESS FOR CALCULATING DEDUCTION U/S. 80 HHC OF THE ACT. THE LD CIT (APPEALS) OUGHT TO HAVE CONSIDERED TO PLAIN LANGUAGE OF AMENDED SEC. 28(III) (E) OF ACT WHERE ONLY PROFITS ON TRANSFER OF DRFC LICENSES I S REQUIRED TO BE EXCLUDED. ALTERNATIVELY THE LD. CIT (APPEALS) SHOULD HAVE EXCLUDED THE AMOUNT OF DFRC LICENSES, WHICH ARE TRANSFERRED DURING THE YEAR AND NOT THE TOTAL AMOUN T OF DFRC LICENSES WHERE THE LICENSES WORTH RS.36,53,850/- ARE ON HAND WHICH ARE STILL NOT TRANSFERRED OR UTILIZED. THE LD. CIT (APPEALS) OUGHT TO HAVE EXCLUDED ONLY 90% OF DFRC LICENSES I.E. 90% OF RS.1,25,51,860/- AND NOT 100% OF DFRC INCOME. 3. THE FACTS OF THE CASE ARE THAT THE DFRC INCOME W AS NOT TAKEN INTO ACCOUNT BY THE A O AS EXPORT INCENTIVE BECAUSE ASSESSEES EXPORT TURNOVER EXCEEDED RS. 10 CRORES AND THE ASSE SSEE WAS NOT ABLE TO SATISFY THE TWIN CONDITIONS WHICH HAVE BEEN BROUGHT IN STATURE BY RETROSPECTIVE AMENDMENT. APART FROM THAT THE ASS ESSEE HAD WRITTEN BACK A SUM OF RS.1,61,067/- UNDER THE HEAD LIABILITIES NO LONGER REQUIRED AND THE SAME WAS EXCLUDED FROM THE PROFITS OF BUSINESS OF THE ASSESSEE. THE ASSESSEE CHALLENGED T HE ORDER OF THE A O BEFORE THE LEARNED CIT (A) AND THE WRITTEN SUBM ISSION OF THE ASSESSEE IS INCORPORATED IN THE IMPUGNED ORDER WHIC H READS AS UNDER: 1(E) 90% OF EXPORT BENEFIT RS.12551860/- ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 3 YOUR APPELLANT REQUEST YOUR HONOR TO DEAL WITH THE ISSUE IN THE LIGHT OF THE TAXATION LAWS (AMENDMENT) ACT 2 005. HOWEVER AS ADVISED BY YOUR HONOR A FRESH CALCULATIO N OF DEDUCTION U/S 80 HHC IS ENCLOSED AFTER IGNORING DFR C INCOME OF RS.1,25,51,860/-. 1(D) 90% OF LIABILITIES NO LONGER REQUIRED RS.1,6 1,067/- RS.161067/- BEING LIABILITIES NO LONGER REQUIRED W RITTEN BACK IS EXCLUDED FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/S 80 HHC OF T HE ACT IN VIEW OF EXPLANATION (BAA) TO SEC. 80HHC (4A). THE ABOVE EXPLANATION REFERS TO PROFITS OF THE BUS INESS MEAN PROFIT OF THE BUSINESS AS COMPUTED UNDER THE H EAD PROFIT AND GAINS OF BUSINESS FOR PROFESSION AS REDU CED BY: (1) NINETY PERCENT OF ANY SUM REFERRED TO IN CLAUSE S (IIIA), (IIIB) AND (IIIC) OF SEC. 28 OR ANY RECEIPT BY WAY OF BROKERAGE, COMMISSION, INTEREST, RENT CHARGES OR ANY OTHER RECEIPT OF A SIMILAR NATURE INCLUDED IN S UCH PROFITS AND .. IN THIS REGARD WE RESPECTFULLY SUBMIT THAT AN AMOUNT OF RS.161067/- BELONGS TO REVERSAL ENTRY OF EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS. THE APPELLANT COMPANY HAS PRACTICE TO PROVIDE FOR EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS AND ACCORDINGLY HAVE PASSED THE CLOSING ENTRY IN. F. Y. 2001-02 AS UNDER: EXCISE DUTY ON F. G. DR. RS.161067/- THEREAFTER IN THE NEXT YEAR I.E. F. Y. 2002-03 THE COMPANY HAVE REVERSED THE SAME ENTRY AS UNDER: ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 4 PROVISION FOR EXCISE DUTY ON F. G. DR. RS.161067 /- TO PROVISION NO LONGER REQUIRED CR. RS.161067/- YOUR APPELLANT FURTHER SUBMIT THAT THE ABOVE INCOME DO NOT FALL UNDER THE EXPLANATION TO SEC. 80 HHC (4A) AND HENCE IT SHOULD NOT BE EXCLUDED FROM THE PROFIT OF THE BUSINESS. YOUR APPELLANT BRING TO YOUR KIND NOTICE THAT THE I TEM OF INCOME WHICH IS INCLUDED IS IN NO WAY SIMILAR TO BROKERAGE, COMMISSION, INTEREST, RENT ETC. IN PRESE NT CASE THE INCOME IS DIRECTLY RELATED TO THE PRINCIPA L BUSINESS OF MANUFACTURING OF APPELLANT HENCE THE SAME SHOULD NOT BE EXCLUDED UNDER SUB CLAUSE (1) OF CLAUSE (BAA) OF EXPLANATION U/S 80 HHC. THE RELIANCE IS PLACED ON (1) ACIT VS HERBAL ISOLATED (P) LTD. 83 ITD 310 (2002) BANGALORE (2) CIT VS BANGALORE CLOTHING CO. 260 ITR 311(BOM). FURTHER YOUR APPELLANT SUBMIT THAT THE ENTRY FOR AMOUNT OF PROVISION FOR EXCISE DUTY NO LONGER REQUIRED RS.161067/- WAS PASSED ON CREDIT SIDE OF PROFIT AND LOSS ACCOUNT BECAUSE THE AMOUNT OF EXCISE DUTY FOR WHICH PROVISION WAS CREATED RS.161067/- WAS ACTUALLY PAID TO THE EXCISE DEPARTMENT IN A. Y. 2004-05 BY DEBITING THE AMOUNT TO RG 23 PART II. THE SAID PAYMENT WAS MADE THROUGH RG 23 A PART II BETWEEN APRIL 2003 ONWARDS AND THAT IS WHY THE PROVISIONAL ENTRY WAS REVERSED. THE SAID PAYMENTS ALSO QUALIFY FOR ALLOWING EXPENDITURE U/S 43B OF THE ACT. IN FACT IT IS NOT AN INCOME BUT ADJUSTMENT ENTRY IS PASSED IN ACCOUNTS. ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 5 YOUR APPELLANT THEREFORE SUBMITS THAT AMOUNT OF RS.161067/- SHOULD NOT BE REDUCED FROM THE PROFIT AND DEDUCTION U/S 80 HHC SHOULD BE ALLOWED ACCORDINGLY. 4. THE LEARNED CIT (A) HOWEVER, CONFIRMED THE ADDI TION ON THE ABOVE ISSUE. HIS FINDINGS ARE REPRODUCED AS UNDER: 3.3 SO FAR AS EXPORT BENEFITS ARE CONCERNED IT HAS BEEN STATED THAT THE SAME MAY BE DEALT WITH IN THE LIGHT OF AMENDED PROVISIONS. AS ASSESSEES EXPORT TURNOVER EXCEEDS RS.10 CRORES, THE TWIN CONDITIONS TO BE SAT ISFIED FOR CLAIMING BENEFIT ON THESE INCENTIVES, CUMULATIV ELY ARE AS UNDER: A) HE HAD AN OPTION TO CHOOSE EITHER DUTY DRAW BACK OR DUTY ENTITLEMENT PASS BOOK SCHEME; AND B) THE RATE OF DRAWBACK CREDIT ATTRIBUTABLE TO THE CUSTOMS DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER DEPB SCHEME OR A) HE HAD AN OPTION TO CHOOSE EITHER DUTY DRAWBACK OR DUTY FREE REPLENISHMENT CERTIFICATE; AND B) THE RATE OF DRAWBACK CREDIT ATTRIBUTABLE TO THE CUSTOMS DUTY WAS HIGHER THAN THE RATE OF CREDIT ALLOWABLE UNDER DFRC CERTIFICATE. THE LD. AUTHORISED REPRESENTATIVE WAS CATEGORICALLY ASKED WHETHER THE CONDITIONS ARE CUMULATIVELY SATIS FIED OR NOT. SINCE THE ANSWER WAS IN NEGATIVE IT IS APPAREN T THAT IN VIEW OF AMENDED PROVISIONS OF SECTION 80 HHC, ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION U/S. 80 H HC IN RESPECT OF EXPORT BENEFITS OF RS.1,25,51,860/-. ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 6 ACCORDINGLY, ACTION OF THE ASSESSING OFFICER IN THI S REGARD IS UPHELD. 3.4 SO FAR AS TREATING THE LIABILITIES NO LONGER RE QUIRED IS CONCERNED, IT IS A FACT THAT THIS LIABILITY WAS CLA IMED AS PROVISION FOR EXCISE DUTY OF FINISHED GOODS IN A. Y . 2002- 03 AND THE SAME WAS WRITTEN BACK AFTER THIS AMOUNT WAS PAID DURING THE YEAR ON ACCOUNT OF CLEARANCE OF GOO DS. IT IS TO BE POINTED OUT THAT THE ITEM IN QUESTION IS N OT SIMILAR TO OTHER INCOME BUT THIS ENTRY WAS PASSED ON THE CR EDIT SIDE OF PROFIT AND LOSS ACCOUNT BECAUSE THE AMOUNT OF EXCISE DUTY FOR WHICH PROVISION WAS CREATED WAS ACT UALLY PAID TO THE EXCISE DEPARTMENT BY DEBITING PART-2 OF RG-1 REGISTER. THIS AMOUNT WOULD ALSO QUALIFY FOR DEDUCT ION U/S. 43B OF THE ACT. SINCE THIS IS ONLY AN ADJUSTME NT ENTRY, THE ASSESSING OFFICER IS DIRECTED TO REDUCE THIS AM OUNT FROM THE PROFITS AND WORK OUT DEDUCTION U/S. 80 HHC OF THE ACT. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER WILL RE - WORK ALLOWABLE DEDUCTION U/S. 80 HHC, HOWEVER, IT H AS BEEN CLEARLY HELD THAT THE ASSESSEE WILL NOT BE ENT ITLED TO ANY DEDUCTION U/S. 80 HHC IN RESPECT OF EXPORT BENE FITS OF RS.1,25,51,860/-. 5.1 THE LEARNED COUNSEL FOR THE ASSESSEE CONCEDED T HAT ASSESSEES EXPORT TURNOVER EXCEEDED RS. 10 CRORES A ND ASSESSEE WAS NOT ABLE TO SATISFY THE TWO CONDITIONS MENTIONE D ABOVE FOR CLAIMING BENEFIT ON THESE INCENTIVES. THE FIRST CON TENTION OF THE ASSESSEE IS THAT WHAT IS TO BE EXCLUDED IS ONLY THE PROFIT AND NOT GROSS VALUE BUT THE ISSUE IS COVERED AGAINST THE AS SESSEE TO THAT EXTENT BY THE DECISION OF THE HON'BLE BOMBAY HIGH C OURT IN THE CASE OF CIT VS KALPTARU COLOURS & CHEMICALS 233 CTR 313 IN WHICH IT WAS HELD THAT THE ASSESSEE HAD AN EXPORT TURNOVER EXCEEDING RS. 1 0 CRORES AND DID NOT FULFILL THE CONDITIONS SET OUT I N 3 RD PROVISO TO ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 7 SECTION 80 HHC (3) AND, THEREFORE, ASSESSEE WAS NOT ENTITLED FOR DEDUCTION U/S 80 HHC ON THE AMOUNT RECEIVED ON TRAN SFER OF DEPB. LEARNED COUNSEL FOR THE ASSESSEE ALSO GIVEN IN WRIT ING THAT THE PLEA OF THE ASSESSEE WAS THAT CIT (A) OUGHT TO HAVE EXCLUDED ONLY 90% OF DFRC INCOME AND NOT 100%, HOWEVER, WHIL E PREPARING THE COMPUTATION IT WAS NOTICED THAT LEARNED CIT (A) HAS EXCLUDED ONLY 90% OF DFRC INCOME AND NOT 100% AS PLEADED. THEREFO RE, THE SAME ISSUE WOULD NOT SURVIVE. THIS SUBMISSION IS MADE FO R BOTH THE ASSESSMENT YEARS UNDER APPEAL 2003-04 AND 2004-05 W ITH STATEMENTS ALSO. HE HAS, THEREFORE, SUBMITTED THAT THE MAIN GROUNDS OF THE ASSESSEE SHALL HAVE TO BE DECIDED AGAINST TH E ASSESSEE. THE ONLY ALTERNATE CLAIM OF THE ASSESSEE MAY BE CO NSIDERED ON WHICH HE HAS SUBMITTED THAT IN ANY CASE WHAT CAN BE EXCLUDED IS ANY PROFIT ON THE TRANSFER OF DFRC. IN THE CASE OF THE ASSESSEE DFRC LICENSE REMAINED IN STOCK IN FIRST YEAR AND SINCE N OTHING WAS SOLD, QUESTION OF EXCLUDING 90% OF THE PROFIT ON THE TRAN SFER OF DFRC LICENSE FOR COMPUTING PROFIT DOES NOT ARISE. HE HAS FURTHER SUBMITTED THAT IN THE YEAR TWO PART OF THE LICENSE WERE UTILI ZED FOR BUSINESS OF THE ASSESSEE AND PART REMAINED ON HAND. APPLYING TH E PROVISIONS LAID DOWN AS PER SECTION 28 (IIIE) PROFIT EARNED ON ONLY DFRC LICENSE UTILIZED / TRANSFERRED IS TO BE EXCLUDED FOR COMPUT ING DEDUCTION U/S 80 HHC. HE HAS THEREFORE, SUBMITTED THAT THE ABOVE ALT ERNATE CONTENTION OF THE ASSESSEE MAY BE RESTORED TO THE FILE OF THE A O FOR RECONSIDERATION. LEARNED D R SUBMITTED THAT SINCE T HE ASSESSEE DID NOT CHALLENGED THE FINDINGS OF THE AUTHORITIES BELO W ON MERIT, THEREFORE, APPEAL OF THE ASSESSEE MAY BE DISMISSED IN PRINCIPLE. HE ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 8 HAS FURTHER SUBMITTED THAT SINCE THE ALTERNATE CLAI M WAS NOT BEFORE THE AUTHORITIES BELOW, THEREFORE, MATTER MAY BE REM ANDED TO THE FILE OF THE A O FOR RECONSIDERATION. 5.2 WE HAVE CONSIDERED RIVAL SUBMISSIONS AND THE MA TERIAL AVAILABLE ON RECORD. IT IS ADMITTED FACT THE TURNOV ER OF THE ASSESSEE WAS MORE THAN RS. 10 CRORES AND THE ASSESSEE COULD NOT SATISFY THE CONDITIONS OF PROVISO TO SECTION 80 HHC (3) OF THE IT ACT, THEREFORE, AUTHORITIES BELOW WERE JUSTIFIED IN REJECTING THE C LAIM OF THE ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE CONCEDED THAT SINC E THE LEARNED CIT (A) EXCLUDED ONLY 90% OF DFRC INCOME AND THE IS SUE IS COVERED AGAINST THE ASSESSEE BY THE BOMBAY HIGH COURT DECIS ION IN THE CASE OF KALPTARU COLOURS (SUPRA), THEREFORE, WE DO NOT F IND ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW IN REJECTING TH E CLAIM OF THE ASSESSEE. THE FINDINGS OF THE AUTHORITIES BELOW ARE , THEREFORE, CONFIRMED TO THAT EXTENT AND PART OF GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. HOWEVER, WITH REGARD TO THE ALTERNATE CLAIM OF THE ASSESSEE THAT THE DFRC LICENSE REMAINED IN STOCK IN THE FIRST YEA R AND NOTHING WAS SOLD AND THE SAME ISSUE ARISES IN THE BOTH ASSESSME NT YEARS AS PER THE PROVISION LAID DOWN IN SECTION 28 (IIIE) OF THE IT ACT, THE MATTER REQUIRES RECONSIDERATION TO VERIFY IF ANY PROFIT EA RNED ON DFRC LICENSE UTILIZED/TRANSFERRED. THE ALTERNATE CONTENT ION WAS NOT RAISED BEFORE THE AUTHORITIES BELOW WHICH HAVE BEARING ON THE COMPUTATION OF DEDUCTION U/S 80 HHC OF THE IT ACT, THEREFORE, T HE ALTERNATE CONTENTION OF THE ASSESSEE IS RESTORED TO THE FILE OF THE A O FOR RECONSIDERATION IN ACCORDANCE WITH LAW. THE A O SHA LL GIVE ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 9 REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE PASSING THE ORDER ON ALTERNATE CONTENTION. P ART OF THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICA L PURPOSES. 6. GROUND NO.2 OF THE APPEAL OF THE ASSESSEE READS AS UNDER: 2. THE LD. CIT (APPEAL) OUGHT TO HAVE DELETED THE INTEREST CHARGED AND PENALTY PROCEEDINGS INITIATED ON ENHANCED INCOME DUE TO REDUCTION IN CLAIM U/S. 80 HHC OF THE ACT IN VIEW OF AMENDMENT IN SECTION 80 HHC BY TAXATION LAWS (AMENDMENT) ACT 2005 AND BOARD CIRCULAR NO.2/2006 DATED 17.01.2006. 7. THE ASSESSEE CHALLENGED CHARGING OF INTEREST AND IT HAS BEEN CLAIMED THAT SINCE THE ADDITIONS ARE MAINLY BECAUSE TAXATION LAWS AMENDMENT ACT, 1005, IN VIEW OF BOARDS CIRCULAR NO INTEREST SHOULD BE LEVIED. 8. HOWEVER, THE LEARNED CIT (A) DID NOT ACCEPT CONT ENTION OF THE ASSESSEE AND HELD IN THIS REGARD, IT IS TO BE POINT ED OUT THAT THE BOARD CIRCULAR DOES NOT SAY THAT INTEREST IS NOT TO BE LE VIED. IT ONLY PROVIDES INTEREST CHARGEABLE MAY BE WAIVED IF THE DEMAND HAS ARISEN DUE TO IMPLEMENTATION OF PROVISIONS CONTAINED IN TAXATION LAWS AMENDMENT ACT, 2005. THEREFORE, THE ASSESSEE IS ONLY ENTITLED TO CONSEQUENTIAL RELIEF IN THIS REGARD BECAUSE WAIVER IS NOT SUBJECT MATTER OF THE APPEAL. 8.1 THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUT SET SUBMITTED THAT THE ISSUE IS NOW COVERED BY ORDER OF ITAT AHME DABAD B BENCH IN THE CASE OF INTAS EXPORTS VS ACIT IN ITA NO.1819 AND ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 10 1820/AHD/2008 DATED 30-07-2010 IN WHICH IT WAS HELD ON THE IDENTICAL ISSUE IN PARA 8 THAT ON HEARING THE RIVAL SUBMISSION, WE FIND FORCE IN THE ARGUMENTS OF LEARNED AUTHORISED REPRES ENTATIVE OF THE ASSESSEE BECAUSE THE ASSESSEE WAS NOT AWARE OF THE FORTHCOMING AMENDMENTS, THEREFORE, SHORT PAYMENT OF TAX WAS MADE, HOWEVER, THE SAID DEFAULT FOR WHICH THE INTER EST U/S. 234B & 234C WAS CHARGED COULD NOT BE ATTRIBUTABLE TO THE ASSESSEE. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO RE-C ALCULATE THE CHARGE OF INTEREST UNDER THESE TWO SECTIONS ONLY AFTER EXCLUDING THE QUANTUM OF THE DISALLOWANCE DISCUSSED HEREINABO VE. THE LEARNED D R DID NOT DISPUTE THE ABOVE DECISION. CON SIDERING THE ABOVE, WE ARE OF THE VIEW ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE BY THE ABOVE DECISION OF THE TRIBUNAL IN THE CASE O F INTAS EXPORTS (SUPRA). WE ACCORDINGLY, SET ASIDE THE ORDERS OF TH E AUTHORITIES BELOW AND DIRECT THE A O TO RECALCULATE THE INTEREST AS I S DECIDED IN THE ABOVE CASE. THIS GROUND OF APPEAL OF THE ASSESSEE I S ACCORDINGLY ALLOWED. 9. GROUND NO.3 OF THE APPEAL OF THE ASSESSEE READS AS UNDER: 3. THE LD. CIT (APPEALS) ERRED IN MAKING ADJUSTMEN T OF RS.24,27,286/- RELYING ON ORDER U/S. 92CA (3) OF TH E ACT, WHEREIN THE ARMS LENGTH PRICE FOR PAYMENT OF ROYALTY IS REDUCED FROM RS.1,02,49,154/- TO RS.34,68,448/-. 10. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND OF APPEAL WHICH READS AS UNDER: ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 11 1.THE APPELLANT PRAYS THAT A O BE DIRECTED THAT TH E CLAIM OF EXPENSES MADE TOWARDS ROYALTY OF RS.93,81,105/- INCURRED IN A. Y. 2002/03 BUT TAX PAID IN THE CURRENT YEAR BE ALLOWED IN THE YEAR UND ER CONSIDERATION. 11. THE ASSESSEE CHALLENGED DISALLOWANCE OF ADJUSTM ENT OF RS.24,47,286/- WHICH HAS BEEN MADE RELYING ON ORDER U/S 92CA(3) OF THE IT ACT WHEREIN THE ARMS LENGTH PRICE OF ROYALT Y HAS BEEN REDUCED. THE RELEVANT DISCUSSION IN THE ORDER IS AS UNDER: AS REFERRED TO EARLIER, A REFERENCE WAS MADE U/S 9 2C A (3) OF THE I. T. ACT TO THE TRANSFER PRICING OFFICE R (T. P. O.) MUMBAI. THIS OFFICE IS IN RECEIPT OF ORDER U/S. 92 CA (3) OF THE IT ACT DATED 10 TH FEBRUARY, 2006. THE T. P. O. VIDE ITS ORDER DATED 10 TH FEBRUARY HAS STATED THAT WITH REGARD TO INTERNATIONAL TRANSACTIO NS THE ASSESSEE HAS PAID THE ROYALTY OF AN AMOUNT OF RS.1,02,49,154/- WHICH IS NOT AS PER ARMS LENGTH P RICE. THE TPO AFTER HAVING DISCUSSED VARIOUS ASPECT OF TH E TRANSACTION AND DETAILED REASONING HAVE MADE ADJUST MENT AS PER PARA 6 ON PAGE 14 OF THIS ORDER WHICH IS AS UNDER: THE ARMS LENGTH PRICE OF THE ROYALTY PAID/PAYABLE IS COMPUTED AT RS.34,68,448/- AS AGAINST TRANSACTION V ALUE OF RS.1,02,49,154/- CONSIDERING THE PROVISIONS OF S ECTION 92 C (4) OF THE I. T. ACT, 1961, NO DEDUCTION UNDER SECTION 10A OR SECTION 10B OR UNDER CHAPTER VIA IS REQUIRED TO BE ALLOWED TO THE ASSESSEE IN RESPECT OF THE INCOME OF RS.67,80,706/- ENHANCED. THE ARMS LENGTH PRICE OF THE REMAINING INTERNATIONAL TRANSACTIONS BE TAKEN AT TRANSACTION VALUE RECORDED IN THE BOOKS OF ACCOUNT. THIS ORDER IS IN RESPONSE TO SPECIFIC REFERENCE U/S. 92C A(1) RECEIVED AND WILL APPLY TO THE CASE OF THE ASSESSEE FOR A. Y. 2003-04. ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 12 HOWEVER, IT IS FURTHER OBSERVED THAT THE ASSESSEE H AS SUO MOTO DISALLOWED ROYALTY PAYMENT OF RS.43,33,420/- I N VIEW OF SEC. 40 (A) (I) OF THE ACT FOR NON DEDUCTIN G TAX AT SOURCE. HENCE A FURTHER AMOUNT OF RS.24,47,286/- IS HEREBY DISALLOWED AS PER THE REVISED COMPUTATION OF INCOME. 12. THE ASSESSEE CHALLENGED THIS ADJUSTMENT BEFORE THE LEARNED CIT (A). THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED AS UNDER: THE LD. A. O. HAS MADE AN ADJUSTMENT IN THE TOTAL INCOME RELYING ON THE ORDER U/S. 92 CA (3) OF THE A CT, WHEREIN THE ARMS LENGTH PRICE FOR PAYMENT OF ROYALT Y AND ADDITION IS MADE FOR RS.2447286. TO JUSTIFY THE PAYMENT YOUR APPELLANT BRING TO YOUR NOTICE FOLLOWING POINTS, (I) AS COMPARED TO ALL OTHER ASSOCIATED ENTERPRISE, BISAZZA INDIA LTD. IS THE OLDEST ONE, WHICH COMMENC ED ITS MANUFACTURING ACTIVITIES IN THE YEAR 1995-96. HENCE BISAZZA INDIA LTD. USED THE TRADEMARK BISAZZA FOR THE LONGEST PERIOD WITHOUT MAKING ANY PAYMENT OF ROYALT Y TILL F. Y. 2000-01. (II) ALL THE OTHER ASSOCIATED ENTERPRISES REFERRED ABOVE, ARE CARRYING ONLY TRADING ACTIVITIES. WHEREAS BISAZ ZA INDIA LTD. CARRIED ON MANUFACTURING ACTIVITIES. (III) AS BISAZZA INDIA LTD. IS IN MANUFACTURING ACT IVITY, IT HAS MUCH INVOLVEMENT OF INVESTMENT AND BUSINESS RIS K AS COMPARED TO OTHER ASSOCIATED ENTERPRISES WHICH ARE IN TRADING ACTIVITIES ONLY. THEREFORE, BISAZZA INDIA L TD. HAS TO TAKE ALL THE PRECAUTION SO AS TO CAPTURE THE DOMEST IC MARKET. THIS CAN BE DONE ONLY WITH THE HELP OF TRAD EMARK BISAZZA ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 13 (IV) THE PRODUCT OF THE COMPANY, GLASS MOSAICS, WER E NEVER KNOWN TO THE INDIAN MARKET AS WELL AS THE ASI AN MARKET, THOUGH IT WAS WELL ACCEPTED IN EUROPEAN MAR KET. GLASS MOSAICS BEING LOCALLY MANUFACTURED ITEM AND NEW PRODUCT, THE QUALITY ASSURANCE WAS VERY ESSENTIAL. IN SUCH CIRCUMSTANCES, THE TRADE MARK BISAZZA WAS VERY US EFUL TO CREATE THE DEMAND IN THE DOMESTIC MARKET. THE FA CTS CAN BE ASCERTAINED FROM FIGURES OF DOMESTIC SALES S INCE THE YEAR 1995-96 TO TILL DATE. (V) THOUGH BISAZZA HOLDING B. V. (NETHARLANDS) OR BISAZZA SPA (INTALY), AS THE CASE MAY BE WERE ELIGI BLE TO CHARGE ROYALTY FROM BISAZZA INDIA LTD. RIGHT FROM T HE F. Y. 1995-96. THE FACT REMAINS THAT BISAZZA INDIA LTD. H AS NOT PAID ANY SUCH ROYALTY TILL DECEMBER, 2000 I.E. FOR ABOVE FIVE (5) YEARS BISAZZA INDIA LTD. HAD USED THE TRAD EMARK BISAZZA AND HAVE NOT PAID ANY ROYALTY. (VI) FURTHER, BISAZZA INDIA LTD. HAD PAID ROYALTY F OR ABOUT TWENTY-SEVEN (27) MONTHS ONLY AND THEREAFTER THE AGREEMENT FOR TERMINATED. AT THE SAME TIME BISAZZA INDIA LTD. CONTINUED TO MAKE THE USE OF THE TRADEMARK BISAZZA FREE OF COST AND ACHIEVED HIGHER SALES IN THE DOMESTIC MARKET, WHICH ARE RS.61214930/- RESPECTIVE LY FOR THE FINANCIAL YEAR 2002-03 AND 2003-04. THE SAM E IS EXPECTED TO GROW FURTHER. (VII) GLASS MOSAICS, BEING MATERIAL AND SANITARY PRODUCT, IT IS AN ESTABLISHED FACT THAT THERE ARE V ARIOUS OPTIONS OF THE VARIOUS PRODUCTS AVAILABLE IN THE MA RKET. IN SUCH AN ENVIRONMENT THE TRADEMARK OF BISAZZA HELP S US IN PROMOTING BISAZZA MOSAICS IN THE MARKET. YOUR APPELLANT RESPECTFULLY FURTHER SUBMIT THAT THE LD. TPO HAS RESTRICTED THE PAYMENT OF ROYALTY MAINLY RE LYING ON THE PRESS NOTE NO.9 (2000 SERIES). THE ABOVE REF ERRED PRESS NOTE READ AS UNDER: PAYMENT OF ROYALTY UPTO 2% FOR EXPORTS AND 1% FOR DOMESTIC SALES IS ALLOWED UNDER AUTOMATIC ROUTE ON USE OF ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 14 TRADEMARKS AND BRAND NAME OF THE FOREIGN COLLABORAT OR WITHOUT TECHNOLOGY TRANSFER. ON GOING THROUGH THE ABOVE PRESS NOTE ALONG WITH T ERMS OF AGREEMENT AS REFERRED ON PAGE 4 PARA 3.1 OF THE ORDER BY TPO ALONG WITH TERMS OF AGREEMENT AS REFERRED ON PAGE 4 PARA 3.1 OF THE ORDER BY THE TPO YOUR HONOUR WILL OBSERVE THAT THE RESTRICTION OF ROYALTY PAYMENT AT 2% ON EXPORT SALE AND 15 ON DOMESTIC SALE IS MEANT FOR US E OF TRADE MARK. WHEREAS YOUR APPELLANT HAS BEEN GRANTED EXCLUSIVE LICENSE TO MAKE USE OF TRADEMARK IN THE TERRITORY A ND CONSEQUENT EXCLUSIVE LICENSE TO MANUFACTURE AND SEL L THE PRODUCT IN THE TERRITORY. NOW REGARDING TOGETHER III & IV OF THE ABOVE REFERR ED PRESS NOTE THE APPELLANT IS USING BOTH THE TRADE MA RK AS WELL AS MANUFACTURING AND SELLING RIGHT. HENCE THE APPELLANT IS ELIGIBLE TO MAKE PAYMENT OF ROYALTY UN DER BOTH THE CLAUSES I.E. FOR USE OF TRADEMARK AND FOR USE OF TECHNOLOGY FOR MANUFACTURING AND SELLING PRODUCT. A COPY OF PRESS NOTE IS ENCLOSED. YOUR APPELLANT THEREFORE PRAYS TO ALLOW THE ROYALTY PAYMENT IN TOTAL AND NOT TO MAKE ANY ADJUSTMENT THE REIN. 13. THE LEARNED CIT (A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE A O. HI S FINDINGS IN PARA 5.2 OF THE IMPUGNED ORDER ARE REPRODUCED AS UN DER: 5.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE. I FIND THAT THE SAME ISSUE HAD CROPPED UP IN ASSESSEE S OWN CASE IN THE EARLIER YEAR, WHEREIN THE LD. CIT ( A), AHMEDABAD HAD UPHELD THE ACTION OF THE ASSESSING OFFICER. THEREFORE, RESPECTFULLY FOLLOWING THE ORDE R OF THE CIT (A)-VI, AHMEDABADS NO. CIT (A)/DCIT(OSD)/R- 1/14/2004-05 DATED 24/03/2006 THE ADJUSTMENT MADE B Y ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 15 THE ASSESSING OFFICER IS CONFIRMED AS THE FACTS ARE IDENTICAL. 14. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ISSUE STARTED FROM PRECEDING ASSESSMENT YEAR 20 02-03 IN WHICH ROYALTY EXPENDITURE WAS RS.1,26,10,026/- AND THE VA LUATION AS PER TPO WAS RS.32,28,921/- AND THE ASSESSEE SUO MOTO DI SALLOWED THE ENTIRE AMOUNT DUE TO NON-DEDUCTION OF TDS. HE HAS F ILED CHART FOR THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05. HE H AS SUBMITTED THAT THE MATTER TRAVELED TO ITAT AHMEDABAD BENCH IN ASSESSMENT YEAR 2002-03 IN THE CASE OF THE SAME ASSESSEE IN IT A NO.1414/AHD/2006 AND 1453/AHD/2006 AND THE TRIBUNAL DECIDED THE SAME ISSUE VIDE ORDER DATED 03-03-2009 AND IT WAS H ELD THAT ALP BY THE ASSESSEE HAS BEEN RIGHTLY COMPUTED. THE FINDING S OF THE TRIBUNAL READ AS UNDER: IN VIEW OF THE AFORESAID DISCUSSION, WE HOLD THAT ALP AS COMPUTED BY ASSESSEE, IN FACTS OF INSTANT CASE, IS RIGHTLY COMPUTED AND LD. TPO HAS ERRED IN SUBSTITUTING THE SAME BY RATE PRESCRIBED IN FDI GUIDELINES FOR AUTOMATIC ROUTE PAYMENTS WITHOUT BRINGING THE CASE UNDER SECTION 92 C (3) READ WITH SECTION 92 C(1) OF THE ACT AND WITHOUT MA KING ANY REFERENCE TO ANY COMPARABLE TRANSACTION. 17. WE ALSO FIND THAT THOUGH THE ASSESSEE HAS MADE THE PROVISION FOR SUCH EXPENSES BUT HAD SUO MOTU DISALLOWED ROYALTY PAYMENT IN VIEW OF SECTION 40A(F ) OF THE ACT FOR THE REASON THAT SINCE THE TAX WAS NOT DEDUC TED AT SOURCE THE EXPENSES WERE NOT CLAIMED. HOWEVER, SINC E THE TRANSACTION RELATES TO AN INTERNATIONAL TRANSAC TION WITH AN ASSOCIATED ENTERPRISE AND SINCE THE TPO HAS MADE ADJUSTMENT WITH REFERENCE TO SUCH TRANSACTION BY NO T ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 16 ACCEPTING THE PAYMENT AT AN ARMS LENGTH, THE GRIEV ANCE OF THE ASSESSEE IS ADDRESSED. IN THE CIRCUMSTANCES WHEN IN THE YEAR OF PAYMENT IF THE ASSESSEE CLAIMS THE R OYALTY PAYMENT AS EXPENSES, A FURTHER ANALYSIS IS IN RELAT ION TO ARMS LENGTH PRICE WILL NOT BE REQUIRED TO BE MADE QUA A LIABILITY INCURRED DURING THIS YEAR 15. THE LEARNED COUNSEL FOR THE ASSESSEE BY REFERRI NG TO THE CHART SUBMITTED THAT TDS WAS PAID ON ROYALTY EXPENDITURE ON THE ENTIRE AMOUNT OF RS.1,26,10,026/- (ASSESSMENT YEAR 2002-03 ) BUT THE VALUATION AS PER TPO WAS RS.32,28,921/-, THEREFORE, THE A O MADE THE ADDITION OF RS.93,81,105/- ON WHICH TAX IS PAID WHICH IS RAISED IN ADDITIONAL GROUND OF APPEAL, THEREFORE, ISSUE WOULD BE COVERED BY THE DECISION OF THE TRIBUNAL. IN THE ASSESSMENT YEAR UN DER APPEAL, THE ROYALTY EXPENDITURE WAS RS.1,02,49,154/-. ASSESSEE SUO MOTU DISALLOWED RS.43,33,420/- FOR NON-TDS. THE ASSESSEE CLAIMED ROYALTY EXPENDITURE WITH TDS IN A SUM OF RS.59,15,7 34/-. THE VALUATION AS PER TPO WAS RS.34,68,448/- AND THE ADD ITION MADE BY THE A O WAS RS.24,47,286/-. HE HAS SUBMITTED THAT S INCE THE ISSUE IS DECIDED BY THE TRIBUNAL THAT ALP COMPUTED BY THE AS SESSEE IS CORRECT, THEREFORE, MATTER MAY BE REMANDED TO THE F ILE OF THE A O FOR GIVING EFFECT OF THE SAME AND DIRECTION MAY BE GIVE N TO THE A O TO ALLOW THE CLAIM OF EXPENSES SINCE THE ASSESSEE HAS DEDUCTED AND PAID THE TAXES ON ROYALTY PAYMENT. LEARNED D R SUBM ITTED THAT CLAIM OF THE ASSESSEE MAY BE VERIFIED BY THE A O. 16. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEV EL OF THE A O. THE A O WITH REGARD TO ADDITION OF RS.93,81,105/- ON WHIC H ADDITIONAL ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 17 GROUND IS RAISED HAS FOLLOWED THE ORDER FOR ASSESSM ENT YEAR 2002-03 AS PER VALUATION DONE BY TPO. SAME FORMULA IS ACCEP TED IN THE ASSESSMENT YEAR UNDER APPEAL AND ADDITION OF RS.24, 47,286/- WAS MADE. SINCE, THE TRIBUNAL DECIDED IN THE PRECEDING ASSESSMENT YEAR 2002-03 THAT ALP COMPUTED BY THE ASSESSEE IS CORREC T AND THAT WHEN IN THE YEAR OF PAYMENT IF THE ASSESSEE CLAIMS THE R OYALTY PAYMENT AS EXPENSES, A FURTHER ANALYSIS IN RELATION TO ALP WIL L NOT BE REQUIRED TO BE MADE QUA A LIABILITY INCURRED DURING THIS YEAR. THE LEARNED CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE ON THIS GROUND BY FOLLOWING THE ORDER OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2002-0 3 DATED 24-03- 2006 IN WHICH THE TRIBUNAL SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW. THEREFORE, THE MATTER REQUIRES RECONSIDERATI ON AT THE LEVEL OF THE A O AS PER DECISION OF THE TRIBUNAL AND THAT A O SHALL HAVE TO VERIFY THE PAYMENTS MADE BY THE ASSESSEE ON MAKING THE PAYMENT OF TDS AS EXPLAINED IN THE CHART. FURTHER, ADDITIONAL GROUND WAS NOT RAISED BEFORE THE LEARNED CIT (A). HON'BLE M P HIGH COURT IN THE CASE OF CIT VS TOLARAM HASSOMAL 298 ITR 22 HELD THAT TR IBUNAL PERMITTING ADDITIONAL GROUND TO BE RAISED FOR THE F IRST TIME SHOULD REMAND THE MATTER TO THE CIT (APPEALS). IN THIS CA SE, THE ENTIRE FINDINGS ARE BASED ON FINDINGS GIVEN IN PRECEDING A SSESSMENT YEAR 2002-03 AND THE ASSESSEE ON DEPOSIT OF THE TDS WOUL D BE ENTITLED FOR DEDUCTION IN THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, THE ADDITIONAL GROUND IS ADMITTED. FURTHER, THE CLAIM O F THE ASSESSEE AND THE CALCULATION IS ENTIRELY BASED WITH REGARD TO VA LUATION DONE BY TPO ON THE BASIS OF PRECEDING ASSESSMENT YEAR WHICH NO LONGER SURVIVE, THEREFORE, IN THE INTEREST OF JUSTICE THE MATTER MA Y BE REMANDED TO THE FILE OF THE A O FOR RECONSIDERATION. WE ACCORDINGLY , SET ASIDE THE ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 18 ORDERS OF THE AUTHORITIES BELOW AND RESTORE GROUND NO.3 AND THE ADDITIONAL GROUND TO THE FILE OF A O FOR RECONSIDER ATION IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN THE CASE OF THE SAM E ASSESSEE FOR PRECEDING ASSESSMENT YEAR 2002-03 DATED 03-03-2009 AND THE A O IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE BY V ERIFYING THE PAYMENT OF TDS ETC. AS PER LAW. THE A O SHALL PASS REASONED ORDER AFTER GIVING REASONABLE SUFFICIENT OPPORTUNITY OF B EING HEARD TO THE ASSESSEE AND THE ASSESSEE IS DIRECTED TO FURNISH EV IDENCE OF PAYMENT OF TDS IN THIS REGARD. IN THE RESULT, GROUN D NO.3 AND ADDITIONAL GROUND ARE ALLOWED FOR STATISTICAL PURPO SES. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ITA 3055/AHD/2007:A. Y. 18. THIS APPEAL IS FILED ON THE FOLLOWING GROUNDS: 1) THE LEARNED A. O. HAD ERRED IN LAW AND ON FACTS IN REDUCING DFRC INCOME FROM THE BUSINESS PROFIT FOR T HE PURPOSE OF CALCULATING DEDUCTION U/S.80 HHC OF THE ACT. YOUR APPELLANT SUBMIT THAT THE TOTAL EXPORT INCENTI VE AVAILED DURING THE YEAR ARE RS.85,86,444/- AS UNDER : DFRC LICENSES RS.72,38,013/- DEPB LICENSES RS.13,48,431/- TOTAL RS.85,86,444/- OF THE ABOVE LICENSES. LICENSES UTILIZED FOR IMPORT OF MATERIAL RS.19,5 3,691/- LICENSES ON HAND RS.29,04,380/- LICENSES TRANSFERRED RS.37,28,373/- ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 19 TOTAL RS.85,86,444/- IN VIEW OF AMENDED SEC. 28 (IIID( & SEC. (IIIE) OF THE ACT THE PROFITS ON TRANSFER OF LICENSES SHOULD BE TAXED. HENCE LICENSES UTILIZED AS WELL AS LICENSES ON HAND SHOULD NOT BE TAXED UNDER THE NEW PROVISION. 2) THE LEARNED A. O. FAILED TO APPRECIATE THE AMEND ED SEC. 80 HHC AND CBDT CIRCULAR NO.2/2006/ DATED 17.01.200 6 WHEREBY NO INTEREST AND PENALTY IS TO BE CHARGED TO THE APPELLANT ON THE ADDITION MADE IN TOTAL INCOME ON A CCOUNT OF AMENDED SEC. 80 HHC OF ACT. 3) THE LEARNED A. O. ERRED IN MAKING ADJUSTMENT OF RS.43,33,420/- RELYING ON ORDER U/S. 92CA (3) OF TH E ACT. WHEREIN ARMS LENGTH PRICE FOR PAYMENT OF ROYALTY IS REDUCED FROM RS.10249154/- TO RS.3468448/-. 4) ALTERNATIVELY WITHOUT PREJUDICE THE APPELLANTS CLAIM THAT AS THE APPELLANT HAD NOT PAID ROYALTY OR SEVERAL PR EVIOUS YEARS THE AMOUNT PAID DURING THE YEAR SHOULD BE AMORTISED OVER FIVE YEARS. 19. LEARNED REPRESENTATIVES OF BOTH THE PARTIES SUB MITTED THAT THESE GROUNDS ARE SAME AS HAVE BEEN CONSIDERED IN A SSESSMENT YEAR 2003-04. THEREFORE, ORDER IN THAT CASE MAY BE FOLLOWED IN THIS YEAR AS WELL. 20. ON CONSIDERATION OF THE ABOVE FACTS AND ON GOIN G THROUGH THE IMPUGNED ORDER, WE FIND THAT ALL THE GROUNDS ARE SA ME AS HAVE BEEN CONSIDERED IN ASSESSMENT YEAR 2003-04. BY FOLLOWING THE SAME ORDER, THE ALTERNATE CLAIM OF THE ASSESSEE ON GROUN D NO.1 IS RESTORED TO THE FILE OF THE A O FOR RECONSIDERATION AS DIREC TED ABOVE. REST OF THE GROUND NO.1 IS ACCORDINGLY DISMISSED. GROUND NO .2 OF THE APPEAL OF THE ASSESSEE IS ALLOWED AS DIRECTED ABOVE. GROUN DS NO.3 AND 4 ITA NO.404 AND 3055/AHD/2007 BISAZA INDIA LTD. VS DCIT(OSD), RANGE-1, AHMEDABAD 20 ARE RESTORED TO THE FILE OF THE A O FOR RECONSIDERA TION AS DIRECTED ABOVE. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. 22. NO OTHER POINT IS ARGUED OR PRESSED. 23. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 8-04-2011. SD/- SD/- (G.D. AGARWAL) VICE-PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 8-04-2011 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : DEPARTMENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD