ACIT, New Delhi V. M/s. Kamla Dials and Devices Ltd., Chandigarh

ITA 4284/DEL/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7526 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 23-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 17-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Additional evidence
• Section: 43B; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1 NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA: JUDICIAL MEMBER ITA NO. 4284/DEL/2010 ASSTT. YR: 2005-06 ACIT CIRCLE 5(1), VS. M/S KAMLA DIALS AND DEVICES LTD., NEW DELHI. KAMLA CENTRE, SCO 88-89, SECTOR 8-C, CHANDIGARH-160018. PAN: AAACK 1929 M AND ITA NO. 5567/DEL/2010 ASSTT. YR: 2006-07 M/S KAMLA DIALS AND DEVICES LTD., VS. ACIT CIRCLE 5 (1), KAMLA CENTRE, SCO 88-89, SECTOR 8-C, NEW DELHI. CHANDIGARH-160018. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA SR. ADV. SHRI RAMIT KATYAL CA REVENUE BY : SHRI AMRENDRA KUMAR CIT(DR) DATE OF HEARING : 23/05/2016. DATE OF ORDER : 30/05/2016. O R D E R PER S.V. MEHROTRA, A.M: THE REVENUE IS IN APPEAL AGAINST CIT(A)S ORDER DAT ED 8.7.2010 IN APPEAL NO. 44/2008-09/CIT(A)-XX RELATING TO AY 2005-06 AND THE ASSESSEE HAS PREFERRED APPEAL AGAINST ASSESSMENT ORDER DATED 18.10.2010 PA SSED BY THE AO U/S 143(3) PURSUANT TO DRP DIRECTIONS U/S 144C RELATING TO AY 2006-07. BOTH THESE APPEALS 2 WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMPOSITE ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE FOR AY 2005-06 ARE THAT THE ASSESSEE COMPANY DEALT WITH THE MANUFACTURING OF PRECISION PARTS DIALS F OR WRIST WATCHES, WATCH HANDS, PRESS TOOLS ETC. THE ASSESSEE HAD FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 2,68,67,560/-. AS THE ASSESSEE HAD ENTERED INTO INT ERNATIONAL TRANSACTIONS WITH ITS AE, THEREFORE, THE MATTER WAS REFERRED TO THE TPO B Y THE AO, WHO PROPOSED AN INCREASE OF RS. 2,50,54,274/- IN THE INCOME OF THE ASSESSEE. THE AO HAS POINTED OUT THAT HONBLE DELHI HIGH COURT HAD QUASHED THE O RDER OF TPO ON 19.12.2008 AND AS PER THE DIRECTIONS THE ORDER OF TPO WAS AGAI N PASSED ON 26.12.2008 AND THE SAME INCREASE IN THE TOTAL INCOME WAS MADE. LD. CIT (A) WHILE PARTLY ALLOWING THE ASSESSEES APPEAL, DELETED THE ADDITION MADE ON ACC OUNT OF TP ADJUSTMENT. BEING AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US AN D HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(APPEALS), NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS. 2,50,54,274/- MADE BY THE AO ON ACCOUNT OF TPO ADJUSTMENTS. 2. THE LD. CIT(A) ERRED ON FACTS BY APPLYING THE TN MM METHOD AS AGAINST THE CUP METHOD CORRECTLY ADOPTED BY THE TPO & THE AO AS PER OECD GUIDELINES. THE LD. CIT(A) HAS ALSO IGNORED THE FINDINGS RECORDED BY THE TPO. 3. AT THE OUTSET LD SENIOR COUNSEL FOR THE ASSESSE E FILED BEFORE US AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE FO R A.YS. 2005-06 AND 2006-07 IN TERMS OF RULE 29 OF THE ITAT RULES, 1963 , WHICH IS IN THE FORM OF AFFIDAVIT SWORN IN BY ERNST HUBER SON OF OTTO HU BER, RESIDENT OF CH- 9053 TEUFEN. LD. SENIOR COUNSEL CLARIFIED THAT THOU GH LD. CIT(A) HAS DELETED 3 THE ADJUSTMENT DIRECTED BY LD. TPO, BUT IN SUBSEQUE NT YEAR I.E. AY 2006-0, LD. DRP HAS CONFIRMED THE ADJUSTMENT MADE BY LD. TP O ON THE ISSUE OF ALP OF THE COMMISSION PAYMENT BY ASSESSEE TO ITS AE BEI NG DETERMINED AT NIL. HE SUBMITTED THAT THE ADMISSION OF THIS AFFIDAVIT F OR BOTH THE YEARS UNDER CONSIDERATION IS NECESSARY IN ORDER TO ESTABLISH TH E SERVICES RENDERED BY AE IN CONNECTION WITH THE EXPORTS MADE BY ASSESSEE. 4. LD. CIT(DR) OBJECTED TO THE ADMISSION OF ADDITIO NAL EVIDENCE, FIRSTLY, ON THE GROUND THAT ASSESSEE HAS NOT GIVEN ANY REAS ON AS TO WHY THIS AFFIDAVIT COULD NOT BE PRODUCED BEFORE LD. TPO AND, SECONDLY, ON THE GROUND THAT SINCE THE AFFIDAVIT IS OF A NON-RESIDENT, THEREFORE , IT SHOULD HAVE BEEN SWORN BEFORE INDIAN CONSULAR. 5. BEFORE WE PROCEED TO DECIDE THE ADMISSION OF ADD ITIONAL EVIDENCE, WE MAY POINT OUT THAT AS FAR AS THE SECOND OBJECTION R AISED BY LD. CIT(DR) IS CONCERNED, LD. COUNSEL HAS FILED BEFORE US COPY OF HAGUE CONVENTION DATED 5.10.1961, WHEREIN 12 TH CONVENTION WAS ARRIVED AT BETWEEN SIGNATORY STATE S FOR ABOLISHING THE REQUIREMENT OF LEGALIZATION FOR FOREIGN PUBLIC DOCUMENTS. THE PREAMBLE OF THE SAID CONVENTION READS AS UNDER: THE STATES SIGNATORY TO THE PRESENT CONVENTION, DESIRING TO ABOLISH THE REQUIREMENT OF DIPLOMATIC O R CONSULAR LEGALIZATION FOR FOREIGN PUBLIC DOCUMENTS, HAVE RESOLVED TO CONCLUDE A CONVENTION TO THIS EFFE CT AND HAVE AGREED UPON THE FOLLOWING PROVISIONS: ARTICLE 1OF THE SAID CONVENTION READS AS UNDER:- THE PRESENT CONVENTION SHALL APPLY TO PUBLIC DOCUME NTS WHICH HAVE BEEN EXECUTED IN THE TERRITORY OF ONE CONTRACT ING STATE AND WHICH HAVE TO BE PRODUCED IN THE TERRITORY OF A NOTHER CONTRACTING STATE. FOR THE PURPOSES OF THE PRESENT CONVENTION, THE FOLLOWING ARE DEEMED TO BE PUBLIC DOCUMENTS: 4 A) DOCUMENTS EMANATING FROM AN AUTHORITY OR AN OFFICIA L CONNECTED WITH THE COURTS OR TRIBUNALS OF THE STATE , INCLUDING THOSE EMANATING FROM A PUBLIC PROSECUTOR, A CLERK O F A COURT OR A PROCESS-SERVER ('HUISSIER DE JUSTICE'); '- . C) NOTARIAL ACTS; 6. LD. COUNSEL HAS ALSO FILED A NOTE ON THE SAID AR TICLE WHICH IS REPRODUCED HEREUNDER: PURPOSE OF THE CONVENTION THE APOSTILLE CONVENTION FACILITATES THE CIRCULATIO N OF PUBLIC DOCUMENTS EXECUTED IN ONE STATE PARTY TO THE CONVEN TION AND TO BE PRODUCED IN ANOTHER STATE PARTY TO THE CONVENTIO N.' IT DOES SO BY REPLACING THE CUMBERSOME AND OFTEN COSTLY FOR MALITIES OF A FULL LEGALISATION PROCESS (CHAIN CERTIFICATION) W ITH THE MERE ISSUANCE OF AN APOSTILLE (ALSO CALLED APOSTILLE CER TIFICATE OR CERTIFICATE). THE CONVENTION HAS ALSO PROVEN TO BE VERY USEFUL FOR STATES THAT DO NOT REQUIRE FOREIGN PUBLIC DOCUM ENTS TO BE LEGALISED OR THAT DO NOT KNOW THE CONCEPT OF LEGALI SATION IN THEIR DOMESTIC LAW: THE CITIZENS IN THESE STATES ENJOY TH E BENEFITS OF THE CONVENTION WHENEVER THEY INTEND TO PRODUCE A DO MESTIC PUBLIC DOCUMENT IN ANOTHER STATE PARTY WHICH, FOR I TS PART, REQUIRES AUTHENTICATION OF THE DOCUMENT CONCERNED. PUBLIC DOCUMENTS THE CONVENTION APPLIES ONLY TO PUBLIC DOCUMENTS. TH ESE ARE DOCUMENTS EMANATING FROM AN AUTHORITY OR OFFICIAL C ONNECTED WITH A COURT OR TRIBUNAL OF THE STATE (INCLUDING DO CUMENTS ISSUED BY AN ADMINISTRATIVE, CONSTITUTIONAL OR ECCL ESIASTICAL COURT OR TRIBUNAL, A PUBLIC PROSECUTOR, A CLERK OR A PROCESS- SERVER); ADMINISTRATIVE DOCUMENTS; NOTARIAL ACTS; A ND OFFICIAL CERTIFICATES WHICH ARE PLACED ON DOCUMENTS SIGNED B Y PERSONS 5 IN THEIR PRIVATE CAPACITY, SUCH AS OFFICIAL CERTIFI CATES RECORDING THE REGISTRATION OF A DOCUMENT OR THE FACT THAT IT WAS IN EXISTENCE ON A CERTAIN DATE AND OFFICIAL AND NOTARI AL AUTHENTICATIONS OF SIGNATURES. THE MAIN EXAMPLES OF PUBLIC DOCUMENTS FOR WHICH APOSTILLES ARE ISSUE IN PRACTIC E INCLUDE BIRTH, MARRIAGE AND DEATH CERTIFICATES; EXTRACTS FR OM COMMERCIAL REGISTERS AND OTHER REGISTERS; PATENTS; COURT RULINGS; NOTARIAL ACTS AND NOTARIAL ATTESTATIONS OF SIGNATURES; ACADEMIC DIPLOMAS ISSUED BY PUBLIC INSTITUTIONS; E TC. APOSTILLES MAY ALSO BE ISSUED FOR A CERTIFIED COPY OF A PUBLIC DOCUMENT. ON THE OTHER HAND, THE CONVENTION NEITHER APPLIES T O DOCUMENTS EXECUTED BY DIPLOMATIC OR CONSULAR AGENTS NOR TO AD MINISTRATIVE DOCUMENTS DEALING DIRECTLY WITH COMMERCIAL OR CUSTO MS OPERATIONS (THIS LATTER EXCEPTION IS TO BE INTERPR ETED NARROWLY). 7. AFTER GOING THROUGH THE AFOREMENTIONED CONTENTS OF CONVENTION AND THE TEXT ON THE SAME, WE ARE OF THE OPINION THAT TH E AFFIDAVIT FILED BY ASSESSEE IS AN ADMISSIBLE EVIDENCE AND CAN BE TAKEN NOTE OF AS IT IS IN TERMS OF THE REQUIREMENTS OF CONVENTION 12 NOTED ABOVE. 8. NOW COMING TO THE MERITS OF THE ISSUE, BRIEF FAC TS AS OBTAINING IN A.Y. 2005-06 ARE AS UNDER: 9. IN THE TPOS ORDER PROFILE OF ASSESSEE HAS BEEN DESCRIBED AS UNDER:- PROFILE OF THE GROUP COMPANY AND ASSESSEE: M/S KAMLA DIALS & DEVICES LIMITED (HEREINAFTER REFE RRED TO AS 'KDDL'), THE ASSESSEE INCORPORATED UNDER THE COMPAN IES ACT, 1956 IS ENGAGED IN THE BUSINESS OF MANUFACTURING PR ECISION PARTS, DIALS FOR WRIST WATCHES, WATCH HANDS ETC..KD DL HAS ITS HEADQUARTER AT CHANDIGARH AND MANUFACTURING UNITS A T PARWANOO, DERABASI AND BANGALORE. ASSESSEE IS A PUB LIC LIMITED COMPANY. 43% EQUITY STAKE OF THE COMPANY IS HELD BY MR. R. K. SABOO AND HIS FAMILY AND THE BALANCE EQUI TY STAKE IS HELD BY PUBLIC IN GENERAL. THE ASSOCIATED ENTERPRIS E, M/S TARATEC SA (TTCH) IS A COMPANY INCORPORATED IN SWIT ZERLAND, 6 WHEREIN KDDL HOLDS 34% EQUITY STAKE. TARATEC SA PRO VIDES ASSISTANCE IN THE FORM OF SOLICITING BUSINESS, SUPP LYING CERTAIN RAW MATERIAL AND PURCHASING CERTAIN FINISHED GOODS FROM KDDL FOR RESALE. TARATEC SA ACTS AS AN AGENT CATERI NG TO THE REQUIREMENTS OF KDDL FOR PURCHASE OF RAW MATERIAL/ COMPONENTS AND FOR EXPORT SALES OF FINISHED GOODS. 10. THE ASSESSEE HAD UNDERTAKEN FOLLOWING INTERNATI ONAL TRANSACTIONS: S.NO. INTERNATIONAL TRANSACTIONS METHOD USED TO JUSTIFY THE ARMS LENGTH PRICE VALUE (IN RS.) 1 PURCHASE/IMPORT OF RAW MATERIAL. TNMM 2,932,229 2 SALE OF FINISHED GOODS TNMM 55,961,550 3 COMMISSION PROVIDED TO AE TNMM 15,944,254 4 HANDLING CHARGES PROVIDED TO AE CUP 2,214,955 5 PAYMENT OF INTEREST ON LOAN CUP 110,379 11. THE ASSESSEE IN ITS TP STUDY HAD APPLIED TNMM M ETHOD AS THE MOST APPROPRIATE METHOD FOR BENCH MARKING THE INTERNATIO NAL TRANSACTION VIZ. PURCHASE OF RAW-MATERIAL, SALE OF FINISHED GOODS, PAYMENT OF COMMISSION, WHEREIN TARATEC SA ACTED AS A MERE INTERMEDIARY RES ELLER OR AGENT. AS REGARDS OTHER TRANSACTIONS, THE ASSESSEE HAD APPLIE D CUP AS THE MOST APPROPRIATE METHOD FOR THE BENCH MARKING. 12. THE OPERATING RESULTS OF THE ASSESSEE WERE CO MPUTED AT 11.40% WHICH WAS GREATER THAN 0.189% OF THE TRADING TRANSA CTIONS WITH UNRELATED PARTIES. THE OPERATING RESULTS OF THE ASSESSEE WERE COMPUTED AS FOLLOWS: 7 PROFIT & LOSS ACCOUNT YEAR ENDED MARCH 31,2005 PBT 3,91,59,680 ADD: INTEREST 1,91,60,811 OPERATING PROFIT 5,83,20,491 OPERATING INCOME 51,12,77,545 OP/SALES(%) 11.40% 13. FOR APPLICATION OF TNMM, THE ASSESSEE HAD IDENT IFIED 4 COMPARABLE COMPANIES ENGAGED IN THE BUSINESS OF MANUFACTURING PRECISION PARTS AND CONSIDERED OPERATING PROFIT MARGIN (OP/SALES) AS UN DER: SR. NO. COMPANY NAME YEAR OP/ SALES % ECONOMIC ACTIVITY 1. RAMBAL LTD. 20503 1.127 PRECISION TURNED COMPONENTS 2. PRECISION FASTENERS LTD. 200409 -9.951 PRECISION SCREWS, NUTS ETC. 3. VST TILLERS TRACTORS LTD. 200503 7.500 PRECISION COMPONENTS 4. BOMBAY BURMAH TRDG. CORPN. LTD. 200503 0.569 PRECISION BALANCES, SPRINGS AVERAGE PLI -0.189 14. ACCORDINGLY, ASSESSEE CONCLUDED THAT THE TRANSA CTIONS RUN BY THE ASSESSEE WITH THE AE WERE AT ARMS LENGTH PRICE. 15. LD. TPO REJECTED THE TNMM AND APPLIED CUP METHO D OBSERVING THAT THE AE IS ACTING MERE ROUTING AGENCY AND JUST ACTI NG AS FACILITATING MECHANISM. THUS, THE APPLICATION OF TNMM METHOD AS HAS BEEN ADVANCED BY THE ASSESSEE CANNOT NOT BE ACCEPTED. THE TPO HELD THAT THE ASSESSEE IS SELLING GOODS ON HUGE DISCOUNTS TO ITS AE AS COMPAR ED WITH UNRELATED CUSTOMERS. THUS, THE CORRECT TRANSFER PRICING APPRO ACH IS TO EXAMINE THE INTERNATIONAL TRANSACTIONS FROM THE PERSPECTIVE OF APPLICATION OF CUP 8 METHOD . LD. TPO ALSO REJECTED THE COMPARABLE COMPANIES, SELECTED BY ASSESSEE, FOR THE APPLICATION OF TNMM ON THE GROUND THAT THEY WERE NOT ENGAGED IN MANUFACTURING OF WATCH DIALS AND WATCH C OMPONENTS AND THEY WERE HAVING NEGATIVE AVERAGE PLI, WHEREAS THE ASSES SEE WAS A PROFIT MAKING COMPANY. THE TPO DETERMINED THE AOP AS UNDER: SUMMARY OF ALP CALCULATION: (A). ALP OF SALE OF FINISHED GOODS SALE OF FINISHED GOODS RS. 55,961,550/- ALP OF TRANSACTION RS. 65,071,570/- DIFFERENCE AS ABOVE (A) RS. 9,110,020/- B) ALP OF COMMISSION PAID TO AE COMMISSION PAID TO AE RS. 15,944,254/- ALP ON COMMISSION NIL DIFFERENCE AS ABOVE(B) RS. 15,944,254/- TOTAL ADJUSTMENT TO BE MADE TO THE INCOME OF RS. 2 5,054,274/- THE ASSESSEE(A+B) 16. AT PRESENT AS WE ARE DECIDING ON THE ADMISSIBIL ITY OF ADDITIONAL EVIDENCE, WE ARE NOT GOING INTO DETAILS OF VARIOUS ISSUES AND ARE CONFINING OURSELVES TO THE ISSUE OF COMMISSION PAID BY ASSESS EE, THE ALP OF WHICH HAS BEEN DETERMINED AT NIL BY LD. TPO. THE FACTS IN THI S REGARD ARE THAT DURING THE FY 2004-05, THE ASSESSEE HAD PURCHASED BRASS CI RCLES/ BLANKS FOR MANUFACTURE OF WATCH DIALS ETC. FROM TARATEC SA AND ALSO SOLD WATCH DIALS ETC. TO THE SAME AE. THE ASSESSEE HAD ALSO SOLD GOO DS TO UNRELATED CUSTOMERS. THE ASSESSEES CLAIM WAS THAT THE SALE O F GOODS TO UNRELATED CUSTOMERS WAS THROUGH TARATEC SA ON WHICH COMMISSIO N WAS PAID TO THE AE. THUS, THE ASSESSEE WAS INVOLVED IN BOTH DIRECT AND INDIRECT SALE OF FINISHED GOODS, SUCH AS WATCH DIALS, STRIPS AND OTH ER PARTS OF WATCHES TO ITS AE AS WELL AS UNRELATED CUSTOMERS IN SWITZERLAND. T OTAL SALES AGGREGATING TO RS. 559.61 LAKHS IN VALUE WERE DIRECTLY MADE TO TAR ATEC SA AND RS. 1088.68 9 LAKHS IN VALUE WERE SOLD TO UNRELATED CUSTOMERS THR OUGH TARATEC SA. THE ASSESSEES CLAIM WAS THAT IT WAS IN THE BUSINESS OF WATCH COMPONENTS AND FOCUSING ON EXPORT TO SWITZERLAND AND EUROPEAN MARK ET ALONG WITH THE ASSOCIATION OF TARATEC SA. THE ASSESSEE CLAIMED THA T TARATEC SA PROVIDED THE FOLLOWING SERVICES TO THE ASSESSEE: I. DEVELOPING NEW CUSTOMERS AND PROMOTION OF SALES FOR THE ASSESSEE IN SWITZERLAND. II. PROCURING ORDERS FROM SWISS CUSTOMERS FOR THE ASSES SEE. III. FACILITATE CLEARANCE AND DELIVERY OF EXPORT SHIPMEN T FOR SWISS CUSTOMERS. IV. ARRANGING EXPORT REALIZATION FOR THE ASSESSEE. V. PROCUREMENT OF TOOLS, COMPONENTS OR ANY CONSUMABLES TO MEET THE EMERGENCY OF THE ASSESSEE PRODUCTION. VI. SCREENING THE DIALS AT THEIR OFFICE FOR QUALITY AS PER CUSTOMER ORDER. VII. HANDLING CUSTOMER COMPLAINTS. 17. THUS, PRIMARILY ASSESSEES CLAIM WAS THAT TARAT EC SA WAS AN INTERMEDIARY FOR IT FOR SALE OF ITS PRODUCTS TO UNR ELATED CUSTOMERS IN SWITZERLAND. LD. TPO EXAMINED THE MARKETING AND PRO JECT MANAGEMENT AGREEMENT BETWEEN TARATEC SA AND ASSESSEE EXECUTED ON 12.2.2004 AND AFTER CONSIDERING THE VARIOUS COVENANTS OF THE AGRE EMENTS OBSERVED THAT THIS AGREEMENT ENTITLED THE TARATEC SA FOR A COMMISSION VARYING FROM 12% TO 16% ON INVOICVED VALUE OF CUSTOMERS OTHER THAN TARA TEC SA. FURTHER, TARATEC SA WAS ALSO ENTITLED FOR PURCHASE FROM ASSE SSEE ON HIS OWN ACCOUNT FOR RESALE FOR WHICH IT WAS GETTING DISCOUNT VARYIN G FROM 12% TO 16%. LD. TPO REJECTED THE ASSESSEES CLAIM IN REGARD TO PAYM ENT OF COMMISSIONS, INTER ALIA, OBSERVING AS UNDER: THE ASSESSEE HAS FAILED TO SUBSTANTIATE ANY REASON OR BASIS FOR MAKING PAYMENT OF HUGE COMMISSION VARYING FROM 12% TO 16% ON SUCH SALES MADE TO UNRELATED PARTIES AS COMPARED TO 10 FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS ASSU MED BY AE IN RELATION TO SALE OF PRODUCTS OF KDDL TO UNRELATE D PARTIES IN SWISS MARKET. 18. THUS, PRIMARILY LD. TPO REJECTED THE ASSESSEES CLAIM AS IT FAILED TO SUBSTANTIATE ITS CLAIM OF SERVICES BEING RENDERED B Y AE FOR WHICH COMMISSION WAS PAID. LD. CIT(A) HAS ALLOWED THE ASS ESSEES CLAIM AFTER CONSIDERING THE ENTIRE FACTS. THE ASSESSEE IS FILIN G THE PRESENT AFFIDAVIT OF THE DIRECTOR OF COMPANY TO CORROBORATE ITS CLAIM REGARD ING SERVICES BEING RENDERED BY TARATEC SA. 19. LD. COUNSEL HAS RELIED ON THE ORDER OF TRIBUNA L DELHI BENCH I DATED 5.7.2013 RENDERED IN ITA NOS. 5420/DEL/2011 AND 605 7/DEL/2012 IN THE CASE OF HUGHES SYSTIQUE INDIA PVT. LTD., WHEREIN THE TRI BUNAL AFTER DETAILED CONSIDERATION OF FACTS ADMITTED THE ADDITIONAL EVID ENCE. 20. AFTER GOING THROUGH THE DECISION IN THE CASE OF HUGHES SYSTIQUE (SUPRA), WE ARE OF THE OPINION THAT IT WOULD BE IN THE INTEREST OF JUSTICE TO ADMIT THE ADDITIONAL EVIDENCE FILED BY ASSESSEE IN THE FORM OF AFFIDAVIT BECAUSE THIS AFFIDAVIT HAS COME IN POSSESSION OF AS SESSEE AFTER THE PROCEEDINGS WERE OVER FOR BOTH THE ASSESSMENT YEARS IN QUESTION. WE, THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) FOR AY 2005-06 AND RESTORE THE MATTER TO THE FILE OF LD. AO/TPO TO DECIDE THE ALP OF THE COMMISSION PAID BY ASSESSEE AFTER TAKING INTO CONSIDERATION THE AFF IDAVIT OF ERNST HUBER, DIRECTOR OF TARATEC SA. ACCORDINGLY, DEPARTMENTS A PPEAL FOR AY 2005-06 STANDS ALLOWED FOR STATISTICAL PURPOSES. 21. NOW COMING TO THE ASSESSEES APPEAL FOR AY 2006 -07, AS THE FACTS ARE IDENTICAL EXCEPT THAT LD. DRP HAS DECIDED THE ISSUE AGAINST ASSESSEE, WE ADMIT THE ADDITIONAL EVIDENCE FILED BY ASSESSEE AN D RESTORE THE MATTER TO THE FILE OF LD. AO/ TPO TO DECIDE IN TERMS OF OUR OBSER VATIONS FOR A.Y. 2005-06. 11 22. THE GROUNDS RELATING TO TP ISSUES RAISED BY ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 23. AS FAR AS CORPORATE ISSUES RAISED BY THE ASSESS EE IN GROUND NOS. 3 & 4 ARE CONCERNED, THE SAME ARE ALSO RESTORED BACK TO T HE FILE OF AO TO DECIDE THE SAME AFRESH AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, IN ACCORDANCE WITH LAW. 24. WE MAY CLARIFY THAT AS FAR AS THE ISSUE RELATIN G TO THE DISALLOWANCE U/S 14A IS CONCERNED, FOR AY 2006-07, UNDER CONSIDERATI ON, RULE 8D WAS NOT APPLICABLE. THE ISSUE RELATING TO 43B DEDUCTION WIL L ALSO BE EXAMINED AFRESH BY AO. 25. IN THE RESULT, BOTH THE APPEALS FILED BY THE A SSESSEE AS WELL AS THE DEPARTMENT STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCEMENT IN OPEN COURT ON 30/05/2016. SD/- SD/- (SUDHANSHU SRIVASTAVA) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/05/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.