ACIT, New Delhi V. M/s. Bechtel India Pvt. Ltd., New Delhi

ITA 4339/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66082 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 13-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 29-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH JAIN
• Keywords: Transfer pricing; Opportunity of being heard; International transaction
• Section: 80HHC; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH I II I : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.4338/DEL/2011 4338/DEL/2011 4338/DEL/2011 4338/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2004 2004 2004 2004- -- -05 0505 05 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2(1), 2(1), 2(1), 2(1), NEW DELHI NEW DELHI NEW DELHI NEW DELHI. .. . VS. VS. VS. VS. M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., 418, NAURANG HOUSE, 418, NAURANG HOUSE, 418, NAURANG HOUSE, 418, NAURANG HOUSE, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACB0298A. PAN : AAACB0298A. PAN : AAACB0298A. PAN : AAACB0298A. (APPELLANT) (RESPONDENT) CROSS CROSS CROSS CROSS- -- -OBJECTION NO.374/DEL/2011 OBJECTION NO.374/DEL/2011 OBJECTION NO.374/DEL/2011 OBJECTION NO.374/DEL/2011 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2004 2004 2004 2004- -- -05 0505 05 M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., 418 418 418 418, NAURANG HOUSE, , NAURANG HOUSE, , NAURANG HOUSE, , NAURANG HOUSE, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACB0298A. PAN : AAACB0298A. PAN : AAACB0298A. PAN : AAACB0298A. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2(1), 2(1), 2(1), 2(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. ITA NO. ITA NO. ITA NO.4339/DEL/2011 4339/DEL/2011 4339/DEL/2011 4339/DEL/2011 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2005 2005 2005 2005- -- -06 0606 06 ASSISTANT C ASSISTANT C ASSISTANT C ASSISTANT COMMISSIONER OF OMMISSIONER OF OMMISSIONER OF OMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2(1), 2(1), 2(1), 2(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., 418, NAURANG HOUSE, 418, NAURANG HOUSE, 418, NAURANG HOUSE, 418, NAURANG HOUSE, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACB0298A. PAN : AAACB0298A. PAN : AAACB0298A. PAN : AAACB0298A. (APPELLANT) (RESPONDENT) ITA-4338/DEL/2011 & 3 OTHERS 2 ITA NO. ITA NO. ITA NO. ITA NO.4573/DEL/2011 4573/DEL/2011 4573/DEL/2011 4573/DEL/2011 ASSESSMENT YEA ASSESSMENT YEA ASSESSMENT YEA ASSESSMENT YEAR : R : R : R : 2005 2005 2005 2005- -- -06 0606 06 M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., 418, NAURANG HOUSE, 418, NAURANG HOUSE, 418, NAURANG HOUSE, 418, NAURANG HOUSE, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, 21, KASTURBA GANDHI MARG, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACB0298A. PAN : AAACB0298A. PAN : AAACB0298A. PAN : AAACB0298A. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2(1), 2(1), 2(1), 2(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI PEEYUSH JAIN, CIT-DR. ASSESSEE BY : SHRI RAHUL MITRA, SHRI SANDEEP CHUFLA, SHRI SANDEEP RASTOGI AND MS.NEHA ARORA, ARS. ORDER ORDER ORDER ORDER PER PER PER PER BENCH BENCH BENCH BENCH : : : : ITA NO.4338/DEL/2011 ITA NO.4338/DEL/2011 ITA NO.4338/DEL/2011 ITA NO.4338/DEL/2011 THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XX, NEW DELHI DATED 29 TH JULY, 2011 FOR THE AY 2004-05. 2. GROUND NO.1 OF THE REVENUES APPEAL READS AS UND ER:- THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DEL ETING ADDITION OF ` 6,93,21,169/- MADE ON ACCOUNT OF ARMS LENGTH PRICE. 3. THOUGH IT WAS THE REVENUES APPEAL, AT THE OUTSE T, IT WAS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE AS SESSEE DERIVES INCOME FROM THE BUSINESS OF DESIGNING ENGINEERING P ROJECTS. THAT DURING THE YEAR UNDER CONSIDERATION, THE TRANSFER P RICING OFFICER (TPO) HAS CONSIDERED THE ASSESSEE TO BE IN THE BUSINESS O F IT/IT-ENABLED ITA-4338/DEL/2011 & 3 OTHERS 3 SERVICES AND ACCORDINGLY, THE ASSESSEES TRANSACTIO NS WITH THE AE WERE BENCHMARKED FOR DETERMINING THE ARMS LENGTH PRICE. THAT THE LEARNED CIT(A) ACCEPTED THE ASSESSEES CONTENTION THAT THE ASSESSEE DERIVES INCOME FROM ENGINEERING, DRAWING AND DESIGN SERVICE S AND ACCORDINGLY, HE ACCEPTED THAT THE ASSESSEES INTERN ATIONAL TRANSACTIONS WERE AT ARMS LENGTH PRICE. THE LEARNED COUNSEL SU BMITTED THAT IN AY 2008-09, THE TPO HIMSELF ACCEPTED THAT THE ASSESSEE COMPANY IS INVOLVED IN THE BUSINESS OF ENGINEERING, DRAWING AN D DESIGNING SERVICES. HE, HOWEVER, FAIRLY POINTED OUT THAT THE CIT(A), WHILE ACCEPTING THE COMPARABLES GIVEN BY THE ASSESSEE IN THE FIELD OF ENGINEERING, DRAWING AND DESIGN SERVICES, HAS NOT A LLOWED ANY OPPORTUNITY TO THE AO/TPO TO REBUT THE COMPARABLES GIVEN BY THE ASSESSEE. HE, THEREFORE SUBMITTED THAT EITHER THE ORDER OF THE LEARNED CIT(A) SHOULD BE SUSTAINED OR THE MATTER CAN BE SET ASIDE TO HIS FILE OR EVEN TO THE FILE OF THE TPO. 4. THE LEARNED DR, ON THE OTHER HAND, STATED THAT O N THE FACTS OF THE ASSESSEES CASE, IT WOULD BE FAIR IF THE MATTER IS SET ASIDE TO THE FILE OF THE TPO AND HE IS DIRECTED TO READJUDICATE THE I SSUE IN THE LIGHT OF HIS OWN ORDER FOR AY 2008-09. 5. IN VIEW OF THE ABOVE SUBMISSION OF BOTH THE PART IES, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS POINT A ND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO AGAIN REFER THE MATTER TO THE TPO FOR DETERMINING THE ARMS LENGTH PRICE AFRESH IN THE LIGHT OF HIS ORDER FOR AY 2008-09 TREATING THE ASSE SSEE COMPANY AS INVOLVED IN THE BUSINESS OF ENGINEERING, DESIGN AND DRAWING. NEEDLESS TO MENTION THAT AO/TPO WHILE READJUDICATING THE ISS UE WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 6. GROUND NO.2 OF THE REVENUES APPEAL READS AS UND ER:- ITA-4338/DEL/2011 & 3 OTHERS 4 THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DEL ETING DISALLOWANCE OF ` 11,95,737/- ON ACCOUNT OF DEDUCTION U/S 80HHE OF THE I.T.ACT. 7. AT THE TIME OF HEARING BEFORE US, IT WAS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER RECOMPUTED THE DEDUCTION PERMISSIBLE UNDER SECTION 80HHE BY INCREASING THE TOTAL TURNOVER (I) BY THE AMOUNT O F ADJUSTMENT MADE BY THE TPO AND (II) REIMBURSEMENT OF THE EXPENSES. HE SUBMITTED THAT THE TPO HAS ENHANCED THE VALUE OF INTERNATIONAL TRA NSACTIONS BY ` 6,93,21,169/-. THEREFORE, IF AT ALL IT WAS TO BE C ONSIDERED, IT SHOULD HAVE BEEN CONSIDERED BY INCREASING THE ASSESSEES I NCOME AND THE EXPORT TURNOVER. THE TOTAL TURNOVER CANNOT BE INCR EASED WITHOUT INCREASING THE EXPORT TURNOVER. THE ADJUSTMENT MAD E BY THE TPO WAS IN RELATION TO THE VALUE OF THE INTERNATIONAL TRANS ACTIONS, THEREFORE, ANY INCREASE THEREIN WILL FIRST INCREASE THE EXPORT TUR NOVER, THEN THE TOTAL TURNOVER AND FINALLY, THE TOTAL INCOME. THE ASSESS ING OFFICER CANNOT SIMPLY INCREASE THE TOTAL TURNOVER BY THE SAID AMOU NT. HE FAIRLY POINTED OUT THAT SECTION 92C(4) PROVIDES THAT NO DE DUCTION UNDER CHAPTER VI-A SHALL BE ALLOWED IN RESPECT OF THE AMO UNT OF INCOME BY WHICH THE TOTAL INCOME IS ENHANCED AS PER THE COMPU TATION UNDER SECTION 92C. THEREFORE, THE ASSESSING OFFICER IS N OT AT ALL JUSTIFIED IN ENHANCING THE TOTAL TURNOVER BY THE ADJUSTMENT MADE UNDER SECTION 92C. WITH REGARD TO THE INCREASE OF TOTAL TURNOVER BY REIMBURSEMENT OF EXPENSES, IT WAS POINTED OUT BY THE LEARNED COUN SEL THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2001-02 & 2002-03 VIDE I TA NOS.4278/DEL/2005 AND 1803/DEL/2006. HE, THEREFORE , SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) ON THIS POINT IS IN ACCORDANCE WITH LAW AND THEREFORE, THE SAME SHOULD BE SUSTAINED. ITA-4338/DEL/2011 & 3 OTHERS 5 8. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE ASSESSING OFFICER. 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ASSESSING OFFICER, WHILE COMPUTING DEDUCTION UNDER SECTION 80 HHE, INCREASED THE TOTAL TURNOVER OF THE ASSESSEE. THE WORKING OF THE ASSESSING OFFICER UNDER SECTION 80HHE IS REPRODUCED BELOW FOR READY REFERENCE:- THE DEDUCTION U/S 80HHE OF THE ACT IS RECALCULATED AS UNDER. EXPORT TURNOVER RS.42,41,01,636 TOTAL TURNOVER AS PER FORM 10CCAF 45,86,53,083 ADD : REIMBURSEMENT OF EXPENSES 5,31,84,493 AS PER TPO ORDER 6,93,21,169 RS.58,11,58,745 PROFIT OF THE BUSINESS RS. 1,77,44,371 DEDUCTION U/S 80HHE OF THE ACT 30% OF RS.1,77,44, 37 X -----------------------= RS.58,11,58,745 = 30% OF 1,32,54,313 = RS.39,76,294. 10. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSIN G OFFICER ENHANCED THE TOTAL TURNOVER BY (I) REIMBURSEMENT OF EXPENS ES AND (II) BY THE INCOME ENHANCED BY THE TPO. THE LEARNED CIT(A) ALL OWED THE RELIEF TO THE ASSESSEE, THEREFORE, THIS APPEAL BY THE REVENUE . 11. WITH REGARD TO REIMBURSEMENT OF THE EXPENSES, W E FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF ITAT IN ASSESSEES OWN CASE FOR AY 2001-02 & 2002-03 (SUPRA ) WHEREIN THE ITAT HELD AS UNDER:- 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND A LSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBS ERVED ITA-4338/DEL/2011 & 3 OTHERS 6 THAT THE REIMBURSEMENT OF EXPENSES ACTUALLY INCURRE D BY THE ASSESSEE COMPANY ON BEHALF OF ITS CLIENTS WAS C LAIMED BY IT FROM THEM AS PER THE AGREEMENT AND EVEN THE B ILLS FOR SUCH REIMBURSEMENT WERE SEPARATELY RAISED BY IT ON THE CONCERNED CUSTOMERS AS IS EVIDENT FROM THE DETAILS FURNISHED BY THE LEARNED COUNSEL FOR THE ASSESSEE A T PAGE NOS.25 TO 27 OF HIS PAPER BOOK. THE REIMBURSEMENT SO CLAIMED WAS ONLY TO THE EXTENT OF THE EXPENSES ACTU ALLY INCURRED BY THE ASSESSEE COMPANY ON BEHALF OF ITS C LIENTS AND IT IS NOT EVEN THE CASE OF THE REVENUE THAT ANY PROFIT ELEMENT WAS INVOLVED IN SUCH REIMBURSEMENTS. IN TH E CASE OF CIT VS. INDUSTRIAL ENGINEERING PROJECTS PVT.LTD. (SUPRA), HONBLE DELHI HIGH COURT HAS HELD RELYING ON THE DE CISION OF HON'BLE SUPREME COURT IN THE CASE OF TEJAJI FARASRA M KHARAWALLA (SUPRA) THAT REIMBURSEMENT OF EXPENSES C AN UNDER NO CIRCUMSTANCES BE REGARDED AS A REVENUE REC EIPT. 14. IN THE CASE OF CIT VS. SUDERSHAN CHEMICAL INDUS TRIES LIMITED (SUPRA), HONBLE BOMBAY HIGH COURT HAS AN OCCASION TO CONSIDER A SIMILAR ISSUE IN THE CONTEXT OF COMPUTATION OF DEDUCTION U/S 80HHC AND IT WAS HELD THEREIN THAT THE RELEVANT PROVISIONS OF SECTION 80H HC CLEARLY SHOW THAT THE TOTAL TURNOVER INCLUDES ANYTH ING WHICH HAS NEXUS WITH SALE PROCEEDS AND EXCLUDES EVERYTHING WHICH HAS NO SUCH NEXUS. IT WAS FURTHER HELD THAT TURNOVER SHOULD BE RESTRICTED ONLY TO SUCH REC EIPTS WHICH HAVE AN ELEMENT OF PROFIT IN IT. AS THE PROV ISIONS OF SECTION 80HHC RELEVANT IN THIS CONTEXT ARE ANALOGOU S TO THE PROVISIONS OF SECTION 80HHE AS POINTED OUT BY T HE LEARNED COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIE W THAT THE RATIO OF THE DECISION OF THE HONBLE BOMBAY HIG H COURT IN THE CASE OF SUDERSHAN CHEMICAL INDUSTRIES LIMITE D ITA-4338/DEL/2011 & 3 OTHERS 7 (SUPRA) IS EQUALLY APPLICABLE TO THE ISSUE INVOLVED IN THE PRESENT APPEAL AND SUPPORTS THE CASE OF THE ASSESSE E. KEEPING IN VIEW THE SAID DECISION AS WELL AS THE OT HER JUDICIAL PRONOUNCEMENTS REFERRED TO HEREINABOVE AND CONSIDERING ALL THE FACTS OF THE CASE, WE HOLD THAT THERE WAS NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED C IT(A) IN DIRECTING THE AO NOT TO INCLUDE THE RECEIPTS BY THE ASSESSEE ON ACCOUNT OF REIMBURSEMENT OF EXPENSES IN ITS TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHE. THE SAME IS, THEREFORE, UPHELD AND GROUND N O.2 OF THE REVENUES APPEAL IS DISMISSED. 12. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF IT AT, WE UPHOLD THE FINDING OF THE LEARNED CIT(A) WITH REGARD TO REDUCT ION OF REIMBURSEMENT OF EXPENSES FROM THE TOTAL TURNOVER. 13. WITH REGARD TO ADDITION MADE BY THE ASSESSING O FFICER IN THE TOTAL TURNOVER BY THE AMOUNT OF ADJUSTMENT MADE AS PER TPOS ORDER, WE FIND THAT SECTION 92C(4) READS AS UNDER:- (4) WHERE AN ARMS LENGTH PRICE IS DETERMINED BY T HE ASSESSING OFFICER UNDER SUB-SECTION (3), THE ASSESS ING OFFICER MAY COMPUTE THE TOTAL INCOME OF THE ASSESSE E HAVING REGARD TO THE ARMS LENGTH PRICE SO DETERMIN ED : PROVIDED PROVIDED PROVIDED PROVIDED THAT NO DEDUCTION UNDER SECTION 10A [OR SE CTION 10AA] OR SECTION 10B OR UNDER CHAPTER VI-A SHALL BE ALLOWED IN RESPECT OF THE AMOUNT OF INCOME BY WHICH THE TOTAL INCOME OF THE ASSESSEE IS ENHANCED AFTER COMPUTATION OF INCOME UNDER THIS SUB-SECTION : ITA-4338/DEL/2011 & 3 OTHERS 8 14. FROM THE PROVISO TO SECTION 92C(4), IT IS EVIDE NT THAT NO DEDUCTION IN CHAPTER VI-A IS TO BE ALLOWED IN RESPE CT OF THE INCOME WHICH IS ENHANCED AFTER THE COMPUTATION OF INCOME I N THE SAID SECTION. THUS, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UN DER CHAPTER VI-A IN RESPECT OF THE ADDITION MADE AS PER THE TPOS ORDER . DESPITE THE ABOVE SPECIFIC PROVISION, THE ASSESSING OFFICER ENH ANCED THE TOTAL TURNOVER BY THE ADDITION MADE AS PER THE TPOS ORDE R, WHICH HAS THE EFFECT OF REDUCING THE DEDUCTION UNDER SECTION 80HH E. HOWEVER, THE FINDING OF THE TPO IS THAT THE INTERNATIONAL TRANSA CTION OF THE ASSESSEE IS NOT AT ARMS LENGTH AND, THEREFORE, BY DETERMINI NG THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION, HE PROPOSED THE ADDITION OF ` 6,93,21,169/-. THOUGH WHILE CONSIDERING GROUND NO. 1 OF THE REVENUES APPEAL WE HAVE ALREADY SET ASIDE THIS MAT TER TO THE FILE OF THE ASSESSING OFFICER, HOWEVER, EVEN IF SOME ADDITI ON IS REQUIRED TO BE MADE BY DETERMINING THE ALP, THE QUESTION IS WHETHE R THE SAME WILL HAVE THE EFFECT OF ENHANCING THE TOTAL TURNOVER. I F AT ALL THE EFFECT IS TO BE GIVEN TO THE ENHANCEMENT OF INCOME MADE BY THE T PO, IT WILL HAVE THE IMPACT OF INCREASING THE ASSESSEES EXPORT TURN OVER, THEN TOTAL TURNOVER AND FINALLY, THE TOTAL INCOME. IF ALL THR EE ARE INCREASED, OBVIOUSLY, THE DEDUCTION CLAIMED BY THE ASSESSEE UN DER CHAPTER VI-A WOULD INCREASE. THE PROVISO TO SECTION 92C(4) PROH IBITS ANY DEDUCTION UNDER CHAPTER VI-A TO BE ALLOWED ON THE ENHANCEMENT MADE AS PER THE TPOS ORDER. THEREFORE, THE ONLY LOGICAL CONCLUSIO N THAT CAN BE DRAWN IS THAT NO EFFECT IS TO BE GIVEN TO THE ADDITION MA DE BY THE ASSESSING OFFICER AS PER THE TPOS ORDER WHILE COMPUTING DEDU CTION UNDER CHAPTER VI-A. THE ASSESSING OFFICERS VIEW CANNOT BE ACCEPTED THAT BY THE ENHANCEMENT OF INCOME AS PER THE TPOS ORDER, O NLY THE TOTAL TURNOVER WOULD BE INCREASED AND NOT THE EXPORT TURN OVER OR THE TOTAL INCOME. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF LEARNED CIT(A) ON THIS POINT ALSO. ACCORDINGLY, GROUND NO.2 OF THE R EVENUES APPEAL IS REJECTED. ITA-4338/DEL/2011 & 3 OTHERS 9 C.O. NO.374/DEL/2011 C.O. NO.374/DEL/2011 C.O. NO.374/DEL/2011 C.O. NO.374/DEL/2011 15. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY THE LEARNED COUNSEL THAT IN THE CROSS-OBJECTION, THE ASSESSEE H AS ONLY SUPPORTED THE ORDER OF LEARNED CIT(A) AND NO FURTHER RELIEF I S CLAIMED, THEREFORE, THE ASSESSEES CROSS-OBJECTION IS TREATED AS INFRUC TUOUS AND DISMISSED AS SUCH. ITA NO.4339/DEL/2011 ITA NO.4339/DEL/2011 ITA NO.4339/DEL/2011 ITA NO.4339/DEL/2011 & ITA NO.4573/DEL/2011 & ITA NO.4573/DEL/2011 & ITA NO.4573/DEL/2011 & ITA NO.4573/DEL/2011 16. THE ONLY GROUND RAISED IN THE APPEAL OF THE REV ENUE READS AS UNDER:- THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN RES TRICTING ADDITION TO ` 4,58,56,978/- AS AGAINST THE ADDITION OF ` 9,36,70,152/- MADE ON ACCOUNT OF ARMS LENGTH PRICE . 17. IN ITS APPEAL, THE ASSESSEE HAS CHALLENGED THE ADDITION SUSTAINED BY THE LEARNED CIT(A) I.E. ` 4,58,56,978/-. AT THE TIME OF HEARING BEFORE US, BOTH THE PARTIES AGREED THAT THE FACTS OF THE Y EAR UNDER CONSIDERATION ARE IDENTICAL TO AY 2004-05 AND, THER EFORE, WHATEVER VIEW IS TAKEN IN AY 2004-05 WOULD BE SQUARELY APPLI CABLE FOR AY 2005- 06. 18. WE HAVE ALREADY CONSIDERED THE ISSUE IN AY 2004 -05 IN DETAIL ABOVE AND FOR THE DETAILED DISCUSSION THEREIN, WE S ET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO BE READJUDICATED AS PER OUR DI RECTION IN AY 2004- 05. NEEDLESS TO MENTION THAT AO/TPO SHALL ALLOW AD EQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA-4338/DEL/2011 & 3 OTHERS 10 19. IN THE RESULT, REVENUES APPEAL FOR AY 2004-05 IS DEEMED TO BE PARTLY ALLOWED, ASSESSEES CROSS-OBJECTION FOR AY 2 004-05 IS DISMISSED AND REVENUES APPEAL AS WELL AS ASSESSEES APPEAL F OR AY 2005-06 ARE DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER, 2012. SD/- SD/- ( (( (A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 21.12.2012 VK. COPY FORWARDED TO: - 1. ASSESSEE : M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., M/S BECHTEL INDIA PVT.LTD., 418, NAURANG HOUSE, 418, NAURANG HOUSE, 418, NAURANG HOUSE, 418, NAURANG HOUSE, 21, KA 21, KA 21, KA 21, KASTURBA GANDHI MARG, STURBA GANDHI MARG, STURBA GANDHI MARG, STURBA GANDHI MARG, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. 2. REVENUE : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2(1), NEW DELHI. 2(1), NEW DELHI. 2(1), NEW DELHI. 2(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR