JCIT, Special Range-1, New Delhi V. American Express (India) Pvt. Ltd., New Delhi

ITA 4487/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5763 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 13-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPIKA AGGARWAL; NAGESWAR RAO SH S CHAKARBORTY
• Assessee Lawyers: VIJAY CHOUDHARY; SURENDAR PAL
• Keywords: Transfer pricing; Rectification of order; Double taxation relief; International transaction; Initiation of penalty proceedings; Notional interest; Tax effect; TDS; Set aside
• Section: 143(3); 37(1); 195; 250; 201; 13; 22; 92CA; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI I-1 BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.2714/DEL/2018 ASSESSMENT YEAR : 2012-13 AMERICAN EXPRESS (INDIA) PVT.LTD ., METROPOLITAN SAKET, 7 TH FLOOR, OFFICE BLOCK, DISTRICT CENTRE, SAKET, NEW DELHI-110017. PAN-AAACA8163F VS JCIT, SPECIAL RANGE-I, NEW DELHI-110002. APPELLANT RESPONDENT ITA NOS.4487 & 2834/DEL/2018 ASSESSMENT YEAR : 2012-13 JCIT, SPECIAL RANGE-I, NEW DELHI-110002. VS AMERICAN EXPRESS (INDIA) PVT.LTD., MGF, METROPOLITAN SAKET, 7 TH FLOOR, OFFICE BLOCK, DISTRICT CENTRE, SAKET, NEW DELHI-110017. PAN-AAACA8163F APPELLANT RESPONDENT C.O.NO.125/DEL/2018 [IN ITA NO.2834/DEL/2018] ASSESSMENT YEAR : 2012-13 AMERICAN EXPRESS (INDIA) PVT.LTD., MGF, METROPOLITAN SAKET, 7 TH FLOOR, OFFICE BLOCK, DISTRICT CENTRE, SAKET, NEW DELHI-110017. PAN-AAACA8163F VS JCIT, SPECIAL RANGE-I, NEW DELHI-110002. APPELLANT RESPONDENT ITA NO.3769/DEL/2018 ASSESSMENT YEAR : 2013-14 AMERICAN EXPRESS (INDIA) PVT.LTD., MGF, METROPOLITAN SAKET, 7 TH FLOOR, OFFICE BLOCK, DISTRICT CENTRE, SAKET, NEW DELHI-110017. PAN-AAACA8163F VS JCIT, SPECIAL RANGE-I, NEW DELHI-110002. APPELLANT RESPONDENT ITA NOS. 2714/DEL/2018 & OTHERS 2 | P A GE ITA NO.3148/DEL/2018 ASSESSMENT YEAR : 2013-14 JCIT, SPECIAL RANGE-I, NEW DELHI-110002. VS AMERICAN EXPRESS (INDIA) PVT.LTD., MGF, METROPOLITAN SAKET, 7 TH FLOOR, OFFICE BLOCK, DISTRICT CENTRE, SAKET, NEW DELHI-110017. PAN-AAACA8163F APPELLANT RESPONDENT C.O.NO.126/DEL/2018 [IN ITA NO.3148/DEL/2018] ASSESSMENT YEAR : 2013-14 AMERICAN EXPRESS (INDIA) PVT.LTD., MGF, METROPOLITAN SAKET, 7 TH FLOOR, OFFICE BLOCK, DISTRICT CENTRE, SAKET, NEW DELHI-110017. PAN-AAACA8163F VS JCIT, SPECIAL RANGE-I, NEW DELHI-110002. APPELLANT RESPONDENT APPELLANT BY SH. NAGESWAR RAO, SH. S.CHAKARBORTY, ADV. & MS. DEEPIKA AGGARWAL, ADV. RESPONDENT BY SH. SURENDAR PAL , CIT DR & SH. VIJAY CHOUDHARY, SR. DR DATE OF HEARING 13.07.2021 DATE OF PRONOUNCEMENT 16 .0 9 .2021 ORDER PER KUL BHARAT, JM : THESE APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEARS 2012-13 & 2013-14 ARE DIRECTED AG AINST THE SEPARATE ORDERS OF LD. CIT(A)-44, NEW DELHI DATED 31.01.2018 , 17.04.2018, 31.01.2018, 28.02.2018 & 28.02.2018 RESPECTIVELY. THE ASSESSEE HAS ALSO FILED CROSS-OBJECTIONS FOR THE ASSESSMENT YEARS 201 2-13 & 2013-14. ITA NOS. 2714/DEL/2018 & OTHERS 3 | P A GE 2. ALL THESE APPEALS ARE HAVING IDENTICAL GROUNDS O F APPEALS. THEREFORE, ALL APPEALS AND CROSS-OBJECTION WERE TAKEN UP TOGET HER AND ARE BEING DISPOSED OF BY WAY OF A CONSOLIDATED ORDER, FOR THE SAKE OF BREVITY. 3. FIRST WE TAKE UP ITA NO.2714/DEL/2018 [ASSESSMENT YEAR 2012- 13] WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE APPELLANT RESPECTFULLY CRAVES LEAVE TO PREFER AN AP PEAL UNDER SECTION 253 OF THE INCOME-TAX ACT, 1961 ('THE ACT') AGAINST THE ORDER DATED JANUARY 31, 2018 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) - 44, NEW DELHI ('REFERRED TO AS LEARNED CIT(A)') AGAINST THE ASSESSMENT ORDER DATED MAY 25,2016 PASSED BY THE AS SISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(2), NEW DELHI ('REFERRED TO AS LEARNED AO') UNDER SECTION 143(3) THE ACT ON THE FO LLOWING GROUNDS: 1. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ORDER PASSED BY THE LEARNED AO WITHOUT APPRECIATING THE FACTS OF THE CA SE AND LAW RELATING THERETO AND THE VARIOUS ADDITIONS TO THE EXTENT CON FIRMED BY THE LEARNED CIT(A) DESERVE TO BE DELETED. PART I - TRANSFER PRICING GROUNDS OF APPEAL 2. THAT LEARNED CIT(A), EVEN AFTER NOTING THAT R ELIEF GRANTED BY LEARNED DISPUTE RESOLUTION PANEL FOR A Y 2009-10 IN APPELLANT'S OWN CASE IS IN ACCORDANCE WITH LAW LAID DOWN BY HON'BLE DELHI HIGH COURT IN THE CASE OF KUSUM HEALTHCARE PVT. LTD. ITA NO. 7 65 OF 2016, FAILED TO GIVE CLEAR DIRECTIONS ALLOWING THE RELIEF SOUGHT FOR BY WAY OF DELETION OF ADJUSTMENT ON ACCOUNT OF OUTSTANDING RECEIVABLE FROM ASSOCIATED ENTERPRISE ('AE'). ITA NOS. 2714/DEL/2018 & OTHERS 4 | P A GE PART II - CORPORATE TAX GROUNDS OF APPEAL 3. DISALLOWANCE OF RELOCATION EXPENSES U/S 40(A)(I ) 3.1 BASED ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF LEARNED AO DISALLOWING THE AMOUNT PAID TO AETRSCO AS REIMBU RSEMENT OF RELOCATION EXPENSES INCURRED BY AETRSCO ON RELOCATI ON OF EMPLOYEES (EXCEPT PROVIDING RELIEF WITH RESPECT TO TRAVEL COS T/TRAVELLING EXPENSES INCURRED TOWARDS VISITS OF THE APPELLANT'S OWN EMPL OYEES VISITING OUTSIDE INDIA), U/S 40(A)(I) OF THE ACT. 3.1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN PROVIDING RELIEF ON LY WITH RESPECT TO REIMBURSEMENT OF TRAVEL COST/TRAVELLING EXPENSES IN CURRED BY AETRSCO TOWARDS VISITS OF THE APPELLANT'S OWN EMPLO YEES VISITING OUTSIDE INDIA INSTEAD OF THE ENTIRE RELOCATION EXPE NSES INCURRED TOWARDS SUCH EMPLOYEES. 3.2 BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) / LEARNED AO HAVE ERRED IN HOLDING THE AFORESAID REIMBURSEMENT OF RELOCATION EXPENSES AS ' FEES FOR TECHNICAL SERVICES' ('FTS') UNDER SECTION 9(1)(VII) OF THE AC T AND ARTICLE 12(4) OF THE INDIA-USA DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTA A'). 3.3 BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AND IN LAW, THE LEARNED CIT(A)/LEARNED AO HAVE ERRED IN RELYING UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CENTRICA INDIA OFFSHORE INDIA PVT LTD WITHOUT APPRECIATING THE FAC T THAT THE SAID DECISION RELATES TO PAYMENT MADE TOWARDS PROVISION OF SERVICES AND NOT TO REIMBURSEMENT OF EXPENSES SUCH AS RELOCATION EXPENSES AND HENCE, IS NOT APPLICABLE TO THE APPELLANT'S CASE. ITA NOS. 2714/DEL/2018 & OTHERS 5 | P A GE PART III- INITIATION OF PENALTY PROCEEDINGS 4. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT ADJUDICATING TH E GROUND OF THE APPELLANT AGAINST THE INITIATION OF PENALTY PROCEED INGS UNDER SECTION 271 (1)(C) OF THE ACT. THE ABOVE GROUNDS OF APPEAL ARE MUTUALLY EXCLUSIVE & WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT PRAYS FOR LE AVE TO ADD, ALTER, AMEND AND / OR MODIFY ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. THE APPELLANT PRAYS FOR APPROPRIATE RELIEF BASED ON THE SAID GROUNDS OF APPEAL AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE ASSESSEE HAS ALSO RAISED THE ADDITIONAL GROU NDS WHICH READ AS UNDER:- 1. THE APPELLANT HAS FILED AN APPEAL VIDE ITA NO. 2714/DEL/2018 AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) - 44, NEW DELHI (LD.CIT(A)) UNDER SECTI ON 250(6) OF THE INCOME-TAX ACT, 1961 ('ACT') DATED JANUARY 31, 2018 (PURSUANT TO WHICH A RECTIFIED ORDER UNDER SECTION 154 R.W.S 250 (6) OF THE ACT DATED APRIL 17, 2018 WAS ALSO PASSED) IN RESPECT OF THE A SSESSMENT YEAR 2012-13 ('SUBJECT AY') ON VARIOUS GROUNDS MENTIONED IN THE AFORESAID APPEAL. 2. IN ADDITION TO THE VARIOUS GROUNDS OF APPEALS RA ISED IN THE ABOVE-MENTIONED APPEAL, THE APPELLANT CRAVES LEAVE OF THIS HON'BLE TRIBUNAL TO RAISE THE FOLLOWING ADDITIONAL GROUND O F APPEAL AND PRAYS THAT THE SAME MAY BE ADMITTED AND BE HEARD AND CONS IDERED AS PART OF THE CAPTIONED APPEAL WHILE ADJUDICATING THE SAME . ITA NOS. 2714/DEL/2018 & OTHERS 6 | P A GE GROUND 5: DEDUCTION IN RESPECT OF EDUCATION CESS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT PRAYS THAT EDUCATION CESS AND SECONDARY HIGHER EDUC ATION CESS ON INCOME-TAX PAID FOR THE YEAR UNDER CONSIDERATION, I .E. ASSESSMENT YEAR 2012-13 OUGHT TO BE ALLOWED AS A DEDUCTION UNDER SE CTION 37(1) OF THE INCOME TAX ACT, 1961 WHILE COMPUTING THE TOTAL INCO ME. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE O R MODIFY THE ABOVE GROUND OF APPEAL. 3. THE APPELLANT HUMBLY SUBMITS THAT THE ABOVE-MEN TIONED GROUND MAY KINDLY BE ADMITTED AS IT DOES NOT REQUIRE ANY F RESH EXAMINATION OF FACTS AND CAN BE ADJUDICATED ON THE BASIS OF MATERI AL ON RECORD IT GOES TO THE ROOT OF THE MATTER AND IS REQUIRED TO BE ADJ UDICATED IN ORDER TO DETERMINE THE CORRECT TAX LIABILITY OF THE APPELLAN T RELIANCE IS ALSO PLACED ON THE DECISION OF THE APEX COURT IN THE CAS E OF NATIONAL THERMAL POWER CORPORATION LIMITED V. ERR (1998) 229 ITR 383 (SC). 4. IN THE INTEREST OF JUSTICE, IT IS THEREFORE HUM BLY REQUESTED THAT THE SAID ADDITIONAL GROUND MAY KINDLY BE ADMITTED AND A DJUDICATED AND THE HON'BLE TRIBUNAL MAY DECIDE ON MERITS AFTER PRO VIDING THE APPELLANT AN OPPORTUNITY OF HEARING IN THE MATTER. 5. IN VIEW OF THE AFORESAID AND IN THE INTERESTS O F EQUITY AND JUSTICE, IT IS RESPECTFULLY PRAYED THAT THE AFORESA ID ADDITIONAL GROUND OF APPEAL, BY VIRTUE OF THE DISCRETION VESTED WITH THI S HON'BLE TRIBUNAL UNDER RULE 11 OF THE INCOME-TAX (APPELLATE TRIBUNAL ) RULES, 1963, BE ADMITTED AND TAKEN INTO CONSIDERATION WHILE ADJUDIC ATING THE ABOVE APPEAL. 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS RELATED TO ALLOWABILITY OF EDUCATION CESS AS DEDUCTION U/S 37( 1) OF THE ACT. HE SUBMITTED THAT THE ISSUE BEING LEGAL CAN BE RAISED AT ANY STAGE. HE PLACED ITA NOS. 2714/DEL/2018 & OTHERS 7 | P A GE RELIANCE ON THE DECISION OF THE HONBLE SUPREME COU RT RENDERED IN THE CASE OF NATIONAL THERMAL POWER CORPORATION VS CIT [1998] 22 9 ITR 383 (SC). 6. ON THE CONTRARY, LD. CIT DR OPPOSED THESE SUBMIS SIONS AND SUBMITTED THAT SUCH A BELATED STAGE, THE ASSESSEE S HOULD NOT BE ALLOWED TO RAISE THIS GROUND. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH RE GARD TO THE FACT THAT GROUND RAISED BY THE ASSESSEE IS A LEGAL GROUND REL ATED TO ALLOWABILITY OF EDUCATION CESS AS A DEDUCTION U/S 37(1) OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE CASE OF NATIONAL THERMAL POWER CORPORATION VS CIT (SUPRA), THE ADDITIONAL GROUND RAISED BY THE ASSES SEE IS HEREBY ADMITTED FOR ADJUDICATION. 8. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT INCOME TAX RETURN DECLARING INCOME OF RS.2,12,33,10,464/- WAS E-FILED ON 29.11.2012 WHICH WAS SUBSEQUENTLY REVISED AND A RETURN DECLARING INC OME OF RS.2,12,92,84,620/- WAS FILED ON 31.03.2014. THE C ASE WAS SELECTED FOR SCRUTINY ASSESSMENT. IN RESPONSE TO THE STATUTORY NOTICES, THE LD.AR OF THE ASSESSEE APPEARED AND FILED THE DETAILS. THEREAFTE R, A DRAFT ASSESSMENT ORDER WAS PASSED ON 17.03.2016 BY THE ADDL.CIT, RAN GE-2, NEW DELHI. SINCE, NO OBJECTION TO DRAFT ASSESSMENT WAS FILED B Y THE ASSESSEE, THE ASSESSING OFFICER PROCEEDED TO MAKE ASSESSMENT. TH E ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY WAS A WHOLLY OWN ED SUBSIDIARY OF AMERICAN EXPRESS INTERNATIONAL INC., USA AND WAS EN GAGED IN THE GLOBAL ITA NOS. 2714/DEL/2018 & OTHERS 8 | P A GE BUSINESS PROCESSING AND SUPPORT SERVICES AND TRAVEL & TRAVEL RELATED SERVICES. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, THE ASSESSEE HAD UNDERTAKEN INTERNATIONAL TRANSACTION W ITH ITS ASSOCIATED ENTERPRISES (AE) AMOUNTING TO MORE THAN RS.15,00, 00,000/-. THEREFORE, IN TERMS OF SECTION 92CA OF THE ACT, THE INTERNATIO NAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH AE WERE REFERRED TO THE T RANSFER PRICING OFFICER (TPO) FOR DETERMINING THE ARM'S LENGTH PRICE (AL P) WITH THE PREVIOUS APPROVAL OF THE CIT, DELHI-1, NEW DELHI. THE TPO V IDE ORDER DATED 15.01.2016 SUGGESTED ADJUSTMENT IN RESPECT OF RECE IVABLES OF RS.10,73,12,034/-. IT WAS OBSERVED BY THE ASSESSIN G OFFICER THAT THE ASSESSEE HAD SHOWN RECEIVABLES FROM ITS AE IN ITS B OOKS OF ACCOUNTS. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSES SEE COMPANY WAS IN RECEIPT OF PAYMENT FOR SERVICES RENDERED TO ITS AES AFTER EXPIRY OF PERIOD SPECIFIED IN THE RESPECTIVE SERVICE AGREEMENTS BUT DID NOT CHARGE ANY INTEREST ON SUCH DELAYED PAYMENTS BY THE AE. THEREF ORE, THE TPO SUGGESTED UPWARD ADJUSTMENTS OF RS.10,73,12,034/- TO THE INCO ME OF THE ASSESSEE U/S 92CA OF THE ACT. THE ASSESSING OFFICER FOLLOWI NG THE REASONING OF THE TPO MADE ADDITION OF RS.10,73,12,034/- ON ACCOUNT O F UPWARD ADJUSTMENT FOR ARM'S LENGTH PRICE. FURTHER, IT WAS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAD DEBITED A SUM OF RS.3,92,81,7 38/- ON ACCOUNT OF RELOCATION EXPENSES REIMBURSED TO AMERICAN EXPRESS TRAVEL RELATED SERVICES AND CO. (AETRSCO). IT WAS NOTICED THAT THESE EXPENSES WERE ON ACCOUNT OF PAYMENTS TO ASSESSEES EMPLOYEES WHO WOR KED FOR ASSESSEE OUTSIDE INDIA. THE EXPENSES FORM PART OF THE SAME SECONDMENT CONTRACTS ITA NOS. 2714/DEL/2018 & OTHERS 9 | P A GE BY WHICH THESE EMPLOYEES WERE PAID SALARIES. THE A SSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE WHICH WAS NOT DONE BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER VIDE ORDER SHEET ENTRY DATED 04.03.2016 CALLED UPON THE ASSESSEE AS TO WHY THE RELOCATION CHARGES OF RS.3,92,81,738/- SHOULD NOT BE DISALLOWE D AND ADDED BACK AS WAS DONE IN THE LAST YEAR ON ACCOUNT OF NON-DEDUCTI ON OF TDS. IN RESPONSE THERETO, THE ASSESSEE FILED A DETAILED REPLY. THE REPLY OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS FURTHER OF THE VIEW THAT HAVING DEDUCTED TAX U/S 19 5 OF THE ACT, ON PAYMENT OF REIMBURSEMENT OF SALARIES OF EMPLOYEES O N SECONDMENT, THE ASSESSEE OUGHT TO HAVE DEDUCTED CORRECTLY RELOCATIO N EXPENSES WHICH FORMED PART OF THE SAME SECONDMENT CONTRACTS. THER EFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.3,92,81,738/-. HENCE, THE ASSESSING OFFICER COMPUTED THE INCOME AT RS.2,27,58,78,390/- AGAINST THE PROFIT BEFORE TAX AS DECLARED BY THE ASSESSEE OF RS.1,82,76,28,525/-. 9. AGGRIEVED AGAINST THESE ADDITIONS, THE ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) WHO AFTER CONSIDERING THE SUBMISSI ONS, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THEREBY, LD.CIT(A) AFFIRME D THE VIEW OF TPO THAT THE TRANSACTION OF THE APPELLANT-ASSESSEE WITH THE AES WITH REGARD TO RECEIVABLE IS AN INTERNATIONAL TRANSACTION WHICH WO ULD COME UNDER THE PURVIEW OF TRANSFER PRICING REGULATIONS. ANY DELAY IN RECEIPT OF MONEY BY THE APPELLANT LEADS TO DECREASE ITS PROFITABILITY AND THERE IS AN OPPORTUNITY COST OF MONEY RECEIVED AFTER A DELAY WHICH HAS CORR ECTLY BEEN TREATED BY THE TPO AS LOAN ADVANCE TO THE AE HENCE, AN INTERNATION AL TRANSACTION. ITA NOS. 2714/DEL/2018 & OTHERS 10 | P A GE HOWEVER, THE LD.CIT(A) FOLLOWING THE DIRECTION OF T HE DRP AND THE JUDGEMENT OF HONBLE DELHI HIGH COURT IN THE CASE O F KUSUM HEALTHCARE PVT.LTD. IN ITA NO.6814/DEL/2014 DATED 26.03.2015, DIRECTED THE ASSESSING OFFICER TO ALLOW WORKING CAPITAL ADJUSTMENT TO THE APPELLANT BY CALCULATING ITS PROFIT MARGIN IN ACCORDANCE WITH FORMULA STIPUL ATED BY DRP FOR ASSESSMENT YEAR 2009-10 AND GIVE RELIEF TO THE APPE LLANT, IF ANY. 10. FURTHER, LD.CIT(A) AGREED WITH THE CONCLUSION D RAWN BY THE ASSESSING OFFICER/TPO THAT THE PAYMENT TOWARDS TRAV EL EXPENSES CONSTITUTES FEE FOR TECHNICAL SERVICES IN TERMS OF SECTION 9(1)(VII) OF THE ACT AND ARTICLE 12 (4) OF INDIA US DTAA. IT WAS FURTHE R HELD THAT THE APPELLANT WAS REQUIRED TO DEDUCT TDS ON THE PAYMENT MADE TO A E HENCE, NON- DEDUCTION OF TAX WOULD ATTRACT DISALLOWANCE U/S 40( A)(I) OF THE ACT. FURTHER, THE DISALLOWANCE OF TRAVELLING EXPENSES MADE IN RE SPECT OF THE EMPLOYEES WHO TRAVELLED ABOARD FOR TRAINING OR BUSINESS PURPO SES, DID NOT ACCEPT THE FINDING OF THE ASSESSING OFFICER AND HELD THAT SUCH EXPENDITURE DO NOT CONSTITUTE FTS UNDER EITHER THE ACT OR THE TREATY. 11. AGGRIEVED AGAINST THIS ORDER, BOTH THE ASSESSEE AND THE REVENUE FILED SEPARATE CROSS-APPEALS BEFORE THIS TRIBUNAL. 12. GROUND NO.1 OF THE ASSESSEES APPEAL IS GENERAL IN NATURE, NEEDS NO SEPARATE ADJUDICATION. 13. GROUND NO.2 OF THE ASSESSEES APPEAL WHICH IS R ELATED TO THE TRANSFER PRICING GROUND OF APPEAL IS AGAINST THAT LD.CIT(A) FAILED TO GIVE CLEAR ITA NOS. 2714/DEL/2018 & OTHERS 11 | P A GE DIRECTION ALLOWING THE RELIEF SOUGHT BY WAY OF DEL ETION OF ADJUSTMENT OF OUTSTANDING RECEIVABLES FROM AES. 14. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT REL IANCE IS PLACED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. H E CONTENDED THAT VIDE ORDER DATED 03.08.2018 IN ITA NO. 2577/DEL/2014 WHEREIN THE DEPARTMENTS APPEAL PERTAINING TO INTEREST ON RECEIVABLES WAS DI SMISSED ON ACCOUNT OF LOW TAX EFFECT. THE DEPARTMENT HAD PREFERRED APPEA L BEFORE HONBLE HIGH COURT IN ITA NO.656/2019 BUT DID NOT RAISE THIS ISS UE. FURTHER, RELIANCE IS PLACED ON THE DECISION OF THIS TRIBUNAL DATED 17.07 .2019 IN ITA NO.1426/DEL/2015 FOR ASSESSMENT YEAR 2010-11 AND AL SO THE ORDER DATED 13.08.2020 WHEREIN ITA NO.355/DEL/2016 FOR THE ASSE SSMENT YEAR 2011- 12. 15. LD. CIT DR OPPOSED THESE SUBMISSIONS AND SUPPOR TED THE ORDERS OF ASSESSING OFFICER AND TPO. LD. CIT DR VEHEMENTLY A RGUED THAT THE JUDGEMENT OF HONBLE DELHI HIGH COURT RENDERED IN T HE CASE OF KUSUM HEALTHCARE PVT.LTD. (SUPRA) WOULD NOT APPLY ON THE FACTS OF THE PRESENT CASE. HE STRONGLY RELIED UPON THE DECISION OF THE LOWER A UTHORITIES. 16. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE I N RE-JOINDER SUBMITTED THAT UNDER THE IDENTICAL FACTS, THE TRIBUNAL WAS PL EASED TO DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NOS. 2714/DEL/2018 & OTHERS 12 | P A GE LD. COUNSEL FOR THE ASSESSEE IN RE-JOINDER, SUBMITT ED THAT IN ASSESSEES OWN CASE IN ITA NO.2577/DEL/2014 PERTAINING TO ASSESSME NT YEAR 2009-10 VIDE ORDER DATED 03.08.2018 WAS DISMISSED ON ACCOUNT OF LOW TAX EFFECT. THE DEPARTMENT PREFERRED APPEAL FOR THE ASSESSMENT YEAR 2010-11. THE DEPARTMENT DID NOT RAISE THIS ISSUE. HOWEVER, IN A SSESSMENT YEAR 2010- 11, THE TRIBUNAL AGAIN DELETED THE DISALLOWANCE. H E ALSO RELIED ON THE DECISION THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.355/DEL/2016 PERTAINING TO ASSESSMENT YEAR 2011-12. THE REVENUE COULD NOT CONTROVERT THESE AVERMENTS OF THE ASSESSEE BY PLACING AND CONT RARY BINDING PRECEDENT OF THE HONBLE HIGH COURT OR THE HONBLE APEX COURT . 18. WE FIND THAT THE TRIBUNAL IN THE CASE OF ASSESS EE ITSELF FOR ASSESSMENT YEAR 2010-11 IN ITA NO.1426/DEL/2015 VID E ORDER DATED 17.07.2019 HAS HELD AS UNDER:- 37. NOW COMING TO GROUND NO.14, THIS IS TO THE EF FECT THAT THE INTEREST OF CREDIT PERIOD GRANTED BY THE COMPANY UN DER NORMAL TRADE PRACTICES WAS UNJUSTLY CHARGED, HAVING HEARD BOTH T HE COUNSEL, WE ARE OF THE CONSIDERED OPINION THAT IF WORKING CAPITAL A DJUSTMENT IS GRANTED, THEN NO SEPARATE ADJUSTMENT OR INTEREST RECEIVABLES IS REQUIRED.WE ARE FORTIFIED IN OUR DECISION BY THE DECISION OF THE HO NBLE DELHI HIGH COURT IN ITA NO.765/2016 IN THE CASE OF KUSUM HEALTHCARE P. LTD. 19. THE ABOVE ORDER WAS FOLLOWED IN ASSESSMENT YEAR 2011-12 BY THE TRIBUNAL. WE DO NOT SEE ANY REASON TO DEVIATE FROM THE DECISION RENDERED IN THE EARLIER YEARS. THE ASSESSING OFFICER IS DIR ECTED ACCORDINGLY. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THU S, ALLOWED. ITA NOS. 2714/DEL/2018 & OTHERS 13 | P A GE 20. NOW, COMING TO GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IN RESPECT OF ADDITION MADE BY INVOKING THE PROVISION OF SECTION 40(A)(I) OF THE ACT. IT IS CONTENDED BY THE LD. COUNSEL FOR THE AS SESSEE THAT THE ASSESSING OFFICER DISALLOWED A SUM OF RS.3,92,81,378/- STATIN G THAT REIMBURSEMENT OF RELOCATION EXPENSES FORM PART OF SECONDMENT CONTRAC T AND AS ASSESSEE HAD DEDUCTED TAX ON SOURCE U/S 195 OF THE ACT FOR THE R EIMBURSEMENT OF SALARIES SO SHOULD HAVE BEEN THE CASE FOR REIMBURSE MENT OF RELOCATION EXPENSES. IT WAS ALSO SUBMITTED THAT THE ASSESSING OFFICER TREATED THE SAME IN THE NATURE OF FTS AND THUS CHARGEABLE TO TA X U/S 9(1)(VII) AND ARTICLE 12(4) OF THE DTAA BETWEEN INDIA AND USA. H E FURTHER SUBMITTED THAT LD.CIT(A) RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CENTRICA OFFSHORE PVT. LTD. VS CIT BEARING WP(C) NO .6807/2012 TO HOLD THAT PAYMENT TOWARDS TRAVEL EXPENSES CONSTITUT E FEES FOR TECHNICAL SERVICES. LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT LD.CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING THA T THE ENTIRE DISALLOWANCE PERTAINED TO TWO SEPARATE HEADS NAMELY , RELOCATION EXPENSES OCCURRED BY ASSESSEES EMPLOYEES WHO TRAVELLED ABOA RD AND EXPENSES OF EMPLOYEES OF AES WHO TRAVELLED TO INDIA. BASED ON THIS OBSERVATION HELD THAT REIMBURSEMENT OF EXPENSES PERTAINING TO RELOCA TION FOR ASSESSEES OWN EMPLOYEES DO NOT CONSTITUTE FTS UNDER THE ACT OR DT AA AND THUS, IT IS TO BE ALLOWED. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS RESPECTFULLY SUBMITTED THAT AS FAR AS DEDUCTION FOR REIMBURSEMEN T MADE TO AE TOWARDS EXPENSES RELATING TO ASSESSEES EMPLOYEES VISIT IS CONCERNED, LD.CIT(A) HAS RIGHTLY GRANTED DEDUCTION AS THE SAME COULD NOT BE FTS BY ANY STRETCH OF ITA NOS. 2714/DEL/2018 & OTHERS 14 | P A GE IMAGINATION AND NO DISALLOWANCE U/S 40(1)(I) OF THE ACT IS JUSTIFIED. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN RESPECT OF REIMBURSEMENT TO AE TOWARDS RELOCATION CHARGES OF EMPLOYEES SECONDED TO ASSESSEE ENTITY FROM AE. IT IS SUBMITTED THAT FIRSTLY, THERE IS NO ESTO PPELS AGAINST LAW AND IT WOULD BE INCORRECT TO CONTEND THAT AS ASSESSEE HAD DEDUCTED TAX ON SALARY REIMBURSEMENT FOR SAME SECONDED EMPLOYEES IT WAS NE CESSARY FOR ASSESSEE TO DEDUCT TAX ON REIMBURSEMENT OF RELOCATION CHARGE S ALSO RELATING TO SAME SECONDED EMPLOYEES. RELIANCE WAS PLACED ON THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF CIT, MADRAS VS V.MR.P.FIRM, MAUR 56 ITR 67 WHEREIN IT HAS BEEN HELD THAT THERE IS NO ESTOPPEL S AGAINST LAW. HE SUBMITTED THAT IN LAW, THE ASSESSEE IS NOT LIABLE T O DEDUCT TAX. THE ASSESSEE CANNOT BE FORCED TO DEDUCT TAX BY ESTOPPEL S MERELY ON THE GROUND THAT THE ASSESSEE HAS DEDUCTED TAX IN EARLIER YEAR. HE SUBMITTED UNDISPUTEDLY, THE MAKE AVAILABLE CLAUSE OF INDIA US DTAA IS NOT SATISFIED IN PRESENT CASE AND REIMBURSEMENT CANNOT BE CHARACT ERIZED AS FTS. HENCE, NO TAX IS DEDUCTIBLE IN LAW AND NO DISALLOWA NCE COULD BE MADE U/S 40(A)(I) OF THE ACT. RELIANCE WAS PLACED ON THE DE CISIONS OF HONBLE KARNATAKA HIGH COURT IN DIT VS ABBEY BUSINESS SERVICES PVT.LTD. IN ITA NO.214 OF 2014 AND THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN T HE CASE OF DIT VS MARKS & SPENCER RELIANCE INDIA PVT.LTD. BEAR ING ITA NO.893 OF 2014. LD. COUNSEL FOR THE ASSESSEE SUBMITTED IN VIEW O F THE AFORESAID DECISIONS AND MORE PARTICULARLY, WHEN THE CLAUSE MA KE AVAILABLE, IS NOT SATISFIED OF INDIA US DTAA. THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE DISALLOWANCE. ITA NOS. 2714/DEL/2018 & OTHERS 15 | P A GE 21. ON THE CONTRARY, LD. CIT DR SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO INFIRMITY IN T HE ORDER OF LD.CIT(A). LD.CIT DR SUBMITTED THAT HONBLE DELHI HIGH COURT I N THE CASE CENTRICA OFFSHORE PVT.LTD. VS CIT (SUPRA) HAS HELD THAT PAYMENT TOWARDS TRAVEL EXPENSES CONSTITUTES FEES FOR TECHNICAL SERVICES. 22. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THE ORDERS OF THE AUTH ORITIES BELOW. LD.CIT(A) CONFIRMED THE VIEW OF THE ASSESSING OFFICER BY RELY ING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CENTRICA OFFSHORE PVT.LTD. VS CIT (SUPRA) DATED 25.04.2014. IT IS CONTENDED BY THE L D. COUNSEL FOR THE ASSESSEE THAT AS PER INDIA US DTAA, THE MAKE AVAILA BLE CLAUSE IS NOT SATISFIED IN THE PRESENT CASE. THEREFORE, THE REIM BURSEMENT CANNOT BE CHARACTERIZED AS FTS. WE FIND THAT THIS ASPECT HAS NOT BEEN EXAMINED BY LD.CIT(A), THEREFORE, THE FINDING OF LD.CIT(A) IS SET ASIDE AND THIS ISSUE IS RESTORED TO LD.CIT(A) TO DECIDE IT AFRESH AFTER HAV ING CONSIDERED THE SUBMISSIONS OF THE ASSESSEE REGARDING MAKE AVAILABL E CLAUSE IN TERMS OF INDIA US DTAA. THUS, GROUND NO.3 RAISED IN THE ASS ESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 23. NOW, WE TAKE UP ADDITIONAL GROUND RAISED BY THE ASSESSEE. THE ADDITIONAL GROUND OF THE ASSESSEES APPEAL READS AS UNDER:- 1. THE APPELLANT HAS FILED AN APPEAL VIDE ITA NO. 2714/DEL/2018 AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) - 44, NEW DELHI (LD.CIT(A)) UNDER SECTI ON 250(6) OF THE INCOME-TAX ACT, 1961 ('ACT') DATED JANUARY 31, 2018 (PURSUANT TO ITA NOS. 2714/DEL/2018 & OTHERS 16 | P A GE WHICH A RECTIFIED ORDER UNDER SECTION 154 R.W.S 250 (6) OF THE ACT DATED APRIL 17, 2018 WAS ALSO PASSED) IN RESPECT OF THE A SSESSMENT YEAR 2012-13 ('SUBJECT AY') ON VARIOUS GROUNDS MENTIONED IN THE AFORESAID APPEAL. 2. IN ADDITION TO THE VARIOUS GROUNDS OF APPEALS RA ISED IN THE ABOVE-MENTIONED APPEAL, THE APPELLANT CRAVES LEAVE OF THIS HON'BLE TRIBUNAL TO RAISE THE FOLLOWING ADDITIONAL GROUND O F APPEAL AND PRAYS THAT THE SAME MAY BE ADMITTED AND BE HEARD AND CONS IDERED AS PART OF THE CAPTIONED APPEAL WHILE ADJUDICATING THE SAME . GROUND 5: DEDUCTION IN RESPECT OF EDUCATION CESS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT PRAYS THAT EDUCATION CESS AND SECONDARY HIGHER EDUC ATION CESS ON INCOME-TAX PAID FOR THE YEAR UNDER CONSIDERATION, I .E. ASSESSMENT YEAR 2012-13 OUGHT TO BE ALLOWED AS A DEDUCTION UNDER SE CTION 37(1) OF THE INCOME TAX ACT, 1961 WHILE COMPUTING THE TOTAL INCO ME. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE O R MODIFY THE ABOVE GROUND OF APPEAL. 3. THE APPELLANT HUMBLY SUBMITS THAT THE ABOVE-MEN TIONED GROUND MAY KINDLY BE ADMITTED AS IT DOES NOT REQUIRE ANY F RESH EXAMINATION OF FACTS AND CAN BE ADJUDICATED ON THE BASIS OF MATERI AL ON RECORD IT GOES TO THE ROOT OF THE MATTER AND IS REQUIRED TO BE ADJ UDICATED IN ORDER TO DETERMINE THE CORRECT TAX LIABILITY OF THE APPELLAN T RELIANCE IS ALSO PLACED ON THE DECISION OF THE APEX COURT IN THE CAS E OF NATIONAL THERMAL POWER CORPORATION LIMITED V. ERR (1998) 229 ITR 383 (SC). 4. IN THE INTEREST OF JUSTICE, IT IS THEREFORE HUM BLY REQUESTED THAT THE SAID ADDITIONAL GROUND MAY KINDLY BE ADMITTED AND A DJUDICATED AND THE HON'BLE TRIBUNAL MAY DECIDE ON MERITS AFTER PRO VIDING THE APPELLANT AN OPPORTUNITY OF HEARING IN THE MATTER. 5. IN VIEW OF THE AFORESAID AND IN THE INTERESTS O F EQUITY AND JUSTICE, IT IS RESPECTFULLY PRAYED THAT THE AFORESA ID ADDITIONAL GROUND OF ITA NOS. 2714/DEL/2018 & OTHERS 17 | P A GE APPEAL, BY VIRTUE OF THE DISCRETION VESTED WITH THI S HON'BLE TRIBUNAL UNDER RULE 11 OF THE INCOME-TAX (APPELLATE TRIBUNAL ) RULES, 1963, BE ADMITTED AND TAKEN INTO CONSIDERATION WHILE ADJUDIC ATING THE ABOVE APPEAL. 24. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONAL GROUND FOR ASSESSMENT YEARS 2012-13 & 2013-14 IS RAISED AGAINS T DISALLOWANCE OF EDUCATION CESS U/S 37(1) OF THE ACT. HE SUBMITTED THAT THE EDUCATION CESS IS ALLOWABLE EXPENDITURE U/S 37(1) OF THE ACT. IN SUPPORT OF THE CONTENTION, LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGMENT OF HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS CHAMBAL FERTILIZERS & CHEMICALS IN ITA NO.52 OF 2018 AND THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SESA GOA LTD. VS JCIT IN ITA NOS.17, 18 OF 2013 AND THE DECISION OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN ITA NOS. 3892/DEL/2017, 704/KOL/2015, 736/PUN/2011, 1824/PUN /2018 . LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSI NG OFFICER OUGHT TO HAVE FOLLOWED THE CLARIFICATION AS MADE BY THE CBD T CIRCULAR F.NO.91/58/66-ITJ(19) DATED 18.05.1967. 25. LD.CIT DR OPPOSED THESE SUBMISSIONS AND SUBMITT ED THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS K.SRINIVASAN AIR 1972 SC 491 HAS HELD THAT THE CESS IS A TAX. 26. LD. COUNSEL FOR THE ASSESSEE IN RE-JOINDER SUBM ITTED THAT RELIANCE PLACED ON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS K.SRINIVASAN (SUPRA) IS MISPLACED. HE SUBMITTED THAT HONBLE S UPREME COURT IN DECISION OF SUN ENGINEERING 198 ITR 297 HAS HELD THAT IT IS ITA NOS. 2714/DEL/2018 & OTHERS 18 | P A GE IMPERMISSIBLE TO READ A SENTENCE FROM DECISION OUT OF CONTEXT AND ASSUME IT TO THE LAW LAID DOWN IN A DECISION. HE SUBMITT ED THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF SESA GOA LTD. VS JCIT (SUPRA) CONSIDERED THE CBDT CIRCULAR AND ALLOWED THE ISSUE IN FAVOUR OF TH E TAXPAYER. THEREFORE, HE SUBMITTED THAT IN THE LIGHT OF THE HONBLE BOMBA Y HIGH COURT DECISION IN THE CASE OF SESA GOA LTD. VS JCIT (SUPRA), DISALLOWANCE WAS NOT JUSTIFIED. FURTHER, IT IS CONTENDED THAT THE CIRCULAR ISSUED B Y CBDT HAS CLEARLY STATED THAT NO DISALLOWANCE COULD BE MADE. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE REVENUE HAS NOT DISPUTED ABOUT THE CIRCULAR ISSUED BY CBDT WHICH HA S BEEN RELIED BY LD. COUNSEL FOR THE ASSESSEE. MOREOVER, THE HONBLE BO MBAY HIGH COURT HAS CONSIDERED ALL THE CASE LAWS ON THIS POINT AND HAS RULED IN FAVOUR OF THE ASSESSEE. THEREFORE, WE DO NOT SEE ANY REASON TO T AKE A DIFFERENT VIEW. RESPECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE BOM BAY HIGH COURT IN THE CASE OF SESA GOA LTD. VS JCIT (SUPRA), WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. THUS, ADDITIONAL GROUNDS RAIS ED BY THE ASSESSEE ARE ALLOWED. 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 29. NOW, WE TAKE UP ITA NO.4487/DEL/2018 [ASSESSMENT YEAR 2012- 13] WHEREIN THE REVENUE HAS RAISED FOLLOWING GROUND OF APPEAL:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE TRANSFER PRICING ADJUSTMENT MADE ON ACCOUNT OF ITA NOS. 2714/DEL/2018 & OTHERS 19 | P A GE DELAY IN RECEIPT OF RECEIVABLES AND BY ALLOWING WOR KING CAPITAL ADJUSTMENT TO THE ASSESSEE WHILE CALCULATING ITS PR OFIT MARGIN. 30. THE SOLITARY GROUND IN THIS APPEAL IS WITH REGA RD TO ALLOWING WORKING CAPITAL ADJUSTMENT OF THE ASSESSEE WHILE CALCULATIN G ITS PROFIT MARGIN. 31. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT LD.CIT(A) HAS ALLOWED THE WORKING CAPITAL ADJUSTMENT BY FOLLO WING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1426/DEL /2015 ORDER DATED 17.07.2019. 32. LD.CIT DR COULD NOT CONTROVERT THESE FACTS. 33. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN PARA 18-19 OF THIS ORDER W E HAVE AFFIRMED THE VIEW OF THE LD. CIT(A) ON ALLOWING WORKING CAPITAL ADJUS TMENTS. THEREFORE, FOR THE SAME REASONING THIS GROUND IS DISMISSED. 34. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 35. NOW, WE TAKE UP ITA NO.2834/DEL/2018 [ASSESSMENT YEAR 2012- 13] WHEREIN THE REVENUE HAS RAISED FOLLOWING GROUND OF APPEAL:- 1.1 THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE TRANSFER PRICING OFFICER (TPO) TO ALLOW WORKING CAP ITAL ADJUSTMENT ON ACCOUNT OF RECEIVABLES ON ACCOUNT OF TP ADJUSTMENT IN ARM'S LENGTH PRICE AS THE LD.CLT(A) HAS FAILED TO APPRECIATE THE FACT THAT WORKING CAPITAL HAS THREE VARIABLES NAMELY DEBTORS, PAYABLE S AND INVENTORY- THE INTERPLAY OF WHICH IS CONSIDERED WHILE MAKING W ORKING CAPITAL ADJUSTMENT. ITA NOS. 2714/DEL/2018 & OTHERS 20 | P A GE 1.2 THE LD.CLT(A) HAS FAILED TO APPRECIATE THAT AS PER EXPLANATION OF SECTION 92B, RECEIVABLES ARE A SEPARATE CATEGORY OF INTERNATIONAL TRANSACTION WHICH COULD BE BENCHMARKED SEPARATELY. 1.3 THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF HON'BLE DRP ON THIS ISSUE IN THE ASSESSEE'S CASE FOR AY 2009-10 AN D IS IN APPEAL BEFORE HON'BLE ITAT FOR AY 2009-10. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D IRECTING THE AO TO ALLOW DEDUCTION MADE BY THE ASSESSEE TO ITS ASSO CIATED ENTERPRISE (AE) ON ACCOUNT OF PAYMENT OF TRAVELLING EXPENSES O F ITS OWN EMPLOYEES FOR THE FOLLOWING REASONS: A. IT IS NOT CLEAR FROM THE ORDER OF THE LD.CIT(A) WHETHER TRAVELLING EXPENSES AS MENTIONED BY THE LD.CLT(A) I S SAME AS RELOCATION EXPENSES BECAUSE ADDITION IN THE ASSESSM ENT ORDER HAD BEEN MADE BY THE AO ON RELOCATION EXPENSES WITH OUT DISTINGUISHING EXPATRIATES AND ASSESSEE'S OWN EMPLO YEES. B. IT IS ALSO NOT CLEAR WHETHER THE EXPENSES INCURR ED FOR ASSESSEE'S OWN EMPLOYEES WERE ALSO PART AND PARCEL OF THE SAME SECONDMENT AGREEMENT BY WHICH THE EXPENSES OF EXPATRIATES HAVE BEEN REIMBURSED. C. SINCE TDS U/S 195 OF THE INCOME-TAX ACT, 1961 IS REQUIRED TO BE DEDUCTED FOR EXPENSES MENTIONED IN THE SECONDMEN T AGREEMENT, FOLLOWING THAT LOGIC, TDS IS ALSO REQUIR ED TO BE DEDUCTED ON EXPENSES INCURRED FOR OWN EMPLOYEES. D. FOR THE AY 2011-12, THE HON'BLE DRP IN ASSESSEE' S OWN CASE HAD DIRECTED DISALLOWANCE OF THESE RELOCATION EXPEN SES SINCE NO TDS HAD BEEN DEDUCTED. 36. GROUND NOS. 1.1 TO 1.3 OF THE REVENUES APPEAL RELATE TO ALLOWABILITY OF WORKING CAPITAL ADJUSTMENT. SINCE THIS ISSUE, W E HAVE DECIDED IN FAVOUR ITA NOS. 2714/DEL/2018 & OTHERS 21 | P A GE OF THE ASSESSEE BY FOLLOWING THE JUDGEMENT OF HONB LE DELHI HIGH COURT IN THE CASE OF KUSUM HEALTHCARE PVT.LTD .(SUPRA) AND ALSO THE DECISION OF TRIBUNAL IN EARLIER YEARS. THEREFORE, WE DO NOT SE E ANY INFIRMITY IN THE FINDING OF LD.CIT(A) AND THE SAME IS HEREBY AFFIRME D. THUS, GROUND NOS.1.1 TO 1.3 RAISED BY THE REVENUE ARE REJECTED. 37. GROUND NO.2 RAISED BY THE REVENUE RELATES TO A LLOWANCE OF PAYMENT OF TRAVELLING EXPENSES. SIMILAR GROUND WAS RAISED BY THE ASSESSEE IN ITA NO.2714/DEL/2018. 38. SINCE, WE HAVE AFFIRMED THE VIEW OF LD. CIT(A) ON THE ISSUE OF ALLOWABILITY OF PAYMENT OF TRAVELLING EXPENSES IN R ESPECT OF ITS OWN EMPLOYEES IN ITA NO.2714/DEL/2018. WE DO NOT SEE A NY REASON TO DISTURB THE FINDING OF LD. CIT(A) AS PAYMENT OF TRAVELLING EXPENSES TO ITS OWN EMPLOYEE COULD NOT FALL WITHIN THE AMBIT OF FTS. THUS, GROUND NO.2 RAISED BY THE REVENUE IS REJECTED. 39. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 40. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION NO.125/DEL/2018 AGAINST ITA NO.2834/DEL/2018 PERTAINING TO ASSESSMENT YEAR 2012-13 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THE CR OSS-OBJECTION:- 1. THE LEARNED TPO AND THE LEARNED AO HAVE ERRED, IN LAW AND ON FACTS AND IN CIRCUMSTANCES OF THE CASE, BY NOT A CCEPTING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE RESPONDENT IN A CCORDANCE WITH PROVISIONS OF THE ACT READ WITH THE INCOME TAX RULE S ('RULES'), AND UNDERTAKING A FRESH ECONOMIC ANALYSIS BY CONSIDERIN G THE OUTSTANDING RECEIVABLES FROM ASSOCIATED ENTERPRISE ('AE') AS SE PARATE ITA NOS. 2714/DEL/2018 & OTHERS 22 | P A GE INTERNATIONAL TRANSACTION ('IMPUGNED TRANSACTION') AND ACCORDINGLY, DETERMINING OF THE ARM'S LENGTH PRICE ('ALP') OF TH E IMPUGNED INTERNATIONAL TRANSACTION AND THEREBY ERRED: A) BY ERRONEOUSLY RE-CHARACTERIZING THE OUTSTANDING RECEIVABLES FROM AE AS UNSECURED LOAN AND COMPUTING NOTIONAL IN TEREST AT THE RATE OF 12.60 PERCENT (I.E SBI BASE RATE IN ADDITION OF 300 BASIS POINT) ON ALLEGED DELAYS IN REALIZATION OF PAYMENT FROM THE A E AGAINST THE INVOICES RAISED FOR THE EXPORT OF DATA PROCESSING AND BACK OFFICE SUPPORT SERVICES; B) BY DETERMINING THE COMPARABLE UNCONTROLLED PRICE ('CUP') METHOD AS THE MOST APPROPRIATE METHOD WITHOUT PROVI DING ANY COMPARABLE UNCONTROLLED TRANSACTION(S) THEREBY COMP ROMISING THE MOST FUNDAMENTAL RULES AND PROVISIONS LAID DOWN IN THE A CT AND THE RULES TO DETERMINE THE ARM'S LENGTH PRICE OF THE INTERNAT IONAL TRANSACTION; C) BY CONSIDERING SBI BASE RATE INSTEAD OF LLBOR WH ILE COMPUTING NOTIONAL INTEREST ON ALLEGED DELAYS IN REALIZATION OF PAYMENT FROM THE AE AS THE INVOICES WERE RAISED ON THE AE ARE IN FOR EIGN CURRENCY I.E. USD; D) BY APPLYING A SPREAD OF 300 BASIS POINTS TO FACT OR VARIOUS RISKS AND IGNORING THE FACT THAT THE APPELLANT IS A CAPTI VE SERVICE PROVIDER AND DOES NOT BEAR ANY RISK; E) BY IGNORING THE FACT THAT INTEREST CHARGEABLE ON OUTSTANDING RECEIVABLE DOES NOT FIT WITHIN THE MEANING OF INTER NATIONAL TRANSACTION AS CONTINUING DEBIT BALANCE IS NOT AN INTERNATIONAL TRANSACTION BUT IS A RESULT OF INTERNATIONAL TRANSACTION. THE ABOVE GROUNDS OF CROSS-OBJECTIONS ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR MODIFY ANY OF THE GROUND S OF CROSS OBJECTIONS EITHER BEFORE OR DURING THE COURSE OF TH E APPELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. ITA NOS. 2714/DEL/2018 & OTHERS 23 | P A GE 41. IT IS STATED THAT THE GRIEVANCES OF THE ASSESSE E RAISED IN THE PRESENT CROSS OBJECTION, HAS BEEN ADDRESSED BY LD. CIT(A) I N THE EARLIER ORDER PASSED IN ITA NO.4487/DEL/2018 RELATING TO ASSESSME NT YEAR 2012-13. HENCE, THE GROUNDS RAISED IN THE CROSS-OBJECTION BY THE ASSESSEE DO NOT SURVIVE. 42. IN THE RESULT, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS REJECTED. 43. NOW, WE TAKE UP ITA NO.3769/DEL/2018 [ASSESSMENT YEAR 2013- 14] WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUND O F APPEAL:- BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE APPELLANT RESPECTFULLY CRAVES LEAVE TO PREFER AN AP PEAL UNDER SECTION 253 OF THE INCOME-TAX ACT, 1961 ('THE ACT') AGAINST THE ORDER DATED FEBRUARY 28, 2018 PASSED BY THE LEARNED COMMISSIONE R OF INCOME-TAX (APPEALS) - 44, NEW DELHI ('REFERRED TO AS LEARNED CIT(A)') AGAINST THE ASSESSMENT ORDER DATED FEBRUARY 27, 2017 PASSED BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX, SPECIAL RANGE-1, NEW DE LHI ('REFERRED TO AS LEARNED AO') UNDER SECTION 143(3) THE ACT ON THE FOLLOWING GROUNDS: 1. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ORDER PASSED BY THE LEARNED- AO WITHOUT APPRECIATING THE FACTS OF THE C ASE AND LAW RELATING THERETO AND THE VARIOUS ADDITIONS TO THE EXTENT CON FIRMED BY THE LEARNED CLT(A) DESERVE TO BE DELETED. 2. DISALLOWANCE OF RELOCATION EXPENSES U/S 40(A)(I ) 2.1 BASED ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF LEARNED ITA NOS. 2714/DEL/2018 & OTHERS 24 | P A GE AO DISALLOWING THE AMOUNT PAID BY THE APPELLANT TO AETRSC0 ON ACCOUNT OF REIMBURSEMENT OF RELOCATION EXPENSES OF EMPLOYEES SECONDED BY AETRSCO TO AEIPL, ON COST TO COST BASIS . 2.2 BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) / LEARNED AO HAVE ERRED IN HOLDING THE AFORESAID REIMBURSEMENT OF RELOCATION EXPENSES AS ' FEES FOR TECHNICAL SERVICES' ('FTS') UNDER SECTION 9(1)(VII) OF THE AC T AND ARTICLE 12(4) OF THE INDIA-USA DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTA A'). 2.3 BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AND IN LAW, THE LEARNED CIT(A)/LEARNED AO HAVE ERRED IN RELYING UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CENTRICA INDIA OFFSHORE INDIA PVT LTD WITHOUT APPRECIATING THE FAC T THAT THE SAID DECISION RELATES TO PAYMENT MADE TOWARDS PROVISION OF SERVICES AND NOT TO REIMBURSEMENT OF EXPENSES SUCH AS RELOCATION EXPENSES AND HENCE, IS NOT APPLICABLE TO THE APPELLANT'S CASE. 3. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT ADJUDICATING TH E GROUND OF THE APPELLANT AGAINST THE INITIATION OF PENALTY PROCEED INGS UNDER SECTION 271 (1 )(C) OF THE ACT. THE ABOVE GROUNDS OF APPEAL ARE MUTUALLY EXCLUSIVE & WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT PRAYS FOR LE AVE TO ADD, ALTER, AMEND AND / OR MODIFY ANY OF THE GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. THE APPELLANT PRAYS FOR APPROPRIATE RELIEF BASED ON THE SAID GROUNDS OF APPEAL AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 44. GROUND NO.1 RAISED BY THE ASSESSEE IS GENERAL I N NATURE, NEEDS NO ADJUDICATION. ITA NOS. 2714/DEL/2018 & OTHERS 25 | P A GE 45. GROUND NOS.2.1 TO 2.3 RAISED BY THE ASSESSEE AR E AGAINST THE DISALLOWANCE OF RELOCATION EXPENSES U/S 40(1)(I) OF THE ACT. THE SIMILAR GROUND HAS BEEN DECIDED VIDE GROUND NO.3 IN ITA NO. 2714/DEL/2018 RELATING TO ASSESSMENT YEAR 2012-13 BY OBSERVING AS UNDER:- 22. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD AND GONE THE ORDERS OF THE AUTH ORITIES BELOW. LD.CIT(A) CONFIRMED THE VIEW OF THE ASSESSING OFFIC ER BY RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CENTRICA OFFSHORE PVT.LTD. VS CIT (SUPRA) DATED 25.04.2014. IT IS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT AS PER INDIA US DTAA, HE MAKE AVAILABLE CLAUSE IS NOT SATISFIED IN THE PRESENT AP PEAL. THEREFORE, THE REIMBURSEMENT CANNOT BE CHARACTERIZED AT EARLIEST. WE FIND THAT THIS ASPECT HAS NOT BEEN EXAMINED BY LD.CIT(A), THEREFOR E, THE FINDING OF LD.CIT(A) IS SET ASIDE AND THIS ISSUE IS RESTORE T O LD.CIT(A) TO DECIDE IT AFRESH AFTER HAVING CONSIDERED THE SUBMISSIONS OF T HE ASSESSEE REGARDING MAKE AVAILABLE CLAUSE IN TERMS OF INDIA U S DTAA. THUS, GROUND NO.3 RAISED IN THE ASSESSEES APPEAL IS PART LY ALLOWED FOR STATISTICAL PURPOSES. 46. NO CHANGE INTO FACTS AND CIRCUMSTANCES HAVE BEE N POINTED BY THE LD. COUNSEL FOR THE ASSESSEE EXCEPT STATING THAT THE FA CTS OF THE OF CASE IN CENTRICA OFFSHORE PVT. LTD. VS CIT (SUPRA) RELIED B Y THE LD. AUTHORITIES BELOW ARE DISTINGUISHABLE AS IN THAT CASE PAYMENT WAS MADE QUA THE PROVISION OF SERVICE. IN ITA NO.2714/DEL/2018, WE HAVE SET-ASIDE THE ORDER OF LD. CIT(A) FOR DECISION AFRESH AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. FOR THE SAME REASONING IN THIS YEAR AS WE LL IMPUGNED ORDER IS SET-ASIDE. LD. CIT(A) IS HEREBY DIRECTED TO DECIDE THE ISSUE AFTER CONSIDERING ALL OBJECTIONS OF THE ASSESSEE. ITA NOS. 2714/DEL/2018 & OTHERS 26 | P A GE 47. GROUND NO.3 RAISED BY THE ASSESSEE IS AGAINST THE INITIATION OF PENALTY PROCEEDINGS. THIS GROUND IS DISMISSED BEIN G PRE-MATURE. 48. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 49. NOW, WE TAKE UP ITA NO.3148/DEL/2018 [ASSESSMENT YEAR 2013- 14] WHEREIN THE REVENUE HAS RAISED FOLLOWING GROUND OF APPEAL:- 1.1. THE LD.CLT(A) HAS ERRED IN LAW AND ON FACTS I N DIRECTING THE TRANSFER PRICING OFFICER (TPO) TO ALLOW WORKING CAP ITAL ADJUSTMENT ON ACCOUNT OF RECEIVABLES ON ACCOUNT OF TP ADJUSTMENT IN ARM'S LENGTH PRICE AS THE LD.CLT(A) HAS FAILED TO APPRECIATE THE FACT THAT WORKING CAPITAL HAS THREE VARIABLES NAMELY DEBTORS, PAYABLE S AND INVENTORY- THE INTERPLAY OF WHICH IS CONSIDERED WHILE MAKING W ORKING CAPITAL ADJUSTMENT. 1.2. THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT AS PER EXPLANATION OF SECTION 92B, RECEIVABLES ARE A SEPARATE CATEGORY OF INTERNATIONAL TRANSACTION WHICH COULD BE BENCHMARKED SEPARATELY. 1.3. THE DEPARTMENT HAS NOT ACCEPTED THE DECISION O F HON'BLE DRP ON THIS ISSUE IN THE ASSESSEE'S CASE FOR AY 2009-10 AN D IS IN APPEAL BEFORE HON'BLE ITAT FOR AY 2009-10. 2. THE LD.CLT(A) HAS ERRED IN LAW AND ON FACTS IN D IRECTING THE AO TO ALLOW DEDUCTION MADE BY THE ASSESSEE TO ITS ASSO CIATED ENTERPRISE (AE) ON ACCOUNT OF PAYMENT OF RELOCATION EXPENSES O F ITS OWN EMPLOYEES FOR THE FOLLOWING REASONS: A. HAVING DEDUCTED TAX U/S 195 OF THE INCOME-TAX AC T, 1961 ON PAYMENT FOR REIMBURSEMENT OF SALARIES OF EMPLOYEES ON SECOND ME NT. THE ASSESSEE SHOULD HAVE DEDUCTED TDS ON REL OCATION ITA NOS. 2714/DEL/2018 & OTHERS 27 | P A GE EXPENSE ALSO SINCE IT ALSO FORMED PART OF THE SAME SECONDMENT AGREEMENT. B. THE TERMS AND SALARY TERMS OF THE AGREEMENT ARE IN THE NATURE OF SERVICES WHICH ARE 'FEE FOR TECHNICAL SERVICES'( FTS). HENCE CHARGEABLE TO TAX BOTH UNDER THE PROVISIONS OF SECT ION 9 (1) (VII) OF THE INCOME -TAX ACT, 1961 AS WELL AS UNDER THE PROV ISIONS OF ARTICLE 12(4) OF INDO-USA DTAA. C. FOR THE AY 2011-12, THE HON'BLE DRP IN ASSESSEE' S OWN CASE HAD DIRECTED DISALLOWANCE OF THESE RELOCATION EXPEN SES SINCE NO TDS HAD BEEN DEDUCTED. 50. GROUND NOS. 1.1 TO 1.3 RAISED BY THE REVENUE WO RKING CAPITAL ADJUSTMENT. THE SIMILAR GROUND WAS DECIDED VIDE GR OUND NOS. 1.1 TO 1.3 IN ITA NO.2834/DEL/2018 RELATING TO ASSESSMENT YEAR 2012-13 BY OBSERVING AS UNDER:- 36. GROUND NOS. 1.1 TO 1.3 OF THE REVENUES APPEAL RELATE TO ALLOWABILITY OF WORKING CAPITAL ADJUSTMENT. SINCE THIS ISSUE, WE HAVE DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE JUDGEMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF KUSUM HEALT HCARE PVT.LTD.(SUPRA) AND ALSO THE DECISION OF TRIBUNAL I N EARLIER YEARS. THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE FINDI NG OF LD.CIT(A) AND THE SAME IS HEREBY AFFIRMED. THUS, GROUND NOS.1.1 TO 1.3 RAISED BY THE REVENUE ARE REJECTED. 51. TAKING THE CONSISTENT VIEW, GROUND NOS. 1.1 TO 1.3 RAISED BY THE REVENUE ARE REJECTED. 52. GROUND NO.2 RAISED BY THE REVENUE RELATES TO PA YMENT OF RELOCATION EXPENSES TO ITS OWN EMPLOYEES. SIMILAR GROUND WAS RAISED VIDE GROUND ITA NOS. 2714/DEL/2018 & OTHERS 28 | P A GE NO.2 IN ITA NO.2834/DEL/2018 RELATING TO ASSESSMENT YEAR 2012-13 BY OBSERVING AS UNDER:- 38. WE HAVE AFFIRMED THE VIEW OF LD.CIT(A) IN RESP ECT OF ALLOWANCE OF PAYMENT OF TRAVELLING EXPENSES IN RESPECT OF ITS OWN EMPLOYEES. THE ASSESSING OFFICER HAS NOT POINTED THAT THE DISALLOW ANCE WAS RELATED TO AES. IN THE ABSENCE OF THE SAME, WE DO NOT SEE ANY REASON TO INTERFERED IN THE FINDING OF LD.CIT(A). THUS, GROU ND NO.2 RAISED BY THE REVENUE IS REJECTED. 53. TAKING THE CONSISTENT VIEW, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 54. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 55. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION NO.126/DEL/2018 AGAINST ITA NO.3148/DEL/2018 PERTAINING TO ASSESSMENT YEAR 2013-14 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THE CR OSS-OBJECTION:- 1. THE LEARNED TPO AND THE LEARNED AO HAVE ERRED, IN LAW AND ON FACTS AND IN CIRCUMSTANCES OF THE CASE, BY NOT A CCEPTING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE RESPONDENT IN A CCORDANCE WITH PROVISIONS OF THE ACT READ WITH THE INCOME TAX RULE S ('RULES'), AND UNDERTAKING A FRESH ECONOMIC ANALYSIS BY CONSIDERIN G THE OUTSTANDING RECEIVABLES FROM ASSOCIATED ENTERPRISE ('AE') AS SE PARATE INTERNATIONAL TRANSACTION ('IMPUGNED TRANSACTION') AND ACCORDINGL Y, DETERMINING OF THE ARM'S LENGTH PRICE ('ALP') OF THE IMPUGNED INTE RNATIONAL TRANSACTION AND THEREBY ERRED: A) BY ERRONEOUSLY RE-CHARACTERIZING THE OUTSTANDING RECEIVABLES FROM AE AS UNSECURED LOAN AND COMPUTING NOTIONAL INTEREST AT THE RATE OF 12.60 PERCENT (I.E SBI BASE RATE IN ADDITION ITA NOS. 2714/DEL/2018 & OTHERS 29 | P A GE OF 300 BASIS POINT) ON ALLEGED DELAYS IN REALIZATIO N OF PAYMENT FROM THE AE AGAINST THE INVOICES RAISED FOR THE EXP ORT OF DATA PROCESSING AND BACK OFFICE SUPPORT SERVICES; B) BY DETERMINING THE COMPARABLE UNCONTROLLED PRICE ('CUP') METHOD AS THE MOST APPROPRIATE METHOD WITHOUT PROVI DING ANY COMPARABLE UNCONTROLLED TRANSACTION(S) THEREBY COMP ROMISING THE MOST FUNDAMENTAL RULES AND PROVISIONS LAID DOWN IN THE ACT AND THE RULES TO DETERMINE THE ARM'S LENGTH PRICE O F THE INTERNATIONAL TRANSACTION; C) BY CONSIDERING SBI BASE RATE INSTEAD OF LIBOR WH ILE COMPUTING NOTIONAL INTEREST ON ALLEGED DELAYS IN RE ALIZATION OF PAYMENT FROM THE AE AS THE INVOICES WERE RAISED ON THE AE ARE IN FOREIGN CURRENCY I.E. USD; D) BY APPLYING A SPREAD OF 300 BASIS POINTS TO FACT OR VARIOUS RISKS AND IGNORING THE FACT THAT THE APPELLANT IS A CAPTIVE SERVICE PROVIDER AND DOES NOT BEAR ANY RISK; E) BY IGNORING THE FACT THAT INTEREST CHARGEABLE ON OUTSTANDING RECEIVABLE DOES NOT FIT WITHIN THE MEAN ING OF INTERNATIONAL TRANSACTION AS CONTINUING DEBIT BALAN CE IS NOT AN INTERNATIONAL TRANSACTION BUT IS A RESULT OF INTERN ATIONAL TRANSACTION. THE ABOVE GROUNDS OF CROSS-OBJECTIONS ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. THE RESPONDENT CRA VES LEAVE TO ADD, ALTER, AMEND AND I OR MODIFY ANY OF THE GROUNDS OF CROSS OBJECTIONS EITHER BEFORE OR DURING THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 56. IT IS SEEN FROM THE RECORD THAT LD.CIT(A) HAS C ARRIED OUT REQUISITE RECTIFICATION. THUS, GROUNDS RAISED BY THE ASSESSE E IN THIS CROSS-OBJECTIONS DO NOT SURVIVE AND THE SAME ARE DISMISSED. ITA NOS. 2714/DEL/2018 & OTHERS 30 | P A GE 57. IN THE RESULT, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 58. IN THE FINAL RESULT, ITA NO.2714/DEL/2018 OF THE ASSESSEE IS PARTLY ALLOWED & ITA NO.3769/DEL/2018 OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES; ITA NOS. 4487, 2834 & 3148/DEL/2018 OF THE REVENUE ARE DISMISSED; AND CROSS-OBJECTION NOS. 125 & 126/DEL/2018 RAISED BY THE ASSESSEE ARE ALSO DISMISSED. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIRT UAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 16 TH SEPTEMBER, 2021. SD/- SD/- (R.K.PANDA) (KUL BH ARAT) ACCOUNTANT MEMBER JUDICIA L MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI