Aster Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-1(1), Hyd, Hyderabad

ITA 458/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2530 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 13-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2016
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Transfer pricing; International transaction; Earning of tax free income; Agreed addition
• Section: 143(3); 14A; 37(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ITA NO. 220/HYD/2015 ASSESSMENT YEAR: 2010-11 M/S ASTER PVT. LTD., HYDERABAD. PAN AACCA5469L VS. DCIT, CIRCLE - 1(1), HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 458/HYD/2016 ASSESSMENT YEAR: 2011-12 M/S ASTER PVT. LTD., HYDERABAD. PAN AACCA5469L VS. DCIT, CIRCLE - 1(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SMT U. MINI CHANDRAN DATE OF HEARING: 13 - 02 - 2017 DATE OF PRONOUNCEMENT: 03 - 05 - 2017 O R D E R PER B. RAMAKOTAIAH, A.M.: THESE TWO APPEALS ARE BY ASSESSEE AGAINST ORDERS OF A.O U/S 143(3) R.W.S 144C OF THE IT ACT. SINCE COMMON ISSUES ARE INVOLVED IN THESE TWO APPEALS, THESE TWO ARE CONSIDERED BY THIS COMMON ORDER. WE HAVE HEARD LD. COUNSEL FOR ASSESSEE AND LD. DR IN DETAIL AND PERUSED THE PAPER BOOKS PLACED ON RECORD AND CASE LAW FOR THE RESPECTIVE A.YS. 2 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. 2. BRIEFLY STATED, ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION, SUPPLY, ERECTION AND MAINTENANCE OF TELECOM TOWERS. IT CATERS TO TELECOM INFRASTRUCTURE AND HAS TRANSACTIONS WITH AES- ASTER INFRASTRUCTURE SERVICES LTD., AFGHANISTAN AND ASTER GLOBAL SERVICES LTD., MAURITIUS, WHICH ARE ASSOCIATE ENTERPRISES OF ASSESSEE. THE TRANSACTIONS WERE ANALYZED IN RESPECTIVE A.YS UNDER TRANSFER PRICING PROVISIONS AND THERE ARE ADDITIONS MADE UNDER THE TRANSFER PRICING PROVISIONS AS WELL AS THE OTHER PROVISIONS OF THE ACT. A.Y 2010-11 ITA NO. 220/HYD/2015 3. IN THIS YEAR ASSESSEE HAD INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATE ENTERPRISES WHICH WERE ACCEPTED BY THE TRANSFER PRICING OFFICER (TPO) AFTER DUE ANALYSIS. HOWEVER, AS ASSESSEE HAS GIVEN CORPORATE GUARANTEE TO ITS AE ASTER INFRASTRUCTURE SERVICES LTD., AFGHANISTAN TO AN EXTENT OF RS. 3.45 CRORES, THE TPO HAS TAKEN THE ARM LENGTH GUARANTEE COMMISSION ON THE CORPORATE GUARANTEE GIVEN BY THE TAX PAYER AT 11.10% AND AN AMOUNT OF RS. 38,29,500 WAS PROPOSED AS AN ADJUSTMENT U/S 92CA OF THE IT ACT. ASSESSEE HAS OBJECTED BEFORE THE DRP STATING THAT THE CORPORATE GUARANTEE DOES NOT COME WITHIN THE INTERNATIONAL TRANSACTION AND FURTHER THERE IS NO FEES PAID TO ANYBODY, THEREFORE NO ADJUSTMENT IS REQUIRED TO BE MADE. THE DRP HOWEVER, AFTER NOTICING THAT IN A.Y 2009-10 THE BANK HAS GIVEN LOAN TO A.E @ 12%, ALTHOUGH THE PROVISIONAL INTEREST RATE IN AFGHANISTAN WAS AROUND 18%, NOTED THAT 6% CAN BE CONSIDERED AS FEE FOR CORPORATE GUARANTEE. ACCORDINGLY SAME WAS DIRECTED TO BE RESTRICTED TO 6% OF THE LOAN AMOUNT OUTSTANDING AS ON 01-04-2009. 3 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. 3.1 ASSESSEE IS AGGRIEVED AND RAISED THE GROUNDS THAT THE CORPORATE GUARANTEE DOES NOT FALL UNDER THE TRANSFER PRICING PROVISIONS AND THE TRANSACTION IS ENTERED OUT OF SHAREHOLDERS OBLIGATION. IT RELIED ON THE FOLLOWING CASE LAW WITH REFERENCE TO THE CORPORATE GUARANTEE: 1. ITAT CHENNAI IN THE CASE OF REDINGTON (INDIA) LIMITED VS JCIT, 513/MDS/2014. 2. ITAT DELHI IN THE CASE OF BHARTI AIRTEL LIMITED VS ACIT, 5816/DEL/2012. 3. ITAT HYDERABAD IN THE CASE OF FOUR SOFT LIMITED VS DCIT, 1495/HYD/2010. 4. ITAT MUMBAI IN THE CASE OF ASIAN PAINTS LIMITED VS ACIT, 41 TAXMANN.COM 71. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS PLACED ON RECORD. THE CONTENTION THAT CORPORATE GUARANTEE DOES NOT FALL UNDER THE TRANSFER PRICING PREVISIONS, IN VIEW OF THE AMENDMENT BROUGHT TO THE PROVISIONS, WAS NOT PRESSED BY LD. COUNSEL AND AGREED FOR RESTRICTING FOR THE SAME TO 0.25%, WHICH WAS CONSIDERED BY THE COORDINATE BENCH IN THE CASE OF ASIAN PAINTS LTD., VS ACIT (SUPRA). THE DIFFERENCE IN INTEREST CHARGED ON THE LOAN CANNOT BE CONSIDERED AS A GUARANTEE COMMISSION FEE AS THE PARAMETER FOR OBTAINING A LOAN AT A PARTICULAR INTEREST RATE IS DIFFERENT FROM PROVIDING CORPORATE GUARANTEE. THUS THERE IS NO BASIS FOR DETERMINING @ 6% BY THE DRP. IN THE ABOVE REFERRED CASE OF ASIAN PAINTS LTD, AFTER ANALYZING THE VARIOUS GUARANTEE COMMISSIONS CHARGED BY BANKS AND ALSO RELYING ON THE ORDER FOR THE A.Y 2006-07 IN THAT ASSESSEES CASE, THE ITAT HAS HELD THAT THE GUARANTEE COMMISSION CAN BE CHARGED AT 0.25%. RESPECTFULLY FOLLOWING THE SAME, WE ALSO DIRECT THE TPO/AO TO RESTRICT THE ADJUSTMENT 4 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. TO 0.25% OF THE AMOUNT. WE DIRECT ACCORDINGLY AND THE GROUND IS PARTLY ALLOWED. 5. THE NEXT ISSUE FOR CONSIDERATION IS THE DISALLOWANCE OF RS. 21,35,456/- U/S 14A OF THE INCOME TAX ACT. ON THE REASON THAT ASSESSEE HAS MADE INVESTMENTS IN SISTER CONCERNS, LD. AO INVOKED PROVISIONS OF SEC. 14A OF THE I.T. ACT AND DETERMINED THE DISALLOWANCE @ 21,35,456 U/S 14A OF THE IT ACT R.W. RULE 8D. THE DRP HAS UPHELD THE ADDITION UNDER 14A OF THE IT ACT, IN SPITE OF THE OBJECTIONS FROM ASSESSEE. IT WAS SUBMITTED THAT ASSESSEE HAS NOT DERIVED ANY EXEMPT INCOME DURING THE YEAR AND THE DIVIDEND RECEIVED FROM FOREIGN SUBSIDIARY IS OFFERED TO TAX AND IS NOT EXEMPT AND MOST OF THE INVESTMENTS IS IN FOREIGN CURRENCY IN FOREIGN SUBSIDIARIES THEREFORE, PROVISIONS OF SEC. 14A OF THE IT ACT DOES NOT APPLY. 6. CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE WE NOTICE THAT THE DIVIDEND INCOME EARNED BY ASSESSEE WAS NOT EXEMPT FROM TAX AND OFFERED AS INCOME, THEREFORE THE PROVISIONS OF SEC. 14A OF THE IT ACT DOES NOT APPLY TO THESE INVESTMENTS. AO IS DIRECTED TO DELETE THE DISALLOWANCE ON THE ABOVE ISSUE. THE GROUNDS ARE ACCORDINGLY CONSIDERED AS ALLOWED. 7. THE NEXT ISSUE FOR CONSIDERATION IS THE ADDITION OF RS. 68,42,242/- TOWARDS EXCISE DUTY ON CLOSING STOCK. IT IS OBSERVED BY A.O THAT ASSESSEE HAS DEBITED EXCISE DUTY FROM THE SALES OF FINISHED GOODS. BUT ASSESSEE WAS ALSO DEBITING THE EXCISE DUTY ON FINISHED GOODS TO THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD ADMINISTRATIVE EXPENSES. THE A.O WAS NOT CONVINCED WITH THE EXPLANATION OF ASSESSEE THAT THE EXCISE DUTY ON FINISHED GOODS DEBITED SEPARATELY TO PROFIT AND LOSS ACCOUNT IS PROVISION FOR UNFINISHED GOODS, AS THE MANAGEMENT PREPARES 5 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. MONTHLY MIS REPORT. IT WAS SUBMITTED BEFORE THE DRP THAT WHEN THE SALES ARE ACCOUNTED CLEAR OF EXCISE DUTY AS PER ACCOUNTING STANDARD-9, WHICH IS CONSISTENTLY FOLLOWED BY ASSESSEE COMPANY, THE EXCISE DUTY DEBITED TO PROFIT & LOSS ACCOUNT UNDER THE HEAD ADMINISTRATIVE EXPENSES REPRESENTS THE DIFFERENCE BETWEEN THE EXCISE DUTY COLLECTED AND PAID, THE PAYMENT BEING MORE THAN THE RECEIPT, THE EXCISE DUTY WHICH WAS PAID DURING THE YEAR WAS AN ALLOWABLE DEDUCTION. IT WAS SUBMITTED THAT THERE IS NO CLAIM OF DOUBLE DEDUCTION OF EXCISE DUTY ON FINISHED GOODS. THE DRP HAS CONSIDERED THE CONTENTIONS AND ALLOWED AS UNDER: 13. WE HAVE GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE AND THE ORDER OF THE A.O, THE CONTENTIONS OF THE ASSESSEE APPEARS TO BE CORRECT AND IF SUCH CONTENTIONS ARE CORRECT THERE IS NO DOUBLE DEDUCTION OF EXCISE DUTY IN VIEW OF THE ABOVE SUBMISSION OF THE ASSESS, THE A.O IS DIRECTED TO VERIFY THE CLAIM AND THE PROVISION MADE UNDER EXCISE DUTY IS FORMING PARTY OF CLOSING STOCK (I.E FINISHED PRODUCTS), THERE IS NO NEED TO ADD THE SAME AGAIN. ACCORDING- THE ADDITION TO BE DELETED ON FINDING THE ABOVE FACT. 7.1 IT WAS THE CONTENTION THAT THE IN SPITE OF THE DIRECTION GIVEN BY THE DRP, A.O DID NOT DELETE THE ADDITION ON THE REASON THAT THE DETAILS ARE NOT SUBMITTED. IT WAS STATED THAT ASSESSEE SUBMITTED THE DETAILS ON 03-11-2014 BUT A.O DID NOT CONSIDER THE SAME. IT WAS THE SUBMISSION THAT ISSUE CAN BE REMITTED TO THE A.O TO EXAMINE AND DELETE. 7.2 AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT THE A.O HAS NOT FOLLOWED THE DIRECTIONS OF THE DRP. A.O IS DIRECTED TO EXAMINE THE DETAILS FURNISHED BY ASSESSEE AND IF THE CONTENTIONS ARE FOUND CORRECT AS STATED BY THE DRP THE AMOUNT HAS TO BE DELETED. WITH THESE OBSERVATIONS THE GROUND IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 6 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. 8. EVEN THOUGH IN THE ORIGINAL GROUNDS A GROUND WAS RAISED WITH REFERENCES TO ADDITION OF RS. 25,000/- BEING THE ENTRY TAX PAYABLE, IN THE REVISED GROUNDS THE SAME WAS NOT CONTESTED AND ACCORDINGLY THE GROUND WAS TREATED AS WITHDRAWN. 9. IN THE RESULT APPEAL FILED BY ASSESSEE IS CONSIDERED PARTLY ALLOWED. A.Y 2011-12 ITA NO. 458/HYD/2016 10. IN THIS YEAR, ASSESSEE IS CONTESTING THE ADDITION MADE TOWARDS CORPORATE GUARANTEE FEE, INTEREST ON LOAN TO AE, ADDITION TOWARDS REIMBURSEMENT EXPENDITURE AND DISALLOWANCE OF EXPENDITURE CLAIM U/S 37(1) OF THE IT ACT. CORPORATE GUARANTEE FEE: 11. THE TPO HAS PROPOSED ADDITION TOWARDS FEES FOR CORPORATE GUARANTEE AT RS. 93,09,761/- ON TOTAL CORPORATE GUARANTEE GIVEN FOR RS. 32,83,56,740/-. THE DRP HAS RESTRICTED THE CORPORATE GUARANTEE @ 6%, 2.25% AND 2% TO VARIOUS AES. ASSESSEE IS CONTESTING THE SAME. 12. SINCE THE ISSUE IS SIMILAR TO THE ONE CONSIDERED IN EARLIER A.Y, ARGUMENTS BEING SIMILAR, WE DIRECT A.O TO ACCEPT 0.25% OF THE CORPORATE GUARANTEE GIVEN AND OUTSTANDING IN THE BEGINNING OF THE YEAR TO BE THE FEE FOR CORPORATE GUARANTEE. ACCORDINGLY THE GROUNDS RAISED ON THIS ISSUE ARE PARTLY ALLOWED. 7 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. INTEREST ON LOAN TO AE 13. ASSESSEE HAS GIVEN A LOAN TO ITS SUBSIDIARY IN AFGHANISTAN OF RS.2.62 CRORES AND CHARGED INTEREST 8%. TPO PROPOSED AN ADDITION RS. 32,09,500/- BY CHARGING THE INTEREST AT 12.25% AND DIFFERENCE BEING CONSIDERED AS ADJUSTMENT UNDER THE TP PROVISIONS. THE DRP HAS RESTRICTED THE INTEREST TO 8.25% AND THE ADDITION WAS RESTRICTED TO RS. 2,09,500. IT WAS THE SUBMISSION THAT THE LOAN WAS TAKEN IN FOREIGN CURRENCY OUTSIDE INDIA AND LIBOR RATE SHOULD BE TAKEN AS THE BASIS FOR CALCULATING THE INTEREST. ASSESSEE HAS ALREADY CHARGED 8% ON THE LOAN, WHICH IS HIGHER THAN THE LIBOR RATE AND ACCORDINGLY NO ALP ADJUSTMENT IS REQUIRED TO BE MADE. ON VERIFICATION OF THE FACTS ON RECORD AND THE ORDERS OF DRP, WE ARE OF THE OPINION THAT THE LOAN WAS GIVEN IN FOREIGN CURRENCY OUTSIDE INDIA AND ACCORDINGLY THE LIBOR RATE SHOULD BE THE BASIS FOR CALCULATION OF INTEREST RATE. SINCE ASSESSEE HAS CHARGED MORE THAN OF THE LIBOR RATE AT 8%, WE ARE OF THE OPINION THAT NO ADJUSTMENT IS REQUIRED TO BE MADE AND ACCORDINGLY THE AMOUNT OF RS.2,09,500/- CONFIRMED BY THE DRP STANDS DELETED. THE GROUNDS ON THIS ISSUE ARE ACCORDINGLY ALLOWED. ADDITION ON REIMBURSEMENT OF EXPENDITURE: 14. ASSESSEE HAS RECEIVED REIMBURSEMENT OF EXPENDITURE TO THE TUNE OF 6.35 CRORES ON COST TO COST BASIS, WHICH WAS NOT PART OF PROFIT AND LOSS ACCOUNT NOR OPERATING EXPENDITURE. THE TPO HAS MADE AN ADDITION OF RS. 63,56,971/- BEING 10% OF THE REIMBURSEMENT AMOUNT, AS FEES ON THE TRANSACTIONS. THE DRP HAS RESTRICTED THE FEES FOR REIMBURSEMENT 5% AND ADDITION WAS RESTRICTED TO 31,78,485/-. IT WAS THE SUBMISSION THAT THE 8 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. REIMBURSEMENT OF EXPENDITURE WAS MADE ON COST TO COST BASIS AND DOES NOT PART OF PROFIT AND LOSS ACCOUNT OF ASSESSEE, THEREFORE NO ADJUSTMENT IS WARRANTED. IT WAS ALSO SUBMITTED THAT THIS WAS NOT A REVENUE GENERATING TRANSACTION AND THE EXPENDITURE WAS PURELY TRAVELING EXPENDITURE WHICH WAS REIMBURSED AND NOT PART OF OPERATING EXPENDITURE AND THERE IS NO MARKUP ALSO. LD. COUNSEL RELIED ON THE FOLLOWING CASE LAW. 1. ITAT HYDERABAD IN THE CASE OF CAMBRIDGE TECHNOLOGIES ENTERPRISES LTD., 89/HYD/2014. 2. ITAT HYDERABAD IN THE CASE OF MYLAN LABORATORIES LTD VS ACIT, 66/HYD/2013. 3. ITAT DELHI IN THE CASE OF ARICENT TECHNOLOGIES (HOLDINGS) LTD., VS DCIT, [2011] 9 TAXMANN.COM 287 (DELHI). 4. ITAT CHENNAI IN THE CASE OF COGNIZANT TECHNOLOGY SOLUTIONS INDIA PVT. LTD VS ACIT, 114 & 2100 (MDS) / 2011. 14.1 CONSIDERING THE ABOVE FACTS OF THE CASE AND THE PRINCIPLES LAID DOWN BY THE COORDINATE BENCH, WE ARE OF THE OPINION THAT NO ALP ADJUSTMENTS CAN BE MADE TO THE REIMBURSEMENT EXPENDITURE, WHICH IS ONLY REIMBURSEMENT OF TRAVELING AND OTHER MISCELLANEOUS EXPENDITURES AND IS NOT CHARGED TO PROFIT AND LOSS ACCOUNT. ACCORDINGLY GROUNDS OF THE ASSESSEE ON THIS ISSUE ARE ALLOWED. CORPORATE MATERS: 15. DISALLOWANCE OF EXPENDITURE: THE A.O DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT ASSESSEE HAS MAINTAINED THE SELF-MADE VOUCHERS WHICH IS NOT SUBJECT TO VERIFICATION AND ACCORDINGLY DISALLOWED AN AMOUNT OF 10% OF EXPENSES ON SALES PROMOTION, OFFICE MAINTENANCE AND OUT OF CORPORATE EXPENSES AND 5% ON SITE MAINTENANCE WHICH 9 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. AMOUNTED TO TOTAL DISALLOWANCE OF RS.40,32,293/-. ASSESSEE HAS OBJECTED TO SAME BEFORE THE DRP THAT THE SAID EXPENDITURE WAS INCURRED ON THE CONTRACTUAL OBLIGATIONS AND NECESSARY FOR THE PURPOSE OF BUSINESS. IT WAS FURTHER SUBMITTED THAT BOOKS OF ACCOUNTS ARE AUDITED AND TAX AUDIT REPORT HAS NOT REPORTED ANY DISCREPANCIES. THE DRP HAS CONSIDERED THE SAME AS UNDER: HAVING CONSIDERED THE SUBMISSIONS, THOUGH THE ASSESSEE HAS TAKEN ADDITIONAL GROUNDS TOWARDS DISALLOWANCE OF EXPENDITURE WHICH WAS MADE BY THE A.O DURING THE COURSE OF ASSESSMENT PROCEEDINGS @ 10% OF EXPENSES ON SALES PROMOTION, OFFICE MAINTENANCE AND OUT OF POCKET AND 5% ON SITE MAINTENANCE. THE AO HAS MENTIONED IN THE ORDER THAT THE SAME WAS AGREED TO BY THE AR BEFORE THE AO. HENCE FILING ADDITIONAL GROUNDS IS NOT IN ORDER. THE HONBLE JURISDICTIONAL ITAT HYDERABAD HAD HELD IN SEVERAL DECISIONS THAT AN APPEAL CANNOT BE FILED AGAINST AN AGREED ADDITION. STILL IN THE INTEREST OF JUSTICE THE AR DURING THE COURSE OF PRESENT PROCEEDINGS ON 17.11.2015 WAS DIRECTED TO PRODUCE ALL EVIDENCE IN SUPPORT OF ITS CLAIM AND GROUNDS THAT NO SUCH DISALLOWANCE CAN BE MADE AND TIME WAS GRANTED TILL 07- 12-2015. ON THE SAID DATE THE AR FAILED TO FURNISH ANY INFORMATION TO SUBSTANTIATE THE CLAIMS MADE IN THE ADDITIONAL GROUNDS. THIS CLEARLY PROVES THE ASSESSEE HAD NO EVIDENCE WHATSOEVER TO SUBSTANTIATE THE GROUNDS TAKEN, HENCE, THE ORDER OF THE AO IS UPHELD AND THE OBJECTION IS REJECTED. 15.1 IT WAS THE SUBMISSION OF LD. COUNSEL THAT AGREEMENT MADE BY THE AR IS NOT BINDING ON ASSESSEE AND RELIED ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF SRI R.T BALA SUBRAMANYAM VS ITD 50 ITD 513 AND CIV VS INDIAN EXPRESS MADHURAI PVT LTD 13 TAXMANN 441 MADRAS. IT WAS FURTHER SUBMITTED THAT EXPENDITURE IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS AND ACCORDINGLY RELYING ON THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SA BUILDERS VS CIT 288 ITR 01, IT WAS SUBMITTED THAT ANY EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS SHOULD NOT BE DISALLOWED. LD. DR HOWEVER REITERATED THE FINDINGS OF THE DRP. 10 ITA NOS. 220/HYD/2015 & 458/HYD/2016 M/S ASTER PVT. LTD. HYD. 15.2 AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT A.O IS CORRECT IN THE DISALLOWING CERTAIN EXPENDITURE AS THE VOUCHERS ARE NOT VERIFIABLE, BEING SELF-MADE. HOWEVER, WE ARE OF THE OPINION THAT 5% OF THE SAID EXPENDITURES CAN BE DISALLOWED AS A.O HAS ADOPTED 10% ON CERTAIN EXPENDITURE AND 5% ON CERTAIN OTHER EXPENDITURE. WE DIRECT THE A.O TO DISALLOW THE EXPENDITURE UNIFORMLY AT 5% ON SALES PROMOTION EXPENSES OF 53,13,003/-, OFFICE MAINTENANCE EXPENSES OF RS. 28,74,687/-, OUT OF POCKET EXPENSES OF 20,71,280/-. 5% ON SITE MAINTENANCE EXPENSES OF RS. 4,93,27,915/- DOES NOT REQUIRE ANY MODIFICATION. THE GROUNDS ARE ACCORDINGLY CONSIDERED PARTLY ALLOWED. 16. IN THE RESULT APPEALS FILED BY ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 03 RD MAY, 2017. SD/- SD/- (G. PAVAN KUMAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 03 RD MAY , 2017. KRK COPY TO:- 1) M/S ASTER PRIVATE LTD, PLOT NO. 141/1, PHASE II, IDA, CHERLAPALLY, HYD - 500051 2) DCIT, CIRCLE 1(1); HYDERABAD. 3) DRP, HYDERABAD 4) THE DIT, INTERNATIONAL TAXATION, HYDERABAD 5) CIT-II, HYDERABAD 6) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 7) GUARD FILE