Super Tannery Ltd., Kanpur V. Dy. Commissioner of Income Tax-VI, Kanpur

ITA 470/LKW/2013

• Counselvise Citation: 47023714 RSA 2013
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 14A; 80IB; 10B; 28; 92

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.470/LKW/2013 ASSESSMENT YEAR:2008 - 09 DY.C.I.T. - VI, KANPUR. VS M/S SUPER TANNERY LTD., 187/170, JAJMAU, KANPUR. PAN:AAICS1142C (RESPONDENT) (APPELLANT) ITA NO.629/LKW/2013 ASSESSMENT YEAR:2007 - 08 M/S SUPER TANNERY LTD., 187/170, JAJMAU, KANPUR. PAN:AAICS1142C VS DY.C.I.T. - VI, KANPUR. (RESPONDENT) (APPELLANT) C.O.NO. 39 /LKW/201 3 (IN ITA NO.629/LKW/2013) ASSESSMENT YEAR:2007 - 08 DY.C.I.T. - VI, KANPUR. VS M/S SUPER TANNERY LTD., 187/170, JAJMAU, KANPUR. PAN:AAICS1142C (RESPONDENT) (OBJECTOR) SHRI P. K. KAPOOR, C.A. ASSESSEE BY SHRI AMIT NIGAM, D. R. REVENUE BY 18/06/2015 DATE OF HEARING 17 /07/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THERE IS ONE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 WHICH IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - I, KANPUR DATED 25/03/2013. 2 APART FROM THIS, THERE IS ONE REVENUES APPEAL FOR ASSESSMENT YEAR 200 7 - 0 8 WHICH IS DIRECTED AGAINST THE ORDE R OF LEARNED CIT(A) - I, KANPUR DATED 24/05/2013 AND THERE IS CROSS OBJECTION OF THE ASSESSEE FOR THE SAME ASSESSMENT YEAR I.E. 2007 - 08. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIR ST WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 I.E. I.T.A. NO.470/LKW/2013. GROUND NO. 1 & 2 ARE AS UNDER: 1. BECAUSE THE 'DUTY DRAWBACK' AND OTHER INVESTMENTS AS RECEIVED BY THE APPELLANT FORM PART OF THE INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING QUALIFYING FOR EXEMPTION UNDER SECTION 80IB(10) AND VIEW TO THE CONTRARY AS HAS BEEN TAKEN BY THE 'CIT(APPEALS)' IS WHOLLY ERRONEOUS. 2. BECAUSE SUCH 'DUTY DRAWBACK' (AS RECEIVED BY THE APPELLANT) WAS IN THE NATURE OF CASH ASSISTANC E FORMING PART OF THE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING AS PER CLAUSE III(C) OF SECTION 28 OF THE ACT READ WITH CIRCULAR NO.564 DATED 5.7.1990 AND CIRCULAR NO.571 DATED 1.8.1990 ISSUED BY CBDT, AND ACCORDINGLY THE SAME SHOULD HAVE BEEN CONSIDERED AS PART OF ELIGIBLE PROFIT, FOR COMPUTING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 3. IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS IDENTICAL TO THE ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL FOR ASSESSMENT YEAR 2009 - 2010 IN I.T.A. NO.804/LKW/20 13, WHICH WAS HEARD ON 17/06/2015 AND THIS ISSUE CAN BE DECIDED ON SIMILAR LINE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 2010 IN I.T.A. NO.804/LKW/2013, THE ISSUE REGARDING ALLOWABI LITY OF DEDUCTION U/S 80IB OUT OF DUTY DRAWBACK HAS BEEN DECIDED BY US AGAINST THE ASSESSEE BY FOLLOWING THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF LIBERTY INDIA 317 ITR 218 AFTER CONSIDERING THE ARGUMENTS OF THE ASSESSEE I.E. REGARDING TH E JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DHARAM PAL PREM CHAND LTD. [2009] 317 ITR 3 353 (DEL) AND ANOTHER JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF TOPMAN EXPORTS VS. CIT [2012] 342 ITR 49 (SC) AND THEREFORE, IN THE PRESENT CASE ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE ON SIMILAR LINE AND ACCORDINGLY GROUND NO. 1 & 2 ARE REJECTED. 5. GROUND NO. 3 TO 5 ARE INTER - CONNECTED, WHICH ARE AS UNDER: 3. BECAUSE THE 'CIT(APPEALS)' HAS ERRED IN LAW AND ON FACTS IN UPHOLDING DISALLOWANCE OF RS.4,80,455/ - AS HAD BEEN MADE IN THE ASSESSMENT OUT OF EXPENDITURE, BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. 4. BECAUSE LOOKING TO THE NATURE OF INVESTMENT AND THE INCOME YIELDED THERE FROM (WIT H REFERENCE TO WHICH THE PROVISIONS OF SECTION 14A HAD BEEN INVOKED) NO SUCH EXPENDITURE AS HAS BEEN DISALLOWED IN THE ASSESSMENT, CAN BE SAID TO HAVE BEEN INCURRED BY THE APPELLANT. 5. BECAUSE IN ANY CASE THE COMPUTATION OF DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D IS ERRONEOUS AS NO INTEREST BEARING FUNDS WERE INVOLVED IN THE INVESTMENT REFERRED TO IN THE ASSESSMENT ORDER. 6. IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS ALSO IDENTICAL TO GROUND NO. 3 & 4 RAISED BY THE ASSESSEE IN ITS APPEA L FOR ASSESSMENT YEAR 2009 - 2010 FOR ASSESSMENT YEAR 804/LKW/2013, WHICH WAS HEARD ON 17/06/2015. IT WAS AGREED THAT IN THE PRESENT YEAR ALSO, TH IS ISSUE CAN BE DECIDED ON SIMILAR LINE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN ASSESSM ENT YEAR 2009 - 2010, THIS ISSUE WAS DECIDED BY US ON THE BASIS THAT THE ASSESSING OFFICER SHOULD RECOMPUTE THE DISALLOWANCE U/S 14A AFTER EXCLUDING THE INVESTMENT IN FOREIGN SUBSIDIARIES BECAUSE INCOME FROM INVESTMENT IN FOREIGN SUBSIDIARIES IS TAXABLE. IN THE PRESENT YEAR ALSO, THERE ARE SOME INVESTMENTS IN FOREIGN SUBSIDIARIES; FOR EXAMPLE, RS.1,62,645/ - IN SUPER TANNERY U.K. (LTD.). HENCE, IN THE PRESENT YEAR ALSO, WE DECIDE THIS ISSUE ON SIMILAR LINE AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING O FFICER FOR RECOMPUTING THE 4 DISALLOWANCE AFTER EXCLUDING THE INVESTMENT IN FOREIGN SUBSIDIARY. ACCORDINGLY, THESE GROUNDS ARE ALSO ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED PARTLY FOR STATISTICAL PURPOSES. 9. NOW WE TAKE UP THE REVENUES APPEAL I.E. I.T.A. NO.629/LKW/2013 FOR ASSESSMENT YEAR 2007 - 08. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF OF RS.1,00,47,551/ - ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT WITHOUT APPRECIATING THE FULL FACTS OF THE CASE. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN FAILING TO APPR ECIATE THAT THE METHOD ADOPTED BY THE TPO WAS THE MOST APPROPRIATE METHOD IN THE CASE OF THE ASSESSEE COMPANY. 3. THE ORDER OF THE CIT(A), KANPUR BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE AO BE RESTORED. 10. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT THE COPY OF ORDER DATED 28/10/2011 PASSED BY TPO U/S 92CA(3) OF THE ACT FOR NEXT YEAR IS AVAILABLE ON PAGES 203 TO 206 OF THE PAPER BOOK AND IN THAT YEAR , THE TPO HAS CONSIDERED THE SAME COMPARABLES WHICH ARE CONSIDERED BY LEARNED CIT(A) IN THE PRESENT YEAR AS NOTED BY HIM ON PAGE NO. 4 OF HIS ORDER THAT THERE IS ONLY ONE DIFFERENCE IN THAT YEAR BECAUSE THE TPO HAS EXCLUDED THE DUTY DRAWBACK AMOUNT BY NOT CONSIDERING IT AN OPERATING INCOME AND WHEN HE FOUND THAT EVEN AFTER EXCLUDING THE DUTY DRAWBACK OF THE ASSESSEE COMPANY FROM OPERATING INCOME, THE DIFFERENCE IS WITHIN THE RANGE OF (+) ( - ) 5%, IT WAS HELD THAT NO ADJUSTMENT IS CALLED FOR. HE SUBMITTED THAT THEREFORE, THE COMPARABLES ADOPTED BY LEARNED CIT(A) STAND ACCEPTED BY TPO IN THE NEXT YEAR AND REGARDING EXCLUSION OF DUTY DRAWBACK FROM OPERATING INCOME, HE SUBMITTED THAT THE SAME SHOULD BE 5 EXCL UDED FROM COMPARABLES ALSO AND IF THE SAME IS NOT EXCLUDED FROM THE INCOME OF THE COMPARABLES, THEN THE SAME SHOULD NOT BE EXCLUDED FROM THE INCOME OF THE ASSESSEE ALSO. HE ALSO SUBMITTED COPY OF THE TRIBUNAL DECISION IN THE CASE OF JCIT VS. SUPER HOUSE T ANNERY IN I.T.A. NO.127/LKW/2012 DATED 11/06/2014 IN SUPPORT OF THIS CONTENTION THAT THE RESALE PRICE METHOD ADOPTED BY THE ASSESSING OFFICER AND TPO IS NOT APPLICABLE IN THE CASE OF EXPORTER BECAUSE IT IS APPLICABLE IN THE CASE OF IMPORTER ONLY. 11. WE H AVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND FORCE IN THE CONTENTIONS RAISED BY LEARNED A.R. OF THE ASSESSEE AND IN THE ORDER OF LEARNED CIT(A) BECAUSE CIT(A) HAS ADMITTEDLY CONSIDERED ONLY THOSE COMPARABLES, WHICH WERE ADOPTED BY TPO IN ASSESSEES OWN C ASE IN THE NEXT YEAR I.E. ASSESSMENT YEAR 2008 - 09 AS PER THE TPO ORDER FOR THAT YEAR DATED 28/10/2011 AVAILABLE ON PAGES 203 TO 206 OF THE PAPER BOOK. THE ONLY DIFFERENCE IS THAT IN THIS YEAR, THE TPO HAS HELD THAT WHEN EVEN AFTER EXCLUDING THE DUTY DRAWB ACK AMOUNT FROM OPERATING INCOME OF THE ASSESSEE ALSO, THE DIFFERENCE IS WITHIN THE RANGE OF (+) ( - ) 5%, NO ADJUSTMENT IS CALLED FOR. IN OUR CONSIDERED OPINION, SUCH A FINDING OF TPO IN NEXT YEAR IS NOT RELEVANT TO HOLD THAT IN EACH AND EVERY CASE, THE D UTY DRAWBACK AMOUNT SHOULD BE REDUCED FROM THE OPERATING INCOME OF THE ASSESSEE. IN OUR CONSIDERED OPINION, SUCH DEDUCTION OF DUTY DRAWBACK INCOME FROM THE OPERATING INCOME OF THE ASSESSEE WILL BE CALLED FOR IF THE SAME HAS BEEN REDUCED FROM THE OPERATI NG INCOME OF THE COMPARABLES. IT IS A DIFFERENT CASE THAT EVEN AFTER MAKING SUCH DEDUCTION FROM THE OPERATING INCOME OF THE ASSESSEE, NO ADDITION WAS PROPOSED BY THE TPO IN THE NEXT YEAR BECAUSE THE DIFFERENCE WAS WITHIN THE RANGE OF (+)( - ) 5% EVEN AFTER DOING SO. IN OUR CONSIDERED OPINION, SUCH DEDUCTION OF DUTY DRAWBACK ETC. FROM OPERATING INCOME OF THE ASSESSEE WILL BE CALLED FOR IF THE INCOME OF THE COMPARABLES IS AFTER EXCLUDING THE SAME. IN THE PRESENT CASE, THE CALCULATION OF THE PLI OF THE COMPA RABLES COMPANIES IS BASED ON THE AUDITED FINANCIAL RESULTS FOR FINANCIAL YEAR 2006 - 07 AND A CLEAR 6 FINDING IS GIVEN BY LEARNED CIT(A) IN PARA 4.2.3 OF HIS ORDER THAT HE HAS VERIFIED THESE CALCULATIONS AND THE BALANCE SHEET OF EACH OF THESE COMPANIES AND TH EY ARE PART OF THE RECORDS AND ALSO IN PUBLIC DOMAIN. THE RELEVANT PARAS OF THE ORDER OF CIT(A) ARE PARA NO. 4.2 TO 4.2.3, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 4.2 DISCUSSION AND DECISION I HAVE CONSIDERED THE FACTS AND CIRCUMS TANCES OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. IN THE SEQUENCE FOR THE COMPUTATION OF ARMS LENGTH PRICE, THE FIRST STEP INVOLVES THE IDENTIFICATION OF THE 'MOST APPROPRIATE METHOD'. IN THE INSTANT ASSTT. YEAR 'RESALE PRICE METHOD' HAS BEEN THE A DOPTED BY THE APPELLANT AS THE 'MOST APPROPRIATE METHOD' AND THE SAME HAS ALSO BEEN ACCEPTED BY THE TP O , WHICH IS LEGALLY INCORRECT . ACCORDING TO THE PROVISIONS OF THE SEC 92 TO 92CA OF THE INCOME TAX ACT, 1961 READ WITH RULES 10B TO 10E, 'RESALE PRICE METHOD' ONLY APPLIES WHERE THE INTERNATIONAL TRANSACTIONS PERTAIN TO IMPORT OF ARTICLES. THE CASE OF THE APPELLANT IS THAT OF AN EXPORTER AND NOT THAT OF AN IMPORTER. THUS, 'RESALE PRICE METHOD' IS NOT APPLICABLE TO THE INSTANT CASE. THIS IS ALSO CLEAR FRO M THE FACT THAT THE TPO HIMSELF IN THE IMMEDIATELY NEXT ASSESSMENT YEAR HAS REJECTED THE RESALE PRICE METHOD AND ADOPTED TNMM METHOD. A COPY OF THE SAME HAS BEEN SUBMITTED BY THE APPELLANT COMPANY. IN THIS VIEW OF THE MATTER, THE MOST APPROPRIATE METHOD FO R THIS YEAR WOULD ALSO BE TNMM. FOR TNMM, PL I I.E. OPERATING PROFIT (OP)/TOTAL COST (TC) COMPUTED FOR THE APPELLANT COMPANY IS TO BE COMPARED WITH THE AVERAGE PLI OF THE OTHER COMPARABLE CASES. FOR THE SAKE OF UNIFORMITY, I ADOPT THE SAME COMPARABLES AS AD OPTED BY THE TPO IN THE TRANSFER PRICING STUDY CONDUCTED IN THE SUCCEEDING ASSESSMENT YEAR. THE CALCULATION OF THE PLI OF THE COMPARABLE COMPANIES BASED ON THE AUDITED FINANCIAL RESULTS OF THE FINANCIAL YEAR 2006 - 07 IS GIVEN BELO W: PARTICULAR) SARUP DELTAMAL GRAZIELLA KH SHOES WORLD LIBERTY SHOES MAYUR LAKHANI SUPER HOUSE PROFIT BEFORE TAXES 21444000 30206744 4894060 - 256968 4711446 195116294 39233958 4154162 1106100 INTEREST 6296000 3848152 3851370 16360619 705473 86188667 3479817 6378348 4971000 OPERATING PROFIT 27740000 34054696 8745430 16103651 5416919 283305151 42713775 10532510 1603200 TOTAL EXPENDITURE 305210000 46190064 662410892 1479099461 113989001 2043067391 239297057 440746785 3050720 %OF OP/TC 9.09% 7.37% 1.32% 1.09% 4.75% 13.87% 17.85% 2.39% 5.26% AVERAGE PLI OF T HE COMPARABL E S OF T HE LAS T YEAR 7% 7 4.2.1 THE PLI OF SUPER TANNERY LIMITED IS GIVEN BELOW; PARTICULARS SUPER TANNERY OPERATING PROFIT 33090921 INTEREST 41450199 TOTAL EXPENDITURE 2031604276 % OF OP/TC 3.67% 4.2.2 HOWEVER, IN THE SUCCEEDING YEAR, THE TPO HAS COMPARED THE PLI AFTER EXCLUDING THE EXPORT ENTITLEMENTS. TO MY MIND, THAT APPROACH OF THE TPO IN EXCLUDING THE EXPORT ENTITLEMENTS FROM CALCULATION OF THE OPERATING PROFIT IS INCORRECT SINCE EXPORT ENTITLEMENTS ARE AN INTEGRAL PART AND PARCEL OF THE OPERATING PROFITS OF A COMPANY. EXPORT ENTITLEMENTS ARE NOT AN EXTRA - ORDINARY ITEM OF INCOME OR AN ITEM OF INCOME WHICH IS UNRELATED TO THE ORDINARY ACTIVITIES OF A COMPANY. FURTHER, IN THE CASH - FLOW STATEMENTS PREPARED AS PER AS - 3 OF THE ICAI AND CERTIFIED BY THE STATUTORY AUDITORY AND ACCEPTED IN THE AGM OF THE COM PANY, THE EXPORT ENTITLEMENTS ARE DULY INCORPORATED IN THE CASH - FLOW FROM OPERATING ACTIVITIES, WHICH FURTHER STRENGTHENS MY VIEW ABOUT THE EXPORT ENTITLEMENTS BEING AN INTEGRAL PART OF THE OPERATING PROFITS. THUS, IT IS IMPERATIVE TO INCLUDE THE FIGURES O F EXPORT ENTITLEMENTS WHILE CALCULATING THE OPERATING PROFITS OF A COMPANY. IN THIS VIEW OF THE MATTER, THE PLI OF THE APPELLANT COMPANY AS WELL AS OF THE OTHER COMPARABLE COMPANIES SHOULD BE COMPUTED AFTER INCLUDING THE EXPORT ENTIT L EMENTS AVAILABLE. 4.2.3 ON PERUSAL O F THE RESULTANT PLIS (KEEPING IN MIND THE DISCUSSION ABOVE), IT IS OBSERVED THAT THE AVERAGE PLI (OP/TC) OF THE COMPARABLE COMPANIES IS 7% AS COMPARED TO 3.67 OF THE APPELLANT COM PANY WHICH COMES WITHIN 5% TOLERANCE AS STIPULATED IN THE I NCOME TAX ACT, 1961.1 HAVE VERIFIED THESE CALCULATIONS FROM THE BALANCE SHEET OF EACH OF THESE COMPANIES AND THEY ARE PART OF THE RECORDS AND ALSO IN PUBLIC DOMAIN. SINCE DIFFERENCE BETWEEN THE PL I IS WITHIN THE RANGE OF 5% TOLERANCE, NO T.P. ADJUSTMENT WA S REQUIRED TO BE MADE. THE ADJUSTMENT OF RS. 1,00,47,451 MADE IS, THEREFORE, DELETED. THE ASSESSING OFFICER/TPO MAY REVERIFY THE ABOVE 8 CALCULATIONS AND IF FOUND TO EB CORRECT, GIVE RELIEF TO THE ASSESSEE AS DIRECTED ABOVE. 1 1.1 FROM THE ABOVE PARAS FROM THE ORDER OF LEARNED CIT(A), WE FIND THAT CIT(A) HAS ADOPTED THE SAME COMPARABLES WHICH WERE ADOPTED BY TPO IN THE NEXT YEAR AND HENCE, THE SELECTION OF COMPARABLES IS PROPER . REGARDING THE EXCLUSION OF DUTY DRAWBACK FROM OPERATING PROFIT OF THE ASSESSEE COMPANY, THIS FINDING IS GIVEN BY LEARNED CIT(A) THAT EXPORT ENTITLEMENTS ARE AN INTEGRAL PART AND PARCEL OF THE OPERATING PROFITS OF A COMPAN Y AND THEREFORE, EXPORT ENTITLEMENTS ARE NOT AN EXTRAORDINARY ITEM OF INCOME OR AN ITEM OF INCOME WHICH IS UNRELA TED TO THE ORDINARY ACTIVITIES OF THE ASSESSEE COMPANY. APART FROM THIS, THIS IS ALSO VERY IMPORTANT THAT EVEN IF THE EXPORT INCENTIVES ENTITLEMENT IS EXCLUDED FROM THE OPERATING INCOME OF THE ASSESSEE COMPANY, SUCH EXCLUSION HAS TO BE MADE FROM THE OPERA TING INCOME OF THE COMPARABLES COMPANY ALSO. WITHOUT EXCLUDING THE EXPORT INCENTIVES ENTITLEMENT FROM THE OPERATING INCOME, THE AVERAGE PLI OF THE COMPARABLE COMPANY IN THE PRESENT CASE IS 7% AS COMPARED TO 3.67% OF THE ASSESSEE COMPANY WHICH IS WITHIN TH E TOLERANCE RANGE OF 5% AS STIPULATED IN THE INCOME TAX ACT, 1961. SINCE THIS IS NOT THE CASE OF THE ASSESSING OFFICER OR TPO THAT THE OPERATING INCOME OF THE COMPARABLE COMPANIES IS AFTER REDUCING THE EXPORT INCENTIVES ENTITLEMENTS, SUCH EXCLUSION OF EXP ORT INCENTIVES ENTITLEMENT FROM THE OPERATING PROFIT OF THE ASSESSEE COMPANY IS NOT JUSTIFIED AND HENCE, WE FIND NO INFIRMITY IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE. WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF LEARNED CIT(A). 12. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 13. NOW WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE. 9 14. GROUND NO. 1 AND 4 OF THE CROSS OBJECTION WERE NOT PRESSED BY LEARNED A.R. OF THE ASSESSEE AND ACCORDINGLY, THESE GROUNDS ARE REJECTED AS NOT PRESSED. 15. GROUND NO. 2 IS AS UNDER: 2. BECAUSE THE ID. CIT(A) HAVING HIMSELF DELETING THE ADJUSTMENT OF RS.1,00,47,551/ - FOR 'TRANSFER PRICING' UNDER SECTION 92CA(3) OF THE ACT AFTER DUE EXAMINATION FROM HIS END, ON THIS BASIS OF MAT ERIAL AND INFORMATION AVAILABLE ON RECORD, HE COULD NOT HAVE RELEGATED THE ASSESSEE/RESPONDENT TO THE STAGE OF THE ASSESSING OFFICER/TRANSFER PRICING OFFICER BY OBSERVING 'THE AO/TPO MAY REVERIFY THE ABOVE CALCULATIONS AND IF FOUND TO BE CORRECT, GIVE RELI EF TO THE ASSESSEE AS DIRECTED ABOVE.' 16. LEARNED A.R. OF THE ASSESSEE SUBMITTED THAT WHEN CIT(A) HAS GIVEN A FINDING THAT HE HAS VERIFIED THE CALCULATIONS FROM THE BALANCE SHEET OF EACH OF THE COMPARABLES AND THEY ARE PART OF THE RECORD AND ALSO I N PUBL IC DOMAIN AND THEREFORE, NO ADJUSTMENT IS CALLED FOR BUT THIS DIRECTION OF CIT(A) IS NOT PROPER THAT THE AO/TPO MAY REVERIFY THESE CALCULATIONS AND IF FOUND CORRECT, GIVE RELIEF TO THE ASSESSEE AS DIRECTED ABOVE. HE SUBMITTED THAT THIS DIRECTION OF CIT(A) AMOUNTS TO SETTING ASIDE THE MATTER WHICH IS NOT WITHIN THE POWER S OF CIT(A). 17. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN PARA 4.2.3 OF HIS ORDER, AS REPRODUCED ABOVE, LEARNED CIT(A) HAS DELETED THE ADJUSTMENT OF RS.1,00,47,451/ - AFTER GIVING A CATEGORICAL FINDING THAT HE HAS VERIFIED THE CALCULATIONS FROM THE BALANCE SHEET OF EACH OF THE COMPARABLES AND THEY A RE PART OF THE RECORD AND ALSO I N PUBLIC DOMAIN. THER EAFTER, IT IS STATED BY CIT(A) THAT THE AO/TPO MAY REVERIFY THESE CALCULATIONS AND IF FOUND CORRECT, GIVE RELIEF TO THE ASSESSEE AS DIRECTED ABOVE. WE FIND FORCE IN THE CONTENTIONS OF LEARNED A.R. OF THE ASSESSEE THAT THIS DIRECTION OF CIT(A) IS AMOUNTIN G TO 10 RESTORING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHICH IS NOT PERMISSIBLE AND EVEN IF HE CONSIDERED THAT SOME RECALCULATIONS OF CALCULATIONS IS NECESSARY, HE SHOULD HAVE DONE SO HIMSELF OR HE SHOULD HAVE OBTAINED REMAND REPORT BUT AFTER GIVING THIS FINDING THAT HE HIMSELF HAS VERIFIED THE CALCULATIONS FROM THE BALANCE SHEET OF EACH OF THE COMPARABLES AND THEY ARE PART OF THE REC ORD AND ALSO I N PUBLIC DOMAIN, THIS DIRECTION OF CIT(A) IS UNCALLED FOR. WE, THEREFORE, HOLD THAT THIS UNNECESSARY DIRECTION OF CIT(A) IS NOT PROPER PARTICULARLY WHEN THERE IS NO POWER AVAILABLE WITH THE CIT(A) TO REMAND THE MATTER TO ASSESSING OFFICER. WE, THEREFORE, MODIFY THE DIRECTION OF CIT(A) BY HOLDING THAT SINCE CIT(A) HAS ALREADY VERIFIED THE CALC ULATIONS ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AVAILABLE IN PUBLIC DOMAIN, THE ASSESSING OFFICER SHOULD GIVE RELIEF TO THE ASSESSEE AS DECIDED BY CIT(A) OF RS.1,00,47,451/ - AND THERE IS NO NECESSITY OF RECALCULATION OF THE CALCULATIONS. ACCORDI NGLY, THIS GROUND OF THE CROSS OBJECTION IS ALLOWED. 19. GROUND NO. 3 OF THE CROSS OBJECTION IS AS UNDER: 3. BEACSUE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF ASSESSEE'S/RESPONDENT'S CLAIM UNDER SECTION 80IB (CAUSED BY EXCLUSION OF MONETARY VALUE OF EXPORT ENTITLEMENT FROM THE COMPUTATION OF ELIGIBLE PROFIT) BY OBSERVING THAT 'THE ISSUE IS ALREADY DECIDED BY THE HON'BLE APEX COURT JUDGMENT IN THE CASE OF LIBERTY INTERNATIONAL VS. CIT (317 ITR 218 WHEREAS ON THE FACTS OF THE PRESENT CASE THE CONTROVERSY DESERVED TO BE DECIDED BY REFERRING TO: ( A ) EARLIER DECISION OF HON'BLE APEX COURT IN THE CASE OF B. DESRAJ VS. CIT REPORTED IN (2008) 301 ITR 439 READ WITH CIRCULARS NO.564 DATED 05.07.1990 AND 571 DATED 01.08.1990 (AS HAS B EEN REFERRED TO IN THE SAID JUDGMENT); AND ( B ) SUBSEQUENT DECISION OF HON'BLE APEX COURT ITSELF IN THE CASE OF TOPMAN EXPORTS VS. ITO REPORTED IN (2012) 342 ITR 49 (SC). AS PER THE DETAILED ANALYSIS GIVEN IN ANNEXURE - 1(A) HERETO. 11 20. IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS IDENTICAL TO GROUND NO. 1 & 2 RAISED BY THE ASSESSEE IN ITS APPEAL FOR ASSESSMENT YEAR 2008 - 09 AND THE SAME CAN BE DECIDED ON SIMILAR LINE. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WHILE DECIDING THE APPEAL OF THE ASSESS EE FOR ASSESSMENT YEAR 2008 - 09, WE HAVE ALREADY HELD THAT THE ISSUE REGARDING ALLOWABILITY OF DEDUCTION U/S 80IB FOR EXPORT INCENTIVE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA (SUPRA) AND ON THE SAME LINE, IN THE PRESENT YEAR ALSO, WE HOLD THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 3 IS REJECTED. 22. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE STANDS ALLOWED PARTLY. 23. IN THE CO MBINED RESULT, THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007 - 08 IS DISMISSED WHEREAS CROSS OBJECTION OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 IS PARTLY ALLOWED AND APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 IS DISMISSED. (ORDER WAS PRONOU NCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 /07/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR