M/s. Insilco Ltd., Noida V. DCIT, New Delhi

ITA 4880/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98034 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I2
• Next Hearing Date: 09-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MITALI MADHUSMITA
• Assessee Lawyers: RASHI KHANNA ADV MS NEHA SINGH
• Keywords: Related party transaction; Transfer pricing; Rectification of order; Opportunity of being heard; Principle of natural justice; International transaction
• Section: 92C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2, NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER & SMT. BEENA PILLAI, JUDICIAL MEMBER I.T.A .NOS. 4880 /DE L/2013 (ASSESSMENT YEAR-2006- 07) INSLICO LTD., THE CORENTHUM, OFFICE NO. 2312, 3 RD FLOOR, 2 ND LOBE, TOWER-A, A-41, SECTOR-62, NOIDA. AAAC11203N V S DCIT, CIRCLE 11(1), NEW DELHI. APPELLANT BY SMT. RASHI KHANNA, ADV. MS. NEHA SINGH, ADV. RESPONDENT BY SMT. MITALI MADHUSMITA, CIT DR ORDER PER BENCH : THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER DATED 29.04.2013, PASSED U/S.143(3) R.W.SEC.1 44C OF THE INCOME TAX ACT, 1961 FOR A.Y. 2006-07. 2. BRIEF FACTS IN ASSESSEES CASE ARE AS UNDER: 2.1 ASSESSEE IS ONE OF GROUP COMPANY OF DEGUSSA AG, GERMANY, WHICH IS THE LEADING PRODUCER OF PRECIPITATED SILIC A IN INDIA. ASSESSEE WAS FORMED AS A JOINT VENTURE COMPANY IN 1988. IN APRIL 1999, DATE OF HEARING 09/10/2015 DATE OF PRONOUNCEMENT 04/12/2015 2 ITA NOS. 4 880 /DEL/2013 DEGUSSA TOOK-OVER THE MAJORITY EQUITY HOLDING, THER EBY RAISING ITS HOLDING TO 63%, THE BALANCE BEING WIDELY DISTRIBUTE D AMONG PUBLIC. AS OF MARCH 31, 2006, DEGUSSA AG HOLDS 73.11% SHARE S OF THE ASSESSEE. ASSESSEE HAS TWO STATE-OF-THE-ART PLANTS IN INDIA, LOCATED AT GAJRAULA, U.P. (110 KM. NORTH EAST OF DELHI) AND PATALGANGA, MAHARASHTRA (75 KM. SOUTH EAST OF MUMBAI). 2.2 ITS MAIN CUSTOMERS CONSIST OF INDIANS MANUFACTU RING TIRES, RICE HULLING ROLLERS, FOOTWEAR, MECHANICAL RUBBER GOODS, IN THE RUBBER SEGMENT, AND PLANT PROTECTION, FEED, FOOD, DETERGEN TS, BATTERY SEPARATORS AND TOOTHPASTE CUSTOMERS IN THE NON-RUBB ER SEGMENT. 2.3 ASSESSEE HAS ITS INDEPENDENT AGENTS AND DISTRIB UTORS WHICH PERFORM THE SALES AND MARKETING FUNCTION. ASSESSEE PAYS COMMISSION TO ALL ITS AGENTS AND DISTRIBUTORS FOR T HE SALES MADE BY THEM. DEGUSSA INDIA PRIVATE LIMITED, ANOTHER GROUP COMPANY IN INDIA, COORDINATES WITH THESE AGENTS AND DISTRIBUTO RS AND ASSISTS THE ASSESSEE IN THE SALES AND MARKETING OF ITS PRODUCTS IN THE DOMESTIC MARKET AND IN COUNTRIES LIKE BANGLADESH, NEPAL AND SRI LANKA. DIPL HAS ITS HEADQUARTER IN MUMBAI AND REGIONAL OFFICES IN DELHI, MUMBAI, CHENNAI AND KOLKATA. 2.4 THE ASSESSEE FILED ITS RETURN OF INCOME 02.11.2 006 DECLARING THE TOTAL INCOME AT RS.2,31,36,857/-. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAS ENTERED INTO INTERNAT IONAL TRANSACTIONS, AND HENCE A REFERENCE WAS MADE TO THE TPO, U/S.92 CA(3). 3 ITA NOS. 4 880 /DEL/2013 2.5 DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE UNDERTOOK THE FOLLOWING INTERNATIONAL TRANSACTIONS WITH ITS A SSOCIATED ENTERPRISES (AES): DESCRIPTION OF TRANSACTION AMOUNT (RS.) TRANSFER PRICING METHOD MARKETING & LOGISTIC SUPPORT 7,88,107 CUP EXPORT SALES 9,17,27,331 TNMM IT RELATED SERVICES 5,08,350 TNMM PACKING CHARGES 16,179 TNMM COST RECHARGES 62,82,080 CUP 2.6. THE ABOVE MENTIONED TRANSACTIONS WERE DULY REP ORTED IN THE ACCOUNTANTS REPORT (FORM NO. 3CEB), FILED ALONG WI TH THE ASSESSEES RETURN OF INCOME, FOR THE RELEVANT AY. FOR THE PURP OSE OF TRANSFER PRICING ANALYSIS IN ITS TP STUDY FOR THE RELEVANT A SSESSMENT YEAR, THE ASSESSEE ADOPTED THE TRANSACTIONAL NET MARGIN METHO D(TNMM) AS MOST APPROPRIATE METHOD(MAM), FOR DETERMINING THE A RMS LENGTH PRICE(ALP), OF INTERNATIONAL TRANSACTIONS, PERTAINI NG TO EXPORT SALES, IT RELATED SERVICES AND PACKING CHARGES. FURTHER, T HE ASSESSEE USED CUP AS MAM, FOR DETERMINING ALP IN RESPECT OF MARKE TING AND LOGISTIC SUPPORT SERVICES AND COST RECHARGES. 2.7 THE ASSESSEE EXPORTS GOODS TO ITS AES, WHICH A RE BROADLY SIMILAR TO THE EXPORTS MADE TO UNRELATED PARTIES. THEREFORE, IN ORDER TO DETERMINE THE ARMS LENGTH PRICE FOR THE EXPORTS MADE TO AES, THE ASSESSEE USED COMPARABLE MARGIN EARNED FROM THE EXP ORTS MADE TO UNRELATED PARTIES. 4 ITA NOS. 4 880 /DEL/2013 2.8 FOR THIS PURPOSE THE ASSESSEE SEGMENTED THE PRO FIT AND LOSS ACCOUNT OF THE COMPANY INTO THREE SEGMENTS VIZ. DOM ESTIC SALES, EXPORT SALES TO AES AND EXPORT SALES TO NON AES. 2.9 DURING THE FIRST ROUND OF THE ASSESSMENT PROCEE DINGS, THE LD. TPO ISSUED A SHOW CAUSE AS TO WHY CUP SHOULD NOT BE USED TO DETERMINE THE ARMS LENGTH PRICE OF THE EXPORT SALE S, IT RELATED SERVICES AND PACKING CHARGES. THE ASSESSEE FILED IT S DETAILED RESPONSE TO THE ABOVE AND EXPLAINED THE BUSINESS AN D COMMERCIAL REALITIES TO JUSTIFY THE USE OF INTERNAL TNMM AS TH E MAM, INSTEAD OF CUP TO SATISFY THE ARMS LENGTH NATURE OF THE EXPOR TS MADE TO AES. 2.10 THE LD. TPO OBSERVED THAT ASSESSEE HAS EXPOR TED THE SAME PRODUCT TO AES AS WELL AS NON AES, AND HENCE THE ASSESSEE HAD A DOMAIN WHERE DIRECT COMPARABILITY EXISTED. THE LD.T PO FURTHER OBSERVED THE GEOGRAPHICAL DIFFERENCE IN THE LOCATIO N OF AES AND NON AES IS OF NO CONSEQUENCE AS FOB PRICE IS TAKEN. TH E LD.AO REJECTED THE SEGMENTAL FINANCIALS OF THE ASSESSEE, ON THE GR OUND THAT THE SAME WERE UNAUDITED. 2.11. THUS, THE LD.TPO APPLIED CUP TO BE THE MOST A PPROPRIATE METHOD TO DETERMINE THE ALP OF SALES, MADE TO AES A ND MADE ADJUSTMENT OF RS. 49,52,417/-. 2.12. AGGRIEVED BY THE ORDER OF THE LD.TPO, THE A SSESSEE FILED ITS OBJECTIONS BEFORE THE DRP. THE DRP WITHOUT GOING IN TO OTHER ISSUES, UPHELD THE ORDER OF THE LD. TPO VIDE HIS ORDER DATE D 30.09.2010. 2.13. THE ASSESSEE PREFERRED APPEAL BEFORE THE HO NBLE TRIBUNAL AGAINST THE ORDER OF THE DRP. THE TRIBUNAL AT THIS STAGE OBSERVED THAT, THE DRP HAD BRUSHED ASIDE THE ISSUES WITHOUT PROPER 5 ITA NOS. 4 880 /DEL/2013 CONSIDERATION. THE TRIBUNAL VIDE ORDER DATED 08.06. 2011, REMANDED THE ISSUE BACK TO THE DRP FOR DE NOVO CONSIDERATION OF THE ISSUE. 2.14. THE LD.DRP ACCORDINGLY VIDE HIS ORDER DATED 26.02.2013, OBSERVED AS UNDER: 4. THE ASSESSEE HAS EXPLAINED, FOR THE PURPOSE OF THE ARMS LENGTH ANALYSIS OF THE EXPORTS MADE TO AES, THE ASS ESSEE, SELECTED TNMM AS THE MOST APPROPRIATE METHOD AND US ED INTERNAL MARGINS EARNED FROM THE EXPORT TO NON AES FOR THE COMPARABILITY ANALYSIS AND TO DETERMINE THE ARMS L ENGTH MARGIN OF ITS RELATED PARTY TRANSACTIONS. FACTS ON RECORD INDICATED THAT ASSESSEE HAS MADE SALE TO AES AND NO N AES. AE IS LOCATED IN GERMANY AND NON AE ARE IN MALAYSIA , SRI LANKA, VIETNAM. IN VIEW OF DRP THERE IS DIFFERENCE CONTRACTUAL TERMS AS WELL AS DIFFERENCE IN GEOGRAPH ICAL AND ECONOMIC IN CIRCUMSTANCES OF THE AES AND NON AES, H ENCE CUP METHOD IS NOT APPROPRIATE, NOR IS INTERNAL TNMM . 4.1 DRP HAS NOTED THE APPELLATE HISTORY OF THE ASSE SSEE WITH REFERENCE TO THE CHOICE OF METHOD. 5. DIRECTIONS OF DRP U/S 144C. DRP HAS EXAMINED ALL FACTS ON RECORD AND FINDS TNMM AS THE MOST APPROPRIATE METHOD. THE TPO IS DIRECTED T O RECOMPUTED ALP USING TNMM AFTER TAKING SUITABLE EXT ERNAL COMPARABLES AND FILTERS RELEVANT FOR COMPARABILITY ANALYSIS INTO ACCOUNT. 6 ITA NOS. 4 880 /DEL/2013 2.15. THE LD. TPO, FOLLOWING THE DIRECTIONS OF DRP, PASSE D THE ORDER ON 26.04.2013, AND COMPUTED THE ADJUSTMENT AT RS.3,12,08,723/-, AFTER ADOPTING EXTERNAL COMPARABL ES. 3. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. THE LD. DY. COMMISSIONER OF INCOME TAX, CIRCLE 11(1), NEW DELHI (THE ASSESSING OFFICER OR THE AO) IN HIS IMPUGNED ORDER DATED 29 APRIL, 2013 HAS ERRED IN CONFIRMING THE ORDER PASSED U/S 92CA(3) OF THE INCO ME TAX ACT, 1961 (ACT) (GIVING EFFECT TO DISPUTE RESOLUT ION PANELS (DRP) DIRECTIONS U/S 144C OF THE ACT) MAKING AN A DDITION OF RS. 31,208,723/- TO THE TOTAL INCOME OF THE APPE LLANT ON ACCOUNT OF ADJUSTMENT IN THE ARMS LENGTH PRICE (A LP) DETERMINED BY THE LD. TRANSFER PRICING OFFICER 1( 5) (TPO). 2. THAT ON THE FACTS AND IN LAW THE IMPUGNED DIRECT IONS PASSED BY THE DRP DATED 26 FEBRUARY, 2013 ARE AGAIN ST PROVISO TO SECTION 144C(8) OF THE ACT AS PER WHICH THE DRP CANNOT ISSUE ANY DIRECTIONS FOR FURTHER ENQUIRY, UN DERTAKING A FRESH SEARCH AND PASSING OF THE ASSESSMENT ORDER. HENCE, THE IMPUGNED DIRECTIONS ISSUED BY THE DRP DA TED 26 FEBRUARY 2013 DIRECTING THE TPO TO CONDUCT A FRESH SEARCH AND RE-COMPUTE THE ALP. 3. THAT ON THE FACTS AND IN LAW THE IMPUGNED ORDER/DIRECTIONS PASSED BY THE LD. ASSESSING OFFICER/TPO/DRP ARE BAD, UNREASONABLE, UNJUSTIFIED AND NOT SUSTAINABLE UNDER LAW AS THE SAME HAS BEEN PASS ED WITHOUT PROPERLY CONSIDERING THE FACTS AND SUBMISSI ONS OF THE APPELLANT AND PROPER APPLICATION OF MIND. 4. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. DRP HAS ERRED IN GIVING IMPUGNED DI RECTION THAT EXTERNAL COMPARABLE SHOULD BE ADOPTED FOR 7 ITA NOS. 4 880 /DEL/2013 TRANSACTIONS NET MARGIN METHOD (TNMM) AND REJECTE D INTERNAL TNMM ANALYSIS OF THE APPELLANT. 5. THAT THE LD. DRP HAS FAILED TO APPRECIATE THE APPROPRIATENESS OF THE METHOD USED BY THE APPELLANT IN ORDER TO DETERMINE ALP, WHICH WAS ACCEPTED BY THE I NCOME TAX AUTHORITIES IN OTHER YEARS ASSESSMENT PROCEEDI NGS (I.E. FOR ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10) AND HONBLE COMMISSIONER OF INCOME TAX (APPEALS) PROCEE DINGS (I.E. FOR AYS. 2003-04, 2004-05 AND 2005-06) HENCE SHOWING INCONSISTENCY WITH THE ALREADY ACCEPTED POS ITION OF THE APPELLANT AND INCOME TAX AUTHORITIES. 6. THAT THE LD. DRP HAS ERRED IN NOT FOLLOWING THE DIRECTION AND OBSERVATION OF THE HONBLE TRIBUNAL IN THE ORDE R PASSED IN APPEAL FOR AY 2006-07 WHICH HAD DIRECTED TO PASS A PROPER AND SPEAKING DIRECTION U/S 144C OF THE ACT. 7. THAT THE REFERENCE MADE TO THE LD. TPO BY THE LD . DRP AND THE ADDITIONS/ADJUSTMENTS MADE ARE ILLEGAL AND BAD IN LAW AS THE REFERENCE HAD ALREADY BEEN MADE EARLIER TO THE LD. TPO AND AN ORDER DATED 20 OCTOBER, 2009 U/S 92C A(3) OF THE ACT WAS PASSED BY MAKING AN ADJUSTMENT OF RS . 4,952,417/- AND SUBSEQUENT RECTIFICATION ORDER DATE D 25 APRIL 2011 U/S 92CA(3) OF THE ACT REDUCING THE ADJU STMENT TO RS. 36,11,840/- ON ACCOUNT OF DIFFERENCE IN THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION ENTER ED BETWEEN APPELLANT AND ITS AES. 8. THAT THE LD. DRP HAS FAILED TO CONSIDER AND ADJU DICATE THE CONTENTION OF THE APPELLANT THAT THE ASSESSING OFFICER HAS NOT RECORDED THE REASONS BASED ON WHICH HE HAD REACHED THE CONCLUSION THAT IT WAS NECESSARY AND EXPEDIENT IN THE CASE OF THE APPELLANT TO REFER TH E MATTER FOR DETERMINATION OF ARMS LENGTH PRICE TO BACK TO THE TPO. 9. WITHOUT PREJUDICE TO OUR OTHER GROUNDS OF APPEAL , THE LD. DRP, ASSESSING OFFICER AND TPO HAVE ERRED IN LAW BY NOT ISSUING SHOWCASE NOTICE TO IN RELATION TO RE-COMPUT ATION OF 8 ITA NOS. 4 880 /DEL/2013 ARMS LENGTH PRICE OF THE TRANSACTION PERTAINING TO SALE OF GOODS BY THE APPELLANT TO ITS AES, WHICH IS CONTRA RY TO THE FACTS, LAW AND THE PRINCIPLES OF NATURAL JUSTICE AN D SINCE NO OPPORTUNITY OF BEING HEARD WAS PROVIDED TO THE APPE LLANT, THE SAME IS VOID AND VITIATED. 10. WITHOUT PREJUDICE TO OUR OTHER GROUNDS OF APPEA L, THE LD. TPO HAS ERRED IN HIS IMPUGNED ORDER DATED 26 APRIL 2013 BY NOT ACCEPTING THE ECONOMIC ANALYSIS UNDERTAKEN B Y THE APPELLANT WHICH WAS IN ACCORDANCE WITH THE PROVISIO NS OF THE ACT READ WITH THE INCOME TAX RULES, 1962 (RULE S) FOR ESTABLISHING THE ARMS LENGTH PRICE OF THE INTERNAT IONAL TRANSACTIONS. 11. WITHOUT PREJUDICE TO OUR OTHER GROUNDS OF APPEA L, THE LD. TPO HAS ERRED HIS IMPUGNED ORDER DATED 26 APRIL, 20 13 BY REJECTING THE SEGMENTAL ANALYSIS CARRIED OUT BY THE APPELLANT FOR DETERMINING THE ARMS LENGTH MARGIN O F ITS INTERNATIONAL TRANSACTIONS. 12. THE LD. TPO/ASSESSING OFFICER/DRP ERRED IN IGNO RING THE BUSINESS/COMMERCIAL REALITY THAT THE EXPORT SAL ES MADE TO ASSOCIATED ENTERPRISES IS NOT THE PRIMARY BUSINE SS OF THE APPELLANT AND EXPORTS TO AES WERE MADE DURING THE YEAR TO IMPLEMENT STRATEGIC BUSINESS DECISION. 13. WITHOUT PREJUDICE TO OUR OTHER GROUNDS OF APPEA L, THE LD. TPO HAS ERRED IN HIS IMPUGNED ORDER DATED 26 APRIL 2013 BY REJECTING TWENTY TWO COMPARABLE COMPANIES SELECT ED BY THE APPELLANT IN THE FRESH SEARCH CONDUCTED AND SUB MITTED TO THE LD. TPO AS PER THE DIRECTIONS OF THE LD. DRP , BASED ON CONJECTURES AND SURMISES, AND WITHOUT ANY COGENT RE ASONS. 14. WITHOUT PREJUDICE TO OUR OTHER GROUNDS OF APPEA L, THE LD. TPO HAS ERRED IN HIS IMPUGNED ORDER DATED 26 APRIL 2013 BY CONSIDERING TWO ADDITIONAL COMPANIES (I.E. COBAT SANMAR LIMITED AND GUJARAT MULTI GAS BASE CHEMICALS PRIVAT E LIMITED) AS COMPARABLE TO THE APPELLANT, BY CONSIDE RING SIMILAR GROUNDS AS CONSIDERED FOR REJECTING THE COM PARABLES 9 ITA NOS. 4 880 /DEL/2013 SELECTED BY THE APPELLANT. FURTHER, THE LD. TPO HA S FAILED TO ESTABLISH THE COMPARABILITY OF THESE TWO COMPANIES CONSIDERED AS COMPARABLE WITH THE APPELLANT IN THE IMPUGNED ORDER. 15. WITHOUT PREJUDICE TO OUR OTHER GROUNDS OF APPEA L, THE LD. TPO HAS ERRED IN FACTS AND CIRCUMSTANCES BY NOT ACC OUNTING FOR MATERIAL DIFFERENCES BETWEEN THE TESTED PARTY A ND COMPARABLE COMPANIES. 16. WITHOUT PREJUDICE TO OUR OTHER GROUNDS OF APPEA L, THE LD. TPO HAS ERRED IN LAW AS PER HIS IMPUGNED ORDER DATE D 26 APRIL 2013 BY NOT APPLYING THE PROVISO TO SECTION 9 2C OF THE ACT THEREBY FAILED TO ALLOW THE APPELLANT THE BENEF IT OF 5% VARIATION FROM THE ARMS LENGTH PRICE. 17. THAT THE ASSESSING OFFICER HAS INCORRECTLY DETE RMINED THE TAXABLE INCOME OF RS. 5,93,44,313/- SINCE THE E ARLIER DEMAND OF RS. 49,52,417/- HAS BEEN DOUBLE COUNTED, ACCORDINGLY THE DEMAND OF RS. 1,66,69,750/- IS ALSO INCORRECTLY DETERMINED. THE APPELLANT CRAVES LEAVE TO SUBMIT SUCH FURTHER G ROUNDS AT OR BEFORE THE HEARING OF THE APPEAL, SO AS TO EN ABLE YOUR HONOUR TO DECIDE THE APPEAL ACCORDING TO LAW. 3.1 WE HAVE HEARD THE RIVAL CONTENTIONS. ON A CARE FUL CONSIDERATION OF THE FACTS OF THE CASE, PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE ISSUE BEFORE US FOR CONSIDERATION IS, WHETHER THE INTERNA L COMPARABLES SHOULD BE ADOPTED OVER EXTERNAL COMPARABLES FOR THE PURPOSES OF COMPUTING ALP, IN RESPECT OF TRANSACTION PERTAINING TO EXPORT OF GOODS. TNMM HAS BEEN ACCEPTED BY BOTH THE PARTIES A S MAM. 10 ITA NOS. 4880 /DEL/2013 3.2 THE ASSESSEE EXPORTS TO VARIOUS AES AND NON A ES IN DIFFERENT COUNTRIES ARE AS UNDER: EXPORT TO VARIOUS AES EXPORT TO VARIOUS NON AES GERMANY, INDONESIA, MALAYSIA, PHILIPPINES INDONESIA, MALAYSIA, PHILIPPINES, VIETNAM, NEPAL, SRI LANKA, BANGLADESH. 4. THE LD.AR SUBMITTED THAT, IT OPERATES IN THREE S EGMENTS I.E; DOMESTIC SALES, EXPORT SALES TO AES AND NON AES. SHE FURTHER SUBMITTED THAT, THE ASSESSEE HAS APPLIED TNMM FOR B ENCHMARKING THIS TRANSACTION, AS IT HAD RELEVANT DATA FOR THIS PURPOSE. THE LD.AR SUBMITTED THAT ASSESSEE HAD ADOPTED THE INTERNAL CO MPARABLES WHICH HAS BEEN ADMITTED TO BE IN EXISTENCE BY THE D RP (INTERNAL PAGE 3 OF DRP ORDER DATED 30.09.2010), AND THE LD.T PO IN THE FIRST ROUND OF ASSESSMENT(INTERNAL PAGE 10 OF THE LD. TPO ORDER DATED 21.10.2009 AND PARA(C ) ). HOWEVER THE DRP AS WELL AS THE LD.TPO APPLIED EXTERNAL COMPARABLES, IN THIS ROUND OF PROC EEDINGS. 5. THE LD.AR ALSO SUBMITTED THAT AS THERE EXIST GEO GRAPHICAL DIFFERENCES, THE FOB VALUE OF SALES COULD BE CONSID ERED, AND THAT SUCH SALES WOULD NOT CONTAIN ANY ELEMENT OF FRIGHT AND INSURANCE WHICH ARE VARIABLE FACTORS DEPENDING ON THE LOCATIO N OF EXPORT. WE ALSO NOTE THAT A SIMILAR SUGGESTION HAS BEEN RECORD ED BY THE LD.TPO IN ORDER DATED 29.10.2009 AT INTERNAL PAGE 11. THE SUBMISSIONS COULD NOT BE CONTROVERTER ON FACTS, BY THE LD.DR. T HE LD.DR PLACED HER RELIANCE ON THE ORDER OF THE DRP. 11 ITA NOS. 4880 /DEL/2013 6. ON A CAREFUL CONSIDERATION, WE FIND FORCE IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. INTERNAL COMP ARABLES ARE TO BE PREFERRED TO EXTERNAL COMPARABLES. THERE IS NO DISP UTE THAT THE ASSESSEE HAS INTERNAL COMPARABLES. GEOGRAPHICAL DIF FERENCES ARE NOT RELEVANT WHEN FOB PRICE IS CONSIDERED. 7. WE, ON THE BASIS OF ABOVE DISCUSSIONS, ARE INCL INED TO SET ASIDE THE MATTER TO THE LD.TPO WITH A DIRECTION TO CONSID ER THE SALE IN RESPECT OF EXPORT TO AES AT FOB VALUE. EVEN OTHERW ISE, EXCEPT FOR EXPORT TO GERMANY, THERE ARE NO GEOGRAPHICAL VARIAT IONS. THE LD.TPO IS DIRECTED TO APPLY INTERNAL COMPARABLES, AT FOB V ALUE, AS IN HIS VIEW, THIS VALUE IS THE COMPARABLE VALUE. THE ASSES SEE IS DIRECTED TO FURNISH THE AUDITED FINANCIALS OF THE SEGMENTAL ACC OUNTS. UNDER THESE CIRCUMSTANCES, WE RESTORE THE ISSUE TO THE FI LES OF THE LD.TPO/AO, FOR FRESH ADJUDICATION OF THE ALP, AS PE R THE DIRECTIONS GIVEN HEREIN.. 8. ACCORDINGLY ASSESSEES APPEAL HAS BEEN ALLOWED F OR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04/12/ 2015 SD/- SD/- (J.S. REDDY) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/12/15 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 12 ITA NOS. 4880 /DEL/2013 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 14.10.2015 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 09.12.15 6. KEPT FOR PRONOUNCEMENT ON 04.12.15 7. FILE SENT TO THE BENCH CLERK 09.12.15 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.