Asst. Comm. of Income-tax, Pune V. Crane Process Flow Technologies (India) Ltd., Pune

ITA 53/PUN/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88842 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-11-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 10-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAZHAR AKRAM
• Keywords: Transfer pricing; International transaction
• Section: 92C; 92B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.53 & 540/PN/2012 (ASSESSMENT YEARS : 2002-03 & 2003-04) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 8, PUNE. . APPELLANT VS. CRANE PROCESS FLOW TECHNOLOGIES, (INDIA) LTD., AMAR AVINASH CORPORATE PLAZA, 7 TH FLOOR, BUND GARDEN ROAD, PUNE 411 001. PAN : AABCA4702H . RESPONDENT DEPARTMENT BY : SHRI MAZHAR AKRAM ASSESSEE BY : SHRI NIKHIL PATHAK DATE OF HEARING : 19-11-2014 DATE OF PRONOUNCEMENT : 02-02-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEALS BY THE REVENUE RELATE TO THE SAME ASSESSEE AND INVOLVE A COMMON ISSUE, THEREFORE, THEY HAVE BE EN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED F OR THE SAKE OF CONVENIENCE AND BREVITY. 2. SINCE THE FACTS AND CIRCUMSTANCES IN BOTH THE AP PEALS ARE SIMILAR, ITA NO.53/PN/2012 PERTAINING TO THE ASSESSMENT YEAR 200 2-03 IS TAKEN AS THE LEAD CASE. THIS APPEAL IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 17.10.2011 WHICH , IN TURN, HAS ARISEN FROM AN ORDER DATED 16.02.2005 PASSED BY THE ASSESS ING OFFICER U/S 143(3)(II) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 3. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ITA NOS.53 & 540/PN/2012 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING ADDITION OF RS .78,51,386/- MADE ON ACCOUNT OF ADJUSTMENT IN ARM'S LENGTH PRICE? 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) WAS JUSTIFIED IN ACCEPTING THE EVIDENCES FURNISHED BY THE ASSESSEE BY WAY OF SEGMENTAL DETAILS IN RESPECT OF DOMESTIC SALE AND E XPORT SALES/SALE TO AES WITHOUT GIVING AN OPPORTUNITY TO THE A.O. AS PROVID ED UNDER RULE 46A OF THE I.T. RULES TO VERIFY THE CLAIM? 4. ALTHOUGH, REVENUE HAS RAISED TWO GROUNDS OF APPE AL BUT THE SOLITARY DISPUTE IS IN RELATION TO THE DECISION OF THE CIT(A ) IN DELETING AN ADDITION OF RS.78,51,386/- MADE BY THE ASSESSING OFFICER WHILE DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF EX PORTS ENTERED BY THE ASSESSEE WITH ASSOCIATED ENTERPRISES. BEFORE WE PROCEED TO ADJUDICATE THE CONTROVERSY, IT WOULD BE APPROPRIATE TO SUMMARIZE THE BACKGROUND OF THE DISPUTE. THE RESPONDENT-ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER-ALIA, ENGAGED IN THE MANUFACTURE AND SALE OF FLOW EQUIPMENTS. THE RESPONDENT IS A SUBSIDIARY OF CRANE PROCESS FLOW TECHNOLOGY LTD., UK, WHICH HOLDS 74% OF ITS SHARE C APITAL. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT FILED A RET URN OF INCOME DECLARING A TOTAL INCOME OF RS.2,25,93,820/- WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT U/S 143(3)(II) OF THE ACT DATED 16.02.2005 WHEREIN THE TOTAL INCOME WAS ASSESSED AT RS.3,16,86,860/-. THE ASSESSEE HAD ENT ERED INTO CERTAIN INTERNATIONAL TRANSACTION WITH ITS ASSOCIATED ENTER PRISES WITHIN THE MEANING OF SECTION 92B OF THE ACT AND THE INCOME ARISING FROM SUCH TRANSACTION WAS LIABLE TO BE COMPUTED HAVING REGARD TO THEIR ARM'S LENGTH PRICE AS REQUIRED BY SECTION 92(1) OF THE ACT. THE ASSESSING OFFICER MA DE A REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) U/S 92CA(1) OF THE A CT FOR THE PURPOSES OF COMPUTING ARM'S LENGTH PRICE OF THE INTERNATIONAL T RANSACTION ENTERED BY THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISES. THE TPO, AFTER ALLOWING THE NECESSARY OPPORTUNITIES TO THE ASSESSEE PASSED AN O RDER U/S 92CA(3) OF THE ACT DATED 19.01.2005 WHEREBY HE HAS DETERMINED THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION RELATING TO THE SALE OF B UTTERFLY VALVES (IN SHORT BVS) AT A FIGURE HIGHER THAN THE STATED VALUE OF SUCH IN TERNATIONAL TRANSACTION WHICH ITA NOS.53 & 540/PN/2012 RESULTED IN AN UPWARD ADJUSTMENT OF RS.78,51,386/- TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER HAS FINALIZED HIS ASSESSMENT ORDER U/S 143(3)(II) OF THE ACT BY DETERMINING THE TOTAL INCO ME OF THE INTERNATIONAL TRANSACTION IN CONFORMITY WITH THE ORDER OF THE TPO WHICH RESULTED IN AN ADDITION OF RS.78,51,386/- TO THE RETURNED INCOME, WHICH IS THE SUBJECT-MATTER OF DISPUTE BEFORE US. 5. THE RESPONDENT-ASSESSEE IS PRIMARILY MANUFACTURI NG VALVES WHICH ARE USED TO CONTROL/REGULATE THE FLOW OF LIQUIDS AND GA SES. IT IS MANUFACTURING INDUSTRIAL VALVES, NAMELY, DIAPHRAGM VALVES (IN SHO RT DVS), BUTTERFLY VALVES (BVS), ACTUATORS AND SPARES FOR VALVES. THE PRODUC TS MANUFACTURED BY THE ASSESSEE FIND APPLICATION IN DIFFERENTIAL SEGMENTS, NAMELY, PHARMACEUTICALS, CHEMICALS, FERTILIZERS, ETC.. DURING THE YEAR UNDE R CONSIDERATION, ASSESSEE WAS FOUND TO HAVE ENTERED INTO INTERNATIONAL TRANSACTIO N WITH ITS ASSOCIATED ENTERPRISES ABROAD ON ACCOUNT OF PURCHASE OF COMPON ENTS, SALE OF VALVES AND RECOVERY OF COST RELATING TO DEVELOPMENT OF PATTERN S, ETC.. THE TOTAL EXPORT SALES OF VALVES TO THE ASSOCIATED ENTERPRISES WAS R S.8,43,87,909/-, OUT OF WHICH EXPORT OF DVS WAS RS.1,69,81,204/- AND THAT OF BVS WAS RS.6,74,06,705/-. TPO ACCEPTED THE ASSERTION OF TH E ASSESSEE THAT THE SALES OF DVS TO THE ASSOCIATED ENTERPRISES WERE AT AN ARM 'S LENGTH PRICE. HOWEVER, HE HAS DIFFERED WITH THE ASSESSEES ASSERTION THAT THE SALES OF BVS TO THE ASSOCIATED ENTERPRISES ARE AT AN ARM'S LENGTH PRICE . THE ONLY INTERNATIONAL TRANSACTION IN DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE IS IN RELATION TO THE SALE OF BVS TO THE ASSOCIATED ENTERPRISES. 6. BEFORE THE TPO, ASSESSEE POINTED OUT THAT DVS AR E USED IN PHARMACEUTICAL INDUSTRY WHILE BVS ARE USED IN WATER TREATMENT AND AIR- CONDITIONING PLANTS. ON ACCOUNT OF THE AFORESAID, IT WAS STATED BEFORE THE TPO THAT THE PROFIT MARGINS ON SALE OF DVS IS MUCH HIGH ER SINCE IT IS A NICHE PRODUCT AND ASSESSEE IS A MARKET LEADER IN RESPECT OF THE S AME. IN THE CASE OF BVS, ITA NOS.53 & 540/PN/2012 THERE IS A COMPETITIVE MARKET AND THE MARGINS WERE CLAIMED TO BE ON A LOWER SIDE. IT WAS FOUND THAT ASSESSEE HAD SOLD DVS IN T HE DOMESTIC MARKET AND EXPORTED THE SAME TO THIRD PARTIES AS WELL AS TO TH E ASSOCIATED ENTERPRISES. IN THE CASE OF BVS, THEY WERE SOLD IN DOMESTIC MARKET AND EXPORTED ONLY TO THE ASSOCIATED ENTERPRISES. THE TPO ACCEPTED THE CLAIM OF THE ASSESSEE THAT PROFITABILITY WITH RESPECT TO THE DVS WAS NOT COMPA RABLE WITH THE PROFITABILITY ON BVS. WITH RESPECT TO THE EXPORT OF DVS TO THE ASSO CIATED ENTERPRISES, THE TPO ACCEPTED THE SAME TO BE AN ARM'S LENGTH PRICE CONSI DERING THE MARGINS IN RESPECT OF SALE OF DVS TO ASSOCIATED ENTERPRISES AN D THIRD PARTIES. HOWEVER, WHILE BENCHMARKING THE EXPORT OF BVS TO ASSOCIATED ENTERPRISES, THE TPO ADOPTED A METHODOLOGY WHICH IS AS FOLLOWS. IN THE FIRST STEP, THE TPO DETERMINED THE NET PROFIT PERCENTAGE EARNED BY THE ASSESSEE ON SALE OF DVS IN DOMESTIC SEGMENT AS WELL AS ON SALE OF DVS TO TH IRD PARTIES IN THE EXPORT SEGMENT, WHICH WERE 14.06% AND 36.03% RESPECTIVELY AS PER A TABULATION PREPARED BY THE TPO, WHICH IS AS UNDER :- S.NO. PARTICULARS EXPORT OF DV TO UNRELATED ENTITIES SALE OF DV IN DOMESTIC MARKET 1 NET SALES 9,035,753 73,708,211 2 COST OF PRODUCTION 4,427,303 52,116,345 3 SELLING OVERHEADS 959,837 7,829,771 4 ADMINISTRATIVE OVERHEADS 372,141 3,035,704 5 NET PROFIT 3,276,472 10,726,390 6 NET PROFIT % AGE TO NET SALES 36.3% 14.6% ON THE BASIS OF THE AFORESAID, THE TPO INFERRED T HAT THE PROFITABILITY MARGIN ON EXPORT OF DVS TO THIRD PARTIES IS 02.48 T IMES THAN THE MARGIN ON THE SALE OF DVS IN THE DOMESTIC MARKET. IN THE SECOND STEP, THE TPO CONSIDERED THE GROSS MARGIN ON SALE OF BVS IN THE DOMESTIC SEG MENT, WHICH WAS DETERMINED AT 9.752%. THIS PROFIT MARGIN OF BVS IN THE DOMESTIC SEGMENT WAS INCREASED BY 2.48 TIMES IN ORDER TO ARRIVE AT THE A RM'S LENGTH PRICE OF THE EXPORT OF BVS MADE TO THE ASSOCIATED ENTERPRISES ON THE GROUND THAT THE EXPORT MARGINS ON SALE OF DVS WAS 2.48 TIMES THAT O F THE DOMESTIC SEGMENT. ON THIS BASIS, THE TPO DETERMINED THE ARM'S LENGTH PRICE OF THE EXPORT OF BVS TO THE ASSOCIATED ENTERPRISES AT RS.7,22,42,698/- A S AGAINST STATED VALUE OF ITA NOS.53 & 540/PN/2012 SUCH EXPORTS OF RS.6,74,06,705/-, THEREBY RESULTING IN AN ADDITION OF RS.78,57,386/- TO THE INCOME OF THE ASSESSEE COMPAN Y. 7. ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE ASSAILED THE METHODOLOGY ADOPTED B Y THE TPO IN ORDER TO DETERMINE THE ARM'S LENGTH PRICE OF THE VALUE OF EX PORT OF BVS TO THE ASSOCIATED ENTERPRISES. FIRSTLY, IT WAS CONTENDED THE THE TPO MISDIRECTED HIMSELF IN PRESUMING THAT THE ASSESSEE OUGHT TO HAV E EARNED MARGIN IN EXPORT OF BVS 2.48 TIMES HIGHER THAN THE MARGIN ON DOMESTI C SALE OF BVS ON THE BASIS OF THE RESPECTIVE MARGINS OF DVS WITHOUT APPRECIATI NG THAT THE TWO PRODUCTS WERE DISTINCT THE FIELD OF USAGE. IT WAS ALSO POIN TED OUT THAT THE TPO HAD ACCEPTED THE SUBMISSION OF THE ASSESSEE THAT THE PR OFITABILITY OF THE DVS WAS NOT COMPARABLE WITH THAT OF THE BVS, AN ASPECT WHIC H HAS BEEN NOTED BY THE CIT(A) IN PARA 11.1 OF HIS IMPUGNED ORDER. WE FIND THAT IN PARA 11.1, THE CIT(A) HAS REPRODUCED A PORTION OF THE ORDER OF THE TPO WHEREIN IT IS ACCEPTED THAT PROFITABILITY OF DVS CANNOT BE COMPARED WITH THE B VS ... 8. APART FROM THE AFORESAID, AN ALTERNATIVE PLEA WA S RAISED BY THE ASSESSEE TO THE EFFECT THAT EVEN IF THE METHODOLOGY ADOPTED BY THE TPO WAS TO BE ACCEPTED, EVEN THAN THE TPO HAS ERRED IN COMP UTING THE PROFIT MARGINS OF DOMESTIC SALES OF BVS, AND IF IT IS RECTIFIED BY ADOPTING THE CORRECT FIGURE OF SELLING OVERHEADS, THE RESULTANT MARGIN WOULD ITSEL F SHOW THAT THE STATED VALUE OF EXPORTS OF BVS TO THE ASSOCIATED ENTERPRISES IS AT AN ARM'S LENGTH PRICE. THE CIT(A) HAS PROCEEDED TO EXAMINE THE ALTERNATIVE PLEA OF THE ASSESSEE AND AFTER BEING SATISFIED THAT A MISTAKE HAD CREPT INTO THE WORKING OF THE MARGIN OF SALE OF BVS IN DOMESTIC SEGMENT, HE CAME TO CONCLUDE THAT THE EXPORT OF BVS TO THE ASSOCIATED ENTERPRISES WAS AT AN ARM'S LENGTH PRICE. THE CIT(A) REFERRED TO THE WORKING IN HIS ORDER AND HAS THEREAFTER FOUND IT FIT TO DELETE THE ADDITION IN QUESTION. AGAINST SUCH A DE CISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. ITA NOS.53 & 540/PN/2012 9. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE A SSAILED THE ORDER OF THE CIT(A) ON THE GROUND THAT THE WORKING OF THE SE LLING AND DISTRIBUTION EXPENSES CONSIDERED BY THE CIT(A) WAS WITHOUT PROPE R VERIFICATION. IN SUM AND SUBSTANCE, THE PLEA OF THE LD. DEPARTMENTAL REP RESENTATIVE IS THAT THE TPO MAY HAVE ERRED IN NOT ALLOCATING CERTAIN EXPENS ES OF SELLING AND DISTRIBUTION OVERHEADS PROPORTIONATELY OVER DIFFERE NT SEGMENTS BUT THE WORKING SUBMITTED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE CIT(A) WITHOUT PROPER VERIFICATION. 10. ON THE OTHER HAND, THE LD. REPRESENTATIVE FOR T HE ASSESSEE VEHEMENTLY ARGUED THAT NO FRESH MATERIAL OR EVIDENCE WAS PUT U P BEFORE THE CIT(A) AND THEREFORE THE ORDER OF THE CIT(A) CANNOT BE ASSAILE D ON THE GROUND THAT HE HAS ADMITTED ANY NEW EVIDENCE WITHOUT GIVING OPPORTUNIT Y TO THE ASSESSING OFFICER. IN THIS CONTEXT, IT HAS BEEN POINTED OUT THAT THE E RROR MADE BY THE TPO IN CALCULATING THE GROSS MARGIN OF THE DOMESTIC SEGMEN T OF THE SALE OF BVS WAS CORRECTED BY THE CIT(A) ON THE BASIS OF THE WORKING S NOTED BY THE TPO IN THE ORDER. THEREFORE, ACCORDING TO HIM NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THIS CASE, THE ONLY AREA OF DIFFERENCE BETWEEN THE ASSESSEE AND TH E REVENUE RELATES TO THE TRANSACTION OF EXPORT OF BVS TO THE ASSOCIATED ENTE RPRISES. THE APPELLANT HAD EFFECTED EXPORTS OF BVS TO THE ASSOCIATED ENTERPRIS ES OF A VALUE OF RS.6,43,91,312/-. THE CONTENTION OF THE ASSESSEE W AS THAT SUCH EXPORTS WERE AT AN ARM'S LENGTH PRICE WHICH WAS NOT ACCEPTED BY THE TPO. THE TPO ACCEPTED THE TRANSACTION OF EXPORT OF DVS TO THE AS SOCIATED ENTERPRISES TO BE AT AN ARM'S LENGTH PRICE. THE TPO COMPUTED THE MAR GIN ON SALE OF DVS IN THE DOMESTIC MARKET I.E. 14.06% AND COMPARED IT TO THE MARGIN ON EXPORT OF DVS TO UN-RELATED PARTIES I.E. 36.06%. ON THIS BASIS, THE TPO WAS OF THE OPINION THAT THE PROFIT MARGIN ON EXPORT OF DVS TO THIRD PA RTIES WAS 2.48 TIMES THE ITA NOS.53 & 540/PN/2012 MARGIN ON SALE OF DVS IN THE DOMESTIC MARKET. HE, THEREFORE, FORMED AN OPINION THAT THE PROFIT MARGIN ON EXPORT OF BVS TO THE ASSOCIATED ENTERPRISES BE ALSO 2.48 TIMES, THE MARGIN ON BVS IN THE DOMESTIC SEGMENT. THE MARGIN OF THE BVS IN THE DOMESTIC SEGMENT WAS DETERMINED AT 9 .752% AND ON THIS BASIS, THE TPO CONCLUDED THAT ON EXPORT OF BVS TO ASSOCIAT ED ENTERPRISES, ASSESSEE OUGHT TO HAVE EARNED A MARGIN OF 24.18% I.E. 2.48 T IMES THE MARGIN ON DOMESTIC SALES. ACCORDINGLY, HE ARRIVED AT AN ARM' S LENGTH PRICE OF THE VALUE OF THE EXPORTS TO THE ASSOCIATED ENTERPRISES OF BVS AT RS.7,22,42,698/- AS AGAINST THE STATED VALUE OF RS.6,43,91,312/-. THIS RESULTED IN AN ADDITION OF RS.78,51,386/-. 12. OSTENSIBLY, THE METHOD ADOPTED BY THE TPO TO CO MPUTE THE ARM'S LENGTH PRICE OF THE TRANSACTION OF THE EXPORT OF BV S TO ASSOCIATED ENTERPRISES IS NOT A METHOD PRESCRIBED IN SECTION 92C OF THE ACT. THIS PLEA WAS RAISED BEFORE THE CIT(A) BUT HE HAS NOT SPECIFICALLY ADDRE SSED THIS ISSUE. HOWEVER, THE CIT(A) FOUND THAT THE COMPUTATION OF GROSS MARG IN ON DOMESTIC SALE SEGMENT OF BVS DONE BY THE TPO AT 9.752% WAS WRONG INASMUCH AS THE TPO HAD WRONGLY CONSIDERED THE SELLING OVERHEADS AT RS. 27,49,322/- AS AGAINST THE TOTAL SELLING OVERHEADS OF RS.1,36,76,114/-. ASSES SEE POINTED OUT THAT IF THE CORRECT FIGURE OF RS.1,36,76,114/- IS CONSIDERED, T HE SELLING OVERHEADS WHICH ARE ALLOCATED TO THE DOMESTIC SALES OF BVS WOULD CO ME TO RS.41,91,883/- AND THE GROSS MARGIN OF THE DOMESTIC SEGMENT OF BVS WOU LD BE 0.526% AS AGAINST 9.752% COMPUTED BY THE TPO. IF THE EXPECTED MARGIN ON EXPORT OF BVS IS COMPUTED AT 2.48 TIMES OF THE MARGIN ON THE DOMESTI C SEGMENT AS PER THE METHOD ADOPTED BY THE TPO, THEN IT WOULD COME TO 1. 31% IN TERMS OF WHICH THE ARM'S LENGTH PRICE OF THE EXPORT OF BVS TO THE ASSOCIATED ENTERPRISES WOULD WORK OUT TO RS.5,89,38,136/- AS AGAINST THE STATED VALUE OF RS.6,43,91,312/-, DEMONSTRATING THAT NO ADJUSTMENT WAS CALLED FOR. T HE AFORESAID FACTUAL ASPECTS HAVE BEEN GONE INTO BY THE CIT(A) AND HE HA S AFFIRMED THE SAME. BEFORE US, NO ERROR ON THIS ASPECT OF THE MATTER HA S BEEN ESTABLISHED BY THE ITA NOS.53 & 540/PN/2012 REVENUE AND THEREFORE, WE FIND NO REASON TO INTERFE RE WITH THE FINDING OF THE CIT(A) ON THIS ASPECT. IN-FACT, THE WORKINGS DONE BY THE TPO CALCULATING THE NET PROFIT PERCENTAGE ON SALE OF DVS IN THE DOMESTI C MARKET AND EXPORT OF DVS TO UNRELATED PARTIES WHICH, INTER-ALIA, CONTAINED S ELLING OVERHEADS AT 78,29,771/- AND RS.9,59,837/- RESPECTIVELY ARE AT P AGE 14 OF THE ORDER OF THE TPO. BEFORE THE LOWER AUTHORITIES, ASSESSEE HAD FU RNISHED THE RELEVANT WORKING OF THE APPORTIONMENT OF SELLING OVERHEADS D ONE BY THE TPO CONSIDERING THE TOTAL SELLING OVERHEADS AT RS.1,36, 76,114/-. THE RELEVANT WORKINGS HAVE BEEN PLACED AT PAGE 26 OF THE PAPER B OOK FILED BEFORE US. THE WORKINGS SO REFERRED TO BEFORE US, ALSO SUGGEST THA T THE CIT(A) MADE NO MISTAKE IN RE-WORKING THE GROSS MARGIN OF THE DOMES TIC SEGMENT OF BVS BY CORRECTING THE FIGURE OF SELLING OVERHEADS. THE CI T(A), IN OUR VIEW, QUITE JUSTLY CORRECTED THE MISTAKE COMMITTED BY THE TPO AND THE CORRECTED RESULT DO NOT JUSTIFY THE IMPUGNED ADDITION. THE RELEVANT WORKIN GS HAVE ALSO BEEN PLACED IN THE PAPER BOOK AT PAGES 28 29, WHICH CLEARLY BRIN G OUT THE ERROR NOTICED BY THE CIT(A). AT THIS POINT, WE MAY ALSO NOTICE THAT THE CIT(A) CALLED FOR A RE- WORKING OF THE ALLOCATION OF SELLING OVERHEADS. TH E CIT(A) REQUIRED THE ASSESSEE TO ALLOCATE ALL SELLING OVERHEADS EXCEPT T HOSE WHO WERE CLEARLY IDENTIFIABLE WITH DOMESTIC SALE EVEN ON THE SALES M ADE TO THE ASSOCIATED ENTERPRISES ON A PROPORTIONATE BASIS. THE ASSESSEE SUBMITTED SUCH A WORKING TO THE CIT(A), A COPY OF WHICH HAS BEEN PLACED IN T HE PAPER BOOK AT PAGES 29 30. IN-FACT, THE CIT(A) HAS ALSO REPRODUCED S UCH A WORKING IN PARA 11.9 OF HIS ORDER. THE CIT(A) FOUND THAT EVEN ON THE BA SIS OF SUCH A WORKING, NO ADJUSTMENT WAS REQUIRED TO BE CARRIED OUT TO ARRIVE AT THE ARM'S LENGTH PRICE OF THE EXPORT SALES OF BVS TO THE ASSOCIATED ENTERPRIS ES. SUCH FINDINGS OF THE CIT(A) ARE CONTAINED IN PARA 11.11 OF THE IMPUGNED ORDER. THE AFORESAID FINDINGS OF THE CIT(A) HAVE NOT BEEN NEGATED BY THE REVENUE BEFORE US AND THEREFORE ON THIS POINT ALSO THERE IS NO JUSTIFICAT ION TO INTERFERE WITH THE ULTIMATE CONCLUSION OF THE CIT(A) IN DELETING THE ADDITION. ACCORDINGLY, THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED. ITA NOS.53 & 540/PN/2012 13. IN THE RESULT, THE APPEAL OF THE REVENUE FOR AS SESSMENT YEAR 2002-03 IS DISMISSED. 14. IN SO FAR AS, THE APPEAL OF THE REVENUE FOR ASS ESSMENT YEAR 2003-04 IS CONCERNED, IT WAS A COMMON POINT BETWEEN THE PARTIE S THAT THE FACTS AND CIRCUMSTANCES OF THE DISPUTE ARE SIMILAR TO ASSESSM ENT YEAR 2003-04, SO OUR DECISION IN ASSESSMENT YEAR 2002-03 SHALL APPLY MUTATIS-MUTANDIS IN ASSESSMENT YEAR 2003-04 ALSO. 15. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED, AS ABOVE. ORDER PRONOUNCED ON 02 ND FEBRUARY, 2015. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 02 ND FEBRUARY, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE