Cisco Systems Capital (India) Private Limited, Bangalore V. Asst.C.I.T., Bangalore

ITA 537/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8647 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 31-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R REDDY
• Assessee Lawyers: CHAVALI S NARAYAN
• Keywords: Depreciation; Transfer pricing; International transaction; Corroborative evidences
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER SP NO.58(BNG)/2015 (IN ITA(TP)A NO.537(BNG)/2015) (ASSESSMENT YEAR : 2010-11) AND IT(TP)A NO.537(BNG.)/2015 (ASSESSMENT YEAR : 2010-11) M/S CISCO SYSTEMS CAPITAL (IND.) PVT.LTD., DIVYASHREE CHAMBERS B WING, NO.11, O SHAUGNESSY ROAD, OFF. LANGFORD ROAD, NAGA R, BANGALORE-560 025 PAN NO.AACCC4552A APPELLANT VS THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(1), BANGALORE RESPONDENT ASSESSEE BY : SHRI CHAVALI S. NARAYAN, CA REVENUE BY : SHRI G.R.REDDY, CIT DATE OF HEARING : 11-02-2016 DATE OF PRONOUNCEMENT : 19-02-2016 O R D E R PER SHRI ABRAHAM P GEORGE, AM; THESE ARE APPEAL AND STAY PETITION FILED BY THE ASS ESSEE AGAINST AN ASSESSMENT DONE ON IT PURSUANT TO DIRECTIONS OF THE DISPUTE RESOLUTION PANEL (DRP) FOR THE IMPUGNED ASSESSMENT. ASSESSEE HAS ALT OGETHER RAISED NINE GROUNDS. GROUND NO.9 IS ON LEVY OF INTEREST U/S 2 34B OF THE IT ACT, 1961 WHICH IS CONSEQUENTIAL IN NATURE. 2 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 2. VIDE ITS GROUND NO.1 & 2 ASSESSEE IS AGGRIEVED T HAT THE NET WORKING EQUIPMENTS USED FOR AUDIO/VIDEO CONFERENCE AND VIDE O STREAMING WERE ALLOWED DEPRECIATION ONLY AT THE RATE OF 15% AS AGAINST THE CLAIM OF 60% MADE BY IT. LEARNED AR AT THE OUTSET SUBMITTED THAT SIMILAR ISS UE HAD COME UP BEFORE THIS TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR ASSESSM ENT YEAR 2009-10. AS PER THE LEARNED AR SIMILAR DISALLOWANCE WAS MADE FOR ASSESS MENT YEAR 2008-09 AND 2009-10 ALSO. THE TRIBUNAL HAD SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR CONSIDERING WHETHER THE NET WORKING EQUIPMENT COULD FUNCTION INDEPENDENTLY OR ONLY IN CONJUNCTION WITH A COMPUTER. THIS TRIBUNAL HELD THAT IN THE FORMER CASE, IT SHOULD BE CONSIDERED AS A COMPUTER ELIGIBLE FOR DEPRECIATION AT THE RATE OF 60%, WHEREAS IN THE LATTER CASE IT WOULD BE ELIGIBLE FOR ONLY 15%. 3. PER CONTRA, LEARNED DR FAIRLY ADMITTED THAT THE ISSUE REQUIRES A FRESH LOOK BY THE AO. 4. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTION. CLAIM OF THE ASSESSEE BEFORE THE AO, WAS THAT THE AUDIO/VIDE O CONFERENCE EQUIPMENT AND VIDEO STREAMING EQUIPMENT WERE ALSO NET WORKING EQU IPMENT ELIGIBLE FOR DEPRECIATION AT 60%. THE AO HAD HELD THE CLAIM OF THE ASSESSEE TO BE FARFETCHED. ACCORDING TO HIM, THE DEVICES HAD LONG PERIOD OF EF FECTIVE USE AND WERE NOT 3 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 AMENABLE TO VIRUS ATTACKS OR REDUNDANCY. LEARNED C IT(A) ALSO APPROVED SUCH VIEW, TAKEN BY THE AO AND HELD THAT SUCH EQUIPMENT WOULD BE ELIGIBLE FOR ONLY 15% DEPRECIATION AS AVAILABLE FOR GENERAL PLANT & M ACHINERY. IN THIS REGARD, WE FIND THAT THE SIMILAR ISSUE HAD COME UP BEFORE THIS TRIBUNAL BOTH FOR THE ASSESSMENT YEAR 2008-09 & 2009-10 IN ASSESSEES OWN CASE. RELEVANT PARA NO.5 OF THE ORDER OF THIS TRIBUNAL IN IT(TP)A NO.116(B)/ 2014 DATED 10-10-2013, FOR ASSESSMENT YEAR 2009-10 IS RE-PRODUCED HEREUNDER; 5. AS REGARDS THE FIRST ISSUE I.E. DEPRECIATION ON NETWORKING EQUIPMENT ALLOWED AT 15% AS AGAINST 60% AS CLAIMED BY THE ASSESSEE, WE FIND THAT THE ISSUE IS COVERED IN FAVO UR OF THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL, TO WHICH ONE OF US I.E. THE JUDICIAL MEMBER IS THE SIGNATORY, IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 IN IT(TP)A NO.1558/BANG/201 2 DATED 19/9/2014. THE TRIBUNAL IN PARA.6 TO 8.3 OF ITS OR DER HAS CONSIDERED THIS ISSUE AT LENGTH AND HAS HELD AS UND ER: 6. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS AS WELL AS THE MATERIAL ON RE CORD, WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE APEX COURT AS WELL AS THE SPECIAL B ENCH (CITED SUPRA) AS REGARDS DEPRECIATION ON ROUTERS AND SWITC HES IS CONCERNED AND THE AO, FOR THE ASSESSMENT YEARS 2006 -07, 2007-08 AND 2010-11, HAS FOLLOWED THE SAME IN ALLOW ING DEPRECIATION AT THE RATE OF 60%. IN VIEW OF THE SA ME, WE DIRECT THE AO TO ADOPT THE SAID RATIONALE FOR THE R ELEVANT ASSESSMENT YEAR ALSO AND ALLOW DEPRECIATION AT THE RATE OF 60% ON ROUTERS AND SWITCHES. 7. AS REGARDS AUDIO VISUAL CONFERENCING EQUIPMENTS AND VIDEO STREAMING EQUIPMENTS, THE LEARNED COUNSEL FOR THE 4 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 ASSESSEE HAS FILED DETAILED SUBMISSIONS BEFORE THE AO AS WELL AS BEFORE US TO CONVINCE US THAT THEY ARE ALSO PART OF THE COMPUTER SYSTEM AND ARE NOT INDEPENDENTLY FUNCTIONA L. HE HAS DRAWN OUR ATTENTION TO THE DETAILED SUBMISSIONS FIL ED BY THE ASSESSEE WHICH HAS ALSO BEEN REPRODUCED BY THE AO I N HIS ORDER. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OT HER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THEY HAVE CONSIDERED THE ISSUE AT LE NGTH AND HAVE GIVEN ELABORATE REASONS FOR TREATING THESE EQU IPMENTS AS PLANT AND MACHINERY ONLY AND NOT AS COMPUTER. 8. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS, WE FIND THAT TO TREAT THE EQ UIPMENT AS COMPUTER OR COMPUTER SYSTEM, THE NATURE OF THE EQUI PMENT AND THE FUNCTIONS THEY PERFORM ARE TO BE EXAMINED. 8.1 AS PER THE DETAILS FURNISHED BY THE LEA RNED COUNSEL FOR THE ASSESSEE, AUDIO AND VIDEO CONFERENCING SYST EM COMPRISE OF AUDIO-VIDEO DEVICES/EQUIPMENTS WHICH FA CILITATE IN BRINGING PEOPLE AT DIFFERENT SITES TOGETHER FOR A M EETING. BESIDES THE AUDIO AND VISUAL AND MEETING ACTIVITIES , THESE SYSTEMS CAN ALSO BE USED TO SHARE DOCUMENT, COMPUTE R INFORMATION AND BOARDS, CONFERENCING WORKS ACROSS IT NET- WORK, ISD THROUGH COMPUTERS/COMPUTER NETWORK ETC., AND AUDIO/VIDEO FACILITY CONSIST OF MANY ELEMENTS INCLU DING THE USE OF CODEC WHICH STANDS FOR CODER-DECODER. CODEC IS A DEVICE, WHICH CONVERTS AND COMPRESSES AN ANALOG AUDIO-VIDEO SIGNAL INTO DIGITAL DATA AND THEN SENDS IT OVER A DIGITAL LINE. THE DECODER REVERSES THE PROCESSES AT THE RECEIVING END AND THIS COMPRESSION AND DECOMPRESSION ALLOWS LARGE AMOUNT O F DATA TO BE TRANSFERRED ACROSS A NETWORK AT CLOSE TO REAL TI ME. CONFERENCING SYSTEMS MAKE USE OF VARIOUS END POINTS IN A SYSTEM SUCH AS VIDEO INPUT CONSISTING OF CAMERA, VI DEO OUTPUT IN THE FORM OF MICROPHONES AND SPEAKERS ETC. THE D ATA TRANSMISSION HAPPENS IN A NUMBER OF WAYS DEPENDING ON THE TECHNOLOGY BEING USED INCLUDING DIGITAL TECHNOLOGIE S AS WELL AS ANALOG TECHNOLOGIES, BROADBAND INTERNET CONNECTION AND RADIO FREQUENCIES WHICH CAN INCLUDE SATELLITE TRANSMISSIO N AND WIFI. THEREFORE, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, COMPUTER SYSTEM IS EXTREMELY IMPORTANT TO CONFERENC ING 5 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 PROCESS AND THEREFORE THE AUDIO VISUAL TRANSMISSION EQUIPMENT SHOULD BE CONSIDERED AS PART OF A COMPUTER. 8.2 REGARDING THE VIDEO STREAMING EQUIPMENT, IT WAS SUBMITTED THAT THE VIDEO STREAMING ALLOWS USER TO B EGIN VIEWING THE VIDEO CLIPS STORED IN A SERVER WITHOUT FIRST DOWNLOADING THE ENTIRE FILE AND AFTER A BRIEF PERIO D OF INITIATING AND BUFFERING, THE FILE WILL BEGIN TO STREAM OR PLA Y IN REAL TIME. VIDEO STREAMING INVOLVES A SERIES OF STEPS INVOLVIN G THE USE OF MEDIA CONTENT, A COMPUTER THAT RUNS ENCODING SOFTWA RE, SERVERS FOR UPHOLDING THE STREAMED MEDIA FORMAT AND ACCESS TO SUCH MEDIA THROUGH VARIOUS DEVICES. FROM THE ABOVE SUBMISSIONS, IT IS CLEAR THAT THE EQUIPMENT USED BY THE ASSESSEE FOR AUDIO VISUAL CONFERENCING AND ALSO VID EO STREAMING INVOLVES THE USE OF COMPUTER. AS CERTAIN INPUT AND OUTPUT EQUIPMENT MAY HAVE INDEPENDENT FUNCTIONALITY AND EXISTENCE BUT THE COMPUTER DEVICES WHICH ARE INVOLV ED IN THESE ACTIVITIES WOULD BE OF NO USE IF THESE INPUT AND OU TPUT DEVICES ARE NOT USED. THEREFORE, THOUGH THE INPUT AND OUTP UT DEVICES MAY HAVE INDEPENDENT EXISTENCE AND FUNCTIONALITY IN SO FAR AS THE ACTIVITY OF THE ASSESSEE IS CONCERNED, THEY DO FORM PART OF THE COMPUTER NETWORK SYSTEM WITHOUT WHICH THE COMPU TER USED FOR THE PURPOSE OF AUDIO AND VIDEO CONFERENCIN G WOULD BE USELESS. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DATACRAFT INDIA LTD., (CITED SUPRA) HAS HELD THAT P ERIPHERAL EQUIPMENTS USED ALONG WITH COMPUTER ARE ALSO PART O F THE COMPUTER. WE FIND THAT A SIMILAR ISSUE HAD COME UP BEFORE B BENCH OF THE TRIBUNAL AT DELHI IN THE CASE OF M/S. CRABTREE INDIA LTD. VS. ACIT IN ITA NOS.3638 & 3639/DEL/2008 AND THE TRIBUNAL VIDE ORDERS DATED 25-2-2010 HAS HELD THAT VIDEO CONFERENCING SYSTEM IS A COMPUTER DEVICE THAT ACCEP TS INFORMATION IN THE FORM OF DIGITAL DATA BY WAY OF V IDEO INPUT I.E. WITH THE HELP OF WEB/CAM OR VIDEO CAMERA AND A UDIO INPUT WITH THE HELP OF MICROPHONE AND THE SYSTEM THEREAFT ER PROCESSED THE DATA AND TRANSFER THROUGH ANALOGUE OR DIGITAL TELEPHONE NETWORK OR LAN AND DIGITAL GIVES THE OUTP UT DATA BY WAY OF AUDIO VIDEO OUTPUT. THEREFORE, IT IS A TECH NICAL DEVICE WHOSE FUNCTIONS ARE SIMILAR TO THE COMPUTER BECAUSE BASICALLY COMPUTER ALSO RESPONDS TO A SPECIFIC SET OF INSTRUC TIONS IN A WELL DEFINED MANNER. THE TRIBUNAL CONSIDERED THE D ECISION OF THE ITAT, CALCUTTA BENCH IN THE CASE OF ITO VS. SIM RAN MAJUMDAR (98 ITD 119) WHEREIN THE TRIBUNAL HAD CONS IDERED THE SIMILAR ISSUE WHEREIN DEPRECIATION AT THE RATE OF 60% WAS 6 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 CLAIMED ON PRINTERS AND SCANNERS AND IT WAS HELD TH AT THEY WERE ELIGIBLE FOR DEPRECIATION AT THE RATE OF 60%. THE TRIBUNAL, HOWEVER, HELD THAT THE CONTENTIONS OF THE ASSESSEE THEREIN WERE NOT BEFORE THE AO AND THEREFORE THE ISSUE WAS SET ASIDE TO THE FILE OF THE AO TO CONSIDER EACH OF THE ITEMS IN DETAIL AND FIND OUT WHICH CAN BE EQUATED AND CONSTRUED AS COMP UTER FOR THE PURPOSE OF GRANTING DEPRECIATION AT THE RATE OF 60% AFTER PROVIDING THE ASSESSEE DUE OPPORTUNITY OF HEARING. 8.3 IN THE CASE BEFORE US ALSO, ALL THE COM PONENTS OF THE EQUIPMENT ARE NECESSARY FOR FULFILLMENT OF THE OBJE CTIVE OF THE AUDIO-VISUAL CONFERENCING AND VIDEO STREAMING. SOM E OF THE COMPONENTS MAY EXIST INDEPENDENTLY AND MAY ALSO BE FUNCTIONING INDEPENDENTLY BUT IN THE ASSESSEES BUS INESS THEY ARE ONLY PERFORMING THE FUNCTIONS AS INPUT AND OUTP UT DEVICES. THE ASSESSEE CAN ALSO USE THIS EQUIPMENT INDEPENDEN T OF THE COMPUTER SYSTEM USED IN THE AUDIO VISUAL CONFERENCI NG AND VIDEO STREAMING ACTIVITY. BUT DID THE ASSESSEE USE THEM INDEPENDENTLY IS THE QUESTION. IN VIEW OF THE SAME , WE ARE OF THE OPINION THAT THE AO, INSTEAD OF CLASSIFYING THE ENTIRE EQUIPMENT AS PLANT AND MACHINERY AND NOT COMPUTER, IS REQUIRED TO EXAMINE EACH ITEM IN DETAIL AS REGARDS ITS FUNCTIONAL DEPENDENCY ON THE COMPUTER AND ITS INDEP ENDENT EXISTENCE. THE ITEMS WHICH ARE FUNCTIONALLY DEPENDE NT ON COMPUTERS ARE DEFINITELY PART OF COMPUTER AND THE I TEMS WITH INDEPENDENT EXISTENCE MAY NOT BE COMPUTERS BUT WHER EVER IT IS FOUND THAT THE DEVICE IS NOT USED INDEPENDENT OF THE COMPUTER SYSTEM AND THE PURPOSE OF AUDIO VISUAL CON FERENCING AND VIDEO STREAMING, THE SAME SHALL BE TREATED AS C OMPUTERS AND WHEREVER IT IS USED INDEPENDENTLY FOR ANY OTHER PURPOSE IT SHALL BE TREATED AS PLANT AND MACHINERY. THE AO, S HALL, THUS ALLOW DEPRECIATION AT THE RATE OF 60% ON THE EQUIPM ENT WHICH COULD BE CLASSIFIED AS COMPUTER AND AT THE RATE OF 15% ON THE EQUIPMENT WHICH COULD BE CLASSIFIED AS PLANT AND MA CHINERY. THIS ISSUE IS ACCORDINGLY SET ASIDE TO THE FILE OF THE AO FOR RE- ADJUDICATION IN ACCORDANCE WITH LAW AND OUR OBSERVA TION ABOVE. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORD INATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE, W E REMAND THE ISSUE TO THE FILE OF THE AO WITH SIMILAR DIRECT IONS. NEEDLESS 7 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 TO MENTION THE ASSESSEE SHALL BE GIVEN A FAIR OPPOR TUNITY OF HEARING. 5. WE ARE OF THE OPINION, THAT IN LINE WITH THE AB OVE DECISION FOR THE IMPUGNED ASSESSMENT YEAR ALSO THE AO HAS TO TAKE A CLOSE LOOK AT THE CLAIM TO VERIFY WHETHER SUCH CLAIM WAS FOR STANDALONE EQUIPM ENT OR EQUIPMENT WHICH COULD BE USED ONLY IN CONJUNCTION WITH A COMPUTER. SIMILAR DIRECTIONS AS GIVEN EARLIER IN THE TWO EARLIER ASSESSMENT YEARS ARE ISS UED HERE ALSO. GROUND NO.1 & 2 OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATIS TICAL PURPOSES. 6. VIDE ITS GROUND NO.3 GRIEVANCE RAISED BY THE ASS ESSEE IS THAT THE SET OFF OF BROUGHT FORWARD DEPRECIATION OF LOS OF RS.15,84, 08,221/- WAS NOT GIVEN TO IT DESPITE CLAIM BEING MADE IN THE RETURN OF INCOME. 7. LEARNED AO HAD IN CONNECTION WITH THE CLAIM OF ASSESSEE FOR SET OFF OF DEPRECIATION NOTED AS UNDER PASSED ON THE DRP. AS THE ITAT IN ITS ORDERS FOR THE ASSESSMENT YEA RS 2008- 09 AND 2009-010 IN ITA NOS.1558/B/2012 DATED 19-09- 2014 AND 116/B/2014 DATED 10-10-2014 RESPECTIVELY HAVE H ELD THAT THE ROUTERS/SWITCHES HAVE TO BE CONSIDERED AS COMPUTERS AND ACCORDINGLY DEPRECIATION AT THE RATE OF 60% IS TO BE ALLOWED. WITH REGARD TO AUDIO/VIDEO STREAMING EQUI PMENTS THE 8 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 HONBLE TRIBUNAL HAS REMANDED THE ISSUE TO THE AO F OR CLASSIFICATION OF THE EQUIPMENTS AS COMPUTERS OR PL ANT & MACHINERY. ANY EXERCISE CARRIED TO REWORK THE WRIT TEN DOWN VALUE IN VIEW OF THE AFORESAID DECISIONS WOULD BE I NFRUCTUOUS AND PRE-MATURE. HOWEVER, ONCE THE AUDIO/VIDEO STRE AMING EQUIPMENTS ARE CLASSIFIED THE WDV VALUE WILL BE RE- WORKED AND THE DEPRECIATION ALLOWED ACCORDINGLY. WITH REGARD TO THE DISALLOWANCE OF BROUGHT FORWARD LOSSES, THE BENEFITS WILL BE PASSED ON TO THE ASSESSEE ON G IVING EFFECT TO THE ORDERS OF THE ITAT RECEIVED. THUS, WE FIND THAT THE CLAIM OF BROUGHT FORWARD LOS S WAS NOT CONSIDERED BY THE AO. THE AO IS DIRECTED TO VERIFY SUCH CLAIM AN D TO GIVE A SET OFF OF BROUGHT FORWARD LOSS AS ALLOWED UNDER LAW. GROUND N O.3 IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN ITS GROUND NOS.4 TO 8 ASSESSEE ASSAILS THE T REATMENT GIVEN BY THE LOWER AUTHORITIES TO THE INTERNATIONAL TRANSACTIONS PERTAINING TO PAYMENTS MADE BY IT FOR ADMINISTRATIVE SUPPORT SERVICES RECE IVED BY IT FROM ITS ASSOCIATED ENTERPRISES NAMELY M/S CISCO SYSTEMS CA PITAL ASIA PTE LTD. SINGAPORE AND M/S CISCO SYSTEMS CAPITAL PTE LTD. AU STRALIA. 9 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 9. LEARNED AR SUBMITTED THAT THE AO/TPO HAD SUBSTI TUTED CUP METHOD TO THE TNM METHOD ADOPTED BY THE ASSESSEE FO R EVALUATING THE INTERNATIONAL TRANSACTIONS RELATING TO THE PAYMENTS MADE BY THE ASSESSEE TO ITS ASSOCIATED ENTERPRISES ( AE ) FOR ADMINISTRATIVE SUPPORT SERVICES RECEIVED FROM THEM. AS PER THE LEARNED AR, LOWER AUTHORITI ES WRONGLY TOOK NIL AMOUNT AS THE BENEFIT RECEIVED BY THE ASSESSEE FROM SUCH SERVICES RENDERED BY THE ASSOCIATED ENTERPRISES. LEARNED AR ALSO SUB MITTED THAT THE VERY SAME ISSUE HAD COME UP IN ASSESSEES OWN CASE FOR A SSESSMENT YEARS 2008- 09 AS WELL AS 2009-10 BEFORE THIS TRIBUNAL. RELIAN CE WAS PLACED ON THE ORDER DATED 10-10-2014 IN IT(TP)A NO.116/B/21014 (SUPRA). FURTHER, AS PER THE LEARNED AR IT HAD EVIDENCE TO SHOW THAT THE BENEFIT S WERE RECEIVED THROUGH THE SERVICES RENDERED BY THE AE . ACCORDING TO THE LEARNED AR IF AN OPPORTUNITY WAS GIVEN EVIDENCE COULD BE PRODUCED TO SUBSTANTIATE ITS CLAIM THAT THE BENEFITS WERE INDEED RECEIVED ON ACCOUNT O F SERVICES RENDERED BY THE AE TO IT, FOR WHICH PAYMENTS WERE EFFECTED. 10. PER CONTRA, LEARNED DR SUBMITTED THAT THE FACT S FOR THE IMPUGNED ASSESSMENT YEAR WERE DIFFERENT IN THAT, EVEN BEFORE THE DRP, ASSESSEE DID NOT PRODUCE EVIDENCE FOR ANY BENEFIT IT HAD RECEIVED ON ACCOUNT OF SERVICES RENDERED BY THE AE . ACCORDING TO HIM, TRIBUNALS ORDER DATED 10-10-2 014 10 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 WAS AVAILABLE WITH THE ASSESSEE WHEN IT APPEARED FO R HEARING BEFORE THE DRP ON 05-12-2014. HOWEVER, ASSESSEE PAID SCANT REGARD TO SUCH ORDER. IF THE ASSSESSEE WAS SERIOUS, ATLEAST FOR THE IMPUGNED ASS ESSMENT YEAR, IN LINE WITH THE ORDERS OF THE TRIBUNAL FOR THE EARLIER YEA RS, IT SHOULD HAVE PRODUCED THE EVIDENCE FOR BENEFITS RECEIVED BY IT ON ACCOUNT OF SERVICES RENDERED BY THE AES BEFORE THE DRP . HOWEVER, THIS WAS NOT DONE. HENCE, ACCORDING T O HIM, FRESH EVIDENCE COULD NOT BE CONSIDERED NOR ALLOWED TO BE ADMITTED AT THIS STAGE. 11. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. LOWER AUTHORITIES HAVE CONSIDERED THE VALUE OF THE BENEFIT IF ANY RECEIVED BY THE ASSESSEE FROM ITS AE AS NIL DUE TO FAILURE OF T HE ASSESSEE TO PRODUCE EVIDENCE IN THIS REGARD. SIMILAR FAILURES WERE TH ERE IN THE EARLIER YEARS ALSO. THIS TRIBUNAL HELD AS UNDER AT PARA-7 OF ITS ORDER FOR THE ASSESSMENT YEAR : 2009-10 AS UNDER; 7. AS REGARDS THE TRANSFER PRICING ADJUSTMENT MADE IN RELATION TO THE ADMINISTRATIVE SUPPORT SERVICES, WE FIND THAT THIS ISSUE HAD ALSO ARISEN IN THE ASSESSEES OWN CASE FO R ASSESSMENT YEAR 2008-09 AND THIS TRIBUNAL, AT PARAGRAPH 13.2 O F ITS ORDER DATED 19-9-2014 (SUPRA) HAS DISCUSSED THE ISSUE AT LENGTH AND HAS REMANDED THE ISSUE WITH CERTAIN DIRECTIONS TO T HE TPO. THE 11 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUND ER FOR READY REFERENCE: 13.2 HAVING HEARD BOTH THE PARTIES AND HAVING C ONSIDERED THE RIVAL CONTENTIONS AND ALSO MATERIAL ON RECORD, WE F IND THAT THE AO HAS GIVEN A FINDING THAT THE TAX PAYER DID NOT PROD UCE ANY SUPPORTING EVIDENCE TO ESTABLISH THAT THE SERVICES WERE ACTUAL LY RECEIVED BY IT. SIMILARLY, BEFORE US ALSO, EXCEPT FOR STATING THAT THE ASSESSEE HAS RECEIVED ADMINISTRATIVE MANAGEMENT SERVICES, NO EVI DENCE IS PRODUCED BEFORE US TO SUBSTANTIATE THE CLAIM. THE ASSESSEE HAS FILED COPIES OF AGREEMENT WITH THE ASSOCIATED ENTERPRISES IN SUPPORT OF ITS CONTENTIONS THAT SERVICES WERE RENDERED PURSUANT TO THE SAID AGREEMENT AND THE PAYMENT FOR SUCH SERVICES IS ALLO WABLE. THE ASSESSEE HAS FURTHER SUBMITTED THAT THE ASSESSEE HA S PAID THE ADMINISTRATIVE SERVICES FEE AT 5% OF COST WHICH WAS LESS THAN THE AVERAGE MARGIN OF 13 COMPARABLES COMPANIES. A CHAR T DISPLAYING THE MARGINS OF COMPARABLE CASES AS WELL AS THE ASSE SSEE-COMPANY IS ALSO FILED BEFORE US. WE FIND THAT THE TPO HAS HEL D THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM OF RECEIVING SERVICES, BUT HAS NOT COMPARED THE MARGIN S DECLARED BY THE ASSESSEE WITH THE MARGINS OF THE COMPARABLE COM PANIES FOR SIMILAR SERVICES. IN ORDER TO SUBSTANTIATE THE CLA IM, THE ASSESSEE NOT ONLY HAS TO FILE THE COPIES OF AGREEMENT WITH THE A SSOCIATED ENTERPRISE TO SHOW THAT THERE IS A LIABILITY OF THE ASSESSEE TO PAY, BUT THAT IT IS ALSO ESSENTIAL TO PROVE THAT THE ASSOCIA TED ENTERPRISE HAS RENDERED SERVICES TO THE ASSESSEE FOR WHICH MANAGEM ENT FEE IS BEING PAID. WHEN THIS WAS PUT TO THE LEARNED COUNS EL FOR THE ASSESSEE, HE SUBMITTED THAT THE ASSESSEE IS IN POSS ESSION OF THE RELEVANT EVIDENCE TO PROVE THAT THE RELEVANT SERVIC ES HAVE BEEN RENDERED BY THE ASSOCIATED ENTERPRISE. HE PRAYED T HAT THE ISSUE MAY BE REMANDED TO THE FILE OF THE TPO FOR RE-ADJUDICAT ION OF THE ISSUE BY GIVING THE ASSESSEE AN OPPORTUNITY TO PRODUCE THE R ELEVANT MATERIAL BEFORE THE TPO. ACCEPTING THE CONTENTION OF THE ASS ESSEE, WE REMAND THIS ISSUE TO THE FILE OF THE TPO WITH A DIR ECTION TO ALLOW THE ASSESSEE TO PRODUCE THE RELEVANT EVIDENCE IN SUPPOR T OF ITS CONTENTION THAT IT HAS RECEIVED MANAGEMENT SERVICES FROM ITS ASSOCIATED ENTERPRISE AND THEREAFTER THE TPO SHALL DETERMINE THE ALP AFTER CONSIDERING THE MARGINS OF THE COMPARABLE COM PANIES IN SIMILAR SET OF FACTS. IN VIEW OF THE SAME, THE ISSUE IS SE T ASIDE TO THE FILE OF THE AO/TPO FOR RE-ADJUDICATION. 12 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 THE FACTS AND CIRCUMSTANCES FOR THE RELEVANT ASSESS MENT YEAR BEING THE SAME, WE REMAND THIS ISSUE ALSO TO THE FI LE OF THE TPO WITH A SIMILAR DIRECTION. 12. NO DOUBT, THIS TRIBUNAL HAD ALLOWED ASSESSEE T O PRODUCE EVIDENCE TO SUBSTANTIATE ITS CASE AND HAD FOR THAT PURPOSE R EMITTED IT BACK TO THE AO/TPO, IN THE EARLIER YEARS. NEVERTHELESS, WE FIN D THAT ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008-09 IN IT(TP)A NO.1558(B)/2012, WHICH WAS FOLLOWED BY THE TRIBUNAL IN SUBSEQUENT AS SESSMENT YEAR AS WELL WAS PRONOUNCED ON 19-09-2014. THE DATE OF HEARING BEFORE THE DRP FOR THE IMPUGNED ASSESSMENT YEAR WAS 05-012-2014. THERE W AS A GAP OF ABOUT TWO AND A HALF MONTHS MENTIONED BY THE LEARNED DR. AS PER THE LEARNED DR, ASSESSEE OUGHT TO HAVE BROUGHT ALL THE EVIDENCE IN SUPPORT OF ITS CLAIM THAT IT HAD RECEIVED BENEFITS FROM ITS AE, DUE TO THE SERVI CES RENDERED BEFORE THE DRP, IN VIEW OF THE TRIBUNALS ORDER FOR ASSESSMENT YEAR 2008-09. HOWEVER, IT IS ALSO POSSIBLE THAT THE ORDER DATED 19-09-2014 WOULD HAVE BEEN RECEIVED BY THE ASSESSEE ONLY MUCH LATER. THERE IS A DISTIN CT PROBABILITY THAT THE ASSESSEE AFTER RECEIPT OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2008- 09, DID NOT HAVE SUFFICIENT TIME TO GATHER AND PROD UCE SUCH DETAILS BEFORE THE LEARNED DRP FOR SUBSTANTIATING ITS CASE DUE TO SHOR T INTERVAL. DUE TO THIS REASON, WE ARE OF THE OPINION, THAT THE BENEFIT OF DOUBT CAN BE GIVEN TO THE 13 IT(TP)A NO.537(B)/15 & SP NO.58(B)/15 ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR ALSO. WE THEREFORE, GIVE SIMILAR DIRECTIONS AS GIVEN IN THE EARLIER YEARS BY THE TRI BUNAL RE-PRODUCED AT PARA - 11 ABOVE. GROUND NO.4 TO 8 OF THE ASSESSEE ARE TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. 13. TO SUMMAIZE THE RESULT, THE APPEAL OF THE ASSE SSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 14. SINCE THE APPEAL OF THE ASSESEE IS DISPOSED OF , THE STAY PETITION HAS BECOME INFRUCTUOUS AND IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 19 TH FEBRUARY, 2016 SD/- SD/- ( VIJAY PAL RAO ) ( ABRAHAM P GEORGE ) JUD I CIAL MEMER ACCOUNTANT MEMBER BANGALORE: D A T E D : 19-02-2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3. CIT(A), BANGALORE 4. CIT, BANGALORE 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER AR, ITAT, BANGALORE