Assistant Commissioner of Income-Tax, Circle , Panvel V. M/s. Johnson Matthey Chemicals India Pvt. Ltd, Panvel

ITA 595/PUN/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2952 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 18-10-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 03-11-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAHADEVAN A M KRISHNAN
• Keywords: Capital asset; Depreciation; Transfer pricing; Principle of natural justice; International transaction; Period of limitation; Cost of acquisition; Valuation report; Arm length price
• Section: 251; 208; 13; 22; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, PUNE BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 595 /PUN/20 20 / ASSESSMENT YEAR : 2013 - 14 THE ASSISTANT COMMISSIONER OF INCOME TAX, PANVEL CIRCLE, PANVEL. ....... / APPELLANT / V/S. M/S. JOHNSON MATTHEY CHEMICALS INDIA PVT. LTD. PLOT NO.6A, MIDC INDUSTRIAL ESTATE, TALOJA, PANVEL, DIST. RAIGAD - 410 208 PAN : AABCJ1620M / RESPONDENT REVENUE BY : SHRI MAHADEVAN A.M. KRISHNAN A SSESSEE BY : SHRI RAJENDRA AGIWAL / DATE OF HEARING : 18 . 10 .2021 / DATE OF PRONOUNCEMENT : 25. 10 .2021 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - 13, PUNE DATED 13.02.2020 FOR THE ASSESSMENT YEAR 2013 - 14 AS PER THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AN IN LAW, THE LD. CIT( A) HAS FAILED TO CONSIDER THE REAL INTENTION OF THE ASSESSEE TO DELIBERATELY UNDERVALUE THE VALUE OF THE PLOT AT PANKI AND SHIFT THAT VALUE TO INTANGIBLE ASSETS INCLUDING NON - COMPETE FEES AND GOODWILL AND THEREBY CLAIMED DEPRECIATION ON THOSE ASSETS FOR WH ICH ACTUALLY NO CONSIDERATION WAS PAID. 2 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING DEPRECIATION ON GOODWILL, TECHNICAL KNOW - HOW & NON - COMPETE FEES WITHOUT APPRECIATING THE FACT THAT THE VALUE ASSIGNED TO THE INDIVIDUAL ASSETS INCLUDING GOODWILL, TECHNICAL KNOW - HOW & NON - COMPETE FEES HAS NOT BEEN DONE IN FAIR AND REASONABLE MANNER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING DEPRECIATION ON GOODWIL L, TECHNICAL KNOW - HOW AND NON - COMPETE FEES WITHOUT APPRECIATING THE FACT THAT IF FAIR VALUE OF RS.174.35 CRORES OF THE YEAR 2002 IS ASSIGNED AS PER LETTER DATED 04/03/2011 OF KANPUR DEVELOPMENT AUTHORITY TO THE LEASEHOLD RIGHTS ACQUIRED IN 279.30 ACRES LAN D AT PANKI (KANPUR) AS AGAINST RS.ONE LAKH ASSIGNED BY THE ASSESSEE, THEN NO VALUE OUT OF TOTAL CONSIDERATION OF RS.153 CRORE IS LEFT TO BE ASSIGNED TOWARD GOODWILL, TECHNICAL KNOW - HOW & NON - COMPETE FEES AND ACCORDINGLY THE CONSEQUENTIAL DEPRECIATION ON TH ESE ASSETS WOULD BE NI L. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AN IN LAW, THE LD. C I T(A) HAS ERRED IN ALLOWING DEPRECIATION ON GOODWILL, TECHNICAL KNOW - HOW & NON - COMPETE FEES WITHOUT APPRECIATING THE FACT THAT ON FINAL TRANSFER OF 279.30 ACRES OF LAND AT. PANKI (KANPUR) IN DECEMBER 2015 NO ADDITIONAL CONSIDERATION ABOVE R S .1 LAKH WAS PAID BY THE ASSESSEE & HENCE THE VALUE ASSIGNED TOWARD INTANGIBLE ASSETS INCLUDING GOODWILL, TECHNICAL KNOW - HOW & NON - COMPETE FEES AND THE CONSEQUENTIAL DEPRE CIATION IS GROSSLY INCORRECT. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN FORMING AN OPINION THAT THE TPO FAILED TO GIVE SHOW CAUSE NOTICE TO THE ASSESSEE AND THE TRANSFER PRICING ADJUSTMENT WAS BAD IN LAW FOR NOT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE, MERELY ON THE BASIS OF ABSENCE OF A MENTION OF SHOW CAUSE NOTICE IN TPO'S ORDER, WITHOUT SEEKING ANY EXPLANATION FROM THE TPO, WITHOUT EXAMINING THE CASE RECORDS ORDER - SHEET AND WITHOUT CONSIDERING F OLLOWING CRUCIAL FACTS: - A) IT IS EVIDENT FROM THE ASESSEE'S SUBMISSION (REFERRING TO THE SUBMISSIONS BEFORE THE TPO DATED 12/10/2016 AND 19/10/2016) BEFORE THE TPO, REPRODUCED IN THE ORDER OF CIT(A) THAT, THE TPO HAD ALSO GIVEN OPPORTUNITIES OF BEING HEARD DURING THE TP PROCEEDINGS ON THE DATES WHICH ARE NOT EXPRESSLY MENTIONED IN THE ORDER OF THE TPO. B) THE ASSESSEE IN IT'S OWN SUBMISSION DATED - MADE BEFORE THE C I T(A) MAKES A FOLLOWING MENTION: 'IT WAS SUBMITTED TO THE LD. TPO THAT ALP OF THE INTERNATIO NAL TRANSACTION OF CCR DIVISIONAL COST AND IT CHARGES CANNOT BE TAKEN AS NIL WITHOUT UNDERTAKING APPROPRIATE ANALYSIS' IT IS EVIDENT FROM THIS MENTION THAT THE TPO HAD ASKED AN EXPLANATION FROM THE ASSESSEE FOR NOT TREATING THE ALP AS NIL. 6. WHETHER O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO/TPO TO DELETE THE ADJUSTMENT MADE BY THE TPO AMOUNTING TO RS.3,73,99,209/ - ON THE PAYMENT OF CCR DIVISIONAL COST, IT SUPPORT SERVICE AND ROYALTY IGNORING THE FACT THAT DURING THE TP PROCEEDINGS THE ASSESSEE HAS NOT FURNISHED THE REQUISITE DETAILS. 7. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN NOT CONSIDERING THAT THE ASSESSEE HAD FAILED TO DEMONSTRA TE THAT THE SERVICES HAD BEEN RENDERED/RECEIVED AND 3 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 HAS F AILED TO SHOW AND QUANTIFY THE BENEFITS DERIVED PURSUANT TO INCURRENCE OF INTRA GROUP CHARGES? 8. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT( A) WAS JUSTIFIED IN NOT CONSIDERING THAT THE ASSESSEE HAS FAILED TO DEMONSTRATE THE ALP OF AN INDEPENDENT COMPARABLE ENTITY IN RENDERING SUCH SERVICES? 9. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED I N IGNORING THAT THERE IS NO DIRECT BENEFIT DERIVED BY THE ASSESSEE IN PAYING THE INTRA SERVICES COST TO THE AES AS THE EMAILS, CORRESPONDENCES DOES NOT SUFFICE TO SHOW THAT THE EXPENDITURE IS INCURRED FOR THE SPECIFIC BENEFIT OF AN INDIVIDUAL MEMBER BUT AS A GROUP? 10. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN NOT CONSIDERING THE OECD GUIDELINES ON THE ISSUE OF INTRA GROUP SERVICES WHEREIN THERE SHOULD BE EXISTENCE OF A SERVICE WHICH IS PROVIDED AN D THE CHARGE TOWARDS SUCH SERVICES AND THAT THE NON - BENEFICIAL SERVICES IDENTIFIED ARE THAT OF SHAREHOLDER ACTIVITIES, DUPLICATIVE SERVICES, SERVICES THAT PROVIDE INCIDENTAL BENEFITS, PASSIVE ASSOCIATION BENEFITS AND ON CALL SERVICES, WHICH ARE BEING REPLI CATED BY THE ASSESSEE UNDER THE GUISE OF CCR DIVISIONAL COST, IT SUPPORT SERVICES AND ROYALTY PAYMENT? 11. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CLT(A) HAS ERRED IN ALLOWING THE ROYALTY PAYMENT IN SPITE OF THE FAILU RE OF THE ASSESSEE TO PROVIDE A COPY OF THE AGREEMENT AND ITS LIST OF COMPARABLES ? 12. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN NOT ACCEPTING THE RELIANCE ON GEMPLUS INDIA PVT . LTD [IT A NO. 352/ BA NG/2009 ] DELOITTE CONSULTING INDIA PVT. LTD. [(2012) 22 TOXMONN.COM 107 ] WHICH ARE SIMILAR TO THE CASE OF THE ASSESSEE? 13. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE L D .CLT(A) WAS JUSTIFIED IN NOT CONSIDERING THAT THE EX PENSES ARE APPORTIONED BY THE AE AMONG ITS VARIOUS SUBSIDIARIES ON THE BASIS OF THEIR OWN AGREEMENTS AND NOT ON THE BASIS OF THE ACTUAL SERVICES RENDERED TO THE INDIVIDUAL UNITS? 14. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, T HE LD . CIT(A) WAS JUSTIFIED IN NOT CONSIDERING THAT THE ASSESSEE HAS NOT SHOWN AS TO WHETHER THERE HAS BEEN ANY REAL OR TANGIBLE BENEFIT BY CARRYING SUCH INTERNATIONAL TRANSACTIONS WITH THE AES? 15. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE A SSESSING OFFICER MAY BE RESTORED. 16. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. 2. IN THIS CASE, THERE IS A DELAY OF 179 DAYS IN FILING OF THE APPEAL BEFORE THE TRIBUNAL. THE LD. DR FOR THE REVENUE HAS FILED A LETT ER DATED 14.10.2020 FOR CONDONATION OF THE DELAY OF 179 DAYS STATING THAT THE HONBLE SUPREME 4 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 COURT OF INDIA, IN CIVIL ORIGINAL JURISDICTION, SUO MOTO WRIT PETITION (CIVIL) NO.3 OF 2020 DATED 27.04.2021 EXTENDED PERIOD OF LIMITATION TILL FURTHER ORDER. THE LD. COUNSEL FOR THE ASSESSEE DID NOT RAISE ANY OBJECTION. AFTER HEARING THE PARTIES HEREIN, WE CONDONE THE DELAY AND PROCEED TO HEAR THIS APPEAL ON MERITS. WE FURTHER TAKE NOTE OF THE PRESENT PANDEMIC SITUATION WHERE THE MOVEMENT OF PEOPLE ARE RESTRICTED AND BECAUSE OF SUCH PRACTICAL SITUATION, IT IS ALWAYS NOT POSSIBLE TO FOLLOW THE TIME OF LIMITATION REGARDING FILING OF APPEAL BEFORE VARIOUS FORUMS. THIS FACT WAS ALSO OBSERVED AND TAKEN COGNIZANCE OF BY THE HONBLE SUPREME COURT OF INDIA, IN CIVIL ORIGIN AL JURISDICTION, SUO MOTO WRIT PETITION (CIVIL) NO.3 OF 2020 (SUPRA.) . 3. AT THE VERY OUTSET, THE LD. DR SUBMITTED THAT THERE ARE BROADLY TWO ISSUES REFLECTING IN THE GROUNDS OF APPEAL FILED BY THE REVENUE IN THE APPEAL MEMO. FIRST ONE RELATES TO THE ISSUE OF DEPRECIATION WHICH ARE GROUND NOS. 1 TO 4. THE OTHER ISSUE RELATES TO TP ADJUSTMENT AND DETERMINATION OF ALP WITH REGARD TO CCR DIVISIONAL COST ON STRATEGY, FINANCE, HUMAN RES OURCES AND OTHER ALONG WITH IT SUPPORT EXPENSES. THERE IS A PROVISION OF ROYALTY CREATED BY THE ASSESSEE AND THE ASSESSEE HAS BENCH - MARKED THE TRANSACTION ON PAYMENT OF ROYALTY BY AGGREGATING TRANSACTIONS WITH OTHER INTERNATIONAL TRANSACTIONS OF PURCHASE OF RAW MATERIALS WITHIN THE MANUFACTURING SEGMENTS. THESE GROUNDS ARE DETERMINED FROM GROUND NOS. 5 TO 14. 4. GROUND NOS. 15 AND 16 ARE GENERAL IN NATURE AND HENCE, NO ADJUDICATION IS REQUIRED. 5. FIRST WE WOULD TAKE UP GROUNDS PERTAINING TO THE ISSUE OF DEPRECIATION FOR ADJUDICATION AND THE BRIEF FACTS ON THE ISSUE ARE THAT THE ASSESSING OFFICER 5 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 OBSERVED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON GOODWILL, PATENTS AND COPYRIGHTS AND NON - COMPETE FEES IN ITS P & L ACCOUNT AS UNDER: THE FACTS ON RECORDS SPELLS OUT THAT THE DEPRECIATION IN RESPECT OF AFORESAID ISSUES WERE DISALLOWED IN THE EARLIER ASSESSMENT YEARS. THE ASSESSING OFFICER STATING THE SAME REASONS AS DONE IN THE ASSESSEES CASE IN THE EARLIER YEARS DISALLOWED THE ASSESSEE S DEPRECATION ON ASSETS TOTALING TO RS.2,14,50,647/ - . 6. THAT BEFORE THE LD. CIT(APPEALS), THE ASSESSEE HAD FILED DETAILED WRITTEN SUBMISSIONS WHICH ARE ON RECORD. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, THE LD. CIT(AP PEALS) HAS HELD AS FOLLOWS: 3.5 IN THIS REGARD, IT IS OBSERVED THAT THE ABOVE GROUNDS HAVE BEEN DULY COVERED IN THE APPELLANTS OWN CASE BY THE HONBLE ITAT, PUNE VIDE ITA NO.2036/PUN/2012 FOR AY 2005 - 06; ITA NO.1274 & 1275/PUN/2016 FOR AYS 2006 - 07 & 2009 - 10 AND ITA NO.7574/PN/2010 FOR AY 2003 - 04 HAD DECIDED THE ABOVE GROUNDS IN FAVOUR OF THE APPELLANT. SIMILAR STAND WAS ALSO TAKEN BY THE CIT(APPEALS) - 2, THANE WHILE DECIDING THE APPELLANTS APPEAL FOR THE AYS 2010 - 11 & 2014 - 15. THEREFORE, FOLLOWING THE ORD ERS AS MENTIONED HEREINABOVE, I ALLOW THE CLAIM OF DEPRECIATION ON INTANGIBLE AND OTHER ASSETS AS MENTIONED ABOVE AMOUNTING TO RS.2,14,50,647/ - . THEREFORE, THE LD. CIT(APPEALS) HAD RELIED ON THE JUDGMENT IN ASSESSES OWN CASE BY THE PUNE BENCH OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2005 - SR. NO. PARTICULARS AMOUNT (IN RS.) 1 GOODWILL 19, 10,242/ - 2 NON - COMPETE FEES 6,24,704/ - 3 TRADEMARKS, PATENTS AND KNOWHOW 1,68,49,209/ - 4 OTHER ASSETS 20,66,411/ - TOTAL 2,14,50,647/ - 6 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 06, 2006 - 07 & 2009 - 10 AND ASSESSMENT YEAR 2003 - 04 WHILE DECIDING THE AFORESAID CASE IN FAVOUR OF THE ASSESSEE. 7. IT IS ALSO OBSERVED THAT SIMILAR RELIEF WAS GIVEN TO THE ASSESSEE BY THE LD. CIT(APPEALS) FOR ASSESSME NT YEARS 2010 - 11 & 2014 - 15. THIS ISSUE RAISED IN ASSESSMENT YEARS 2010 - 11 & 2014 - 15 WAS CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL IN ITA NOS.1725 & 1726/PUN/2018 ORDER DATED 03.05.2021. IN THESE CASES, THE TRIBUNAL HAD DEALT WITH THE ISSUE OF DEPRECIAT ION ON INTANGIBLE ASSETS I.E. TECHNICAL KNOW - HOW, GOODWILL AND NON - COMPETE FEES. THE RELEVANT EXTRACT OF THE FINDINGS OF THE TRIBUNAL READS AS FOLLOWS: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE EXTANT ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL FOR THE FIRST TIME IN ITS ORDER FOR THE A.YRS. 2004 - 05 & 2005 - 06 ( ITA NOS. 1507 AND 2036/PUN/2012 ). VIDE ORDER DATED 12 - 12 - 2017, THE TRIBUNAL ALLOWED DEPRECIATION ON SUCH INTANGIBLE ASSETS WITH THE QUALIFICATION CONTAINED IN PARA 69, READING AS BELOW : 69. BEFORE PARTING, WE MAY ALSO POINT OUT THAT AS PER THE TOLL CO NVERSION AGREEMENT, THE VALUE OF PANKI ASSETS WAS TAKEN AT RS.1 LAKH. HOWEVER, THE CIT(A) HAD WORKED OUT THE COST OF 279.30 ACRES I.E. TOTAL LANDHOLDING OF ICI INDIA LTD. AT RS.174 CRORES; IN CASE THE SAME RATE IS APPLIED TO 27.52 ACRES, WHICH WAS THE PORT ION OF LAND ON WHICH CATALYST BUSINESS WAS CARRIED ON, THEN THE SAME WOULD WORK TO RS.17.37 CRORES. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THAT THE VALUE OF RS.17.37 CRORES BE ATTRIBUTED TO PANKI ASSETS. HOWEVER, REVISED ALL OCATION VALUE OF LAND AT PANKI WOULD BE RS.13 CRORES, OUT OF TOTAL SLUMP PRICE OF RS.153 CRORES. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE VALUE OF BOTH TANGIBLE AND INTANGIBLE ASSETS, ACCORDINGLY. FOLLOWING THE SAME PROPOSITION, WE HOL D THAT THE ASSESSEE IS ENTITLED TO CLAIM THE DEPRECIATION ON THE VALUE OF TANGIBLE ASSETS AND FURTHER ON KNOW - HOW, TRADEMARKS AND PATENTS AND ALSO ON THE GOODWILL. THE ASSESSEE HAS ALSO CLAIMED DEPRECIATION ON NON - COMPETE FEES. THE ASSESSING OFFICER IS ALS O DIRECTED TO ALLOW DEPRECIATION ON NON - COMPETE FEES OF RS.3.51 CRORES. 5. FROM THIS ORDER, IT IS CLEAR THAT THE TRIBUNAL DIRECTED GRANT OF DEPRECIATION ON INTANGIBLE ASSETS BUT ON THE REDUCED VALUE IMBIBING THE EFFECT OF INCREASE IN THE VALUE OF THE PANK I LAND TO RS.13.00 CRORE AND CONSEQUENTLY REDUCING THE VALUE OF INTANGIBLE ASSETS. THE LD. DR SUBMITTED THAT THE REVENUE HAS NOT ACCEPTED THIS ORDER AND ITS APPEAL BEFORE THE HON BLE BOMBAY HIGH COURT IS PENDING. 7 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 6. TURNING TO THE FACTS OF THE INSTANT CASE , IT IS SEEN THAT THE AO DISALLOWED FULL DEPRECIATION ON INTANGIBLE ASSETS. HOWEVER, THE LD. CIT(A) OVERTURNED THE ASSESSMENT ORDER WITHOUT NOTICING THE AFORE QUOTED PARA 69 OF THE TRIBUNAL ORDER, BY WHICH DIRECTION WAS GIVEN TO INCREASE THE VALUE OF PANKI PLOT TO RS.13.00 CRORE FROM RS.1.00 LAKH INITIALLY SHOWN BY THE ASSESSEE AND THEREBY CORRESPONDINGLY REDUCING THE VALUE OF INTANGIBLE ASSETS AND THE RESULTANT CLAIM OF DEPRECIATION THEREON. THIS POSITION WAS FAIRLY ACCEPTED BY THE LD. AR. RESPECTFULLY FOL LOWING THE PRECEDENT, WE SET - ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF THE AO FOR ALLOWING DEPRECIATION ON INTANGIBLE ASSETS BUT ONLY AFTER GIVING EFFECT TO THE AFORE - EXTRACTED DIRECTION FROM PARA 69 OF THE TRIBUNAL ORDER. NEEDLESS TO SAY, THE ASSESSEE WILL BE ALLOWED OPPORTUNITY OF HEARING IN SUCH FRESH PROCEEDINGS. A.Y. 2014 - 15 : 7. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THIS APPEAL ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF THE APPEAL FOR THE A.Y. 2010 - 11. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE SET - ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE F ILE OF THE AO FOR DECIDING THIS ISSUE IN ACCORDANCE WITH OUR DIRECTIONS GIVEN ABOVE. 8. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. THE RELIEF IMPACT OF THE AFORESAID DECISION IN ASSESSEES OWN CASE FOR THE ASSESSMEN T YEARS 2010 - 11 & 2014 - 15 IS THAT THEREIN IT WAS OBSERVED IN THE TRIBUNALS ORDER DATED 12.12.2017 FOR THE ASSESSMENT YEARS 2004 - 05 & 2005 - 06 IN ITA NO.1507 AND 2036/PUN/2012, THE TRIBUNAL HAD DEALT WITH THE ISSUE OF DEPRECIATION ON INTANGIBLE ASSETS WITH THE QUALIFICATION CONTAINED IN PARA 69 OF ITS ORDER. THE TRIBUNAL IN ITS ORDER FOR ASSESSMENT YEARS 2010 - 11 & 2014 - 15 IN RESPECT OF THE ASSESSEE HAS TAKEN NOTE OF THE SAID FACT AND AT PARA 6 HAS GIVEN A CATEGORICAL FINDING THAT THE ISSUE IS RESTORED TO TH E FILE OF THE ASSESSING OFFICER AFTER ALLOWING DEPRECIATION ON INTANGIBLE ASSETS BUT ONLY AFTER GIVING EFFECT TO THE DIRECTIONS AS CONTAINED AT PARA 69 OF THE TRIBUNALS ORDER (SUPRA.). 9. BOTH THE PARTIES AGREED THAT THERE IS NO CHANGE IN FACTS AND CIRCU MSTANCES IN THIS CASE BEFORE US AND FOLLOWING THE SAME PARITY OF REASONING AFTER HEARING THE SUBMISSIONS OF THE PARTIES, WE RESTORE THIS ISSUE 8 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 TO THE FILE OF THE ASSESSING OFFICER FOLLOWING SAME DIRECTIONS GIVEN IN OUR EARLIER ORDER AS AFORE - STATED. 10. N OW COMING TO THE DEPRECIATION ON OTHER ASSETS, THE SAME WAS DISCUSSED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012 - 13 IN ITA NO.725/PUN/2017 DATED 30.08.2021 VIDE PARAS 13, 14 & 15 OF ITS ORDER. HEREIN, THE TRIBUNAL FOLLOWED THE DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004 - 05 WHERE DEPRECIATION ON OTHER ASSETS AND TECHNICAL KNOW - HOW WERE GRANTED TO THE ASSESSEE AND FOLLOWING THE SAME PARITY OF REASONING PROVIDED RELIEF TO THE ASSESSEE. THE RELEVANT EXTRACTS OF THE FINDINGS READS AS FOLLOWS: 13. GROUND NO. 10 RAISED BY THE ASSESSEE REGARDING THE DISALLOWANCE OF DEPRECIATION ON TECHNICAL KNOW - HOW AND OTHER ASSETS. 14. WE NOTE THAT IN ASSESSEES OWN CASE FOR A.Y. 2004 - 05 IN ITA NO. 1507/PUN/2012 VIDE ORDER DATED 12 - 12 - 2017 THIS TRIBUNAL GRANTED ALLOWANCE OF DEPRECIATION ON TECHNICAL KNOW - HOW AND OTHER ASSETS. FOR READY REFERENCE THE RELEVANT PORTION OF THE SAID ORDER IN A.Y. 2004 - 05 IS REPRODUCED HERE - IN - BELOW : 35. COMING TO THE NEXT STAND OF THE LEARNED DEPARTMEN TAL REPRESENTATIVE FOR THE REVENUE THAT KNOW - HOW WAS OWNED BY ICI INDIA LTD. AND COULD NOT BE TRANSFERRED. HE POINTED OUT THAT THE CIT(A) IN PARA 6.4.1 AT PAGE 31 HAS HELD THAT KNOW - HOW WAS NOT ASCERTAINABLE. REFERRING TO THE DEFINITION OF SLUMP SALE IN SE CTION 2(42C) OF THE ACT, WHERE THE COST OF ASSETS WERE NOT KNOWN, THEN THE STEPS TO BE TAKEN. HE ALSO REFERRED TO THE DEFINITION OF EXCLUDED ASSETS WHICH DOES NOT INCLUDE KNOW - HOW. REFERRING TO PARA 6.4.5 OF CIT(A) S ORDER, THE LEARNED AUTHORIZED REPRESENT ATIVE FOR THE ASSESSEE POINTED OUT THAT BUSINESS WAS TAKEN OVER BY THE ASSESSEE AND NOT THE PLANT & MACHINERY AND PLOT OF LAND AT PANKI; HENCE THE KNOW - HOW HAD TO BE TAKEN, OTHERWISE, HOW THE BUSINESS WOULD GO ON. IN PARA 6.4.7, THE CIT(A) REFERS TO THE TO LL AGREEMENT AND LICENSE TO BE GIVEN TO ICI INDIA LTD. TO MANUFACTURE ON ASSESSEE S BEHALF. THE ASSESSEE BECAME THE OWNER OF KNOW - HOW UNDER THE BTA AND THAT IS HOW IT COULD GIVE SAME TO ICI INDIA LTD. UNDER TOLL AGREEMENT. 36. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DISTINGUISHED THE RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. HE FURTHER POINTED OUT THAT FOR PERIOD OF FOUR YEARS AFTER PERUSING THE DETAILS GIVEN BY THE ASSES SEE, THE ASSESSING OFFICER WAS SATISFIED AND NO ADDITION WAS MADE. IN THE FOURTH YEAR, THE COMMISSIONER EXERCISED JURISDICTION UNDER SECTION 263 OF THE ACT AND THE CIT(A) THEREAFTER, EXERCISED HIS JURISDICTION IN THE SECOND YEAR ITSELF. OBJECTING TO THE CO MMENTS OF LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE 9 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 REVENUE ON THE REPORT OF ERNST & YOUNG PVT. LTD., HE POINTED OUT THAT THERE WAS DUE DILIGENCE IN VALUATION REPORT. HE FURTHER POINTED OUT THAT NO FAULT WAS FOUND WITH THE VALUER. IN RESPECT OF RELIANCE OF THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. NIRBHERAM DELURAM (1997) 91 TAXMAN 181 (SC), THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REPLY POINTED OUT THAT THE FULL BENCH OF HON BLE HIGH COURT OF DELHI IN CIT VS. SARDARILAL AND CO. (SUPRA) HAD COVERED THE SAID DECISION. HE CONCLUDED BY SAYING THAT WHETHER AFTER ALLOCATION OF VALUE TO ASSETS, THE BALANCE IS TAKEN IS KNOW - HOW OR GOODWILL, THERE IS NO DIFFERENCE AS THE DEPRECIATION ON SAME IS ALLOWABLE IN THE HANDS OF ASSESSEE, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN CIT VS. SMIFS SECURITIES LTD. (SUPRA). 37. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS CARRYING ON THE MAN UFACTURING AND SALE OF CATALYSTS. THE WORLDWIDE CATALYSTS BUSINESS OF ICI INDIA LTD. WAS PURCHASED BY JOHNSON MATHEYS, CONSEQUENT TO WHICH BUSINESS TRANSFER AGREEMENT (BTA) WAS ENTERED INTO ON 02.12.2002 FOR THE PURCHASE OF CATALYSTS BUSINESS FROM ICI INDI A LTD. AS GOING CONCERN. THE ASSESSEE CLAIMED THAT IT HAD ACQUIRED GOODWILL OF RS.10.73 CRORES FROM ICI INDIA LTD. FURTHER, THE ASSESSEE HAD ALSO ENTERED INTO NON - COMPETE AGREEMENT WITH ICI INDIA LTD., UNDER WHICH SUM OF RS.3.51 CRORES WAS PAID. THE ASSESS EE HAD CLAIMED DEPRECIATION ON BOTH THE SAID ITEMS ON THE GROUND THAT THE SAME WERE CAPITAL ASSETS. THE FIRST SUCH CLAIM WAS MADE IN ASSESSMENT YEAR 2003 - 04. THE ASSESSING OFFICER DENIED DEPRECIATION CLAIMED ON BOTH GOODWILL AND NON - COMPETE FEES. HOWEVER, THE TRIBUNAL (SUPRA) ALLOWED THE CLAIM OF ASSESSEE. THE ASSESSING OFFICER FOLLOWING HIS EARLIER ORDER DENIED DEPRECIATION ON GOODWILL CLAIMED AT RS.1.49 CRORES AND DEPRECIATION ON NON - COMPETE FEES AT RS.81,45,129/ - TOTALING RS.2.30 CRORES. THE CIT(A) WHILE DECIDING THE APPEAL FOR INSTANT ASSESSMENT YEAR OBSERVED THAT WHERE THE ENTIRE BUSINESS WAS TAKEN OVER BY THE ASSESSEE AS GOING CONCERN, WITH ALL ASSETS AND LIABILITIES, THERE WOULD REMAIN NO COMPETITION FROM THE SELLER AND HENCE, SO - CALLED PAYMENT OF NON COMPETE FEES AT RS.3.51 CRORES WAS NOTHING BUT PART OF COMPOSITE PRICE PAID FOR ACQUISITION OF ENTIRE BUSINESS OF ICI INDIA LTD., WHICH HAD TO BE CLUBBED WITH TOTAL SLUMP SALE PRICE OF RS.153.18 CRORES. THE SECOND OBSERVATIONS OF THE CIT(A) WAS THAT THERE WAS NO EXPLICIT PAYMENT FOR GOODWILL AS PER THE BTA AND/OR THE PAYMENT TOWARDS NON - COMPETE FEES, HENCE THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM DEPRECIATION ON GOODWILL; SINCE IT WAS NOT SPECIFICALLY MENTIONED IN THE LIST OF INTANGIBLE ASSETS UNDER SECTION 3 2(1)(II) OF THE ACT, WHICH TALKED ABOUT KNOW - HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENSE, FRANCHISE, ETC. FURTHER GOODWILL WAS ALSO NOT COVERED BY THE EXPRESSION ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. THE CIT(A) THUS, DENIED THE DEP RECIATION ON GOODWILL AND NON - COMPETE FEES. FURTHER, DURING THE APPELLATE PROCEEDINGS, THE CIT(A) ISSUED ENHANCEMENT NOTICE TO THE ASSESSEE UNDER SECTION 251 OF THE ACT VIS - - VIS CLAIM OF DEPRECIATION ON KNOWHOW, TRADEMARK AND PATENTS, WHICH WAS ALLOWED BY THE ASSESSING OFFICER. THE OBJECTION OF CIT(A) WAS THAT TWO - FOLD THAT IT WAS NEITHER OWNED NOR USED BY THE ASSESSEE AND THE COST OF ACQUISITION OF INTANGIBLE ASSETS WAS ALSO INCORRECTLY TAKEN FOR THE PURPOSE OF DEPRECIATION. THE CIT(A) THUS, SHOW CAUSED A S TO WHY SUM OF RS.21.93 CRORES CLAIMED AS DEPRECIATION ON KNOWHOW, TRADEMARKS AND PATENTS, SHOULD NOT BE WITHDRAWN. THE BASIS FOR MAKING THE AFORESAID DISALLOWANCE WAS THAT THE ASSESSEE HAD NOT 10 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 PURCHASED THE SAME AS PER BTA. FURTHER, THERE WAS NO MATERIAL AVAILABLE ON RECORD TO SHOW THAT THE SAID KNOW - HOW HAD BEEN USED FOR THE PURPOSE OF ASSESSEE S BUSINESS. THE NEXT OBJECTION OF CIT(A) IN THIS REGARD WAS THAT WHERE NO VALUE WAS ATTRIBUTED TO THE LAND AT PANKI AND TALOJA, WHICH WERE THE PREMISES ON WHICH I CI INDIA LTD. S BUSINESS WAS BEING CARRIED OUT, HENCE COST OF INTANGIBLE ASSETS WAS NOT CORRECTLY SHOWN. THE EXPLANATION OF ASSESSEE VIS - - VIS ALLOCATION OF NO VALUE TO THE LAND AT TALOJA AND PANKI, AS THE SAME WERE NOT TRANSFERRED BY ICI INDIA LTD. AND HE NCE, ADOPTION OF NIL VALUE, WAS NOT ACCEPTED BY THE CIT(A). THE CIT(A) ELABORATELY CONSIDERED THE TAKEOVER OF ASSETS BOTH MOVABLE AND IMMOVABLE AND THE INTANGIBLE ASSETS AND ALSO THE TRADEMARKS, PATENTS AND KNOW - HOW AND HELD THAT SLUMP PRICE PAID BY THE AS SESSEE AT BEST WOULD TAKE CARE OF THE VALUE OF THE LAND AT TALOJA AND PANKI AND HENCE, NO PART OF IT COULD BE ATTRIBUTED TO ANY OTHER ASSET. ANOTHER LINKED ASPECT WHICH WAS TAKEN NOTE OF BY THE CIT(A) WAS THE FAILURE OF ASSESSEE TO FILE EVIDENCES TO SHOW T HAT KNOW - HOW, PATENTS AND TRADEMARKS, ETC. WERE USED FOR THE PURPOSE OF BUSINESS. IN THIS REGARD, THE FIRST PLANK OF OBSERVATION OF CIT(A) WAS THAT WHERE THE ASSESSEE WAS NOT NEW IN THE LINE OF BUSINESS OF MANUFACTURING CATALYSTS AND ALSO WHERE THE PARENT COMPANY OF ASSESSEE WAS SPECIALITY CHEMICAL COMPANY WITH ITS CORE FOCUS ON PRECIOUS METAL, CATALYST AND FINE CHEMICALS, THERE WAS NO MERIT IN THE PLEA THAT THE PURPOSE FOR ACQUIRING ICI INDIA LTD. S BUSINESS WAS TO ACQUIRE KNOW - HOW, PATENTS AND TRADEMARKS, ETC. HE WAS OF THE VIEW THAT ACQUISITION WAS PRIMARILY WITH A VIEW TO INCREASE ITS MARKET SHARE I.E. OF JOHNSON MATHEYS. ANOTHER LINKED OBSERVATION OF THE CIT(A) WAS THAT AS PER TOLL CONVERSION AGREEMENT (TCA), THE BUSINESS WAS FIRST PURCHASED FROM ICI IN DIA LTD. AND THEN GIVEN BACK TO ICI INDIA LTD. FOR THE PURPOSE OF MANUFACTURING OF ITS PRODUCTS, WAS NOT ACCEPTABLE. REFERRING TO THE TERMS OF BTA, THE CIT(A) HELD THAT THERE WAS NO SEGREGATION OF ASSETS BOTH TANGIBLE AND INTANGIBLE IN THE SAME. HIS MAIN P LANK OF DECISION WAS THE VALUE OF ASSETS I.E. LANDS AT PANKI AND TALOJA. AFTER DELIBERATIONS, HE WAS OF THE VIEW THAT THE PURCHASE PRICE OF RS.153.18 CRORES PAID BY THE ASSESSEE INCLUDED CONSIDERATION PAID FOR THE RIGHTS IN LAND AND HENCE, AFTER WORKING OU T THE MARKET VALUE OF IDENTIFIABLE TANGIBLE ASSETS, HE WAS OF THE VIEW THAT WHERE THE MARKET VALUE OF SAID TANGIBLE ASSETS WORKED OUT TO RS.231.85 CRORES AS AGAINST SLUMP PRICE OF RS.153.18 CRORES, THEN NO BALANCE AMOUNT WAS LEFT TO BE ALLOCATED TO INTANGI BLE ASSETS. HE WAS OF THE VIEW THAT THE ASSESSEE HAD NOT ACQUIRED ANY INTANGIBLE ASSETS IN CONSOLIDATED SLUMP PRICE OF RS.153.18 CRORES. ACCORDINGLY, HE DID NOT ACCEPT THE WORKING OF ASSET VIS - - VIS VALUE ALLOCATED TO INTANGIBLE ASSETS INCLUDING KNOW - HOW, PATENTS, TRADEMARKS, ETC. AND REJECTING THE REPORT OF THE VALUER WHO WAS ASSIGNED THIS JOB OF BIFURCATING VALUE OF TANGIBLE AND INTANGIBLE ASSETS, THE CIT(A) HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR ANY DEPRECIATION ON KNOWHOW, TRADEMARKS AND PATENTS. A CCORDINGLY, HE MADE ENHANCEMENT OF RS.21.93 CRORES. THE SECOND ISSUE FOR ENHANCEMENT WHICH WAS CONSIDERED BY THE CIT(A) WAS THE DEPRECIATION ON ASSETS ACQUIRED IN THE SLUMP SALE. HE WAS OF THE VIEW THAT AS APPARENT FROM THE TERMS OF BTA, NO SPECIFIC COST W AS PAID BY THE ASSESSEE FOR PURCHASE OF SPECIFIC ASSETS AND THE VALUE WHICH WAS ASSIGNED TO THE ASSETS WAS MERELY GUESS WORK AND AT BEST AN ESTIMATED COST OF PARTICULAR ASSETS. HE WAS OF THE VIEW THAT SLUMP PRICE PAID FOR ACQUIRING BUNDLE OF RIGHTS/ASSETS COULD NOT BE APPORTIONED AMONGST THE INDIVIDUAL ASSETS FOR THE PURPOSE OF DEPRECIATION. AT BEST, SINCE THE ASSESSEE HAD ACQUIRED CERTAIN IDENTIFIABLE FIXED 11 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 ASSETS, THE VALUE OF WHICH WAS SHOWN IN THE CHART OF DEPRECIATION, DEPRECIATION WAS ALLOWABLE ON SAM E. HE WAS OF THE VIEW THAT BALANCE VALUE HAS BEEN ACCOUNTED FOR IN THE BOOKS AS GOODWILL, ON WHICH THE ASSESSEE WAS NOT ENTITLED TO CLAIM OF DEPRECIATION. HENCE, HE DIRECTED THE ASSESSING OFFICER TO DISALLOW THE DEPRECIATION ON ALL THE ASSETS ACQUIRED IN S LUMP SALE. IN THIS REGARD, SINCE DEPRECIATION ON GOODWILL AT RS.1.59 CRORES AND ON NON - COMPETE FEES AT RS.81,45,129/ - WAS ALREADY DISALLOWED BY THE ASSESSING OFFICER, THE CIT(A) ENHANCED THE ASSESSMENT BY RS.24.83 CRORES IN THIS ACCOUNT. HOWEVER, SINCE THE INCOME WAS ALREADY ENHANCED BY RS.21.93 CRORES BY DISALLOWING DEPRECIATION ON KNOW - HOW, PATENTS AND TRADEMARKS, FURTHER ENHANCEMENT OF ASSESSMENT WAS RESTRICTED TO RS.2.90 CRORES. 15. IN THE LIGHT OF THE ORDERS OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004 - 05 IT IS CLEAR THAT THE ALLOWANCE OF DEPRECIATION ON TECHNICAL KNOW - HOW AND OTHER ASSETS IS GRANTED. THERE WAS NO CONTRARY VIEW PLACED BY THE LD. DR BEFORE US. THUS, THE GROUND NO. 10 RAISED BY THE ASSESSEE IS ALLOWED. 11. THEREFORE, AS PER OUR ORDERS IN THE EARLIER ASSESSMENT YEARS IN RESPECT OF THE ASSESSEE, THE ISSUE OF DEPRECIATION ON INTANGIBLE ASSETS IS ALLOWED FOR STATISTICAL PURPOSES WHERE AS THE ISSUE OF DEPRECIATION ON OTHER ASSETS IS ALLOWED. THUS, GROUND NOS. 1 TO 4 RAISED IN APPEAL BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12. NEXT ISSUE IS WITH REGARD TO THE TP ADJUSTMENT ( GROUND NOS.5 TO 14) AND IT WAS THE GROUND TAKEN BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) THAT PRINCIPLE S OF NATURAL JUSTICE WERE NOT FOLLOWED AND PROPER OPPORTUNITY OF HEARING WAS NOT PROVIDED TO THE ASSESSEE BY THE ASSESSING OFFICER/TPO. ON THIS ISSUE, THE LD. CIT(APPEALS) OBSERVED THAT PROVISO TO SECTION 92C(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) MANDATES THE TPO/ASSESSING OFFICER TO PROVIDE OPPORTUNITY TO THE ASSESSEE BY SERVING A SHOW CAUSE NOTICE ON THE PROPOSED DETERMINATION OF ARM LENGTH PRICE. HOWEVER, IN THE TPOS ORDER DID NOT EXHIBIT ANY SUCH SHOW CAUSE NOTICE AND H ENCE, IT WAS HELD BY THE LD. CIT(APPEALS) THAT WHILE DETERMINING TP ADJUSTMENT BY THE TPO, PRINCIPLES OF NATURAL JUSTICE W ERE NOT FOLLOWED AND THE ORDER WA S LIABLE TO BE QUASHED. 12 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 13. AT THE TIME OF HEARING, WHEN WE ENQUIRE D WITH THE LD. DR WHETHER THE CAS E RECORDS WERE THERE OR NOT, THE LD. DR RESPONDED IN NEGATIVE. PROCEEDING WITH THE MERITS OF THE CASE AS PER MATERIAL AVAILABLE ON RECORD WE FIND DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS MADE PAYMENT TO ITS AE JOHNSON MATTHEY PLC, UK FOR VAR IOUS INTRA - GROUP SERVICES. REGARDING CCR DIVISIONAL COST I.E. STRATEGY, FINANCE, HUMAN RESOURCES OTHERS HEALTH AND SAFETY MATTERS, THE AMOUNT PAID TO AE WAS RS.2,21,10,297/ - . IN THIS REGARD, THE ASSESSEE HAS PLACED BEFORE THE DEPARTMENT VARIOUS E - MAIL CORR ESPONDENCES BETWEEN LOCAL AND REGIONAL PERSONNEL TOWARDS AVAILING OF VARIOUS SERVICES ETC. THE TPO ON THE OTHER HAND FELT THAT THESE DOCUMENTARY EVIDENCES WERE NOT SUFFICIENT ENOUGH TO JUSTIFY CCR DIVISIONAL COST AND HENCE, THIS AMOUNT WAS ADDED TO THE INC OME OF THE ASSESSEE. 13.1 THE N EXT NATURE OF SERVICE WAS WITH REGARD TO IT SUPPORT AND IMPLEMENTATION OF VARIOUS PROJECTS SUCH AS SAP FOR WHICH RS.1,07,29,271/ - WAS PAID. AGAIN THE ASSESSEE PROVIDED EVIDENCES AND E - MAIL CORRESPONDENCE BETWEEN LOCAL AND REGIONAL PERSONNEL WITH RESPECT TO AVAILING ALL THESE SERVICES. HOWEVER, THE TPO DID NOT FIND THESE EVIDENCES SUFFICIENTLY ACCEPTABLE AND HENCE, REJECTED THE CLAIM OF ASSESSEE AND ADDED THE ENTIRE AMOUNT OF RS.1,07,29,271/ - TO THE INCOME OF THE ASSESSEE . 13.2 NEXT NATURE OF SERVICE WAS WITH REGARD TO PAYMENT OF ROYALTY FOR TECHNOLOGY LICENSE RECEIVED FROM AE AMOUNTING TO RS.45,59,641/ - . THE TPO GAVE COMMENTS THAT THE ASSESSEE FAILED TO PROVIDE ANY BENCHMARKING REGARDING PAYMENT OF ROYALTY AND THAT NO AGREE MENT FOR PAYMENT ROYALTY W AS PROVIDED. ACCORDINGLY, THIS AMOUNT WAS ALSO DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 13 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 14. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COPY OF AGREEMENT FOR GROUP CONSULTANCY SERVICES HAS BEEN PLACED BEFORE T HE DEPARTMENT WHICH IS ANNEXED AT PAGE 821 ONWARDS OF THE PAPER BOOK FILED BEFORE US. SIMILARLY FROM PAGE 845 ONWARDS THE ASSESSEE HAD FURNISHED DOCUMENTARY EVIDENCES IN RESPECT OF SERVICES RECEIVED FROM AES. 15. WE HAVE ALSO PERUSED THE ORDER OF LD. CIT( APPEALS)S ON THIS ISSUE AND VIDE PARA 2.9 ONWARDS UP TO 2.11, THE LD. CIT(APPEALS) HAS ACCEPTED THE SERVICES AVAILED BY THE ASSESSEE FROM ITS AES. HOWEVER, THE LD. CIT(APPEALS) HAS NOT GIVEN HIS REASONING SPECIFICALLY WHILE PROVIDING RELIEF TO THE ASSESSE E BUT HAS ONLY MENTION ED THAT THE ASSESSING OFFICER/TPO HAS NOT GIVEN ANY CATEGORICAL FINDINGS AND HAS SUMMARILY DISPOSED OF THE MATTER OF THE ASSESSEE. THE LD. CIT(APPEALS) HAS ALSO ACCEPTED THE BENCH - MARKING OF THE INTERNATIONAL TRANSACTIONS IN RESPECT O F PAYMENT OF ROYALTY BY THE ASSESSEE AGGREGATING TRANSACTIONS WITH OTHER INTERNATIONAL TRANSACTIONS OF PURCHASE OF RAW MATERIALS WITHIN MANUFACTURING SEGMENTS SINCE THE AFORESAID TRANSACTION WAS CLOSELY LINKED AND INTERRELATED WITH REGARD TO ITS MAIN BUSI NESS ACTIVITY OF MANUFACTURING OF CATALYSTS. 16. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THIS METHOD OF BENCHMARKING ROYALTY PAYMENT MERGING WITH TRANSACTIONS OF PURCHASE OF RAW MATERIALS IS NOT CORRECT METHOD AND THAT ARMS LENGTH PRICE HA S TO BE DETERM INED BENCHMARKING THE PAYMENT OF ROYALTY SEPARATELY AND SUCH TRANSACTION S OF PURCHASE OF RAW MATERIALS SEPARATELY. THE LD. DR CONCEDED TO THESE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. 17. HAVING HEARD THE PARTIES HEREIN, WE FIND TH E LD. CIT(APPEALS) HAS ACCEPTED THE RECEIPTS OF SERVICES AND GOING THROUGH THE VARIOUS EVIDENCES 14 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 PLACED BEFORE US ANNEXED IN THE PAPER BOOK, THERE IS NO DISPUTE REGARDING SUCH RECEIPT OF SERVICES. THE LD. DR COULD NOT PLACE ANY EVIDENCES CONTRARY TO THESE FACTS ON RECORD. THAT ONLY FOR DETERMINATION OF ARM S LENGTH PRICE OF THE TRANSACTION PAYMENT OF ROYALTY HAS TO BE BENCHMARKED SEPARATELY AND CANNOT BE AGGREGATED WITH THE PAYMENT FOR PURCHASE OF RAW MATERIALS. THIS EXERCISE HAS TO BE DONE BY THE ASSESSING OFFICER/TPO. THEREFORE, THE ISSUE RAISED IN GROUND NOS. 5 TO 14 ARE RESTORED TO THE FILE OF ASS ESSING OFFICER/TPO FOR ADJUDICATION AS PER LAW AND AS PER AFORESAID OBSERVATIONS. THUS, GROUND NOS. 5 TO 14 RAISED IN APPEAL BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 18. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURP OSES. ORDER PRO NOUNCED ON 25 TH DAY OF OCTO BER , 20 2 1 . S D/ - S D/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 25 TH OCTOBE R , 202 1 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 13, PUNE. 4. THE PR. CIT - 5, PUNE. 5. , , , / DR, ITAT, C BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // T RUE C OPY // / PRIVATE SECRETARY , / ITAT, PUNE . 15 ITA NO. 595/PUN/2020 A.Y. 2013 - 14 DATE 1 DRAFT DICTATED ON 18 . 10 .2021 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 20 .10 .202 1 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER