DCIT, New Delhi V. M/s. Luxottica India Eyewear Pvt Ltd., Gurgaon

ITA 617/DEL/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81942 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I1
• Next Hearing Date: 04-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: YOGESH VERMA
• Assessee Lawyers: SHAILESH KUMAR ADV S
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Wholly owned subsidiary
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, A.M. AND SHRI C.M. GARG , J.M. ITA NO. 1115 /DEL/201 4 ASSESSMENT YEAR : 200 9 - 10 LUXOTTICA INDIA EYEWEAR P.LTD. VS. DCIT, CIRCLE 4(1) 7 TH FLOOR, TOWER 9B, DLF CYBER GREENS NEW DELHI GURGAON PAN: AABCL 3871 C ITA NO. 617 /DEL/201 4 ASSESSMENT YEAR : 200 9 - 10 DCIT, CIRCLE 4(1) VS. LUXOTTICA INDIA EYEWEAR PVT.LTD. NEW DELHI GURGAON (APPELLANT) (RESPONDENT) ASSESSEE BY: - SHRI NAGESHWAR RAO & SH.SHAILESH KUMAR, ADV S . DEPARTMENT BY: - SH. YOGESH VE RMA, CIT, D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS AND ARE DIRECTED AGAINST THE ORDER OF THE AO PASSED U/S 143(3) R.W.S. 144C OF THE ACT ON 31.3.2009. BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE AGGRIEVED WITH THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL ( DSP ) U/S 144C(5) OF THE I.T.ACT, 1961. 2. FACTS IN BRIEF: - THE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF L UXOTTICA HOLLAND B.V.LUXOTTICA GROUP AND WAS INCORPORATION ON 15.11.2007 IN INDIA AND COMMENCED ITS OPERATION FROM FEB.,2008. THE MAIN FUNCTION OF THE ASSESSEE IS TO CARRY OUT BUSIN ESS OF TRADING OF SUNGLASSES AND FRAMES. ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 2 2.1. INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE DURING THE YEAR ARE (A) PURCHASE OF GOODS AND B)REIMBURSEMENT OF EXPENSES. 2.2. IN THE TRANSFER PRICING STUDY REPORT THE ASSESSEE ADOPTED TRANSACTION NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD (MAM) AND FURTHER IT HAS ALSO ADOPTED R ESALE P RICE M ETHOD (RPM) TO CORROBORATE THE ARMS LENGTH PRICE (ALP). 2.3. THE TPO INITIALLY GAVE A SHOW CAUSE NOTICE TO THE ASSESSEE PROPOSING TO APPLY RPM AS THE MAM FOR THE REASON THAT LUXOTTICA INDIA IS A FULL FLEDGED DISTRIBUTOR ENGAGED IN RESALE OF GOODS PURCHASED FROM AE S TO UNRELATED PARTIES IN INDIA, WITHOUT ANY VALU E ADDITION AND UNDER SUCH CIRCUMSTANCES RPM IS THE MAM TO ESTABLISH THE ARMS LENGTH NATURE OF THE TRANSACTIONS OF IMPORT OF SUN GLASSES/ SUN GLASS FRAMES FROM AES FOR RESALE IN INDIA. LATER THE TPO REJECTED THE TP STUDY FOR THE REASON PROVIDED IN THE SHOW CAUSE NOTICE DT. 24.12.2013 EXCEPT PO INTS 6 AND 7. THE TPO ALLEGED SERIOUS FLAWS IN THE T.P. DOCUMENTATION. 2.4. AT PAGE 14 OF THE TPO S ORDER, HE GAVE REASONS FOR APPLYING TNMM AS THE MAM WHICH ARE AS FOLLOWS: (A) IT IS NOT POSSIBLE TO PRESCRIBE PROCEDUR ES/PRACTICES FOR EVERY OPERATION. (B) EVEN IN THE SAME INDUSTRY IT DEPENDS ON THE NATURE OF TRANSACTIONS AND CIRCUMSTANCES SURROUNDING THE TRANSACTIONS . T HE APPROACH WOULD BE DIFFERENT FROM INDUSTRY TO INDUSTRY. (C) THE ULTIMATE SELECTION OF THE METHOD IN A PARTICULAR CASE MAY SOMETIMES BE POSSIBLE, ONLY IF ALL THE OTHER METHODS ARE SUFFICIENTLY ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 3 EVALUATED AND EXCLUDED AND BECAUSE OF THIS EXCLUS IONARY PROCESS , SHIFTING FROM ONE METHOD TO ANOTHER METHOD IN THE SELECT ION PROCESS OF THE MOST APPROPRIATE METHOD IS INHERENT IN THE TRANSFER PRICING CASE. (D) THE ARGUMENT OF THE ASSESSEE THAT ONCE THE TPO SELECTED ONE METHOD , THEREAFTER , HE COULD NOT P REFER ANOTHER METHOD , CANNOT BE ACCEPTED. FOR THIS PROPOSITION HE RELI ED ON THE DECISION OF BANGALORE TRIBUNAL IN THE CASE OF SAP LABS INDIA (P) LTD. VS. ACIT (2011) 44 SOT 156 ( BANGALORE ) . (E) THE SELECTION OF THE ASSESSEE OF TNMM AS THE MAM IS ACCEPTED. 2.5. THERE ARE CERTAIN ADJUSTMENTS GIVEN BY THE ASSESSEE, WHICH WERE REJE CTED BY THE TPO, THE DETAILS OF WHICH WE WOULD BE DISCUSSING WHEN THE OCCASION ARISES. 3. THE DRP IN ITS ORDER CONSIDERED THE OBJECTIONS OF THE ASSESSEE TO THE ADOPTION OF TNMM AS THE MAM AND AT PARA 10.2 PAGE 15 HELD AS FOLLOWS. 10.2. THIS DRP HAVE CON SIDERED THE TAX PAYER S CONTENTIONS AND TP STUDY, AS WELL AS FACTS AND EVIDENCES AVAILABLE ON RECORD AND IS OF THE VIEW THAT THE TAX PAYER HAS RIGHTLY SELECTED THE TNMM AS THE MAM (REFER PAGE 22 OF TP STUDY) AND TPO ALSO IS RIGHTLY OF THE VIEW THAT TNMM PROVIDES MORE FLEXIBILITY AS COMPARED TO RPM WHERE THE TAX PAYER HIMSELF SELECTS THE TNMM AS THE MAM THEREFORE, THIS PANEL REFUSES TO INTERFERE IN THIS REGARD AT THIS STAGE. THEREFORE, THE OBJ ECTION RAISED IN THIS REGARD DESERVES TO BE JETTISONED. THIS IS THE FIRST ISSUE IN THE ASSESSEE S APPEAL. 4. THE SECOND ISSUE IS ON THE TRANSFER PRICING ADJUSTMENT IN RESPECT TO (A) PURCHASES, AND (B) EXPENDITURE. 4.1. THE AO IN HIS DRAFT ASSESSMENT OR DER MADE ADDITIONS/DISALLOWANCES WITH RESPECT TO: (A) PRIOR PERIOD EXPENSES; (B) PROVISION FOR WARRANTY AND (C ) DISALLOWANCE ON ACCOUNT OF NON DEDUCTION OF ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 4 TDS U/S 40A(IA) WITH RESPECT TO ADVERTISEMENT EXPENDITURE. THE DRP RESOLVED THESE ISSUES IN FAVOU R OF THE ASSESSEE. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD MR. NAGESHWAR RAO, T HE LD.COUNSEL FOR THE ASSESSEE AND SHRI YOGESH VERMA, LD.CIT, D.R. ON BEHALF OF THE REVENUE. 6. THE SUBMISSIONS OF MR.NAGES H WAR RAO ARE THAT: (A) THERE IS NO DISPUTE ON THE FUNCTIONAL PROFILE OF THE ASSESSEE AND ON THE CHARACTERISATION OF THE TRANSACTIONS. AS THE ASSESSEE IS A TRADER AND AS THERE IS NO VALUE ADDITION TO THE PRODUCTS, RETAIL PRICE METHOD IS THE MOST APPROPRIATE METHOD. (B) THE AO INITIALLY STATE D THAT RESALE PRICE METHOD IS THE MAM IN ITS SHOW CAUSE NOTICE, BUT LATER DUE TO REVENUE CONSIDERATIONS ADOPTED TNMM. (C) THAT THE ASSESSEE IN ITS T.P.STUDY HAD IN FACT USED TNMM AS THE PRIMARY METHOD BUT IT ALSO HAS USED RESALE PRICE METHOD AS THE SECONDARY MAM FOR ARRIVING AT THE ALP . THA T THE ASSESSEE IS NOT STOPPED FROM CLAIMING BEFORE THE TPO , TO ADOPT RESALE PRICE METHOD AS THE MAM, THOUGH IN ITS TP STUDY , THE ASSESSEE ADOPTED TNMM AS ONE OF THE MAM, WHEN THE ASSESSEE CLAIM THAT THE RSPM IS THE MAM IN CASE OF A TRADER. FOR THIS PROPOSITION THAT THE ASSESSEE IS NOT ESTOPPED FROM CLAIMING THAT A PARTICULAR METHOD IS THE MAM HE RELIED ON THE JUDGEMENT OF THE MUMBAI K BENCH OF THE TRIBUNAL IN ITA NO. 2476/MUM/2008 I N THE CASE OF METAL TOYS INDIA ( I) PVT.LTD. 7.1. FURTHER HE RELIED ON THE FOLLOWING CASE LAWS FOR THE PROPOSITION THAT VARIOUS BENCHES OF THE TRIBUNAL HAVE HELD THAT RSPM IS THE MAM WHEN THE FUNCTIONAL PROFILE OF THE ASSESSEE IS THAT OF A TRADER. I. STAR DIAMOND GROUP NV MUMBAI IN ITA NO.3923/MUM/2008 ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 5 II. L O REAL INDIA PVT.LTD. VS. ITO , ITA NO.5423/MUM/2009 III. DANISCO (INDIA) PVT. LTD. VS. ACIT , ITA NO.5291/DEL/2010 IV. FRIGOG LASS INDIA PVT.LTD. IN ITA NO. 463/DEL/2013 V. TEX TRON IX INDIA PVT.LTD. VS DCIT IN ITA 1334/BANG/2010 7.2. ALTERNATI VELY HE SUBMITTED THAT WITHOUT PREJUDICE TO HIS CLAIM THAT RSPM IS THE MAM, IN CASE TNMM IS ACCEPTED, THEN THE FOLLOWING ADJUSTMENTS HAVE TO BE GRANTED FOR THE REASON THAT THE ASSESSEE HAS RECENTLY BEEN SET UP IN FEB., 2008 AND START UP EXPENSES HAVE TO BE CONSIDERED FOR ADJUSTMENT . HE SPECIFICALLY PLEADED FOR THE FOLLOWING ADJUSTMENTS. A. EMPLOYEE COST ADJUSTMENT B. MARKETING ADJUSTMENT C. FOREIGN EXCHANGE ADJUSTMENT 7.3. ON THE SECOND ISSUE OF TRANSFER PRICING ADJUSTMENT OF AMP, HE SUBMITTED THAT THE JUDGEMEN T IN THE CASE OF L.G.ELECTRONCIS WAS NOT AVAILABLE EITHER WITH THE TPO OR TO THE DRP AND HENCE THE ISSUE SHOULD BE SET ASIDE TO THE FILE OF THE TPO FOR FRESH ADJUDICATION. ON THE ISSUE OF INTEREST U/S 234B HE ADMITTED THAT IT IS CONSEQUENTIAL IN NATURE. 8. THE LD. CIT, D.R. MR.YOGESH VERMA ON THE OTHER HAND OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT IT WAS THE ASSESSEE WHICH HAD IN THE TRANSFER PRICING STUDY ADOPTED TNMM AS THE MAM. HE ARGUED THAT THE TPO HAS NOT ONLY ACCEPTED TNMM PRO POSED BY THE ASSESSEE AS THE MAM BUT HAS ALSO ACCEPTED ALL THE COMPARABLES GIVEN BY THE ASSESSEE WITHOUT ANY MODIFICATION. HE VEHEMENTLY CONTENDED THAT SUCH FLIP FLOP ON THE PART OF THE ASSESSEE SHOULD NOT BE ACCEPTED. HE REFERRED TO PARA 5.02.5 OF THE T PO STUDY AND THE ANALYSIS OF THE ASSESSEE IN THE STUDY FOR COMING TO ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 6 A CONCLUSION THAT TNMM IS THE MAM. HE FURTHER RELIED ON THE ORDER OF THE TPO AS WELL AS THE DRP AND THE REASONS GIVEN THEREIN FOR ADOPTION OF TNMM AS THE MAM. 8.1. ON THE CLAIM OF THE ASSESSEE FOR CERTAIN ADJUSTMENT, IN CASE TNMM IS ACCEPTED, HE RELIED ON THE ORDER OF THE DRP AND CONTENDED THAT EMPLOYEE COST ADJUSTMENT , THE MARKETING ADJUSTMENT AND FOREIGN EXCHANGE ADJUSTMENT CANNOT BE GRANTED. 9. AFTER HEARING RIVAL CONTENTIONS WE HOLD AS FOLLOWS. 10. THE UNDISPUTED FACT IS THAT THE FUNCTIONAL PROFILE OF THE ASSESSEE IS TRADING IN SUN GLASSES AND SUN GLASS FRAMES. IT PURCHASES AND SELLS GOODS WITHOUT ANY VALUE ADDITION. IN FACT THE TPO IN THE ORIGINAL SHOW CAUSE NOTICE HAS, IN O UR VIEW, CORRECTLY STATED AS FOLLOWS. 5. FROM THE DETAILS FILED BY THE ASSESSEE, IT IS OBSERVED THAT THE COMPANY HAS BEEN ESTABLISHED PRIMARILY FOR THE PURPOSE OF CARRYING ON THE BUSINESS OF TRADING OF SUN GLASSES AND FRAMES. KEEPING THE FUNCTIONAL PRO FILE OF THE ASSESSEE IN MIND, IT IS HELD THAT RPM IS THE MAM FOR THIS CASE. THE RPM IS APPLICABLE IN A RESALE SITUATION, WHEREIN THE PROPERTY OR SERVICES PURCHASED FROM AN ASSOCIATED ENTERPRISE ARE RESOLD TO UNRELATED ENTERPRISES. FURTHER MORE, RPM IS G ENERALLY ADOPTED WHERE THE TESTED PARTY I.E. TRADER PURCHASES FROM AN ASSOCIATED ENTERPRISE AND RESELLS TO AN INDEPENDENT ENTERPRISE WITHOUT ADDING SUBSTANTIAL VALUE TO THE PRODUCT, OR DOES NOT CONTRIBUTE SUBSTANTIALLY TO THE CREATION OF MAINTENANCE OF INT ANGIBLE PROPERTY ASSOCIATED WITH THE PRODUCT (TRADE MARK OR TRADE NAMES) WHICH ARE OWNED BY THE AES. LUXOTTICA INDIA IS A FULL FLEDGED DISTRIBUTOR ENGAGED IN RESELLING GOODS PURCHASED FROM AES TO UNRELATED PARTIES IN INDIA. LUXOTTICA INDIA DOES NOT ADD VA LUE TO THE GOODS PURCHASED FROM RELATED PARTY, WHICH ARE RESOLD TO UNRELATED PARTIES. ACCORDINGLY, THE RPM IS THE MAM TO ESTABLISH THE ARM S LENGTH NATURE FOR LUXOTTICA INDIA S INTER COMPANY TRANSACTION OF THE IMPORT OF SUN GLASSES / SUN GLASS FRAMES FROM AES FOR RESALE IN INDIA. ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 7 10.1. THE REASONS GIVEN BY THE TPO FOR ADOPTING TNMM AT PAGE 14 OF HIS ORDER ARE GENERAL IN NATURE. THE TPO OR THE DRP HAS NOT GIVEN ANY SPECIFIC REASON ON THE RESALE PRICE METHOD (RSPM) SHOULD NOT BE ADOPTED AS ITS MAM. 10.2. COMING TO THE ARGUMENT THAT THE ASSESSEE HIMSELF HAS ADOPTED TNMM AS THE MAM FOR ITS TRANSFER PRICING STUDY AND HENCE IT CAN NOT TURN AROUND AND ARGUE FOR ADOPTION OF RSPM AS THE MAM, WE FIND THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M ATTEL T O Y S (I) PVT.LTD. IN ITA NO.2476/MUM/2008 HELD AS FOLLOWS. 41. NOW COMING TO THE ARGUMENT OF THE LD.DR THAT ONCE THE ASSESSEE ITSELF HAS CHOSEN TNMM AS THE MAM IN TPR, THEN IT CANNOT RESORT TO CHANGE ITS METHOD AT AN ASSESSMENT OR APPELLATE STAGE. IN OUR OPINION, SUCH A CONTENTION CANNOT BE UPHELD BECAUSE IF IT IS FOUND ON THE FACTS OF THE CASE THAT A PARTICULAR METHOD WILL NOT RESULT INTO PROPER DETERMINATION OF THE ALP, THE TPO OR THE APPELLATE AUTHORITIES CAN VERY WELL HOLD THAT WHY A PARTICULAR METHOD CAN BE APPLIED FOR GETTING PROPER DETERMINATION OF ALP OR THE ASSESSEE CAN DEMONSTRATE A PARTICULAR METHOD TO JUSTIFY ITS ALP. THUS, EVEN IF THE ASSESSEE HAD ADOPTED TNMM AS THE MAM IN THE TP REPORT, THEN ALSO IT IS NOT PRECLUDED FROM RAISING THE CONTENTI ONS/OBJECTIONS BEFORE THE TPO OR THE APPELLATE COURTS THAT SUCH A METHOD WAS NOT AN APPROPRIATE METHOD AND IS NOT RESULTING INTO PROPER DETERMINATION OF ALP AND SOME OTHER METHOD SHOULD BE RESORTED. THE ULTIMATE AIM OF THE TP IS TO EXAMINE WHETHER THE PRI CE OR THE MARGIN RAISING FROM AN INTERNATIONAL TRANSACTION WITH THE RELATED PARTY IS AT ALP OR NOT. THE DETERMINATION OF APPROXIMATE ALP IS THE KEY FACTOR FOR WHICH THE MAM IS TO BE FOLLOWED. THEREFORE, IF AT ANY STAGE OF THE PROCEEDINGS, IT IS FOUND THA T BY ADOPTING ONE OF THE PRESCRIBED METHODS OTHER THAN CHOSEN EARLIER, THE MOST APPROPRIATE ALP CAN BE DETERMINED, THE ASSESSMENT AUTHORITIES AS WELL AS THE APPELLATE COURTS SHOULD TAKE INTO CONSIDERATION SUCH A PLEA BEFORE THEM PROVIDED, IT IS DEMONSTRAT ED AS TO HOW A CHANGE IN THE METHOD WILL PRODUCE BETTER OR MORE APPROPRIATE ALP ON THE FACTS OF THE CASE. ACCORDINGLY, WE REJECT THE CONTENTIONS OF THE LD.DR AND ALSO THE OBSERVATIONS OF THE AO AND THE LD.CIT(A) THAT THE ASSESSEE CANNOT RESORT TO ADOPTIO N OF RPM METHOD INSTEAD OF TNMM. ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 8 10.3. THE CASE OF THE ASSESSEE IS MUCH BETTER THAN THE CASE OF M/S MATTEL TOYS (I) PVT.LTD. (SUPRA) FOR THE REASON THAT THE ASSESSEE IN ITS TRANSFER PRICING REPORT HAS ALSO USED RSPM AS THE MAM. HENCE THIS ARGUMENT OF THE REVENUE IS REJECTED. 10.4. AS THE UNDISPUTED FACT IS THAT THE FUNCTIONAL PROFILE OF THE ASSESSEE IS THAT OF A TRADER AND AS THE CHARACTERISATION OF THE TRANSACTION IS PURCHASE AND SALE OF GOODS, WE HOLD THAT RSPM IS THE MAM BY APPLYING THE FOLLOWING DECISIONS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL. (I) IN THE CASE OF STAR DIAMOND GROUP NV MUMBAI ( ITA NO.3923/MUM/2008 ), IT IS HELD AS FOLLOWS: 13. THIS FINDING IN OUR HUMBLE OPINION IS WRONG FOR THE REASON THAT THE CIT(A) HAS ADOPTED THESE VERY COMPARABLES, ALONG WITH THREE OTHERS WHILE ARRIVING AT THE OPERATING MARGINS AT PARA 7.16 OF HIS ORDER. AS THE ASSESSEE IS A TRADER, WITHOUT VALUE ADDITION TO THE GOODS, WE FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE THAT RESALE PRICE METHOD IS TH E MOST APPROPRIATE METHOD FOR DETERMINING THE ALV WITH RESPECT TO AE TRANSACTION. IN FACT, THE REVENUE HAS ACCEPTED THIS METHOD IN EARLIER TWO YEARS. THE TPO IN HIS ORDER DT. 7.3.2005 FOR THE AY 2002 - 03 AND ORDER DT. 20.3.2006 FOR THE AY 2003 - 04, HAS AGRE ED WITH THE COMPUTATION OF ARM S LENGTH PRICE MADE BY THE ASSESSEE UNDER THE RESALE PRICE METHOD. (II) IN THE CASE OF L OR EAL INDIA P.LTD. VS. ITO (ITA NO.5423/MUM/2009 ) IT IS HELD AS FOLLOWS: 19. DURING THE COURSE OF HEARING, LD.DR ALSO SUPPORTED THE METHOD CONSIDERED BY TPO AND REFERRED TO PARA 2.29 OF OECD PRICE GUIDELINES 2010 AS STATED HEREINABOVE. ON THE OTHER HAND, LD.AR JUSTIFIED THE RP< METHOD ADOPTED BY IT AND ALSO REFERRED TO ORDER OF TPO IN THE PRECEDING AY AS WELL AS SUCCEEDING AY TO THE AY UNDER CONSIDERATION TO SUBSTANTIATE THAT RPM IS THE MOST APPROPRIATE METHOD TO DETERMINE ALP. HE SUBMITTED THAT THE ASSESSEE MADE ADJUSTMENT FOR MARKETING AND SELLING EXPENSES TO THE PROFITS TO MAKE IT COMPARABLE TO THE COMPARABLE COMPANIES PROFITS. W E AGREE WITH THE LD.CIT(A) THAT THERE IS NO ORDER OF PRIORITY OF METHODS TO DETERMINE ALP. RPM IS ONE OF THE STANDARD METHOD AND OECD GUIDELINES ALSO STATES THAT IN CASE OF DISTRIBUTION AND MARKETING ACTIVITIES WHEN THE GOODS ARE PURCHASED FROM AES WHICH ARE SOLD TO UNRELATED PARTIES, RPM IS THE MOST APPROPRIATE METHOD. IN THE CASE BEFORE US, THERE IS NO DISPUTE TO THE FACT THAT THE ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 9 ASSESSEE BUYS PRODUCTS FROM ITS AES AND SELLS TO UNRELATED PARTIES WITHOUT ANY FURTHER PROCESSING. (III) IN THE CASE OF DA NISCO (INDIA) PVT.LTD. VS. ACIT, CIRCLE 10(1), NEW DELHI (ITA NO.5291/DEL/2010 ), IT IS HELD AS FOLLOWS: 22. CONSIDERING THE ABOVE SUBMISSIONS WE FIND THAT THE ASSESSEE ESTABLISHED IN 1998 AS A 100% SUBSIDIARY OF DANISCO A/S DENMARK. DANISCO INDIA IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF FOOD ADDITIVES. THE MANUFACTURING BUSINESS IN RESPECT OF FOOD FLAVOURS AND THE TRADING BUSINESS IS FOR PRODUCTS FOR FALLING UNDER THE CATEGORY OF FOOD INGREDIENTS. THE MAIN GRIEVANCES OF THE ASSESSE E AGAINST THE ORDER OF THE LD.TPO UPHELD BY THE LD.DRP ARE REGARDING THEIR APPROACH IN THE MANNER IN WHICH TRANSFER PRICING ADJUSTMENT HAS BEEN MADE, THE APPROACH ADOPTED BY THE LD.TPO IN GRANTING 17 COMPARABLE COMPANIES DENYING THE ECONOMIC ADJUSTMENT CLA IM MADE BY THE ASSESSEE, REGARDING COMPUTATION OF MARGINS OF THE ASSESSEE, NON CONSIDERATION OF SUPPLEMENTARY TRANSACTION AND DENIAL OF ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BY THE AUTHORITIES BELOW AS WELL AS THEIR FAILURE TO EXAMINE THE CON TENTIONS AND ARGUMENTS OF THE ASSESSEE IN THIS REGARD. CONSIDERING THESE GRIEVANCES AS DISCUSSED HEREIN ABOVE BY US IN THE ARGUMENTS ADVANCED BY THE PARTIES/THEIR SUBMISSIONS AND HAVING GONE THROUGH THE DECISION RELIED UPON, WE FIND SUBSTANCE IN THE SUBMI SSION OF THE ASSESSE3E AND THUS WE ARE OF THE VIEW THAT IT IS A FIT CASE TO SET ASIDE THE MATTER TO THE FILE OF THE LD.TPO FOR HIS FRESH CONSIDERATION AND DECIDE THE ISSUE AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DISCUSSING THE IR SUBMISSIONS IN THE ORDER AND REASONS, IF ANY, FOR NOT AGREEING OR AGREEING WITH THEM. IT IS ORDERED ACCORDINGLY WITH DIRECTION TO THE LD.TPO TO: A) FIRST EXAMINE AS TO WHETHER, WAS THERE ANY VALUE ADDITION ON IMPORTED GOODS, AND IF ANSWER IS IN NEGATI VE THEN APPLY RPM AS A MOST APPROPRIATE METHOD FOR TRADING TRANSACTIONS OF IMPORTED GOODS AND IN CONSEQUENCE EXAMINE THE APPLICATION OF APPROPRIATE METHOD AS COMMISSION PAYMENT; (IV) FRIGOGLASS INDIA P.LTD. (ITA NO.463/DEL/2013 ), IT IS HELD AS FOLLOWS: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW, ONCE ASSESSEE HAS GIVEN A METHODOLOGY FOR WORKING OF ALP ON SELECTION OF A PARTICULAR METHOD SUPPORTED BY APPROPRIATE COMPARABLES, THE WORKING CAN BE DISLODGED BY TPO ON THE BASIS OF COGENT REASONS AND OBJECTIVE FINDINGS. IN THIS CASE EXCEPT THEORETICAL ASSERTIONS AND GENERALIZED OBSERVATIONS, NO OBJECTIVE FINDINGS HAVE BEEN GIVEN TO COME TO A REASONED CONCLUSION THAT ASSESSEE'S ADOPTION OF CPM FOR MANU FACTURING ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 10 SEGMENT AND RPM FOR TRADING SEGMENT WAS FACTUALLY AND OBJECTIVELY NOT CORRECT. THUS THE REJECTION OF METHODS BY TPO AS ADOPTED BY ASSESSEE IS BEREFT OF ANY COGENCY AND OBJECTIVITY. THE SAME IS A WORK OF GUESSING AND CONJECTURED. SIMILARLY THE TNM M METHOD APPLIED BY THE TPO SUFFERS FROM THE SAME INHERENT ABERRATIONS AS MENTIONED ABOVE. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT ASSESSEE'S METHODS OF CPM AND RPM RESPECTIVELY WORKED BY APPLYING APPROPRIATE COMPARABLES IS TO BE UPHELD. THUS THE AL P WORKING RETURNED BY THE ASSESSEE IS UPHELD. THE ASSESSEE'S TP GROUNDS ARE ALLOWED.' (V) TEXTRONIC INDIA PVT.LTD. VS. DCIT (ITA NO. 1334/BANG/2010 ), IT IS HELD AS FOLLOWS: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE DISPUTE IS WITH REGARD TO THE ALP IN RESPECT OF INTERNATIONAL TRANSACTIONS WHEREBY THE ASSESSEE IMPORTS EQUIPMENT FROM ITS AE AND RESELLS THEM WITHOUT ANY VALUE ADDITION TO THE INDIAN CUSTOMERS. IN SIMILAR CIRCUMSTANCES, MUMBIA BENCH OF THE TRIBUNAL IN THE CASE OF L OREAL INDIA PVT.LTD. (SUPRA) HAS TAKEN THE VIEW THAT THE RPM WOULD BE THE MOST APPROPRIATE METHOD FOR DETERMINING THE ALP. THE MUMBAI BENCH OF TRIBUNAL IN THIS REGARD, HAS REFERRED TO THE OECD GUIDELINES WHEREIN A VIEW HAS BEEN EXPRESSED THAT RPM WOULD BE THE BEST METHOD WHE N A RE - SALE TAKES PLACE WITHOUT ANY VALUE ADDITION TO A PRODUCT. IN THE PRESENT CASE, THE ASSESSEE BUYS PRODUCTS FROM THE AE AND SELLS IT WITHOUT ANY VALUE ADDITION TO THE INDIAN CUSTOMERS. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF L 'OREAL INDIA PVT. LTD. (SUPRA) WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE. IN THAT EVENT, THE GP AS A PERCENTAGE OF SALES ARRIVED AT BY THE TPO IN ANNEXURE TO THE TPO'S ORDER INSOF AR AS TRADING ACTIVITY OF COMPARABLES IDENTIFIED BY THE TPO AT 12.90%. THE GP AS A PERCENTAGE OF SALES OF THE ASSESSEE IS AT 35.6% WHICH IS MUCH ABOVE THE PERCENTAGE OF COMPARABLES IDENTIFIED BY THE TPO. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT NO AD JUSTMENT COULD BE MADE BY WAY OF ALP. WE, THEREFORE, ACCEPT THE ALTERNATIVE PLEA OF THE ASSESSEE AND DELETE THE ADDITION MADE BY THE AO. IN VIEW OF THE ABOVE CONCLUSION, WE ARE NOT GOING INTO THE OTHER ISSUES ON MERITS RAISED BY THE ASSESSEE ON THE APPROAC H ADOPTED BY THE TPO IN ARRIVING AT THE ALP. THUS, GROUND NOS. 2 TO 7 ARE ALLOWED. 10.5. IN VIEW OF THE ABOVE DISCUSSION, WE DIRECT THE TPO TO ADOPT RSPM AS THE MAM IN THIS CASE. 10.6. IN THE RESULT THIS GROUND OF THE ASSESSEE IS ALLOWED. ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 11 10.7. IN VIEW OF OUR ABOVE DECISION, WE DO NOT ADJUDICATE ON THE ALTERNATIVE PLEAS MADE BY THE ASSESSEE REGARDING , ADJUSTMENTS ON ACCOUNT OF (A) EMPLOYEE COST; (B) MA RKETING AND C) FOREIGN EXCHANGE AS IT IS INFRUCTUOUS TO DO SO. 11. THE SECOND ISSUE IS REGARD ING TRANSFER PRICING ADJUSTMENT OF AMP EXPENSES. AS AGREED BY BOTH THE PARTIES THIS ISSUE IS SET ASIDE TO THE FILE OF THE AO/TPO FOR FRESH ADJUDICATION IN LINE WITH THE PROPOSITIONS LAID DOWN BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF L.G.ELECTRO NICS INDIA (SUPRA). 11.1. IN THE RESULT THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 11.2. THE GROUND OF LEVY OF INTEREST U/S 234B IS CONSEQUENTIAL IN NATURE. 11.3. THE GROUND AGAINST INITIATION OF PENALTY U/S 271(1)(C ) OF THE ACT, IS PREMATURE AN D DISMISSED AS SUCH. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 13. THE REVENUE S APPEAL IS ON THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.MEMBERS OF DRP HAS ERRED IN TREATING FORE X FLUCTUATION LOSS AS AN ITEM OF NON OPERATING EXPENDITURE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.MEMBERS OF DRP HAS ERRED IN HOLDING THAT THE AMP COST OVER AND ABOVE THE BRIGHT LINE SHOULD NOT BE TAKEN AS THE COST FOR DI STRIBUTION ACTIVITIES. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.MEMBERS OF DRP HAS ERRED IN ALLOWING THE RELIEF OF RS.6,66,938/ - ON ACCOUNT OF PRIOR PERIOD EXPENSES. ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 12 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.MEMBERS OF DRP HAS ERRED IN ALLOWING THE RELIEF OF RS.17,52,000/ - ON ACCOUNT OF PROVISION OF WARRANTY. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.MEMBERS OF DRP HAS ERRED IN ALLOWING THE RELIEF IN RESPECT OF PRO VISIONS OF SECTION 40(A)(IA). 6. THAT THE ORDER OF THE DRP IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FORGO ANY GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 14. AFTER HEARING RIVAL CONTENTIONS WE HOLD AS FOLLOWS. 15. ON THE ISSUE OF TREATING FOREIGN EXCHANGE LOSS AS AN ITEM OF NON OPERATING EXPENDITURE, THE SOLE OBJECTION OF THE REVENUE IS AGAINST THE DIRECTIONS OF THE DRP IS TO APPLY SAFE HARBOUR RULES. THE CONTENTION OF THE REVENUE IS THAT SAFE HARBOUR RULES HAVE TO BE PROSPECTIVELY APPLIED. 15.1. THE LD.COUNSEL FOR THE ASSESSEE AGREED WITH THE CONTENTION OF THE LD.D.R. THAT SAFE HARBOUR RULES SHOULD NOT BE THE BASIS OF DECISION MAKING . IN VIEW OF THE ABOVE CONTENTIONS , WE MODIFY THE DIRECTIONS OF THE DRP TO THE EXTENT THAT SAFE HARBOUR RULES SHOULD NOT BE APPLIED WHILE CONSIDERING FOREIGN EXCHANGE FLUCTUATION LOSS WHILE ARRIVING AT NET OPERATING MARGINS. IN THE RESULT THIS GROUND IS ALLOWED . 15.2. GROUND NO.2 IS ON THE ISSUE OF TRANSFER PRICING ADJUSTMENT OF A MP EXPENSES. CONSISTENT WITH THE VIEW TAKEN IN THE ASSESSEE S APPEAL THIS ISSUE IS SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN LINE WITH THE PROPOSITIONS LAID DOWN BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF L.G.ELECTRONICS (SUPRA). ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 13 15.3. GROUND NO.3 IS AGAINST THE RELIEF ALLOWED BY THE DRP ON PRIOR PERIOD EXPENSES. 15.4. AFTER CONSIDERING RIVAL SUBMISSIONS WE FIND THAT THE DRP AT PARA 14.4.1 AT PAGE 27 HELD AS FOLLOWS. 14.4.1. THE PANEL HAS EXAMINED THE MATTER AT LENGTH. IT APPEARS THAT THE AO HAS NOT GONE INTO THE ISSUE IN APPROPRIATE DEPTH TO ARRIVE AT HIS CONCLUSION. THE AO HAS ALSO NOT LOOKED INTO THE MANNER IN WHICH THE ASSESSEE HAS BEEN CREATING THE PROVISIONS AND THEREAFTER, ON RECEIPT OF THE RELEVANT BILLS, HAS BEEN SQUARING UP THE PROVISIONS SO MADE BY IT. THE PANEL THEREFORE, WOULD LIKE TO REPRODUCE THE ASSESSEE S SUBMISSIONS ON THIS ACCOUNT. F.Y. 2007 - 08 (AY 2008 - 09) DURING THE AY 2008 - 09, THE ASSESSEE AHS CREATED PROVISION FOR FOLLOWING EXPENSES BY DEBITING THE ACCOUNT HEAD AUDIT FEES AS ON 31 ST MARCH,2008. - LEGAL AND PROFESSIONAL CHARGES RS.365,170 - TAX AUDIT FEES RS.129,992 - TAX C OMPLIANCE FEES RS.171,776 PARTICULARS DEBIT AMOUNT (RS.) CREDIT AMOUNT (RS.) AUDIT FEES (A.R. 2007 - 08 BOOKED IN DEC.2008 AND PAID IN JAN.2009) 84,270 AUDIT FEES (TAX AUDIT FEES FOR 2007 - 08 BOOKED AND PAID IN NOV.08) 5,05,620 AUDIT FEES (FOR TAX COMPLIANCE OF EXPAT AND TP STUDY AND TP REPORT FY 2007 - 08) 3,65,170/ - (INCLUDES 171776) TO PROVISION FOR EXPENSE (BEING PROVISION CREATED FOR EXPENSES) 955,060 F.Y. 2008 - 09 (AT 2009 - 10) ISSUE 1: TAX AUDIT FEES RS.129,992 AND TAX COMPLIANCE FEES RS.171,776 ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 14 IN THIS REGARD, THE FOLLOWING ACCOUNTING ENTRIES WERE PASSED BY THE ASSESSEE IN AY 2009 - 10: (A) BREAKUP OF ENTRY PASSED FOR REVERSAL OF PROVISION (B) PARTICULARS DEBIT AMOUNT (RS.) CREDIT AMOUNT (RS.) PROVISION FOR EXPENSE 993,683 TO AUDIT FEES (TAX AUDIT FEES FOR 2007 - 08) 129,992 AUDIT FEES (FOR TAX COMPLIANCE OF EXPAT AND TP STUDY AND TP REPORT FY 2007 - 08) 171,776 TO AUDIT FEES (OTHER EXPENSES REVERSED) (BEING PROVISION REVERSED) 691,915 FURTHER, IN AY 2009 - 10, THE ASSESSEE RECEIVED INVOICE FOR EXPENSES AMOUNTING TO RS.171,776 AND RS.129,992 FROM THE PARTIES. (C) BOOKING OF INVOICE (D) PARTICULARS DEBIT AMOUNT (RS.) CREDIT AMOUNT (RS.) LEGAL AND PROFESSIONAL (DR.) (ONLY NOMENCLATURE OF EXPENSE HEAD CHANGED FROM AUDIT FEES) 129,992 LEGAL AND PROFESSIONAL (DR.) (ONLY NOMENCLATURE OF EXPENSE HEAD CHANGED FROM AUDIT FEES) 171,776 TO PARTY ACCOUNT (CR.) 301,768 THE LD.AO HAS DISALLOWED THE EXPENSE BOOKED UNDER THE HEAD LEGAL AND PROFESSIONAL CHARGES IN AY 2009 - 10 WITHOUT CONSIDERING THE FACT THAT THE SAME HAS BE EN REVERSED BY DEBITING PROVISION FOR EXPENSE ACCOUNT AND CREDITING AUDIT FEES ACCOUNT. THUS THE CAPTIONED ENTRY PASSED HAS NO IMPACT ON PROFIT AND LOSS ACCOUNT AS THE EXPENSE BOOKED UNDER THE HEAD LEGAL AND PROFESSIONAL CHARGES IS NULLIFIED BY THE REVERS AL OF PROVISION ENTRY PASSED. ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 15 ISSUE 2: LEGAL AND PROFESSIONAL CHARGES RS.365,170: IN AY 2009 - 10, THE ASSESSEE IDENTIFIED THAT THE PROVISION FOR EXPENSE OF RS.365,170 HAS BEEN WRONGLY CREATED BY DEBITING AUDITING FEES INSTEAD OF LEGAL AND PROFESSIONAL FEES AND THE SAME WAS RECTIFIED BY PASSING THE FOLLOWING ACCOUNTING ENTRY: PARTICULARS DEBIT AMOUNT (RS.) CREDIT AMOUNT (RS.) LEGAL AND PROFESSIONAL (DR.) 365,170 TO AUDIT FEES (CR.) (BEING EXPENSE RECLASSIFIED) 365,170 SINCE, ONE EXPENSE ACCOUNT WAS CREDITED AND THE OTHER WAS DEBITED, NO DEDUCTION WAS CLAIMED FOR RS.365,170 AND OVERALL THERE WAS NO IMPACT ON THE PROFIT AND ACCOUNT. 15.5. AGAIN IN PARA 14.4.3 IT IS HELD AS FOLLOWS. 14.4.3. IN VIEW OF THE ABOVE, THE PANEL IS OF THE VIEW THAT ACTU ALLY THE MATTER INVOLVES TWO ENTRIES OF PROVISIONS MADE IN FY 2007 - 08 FOR GROSS AMOUNTS OF RS.5,05,620/ - (WHICH INCLUDES RS.1,29,992/ - ) AND THE OTHER FOR RS.3,65,170/ - (WHICH INCLUDES RS.1,71,776). NONE OF THE EXPENDITURE IDENTIFIED BY THE AO HAS BEEN CLA IMED IN AY 2009 - 10, AS THE RELEVANT PROVISIONS WERE MADE IN AY 2008 - 09 AND THE SAID PROVISION EXPENDITURE AHS BEEN ALLOWED BY THE AO IN AY 2008 - 09. THUS, THE ADDITION PROPOSED BY THE AO DOES NOT SURVIVE. HOWEVER, THE AO IS DIRECTED TO REVERIFY THE FACTUA L CLAIM OF THE ASSESSEE WHILE FINALISING THE ASSESSMENT ORDER AND IN CASE ANY DISCREPANCY IS STILL NOTICED, TO TAKE ACTION ACCORDINGLY. WE FIND NO INFIRMITY IN THE SE FINDINGS. IN THE RESULT THIS GROUND OF THE REVENUE IS DISMISSED. 15.6. GROUND NO.4 IS ON THE ISSUE OF RELIEF GRANTED BY THE DRP ON ACCOUNT OF PROVISION FOR WARRANTY. THE DRP AT PARA 15.4, APPL IED THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA PVT.LTD. VS. CIT, 314 ITR 62 AND THE DELHI HIGH C OURT IN CIT VS. VINITEC ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 16 CORPORATION PVT.LTD. 278 ITR 337 AN D JUDGEMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ERICSSON COMMUNICATIONS PVT.LTD. (2009) TIOL - 583 - HC - DEL - IT . ON THE GROUND THAT THE ASSESSEE HAS MADE PROVISIONS OF WARRANTY O N A C ONSISTENT AND RATIONAL BASIS , THE DRP DIRECTED THE AO TO GRANT DEDUCTION. WE FIND NO INFIRMITY IN THIS FINDING. HENCE THIS GROUND OF THE REVENUE IS DISMISSED. 15.7. GROUND NO.5 IS ON THE DISALLOWANCE MADE U/S 40(A)(IA) WITH RESPECT TO ADVERTISEMENT EXP ENDITURE. THE DRP RECORDED THAT THE ASSESSEE HAD COMPLIED WITH THE STATUTORY REQUIREMENT OF DEDUCTING TAX AT SOURCE AND HENCE THE DISALLOWANCE U/S 40(A)(IA) IS NOT WARRANTED. THERE IS NO INFIRMITY IN THIS FINDING AND HENCE THIS GROUND OF REVENUE IS DISM ISSED. 15.8. GROUND NOS. 6 AND 7 ARE GENERAL IN NATURE. 16. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED IN PART. 17. IN THE RESULT THE APPEALS BY REVENUE AS WELL AS THAT OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N 05 TH NOVEMBER , 2014. SD/ - SD/ - ( C.M. GARG ) ( J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 05 TH NOVEMBER , 2014 *MANGA ITA NO. 1115/DEL/2014 ITA 617/DEL/2014 M/S LUXOTTICA INDIA EYEWEAR PVT.LTD., GURGAON AY 2009 - 10 17 COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR