ACIT 10(3), MUMBAI V. STRIDES ARCOLAB LTD, NAVI MUMBAI

ITA 6528/MUM/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7828 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 12-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 06-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Keywords: Depreciation; Transfer pricing; Rectification of order; Opportunity of being heard; Additional evidence
• Section: 143(3); 92F; 92

Judgement Text

P AGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO.6528/MUM/2010 ( / ASSESSMENT YEAR: 2005 - 06 ) THE ASS T. COMMISSIONER OF INCOME TAX , RANGE - 10(3), MUMBAI / VS. M/S. STRIDES ACROLABS L IMITED. 206 DEVARATA C HS LIMITED, . SECTOR 17, VASHI NAVI MUMBAI 400703 ./ ./ PAN/GIR NO. AADCS 8104 P ( REVENUE ) : ( ASSESSEE ) / APPELLANT BY : SHRI N.K CHAND, CIT - DR / RE SPONDENT BY : SHRI NITESH JOSHI / DATE OF HEARING : 20 /0 1 /2017 / DATE OF PRONOUNCEMENT : 31/ 03/2017 / O R D E R PER RAVISH SOOD, JM: THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER DATED 29.06.2010 PASSED BY THE CIT(A) - 15, MUMBAI, WHICH IN ITSELF ARISES FROM THE ASSESSMENT ORDER PASSED BY THE A.O. UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961, (FOR SHORT ACT) , DATED 30.12.2008. THE DEPARTMENT ASSAILING THE ORDER PASSED BY THE CIT(A) HAD RAISED TH E FOLLOWING GROUNDS OF APPEAL BEFORE US : - P AGE | 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING DISALLOWANCE OF DEDUCTION AMOUNTING TO RS.6,56,69,350/ - CLAIMED U/S 35(2AB) BY THE ASSESSEE FOR FULFILLMENT O F CONDITIONS THEREON. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADJUSTMENTS MADE BY THE ASSESSING OF FICER IN ARM'S LENGTH PRICE U/S. 92CA(3) OF THE ACT AMOUNTING TO RS.3,70,70,000/ - . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF DEPRECIATION OF RS.85,40,684/ - MADE BY THE TPO IN THE RECTIFICATION ORDER DATED 12.03. 2009. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 5. THE APPELLANT PRAYS FOR APPROPRIATE RELIEF BASED ON THE SAID GROUNDS OF APPEAL AND THE FACT S AND CIRCUMSTANCES OF THE CASE. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PHARMACEUTICAL S HAD FILED ITS RETURN OF INCOME FOR A.Y. 2005 - 06 ON 30.10.2005 DECLARI NG INCOME OF RS.12,21,74,987/ - . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY PROCEEDINGS UNDER SECTION 143(2). THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O. MADE A REFEREN CE TO THE TRANSFER PRICING P AGE | 3 OFFICER (TPO) FOR DETERMINING THE AR MS LENGTH PRICE (ALP) IN RESPECT OF CERTAIN I NTERNATIONAL TRANSACTIONS CARRIED OUT BY THE ASSESSEE WITH ITS ASSOCIATE ENTERPRISES (AE ). THE TPO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE MADE AN UPWARD ADJUSTMENT OF RS. 10,49,09,766/ - TO THE ALP, AS UNDER: - (I). EXPORT OF FINISHED GOODS :RS. 3,70,70,000/ - (II). INTEREST ON ADVANCES :RS. 33,49,416/ - (III). PURCHASE OF TRADE MARKS : RS. 6,44,90,350/ - TOTAL : RS . 10,49,09,766/ - THE A.O. AFTER RECEIVING THE REPORT OF THE TPO THEREIN DELIBERAT ED ON CERTAIN OTHER ISSUES AND ASSESS ED THE INCOME OF THE ASSESSS EE AT RS.38,29,29,330/ - . 3. THE ASSESSEE BEING AGGRIEVED WITH THE ASSESSMENT FRAMED BY THE A.O. THEREIN CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) - 15, MUMBA I . THE CIT(A) VIDE HIS ORDER DATED 29.06.2010 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE, THE FACTS AS REGARDS WHICH TO THE EXTENT RELEVANT TO THE PRESENT CASE AR E BRIEFLY CULLED OUT AS UNDER: - (A) CLAIM OF DEDUCTION UNDER SECTION 35(2AB) : 4. THE ASSESSEE IN ITS RETURN OF INCOME HAD CLAIM ED DEDUCTION OF RS.19,70,08,052/ - U/S 35(2AB) OF THE ACT . TH AT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS THOUGH SU BMITTED BY THE ASSESSEE THAT THE REQUISITE CONDITIONS CONTEMPLATED FOR CLAIMING THE DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION STOOD DULY SATISFIED DURING THE YEAR UNDER CONSIDERATION , HOWEVER P AGE | 4 THE A.O. BEING GUIDED BY THE FACT THAT THE SAID DEDUCTION WAS DISALLOWED BY HIS PREDECESSOR WHILE FRAMING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS, THUS ADOPTING THE OBSERVATIONS OF HIS PREDECESSOR THEREIN CONCLUDED THAT AS THE ASSESSEE HAD NOT ENTER ED INTO AN A GREEMENT WITH THE PRESCRIBED AUTHORITY FOR COOPERATION FOR SUCH RESEARCH AND DEVELOPMENT FACILITY AND FOR AUDIT OF ACCOUNTS MAINTAINED FOR THE SAID FACILITY, AS REQUIRED UNDER LAW, AND RATHER HAD MERELY SUBMITTED THE FORM FOR SUCH AGREEMENT WITH THE DSIR W HICH COULD NOT BE CONSTRUED AS FULFILLMENT OF THE PRE CONDITION CONTEMPLATED U/S 35(2AB), THERE FORE DISALLOWED THE AFORESAID CLAIM TOWARDS WEIGHTED DEDUCTION OF RS.19,70,08,052/ - RAISED BY THE ASSESSEE U/S 35(2AB) , AND SUBSTITUTED THE SAME BY A DEDUCTION OF RS. 13,13,38,701/ - UNDER SEC . 35(1)(I) AND SEC . 35(1)(IV) OF THE ACT . THAT CONSEQUENT TO THE AFORESAID DELIBERATIONS, THE A.O MADE A CONSEQUENTIAL ADDITION OF RS.6,56,69,350/ - [RS. 19,70,08,052/ - ( - ) R S . 13,13,38,701/ - ] IN THE HANDS OF THE A SSESSEE. 4.1 THE ASSESSEE ASSAILED THE DISALLOWANCE OF ITS CLAIM TOWARDS WEIGHTED DEDUCTION UNDER SECTION 35(2AB) BEFORE THE CIT(A). THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT ALL OF THE RE QUISITE CONDITIONS CONTEMPLATED FOR CLAIMING THE AFORESAID WEI GHTED DEDUCTION STOOD DULY SATISFIED, AND IN SUPPORT OF HIS AFORESAID CONTENTION PLACED SUBSTANTIAL MATERIAL ON THE RECORD OF THE SAID FIRST APPELLATE AUTHORITY. THE CIT(A) AFTER DELIBERATING ON THE SUBMISSIONS OF THE ASSESSEE AND PERUSING THE MATERIAL AVAILABLE ON RECORD , THEREIN FOUND FAVOR WITH THE CLAIM OF THE ASSESSEE AND P AGE | 5 HELD THAT THE LATTER HAD DULY SATISFIED THE REQUISITE CONDITIONS FOR CLAIMING THE DEDUCTION U/S 35(2AB). THE DEPARTMENT BEING AGGRIEVED W ITH THE ALLOWING OF THE CLAIM OF THE ASSESSEE COMPANY UNDER SECTION 35(2AB) BY THE CIT(A), THEREIN LEADING TO A CONSEQUEN T DELETION OF AN ADDITION OF RS.6,56,69,350/ - IN THE HANDS OF THE ASSESSEE , HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THAT DU RING THE COURSE OF THE HEARING OF THE APPEAL THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDER OF THE A.O. AND SUBMITTED THAT THE CIT(A) HAD WRONGLY CONCLUDED THAT THE ASSESSEE SATISFIED ALL THE REQUISITE CONDITIONS FOR CLAIMING THE DEDUCTION U/S 35(2AB). THAT ON THE OTHER HAND THE L D. AUTHORIZED REPRESENTATIVE (FOR SHORT A .R ) FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) OBSERVING THAT THE ASSESSEE HAD CARRIED OUT A CONJOINT SATISFACTION OF ALL THE REQUISITE CONDITIONS CONTEMPLATED U /S 35(2AB) HAD THUS RIGHTLY VACATED THE ORDER OF THE A.O. HOLDING TO THE CONTRARY AND DELETED THE CONSEQUENTIAL ADDITION OF RS.6,56,69,350/ - MADE IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER AVERRED BY THE L D. A.R THAT THE A.O. HAD MISCONCEIVED THE FACTUAL MATRIX AND IN STEAD OF INDEPENDENTLY CONSIDERING THE SATISFACTION OF THE REQUISITE CONDITIONS BY THE ASSESSEE FOR CL A IMING THE DEDUCTION U/S 35(2AB) DURING THE YEAR UNDER CONSIDERATION , HAD GONE BY THE ORDER OF HIS PREDECESSOR IN PRECEDING YEARS AND ON THE BASIS OF MISCONCEIVED FACTS HAD DRAWN ADVERSE INFERENCES AS REGARDS THE ENTITLEMENT OF THE ASSESSEE TOWARDS THE CLAIM OF THE AFORESAID WEIGHTED DEDUCTION U/S 35(2AB) DURING THE YEAR UNDER CONSIDERATION . P AGE | 6 4.2 WE HAVE HEARD THE AUTHORIZED R EPRESENTATIVE FO R BOTH THE PARTIES , PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PLACED ON RECORD BEFORE US. WE FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT THE A.O WHILE DISLODGING THE CLAIM OF THE ASSESSEE TOWARDS THE AFORESAID WEIGHTED D EDUCTION U/S 35(2AB) HAD INSTEAD OF VETTIN G AND VERIFYING THE SATISFACTION OF THE REQUISITE CONDITIONS CONTEMPLATED UNDER THE SAID STATUTORY PROVISION BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, HAD RATHER GONE BY THE OBSERVATIONS RECORDED BY HIS PREDECESSOR IN THE PREC EDING YEARS . W E FIND THAT UNLIKE THE PRECEDING YEARS WHERE THE ASSESSEE HAD FAILED TO PRODUCE THE COPY OF THE AGREEMENT WITH THE DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH (DSIR) AS REQUIRED IN SUB - SECTION (3) , DURING THE COURSE OF PROCEEDINGS BEFORE THE LOWER AUTHORITIES FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE AS REQUIRED U/S 35(2AB) HAD PLACED ON RECORD THE COPY OF THE L E TTER DATED 0 6.03.2007 ALONG WITH THE ORDER OF APPROVAL IN F ORM N O. 3CM OF I N - HOUSE R ESEARCH AN D D EVELOPMENT F ACILITY ISSUE D BY DSIR . THE ASSESSEE HAD FURTHER FILED A COPY OF THE REPORT DATED 05.03.2007 SUBMITTED BY THE PRESCRIBED AUTHORITY TO THE DIRECTORY GENERAL ( I NCOME T AX E XEMPTION S ) UNDER SEC . 35(2AB) IN F ORM 3CL , THEREIN EVIDENCING THE AGREEMENT ENTERED INTO FOR CO - OPERATION AND RESEARCH DEVELOPMENT FACILITY AND FOR AUDIT OF ACCOUNTS MAINTAINED FOR THAT FACILITY . WE THUS IN THE BACKDROP OF THE AFORESAID FACTS ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE HAD DURING TH E YEAR UNDER CONSIDERATION DULY SATISFIED THE REQUISITE CONDITIONS UNDER SEC . 35(2AB) , THEREFORE NO INFIRMITY EMERGES FROM THE OBSERVATIONS OF THE CIT(A). IN THIS REGARD IT WOULD ALSO BE RELEVANT TO POINT OUT P AGE | 7 THAT NO MATERIAL HAD BEEN PRODUCED BEFORE US BY THE L D. D.R. WHICH COULD PERSUADE US TO CONCLUDE THAT THE ORDER PASSED BY THE CIT(A) IN CONTEXT OF VACATING THE DISALLOWANCE OF DEDUCTION UNDER SEC . 35(2AB) SUFFERED FROM ANY PERVERSITY. WE THUS IN LIGHT OF THE AFORESAID FACTS ARE OF THE CONSIDERED VIEW T HAT THE CIT(A) ON THE BASIS OF A WELL REASONED ORDER HAD SET ASIDE THE DISALLOWANCE OF DEDUCTION OF RS. 19,70,08,052/ - CLAIMED BY THE ASSESSEE U/S 35(2AB), AND AS A RESULT T HEREOF HAD VACATED THE CONSEQUENTIAL ADDITION OF RS.6,56,69,350/ - IN THE HANDS OF THE ASSESSEE. WE FIND NO REASON TO DISTURB THE AFORESAID ORDER OF THE CIT(A) ON THE ISSUE UNDER CONSIDERATION , AND THUS TO THE SAID EXTENT UPH O LD THE SAME. THE GROUND OF APPEAL NO. 1 SO RAISED BEFORE US IS DISMISSED. (B). DELETION OF ADJUSTMENTS TO A RMS LENGTH PRICE 5. THAT THE TPO ON A REFERENCE BEING MADE BY THE A.O , THEREIN VIDE HIS ORDER U/S 92CA(3), DATED 31.10.2008 , CARRIED OUT AN UPWARD ADJUSTMENT OF RS.3,70,70,000/ - AS REGARDS THE ALP PERTAINING TO THE E XPORT OF FINISHED GOODS MADE BY THE ASSESSEE TO ITS AE S . THE A.O. GIVING EFFECT TO THE AFORESAID ORDER OF THE TPO, THEREIN MADE AN ADDITION OF RS.3,70,70,000/ - IN THE HANDS OF THE ASSESSEE . THE ASSESSEE ASSAILING THE AFORESAID ADDITION THEREIN CARRIED THE SAME IN APPEAL BEFORE THE CIT(A) , WHO BEING OF THE VIEW THAT AS THE UPWARD ADJUSTMENTS TOWARDS ALP MADE BY THE AO/TPO AS REGARDS THE EXPORT OF FINISHED GOODS BY THE ASSESSEE TO ITS A.ES WERE RECURRING ISSUES WHICH HAD CAME UP IN THE CASE OF THE ASSESSEE FOR THE PRECEDING YEARS, AND THE SAME HAD BEEN DELETED BY HIM IN THE APPEAL OF THE ASSESSEE FOR A.Y. 2004 - 05, AS P AGE | 8 WELL AS MET THE SAME FATE IN THE EARLIER YEARS, THEREFORE IN THE BACKDROP OF THE SAID FACT UAL MATRIX , BEING OF THE VIEW THAT AS THE AFORESAID UPWARD TP ADJUSTMENT OF RS.3,70,70,000/ - WAS MADE IN THE HANDS OF THE ASSESSEE ON IDENTICAL FACTS INVOLVED IN THE YEAR UNDER CONSIDERATION, THEREFORE DELETED THE SAME. 5.1 THE DEPARTMENT BEING AGGRIEVED WITH THE O RDER OF THE CIT(A) THEREIN DELETING THE ADDITION OF RS.3,70,70,000/ - WHICH WAS MADE BY THE A.O ON THE BASIS OF THE UPWARD TP ADJUSTMENT AS REGARDS THE E XPORT OF FINISHED GOODS MADE BY THE ASSESSEE TO ITS AES, HAD THEREIN CARRIED THE MATTER IN APPEAL BE FORE US. THAT DURING THE COURSE OF HEARING OF THE APPEAL IT WAS SUBMITTED BY THE L D. A.R THAT THE CIT( A ) WHILE DELETING THE AFORESAID ADDITION HAD RELIED ON THE ORDER PASSED BY HIM IN THE CASE OF THE ASSESSEE FOR A.Y. 2004 - 05, AS WELL AS THOSE PASSED IN TH E EARLIER YEARS. THE L D. A.R IN ALL FAIRNESS RELIED ON THE ORDER PASSED BY THE T RIBUNAL IN THE CASE OF THE ASSESSEE, VIZ. ACIT, RANGE - 10(3), MUMBAI VS. M/S. STRIDES INTERNATIONAL LIMITED (ITA NO. 1605/MUM/2006 - A.Y. 2002 - 03, DATED 16.12.2015) , AND THEREIN T OOK US TO GROUND NO. 8 RAISED BY THE DEPARTMENT BEFORE THE TRIBUNAL AGAINST THE DELETION OF A SIMILAR ADDITION EMERGING FROM AN UPWARD ADJUSTMENT TO THE ALP MADE BY THE A.O. INVOLVING IDENTICAL FACTS, WHEREIN THE TRIBUNAL OBSERVING AS UNDER : - WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY BOTH THE SIDES AS WELL AS ORDER OF TH E LOWER AUTHORITIES. IT IS NOTED BY US THAT LD. CIT - DR IS FACTUALLY CORRECT IN SUBMITTING THAT CIT(A) HAS DELETED THE ADDITION WITHOUT FOLLOWING THE CORRECT APPROACH. THE ISSUES WITH R EGARD TO TRANSFER PRICING P AGE | 9 ADJUSTMENT HAVE TO BE RESOLVED FOLLOWING A MECHANISM AND COMPLYING WITH THE PROVISIONS AS CONTAINED IN C HAP T ER X, DEALING WITH THE TRANSFER PRICING ISSUES AS CONTAINED IN SECTIONS 92 - 92F AND CONNECTED R ULES AS CON TAINED IN RULES 1 0 A,10B,1OC,1 0 D AND 1 0 E OF INCOME TAX RULES 1962. THESE SECTIONS AND RULES PRESCRIBE VARIOUS METHODS THAT MAY BE EMPLOYED TO ESTABLISH ARM'S LENGTH PRICE, EXPLAINING APPLICABILITY OF EACH METHOD, THE DOCUMENTATION REQUIRED TO BE MAINTAINED AND FORM OF THE CERTIFICATE TO BE ISSUED BY AUDITORS IN THIS REGARD. THESE REGULATIONS PROVIDE THAT ANY INCOME ARISING FROM THE INTER NATIONAL TRANSACTIONS SHALL BE DETERMINED HAVING REGARD TO THE ARM'S LENGTH PRICE. THIS ISSUE HAS NOW BE EN DECIDED IN VARIO US COURTS THAT WHERE INTERNATIONAL TRANS ACTIONS ARE INVOLVED WITH AE, THEN ARM'S LENGTH PRICE HAS T O BE DETERMINED IN LINE WITH THE AFORESAID PROVISIONS. IT IS NOTED BY US THAT LD. CIT(A) HAS DECIDED THIS ISSUE WITHOUT TAKING INTO ACCOUNT THE EFFECT OF THE SE PROVISIONS. THEREFORE, IN OUR CONSIDERED VIEW, THIS ISSUE NEEDS TO BE SENT BACK. ON THE OTHER HAND, THE ASSESSEE HAS ALSO MADE A GRIEVANCE THAT THE TPO HAS NOT MADE PROPER ANALYSIS WHILE BENCHMARKING THE TRANSACTIONS TO COMPUTE ARM'S LENGTH PRICE. IT HA S BEEN FURTHER SUGGESTED THAT TNMM METHOD WILL BE MOST APPROPRIATE METHOD, NO OBJECTION HAS BEE N RAISED BY THE LD. CIT - DR IN THIS REGARD. THEREFORE KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THIS CASE, WE DEEM IT APPROPRIATE TO SEND THIS ISSUE BACK TO THE FILE OF THE TPO WHO SHALL CARRY OUT AFRESH SEARCH AND MAKE FRESH ANALYSIS AND SHALL ALSO KEEP IN VIEW THE AFORESAID OBJECTIONS RAISED BY THE ASSESSEE. P AGE | 10 THE TPO SHALL ALSO GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSE E TO SUBMIT REQUIRED DETAILS AND DOCUMENTS, AS PER LAW, BEFORE DECIDING THIS ISSUE AFRESH. THUS, WITH THESE DIRECTIONS, THIS ISSUE IS SENT BACK TO THE FILE OF AO/TPO. THUS GROUND NO. 8 O F REVENUE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. , H AD THEREIN RESTORED THE MATTER TO THE FILE OF THE AO/TPO. THUS, IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION WHICH WAS VERY FAIRLY BROUGHT TO OUR NOTICE, IT WAS THUS SUBMITTED BY THE L D. A.R THAT AS IDENTICAL FACTS WERE INVOLVED IN THE YEAR UNDER CONSIDERATION, THEREFORE THE MATTER ON THE SAME FOOTING MAY BE RESTORED TO THE FILE OF THE AO/TPO. THAT ON THE OTHER HAND THE L D. D.R AGREED THAT HE HAD NO OBJECTION IF THE MATTER WAS RESTORED TO THE FILE OF THE AO/TPO ON THE SIMILAR LINES AS HAD BEEN RECORDED BY THE T R IBUNAL WHILE DISPOSING OF THE AFORESAID APPEAL OF THE ASSESSEE FOR A.Y. 2002 - 03 , SO THAT THE ISSUE PERTAINING TO TP ADJUSTMENT MAY BE RESOLV ED FOLLOWING A MECHANISM WHICH IS FOUND TO BE IN COMPLIANCE WITH THE PROVISIONS CONTAINED IN C HAPTER X DEALING WITH THE T RANSFER PRICING ISSUE S CONTAINED IN SECTION 92 TO 92F , AND THE CONNECTED RULES CONTEMPLATED IN RULES 10A, 10B, 10C, 10D, AND 10E OF THE INCOME TAX RULE S, 1962. IT WAS HOWEVER SUBMITTED BY THE L D. D.R THAT WHILE RESTORING THE MATTER , NO DIRECTIONS AS REGARDS THE PARTICULAR METHOD TO BE ADOPTED BE GIVEN BY THE T RIBUNAL, TO WHICH NO OBJECTION WAS RAISED BY THE L D. A.R . 5.2 WE HAVE HEARD THE A UTHORIZED R EPRESENTATIVE S OF BOTH THE PARTIES , PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE P AGE | 11 MATERIAL PLACED ON RECORD BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT AS OBSERVED BY US HEREINABOVE, AS THE ISSUE PERTAINING TO DETERMINATION OF ALP W.R.T. E XPORT OF FINISHED GOODS BY THE ASSESSEE TO ITS AE S , IN THE BACKDROP OF THE SAME FACTS INVOLVED DURING THE YEAR UNDER CONSIDERATION HAD ALREADY BEEN LOOKED INTO BY THE T RIBUNAL IN THE CASE OF THE ASSESSEE FOR A.Y. 200 2 - 0 3, THEREFORE IN LIGHT OF THE SAID FA CTUAL MATRIX AND THE CONCESSIONS MADE BY THE AFORESAID PARTIES BEFORE US, WE RESTORE THE MATTER TO THE FILE OF THE TPO WHO SHALL DETERMINE THE ALP AS REGARDS THE E XPORT OF FINISHED GOODS CARRIED OUT BY THE ASSESSEE TO ITS AES DUR ING THE YEAR UNDER CON SIDERATION BY FOLLOWING THE DIRECTION S OF THE TRIBUNAL IN ITS ORDER DATED 16.12.2015 (SUPRA) IN A SIMILAR SITUATION AND BY A MECHANISM CONSISTENT WITH THE PROVISIONS DEALING WITH THE T RANSFER PRICING ISSUES CONTEMPLATED BY SECTION 92 - 92F , AND THE CONNECTED R ULES CONTAINED IN RULES 10A, 10B,10C,10D AND 10E OF THE INCOME TAX RULES 1962. AT THIS POINT, WE MAY CLARIFY THAT EVEN IN A.Y. 2002 - 03 NO PARTICULAR METHOD HAS BEEN DIRECTED TO BE ADOPTED BY THE TRIBUNAL. RATHER, THE MATTER HAS BEEN REMANDED BACK FOR FRE SH ANALYSIS, AS IS EVIDENT FROM A READING OF THE RELEVANT PORTION OF THE ORDER, WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER . NEEDLESS TO SAY, THE TPO SHALL DURING THE COURSE OF THE SET ASIDE PROCEEDINGS AFFORD OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THE G ROUND OF APPEAL NO. 2 SO RAISED BEFORE US IS THUS ALLOWED FOR STATISTICAL PURPOSE IN TERMS OF OUR AFORESAID OBSERVATIONS. P AGE | 12 (C). DELETION OF ADDITION ON ACCOUNT OF DEPRECIATION 6. THAT THE TPO VIDE HIS ORDER DATED 31.10.2008 PASSED UNDER SECTION 92CA(3) HAD CARRIED OUT AN ADJUSTMENT OF RS.6,44,90,350/ - AS REGARDS THE ALP PERTAINING TO P URCHASE OF TRADEMARK S . THAT AS THE ASSESSEE HAD ONLY CLAIMED DEPRECIATION IN RESPECT OF PURCHASE OF TRADEMARK S , AND AS SUCH, THE ADJUSTMENT COULD HAVE BEEN MADE BY THE TPO ONLY AS REGARDS THE AMOUNT OF RS. 85,40,684/ - AMORTIZED AND CLAIMED AS DEDUCTION BY THE ASSESSEE IN RESPECT OF THE SAID TRADEMARKS, THEREFORE THE TPO VIDE HIS RECTIFICATION ORDER PASSED U/S 92CA(5), DATED 12.03.2009 , THEREIN RESTRICTED THE ADJUSTMENT AS REGARDS THE ALP PERTAINING TO PURCHASE OF TRADEMARK S TO AN AMOUNT OF RS.85,40,684/ - .THE ASSESSEE BEING AGGRIEVED WITH THE AFORESAID ADDITION OF RS.85,40,684/ - SO MADE BY THE AO/TPO THEREIN ASSAILED THE SAME BEFORE THE CIT(A). THE CIT(A) AFTER TAKING ON RECORD THE COPIES OF AGREEMENTS WHER E UNDER THE TRADEMARKS IN QUESTION HAD BEEN PURCHASED BY THE AE S FROM OUTSIDE PARTIES , AND BEING CONSCIOUS OF THE FACT THAT THE SAID AGREEMENTS WERE NOT FILED BEFORE THE TPO, THEREFORE VIDE HIS LETTER DATED. 08.03.2010 DIRECTED THE TPO TO CONDUCT AN ENQUIRY UNDER SEC . 250(4) AFTER CONSIDERING THE SAID DOCUMENTS AND AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE TPO VIDE HIS REMAND REPORT UNDER SEC . 250(4) THOUGH CONCEDED TH AT THE DOCUMENTS FURNISHED BY THE ASSESSE E WERE IN ORDER, BUT REFERRING TO THE DISCLAIMER IN THE CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT, THEREIN RAISED DOUBTS AS REGARDS TH E RELIABILITY OF THE DOCUMENTS WHICH WERE PLACE D ON RECORD. THE TPO FURTHER RAISED P AGE | 13 HIS OBJECTION IN CONTEXT OF THE AFORESAID CERTIFICATES WHICH THE ASSESSEE HAD FURNISHED WITH THE CIT(A), ON THE GROUND THAT THOUGH THE SAME WERE DATED. OCTOBER, 2004, AND THUS DESPITE BEING AVAILABLE WITH THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, WERE HOWEVER NOT FILED WITH THE A.O. THE CIT(A) AFTER CONSIDERING THE AFORESAID FACTS AND THE OBJECTIONS RAISED BY THE A.O BEFORE HIM, THEREIN TOOK COGNIZANCE OF AND ACTED UPON THE AFORESAID DOCUMENTS. THE CIT(A) BEING PERSUADED TO SUBSCRIBE TO THE CONTENTION OF THE ASSESSEE THAT THE DISCLAIMER CONTAINED IN THE CERTIFICATE ISSUED BY THE C.A WAS A CUSTOMARY DISCLAIMER AND ONLY REFERRED TO THE SUBJECTIVITY INVOLVED IN THE PROCESS OF VALUATION, THE PURPOSE BEHIND WHICH WAS TO PROTECT T HE INTEREST OF THE INDIVIDUAL PROFESSION AL ISSUING SUCH CERTIFICATE/S WITHOUT LIMITING AND /OR REDUCING THE VALUE OF THE SAME. THE CIT(A) FURTHER FOUND HIMSELF TO BE IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT AS THE ASSESSEE HAD PAID THE SAME PR ICE FOR THE BRANDS/REGISTRATIONS AS WAS PAID BY THE AE S FOR ACQUIRING THE SAME A COUPLE OF MONTHS AGO FROM UNRELATED THIRD PART Y OWNERS OF SUCH PRODUCT BRANDS/REGISTRATIONS ETC . , THEREFORE THE SAME IN ITSELF SUFFICIENTLY PROVED THAT THE ACQUISITION OF THE BRANDS/REGISTRATIONS UNDER CONSIDERATION BY THE ASSESSEE WAS WITHIN THE ARMS LENGTH PRICE . THE CIT(A) THUS IN THE BACKDROP OF THE AFORESAID FACTS THEREIN CONCLUDED THAT THERE WAS NO REASON FOR SUSTAINING THE ADJUSTMENT WHICH WAS MADE BY THE TPO BY CONSIDER ING NIL VALUE AS THE C OST OF THE BRANDS / REGISTRATIONS ETC. IT WAS THUS OBSERVED BY THE CIT(A) THAT THE AFORESAID FACT THAT THE ASSESSEE HAD PURCHASED THE PRODUCT REGISTRATION/BRANDS FROM THE AE S AT THE SAME PRICE AT WHICH IT WAS PURCHASED BY THE LAT T ER P AGE | 14 FROM UNRELATED THIRD PARTIES, IN ITS ELF WAS A CRUCIAL FACT WHICH SINGLE HANDEDLY PROVED BEYOND ANY SCOPE OF DOUBT THAT T HE ALP OF THE TRANSACTIONS WAS IN THE NATURE OF A BACK TO BACK PAYMENT. THUS THE CIT(A) BEING OF THE VIEW THAT THE ASSESSEE HAD ALSO PLACED ON RECORD SUBSTANTIAL MATERIAL JUSTIFYING COMMERCIALLY THE PURCHASE OF BRANDS, WHILE FOR ON THE OTHER HAND NO MATER IAL HAD BEEN PLACED ON RECORD BY THE AO/TPO TO INDICATE THAT THE PRICE PAID BY THE ASSESSEE TO ITS AE S FOR THE BRANDS WAS EXCESSIVE OR UNREASONABLE, THEREFORE CONCLUDED THAT IN THE TOTALITY OF THE AFORESAID FACTS NO ADJUSTMENT AS REGARDS THE ALP IN CONTEXT OF THE PURCHASE OF TRADEMARK S BY THE ASSESSEE FROM ITS AE S WAS LIABLE TO BE MADE, AND TH US DELETED THE ADDITION OF RS.85,40,684/ - . 6.1 THAT DURING THE COURSE OF HEARING OF THE APPEAL THE L D. D.R STRONGLY OBJECTED TO THE ADMISSION OF THE DOCUMENTARY EVID ENCE BY THE CIT(A), VIZ. COPIES OF THE AGREEMENTS WHEREIN TRADEMARKS HAD BEEN PURCHASED BY THE AE S FROM OUTSIDE PARTIES, WHICH IT WAS AVERRED BY THE CIT(A) WAS NOT IN TERMS OF THE PROCEDURE CONTEMPLATED UNDER RULE 46A OF THE INCOME - TAX RULE 1962. IT WAS SU BMITTED BY THE L D. D.R THAT THE AFORESAID DOCUMENTS WHICH WERE CLEARLY IN THE NATURE OF ADDITIONAL EVIDENCE COULD ONLY BE ADMITTED BY THE CIT(A) IN EXERCISE OF HIS POWERS UNDER RULE 46A, AND THE SAME HAD NOT BEEN FOLLOWED BY THE LATTER IN THE RIGHT SPIRI T . IT WAS AVERRED BY THE LD. D.R THAT DIRECTIONS BE ISSUED TO THE CIT(A) TO CONSIDER THE ADMISSION OF THE AFORE SAID DOCUMENTS AFRESH IN THE BACKDROP OF THE PROCEDURE CONTEMPLATED UNDER RULE 46A. THE L D. D.R IN SUPPORT OF HIS AFORESAID CONTENTION THEREIN RE LIED ON THE ORDER OF THE ITAT, B ENCH D, N EW DELHI IN THE CASE P AGE | 15 OF ITO, W ARD - 6(4) NEW DELHI VS. M/S. MITTAL INTERNATIONAL (I) PVT. LTD. NEW DELHI. (ITA NO. 1671/DEL/2004 - A.Y 2001 - 02, DATED 30.06.2008 ) . THAT ON THE OTHER HAND THE L D. A.R OBJECTING TO THE AFORESAID CONTENTION SO RAISED BY THE LD. D.R , THEREIN SUBMITTED THAT THE CIT(A) NOT BEING OBLIVIOUS OF THE FACT THAT THE AFORESAID DOCUMENTS WERE NOT FILED BEFORE THE TPO , HAD THUS VIDE HIS LETTER DATED 08.03.2010 DIRECTED THE A.O TO CARRY OUT AN ENQUIRY UNDER SEC . 250(4) AFTER CONSIDERING THE SAID DOCUMENTS WHICH WERE DULY FORWARDED TO THE TPO. IT WAS SUBMITTED BY THE L D. A.R THAT THE TPO HAD THEREAFTER CARRIED OUT AN ENQUIRY , AND AFTER AFFORDING OPPORTUNITY TO THE ASSESSEE , THERE IN FINALLY FORWARDED H IS REMAND REPORT TO THE CIT(A) ON 10.06.2010, WHEREIN THE OBJECTIONS AS REGARDS ADMISSION OF THE SAID DOCUMENTS WHICH WERE AVAILABLE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, AS WELL AS REGARDS THE RELIABILITY OF THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE WERE RAISED BEFORE THE CIT(A) . IT WAS SUBMITTED BY THE L D. A . R THAT THE CIT(A) IN EXERCISE OF HIS POWER UNDER SECTION 250(4) HAD CALLED FOR A REPORT FROM THE TPO, WHO AFTER DULY PERUSING, VERIFYING AND VETTING THE DOCUMENTS HAD FILED HIS REPORT WITH THE CIT(A) , ALONGWITH RAISING OF OBJECTIONS AS REGARDS BOTH THE ADMISSION AND RELIABILITY OF THE DOCUMENTS BEFORE HIM . IT WAS THUS AVERRED BY THE L D. A.R THAT IT WAS NOT A CASE WHERE THE CIT(A) HAD ADMITTED ANY DOCUMENT AT THE BA CK OF THE AO/TPO, BUT RATHER HAD EXERCISED THE JURISDICTION AS STOOD VESTED WITH HIM UNDER SECTION 250(4) AFTER CONSIDERING THE REMAND REPORT OF THE A.O , WHICH INCLUDED THE AFORESAID OBJECTIONS RAISED BY HIM DURING THE COURSE OF THE REMAND PROCEEDINGS. THE L D. A.R THUS RELIED ON THE ORDER OF THE CIT(A) AND SUBMITTED THAT P AGE | 16 THE LATTER AFTER DULY APPRECIATING THE FACTS OF THE CASE HAD RIGHTLY DELETED THE DISALLOWANCE/ADDITION OF RS.85,40,684/ - PERTAINING TO THE PURCHASE OF TRADEMARK S BY THE ASSESSEE FROM ITS AE S . 6.2 WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE CIT(A) AFTER CALLING FOR A REMAND REPORT FROM THE A.O , HAD THEREIN B Y WAY OF A REASONED ORDER DEALT WITH THE ISSUE UNDER CONSIDERATION. WE FIND THAT THE CIT(A) AFTER CONSIDERING THE FACT THAT NOW WHEN THE ASSESSEE HAD PAID THE SAME PRICE FOR BRAND S/REGISTRATION S, AS WAS PAID BY THE AE S FOR ACQUIRING THE SAME FROM UNRELATED THIRD PARTY OWNERS OF SUCH PRODUCT BRANDS/REGISTRATION A FEW MONTHS AGO, THEREFORE THE SAID FACT ITSELF WAS SUFFICIENT ENOUGH TO FORTIFY THE FACT THAT ACQUISITION OF BRANDS/REGIS TRATION S BY THE ASSESSEE FROM ITS AE S WAS AT ARMS LENGTH PRICE. WE FIND OURSELVES TO BE IN AGREEMENT WITH THE CIT(A) THAT THE DISCLAIMER INCORPORATED IN THE CERTIFICATE OF TH E CHARTERED ACCOUNTANT WAS IN THE NATURE OF A CUSTOMARY DISCLAIMER , WHICH IS GIVEN IN THE REPORTS/CERTIFICATE S TO PROTECT THE INTEREST OF THE INDIVIDUAL PROFESSIONAL ISSUING SUCH CERTIFICATE/S , AND THE SAME IN NO WAY CAN GO TO ADVERSELY HIT THE RELIABILITY OF THE SAME . WE ARE FURTHER OF THE CONSIDERED VIEW THAT IN THE TOTALITY OF THE FA CTS INVOLVED IN THE PRESENT CASE , THE CIT(A) IN EXERCISE OF HIS POWERS UNDER SEC . 250(4) HAD CALLED FOR A REMAND REPORT FROM THE A.O, WHICH WAS FURNISHED BY THE LATTER WITH CERTAIN OBJECTIONS , BOTH AS REGARDS ADMISSION AND RELIABILITY OF THE DOCUMENTS SO F ILED BY THE P AGE | 17 ASSESSEE. WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) ACTING UPON THE DOCUMENTS FILED WITH HIM BY THE ASSESSEE, HAD THEREIN WHILE EXERCISING HIS POWERS U/S 250(4) HAD ACTED IN THE TRUE LETTER AND SPIRIT BY MAKING THE SAID DOCUMENTS AVAILABLE TO THE A.O, CALLING FOR A REMAND REPORT AND THEREAFTER PROCEEDING WITH AFTER CONSIDERING THE LATTERS OBJECTIONS AS REGARDS BOTH THE ADMISSION AS WELL AS RELIABILITY OF THE DOCUM ENTS FILED BEFORE HIM BY THE ASSESSEE. WE ARE UNABLE TO COMPREHEND THAT AS TO HOW ANY INFIRMITY COULD BE RELATED TO THE EXERCISE OF SUCH POWERS BY THE CIT(A) , AND AS SUCH ARE UNABLE TO SUBSCRIBE TO THE AFORESAID OBJECTION SO RAISED BY THE LD. D.R BEFORE US . WE THUS IN THE BACKDROP OF THE AFORESAID OBSERVATIONS AS REGARDS THE VALIDITY OF THE EXERCISE OF THE POWERS BY THE CIT(A) UNDER SECTION 250(4), THUS ARE NOT IMPRESSED BY THE OBJECTION OF THE L D. D.R , WHO HAD SOUGHT A DIRECTION THAT THE AFORESAID DOCUMENTS WHICH WERE FURNISHED BY THE ASSESSEE WITH THE CIT(A) TO SUPPORT ITS CLAIM THAT THE PURCHASE OF TRADEMARKS FROM THE AE S WAS AS PER THE ARMS LENGTH PRICE, BE THEREIN RESTORED TO THE FILE OF THE CIT(A) FOR EXAMINING THE SAME AFRESH IN THE BACKDROP OF THE PRO CEDURE CONTEMPLATED UNDER RULE 46A. WE FURTHER FIND THAT THE RELIANCE PLACE D BY THE L D. D.R ON THE ORDER OF THE COORDINATE BENCH OF THE T RIBUNAL IN THE CASE OF : M/S. MITTAL INTERNATIONAL (I) PVT. LTD. (SUPRA) IS DISTINGUISHABLE ON FACTS, FOR THE VERY REASON THAT UNLIKE THE FACTS INVOLVED IN THE SAID CASE, IN THE PRESENT CASE THE CIT(A) HAD NOT ONLY FORWARDED THE COPIES OF THE AFORESAID DOCUMENTS TO THE A.O WHILE CALLING FOR A REMAND REPORT, BUT RATHER HAD ACT ED UPON THE SAME ONLY AFTER CONSIDERING THE OBJECTIONS AS REGARDS THE SAME AS WAS SO RAISED BY THE A.O IN HIS REMAND REPORT. WE THUS IN THE BACKDROP OF OUR P AGE | 18 AFORESAID FINDINGS ARE THUS OF THE CONSIDERED VIEW THAT THE CIT(A) BY WAY OF A REASONED ORDER HAD DELETED THE ADDITION OF RS. 85,40,684/ - , WHICH IN THE ABSENCE ANY PERVERSITY HAVING BEEN BROUGHT TO OUR NOTICE IS THUS UPHELD. THE G ROUND OF APPEAL NO. 3 SO RAISED BY THE DEPARTMENT IS THUS DISMISSED. 7. THAT AS REGARDS THE G ROUND S OF APPEAL NO. 4 AND 5 , THE SAME APPEARS TO BE GENERAL IN NATURE , AND IN THE ABSENCE OF ANY AVERMENT HAVING BEEN MADE BY THE L D. D.R AS REGARDS THE SAME , ARE DISMISSED AS NOT PRESSED. 8. THE APPEAL OF THE DEPARTMENT IS THUS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS . ORDER PRONOUNCED IN THE OPEN COURT ON 31 /03/2017 . SD/ - SD/ - (G.S . PANNU) (RAVISH SOOD) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 31 .03.2017 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE P AGE | 19 / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI