ACIT, Chandigarh V. M/s Gemcom Software India Pvt. Ltd., Chandigarh

ITA 676/CHANDI/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9858 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 15-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 06-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A K JINDAL
• Keywords: Transfer pricing

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.676/CHD/2015 ASSESSMENT YEAR: 2011-12 ASST. CIT, VS. M/S GEMCOM SOFTWARE CIRCLE-2(1), INDIA PVT. LTD, ROOM NO. 414, 4 TH FLOOR SCO-117-118, SEC-17-B AAYAKAR BHAWAN, CHANDIGARH SECTOR- 17 E, CHANDIGARH PAN NO. AAGCS4694F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUSHIL KUMAR RESPONDENT BY : SH. A.K. JINDAL DATE OF HEARING : 28/06/2016 DATE OF PRONOUNCEMENT : 30/06/2016 ORDER PER ANNAPURNA GUPTA A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE LD. CIT(A)-1, CHANDIGARH, DT. 01/04/2015, RAISING THE FOLLOWING G ROUNDS: 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS & C ONTRARY TO FACTS & LAW. 2. WHETHER THE LD. CIT(A) ERRED IN DELETING THE AD DITION OF RS. 44,46,029/- MADE ON ACCOUNT OF INTER CORPORATE CHARGES PAID TO THE PARENT COMPANY WHEN THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS OF SH OWING THAT SERVICES WERE PASSED ON TO IT IN RELATION TO THESE EXPENSES? 3. WHETHER THE LD. CIT(A) ERRED IN DELETING THE ADD ITION OF RS. 44,46,029/- BY RELYING ON THE DECISION OF THE HONBLE DELHI HIGH C OURT IN THE CASE OF NESTLE INDIA LIMITED WHICH IS DISTINGUISHABLE ON FACTS ? 4. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 2. PRIMARILY THE ONLY ISSUE IN THE PRESENT APPEAL I S RELATING TO THE DELETION OF DISALLOWANCE MADE BY THE AO OF INTER COMPANY CONSUL TANCY CHARGES AMOUNTING TO RS. 44,46,029/-. 2 3. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE IS A 100% SUBSDIARY OF GEMCO. SOFTWARE AUSTRALIA PTY LTD., AUSTRALIA ENGAG ED IN THE BUSINESS OF MARKETING MINING SOFTWRARE. DURING THE IMPUGNED ASS ESSMENT YEAR, THE ASSESSEE CLAIMED EXPENSES AMOUNTING TO RS. 44,46,029/- UNDER THE HEAD INTER CO. CONSULTANCY EXPENSES WHICH HE WAS ASKED TO SUBSTAN TIATE DURING ASSESSMENT PROCEEDING. THE ASSESSEE SUBMITTED A DETAILED NOTE ON THE EXPENSES INCURRED, REPRODUCED AT PAGE 2 & 3 OF THE ASSESSMENT ORDER, T HE GIST OF WHICH WAS THAT THE PARENT COMPANY OF THE ASSESSEE HAD ASSOCIATES I N SEVEN COUNTRIES AND IN THE COURSE OF DEALING WITH THEM, CERTAIN SERVICES W ERE RENDERED BY THE PARENT TO THE ASSOCIATES. SUCH COMMON EXPENSES WERE DECIDE D TO BE SHARED BY ALL THE ENTITIES BASED ON THE TRANSFER PRICE STUDY AND AGRE EMENT ENTERED INTO WITH THEM. THE ASSESSEE FURTHER STATED THAT IT HAD ALSO PAID SERVICE TAX ON THE SAME AND WITHHELD TAX ALSO AND FURTHER THAT THE DISALLOW ANCE WOULD RESULT IN DOUBLE TAXATION OF THE SAME INCOME. 4. LD. AO REJECTED THE ASSESSES CONTENTION FOR THE REASON THAT THE AGREEMENTS DID NOT PROVIDE FOR THE SAME AND IN ANY CASE THE ASSESSEE WAS MAKING PAYMENTS FOR THE SOFTWARE AND USTS PURCHASED TO ITS GROUP COMPANIES AT ARMS LENGTH AND THERE WAS NO REASON TO MAKE ANY FURTHER PAYMENTS LD. AO ALSO HELD THAT THE ASSESSEE HAD NOT EXPLAINED THE C OMMON EXPENSES INCURRED. THE AO WHILE MAKING THE DISALLOWANCE HELD AT PARA 3 .4 OF HIS ORDER AS FOLLOWS: 3.4 THESE AGREEMENTS DO NOT PROVIDE FOR PAYMENT OF INTERPRETED COMPANY CONSULTANCY OF THE DESCRIPTION MENTIONED IN PARA 3. 1 ABOVE. APART FROM THIS, THE ASSESSEE HAS ADMITTED IN HIS REPLY, REPRODUCED AT P ARA 3.1 ABOVE THAT THESE ARE EXPENSES OF OTHER GROUP COMPANIES AND THEREFORE, TH ERE IS NO JUSTIFICATION FOR PAYMENT OF THESE EXPENSES BY THE ASSESSEE, ESPECIAL LY KEEPING IN VIEW THE FACT THAT THE ASSESSEE HAS BEEN PAYING PRICE FOR SOFTWAR E AND USTS TO ITS GROUP COMPANIES WHICH HAS BEEN CLAIMED TO BE AT ARMED LEN GTH PRICE. THE ASSESSEE COMPANY AND ITS HOLDING COMPANY ARE SEPARATE LEGAL ENTITIES AND THERE CAN BE NO JUSTIFICATION FOR ANY PAYMENT OTHER THAN THAT PR OVIDED IN THEIR AGREEMENT OR A PAYMENT WHICH IS NOT SUPPORTED BY COMMENSURATE SUPP LY OF GOODS OR SERVICES. FURTHER, THE ASSESSEE HAS NOT EXPLAINED WHAT ARE TH E COMMON EXPENSES INCURRED BY THE GROUP COMPANIES RELATING TO THE ASSESSE COMP ANY. IN ANY CASE, THE COMMON EXPENSES, IF ANY, CANNOT BE CALLED CONSULTAN CY EXPENSES BY ANY STRETCH OF IMAGINATION UNLESS THEY ARE THE CONSULTANCY EXPE NSES PAID BY A GROUP COMPANY THE BENEFITS OF WHICH ARE DIRECTLY PROVIDED TO THE ASSESSEE COMPANY. 3 THESE FACTS PROVE THAT THE ASSESSEE HAS ONLY TRIED TO TRANSFER PART OF ITS PROFITS TO ITS HOLDING COMPANY TO AVOID TAXES IN INDIA. 3.5 FURTHER , THE PLEA OF DEPOSIT OF SERVICE TAX ON INTERPRETED CO. CONSULTANCY OF TDS ON THIS EXPENSE IS NOT RELEVANT HERE BECAUSE TH E EXPENSE ITSELF IS NOT ALLOWABLE IN VIEW OF FACTS MENTIONED ABOVE AND THES E PAYMENTS WILL NOT MAKE AN EXPENSE WHICH IS INHERENTLY INADMISSIBLE, ALLOWA BLE. THE PLEA OF DOUBLE TAXATION RAISED BY THE ASSESSEE IS ALSO NOT ACCEPTA BLE BECAUSE APART FROM THE PRINCIPLES OF DOUBLE TAXATION, THE BASIS PRINCIPAL OF RELATIONSHIP OF AN EXPENSE WITH THE BUSINESS OF THE ASSESSEE IS ALSO IMPORTANT AND, IN FACT, CARRIES MORE WEIGHT. THE ASSESSEE CANNOT, AS ITS OPTION, CHANGE THE TERR ITORY OF TAXATION OF AN INCOME BY RESORTING TO MAKING PAYMENTS WHICH ARE NOT RELAT ED TO THE BUSINESS OF THE ASSESSEE BUT TO THE BUSINESS OF ITS PRINCIPAL. 5. AGGRIEVED BY THE SAME THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A), WHO ALLOWED THE ASSESSEES APPEAL FOLLOWING HIS ORDER IN THE ASSESSES OWN CASE ON IDENTICAL ISSUE IN ASSESSMENT YEAR 2008-09 . 6. AGGRIEVED BY THE SAME THE REVENUE FILED THE PRES ENT APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING BEFORE US LD. AR TO OK US THROUGH THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH ITS PA RENT COMPANY DT. 01/01/2008 .AND DT. 01/04/2008 PLACED AT PAPER BOOK PAGE NO. 109-111 & 189- 214 RESPECTIVELY AND REFERRING TO CLAUSES 6,7,8 OF THE RECITALS AND 3-8 OF THE AGREEMENT DT. 01/01/2008 AND ARTICLE 6 OF AGREEMENT DT. 01/04/2008 POINTED OUT THAT THE INCURRING OF SUCH EXPENSES WAS CONTEMP LATED IN THE AGREEMENTS AND SO ALSO THE SHARING OF THESE EXPENSES. LD. AR A LSO POINTED OUT THE RELEVANT CLAUSES IN THE AGREEMENT SETTING OUT THE BASIS OF C ALCULATING THE CHARGE OF THE EXPENSE. LD. AR FURTHER DREW OUR ATTENTION TO THE C OPY OF INVOICE PLACED AT PAPER BOOK PAGE NO 262-264 RAISED BY THE PARENT COM PANY, CHARGING THE IMPUGNED COST ALLOCATED TO THE ASSESSEE, AND ALSO T HE DETAIL ATTACHED TO THE INCOME SHOWING THE BASIS OF ARRIVING AT THE FIGURE OF COST ALLOCATED. THUS THE LD. AR STATED THAT THE AO HAD ERRED IN STATING THAT THE IMPUGNED EXPENSES WERE NOT AS PER THE AGREEMENTS ENTERED INTO WITH THE PAR ENT COMPANY AS HELD BY THE LD. CIT(A). 8. LD. DR COUNTERED BY STATING THAT THE LD. CIT(A), IN THE PRESENT CASE, HAD RELIED UPON HIS ORDER PASSED IN THE CASE OF THE ASS ESSEE FOR ASSESSMENT YEAR 4 2008-09, WHEN ONLY THE AGREEMENT DT. 01/01/2008 WAS THERE WHILE THE OTHER AGREEMENT, HAVING BEEN ENTERED INTO ON 01/04/2008 H AD NOT BEEN CONSIDERED BY THE CIT(A). IN THE IMPUGNED YEARS BOTH THE AGREE MENT WERE IN EFFECT AND THEREFORE BY RELYING UPON HIS EARLIER YEAR ORDER. L D. CIT(A) HAD VIRTUALLY NOT TAKEN INTO CONSIDERATION THE IMPACT OF THE OTHER AGREEMEN T. TO THIS, LD. AR, REBUTTED BY STATING THAT WHAT WAS RELEVANT TO THE PRESENT ISSUE IN HAND WAS THE AGREEMENT DT. 01/01/2008 WHICH CONTAIN ED THE CLAUSES RELATING TO COST SHARING AND THESE CLAUSES HAD NOT BEEN IN A NY WAY AMENDED BY THE OTHER AGREEMENT THEREFORE NON-CONSIDERATION OF THE OTHER AGREEMENT BY THE LD. CIT(A) WOULD NOT IN ANY CASE HAVE EFFECTED THE OUTC OME OF THE ORDER. 9. LD. DR FURTHER POINTED OUT THAT THE EXPENSES HAD BEEN DISALLOWED NOT MERELY BECAUSE THE AGREEMENTS DID NOT PROVIDE FOR T HE SAME, BUT ALSO BECAUSE THE ASSESSEE HAD NOT EXPLAINED THE NATURE OF THE SA ME NOR SUPPORTED THE INCURRING OF EXPENSES BY COMMENSURATE SUPPLY OF SER VICES. LD. DR DREW OUR ATTENTION TO PARA 3.4 OF THE AO CONTAINING THE RELE VANT FINDING OF THE AO WHILE MAKING THE IMPUGNED DISALLOWANCE. LD. DR THEREAFTER STATED THAT NEITHER HAS THE ASSESSEE ADDUCED ANY EVIDENCE TO THE EFFECT BEF ORE THE AO OR THE CIT(A) NOR HAS THE LD. CIT(A) DEALT WITH THIS ASPECT OF TH E MATTER. THEREFORE HE ARGUED THAT THE ORDER OF THE LD. CIT(A) DELETING THE DISAL LOWANCE IS BAD. LD. AR REBUTTED BY DRAWING OUR ATTENTION TO THE INV OICE RAISED BY THE PARENT COMPANY ON THE ASSESSEE CHARGING THE IMPUGNED AMOUN T OF COST ALLOCATED PLACED AT PAPER BOOK PAGE NO. 262 AND ALSO THE DETA ILED ATTACHED WITH IT SHOWING COST ALLOCATING TO DIFFERENT ENTITIES, AND STATED THAT THESE WERE EVIDENCE ENOUGH TO PROVE THE CHARGE AND WERE THERE BOTH BEFORE THE AO AND THE LD. CIT(A). AT THIS JUNCTURE, ON A QUERY RAISED BY THE BENCH, W HETHER THE ASSESSEE HAD ADDUCED ANY EVIDENCE BEFORE THE LOWER AUTHORITIES T O SHOW THE NUMBER OF 5 HOURS LOGGED IN BY EMPLOYEES OF THE PARENT COMPANY WHILE RENDERING SERVICES TO THE ASSESSEE, AS ALSO THE BASIS OF ALLOCATING OT HER COSTS TO THE ASSESSEE AND FURTHER REGARDING THE NATURE OF SERVICES RENDERED B Y THE PARENT COMPANY TO THE ASSESSEE, THE LD. AR STATED AT BAR THAT OTHER THAN THE VOUCHER, AS POINTED OUT ABOVE, NO OTHER EVIDENCES WERE PRODUCED EITHER BEFO RE THE AO OR THE CIT(A). 10. AFTER HEARING THE ARGUMENTS OF BOTH THE PARTIES WE FIND THAT THIS ISSUE SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR F RESH ADJUDICATION AND DETERMINATION OF THE FACT OF RENDERING SERVICES TO THE ASSESSEE AS WELL AS CALCULATION OF THE EXPENSES INCURRED, WHETHER BOTH WERE AS AGREED UPON BETWEEN THE PARTIES. 11. UNDOUBTEDLY THERE WAS A COST SHARING AGREEMENT BETWEEN THE TWO PARTIES WHICH IS CLEARLY BROUGHT OUT IN THE RECITAL S TO THE AGREEMENT AND CLAUSE 3-8 OF THE AGREEMENT DT. 01/01/2008 WHICH STATED AS FOLLOWS: RECITALS 1. GSI IS THE PARENT COMPANY OF GSA, GSA IS THE PAR ENT COMPANY OF SSL, GSI IS THE ULTIMATE HOLDING COMPANY OF SSI, GSI IS THE PARENT COMPANY O F WHITTLE. 2. GSI IS THE DEVELOPER AND OWNER OF INTELLECTUAL P ROPERTY, INCLUDING THE GEMS, PRODTRAK AND INSITE SUITE OF SOFTWARE PRODUCTS. GSI ALSO HOLDS A PPROPRIATE OEM AGREEMENTS WITH THIRD PARTY SOFTWARE DEVELOPERS OF THE SALE AND USE OF MINESCHE D AND MINE MAX/ GANTT SOFTWARE. 3. GSA IS THE DEVELOPER AND OWNER OF INTELLECTUAL P ROPERTY, INCLUDING THE SUPRAC VISION, MINEX, MAXIMIZER, XPLORPAC AND QUARRY SUITE OF PRODUCTS. 4. WHITTLE IS THE DEVELOPER AND OWNER OF INTELLECTU AL PROPERTY FOR WHITTLE SOFTWARE PRODUCTS. 5. SSI IS AN AUTHORIZED RESELLER OF LICENCES AND MA INTENANCE UPGRADES OWNED BY GSI, GSA AND WHITTLE. 6. GSI, GSA AND WHITTLE MAY ENGAGE SSI TO CONDUCT R ESEARCH AND DEVELOPMENT ON THEIR BEHALF COSTS FOR THAT PORTION OF RESEARCH AND DEVELOPMENT COMPLETED BY SSI EMPLOYEES MAY BE CHARGED BACK TO GSL, GSA AND WHITTLE. 7. SSI MAY FROM TIME TO TIME REQUIRE THE ASSISTANCE OF GSI EMPLOYEES OR GSA EMPLOYEES TO PERFORM PROFESSIONAL SERVICES WORK. 8. THE TRANSFER PRICE OF THE SOFTWARE LICENCES, SOF TWARE USTS (MAINTENANCE) PROFESSIONAL SERVICES WORK AND OUTSOURCED RESEARCH AND DEVELOPMENT WORK I S DETERMINED BY THIS AGREEMENT. CLAUSE 3 TO 8 3. TRANSFER PRICING ON OWNED INTELLECTUAL PROPERTY 3.1 THE TRANSFER PRICE RATE CHARGED TO SSI FOR SOFT WARE LICENSE AND SOFTWARE USTS WIPE 50% OF THE INVOICED AMOUNT, NET OF ANY AGENCY COMMISSION. 6 PRODUCT GROUP PAY TO RATE SURPAC LICENSE SURPAC USTS GSA 50% MINEX LICENSE MINEX USTS GSA 50% MAXIMIZER LICENSE MAXIMIZER USTS GSA 50% GEMS LICENSE GEMS USTS GSA 50% INSITE (PRODTRAK) LICENSE INSITE (PRODTRAK) USTS GSA 50% WHITTLE LICENSE WHITTLE USTS WHITTLE 50% EXAMPLE: SSI SELLS A SURPAC LICENSE FOR INR 100,000 THROUGH AN AGENT WHO EARNS 30% COMMISSION. REVENUE: SURPAC LICENSE INR 100,000 COGS: AGENCY COMMISSION (30,000) NET INVOICE VALUE 70,000 TRANSFER PRICE CHARGE AT 50% (35,000) NET MARGIN AFTER COSTS TO SSI 35,000 3.2 THE TRANSFER PRICING INVOICE WILL BE RAISED AGA INST SSI AT THE TIME OF THE SALE. 4. TRANSFER PRICING ON THIRD PARTY PRODUCTS MINES CHED 4.1 THE TRANSFER PRICE RATE CHARGED TO SSI FOR MINE SCHED LICENSES AND USTS WILL BE 30% OF THE GROSS INVOICE VALUE IE NO DEDUCTION FOR ANY AGENCY COMMIS SION. PRODUCT GROUP PAY TO RATE MINESCHED LICENSE MINESCHED USTS GSI 30% 5. TRANSFER PRICING ON THIRD PARTY PRODUCTS MINEM AX/ GANTT 5.1 THE TRANSFER PRICE RATE CHARGED TO SSI FOR MINE MAX / GANTT LICENSE AND USTS WILL BE A FIXED SUM REGARDLESS OF THE INVOICES VALUE OR ANY APPLICA BLE AGENCY COMMISSION. PRODUCT GROUP PAY TO RATE MINEMAX / GANTT LICENSE MINEMAX/ GANTT USTS GSI AUD $14,000 AUD$3,000 6. TRANSFER PRICING ON RESEARCH & DEVELOPMENT STAFF 6.1 THE TRANSFER PRICE RATE CHARGED TO GSI, GSA AND WHITTLE INCLUDES A. THE BASE SALARIES AND ON-COSTS OF STAFF EMPLOYED TO DEVELOP SOFTWARE ON BEHALF OF THESE PARTIES. B. VARIABLE EXPENSES INCURRED BY THESE STAFF, INCLU DING BUT NOT LIMITED TO OFFICE CONSUMABLES, TELEPHONE EXPENSES AND TRAVEL RELATED EXPENSES; C. A PORTION OF OFFICE OVERHEAD EXPENSES, INCLUDING BUT NOT LIMITED TO RENTS AND OUTGOINGS; AND D. ADMINISTRATION CHARGES 7. TRANSFER PRICING ON PROFESSIONAL SERVICES STAFF 7.1 THE TRANSFER PRICE RATE CHARGED BY ONE PARTY FO R THE USE OF THEIR PROFESSIONAL SERVICES STAFF BY ANOTHER PARTY IS BASED ON THE FORMULAS: HOURLY RATE = COST TO COMPANY (CTC) MULTIPLIED BY 2 ; DAILY RATE = HOURLY RATE MULTIPLIED BY 8 HOURS. 7 WHERE CTC = EMPLOYEE ANNUAL BASE SALARY DIVIDED BY 2080 HOURS. 8. TRANSFER PRICING ON OTHER EXPENSES 8.1 THE TRANSFER PRICE RATE CHARGED BY ONE PARTY IN RELATION TO EXPENSES INCURRED BY THAT PARTY ON BEHALF OF THE OTHER PARTY IS CALCULATED ON A COST RECOVERY BASIS. THIS AGREEMENT BEING DT. 01/01/2008 WAS THERE BEFOR E THE LD. CIT(A) WHILE ADJUDICATING THIS ISSUE FOR ASSESSMENT YEAR 2008-0 9 AND THEREFORE RELIANCE PLACED BY LD. CIT(A) ON HIS ORDER FOR ASSESSMENT YE AR 2008-09 IS NOT MISPLACED TO THIS EXTENT. BUT HAVING SAID SO WE FIND THAT THIS ALONE DOES NOT ESTABLISH THE CLAIM OF THE ASSESSEE OF INCURRING EXPENSES ON THIS ACCOUNT OF R S. 44,46,029/-. THE ASSESSEE HAS ADMITTEDLY NOT BROUGHT ON RECORD ANY EVIDENCE P ROVING THAT SERVICES OF THE NATURE AGREED UPON WITH THE PARENT COMPANY WERE REN DERED BY IT IN THE FIRST PLACE. NO EVIDENCE OF THE NUMBER OF HOURS LOGGED IN BY THE PERSONNEL OF THE PARENT COMPANY WHILE RENDERING THESE SERVICES, WAS ALSO PRODUCED. NO BASIS OF CALCULATION OF THE COST ALLOCATION WAS ALSO PRODUCE D BEFORE THE LOWER AUTHORITIES. IN SUBSTANCE, WE FIND THAT THE ASSESSE E HAS NOT DISCHARGED HIS ONUS OF PROVING THAT HE INCURRED THE IMPUGNED EXPENSES D URING THE YEAR WHICH IS A SINE QUA NON FOR CLAIMING ANY EXPENDITURE. MOREOVER WE AGREE WITH THE LD. DR THAT THE DISALLOWANCE WAS MADE NOT MERELY FOR THE R EASON THAT THE AGREEMENTS DID NOT PROVIDE FOR THE PAYMENT OF INTERNATIONAL CO MPANY CONSULTANCY, BUT ALSO FOR NOT SUBSTANTIATED THE SAME. THE RELEVANT FINDIN G OF THE AO AT PARA 3.4 OF HIS ORDER (SUPRA) LEND CREDENCE TO THIS BELIEF. 12. THE LD. CIT(A) WE FIND, ALLOWED THE ASSESSEES A PPEAL WITHOUT EXAMINING THE ABOVE ASPECTS. THE LD. CIT(A) HAS SIMPLY RELIED UPON HIS ORDER IN ASSESSMENT YEAR 2008-09 WHERE IT APPEARS THAT HE RELIED UPON THE SUBMISSIONS MADE BY THE ASSESSEE DURING APPELLATE PROCEEDING WITHOUT CORROB ORATING THE SAME WITH EVIDENCES. THERE IS NO WHISPER IN THE ORDER OF THE CIT(A) OF ANY EVIDENCE RELIED UPON BY THE CIT(A) OTHER THAN THE AGREEMENT AND COP Y OF INVOICE, TO ARRIVE AT THE CONCLUSION THAT THE EXPENSES WERE INCURRED BY T HE ASSESSEE DURING THE YEAR. 8 MOREOVER THE PRINCIPLE OF RES JUDICATA DOES NOT APP LY IN INCOME TAX AND THE CLAIM OF AN EXPENDITURE HAS TO BE EXAMINED EVERY YE AR. BY FOLLOWING HIS EARLIER YEAR ORDER, LD. CIT(A) HAS ERRED IN DELETING THE DI SALLOWANCE WITHOUT EXAMINING THE FACTS OF THE CASE. 13. IN THE LIGHT OF THE ABOVE WE CONSIDER IT FIT TO RESTORE THE ISSUE OF ALLOWABILITY OF INTER CORPORATION CONSULTANCY EXPENSES AMOUNTING TO RS. 44,46,029/-, BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION AS PER LA W. THE ASSESSEE, WE MAY ADD, BE GIVEN DUE OPPORTUNITY OF HEARING. 14. THE APPEAL OF THE REVENUE IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (GEORGE GEORGE K) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :30/06/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR