East West Seeds India Private Limited, Aurangabad V. Assistant Commissioner of Income-Tax, Aurangabad

ITA 702/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9416 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-12-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 24-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VIJAYA BHASKAR REDDY
• Keywords: Business income; Transfer pricing; Opportunity of being heard; International transaction; Set aside
• Section: 92C; 143(3); 10B; 201; 144C; 251; 73; 13; 22; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 469 /PUN/201 6 / ASSESSMENT YEAR : 20 1 1 - 12 EAST WEST SEEDS INDIA PRIVATE LIMITED, GUT NO. 66, VILLAGE - NARAYANPUR (BK), P.O. - WALUJ, TALUKA - GANGAPUR, AURANGABAD 431133 PAN : AABCE1237F ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD / RESPONDENT . / ITA NO.702/PUN/2017 / ASSESSMENT YEAR : 2012 - 13 EAST WEST SEEDS INDIA PRIVATE LIMITED, GUT NO. 66, VILLAGE - NARAYANPUR (BK), P.O. - WALUJ, TALUKA - GANGAPUR, AURANGABAD 431133 PAN : AABCE1237F ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD / RESPONDENT 2 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 . / ITA NO.3054/PUN/2017 / ASSESSMENT YEAR : 2013 - 14 EAST WEST SEEDS INDIA PRIVATE LIMITED, GUT NO. 66, VILLAGE - NARAYANPUR (BK), P.O. - WALUJ, TALUKA - GANGAPUR, AURANGABAD 431133 PAN : AABCE1237F ....... / APPELLANT / V/S. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD / RESPONDENT ASSESSEE BY : S HRI NIKHIL PATHAK REVENUE BY : SHRI T. VIJAYA BHASKAR REDDY / DATE OF HEARING : 13 - 08 - 2020 / DATE OF PRONOUNCEMENT : 18 - 0 8 - 20 20 / ORDER PER S.S. VISWANETHRA RAVI, JM : THESE THREE APPEALS BY THE ASSESSEE AGAINST THE SEPARATE ORDERS DATED 22 - 01 - 2016, 25 - 01 - 2017 AND 25 - 10 - 2017 PASSED BY THE AO ( A CIT, CIRCLE - 1 , AURANGABAD ) U/S. 143(3) R.W.S. 92CA AND 144C OF THE ACT FOR ASSESSMENT YEAR S 201 1 - 12 , 2012 - 13 AND 2013 - 14, RESPECTIVELY . 2. THE LD. AR SUBMITS THAT THE ISSUES RAISED IN ALL THE THREE APPEALS ARE SIMILAR BASED ON SAME IDENTICAL FACTS AND REQUESTED TO TAKE UP ALL THE APPEALS TOGETHER. UPON HEARING BOTH THE PARTIES AND WITH THE CONSENT OF BOTH THE PARTIES, WE PR OCEED TO HEAR ALL THE THREE APPEALS TOGETHER AND TO PASS A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 3. FIRST, WE SHALL TAKE THE APPEAL IN ITA NO. 469/PUN/2016 FOR THE A.Y. 2011 - 12. 4. THE LD. AR SUBMITS THAT THE ASSESSEE IS NOT INTERESTED TO PRO SECUTE GROUND NOS. 3 TO 3.3 AND REQUESTED TO TREAT THE SAME AS NOT PRESSED. ACCORDINGLY, GROUND NOS. 3 TO 3.3 RAISED BY THE ASSESSEE ARE DISMISSED AS NOT PRESSED. 5. THE LD. AR SUBMITS THAT THE GROUND NOS. 1 TO 2.5 RAISED BY THE ASSESSEE REGARDING CHAL LENGING THE ACTION OF AO IN DETERMINING THE ALP OF INTERNATIONAL TRANSACTIONS INVOLVING RESEARCH AND DEVELOPMENT FEES AND MANAGEMENT FEES AT NIL WITHOUT APPLYING MOST APPROPRIATE METHOD. THE LD. AR SUBMITS THAT IT IS A LEGAL ISSUE CONCERNING THE ACTION OF AO/TPO IN DETERMINING ALP WITHOUT FOLLOWING THE PRESCRIBED PROCEDURE U/S. 92CA OF THE ACT. TO SUPPORT HIS CONTENTION HE REFERRED TO PAGE 9 OF TPO AND BRINGING OUR ATTENTION TO PARA 10. HE ARGUED THAT THE AO/TPO BASING ON THE SIMILAR ISSUES FOR A.YS. 200 9 - 10 AND 2010 - 11 TREATED THE ALP OF MANAGEMENT SUPPORT FEES AT NIL WITHOUT APPLYING METHOD. FURTHER, HE SUBMITS THAT THE FINDING OF TPO/DRP IS INCORRECT IN RESPECT OF THAT THE ASSESSEE DID NOT PREFER AN APPEAL FOR A.YS. 2009 - 10 AND 2010 - 11 REGARDING THE I SSUE ON HAND AND REFERRED TO PAGE 164 OF THE PAPER BOOK TO SHOW THE INFORMATION REGARDING FILING OF APPEAL FOR A.Y. 2010 - 11 IN ANNEXURE 5 AND BROUGHT OUR ATTENTION AT POINT NO. 7 AND SUBMITTED THAT FILING OF APPEAL HAS BEEN BROUGHT TO THE NOTICE OF TPO . 6. THE LD. AR PLACED RELIANCE ON THE DECISIONS OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. JOHNSON & JOHNSON LTD. REPORTED IN [2017] 80 TAXMANN.COM 269 (BOM) AND COMMISSIONER OF INCOME TAX VS. MERCK LTD. REPORTED IN [2016] 73 TAXMANN.COM 23 (BOM) 4 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 AND ARGUED THAT THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF JOHNSON & JOHNSON LTD. (SUPRA) HELD THAT THE TRANSFER PRICING ADJUSTMENT DONE BY THE AO/TPO WITHOUT DETERMINING THE ALP IS BAD UNDER LAW. FURTHER, HE REFERRED TO THE ORD ER OF THIS TRIBUNAL IN THE CASE OF INA BEARINGS INDIA (P.) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX REPORTED IN [2019] 108 TAXMANN.COM 198 (PUNE - TRIB.) AND SUBMITTED THAT THE TRIBUNAL IN THE SAID CASE BY FOLLOWING THE DECISION OF HONBLE HIGH COURT OF BO MBAY IN THE CASE OF JOHNSON & JOHNSON LTD. (SUPRA) HELD THE TRANSFER PRICING ADJUSTMENT IS REFUTED IF THE TPO DOES NOT FOLLOW ANY OF THE PRESCRIBED METHOD AND THE ALP DETERMINED THEREON IS HELD TO BE BAD UNDER LAW AND DELETED THE ADJUSTMENT MADE THEREON. 7. THE LD. DR SUBMITS THAT THE ASSESSEE CONCLUDED THAT THE COST INCURRED BY THE AES AND THE RELEVANT DOCUMENTS MAINTAINED BY THE AES HAVE BEEN CONSIDERED AS COMPARABLE AND THE ASSESSEE ITSELF CLAIMED TO HAVE USED CUP METHOD FOR BENCHMARKING FOR TRANSACTION S OF INTRA GROUP SERVICES AND NO COMPARABLE CASES PROVIDING SIMILAR SERVICES TO INDEPENDENT PARTIES FOR USED FOR THE PURPOSE OF BENCHMARKING AND DETERMINATION OF ARMS LENGTH PRICE. THE ASSESSEE CONSIDERED THE CONTROL TRANSACTIONS OF SIMILAR SERVICES PROV IDED BY THE GROUP AES TO OTHER GROUP ENTITIES AS COMPARABLE TO THE CONTROL TRANSACTIONS OF INTRA GROUP SERVICES IS NOT IN ACCORDANCE WITH THE REQUIREMENTS OF CUP METHOD AS PER INDIAN TP REGULATIONS. 8. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE NOTE THAT THE TPO DISCUSSED THE ISSUE OF MANAGEMENT SERVICE FEES IN ITS PAGE 9 AT PARA 10 AND A SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE AS TO WHY PAYMENT MADE TOWARDS MANAGEMENT FEES SHOULD NOT BE TREATED AS NIL. AS POINTED OUT BY THE LD . AR THE ASSESSEE SUBMITTED THAT THE DETAILS OF 5 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 SERVICES WERE FURNISHED TO THE TPO VIDE POINT NO. 9 TO 15 VIDE LETTER DATED 29 - 10 - 2014 BUT HOWEVER WE NOTE THAT THE AO/TPO MADE UPWARD ADJUSTMENT REGARDING THE SEGMENT MANAGEMENT SERVICE FEES OF RS.5,08,05,39 8/ - MAINLY BASING ON THE ISSUE AROSE FOR A.YS. 2009 - 10 AND 2010 - 11. FURTHER, WE NOTE THAT THE ABOVE SAID ADJUSTMENT WAS MADE WITHOUT FOLLOWING ANY PRESCRIBED METHOD CONTEMPLATED UNDER THE PROVISIONS OF SECTION 92C OF THE ACT. WE NOTE THAT AT POINT NO. 7 VIDE ITS REPLY THE ASSESSEE IS STATED THAT THE APPEALS FOR A.YS. 2009 - 10 AND 2010 - 11 WERE PENDING BEFORE THE CIT(A). THEREFORE, IT IS CLEAR THAT THE TPO MADE THE SAID ADJUSTMENT WITHOUT FOLLOWING THE DUE PROCEDURE CONTEMPLATED UNDER LAW AND THE ADJUSTMENT MADE THEREON IS LIABLE TO BE DELETED. 9. COMING TO THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF JOHNSON & JOHNSON LTD. (SUPRA) WE FIND THAT THE TPO HAD MADE TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF SALES PROMOTION AND PUBLICITY EXPENSES BEING PAYABLE BY THE ASSESSEE TO ITS PA R ENT COMPANY M/S. JOHNSON & JOHNSON, USA. THE TPO DID NOT FOLLOW ANY METHOD PRESCRIBED U/S. 92C(1) OF THE ACT R.W.S. 10B MADE ADJUSTMENT. THE HONBLE HIGH COURT OF BOMBAY WAS PLEASED TO HOLD THAT THE TPO IS OBLIGED UNDER THE LAW TO DETERMINE THE ALP BY FOLLOWING ANY ONE OF THE PRESCRIBED METHODS OF DETERMINING THE ALP AS DETAILED IN SECTION 92C(1) OF THE ACT AND UPHELD THE ORDER OF TRIBUNAL IN ALLOWING ASSESSEES APPEAL BY DELETING THE ADDITION MADE ON ACCOUNT OF SA LES PROMOTION AND PUBLICITY EXPENSES. 10. FURTHER, THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF MERCK LTD. (SUPRA), THE HONBLE HIGH COURT OF BOMBAY WAS PLEASED TO HOLD THE ENTIRE TRANSFER PRICING AGREEMENT BECOMES UNSUSTAINABLE IN LAW IN NOT ADOPTIN G ONE OF THE MANDATORILY PRESCRIBED METHODS TO DETERMINE THE ALP IN RESPECT OF FEES OF TECHNICAL SERVICES PAYABLE BY THE ASSESSEE THEREIN TO ITS AE. THE 6 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 HONBLE HIGH COURT OF BOMBAY HELD THE VIEW TAKEN BY THE TRIBUNAL IN DELETING THE ADJUSTMENT MADE BY TH E TPO WITHOUT APPLYING ANY OF THE METHOD PRESCRIBED U/S. 92C TO DETERMINE ALP IS A POSSIBLE VIEW. 11. FURTHER, THIS TRIBUNAL IN THE CASE OF INA BEARINGS INDIA (P.) LTD. (SUPRA) BY PLACING RELIANCE IN THE CASE OF JOHNSON & JOHNSON LTD. (SUPRA) DISCUSSED IN LENGTH THE PROVISIONS OF SECTION 92C(1) OF THE ACT IN ITS ORDER AT PARA 27 AND HELD THE TERM SHALL USED IN THE PROVISION GIVES IT A STATUS OF MANDATORY CHARACTER AND IT CANNOT BE CONSTRUED HERE AS DIRECTORY SO AS TO EMPOW ER THE TPO TO DETERMINE THE ALP OF AN INTERNATIONAL TRANSACTION IN AN ARBITRARY MANNER. THE TPO HAS TO CONFINE HIMSELF TO ONE OF THE PRESCRIBED METHODS FOR DETERMINATION OF THE ALP OF INTERNATIONAL TRANSACTION, FOR WHICH MECHANISM HAS BEEN PRESCRIBED IN R ULE 10B OF THE INCOME - TAX RULES, 1962. FURTHER, IT HELD THE ALP OF AN INTERNATIONAL TRANSACTION CAN BE DETERMINED ONLY BY APPLYING ONE OF THE PRESCRIBED METHODS GIVEN UNDER SECTION 92C(1) OF THE ACT AND THE ALP IS DETERMINED BY TPO BY NOT APPLYING ANY MET HOD AT ALL OR BY CHOOSING A METHOD WHICH IS NOT PRESCRIBED U/S.92C(1) OF THE ACT, THEN SUCH A DETERMINATION OF ALP FRUSTRATES THE TRANSFER PRICING ADDITION AND DELETED THE TRANSFER PRICING ADDITION MADE THEREON BY HOLDING THE METHODS PRESCRIBED FOR DETERMI NING THE ALP ARE STATUTORY PRESCRIPTION, IT IS ABSOLUTELY ESSENTIAL FOR THE TPO TO COMPUTE THE ALP BY ADHERING STRICTLY TO ONE OF SUCH METHODS. THUS, ADJUSTMENT MADE IN RESEARCH AND DEVELOPMENT FEES AND MANAGEMENT FEES WITHOUT FOLLOWING PRESCRIBED METHOD UNDER LAW IS DELETED. THEREFORE, GROUND NOS. 1 TO 2.5 RAISED BY THE ASSESSEE ARE ALLOWED. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. 7 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 ITA NO. 702/PUN/2017, (A.Y. 2012 - 13) 1 3 . BOTH THE SIDES ARE UNANIMOUS IN STATING THAT THE FACTS AND THE GROUND NOS. 1 TO 3.5 OF APPEAL EXCEPT THE AMOUNT RAISED IN ITA NO. 702/PUN/2017 IS IDENTICAL TO THE GROUNDS RAISED IN ITA NO. 469/PUN/2016. THUS, IN VIEW OF THE FACT THAT THE ISSUE IN THE APPEAL IS IDENTICAL AND IS ARISING FROM SAME SET OF FACTS THE FIND INGS GIVEN BY US WHILE ADJUDICATING THE GROUND NOS. 1 TO 3.5 OF APPEAL IN ITA NO. 469/PUN/2016 WOULD MUTATIS MUTANDIS APPLY TO THE GROUND NOS. 1 TO 3.5 OF THE APPEAL IN ITA NO. 702/PUN/2017, AS WELL. ACCORDINGLY, THE GROUND NOS. 1 TO 3.5 OF THE APPEAL IN ITA NO. 702/PUN/2017 ARE ALLOWED. 14. THE ASSESSEE RAISED GROUND NOS. 4 TO 4.2 QUESTIONING THE ACTION OF TPO IN NOT GRANTING WEIGHTED DEDUCTION U/S. 35(2AB) OF THE ACT. 15. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THA T ISSUE IS COVERED BY THE ORDER OF THIS TRIBUNAL IN THE CASE OF M/S. EAST WEST SEEDS LTD. IN ITA NO. 179/PUN/2018 FOR A.Y. 2014 - 15 WHEREIN THIS TRIBUNAL WHILE PLACING RELIANCE ON THE DECISION OF AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF TORRENT PHARMACEUT ICALS LTD. IN ITA NO. 3569/AHD/2004 ALLOWED THE CLAIM OF WEIGHTED DEDUCTION U/S. 35(2AB) OF THE ACT. THE LD. AR PLACED ON RECORD ABOVE ORDER DATED 06 - 08 - 2019 AND DREW OUR ATTENTION TO THE PARAS 3 TO 6. 16. FURTHER, HE PLACED ON RECORD SUBSEQUENT DECISI ON FOLLOWING THE ABOVE ORDER IN THE CASE OF BHARAT FORGE LTD. IN ITA NO. 1229/PUN/2017 FOR A.Y. 2014 - 15 WHEREIN WE FIND THIS TRIBUNAL ALLOWED THE SIMILAR WEIGHTED DEDUCTION IN FAVOUR OF THE ASSESSEE THEREIN BY FOLLOWING THE DECISION OF A.Y. 8 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 2012 - 13. FOR R EADY REFERENCE PARAS 16 AND 17 IS REPRODUCED HERE - IN - BELOW: 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE GROUND NOS.2.1 TO 2.6 IS WITH RESPECT TO DISALLOWANCE OF WEIGHTED DEDUCTION U/S 35(2AB) OF THE ACT. WE FIND THAT PUNE TRIBUNAL IN ITA NO.805/PUN/2017, ORDER DATED 04.09.2019 FOR A.Y. 2012 - 13 ON IDENTICAL FACTS IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR BY OBSERVING AS UNDER: - 5. IN GROUND NO. 2 OF THE APPEAL, THE ASSESSEE HAS ASS AILED DISALLOWANCE OF WEIGHTED DEDUCTION CLAIMED IN RESPECT OF EXPENDITURE ON IN - HOUSE RESEARCH & DEVELOPMENT ACTIVITIES U/S. 35(2AB) OF THE ACT. WE FIND THAT SIMILAR DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2011 - 12. THE TRIBUNAL D ECIDED THIS ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER : 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE BEFORE US IS VIS - - VIS WEIGHTED DEDUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT. THE ASSESSEE HAD RECOGNIZED R& D FACILITY, FOR WHICH APPROVAL WAS GIVEN BY DSIR. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD INCURRED EXPENDITURE OF 15.05 CRORES (APPROX.), ON WHICH THE ASSESSEE HAD CLAIMED WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. HOWEVER, THE SAI D WEIGHTED DEDUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT WAS CURTAILED BY ASSESSING OFFICER BY 18,42,000/ - ON THE GROUND THAT DSIR HAD NOT APPROVED THE EXPENDITURE. THE ISSUE WHICH ARISES IS WHETHER UNDER THE PROVISIONS OF THE ACT, DSIR HAD ANY AUTH ORITY DURING THE YEAR UNDER APPEAL TO APPROVE OR DISAPPROVE THE EXPENDITURE INCURRED BY ASSESSEE ON R&D FACILITY ESPECIALLY ONCE THE SAID R&D FACILITY HAS BEEN RECOGNIZED BY DSIR. 17. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE PUNE BENCH OF TRIBUNAL IN TH E CASE OF CUMMINS INDIA LTD. VS. DCIT (SUPRA) AND THE TRIBUNAL NOTED THE PROVISIONS OF SECTION 35(2AB) OF THE ACT, THE APPROVAL GIVEN BY DSIR IN FORM NO.3CL AND CONSEQUENT TO THE APPROVAL GIVEN, WHETHER DSIR HAD ANY ROLE IN APPROVING THE EXPENDITURE CLAIME D BY ASSESSEE. THE RELEVANT FINDINGS OF TRIBUNAL ARE VIDE PARAS 38 TO 46, WHICH READ AS UNDER: - 38. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 35(2AB) OF THE ACT I.E. EXPENDITURE INCURRED ON RESEARCH & DEVELOPMENT ACTIVITY. FOR COMPUTATION OF BUSINESS INCOME UNDER SECTION 35 OF THE ACT, EXPENDITURE ON SCIENTIFIC RESEARCH IS TO BE ALLOWED ON FULFILLMENT OF CERTAIN CONDITIONS WHICH ARE ENLISTED IN THE SAID SECTION. UNDER VARIOUS SUBSECTIONS OF SECTION 35 OF THE ACT, THE CONDITIONS AND THE ALLOWABILITY OF EXPENDITURE VARY. SUB - SECTION (1) TO SECTION 35 OF THE ACT DEALS WITH EXPENDITURE ON SCIENTIFIC RESEARCH, NOT BEING IN THE NATURE OF CAPITAL EXPEND ITURE, IS TO BE ALLOWED TO RESEARCH ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION; FOR WHICH AN APPLICATION IN THE PRESCRIBED FORM AND MANNER IS TO BE MADE TO THE CENTRAL GOVERNMENT FOR THE PURPOSE OF GRANT OF APPROVAL OR CONTINUATION THERETO. BEFO RE GRANTING THE APPROVAL, THE PRESCRIBED AUTHORITY HAS TO SATISFY ITSELF ABOUT THE GENUINENESS OF ACTIVITIES AND MAKE ENQUIRIES IN THIS 9 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 REGARD. UNDER SUB - SECTION (2B) TO SECTION 35 OF THE ACT, A COMPANY ENGAGED IN THE SPECIFIED BUSINESS AS LAID THERE ON, I F IT INCURS EXPENDITURE ON SCIENTIFIC RESEARCH OR IN - HOUSE RESEARCH & DEVELOPMENT FACILITY ALSO NEEDS TO BE APPROVED BY THE PRESCRIBED AUTHORITY, IS ENTITLED TO DEDUCTION, PROVIDED THE SAME IS APPROVED BY THE PRESCRIBED AUTHORITY. 39. NOW, COMING TO SUB - S ECTION (2AA) TO SECTION 35 OF THE , IT TALKS ABOUT GRANTING OF APPROVAL BY THE PRESCRIBED AUTHORITY BUT THE APPROVAL TO THE EXPENDITURE BEING INCURRED IS MISSING UNDER THE SAID SECTION. SIMILAR IS THE POSITION IN SUB - SECTION (2A). FURTHER IN SUBSECTION (2A B), IT IS PROVIDED THAT FACILITY HAS TO BE APPROVED BY THE PRESCRIBED AUTHORITY, THEN THERE SHALL BE ALLOWED DEDUCTION OF EXPENDITURE INCURRED WHETHER 100%, 150% OR 200% AS PRESCRIBED FROM TIME TO TIME. CLAUSE (2) TO SECTION 35 OF THE ACT PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE MENTIONED IN CLAUSE (1) UNDER ANY PROVISIONS OF THE ACT. CLAUSE (3) FURTHER LAYS DOWN THAT NO COMPANY SHALL BE ENTITLED FOR DEDUCTION UNDER CLAUSE (1) UNLESS IT ENTERS INTO AGREEMENT WITH PRESCRIBED AUTH ORITY FOR COOPERATION IN SUCH R & D FACILITY. THE FINANCE ACT, 2015 W.E.F. 01.04.2016 HAS SUBSTITUTED AND PROVIDED THAT FACILITY HAS TO FULFILL SUCH CONDITION WITH REGARD TO MAINTENANCE OF ACCOUNTS AND AUDIT THEREOF AND FOR AUDIT OF ACCOUNTS MAINTAINED FOR THAT FACILITY. 40. UNDER RULE 6 OF INCOME TAX RULES, 1962 (IN SHORT THE RULES), THE PRESCRIBED AUTHORITY FOR EXPENDITURE ON SCIENTIFIC RESEARCH UNDER VARIOUS SUBCLAUSES HAS BEEN IDENTIFIED. AS PER RULE 6(1B) OF THE RULES FOR THE PURPOSE OF SUB - SECTION 2 AB OF SECTION 35 OF THE ACT, THE PRESCRIBED AUTHORITY SHALL BE THE SECRETARY, DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH I.E. DSIR. UNDER SUB - RULE (4), APPLICATION FOR OBTAINING APPROVAL UNDER SECTION 35(2AB) OF THE ACT IS TO BE MADE IN FORM NO.3CK. UNDER SUB - RULE (5A) OF RULE 6 OF THE RULES, THE PRESCRIBED AUTHORITY SHALL, IF SATISFIED THAT THE CONDITIONS PROVIDED IN THE RULE AND IN SUB - SECTION (2AB) BEING FULFILLED, PASS AN ORDER IN WRITING IN FORM NO.3CM. THE PROVISO HOWEVER LAYS DOWN THAT REASONAB LE OPPORTUNITY OF BEING HEARD IS TO BE GRANTED TO THE COMPANY BEFORE REJECTING AN APPLICATION. SO, THE APPLICATION HAS TO BE MADE UNDER SUB - RULE (4) IN FORM NO.3CK AND THE PRESCRIBED AUTHORITY HAS TO PASS AN ORDER IN WRITING IN FORM NO.3CM. SUB - RULE (7A) P ROVIDES THAT THE APPROVAL OF EXPENDITURE UNDER SUB - SECTION (2AB) OF SECTION 35 OF THE ACT, SHALL BE SUBJECT TO THE CONDITIONS THAT THE FACILITIES DO NOT RELATE PURELY TO MARKET RESEARCH, SALES PROMOTION, ETC. CLAUSE (B) TO SUB - RULE (7A) AT THE RELEVANT TIM E PROVIDED THAT THE PRESCRIBED AUTHORITY SHALL SUBMIT ITS REPORT IN RELATION TO THE APPROVAL OF IN - HOUSE R & D FACILITY IN FORM NO.3CL TO THE DG (INCOME - TAX EXEMPTION) WITHIN SIXTY DAYS OF ITS GRANTING APPROVAL. UNDER CLAUSE (C), THE COMPANY AT THE RELEVAN T TIME HAD TO MAINTAIN SEPARATE ACCOUNTS FOR EACH APPROVED FACILITY, WHICH HAD TO BE AUDITED ANNUALLY. CLAUSE (B) TO SUBRULE (7A) HAS BEEN SUBSTITUTED BY IT (TENTH AMENDMENT) RULES, 2016 W.E.F. 01.07.2016, UNDER WHICH THE PRESCRIBED AUTHORITY HAS TO FURNIS H ELECTRONICALLY ITS REPORT (I) IN RELATION TO APPROVAL 10 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 OF IN - HOUSE R & D FACILITY IN PART A OF FORM NO.3CL AND (II) QUANTIFYING THE EXPENDITURE INCURRED ON IN - HOUSE R & D FACILITY BY THE COMPANY DURING THE PREVIOUS YEAR AND ELIGIBLE FOR WEIGHTED DEDUCTION UNDER SUB - SECTION 2AB OF SECTION 35 OF THE ACT IN PART B OF FORM NO.3CL. IN OTHER WORDS THE QUANTIFICATION OF EXPENDITURE HAS BEEN PRESCRIBED VIDE IT (TENTH AMENDMENT) RULES, 2016 W.E.F. 01.07.2016. PRIOR TO THIS AMENDMENT, NO SUCH POWER WAS WITH DSIR I.E . AFTER APPROVAL OF FACILITY. 41. UNDER THE AMENDED PROVISIONS, BESIDE MAINTAINING SEPARATE ACCOUNTS OF R & D FACILITY, COPY OF AUDITED ACCOUNTS HAVE TO BE SUBMITTED TO THE PRESCRIBED AUTHORITY. THESE AMENDMENTS TO RULES 6 AND 7A ARE W.E.F. 01.07.2016 I. E. UNDER THE AMENDED RULES, THE PRESCRIBED AUTHORITY AS IN PART A GIVE APPROVAL OF THE FACILITY AND IN PART B QUANTIFY THE EXPENDITURE ELIGIBLE FOR DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. 42. THE ISSUE WHICH IS RAISED BEFORE US RELATES TO PRE - PROVISI ONS AND QUESTION IS WHERE THE FACILITY HAS BEEN APPROVED BY THE PRESCRIBED AUTHORITY, CAN THE DEDUCTION BE DENIED TO THE ASSESSEE UNDER SECTION 35(2AB) OF THE ACT FOR NON ISSUE OF FORM NO.3CL BY THE SAID PRESCRIBED AUTHORITY OR THE POWER IS WITH THE ASSESS ING OFFICER TO LOOK INTO THE NATURE OF EXPENDITURE TO BE ALLOWED AS WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. THE FIRST ISSUE WHICH ARISES IS THE RECOGNITION OF FACILITY BY THE PRESCRIBED AUTHORITY AS PROVIDED IN SECTION 35(2AB) OF THE ACT. 43. THE HON BLE HIGH COURT OF GUJARAT IN CIT VS. CLARIS LIFESCIENCES LTD. (2010) 326 ITR 251 (GUJ) HAVE HELD THAT WEIGHTED DEDUCTION IS TO BE ALLOWED UNDER SECTION 35(2AB) OF THE ACT AFTER THE ESTABLISHMENT OF FACILITY. HOWEVER, SECTION DOES NOT MENTION ANY C UTOFF DATE OR PARTICULAR DATE FOR ELIGIBILITY TO CLAIM DEDUCTION. THE HON BLE HIGH COURT HELD AS UNDER: - 8. THE TRIBUNAL HAS CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND TOOK THE VIEW THAT SECTION SPEAKS OF: (I) DEVELOPMENT OF FACILITY; (II) INCURRING OF EXPENDITURE BY THE ASSESSEE FOR DEVELOPMENT OF SUCH FACILITY; (III) APPROVAL OF THE FACILITY BY THE PRESCRIBED AUTHORITY, WHICH IS DSIR; AND (IV) ALLOWANCE OF WEIGHTED DEDUCTION ON THE EXPENDITURE SO INCURR ED BY THE ASSESSEE. 9. THE PROVISIONS NOWHERE SUGGEST OR IMPLY THAT R&D FACILITY IS TO BE APPROVED FROM A PARTICULAR DATE AND, IN OTHER WORDS, IT IS NOWHERE SUGGESTED THAT DATE OF APPROVAL ONLY WILL BE CUT - OFF DATE FOR ELIGIBILITY OF WEIGHTED DEDUCTION ON THE EXPENSES INCURRED FROM THAT DATE ONWARDS. A PLAIN READING CLEARLY MANIFESTS THAT THE ASSESSEE HAS TO DEVELOP FACILITY, WHICH PRESUPPOSES INCURRING EXPENDITURE IN THIS BEHALF, APPLICATION TO THE PRESCRIBED AUTHORITY, WHO AFTER FOLLOWING PROPER PROCEDUR E WILL APPROVE THE FACILITY OR OTHERWISE 11 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 AND THE ASSESSEE WILL BE ENTITLED TO WEIGHTED DEDUCTION OF ANY AND ALL EXPENDITURE SO INCURRED. THE TRIBUNAL HAS, THEREFORE, COME TO THE CONCLUSION THAT ON PLAIN READING OF SECTION ITSELF, THE ASSESSEE IS ENTITLED T O WEIGHTED DEDUCTION ON EXPENDITURE SO INCURRED BY THE ASSESSEE FOR DEVELOPMENT OF FACILITY. THE TRIBUNAL HAS ALSO CONSIDERED R. 6(5A) AND FORM NO. 3CM AND COME TO THE CONCLUSION THAT A PLAIN AND HARMONIOUS READING OF RULE AND FORM CLEARLY SUGGESTS THAT ON CE FACILITY IS APPROVED, THE ENTIRE EXPENDITURE SO INCURRED ON DEVELOPMENT OF R&D FACILITY HAS TO BE ALLOWED FOR WEIGHTED DEDUCTION AS PROVIDED BY S. 35(2AB). THE TRIBUNAL HAS ALSO CONSIDERED THE LEGISLATIVE INTENTION BEHIND ABOVE ENACTMENT AND OBSERVED TH AT TO BOOST UP R&D FACILITY IN INDIA, THE LEGISLATURE HAS PROVIDED THIS PROVISION TO ENCOURAGE THE DEVELOPMENT OF THE FACILITY BY PROVIDING DEDUCTION OF WEIGHTED EXPENDITURE. SINCE WHAT IS STATED TO BE PROMOTED WAS DEVELOPMENT OF FACILITY, INTENTION OF THE LEGISLATURE BY MAKING ABOVE AMENDMENT IS VERY CLEAR THAT THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE ON DEVELOPMENT OF FACILITY, IF APPROVED, HAS TO BE ALLOWED FOR THE PURPOSE OF WEIGHTED DEDUCTION. 10. WE ARE IN FULL AGREEMENT WITH THE REASONING GIV EN BY THE TRIBUNAL AND WE ARE OF THE VIEW THAT THERE IS NO SCOPE FOR ANY OTHER INTERPRETATION AND SINCE THE APPROVAL IS GRANTED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN QUESTION, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO CLAIM WEIGHTED DEDUCTION IN RESPECT OF THE ENTIRE EXPENDITURE INCURRED UNDER S. 35(2AB) OF THE ACT BY THE ASSESSEE. 44. THE HON BLE HIGH COURT OF DELHI IN CIT VS. SANDAN VIKAS (INDIA) LTD. (2011) 335 ITR 117 (DEL) ON SIMILAR ISSUE OF WEIGHTED DEDUCTION UNDER S ECTION 35(2AB) OF THE ACT HELD THAT THE CONDITION PRECEDENT WAS THE CERTIFICATE FROM DSIR, BUT THE DATE OF CERTIFICATE WAS NOT IMPORTANT, WHERE THE OBJECTIVE WAS TO ENCOURAGE RESEARCH AND DEVELOPMENT BY THE BUSINESS ENTERPRISES IN INDIA. IN THE FACTS BEFOR E THE HON BLE HIGH COURT OF DELHI, THE ASSESSEE HAD APPROACHED DSIR VIDE APPLICATION DATED 10.01.2015. THE DSIR VIDE LETTER DATED 23.02.2006 GRANTED RECOGNITION TO IN - HOUSE RESEARCH AND DEVELOPMENT FACILITY OF ASSESSEE. FURTHER, VIDE LETTER DATED 18.09.200 6, DSIR GRANTED APPROVAL FOR THE EXPENSES INCURRED BY THE COMPANY ON INHOUSE RESEARCH AND DEVELOPMENT FACILITY IN THE PRESCRIBED FORM NO.3CM. THE ASSESSING OFFICER IN THAT CASE REFUSED TO ACCORD THE BENEFIT OF AFORESAID PROVISION ON THE GROUND THAT RECOGNI TION AND APPROVAL WAS GIVEN BY DSIR IN THE NEXT ASSESSMENT YEAR. THE TRIBUNAL ALLOWED THE CLAIM OF ASSESSEE RELYING ON THE DECISION OF THE HON BLE HIGH COURT OF GUJARAT IN CIT VS. CLARIS LIFESCIENCES LTD. (SUPRA). THE HON BLE HIGH COURT OF DELHI TAKING NOT E OF THE DECISION OF THE HON BLE HIGH COURT OF GUJARAT OBSERVED THAT IT HAS BEEN HELD THAT CUTOFF DATE MENTIONED IN THE CERTIFICATE ISSUED BY DSIR WOULD BE OF NO RELEVANCE WHERE ONCE THE CERTIFICATE WAS ISSUED BY 12 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 DSIR, THEN THAT WOULD BE SUFFICIENT TO HOLD THAT THE ASSESSEE HAD FULFILLED THE CONDITIONS LAID DOWN IN THE AFORESAID PROVISIONS. 45. THE ISSUE WHICH IS RAISED IN THE PRESENT APPEAL IS THAT WHETHER WHERE THE FACILITY HAS BEEN RECOGNIZED AND NECESSARY CERTIFICATION IS ISSUED BY THE PRESCRIBED AUTHO RITY, THE ASSESSEE CAN AVAIL THE DEDUCTION IN RESPECT OF EXPENDITURE INCURRED ON IN - HOUSE R&D FACILITY, FOR WHICH THE ADJUDICATING AUTHORITY IS THE ASSESSING OFFICER AND WHETHER THE PRESCRIBED AUTHORITY IS TO APPROVE EXPENDITURE IN FORM NO.3CL FROM YEAR TO YEAR. LOOKING INTO THE PROVISIONS OF RULES, IT STIPULATES THE FILING OF AUDIT REPORT BEFORE THE PRESCRIBED AUTHORITY BY THE PERSONS AVAILING THE DEDUCTION UNDER SECTION 35(2AB) OF THE ACT BUT THE PROVISIONS OF THE ACT DO NOT PRESCRIBE ANY METHODOLOGY OF A PPROVAL TO BE GRANTED BY THE PRESCRIBED AUTHORITY VIS - - VIS EXPENDITURE FROM YEAR TO YEAR. THE AMENDMENT BROUGHT IN BY THE IT (TENTH AMENDMENT) RULES W.E.F. 01.07.2016, WHEREIN SEPARATE PART HAS BEEN INSERTED FOR CERTIFYING THE AMOUNT OF EXPENDITURE FROM Y EAR TO YEAR AND THE AMENDED FORM NO.3CL THUS, LAYS DOWN THE PROCEDURE TO BE FOLLOWED BY THE PRESCRIBED AUTHORITY. PRIOR TO THE AFORESAID AMENDMENT IN 2016, NO SUCH PROCEDURE / METHODOLOGY WAS PRESCRIBED. IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN THE ORDER OF ASSESSING OFFICER IN CURTAILING THE EXPENDITURE AND CONSEQUENT WEIGHTED DEDUCTION CLAIM UNDER SECTION 35(2AB) OF THE ACT ON THE SURMISE THAT PRESCRIBED AUTHORITY HAS ONLY APPROVED PART OF EXPENDITURE IN FORM NO.3CL. WE FIND NO MERIT IN THE SAID O RDER OF AUTHORITIES BELOW. 46. THE COURTS HAVE HELD THAT FOR DEDUCTION UNDER SECTION 35(2AB) OF THE ACT, FIRST STEP WAS THE RECOGNITION OF FACILITY BY THE PRESCRIBED AUTHORITY AND ENTERING AN AGREEMENT BETWEEN THE FACILITY AND THE PRESCRIBED AUTHORITY. ON CE SUCH AN AGREEMENT HAS BEEN EXECUTED, UNDER WHICH RECOGNITION HAS BEEN GIVEN TO THE FACILITY, THEN THEREAFTER THE ROLE OF ASSESSING OFFICER IS TO LOOK INTO AND ALLOW THE EXPENDITURE INCURRED ON IN - HOUSE R&D FACILITY AS WEIGHTED DEDUCTION UNDER SECTION 35 (2AB) OF THE ACT. ACCORDINGLY, WE HOLD SO. THUS, WE REVERSE THE ORDER OF ASSESSING OFFICER IN CURTAILING THE DEDUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT BY 6,75,000/ - . THUS, GROUNDS OF APPEAL NO.10.1, 10.2 AND 10.3 ARE ALLOWED. 18. THE ISSUE ARI SING BEFORE US IS SIMILAR TO THE ISSUE IN CUMMINS INDIA LTD. VS. DCIT (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT WHERE FACILITY HAS BEEN RECOGNIZED BY THE PRESCRIBED AUTHORITY AND AGREEMENT HAS BEEN ENTERED INTO BETWEEN FACILITY AND T HE PRESCRIBED AUTHORITY AND THEREAFTER THE ROLE OF ASSESSING OFFICER IS TO LOOK INTO AND ALLOW THE EXPENDITURE INCURRED ON IN - HOUSE R&D FACILITY AS WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. ACCORDINGLY, WE FIND NO MERIT IN THE ORDERS OF AUTHORIT IES BELOW IN RESTRICTING WEIGHTED DEDUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT BY 18,42,000/ - ON THE GROUND THAT DSIR HAD NOT APPROVED THE SAID EXPENDITURE. IT MAY BE POINTED OUT HEREIN ITSELF THAT REASONS FOR NOT APPROVING EXPENDITURE HAVE ALSO NO T BEEN MADE AVAILABLE TO THE ASSESSEE. CONSEQUENTLY, 13 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 THE SAME CANNOT BE BASIS FOR CURTAILING DEDUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT. THE ASSESSING OFFICER IS THUS, DIRECTED TO ALLOW WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT AT 18,42 ,000/ - . THE GROUNDS OF APPEAL NO.2.1 TO 2.5 ARE THUS, ALLOWED. THE ISSUE IN GROUND OF APPEAL NO.2.6 IS WITHOUT PREJUDICE BASIS AND THE SAME DOES NOT STAND. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, PARTLY ALLOWED. 6. THE REVENUE HAS NOT BROUGHT BEFORE US ANY MATERIAL TO SHOW ANY CHANGE IN THE FACTS IN ASSESSMENT YEAR UNDER APPEAL. THEREFORE, RESPECTFULLY, FOLLOWING THE DECISION OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE IN IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE GROUND NO. 2 RAISED IN THE APP EAL BY THE ASSESSEE IS ALLOWED IN THE SAME TERMS. 17. BEFORE US, THE REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT NOR HAS PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE DECISION OF PUNE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA ) HAS BEEN SET ASIDE / OVERRULED / STAYED BY HIGHER JUDICIAL FORUM. THE REVENUE HAS ALSO NOT POINTED TO ANY DISTINGUISHABLE FACTS BETWEEN THE ISSUE IN THE YEAR UNDER CONSIDERATION AND THAT OF A.Y. 2012 - 13. IN VIEW OF THE AFORESAID, FOLLOWING THE DECISION OF CO - ORDINATE BENCH FOR A.Y. 2012 - 13, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE WEIGHTED DEDUCTION AS CLAIMED U/S 35(2AB) OF THE ACT. THUS, THE GROUND NOS.2.1 TO 2.6 RAISED BY THE ASSESSEE ARE ALLOWED. 17. IN VIEW OF THE ABOVE AND CONSIDERING THE UNDISPUTED FACTS OF THE CASE AND THE ORDERS PLACED RELIANCE BY THE LD. AR IS ABOVE, WE ALLOW THE CLAIM OF WEIGHTED DEDUCTION U/S. 35(2AB) OF THE ACT. THUS, GROUND NOS. 4 TO 4.2 RAISED BY THE ASSESSEE ARE ALLOWED. 18. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 3054/PUN/2017, (A.Y. 201 3 - 14) 1 9 . BOTH THE SIDES ARE UNANIMOUS IN STATING THAT THE FACTS AND THE GROUND NOS. 1 TO 3.5 OF APPEAL EXCEPT THE AMOUNT RAISED IN ITA NO. 3054/PUN/2017 IS IDENTIC AL TO THE GROUNDS RAISED IN ITA NO. 469/PUN/2016. THUS, IN VIEW OF THE FACT THAT THE ISSUE IN THE APPEAL IS IDENTICAL AND IS ARISING FROM SAME SET OF FACTS THE FINDINGS GIVEN BY US WHILE ADJUDICATING THE GROUND NOS. 1 TO 3.5 OF APPEAL IN ITA NO. 469/PUN/2 016 WOULD MUTATIS MUTANDIS APPLY TO THE GROUND NOS. 1 TO 3.5 14 ITA NOS. 469/PUN/2016, 702 & 3054/PUN/2017, A.YS. 2011 - 12, 2012 - 13 & 2013 - 14 OF THE APPEAL IN ITA NO. 3054/PUN/2017, AS WELL. ACCORDINGLY, THE GROUND NOS. 1 TO 3.5 OF THE APPEAL IN ITA NO. 3054/PUN/2017 ARE ALLOWED. 20. SINCE THE GROUND NOS. 4 , 5 AND 5.1 OF THE APPEAL IN ITA NO. 3054/PUN/2017 ARE IDENTICAL TO THE GROUND NOS. 4 TO 4.2 OF THE APPEAL IN ITA NO. 702/PUN/2017 , OUR DECISION FOR ITA NO. 702/PUN/2017 SHALL APPLY MUTATIS MUTANDIS FOR ITA NO. 3054/PUN/2017, AS WELL. ACCORDINGLY, THE GROUND NOS. 4 , 5 AND 5.1 ARE ALLOWED. 21. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. 22. TO SUM UP, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2020 . SD/ - SD/ - (ANIL CHATURVEDI) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBE R / PUNE; / DATED : 18 TH AUGUST, 20 20 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE DISPUTE RESOLUTION PANEL - 3 , MUMBAI 4. THE COMMISSIONER OF INCOME TAX ( IT & TP), PUNE 5. , , , / DR, ITAT, C BENCH, PUNE. 6. / GUARD FILE. // // TRU E COPY // / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE