LEVER INDIA EXPORTS LTD( MERGED WITH HINDUSTAN UNILIVER LTD), MUMBAI V. ASST CIT 1(2), MUMBAI

ITA 7089/MUM/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5800 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 11-02-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 13-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P J PARDIWALA
• Assessee Lawyers: AJEET KUMAR JAIN
• Keywords: Depreciation; Transfer pricing; International transaction

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K MUMBAI . . , / , ! ' # BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER . / ITA NO. 7089/MUM/2010 % % % % / ASSESSMENT YEAR 2003-04 . / ITA NO. 7090/MUM/2010 % % % % / ASSESSMENT YEAR 2004-05 LEVER INDIA EXPORTS LIMITED, (MERGED WITH HINDUSTAN UNILEER LTD.), UNILEVER HOUSE, B.D. SAWANT MARG, CHAKALA, ANDHERI (EAST), MUMBAI 400 099 / VS. THE ACIT 1(2), MUMBAI. & ! ./ '( ./ PAN/GIR NO. : AAACL 2224J ( &) / APPELLANT ) .. ( *+&) / RESPONDENT ) . / ITA NO. 6865/MUM/2010 % % % % / ASSESSMENT YEAR 2003-04 . / ITA NO. 6866/MUM/2010 % % % % / ASSESSMENT YEAR 2004-05 . / ITA NO. 20/MUM/2012 % % % % / ASSESSMENT YEAR 2005-06 THE ACIT 1(2), MUMBAI. / VS. LEVER INDIA EXPORTS LIMITED, (MERGED WITH HINDUSTAN UNILEER LTD.), UNILEVER HOUSE, B.D. SAWANT MARG, CHAKALA, ANDHERI (EAST), MUMBAI 400 099 & ! ./ '( ./ PAN/GIR NO. : AAACL2224 ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 2 ( &) / APPELLANT ) .. ( *+&) / RESPONDENT ) REVENUE BY S/SHRI AJEET KUMAR JAIN & ABHINAY KUMBHAR RESPONDENT BY : SHRI P.J.PARDIWALA , -.! / DATE OF HEARING : 11/02/2014 /0% , -.! / DATE OF PRONOUNCEMENT : 11/02/2014 1 / O R D E R PER BENCH: ITA NO.6865 & 7089/MUM/2010 ARE CROSS APPEALS FO R A.Y 2003- 04 AND THEY ARE DIRECTED AGAINST ORDER PASSED BY LD . CIT(A)-15 DATED 22/7/2010. ITA NO.6866 & 7090/MUM/2010 ARE CROSS A PPEALS FOR A.Y 2004- 05 AND THEY ARE DIRECTED AGAINST ORDER PASSED BY LD . CIT(A) DATED 22/7/2010. ITA NO.20/MUM/2012 IS DEPARTMENTAL APPEAL DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-15, DATED 13/10/2011 FOR ASSESSMENT YEAR 2005-06. GROUNDS OF APPEAL IN ALL THESE APPEALS ARE AS UNDER: GROUNDS OF APPEAL IN ITA NO.7089/M/2010-ASSESSEES APPEAL: THE APPELLANT BEING AGGRIEVED BY THE ORDER DATED 22 .07.2010 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-15, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A) ], PLACES FOR YOUR CONSID ERATION THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED BOTH ON FACTS AND IN LA W IN CONFIRMING THE REDUCTION OF 90% OF THE GROSS INTEREST I.E. RS.4,77 ,31,000 FROM THE PROFIT OF THE BUSINESS FOR THE PURPOSE OF DEDUCTION U/S 8O HHC. 2. HE FAILED TO APPRECIATE THAT THE APPELLANT HAD A LSO INCURRED INTEREST COST OF RS.1,43,82,000/- AND THEREFORE 90% OF NET I NTEREST(I.E. INTEREST INCOME NET OF INTEREST COST) ONLY SHOULD HAVE REDUC ED FROM THE PROFIT OF BUSINESS FOR THE PURPOSE OF DEDUCTION U/S 8OHHC. GROUNDS OF APPEAL IN ITA NO.7090/M/2010-ASSESSEES APPEAL: THE APPELLANT BEING AGGRIEVED BY THE ORDER DATED 22 .07.2010 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-15, MUMBAI [HEREINAFTER ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 3 REFERRED TO AS THE CIT(A) ], PLACES FOR YOUR CONSID ERATION THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED BOTH ON FACTS AND IN LA W IN CONFIRMING THE REDUCTION OF 90% OF THE GROSS INTEREST I.E. RS.4,77 ,31,000 FROM THE PROFIT OF THE BUSINESS FOR THE PURPOSE OF DEDUCTION U/S 8O HHC. 2. HE FAILED TO APPRECIATE THAT THE APPELLANT HAD A LSO INCURRED INTEREST COST OF RS.1,43,82,000/- AND THEREFORE 90% OF NET I NTEREST(I.E. INTEREST INCOME NET OF INTEREST COST) ONLY SHOULD HAVE REDUC ED FROM THE PROFIT OF BUSINESS FOR THE PURPOSE OF DEDUCTION U/S 8OHHC. GROUNDS OF APPEAL IN ITA NO.6865/M/2010-REVENUES A PPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, AND ION LAW THE CIT(A) ERRED IN DELETING THE ADJUSTMENT OF RS.1,39,12,066/- IN RESPECT OF ADVERTISEMENT EXPENSES PAID TO ASSOCIATE ENTERPRISE U/S. 92CA(3) OF THE I.T. ACT. GROUNDS OF APPEAL IN ITA NO.6866/MUM/2010- REVENUE S APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, AND ION LAW THE CIT(A) ERRED IN DELETING THE ADJUSTMENT OF RS.1,61,47,000/- IN RESPECT OF ADVERTISEMENT EXPENSES PAID TO ASSOCIATE ENTERPRISE U/S. 92CA(3) OF THE I.T. ACT. GROUNDS OF APPEAL IN ITA NO.6866/MUM/2010- REVENUE S APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, AND ION LAW THE CIT(A) ERRED IN DELETING THE ADJUSTMENT OF RS.88,83,650/- IN RESPECT OF ADVERTISEMENT EXPENSES PAID TO ASSOCIATE ENTERPRISE U/S. 92CA(3) OF THE I.T. ACT. 2. SINCE ALL THESE APPEALS RELATE TO COMMON ISSUES, ALL OF THEM WERE ARGUED TOGETHER BY BOTH THE PARTIES AND FOR THE SAKE OF C ONVENIENCE ALL THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER. 2.1 ITA NO.7089/MUM/2010 AND 7090/MUM/2010 BEING AP PEALS FILED BY THE ASSESSEE RAISE A COMMON ISSUE. IT WAS STATED T HAT IT IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD. VS. CIT, 343 ITR 89 (SC), WHEREIN IT HAS BEEN HELD THAT 90% OF NOT THE GROSS RENT OR GROSS INTEREST BUT ONLY NET INTEREST ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 4 OR NET RENT, WHICH HAD BEEN INCLUDED IN THE PROFIT S OF THE BUSINESS OF THE ASSESSEE AS COMPUTED UNDER THE HEAD PROFIT AND GAI N OF BUSINESS OR PROFESSION WAS TO BE DEDUCTED UNDER CLAUSE (1) OF EXPLANATION (BAA) TO SECTION 80 HHC OF THE INCOME TAX ACT,1961 (THE ACT) FOR D ETERMINING THE PROFITS OF THE BUSINESS. IN THE SAID DECISION THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ASIAN STAR COMPANY LTD., 326 IT R 56 WAS IMPLIEDLY OVERRULED. ACCORDINGLY, WE RESTORE THIS MATTER TO THE FILE OF AO WITH A DIRECTION TO RE-COMPUTE THE DEDUCTION UNDER SECTION 80 HHC O F THE ACT ON THE ISSUE OF INTEREST AS PER AFOREMENTIONED DECISION OF HONBLE SUPREME COURT. THESE GROUNDS OF THE ASSESSEE ARE ALLOWED IN THE MANNER A FORESAID. 3. NOW COMING TO DEPARTMENTAL APPEALS WHICH RAISE C OMMON ISSUE REGARDING T.P ADJUSTMENT. THE FACTS WHICH WERE R EFERRED BEFORE US RELATE TO A.Y 2003-04 AND IT WAS SUBMITTED THAT IN RESPECT O F OTHER YEARS THE FACTS ARE ALMOST SIMILAR AND DECISION TAKEN IN RESPECT OF A.Y 2003-04 WILL BE APPLICABLE TO OTHER YEARS. 3.1 DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E ENTERED INTO FOLLOWING INTERNATIONAL TRANSACTIONS. S.NO. NATURE OF TRANSACTION AMOUNT (RS.) METHOD USED 1. EXPORT OF HOME & PERSONAL CARE PRODUCTS 81,73, 23,226 TNMM 2. ADVERTISING EXPENSES PAID TO AES 1,39,12,066 TNMM 3 OTHERS 3,93,900 TNMM THE ASSESSEE HAS BENCH MARKED THESE TRANSACTIONS AT ENTITY LEVEL ON THE BASIS OF METHOD DESCRIBED AS TNMM. IT WAS THE CASE OF T HE ASSESSEE THAT ITS OPERATING MARGIN IS 47.17% AS COMPARED TO OPERATING MARGIN OF THE COMPARABLE COMPANIES AT 8.08%. REFERENCE CAN BE M ADE TO THE FOLLOWING TWO TABLES. ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 5 A. OPERATING MARGIN OF THE COMPANY: FIGURES IN000 PARTICULARS AMOUNT GROSS SALES 850,709 NET SALES 850,709 LESS: OPERATING EXPENSES & DEPRECIATION 449,405 OPERATING PROFIT 401,304 OM 47.17% A. OPERATING MARGIN OF THE COMPARABLE COMPANIES: COMPANY NAME OM 1. AJAY HOME PRODUCTS LTD. -6.45% 2. EMAMI LTD. 14.65% 3. FEM CARE PHARMALTD. 6.20% 4. NIRMA LTD. 21.23% 5. PEE CEE COSMA SOPE LTD. 5.81% 6. ULTRAMARINE & PIGMENTS LTD. 7.07% MEAN 8.08% 3.2 LD. TPO HAS ACCEPTED THE TRANSACTIONS MENTIONED AT SL. NO.1 & 3 TO BE AT ARMS LENGTH. HOWEVER, TRANSACTIONS MENTIONED AT SL . NO.2 RELATING TO ADVERTISING EXPENSES PAID TO AES WAS NOT CONSIDERE D TO BE AT ARMS LENGTH PRICE AND ENTIRE AMOUNT WAS ADDED AS T.P. ADJUSTMEN T. THE TPO NOTICED THAT THE ASSESSEE HAD REIMBURSED ADVERTISEMENT EXPENDITU RE INCURRED FOR ITS TWO PRODUCTS NAMELY FAIR AND LOVELY AND FAIR AND LO VELY UNDER EYECREAM TO ITS AE UNILEVER GULF FZE TO THE EXTENT OF 20% OF THE AD VERTISEMENT EXPENSES INCURRED BY UNILEVER GULF FZE WHICH WORKED OUT AT RS.94.65 LACS. SIMILARLY, ADVERTISEMENT EXPENDITURE TO THE EXTENT OF 20% WERE REIMBURSED TO UNILEVER MALAYSIA HOLDINGS SDN BERHAD AMOUNTING TO RS. 44.0 3 LACS AND A SUM OF RS.43,731/- TO ITS AE LEVER EGYPT SAE. THE TPO REQ UIRED THE ASSESSEE TO ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 6 EXPLAIN THE SAME. IN RESPONSE, IT WAS SUBMITTED TH AT THE COMPANY EXPORTS COSMETICS (SKIN CREAMS) TO VARIOUS COUNTRIES. THE ASSESSEE COMPANYS EXPORT BUSINESS IS HIGHLY PROFITABLE, LARGELY DUE TO THE EQUITY AND MARKET POSITION ENJOYED BY IT BRANDS. IN VIEW OF SEVERE COMPETIT IVE PRESSURES AND IN THE INTEREST OF BUSINESS THESE ADVERTISEMENT EXPENSES WERE PAID BY THE ASSESSEE SO THAT PRODUCTS OF THE COMPANY DO NOT LOOSE OUT IN THE MARKET PLACE. THESE EXPENSES ARE ALSO INCURRED FROM TIME TO TIME IN ORD ER TO PROMOTE NEW PRODUCTS IN FOREIGN MARKETS, THEREFORE, ASSESSEE COMPANY COL LABORATES WITH ITS AE WHO OPERATES IN THAT FOREIGN MARKET AND PROVIDE SUPPORT IN THEIR MARKETING EFFORT. IT WAS SUBMITTED THAT THE ADVERTISEMENT EXPENSES REIMBURSED TO UNILEVER GULF FZE REPRESENT THE SUPPORT PROVIDED FOR A SMAL L PART OF TOTAL EXPENSES INCURRED ON ADVERTISEMENT IN RESPECT OF TWO PRODUCT S NAMELY FAIR AND LOVELY AND FAIR AND LOVELY END EYECREAM IN ORDER TO ENA BLE THEM TO LAUNCH THESE NEW PRODUCTS IN THE MARKETS AND TO BUILD AWARENESS AND TRIALS. SIMILARLY, THE EXPENSES IN RESPECT OF UNILEVER (MALAYSIA) HOLDINGS SDN. THE ASSESSEE COMPANY HAS PROVIDED SUPPORT FOR BRAND FOR SHARING A SMALL PART OF THE EXPENDITURE INCURRED ON ADVERTISEMENT WHICH HELPED THE COMPANY TO RETAIN AND GROW THE VOLUME IN MALAYSIA IN THE FACE OF SEVERE PRICE COMPETITION FROM FAIR EVER. FROM THESE SUBMISSIONS OF THE ASSESSEE AND AFTER G OING THROUGH THE DETAILS, LD. TPO HAS OBSERVED THAT ASSESSEE DID NOT PROVIDE INFORMATION REGARDING FIXED BASIS ON WHICH THE DEVELOPMENT EXPENDITURE WERE T O BE REIMBURSED. ACCORDING TO TPO THE EXPENDITURE INCURRED BY THE AS SESSEE WAS ON PRINCIPAL TO PRINCIPAL BASIS WHEREAS AE OF THE ASSESSEE WAS RESP ONSIBLE FOR ITS OWN BUSINESS. THERE WAS NO BASIS FOR PAYMENT OF ADVER TISEMENT COST OF THE AE BY THE ASSESSEE. THEREFORE, TPO OBSERVED THAT THE TRA NSACTION WAS NOT AT ARMS LENGTH PRICE. THE ALP OF SUCH TRANSACTION WAS TAKE N AT NIL AND WHOLE AMOUNT OF RS.1,39,12,066/- WAS ADDED AS T.P. ADJUSTMENT. 3.3 AN APPEAL WAS FILED BEFORE LD. CIT(A). IT WAS SUBMITTED THAT THE REIMBURSEMENT OF ADVERTISEMENT EXPENSES WERE INTEGR AL PART OF THE EXPORT TRANSACTION WITH THE RELEVANT AES AND THE COST IS SOLELY INCURRED TO MAXIMIZE ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 7 THE OVER ALL PROFIT FROM SUCH EXPORT MARKET AND TO SUSTAIN EXPORT IN FUTURE. IT WAS FURTHER SUBMITTED THAT THE EXPORT BUSINESS OF THE ASSESSEE COMPANY IS HIGHLY PROFITABLE AND IT HAS EARNED OPERATING MARGI N OF 47.17% AS AGAINST OPERATING MARGIN OF 8.08% OF THE COMPARABLE COMPANI ES AND OPERATING MARGIN HAS BEEN HELD BY THE TPO TO BE AT ARMS LENGTH. APA RT FROM THESE SUBMISSIONS THE SUBMISSIONS MADE BEFORE TPO WERE REITERATED. CONSIDERING ALL THESE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ON THE GROUND THAT TPO HAS MADE THIS ADDI TION IN ADHOC MANNER WITHOUT ADOPTING ANY METHOD PRESCRIBED TO DETERMINE ALP OF A TRANSACTION. IT WAS OBLIGATORY UPON TPO TO DETERMINE ALP AS PER PR ESCRIBED METHODS. THE ASSESSEE LAUNCHED TWO NEW PRODUCTS WHICH INVOLVED H UGE ADVERTISEMENT EXPENDITURE. TO SHARE SUCH TYPE OF EXPENDITURE CAN NOT BE ISOLATED OR SEEN AS INCIDENTAL PHENOMENA BUT IT WAS THE STRATEGY TO D EVELOP THE BUSINESS. IN THIS MANNER THE ADDITION HAS BEEN DELETED. THE DEPARTME NT IS AGGRIEVED, HENCE, HAS FILED AFOREMENTIONED GROUNDS. 3.4 RELYING UPON THE ORDER PASSED BY TPO IT WAS SU BMITTED BY LD. DR THAT THE TRANSACTION BETWEEN AE AND ASSESSEE WAS ON PRIN CIPAL TO PRINCIPAL BASIS. THE ASSESSEE WAS NOT REQUIRED TO INCUR ANY EXPENDIT URE. THEREFORE, LD. DR PLEADED THAT TPO WAS RIGHT IN TAKING ALP OF THE TRA NSACTION AT NIL. LD. DR HAS SUBMITTED THAT LD. CIT(A) HAS WRONGLY DELETED THE A DDITION AND ORDER OF LD. CIT(A) SHOULD BE SET ASIDE AND THAT OF TPO BE RESTO RED. 3.5 ON THE OTHER HAND, IT WAS SUBMITTED BY LD. AR T HAT THIS TRANSACTION OF THE ASSESSEE CANNOT BE SEEN IN ISOLATION AS SUCH E XPENSES RELATE TO EXPORT BUSINESS OF THE ASSESSEE. HE SUBMITTED THAT ASSESS EES OPERATING MARGIN ON THE EXPORT IS TO THE TUNE OF 47.17% AS AGAINST OPER ATING MARGIN OF COMPARABLE COMPANIES OF 8.08%. HE SUBMITTED THAT IF AFOREMENT IONED EXPENDITURE IS REDUCED FROM THE OPERATING MARGIN THEN ALSO THE MA RGIN OF THE ASSESSEE WILL BE MUCH MORE THAN THE OPERATING MARGIN OF THE COMPARAB LES. HE SUBMITTED THAT TPO DID NOT HAVE ANY JURISDICTION TO DECIDE THAT WH ETHER OR NOT ASSESSEE WAS ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 8 RIGHT IN INCURRING DEVELOPMENT EXPENDITURE AND FOR THIS PURPOSE LD. AR RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. EKL APPLIANCES LTD., 345 ITR 241 (DEL), WHEREIN IT HAS BEEN HELD THAT IT IS NOT NECESSARY FOR THE ASSESSEE TO SHOW THAT ANY LEGITIM ATE EXPENDITURE INCURRED BY HIM WAS ALSO INCURRED OUT OF NECESSITY. IT IS ALSO NOT NECESSARY FOR THE ASSESSEE TO SHOW THAT ANY EXPENDITURE INCURRED BY H IM FOR THE PURPOSE OF HIS BUSINESS HAS ACTUALLY RESULTED IN PROFIT OR INCOME EITHER IN THE SAME YEAR OR IN THE SUBSEQUENT YEARS. THE ONLY CONDITION IS T HAT THE EXPENDITURE SHOULD HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR TH E PURPOSE OF BUSINESS AND NOTHING MORE. LD. AR SUBMITTED THAT SUCH OBSERVATI ON OF HONBLE DELHI HIGH COURT ARE IN THE CONTEXT OF TRANSFER PRICING PROVIS IONS. 3.6 LD. AR FURTHER SUBMITTED THAT ALP OF AN INTER NATIONAL TRANSACTION IS REQUIRED TO BE DETERMINED AS PER METHOD DESCRIBED I N THE STATUTE AND IF IT IS NOT SO DONE THEN THE ADJUSTMENT IS REQUIRED TO BE STRUCK DOWN. FOR THIS PURPOSE LD. AR RELIED UPON THE DECISION OF TRIBUNAL IN THE CASE OF KOTAK INDIA PVT. LTD. VS. ADDL.CIT, 88 DTR (MUM)(TRIB) 242. LD . AR ALSO RELIED UPON THE DECISION OF ITAT, MUMBAI IN THE CASE OF C.A.COMPUTE R ASSOCIATES PVT. LTD. VS. DCIT IN ITA NO.5420 & 5421/MUM/06, 2010 TOIL 68 (IT AT)(MUM). 3.7 WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTEN TIONS HAVE CAREFULLY BEEN CONSIDERED. THE EXPENSES OF ADVERTISEMENT REIMBUR SED BY THE ASSESSEE TO ITS AE BELONGS TO THE EXPORT ACTIVITY OF THE ASSESSEE. TO ALL THE THREE AES TO WHOM THE ASSESSEE HAS REIMBURSED ADVERTISEMENT EXPENDITU RE HUGE EXPORT SALES ARE MADE. IT IS THE CASE OF THE ASSESSEE THAT ITS OPER ATING MARGIN ON ITS EXPORT ACTIVITY IS 47.17% AS AGAINST SIMILAR MARGIN OF CO MPARABLES OF 8.08%. IF THE CASE OF THE ASSESSEE IS EXAMINE IN THE LIGHT OF THE SE FACTS, THEN WE ARE OF THE OPINION THAT LD. CIT(A) WAS RIGHT IN DELETING THE A DJUSTMENT AS THOUGH THE TRANSACTION OF SHARING THE ADVERTISEMENT EXPENDITUR E MAY BE AN INDEPENDENT TRANSACTION BUT IT RELATES TO THE ACTIVITY OF EXPOR T. EVEN IF THE TOTAL EXPENDITURE MADE BY THE ASSESSEE ON SHARING OF ADVERTISEMENT E XPENSES IS REDUCED FROM ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 9 OPERATING MARGIN OF EXPORTS THEN ALSO THE OPERATING MARGIN OF THE ASSESSEE WILL BE MUCH MORE THAN THE OPERATING MARGIN OF THE CO MPARABLES AND OPERATING MARGIN OF ASSESSEE ON EXPORT ACTIVITY HAS BEEN HELD TO BE AT ARMS LENGTH BY THE TPO. IT IS NOT THE CASE OF TPO THAT THE COMPARABL ES SELECTED BY THE ASSESSEE WERE NOT APPROPRIATE OR SOME OTHER COMPARABLES WERE ALSO REQUIRED TO BE INCLUDED. IN THE LIGHT OF THESE FACTS, WE DO NO T FIND ANY INFIRMITY IN THE RELIEF GRANTED BY LD. CIT(A) AND WE DECLINE TO INTERFERE IN THE DELETION OF ADDITION. THIS GROUND OF THE REVENUE IS DISMISSED. 3.8 SO FAR AS IT RELATES TO SIMILAR GROUND OF THE D EPARTMENT FOR OTHER YEARS, APPLYING AFOREMENTIONED RATIO THIS GROUND OF THE RE VENUE IN RESPECT OF OTHER YEARS IS ALSO DISMISSED. 4. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED IN THE MANNER AFORESAID AND APPEALS FILED BY THE REVENUE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/02/2014 1 , /0% ! 2 34 11/02/2014 0 , 5 # SD/- SD/- ( / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) ! / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 3 DATED 11/02/2014 ITA NO. 7089,7090,6865,6866/MUM/2010 ITA NO.20/MUM/2012 10 1 1 1 1 , ,, , *- *- *- *- 6%- 6%- 6%- 6%- / COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 85 *- , , / DR, ITAT, MUMBAI 6. 59 : / GUARD FILE. 1 1 1 1 / BY ORDER, +- *- //TRUE COPY// ; ;; ; / < < < < ' ' ' ' (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS