NIVEA INDIA PRIVATE LIMITED , MUMBAI V. DY. COMMISSIONER OF INCOME TAX 10(3)(1), MUMBAI

ITA 7174/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8835 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 13-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 143(3); 234B; 144C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI , # ,$ % BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI N.K.PRADHAN, ACCOUNTANT MEMBER . 7174 / /201 8 (. . 2014-15 ) ITA NO.7174/MUM/2018 (A.Y.2014-15) NIVEA INDIA PRIVATE LIMITED, 4 TH FLOOR, ART GUILD HOUSE, PHOENIX MARKET CITY, KURLA (WEST) MUMBAI PAN: AACCN1990P ...... - / APPELLANT VS. THE DCIT , RANGE 10(3)(1) ROOM NO.217, 2 ND FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ..... #. / RESPONDENT -// APPELLANT BY : SHRI DHANESH BAFNA #. // RESPONDENT BY : SHRI A. MOHAN 0. / DATE OF HEARING : 07/07/2020 123 0. / DATE OF PRONOUNCEMENT : 27 /07/2020 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ASSESSMENT ORDER DATED 31/10/2018 PASSED UNDER SECTION 143(3) R.W.S . 144C (13) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) FOR THE ASSESS MENT YEAR 2014-15. 2 ITA NO.7174/MUM/2018(A.Y.2014-15) 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FAST MOVING CONSUMER GOODS (FMCG) - PERSONAL AND BEAUTY CARE PRODUCTS SEGMENT. THE ASSESSEE IS AN AFFILIATE/FELLOW SUBSIDIARY OF BEIERSDORF GROUP, GERMANY. DURING TH E PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE ENTERED INTO FOLLOWING INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTE RPRISES (AES): S. NO. NATURE OF INTERNATIONAL TRANSACTIONS AMOUNT (IN RS.) 1. PURCHASE OF FINISHED GOODS 1,13,93,93,465/- 2. DEEMED INTERNATIONAL TRANSACTION IMPORT OF FINISHED GOODS 6,13,61,004/- TOTAL 2,98,66,69,493/- REFERENCE WAS MADE TO TRANSFER PRICING OFFICER (TP O) TO DETERMINE ARMS LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION S WITH AES. THE TPO HELD THAT THE ASSESSE HAS INCURRED HUGE EXPENDITURE ON ADVERT ISEMENT, MARKETING AND PROMOTION ON NIVIA BRAND IN INDIA. HENCE, HE PROPOS ED ADJUSTMENT OF RS.69.59 CRORES IN RESPECT OF ADVERTISEMENT, MARKET ING AND SALES PROMOTION (AMP) EXPENDITURE. IN ALTERNATE, THE TPO MADE ADJUS TMENT OF RS.13.14 CRORES ON ALP OF IMPORT OF FINISHED GOODS. BASED ON THE AD JUSTMENTS PROPOSED BY THE TPO VIDE ORDER DATED 27/10/2017, THE ASSESSING OFFI CER PASSED DRAFT ASSESSMENT ORDER DATED 30/11/2017. AGGRIEVED AGAIN ST THE ORDER OF TPO AND DRAFT ASSESSMENT ORDER, THE ASSESSEE FILED OBJECTIO NS BEFORE THE DISPUTE RESOLUTION PANEL (DRP). THE DRP VIDE DIRECTIONS D ATED 31/02/2018 DISMISSED 3 ITA NO.7174/MUM/2018(A.Y.2014-15) THE OBJECTIONS. IN LINE WITH THE DIRECTIONS OF THE DRP, IMPUGNED ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER. 3. SHRI DHANESH BAFNA, APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED THAT THE ASSESSEE IN APPEAL HAS ASSAILED THE ASSESSMENT ORDER/DIRECTIONS OF THE DRP ON TWO COUNTS:- (I) IN GROUND NO.1 TO 6 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED ADJUSTMENT MADE ON ACCOUNT OF AMP EXPENDITURE; AND (II) IN GROUND NO.7 TO 10 OF THE APPEAL, THE ASSESS EE HAS ASSAILED TP ADJUSTMENT MADE IN RESPECT OF IMPORT OF FINISHED GO ODS. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTED THAT BOTH THE AFORESAID ISSUES ARE RECURRING SINCE ASSESSMENT YEA R 2008-09. THE TRIBUNAL IN THE PRECEDING ASSESSMENT YEARS HAS ADJUDICATED BOTH THESE ISSUES. THERE HAS BEEN NO CHANGE IN THE FACTS AND THE NATURE OF TRANS ACTIONS IN ASSESSMENT YEAR UNDER APPEAL. 3.1. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSES SEE POINTED THAT THE TRIBUNAL WHILE ADJUDICATING ASSESSEES APPEALS FOR ASSESSMENT YEAR 2008-09 TO 2013-14 HAS HELD THAT NEITHER THE TPO NOR THE DRP H AS BROUGHT ANYTHING ON RECORD TO PROVE THAT ADVERTISEMENT, MARKETING AND S ALES PROMOTION EXPENDITURE WAS INCURRED BY THE ASSESSEE ON BEHALF OF THE AES, THEREFORE, AMP EXPENDITURE CLAIMED BY THE ASSESSEE WAS NOT AN INTE RNATIONAL TRANSACTION. THE TRIBUNAL FURTHER REJECTED BRIGHT LINE TEST APPLIED BY THE TPO/DRP. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED ON RECORD ORDER OF THE TRIBUNAL IN ITA NOS.7744/MUM/2012, 1792/MUM/2014, 1 105/MUM/2015, 4 ITA NO.7174/MUM/2018(A.Y.2014-15) 903/MUM/2016 AND 674/MUM/2017 DECIDED ON 21/03/2018 COMMON FOR THE ASSESSMENT YEARS 2008-09 TO 2012-13 AND ORDER OF TH E TRIBUNAL IN ITA NO.6848/MUM/2017 FOR ASSESSMENT YEAR 2013-14 DECIDE D ON 03/03/2020. THE LD. AR FURTHER POINTED THAT THE ORDER OF TPO, DIREC TIONS OF THE DRP AND THE GROUNDS OF APPEAL IN THE IMPUGNED AY ARE IDENTICAL TO AY 2013-14. 3.2. IN RESPECT OF SECOND ISSUE RELATING TO TP ADJU STMENT ON IMPORT OF FINISHED GOODS, THE LD. AUTHORIZED REPRESENTATIVE O F THE ASSESSEE SUBMITTED THAT THE SAID ISSUE IS ALSO COVERED BY THE ORDER OF TRIBUNAL DATED 03/3/2020 COMMON FOR THE ASSESSMENT YEARS 2008-09 TO 2013-14. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTED THAT THE ADJ USTMENT HAS BEEN MADE BY TPO/DRP FOR SELECTING FOREIGN AE AS TESTED PARTY FO R BENCHMARKING INTERNATIONAL TRANSACTIONS OF IMPORT OF FINISHED GO ODS. IN THE PRECEDING ASSESSMENT YEARS, THE TRIBUNAL HAS RESTORED THE ISS UE BACK TO THE FILE OF DRP. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE P OINTED THAT SINCE THE FACTS IN THE ASSESSMENT YEAR UNDER APPEAL ARE IDENTICAL A ND THE ORDERS OF TPO AND THE DIRECTIONS OF THE DRP ARE ON SAME LINE AS WERE IN THE EARLIER ASSESSMENT YEARS, THE ISSUE CAN BE RESTORED BACK TO THE FILE O F DRP WITH SIMILAR DIRECTIONS. 4. SHRI A. MOHAN, REPRESENTING THE DEPARTMENT VEHEM ENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE TPO HAS MADE ADJUSTMENT IN RESPECT OF AMP EXPENDITURE BY PASSING A DETAILED OR DER AFTER CONSIDERING ALL THE ARGUMENTS AND THE DECISIONS RELIED ON BY THE AS SESSE. 5 ITA NO.7174/MUM/2018(A.Y.2014-15) 5. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN AP PEAL HAS RAISED AS MANY AS 12 GROUNDS. THE SAME ARE SUMMED UP AS UNDER:- - THE GROUND OF APPEAL NO.1 TO 6 ARE IN RESPECT OF TP ADJUSTMENT MADE ON AMP EXPENDITURE. - THE GROUND OF APPEAL NO.7 TO 10 ARE ON TP ADJUSTM ENT IN RESPECT OF IMPORT OF FINISHED GOODS. - THE GROUND OF APPEAL NO.11 IS AGAINST CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT; AND - THE GROUND NO.12 IS GENERAL. TP ADJUSTMENT ON AMP EXPENDITURE - RS. 69.59 CRORES 6. WE FIND THAT THE ISSUE IS PERENNIAL AND HAS BE EN RECURRING SINCE ASSESSMENT YEAR 2008-09. A SPECIFIC QUERY WAS MADE TO LD. DEPARTMENTAL REPRESENTATIVE ON RECURRING OF THE ISSUE. THE LD. D EPARTMENTAL REPRESENTATIVE ADMITTED THAT THE ISSUE HAS BEEN ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN THE PRECEDING ASSESSMENT YEARS. NO MATERIAL WAS BROUGHT TO THE NOTICE OF BENCH DISTINGUISHING THE FACTS IN THE IMPUGNED A SSESSMENT YEAR OR CONTROVERTING THE COMPOSITE ORDER OF TRIBUNAL FOR A SSESSMENT YEARS 2008-09 TO 2013-14 IN ASSESSEES OWN CASE. THE TRIBUNAL VIDE O RDER DATED 21/3/2018 WHILE ADJUDICATING THE ISSUE HELD AS UNDER:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT ADJUSTMENT OF AMP EXPENSES, UNDER THE HEADS MAN UFACTURING AND DISTRIBUTION, ARE THE SUBJECT MATTER OF ADDITIONAL GROUNDS NUMBER 29, 5, 12, 1 AND 1 FOR THE AY.S.2008-09, 2009-10, 2010-11, 2011-12, 2012-13 RESPECTIVELY. 6 ITA NO.7174/MUM/2018(A.Y.2014-15) 5.1. WE ARE OF THE OPINION THAT IN THE ABSENCE OF A N AGREEMENT OR ARRANGEMENT BETWEEN AN ASSESSEE AND THE AE, FOR INCURRING AMP EXPENSES, NO TP ADJUSTMENT CAN BE MADE. IN THE CASE BEFORE US, THE TPO AND THE DRP HAVE NOT BR OUGHT ON RECORD THE FACT THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE NOT FOR THE ITS OWN BUSINESS. EVEN IF FOR THE SAKE OF ARGUMENT, IT IS ACCEPTED THAT THE AE WAS BENEFIT TED INDIRECTLY BECAUSE OF THE EXPENSES INCURRED BY THE ASSESSEE, IT HAS TO BE HELD THAT TH E TRANSACTION WAS NOT AN IT. THE LOGIC BEHIND THE FINDING IS VERY SIMPLE-THE BASIC PURPOSE FOR INCURRING EXPENSES BY THE ASSESSEE WAS TO EXPAND ITS BUSINESS IN INDIA AND NOT TO LOOK AFTER THE INTEREST OF THE AE. WE HAVE TAKEN NOTE OF THE FACT THAT THE ASSESSEE HAD STARTE D MANUFACTURING ACTIVITIES IN INDIA AND WANTED TO ESTABLISH ITS FOOTHOLD IN THE COUNTRY. FO R THAT PURPOSE, IF IT HAD INCURRED CERTAIN EXPENDITURE, IT HAS TO BE ACCEPTED THAT IT WANTED T O CREATE AWARENESS ABOUT ITS PRODUCT IN THE INDIAN MARKET. WE WOULD LIKE TO REFER TO THE GROWTH OF THE BUSINESS OF THE ASSESSEE FOR SOME OF THE YEARS : AY TURNOVER/ REVENUE FROM SALES (CRORES) GROWTH (%) TAKING ASSESSMENT YEAR 2007-08 AS BASE 2007 - 08 44.3 2008 - 09 70.14 58.33% 2009 - 10 119.8 170.43% 2010 - 11 1 03.41 133 - 43% 2011 - 12 104.09 134.97% ON THE BASIS OF THE ABOVE CHART, IT CAN SAFELY BE S AID THAT EXPENSES INCURRED BY THE ASSESSEE WERE WHOLLY AND EXCLUSIVELY FOR ITS OWN BU SINESS AND NOT AN IT. 5.2. IN THE CASE UNDER CONSIDERATION, THE TPO HAD M ADE THE ADJUSTMENT BY APPLYING BLT. THE SOLE BASIS ON WHICH THE ADJUSTMENT, UNDER THE HE AD AMP EXPENDITURE, WAS MADE WAS THAT EXPENDITURE INCURRED BY THE ASSESSEE WAS S IGNIFICANTLY HIGHER THAN THAT OF ITS COMPARABLE IS ON APPLICATION OF BLT. THE HONBLE CO URTS ARE OF THE UNANIMOUS OPINION THAT BLT CANNOT AND SHOULD NOT BE APPLIED FOR MAKIN G TP ADJUSTMENTS, AS SAME IS NOT ONE OF THE RECOGNIZED METHODS. 5.3.WE FIND THAT AS PER THE LO, THE AE WAS THE LEGA L AND ECONOMIC OWNER OF ALL MANUFACTURING KNOW-HOW AND CONTRACTUAL PROPERTY RIG HTS OF ITS PRODUCTS THAT WERE MANUFACTURED BY ITS AFFILIATED UNITS, THAT THE ASSE SSEE HAD TO PAY LICENSE FEE AT FIXED PERCENTAGE TO THE AE, THAT BESIDES THE TECHNOLOGY I NTANGIBLES THE LETTER TALKS ABOUT MARKETING INTANGIBLES ALSO, THAT AE WAS THE LEGAL O WNER OF THE GROUP TRADEMARKS, THAT IT HAD ALLOWED THE ASSESSEE TO USE THE NAMES AND THE T RADEMARKS FOR THE PRODUCTS MANUFACTURED BY THE ASSESSEE, THAT THE AE HAS BEEN NARRATED AS TRADEMARK OWNER- LICENSOR IN THE LETTER, THAT THE ASSESSEE IS NARRA TED AS ECONOMIC OWNER OF LONG TERM DISTRIBUTION RIGHTS, THAT THE ASSESSEE WAS NOT SUPP OSED TO PAY ROYALTY TO ITS AE, THAT THE ASSESSEE HAD ADVERTISED THE PRODUCTS AS PER THE CON DITIONS AND THE REQUIREMENTS OF THE LOCAL MARKET. TWO PRODUCTS- A DEODORANT FOR WOMEN A ND A FACE WASH PRODUCT- MANUFACTURED AND ADVERTISED BY IT HAD THE FLAVOR OF THE LOCAL MARKET. ONE THING MORE HAS TO BE REMEMBERED HERE-THAT THE ASSESSEE WAS A N EW ENTRANT IN THE FIELD OF 7 ITA NO.7174/MUM/2018(A.Y.2014-15) MANUFACTURING AND SALE OF COSMETIC AND PERSONAL CAR E, THAT THERE WERE ALREADY OLD PLAYERS-LIKE HUL, P & G AND COLGATE PAMOLIVE-THAT M ANUFACTURED SAME PRODUCTS. NATURALLY TO COMPETE WITH ESTABLISHED MANUFACTURERS AND BRANDS IT HAD TO INCUR HUGE ADVERTISEMENT EXPENSES, SO THAT NEW PRODUCTS WOULD BECOME POPULAR. IN OUR OPINION, THERE IS A SUBTLE BUT DEFINITE DIFFERENCE BETWEEN T HE PRODUCT PROMOTION AND BRAND PROMOTION. IN THE FIRST CASE PRODUCT IS THE FOCUS O F THE ADVERTISEMENT CAMPAIGN AND THE BRAND TAKES SECONDARY OR BACKSEAT, WHEREAS IN SECON D CASE, BRAND IS HIGHLIGHTED AND NOT THE PRODUCT. IN THE CASE UNDER CONSIDERATION THE AS SESSEE WAS INTRODUCING NEW PRODUCTS IN THE FIELDS OF BODY -CARE, DEODORANTS, CREAMS, SH OWER SOAPS.TALC, FIRST AID DRESSING ETC. IF IT HAS TO PENETRATE THE LOCAL MARKET, IT WILL HAD T O PROMOTE THE PRODUCTS THAT COULD COMPETE WITH THE SIMILAR PRODUCTS OF OTHER PLAYERS. THEREAFTER, RELYING ON VARIOUS DECISIONS INCLUDING THOMAS COOK INDIA LTD. IN ITA NO. 1261/MUM/2015, THE TRIBUNAL CONCLUDED THAT AMP EXPENDITURE INCURRED BY THE ASSESSE WAS NOT INTERNATIONAL TRANSACTION AN D HENCE, NO ADJUSTMENT WAS CALLED FOR. 7. THE TRIBUNAL IN THE IMMEDIATELY PRECEDING ASSESS MENT YEAR IN APPEAL BY THE ASSESSEE IN ITA NO.6848/MUM/2017 DECIDED ON 21/ 3/2018 FOLLOWED THE ORDER OF TRIBUNAL DATED 21/3/2018 IN ASSESSES OWN CASE FOR AYS 2008-09 TO 2012-13. WE OBSERVE THAT THE FACTS IN THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO THE PRECEDING ASSESSMENT YEARS. NO DIS TINCTION IN THE FACTS OR ANY DECISION CONTROVERTING THE FINDINGS OF CO-ORDINATE BENCH HAS BEEN BROUGHT TO OUR NOTICE. THUS, FOLLOWING THE DECISION OF TRIBUNA L IN ASSESSEES CASE FOR PRECEDING ASSESSMENT YEARS, THE GROUNDS OF APPEAL NUMBER 1 TO 6 ARE ALLOWED FOR PARITY OF REASONS . ADJUSTMENT ON IMPORT OF FINISHED GOODS - RS.13.14 COR ES. 8. BEFORE PROCEEDING FURTHER TO DECIDE THE ISSUE, I T IS RELEVANT TO CLARIFY A VITAL FACT REGARDING THE DATE OF DECISION OF THE AP PEALS OF THE ASSESSE IN PRECEDING ASSESSMENT YEARS. INITIALLY, THE APPEALS OF THE ASSESSE FOR AY 2008-09 TO AY 2012-13 WERE ADJUDICATED BY THE TRIBUNAL VIDE ORDER DATED 21/03/2018. 8 ITA NO.7174/MUM/2018(A.Y.2014-15) HOWEVER, WHILE DECIDING THE APPEALS SOME OF THE GRO UNDS REMAIN TO BE ADJUDICATED. THE ASSESSEE FILED MISC. APPLICATION, THE TRIBUNAL VIDE ORDER DATED 12/10/2018 RECALLED THE ORDER DATED 21/03/2018 FOR THE LIMITED PURPOSE TO ADJUDICATE THE GROUNDS THAT REMAIN TO BE DECIDED. T HE TRIBUNAL VIDE ORDER DATED 03/03/2020 DECIDED THE REMAINING GROUNDS FOR AY 2008-09 TO 2012-13, AS WELL AS, THE APPEAL OF ASSESSE IN ITA NO.6848/MU M/2017 FOR AY 2013-14. 9. REVERTING BACK TO THE ISSUE, WE FIND THAT TP ADJ USTMENT ON IMPORT OF FINISHED GOODS HAS BEEN SUBJECT MATTER OF DISPUTE U NCEASINGLY SINCE ASSESSMENT YEAR 2007-08. THEREFORE, THIS ISSUE IS A LSO PERENNIAL. THE TRIBUNAL IN PAST HAS RESTORED THE ISSUE TO DRP WITH SPECIFIC DIRECTIONS. THE RELEVANT EXTRACT OF THE ORDER OF TRIBUNAL ON THIS ISSUE DECI DED VIDE ORDER DATED 03/03/2020 ARE REPRODUCED HEREIN BELOW: 18. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PAR TIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. TRANSFER PRICING OFFICER FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION HAD RECORDED THE FINDING THAT THE ASSESSEE DID NOT PROVIDE THE REQUISITE INFORMATION AS MENTIONED HEREINABOVE IN PARAGRAPH 12(SUPRA). HOWEV ER, DURING THE COURSE OF ARGUMENT, AR HAD DRAWN OUR ATTENTION TO THE ANNUAL ACCOUNTS OF THE COMPARABLES, WHICH ARE PROVIDED BY THE ASSESSEE BEFORE THE TPO. HOWEVER, DESPITE PROVIDING THE REQUISITE INFORMATION TPO HAD RECORDED THAT THE SAI D INFORMATION'S WERE NOT PROVIDED TO TPO. FURTHER, WE ALSO NOTICED THAT THE ANNUAL REPOR TS OF THE COMPARABLES WAS NOT CONSIDERED AS COMPARABLES WERE HAVING DIFFERENT CAL ENDAR YEARS, OTHER THAN THE FINANCIAL YEAR OF THE TESTED PARTY. FURTHER, IT WAS ALSO MENTIONED THAT THE ASSESSEE IS CARRYING OUT THE DISTRIBUTION FUNCTION WITH RESPECT TO GOODS IMPORTED FROM ITS AE. THEREFORE, FOREIGN AE OF THE ASSESSEE CANNOT BE CON SIDERED AS A TESTED PARTY FOR BENCHMARKING THE INTERNATIONAL TRANSACTION. 19. ON PERUSAL OF THE PAPER BOOK AND DOCUMENTS SUBM ITTED BY THE ASSESSEE, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE HAD PROVIDED REQ UISITE NECESSARY DATA OF THE FOREIGN AE OF THE ASSESSEE AS WELL AS THE COMPARABLES TO TH E TPO, THIS FACT WAS DULY ACKNOWLEDGED BY THE DRP IN THE ORDER REPRODUCED HER EINABOVE. HOWEVER, BOTH THE LOWER AUTHORITIES HAD REJECTED THE CONTENTION OF THE ASSES SEE FOR CONSIDERING THE FOREIGN AE AS A TESTED PARTY BY FOLLOWING THE REASONS GIVEN BY TH E DRP FOR THE ASSESSMENT YEAR 2009- 2010. 9 ITA NO.7174/MUM/2018(A.Y.2014-15) 20. IN THE LIGHT OF THE ABOVE, WE ARE OF THE OPINIO N THAT THE ORDER PASSED BY THE LOWER AUTHORITIES IS REQUIRED TO BE SET ASIDE, AS THE ORD ER PASSED BY THE LOWER AUTHORITIES WERE CRYPTIC ORDERS, AS AUTHORITIES HAVE FAILED TO CONSI DER THE DOCUMENTARY EVIDENCE PRODUCED BEFORE IT WHILE PASSING THE ORDER ON THE SUBMISSION S OF THE ASSESSEE. FURTHER THE LOWER AUTHORITIES HAVE FAILED TO PASS REASONED SPEAKING O RDER DEALING WITH THE SUBMISSIONS/DOCUMENTARY EVIDENCE OF THE ASSESSEE. T HEREFORE, WE REMAND THESE GROUNDS BACK TO THE FILE OF THE DISPUTE RESOLUTION PANEL (DRP) FOR DENOVO EXAMINATION AND PASSING THE REASONED SPEAKING ORDER WITHOUT INF LUENCING WITH THE ORDER PASSED BY THE DRP FOR THE ASSESSMENT YEAR 2009-10. 21. THE DRP IS DIRECTED TO PASS A DETAILED SPEAKING ORDER AFTER CONSIDERING THE DOCUMENTS/ EVIDENCE ALREADY ON RECORD ON THE FOLLOW ING ASPECT: - (I) WHETHER THE FOREIGN AE OF THE ASSESSEE CAN BE C ONSIDERED AS TESTED PARTY FOR THE PURPOSE OF BENCHMARKING THE INTERNATIONAL TRANS ACTION SUBJECT MATTER OF THE PRESENT DISPUTE. FOR THAT PURPOSES THE DRP SHALL EX AMINE THE PROFILE OF THE FOREIGN AE, FUNCTIONS PERFORMED BY THE FOREIGN AE, ASSET DEPLOYED AND RISK ASSUMED. THE DRP IS DUTY BOUND TO CONSIDER THE DECI SION RELIED ON THE BY THE ASSESSEE NAMELY 1) RANBAXY ITA 196/DEL/ 2013, IDS I NFOTECH 130/CHD/2016 AND GENERAL MOTORS INDIA 3096/AHD/2010 AND 3308/AHD /2011 AND ALSO THE DECISION REFERRED BY THE LEARNED DEPARTMENTAL R EPRESENTATIVE IN THE CASE OF CARRARO INDIA (P.) LTD. VS. DCIT (2019) 104 TAXMANN .COM 166 (PUNE TRIB.), WHICH RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GE MONEY FINANCIAL SERVICES (P.) LTD. V. PR. CIT (ITA NO.662 /2016) DATED 31-08-2016. (II) IF ON EXAMINATION OF THE ABOVE PARAMETERS, THE DRP COMES TO THE CONCLUSION THAT THE FOREIGN AE CAN BE CONSIDERED AS TESTED PAR TY, THEN THE DRP WILL EXAMINE THE SUITABILITY OF COMPARABLE PROVIDED BY THE ASSES SEE IN THE TP STUDY ON THE BASIS OF THE PARAMETER LAID DOWN IN CHAPTER 10 AND THE RULE FRAMED THEREIN FOR SAID PURPOSE. THE DRP SHALL ALSO FIND OUT WHETHER T HE COMPARABLES PROVIDED BY THE ASSESSEE ARE INTO THE SAME LINE OF BUSINESS OR NOT. FURTHER DRP SHALL ALSO FIND OUT WHETHER THESE COMPARABLES ARE FROM THE SAME COU NTRY OR FROM THE SAME REGION HAVING THE SIMILAR ECONOMIC, GEOGRAPHICAL AN D POLITICAL CONDITION OR NOT WHICH MAY AFFECT THE PROFITABILITY OF THESE COMPARA BLE. THE DRP SHALL APPLY APPROPRIATE FILTERS FOR THE PURPOSE OF INCLUDING AN D EXCLUDING THE COMPARABLES. III) HOWEVER, IF THE DRP COMES TO THE CONCLUSION TH AT THE FOREIGN AE OF THE ASSESSEE CAN BE CONSIDERED AS A TESTED PARTY AND TH EREAFTER DRP REJECTS THE COMPARABLES SELECTED BY THE ASSESSEE, THEN THE DRP MAY INCLUDE ANY OTHER SUITABLE COMPARABLE WHICH SATISFY THE VARIOUS FILTE RS APPLIED BY THE DRP FOR THAT PURPOSES AFTER FOLLOWING THE PROCEDURE AS LAID DOWN IN CHAPTER 10 OF THE INCOME TAX ACT READ WITH RULE FRAMED THERE UNDER. IV) THE DRP SHALL DECIDE THE MATTER BASED ON THE ME RITS OF THE CASE WITHOUT BEING INFLUENCED BY THE OBSERVATION MADE BY THE DRP FOR T HE ASSESSMENT YEAR 2009- 10. 10 ITA NO.7174/MUM/2018(A.Y.2014-15) SINCE THE FACTS IN THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL AND NO CONTRARY MATERIAL HAS BEEN BROUGHT BEFORE US BY THE DEPARTME NT, WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF DRP WITH SIMILAR DIRECTIONS. CONSEQUENTLY, GROUND NO.7 TO 10 OF THE APPEAL ARE ALLOWED FOR STATI STICAL PURPOSE. 10. IN GROUND NO.11 OF THE APPEAL, THE ASSESSEE HAS ASSAILED CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT. THE CHARGI NG OF INTEREST IS MANDATORY AND CONSEQUENTIAL, GROUND NO.11 OF APPEAL IS WITHOUT ANY MERIT AND HENCE, DISMISSED . 11. THE GROUND NO.12 OF THE APPEAL IS GENERAL IN NA TURE, HENCE, REQUIRES NO ADJUDICATION. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED ON MONDAY THE 27TH DAY OF JULY, 2020. SD/- SD/- (N.K.PRADHAN) (VIKAS AWASTHY) $ / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 5 / DATED 27/07/2020 VM , SR. PS (O/S) 11 ITA NO.7174/MUM/2018(A.Y.2014-15) COPY OF THE ORDER FORWARDED TO : 1. - / THE APPELLANT , 2. #. / THE RESPONDENT. 3. 6. ( )/ THE CIT(A)- 4. 6. CIT 5. 78#. , . . . , / DR, ITAT, MUMBAI 6. 89:;< / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI