ANTHEA AROMATICS PVT. LTD., NAVI MUMBAI V. ADDL.C.I.T. RG. 8(1), MUMBAI

ITA 7301/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5709 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEERJA PRADHAN
• Assessee Lawyers: ALOK K SAKSENA
• Keywords: Related party transaction; Business income; Transfer pricing; International transaction
• Section: 143(3); 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL K , BENCH MUMBAI BEFORE SHRI I.P.BANSAL , JM & SHRI N.K.BILLAIYA , AM ITA N O. 7301 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 8 - 0 9 ) M/S ANTHEA AROMATICS PRIVATE LIMITED, R - 81/82, TTC INDUSTRIAL ESTATE, MIDC, RABALE, NAVI MUMBAI - 400701 VS. ADCIT RANGE 8(1), MUMBA I PAN/GIR NO. : A AA CA 6031 G ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. ALOK K. SAKSENA /REVENUE BY : MS. NEERJA PRADHAN DATE OF HEARING : 6 TH JANUARY , 201 4 DATE OF PRONOUNCEMENT : 6 TH JANUARY , 201 4 O R D E R PER I.P.BANSAL ( J .M.) : THIS APPEAL IS FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER DATED 10 - 10 - 2012 , PASSED UNDER SECTION 143(3) READ WITH SECTION 144C(13) OF THE IT ACT, 1961( THE ACT ) FOR THE ASSESSMENT YEAR 200 8 - 0 9 . 2 . THE GROUNDS OF APPEAL IN APPEAL OF THE ASSESSEE ARE AS UNDER: - 1) THE LEARNED AO/TPO/DRP HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE BY APPLYING THE OPERATING PROFIT MARGIN OF ROHA UNIT I.E 25.93 % (OP/TC) TO AC SANTOL CRUDE MANUFACTURED IN RABALE UNIT. 2) THE LEARNED AO/TPO/DRP HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE BY IGNORING PRE - REQUISITE OF RULE 10B(1)(E) AND RULE 10B(2) ON THE FACTS POINTED OUT THAT THE FUNCTIONS, ASSETS, AND RISK ASSUMED ( FAR) OF ROHA UNIT ITA NO. 7301 /20 1 2 2 (100% EOU) ARE SIGNIFICANTLY DIFFERENT FROM THE FAR OF RABALE UNIT (A DOMESTIC UNIT). 3) THE LEARNED AO/TPO/DRP HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE BY NOTING THAT THE INTERNATIONAL TRANSACTIONS IN ALL OTHER PRODUCTS H AD MADE SIGNIFICANT PROFITS AND ACSANTOL CRUDE WAS THE ONLY PRODUCT ON WHICH THERE WAS AN OPERATIONAL LOSS. 4) THE LEARNED AO/TPO/DRP HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE BY BENCHMARKING THE OPERATING MARGIN OF ACSANTOL CRUDE MANUFACTUR ED IN THE RABALE UNIT, TO THE OPERATING MARGIN OF THE ROHA UNIT. 5) THE LEARNED AO/TPO/DRP HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE BY NOT MAKING THE REASONABLE ACCURATE ADJUSTMENT AS REQUIRED UNDER RULE 10B(3) WHILE ADOPTING THE OPERATING MARGINS OF ROHA UNIT TO ASCANTOL CRUDE. 6) THE LEA RNED AO ERRED IN THE FACTS AND IN LAW IN LEVYING OF INTEREST U/S 234B & 234C OF THE INCOME TAX ACT, 1961. 7) THE LEARNED AO ERRED IN THE FACTS AND IN LAW IN INITIATING PENALTY U/S. 271(1)(C) OF THE IN COME TAX ACT, 1961. 3 . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF RAW MATERIAL OF PERFUMES. IT HAD ENTERED INTO SIX INTERNATIONAL TRANSACTIONS WITH ITS AES, WHICH ARE UNDER : - SL. NO. PARTICULARS AMOUNT IN INRS 1. EXPORT OF ANTHAMBER ( ISO - E - SUPER) 14,92,40,000 2. EXPORT OF ACSANTOL CRUDE (INTERMEDIATE) 1,15,60,370 3. EXPORT OF PSEUDO MYRCENYL ACETATE (INTERMEDIATE) 65,04,840 4. EXPORT OF PRECLOMONE A (INTERMEDIATE) 3,52,800 5. IMPORT OF MYRCENE 5,04,96,081 6. IMPORT OF DIHYDROMYRCE NE 12,24,000 TOTAL 21,93,78,091 IN THE TRANSFER PRICING REPORT FILED BY THE ASSESSEE, IT USED COMPARABLE UNCONTROLLED METHOD TO BENCHMARK THE MAIN TWO TRANSACTIONS OF EXPORT I.E. EXPORT OF ANTHAMBER(I SO - E - SUPER) AND IMPORT OF MYRCENE I.E. THE TRANSACTIONS LISTED AT SERIAL NO. 1 & 5 , ITA NO. 7301 /20 1 2 3 POSSIBLY BECAUSE THE ASSESSEE HAD PURCHASED AND SOLD SIMILAR TYPES OF CHEMICALS FROM INDEPENDENT PARTIES ALSO. BOTH THE AFOREMENTIONED TRANSACTIONS ARE CONSIDERED TO BE AT A RMS LENGTH. HOWEVER, THE REMAINING FOUR TRANSACTIONS WERE NOT BENCHMARKED IN THE TP REPORT. THE ASSESSEE IN REPLY TO THE EXPLANATION REQUIRED BY THE TPO SUBMITTED THAT THEY CONSTITUTE ONLY A SMALL PROPORTION OF THE TOTAL TRANSACTION S . THE TPO REQUIRED THE ASSESSEE TO JUSTIFY THE ARMS LENGTH PRICE, PARTICULARLY, IN RESPECT OF SALES OF RS. 1,15,60,370/ - RECEIVED BY THE ASSESSEE ON EXPORT OF ACSANTOL CRUDE I.E THE TRANSACTION LISTED AT SERIAL NO. 2. IN RESPONSE, THE ASSESSEE FILED SOME COST STATEMENTS WORKING O UT THE OPERATING PROFITS OF THE REMAINING PRODUCTS. IN RESPECT OF A CSANTOL, THE TOTAL OPERATING COST PER KG WAS WORKED OUT AT RS. 1,179/ - WHILE THE WEIGHTED AVERAGE SELLING PRICE, WHICH WAS ENTIRELY TO THE A E , WAS SHOWN AT RS.1,154/ - PER KG. THUS, THERE WAS AN OPERATING LOSS OF RS.24.50 PER KG IN THIS CHEMICAL WHICH WORKED OUT TO ( - )2.1% ON SALES. THUS, IT WAS CONTENDED THAT THE OPERATING LOSS IN A CSANTOL WAS AT ARMS LENGTH. IT WAS SUBMITTED THAT THE AE OF THE ASSESSEE (WHICH IN THE PRESENT CASE IS ONLY ONE DE RIVES RESINIQUES ET TERPENIQUES, CALLED AS DRT ) HAD PLACED AN ORDER TO THE ASSESSEE FOR MANUFACTURE OF A CSANTOL ON A TRIAL BASIS. DUE TO HIGH OVERHEAD COSTS RESULTING FROM THE LOW OVERALL OUTPUT OF PRODUCTION FROM THE RABALE UNIT, THERE WAS A NET OPERA TING LOSS OF 2.1%. THE TPO DID NOT ACCEPT THE SAID CONTENTION AND NOTED THAT THE ROHA UNIT OF THE ASSESSEE , WHICH DID NOT MANUFACTURE A CSANTOL, HAD DECLARED AN OPERATING MARGIN OF ITA NO. 7301 /20 1 2 4 25.93%. HE ADOPTED THE SAID MARGIN ON THE TRANSACTIONS RELATING A CSANTOL CRU DE AND WORKED OUT AN ADJUSTMENT OF RS. 3 3 .07 LAKHS. IT IS IN THIS MANNER, THE ADDITION WAS PROPOSED BY THE AO IN THE DRAFT ORDER AGAINST WHICH THE ASSESSEE PREFERRED A REFERENCE TO THE DISPUTE RESOLUTION PANEL (DRP), WHICH IS DECIDED VIDE ITS DIRECTION S DAT ED 4 - 9 - 2012. 4 . BEFORE THE DRP, IT WAS THE CONTENTION OF THE ASSESSEE THAT THE TPO HAS INCORRECTLY APPLIED THE TRANSACTION NET MARGINAL METHOD (TNMM) WITHOUT FULFILLING THE PRE - REQUISITE LAID DOWN IN THE RULE FOR USE OF SUCH METHOD. IT WAS SUBMITTED THAT THE METHOD REQ UIRED COMPARING OF THE MARGINS ON A CSANTOL SALES TO AE WITH MARGINS OF THIRD PARTY SALES OF SIMILAR PRODUCTS. THE SAID CHEMICAL WAS MANUFACTURED AT THE RABALE UNIT AND THE OPERATIONS CARRIED OUT AT THIS UNIT WERE ENTIRELY DIFFERENT FROM THOSE AT THE ROHA UNIT, WHICH WAS A 100% EXPORT ORIENTED UNIT. THE FUNCTIONS PERFORMED, ASSETS USED AND RISKS ASSUMED (FAR) AT THE ROHA UNIT WERE VERY DIFFERENT FROM THE FAR OF THE RABALE UNIT. HENCE, THE OVERALL OPERATING MARGIN OF THE ROHA UNIT COULD NOT HAVE BEEN APPLIED TO THE TRANSACTIONS OF THE RABALE UNIT. IT WAS SUBMITTED THAT THE EXPORT OF A CSANTOL WAS A ONE - OFF TRANSACTION CARRIED OUT DURING THE YEAR ON TRIAL BASIS, AND HENCE, N O BENCH MARKING WAS REQUIRED IN THE FIRST PLACE. THE REASONS FOR THE LOS S IN EXPORT OF A CSANTOL HAD BEEN EXPLAINED TO THE TPO. IT WAS SUBMITTED THAT IF AT ALL , THE MARGINS OF ROHA UNIT WERE TO BE APPLIED, SUITABLE ADJUSTMENTS WERE REQUIRED TO BE MADE UNDER THE RULES , WHICH THE TPO HAS FAILED TO DO SO. ITA NO. 7301 /20 1 2 5 5 . LEARNED DRP AFTER CONS IDERING THE SUBMISSION OF THE ASSESSEE HAS OBSERVED THAT THE TRANSACTIONS IN QUESTION BEING VALUE OF 1.16 CRORE OUT OF TOTAL TURNOVER OF THE ASSESSEE 34.42 CRORE IS SURPRISINGLY NOT BENCHMARKED IN THE TRANSFER PRICING STUDY CARRIED OUT BY THE ASSESSEE. APP ARENTLY, S O HAS BEEN DONE BY THE ASSESSEE ON THE GROUND THAT NO CUP WAS AVAILABLE FOR BENCH MARKING THE TRANSACTION BECAUSE THE SALE OF THE A CSANTOL WAS MADE ONLY TO DRT, THE AE OF THE ASSESSEE. HOWEVER, THE ASSESSEE SHOULD HAVE MADE AN ATTEMPT TO APPLY ON E OF THE OTHER METHODS TO EVALUATE THE ARMS LENGTH NATURE OF THE TRANSACTION. LEARNED DRP FURTHER NOTED THAT THE ASSESSEE HAS DECLARED AN OVERALL OPERATING MARGIN OF 18.91% AND THE INTERNATIONAL TRANSACTIONS IN ALL OTHER PRODUCTS HA S MADE SIGNIFICANT PRO FITS. ACSANTOL CRUDE WAS THE ONLY PRODUCT ON WHICH OPERATING LOSS HA S BEEN DECLARED. THE ASSESSEE WAS REQUIRED TO SUBMIT COPY OF ANY AGREEMENT ENTERED INTO WITH THE AE TO ESTABLISH THAT THE PRODUCTION OF A CSANTOL WAS ONLY A TRIAL MANUFACTURE. ON SUCH REQUI REMENT THE ASSESSEE HAS SUBMITTED COPY OF THREE PURCHASE ORDERS, WHICH ACCORDING TO DRP, DID NOT ESTABLISH THAT THE PRODUCTION OF A CSANTOL WAS CARRIED OUT ON TRIAL BASIS. IT WAS NOTED THAT THE FIRST ORDER FOR 1000 KGS. COULD BE CONSIDERED TO BE ON TRIAL BA SIS AND SUBSEQUENT TWO ORDERS , PLACED TOWARDS THE END OF THE FINANCIAL YEAR , WERE APPARENTLY REGULAR ORDERS. THEREFORE, LEARNED DRP OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT OPERATING LOSS IN ACSANTOL SHOULD BE BENCHMARKED AGAINST THE OVERALL OPER ATING LOSS IN THE RABALE UNIT IS NOT ACCEPTABLE AS THE TRANSACTION S CARRIED OUT AT ITA NO. 7301 /20 1 2 6 RABALE UNIT WERE INCLUSIVE OF THE TRANSACTION RELATING TO A CSANTOL ITSELF, WHERE A SIGNIFICANT LOSS HAS BEEN INCURRED. THE SALE OF A CSANTOL IS SHOWN AT RS.1.16 CRORES OUT OF TOTAL SALES OF RS.6.97 CRORES AT RABALE UNIT. THUS, ACCORDINGLY TO LEARNED DRP THE ONLY OPTION REMAINING WITH THE DEPARTMENT IS TO BENCHMARK THE TRANSACTION AGAINST OPERATING MARGINS OF ROHA UNIT WHICH HAS UNDERTAKEN A SUBSTANTIAL OPERATION OF UN - RELATED PARTY TRANSACTIONS AND WHERE THE RELATED PARTY TRANSACTIONS HAVE ALREADY BEEN FOUND TO BE AT ARMS LENGTH BY THE TPO. LEARNED DRP ALSO REJECTED THE CONTENTION OF THE ASSESSEE REGARDING ADJUSTMENT ON ACCOUNT OF FAR ANALYSIS. IN THIS MANNER, THE ADJUSTMENT MA DE BY THE TPO AMOUNTING TO RS. 33,06,552/ - HAS BEEN UPHELD BY THE DRP AND THIS ADJUSTMENT IS ADDED TO THE INCOME OF THE ASSESSEE BY THE AO . AGGRIEVED, ASSESSEE HAS FILED AFOREMENTIONED GROUNDS OF APPEAL. 6 . AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY TH E LEARNED AR THAT DURING THE YEAR UNDER CONSIDERATION T HE ROHA UNIT OF THE ASSESSEE HAS MAINLY MANUFACTURED ANTHAMBER (MENTIONED AT SERIAL NO. 1 IN THE LIST OF INTERNATIONAL TRANSACTION) EXCEPT SMALL AMOUNT OF EXPORT OF PRECLOMONE A AMOUNTING TO RS. 3,52,800 / - , WHICH IS AN ITEM MENTIONED AT SERIAL NO. 4 OF THE INTERN ATION AL TRANSACTION S . HE SUBMITTED THAT RABALE UNIT OF THE ASSESSEE IS MANUFACTURING OTHER ITEMS OF WHICH OPERATING MARGIN S ARE DIFFERENT. LEARNED AR SUBMITTED THAT D URING THE COURSE OF HEARING BE FORE THE TPO, IT WAS POINTED OUT THAT THE AVERAGE OPERATING MARGIN OF THE PRODUCTS OF THE ASSESSEE PRODUCED AT RABALE UNIT SHOULD BE CONSIDERED AS BENCHMARK FOR COMPUT ING THE ARM S LENGTH PRICE OF ITA NO. 7301 /20 1 2 7 A CSANTOL. HE SUBMITTED THAT THERE ARE SIX ITEMS OF INTERNAT IONAL TRANSACTION S WITH THE AE AND THE TPO HAS ACCEPTED ARMS LENGTH PRICE OF ALL REMAINING FIVE ITEMS. HE REFERRED TO A CHART OF THE ITEMS PRODUCED BY THE RABALE UNIT AND OPERATING MARGIN THEREOF. THE CHART IS ENCLOSED WITH THE GROUNDS OF APPEAL. THE PRO DUCT - WISE OPERATING MARGINS , ACCORDING TO THE SAID CHART, ARE AS UNDER : - SL.NO. PRODUCT % OPERATING MARGIN 1. TCD KETONE - 0.4% 2. SHANOL 5.7% 3. ACSANTOL - 2.1% 4. LILIVOL - 12.3% 5. FLORETHER 6.4% 6. PMP - 39.6% 7. ISOLONGIFOLANONE - 42.2% 8. PMA 14 .3% 9. ACETYL CAREEN - 22.0% 10. CHANDANONE - 38.6% 6.1 LEARNED AR FURTHER REFERRED TO PARA 6.2 OF THE DRP S ORDER TO CONTEND THAT READING THEREOF WOULD SUGGEST THAT THE RELIEF IS NOT GIVEN BY THE DRP ON THE GROUND THAT OPERATING LOSS IN RABALE UNIT IN CLUDES ACSANTOL ALSO. HE SUBMITTED THAT EVEN IF ACSANTOL LOSS/TRANSACTION I S EXCLUDED FROM OPERATING MARGINS OF RABALE UNIT THEN ALSO TH ERE WILL BE SAME OPERATING LOSS. THUS, IT WAS PLEADED BY LEARNED AR THAT ADDITION SHOULD BE DELETED. 7 . ON THE OTHER HAND , IT WAS SUBMITTED BY THE LEARNED DR THAT THE ADDITION HAS RIGHTLY BEEN MADE AND THE SAME SHOULD BE UPHELD. ITA NO. 7301 /20 1 2 8 8 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. OUT OF SIX INTERNATIONAL TRANSACTIONS, THE ASSESSEE IN ITS TP STUDY HAD BENCHMARKED ONLY TWO TRANSACTIONS, WHICH WERE FOUND TO BE AT ARMS LENGTH PRICE ON THE BASIS OF COMPARISON WITH UNRELATED PARTIES. HOWEVER, IN RESPECT OF OTHER FOUR TRANSACTIONS, THE ASSESSEE DID NOT COMPUTE ARMS LENGTH PRICE IN THE TP ST UDY. DURING THE COURSE OF HEARING BEFORE THE TPO, OVERALL OPERATING MARGIN OF R ABALE UNIT WAS REFERRED TO CONTEND THAT REMAINING TRANSACTION S SHOULD BE CONSIDERED TO BE AT ARMS LENGTH. THE TPO HAS DOUBTED THE ARMS LENGTH PRICE OF A CSANTOL AND HAS APPLIED THE MARGIN OF ROHA UNIT TO COMPUTE THE ARMS LENGTH PRICE. AS AGAINST SUCH ACTION OF THE TPO, IT IS THE CONTENTION OF THE ASSESSEE THAT OPERATING MARGIN OF ROHA UNIT SHOULD NOT BE APPLIED AS THERE IS A LOT OF DIFFERENT BETWEEN THE WORK OF ROHA UNIT AND RA BALE UNIT AND SUCH CONTENTION HAS ALSO BEEN ACCEPTED BY THE TPO AS FOUR OUT OF REMAINING FIVE INTERNATIONAL TRAN SACTIONS HAVE BEEN ACCEPTED TO BE AT ARM S LENGTH. WE HAVE DULY CONSIDERED SUCH SUBMISSIONS OF THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE ORDER PASSED BY THE LEARNED DRP. WE FOUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO PLACE ON RECORD ANY CONCRETE EVIDENCE TO SUBSTANTIATE ITS CONTENTION THAT THE IMPUGNED PRODUCT WAS DEALT WITH BY THE ASSESSEE ON TRIAL BASIS. NO ARGUMENT WAS RAISED BEFORE US TO CO NTRADICT THE FINDINGS OF THE DRP VIDE WHICH WHEN IT HAS BEEN OBSERVED THAT THE LAST TWO TRANSACTIONS WERE NOT APPARENTLY ON TRIAL BASIS. IN ANY CASE, THERE IS NO MATERIAL ON RECORD, TO SUPPORT THE SALE PRICE OF THE ASSESSEE OF ACSANTOL PRODUCT . IT IS ALSO THE ITA NO. 7301 /20 1 2 9 FINDING OF LEARNED DRP THAT BOTH OF THE UNITS OF THE ASSESSEE ARE MANUFACTURING THE SAME SORT OF PRODUCTS WHICH ARE UNIQUE IN THEMSELVES AS A CLASS OF PRODUCTS. THE TECHNOLOGY IN NATURE OF RAW MATERIAL USED IS THE SAME. IF SUCH FINDINGS OF LEARNE D DRP ARE KEPT IN MIND, THEN, SO FAR AS IT RELATES TO RABALE UNIT, THE DIFFERENT PRODUCTS OF THE ASSESSEE SHOULD EARN THE SAME PROFIT MARGIN . AS AGAINST THAT, WE HAVE FOUND THAT IN DIFFERENT TYPE OF PRODUCTS, THE OPERATING MARG INS OF THE ASSESSEE ARE VARYING AND INCLUDE NEGATIVE MARGIN OF 42.2% IN THE PRODUCT KNOWN AS ISOLONGIFOLANONE . THEREFORE, IT CANNOT BE SAID THAT ON ALL THE PRODUCTS THE ASSESSEE WILL HAVE SIMILAR MARGIN. IF IT IS SO, THEN IN ABSENCE OF ANY MATERIAL SUPPORTING THE APPROPRIATE BENCHMARKING OF THE IMPUGNED INTERNATIONAL TRANSACTION, IT IS DIFFICULT TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT OVERALL MARGIN OF THE ASSESSEE IN ALL THE PRODUCTS SHOULD BE TAKEN AS BENCH - MARK TO EVALUATE ARMS LENGTH PRICE OF ACSANTOL PRODUCT. HOWEVER, THE EXTR EM E VIEW TAKEN BY THE REVENUE IN TAKING ROHA MARGIN TO REGULATE ARMS LENGTH PRICE OF ACSANTOL ALSO CANNOT BE UPHELD IN VIEW OF THE FACT THAT THE REMAINING FOUR TRANSACTIONS HAVE BEEN ACCEPTED BY THE REVENUE AT ARMS LENGTH I.E. ON THE PRICE ACCORDING TO THE MARGINS SHOWN BY THE ASSESSEE. T HEREFORE, WE ARE OF THE OPINION THAT THE AVERAGE MARGIN OF THE ASSESSEE OF THE PRODUCTS ON WHICH THE ASSESSEE HAS EARNED PROFIT SHOULD BE TAKEN AS BENCHMARK FOR ACSANTOL TRANSACTION . THE PRODUCTS ON WHICH THE ASSESSEE HAS EA RNED PROFIT ARE THE ITEMS - (1) SHANOL, (2) FLORETHER & (3) PMA. THE AVERAGE MARGIN OF THESE PRODUCTS WILL COME ITA NO. 7301 /20 1 2 10 TO 8.8%. THEREFORE, WE RESTRICT THE ADDITION TO THE MEAN MARGIN OF 8.8%, WHICH IS COMPUTED AT A SUM OF RS. 10,17,313/ - . HENCE, THE ADDITION IS HE REBY RESTRICTED TO A SUM OF RS. 10, 17,313/ - AND THE REST OF THE ADDITION IS DELETED. GROUNDS NO.1 TO 5 ARE CONSIDERED TO BE PARTLY ALLOWED. 9 . N O ARGUMENTS WERE ADDRESSED FOR GROUND NO.6 . THIS GROUND RELATES TO LEVY OF INTEREST UNDER SECTION 234B & 234 C . T HE LEVY OF SUCH INTEREST IS CONSEQUENTIAL . THEREFORE, THE AO IS DIRECTED TO RECOMPUTE THE INTEREST AS PER LAW ON THE INCOME DETERMINED AFTER GIVING EFFECT TO THIS ORDER. 10 . G ROUND NO.7 IS REGARDING INITIATION OF PENALTY UNDER SECTION 271(1)(C). IN OUR OP INION, THIS GROUND IS PREMATURE AND AT THIS STAGE, NO ADJUDICATION IS REQUIRED. HENCE, THIS GROUND IS DISMISSED. 1 1 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN THE MANNER AS AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH JANUARY . 201 4 . 6 TH JAN,2014 SD/ - SD/ - ( ) ( N.K.BILLAIYA ) ( ) (I.P.BANSAL) / ACCOUNTANT MEMBER / JUDICIALMEMBER MUMBAI ; DATED 06 / 01/2014 ITA NO. 7301 /20 1 2 11 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRU E COPY//