Honda Motorcycle and Scooters India Pvt. Ltd., Gurugram V. DCIT, Circle- 2(1), Gurugram

ITA 7463/DEL/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5839 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Assessment Year: 2013-2014
• Appeal Filed On: 26-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Depreciation; Transfer pricing; Business expenditure; International transaction; Royalty expenses; Revenue expenditure; Capital expenditure; TDS; Set aside
• Section: 37(1); 144C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI I-1 B ENCH, NEW DELH I BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA NO.7463 & 7464/DEL/2018 [A.Y 2013-14 & 2014-15] HONDA MOTORCYCLE AND DCIT SCOOTERS INDIA PVT. LTD. VS. CIRCLE 2 (1) COMMERCIAL COMPLEX-II, GURUGRAM SECTOR-49-50 GOLF COURSE EXTENSION ROAD, GURUGRAM APPELLANT BY : SH. DEEPAK CHOPRA, ADVOCATE MS. MANSVINI BAJPAI, ADVOCATE RESPONDENT BY : SH. SURENDRA PAL, CIT DR DATE OF HEARING : 28.09.2020 DATE OF PRONOUNCEMENT : 30. 09.2020 ORDER PER N. K. BILLAIYA , AM : 1. 7463/DEL/2018 AND 7464/DEL/2018 ARE TWO SEPARATE AP PEALS BY THE ASSESSEE PREFERRED AGAINST TWO SEPARATE ORDERS DATE D 30.10.2019 FRAMED U/S. 143 (2) R.W.S. 144C OF THE ACT PERTAINING TO A .Y. 2013-14 AND 2014-15 RESPECTIVELY. 2. SINCE COMMON GROUNDS ARE INVOLVED IN BOTH THESE APP EALS, THEREFORE, THEY WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY THIS BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AN D BREVITY. 3. SINCE UNDERLINE FACTS IN THE ISSUES ARE IDENTICAL I N BOTH THE YEARS. WE HAVE CONSIDERED THE FACTS OF A.Y.2013-14 FOR DIS POSING ALL THESE APPEALS. 4. THE COMMON GRIEVANCE CAN BE SUMMARISED AS UNDER :- 1. ADDITION ON ACCOUNT OF EXPORT COMMISSION 2. ADDITION ON ACCOUNT OF ROYALTY ON SALES TO ITS AES 3. DISALLOWANCE OF EXPENDITURE BEING INCURRED UNDER CO RPORATE SOCIAL RESPONSIBILITY 4. DISALLOWANCE OF EXPENDITURE ON SIGNAGES 5. DISALLOWANCE OF SALES TOOLS EXPENSES 6. CAPITALISATION OF ROYALTY 7. DISALLOWANCE OF CLAIM OF DEDUCTION OF EXPENSES IN R ESPECT OF TECHNICAL KNOW-HOW 8. CLAIM OF TDS 5. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH. CASE RECORD CAREFULLY PERUSED AND WITH THE ASSISTANCE OF THE COUNSEL WE HAVE CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUG HT ON RECORD IN THE FORM OF PAPER BOOK IN THE LIGHT OF RULE 18 (6) OF T HE ITAT RULES. 6. ON THE AGREEMENT OF BOTH THE REPRESENTATIVES WE HAVE CONSIDERED THE FACTS OF A.Y.2013-14 SINCE FACTS OF A.Y. 2014-1 5 ARE IDENTICAL. 7. APPELLANT IS A SUBSIDIARY OF HONDA MOTOR COMPANY LTD,. JAPAN, GROUP AND IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF MOTOR CYCLES AND SCOOTERS. THE DETAILS OF THE INTERNATIO NAL TRANSACTIONS AND SPECIFIED DOMESTIC TRANSACTIONS ENTERED BY THE ASSE SSEE WITH ITS AE DURING THE YEAR UNDER CONSIDERATION WHICH ARE AS UNDER :- S. NO. NATURE OF TRANSACTIONS TOTAL VALUE OF TRANSACTION A. INTERNATIONAL TRANSACTION 1 IMPORT OF MACHINE SPARES AND CONSUMABLES 68,24,46,686 2 EXPORT OF COMPONENTS & PARTS 35,26,58,041 3 PURCHASE OF FINISHED GOODS 3,72,39,286 4 SALE OF FINISHED GOODS 2,26,20,78,561 5 PURCHASE OF CAPITAL ITEMS 1,95,02,08,054 6. PAYMENT OF ROYALTY AND TECHNICAL KNOWHOW 6,15,64,20,046 7. PAYMENT OF TECHNICAL ASSISTANCE, CONSULTANCY FEE AN D OTHER SERVICE FEE 38,53,15,184 8. PAYMENT OF EXPORT COMMISSION 35,75,87,747 9 REIMBURSEMENT OF EXPENSES/ WARRANTY CLAIMS TO AES 5,34,77,692 10. ISSUE OF EQUITY SHARES 3,00,00,00,000 11 REIMBURSEMENT OF EXPENSES OF AES 3,46,41,212 B SPECIFIED DOMESTIC TRANSACTIONS 1. PURCHASE OF MACHINE SPARES AND CONSUMABLES 2,62,99,319 2. TRAINING EXPENSES 7,78,320 3. MERCHANDISING ITEMS 53,088 4. INFRASTRUCTURE SUPPORT SERVICES 2,97,60,000 5. REIMBURSEMENT OF EXPENSES OF AES 33,09,838 6. PAYMENT OF MANAGERIAL REMUNERATION 2,46,89,690 8. WITH THIS BACKGROUND WE WILL FIRST ADDRESS THE I SSUES WHICH HAVE ALREADY BEEN DECIDED BY THE COORDINATE BENCHES IN E ARLIER ASSESSMENT YEARS ON IDENTICAL SET OF FACTS. 1. PAYMENT OF ROYALTY ON SALES TO ITS AE - IDENTICAL ISSUE WAS CONSIDERED AND DECIDED BY THE TRIBUNAL IN ASSESSEE S OWN CASE IN A.Y. 2008-09 IN ITA NO.132/DEL/2013. THE RELEVANT FINDI NG READ AS UNDER :- 12. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS MADE PAYMENT OF ROYALTY AS PER THE TECHNOLOGY KNOW-HOW AGREEMENT DA TED JULY 13, 2000. THE RELEVANT CLAUSES OF THE AGREEMENT , NAMELY ARTICLES 2,3 & 11 REGARDING PAYMENT OF CONSI DERATION READ AS UNDER :- 1.1 AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT TO OUR NOTICE RESPECTIVELY FOLLOWING THE DECISION OF THE COORDINA TE BENCH (SUPRA) WE DIRECT THE AO/ TPO TO DELETE THE ADDITION ON THI S ACCOUNT. THIS GROUND IS ACCORDINGLY ALLOWED. 2. DISALLOWANCE OF CSR EXPENDITURE - A SIMILAR ISSUE WAS CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE I N A.Y. 2012-13 IN ITA NO. 7714/DEL/2017. THE RELEVANT FINDINGS READ AS UNDER :- 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE ALLOWABILITY O F EXPENDITURE INCURRED BY THE ASSESSEE UNDER THE HEAD CSR-EXPENDITURE. THE ASSESSEE CLAIME D THAT THE EXPENDITURE HAS BEEN INCURRED TOWARDS MAINTENANCE CHARGES OF GSS, GURGAO N FOR THE BENEFIT OF THE CHILDREN OF THE EMPLOYEES OF THE ASSESSEE COMPANY. THE ASSESSEE HAS PLACED ON RECORD THE LIST OF THE EXPENDITURE BEFORE US. THE PERUSAL OF THE SAME REFL ECTS THE EXPENDITURE ON CERTAIN RENOVATION WORK AT MOHINDERGARH INCLUDING PROVIDING CHAIRS AND TABLES BY THE ASSESSEE. FURTHER EXPENSES ARE DEBITED ON ACCOUNT OF TOOLS FO R HONDA TRAINING CENTER LAB- MOHINDERGARH. ALL THE SAID EXPENSES ARE INCURRED FO R EFFICIENTLY CARRYING OUT THE BUSINESS OF THE ASSESSEE AND THUS FULFILL THE CONDITION OF W HOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. FURTHER, THE DONATION TO BRAHMA KUMARIS M ERITS TO BE DISALLOWED IN THE HANDS OF THE ASSESSEE, AS IT IS CASE OF CHARITY. THE SAME MAY BE LOOKED INTO AS PER THE PROVISION OF SECTION BOG OF THE ACT. FURTHER, EXPENDITURE INC URRED TOWARDS DISPLAY OF NAME/LOGO OF THE ASSESSEE ON VARIOUS ITEMS IS UNDOUBTEDLY FOR TH E PROMOTION OF THE BUSINESS OF THE ASSESSEE AS IT PROMOTES GOODWILL. HENCE, THE EXPEND ITURE IS TO BE ALLOWED AS REVENUE EXPENDITURE. 14. BEFORE PARTING, WE MAY ALSO REFER TO THE ALTERN ATE OBSERVATIONS OF THE ASSESSING OFFICER THAT THE EXPLANATION (2) TO SECTION 37(1) W HICH HAS BEEN INTRODUCED W.E.F. 01.04.2015 IS TO BE APPLIED RETROSPECTIVELY. WE FIN D THAT THE RAIPUR BENCH OF TRIBUNAL IN JINDAL POWER LTD. (SUPRA) AND DELHI TRIBUNAL IN NAT IONAL SMALL INDUSTRIES CORPN. LTD. VS DCIT (SUPRA) HAVE HELD THAT THE SAID EXPLANATION IS PROSPECTIVE IN NATURE. CONSEQUENTLY, WE FIND NO MERIT IN THE STAND OF THE ASSESSING OFFI CER IN THIS REGARD EXCEPT EXPENDITURE OF RS.50,000/-, THE BALANCE EXPENDITURE IS ALLOWED IN THE HANDS OF THE ASSESSEE. THUS, GROUND OF APPEAL NOS. 3 TO 3.3 ARE PARTLY ALLOWED. 2.1 IN THE LIGHT OF THE ABOVE WE DIRECT THE AO TO D ELETE THE IMPUGNED ADDITION. HOWEVER, WE MAKE IT CLEAR THAT AMOUNT OF RS.50,000/- BEING PAID TO BRAHMA KUMARIS NEED NO T BE DELETED. THIS GROUND IS PARTLY ALLOWED. 3. DISALLOWANCE OF EXPENDITURE ON SIGNAGES A SIMILAR ISSUE WAS CONSIDERED AND DECIDED BY THE TRIBUNAL IN A.Y.2 012-13 IN ITA NO.7714/DEL/2017. THE RELEVANT FINDINGS READ AS UNDER :- 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE EXPENDITURE WAS INCURRED ON SIGNAGE FOR DISPLAY OF THE NAME OF THE ASSESSEE AT THE DEALERS PREMISES. HOWEVER, ONCE THE SAME IS FIXED AT DEALERS SITE THE N THE COURTS HAVE HELD THAT IT DOES NOT SATISFY THE TEST OF OWNERSHIP WITH THE ASSESSEE AND THE EXPENDITURE IS TO BE ALLOWED AS REVENUE EXPENDITURE, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS HONDA SIEL POWER PRODUCTS LTD.(SUPR A). THUS, WE ARE OF THE VIEW THAT THE EXPENDITURE TO THE EXTENT CLAIMED BY THE ASSESSEE I S TO BE ALLOWED IN THE HANDS OF THE ASSESSEE AND NOT/THE ENTIRE EXPENDITURE. GROUND OF APPEAL NO.6 IS THUS PARTLY ALLOWED. 3.1 RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH, WE HOLD ACCORDINGLY. 4. DISALLOWANCE OF SALES TOOLS EXPENSES AN IDENTICAL ISSUE WAS DECIDED BY THE TRIBUNAL IN A.Y. 2012-13 IN ITA NO. 7714/DEL/2017. THE RELEVANT FINDINGS READ AS UNDER :- 30. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE EXPENDITURE INCURRED BY THE ASSESSEE ON SALES TOOLS/FIXTURES WH ICH ARE PLACED AT DEALERS OUTLETS ARE SPECIFICALLY MANUFACTURED BY THIRD PARTY MANUFACTUR ERS IN ACCORDANCE WITH THE SPECIFICATIONS PROVIDED BY THE ASSESSEE. AS PER THE TERMS OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE THIRD PARTY MANUFACTURERS, 50% OF THE PRICE OF THE SALES TOOLS IS DIRECTLY PAID BY THE ASSESSEE AS ADVANCE TO THE THIRD PARTY MANUFACTURER AT THE TIME OF PLACEMENT OF ORDER AND BALANCE 50% IS PAID BY THE A UTHORIZED DEALERS, POST INSPECTION AND APPROVAL OF THE ORDERED ITEMS BY THE INSPECTING OFFICER OF THE ASSESSEE BEFORE DELIVERY AT DEALERS OUTLET. SUCH SALES TOOLS/ FIXT URES INTER-ALIA INCLUDES THE FOLLOWING:- RECEPTION COUNTER; CUSTOMER LOUNGE PARTITION WITH MONITOR STAND; SHELF PARTITION FOR PARTS AND ACCESSORIES; FROST GLASS PARTITION; DIGITAL GRAPHIC PANEL; SPECIFICATIONS PANEL; TWO-WHEELER DISPLAY BASE (WINDOW); TWO-WHEELER DISPLAY BASE (CORNER); SING RING; CATALOGUE STAND. 31. THE QUESTION WHICH ARISES IS WHETHER THE ASSESS EE IS INCURRING EXPENDITURE TO MAINTAIN STANDARD FORMAT OF DISPLAYING ITS PRODUCTS ALL OVER INDIA IN ORDER TO INDUCE PROSPECTIVE CUSTOMERS TO CLEARLY IDENTIFY THE EXCLU SIVE DEALERS OF ASSESSEES PRODUCTS IN INDIA AND EXPENDITURE INCURRED WAS WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF HIS BUSINESS. 32. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDERS OF THE AUTHORITIES BELOW. 33. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE HAVE PERUSED THE AGREEMENT BETWEEN THE ASSESSEE AND ITS DEALER AND A RTICLE 11.2 OF THE DEALERSHIP AGREEMENT READS AS UNDER:- 11.2. THE COMPANY SHALL PROVIDE THE NECESSARY INF ORMATION, MATERIALS AND SUCH OTHER ASSISTANCE FROM TIME TO TIME AT THE DEALERS COST A ND EXPENSE, WHEREVER APPLICABLE, WHICH SUPPORT THE DEALERS ADVERTISING AND SALES PR OMOTION EFFORTS FOR THE PRODUCTS, IN ACCORDANCE WITH THE PROVISIONS OF THE POLICY, GUIDE LINES, AND OPERATIONS STANDARDS WITH REGARD, TO ADVERTISING ISSUED, BY THE COMPANY FROM TIME TO TIME. THE COMPANY MAY AT DISCRETION, PROVIDE SUBSIDY ON THE ADVERTISING MATE RIAL. 34. CLAUSE 7.2 OF THE DEALERSHIP AGREEMENT STATES A S FOLLOWS:- 7.2. THE DEALER AGREES TO COMPLY AT ALL TIMES DURI NG THE VALIDITY OF THIS AGREEMENT WITH THE MINIMUM REQUIREMENTS CONCERNING THE DEALER SHIP PREMISES INCLUDING INTERALIA SALES OFFICE, SHOWROOM, WORKSHOP, SPARE PARTS AND A CCESSORIES SHOP AND OTHER NECESSARY EQUIPMENT, MACHINERY, TOOLS SPECIFIED BY THE COMPAN Y FROM, TIME TO TIME. THE LIST OF EQUIPMENTS, MACHINERY AND TOOLS WITH DETAILED SPECI FICATIONS AND QUANTITIES BASED ON DEALER'S SALES/SERVICE CAPACITY WILL BE ISSUED BY T HE COMPANY TO THE DEALER FROM TIME TO TIME ALONGWITH GUIDELINES AND PROCEDURES FOR PROCUR ING FILE SAME. THIS MAY INCLUDE RECOMMENDED PURCHASE PRICES FOR SUCH EQUIPMENTS, MA CHINERY AND. TOOLS BASED ON ARRANGEMENT FOR BULK PURCHASES/QUANTITY DISCOUNTS E TC. WITH THE SUPPLIERS AND ON TRAINING, AFTER SALES SERVICE INFRASTRUCTURE/SUPPORT ETC. PR OVIDED BY THE SUPPLIER. 35. IN VIEW OF THE AFORESAID, WE ARE OF THE VIEW TH AT THE EXPENDITURE INCURRED ON SIGNAGES EXPENSES WAS IN THE NATURE OF ADVERTISEMEN T EXPENDITURE, WHICH ARE RECURRING IN NATURE, INCURRED FOR THE PURPOSE OF BUSINESS AND IN THE ABSENCE OF ANY CAPITAL ASSET BEING ACQUIRED/OWNED BY THE ASSESSEE, THE SAME WAS ALLOWABLE AS BUSINESS DEDUCTION UNDER SECTION 37(1) OF THE ACT. 36. THE ASSESSING OFFICER WHILE DISALLOWING THE CLA IM OF THE ASSESSEE HAS STRONGLY PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT I N HONDA SIEL CARS INDIA LTD. VS CIT [395 ITR 713] (SC). HOWEVER, THE FACTS OF THE SAID CASE ARE DISTINCT AS IN THE FACTS OF THE SAID CASE EXPENDITURE WAS ON ACCOUNT OF SETTING UP OF MANUFACTURING FACILITY AND WAS NOT FOR RUNNING OF THE BUSINESS. THE TRIBUNAL IN AS SESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 WHILE DECIDING THE ISSUE IN APPEAL FILED AG AINST THE ORDER PASSED U / S 263 OF THE ACT HAD DISTINGUISHED THE SAID DECISION AND ALLOWED THE CLAIM OF THE ASSESSEE. HENCE, GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE IS ALL OWED. 4.1 RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH, WE HOLD ACCORDINGLY. 5. CAPITALISATION OF ROYALTY A SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN A.Y. 2012-13 IN ITA NO. 7714/DEL/20 17. THE RELEVANT FINDINGS READ AS UNDER :- 37. NOW COMING TO GROUND OF APPEAL NO.8 RAISED BY THE ASSESSEE UNDER WHICH THE ASSESSEE IS AGGRIEVED BY THE ORDERS OF THE AUTHORIT IES BELOW IN DISALLOWING 25% OF ROYALTY EXPENSES. THE LD.AR FOR THE ASSESSEE POINTE D OUT THAT GROUND OF APPEAL NO.9(A) WHICH IS THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE MAY BE TAKEN UP ALONGWITH THIS GROUND OF APPEAL. 38. BRIEFLY IN THE FACTS OF THE CASE RELATING TO TH E ISSUE, THE ASSESSEE HAS CLAIMED EXPENSES ON TECHNICAL KNOWHOW FEES AND ROYALTY DURI NG THE YEAR AMOUNTING TO RS.488.65 CRORES (APPROX.). THE SAID AMOUNT WAS PAI D TO THE FOREIGN COMPANY I.E. HONDA MOTOR COMPANY, JAPAN, IN VIEW OF TECHNICAL KNOWHOW AND TECHNOLOGY ASSISTANCE RECEIVED FROM THEM, THE ASSESSEE CLAIMED IT TO BE R EVENUE EXPENDITURE IN ITS HAND. THE ASSESSING OFFICER AFTER CONSIDERING THE REPLY OF TH E ASSESSEE WAS OF THE VIEW' THAT THE AGREEMENT EXECUTED BETWEEN THE ASSESSEE AND HONDA M OTOR COMPANY, JAPAN FOR THE PURPOSE OF TRANSFERRING OF TECHNICAL KNOW-HOW AND T ECHNOLOGY REFLECTS THAT THE PAYMENT IN LUMPSUM AS WELL AS VARIABLE WAS PAID FOR ACQUIRI NG ASSET OF ENDURING BENEFIT. THE PLEA OF THE ASSESSEE WAS THAT THE AFORESAID PAYMENT WAS IN RESPECT OF INFORMATION OF PRODUCTION PROCESS OF PRODUCT WHICH INCLUDED THE PL ANNING SHEET OF PRODUCTION, CONTROL SHEET OF QUALITY, FLOW CHART OF THE PRODUCTION PROC ESS AND DRAWINGS, CONCEPT DRAWINGS BROCHURES, JIGS, ASSEMBLE AND INSPECTION TOOLS, INF ORMATION FOR QUALITY CONTROL OF THE PRODUCTS ETC. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE KIND OF KNOWLEDGE WHICH WAS SHARED BY HONDA MOTOR COMPANY, JAPAN COMPRISES THE LIFE CYCLE OF THE PRODUCT I.E. STARTING FROM PRODUCTION PROCESS TILL THE OUTPUT OF THE FINAL PRODUCT. HE FURTHER OBSERVED THAT THIS NOT ONLY INCREASES THE GOODWILL OF THE AS SESSEE COMPANY IN THE MARKET BUT ALSO OTHER INTANGIBLES, THROUGH WHICH THE ASSESSEE COMPA NY GOT ENDURING BENEFIT. VIDE PARA 13.5 AT PAGE 35 OF THE ASSESSMENT ORDER, THE ASSESS ING OFFICER HAS ENLISTED THE BENEFITS ARISING TO THE ASSESSEE AS ASSESSING OFFICER HAD SH OW CAUSED THE ASSESSEE WITH REGARD TO LUMPSUM PAYMENT OF RS.L 10.45 CRORES (APPROX.) AND ROYALTY OF RS.378.20 CRORES (APPROX.) TOTALING TO RS.488.65 CRORES (APPROX.). R ELYING ON THE FINDINGS OF THE EARLIER YEAR, IT WAS PROPOSED BY ASSESSING OFFICER THAT THE SAID AMOUNT IS DISALLOWED IN THE HANDS OF THE ASSESSEE. 39. THE DRP DIRECTED THE ASSESSING OFFICER TO PROVI DE AN OPPORTUNITY TO THE ASSESSEE TO FILE SUBMISSIONS IN THIS REGARD. IN THE FINAL ASSES SMENT ORDER AT PAGE 37, THE ASSESSING OFFICER NOTES THAT OUT OF TOTAL TECHNICAL KNOWHOW O F RS.L 10.45 CRORES (APPROX.), THE ASSESSEE HAD ALREADY CAPITALIZED SUM OF RS.75.58 CR ORES (APPROX.) AND REST WAS SHOWN AS INTANGIBLE ASSETS AND NOT CLAIMED AS AN EXPENSE DUR ING THE YEAR. SO, THE CONTENTION OF THE ASSESSEE WITH REGARD TO TECHNICAL KNOW-HOW EXPE NSES WAS NOT ACCEPTED. IN RELATION TO THE ROYALTY EXPENSES INCURRED DURING THE YEAR, A GAINST WHICH THE ASSESSEE FILED ELABORATE SUBMISSIONS BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER NOTED THAT THE ARGUMENTS OF THE ASSESSEE THAT THIS WAS RUNNING ROY ALTY, THEREFORE, IT WAS TREATED AS REVENUE EXPENDITURE. THE ASSESSING OFFICER ON PERUS AL OF THE TECHNICAL KNOW-HOW AND ROYALTY AGREEMENT CAME TO A FINDING THAT THE ROYALT Y AGREEMENT WAS EXTENSION OF PAYMENT TOWARDS TECHNICAL KNOW-HOW. HE THUS OBSERVE D THAT. ANY PAYMENT WHICH HAS BEEN MADE ON ACCOUNT OF TECHNICAL KNOW-HOW AND ROYA LTY SHOULD BE READ, INTO ONE AND CANNOT BE BIFURCATED AS THE ASSESSES HAS DONE. IT I S FURTHER NOTED THAT THE ROYALTY WITHOUT TECHNICAL KNOWHOW DO NOT HAVE ANY EXISTENCE PER SE. THEREFORE THE SAME IS INEXTRICABLE FROM THE TECHNICAL KNOW-HOW. THE ASSES SEE CLAIMED THAT THE ROYALTY PAID WAS A RUNNING ROYALTY THEREFORE, THE SAME WOULD HE ALLOWABLE EXPENDITURE HOWEVER IT FAILED TO ACKNOWLEDGE THE. FACT THAT THE ROYALTY WA S CONJOINT WITH THE TECHNICAL KNOW- HOW AND WITHOUT WHICH THE SAME DID NOT HAVE ANY EXI STENCE THEREFORE, THE SAME SHOULD BE TREATED, AS CAPITAL IN NATURE.' 40. THE ASSESSING OFFICER DID NOT ACCEPT THE PLEA O F THE ASSESSEE THAT THE SAME ROYALTY BEING PAID FOR MORE THAN 15 YEARS AND BEING ALLOWED IN THE HANDS OF THE ASSESSEE, WAS NOT ACCEPTED IN VIEW OF THE DECISIONS OF HONBLE SU PREME COURT AND HONBLE ALLAHABAD HIGH COURT AND 25% OF THE ROYALTY EXPENDITURE OF RS .378,20 CRORES (APPROX.), WHICH WORKED TO RS. 94,45,04,266/- WAS TREATED AS CAPITAL EXPENDITURE BEING SPENT TOWARDS ACQUISITION OF CAPITAL ASSETS. DEPRECIATION ON THE SAME WAS ALLOWED AND BALANCE SUM OF RS.70,83,78,.200/- WAS ADDED IN THE HANDS OF THE AS SESSEE. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER. 41. THE LD.AR FOR THE ASSESSEE POINTED OUT THAT UND ER SAME AGREEMENT, THE ASSESSEE HAD PAID TO HONDA MOTOR COMPANY, JAPAN TWO CONSIDER ATIONS I.E. ONE' WAS THE LUMPSUM ROYALTY ON ACCOUNT OF MODEL FEE AND SECOND WAS THE RECURRING ROYALTY. HE FURTHER POINTED OUT THAT BOTH THE PAYMENTS FLOWED FROM THE SAME AGREEMENT AND THE PLEA OF THE ASSESSEE WAS THAT THERE WAS NO ENDURING BENEFIT TO THE ASSESSEE VIS-A-VIS THE RECURRING ROYALTY, THE LD.AR FOR THE ASSESSEE POINT ED OUT THAT IN EARLIER YEARS, THE SAME WAS ALLOWED AS REVENUE EXPENDITURE AND ONLY IN THE YEAR UNDER CONSIDERATION, THE SAME WAS DISALLOWED. HE REFERRED TO THE ORDER OF ASSESSI NG OFFICER AND WHO IN TURN RELIED ON THE DECISION OF HONBLE SUPREME COURT IN HONDA SIEL CARS INDIA LTD. VS CIT [395 ITR 713] (SC) TO DISALLOW 25% OF THE EXPENSES. THE LD.AR FOR THE ASSESSEE POINTED OUT THAT IN THE CASE OF HONDA SIEL CARS INDIA LTD. VS CIT (SUPRA) I TSELF, IN LATER YEARS TRIBUNAL HAS ALLOWED ENTIRE ROYALTY EXPENSES AS REVENUE AFTER CONSIDERIN G THE DECISION OF HONBLE SUPREME COURT (SUPRA), ON THE GROUND THAT THE ROYALTY PAYME NT WAS FOR AVAILING KNOW-HOW FOR NEW MODELS. THE LD.AR FOR THE ASSESSEE POINTED OUT THAT IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2011-12, THE COMMISSIONER INVOKE D THE PROVISION OF SECTION 263 OF THE ACT TO DISALLOW 25% OF ROYALTY EXPENDITURE FOR SIMILAR REASONS. HE REFERRED TO THE DECISION OF TRIBUNAL PLACED AT PAGE 458 AND POINTED OUT THAT THE ORDER U/S 263 OF THE ACT,, WAS QUASHED AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN HONDA SIEL CARS INDIA LTD. VS CIT (SUPRA) IN LATER DECISION OF THE TRIBUNAL IN SAID CASE ITSELF. HE FURTHER POINTED OUT 'THAT UNDER THE SAID AGREEMENT, LIMITED RIGHT TO USE THE KNOW-HOW WITHOUT ANY OWNERSHIP RIGHT WAS ACQUIRED AND AS THE KNOW-HO W WAS USED IN EXISTING BUSINESS OF MANUFACTURING THROUGH DEALERS, THE EXPENSES WAS INC URRED FOR THE PURPOSE OF BUSINESS. HE FAIRLY POINTED OUT THAT THE LUMPSUM FEE PAID OF RS.110 CRORES WAS CAPITALIZED IN THE BOOKS OF ACCOUNTS AS WELL AS FOR INCOME TAX PURPOSE AND THE ASSESSEE WAS CLAIMING DEPRECIATION ON THE SAME. BUT BY WAY OF ADDITIONAL GROUND OF APPEAL NO.9(A), THE SAME IS BEING CLAIMED AS REVENUE EXPENDITURE. THE LD.AR FOR THE ASSESSEE STRESSED THAT WHERE THE ASSESSEE HAD ACQUIRED ONLY LIMITED RIGHTS IN TH E AGREEMENT, THEN SAME REASONS ARE APPLICABLE FOR RUNNING ROYALTY, AND LUMPSUM ROYALTY PAYMENT SHOULD ALSO BE ALLOWED AS EXPENSES. IN THIS REGARD, RELIANCE WAS PLACED ON TH E FOLLOWING DECISIONS:- [IJ CIT V. HERO HONDA MOTORS LTD. 372 ITR 481 (DEL. HC) [LIJ CIT V. MUNJAL SHOWA LTD. 329 ITR 449 (DEL.HC) (IN) MARUTI SUZUKI INDIA LTD. VS ADDL. CIT (ITA NO. 6021/DEL/2012) (ASSESSMENT YEAR 2008-09] 42. THE LD.AR FOR THE ASSESSEE FURTHER POINTED OUT THAT THIS WAS A LEGAL ISSUE RAISED BY THE ASSESSEE WHERE THE FACTS WERE ALREADY ON RECORD AND IN THE LIGHT OF THE DECISION OF HON'BLE SUPREME COURT IN NATIONAL THERMAL. POWER CO .LTD. VS CIT (1998] 229 ITR 383 (SC), THE ADDITIONAL GROUND TO BE ADMITTED AND CLAI M TO BE ALLOWED. HE FURTHER STRESSED THAT THERE IS NO ESTOPPEL IN LAW FOR RAISING THE SA ID ISSUE; IN VIEW OF CORRECT LEGAL POSITION IN THE EYES OF LAW. 43. THE LD.DR FOR THE REVENUE STRONGLY OPPOSED THE ADMISSION OF THE ADDITIONAL GROUND OF APPEAL. HE STRESSED THAT THE DISCRETION OF COURT CAN BE EXERCISED ONLY IN EXTRAORDINARY CIRCUMSTANCES. HE STRESSED THAT THE ASSESSEE HAD CL AIMED IT TO BE CAPITAL EXPENDITURE SO THE DEPARTMENT WAS STOPPED FROM MAKING INVESTIGATIO N AND IT WAS POINTED OUT THAT IT WAS INVESTIGATION INTO FACTS. OUR ATTENTION WAS DRA WN TO THE AGREEMENT PLACED AT PAGES 44 ONWARDS OF THE PAPERBOOK AND HE POINTED OUT THAT THE PARENT COMPANY WAS ...JAPANESE COMPANY AND 99% HOLDING OF THE ASSESSEE WAS WITH JAPANESE COMPANY. HE OBJECTED TO THE LD.ARS STATEMENT THAT THE FACTS WE RE ON RECORD AND POINTED OUT THAT ALL. THE FACTS WERE NOT ON RECORD. HE ALSO STATED THAT, THE PLEA OF NO KNOWLEDGE WAS VERY MUCH WEAK WHERE BEST LEGAL MINDS WERE AVAILABLE TO THE ASSESSEE. HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN MANISH BUIL D WELL (P.) LTD. [2011] 16 TAXMANN.COM 27 (DELHI) AND THE DECISION OF HONHLE S UPREME COURT IN KESHAV MILLS CO.LTD. VS CIT [1965] 56 ITR 365 (SC). 44. THE LD.AR FOR THE ASSESSEE ALSO POINTED OUT THA T THE ISSUE STANDS COVERED BY THE DECISION OF HON TILE SUPREME COURT AND STRONG RELIA NCE WAS PLACED ON THE OBSERVATIONS OF THE ASSESSING OFFICER IN THIS REGARD. THE LD.AR FOR THE ASSESSEE IN RE-JOINDER POINTED OUT THAT THE SOLE ARGUMENT OF THE LD.DR FOR THE REV ENUE WAS PLACING RELIANCE ON THE DECISION OF .HONBLE SUPREME COURT IN THE CASE OF H ONDA SIEL CARS INDIA LTD. VS CIT (SUPRA), WHEREIN THE FACTS WERE DIFFERENT AND HENCE THAT DECISION WAS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ON AN WITHOUT PREJUD ICE BASIS, IT WAS POINTED OUT THAT EVEN IF THERE WAS SOME CONSIDERATION FOR MANUFACTURING I N EARLIER YEARS THEN IN THE PRESENT YEARS, THE KNOWHOW WAS ONLY IMPARTED FOR THE NEWER MODELS. HE AGAIN PLACED RELIANCE IN THE LATER DECISION OF HONBLE DELHI HIGH COURT I N CIT VS HERO HONDA MOTORS LTD. (ITA NOS. 694, 696, 698, 699 OF 2011 AND 625 AND 633 OF 2012) RELATING TO ASSESSMENT YEAR 2000-01 TO 2002-03 VIDE ORDER DATED 03.02.2015. 45. THE APPEAL WAS FIXED FOR CLARIFICATION AND THE LD.AR FOR THE ASSESSEE POINTED OUT THAT THE DECISION OF THE HONBLE SUPREME COURT IN HONDA SIEL CARS INDIA LTD. VS CIT (SUPRA) WAS WITH REGARD TO THE EXPENDITURE IN FIRST YEAR WH EREIN HONBLE APEX COURT HELD THAT SINCE THE INFORMATION WAS PASSED FOR ESTABLISHING T HE MANUFACTURING FACILITIES, THE SAME WAS CAPITAL IN NATURE. THE LD.AR FOR THE ASSESSEE S TRESSED THAT UNDER GROUND OF APPEAL NO.8, THE CLAIM WAS MADE IN RESPECT OF RECURRING RO YALTY WHICH IS ALWAYS BEEN ALLOWED AS REVENUE EXPENDITURE IN THE HANDS OF THE ASSESSEE . GROUND NO.9A WAS AGAINST ALLOWANCE OF TECHNICAL KNOW-HOW PAID FOR NEW MODELS , WHICH COME INTO THE MARKET AND THIS LUMPSUM ROYALTY WHICH IN TURN IS MODEL FEE HAS BEEN, ALLOWED AS AN EXPENDITURE IN THE CASE OF THE CIT VS HERO HONDA MOTORS LTD. (SUPR A), THE SLP AGAINST THE ORDER OF HONBLE DELHI HIGH COURT HAS BEEN DISMISSED. THE LD .AR FOR THE ASSESSEE ALSO POINTED OUT THAT THE AMOUNT HAS BEEN PAID IN RESPECT OF THE NEW MODELS INTRODUCED DURING THE YEAR. 46. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD ENTERED INTO A TECHNICAL KNOW-HOW AGREEMENT WITH HO NDA MOTORS COMPANY, JAPAN UNDER WHICH IT WAS PAYING LUMPSUM FEE WHICH WAS THE AMOUNT IN CONNECTION WITH THE NEW MODELS INTRODUCED IN A YEAR. THE TOTAL AMOUNT P AID DURING THE YEAR WAS RS. 110.45 CRORES (APPROX.) WHICH WAS CAPITALIZED BY THE ASSE SSEE IN ITS BOOKS OF ACCOUNTS AND ALSO IN THE P&L A/C. THE ASSESSEE ALSO PAID RUNNING ROYA LTY WHICH WAS PAID FOR GRANT OF THE RIGHT TO LICENSE AND MANUFACTURING OF TWO-WHEELERS IN INDIA. THE TOTAL RUNNING ROYALTY PAID WAS RS.378.20 CRORES (APPROX.). THE SAID ROYAL TY WHICH IS THE RECURRING ROYALTY PAID BY THE ASSESSEE FROM YEAR TO YEAR HAD BEEN ALLOWED AS REVENUE EXPENDITURE IN THE HANDS OF THE ASSESSEE IN THE PRECEDING YEARS. WE FIND NO MERIT IN THE SAID EXERCISE CARRIED OUT BY THE ASSESSING OFFICER AND ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO ALLOW THE RUNNING ROYALTY AS BUSINESS EXPENDITURE IN ENTIRETY . GROUND OF APPEAL NO.8 RAISED BY THE ASSESSEE IS THUS ALLOWED. 5.1 RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH, WE HOLD ACCORDINGLY. 6. ADDITIONAL CLAIM OF DEDUCTION OF EXPENSES IN RES PECT OF TECHNICAL KNOW-HOW - A SIMILAR ISSUE HAS BEEN DECIDED IN A.Y. 2012-13. THE RELEVANT FINDINGS READ AS UNDER :- 47. NOW COMING TO THE NEXT ISSUE RAISED WHICH IS BY WAY OF ADDITIONAL GROUND OF APPEAL. SINCE IT IS LEGAL ISSUE, IT IS ADMITTED FOR ADJUDICATION. THE ASSESSEE FAIRLY POIN TED OUT. THAT THE LUMPSUM ROYALTY WAS CAPITALIZED IN IT S BOOKS OF ACCOUNTS AND ALSO NOT CLAIMED AS AN EXPENDITURE IN THE RETURN OF INCOME. HOWEVER, BECAUSE OF THE SETTLED POSITION BY WAY OF THE DECISION OF THE JURISDICTION AL HIGH COURT IN CIT V. HERO HONDA MOTORS LTD. (SUPRA), THE SAME IS BEING CLAIMED AS B USINESS EXPENDITURE. THE RELEVANT FINDINGS ARE AS UNDER:- THE HONBLE ITAT IN THE APPELLANTS OWN CASE FOR A SSESSMENT YEAR 2011- 12 REITERATED THAT THE FACTS IN THE CASE OF THE APPELLANT DIFFER FROM, THE FACTS OF HONDA SIEL CARS LTD. (SUPRA) BECAUSE THE AMOUNT EXPENDED IS IN RELATION TO THE RUNNING ROYALTY AND NOT FOR THE PURPOSE OF SETTING UP OF PLANT. FURTHER, REFERENCE IS ALSO MADE TO THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF HONDA CARDS INDIA LTD VS DCIT : ITA NO.4491/DEL/201 4 DATED 18.08.2017 (PAGES 414- 457 OF THE CLPB) AND ALSO CONFIRMED BY HONBLE DELH I HIGH COURT IN ITA NO.45/2019 VIDE ORDER DATED. 13.05.2019 (REFER PAGES 457A-457F OF THE CLPB), WHEREIN THE TRIBUNAL AFTER REFERRING TO THE DECISION OF THE SUP REME COURT IN THE CASE OF HONDA SIEL CARS (SUPRA) OBSERVED THAT THE SUPREME COURT HAS CA RVED OUT THE DISTINCTION BETWEEN THE PAYMENTS AT THE TIME OF SETTING UP OF THE MANUF ACTURING FACILITY AND THE PAYMENTS MADE ONCE THE MANUFACTURING PROCESS HAS ALREADY BEG AN. IN THE FORMER CASE, ROYALTY EXPENDITURE FOR SETTING UP THE MANUFACTURING FACILI TY IS CAPITAL IN NATURE WHILE IN THE LATTER CASE, THE ROYALTY EXPENSE IS REVENUE IN NATU RE. 48. THE SLP FILED AGAINST THE SAID DECISION HAS BEE N DISMISSED BY THE HONBLE SUPREME COURT. APPLYING THE SAID RATIO, WE ARE OF THE VIEW THAT THE ASSESSEE WAS ENTITLED TO CLAIM THE AFORESAID EXPENDITURE AS REVENUE EXPENDIT URE IN THE HANDS OF THE ASSESSEE. 49. COMING TO THE STAND OF THE REVENUE THAT WHERE T HE ASSESSEE ITSELF HAD NOT CLAIMED AS DEDUCTIBLE IN ITS HANDS, THEN THE SAME CANNOT BE ALLOWED BY THE ADDITIONAL GROUND OF APPEAL. WE FIND NO MERIT IN THE STAND OF THE LD. DR FOR THE REVENUE AS THERE IS NO ESTOPPEL IN LAW; ESPECIALLY WHERE THE ISSUE HAS BEE N DECIDED BY THE JURISDICTIONAL HIGH COURT ON SIMILAR FACTS. ACCORDINGLY, WE ALLOW THE A DDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE. 6.1 RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO ORDINATE BENCH WE DECIDE ACCORDINGLY. 7. NOW, WE WILL ADDRESS TO THE GRIEVANCE RELATING T O ADDITION ON ACCOUNT OF PAYMENT OF EXPORT COMMISSION - UNDER TECHNICAL KNOWHOW AGREEMENT DATED 13.07.2000 THE ASSESSEE WAS ENTITLED TO USE TECHNICAL KNOWHOW PROVIDED BY HONDA MOTOR COMPA NY LIMITED JAPAN FOR MANUFACTURE AND SALE OF TWO WHEELERS AND PARTS IN INDIA AND WAS NOT AUTHORIZED TO SELL ITS PRODUCTS OR PART IN ANY OTHER TERRITORY THAN IN INDIA WITHOUT PRIOR WRITTEN CONSE NT OF HMJ. THE ASSESSEE ENTERED INTO A SEPARATE EXPORT AGREEMENT D ATED 13.07.2000 UNDER WHICH HMJ ACCORDED CONSENT TO THE ASSESSEE TO EXPORT SPECIFIC MODELS OF TWO WHEELERS TO CERTAIN C OUNTRIES ON PAYMENT OF EXPORT COMMISSION @ 5% OF THE FOB VALUE OF SUCH EXPORTS. 7.1 UNDER TNMM ANALYSIS THE OPERATING PROFIT RATIO OF THE ASSESSEE @ 4.60% WAS HIGHER THAN AVERAGE OF OPERATING MARGIN OF -2.24% EARNED BY THE COMPARABLES COMPANIES. CONSIDERING T HAT THE OPERATING PROFIT MARGIN OF THE SELECTED COMPARABLE COMPANIES WAS LOWER THAN THE OPM OF THE ASSESSEE, SUCH INTERNATIO NAL TRANSACTIONS WERE CONSIDERED AS BEING AT ARMS LENGT H TNMM. 7.2 THE TPO HELD THAT THE ASSESSEE HAS NOT RECEIVED ANY SERVICES THAT AN INDEPENDENT ENTREPRENEUR WOULD BE WILLING T O PAY FOR AND ACCORDINGLY CONSIDERED THE ARMS LENGTH PRICE OF THE SAID TRANSACTION OF PAYMENT OF EXPORT COMMISSION OF NIL. 7.3 WHILE TREATING THE ALP AS NIL THE TPO HELD THAT THE ASSESSEE IS A CONTRACT MANUFACTURER AND FURTHER HELD THAT BY IT S EXPORT ACTIVITIES THE ASSESSEE IS DEVELOPING THE BRAND OF THE AE AND ACTUALLY HAS CARRIED OUT SERVICE TO THE AE. 7.4 IT WAS ALSO POINTED OUT THAT THE ASSESSEE HAS M ADE EXPORT TO AES RELATED PARTIES IN CHILE, PERU AND MEXICO AND SUCH EXPORTS ARE APPARENTLY FOR THE BENEFIT OF THE AES OF PARENT CO MPANY. 7.5 THE TPO/ DRP/ DR WERE OF THE STRONG BELIEF THAT THE SERVICES RENDERED BY THE AE FOR FACILITATING EXPORTS WERE UN CLEAR. 7.6 AT THE VERY OUTSET WE HAVE TO STATE THAT THE OB SERVATIONS OF THE TPO/DRP THAT THE ASSESSEE WAS ONLY A CONTRACT M ANUFACTURER HAS BEEN OUTRIGHTLY REJECTED BY THE TRIBUNAL IN ASS ESSEES OWN CASE IN EARLIER ASSESSMENT YEARS. 7.7 THE PRIMARY ISSUE WHICH NEEDS TO BE EXAMINED I S WHETHER THE ASSESSEE WAS BENEFITED BY MAKING SUCH EXPORT SALES. THE FOLLOWING CHART WOULD THROW LIGHT ON THIS ISSUE :- 7.8 FROM THE ABOVE CHART IT CAN BE SEEN THAT THE AV ERAGE PRICE IN RESPECT OF EXPORTS TO AES WAS HIGHER THAN THE PRIC E OF THE SAME PRODUCT SOLD IN THE DOMESTIC MARKET TO NON AE. 7.9 FURTHER WE FIND FROM THE COMPARATIVE PROFITABIL ITY STATEMENT, THE PROFITABILITY DERIVED BY THE ASSESSEE FROM EXPORT O F GOODS AT 8.91 % IS SIGNIFICANTLY HIGHER THAN THE PROFITABILITY DERIVED BY THE ASSESSEE FROM SALE OF GOODS IN THE DOMESTIC MARKET @ 5.50%. THE COMPARATIVE PROFITABILITY STATEMENT IS AS UNDER :- 7.10 FOR THE SAKE OF REPETITION, THE ENTIRE EDIFICE OF THE TPO/DRPS FINDING IS BASED UPON THE ASSUMPTION THAT THE ASSESSEE IS OPERATING AS A CONTRACT MANUFACTURER WITH RESPEC T TO EXPORT OF GOOD. 7.11 IN OUR UNDERSTANDING OF THE FACTS OF THE CASE IN HAND, WE ARE OF THE CONSIDERED VIEW THAT THE TPO/ DRP HAVE GROSS LY FAILED IN DISTINGUISHING BETWEEN THE FUNCTION OF THE LICENSE MANUFACTURERS AND CONTRACT MANUFACTURERS. 7.12 A PERUSAL OF THE BUSINESS PROFILE OF THE ASS ESSEE VIZ-A-VIZ AGREEMENT WITH THE PARENT, WE FIND THAT THE ASSESSE E IS A LICENSED MANUFACTURER SUCH AS THE ASSESSEE, THE SELLER IS EN TITLED TO COMPENSATION WHICH INCLUDES RETURNS ATTRIBUTABLE TO EXPLOITATION OF INTANGIBLES SUCH TECHNICAL KNOW-HOW ETC I.E. MAR KET DETERMINED PRICES. ON THE OTHER HAND, IN THE CASE OF A CONTACT MANUFACTURER, THE MANUFACTURER ACTS IN ACCORDANCE WITH THE INSTRU CTIONS OF THE BUYER AND IS ONLY ENTITLED TO ROUTINE COST PLUS RET URNS. IT WOULD BE PERTINENT TO REFER TO THE DECISION OF THE TRIBUNAL IN ASSESEES OWN CASE IN ITA NO.132/DEL/2013 HELD AS UNDER :- 7.13 A SIMILAR DECISION WAS TAKEN BY THE TRIBUNAL I N THE CASE OF HERO MOTOCORP LIMITED IN ITA NO. 5130/DEL/2010 WHER EIN THE TRIBUNAL HAS HELD AS UNDER :- 7.14. IN THE LIGHT OF THE ABOVE THE FIRST LIMB OF FINDING OF THE TPO/DRP IS REMOVED. 7.15. WE FIND THAT WHILE MAKING THE DISALLOWANCE T HE TPO HAS HELD THAT ASSESSEE FAILED TO DEMONSTRATE THE BENEFI TS DERIVE BY IT. THIS PROPOSITION OF THE TPO / DRP ALSO DO NOT HOLD ANY WATER IN THE LIGHT OF THE PRINCIPLE LAID DOWN BY THE HONBLE JUR ISDICTION HIGH COURT OF DELHI IN THE CASE OF CUSHMAN AND WAKEFIEL D (367 ITR 730). IT WOULD NOT BE OUT OF PLACE TO MBENTION HERE THAT IN EARLIER ASSESSMENT YEARS, THIS QUARREL WAS RESTORED TO THE FILES OF THE TPO TO DECIDE THE ISSUE AFRESH IN THE LIGHT PRINCIPLE L AID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CUSHMAN AND WAKEF IELD (SUPRA). 7.16. WE HAVE BEEN TOLD THAT IN THE SET ASIDE ASSES SMENT PROCEEDINGS THE TPO HAS ONCE AGAIN MADE THE ADDITIO N FOLLOWING THE EARLIER FINDINGS THAT THE ASSESSEE HAD FAILED T O PROVIDE EVIDENCE. 7.17 CONSIDERING THE FACTS OF THE CASE AS MENTION ED ELSEWHERE WE ARE OF THE CONSIDERED VIEW THAT THE AS SESSEE HAS SUCCESSFULLY DEMONSTRATED NOT ONLY THE BENEFITS BUT HAS ALSO SHOWN THAT THE PROFITABILITY IS HIGHER (AS PER THE CHARTS EXHIBITED ELSEWHERE). CONSIDERING THE TOTALITY OF THE FACTS WE HAVE NO HESITATION IN DIRECTING THE AO / TPO TO DELETE THE IMPUGNED ADDITION ON ACCOUNT OF EXPORT COMMISSION. 7.18 THIS GROUND IS ACCORDINGLY ALLOWED. 9. THE OTHER ISSUE RELATES TO THE CLAIM OF TDS. THE AO IS DIRECTED TO ALLOW THE CREDIT OF THE TDS AS PER THE PROVISIONS O F LAW. 10. AS MENTIONED AT THE BEGINNING SINCE FACTS OF A. Y.2013-14 AND 2014- 15 ARE IDENTICAL, THEREFORE, FOR THE DETAILED REASO NING GIVEN HERE IN ABOVE THE APPEAL OF A.Y.2014-15 IS ALSO DECIDED ACCORDING LY. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.09.2020. SD/- SD/- [SUCHITRA KAMBLE] [ N. K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30.09.2020 *NEHA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR ITAT, NEW DELHI DATE OF DICTATION 29.09.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.09.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 30.09.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 30.09.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30.09.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 30.09.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 30.09.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.0 9.2020 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER