Huawei Telecommunications (India) Company Pvt. Ltd., Gurgaon V. ACIT, CIRCLE- 2(1), Gurgaon

ITA 7509/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2383 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 14-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; Principle of natural justice; International transaction; Rule of consistency; Question of law; Commercial expediency; Revenue expenditure; Capital expenditure; Set aside
• Section: 271(1)(c); 234B; 40(a)(ia); 37(1); 10B; 144C; 207; 48; 194A; 13; 22; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-1 : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.7509/DEL./2017 (ASSESSMENT YEAR : 2012-13) ITA NO.7510/DEL./2017 (ASSESSMENT YEAR : 2013-14) HUAWEI TELECOMMUNICATIONS (INDIA) PVT. LTD., VS. DC IT, CIRCLE 2 (1), 7 TH FLOOR, TOWER A, SPAZE I-TECH PARK, NEW DELHI. SOHNA ROAD, SECTOR 49, GURGAON 122 002. (PAN : AABCH1376E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPARK CHOPRA, ADVOCATE SHRI HARPREET S. AJMANI, ADVOCATE SHRI ROHAN KHARE, ADVOCATE MS. SEHR CHOPRA, ADVOCATE REVENUE BY : SHRI SURENDER PAL, CIT DR DATE OF HEARING : 07.01.2021 DATE OF ORDER : 24.02.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN THE AFORESAID INTER-CONNECTED APPEALS, THE SAME ARE BEING ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 2 DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSION. 2. APPELLANT, HUAWEI TELECOMMUNICATIONS (INDIA) COM PANY PVT. LTD. (HTICL) (HEREINAFTER REFERRED TO AS THE TAXPAYER) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED ORDER BOTH DATED 03.10.2017 PASSED BY THE AO IN CONSONANC E WITH THE ORDERS PASSED BY THE LD. DRP/TPO UNDER SECTION 143 (3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEARS 2012-13 & 2013-14 ON THE IDENT ICAL GROUNDS EXCEPT DIFFERENCE IN THE AMOUNT OF ADJUSTMENTS/ADDI TIONS/ DISALLOWANCES AND EXCEPT ONE ADDITIONAL GROUND NOS. 2.6 TO 2.6.5 FOR BENCHMARKING OF PROJECT MANAGEMENT SERVICES IN AS SESSMENT YEAR 2012-13 VALUE OF WHICH HAS BEEN TAKEN AT NIL, INTER ALIA THAT :- 1. GENERAL 1.1. THAT ON THE FACTS AND. IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. AO ERRED IN PASSING THE IMPUGNE D ASSESSMENT ORDER DATED OCTOBER 03, 2017 PURSUANT TO THE DIRECT IONS OF THE HON'BLE DISPUTE RESOLUTION PANEL (HON'BLE DRP) THER EBY COMPUTING THE TOTAL INCOME OF THE APPELLANT AT RS.1 ,380,032,000 AS AGAINST RETURNED LOSS OF RS. 62,390,267; AND 1.2. THAT THE ASSESSMENT ORDER PASSED BY THE LD. A O PURSUANT TO THE DIRECTIONS OF HON'BLE DRP IS BASED ON SURMIS ES AND CONJECTURES, AND, WITHOUT CONSIDERING THE FACTS AND ARGUMENTS SUBMITTED BY THE APPELLANT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS. 2. TRANSFER PRICING ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 3 2.1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. AO) TRANSFER PRICING OFFICER (,LD. TPO')/ ' HON'BLE DRP' HAS ERRED IN MAKING TRANSFER PRICING ADJUSTMENTS TO THE EXTENT OF RS.394,552,611 IN RESPECT OF THE INTERNATIONAL TRAN SACTIONS, ALLEGING THAT THE SAME TO BE NOT AT ARM'S LENGTH IN TERMS OF THE PROVISIONS OF SECTIONS 92C(1) AND 92C(2) OF THE ACT , READ WITH RULE 10D OF THE INCOME-TAX RULES,1962 (,RULES'); 2.2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. AO / LD. TPO/ HON'BLE DRP HAS ERRED BY NOT SATISFYING ANY OF THE CONDITIONS PRESCRIBED UNDER S ECTION 92C(3) OF THE ACT WHILE MAKING TRANSFER PRICING ADJUSTMENT S AND HAS ERRED BY NOT ACCEPTING THE TRANSFER PRICING DOCUMEN TATION MAINTAINED BY THE APPELLANT IN THE MANNER AS CONTEM PLATED UNDER THE ACT AND RULES; 2.3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. AO / LD. TPO/ HON'BLE DRP HAS MADE SUB STANTIAL ERRORS IN THE FACTS AND CONCLUSIONS AS STATED IN TH E TRANSFER PRICING (TP') ORDER BASED ON WHICH THE ARM'S LENGT H PRICE OF THE INTERNATIONAL TRANSACTION HAS BEEN DETERMINED; 2.4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. AO / LD. TPO HAS GROSSLY ERRED IN NOT PROVIDING THE APPELLANT WITH AN OPPORTUNITY TO SHOW CAUSE THE PRO POSED TP ADJUSTMENTS AND THEREBY DISREGARDING THE PRINCIPLES OF NATURAL JUSTICE; 2.5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. AO / LD. TPO/ HON'BLE DRP HAS ERRED IN MAKING AN ADJUSTMENT TO THE EXTENT OF RS. 39,138,666 IN RESPE CT OF INTERNATIONAL TRANSACTION PERTAINING TO AVAILING OF TECHNICAL SERVICES FROM ITS ASSOCIATED ENTERPRISE (AE') ALLE GING THE SAME TO BE NOT AT ARM'S LENGTH. IN DOING SO: 2.5.1. THE LD. LD. AO / LD. TPO/ HON'BLE DRP HAS E RRED IN LAW AND ON FACTS, BY DETERMINING THE ARM'S LENGTH PRICE FOR PAYMENT FOR AVAILING TECHNICAL SERVICES AS 'NIL' AND NOT AC KNOWLEDGING THE FACT THAT THE SERVICES WERE ACTUALLY RECEIVED B Y THE APPELLANT. 2.5.2. THE LD. AO / LD. TPO/ HON'BLE DRP HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE RATIONALE, BAC K-UP INFORMATION/ EXPLANATION AS PROVIDED / SUBMITTED BY THE APPELLANT DURING THE COURSE OF THE ASSESSMENT PROCE EDINGS. 2.5.3. THE LD. AO / LD. TPO/ HON'BLE DRP HAS ERRED IN LAW AND ON FACTS BY QUESTIONING THE COMMERCIAL EXPEDIEN CY/WISDOM OF THE APPELLANT FOR AVAILING SUCH SERVICES. 2.5.4. THE LD. TPO HAS ERRED IN LAW AND ON FACTS BY IGNORING THE PROVISIONS OF RULE 10B WHILE APPLYING 'OTHER METHOD ' IN ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 4 DETERMINING THE ARM'S LENGTH PRICE FOR RECEIPT OF T ECHNICAL SERVICES. 2.5.5. THE LD. TPO / HON'BLE DRP HAS ERRED IN LAW A ND ON FACTS BY NOT SHARING THE RELEVANT MATERIAL / INFORMATION RELIED UPON TO APPLY THE 'OTHER METHOD' AS MOST APPROPRIATE METHOD FOR BENCHMARKING THE TRANSACTION OF RECEIPT OF TECHNICA L SERVICES. 2.5.6. THE LD. AO / TPO HAS ERRED IN LAW AND ON FAC TS BY NOT APPRECIATING THE FACT THAT THE SUBJECT TRANSACTION HAS BEEN BENCHMARKED USING COMPARABLE UNCONTROLLED PRICE (C UP) METHOD; 2.6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. AO/LD.TPO/HONBLE DRP HAS ERRED IN MAK ING AN ADJUSTMENT OF RS.355,413,945 IN RESPECT OF INTERNAT IONAL TRANSACTION PERTAINING TO AVAILING OF PROJECT MANAG EMENT SERVICES FROM ITS AE ALLEGING THAT THE SAME TO BE N OT AT ARMS LENGTH. IN DOING SO : 2.6.1. THE LD. AO / LD. TPO / HONBLE DRP HAS ERRED IN LAW AND ON FACTS, BY DETERMINING THE ARMS LENGTH PAYME NT FOR AVAILING PROJECT MANAGEMENT SERVICES AS NIL AND N O ACKNOWLEDGING THE FACT THAT THE SERVICES WERE ACTUA LLY RECEIVED BY THE APPELLANT. 2.6.2. THE LD. AO / LD. TPO / HONBLE DRP HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE RATIONALE, BAC K-UP DOCUMENTARY EVIDENCE/EXPLANATION AS PROVIDED BY THE APPELLATE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. 2.6.3. THE LD. AO / LD. TPO / HONBLE DRP HAS ERRED IN LAW AND ON FACTS BY QUESTIONING THE COMMERCIAL EXPEDIEN CY/WISDOM OF THE APPELLANT FOR AVAILING SUCH SERVICES AND IGN ORING THAT THESE SERVICES WERE DIRECTLY UTILIZED FOR PROVISION OF SERVICES TO THIRD PARTIES; 2.6.4. THE LD. AO / LD. TPO/ HON'BLE DRP HAS ERRED IN LAW AND ON FACTS BY IGNORING THE PROVISIONS OF RULE 10B WHILE APPLYING THE 'OTHER METHOD' METHODOLOGY IN DETERMIN ING THE ARM'S LENGTH PRICE FOR AVAILING PROJECT MANAGEMENT SERVICES; 2.6.5. THE LD. AO / LD. TPO/ HON'BLE DRP HAS ERRED IN LAW AND ON FACTS BY NOT SHARING THE RELEVANT MATERIAL/ INFORMATION RELIED UPON TO APPLY 'OTHER METHOD' AS MOST APPROPR IATE METHOD FOR BENCHMARKING THE TRANSACTION OF AVAILING OF PRO JECT MANAGEMENT SERVICES. CORPORATE TAX 3. ADDITION ON ACCOUNT OF ADVERTISEMENT EXPENSES RS.28,479,838 ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 5 3.1 THE LD. AO AND THE HON'BLE DRP HAS ERRED ON FA CTS AND IN LAW IN CONFIRMING A DISALLOWANCE OF INR 28,479,8 38 ON AN ADHOC BASIS BEING 30% OF TOTAL ADVERTISEMENT EXPENS ES OF RS.94,932,796, WITHOUT APPRECIATING THAT THE ADVERT ISEMENT EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF APPELLANT'S BUSINESS AND IT IS IRRESPECT IVE OF ANY BENEFIT TO ANY GROUP COMPANY OR TO A THIRD PARTY; 3.2 THE LD. AO AND THE HON'BLE DRP ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ADVERTISEMENT EXPENSES HAVE BEEN INCURRED FOR CREATION OF THE BRAND OF THE GROUP AND THUS IS CAPITAL IN NATURE; 3.3 WITHOUT PREJUDICE TO THE ABOVE, THE LD. AO AND THE HON'BLE DRP ERRED IN IGNORING THE FACT THAT THE ADV ERTISEMENT EXPENSES HAVE ALREADY BEEN RECOVERED FROM THE AES A T AN AGREED MARK-UP AND THEREFORE, BASED ON THE JUDGEMENTS OF J URISDICTIONAL TRIBUNAL, NO DISALLOWANCE OF THE ADVERTISEMENT EXPE NSES CAN BE MADE; 3.4 WITHOUT PREJUDICE TO THE ABOVE, THE LD. AO AND HON'BLE DRP ERRED IN NOT ALLOWING DEPRECIATION AT THE RATE OF 25 PERCENT OF THE ADVERTISEMENT EXPENSES ALLEGEDLY HELD AS CAP ITAL IN NATURE. 4. ADDITION ON ACCOUNT OF PROVISION FOR CUSTOMER C LAIMS RS.1,010,856,249 4.1 THE LD. AO AND THE HON'BLE DRP ERRED ON THE FA CTS AND IN LAW IN CONFIRMING DISALLOWANCE TOWARDS PROVISION FOR CUSTOMER CLAIMS OF RS 1,010,856,249 WITHOUT APPRECI ATING THAT THE AMOUNT PROVIDED BY THE APPELLANT IS IN RELATION TO ACTUAL DELAYS/DEFAULTS OCCURRED AS PER THE TERMS OF THE CO NTRACT ENTERED BETWEEN THE APPELLANT AND ITS CUSTOMERS AND THUS, I S AN ASCERTAINED LIABILITY; 4.2 THE HON'BLE DRP ERRED ON THE FACTS AND IN LAW IN HOLDING THAT SUCH PROVISION IS AN UNLIQUIDATED DAMAGES MADE UNILATERALLY ON ESTIMATED BASIS AND HAS NOT BEEN COMPUTED ON SCI ENTIFIC BASIS, THEREBY COMPLETELY IGNORING THE COMPLETE DETAILS FU RNISHED BY THE APPELLANT PROVIDING DETAILS OF CUSTOMERS, BASIS OF CALCULATION, PERIOD OF DELAY, WORKINGS, COPY OF AGREEMENTS, ; 4.3 WITHOUT PREJUDICE TO ABOVE, THE LD. AO AND THE HON'BLE DRP ERRED ON THE FACTS AND IN LAW IN MAKING DISALLO WANCE OF THE PROVISION UNDER SECTION 40(A)(IA) OF THE ACT BY HOL DING THAT THE PROVISION FOR CUSTOMER CLAIMS IS COMPENSATION IN TH E FORM OF INTEREST PAID TO CUSTOMERS AND TAX SHOULD HAVE BEEN DEDUCTED UNDER SECTION 194A OF THE ACT; 5. ADDITION ON ACCOUNT OF ADVANCES WRITTEN OFF RS.8,533,563 ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 6 5.1 THE LD. AO AND THE HON'BLE DRP ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF ADVANCES WRIT TEN-OFF AMOUNTING TO RS 8,533,563 ON SURMISES AND CONJECTUR ES WITHOUT APPRECIATING THAT THE EXPENDITURE WAS INCURRED WHOL LY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS; 5.2 THE HON'BLE DRP HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ADVANCES IN THE NATURE OF SECURITY DEPOSIT ARE A LIABILITY TO BE DISCHARGED BY EMPLOYEES AND THUS, T HE AMOUNT BORNE BY THE APPELLANT SHOULD BE PART OF PERQUISITE S TAXABLE IN THE HANDS OF EMPLOYEES ON WHICH TAX SHOULD HAVE BEE N DEDUCTED AT SOURCE; 5.3 THE HON'BLE DRP ERRED IN IGNORING THE DETAILS FILED BY THE APPELLANT AND IN HOLDING THAT THE NECESSARY DETAILS WERE NOT FILED BY THE APPELLANT WITHOUT APPRECIATING THAT SUCH DET AILS OR EXPLANATIONS WERE NEVER ASKED FROM THE APPELLANT; 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO AND THE HON'BLE DRP ERRED IN LEVYIN G INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO AND THE HON'BLE DRP ERRED IN INITIA TING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : HUAWAI TECHNOLOGIES CO. LTD. ( HTCL) IS ONE OF THE CHINAS LARGEST PRIVATE SECTOR TELECOM COMPA NY FOR THE YEAR 2012 ESTABLISHED IN 1988 WITH HEADQUARTER AT SHENZH EN SPECIAL ECONOMIC ZONE IN CHINA FOR PROVIDING TOTAL SOLUTION S FOR MOBILE TELECOMS PRODUCTS AND NETWORKS. ITS PROJECTS AND S OLUTIONS RANGED FROM COMPLETE TELECOMS SOLUTIONS, NETWORK PLANNING AND DESIGN TO MANUFACTURING AND MANAGEMENT. HTCL HAS ALSO RESEAR CH & DEVELOPMENT (R&D) SUPPORT MANAGEMENT ACROSS THE WOR LD INCLUDING IN THE USA, SWEDEN AND RUSSIA AS WELL AS IN CHINA. ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 7 4. HUAWEI TELECOMMUNICATIONS (INDIA) COMPANY PVT. L TD., THE TAXPAYER WAS INCORPORATED ON 23.07.2002 UNDER THE I NDIAN COMPANIES ACT, 1956 BEING A SUBSIDIARY OF HUAWEI TE CHNOLOGIES COOPERATIEF U.A. WHICH HOLDS 90.11% OF THE TOTAL EQ UITY SHAREHOLDING OF THE TAXPAYER. HUAWEI TECH INVESTME NT CO. LTD., HONG KONG (HTICL) HOLDS THE BALANCE 9.89% OF THE TO TAL SHAREHOLDING OF THE TAXPAYER. THE TAXPAYER WAS INT O THE BUSINESS OF DISTRIBUTION OF TELECOM EQUIPMENT AND PROVISION OF TECHNICAL SERVICES, SUCH AS, INSTALLATION, COMMISSIONING, INT EGRATION AND OTHER SERVICES RELATED TO ITS CUSTOMERS IN INDIA. THE TA XPAYER ALSO PROVIDED BUSINESS SUPPORT SERVICES TO ITS ASSOCIATE D ENTERPRISES (AES). 5. DURING THE YEAR UNDER CONSIDERATION, THE TAXPAYE R ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS AES AS UND ER :- S. NO. DESCRIPTION OF THE TRANSACTIONS AMOUNT (RS.) PAID/PAYABLE AMOUNT (RS.) RECEIVED/ RECEIVABLE 1 PROVISION OF BUSINESS SUPPORT SERVICES - 2,085,914,472.00 2 IMPORT OF TELECOMMUNICATION EQUIPMENTS 483,717,622.00 - 3 PURCHASE OF FIXED ASSETS 267,802,270.00 - 4 PURCHASE OF SPARE PARTS 205,640,341 5 AVAILING OF TECHNICAL SERVICES 39,138,666 - 6 REIMBURSEMENT OF EXPENSES - 80,886,384.00 7 RECOVERY OF OPERATIONAL LOSS - 529,610,988 8 RETURN OF GOODS AND SPARES PARTS - 70,417,186 9 AVAILING OF PROJECT MANAGEMENT SERVICES 355,413,945 - ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 8 6. THE TAXPAYER CHALLENGED THE BENCHMARKING OF TWO INTERNATIONAL TRANSACTIONS MENTIONED AT SL.NOS.5 & 9 QUA AVAILING OF TECHNICAL SERVICES AND AVAILING OF PROJECT MANAG EMENT SERVICES BY AO/DRP/TPO BY FILING PRESENT APPEALS. LD. TPO D ECLINING THE CONTENTIONS RAISED BY THE TAXPAYER PROCEEDED TO BEN CHMARK THE TRANSACTIONS QUA TECHNICAL SERVICES AND PROJECT MAN AGEMENT SERVICES BY APPLYING THE BENEFIT TEST CLAIMED TO BE AN INTERNATIONALLY ACCEPTED METHOD. 7. LD. TPO ALSO OBSERVED THAT IN ARMS LENGTH SITUA TION, ONE WOULD PAY FEE FOR MANAGEMENT AND TECHNICAL SERVICES ONLY IF THE USE OF TECHNOLOGY WILL GIVE HIM GREATER ECONOMIC BE NEFIT BUT, IN THE INSTANT CASE, DESPITE THE USE OF INTANGIBLES, T HE MARGIN OF THE TAXPAYER IS LOWER THAN THE COMPARABLES WHICH CLEARL Y SHOWS THAT THE TECHNIQUES OR BRANDING HAS NOT PROVIDED ANY BEN EFITS TO THE SERVICES AND THEREBY DETERMINED THE ARMS LENGTH PR ICE (ALP) OF THIS TRANSACTION AT NIL AS NO INDEPENDENT PERSON IN SIMILAR CIRCUMSTANCES WOULD PAY ANY SUCH CHARGES. 8. AO ALSO DISALLOWED 30% OF THE ADVERTISEMENT EXPE NDITURE TOWARDS PUBLIC RELATION SERVICE, PROMOTION ACTIVITI ES, COMMERCIAL ADVERTISEMENT, SPONSORSHIP, PRINT MEDIA, MEDIA MONI TORING AND ANALYSIS ETC. BY TREATING THE SAME AS CAPITAL EXPEN DITURE TO THE TUNE ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 9 OF RS.2,84,79,838/- & RS.90,74,855/- IN AYS 2012-13 & 2013-14 RESPECTIVELY. AO ALSO MADE DISALLOWANCE OF RS.101 ,08,56,249/- & RS.12,86,11894/- IN AYS 2012-13 & 2013-14 RESPECTIV ELY ON ACCOUNT OF PROVISION MADE BY THE TAXPAYER FOR CUSTO MER CLAIM U/S 37 OR 40(A)(IA) OF THE ACT. AO ALSO MADE ADDITION OF RS.85,33,563/- & RS.61,60,172/- IN AYS 2012-13 & 20 13-14 RESPECTIVELY ON ACCOUNT OF ADVANCES WRITTEN OFF. 9. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. D ISPUTES RESOLUTION PANEL (DRP) BY WAY OF OBJECTIONS WHO HAS UPHELD THE ORDER PASSED BY THE TPO/AO. FEELING AGGRIEVED, THE TAXPAYER HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PR ESENT APPEALS. 10. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE S OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 OF ITA NO.7509/DEL/2017 (AY 2012-13) ITA NO.7510/DEL/2017 (AY 2013-14) 11. GROUND NO.1 OF AYS 2012-13 & 2013-14 IS GENERAL IN NATURE, HENCE NEEDS NO SPECIFIC ADJUDICATION. ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 10 GROUNDS NO.2 TO 2.6.5 OF ITA NO.7509/DEL/2017 (AY 2012-13) GROUNDS NO.2 TO 2.5.6 OF ITA NO.7510/DEL/2017 (AY 2013-14) 12. THE TAXPAYER IN ORDER TO BENCHMARK ITS INTERNAT IONAL TRANSACTIONS QUA AVAILING OF TECHNICAL SERVICES AND AVAILING OF PROJECT MANAGEMENT SERVICES APPLIED COMPARABLE UNCO NTROLLED PRICE (CUP) METHOD AS MOST APPROPRIATE METHOD (MAM) WHICH HAS BEEN REJECTED BY THE TPO/DRP WHO HAVE APPLIED T HE BENEFIT TEST AND DETERMINED THE ARMS LENGTH VALUE OF TECHN ICAL SERVICES AND PROJECT MANAGEMENT SERVICES AT NIL, WHICH IS NO W UNDER CHALLENGE BEFORE THE TRIBUNAL. 13. UNDISPUTEDLY, THE REVENUE HAS BEEN ACCEPTING TH E ARMS LENGTH VALUE OF THE INTERNATIONAL TRANSACTIONS QUA RECEIPT OF TECHNICAL SERVICES AND PROJECT MANAGEMENT SERVICES SINCE AY 2004-05 ONWARDS AND HAS NOT DRAWN ANY ADVERSE INFER ENCE THEREIN. IT IS ALSO NOT IN DISPUTE THAT THERE IS NO CHANGE I N THE BUSINESS MODEL/ FUNCTION PERFORMED AND RISK ASSUMED QUA THE TRANSACTION IN QUESTION BY THE TAXPAYER DURING THE YEARS UNDER CON SIDERATION. 14. LD. TPO IN ORDER TO BENCHMARK INTERNATIONAL TRA NSACTIONS QUA INTRA-GROUP SERVICES AVAILED FROM AES IN RESPEC T OF TECHNICAL SERVICES FOR AYS 2012-13 & 2013-14 AND BENCHMARKING OF PROJECT MANAGEMENT SERVICES FOR AY 2012-13 CONSIDERED BOTH THE ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 11 TRANSACTIONS JOINTLY AND PROCEEDED TO CONCLUDE THAT THE TAXPAYER HAS NOT ESTABLISHED COST BENEFIT ANALYSIS FOR AVA ILING THE SERVICES IN RESPECT OF EX-PATS VIS--VIS INDEPENDENT EMPLOYE ES. AT THE SAME TIME, AS IS EVIDENT FROM PAGE 11 OF THE TP ORDER UN DER THE HEADING FINDINGS ON THE BASIS OF ABOVE, LD. TPO PROPOSED TO APPLY CUP AS THE MAM BUT ALL OF SUDDEN IN ORDER TO MAKE ADJUS TMENT APPLIED OTHER METHOD FOR BENCHMARKING AND RE-DETERMINING THE ALP OF THE TRANSACTION AS NIL, AS IS EVIDENT AT PAGE 16 OF THE TP ORDER. 15. BEFORE THE LD. DRP, THE TAXPAYER HAS RAISED OBJ ECTIONS CHALLENGING THE IMPUGNED ORDER PASSED BY THE TPO WH ICH HAVE BEEN DISPOSED OFF. 16. LD. AR FOR THE TAXPAYER CONTENDED INTER ALIA TH AT THE TPO HAS RETURNED HIS FINDING WITHOUT PROVIDING SUFFICIE NT OPPORTUNITY OF BEING HEARD QUA BOTH THE TRANSACTIONS I.E. TECHNICA L SERVICES AND PROJECT MANAGEMENT SERVICES; THAT LD. DRP WHILE CON FIRMING THE BENEFIT TEST FOR AVAILING TECHNICAL SERVICES HAS NOT CONSIDERED THE RELEVANT EVIDENCE AND NO SEPARATE FINDINGS HAVE BEE N RETURNED ON THE ISSUE OF BENCHMARKING OF PROJECT MANAGEMENT SE RVICES; THAT IN THE ALTERNATIVE, LD. DRP ERRED IN HOLDING THA T AVAILING OF INTRA-GROUP SERVICES ARE ALLOWABLE U/S 37 OF THE AC T WITHOUT APPRECIATING THAT NO SUCH FINDINGS HAVE BEEN RETURN ED IN THE DRAFT ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 12 ORDER PASSED BY THE AO AND NO SEPARATE SHOW-CAUSE N OTICE WAS ISSUED TO THE TAXPAYER TO DECIDE THIS ISSUE. 17. PERUSAL OF THE ORDER PASSED BY THE TPO/DRP/AO G OES TO PROVE THAT THE LD. DRP PASSED THE ORDER WITHOUT PRO VIDING OPPORTUNITY OF BEING HEARD TO THE TAXPAYER BECAUSE WHEN THE TAXPAYER HAS SPECIFICALLY RAISED THE ISSUE THAT INI TIALLY TPO PROPOSED APPLICATION OF CUP METHOD AS MAM FOR BENCH MARKING THE INTERNATIONAL TRANSACTIONS IN QUESTION BUT ABRU PTLY APPLIED OTHER METHOD WITHOUT PROVIDING OPPORTUNITY OF BEING HEARD AND DETERMINED THE ALP OF TRANSACTION IN QUESTION AT NI L. 18. EVEN PLETHORA OF EVIDENCE BROUGHT ON RECORD BY THE TAXPAYER HAS NOT BEEN CONSIDERED BY THE TPO AS WELL AS LD. D RP QUA PAYMENT FOR TECHNICAL SERVICES RECEIVED ON THE BASI S OF USD 1600 PER MAN-MONTH ON ACTUAL TIME SPENT BY THE RELEVANT PERSONNEL NOR THE COPY OF TECHNICAL SERVICES AGREEMENT BETWEEN TA XPAYER AND HTCL HAS BEEN EXAMINED. 19. SO FAR AS QUESTION OF DETERMINING ALP OF PROJEC T MANAGEMENT SERVICES IS CONCERNED, LD. DRP HAS NOT R ETURNED ANY SEPARATE FINDING ON THIS ISSUE RATHER CONSIDERED TH E SAME ON THE BASIS OF REASONING GIVEN QUA INTRA-GROUP SERVICES. WHEN WE EXAMINE PARA 10.6.2 OF OBJECTIONS RAISED BEFORE THE LD. DRP BY THE TAXPAYER AVAILABLE AT RUNNING PAGE 189 OF THE APPEA L SET, THE ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 13 TAXPAYER HAS SPECIFICALLY EXPLAINED THE INTERNATION AL TRANSACTIONS AS UNDER :- THE FACTS OF THE INTERNATIONAL TRANSACTION ARE AS FOLLOWS : HUAWEI INDIA HAD ENTERED INTO A CONTRACT WITH A THI RD PARTY IN NEPAL FOR RENDERING SPECIALIZED NETWORK SERVICES. HOWEVER, HUAWEI INDIA APPROACHED HUAWEI CHINA FOR ASSISTANCE SINCE HUAWEI CHINA ALREADY HAD WORKING RELATIONSHIPS IN N EPAL. HUAWEI CHINA WAS ALREADY DEALING WITH THIRD PARTY C USTOMERS IN NEPAL AND THEREFORE, IT HAD THE RELATIONSHIP WIT H THIRD PARTY SUB-CONTRACTORS IN NEPAL FOR RENDERING SERVICES TO ITS CUSTOMERS. THUS, HUAWEI CHINA ASSISTED HUAWEI INDI A BY DELIVERING SERVICES TO THE CUSTOMER THROUGH THE SUB - CONTRACTORS. TO CONCLUDE, HUAWEI INDIA SUB-CONTRACTED THE ASSIGN MENT TO HUAWEI CHINA AND HUAWEI CHINA ENSURED THAT THE SERV ICES WERE DELIVERED THROUGH THE SUB-CONTRACTORS IN NEPAL . 20. HOWEVER, FINDINGS OF THE LD. TPO GIVEN IN PARA 10.6.3 GO TO PROVE THAT THE CONTENTIONS RAISED BY THE TAXPAYER H AS NOT BEEN TAKEN INTO ACCOUNT RATHER ISSUE HAS BEEN DECIDED ON THE BASIS OF SURMISES THAT NO INDEPENDENT ENTITY WOULD PAY FOR S UCH SERVICES WITHOUT ANY COST BENEFIT ANALYSIS AND THAT THE TAXP AYER HAS NOT FURNISHED ANY EVIDENCE AS TO THE COST BENEFIT ANALY SIS. THESE CONTENTIONS HAVE NOT BEEN TAKEN INTO CONSIDERATION BY THE LD. DRP EVEN. THE TAXPAYER HAS ALSO BROUGHT ON RECORD BENE FITS DERIVED BY THE TAXPAYER FROM THE RECEIPT OF SUCH SERVICES. EV EN, THE SAID CONTRACT AGREEMENT BETWEEN TAXPAYER AND HTCL, WHICH IS AVAILABLE AT PAGE 164 OF THE PAPER BOOK, HAS NOT BE EN CONSIDERED. ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 14 21. IDENTICAL QUESTION AS TO APPLYING BENEFIT TEST AND COMMERCIAL EXPEDIENCY BY THE LD. TPO/DRP/AO IN BENC HMARKING OF TECHNICAL SERVICES AND PROJECT MANAGEMENT SER VICES AT NIL HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN DANISCO INDIA (P) LTD. VS. DCIT (2020) 120 TAXMANN. COM 224 (DELHI-TRIB.) BY FOLLOWING OTHER CASES DECIDED BY THE TRIBUNAL I N IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE VIZ. EMERSON CLIMATE TECHNOLOGIES (INDIA) LTD. VS. DCIT (2018) 9 0 TAXMANN.COM 125 (PUNE-TRIB), DRESSER RAND INDIA (P) LTD. VS. ADDL.CIT AND ALSO BY RELYING UPON THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN CASE OF HIVE COMMUNICAT ION PVT. LTD. IN INCOME-TAX APPEAL 306/2011 AND REACHED THE CONCLUSION THAT IN SUCH LIKE CIRCUMSTANCES LD. TPO IN ORDER TO BENCHMARK THE TRANSACTION HAS TO DETERMINE WHETHER THE PRICE PAID BY THE ASSESSEE FOR THE SERVICES AVAILED IS WHAT AN INDEPE NDENT ENTERPRISE WOULD HAVE PAID FOR THE SAME SERVICES AND THE ANALY SIS DONE BY THE TPO IN THE NATURE OF SERVICES AND THE BENEFITS ARIS ING TO THE ASSESSEE ON AVAILING SUCH SERVICES WAS BEYOND THE S COPE OF TRANSFER PRICING PROVISIONS. 22. HONBLE HIGH COURT OF DELHI IN CASE OF HIVE COMMUNICATION PVT. LTD. (SUPRA) ALSO HELD THAT, LEGITIMATE BUSINESS NEEDS OF THE COMPANY MUST BE JUDGED FROM T HE VIEW POINT ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 15 OF THE COMPANY ITSELF AND MUST BE VIEWED FROM THE P OINT OF VIEW OF A PRUDENT BUSINESSMAN AND IT IS NOT FOR THE AO TO D ICTATE WHAT THE BUSINESS NEEDS OF THE COMPANY SHOULD BE. HONBLE HIGH COURT ALSO HELD THAT, THE TERM BENEFIT TO A COMPANY IN RELATION TO ITS BUSINESS HAS A VERY WIDE CONNOTATION AND IT WAS DIF FICULT TO ACCURATELY MEASURE THESE BENEFITS IN TERMS OF MONEY SEPARATELY. 23. HONBLE DELHI HIGH COURT IN CASE OF CIT VS. CUSHMAN AND WAKEFIELD INDIA (P) LTD. (2015) 60 TAXMANN.COM 168 (DELHI) JUDGMENT DATED 07.05.2015 HAS HELD THAT, THE COURT FIRST NOTES THAT THE AUTHORITY OF TPO IS TO CONDUCT TRANSFER PR ICING ANALYSIS TO DETERMINE THE ALP AND NOT TO DETERMINE WHETHER THER E IS A SERVICE OR NOT FROM WHICH THE ASSESSEE BENEFITS. 24. SO, FOLLOWING THE DECISIONS RENDERED BY THE HON BLE HIGH COURT AND COORDINATE BENCH OF THE TRIBUNAL, AS DISC USSED IN THE PRECEDING PARAS, WE ARE OF THE CONSIDERED VIEW THAT IT IS BEYOND THE JURISDICTION OF LD. TPO TO DETERMINE THE BENCHMARKI NG OF TECHNICAL SERVICES AND PROJECT MANAGEMENT SERVICES BY APPLYIN G THE BENEFIT TEST AND COMMERCIAL EXPEDIENCY TEST RATHER HIS J URISDICTION IS LIMITED TO DETERMINE THE ALP OF TRANSACTIONS WITH T HE STANDPOINT OF A BUSINESSMAN AND NOT BY SITTING ON THE CHAIR OF TH E BUSINESSMAN. MOREOVER, IN THE INSTANT CASE, ASSESSEE HAS BROUGHT ON RECORD PLETHORA OF EVIDENCE FOR AVAILING OF THE TECHNICAL SERVICES AND ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 16 PAYMENT MADE FOR TECHNICAL SERVICES RECEIVED ON THE BASIS OF USD 1600 PER MAN-MONTH ON ACTUAL TIME SPENT BY THE RELE VANT PERSONNEL, COPY OF TECHNICAL SERVICES AGREEMENT BET WEEN THE TAXPAYER AND THE HUAWEI, CHINA AND ALSO BROUGHT ON RECORD INVOICES FILED ON SAMPLE BASIS FOR AVAILING TECHNIC AL SERVICES, BUT ALL THESE DOCUMENTS HAVE NOT BEEN EXAMINED BY THE T PO/DRP RATHER BENCHMARKED THE TECHNICAL SERVICES/PROJECT MANAGEME NT SERVICES AVAILED OF BY THE TAXPAYER FROM ITS AE AT NIL BY ME CHANICALLY DEALING WITH THE ISSUE BY APPLYING THE BENEFIT TEST AND COMMERCIAL EXPEDIENCY TEST AND HAS NOT PROVIDED OPPORTUNITY OF BEING HEARD TO THE TAXPAYER AT THE TIME OF ABRUPTLY APPLYING THE O THER METHOD. 25. SO, IN THE GIVEN CIRCUMSTANCES, WE ARE OF THE C ONSIDERED VIEW THAT THIS ISSUE IS LIABLE TO BE REMITTED BACK TO THE TPO TO DECIDE AFRESH BY EXAMINING ALL THE EVIDENCES BROUGH T ON RECORD BY THE TAXPAYER AND TO DECIDE THE ISSUE IN THE LIGHT O F THE DECISIONS DISCUSSED IN THE PRECEDING PARAS AND BY FOLLOWING T HE RULE OF CONSISTENCY AS IN THE EARLIER YEARS I.E. IN AY 2004 -05 ONWARDS, TPO HIMSELF HAS ACCEPTED AVAILING OF TECHNICAL SERV ICES AT ARMS LENGTH PRICE AS DETERMINED BY THE ASSESSEE. NEEDLE SS TO SAY THAT TPO IS TO DECIDE THE ISSUE AFRESH BY PROVIDING AN O PPORTUNITY OF BEING HEARD TO THE TAXPAYER. CONSEQUENTLY, GROUN DS NO.2 TO 2.6.5 OF ITA NO.7509/DEL/2017 (AY 2012-13) AND GRO UNDS ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 17 NO.2 TO 2.5.6 OF ITA NO.7510/DEL/2017 (AY 2013-14) ARE DETERMINED IN FAVOUR OF THE TAXPAYER FOR STATISTICA L PURPOSES. GROUNDS NO.3 TO 3.4 OF ITA NO.7509/DEL/2017 (AY 2012-13) ITA NO.7510/DEL/2017 (AY 2013-14) 26. THE TAXPAYER CHALLENGING THE DISALLOWANCE OF RS.28,479,838/- & RS.90,74,855/- BEING 30% OF THE T OTAL ADVERTISEMENT EXPENSES OF RS.94,932,796/- & RS.30,2 49,518/- FOR AYS 2012-13 & 2013-14 RESPECTIVELY BY DECLINING ITS CONTENTIONS THAT THESE ADVERTISEMENT EXPENSES HAVE BEEN INCURRE D WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF TAXPAYERS BUSINESS AND NOT FOR ANY BENEFIT TO ANY GROUP COMPANY OR TO A THIRD PARTY. 27. THE TAXPAYER CHALLENGED THE DISALLOWANCE OF ADV ERTISEMENT EXPENSES ON THE GROUNDS INTER ALIA THAT AO HAS NO J URISDICTION TO EXAMINE COMMERCIAL EXPEDIENCY; THAT EXPENSES ARE NO T IN THE NATURE OF CAPITAL EXPENDITURE; THAT DISALLOWANCE ON AD HOC BASIS IS NOT SUSTAINABLE. HOWEVER, LD. DRP PROCEEDED TO CON FIRM THE DISALLOWANCE MADE BY THE AO ON THE GROUND THAT THE TAXPAYER OPERATES IN A SEGMENT WHERE THERE ARE ONLY 3 4 PL AYERS AT GLOBAL LEVEL AND THAT THERE ARE ONLY 3 4 CUSTOMERS IN IN DIAN MARKET AND THAT THE CASE OF TAXPAYER IS THAT OF A LIMITED SUPP LIERS AND LIMITED BUYERS; THAT THE ACTIVITY OF THE TAXPAYER AFTER SAL E OF EQUIPMENT I.E. INSTALLATION & COMMISSIONING, POST COMMISSIONING MA INTENANCE ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 18 SERVICES, UPGRADATION ETC. ARE MONOPOLISTIC WHICH C AN ONLY BE DONE BY THE TAXPAYER REQUIRING ANY KIND OF ADVERTISEMENT /PROMOTION ETC. SINCE EQUIPMENT BELONGS TO BRAND OF AES BUT, AT THE SAME TIME, IT CAN ALSO NOT BE PRESUMED THAT ALL THESE EXPENSES AR E ONLY FOR THE BENEFIT OF BUSINESS OF THE TAXPAYER. 28. BARE PERUSAL OF THE FINDINGS RETURNED BY THE LD . DRP GOES TO PROVE THAT DISALLOWANCES OF ADVERTISEMENT EXPENSES HAVE BEEN MADE ON THE BASIS OF GUESSWORK/AD HOC BASIS MERELY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS AS LD. DRP ITSELF RECO RDED THE FINDING THAT, HOWEVER IT CAN ALSO NOT BE PRESUMED THAT ALL THESE EXPENSES ARE ONLY FOR THE BENEFIT OF BUSINESS OF TH E TAXPAYER. SO, DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD . DRP IS NOT SUSTAINABLE. 29. THE TAXPAYER HAS CATEGORICALLY BROUGHT ON RECOR D THE BIFURCATION OF THE ADVERTISEMENT EXPENSES AT PAGE 2 21 & 204 OF THE PAPER BOOK FOR AYS 2012-13 & 2013-14 RESPECTIVELY. IT IS THE SETTLED PRINCIPLE OF LAW THAT TO EXAMINE THE QUESTI ON WHETHER AN EXPENDITURE WAS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS, REASONABLENESS OF THE SAME HAS TO BE E XAMINED FROM THE STANDPOINT OF THE BUSINESSMAN AND NOT OF THE RE VENUE DEPARTMENT. EVEN OTHERWISE, AD HOC DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF INCIDENTAL THIRD PARTY BENEFIT IS NOT PERMISSIBLE. ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 19 30. HONBLE SUPREME COURT IN CASE OF SA BUILDERS LTD. VS. CIT 289 ITR 26 (SC) HAS HELD THAT, THE EXPRESSION COMMERCIAL EXPEDIENCY IS AN EXPRESSION OF WIDE IMPORT AND INC LUDES SUCH EXPENDITURE AS A PRUDENT BUSINESSMAN INCURRED FOR T HE PURPOSE OF BUSINESS. SUCH EXPENDITURE MAY NOT HAVE BEEN INCUR RED UNDER LEGAL OBLIGATION, BUT YET IT IS ALLOWABLE AS BUSINE SS EXPENDITURE IF IT WAS INCURRED ON GROUNDS OF COMMERCIAL EXPEDIENCY. SO, WE ARE OF THE CONSIDERED VIEW THAT COMMERCIAL EXPEDIENCY O F AN EXPENDITURE INCURRED BY A BUSINESSMAN HAS TO BE EXA MINED FROM THE PERSPECTIVE OF BUSINESS PERSON AND NOT FROM THE PERSPECTIVE OF A TAX AUTHORITY. 31. HONBLE SUPREME COURT IN CASE OF EMPIRE JUTE COMPANY LTD. VS. CIT 124 ITR 1 (SC) LAY DOWN THE PRINCIPLE FOR DETERMINING WHETHER AN EXPENDITURE INCURRED IS IN T HE NATURE OF REVENUE OR CAPITAL HELD AS UNDER : THERE MAY BE CASES WHERE EXPENDITURE, EVEN IF INCU RRED FOR OBTAINING AN ADVANTAGE OF ENDURING BENEFIT, MAY, NO NETHELESS, BE ON REVENUE ACCOUNT AND THE TEST OF ENDURING BENEFIT MAY BREAK DOWN. WHAT IS MATERIAL IS TO CONSIDERED THE NATURE OF THE ADVANTAGE IN A COMMERCIAL SENSE AND IT IS ONLY WHER E THE ADVANTAGE IS IN THE CAPITAL FIELD THAT THE EXPENDIT URE WOULD BE DISALLOWABLE ON AN APPLICATION OF THIS TEST. THE T EST OF ENDURING BENEFIT IS, THEREFORE, NOT A CERTAIN OR CONCLUSIVE TEST AND IT CANNOT BE APPLIED BLINDLY AND MECHANICALLY WITHOUT REGARD TO THE PARTICULAR FACT AND CIRCUMSTANCES OF A GIVEN CASE. 32. HONBLE DELHI HIGH COURT IN CASE OF CIT VS. SPICE DISTRIBUTION LTD. (2015) 229 TAXMAN 400 (DELHI) DECIDED THE ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 20 ISSUE AS TO WHETHER ADVERTISEMENT EXPENSES ARE CAPI TAL OR REVENUE IN NATURE IN FAVOUR OF THE TAXPAYER BY RETURNING FO LLOWING FINDINGS:- THE TRIBUNAL HAS RIGHTLY NOTICED AND REFERRED TO T HE DECISION OF THE DELHI HIGH COURT IN CIT V. PEPSICO INDIA COLD D RINK LTD. [2012J 207 TAXMAN 5/21 TAXMANN.COM 165 WHEREIN, THE JUDGMENT OF THE SUPREME COURT IN MADRAS INDUSTRIAL INVESTMENT CORPN. V. CIT [1997] 225 ITR 802/91 TAXMAN 340 (SC) WAS 'EXAMINED AND IT WAS OBSERVED THAT THE ASSESSEE IS ENTITLED TO CLAIM DEFERRED REVENUE EXPENDITURE BUT THE ASSESSIN G OFFICER CANNOT TREAT THE REVENUE EXPENDITURE AS DEFERRED RE VENUE EXPENDITURE. THE REASON IS THAT THE ACT ITSELF DOES NOT HAVE ANY CONCEPT OF DEFERRED REVENUE EXPENDITURE. EVEN OTHER WISE, THERE ARE A NUMBER OF DECISIONS THAT THE ADVERTISEMENT EX PENDITURE NORMALLY IS AND SHOULD BE TREATED AS REVENUE IN NAT URE BECAUSE ADVERTISEMENTS DO NOT HAVE LONG LASTING EFFECT AND ONCE THE ADVERTISEMENTS STOP, THE EFFECT THEREOF ON THE GENE RAL PUBLIC AND CUSTOMER DIMINISHES AND VANISHED SOON THEREAFTER. ADVERTISEMENTS DO NOT LEAVE A LONG LASTING AND PERM ANENT EFFECT IN THE SENSE THAT THE PRODUCT OR SERVICE HAS TO BE REPEATEDLY ADVERTISED. EVEN OTHERWISE ADVERTISEMENT EXPENSE IS A DAY TO DAY EXPENSE INCURRED FOR RUNNING THE BUSINESS AND IMPRO VING SALES. IT IS NOTICEABLE THAT EVERY YEAR, THE RESPONDENT-AS SESSEE HAS BEEN INCURRING SUBSTANTIAL EXPENDITURE ON ADVERTISEMENTS . THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER, HAD REF ERRED TO THE FACT THAT SIMILAR ADDITIONS WERE ALSO MADE IN THE A SSESSMENT YEAR 2008-09. KEEPING IN VIEW THE NATURE AND CHARACTER O F THE RESPONDENT-ASSESSEE'S BUSINESS, EVERY YEAR EXPENDIT URE HAS TO BE INCURRED TO MAKE AND KEEP PUBLIC INFORMED, AWARE AN D REMAIN IN LIMELIGHT. THIS REQUIRES CONTINUOUS AND REPEATED PU BLICITY AND ADVERTISEMENTS TO REMAIN IN PUBLIC EYE, TO DO BUSIN ESS BY ATTRACTING CUSTOMERS. IT IS AN EXPENDITURE OF TRADI NG NATURE. THE AFORESAID ASPECT HAS BEEN HIGHLIGHTED BY THE DELHI HIGH COURT IN CIT V. SALORA INTERNATIONAL LTD. [2009] 308 ITR 199 (DELHI) AND CIT V. CASIO INDIA LTD. [2011] 355 ITR 196 [2012] 2 0 TAXINANN.COM 449(DEL). 33. SIMILARLY, FINDINGS RETURNED BY THE AO AND CONF IRMED BY THE LD. DRP THAT ADVERTISEMENT EXPENSES INCURRED BY THE TAXPAYER WILL INCREASE THE BRAND IMAGE OF THE GROUP COMPANY OF HU AWEI TECHNOLOGY AND DISALLOWED THE ADVERTISEMENT EXPENSE S TO THE TUNE ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 21 OF 30% IS ALSO NOT SUSTAINABLE. HONBLE SUPREME CO URT IN CASE OF SASSOON J. DAVID AND CO. P. LTD. VS. CIT 118 ITR 26 1 (SC) HELD THAT, THE FACT THAT SOMEBODY OTHER THAN THE ASSESSEE IS ALSO BENEFITED BY THE EXPENDITURE SHOULD NOT COME IN THE WAY OF AN EXPENDITURE BEING ALLOWED BY WAY OF DEDUCTION UNDER SECTION 10(2)(XV) OF THE ACT IF IT SATISFIED OTHERWISE THE TESTS LAID DOWN BY LAW. 34. SIMILARLY, HONBLE SUPREME COURT IN CASE OF J.J. ENTERPRISES VS. CIT 254 ITR 216 (SC) HELD THE DISALLOWANCE OF ANY EXPENDITURE ON AD HOC BASIS NOT SUSTAINABLE BY RETURNING FOLLOWING FINDINGS :- 'IN ITS PRINCIPAL ORDER, THE TRIBUNAL HAD CONCLUDED THAT THE ADDITION WAS UNSUSTAINABLE BECAUSE IT HAD BEEN MADE 'ON THE BASIS OF PURE GUESS WORK'. THE REVENUE MOVED THE HI GH COURT UNDER SECTION 256(2) OF THE INCOME-TAX ACT, 1961, A ND THE HIGH COURT CALLED FOR A REFERENCE ON THE BASIS THAT THE QUESTION WAS A QUESTION OF LAW. -WE ARE UNABLE TO AGREE WITH THE H IGH COURT. IN THE FIRST PLACE, THE TRIBUNAL HAS HELD THAT THE ADD ITION HAD BEEN MADE ON THE BASIS OF PURE GUESS WORK AND THIS IS A MATTER OF FACT IN RESPECT OF WHICH THE TRIBUNAL'S CONCLUSION IS FI NAL. IN THE SECOND PLACE, THERE WAS NO QUESTION OF REMANDING TH E MATTER TO THE ASSESSING OFFICER FOR RE-EXAMINATION OF THE SAM E QUESTION.' 35. SO IN VIEW OF THE MATTER AND FOLLOWING THE DECI SIONS RENDERED BY THE HONBLE SUPREME COURT AND HONBLE H IGH COURT DISCUSSED IN THE PRECEDING PARAS, WE ARE OF THE CON SIDERED VIEW THAT DISALLOWANCE OF 30% OF THE ADVERTISEMENT EXPEN SES BY THE AO AND CONFIRMING THE SAME BY THE LD. DRP IS NOT SUSTA INABLE FOR THE ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 22 REASONS INTER ALIA THAT COMMERCIAL EXPEDIENCY OF AN Y EXPENDITURE INCURRED BY THE TAXPAYER HAS TO BE EXAMINED WITH BU SINESSMAN STANDPOINT AND NOT WITH THE PERSPECTIVE OF TAX AUTH ORITY; THAT ADVERTISEMENT EXPENSES ARE REVENUE IN NATURE; THAT MERELY BECAUSE OF THE FACT THAT ADVERTISEMENT EXPENDITURE INCURRED BY THE TAXPAYER HAS BENEFITED THE THIRD PARTY, THE SAME CANNOT BE D ISALLOWED; AND THAT DISALLOWANCE OF ANY EXPENDITURE ON AD HOC BASI S IS NOT PERMISSIBLE IN LAW, HENCE ORDERED TO BE DELETED. C ONSEQUENTLY, GROUNDS NO.3 TO 3.4 OF ITA NO.7509/DEL/2017 & 7510/ DEL/2017 FOR AYS 2012-13 & 2013-14 RESPECTIVELY ARE DETERMIN ED IN FAVOUR OF THE TAXPAYER. GROUNDS NO.4 TO 4.3 OF ITA NO.7509/DEL/2017 (AY 2012-13) ITA NO.7510/DEL/2017 (AY 2013-14) 36. THE TAXPAYER CHALLENGED DISALLOWANCE/CONFIRMATI ON OF RS.1,010,856,249/- & RS.128,611,894/- FOR ASSESSMEN T YEARS 2012-13 & 2013-14 RESPECTIVELY ON ACCOUNT OF PROVIS ION FOR CUSTOMER CLAIM ON THE GROUND THAT THE AMOUNT PROVID ED BY THE TAXPAYER PERTAINING TO ACTUAL DELAYS/DEFAULTS OCCUR RED AS PER THE TERMS OF THE CONTRACT ENTERED BETWEEN THE TAXPAYER AND ITS CUSTOMERS AND AS SUCH IS AN ASCERTAINED LIABILITY . THE TAXPAYER HAS RAISED SPECIFIC OBJECTIONS BEFORE THE LD. DRP, AVAILABLE AT PAVES 256-274 AND 217-234 FOR AYS 2012-13 & 2013-14 ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 23 RESPECTIVELY, AND ALSO BROUGHT ON RECORD EVIDENCE I N THE FORM OF CREDIT-MEMO IN RELATION TO LIQUIDATED DAMAGES AND D ETAILS OF LIQUIDATED DAMAGES, CHART SHOWING TREND AND UTILIZA TION OF PROVISION OF CUSTOMER CLAIMS FROM AYS 2010-11 TO 20 14-15 AND EXTRACT OF AUDITED FINANCIALS FOR AYS 2010-11 TO 20 16-17 TO SHOW THE DETAILS OF PROVISION OF CUSTOMER CLAIMS AND EXT RACT OF CONTRACT ENTERED INTO BETWEEN THE TAXPAYER AND CUSTOMER CLAI MS FROM PAGES 6 TO 26 OF THE CONVENIENCE PAPER BOOK. 37. LD. AR FOR THE TAXPAYER CONTENDED THAT AO/DRP H AVE ERRED IN MAKING/CONFIRMING THE DISALLOWANCE TOWARDS PROVI SION OF CUSTOMERS CLAIM WITHOUT APPRECIATING THE FACT THAT AMOUNT PROVIDED BY THE TAXPAYER IS IN RELATION TO THE ACTU AL DELAYS/DEFAULTS OCCURRED AS PER THE TERMS OF THE CONTRACT ENTERED I NTO BETWEEN THE TAXPAYER AND ITS CUSTOMERS, THUS IS AN ASCERTAINED LIABILITY AND RELIED UPON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN DCIT VS. NOKIA SIEMENS NETWORKS INDIA PVT. LTD. IN ITA NO.3202/DEL/2014 ORDER DATED 31.01.2018. 38. WE HAVE PERUSED THE ORDER PASSED BY THE TRIBUNA L IN CASE OF NOKIA SIEMENS NETWORKS INDIA PVT. LTD. (SUPRA) WHEREIN THE IDENTICAL ISSUE HAS BEEN EXAMINED BY RETURNING FOLL OWING FINDINGS:- 8. IN THE PRESENT CASE FROM PAGE NO. 136 OF THE A SSESSEE'S PAPER BOOK, IT IS NOTICED THAT TOTAL PROVISION FOR LIQUID ATED DAMAGES WAS OF RS. 19,66,51,910/- OUT OF WHICH RS. 2,04,52,238/- W ERE UTILIZED AND CREDITED / WRITTEN BACK, THE REMAINING AMOUNT OF RS . 17,61,99,672/- ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 24 WAS THE ACTUAL AMOUNT OF THE DAMAGES WHICH WERE ACC OUNTED FOR IN THE PROFIT AND LOSS ACCOUNT. IN THE INSTANT CASE, T HE LEARNED CIT(A) CATEGORICALLY STATED THAT WHEN THE PAYMENTS WERE AC TUALLY MADE, THE ACCOUNTS WERE ADJUSTED WITH REFERENCE TO ANY REMISS ION OR WAIVER THAT THE COMPANY MAY GET IN RESPECT OF DAMAGES PAYA BLE FOR THE LATE DELIVERY AND THE SAME WAS BROUGHT TO TAX U/S 41 (1) OF THE ACT BY CREDITING THE LIQUIDATED DAMAGES ACCOUNTS. THEREFOR E, THE IMPUGNED AMOUNT WAS NOT ONLY THE PROVISION BUT THE ACTUAL AM OUNT OF THE LIQUIDATED DAMAGES PERTAINING TO THE PERIOD OF DELA Y FALLING WITHIN THE PREVIOUS YEAR RELATING TO THE ASSESSMENT YEAR U NDER CONSIDERATION. THE LEARNED CIT(A) CATEGORICALLY STA TED THAT THE ASSESSEE WAS FOLLOWING THIS METHOD CONSISTENTLY. WE , THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FACT UAL FINDINGS GIVEN BY THE LEARNED CIT(A) AND ACCORDINGLY DO NOT SEE AN Y MERIT IN THE GROUND RAISED BY THE DEPARTMENT. 39. HONBLE SUPREME COURT IN CASE OF ROTORK CONTROLS INDIA P. LTD. VS. CIT (2009) 314 ITR 62 (SC) DECIDED THE IDENTICAL ISSUE AS UNDER :- HELD, REVERSING THE DECISION OF THE HIGH COURT, TH AT THE VALVE ACTUATORS, MANUFACTURED BY THE ASSESSEE, WERE SOPHI STICATED GOODS AND STATISTICAL DATA INDICATED THAT EVERY YEAR SOME OF THESE WERE FOUND DEFECTIVE; THAT VALVE ACTUATOR BEING A SOPHIS TICATED ITEM NO CUSTOMER WAS PREPARED TO BUY A VALVE ACTUATOR WITHO UT A WARRANTY. THEREFORE, THE WARRANTY BECAME AN INTEGRAL PART OF THE SALE PRICE; IN OTHER WORDS, THE WARRANTY STOOD ATTACHED TO THE SAL E PRICE OF THE PRODUCT. IN THIS CASE THE WARRANTY PROVISIONS HAD T O BE RECOGNIZED BECAUSE THE ASSESSEE HAD A PRESENT OBLIGATION AS A RESULT OF PAST EVENTS RESULTING IN AN OUTFLOW OF RESOURCES AND A R ELIABLE ESTIMATE COULD BE MADE OF THE AMOUNT OF THE OBLIGATION. THER EFORE, THE ASSESSEE HAD INCURRED A LIABILITY DURING THE ASSESS MENT YEAR WHICH WAS ENTITLED TO DEDUCTION UNDER SECTION 37 OF THE I NCOME-TAX ACT, 1961. THE PRESENT VALUE OF A CONTINGENT LIABILITY, LIKE T HE WARRANTY EXPENSE, IF PROPERLY ASCERTAINED AND DISCOUNTED ON ACCRUAL BASIS CAN BE AN ITEM OF DEDUCTION UNDER SECTION 37. THE P RINCIPLE OF ESTIMATION OF THE CONTINGENT LIABILITY IS NOT THE N ORMAL RULE. IT WOULD DEPEND ON THE NATURE OF THE BUSINESS, THE NATURE OF SALES, THE NATURE OF THE PRODUCT MANUFACTURED AND SOLD AND THE SCIENT IFIC METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE. IT WOULD ALSO D EPEND UPON THE HISTORICAL TREND AND UPON THE NUMBER OF ARTICLES PR ODUCED. A PROVISION IS A LIABILITY WHICH CAN BE MEASURED ON LY BY USING A SUBSTANTIAL DEGREE OF ESTIMATION. A PROVISI ON IS RECOGNIZED WHEN : (A) AN ENTERPRISE HAS A PRESENT OBLIGATION A S A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THAT AN OUTFLOW OF R ESOURCES WILL BE REQUIRED TO SETTLE THE OBLIGATION, AND (C) A RELIAB LE ESTIMATE CAN BE ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 25 MADE OF THE AMOUNT OF THE OBLIGATION. IF THESE COND ITIONS ARE NOT MET, NO PROVISION CAN BE RECOGNIZED. THE PRINCIPLE IS THAT IF THE HISTORICAL TREND INDIC ATES THAT A LARGE NUMBER OF SOPHISTICATED GOODS WERE BEING MANU FACTURED IN THE PAST AND THE FACTS SHOW THAT DEFECTS EXISTED IN SOME OF THE ITEMS MANUFACTURED AND SOLD, THEN PROVISION MADE FOR WARR ANTY IN RESPECT OF SUCH SOPHISTICATED GOODS WOULD BE ENTITLED TO DE DUCTION FROM THE GROSS RECEIPTS UNDER SECTION 37. 40. SO, FOLLOWING THE DECISION RENDERED BY THE COOR DINATE BENCH OF THE TRIBUNAL AND PROPOSITION LAID DOWN BY THE HO NBLE SUPREME COURT, PROVISION FOR CUSTOMER CLAIM IS A LIABILITY WHICH CAN BE USED ONLY BY USING A SUBSTANTIAL DECREE OF ESTIMATION. WHEN THE TAXPAYER HAS BROUGHT ON RECORD AMPLE EVIDENCE IN TH E FORM OF CREDIT MEMO IN RELATION TO LIQUIDATED DAMAGES AND D ETAILS OF LIQUIDATED DAMAGES, CHART SHOWING TREND AND UTILIZA TION OF PROVISION OF CUSTOMER CLAIMS FROM AYS 2010-11 TO 20 14-15 AND EXTRACT OF AUDITED FINANCIALS FOR AYS 2010-11 TO 20 16-17, TO SHOW THAT THE DETAILS OF CUSTOMER CLAIMS AND EXTRACT OF CONTRACT ENTERED INTO BETWEEN THE TAXPAYER AND THE CUSTOMER CLAIMS, AVAILABLE FROM PAGES 6 TO 26 OF THE CONVENIENCE PAPER BOOK, THIS P ROVISION HAS TO BE MEASURED BY USING SUBSTANTIAL DECREE OF ESTIMATI ON. MOREOVER, HISTORICAL TREND BROUGHT ON RECORD BY THE TAXPAYER ALSO SHOWS THE ACTUAL USE OF PROVISION FOR CUSTOMER CLAIM. 41. HONBLE SUPREME COURT IN CASE OF ROTORK CONTROLS INDIA P. LTD. (SUPRA) HELD THAT A PROVISION IS RECOGNISED : ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 26 (A) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THAT AN OUTFLOW OF RESOURCES WI LL BE REQUIRED TO SETTLE THE OBLIGATION, AND (C) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. 42. EVIDENCE BROUGHT ON RECORD BY THE TAXPAYER SHOW S THAT AFORESAID CONDITIONS HAVE BEEN FULFILLED AND AS SUC H, PROVISION MADE QUA THE AMOUNT PROVIDED BY THE TAXPAYER PERTAI NING TO ACTUAL DELAYS AND DEFAULTS OCCURRED IN TERMS OF THE CONTRA CT ENTERED INTO BETWEEN THE TAXPAYER AND ITS CUSTOMERS IS TO BE CON SIDERED AS ASCERTAINED LIABILITY. SO, AO/DRP HAVE ERRED IN MAKING DISALLOWANCE ON ACCOUNT OF PROVISION FOR CUSTOMER C LAIMS. SO, IT IS ORDERED TO BE DELETED SUBJECT TO VERIFICATION OF DA TA BROUGHT ON RECORD BY THE TAXPAYER AS DISCUSSED IN THE PRECEDIN G PARAS. CONSEQUENTLY, GROUNDS NO.4 TO 4.3 OF ITA NO.7509/DE L/2017 & 7510/DEL/2017 FOR ASSESSMENT YEARS 2012-13 & 2013-1 4 RESPECTIVELY ARE DETERMINED IN FAVOUR OF THE TAXPAY ER. GROUNDS NO.5 TO 5.3 OF ITA NO.7509/DEL/2017 (AY 2012-13) ITA NO.7510/DEL/2017 (AY 2013-14) 43. THE TAXPAYER CHALLENGED THE DISALLOWANCE/CONFIR MATION OF ADVANCES WRITTEN OFF TO THE TUNE OF RS.85,33,563/- & ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 27 RS.61,60,172/- FOR AYS 2012-13 & 2013-14 BY AO/DRP ON THE GROUND THAT WITHOUT APPRECIATING THE FACT THAT EXPE NDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. LD. DRP CONFIRMED THIS DISALLOWANCE MADE BY THE AO ON T HE GROUND THAT THE COMPANIES GENERALLY HELD THE SALARIES OR A LLOWANCES FOR SUCH KIND OF SETTLEMENTS WHEN THE EMPLOYEES LEAVE T HE COMPANIES AND THE COMPANY IS UNDER NO OBLIGATION TO PAY THE P AYMENTS AND IF ANY SUCH PAYMENT HAS BEEN MADE BY THE EMPLOYEES, TH EN IT MUST FORM PART OF PERQUISITE OF THE EMPLOYEES FOR CLAIMI NG DEDUCTION BY THE COMPANY. SINCE THE TAXPAYER HAS NOT BEEN ABLE TO PROVIDE COMPLETE DETAILS OF THESE AMOUNTS, THE EMPLOYEES ON WHOSE BEHALF THESE AMOUNTS HAVE BEEN PAID, IT CANNOT BE CONSIDER ED AS LIABILITY OF THE EMPLOYER. 44. AO HAS PRIMARILY MADE DISALLOWANCE ON THE GROUN D THAT TAXPAYER HAS FAILED TO FURNISH ANY EVIDENCE TO SUPP ORT THE CLAIM OF THE EXPENDITURE. WHEN WE EXAMINE PAGES 30 TO 47 & 48 TO 75 FOR AYS 2012-13 & 2013-14 RESPECTIVELY OF THE CONVENIEN CE PAPER BOOK, THE TAXPAYER HAS GIVEN COMPLETE DETAILS OF TH E ADVANCES WRITTEN OFF. 45. IT IS CONTENDED BY THE LD. AR FOR THE TAXPAYER THAT ONCE THE ADVANCE HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUN T, IT IS SUFFICIENT TO CLAIM THE DEDUCTION OF THE ADVANCES W RITTEN OFF U/S 37 ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 28 OF THE ACT AND TAXPAYER IS NOT REQUIRED TO PROVE TH AT THE ADVANCES WRITTEN OFF IS IRRECOVERABLE AS PER SECTION 37(1) O F THE ACT. 46. HONBLE SUPREME COURT IN CASE OF TRF LTD. VS. CIT (2010) 323 ITR 397 (SC) HELD THAT, AFTER 1 ST APRIL, 1989 IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DE BT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. 47. THE TAXPAYER HAS GIVEN COMPLETE DETAIL OF ADVAN CES GIVEN AT PAGE 30 OF THE CONVENIENCE PAPER BOOK IN TABULATED FORM. SO, IN VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW T HAT LET THIS ISSUE GO BACK TO AO TO VERIFY THE FACTS IF THESE ADVANCES WERE GIVEN FOR BUSINESS PURPOSES AND DECIDE AFRESH IN THE LIGHT OF FINDINGS RETURNED HEREINBEFORE BY PROVIDING OPPORTUNITY OF B EING HEARD TO THE TAXPAYER. CONSEQUENTLY, GROUNDS NO.5 TO 5.3 OF ITA NO.7509/DEL/2017 & 7510/DEL/2017 FOR ASSESSMENT YEA RS 2012-13 & 2013-14 RESPECTIVELY ARE DETERMINED IN FA VOUR OF THE TAXPAYER FOR STATISTICAL PURPOSES. GROUND NO.6 OF ITA NO.7509/DEL/2017 (AY 2012-13) ITA NO.7510/DEL/2017 (AY 2013-14) 48. GROUND NO.6 OF ITA NO.7509/DEL/2017 & 7510/DEL/ 2017 FOR AYS 2012-13 & 2013-14 RESPECTIVELY BEING CONSEQ UENTIAL IN NATURE NEEDS NO SPECIFIC FINDINGS. ITA NO.7509/DEL./2017 ITA NO.7510/DEL./2017 29 GROUND NO.7 OF ITA NO.7509/DEL/2017 (AY 2012-13) ITA NO.7510/DEL/2017 (AY 2013-14) 49. GROUND NO.7 OF ITA NO.7509/DEL/2017 & 7510/DEL/ 2017 FOR AYS 2012-13 & 2013-14 RESPECTIVELY BEING PREMAT URE NEEDS NO SPECIFIC FINDINGS. 50. IN VIEW OF GROUND-WISE FINDINGS RETURNED IN THE PRECEDING PARAS, WRITTEN SUBMISSIONS FILED BY THE LD. DR FOR THE REVENUE AND CASE LAWS RELIED UPON, WHICH HAVE BEEN MADE PART OF THE JUDICIAL FILE ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTAN CES OF THE CASE. 51. IN VIEW OF FINDINGS RETURNED IN THE PRECEDING P ARAS, BOTH THE APPEALS BEING ITA NO.7509/DEL/2017 & 7510/DEL/2017 FOR AYS 2012-13 & 2013-14 RESPECTIVELY ARE ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF FEBRUARY, 2021. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 24 TH DAY OF FEBRUARY, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A). 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.