TATA AUTOCOMP SYSTEMS LTD, MUMBAI V. ASST CIT CIR 2(3), MUMBAI

ITA 774/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2450 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 27-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: P J PARDIWALA
• Keywords: Business income; Transfer pricing; Rectification of order; International transaction; Earning of tax free income; Question of law; Notional interest; Revenue expenditure
• Section: 92C; 14A; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH K, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND ASHWANI TANEJA ACCOUNTANT MEMBER ITA NO. 774/M/2014 ASSESSMENT YEAR: 2009-10 TATA AUTOCOMP SYSTEMS LTD., BOMBAY HOUSE, 24, HOMY MODY STREET, FORT, MUMBAI- 400001 PAN: AAACT1848E VS. A CIT - 2(3 ), R.NO. 552, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 (APPELLANT) (RESPONDENT) ITA NO.1508/MUM/2014 ASSESSMENT YEAR: 2009-10 ACIT - 2(3), R.NO. 552, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS. TATA AUTOCOMP SYSTEMS LTD., BOMBAY HOUSE, 24, HOMY MODY STREET, FORT, MUMBAI- 400001 PAN: AAACT1848E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.J.PARDIWALA , SR. ADVOCATE REVENUE BY : SHRI N.K.CHAND (CIT-DR) DATE OF HEARING : 28.09.2015 DATE OF PRONOUNCEMENT : 18.11.2015 2 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. O R D E R PER ASHWANI TANEJA, AM: THESE CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AND REVENUE AGAINST ORDER OF THE DISPUTE RESOLUTION PANEL-II, M UMBAI (IN SHORT DRP), DATED 13.12.2013 U/S 144C OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). 2. DURING THE COURSE OF HEARING, THESE APPEALS WERE A RGUED BY MR. P.J. PARDIWALA, SR. ADVOCATE ON BEHALF OF THE ASSES SEE COMPANY AND MR. N.K.CHAND, CIT (DR) ON BEHALF OF THE REVENUE. AFTER HEARING BOTH THE SIDES, THESE APPEALS ARE ADJUDICATED AS UNDER:- FIRST WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO. 774/M/2014: 3. GROUND NO. 1: THIS GROUND IS GENERAL AND DOES NOT REQUIRE SPECIFI C ADJUDICATION, AS THE SAME HAS BEEN DECIDED WHILE DECIDING OTHER GROUNDS. 4. GROUNDS NO. 2 TO 9:- IN ALL THESE GROUNDS, ONLY ONE ISSUE HAS BEEN RAISE D. THE ASSESSEE HAS RAISED THE GRIEVANCE WITH REGARD TO THE ORDER OF TH E DISPUTE RESOLUTION PANEL (DRP) IN CONFIRMING THE ADJUSTMENT OF RS. 87,27,27,128/- TO THE 3 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. INTERNATIONAL TRANSACTIONS PERTAINING TO EXPORTS/IM PORTS TO/FROM AES (I.E. ASSOCIATED ENTERPRISES), MAINLY, IN HOLDING T HAT SIMILAR ISSUE WAS THERE BEFORE THE PREDECESSOR DRP FOR THE ASSESSMENT YEAR(AY) 2007-08 AND AY 2008-09; WHEREAS IN FACT IMPUGNED AY- 2009-1 0 WAS THE FIRST YEAR IN WHICH THIS KIND OF ADJUSTMENT HAS BEEN MADE BY THE AO/TPO AND NO SUCH ADJUSTMENT WAS NEVER MADE IN ANY OF THE PREVIOUS YEARS, IN THE CASE OF THE ASSESSEE-COMPANY. IT HAS ALSO RA ISED OTHER NUMEROUS GROUNDS CHALLENGING THE ADJUSTMENT ON MERITS ALSO. F OR THE SAKE OF READY REFERENCE, THESE GROUNDS ARE REPRODUCED BELOW :- GROUNDS IN RESPECT OF INTERNATIONAL TRANSACTIONS P ERTAINING TO THE EXPORTS/IMPORTS TO/FROM AES: GROUND NO. 2: ERRONEOUS DIRECTIONS OF THE HON'BLE D RP BASED ON INCORRECT FACTS' PERTAINING TO PREVIOUS ASSESSME NT YEARS THE HON'BLE DRP ERRED IN CONFIRMING THE ADJUSTMENT O F RS. 87,27,27,128 TO THE INTERNATIONAL TRANSACTIONS PERT AINING EXPORTS/IMPORTS TO/FROM AES BY HOLDING THAT SIMILAR ISSUE WAS BEFORE THE PREDECESSOR DRP FOR THE ASSESSMENT YEAR ('AY') 2007-08 AND AY 2008-09; WHEN IN FACT AY 2009-10 WAS THE FIRST YEAR IN WHICH SIMILAR ADJUSTMENT WAS MADE BY T HE LD. AO/LD. TPO AND SUCH AN ADJUSTMENT WAS NEVER MADE IN ANY OF THE PREVIOUS AYS IN THE APPELLANT'S CASE. GROUND NO. 3: VIOLATION OF PRINCIPLES OF NATURAL JUS TICE BY MAKING ADJUSTMENT WITHOUT ISSUING SHOW CAUSE NOTICE THE LEARNED TRANSFER PRICING OFFICER ('LD. TPO') ER RED IN NOT ISSUING A SHOW CAUSE NOTICE NOR GRANTED THE APPELLA NT AN OPPORTUNITY TO PROVIDE ITS SUBMISSIONS AGAINST THE APPROACH ADOPTED AND HAS VIOLATED THE PRINCIPLES LAID DOWN I N SECTION 92C (3) OF THE ACT. 4 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. GROUND NO. 4: ERRONEOUS APPLICATION OF TRANSACTIONA L NET MARGIN METHOD ('TNMM') AT ENTITY LEVEL THE HON'BLE DRP / LD. AO / LD. TPO ERRED IN APPLYIN G TNMM AT ENTITY LEVEL TO DETERMINE THE ARM'S LENGTH NATUR E OF THE INTERNATIONAL TRANSACTIONS PERTAINING TO THE EXPORT S/IMPORTS TO/FROM AES. GROUND NO. 5: ERRONEOUS REJECTION OF TRANSACTIONAL PROFITABILITY ANALYSIS UNDERTAKEN BY THE APPELLANT THE HON'BLE DRP / LD.AO / LD. TPO ERRED IN REJECTIN G THE TRANSACTIONAL PROFITABILITY ANALYSIS CONDUCTED BY T HE APPELLANT UNDER THE TNMM TO EVALUATE THE ARM'S LENGTH NATURE OF THE INTERNATIONAL TRANSACTIONS PERTAINING TO THE EXPORT S/IMPORTS TO/FROM AES. GROUND NO. 6: ERRONEOUS COMPUTATION OF TP ADJUSTMENT WITHOUT CONSIDERING PRINCIPLE OF PROPORTIONALITY WITHOUT PREJUDICE TO THE ABOVE, THE HON'BLE DRP / LD . AO / LD. TPO ERRONEOUSLY COMPUTED THE TP ADJUSTMENT WITHO UT CONSIDERING THE PRINCIPLE OF PROPORTIONALITY. ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS SUBMITTED THAT IF AN ADJUSTMENT IS SOUGHT TO BE MADE TO THE PR ICE OF INTERNATIONAL TRANSACTIONS, THEN THE ADJUSTMENT SHOU LD BE MADE ONLY ON A PROPORTIONATE BASIS TO THE EXTENT OF VALUE OF INTERNATIONAL TRANSACTIONS. GROUND NO. 7: ERRORS IN COMPUTATION OF PROFIT LEVEL INDICATOR ('PLI') OF THE APPELLANT, AT ENTITY LEVEL. WITHOUT PREJUDICE TO THE ABOVE, THE HON'BLE DRP / LD . AO/ LD. TPO COMMITTED ERRORS IN COMPUTING THE PLI OF TH E APPELLANT AT ENTITY LEVEL. GROUND NO. 8: ERRORS IN COMPUTATION OF PLI OF THE COMPARABLE COMPANIES AND ERRONEOUS CONSIDERATION OF COMPANIES AT ENTITY LEVEL AS AGAINST COMPARABLE SEG MENT WITHOUT PREJUDICE TO THE ABOVE, THE HON'BLE DRP / LD . AO/ LD. TPO COMMITTED ERRORS IN COMPUTING THE PLI OF CE RTAIN COMPARABLE COMPANIES. THE HON'BLE DRP / LD. AO / LD . TPO ALSO ERRED IN COMPUTING THE PLI OF KRITI INDUSTRIES (INDIA) LTD, 5 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. MAHINDRA COMPOSITES LTD. AND PRIMA PLASTICS LTD. AT ENTITY LEVEL INSTEAD OF PLI FOR COMPARABLE SEGMENT. GROUND NO 9: REJECTION OF USE OF MULTIPLE YEAR DATA FOR COMPARABLES THE HON'BLE DRP / LD. AO / LD. TPO ERRED IN CONSIDE RING THE SINGLE YEAR DATA FOR THE COMPARABLES I.E. DATA FOR FINANCIAL YEAR (FY) 2008-09 ONLY AND DISREGARDING MULTIPLE YE AR DATA WHICH WAS CONSIDERED BY THE APPELLANT IN ACCORDANCE WITH THE PROVISIONS OF RULE 10B (4) OF THE RULES. 4.1. DURING THE COURSE OF HEARING, OUR ATTENTION WAS DR AWN BY THE LD. COUNSEL ON THE RELEVANT PART OF THE ORDER OF THE DR P, AND ARGUED THAT THE DRP HAS MISUNDERSTOOD THE FACTS AND UNDER SOME WRONG IMPRESSION, IT WAS PRESUMED BY IT THAT SIMILAR ISSU E WAS INVOLVED IN THE PRECEDING TWO YEARS, WHEREAS NO SUCH ISSUE WAS INVO LVED IN ANY OF THE EARLIER YEARS, IT WAS FURTHER SUBMITTED THAT THE DR P DECIDED SUCH A BIG ISSUE IN JUST THREE LINES BY STATING THAT SIMILAR IS SUE WAS INVOLVED IN EARLIER YEARS, AND FOLLOWING THE ORDER OF EARLIER Y EARS, CLAIM OF THE ASSESSEE WAS REJECTED IN THIS YEAR ALSO. IT WAS SUB MITTED THAT THIS KIND OF ORDER IS DEVOID OF ANY RESPECT OR REGARD TOWARDS THE LAW AND IS MANIFESTATIONS OF CASUAL APPROACH OF THE DRP, AS IS SOMETIMES FOLLOWED IN ADJUDICATING THE APPEALS. IT WAS FURTHER SUBMITTE D THAT THIS KIND OF CRYPTIC, NON-SPEAKING, CASUAL, PRESUMPTUOUS AND FAC TUALLY INCORRECT ORDER HAS CAUSED SERIOUS HARDSHIPS TO THE ASSESSEE- COMPANY. OUR ATTENTION WAS DRAWN UPON THE ORDERS OF THE EARLIER YEARS TO SHOW THAT 6 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. NO SUCH ISSUE WAS INVOLVED IN ANY OF THE EARLIER YE ARS. IT WAS ALSO STATED BY THE LD. COUNSEL THAT A RECTIFICATION PETI TION WAS ALSO FILED BEFORE THE DRP, ON WHICH NO ACTION HAS BEEN TAKEN S O FAR. IN VIEW OF THESE CIRCUMSTANCES, IT WAS REQUESTED BY THE LD. CO UNSEL THAT THIS ISSUE SHOULD BE SENT BACK TO THE FILE OF THE DRP WITH THE DIRECTION TO DISPOSE THIS ISSUE PROPERLY ON MERITS AFTER PASSING A DETAI LED, WELL-REASONED AND SPEAKING ORDER. 4.2. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE (DR) INITIALLY SUPPORTED THE ORDER OF THE DRP, BUT WHEN THE ORDER OF DRP WAS READ BY THE LD. COUNSEL IN THE COURTROOM, POINTING OUT T HAT THE ORDER OF DRP IS TOTALLY MISPLACED AND FACTUALLY INCORRECT, AND L EADS US NOWHERE, THEN LD. CIT(DR) WAS NOT ABLE TO POINT OUT ANYTHING WRON G IN THE SUBMISSIONS OF THE LD. COUNSEL AND THEREFORE, NO SE RIOUS OBJECTIONS WERE RAISED BY HIM, IF THIS ISSUE WAS SENT BACK TO THE D RP FOR FRESH ADJUDICATION. 4.3. WE HAVE GONE THOUGH THE ORDER OF THE DRP AND OTHER LOWER AUTHORITIES, THE SUBMISSIONS MADE BY BOTH THE SIDES AS WELL AS MATERIAL PLACED BEFORE US FOR OUR CONSIDERATION. WE NOTE TH AT, ALTHOUGH, DETAILED SUBMISSIONS ALONG WITH HUGE DOCUMENTATION WAS PROVIDED TO 7 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. THE DRP BY THE ASSESSEE, THE DRP DECIDED THIS ISSUE , IN THE FOLLOWING MANNER:- '4.6 DISCUSSION AND DIRECTIONS OF THE DRP: WE HAVE GONE THROUGH THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE. IT IS SEEN THAT THE SI MILAR ISSUE WAS BEFORE THE PREDECESSOR DRP FOR THE AY 2007-08 A ND 2008-09 AND DRP HAS REJECTED THE CLAIM OF THE ASSESS EE. RESPECTFULLY FOLLOWING THE PREDECESSOR DRP, THE ACT ION OF THE TPO IS UPHELD. ' IT IS NOTED BY US THAT EXHAUSTIVE DOCUMENTATION WOR K HAS BEEN DONE BY THE ASSESSEE AND DETAILED SUBMISSIONS WERE MADE BEF ORE THE DRP, BUT IT IS VERY DISAPPOINTING TO NOTE THAT SUCH A BIG IS SUE INVOLVING ADDITION OF THE AMOUNT OF MORE THAN RS. 87 CRORES, HAS BEEN DISPOSED OF IN SUCH A NON-SPEAKING AND CRYPTIC MANNER, AND NO REASONING , WHATSOEVER, HAS BEEN GIVEN, NO FACTS HAVE BEEN DISCUSSED, NO COMPAR ISON WITH THE ISSUE CLAIMED TO BE INVOLVED IN THE EARLIER YEARS, IF AT ALL ANY SIMILAR ISSUE WERE INVOLVED IN THE EARLIER YEARS, HAS BEEN MADE. THE ORDER IS DISREGARDFUL OF ANY MINIMUM STANDARDS THAT SHOULD B E FOLLOWED WHILE ADJUDICATING AN APPEAL BY AN APPELLATE AUTHORITY. 4.4. FURTHER, ON CAREFUL EXAMINATION OF ALL THE FACTS, IT IS NOTED BY US THAT NO SUCH ISSUE WAS INVOLVED IN THE PRECEDING YE ARS I.E. AYS 2007-08, 2008-09 OR ANY OTHER PRECEDING YEAR. THE MINIMUM, T HE DRP COULD 8 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. HAVE DONE WAS TO AT LEAST REPRODUCE OR DISCUSS SOME OF THE RELEVANT FINDINGS FROM THE ORDERS OF EARLIER YEARS WHILE DIS POSING THE APPEAL OF THIS YEAR. IT IS FURTHER NOTED THAT THE ASSESSEE HA S ALSO SUBMITTED A RECTIFICATION PETITION DATED JANUARY 13, 2014 UNDER RULE 13 OF THE INCOME TAX (DISPUTE RESOLUTION PANEL) RULES, 2009, REQUESTING FOR RECTIFICATION OF INADVERTENT MISTAKE APPARENT FROM RECORD IN THE DIRECTIONS GIVEN BY THE DRP. RELEVANT PORTION OF TH E RECTIFICATION PETITION IS REPRODUCED BELOW:- 'ALL THE ABOVE GROUNDS WERE DISPOSED OFF TOGETHER B Y THE HON'BLE DRP BY WAY OF FOLLOWING DIRECTIONS (PG. 10 PARA 4.6 OF THE DIRECTIONS): 'WE HAVE GONE THROUGH THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE. IT IS SEEN THAT THE SI MILAR ISSUE WAS BEFORE THE PREDECESSOR DRP FOR THE AY 200 7- 08 AND 2008-09 AND DRP HAS REJECTED THE CLAIM OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE PREDECESSOR DR P, THE ACTION OF THE TPO IS UPHELD'. (EMPHASIS SUPPLIE D) FACTS: THE FACTS OF THE ASSESSEE'S CASE ARE AS UNDER: THE YEAR UNDER CONSIDERATION I.E. AY 2009-10 IS THE FIRST YEAR IN WHICH AN ADJUSTMENT TO THE INTERNATIONAL TRANSACT IONS PERTAINING TO THE EXPORTS/IMPORTS TO/FROM AES WAS M ADE BY THE LEARNED TRANSFER PRICING OFFICER ('LD. TPO') AN D SUCH AN ADJUSTMENT WAS NEVER MADE IN ANY OF THE PREVIOUS AYS IN THE ASSESSEE'S CASE. IN VIEW OF THIS NO OBJECTIONS WERE RAISED BY THE ASSESSEE BEFORE THE HON'BLE DRP IN AY 2007-08 A ND 2008-09. A COPY OF THE HON'BLE DRP DIRECTIONS IS AT TACHED AS ANNEXURE 2 AND 3, RESPECTIVELY. 9 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. IN LIGHT OF THE ABOVE, WE WOULD REQUEST THE HON'BLE DRP TO RECONSIDER THEIR DECISION ON THESE OBJECTIONS AS IT IS CLEAR THAT THIS IS AN INADVERTENT MISTAKE, APPARENT FROM RECOR D.' 4.5. IT IS FURTHER NOTED THAT IN THE AFORESAID PETITION, THE ASSESSEE- COMPANY BRIEFLY REITERATED THE OBJECTIONS THAT WERE RAISED BY IT BEFORE THE DRP IN ITS SUBMISSIONS, CONTAINING VARIOUS CONT ENTIONS AS FILED BEFORE THE DRP DATED 26 TH APRIL 2013, AND WE FIND IT APPROPRIATE TO REPRODUCE HEREUNDER ALL THE DETAILS OBJECTIONS/ARGUM ENTS FILED BY THE ASSESSEE COMPANY BEFORE THE DRP FOR THE SAKE OF CON VENIENCE. IT IS NOTED FROM THE FACTS HELD ON RECORD THAT THE DETAIL ED CONTENTIONS OF THE ASSESSEE WERE FILED WITH THE HON'BLE DRP VIDE ITS D ETAILED OBJECTIONS DATED APRIL 26, 2013 AND THESE WERE DISCUSSED IN DE TAIL DURING THE HEARING DATED DECEMBER 9, 2013, HELD BEFORE THE DRP . THE KEY CONTENTIONS PUT FORTH BY THE ASSESSEE ARE ENCAPSULA TED IN BRIEF BELOW: THE LD. TPO COMPUTED THE TP ADJUSTMENT OF RS. 89.9 4 CRORES CONSIDERING ASSESSEE'S ENTITY LEVEL OPERATIN G MARGIN AND IGNORED THE FACT THAT EXPORT SALES TO AES AMOUN T TO ONLY RS. 21.72 CRORES (3.29% OF ENTITY LEVEL SALES) AS A GAINST THE ENTITY LEVEL SALES OF RS. 659.36 CRORES. THUS, THE APPROACH OF THE LD. TPO IN EVALUATING ENTITY LEVEL PROFITABILIT Y TO TEST 3.27% OF TOTAL SALES WAS UNREASONABLE AND BEREFT OF ANY RATIONALE. THE DETAILED BREAK-UP OF THE SEGMENTAL PROFITABIL ITY STATEMENT EXPLAINING THE METHODOLOGY AND THE ALLOCA TION KEYS ADOPTED IN RESPECT OF SALE OF FINISHED GOODS T O AES WERE SUBMITTED TO THE LD. TPO (PAPER BOOK PAGE NO. 322 T O 325). FURTHER, THE COPY OF AUDITED SEGMENTAL PROFITABILIT Y, CERTIFIED 10 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. BY AN INDEPENDENT AUDITOR, WAS AGAIN SUBMITTED TO T HE HON'BLE DRP VIDE OUR SUBMISSION DATED DECEMBER 9, 2 013 (PAPER BOOK PAGE NO 466 TO 477). THE LD. TPO COMMITTED ERRORS IN COMPUTATION OF PR OFIT LEVEL INDICATOR CPU') OF COMPARABLE COMPANIES AND ERRONEOUSLY CONSIDERED CERTAIN COMPANIES AT ENTITY LEVEL AS AGAINST COMPARABLE SEGMENTS. THE LD. TPO HAD ALSO COMMITTED CERTAIN ERRORS IN COMPUTING THE ENTITY LE VEL PU OF THE ASSESSEE [PAPER BOOK PAGE NO 52 TO 54]. WITHOUT PREJUDICE TO ANY OF THE CONTENTIONS RAISED BY THE ASSESSEE, IT IS SUBMITTED THAT THE ADJUSTMENT SHOUL D BE MADE ONLY ON A PROPORTIONATE BASIS TO THE EXTENT OF VALU E OF INTERNATIONAL TRANSACTIONS AND ACCORDINGLY THE TP A DJUSTMENT WOULD WORK OUT TO RS, 1.52 CRORES. THE PRINCIPLE OF PROPORTIONALITY HAS BEEN UPHELD BY THE HON'BLE ITAT IN VARIOUS CASES INCLUDING THE JURISDICTIONAL MUMBAI BE NCH IN THE CASE OF T. TWO INTERNATIONAL PRIVATE LIMITED VS DCI T (ITA NO.7331/MUM/2011) [PAPER BOOK PAGE NO 56 TO 57]. AS REGARDS OBJECTION NO. 6, THE ASSESSEE HAD FILE D A RECTIFICATION APPLICATION BEFORE THE LD. TPO AND AF TER CONSIDERING THE RECTIFICATION ORDER PASSED BY THE L D. TPO (ENCLOSED AS ANNEXURE 4), THE TP ADJUSTMENT STANDS R EDUCED FROM RS. 89.94 CRORES TO RS. 87.27 CRORES. IN THE AFORESAID PETITION, THE ASSESSEE-COMPANY MAD E A REQUEST TO THE DRP TO MAKE SUITABLE RECTIFICATION AND PROVIDE OPPO RTUNITY OF PERSONAL HEARING TO ENABLE THE ASSESSEE-COMPANY TO EXPLAIN T HE SITUATION AND ALSO POINTED OUT VARIOUS ANOMALIES THAT HAVE BEEN T AKEN PLACE, AS A RESULT OF ORDER OF THE DRP. 4.6. WE WERE DISAPPOINTED TO NOTE, WHEN IT WAS INFORMED BY THE LD. COUNSEL OF THE ASSESSEE COMPANY, THAT NO ACTION WHA TSOEVER HAS BEEN 11 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. TAKEN BY THE DRP IN RESPONSE TO THE AFORESAID PETIT ION FILED BY THE ASSESSEE-COMPANY. UNDER THESE CIRCUMSTANCES, WE DIR ECT THE DRP TO TAKE UP THIS MATTER ON PRIORITY BASIS AND DISPOSE O F THIS ISSUE AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSES SEE, IN A DETAILED, WELL REASONED AND SPEAKING MANNER. THE DRP SHALL GI VE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE, AND THEREAF TER IT SHALL ADJUDICATE ALL THE ISSUES AS HAVE BEEN RAISED IN GROUNDS NO 2 TO 9 ABOVE, BY PASSING A WELL REASONED AND SPEAKING ORDER, DEALING WITH AND GIVING ITS FINDINGS ON ALL THESE GROUNDS INDIVIDUALLY AND SEPA RATELY. AS A RESULT, GROUNDS NO. 2 TO 9 ARE ALLOWED FOR STATISTICAL PURP OSES. 5. GROUND NO. 10 TO 12:- THESE GROUNDS ARE REPRODUCED HEREUNDER FOR CONVENIENCE: 'GROUNDS IN RESPECT OF NOTIONAL INTEREST ON INTERES T-FREE LOAN GROUND NO. 10: DISREGARDING THE COMMERCIAL AND ECON OMIC CIRCUMSTANCES FOR EXTENDING INTEREST FREE LOAN THE HON'BLE DRP / LD. AO / LD. TPO ERRED IN MAKING A TP ADJUSTMENT OF RS. 77,98,656 TO THE INCOME OF THE APP ELLANT, BY HOLDING THAT THE APPELLANT SHOULD HAVE CHARGED I NTEREST ON THE INTERNATIONAL LOAN EXTENDED TO ITS AE. GROUND NO. 11: ERRONEOUS APPLICATION OF CUP METHOD FOR COMPUTIL1G THE ARM'S LENGTH INTEREST RATE WITHOUT PREJUDICE TO THE ABOVE, THE HON'BLE DRP ERRE D IN THE APPLICATION OF THE CUP METHOD FOR COMPUTING THE ARM 'S LENGTH 12 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. INTEREST RATE, WITHOUT ACTUALLY UNDERTAKING ANY SEA RCH FOR COMPARABLE UNCONTROLLED TRANSACTIONS AND CONSIDERIN G THE STATE BAND OF INDIA'S (SBI) PRIME LENDING RATE (PLR ) OF 12.25% P. A. AS THE ARM'S LENGTH INTEREST RATE. GROUND NO. 12: DISREGARDING THE CONSIDERATION OF EURIBOR/LIBOR BASED INTEREST RATE FOR APPLICATION O F THE CUP METHOD WITHOUT PREJUDICE TO THE ABOVE, THE HON'BLE DRP / LD . AO / LD. TPO DISREGARDED THE USE OF EURIBOR/LIBOR BASED INTEREST RATE FOR APPLICATION OF THE CUP METHOD DES PITE THE PRESENCE OF RULING OF THE HONOURABLE JURISDICTIONAL MUMBAI INCOME TAX APPELLATE TRIBUNAL ('ITAT') AND THE DIRE CTIONS OF THE HON'BLE DRP IN APPELLANT'S OWN CASE FOR AY 2007 -08 AND AY 2008-09 RESPECTIVELY.' 5.1. THESE GROUNDS DEAL WITH THE COMMON ISSUE PERTAININ G TO ACTION OF THE DRP IN CONFIRMING THE ACTION OF AO/TPO IN MAKIN G A TRANSFER PRICING ADJUSTMENT OF RS. 77,98,656/- TO THE INCOME OF THE ASSESSEE- COMPANY, BY HOLDING THAT THE ASSESSEE SHOULD HAVE C HARGED INTEREST ON THE INTERNATIONAL LOAN EXTENDED TO ITS A.E. 5.2. DURING THE COURSE OF HEARING, IT WAS SUBMITTED BY THE LD. COUNSEL OF THE ASSESSEE THAT NO INTEREST WAS CHARGED BY IT ON THE AMOUNT OF LOAN GIVEN TO ITS SUBSIDIARY. IT WAS HELD BY THE AO THAT INTEREST SHOULD BE CHARGED AT SBI PLR +3%, WHEREAS THE DRP CAPPED I T TO SBI PLR AT 12.25%, HOLDING THAT ADDITIONAL CHARGE OF RISK PREM IUM WAS NOT JUSTIFIED. IT WAS SUBMITTED THAT SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL IN AY 2007-08 IN ASSESSEES OWN CASE, WHER EIN AFTER MAKING 13 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. DETAILED DISCUSSION, IT WAS HELD BY THE HONBLE TRI BUNAL THAT CLAIM OF THE ASSESSEE TO ADOPT EURIBOR RATE AS STATED BEFORE THE TPO WAS REASONABLE AND DESERVE TO BE ACCEPTED. IT WAS FURTH ER BROUGHT TO OUR NOTICE THAT THIS MATTER WAS CARRIED UPTO HIGH COURT BY THE REVENUE, AND HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE. IT WAS FURTHER SUBMITTED THA T IN AY 2008-09 ALSO, THIS ISSUE CAME UP AGAIN BEFORE THE DRP, WHER EIN THE ASSESSEE SUBMITTED THAT THE EURIBOR RATE WAS ONLY 5.25% DURI NG THE RELEVANT PERIOD, WHEREAS THE ASSESSEE ITSELF HAS CHARGED INT EREST @ 6%, AND THEREFORE, NO FURTHER ADJUSTMENT WAS WARRANTED ON TH IS ISSUE. THE CLAIM OF THE ASSESSEE WAS ACCEPTED BY THE DRP AND IT WAS HELD THAT THE AO SHALL EXAMINE THE CORRECTNESS OF THE DETAILS SUBMIT TED BY THE ASSESSEE, AND IF IT IS FOUND THAT DELAY IN PAYMENT BY THIRD P ARTIES WAS COMPARABLE TO DELAY BY AE, THE AO SHALL NOT MAKE ANY ADJUSTMENT AS THE ASSESSEE HAS ALREADY CHARGED INTEREST @ 6%. 5.3. ON THE OTHER HAND, ALTHOUGH, LD. DEPARTMENTAL REPR ESENTATIVE (DR) HAD INITIALLY OPPOSED THE SUBMISSIONS OF THE L D. COUNSEL, BUT, HE WAS FAIR ENOUGH TO SUBMIT THAT, IT WAS NOT MANDATOR Y UNDER THE LAW TO APPLY INDIAN PLR. THEREFORE, THE BENCH MARK OF EURI BOR CAN BE ADOPTED. BUT, THESE EURIBOR RATES ARE FOR WHOLESALE MARKET AND NOT 14 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. FOR THE RETAIL BORROWERS AND THEREFORE, PROPER RATE FOR THE RETAIL BORROWERS SHOULD BE EURIBOR + BPS. HE HAS DRAWN OUR ATTENTION TO PARAGRAPH 19 OF THE ORDER OF THE TRIBUNAL IN ASSESS EES OWN CASE FOR AY 2007-08, WHEREIN, IT WAS MENTIONED THAT THE APPROPR IATE PERCENTAGE RANGING FROM 1% TO 2% SHOULD BE ADDED OVER AND ABOV E THE EURIBOR RATE. HE DREW OUR ATTENTION ON THE RELEVANT PART OF THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE-COMPANY BEFORE THE TPO VIDE PARAGRAPH NOS. 1.8.17 WHEREIN ASSESSEE HIMSELF HAS SUGGESTED THAT SOME BPS POINTS SHOULD BE ADDED TO EURIBOR RATE, AN D IT WAS SUGGESTED BY THE ASSESSEE THAT ALP RATES SHOULD BE 5.17% (I.E. 4.37% EURIBOR RATE + 0.8%). IT WAS FURTHER SUBMITTED BY H IM THAT ALL THE SUBMISSIONS OF THE ASSESSEE REFERS TO LIBOR + RATES . WITH REGARD TO THE ORDER OF THE ITAT AS WELL AS ORDER OF THE HONBLE H IGH COURT FOR AY 2007-08, IT WAS SUBMITTED BY HIM THAT THERE WAS NO QUESTION OF LAW BEFORE THE HONBLE HIGH COURT AND THEREFORE, LEGAL POSITION HAS NOT ATTAINED FINALITY IN THIS REGARD, AS FAR AS ASSESSE E IS CONCERNED, SINCE THIS DECISION WAS GIVEN BY THE TRIBUNAL AND CONFIRM ED BY THE HONBLE HIGH COURT ON THE FACTUAL MATRIX OF THAT YEAR, AND EVEN ITAT HAD GIVEN ITS DECISION REFERRING TO THE FACTS AND CIRCUMSTANC ES OF THAT YEAR ONLY. IT WAS SUBMITTED BY HIM THAT, THUS, THE QUESTION OF AD DING SOME BPS 15 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. POINT WAS STILL LEFT OPEN. WITH RESPECT TO THE RATI ONALE FOR ADDING SOME BPS POINTS, IT WAS SUBMITTED BY HIM THAT AE OF THE ASSESSEE-COMPANY WAS IN FINANCIAL CRISIS AND THEREFORE IT SHOULD RAT HER INCREASE THE BPS, AND FURTHER, SINCE FINANCIAL POSITION OF THE AE IN THIS YEAR MAY HAVE BEEN FURTHER DETERIORATED, THEREFORE, THESE FACTS N EEDS EXAMINATION TO DECIDE THAT HOW MUCH BPS SHOULD BE ADDED. 5.4. ON THE OTHER HAND, IN REPLY TO THE SUBMISSIONS OF THE LD. CIT (DR), IT WAS SUBMITTED BY THE LD. COUNSEL THAT THE TRIBUNAL IN AY 2007- 08 HAS CLEARLY SAID THAT THE NOTIONAL INTEREST RATE TO BE CHARGED SHOULD BE EURIBOR RATE, AND THAT THE ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE HIGH COURT BY ACCEPTING THE SAME AND THAT TOO BY PASSING A DETAILED ORDER, INDEPENDENTLY. THE ORDER OF THE TRIBUNAL STOOD MERGED IN THE ORDER OF THE HONBLE HIGH COURT. ONCE AN ISSUE HAS BEEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT, IT ATTAINS FINALITY AND NO CONTROVERSY WHATSOEVER SHOULD BE ALLOWED TO REMA IN ALIVE, OTHERWISE THERE WILL BE ENDLESS LITIGATION AND FINALITY OF TH E LITIGATION SHALL NEVER BE ACHIEVED. WITH REGARD TO THE SUBMISSIONS OF THE LD. CIT (DR) THAT ASSESSEE HAS HIMSELF SUGGESTED THAT IN THIS YEAR, T HAT THE ASSESSEE MAY BE CHARGED EURIBOR +BPS BASIS. IT WAS REPLIED BY TH E LD. COUNSEL THAT IT MAY BE NOTED FROM THE PERUSAL OF THE SUBMISSIONS AVAILABLE AT PAGE 16 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. 426 OF PAPER BOOK THAT THIS SUGGESTION WAS MADE ON WITHOUT PREJUDICE BASIS AND THEREFORE, IT SHOULD NOT BE HELD AGAINST THE ASSESSEE, THAT TOO DISREGARDING THE JUDGMENT OF THE HONBLE JURISDICTION AL HIGH COURT. 5.5. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES, SUBMISSIONS MADE BY THE BOTH THE SIDES AS WELL AS T HE MATERIAL PLACED BEFORE US FOR OUR CONSIDERATION, AND ALSO ORDERS OF THE EARLIER YEARS OF DRP, TRIBUNAL AND HONBLE HIGH COURT. IN OUR CONSID ERED VIEW, THE CONTROVERSY HAS NOW BEEN REDUCED TO A NARROW COMPAS S BECAUSE OF THE DECISIONS OF EARLIER YEAR AND ONLY LIMITED OBJECTIO NS MADE BY THE PARTIES, IT IS NO MORE A CONTROVERSY, NOW IN THE GI VEN FACTS AND CIRCUMSTANCES OF THE CASE, THAT WHETHER INDIAN PLR SHOULD BE APPLIED OR EURIBOR SHOULD BE APPLIED, BECAUSE THIS ISSUE HA S BEEN DECIDED IN ASSESSEES OWN CASE BY THE TRIBUNAL AND CONFIRMED B Y THE HONBLE HIGH COURT IN AY 2007-08, HOLDING CLEARLY THAT EURIBOR R ATE SHOULD BE APPLIED. IN THIS REGARD, POSITION WAS ACCEPTED BY T HE LD. CIT (DR) ALSO VERY FAIRLY. THUS TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDER OF THE TRIBUNAL AND HONBLE HIGH CO URT IN AY 2007-08, WE HOLD THAT OUT OF THE ABOVE SAID TWO RATES, RATE TO BE APPLIED IS THAT OF EURIBOR. THE ASSESSEE HAS SUBMITTED THE EURIBOR RATE WAS 4.37%. THIS RATE HAS NOT BEEN NEGATED OR CONTROVERT ED BY ANY OF THE 17 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. LOWER AUTHORITIES OR BY THE REVENUE BEFORE US, AND THEREFORE, WE HOLD THAT EURIBOR RATE OF 4.37% SHOULD BE ADOPTED IN THI S YEAR FOR THE PURPOSE OF MAKING T.P. ADJUSTMENT ON ACCOUNT OF NOTI ONAL INTEREST TO BE CHARGED ON THE AMOUNT OF INTEREST FREE LOAN GRAN TED BY THE ASSESSEE TO TACO KUNSTSOFFTECHNIK GMBH (IN SHORT REFERRED TO TKT) BY THE ASSESSEE. 5.6. LD. CIT(DR) HAS RAISED ANOTHER CONTENTION I.E. THE RATE SHOULD BE EURIBOR RATE + BPS BASIS. THE REASONING GIVEN BY TH E LD. CIT(DR) IS THAT DECISION IN AY 2007-08 HAS BEEN TAKEN ON THE D ECISION OF FACTUAL MATRIX OF THAT YEAR AND THAT IN THIS YEAR THE ASSES SEE HAD HIMSELF SUGGESTED THE RATE OF 4.37% + 0.8%, AGGREGATING TO 5.17%. 5.7. WE HAVE CAREFULLY ANALYSED THE SUBMISSIONS OF THE LD. CIT (DR). TO RESOLVE THIS CONTROVERSY, LET US FIRST REFER TO THE ORDER OF THE TRIBUNAL IN AY 2007-08 IN ITA NO. 7354/MUM/2011 ORDER DATED 30 TH APRIL 2012, HOLDING VIDE PARAGRAPH 19 AS UNDER:- 'IN THE PRESENT CASE THE AE IS A GERMAN COMPANY. EU RIBOR RATES ARE BASED ON THE AVERAGE INTEREST RATES AT WH ICH A PANEL OF MORE THAN 50 EUROPEAN BANKS BORROWS FROM O NE ANOTHER. THERE ARE DIFFERENT MATURITIES, RANGING FR OM ONE WEEK TO ONE YEAR. THESE RATES ARE CONSIDERED TO BE THE MOST IMPORTANT RATE IN THE EUROPEAN MONEY MARKET. THE IN TEREST RATES DO PROVIDE THE BASIS FOR THE PRICE AND INTERE ST RATES OF ALL KINDS OF FINANCIAL PRODUCTS LIKE INTEREST RATE SWAPS, INTEREST RATE FUTURES, SAVING ACCOUNT AND MORTGAGES. WE FIND THAT THE 18 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. RBI IN RESPECT OF EXPORT CREDIT TO EXPORTERS AT INT ERNATIONALLY COMPETITIVE RATES UNDER THE SCHEME OF PRE-SHIPMENT CREDIT IN FOREIGN CURRENCY (PCFC) AND REDISCOUNTING OF EXPORT BILLS ABROAD (EBR), HAS PERMITTED BANKS TO FIX THE RATES OF INTEREST WITH REFERENCE TO RULING LIBOR, EURO LIBOR OR EURIB OR, WHEREVER APPLICABLE AND THERETO APPROPRIATE PERCENT AGE RANGING FROM 1 % TO 2%. THE REFERENCE TO THE SAID C IRCULAR IS AT PAGE - 80 OF THE ASSESSEE'S PAPER BOOK. IN OUR VIEW THE CLAIM OF THE ASSESSEE TO ADOPT EURIBOR RATE AS STATED BEFORE THE TPO IS REASONABLE AND DESERVES TO BE ACCEPTED. FOLLOWING THE RULING OF THE TRIBUNAL IN THE AFORESAID CASES, WE ARE OF THE VIEW THAT THE CLAIM MADE BY THE ASSESSEE IN THIS IS TO BE ACCEPTED. THE AO IS D IRECTED TO WORK OUT THE TP ADJUSTMENT ACCORDINGLY. GR. NO. 1 TO 4 ARE THUS PARTLY ALLOWED.' THIS MATTER WAS CARRIED BY THE REVENUE BEFORE HONB LE BOMBAY HIGH COURT, WHEREIN THE TRIBUNALS ORDER WAS UPHELD BY T HE HONBLE HIGH COURT. 5.8. IT IS NOTED FROM THE ORDER OF THE TRIBUNAL THAT BOT H THE ISSUES WERE RAISED BEFORE IT I.E. 1) ADOPTION OF INDIAN PLR OR EURIBOR/LIBOR AND 2) APPROPRIATE PERCENTAGE OF BPS TO BE ADDED. THE T RIBUNAL DECIDED THE FIRST ISSUE BY CHOOSING EURIBOR, BUT THE SECOND ISS UE WITH REGARD TO ADDITION OF BPS, HAS NOT BEEN DECIDED AND THUS, WE FIND FORCE IN THE CONTENTION OF LD CIT (DR) THAT THE QUESTION OF ADDI NG SOME BPS POINT WAS STILL LEFT OPEN. WITH RESPECT TO THE RATIONALE FOR ADDING SOME BPS POINTS, IT WAS SUBMITTED BY HIM THAT AE OF THE ASSE SSEE-COMPANY WAS IN FINANCIAL CRISIS AND THEREFORE IT SHOULD RATHER INC REASE THE BPS, AND 19 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. FURTHER, SINCE FINANCIAL POSITION OF THE AE IN THIS YEAR MAY HAVE BEEN FURTHER DETERIORATED, THEREFORE, THESE FACTS NEEDS EXAMINATION TO DECIDE THAT HOW MUCH BPS SHOULD BE ADDED. IT WAS FURTHER S UBMITTED BY HIM THAT ASSESSEE HAD HIMSELF SUGGESTED ABOUT THE RATE OF 5.17% (I.E. EURIBOR + BPS RATE). WE FIND IT APPROPRIATE TO REPR ODUCE THE SUBMISSIONS MADE BY THE ASSESSEE TO THE TPO VIDE LE TTER DATED 03.01.2013 VIDE PARAGRAPH NO. 1.8.17 AS UNDER:- 'IT IS PERTINENT TO NOTE THAT DURING THE YEAR UNDER CONSIDERATION, TKT HAS PAID INTEREST TO A GERMAN BA NK AT THE RATE OF EURIBOR PLUS 80 BASIS POINTS I.E. EURIBOR P LUS 0.8% (REFER ANNEXURE A). THE AVERAGE EURIBOR FOR THE PER IOD APRIL 2008 TO MARCH 2009 WAS 4.37 (REFER ANNEXURE B ). ACCORDINGLY, ON A WITHOUT PREJUDICE BASIS WE SUBMIT THAT IF NOTIONAL INTEREST HAS TO BE COMPUTED, THE ARMS LENGTH INTEREST RATE SHOULD BE 5.17% (4.37+0.8%)' 5.9. WE HAVE CAREFULLY CONSIDERED THIS ISSUE. WE FIND F ORCE IN THE CONTENTION THAT EURIBOR RATE IS THAT AT WHICH BANKS AND OTHER LARGE FINANCIAL INSTITUTIONS DEAL WITH EACH OTHER, INTER SE . RETAIL BORROWER DO NOT GET FINANCE AT THIS RATE, BECAUSE LENDING BANK/ INSTITUTION WOULD ADD SOME MARGIN/PREMIUM TO COVER THEIR RISKS/PROFITS, W HICH RANGES TO BE GENERALLY BETWEEN 1 TO 2%. BUT, KEEPING IN VIEW PEC ULIAR FACTS OF THIS CASE, AND PARTICULARLY WHEN NO CONTRARY EVIDENCE HA S BEEN BROUGHT ON RECORD BY THE REVENUE, WE FIND IT APPROPRIATE TO AC CEPT THE SUBMISSIONS 20 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. OF THE ASSESSEE, AND HOLD THAT 0.8% SHOULD BE ADDED UPON EURIBOR, AND THUS TOTAL INTEREST TO BE CHARGED WOULD BE 5.17 %. WE DIRECT ACCORDINGLY. 5.10. AS A RESULT, THESE GROUNDS ARE PARTLY ALLOWED IN T ERMS OF OUR DIRECTIONS AS GIVEN ABOVE. 6. GROUND NOS. 13 & 14:- THESE GROUNDS ARE REPRODUCED BELOW FOR READY REFERENCE: GROUNDS PERTAINING TO THE INTERNATIONAL TRANSACTION OF PROVISION OF CORPORATE GUARANTEE GROUND NO. 13: DISREGARDING THE COMMERCIAL AND ECON OMIC CIRCUMSTANCES FOR PROVIDING CORPORATE GUARANTEE WIT HOUT CHARGING GUARANTEE FEE THE HON'BLE DRP / LD. AO / LD. TPO ERRED IN NOT APP RECIATING THE COMMERCIAL AND ECONOMIC CIRCUMSTANCES UNDER WHI CH THE CORPORATE GUARANTEE WAS PROVIDED BY THE APPELLANT T O ITS AES. GROUND NO. 14: COMPUTING ARM'S LENGTH GUARANTEE FEE WITHOUT CONDUCTING ANY ANALYSIS OF COMPARABLE UNCON TROLLED TRANSACTION WITHOUT PREJUDICE TO THE GROUND NO. 13 ABOVE, THE HO N'BLE DRP / LD. AO / LD. TPO ERRED IN COMPUTING ARM'S LEN GTH PRICE FOR PROVISION OF GUARANTEE WITHOUT CONDUCTING ANY A NALYSIS FOR SELECTION OF MOST APPROPRIATE METHOD AND IDENTI FICATION OF COMPARABLE UNCONTROLLED TRANSACTION. 6.1. THESE GROUNDS DEAL WITH THE GRIEVANCE OF THE ASSES SEE WITH RESPECT TO T.P. ADJUSTMENT OF RS. 4,23,09,960/- BY W AY OF CORPORATE 21 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. GUARANTEE EXTENDED BY THE ASSESSEE ON BEHALF OF ITS AE. DURING THE COURSE OF PROCEEDINGS BEFORE THE TPO, THE ASSESSEE WAS ASKED BY THE TPO THAT WHY SHOULD NOT A SUITABLE ADJUSTMENT AT ARM S LENGTH PRICE (ALP) ON ACCOUNT OF CORPORATE GUARANTEE EXTENDED BY THE ASSESSEE ON BEHALF OF ITS AE BE MADE, THE ASSESSEE SUBMITTED TH AT THERE WAS NO NEED TO COMPUTE THE ALP INTEREST IN ASSESSEES CASE , AND EVEN IF THE NOTIONAL INTEREST WAS TO BE COMPUTED, THE ARMS LEN GTH INTEREST RATE SHOULD BE IN ACCORDANCE WITH THE INDIAN PRICING REG ULATIONS, BUT THE TPO DID NOT AGREE FULLY WITH THE SUBMISSIONS OF THE ASSESSEE AND MADE ADJUSTMENT @ 3% ON THE EQUIVALENT INR VALUE OF LOAN TAKEN BY AE FOR RS. 14,17,08,000/- AND ACCORDINGLY A TOTAL ADJUSTMENT O F RS. 4,23,09,960/- WAS MADE TO THE TOTAL INCOME OF THE A SSESSEE. THE ASSESSEE CONTESTED THIS MATTER BEFORE THE DRP WHERE IN DETAILED SUBMISSIONS WERE MADE BY TAKING VARIOUS ARGUMENTS. THE DRP DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE FULLY. I T WAS HELD BY THE DRP THAT SERVICE WAS RENDERED BY THE ASSESSEE TO IT S AE, AND IF THE SAME SERVICE WOULD HAVE BEEN RENDERED BY A BANK, TH AN ARMS LENGTH PRICE WOULD HAVE BEEN DETERMINED ON THE BASIS OF FI NANCIAL CONSIDERATIONS OF THE BANK, AND THUS THE ORDER OF T HE AO WAS APPROVED, IN PRINCIPLE. BUT RATE APPLIED BY THE TPO @ 3% FOR GUARANTEE 22 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. COMMISSION WAS FOUND BY THE DRP ON THE HIGHER SIDE, AND THEREFORE THE DRP DIRECTED TO RE-COMPUTE THE ALP OF GUARANTEE COM MISSION BY APPLYING THE RATE OF 2%, THEREBY ACCEPTING THE CLAI M OF THE ASSESSEE IN PART. 6.2. BEFORE US, LD. COUNSEL HAS SUBMITTED THAT NO COMPA RABLE ANALYSIS OF THE RATES HAVE BEEN DONE BY THE TPO OR THE DRP. RELIANCE WAS PLACED BEFORE HIM IN THIS REGARD ON THE JUDGMENT OF THE TRIBUNAL IN THE CASE OF EVEREST KANTO CYLINDER VS. DCIT (ITA NO. 54 2/M/2012 FOR AY- 2007-08 ORDER DATED 23.11.2012), WHEREIN THE TPO HA D APPLIED THE RATE OF 3% BUT ASSESSEE HAD CHARGED THE RATE OF 0.5% FRO M ITS AE, AND HONBLE BENCH FOUND THE RATE OF 0.5% TO BE REASONAB LE AND AT ALP. IT WAS FURTHER SUBMITTED THAT AFORESAID DECISION HAS B EEN UPHELD BY THE HONBLE HIGH COURT. OUR ATTENTION WAS DRAWN ON PAGE NO. 169 TO 171 OF THE PAPER BOOK COMPRISING OF DETAILED OBJECTIONS MA DE BEFORE THE DRP, WHEREIN IT WAS SUBMITTED THAT NO COST HAS BEEN INCU RRED BY THE ASSESSEE IN THIS REGARD AND THAT ASSESSEE HAS HUGE OWN FUNDS. IN RESPONSE TO OUR QUERY, IT WAS SUBMITTED BY THE LD. COUNSEL THAT NO DETAILS WERE AVAILABLE WITH RESPECT TO THE COST, TH E AE (I.E. TKT), WOULD HAVE INCURRED IF IT WOULD HAVE TAKEN LOAN/GUARANTEE FROM SOME OTHER INDEPENDENT PARTY. 23 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. 6.3. ON THE OTHER HAND, IT HAS BEEN SUBMITTED BY THE LD . CIT (DR) THAT, THERE IS NO DOUBT ON THE LEGAL PROPOSITION THAT SOM E AMOUNT ON ACCOUNT OF GUARANTEE COMMISSION HAS TO BE CHARGED BY THE AS SESSEE FOR EXTENDING CORPORATE GUARANTEE ON BEHALF OF ITS AE, BECAUSE ANY TRANSACTION OF GUARANTEE INVOLVES COSTS, FOR EXAMPL E, THERE ARE SOME COSTS NECESSARILY TO BE INCURRED FOR ADMINISTRATION AND RISK MANAGEMENT ETC. THUS, THE ONLY CONTROVERSY TO BE RESOLVED BY T HE HONBLE BENCH WOULD BE THAT HOW MUCH RATE SHOULD BE CHARGED BY TH E ASSESSEE FROM ITS AE WHICH SHOULD BE TAKEN AS ALP IN THE HANDS OF THE ASSESSEE. WITH REGARD TO THE FIXATION OF RATE, IT WAS SUBMITTED BY THE LD. CIT (DR) THAT FINANCIAL POSITION OF THE AE IS NOT GOOD, THEREFORE , THE AE WOULD GET CREDIT FACILITY AT RELATIVELY HIGHER RATE OF INTERE ST AND THEREFORE, HIGHER AMOUNT SHOULD BE CHARGED. IN RESPONSE TO THE JUDGMEN T OF EVEREST KANTO (SUPRA) IT HAS BEEN SUBMITTED BY THE LD. CIT (DR) THAT RATE OF 0.5% AS ADOPTED IN THE AFORESAID CASE IS ON THE LOW ER SIDE. AS SUGGESTED BY HIM, THE RATE OF 2% WOULD BE REASONABL E. 6.4. IN REPLY, IT WAS SUBMITTED BY THE LD. COUNSEL THAT CIT (DR) WAS NOT ABLE TO SHOW THAT WHAT METHOD COULD BE ADOPTED TO DETERMINE THE RATE TO BE CHARGED BY THE ASSESSEE FROM ITS AE, WHA T KIND OF COSTS HAVE BEEN INCURRED BY THE AE VIS-A-VIS OTHER INDEPENDENT PARTIES FOR THE 24 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. SIMILAR TRANSACTIONS. UNDER THESE CIRCUMSTANCES, TH E TPO HAS TO SUGGEST A SUITABLE METHOD, FOLLOWING THE JUDICIAL APPROACH, AND KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, AND FOR TH IS PURPOSE THIS MATTER CAN BE SENT BACK TO THE FILE OF THE TPO FOR ITS RE-EXAMINATION. 6.5. WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY BOTH THE SIDES AS WELL AS MATERIAL PLACED BEFORE OUR CONSIDERATION. T HERE IS UNANIMITY ON THE POINT THAT SOME AMOUNT SHOULD BE CHARGED BY THE ASSESSEE FROM ITS AE ON ACCOUNT OF CORPORATE GUARANTEE ISSUED BY THE ASSESSEE ON BEHALF OF ITS AE. THE ONLY CONTROVERSY TO BE DECIDED IS TH AT HOW MUCH RATE SHOULD BE APPLIED. LD. COUNSEL HAS RELIED UPON THE JUDGMENT OF HONBLE TRIBUNAL IN THE CASE OF EVEREST KANTO (SUPRA). THIS JUDGMENT HAS BEEN ACCEPTED TO BE APPLICABLE ON LAW, BY BOTH THE PARTI ES. BUT IT HAS BEEN ARGUED BY THE LD. CIT(DR) THAT RATE OF 0.5% HAS BEE N DECIDED IN THAT CASE KEEPING IN VIEW THE SPECIFIC FACTS OF THE ACTU AL COST INCURRED BY THE AE OF EVEREST KANTO, AND ALSO THAT 0.5% WAS TOO LOW A RATE, AND THEREFORE, IT CANNOT BE BLINDLY APPLIED, UNIVERSALL Y OR UNIFORMLY, IN ALL OTHER CASES. LD. COUNSEL HAS ALSO FAIRLY ACCEPTED T HE ARGUMENT OF LD. CIT (DR), TO THE EXTENT THAT ALP RATE OF CORPORATE GUARANTEE CAN BE DETERMINED, KEEPING IN VIEW THE ACTUAL COST INCURRE D BY THE AE OR AS IT WOULD HAVE BEEN INCURRED BY THE AE WITH RESPECT TO A SIMILAR 25 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. TRANSACTION BETWEEN THE AE AND ANY OTHER INDEPENDEN T PARTY. BUT, NO INFORMATION IN THIS REGARD WAS AVAILABLE. THUS TAKI NG INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES AS WELL AS SUBMISSIONS MADE BY BOTH THE PARTIES BEFORE US, AND IN THE INTEREST OF JUSTICE, W E FIND THAT THIS CASE SHOULD BE SENT BACK TO THE FILE OF THE TPO. THEREFO RE, WE SEND THIS ISSUE BACK TO THE FILE OF THE TPO FOR DECIDING THE RATE OF COMMISSION. HE WILL GIVE OPPORTUNITY TO THE ASSESSEE TO SUBMIT ALL THE DETAILS AND DOCUMENTS AS MAY BE CONSIDERED APPROPRIATE BY IT, A ND SHALL DECIDE THIS ISSUE AFTER TAKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF THIS CASE, AND BY EXERCISING HIS SUITABLE POWERS UN DER THE LAW TO GET THE REQUIRED INFORMATION FROM THE CONCERNED AGENCIES, A ND THEREAFTER HE SHALL TAKE A JUDICIOUS VIEW OF THE MATTER, TAKING IN TO ACCOUNT ALL THE JUDGMENTS AVAILABLE INCLUDING THE JUDGMENT OF THE TRI BUNAL AS CONFIRMED BY THE HONBLE HIGH COURT IN THE CASE OF EVEREST KANTO (SUPRA). THUS, THESE GROUNDS ARE ALLOWED FOR STATIS TICAL PURPOSES. 7. GROUND NO. 15 TO 19:- DEAL WITH THE DISALLOWANCE MADE U/S 14A R.W.S RULE 8D OF THE INCOME-TAX RULES, 1962, AND TH ESE ARE REPRODUCED HEREUNDER FOR THE SAKE OF READY REFERENCE: GROUND 15: ERRONEOUSLY INVOKING RULE 8D OF THE INCO ME-TAX RULES, 1962 AND THEREBY DISALLOWING ADDITIONAL EXPE NDITURE UNDER SECTION 14A OF THE ACT 26 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD: AO/HON'BLE DRP HAS ERRED IN ERRONEOUSLY INVOKIN G THE PROVISIONS OF RULE 8D AND THEREBY DISALLOWING AMOUN T OF RS. 13,01,27,740 AS ADDITIONAL DISALLOWANCE UNDER SECTI ON 14A READ WITH RULE 8D OF THE ACT. GROUND 16: ERRONEOUSLY APPLYING RULE 8D OF THE INCO ME-TAX RULES, 1962 AND THEREBY DISALLOWING ADDITIONAL EXPE NDITURE UNDER SECTION 14A OF THE ACT WITHOUT PREJUDICE TO THE GROUND 15, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO / HON'BLE DRP HAS ERRED IN ERRONEOUSLY APPLYING THE PROVISION S OF RULE 8D AND THEREBY DISALLOWING AMOUNT OF RS. 13,01,27,7 40 AS ADDITIONAL DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D OF THE ACT. GROUND 17: THE LD. AO ERRED IN DISSENTING WITH THE DIRECTIONS ISSUED BY HON'BLE DRP WITHOUT PREJUDICE TO THE GROUND 15 AND 16, ON THE FA CTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 144C(1O) OF THE ACT, THE LD. AO HAS ERRED IN INCLUDING THE INTEREST INCURRED FOR INVEST MENT IN OVERSEAS SUBSIDIARY FOR COMPUTING DISALLOWANCE UNDE R RULE 8D(2)(II) WHICH HAS ALREADY BEEN ALLOWED AS REVENUE EXPENDITURE BY HON'BLE DRP. YOUR APPELLANT SUBMITS THAT THE LD. AO IS BOUND TO FOLLOW THE DIRECTIONS ISSUED BY THE HON'BLE DRP AS PER SECTION 144C(1O) OF THE ACT AND HENCE SUCH ACT OF THE LD. AO IS NOT VALID IN ACCORDANCE WITH PROVISIONS OF THE ACT. GROUND 18: ERRONEOUSLY CONSIDERING THE INTEREST EXP ENDITURE INCURRED FOR INVESTMENT IN OVERSEAS SUBSIDIARY FOR COMPUTING DISALLOWANCE AS PER RULE 8D(2)(II) WITHOUT PREJUDICE TO THE GROUND 15, 16 AND 17 AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN CONSIDERING THE INTEREST EXPENDITURE I NCURRED FOR INVESTMENT IN OVERSEAS SUBSIDIARY FOR COMPUTING DIS ALLOWANCE AS PER RULE 8D(2)(II). 27 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. 7.1. IN THESE GROUNDS, ASSESSEE HAS CHALLENGED THE ACTI ON OF THE LOWER AUTHORITIES IN MAKING THE DISALLOWANCE U/S 14A FOR RS. 13,01,27,740/- AS ADDITIONAL DISALLOWANCE OVER AND ABOVE THE DISALLOW ANCE OF RS. 2,59,85,604/- MADE BY THE ASSESSEE-COMPANY, VOLUNTA RILY, IN THE COMPUTATION OF INCOME FILED BY IT ALONG WITH ITS RE TURN. 7.2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THA T THE ASSESSEE HAS CALIMED EXEMPT INCOME OF RS.14,69,16,869/- AND THE ASSESSEE HAD MADE DISALLOWANCE OF RS.2,59,85,604/- FOR EARNING E XEMPT INCOME. THE AO WAS OF THE VIEW THAT THE DISALLOWANCE WAS NEITHE R PROPER NOR IN ACCORDANCE WITH RULE 8D. IT WAS THE CLAIM OF THE AS SESSEE THAT REASONABLE HAS DISALLOWANCE BEEN MADE. THE AO WAS N OT SATISFIED WITH THE WORKING OF THE ASSESSEE. HE WORKED OUR TOTAL DI SALLOWANCE OF RS.14,72,27,181/- AFTER GIVING DEDUCTION OF RS. 2,5 5,40,604/-( I.E. DISALLOWANCE MADE IN THE RETURN), AN ADDITION OF RS .12,16,86,577/- WAS MADE BY THE AO. 7.3. BEFORE THE DRP, DETAILED SUBMISSIONS WERE MADE BY THE ASSESSEE- COMPANY AND VARIOUS ARGUMENTS WERE TAKEN COVERING V ARIOUS ASPECTS OF THE ISSUE INVOLVED. BUT, THE DRP CONFIRMED THE DISA LLOWANCE WITHOUT 28 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. DEALING WITH THE SPECIFIC ARGUMENTS OF THE ASSESSEE -COMPANY. IT IS NOTED BY US THAT IN SUPPORT OF EACH AND EVERY ARGUM ENT, THE ASSESSEE- COMPANY HAD PLACED RELIANCE ON VARIOUS JUDGMENTS OF TRIBUNAL AS WELL AS HIGH COURTS, BUT THE DRP, WITHOUT DISTINGUISHING OR DEALING WITH THESE JUDGMENTS, UPHELD THE DISALLOWANCE MADE BY AO. 7.4. BEFORE US, LD. COUNSEL MADE DETAILED ARGUMENTS AGA INST THE ACTION OF THE LOWER AUTHORITIES. HIS ARGUMENTS CAN BE SUMMARISED AS UNDER:- (I) ALL INVESTMENTS IN JOINT VENTURES AND SUBSIDIAR IES MADE AS STRATEGIC INVESTMENT SHOULD BE EXCLUDED FOR COMPUTI NG THE AMOUNT OF AVERAGE INVESTMENT FOR THE PURPOSE OF FORMULA PRESC RIBED UNDER RULE 8D. (II) AMOUNT OF INVESTMENT ON WHICH NO DIVIDEND INC OME HAS BEEN RECEIVED SHOULD ALSO BE EXCLUDED. (III) INVESTMENT IN THE SHARE CAPITAL OF FOREIGN CO MPANIES, DIVIDEND INCOME FROM WHICH IS TAXABLE, SHOULD BE EXCLUDED. (IV) CERTAIN BORROWINGS WERE MADE FOR THE PURPOSE O F BUSINESS, AND THE AMOUNT BORROWED HAS BEEN UTILIZED FOR THE PURPO SE OF BUSINESS, AND ITS NEXUS HAS ALSO BEEN ESTABLISHED. INTEREST PAID ON SUCH BORROWINGS SHOULD BE EXCLUDED BEFORE CONSIDERING THE AMOUNT OF INTEREST TO BE DISALLOWED U/S 14A. 7.5. IT WAS REQUESTED THAT, FOR THIS PURPOSE, THIS ISSU E SHOULD BE SENT BACK TO THE FILE OF THE AO FOR EXAMINING THESE FACT S PROPERLY AND RE- QUANTIFYING THE AMOUNT DISALLOWABLE U/S 14A. ON THE OTHER HAND, LD. CIT 29 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. (DR) HAS SUPPORTED THE ORDER OF THE LOWER AUTHORITI ES AND SUBMITTED THAT THE DISALLOWANCE HAS BEEN MADE IN ACCORDANCE W ITH THE RULE 8D. HE HAS PLACED RELIANCE UPON THE JUDGMENT OF MAXOPP I NVESTMENT LTD. VS. CIT (347 ITR 272). IN REPLY, LD. COUNSEL OF THE ASSESSEE HAS DRAWN OUR ATTENTION UPON VARIOUS JUDGMENTS, WHICH HAVE BEE N RENDERED SUBSEQUENT TO THE JUDGMENT OF MAXOPP INVESTMENT LTD. (SUPRA), WHEREIN THE ARGUMENTS MADE BY THE LD. COUNSEL HAVE BEEN FOUND TO BE ACCEPTABLE. 7.6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH TH E SIDES, THE ORDER OF THE LOWER AUTHORITIES, THE FACTS AND CIRCU MSTANCES OF THIS CASE AS WELL AS JUDGMENTS RELIED UPON BY BOTH THE SIDES. IN OUR CONSIDERED OPINION THERE HAS BEEN LOT OF JUDICIAL DEVELOPMENT W ITH RESPECT TO DISALLOWANCE U/S 14A, AND THEREFORE, WE FIND THAT T HE ARGUMENTS MADE BY THE LD. COUNSEL CARRY WEIGHT UNDER THE LAW. THIS CANNOT BE DISMISSED OR BRUSHED ASIDE WITHOUT EXAMINING THEM ON FACTS. R ECENTLY, HONBLE DELHI HIGH COURT HAS HELD IN THE CASE OF CIT VS. CH EMINVEST LTD (ITA NO 749 OF 2014, ORDER DATED 2-9-2014) THAT INVESTMENT MADE FOR STRATEGIC REASONS CANNOT BE CONSIDERED FOR MAKING DISALLOWANC E U/S 14A, AND THAT THOSE INVESTMENTS ON WHICH NO DIVIDEND INCOME HAS BEEN RECEIVED, CANNOT BE CONSIDERED FOR MAKING DISALLOWANCE U/S 14 A. THERE ARE 30 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. VARIOUS OTHER JUDGMENTS, AS HAS BEEN RELIED UPON BY THE LD. COUNSEL IN THE SUBMISSIONS MADE BEFORE US AND BEFORE THE LOWER AUTHORITIES, IN SUPPORT OF THE PROPOSITIONS ARGUED BY HIM. THUS, AF TER ANALYSING THE LATEST POSITION OF LAW, WE FIND IT PROPER TO SEND T HIS ISSUE BACK TO THE FILE OF THE AO TO RE-COMPUTE THE AMOUNT OF DISALLOWANCE AFTER TAKING INTO ACCOUNT FOLLOWING DIRECTIONS:- (I) ALL THE INVESTMENTS MADE IN JOINT VENTURES, SUBS IDIARIES AND OTHER COMPANIES AS STRATEGIC INVESTMENT, SHOULD BE EXCLUD ED FOR COMPUTING THE AVERAGE AMOUNT OF INVESTMENT FOR THE PURPOSE OF RULE 8D. (II) THOSE INVESTMENTS SHOULD BE EXCLUDED ON WHICH NO DIVIDEND INCOME HAS BEEN RECEIVED DURING THE YEAR. (III) ALL THOSE INVESTMENTS SHOULD BE EXCLUDED WHIC H HAVE BEEN MADE IN THE FOREIGN COMPANIES WHOSE DIVIDEND INCOME WOUL D BE TAXABLE AS PER LAW, AS AND WHEN RECEIVED BY THE ASSESSEE-COMPA NY. (IV) IF THE ASSESSEE IS ABLE TO DEMONSTRATE THAT A PARTICULAR AMOUNT BORROWED BY IT HAS BEEN USED DIRECTLY FOR THE PURPO SE OF ITS BUSINESS AND HAS NOT BEEN UTILIZED ANYWHERE FOR EARNING TAX FREE INCOME, THAN INTEREST PAID ON SUCH BORROWING SHOULD BE EXCLUDED FROM THE AMOUNT OF INTEREST PAID TO BE CONSIDERED FOR COMPUTATION OF D ISALLOWANCE U/S 14A. 31 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. 7.7. THE AO SHALL KEEP IN MIND THE AFORESAID DIRECTIONS WHILE RE- ADJUDICATING THIS ISSUE. THE ASSESSEE SHALL FURNISH REQUIRED DETAILS AND DOCUMENTS AS MAY BE REQUIRED BY THE AO, AND AS MAY BE CONSIDERED APPROPRIATE BY THE ASSESSEE, AS PER LAW, FOR WHICH THE AO SHALL GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. TH E AO SHALL TAKE INTO CONSIDERATION ALL THE JUDGMENTS AS MAY BE PLACED BEF ORE HIM, BY THE ASSESSEE AND AS MAY BE AVAILABLE AT THAT TIME. WITH THESE DIRECTIONS, THESE GROUNDS ARE SENT BACK TO THE FILE OF THE AO, TO BE DECIDED AFRESH. THUS, THESE GROUNDS ARE ALLOWED FOR STATISTICAL PUR POSES. NOW, WE TAKE UP APPEAL OF THE REVENUE IN ITA NO. 1508/MUM/2014: 8. GROUND NO. 1 TO 4: IN THESE GROUNDS, THE REVENUE IS AGGRIEVED WITH THE DECISION OF THE DRP IN REDUCING THE RISK P REMIUM CHARGED BY THE TPO ON ACCOUNT OF GUARANTEE FEES @ 3% TO 2%. 8.1. SINCE, WE HAVE ADJUDICATED THIS ISSUE IN DETAIL WHI LE DECIDING GROUND NO. 13 AND 14 OF THE ASSESSEES APPEAL, THER EFORE, OUR ORDER GIVEN IN ASSESSEES APPEAL SHOULD BE FOLLOWED FOR D ECIDING THE GROUNDS RAISED BY THE REVENUE. ISSUES RAISED IN GROUNDS NO. 13 & 14 OF ASSESSEES APPEAL HAVE BEEN SENT BACK TO THE FILE O F THE TPO, AND ACCORDINGLY, THE ISSUES RAISED BY THE REVENUE IN IT S GROUND ARE ALSO SENT 32 ITA NOS. 774 & 1508/MUM/14 TATA AUTOCOMP SYSTEMS LT D. BACK TO THE FILE OF THE TPO. ACCORDINGLY, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 9. AS A RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH NOVEMBER, 2015. SD/- SD/- ( AMIT SHUKLA ) ( ASHWANI TANEJA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 18/11/2015 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/