Agro Tech Foods Limited., Sec'bad, Secunderabad V. DCIT, Circle-1(1), Hyd, Hyderabad

ITA 775/HYD/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0817 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 19-11-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Related party transaction; Revision of order; Transfer pricing; Opportunity of being heard; International transaction; Difference of opinion; Assessment record; Change of opinion; Set aside
• Section: 143(3); 250; 144C; 207; 264; 48; 13; 92CA; 263; 154

Judgement Text

ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NOS.775/HYD/2016 & ITA NO.1116/HYD/2018 ASSESSMENT YEAR: 2010-11 M/S. AGRO TECH FOODS LTD SECUNDERABAD PAN:AAECA0303M VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI DHANESH BAFNA REVENUE BY : SRI Y.V.S.T. SAI, CIT-DR DATE OF HEARING: 19/11/2020 DATE OF PRONOUNCEMENT: 17/12/2020 ORDER PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE ASSESSEES APPEALS FOR THE A.Y 2010-11. IT A NO.775/HYD/2016 IS THE ASSESSEES APPEAL AGAINST TH E ORDER OF THE CIT (IT&TP) U/S 263 OF THE I.T. ACT DATED 31.03 .2016 AND ITA NO.1116/HYD/2018 IS ASSESSEES APPEAL AGAINST THE O RDER OF THE CIT(A) CONFIRMING THE ASSESSMENT ORDER PASSED BY TH E AO U/S 143(3) R.W.S. 263 OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING, SELLING A ND DISTRIBUTION OF BRANDED EDIBLE OILS, FOOD PRODUCTS, BULK COMMODITIES ETC., HAS FILED ITS RETURN OF INCOME FO R THE A.Y.2010- 11 ON 8.10.2010 DECLARING A TOTAL INCOME OF RS.30,9 9,25,790/- ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 2 OF 18 UNDER THE NORMAL PROVISIONS. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT THE ASS ESSEE HAS ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS AE S. HE THEREFORE, REFERRED THE MATTER TO THE TPO FOR DETERMINATION OF THE ALP OF THE INTERNATIONAL TRANSACTIONS U/S 92CA(3) OF THE I.T. ACT. THE TPO, VIDE ORDER DATED 28.8.2013, SUGGESTED ADJUSTMENT OF RS.6,06,93,406/- U/S 92CA OF THE ACT. ACCORDINGLY, THE AO PROPOSED THE DRAFT ASSESSMENT ORDER AGAINST WHICH, THE ASSESSEE PREFERRED ITS OBJECTIONS BEFORE THE DRP. THE DRP PA SSED AN ORDER DATED 28.10.2014 WHEREIN IT HAS DIRECTED THE TPO TO RE-EXAMINE THE COMPUTATION OF MARK-UP BY GIVING DUE OPPORTUNIT Y TO THE ASSESSEE AND ALSO TO RE-WORKOUT THE ADJUSTMENT AND ALSO BY INCLUDING THE THREE COMPANIES I.E., 1.ADF FOODS LTD ., 2.DFM FOODS LTD., AND 3.TASTY BITE EATABLES LTD., AS COMP ARABLES. ACCORDINGLY, THE TPO PASSED THE CONSEQUENTIAL ORDER DATED 31.12.2014 AND SUGGESTED TP ADJUSTMENT AT RS.3,19,1 1,176/-. 2.1. THE AO WHILE PASSING THE ASSESSMENT ORDER ALSO CONSIDERED THE EXPENDITURE DEBITED BY THE ASSESSEE TOWARDS ADVERTISEMENT AND SALES PROMOTION AND HELD THAT IT FALLS INTO THE EXPENDITURE REFERRED TO UNDER SUB-CLAUSE(III) OF CL AUSE (A) OF SECTION.35D OF THE I.T. ACT AND HE ALLOWED 1/5 TH OF THE TOTAL OF ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 3 OF 18 SUCH EXPENDITURE IN THIS YEAR AND DISALLOWED THE BA LANCE BEING RS.6,93,37,003/- AND ACCORDINGLY BROUGHT IT TO TAX. 2.2. SUBSEQUENTLY, THE CIT (IT & TP) ASSUMING POWER S U/S 263 OF THE I.T. ACT, PERUSED THE TPOS ORDER AND OB SERVED THAT THE ORDER PASSED BY THE TPO IS ERRONEOUS IN SO FAR AS I T IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE OBSERVED THAT TH E ASSESSEE HAS INCURRED TOTAL OPERATING COST OF RS.626.92 CRORES B UT THE TPO HAS ALLOCATED ONLY RS.610.44 CRORES IN HIS SEGMENTAL AN ALYSIS AND NO REASON WAS MENTIONED FOR NOT ALLOCATING THE BALANCE SUM OF RS.16.48 CRORES. HE ALSO OBSERVED THAT THE TPO HAS CONSIDERED THE MISCELLANEOUS INCOME AND FOREIGN EXCHANGE FLUCT UATION GAIN AS OPERATING REVENUE IN THE ASSESSEES CASE, BUT WH ILE COMPUTING THE OPERATING REVENUE OF THE COMPARABLES, MISCELLAN EOUS INCOME AND FOREIGN EXCHANGE FLUCTUATION GAINS WAS NOT CONS IDERED AS OPERATING REVENUE IN THEIR CASES. THEREFORE, HE OBS ERVED THAT THE ARITHMETIC MEAN OF THE ASSESSEE AND THE COMPARABLE COMPANIES HAS NOT BEEN PROPERLY WORKED OUT BY THE TPO. ACCORD INGLY, HE ARRIVED AT THE PLI OF THE ASSESSEE AT 5.03% AS AGAI NST THE PLI OF THE COMPARABLE ENTITIES AT 10.83% AND HELD THAT ASS ESSEES PLI OF 5.30% BEING MORE THAN THE TOLERANCE RANGE OF 5%, IT CALL FOR TP ADJUSTMENT. ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 4 OF 18 2.3. THEREFORE, THE CIT ISSUED A NOTICE TO THE ASSE SSEE U/S 264 OF THE I.T. ACT. THE ASSESSEE OBJECTED TO THE R EVISION ON THE GROUND THAT THE TPO IS NOT AN AO AND THEREFORE, THE TP ORDER IS NOT AMENABLE TO REVISION U/S 263 OF THE I.T. ACT. THE CIT (IT& TP) HOWEVER, HELD THAT THE TP ORDER IS ALSO AMENABLE TO SECTION 263 OF THE ACT AND THAT THE TPO AS WELL AS THE DRP HAVE NO T CONSIDERED THE INCORRECT ALLOCATION OF OPERATING EXPENDITURE A ND ALSO THE INCORRECT CONSIDERATION OF MISCELLANEOUS INCOME AND FOREIGN EXCHANGE GAINS IN THE CASE OF THE ASSESSEE AND NOT IN THE CASE OF THE COMPARABLES WHILE COMPUTING THEIR PLI. HE THERE FORE, HELD THE ASSESSMENT ORDER TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE ASSESSEE ALSO ARG UED BEFORE THE CIT THAT ONE OF THE COMPARABLE I.E. TASTY BITES LIM ITED SHOULD NOT BE CONSIDERED AS COMPARABLE BECAUSE IT DID NOT SATI SFY ONE OF THE FILTERS ADOPTED BY THE TPO. THE CIT (IT&TP) DID NOT ACCEPT THE SAME BY HOLDING THAT THE ISSUE OF SELECTION OF COMP ARABLES WAS DECIDED BY THE TPO & DRP AND THAT IF THE ASSESSEE W AS NOT SATISFIED WITH THE SAME, IT HAD RECOURSE OF REMEDY UNDER THE ACT AND THAT THE PROVISIONS U/S 263 OF THE I.T. ACT ARE NOT MEANT TO PROVIDE SUCH REMEDY TO THE ASSESSEE. HE THEREFORE, DIRECTED THE TPO TO RECOMPUTE THE ALP IN ACCORDANCE WITH THE DIR ECTIONS OF THE DRP AND KEEPING IN MIND THE ERRORS POINTED OUT IN THE REVISION ORDER, HE FURTHER OBSERVED THAT THE DIRECT IONS OF THE DRP ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 5 OF 18 CANNOT BE AGITATED BY THE ASSESSEE NOR CAN THEY BE RECONSIDERED BY THE TPO. HE THEREFORE, HELD THAT THE PURPOSE OF EXERCISE WILL BE LIMITED TO CORRECTLY COMPUTING THE ARMS LENGTH PRI CE IN THE GIVEN SET OF TRANSACTIONS. AGAINST THIS ORDER OF THE CIT (IT & TP) U/S.263 OF THE ACT, THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: EACH OF THE GROUNDS AND/ OR SUB-GROUNDS OF THE APP EAL ARE INDEPENDENT AND WITHOUT PREJUDICE TO THE OTHERS . 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HON'BLE COMMISSIONER OF INCOME TAX (IT& TP) ['CIT'] ERRED IN REVISING THE ORDER PASSED BY THE L D. TRANSFER PRICING OFFICER ('TPO') UNDER SECTION 263 OF THE ACT 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HON'BLE CIT HAS GROSSLY ERRED IN INVOKI NG THE JURISDICTION UNDER SECTION 263 OF THE ACT FOR SETTI NG ASIDE THE ORDER PASSED BY THE LD. TPO UNDER SECTION 92CA OF THE ACT 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HON'BLE CIT GROSSLY ERRED IN MAKING REV ISION UNDER SECTION 263 OF THE ACT WITHOUT APPRECIATING / IGNORING THAT: I. ORDER OF THE LD. TPO IS NOT ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE AND HENCE NEEDS TO BE QUASH ED; II. THE VIEW TAKEN BY THE LD. TPO IS POSSIBLE VIEW; III. THERE IS A CHANGE OF OPINION AND HENCE DOES NO T JUSTIFY THE INITIATION OF REVISION UNDER SECTION 26 3 OF THE ACT; IV. WITHOUT PREJUDICE, LD. TPO ERRED IN INCLUDING T ASTY BITES EATABLES LIMITED AS A COMPARABLE WHICH FAILS THE RELATED PARTY TRANSACTION FILTER. IT IS PRAYED THAT THE REVISION INITIATED BY THE CIT UNDER SECTION 263 OF THE ACT BE QUASHED. THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTH ER. THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER, AME ND, DELETE OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFO RE OR AT THE TIME OF HEARING OF THIS APPEAL. ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 6 OF 18 3. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI DHANE SH BAFNA SUBMITTED THAT INITIALLY THE ASSESSEE HAS TAK EN ONLY TWO COMPANIES AS COMPARABLE TO THE ASSESSEE I.E. CAPITA L FOOD PRODUCTS LTD AND HALDIRAM BHUJIAWALA LTD, BUT SUBSE QUENTLY, THE TPO HAD TAKEN THREE MORE COMPANIES I.E. ADF FOOD LT D, TASTY BITES EATABLES LTD, DFM FOODS LTD ALSO AS COMPARABL ES AND CONSEQUENTLY, THE MARGINS OF THE ASSESSEE AS PER TH E TP ORDER WAS AT 7.83% AS AGAINST THE MARGIN OF THE COMPARABLE AT 14.36%. HE SUBMITTED THAT AFTER GIVING EFFECT TO THE DRPS DIR ECTION, DIRECTING THE TPO TO CORRECT THE MARGIN OF THE COMPARABLES AD OPTED BY THE TPO, THE TPO ARRIVED THE MARGIN OF THE ASSESSEE AT 7.8% AND AS IT WAS WITHIN +_ 5% OF THE ASSESSEES MARGIN, THERE WA S NO ADJUSTMENT PROPOSED BY THE TPO. HE SUBMITTED THAT B EFORE THE DRP, THE ASSESSEE HAD RAISED THE ISSUE OF COMPARABI LITY OF TASTY BITES AND EATABLES LTD TO THE ASSESSEE ON ACCOUNT O F RPT FILTERS ADOPTED BY THE TPO BUT THE DRP DID NOT CONSIDER THE SAME AND SINCE THE ALP COMPUTED BY THE AO AFTER GIVING EFFEC T TO THE ORDER OF THE DRP WAS LESS THAN +_5% OF THE ASSESSEES MAR GIN AND THERE WAS NO DEMAND ARISING FROM THE SAID AMOUNT, THE ASS ESSEE HAS NOT CHALLENGED THE SAME BEFORE THE ITAT. HE SUBMITT ED THAT THE CIT U/S 263 HAS NOT ONLY REVISED THE PLI OF THE ASS ESSEE AT 5.29% BUT HAS ALSO DIRECTED THE TPO TO RECOMPUTE THE PLI OF THE COMPARABLE COMPANIES DUE TO WHICH THE PLI OF THE CO MPARABLE ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 7 OF 18 COMPANIES ROSE TO 10.83% AND SINCE THE DIFFERENCE B ETWEEN THE PLI OF THE ASSESSEE AND THE COMPARABLE COMPANIES CO NSEQUENT TO THE ORDER U/S 263 IS MORE THAN +_5%, THE TP ADJUSTM ENT WAS REQUIRED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE TPO, IN HIS ORDER, HAS ADOPTED MORE THAN 25% OF TH E RPT TRANSACTIONS AS ONE OF THE FILTERS TO EXCLUDE SEVE RAL COMPANIES. HE HAS DRAWN OUR ATTENTION TO THE ANNUAL REPORT OF THE COMPARABLE, TASTY BITES EATABLES LTD, TO DEMONSTRATE THAT THE R PT OF THE SAID COMPANY WITH ITS HOLDING COMPANY WAS ACTUALLY 75%. THEREFORE, ACCORDING TO HIM, IF THE TPO HAD CALCULATED AND APP LIED THE RPT FILTER TO TASTY BITES AND EATABLES LTD, THIS COMPAN Y WOULD HAVE BEEN EXCLUDED FROM THE FINAL LIST OF COMPARABLE BY THE TPO DURING THE 92CA PROCEEDINGS ITSELF AND THE PLI OF THE ASSE SSEE WOULD HAVE BEEN WITHIN +_5% OF THE PLI OF THE COMPARABLES AND IN THE RESULT THE ASSESSMENT ORDER WOULD NOT HAVE BEEN ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE SUBM ITTED THAT SINCE THERE WAS NO DEMAND ARISING OUT OF THE DRAFT ASSESS MENT ORDER OR THE FINAL ASSESSMENT ORDER AFTER GIVING EFFECT TO T HE DIRECTIONS OF THE DRP, THERE WAS NO OCCASION FOR THE ASSESSEE TO FILE ANY APPEAL BEFORE THE ITAT AND THAT IT WAS ONLY DUE TO ERRONEO US ORDER OF THE CIT U/S.263 OF THE ACT, THE DEMAND HAS ARISEN. HE S UBMITTED THAT THE CIT, IN HIS ORDER U/S 263, ALSO COULD HAVE CONS IDERED WHETHER THE SAID COMPANY I.E., TASTY BITES AND EATABLES LTD SATISFIED THE ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 8 OF 18 FILTERS ADOPTED BY THE TPO AND IF FOR THE SAID REAS ON, THE SAID COMPANY IS EXCLUDED FROM THE FINAL LIST OF THE COMP ARABLES, THE ASSESSMENT ORDER COULD NOT HAVE BEEN HELD TO BE ERR ONEOUS. HE THEREFORE, PRAYED THAT THE ORDER OF THE CIT (IT&TP) U/S.263 OF THE ACT SHOULD BE SET ASIDE. HE ALSO ARGUED THAT U/S 26 3 OF THE ACT ONLY AN ASSESSMENT ORDER CAN BE REVISED AND NOT THE TPOS ORDER PASSED U/S 92CA OF THE ACT AND THEREFORE, THE ORDER U/S.263 OF THE ACT IS NOT SUSTAINABLE. 4. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE CIT (IT & TP) U/S.263 OF THE ACT AND S UBMITTED THAT THE CIT HAS ONLY REVISED THE TPOS ORDER AND HAS NO T INTERFERED WITH THE DIRECTIONS OF THE DRP AND THEREFORE, THE C IT HAS NOT EXCEEDED HIS JURISDICTION U/S 263 OF THE ACT. HE AR GUED THAT U/S 263 OF THE ACT, ANY ORDER PASSED BY THE AO CAN BE R EVISED AND IT MAY NOT BE ONLY THE ASSESSMENT ORDER. AS REGARDS T HE EXCLUSION OF THE TASTY BITES AND EATABLES LTD FROM THE FINAL LIST OF COMPARABLES, HE SUBMITTED THAT THE TPO HAD ISSUED A SHOW-CAUSE NOTICE AS TO WHY THE SAID COMPANY SHOULD NOT BE CON SIDERED AS A COMPARABLE TO THE ASSESSEE BUT THE ASSESSEE HAD NOT RAISED ANY OBJECTION TO THE SAME AND IT WAS ONLY DURING THE RE VISION PROCEEDING U/S 263 OF THE ACT THAT THE ASSESSEE HAS RAISED ITS OBJECTION AND AS IT WAS NOT PART OF THE TPO ORDER, THE CIT COULD ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 9 OF 18 NOT HAVE ENTERTAINED THE SAME. HE THEREFORE, PRAYED THAT THE REVISION ORDER BE SUSTAINED. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE CIT (IT&TP) HAS FOUND T HAT THERE WAS ERROR IN THE CALCULATION OF THE PLI OF THE ASSESSEE COMPANY I.E. ADOPTION OF THE OPERATING COST AND ALSO ALLOCATION OF OPERATING COST BETWEEN THE BRANDED FOOD SEGMENT AND SIT SEGMENT AN D THE ASSESSEE HAS NOT BEEN ABLE TO POINT OUT THAT THESE DISCREPANCIES ARE NOT ARISING OUT OF THE TPOS ORDER. THEREFORE, THERE IS CLEARLY AN ERROR COMMITTED BY THE TPO, IN COMPUTING THE OPE RATING REVENUE WHILE DETERMINING THE ALP. THUS, THE TPO OR DER WAS CLEARLY ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL T O THE INTEREST OF THE REVENUE. 5.1. SECOND QUESTION RAISED BY THE ASSESSEE WAS WHE THER THE CIT (IT&TP) COULD HAVE REVISED THE TPO ORDER. T HE PROVISIONS OF SECTION 263 READS AS UNDER: THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CAL L FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT , AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE 2 ASSESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE, MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSE SSMENT AND DIRECTING A FRESH ASSESSMENT. ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 10 OF 18 THUS, IT IS CLEAR THAT ANY ORDER PASSED BY THE AO C AN BE REVISED BY THE CIT. THE ORDER OF THE TPO U/S 92CA OF THE AC T IS BASED ON THE REFERENCE OF THE AO AND THEREFORE, IT IS ALSO P ART OF THE ASSESSMENT RECORD AND CAN BE REVISED BY THE CIT U/S 263 OF THE I.T. ACT. SIMILAR ISSUE HAD ARISEN BEFORE THE CO-O RDINATE BENCH OF ITAT AT KOLKATA IN THE CASE OF PHILIPS LTD., VS. PR .CIT, KOLKATA IN ITA NO.1142/KOL/2016 FOR A.Y.2009-10 AND VIDE ORDER DT.27.03.2019, THE TRIBUNAL HAS HELD AS UNDER: 7. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CON SIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW A S WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 8. THE FIRST ISSUE THAT IS TO BE ADJUDICATED IS WHE THER LD. PR. CIT HAS THE POWER U/S 263 OF THE ACT TO REVISE THE ASSESSMENT ORDER PASSED BY AN ASSESSING OFFICER IN COMPLIANCE WITH THE DIRECTIONS OF THE DRP U/S 144C(13) R.W.S 144C(5) OF THE ACT. UNDER SECTION 144C(10) OF THE ACT, THE DIRECTIONS I SSUED BY THE DRP ARE BINDING ON THE ASSESSING OFFICER. UNDER SEC TION 144C(13) OF THE ACT, THE ASSESSING OFFICER IS REQUI RED TO COMPLETE THE ASSESSMENT IN CONFORMITY WITH THE DIRE CTIONS OF THE DRP, WITHOUT PROVIDING ANY FURTHER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSE SSEE ARGUES THAT THIS PROCESS RESULTS IN MERGER OF THE ASSESSME NT ORDER PASSED U/S 143(3)/144C(13) OF THE ACT, WITH THE ORD ER OF THE DRP. WE NOW EXAMINE THIS ARGUMENT. 8.1. THE LOGIC UNDERLYING THE DOCTRINE OF MERGER, A S LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF 'COMMIS SIONER OF INCOME-TAX VS M/S. AMRITLAL BHOGILAL & CO. 1958 AIR 868', IS THAT; THE JURISTIC JUSTIFICATION OF THE DO CTRINE OF MERGER MAY BE SOUGHT IN THE PRINCIPLE THAT, THERE CANNOT B E, AT ONE AND THE SAME TIME, MORE THAN ONE OPERATIVE ORDER GO VERNING THE SAME SUBJECT-MATTER. THEREFORE THE JUDGMENT OF AN INFERIOR COURT, IF SUBJECTED TO AN EXAMINATION BY THE SUPERI OR COURT, CEASES TO HAVE EXISTENCE IN THE EYE OF LAW AND IS T REATED AS BEING SUPERSEDED BY THE JUDGMENT OF THE SUPERIOR CO URT. IN ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 11 OF 18 OTHER WORDS, THE JUDGMENT OF THE INFERIOR COURT LOS ES ITS IDENTITY BY ITS MERGER WITH THE JUDGMENT OF THE SUP ERIOR COURT. 8.1.1. THE ORDER PASSED BY THE ASSESSING OFFICER U/ S 143(3) R.W.S. 144C(13) OF THE ACT, IN PURSUANCE OF DIRECTI ONS OF THE DRP IS APPEALABLE BEFORE THE ITAT AS PER SECTION 25 3(1)(D) OF THE ACT. THE DIRECTIONS OF THE DRP U/S 144(5) OF TH E ACT, ARE NOT APPEALABLE BEFORE THE ITAT. UNDER THOSE CIRCUMS TANCES, IN OUR VIEW, THE DIRECTIONS OF THE DRP, WHICH IS A HIG HER AUTHORITY CANNOT BE SAID TO HAVE MERGED WITH THE OR DER OF THE ASSESSING OFFICER, PASSED U/S 143(3) R.W.S. 144C(13 ) OF THE ACT, WHICH IS A LOWER AUTHORITY. THUS WE ARE UNABLE TO ACCEPT THIS ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. 8.1.2. WITHOUT PREJUDICE TO OUR ABOVE VIEW, IT IS A LSO SETTLED THAT THE DOCTRINE OF MERGER APPLIES ONLY ON THOSE I SSUES THAT ARE CONSIDERED AND ADJUDICATED BY A HIGHER APPELLAT E AUTHORITY. IN THE CASE ON HAND, THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE, AT BEST, HOLDS GOOD, ONLY ON THOS E ISSUES, WHICH THE DRP HAD CONSIDERED AND HAD ADJUDICATED UP ON. THOSE ISSUES WHICH WERE NEVER CONSIDERED OR LOOKED INTO BY THE DRP CANNOT BE CONSIDERED AS THOSE WHICH HAVE ME RGED WITH THE ORDER OF THE ASSESSING OFFICER, SIMPLY BEC AUSE, THE DRP, HAS AS PER THE PROVISIONS OF THE ACT, HAD THE POWERS TO CONSIDER ANY ISSUE THAT ARISES IN AN ASSESSMENT ORD ER. SUCH ENABLING POWER UNDER THE ACT, DOES NOT LEAD TO A CO NCLUSION THAT ALL ISSUES WHICH WERE NEVER LOOKED INTO BY THE DRP WERE CONSIDERED AND ADJUDICATED BY THE DRP. 8.2. IN OUR VIEW AT BEST, WITHOUT PREJUDICE TO OUR FINDING THAT THERE IS NO MERGER OF THE ORDER OF THE ASSESSING OF FICER WITH THAT OF THE DRP, THE DOCTRINE OF PARTIAL MERGER MAY APPLY TO THE FACTS OF THE CASE AT HAND. THUS, ON THE ISSUES THAT WERE NOT BEFORE THE DRP AND THE ISSUES WHICH THE DRP HAD NOT EXAMINED NOR HAS APPLIED ITS MIND TO, THERE CAN BE NO MERGER WITH THE DIRECTIONS OF THE DRP. IN THE CASE ON HAND , BOTH THE ISSUES THAT WERE SUBJECT MATTER OF REVISION U/S 263 OF THE ACT, WERE NOT ISSUES CONSIDERED OR EXAMINED BY THE DRP. 9. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE D ECISION OF THE BOMBAY 'A' BENCH OF THE TRIBUNAL IN THE CASE OF TRU STEES OF PARSI PANCHAYAT FUNDS & PROPERTIES VS. DIRECTOR OF INCOME- TAX (SUPRA). THE CONTENTION OF THE ASSESSEE IN THIS CASE WAS THAT, THE ORDER FRAMED ON THE DIRECTIONS GIVEN BY T HE DDIT U/S 144A OF THE ACT, COULD NOT BE REVISED U/S 263 OF TH E ACT, AS TO THE EXTENT, THE ASSESSING OFFICER COULD NOT BE SAID TO HAVE APPLIED HIS MIND. THE TRIBUNAL HELD AS FOLLOWS:- '7. THE CONTENTION OF THE ASSESSEE WAS THAT THE ORDE R WAS FRAMED ON THE DIRECTION GIVEN BY DDIT UNDER SECTION 144A OF ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 12 OF 18 THE ACT AND TO THAT EXTENT THE ASSESSING OFFICER CO ULD NOT BE SAID TO HAVE APPLIED HIS MIND AND THEREFORE, THAT P ORTION OF THE ORDER BASED ON THE DIRECTION OF DDIT UNDER SECT ION 144A OF THE ACT, COULD NOT BE REVISED UNDER SECTION 263. AC CORDING TO THE COUNSEL THE AMENDMENT TO SECTION 263 OF THE ACT WHICH PERMITS REVISION OF ORDERS THAT ARE MADE IN PURSUAN CE TO THE DIRECTIONS UNDER SECTION 144A OF THE ACT IS INTENDE D TO COVER ALL THOSE CASES AND TO THAT PART OF THE ORDER OF AS SESSMENT WHICH IS NOT GUIDED BY THE DIRECTIONS UNDER SECTION 144A OF THE ACT. THE SUPPORT OF THE ARGUMENT WAS WITH REFER ENCE TO THE EARLIER DECISIONS WHICH HAVE HELD THAT THE ORDE R COULD NOT BE ERRONEOUS WHEN HE FOLLOWS HIS SUPERIOR ORDERS. T HE SUPREME COURT DECISION IN CIT V. ELPHINSTONE SPG. & WVG. MILLS CO. LTD. [1960] 40 ITR 142 WAS REFERRED TO FOR THE PROPOSITION THAT FICTION CREATED BY THE SECTION SHOULD NOT BE C ARRIED BEYOND THE PURPOSE FOR WHICH IT WAS INTENDED WHICH WAS REITERATED BY THE SUPREME COURT IN CIT V. MOON MILL S LTD. [1966] 59 ITR 574, IN CIT V. AJAX PRODUCTS LTD. [19 65] 55 ITR 741 , IN CIT V. AMARCHAND N. SHROFF [1963] 48 ITR 5 9 . IT WAS SUBMITTED THAT THE CALCUTTA HIGH COURT IN CIT V. JU STICE R.M. DATTA [1989] 180 ITR 86 HAD HELD THAT THE WORDS OF THE STATUTE ARE PRECISE AND UNAMBIGUGUS, THEY MUST BE A CCEPTED AS DECLARING THE EXPRESS INTENTION OF THE LEGISLATI ON. THE DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE AMENDMENT INCLUDING THE REVISION OF AN ORDER OF ASS ESSMENT FRAMED ON THE DIRECTIONS UNDER SECTION 144A OF THE ACT HAS TO BE CONSTRUED IN ITS TRUE. PERSPECTIVE AND SHOULD NO T BE BROKEN UP AS SUGGESTED BY THE LEARNED COUNSELS FOR THE ASS ESSEE. IN SUPPORT OF THE ABOVE ARGUMENTS, RELIANCE WAS PLACED ON THE BOMBAY HIGH COURT DECISION IN CIT V. M.M. VIRWANI [ 1994] 207 ITR 225. IN SUPPORT OF THE ARGUMENT THAT THE ASSESS ING OFFICER WHEN APPLIES WRONG LAW IT GIVES RAISE TO AN ERROR A ND COULD BE REVISED BY THE COMMISSIONER, RELIANCE WAS PLACED ON THE RAJASTHAN HIGH COURT DECISION IN CIT V. EMERY STONE MFG. CO. [1995] 213 ITR 843. IT WAS POINTED OUT THAT THE ORD ER DID NOT DEAL WITH THE PROVISIONS OF SECTION 11(4A) OF T HE ACT AND THEREFORE, ERROR DID CREEP IN THE ORDER OF ASSESSIN G OFFICER. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSES SEE THAT THE AMENDMENT TO SECTION 263 OF THE ACT PERMITTING REVISION OF ORDERS HAS TO BE LIMITED TO THAT PORTION OF THE ORDER NOT COVERED BY THE DIRECTION UNDER SECTION 144A OF THE ACT, IN OUR CONSIDERED OPINION DESERVES TO BE REJECTED. SECTION S 144A AND 144B OF THE ACT WERE INTRODUCED WITH A VIE W TO CONTAIN LITIGATION BY MAKING THE IMMEDIATELY SUPERI OR AUTHORITY TO THE ASSESSING OFFICER TO HAVE CONCURRE NT JURISDICTION IN THE FRAMING OF THE ASSESSMENT AND T HIS JURISDICTION SO EXERCISED BY THAT SUPERIOR AUTHORIT Y IS NOT ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 13 OF 18 MERELY AS A SUPERIOR BUT AS AN ASSESSING OFFICER AS WELL. TO ENSURE THAT THE ASSESSMENTS FRAMED AFTER OBTAINING THE DIRECTIONS UNDER SECTION 144A DO NOT GO UNCHECKED T HE LEGISLATURE IN THEIR WISDOM HAD AMENDED THE SECTION 263 TO INCLUDE SUCH AN ORDER AS WITHIN THE AMBIT OF REVISI ON PROVIDED OF COURSE IT COULD BE SAID THAT THE ORDER IS ERRONE OUS SO AS TO MAKE IT PREJUDICIAL TO THE INTERESTS OF THE REVENUE . CONSIDERING THE VOLUME AND THE TAX INVOLVED, THE CBDT FROM TIME TO TIME HAD ISSUED SUCH NOTIFICATIONS TO THE EFFECT THAT IN SPECTING ASSISTANT COMMISSIONERS OF INCOME-TAX, DEPUTY COMMISSIONERS OF INCOME-TAX WOULD ALSO ACT AS ASSES SING OFFICER SINGLY OR SHALL HAVE CONCURRENT JURISDICTIO N. THE ORDER OF ASSESSMENT PASSED BY ASSESSING OFFICER OR ASSESS ING OFFICER UNDER DIRECTIONS OF INSPECTING ASSISTANT COMMISSION ER (IAC) OR BY IAC ALL ARE PERFORMING THE FUNCTIONS OF AN ASSES SING OFFICER. THIS IS CLEARLY BROUGHT OUT IN THE NOTES ON CLAUSES TO THE TAXATION LAWS AMENDMENT BILL, 1984 BY WHICH THE EXPLANATION TO SECTION 263 WAS INTRODUCED COVERING THE ORDERS FRAMED AS PER THE DIRECTIONS RECEIVED UNDER SECTION 144A OF THE ACT. THIS IS REPRODUCED BELOW FOR THE SAKE OF F ACILITY: 'SUB-CLAUSE (A) SEEKS TO INSERT AN EXPLANATION TO S UB-SECTION (1) OF SECTION 263. UNDER THE EXISTING PROVISIONS, THE COMMISSIONER IS EMPOWERED TO REVISE ANY ORDER PASSED BY THE INCOME- TAX OFFICER UNDER THE INCOME-TAX ACT IF HE CONSIDERS THAT SUCH AN ORDER IS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE. THE EXPLANATION SEEKS TO CLARIFY THAT, FOR THE PURPOSES OF THIS SECTION, AN ORDER OF ASSESSMENT PASSED BY THE INCOME-TAX OFFICE R, ON THE BASIS OF THE DIRECTIONS ISSUED BY THE INSPECTING ASSISTAN T COMMISSIONER UNDER SECTION 144A OR SECTION 144B OR AN ORDER PASS ED BY THE INSPECTING ASSISTANT COMMISSIONER IN EXERCISE OF TH E POWERS OR IN PERFORMANCE OF THE FUNCTIONS OF AN INCOME-TAX OFFIC ER CONFERRED ON OR ASSIGNED TO HIM UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 125 OR UNDER SUB-SECTION (1) OF SECTION 125A SHALL BE REGA RDED AS AN ORDER PASSED BY THE INCOME-TAX OFFICER.' IN THE CASE BEFORE US THE ASSESSMENT WAS SELECTED F OR SCRUTINY AND THE DDIT WAS CLOSELY FOLLOWING EVERY STAGE OF T HE ASSESSMENT AND IN THE COURSE OF SUCH FUNCTION HAD I SSUED HIS DIRECTIONS UNDER SECTION 144A OF THE ACT AND WAS PE RFORMING THE IDENTICAL FUNCTIONS OF THE ASSESSING OFFICER AN D THE ORDER FINALLY PASSED ACCORDING TO THE DIRECTIONS REMAIN T O BE AN ORDER MADE BY ASSESSING OFFICER JOINTLY WITH DDIT A CTING AS AN ASSESSING OFFICER. THEREFORE, THERE IS ABSOLUTELY N O MERIT IN THE ARGUMENT ADVANCED BY THE LEARNED COUNSEL OF THE APP ELLANT- TRUST THAT TO THE EXTENT OF THE DIRECTIONS RECEIVED UNDER SECTION 144A AND APPLIED BY THE ASSESSING OFF ICER IT COULD NOT BE REVISED AND HENCE IS REJECTED.' ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 14 OF 18 9.1. A PERUSAL OF THE ABOVE CASE-LAW SHOWS THAT, IT CAN BE SAID THAT THE DRP IS ALSO DISCHARGING A FUNCTION OF AN A SSESSING OFFICER AND THE ASSESSMENT ORDER STILL REMAINS THAT OF THE ASSESSING OFFICER, THOUGH IT INCORPORATES THE DIREC TIONS OF THE DRP. THE DRP PROCEEDINGS ARE A STAGE OF ASSESSMENT PROCEEDINGS. IF THE PROPOSITION OF LAW LAID DOWN IN THIS CASE- LAW IS APPLIED TO THE CASE AT HAND, THEN EVEN THE D IRECTIONS GIVEN BY THE DRP AND INCORPORATED IN THE ASSESSMENT ORDER CAN BE A SUBJECT MATTER OF REVISION U/S 263 OF THE ACT, EVEN IN THE ABSENCE OF AN ENABLING PROVISIONS SUCH AS SUB-C LAUSE (A) TO EXPLANATION 1 TO SECTION 263 OF THE ACT, WHICH I S CLARIFICATORY IN NATURE. HENCE THE ARGUMENT THAT AN ENABLING PROVISION SUCH AS EXPLANATION 1(A) TO SECTION 263 OF THE ACT, IS REQU IRED FOR THE LD. PR. CIT TO REVISE AN ORDER PASSED U/S 143(3)/14 4C OF THE ACT, IS IN OUR VIEW NOT CORRECT AS THIS EXPLANATION ONLY CLARIFIES THE POWERS THAT ARE INHERENTLY HELD BY THE PR. CIT U/S 263 OF THE ACT. IN ANY EVENT, THE ARGUMENT OF THE ASSESSEE CANNOT BE APPLIED TO THOSE ISSUES WHICH WERE NOT CONSIDERED B Y THE DRP. 9.2. ANOTHER LIMB OF THE ARGUMENT OF THE LD. COUNSE L FOR THE ASSESSEE IS THAT THE DRP'S POWER EXTENDS TO SUCH MA TTERS THAT HAVE NOT BEEN RAISED IN THE OBJECTIONS FILED BY THE ASSESSEE BEFORE IT UNDER SECTION 144C SUB-SECTION 8 AND EXPL ANATION THERETO, AND HENCE THE ENTIRE ORDER OF THE ASSESSIN G OFFICER CAN BE SAID TO BE HAVE BEEN PASSED ON THE DIRECTION S OF THE DRP. SIMPLY BECAUSE THERE IS A POWER IN THE ACT PRO VIDED TO THE DRP, TO EXAMINE ALL ISSUES RELATABLE TO AN ASSE SSMENT, WHETHER RAISED BY THE ASSESSEE BEFORE IT OR NOT, IT CANNOT BE CONCLUDED THAT ALL THE ISSUES THAT ARISE IN AN ASSE SSMENT ARE DEEMED TO HAVE BEEN EXAMINED OR CONSIDERED BY THE D RP. THOSE ISSUES WHICH WERE NOT CONSIDERED OR LOOKED IN TO BY THE DRP CANNOT BE HELD AS DECISIONS TAKEN BY THE DRP AN D INCORPORATED IN THE ASSESSMENT ORDER PASSED U/S 143 (3) R.W.S. 144C(13) OF THE ACT. 9.3. ANOTHER ARGUMENT RAISED WAS THAT, IN THE ABSEN CE OF AN ENABLING PROVISION TO SECTION 263 AKIN TO CLAUSE (C ) TO EXPLANATION 1 TO SECTION 263, THE LD. PR. CIT DOES NOT HAVE THE POWER TO REVISE THE ORDER PASSED IN COMPLIANCE WITH THE DIRECTIONS OF THE DRP. IN OUR VIEW, THE EXPLANATION IN QUESTION ONLY CLARIFIES OR EXPLAINS THE POSITION OF LAW. IT IS NOT A DEVIATION FROM THE SETTLED POSITION OF LAW. IN OUR VIEW EVEN WITHOUT SUCH ENABLING PROVISION, THE LD. PR. CIT HA S THE POWER TO REVISE U/S 263 OF THE ACT, THOSE ISSUES WHICH WE RE NOT A MATTER OF CONSIDERATION BY THE DRP. 9.4. RELIANCE WAS PLACED ON SECTION 144C(15) OF THE ACT, FOR BRINGING TO OUR NOTICE THAT THE DRP COMPRISES OF A COLLEGIUM OF THREE PRINCIPAL COMMISSIONERS OF INCOME TAX ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 15 OF 18 /COMMISSIONERS OF INCOME TAX AND HENCE WHEN AN ORDE R IS PASSED BY THE ASSESSING OFFICER PURSUANT TO THE DRP 'S DIRECTION, A PRINCIPAL COMMISSIONER OF INCOME TAX O F EQUAL RANK CANNOT REVIEW SUCH ORDER U/S 263 OF THE ACT. R ELIANCE IS PLACED ON THE DECISION OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF CIT VS. K.L. AHUJA REPORTED IN [2001] 250 I TR 763 (DELHI). IN THIS JUDGEMENT THE PROPOSITION OF LAW L AID DOWN WAS THAT, IF AN ORDER IS PASSED BY THE ASSESSING OF FICER IN PURSUANCE OF DIRECTIONS OF HIS SUPERIOR OFFICERS WH O HAPPENS TO BE A COMMISSIONER OF INCOME TAX, THEN SUCH COMMI SSIONER OF INCOME TAX CANNOT REVISE THAT ORDER, AS IT WOULD TANTAMOUNT TO REVISING ONE'S OWN ORDER. IN THE CASE OF K.L. AH UJA (SUPRA), AN ORDER UNDER SECTION 154 OF THE ACT WAS PASSED BY THE ASSESSING OFFICER RELYING UPON A GENERAL CIRCULAR I SSUED BY CIT WHICH IN TURN FOLLOWED AN EARLIER CBDT CIRCULAR ACCEPTING THE ITAT MUMBAI BENCH'S DECISION. HERE TH E FACTS ARE ENTIRELY DIFFERENT. IN THIS CASE, IT IS NOT A Q UESTION OF REVISING ONE'S OWN ORDER. FURTHER, NEITHER THE ASSE SSING OFFICER NOR THE DRP HAVE APPLIED THEIR MIND ON THE ISSUES WHICH ARE THE SUBJECT MATTER OF REVISION. HENCE THE QUESTION OF REVISING ONE'S OWN ORDER OR ORDERS OF AUTHORITIES O F CONCURRENT OR EQUAL RANKS DOES NOT ARISE. THIS ARGUMENT MAY BE ACCEPTED ONLY TO THE EXTENT THAT THE DIRECTIONS GIVEN BY THE DRP AND FOLLOWED BY THE ASSESSING OFFICER MAY NOT BE SUBJEC T MATTER OF REVISION BY THE LD. CIT U/S 263 OF THE ACT AS THE P ERSONS CONSTITUTING THE DRP ARE OF THE SAME RANK AS THAT O F THE LD PR. CIT. . 11. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN T HESE CASE- LAWS TO THE FACTS OF THE CASE AT HAND, IN OUR CONSI DERED OPINION, AS THE ASSESSING OFFICER HAS PASSED THIS A SSESSMENT ORDER, WITHOUT ENQUIRY AND APPLICATION OF MIND ON T HESE TWO ISSUES, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. 11.1. THE LD. COUNSEL FOR THE ASSESSEE FURTHER RELI ED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT FOR THE PR OPOSITION THAT THE LD. CIT CANNOT DIRECT THE ASSESSING OFFICE R TO CONDUCT A FRESH ENQUIRY ON THE ISSUE WITHOUT SPECIFYING AS TO HOW THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WA S ERRONEOUS INSOFAR IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN OUR VIEW, THE LD. CIT HAS APPLIED HIS M IND TO BOTH THESE ISSUES BY CONSIDERING, THE FACTS AND THE LAW AS WELL AS THE EXPLANATION OF THE ASSESSEE. HE HAS INDICATED AS TO HOW THE ASSESSMENT ORDER IN HIS OPINION WAS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF THE REVENUE, TO THE EXTENT OF TH ESE TWO ISSUES. HENCE THIS ARGUMENT OF THE LD. COUNSEL FOR THE ASSE SSEE BY RELYING ON THE JUDGEMENT OF THE HON'BLE DELHI HIGH COURT IN ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 16 OF 18 THE CASE OF D.G. HOUSING PROJECTS (SUPRA), IS NOT A PPLICABLE TO THE FACTS OF THIS CASE. HENCE WE FIND NO INFIRMITY IN THE ORDER OF THE LD. PR. CIT, GIVING DIRECTION TO THE ASSESSING OFFICER TO EXAMINE BOTH THESE ISSUES PROPERLY AND ADJUDICATE T HE ISSUES AFRESH, AFTER GIVING THE ASSESSEE PROPER OPPORTUNIT Y OF BEING HEARD. 11.2. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED E VIDENCES AND MADE DETAILED SUBMISSIONS ON MERITS ON THE TWO ISSUE THAT WHERE THE SUBJECT MATTER OF REVISION. IN OUR VIEW, TO EXPRESS A VIEW ON THE MERITS OF THE CLAIM OF THE ASSESSEE AT THIS STAGE, IS NOT PROPER. THE FACTS HAVE TO BE EXAMINED BY THE AS SESSING OFFICER. THE LD.PR. CIT HAS EXAMINED THE EXPLANATIO N AND FACTS SUBMITTED BY THE ASSESSEE AND HAS COME TO A CONCLUS ION THAT THE ASSESSING OFFICER HAS TO EXAMINE THE SAME. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE BOTH THESE ISSUES IN DEPENDENTLY, WITHOUT GETTING INFLUENCED BY ANY OF THE OBSERVATIO NS OF THE LD. CIT ON THESE ISSUES AFRESH IN HIS ORDER U/S 263 OF THE ACT AND ADJUDICATE BOTH THESE ISSUES IN ACCORDANCE WITH LAW . 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. THUS, WHERE THE DIRECTION OF THE DRP HAVE BEEN HELD TO BE PART OF THE ASSESSMENT ORDER, THEN, THERE CAN BE NO DOUBT T HAT TP ORDER IS ALSO PART OF ASSESSMENT ORDER AND IS THUS AMENAB LE TO JURISDICTION OF THE CIT U/S.263 OF THE ACT AND PART ICULARLY ON THE ISSUES WHICH WERE NOT CONSIDERED BY THE TPO AND DRP . THUS, ASSESSEES GROUNDS OF APPEAL NO.1 TO 3(I), (II) & ( III) ARE REJECTED. 5.2. AS REGARDS G.NO.3(IV) I.E., THE ASSESSEES OBJ ECTION THAT THE TASTY BITES AND EASTABLES LTD DOES NOT SATISFY THE FILTER ADOPTED BY THE TPO, WE FIND THAT THE TPO HAS HIMSEL F ADOPTED THE RPT FILTER OF MORE THAN 25% AND IN THE CASE OF TAST Y BITES AND EATABLES LTD., ITS RPT IS CLEARLY BEYOND THE RANGE FIXED BY THE ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 17 OF 18 TPO, ITS RPT TRANSACTIONS ARE MUCH MORE THAN 50%, B UT NEARLY 75%. IN SUCH CIRCUMSTANCES, THE TPO OUGHT NOT TO HA VE CONSIDERED THE SAID COMPANY AS A COMPARABLE COMPANY . THOUGH THE ASSESSEE MAY NOT HAVE CHALLENGED THE SAME BEFOR E THE TPO, ASSESSEE HAS CHALLENGED IT BEFORE THE DRP, BUT THE DRP HAS NOT ADJUDICATED THE SAME AND SINCE THERE WAS NO DEMAND ARISING DUE TO THE CONSEQUENTIAL ORDER PASSED BY THE AO, THERE WAS NO OCCASION FOR THE ASSESSEE TO FILE AN APPEAL BEFORE THE ITAT. THEREFORE, IN OUR OPINION, THE CIT (IT&TP) OUGHT TO HAVE DIRECTED THE TPO TO CONSIDER ASSESSEES OBJECTIONS TO TASTY BITES AND EATABLES LTD BEFORE CONCLUDING THE ASSESSMENT PROCE EDINGS. THEREFORE, WE DEEM IT FIT AND PROPER TO DIRECT THE AO TO EXAMINE AND VERIFY WHETHER THE RPT TRANSACTION OF TASTY BIT ES EATABLES LTD WITH ITS AE IS MORE THAN 25% AND IF IT IS FOUND TO BE CORRECT, THEN THE SAID COMPANY SHALL BE EXCLUDED FROM THE FI NAL LIST OF COMPARABLES. WITH THESE DIRECTIONS, THE ORDER OF TH E CIT U/S 263 IS MODIFIED AND THE AO/TPO IS DIRECTED TO RECOMPUTE THE ALP BY EXCLUDING THE TASTY BITES EATABLES LTD, AND IF THER EAFTER THE PLI OF THE ASSESSEE IS LESS THAN +_5% OF THE COMPARABLE CO MPANIES, THEN NO TP ADJUSTMENT IS CALLED FOR. WITH THESE DIRECTIO NS, THE APPEAL OF THE ASSESSEE AGAINST THE ORDER U/S.263 OF THE AC T, IS PARTLY ALLOWED. ITA NOS 775 AND 1116 OF 2018 AGRO FOOD TECH LTD PAGE 18 OF 18 ITA NO.1116/HYD/2018 6. IN ITA NO.1116/HYD/2018, THE ONLY GRIEVANCE OF T HE ASSESSEE IS THAT BOTH THE TPO AND CIT(A) HAVE ERRED IN NOT CONSIDERING THE ASSESSEES OBJECTIONS TO TASTY BITE S AND EATABLES LTD. SINCE WE HAVE ALREADY MODIFIED THE DIRECTION O F THE CIT U/S 263 OF THE IT ACT, THIS APPEAL OF THE ASSESSEE BECO MES INFRUCTUOUS AND IT IS ACCORDINGLY DISMISSED AS INFRUCTUOUS. 7. IN THE RESULT, APPEAL IN ITA NO.775/HYD/2016 IS PARTLY ALLOWED AND APPEAL IN ITA NO.1116/HYD/2018 IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER, 2020. SD/- SD/- (D.S.SUNDER SINGH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 17 TH DECEMBER, 2020. VINODAN/SPS COPY TO: 1 AGRO TECH FOODS LTD, 31, SAROJINI DEVI ROAD, SECU NDERABAD 500003 2 CIT (IT&TP) 5 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500004 3 TPO-2 HYDERABAD 4 PR. CIT - 5 6 THE JT.COMMISSIONER OF INCOME TAX (TRANSFER PRICING ) HYDERABAD THE DR, ITAT HYDERABAD 7 GUARD FILE BY ORDER