M/s. Perfetti Van Melle India Pvt. Ltd., Gurgaon V. DCIT, Gurgaon

ITA 789/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3253 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I1
• Next Hearing Date: 28-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 12-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Rule of consistency; Additional depreciation; Difference of opinion; Change of opinion
• Section: 92C; 143(3)

Judgement Text

1 ITA NO. 78 9/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I-1 NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .NO. 789/DEL/2016 (ASSESSMENT YEAR-2011-12) APPELLANT BY SH. NAGESHWAR RAO, ADV, RESPONDENT BY SH. AMRENDER KUMAR, CIT DR, SH. NEERAJ KUMAR, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER DATED 28/01/2016 PASSED BY DCIT CIRCLE-3, GURGAON U /S 143(3) R/W SECTION 144C OF INCOME TAX ACT, 1961 IN ASSESSMENT YEAR 201 1-12. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT M/S. PER FETTI VAN MELLE, ITALY (PVM) STARTED OPERATIONS IN 1994 AND IS ENGAGED IN MANUFA CTURING VARIETY OF CONFECTIONARY PRODUCTS. THE ASSESSEE COMPANY IS A S UBSIDIARY OF THE PVM, ITALY. THE MANUFACTURING OF VARIETY OF CONFECTIONA RY PRODUCTS ARE FROM ITS FACTORY IN TAMIL NADU, HARYANA AND UTTRAKHAND. REF ERENCE U/S 92CA (1) OF THE INCOME-TAX ACT, 1961 WAS MADE BY THE ASSESSING OFFICER TO THE TRANSFER PERFETTI VAN MELLE INDIA PVT. LTD. 47 TH MILESTONE, DELHI-JAIPUR HIGHWAY, MANESAR, GURGAON AAACP2626A (APPELLANT) VS DCIT CIRCLE-3 GURGAON (RESPONDENT) DATE OF HEARING 28.02.2017 DATE OF PRONOUNCEMENT 28.04.2017 2 ITA NO. 78 9/DEL/2016 PRICING OFFICER FOR DETERMINING THE ASSESSEE ARMS LENGTH PRICE U/S 92C A(3) OF THE ACT, IN RESPECT OF THE INTERNATIONAL TRANSACTIO NS ENTERED INTO BY THE ASSESSEE DURING THE FINANCIAL YEAR 2010-11 RELEVANT TO THE ASSESSMENT YEAR 2011-12. THE TPO PASSED AN ORDER DATED 29/1/2015 A ND DETERMINE THE ADJUSTMENT/DIFFERENCE IN RESPECT OF INTERNATIONAL T RANSACTIONS AS UNDER:- ADVERTISEMENTS MARKETING AND SALES PROMOTION RS. 194,02,13,185/- GROSS SALES OF ASSESSEE 13,116,894,000/- AMP % OF ASSESSEE 14.79% ARMS LENGTH LEVEL OF AMP% 4.55 % ARMS LENGTH LEVEL OF AMP EXPENSES 59,68,18,677/- AMOUNT SPENT IN EXCESS OF BRIGHT LINE AND ON CREATION OF MARKETING IN TANGIBLE 1,343,394,508/- MARK UP% 12.26% MARK UP (RS.) 16,47,00,167/- THE AMOUNT BY WHICH THE ASSESSEE COMPANY SHOULD HAVE BEEN REIMBURSED BY A.E 1,50,80,94,675/- 3. IN VIEW OF THE TPOS DIRECTION AN ADDITION OF RS .1,50,80,94,675/- WAS MADE TO THE INCOME OF THE ASSESSEE COMPANY. THE A SSESSEE CLAIM THE DEDUCTION U/S 80 IC OF THE ACT TO THE EXTENT OF RS. 149,89,32,563/- AS AGAINST THE TOTAL INCOME FROM BUSINESS AND PROFESSION TO TH E EXTENT OF RS.92.33 CRORES. THE ASSESSEE HAS THREE UNITS OUT OF WHICH DEDUCTION U/S 80IC WAS CLAIMED ONLY ON ONE UNIT SITUATED IN RUDRAPUR (UTTRAKHAND). THE ASSESSEE HAS OTHER UNITS AT MANESAR (GURGAON) AND CHENNAI. THE ASSESS EE WAS ASKED TO SUBMIT THE DETAILS. THE ASSESSEE SUBMITTED REPLIES VIDE L ETTERS DATED 12/1/2015, 12/2/2015 & 18/2/15. THE ASSESSEE SUBMITTED ONLY T HE PROFIT AND LOSS ACCOUNT FOR THREE UNITS. THERE IS NET LOSS IN THE MANESAR AND CHENNAI UNITS AND NET PROFIT IN RUDRAPUR UNIT. THE PARTICULARS A RE AS FOLLOWS:- PARTICULARS MANESAR CHENNAI RUDRAPUR TOTAL 3 ITA NO. 78 9/DEL/2016 TOTAL TURNOVER (RS. IN LAKHS) 33144 21029 74316 128489 NET PROFIT (RS. IN LAKHS) (-)3854 (-)2037 14681 8788 % PROFIT/LOSS (-)11.62 (-)9.68 19.75 6.83 4. THE TPO OBSERVED THAT THE PROFIT HAS BEEN SHOWN AROUND 20% IN A UNIT THE INCOME FROM WHICH IS EXEMPTED WHEREAS IN OTHER UNITS FROM WHICH THE INCOME IS LIABLE TO TAX. THE ASSESSEE HAS SHOWN NE T LOSS OF RS.10% OR MORE THAN 10%. THE ASSESSING OFFICER HELD THAT THE OTHE R UNITS WERE EARNING HANDSOMELY TILL THE START OF RUDRAPUR, UTTARAKHAND UNIT. THE NET PROFIT WAS AROUND 6% IN ASSESSMENT YEAR 2007-08 BEFORE THE STA RT OF UTTRAKHAND UNIT, BUT IT CONTINUOUSLY REDUCED FROM ASSESSMENT YEAR 20 10-11 & COMPANY STARTED SHOWING LOSS IN OTHER UNITS. THE TPO FURTHER OBSE RVED THAT THE ASSESSEE WAS NOT ABLE TO SUBMIT ANYTHING TO JUSTIFY THIS CLAIM A ND HENCE DISALLOWED THIS CLAIM MADE U/S 80IC (2) (B) OF THE ACT BY OBSERVING THAT THE ASSESSEE IS NOT INVOLVED IN MANUFACTURE OF ANY ITEM COVERED BY SCHE DULE XIV. THE ASSESSING OFFICER FURTHER HELD THAT WITHOUT PREJUDICE TO THE EARLIER DISALLOWANCE ALTHOUGH THE CLAIM OF THE ASSESSEE WAS NOT ALLOWABLE AT ALL BUT EVEN IF FOR THE SAKE OF ARGUMENT IT IS ACCEPTED THAT THE CLAIM OF THE ASSES SEE IS ALLOWABLE U/S 80 IC (2)(A) OF THE INCOME TAX ACT, THEN THE CLAIM MADE BY IT IS EXCESS IN ORDER, AND IF IT IS ACCEPTABLE THEN THE DEDUCTION CAN ONLY BE ALL OWED ON PRO RATA BASIS I.E. NET TAXABLE PROFIT IN THE RATIO OF TURNOVER. HE FU RTHER OBSERVED THAT THE TURNOVER OF UTTRAKHAND UNIT WAS OVER STATED IN SUCH A WAY THAT ITS PROFIT SHOWN WAS ON HIGHER SIDE. THE ASSESSING OFFICER AL SO DECIDED THE ISSUE OF CAPITAL SUBSIDY OF RS.37.5 LAKHS WHICH WAS RECEIVED BY THE ASSESSEE. THE SAID AMOUNT WAS INCLUDED IN GENERAL RESERVES WHICH FORMS PART OF THE CAPITAL. THE ASSESSING OFFICER HELD THAT THE SUBSIDY WAS RECEIVE D TOWARDS THE CAPITAL ASSETS 4 ITA NO. 78 9/DEL/2016 AND THAT THE COST OF THE ASSET TO THE EXTENT OF SUB SIDY WAS PAID BY THE GOVERNMENT, THEREFORE, IN VIEW OF THE PROVISION OF SECTION 43(1) OF THE INCOME TAX ACT, THE AMOUNT OF SUBSIDY RECEIVED HAS TO BE D EDUCTED FROM THE COST OF THE ASSET TO ARRIVE AT THE ACTUAL COST FOR THE PURPOSE OF DEPRECIATION. HE FURTHER OBSERVED THAT THE ASSESSEE HAS NOT ACTUALLY REDUCED COST OF THE PLANT AND MACHINERY BY SUBSIDY RECEIPT, THEREFORE, DEPRECIATI ON AND ADDITIONAL DEPRECIATION WAS CLAIMED IN EXCESS. THE SUBSIDY RE CEIVED WAS NOT REDUCED FROM THE COST OF THE PLANT AND MACHINERY EXCESS CLA IM OF DEPRECIATION AND ADDITIONAL DEPRECIATION TO THE EXTENT OF 35% WAS DI SALLOWED BY THE ASSESSING OFFICER. 5. THE ASSESSEE CHALLENGED THESE ADDITIONS BEFORE T HE DRP AND FILED THE OBJECTIONS. THE DRP OBSERVED THAT ALL THE TRANSFER PRICING GROUNDS OF OBJECTIONS OF THE ASSESSEE WAS RELATED TO THE TRANS FER PRICING ADJUSTMENT TOWARDS AMP EXPENSES. THE DRP FURTHER OBSERVED THAT THE TPO DID NOT HAVE THE BENEFIT OF THE DECISION OF THE HONBLE HIGH COU RT IN CASE OF SONY ERICSSON. THE DRP UPHELD THE DECISION OF THE TPO THAT IT IS A N INTERNATIONAL TRANSACTION. THE DRP HELD THAT THE TPO HAS GIVEN VALID REASONS F OR THE ADJUSTMENT MADE AND THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT TH E FINDINGS OF THE TPO. THE DRP UPHELD THE ORDER OF THE TPO AS REGARDS TO THE A MP ADJUSTMENT MADE BY AO/TPO SUBJECT TO THE DIRECTION TO USE THE ASSESSEE S GROSS PROFIT RATE IN THE DISTRIBUTION SEGMENT AS THE MARK-UP ON THE AMP EXPE NDITURE TAKEN FOR THE TP ADJUSTMENT, IN ACCORDANCE WITH THE OBSERVATIONS OF THE HONBLE HIGH COURT IN SONY ERICSSON. 6. THE LD. AR SUBMITS THAT THERE ARE BROADLY THREE ISSUES CONTESTED IN PRESENT APPEAL: (I) AMP ADJUSTMENT OF RS. 146.19 CR ORES (GROUNDS 2 TO 13) (II) DENIAL OF DEDUCTION U/S 80 1C OF RS. 102.31 CRORES (GROUNDS 14 TO 25) AND (III) DISALLOWANCE OF DEPRECIATION TO THE EXTENT OF CAPIT AL SUBSIDY RS. 13.12 LACS (GROUNDS 26 & 27). 5 ITA NO. 78 9/DEL/2016 6.1 THE LD. AR SUBMITS THAT THE ASSESSEE INCURRED A MP EXPENDITURE OF RS. 194.02 CRORES OF WHICH RS. 102 CRORES OF BALANCE AM P IS MARKED UP BY GROSS PROFIT MARGIN IN MANUFACTURING AND SALE BUSINESS @ 42.66% RESULTING IN DISPUTED TP ADJUSTMENT OF RS. 146.19 CRORES. THE LD . AR SUBMITTED THAT BY REFERRING TO LG ELECTRONICS DECISION OF SPECIAL BEN CH, TPO PRESUMED EXISTENCE OF INTERNATIONAL TRANSACTION OF AMP BY ADOPTING BRI GHT LINE TEST ('BIT') AND ALLEGED THAT AE WAS BENEFITED BY WAY OF INCREASED B USINESS. THE LD. AR FURTHER SUBMITS THAT THOUGH THE DRP HAD BENEFIT OF BOTH SON Y ERICSON 374 ITR 118 AND MARUTI SUZUKI 381 ITR 117 DECISIONS OF HON'BLE HIGH COURT. THE LD. AR SUBMITS THAT THE DRP DELIBERATELY IGNORED SAID DECI SION IN MARUTI SUZUKI AND UPHELD EXISTENCE OF INTERNATIONAL TRANSACTION OF AM P SOLELY ON BASIS OF PARAS 52 OF SONY ERICSSON AND OTHER DECISIONS I.E., PRESU MPTION WHICH WAS DIRECTLY CONTRARY TO EVIDENCE/FACTS. THE LD. AR FURTHER SUBM ITTED THAT NO FACTUAL FOUNDATION WITH REFERENCE TO FACTS OF PRESENT CASE WAS INDICATED AND DEPARTMENT HAS NOT DISCHARGED ITS PRIMARY ONUS TO E STABLISH OR EVEN REMOTELY INDICATE BASIS TO SHOW EXISTENCE OF SEPARATE INTER NATIONAL TRANSACTION. 6.2 THE LD. AR SUBMITS THAT THE PRESENT CASE IS NOT ONE WHEREIN SET ASIDE AND REMAND FOR FRESH CONSIDERATION WOULD BE JUSTIFI ED (ON THE PRETEXT THAT CERTAIN JUDICIAL DECISIONS WERE NOT AVAILABLE TO LO WER AUTHORITIES AT THE POINT OF TIME OF CONSIDERATION OF ISSUES BY THEM) AS NOT ONL Y RELEVANT DECISIONS LAYING DOWN PRINCIPLES APPLICABLE IN THE CONTEXT WERE AVAI LABLE BUT SPECIFICALLY POINTED OUT. THE LD. AR FURTHER SUBMITS THAT IF THE AUTHORITIES CHOSE TO IGNORE/FAILED TO DISCHARGE THE ONUS AND MADE DETERM INATION CONTRARY TO LAW IT WOULD BE UNJUST AND UNLAWFUL TO ALLOW THEM MULTIPLE OPPORTUNITIES TO SOMEHOW TRY AND IMPROVE THEIR CASE AGAINST THE ASSE SSEE. THE LD. AR FURTHER SUBMITS THAT AS ALL THE MATERIAL RELEVANT FOR DECID ING THE ISSUE AS ALSO CASE LAWS WERE AVAILABLE TO LOWER AUTHORITIES THE CRITIC AL ISSUE ABOUT EXISTENCE OF INTERNATIONAL TRANSACTION DESERVES TO BE DECIDED BY THIS TRIBUNAL. 6 ITA NO. 78 9/DEL/2016 6.3 AS RELATES TO ISSUE NO. 2, THE LD. AR FURTHER S UBMITTED THAT THIS IS THE FOURTH YEAR OF THE ASSESSEE FOR CLAIMING THE BENEFI T OF SECTION 80IC. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSING OFFICER MISINT ERPRETED CERTIFICATE ISSUED BY CHARTERED ACCOUNTANT, IGNORED THE EXPLANATION OF FERED BY THE ASSESSEE AND DENIED THE BENEFIT OF THIS DEDUCTION. THE LD. AR SU BMITTED THAT THE CLAIM OF THE ASSESSEE IS UNDER SECTION 80IC(2)(A) OF THE ACT I.E. NOT RELATED TO MANUFACTURING OF ANY ITEMS SPECIFIED IN THIRTEENTH SCHEDULE (NEGATIVE LIST) AND THE SAME HAS BEEN CERTIFIED BY THE AUDITOR IN FORM 10CCB. THE LD. AR FURTHER SUBMITTED THAT THE FULFILLMENT OF CONDITIONS OF EIT HER SECTION 80IC(2)(A) OR SECTION 80IC(2)(B) IS REQUIRED TO CLAIM THE DEDUCTI ON UNDER SECTION 80IC OF THE ACT AND THE ASSESSEE FULFILLS THE CONDITIONS OF SEC TION 80IC (2)(A) OF THE ACT AS IT IS NOT MANUFACTURING ANY PRODUCT MENTIONED IN NEGAT IVE LIST OF THIRTEENTH SCHEDULE. THE LD. AR SUBMITTED THAT CST REGISTRATIO N WAS OBTAINED AS A TRADER IN THE YEAR 2000 WHEN UTTARAKHAND STATE WAS CONSTIT UTED WHILE THE MANUFACTURING UNIT WAS SET UP ONLY ON MAY 15, 2007 AS EVIDENT FROM THE CERTIFICATE OF REGISTRATION ISSUED BY THE DEPUTY COMMISSIONER OF THE DEPARTMENT OF COMMERCIAL TAX, GOVERNMENT OF UTTARAK HAND. THE LD. AR SUBMITTED THAT THE REQUIRED DATE DURING THE COURSE OF THE PROCEEDINGS WAS SUBMITTED AT THE TIME OF ASSESSMENT PROCEEDINGS BUT THE SAME WAS IGNORED BY THE ASSESSING OFFICER. THE LD. AR SUBMITTED THAT TH E ASSESSEE FOLLOWS SAP BASED SYSTEM OF ACCOUNTING AND SEPARATE PRODUCT COD ES EXIST IN SAP FOR EACH PRODUCT MANUFACTURED BY EACH MANUFACTURING UNIT. AL L SALES ARE DULY BOOKED UNDER THE RESPECTIVE PRODUCT CODES. THE LD. AR FURT HER SUBMITTED THAT UNIT WISE PROFIT AND LOSS ACCOUNTS WAS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS, BUT THE SAME WAS IGNORED BY THE ASSESS ING OFFICER. THE LD. AR SUBMITTED THAT ASSESSEE MAINTAINS BOOKS OF ACCOUNTS PHYSICALLY AT THE RESPECTIVE UNITS AS WELL AS IN SAP SYSTEM, THOUGH T HERE IS NO REQUIREMENT UNDER THE INCOME TAX ACT TO PHYSICALLY MAINTAIN UNI T WISE BOOKS AT THE UNIT ITSELF OR GET THEM AUDITED UNIT WISE. THE LD. AR FU RTHER SUBMITS THAT THE ASSESSEE SUBMITTED DETAILED REASONS FOR HIGHER PROF ITS IN RUDRAPUR UNIT AS COMPARED TO THE OTHER TWO MANUFACTURING UNITS, HOWE VER THE SAME WERE 7 ITA NO. 78 9/DEL/2016 IGNORED BY THE AO/TPO. THE LD. AR SUBMITTED THAT A SSUMPTION OF DETERMINING PRODUCTION/ SALES VOLUME BASED ON THE G ROSS BLOCK OR NET BLOCK WILL LEAD TO HYPOTHETICAL/ABSURD CONCLUSIONS. THE A SSESSEE IS MANUFACTURING DIFFERENT PRODUCTS AT DIFFERENT UNITS. PRODUCTION P ROCESS OF ALL THE ITEMS MANUFACTURED IS ALSO DIFFERENT. THE ASSESSING OFFIC ER HAS COMPLETELY DISREGARDED THE PROCESS AND TECHNOLOGY VARIES IN PR ODUCING EACH BRAND OF PRODUCT LINE. EVEN WITHIN A CATEGORY, THE PRODUCTIO N PROCESS VARIES WITH EACH BRAND NAME. THE ASSESSEE DULY SUBMITTED ALL THE DOC UMENTS AS REQUIRED BY THE ASSESSING OFFICER AND THE SAME WAS VERIFIED BY THE AO WHEREIN NO DISCREPANCIES WERE POINTED OUT BY HIM. THE CLAIM OF DEDUCTION UNDER SECTION 80IC IS A FACT SPECIFIC ANALYSIS AND THE FACTS OF O NE CASE CANNOT BE SQUARELY APPLIED TO THE OTHER. FURTHER THE CASE OF JAPAN EXP ORTS WHICH WAS RELIED BY THE DRP IS INCORRECT AND HAS DISTINGUISHING FACTS. THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION OF RS. 149 CRORES. HOWEVER, THE DEDUCTION CLAIMED BY THE ASSESSEE WAS RESTRICTED TO GROSS TOTAL INCOME I.E. UPTO RS. 120 CRORES. THE LD. AR SUBMITS THAT NO LOSS/EXCESS DEDUCTION WAS CARRIED F ORWARD BY THE ASSESSEE. SECTION 80AB OF THE ACT PROVIDES FOR COMPUTATION OF TAXABLE BUSINESS PROFITS OF THAT UNIT. WHILE COMPUTING GROSS TOTAL INCOME, ALL THE HEADS OF INCOME HAVE TO BE CONSIDERED INCLUDING INCOME FROM OTHER SOURCES. THUS, THE LD. AR SUBMITS THAT THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTIO N OF RS. 102 CRORES. 6.4 AS RELATES TO ISSUE NO. 3, THE LD. AR FURTHER S UBMITTED THAT DEPRECIATION DISALLOWED ON CAPITAL SUBSIDY BY THE AO IS NOT PROP ER AS THE SAME IS ALLOWABLE SINCE THE AMOUNT OF CAPITAL SUBSIDY WAS NOT RECEIVE D DURING THE SUBJECT YEAR. THE LD. AR SUBMITS THAT IF THE DISALLOWANCE IF ANY MADE, THE SAME SHOULD BE RESTRICTED TO RS. 9,37,500/-. 7. THE LD. DR SUBMITS THAT THE AMP ISSUE HAS BEEN D ULY CONSIDERED BY THE TPO AND THE DRP AS PER THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN CASE OF SONY ERICSON AND THE SAME SHOULD BE REMANDED BAC K TO THE TPO. 8 ITA NO. 78 9/DEL/2016 7.1 THE LD. DR SUBMITS THAT AS REGARDS GROUND NOS. 14 TO 16 RELATED TO DISALLOWANCE OF CLAIM OF DEDUCTION OF RS. 102,31,58 ,679/- UNDER SECTION 80IC OF THE ACT, THE A.O CORRECTLY HELD IN THE ASSESSMEN T ORDER THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IC (2) (B) AS EVIDENT FROM THE PERUSAL OF THE FORM NO. 10CCB WHEREIN THE AUDITOR HAS OBSERVED AT PARA NO. 25(F) OF THE REPORT THAT THE UNDERTAKING HAS MANUFACTURED ANY ARTICLE OR THI NG MENTIONED IN FOURTEENTH SCHEDULE. IN THE COLUMN NO. 26 ALSO THE AUDITOR HAS MENTIONED THE PRODUCTION OF PHARMA PRODUCTS/CHLOROMINT CANDY COVERED BY EXCISE CLASSIFICATION 30.03 TO 30.05. AS PER THE NOTIFICA TION NO. 49/2003-CENTRAL EXCISE; DATED: 10/6/2003 THE EXCISE CLASSIFICATION 30/3-30/2005 PERTAINS TO THE PHARMA PRODUCTS. THUS, IT IS EVIDENT THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IC (2)(B) AND NOT U/S 80IC (2)(A) A S SUBSEQUENTLY CLAIMED BY THE ASSESSEE. SINCE, DURING THE ASSESSMENT YEAR 20 11-12 THE ASSESSEE HAS NOT PRODUCED ANY PHARMA PRODUCT (SCHEDULE XIV) HENC E IT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IC. 7.2 AS RELATES TO GROUND NO. 17, THE LD. DR RELIED ON THE PRINCIPLE OF CONSISTENCY WHICH FLOWS FROM THE FACT THAT ONCE AN OPINION IS FORMED BY THE REVENUE ON ANY PARTICULAR ISSUE THEN IT CANNOT CHAN GE THAT IN SUBSEQUENT ASSESSMENT YEARS. THUS, PRINCIPLE OF CONSISTENCY I S APPLICABLE ONLY WHEN AN OPINION IS FORMED BY THE A.O IN EARLIER ASSESSMENT YEARS. THE SAID ISSUE WAS NOT EXAMINED BY THE A.O IN THE EARLIER ASSESSMENT Y EARS HENCE THE PRINCIPLE OF CONSISTENCY IS NOT APPLICABLE. IT IS PERTINENT TO MENTION THAT IN SUBSEQUENT ASSESSMENT YEARS DEDUCTION U/S 80IC HAS NOT BEEN AL LOWED. THUS, THE A.O HAS CONSISTENTLY FOLLOWED THE IDENTICAL APPROACH FR OM THIS ASSESSMENT YEAR ONWARD. THE HONBLE DELHI HIGH COURT IN CASE OF COM MISSIONER OF INCOME-TAX- VI, NEW DELHI V. USHA INTERNATIONAL LTD. [2012] 25 TAXMANN.COM 200 (DELHI) (FB) HAS HELD IN RESPECT OF PRINCIPLE OF CHANGE OF OPINION THAT WHEN SPECIFIC QUERY IS RAISED BY THE AO AND IT IS ANSWERED BY THE ASSESSEE THEN IT WILL BE TERMED AS CHANGE OF OPINION. IN THIS CASE NO SUCH QUERY, IDENTICAL TO THE QUERIES RAISED DURING THE COURSE OF ASSESSMENT PROC EEDING FOR THE AY 2011-12, 9 ITA NO. 78 9/DEL/2016 WAS EVER RAISED IN THE EARLIER ASSESSMENT YEARS. TH US, WHEN NO OPINION WAS FORMED IN THE EARLIER ASSESSMENT YEARS THEN THERE I S NO QUESTION OF ANY CHANGE OF OPINION IN THIS ASSESSMENT YEAR BY FOLLOWING THE RATIO DECIDENDI OF THE ABOVE DECISION OF JURISDICTIONAL HIGH COURT. THE LD. DR F URTHER SUBMITTED THAT THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE IN CASE OF THE ASSESSMENT PROCEEDING AND EVERY ASSESSMENT YEAR IS DIFFERENT. THOUGH THE PRINCIPLE OF CONSISTENCY HAS HELD TO BE APPLICABLE BY THE HONBLE COURTS BUT THE HONBLE COURTS HAVE ALSO HELD IN VARIOUS JUDICIAL PRONOUNCEMENTS THAT THIS P RINCIPLE CANNOT BE STRETCHED BEYOND A LIMIT IN CASES WHERE ERRONEOUS V IEWS WERE TAKEN IN PAST. SOME OF THOSE LANDMARK JUDGMENTS ARE OF THE HONBLE DELHI HIGH COURT IN CASE OF KRISHAK BHARATI COOPERATIVE LTD. [2012] 23 TAXMA NN.COM 265 (DELHI) WHEREIN IT HAS BEEN HELD THAT THERE CANNOT BE A WIL D APPLICATION OF THE PRINCIPLE OF CONSISTENCY AFTER INTERPRETING THE JUD GMENT GIVEN BY THE HONBLE APEX COURT IN CASE OF RADHASOAMI SATSANG WHICH HAS BEEN RELIED UPON BY THE ASSESSEE. 7.3 IT IS NOW NECESSARY TO TAKE UP THE SUBMISSION T HAT THE TRIBUNAL ERRED IN DEPARTING FROM THE 'CONSISTENCY' RULE. THIS IS B ASED ON THE FACT THAT FOR THE PERIOD OF ABOUT 15 YEARS, THE INCOME TAX AUTHOR ITIES HAD ACCEPTED THE ASSESSEE'S SUBMISSIONS AND PERMITTED ANNUAL AMORTIZ ATION OF THE INITIAL LEASE CONSIDERATION, AS ADVANCE RENT. THE ASSESSEE HAS RELIED ON THE 'CONSISTENCY' RULE ENUNCIATED IN RADHASOAMI SATSANG ( SUPRA). THE SUPREME COURT OBSERVED, IN THAT CASE THAT: '...WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH T HE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. THE LD. DR FURTHER SU BMITTED THAT THERE CANNOT BE A WIDE APPLICATION OF THE RULE OF CONSIST ENCY. IN RADHASOMI SATSANG'SCASE (SUPRA) ITSELF, THE SUPREME COURT ACK NOWLEDGED THAT THERE 10 ITA NO. 7 89/DEL/2016 IS NO RES JUDICATA, AS REGARDS ASSESSMENT ORDERS, A ND ASSESSMENTS FOR ONE YEAR MAY NOT BIND THE OFFICER FOR THE NEXT YEAR . THIS IS CONSISTENT WITH THE VIEW OF THE SUPREME COURT THAT 'THERE IS N O SUCH THING AS RES JUDICATA IN INCOME-TAX MATTERS' RAJA BAHADUR VISHES HWARA SINGH V. CIT AIR 1961 SC 1062. SIMILARLY, ERRONEOUS OR MISTAKEN VIEWS CANNOT FETTER THE AUTHORITIES INTO REPEATING THEM, BY APPLICATION OF A RULE SUCH AS ESTOPPEL, FOR THE REASON THAT BEING AN EQUITABLE PR INCIPLE, IT HAS TO YIELD TO THE MANDATE OF LAW. A DEEPER REFLECTION WOULD SH OW THAT BLIND ADHERENCE TO THE RULE OF CONSISTENCY WOULD LEAD TO ANOMALOUS RESULTS, FOR THE REASON THAT IT WOULD ENGENDER THE UNEQUAL APPLI CATION OF LAWS, AND DIRECT THE TAX AUTHORITIES TO ADOPT VARIED INTERPRE TATIONS, TO SUIT INDIVIDUAL ASSESSES, SUBJECTIVE TO THEIR CONVENIENC E, - A RESULT AT ONCE DEBILITATING AND DESTRUCTIVE OF THE RULE OF LAW. A PREVIOUS DIVISION BENCH OF THIS COURT, IN ROHITASAVA CHAND V. CIT [2008] 306 ITR 242/ 171 TAXMAN 147 HAD HELD THAT THE RULE OF CONSISTENCY CA NNOT BE OF INFLEXIBLE APPLICATION. HON'BLE APEX COURT IN DISTRIBUTORS (BA RODA) (P.) LTD. V. UNION OF INDIA [1985] 155 ITR 120/22 TAXMAN 49 (SC) HAS HELD THAT TO PERPETUATE AN ERROR IS NO HEROISM AND TO RECTIFY IT IS THE COMPULSION OF THE JUDICIAL CONSCIENCE. IN CASE OF CIT V. EXCEL IN DUSTRIES 358 ITR 295 THE HONBLE APEX COURT HAS HELD THAT WHEN THE REVEN UE ACCEPTED THE ORDER OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND DID NOT PURSUE THE MATTER ANY FURTHER, IT CANNOT BE ALLOWED TO FLIP-FL OP ON THE ISSUE AND IT OUGHT LET THE MATTER REST RATHER THAN SPEND THE TAX PAYERS MONEY IN PURSUING LITIGATION FOR THE SAKE OF IT. THIS IS NOT THE CASE HERE THUS THE ABOVE JUDGEMENT OF THE APEX COURT IS NOT APPLICABLE KEEPING IN VIEW THE FACTS OF THE CASE WHICH ARE DISTINGUISHED FROM THE FACTS OF THE ABOVE CASE. 7.4 AS REGARDS TO GROUND NO. 19, ON MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS FOR THE ELIGIBLE UNIT, THE LD. DR SUBMITTE D THAT SEPARATE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET IS REQUIRED TO BE M AINTAINED AS PER THE RULE 18BBB OF THE INCOME TAX RULES A SEPARATE REPOR T IS TO BE FURNISHED BY 11 ITA NO. 7 89/DEL/2016 EACH UNDERTAKING OR ENTERPRISE OF THE ASSESSEE CLAI MING DEDUCTION UNDER SECTION 80-1 OR 80-1 A OR 80-IB OR 80-IC AND SHALL BE ACCOMPANIED BY THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE UNDERTAKI NG OR ENTERPRISE AS IF THE UNDERTAKING OR THE ENTERPRISE WERE A DIST INCT ENTITY. 7.5 THE LD. DR FURTHER SUBMITTED THAT IN THE CASE O F AN ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING OR OPERATING AND MAIN TAINING OR DEVELOPING, OPERATING AND MAINTAINING AN INFRASTRUCTURE FACILIT Y, THE FORM SHALL BE ACCOMPANIED BY A COPY OF THE AGREEMENT OF THE ENTER PRISE WITH THE CENTRAL GOVERNMENT OR THE STATE GOVERNMENT OR THE LOCAL AUT HORITY FOR CARRYING ON THE BUSINESS OF DEVELOPING OR OPERATING AND MAINTAINING OR DEVELOPING, OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY. IN ANY OTHER CASE, THE FORM SHALL BE ACCOMPANIED BY A COPY OF THE AGREEMENT, APPROVAL OR PERMISSION, AS THE CASE MAY BE, TO CARRY ON THE ACTIVITY SIGNED OR ISSUED B Y THE CENTRAL GOVERNMENT OR THE STATE GOVERNMENT OR THE LOCAL AUTHORITY FOR CAR RYING ON THE ELIGIBLE BUSINESS. IT IS EVIDENT THAT SEPARATE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE ELIGIBLE UNIT CAN BE PREPARED ONLY IF SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED. HOWEVER, THE ASSESSEE HAS NOT SUBMITTED SEPARATE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR THE RUDRAPUR UNIT. IT HAS MERELY ESTIMATED THE PROFIT OF THE UNIT FROM THE CONSOLIDATED ACCOUNT. T HE HONBLE SUPREME COURT HAS ALSO HELD IN CASE OF ARISUDANA SPINNING MILLS L TD. V. COMMISSIONER OF INCOME-TAX, LUDHIANA [2012] 26 TAXMANN.COM 39 (SC) THAT FOR CLAIM OF DEDUCTION U/S 80IA SEPARATE ACCOUNTS ARE REQUIRED T O BE MAINTAINED. THUS, THE CLAIM OF DEDUCTION U/S 80IC IS NOT ELIGIBLE FOR DEDUCTION AS THE ASSESSEE HAS NOT SUBMITTED SEPARATE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AS PER THE PROVISION OF RULE 18BBB OF THE IT RULES. 7.6 AS RELATES TO GROUND NO. 20 AND 21 REGARDING RE JECTION OF BOOKS OF ACCOUNT AND NON-SUBMISSION OF REQUIRED DOCUMENTS/IN FORMATION, THE LD. DR SUBMITTED THAT THE AO HAS CLEARLY HELD AT PARA 4.9 THAT DETAILS WERE NOT SUBMITTED BY THE ASSESSEE AND UNIT-WISE BOOKS OF AC COUNT WERE NOT PRODUCED 12 ITA NO. 7 89/DEL/2016 BY THE ASSESSEE. 7.7 AS REGARDS TO GROUND NO. 23 AND 24 RELATED TO S HIFTING OF PROFIT FROM OTHER UNITS TO THE RUDRAPUR (ELIGIBLE) UNIT AND RES TRICTION OF CLAIM OF DEDUCTION ON PRO-RATA BASIS, THE LD. DR SUBMITTED THAT THE AO HAS DISCUSSED IN DETAIL HOW THE ASSESSEE HAS SHIFTED PROFIT FROM ITS OTHER TWO INELIGIBLE UNITS AT MANESAR AND CHENNAI TO ELIGIBLE UNIT AT RUDRAPUR. D URING THE AY 2011-12 THE ASSESSEE HAS DISCLOSED LOSSES OF RS.3854 LAKHS AND RS.2037 LAKHS IN MANESAR AND CHENNAI UNIT RESPECTIVELY AND PROFIT OF RS.7431 6 LAKHS IN THE RUDRAPUR UNIT. THE ASSESSEES PROFIT HAS SYSTEMATICALLY DECL INED IN THE INELIGIBLE UNITS, ESPECIALLY THE MANESAR UNIT WHICH WAS GETTING DEDUC TION U/S 80IC EARLIER AND IS MANUFACTURING IDENTICAL PRODUCTS I.E. CHEWING GU M, TOFFEE AND BUBBLE GUMS. THE AO HAS DISCUSSED THAT THE ASSESSEE WAS D ISCLOSING GOOD PROFITS IN THE MANESAR UNIT TILL THE AY 2007-08 BUT SINCE THE AY 2008-09 WHEN THE ASSESSEE SET-UP THE RUDRAPUR UNIT THE PROFITS IN TH E MANESAR UNIT STARTED DECLINING AND RESULTED IN LOSS IN SUBSEQUENT ASSESS MENT YEARS DESPITE THE FACT THAT IT IS PRODUCING IDENTICAL GOODS. THE ASSESSEE FAILED TO SUBMIT ANY PLAUSIBLE EXPLANATION FOR THIS AS NON-LEVY OF EXCISE DUTY, ONLY DISTINGUISHING FACTOR BETWEEN THE MANESAR UNIT AND RUDRAPUR UNIT, IN THE RUDRAPUR UNIT CANNOT JUSTIFY SUCH HUGE DIFFERENCE BETWEEN THE PROFITS OF THESE UNITS. THE FACT THAT THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF A CCOUNTS AND HAS NOT SUBMITTED SEPARATE PROFIT AND LOSS ACCOUNT AND BALA NCE SHEET AS MANDATED BY THE RULES 18BBB OF THE IT RULES ESTABLISHES THE SHIFTING OF P ROFIT BY THE ASSESSEE TO LOWER ITS TAX LIABILITY. FROM THE BARE PERUSAL OF THE UNIT-WISE PROFIT AND LOSS ESTIMATED BY THE ASSESSEE IT IS EVI DENT THAT THE ASSESSEE HAS ATTRIBUTED LESS EXPENSES ON ACCOUNT OF AMP AND OPER ATING TO THE RUDRAPUR UNIT. IF THE ABOVE EXPENSES, WHICH ARE COMMON EXPE NSES AND IN ABSENCE OF SEPARATE BOOKS OF ACCOUNT HAVE TO BE DISTRIBUTED IN PRO-RATA BASIS (ON TURNOVER), ARE COMPUTED IN RATIO OF THE RESPECTIVE SALES OF THE THREE UNITS THEN INSTEAD OF RS.7379 LAKHS RS. 10,993 LAKHS SHOULD BE ATTRIBUTED ON ACCOUNT OF AMP EXPENSES AND INSTEAD OF RS. 10,679 LAKHS RS. 14 ,144 LAKHS SHOULD BE 13 ITA NO. 7 89/DEL/2016 ATTRIBUTED ON ACCOUNT OF OPERATING AND OTHER EXPENS ES FOR THE RUDRAPUR UNIT THUS, THE NET PROFIT OF THE RUDRAPUR UNIT WILL BE R S. 7601 LAKHS INSTEAD OF RS. 14681 LAKHS AS CLAIMED BY THE ASSESSEE. IT IS ALSO EVIDENT THAT THE ASSESSEE HAS BASICALLY TAKEN OVER THE BUSINESS OF THE MANESA R UNIT ONCE IT EXHAUSTED ITS CLAIM OF DEDUCTION U/S 80IC. THE HONBLE APEX COURT HAS HELD IN CASE OF TEXTILE MACHINERY CORPORATION LTD. V. CIT [1977] 10 7 ITR 195 (SC) THAT RECONSTRUCTION OF BUSINESS INVOLVES THE IDEA OF SUB STANTIALLY THE SAME PERSONS CARRYING ON SUBSTANTIALLY THE SAME BUSINESS. THUS T HE CLAIM OF DEDUCTION IS LIABLE TO BE DISALLOWED ON THIS GROUND AS WELL. IT IS EVIDENT THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IC BY ADOPTING COLOURAB LE DEVICE TO EVADE TAX. THE HONBLE APEX COURT HAS HELD IN CASE OF MCDOWELL & CO. V. CTO(1985) 154 ITR 148 THAT IT IS THE RIGHT OF THE REVENUE TO DISR EGARD A TRANSACTION AND LOOK AT ITS SUBSTANCE IF IT WAS UNDERTAKEN AS AN ANTIAVOIDA NCE TOOL. IN JIYAJEERAO COTTON MILLS LTD. V. COMMISSIONER OF INCOME TAX AND EXCESS PROFITS TAX, BOMBAY AIR 1959 SC 270 THE HONBLE SUPREME COURT HA S HELD THAT - EVERY PERSON IS ENTITLED SO TO ARRANGE HIS AFFAIRS AS TO AVOID TAXATION, BUT THE ARRANGEMENT MUST BE REAL AND GENUINE AND NOT A SHAM OR MAKEBELIEVE. FINALLY THE HONBLE SUPREME COURT, AFTER ANALYZING ALL RELE VANT JUDGMENTS ON TAX PLANNING AND TAX EVASION CAME TO THE FOLLOWING C ONCLUSION IN CASE OF VODAFONE INTERNATIONAL HOLDINGS B.V. V. UNION OF IN DIA &ANR. 341 ITR 1:- 117. REVENUE CANNOT TAX A SUBJECT WITHOUT A STATUT E TO SUPPORT AND IN THE COURSE WE ALSO ACKNOWLEDGE THAT EVERY TAX PAYER IS ENTITLED TO ARRANGE HIS AFFAIRS SO THAT HIS TAXES SHALL BE AS LOW AS PO SSIBLE AND THAT HE IS NOT BOUND TO CHOOSE THAT PATTERN WHICH WILL REPLENISH T HE TREASURY.REVENUES STAND THAT THE RATIO LAID DOWN IN MCDOWELL IS CONTR ARY TO WHAT HAS BEEN LAID DOWN IN AZADI BACHAO ANDOLAN, IN OUR VIEW, IS UNSUSTAINABLE AND, THEREFORE, CALLS FOR NO RECONSIDERATION BY A LARGER BRANCH. 7.8 AS RELATES TO GROUND NO.25 REGARDING DISALLOWAN CE OF DEDUCTION U/S 80IC ON THE INCOME FROM OTHER SOURCES THE LD. DR SU BMITTED THAT FROM THE 14 ITA NO. 7 89/DEL/2016 PERUSAL OF THE COMPUTATION OF 80IC DEDUCTION SUBMIT TED BY THE ASSESSEE IT IS EVIDENT THAT THE ASSESSEE HAS CLAIMED DEDUCTION ON THE INTEREST INCOME ON FDRS AMOUNTING TO RS.5,54,89,633/-. THIS ISSUE HAS BEEN SETTLED BY THE HONBLE APEX COURT THAT DEDUCTION U/S 80IC CANNOT B E ALLOWED ON THE INTEREST INCOME EARNED ON FDRS IN CASE OF PANDIAN CHEMICALS LTD. V. CIT [2003] 129 TAXMAN 539 (SC). BESIDES THE ABOVE, THE HONBLE J&K HIGH COURT HAS HELD IN CASE OF ASIAN CEMENT INDUSTRIES V. INCOME TAX APPEL LATE TRIBUNAL [2012] 28 TAXMANN.COM 290 (JAMMU & KASHMIR) THAT INTEREST INC OME ON FDRS CANNOT BE REGARDED AS INCOME FLOWING FROM BUSINESS ACTIVIT Y OF INDUSTRIAL UNDERTAKING AND, THUS, IT CANNOT BE COMPUTED FOR DEDUCTION UNDE R SECTION 80-IB. IDENTICAL VIEW HAS BEEN TAKEN BY THE ITAT DELHI IN CASE OF M/ S. A. T. KEARNEY INDIA PVT. LTD. V. ITO ITA NO. 1403/DEL/2010. 7.9 AS REGARDS TO GROUND NO. 26 AND 27 RELATED TO C LAIM OF DEPRECIATION ON ASSETS ON WHICH CAPITAL SUBSIDY WAS RECEIVED, THE L D. DR SUBMITS THAT THE ASSESSEE CANNOT CLAIM THE DEPRECIATION ON THE ASSET S OR PART OF THE ASSETS WHICH HAVE BEEN ACQUIRED THROUGH CAPITAL SUBSIDY RE CEIVED FROM THE GOVERNMENT. 8. WE HAVE HEARD BOTH THE SIDES AND PERUSED ALL THE RECORDS. THE ISSUES INVOLVED IN THESE PARTICULAR APPEALS ARE THREE FOLD S. GROUND NO. 2 TO 13 IS RELATED TO AMP ADJUSTMENT OF RS.146.19 CRORES, GROU ND NO. 14 TO 25 IS RELATED TO DENIAL OF DEDUCTION U/S 80IC OF RS.102.31 CRORES AND GROUND NOS. 26 & 27 ARE RELATED TO DISALLOWANCE OF DEPRECIATION TO THE EXTENT OF CAPITAL SUBSIDY RS.13.12 LAKHS. THE ASSESSEE IS ENGAGED IN MANUFACT URING OF VARIOUS CONFECTIONARY PRODUCTS AND IS A SUBSIDIARY OF PVM, ITALY. THE ASSESSEE HAS THREE FACTORIES AT TAMIL NADU, HARYANA AND UTTRAKHA ND. THE AMP EXPENDITURE OF RS.194.02 CRORES WHICH INCLUDED RS.91.54 CRORES OF SELLING AND DISTRIBUTION EXPENSES AND RS.102 CRORES IS MARKED UP BY GROSS PR OFIT MARGIN IN MANUFACTURING AND SELLING BUSINESS AT 42.66% RESULT ING IN DISPUTED TRANSFER PRICING ADJUSTMENT OF RS.146.19 CRORES. THE LD. AR DURING THE HEARING CLEARLY 15 ITA NO. 7 89/DEL/2016 STATED THAT THE TPO WAS NOT DEALT WITH THE JUDGMENT IN CASE OF SONY ERICSON 374 ITR 118 & MARUTI SUZUKI 381 ITR 117 PASSED BY T HE HON'BLE HIGH COURT. BEFORE THE DRP THESE TWO DECISIONS WERE PLACED BY T HE ASSESSEE BUT DRP HAS NOT TAKEN INTO CONSIDERATION OF MARUTI SUZUKI AND H ELD THAT EXISTENCE OF INTERNATIONAL TRANSACTION OF AMP SOLELY ON BASIS OF SONY ERICSON AND OTHER DECISIONS REFERRED THEREIN. THE TPO PRESUMED EXIST ENCE OF INTERNATIONAL TRANSACTION OF AMP BY ADOPTING BRIGHT LINE TEST BY RELYING SPECIAL BENCHS DECISION IN CASE OF LG ELECTRONICS. THE TPO FURTHE R HELD THAT A.E WAS BENEFITTED FROM INCREASED BUSINESS AS ALL PURCHASES FROM A.E ACCOUNTED FOR 3% OF TURNOVER OF RS.1311 CRORES AMOUNTS TO INTERNATIO NAL TRANSACTION AND IS ONLY TO THE TUNE OF 6.09%. WHEN THE DECISION IN CASE OF MARUTI SUZUKI WAS PRESENTED BEFORE THE DRP, THE DRP SHOULD HAVE TAKEN COGNIZANCE OF THESE DECISIONS WHILE DETERMINING THE ISSUE OF AMP ADJUST MENT. BUT THE DRP CHOSE NOT TO COMMENT ON THE SAID DECISION. WHILE HOLDING AMP EXPENSES AS AN INTERNATIONAL TRANSACTION, THE TPO DID NOT HAVE THE BENEFIT OF THE JUDICIAL PRECEDENTS NOW AVAILABLE FOR CONSIDERATION, IN SOME OF WHICH THE TRANSACTION OF AMP EXPENSES HAS BEEN HELD AS AN INTERNATIONAL TRAN SACTION, IN OTHERS AS NOT AN INTERNATIONAL TRANSACTIONS, WHILE STILL IN SOME OTHERS, THE MATTER HAS BEEN RESTORED FOR FRESH CONSIDERATION IN THE LIGHT OF TH E JUDGMENT IN SONY ERICSSON MOBILE COMMUNICATIONS (INDIA) PVT. LTD. VS. CIT (20 15) 374 ITR 118 (DEL), IN WHICH THE AMP EXPENSES AS AN INTERNATIONAL TRANSACT ION HAS BEEN ACCEPTED. IN ANOTHER JUDGMENT DATED 28.1.2016 OF THE HONBLE DEL HI HIGH COURT IN SONY ERICSON MOBILE COMMUNICATIONS (INDIA) PVT. LTD. (FO R A.Y. 2010-11), THE QUESTION AS TO WHETHER AMP EXPENSES IS AN INTERNATI ONAL TRANSACTION, HAS BEEN RESTORED FOR A FRESH DETERMINATION. THERE ARE THREE RECENT JUDGMENTS OF THE HONBLE DELHI HIGH COURT, VIZ., RAYBAN SUN OPTICS I NDIA LTD. VS. CIT (DT. 14.9.2016), PR. CIT VS. TOSHIBA INDIA PVT. LTD. (DT . 16.8.2016) AND PR. CIT VS. BOSE CORPORATION (INDIA) PVT. LTD. (DT. 23.8.2016) IN ALL OF WHICH SIMILAR ISSUE HAS BEEN RESTORED FOR FRESH DETERMINATION IN THE LI GHT OF THE EARLIER JUDGMENT IN SONY ERICSSON MOBILE COMMUNICATIONS INDIA PVT. LTD. (SUPRA). RESPECTFULLY FOLLOWING THE PREDOMINANT VIEW OF THE HONBLE HIGH COURT, WE ARE OF THE 16 ITA NO. 7 89/DEL/2016 CONSIDERED OPINION THAT IT WOULD BE IN THE FITNESS OF THINGS IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTORED TO FI LE OF TPO/AO FOR FRESH DETERMINATION OF THE QUESTION AS TO WHETHER THERE E XISTS AN INTERNATIONAL TRANSACTION OF AMP EXPENSES. IF THE EXISTENCE OF SU CH AN INTERNATIONAL TRANSACTION IS NOT PROVED, THE MATTER WOULD END THE RE AND THEN, CALLING FOR NO TRANSFER PRICING ADDITION. IF ON THE OTHER HAND, TH E INTERNATIONAL TRANSACTION IS FOUND TO BE EXISTING, THEN THE TPO WILL DETERMINE T HE ALP OF SUCH AN INTERNATIONAL TRANSACTION IN THE LIGHT OF THE RELEV ANT JUDGMENTS OF THE HONBLE HIGH COURT, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8.1 TO SUM UP, WE SET ASIDE THE IMPUGNED ORDER ON T HE ISSUE OF TRANSFER PRICING ADDITIONS TOWARDS AMP EXPENSES AND REMIT TH E MATTER TO THE FILE OF AO/TPO FOR A FRESH DETERMINATION OF THEIR ALP IN CO NSONANCE WITH OUR ABOVE OBSERVATIONS AND DIRECTIONS. NEEDLESS TO SAY, THE A SSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF BEING HEARD IN SUCH FRESH PROCEEDINGS. THUS, GROUND NO. 2 TO 13 ARE PARTLY ALLOWED FOR STATISTIC AL PURPOSES. 8.2. AS RELATES TO BENEFIT OF DEDUCTION UNDER SECTI ON 80IC THE SAME WAS CLAIMED ONLY FOR THE UNIT SITUATED IN RUDRAPUR (UTT RAKHAND). THERE IS NET LOSS IN THE UNITS OF MANESSAR (HARYANA) & CHENNAI (TAMIL NADU) AND THERE IS A NET PROFIT IN RUDRAPUR UNIT. THE TPO HAS ONLY DISALLOW ED THIS CLAIM AS THE ASSESSEE WAS NOT INVOLVED IN MANUFACTURE OF ANY ITE M COVERED BY SCHEDULE XIV, WHERE AS THE ASSESSEE HAS REFERRED SCHEDULE XI II AND SUBMITTED THAT IT IS NOT CONSIDERED BY THE TPO. AFTER VERIFYING SCHEDUL E XIII & XIV IT IS PERTINENT TO NOTE THAT THE ASSESSEES LOCATION AT RUDRAPUR IS CO MING UNDER THE SCOPE OF 80IC BUT THE ADDRESS WAS NOT PROPERLY VERIFIED BY T HE TPO. THEREFORE, THIS NEEDS TO BE VERIFIED. WE THEREFORE, REMIT THIS ISSU E BACK TO THE FILE OF THE TPO TO EXAMINE THE SAME AS RELATES TO THE APPLICABILITY OF THE SCHEDULE XIII. NEEDLESS TO SAY, THE ASSESSEE WILL BE ALLOWED A REASONABLE O PPORTUNITY OF BEING HEARD IN 17 ITA NO. 7 89/DEL/2016 SUCH FRESH PROCEEDINGS. THEREFORE, GROUND NO. 14 TO 25 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8.3. AS RELATED TO GROUND NO. 26 AND 27 RELATING TO DEPRECIATION, THE AMOUNT OF CAPITAL SUBSIDY WAS NOT RECEIVED DURING THE SUBJ ECT YEAR AS PER THE LD. ARS CONTENTION BUT THE SAME NEEDS TO BE VERIFIED. THERE FORE, WE REMIT THIS ISSUE BACK TO THE FILE OF THE TPO TO EXAMINE THE SAME. NE EDLESS TO SAY, THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF BEING H EARD IN SUCH FRESH PROCEEDINGS.. 9. IN THE RESULT, THIS APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH OF APRIL, 2017. SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28/04/2017 *R.NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 18 ITA NO. 7 89/DEL/2016 DATE 1. DRAFT DICTATED ON 01/03/2017 SR. PS 2. DRAFT PLACED BEFORE AUTHOR 0 4 /03/2017 SR. PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.04.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 28.04.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.