Deputy Commissioner of Income-tax, Circle - 1 (2), Pune V. M/s. Eaton Industries Private Limited, Pune

ITA 868/PUN/2019

• Counselvise Citation: [2020] 112 COUNSELVISE.COM (IT) 0071 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-01-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KISHORE
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 143(3); 13; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY , J UDICIAL MEMBER . / ITA NO S . 868 TO 870 /PUN/201 9 / ASSESSMENT YEAR S : 20 09 - 10 TO 2011 - 12 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1 (2) , PUNE ....... / APPELLANT / V/S. M/S. EATON INDUSTRIES PVT. LTD., (NEW MERGED WITH EATON TECHNOLOGIES PVT. LTD.,) CLUSTER C WING 1, EON FREE ZONE, PLOT NO.1, SURVEY NO.77, MIDC, KHARADI KNOWLEDGE PARK, KHARADI, PUNE 411014 PAN: AA ACE6351P / RESPONDENT ASSESSEE BY : SHRI VISHAL KALRA REVENUE BY : SHRI B. KISHORE / DATE OF HEARING : 0 2 - 0 1 - 20 20 / DATE OF PRONOUNCEMENT : 02 - 01 - 2020 / ORDER PER ANIL CHATURVEDI , A M : THE CAPTIONED APPEALS PREFERRED BY THE REVENUE EMANATE FROM THE CONSOLIDATED ORDER OF THE LD. CIT(A) - 6, PUNE, DATED 11.03.2019, FOR THE ASSESSMENT YEARS 2009 - 10, 2010 - 11 AND 2011 - 12. 2 ITA NOS.868 TO 870/PUN/2019 M/S. EATON INDUSTRIES PVT. LTD. 2. BEFORE US, AT THE OUTSET, LD.AR SUBMITTED THAT THOUGH THE APPEALS FILED BY THE REVENUE ARE FOR DIFFERENT ASSESSMENT YEARS BUT THE FACTS AND ISSUES INVOLVED IN ALL THE THREE APPEALS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE AMOUNTS INVOLVED AND T HEREFORE THE SUBMISSIONS MADE BY HIM WHILE ARGUING ONE APPEAL WOULD BE EQUALLY APPLICABLE TO THE OTHER APPEAL ALSO AND THEREFORE, BOTH THE APPEALS CAN BE HEARD TOGETHER. THE AFORESAID SUBMISSION OF THE LD.AR HAS NOT BEEN OBJECTED TO BY LD.DR. WE THEREFORE FOR THE SAKE OF CONVENIENCE PROCEED TO DISPOSE OF ALL THE THREE APPEALS BY A CONSOLIDATED ORDER BUT H OWEVER, WE PROCEED WITH NARRATING THE FACTS FOR ASSESSMENT YEAR 20 09 - 10 . 3 . THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER : - THE ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF DESIGN ENGINEERING AND TESTING SERVICES TO EATON GROUP COMPANIES AND BUSINESS SUPPORT SERVICES TO EATON CORPORATION USA . THE ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 20 09 - 10 ON 30 . 1 0.20 09 DECLARING TOTAL INCOME AT RS. 19,38,55,536 / - . THE CASE WAS TAKEN UP FOR SCRUTINY. THEREAFTER, ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 2 6 .03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS. 63 , 91 , 28,960 / - . AGGRIEVED BY THE ORDER OF ASSESSING OFFICER , ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE CONSOLIDATED ORDER D ATED 1 1 .0 3 .201 9 (IN APPEAL NO S . PN/CIT(A) - 6/DCIT CIR - 8/247/13 - 14, PN/CIT(A) - 6/DCIT CIR - 8/2 1 7/1 4 - 1 5 AND PN/CIT(A) - 6/DCIT CIR - 8/129/15 - 16 ) ALLOWED THE APPEAL S OF THE ASSESSEE . AGGRIEVED BY THE ORDER OF 3 ITA NOS.868 TO 870/PUN/2019 M/S. EATON INDUSTRIES PVT. LTD. LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1 . THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 . ON THE FACTS OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THAT SINCE THE ASSESSEE HAS SHOWN DISPROPORTIONATELY HIGHER PROFIT MARGIN ON ENGINEERING DESIGN AND DEVELOPMENT SERVICE AS COMPARED TO BUSINESS SUPPORT SERVICE, THE DEDUCTION U/S 10A WAS REQUIRED TO BE RES TRICTED IN VIEW OF THE PROVISIONS OF SECTION 10A(7) RWS 80IA(10) OF THE IT ACT. 3 . ON THE FACTS OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THAT THERE IS AN ARRANGEMENT BETWEEN THE TWO AES AND BY SHOWING HIGHER VALUE OF SALES AND THEREFORE HIGHER PROFITABILITY IN ENGINEERING DESIGN AND DEVELOPMENT SERVICE, AN STPI UNIT ENJOYING TAX HOLIDAY U/S 10A, THE ASSESSEE IS NOT PAYING ANY TAX IN INDIA, WHILE THE SALE PRICE OF ENGINEERING DESIGN AND DEVELOPMENT SERVICE BECOMES THE PURCHASE PRICE OF EIC (USA) AND THEREFORE, THE PROFITABILITY IS SHOWN LESS TO THAT EXTENT EVEN IN USA. 4 . ON THE FACTS OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT BY ARRANGING ITS AFFAIR WITH AE, THE ASSESSEE HAS INFLATED THE PROFIT IN INDIA ON WHICH DEDUCTION U/S 10A IS CLAIMED AND ASSESSEE HAS ARRANGED ITS TRANSACTION TO EVADE THE TAXES AND THE PROVISIONS OF SECTION 10A(7) RWS 80IA(10) ARE CLEARLY ATTRACTED IN THE ASSESSEES CASE. 5 . ON THE FACTS OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATIN G THAT THE DEALING OF THE ASSESSEE EXCLUSIVELY WITH ITS AES LED TO HIGHER PROPORTIONS OF PROFIT AND THE SAME OCCURRED ONLY DUE TO THE ARRANGEMENT MADE BETWEEN THE ASSESSEE AND ITS AES. ALL THE GROUNDS BEING INTERCONNECTED ARE CONSIDERED TOGETHER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS REGISTERED WITH SOFTWARE TECHNOLOGY PARK OF INDIA (STPI) AND HAD CLAIMED TAX HOLIDAY BENEFIT U/S 10A OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) IN RESPECT OF REVENUE EARNED AT RS.58,16,07,422/ - FROM PROVISION OF ENGINEERING SERVICES AND CUSTOMER SUPPORT SERVICES. THE ASSESSING OFFICER ON COMPARING THE DETAILS SUBMITTED BY THE ASSESSEE NOTICED THAT ON THE SALES TURNOVER OF RS.117.4 CRORES , THE ASSESSEE HAD MADE NET PROFIT OF RS.68.4 CRORES AFTER TAX, WHICH ACCORDING TO HIM, WAS EXTRAORDINARILY HIGH. THE ASSESSING OFFICER POINTED 4 ITA NOS.868 TO 870/PUN/2019 M/S. EATON INDUSTRIES PVT. LTD. TO THE ASSESSEE THAT M/S. JOHN DEERE (INDIA) PVT. LTD. (JDIPL) WHICH WAS OPERATING IN SIMILAR TYPE OF BUSINESS HAD SHOWN OPERATING PROFITS OF 16.95%. THE ASSESSEE WAS THEREFORE ASKED THAT IN VIEW OF PROVISIONS OF SECTION 10A(7) OF THE ACT, WHY THE OPERATING PROFIT RATIO OF JDIPL NOT BE APPLIED IN ITS CASE AND THE CLAIM U/S 10A OF THE ACT SHOULD NOT BE RESTRICTED T O THAT EXTENT. THE ASSESSEE MADE THE SUBMISSIONS WERE NOT FOUND TO BE ACCEPTABLE TO THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROFITABILITY DECLARED BY JDIPL HAS TO BE CONSIDERED AS ORDINARY PROFIT WHICH IS EXPECTED TO ARISE I N THE ELIGIBLE BUSINESS. THE ASSESSING OFFICER ALSO NOTED THAT ON IDENTICAL FACTS FOR A.Y. 2008 - 09 IN ASSESSEES OWN CASE, CLAIM OF EXCESS PROFIT OF RS.70,33,19,220/ - WAS DISALLOWED IN RESPECT OF DEDUCTION U/S 10A OF THE ACT AND THE FACTS IN THE CASE OF A SSESSEE IN THE YEAR UNDER CONSIDERATION WERE SIMILAR TO THAT OF A.Y. 2008 - 09. WITH RESPECT TO ASSESSEES OBJECTION FOR COMPARING THE OPERATING PROFIT MARGINS DECLARED BY JDIPL WERE ALSO NOT FOUND TO BE ACCEPTABLE TO THE ASSESSING OFFICER AS HE NOTED THAT THE ISSUE OF SIMILARITY OF BUSINESS MODULE OF JDIPL WITH THAT OF ASSESSEE WAS EXTENSIVELY DEALT WITH IN THE ASSESSMENT ORDER FOR A.Y. 2008 - 09 AND IT WAS HELD THAT JDIPL MEETS ALL THE PARAMETERS FOR COMPARISON. HE WAS OF THE VIEW THAT PROVISIONS OF SECTION 10A(7) OF THE ACT WERE APPLICABLE IN THE CASE OF ASSESSEE. HE THEREAFTER, BY APPLYING THE PROFIT MARGINS AS DECLARED BY JDIPL, WORKED OUT THE EXCESS PROFIT ALLEGED TO HAVE BEEN EARNED BY ASSESSEE TO THE EXTENT OF RS. 44,52,73,422/ - AND DISALLOWED THE CLAI M OF DEDUCTION U/S 10A OF THE ACT TO THAT EXTENT. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A), WHO NOTED THE FACT THAT AN IDENTICAL ISSUE IN ASSESSEES OWN CASE WAS BEFORE THE TRIBUNAL IN A.Y. 2008 - 09, 5 ITA NOS.868 TO 870/PUN/2019 M/S. EATON INDUSTRIES PVT. LTD. WHEREI N THE TRIBUNAL HAD ALLOWED THE CLAIM OF ASSESSEE. HE THERE AFTER BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 5.1. THE ONLY EFFECTIVE GROUNDS ARE GROUNDS 2 TO 5 IN ALL THE APPEALS AND ARE THEREFORE CLUBBED TOGETHER FOR THE SAKE OF CONVENIENCE, MORE SO IN THE LIGHT OF THE FACTS THAT THE APPEAL FOR A.Y. 08 - 09 HAS BEEN ALLOWED BY THE ITAT VIDE ITS ORDER DTD.30/10/201 7. I HAVE PERUSED THE ORDER OF THE ITAT IN THE CASE OF THE APPELLANT FOR THE A.Y. 08 - 09 AND FIND THAT THE PRESENT GROUNDS BEFORE ME REGARDING R E STRIC TI ON OF T HE DEDUCTION U/S 10 A ARE IDENTICAL TO GROUNDS 3 TO 8 TAKEN BY THE ASSESSEE BEFORE THE ITAT. THE HO NBLE ITAT HAS DISCUSSED THIS ISSUE FROM PARAS 7 TO 15 OF THEIR ORDER. THE OPERATIVE PARAS AR E AS UNDER: '8 ... THE FIRST ISSUE WINCH HAS BEEN RAISED BEFORE US IS IN RESPECT OF CURTAILMENT OF DEDUCTION CLAIMED UNDER SECTION 10 A OF THE ACT. THE ASSESSEE WAS PROVIDING HIGH END DESIGN E NG INEERING SERVICES TO ITS ASSOCIATED ENTERPRISES AND WAS BEING REMUNERATED ON MAN HOURLY RATE BASIS, WHICH HAS BEEN COMPUTED APPLYING THE CUP METHODOLOGY. THE ASSESSEE IN THE TRANSFER PRICING STUDY REPORT TO BENCHMARK THE E NGINEERING DESIGN SERVICES HAD APPLIED CUP METHOD AS THE MOST APPROPRIATE METHOD AND THE TRANSACTION WAS DECLARED TO AT ARM'S LEN G TH. T HE TPO IN THE ORDER PASSED UNDER SECTION 92CA(3) OF T H E ACT HAS ACCEPTED THE ARM'S LENGTH PRICE OF ENGINEERING DESIGN SERVICES AS DECLARED BY THE ASSESSEE. THE ASSESSEE HAD SHOWN NET PROFIT OF 68.02% DURING THE YEAR UNDER CONSIDERATION, WHICH AS PER THE ASSESSEE, WAS NOT MORE THAN ORDINARY PROFITS SINCE IT WAS PROVIDING HIGH END ENGINEERING DESIGN SERVICES. ONCE THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS OF PROVISION OF ENGINEERING DESIGN SERVICES HAS BEEN ACCEPTED I.E. MAN HOURLY RATES CHARGED BY THE ASSESSEE FOR PROVIDING SUCH SE R VICES HAVE BEEN ACCEPTED BY THE TPO IN THE TRANSFER PRICING ORDER, TH E N THE ASSESS IN G OFFICER CANNOT RE - EXAMINE THE SAID TRANSACTION TO ALLEGE THAT THE ASSESSEE HAD EARNED MORE THAN ORDINARY PROFITS AS COMPARED TO THOSE OF COMPARABLES. I N THE ABSENCE OF ANY EVIDENCE BEING BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE RATE S CHARGES BY THE ASSESSEE WERE EXCESSIVE AND ALSO TO ESTABLISH THAT THERE WAS AN ARRANGEMENT BETWEEN THE ASSESSEE AND ITS ASSOCIATED ENTERPRISES TO CHARGE SUCH EXCESSIVE RATES, WHICH HAS RESULTED IN MORE ORDINARY PROFITS IN THE HANDS OF ASSESSEE, THERE IS NO MERIT IN THE EXERCISE CARRIED OUT BY THE ASSESSING OFFICER . WHERE TILE ASSESSEE HAD ADOPTED A PRICE MECHANISM BASED ON THIRD PA RT Y COMPARABLES, WHICH IN TURN, HAS BEEN ACCEPTED BY THE TPO TO BE AT ARM'S LENGTH PRICE , THERE IS NO MERIT IN THE ORDER OF ASSESSING OFFICER IN APPLYING THE PROVISIONS OF SECTION 10A(7) R.W.S. 80 I A(10) OF T H E ACT. THE BASIC REQUIREMENT FOR APPLYING THE SAID PROVISIONS OF THE ACT IS AN ARRANGEMENT BETWEEN THE PARTIES TO EARN MORE THAN ORDINARY PROFITS AND IN THE ABSENCE OF ANY ARRANGEMENT BEING FOUND, THERE IS NO MERIT IN THE CURTAILMENT OF DEDUCTION CLAIMED UNDER SECTION 10A OF THE ACT. 9. W E FIND THAT T HE PUNE BENCH OF TRIBUNAL IN ASSESSEE'S OWN 6 ITA NOS.868 TO 870/PUN/2019 M/S. EATON INDUSTRIES PVT. LTD. CASE FOR ASSESSMENT YEAR 06 - 07 HAD HELD THAT ONUS WAS ON THE DEPORTMENT TO PROV E T HAT THERE EXISTED AN ARRANGEMENT B E TW E EN TH E ASSESSEE AND ITS ASSOCIATED ENTERPRISES TO EARN MORE THAN ORDINARY PROFITS. 10 . THE TRIBUNAL ALSO VIDE PARA 25 HELD THAT WHERE THE TRANSACTION HAD BEEN BENCHM ARKED BY APPLYING CUP METHOD, WHICH WAS ALSO APPLIED BY THE TPO AND NO ADJUSTMENT WAS PROPOSED BY THE TP O, THEN THERE IS NO MERIT IN DISTURBING THE DEDUCTION CLAIMED U/S 10A OF THE ACT APPLYING THE PROVISIONS OF S E C. 10 A(7) R. W.S 80IA(10) OF THE ACT. ... ............ 15. A PPLYING T HE SAID PRINCIPLE TO THE FACTS OF PRESENT CASE, WE FIND THAT THE ASSESSEE IN ITS ENGINEERING DESIGN DEVELOPMENT SERVICES WHICH WAS STPI UNIT SHOWN NET PROFIT MARGIN OF 68.02%. THE INTERNATIONAL TRANSACTIONS UNDERT A KEN BY THE ASSESSEE WITH ITS ASSO CIATED ENTER PRISES IN WHICH PLI WAS 205% BY TA KING OP/OC WAS ACCEPTED BY THE TPO TO BE AT A RM S LENGTH AND NO ADJUSTMENT WAS MADE IN THE HANDS OF ASSESSEE WITH REG A RD TO SAID DIVISION. THE ASSESSING OFFICER HOWEVER, WAS OF THE VIEW THAT THE ASSESSEE HAD EARNED MORE THAN ORDINARY PROFITS IN THE ENGINEERING DESIGN SERVICES DIVISION AND CONSEQUENTLY, CURTAILED THE DEDUCTION CLAIMED UNDER SECTION 10A OF THE ACT. THE QUESTION WHICH IS RAISED BEFORE US VIDE GROUNDS OF APPEAL NO. 3 TO 8 IS WHETHER IN SUCH CIRCUMS T A NCES, THE DEDUCTION CLAIMED UNDER SECTION 10A OF THE ACT CALL BE CURTAILED. WHERE THE DEPARTMENT HAS FAILED TO PROVE THAT THERE EXISTED AN ARRANGEMENT BETWEEN ASSESSEE AND ITS ASSOCIATED ENTERPRISES TO EARN MORE THAN ORDINARY, THERE IS NO MERIT IN THE A FORESAID CURTAILMENT OF DEDUCTION UNDER SECTION 10A OF THE ACT. IN THIS REGARD, WE PLACE RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN CIT VS. SCHMETZ INDIA PVT. LTD. (SUPRA), WHERE THE SLP FILED HAS BEEN REJECTED BY THE HON'BLE SUPRE ME COURT. WE ALSO PLACE RELIANCE ON THE RATIO LAID DOWN IN HONEYWELL AUTOMATION INDIA LTD. VS. D CIT (SUPRA) AND IN ASSESSEE'S OWN CASE RELATING TO ASSESSMENT YEAR 2006 - 07. HENCE, GROUNDS OF APPEAL NOS. 3 TO 8 ARE ALLOWED. 5.2 IT IS EVIDENT FROM THE ABOVE THAT THE ITAT HAS CATEGORICALLY HELD THAT THE AO HAS FAILED TO PROVE THAT THERE EXISTED AN ARRANGEMENT BETWEEN THE ASSESSEE AND ITS AE TO EARN MORE T HA N ORDINARY PROFITS AND THEREFORE THE ACTION OF THE AO IN CURTAILING THE DEDUCTION 10 A IS WITHOUT BASIS. T HE ITAT HAS ALSO HELD THAT ONCE THE ARMS L EN GTH PRICE IS ACCEPTED BY THE TPO, IT IS NOT OPEN FOR THE AO RE - EXAMINE THE TRANSACTION AND HOLD THAT THERE AR E MORE THAN ORDINARY PROFITS. THE FACTS BEFORE ME FOR THESE THREE A YS ARE IDENTICAL TO THE A.Y. 08 - 09, WHICH IN FACT HAS BEEN ADMITTED AS SUCH BY THE AO IN HIS ASSESSMENT ORDERS . IN VIEW OF THIS, RESPECTFULLY FOLLOWING THE DECISION OF THE ITAT IN THE APPELLANT'S OWN CASE FOR A. Y. 08 - 09, I AM OF THE VIEW THAT TH E ACTION OF TH E AO IN CURTAILING THE DEDUCTIO N U/S 10 A IS WITHOUT BASIS. THE ADDITION OF RS. 44 ,52,73,422 FOR A.Y. 09 - 10, RS. 25,21,83,710 FOR A.Y. 10 - 11 & RS.17 ,91,68,636 FOR A.Y. 11 - 12 IS DELETED. GROUNDS 2 TO 4 FOR A.Y. 9 - 10, 2 TO 5 FOR A. Y S 10 - 11 & 1 1 - 12 AR E ALLOWED. IN VIEW OF THIS, GROUND 5 FOR A.Y. 09 - 10 & GROUND 6 FOR A.Y. 10 - 11 ARE RENDERED INFRUCTUOUS. 7 ITA NOS.868 TO 870/PUN/2019 M/S. EATON INDUSTRIES PVT. LTD. 5.3 BEFORE PARTING, I ALSO HAVE TO POINT OUT THAT THERE IS NOT MUCH DIFFERENCE IN THE FIGURES OF PBT (PROFIT BEFORE TAX) IN THE CASE OF THE APPELLANT FOR THE A.YS 09 - 10 TO 14 - 15. HOWEVER, THE PAT (PROFIT AFTER TAX) HAS DIPPED BY ABOUT 20% FROM A. Y. 11 - 12 TO A.Y. 12 - 13. THIS HAS OCCURRED AS A.Y. 11 - 12 WAS THE LAST YEAR IN WHICH TH E APPELLANT COULD CLAIM DEDUCTION U/S 10 A . THUS, THE ONLY REASON FOR A CHANGE IN TH E NET PROFIT RATIO IS THE TAX EXPENSE BEING INCURRED BY THE ASSESSEE FROM A.Y. 1 2 - 13 ONWARDS. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 6 . BEFORE US, LD. DR TOOK US THROUGH THE OBSERVATIONS OF ASSESSING OFFICER AND SUPPORTED THE ORDER OF ASSESSING OFFICER. 7 . THE LD. AR ON THE OTHER HAND SUBMITTED THAT WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE , THE ASSESSING OFFICER HAD RELIED UPON THE ORDER OF HIS PREDECESSOR FOR A.Y. 2008 - 09. HE SUBMITTED THAT THE CIT(A) WHILE DECIDING THE ISSUE IN THE APPEAL HAD RELIED ON THE TRIBUNALS ORDER FOR A.Y. 2008 - 09. HE FURTHER SUBMITTED THAT IN A.Y. 2008 - 09 THE T RIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE AND FOR WHICH, HE POINTED TO RELEVANT PARA OF THE ORDER IN ASSESSEES CASE. HE THUS, SUPPORTED THE ORDER OF CIT(A). 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL IS WITH RESPECT TO RESTRICTING THE CLAIM OF DEDUCTION U/S 10A OF THE ACT. WE FIND THAT THE CIT(A) WHILE DECIDING THE ISSUE IN ASSESSEES FAVOUR HAD FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2008 - 09. WE FURTHER FIND THAT THE TRIBUNAL IN ITA NO.2544/PUN/2012, ORDER DATED 30.10.2017 FOR A.Y. 8 ITA NOS.868 TO 870/PUN/2019 M/S. EATON INDUSTRIES PVT. LTD. 2008 - 09 IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR BY OBSERVING AS UNDER: 15. APPLYING THE SAID PRINCIPLE TO THE FACTS OF PRESENT CASE, WE FIND THAT THE ASSESSEE IN ITS ENGINEERING DESIGN DEVELOPMENT SERVICES WHICH WAS STPI UNIT SHOWN NET PROFIT MARGIN OF 68.02%. THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISES IN WHICH PLI WAS 205% BY TAKING OP/OC WAS ACCEPTED BY THE TPO TO BE AT ARM'S LENGTH AND NO ADJUSTMENT WAS MADE IN THE HANDS OF ASSESSEE WITH REGARD TO SAID DIVISION. THE ASSESSING OFFICER HOWEVER, WAS OF THE VIEW THAT THE ASSESSEE HAD EARNED MORE THAN ORDINARY PROFITS IN THE ENGINEERING DESIGN SERVICES DIVI SION AND CONSEQUENTLY, CURTAILED THE DEDUCTION CLAIMED UNDER SECTION 10A OF THE ACT. THE QUESTION WHICH IS RAISED BEFORE US VIDE GROUNDS OF APPEAL NO.3 TO 8 IS WHETHER IN SUCH CIRCUMSTANCES, THE DEDUCTION CLAIMED UNDER SECTION 10A OF THE ACT CAN BE CURTAI LED. WHERE THE DEPARTMENT HAS FAILED TO PROVE THAT THERE EXISTED AN ARRANGEMENT BETWEEN ASSESSEE AND ITS ASSOCIATED ENTERPRISES TO EARN MORE THAN ORDINARY, THERE IS NO MERIT IN THE AFORESAID CURTAILMENT OF DEDUCTION UNDER SECTION 10A OF THE ACT. IN THIS REGARD, WE PLACE RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT CIT VS. SCHMETZ INDIA PVT. LTD. (SUPRA), WHERE THE SLP FILED HAS BEEN REJECTED BY THE HON'BLE SUPREME COURT. WE ALSO PLACE RELIANCE ON THE RATIO LAID DOWN IN HONEYWELL AUTOM ATION INDIA LTD. VS. DCIT (SUPRA) AND IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006 - 07. HENCE, GROUNDS OF APPEAL NOS.3 TO 8 ARE ALLOWED. 9. BEFORE US, NO DISTINGUISHING FEATURE IN THE FACTS OF THE CASE UNDER CONSIDERATION AND THAT OF A.Y. 2008 - 09 WAS POINTED BY THE REVENUE NOR THE REVENUE HAS POINTED OUT ANY FALLACY IN THE FINDINGS OF CIT(A). WE FURTHER FIND THAT THE REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT NOR PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE ORDER OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 20 08 - 09 HAS BEEN SET ASIDE / OVERRULED / STAYED BY HIGHER JUDICIAL FORUM . IN VIEW OF THE AFORESAID , WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS, THE GROUND S RAISED BY THE REVENUE ARE DISMISSED. 10. SINCE T H E FACTS AND ISSUES RAISED IN OTHER APPEALS I.E. ITA NOS.869/PUN/2019 & 870/PUN/2019 ARE IDENTICAL TO THE FACTS AND ISSUE S 9 ITA NOS.868 TO 870/PUN/2019 M/S. EATON INDUSTRIES PVT. LTD. RAISED IN ITA NO. 868 / PUN /201 9 , OUR DECISION IN ITA NO. 868 / PUN /201 9 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.869/PUN/2019 & 870/PUN/2019. 11 . IN THE RESULT, ALL THE APPEAL S OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 2 N D DAY OF JANUARY, 2020. SD/ - SD/ - PARTHA SARATHI CHAUDHURY ANIL CHATURVEDI JUDICIAL MEMBER ACCOUNTANT MEMBER / PUNE; / DATED : 2 N D JANUARY, 2020 GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 6 , PUNE 4. / THE PR. CIT - 5, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / SR. PRIVATE SECRETARY , / ITAT, PUNE