ACIT 8(1), MUMBAI V. DHL DANZAS LEMUIR P. LTD, MUMBAI

ITA 9112/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75526 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Next Hearing Date: 10-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 29-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJEET KUMAR JAIN
• Assessee Lawyers: P J PARDIWALA
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 92D; 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL K B ENCH, MUMBAI . . , , !'# , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLAI YA, AM ./ I.T.A. NO.9112/MUM/2010 ( & & & & / ASSESSMENT YEAR :2005-06 THE DCIT 8(1), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. DHL DANZAS LEMUIR PVT. LTD., 101/102 PRIME CORPORATE PARK, SAHAR ROAD, ANDHERI (E), MUMBAI-400 059 ' $ ./ () ./ PAN/GIR NO. : AABCD 7475N ( '* / APPELLANT ) .. ( +,'* / RESPONDENT ) ./ I.T.A. NO.8119/MUM/2011 ( & & & & / ASSESSMENT YEAR :2007-08 M/S. DHL LEMUIR LOGISTICS PVT. LTD., 101/102 PRIME CORPORATE PARK, SAHAR ROAD, ANDHERI (E), MUMBAI-400 059 / VS. THE DCIT 8(1), AAYAKAR BHAVAN, MUMBAI-400 020 ' $ ./ () ./ PAN/GIR NO. : AABCD 7475N ( '* / APPELLANT ) .. ( +,'* / RESPONDENT ) '* - / ASSESSEE BY: SHRI P.J. PARDIWALA +,'* . - / REVENUE BY: SHRI AJEET KUMAR JAIN . /0$ / DATE OF HEARING :10.02.2014 12& . /0$ / DATE OF PRONOUNCEMENT :10.02.2014 ITA NOS. 9112 /M/2010 & 8119/M/2011 2 3 / O R D E R PER N.K. BILLAIYA, AM: ITA NO. 9112/MUM/2010 A.Y 2005-06 REVENUES APP EAL THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-15, MUMBAI DT. 29.10.2010 PERTAINING TO A.Y. 2005-06. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 5,11,03,531/- MADE BY THE TPO/AO IN RESPECT OF ARMS LENGTH PRICE DETERMINED BY THE TPO. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE TPO/AO IN RESPECT OF RS. 2,04,41,412/- AND ADJUSTMENT MADE IN PAYMENTS AMOUNTING TO RS. 3,06,62,119/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. 3. THE ASSESSEE IS A JOINT VENTURE BETWEEN LEMUIR A IR EXPRESS, INDIA AND DEUTSCHE POST INTERNATIONAL B.V. NETHERLANDS A ND IS A LOGISTICS SERVICE PROVIDER, OFFERING A COMPREHENSIVE PORTFOLI O OF INTERNATIONAL, DOMESTIC AND SPECIALIZED FREIGHT HANDLING SERVICES. THE ASSESSEE RECORDED A TURNOVER OF RS. 329.26 CRORES FOR THE Y EAR ENDED MARCH 31 ST , 2005. THE ASSESSEE REPORTED THE FOLLOWING INTERNAT IONAL TRANSACTION. SR. NO. NATURE OF TRANSACTION AMOUNT A.Y.2005-06 METHOD USED AMOUNT A.Y 2004-05 METHOD USED 1. PAYMENT OF FREIGHT EXPENSES TO AES 1,097,727,262 TNMM 737106702 TNMM 2. RECEIPT OF FREIGHT REVENUE FROM AES 773,288,027 -DO - 501444813 -DO- ITA NOS. 9112 /M/2010 & 8119/M/2011 3 3. MANAGEMENT SERVICES FEES PAID 59,722,225 -DO- 49347804 -DO- 4. TRAINING FEES PAID -- -- 4773341 -DO- 5. INTEREST ON SHORT TERM LOAN -- -- 4533584 CUP TOTAL 1,930,737,514 1297206244 4. THE TPO PROCEEDED WITH THE DETERMINATION OF ARM S LENGTH PRICE IN RESPECT OF RECEIPT OF FREIGHT, REVENUE AND PAYM ENT. IT WAS OBSERVED THAT THE ASSESSEE HAS BENCHMARKED THIS TRANSACTION ON THE BASIS OF TNMM BY USING OP/VAE AS THE PROFIT LEVEL INDICATOR (PLI) . AS PER THE TRANSFER PRICING REPORT, THE OP/VAE IS 61.96% AS AGAINST THE MEAN OP/VAE OF 18.79% OBTAINABLE IN THE CASE OF 6 COMPARABLES SELE CTED. ACCORDINGLY, THE ASSESSEE CONSIDERED THIS TRANSACTION TO BE AT A RMS LENGTH. 5. THE TPO ISSUED A NOTICE REQUESTING THE ASSESSEE TO SHOW CAUSE WHY THE RATIO OF COMPARING PROFITS TO TOTAL COST (O P/TC) SHOULD NOT BE USED AS A PROFIT LEVEL INDICATOR TO BENCH-MARK THE TRANSACTIONS INSTEAD OF OP/VAE. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED CUP DATA IN RESPECT OF THE PERIOD 1.4.2004 TO 31.10 .2004 IN THE FORM OF COMPARABLE TRANSACTION WITH THIRD PARTY DHL NETWORK AGENT. IT WAS EXPLAINED THAT DURING THE SAID PERIOD, THE TERMS AN D CONDITIONS APPLICABLE TO GROUP COMPANIES WERE THE SAME AS THOSE FOR THIRD PARTY NETWORK AGENT WORLD-WIDE. THE ASSESSEE ALSO EXPLAINED WHY OP/VAE IS AN APPROPRIATE PROFIT LEVEL INDICATOR AS COMPARED TO OP/TC. THE T PO DISREGARDED THE SUBMISSIONS OF THE ASSESSEE AND PROCEEDED TO COMPAR E THE OP/TC RATIO OF THE COMPARABLE COMPANIES (7.34%) FOR THE YEAR 2004- 05 WITH THE CORRESPONDING RATIO OF THE ASSESSEE (5.69%) FOR THE SAME YEAR. THE AO COMPLETED THE ASSESSMENT BY MAKING THE FOLLOWING OB SERVATIONS: AS THE ASSESSEE HAS APPLIED A SIMILAR PROFIT SPLIT RATIO OF 50:50 FOR BOTH RECEIPTS AND PAYMENTS. SINCE THE OF FICE IS ITA NOS. 9112 /M/2010 & 8119/M/2011 4 CONTESTING THE BASIS ITSELF AN ADJUSTMENT NEEDS TO BE MADE BOTH ON RECEIPTS AND PAYMENTS. ACCORDINGLY, THE AB OVE ADJUSTMENT OF RS. 5,11,03,531/- IS APPORTIONED BETW EEN RECEIPTS FROM AES AND PAYMENTS TO AES ON THE BASIS OF THE VALUE OF THE TRANSACTIONS. THE WORKING OF THE SAME IS REPRODUCED BELOW: AS % OF TOTAL INTL. TAX. RECEIPT FROM AE 77,32,88,027/- 60% PAYMENT TO AE 1,15,74,49,487 40% TOTAL INTERNATIONAL TRANSACTION SELECTED FOR ADJUSTMENT 1,03,07,37,514/- 100% APPORTIONMENT OF ADJUSTMENT ADJUSTMENTS ON RECEIPT (51103531X40%) 2,04,41,41 2 ADJUSTMENTS ON PAYMENTS(51103531X60% 3,06,62,119 ----------------- 5,11,03,531 ======== THE ASSESSEE HAS PRODUCED VARIOUS DOCUMENTS FOR EXA MINATION AND THEY ARE PLACED ON RECORD. IN THE LIGHT OF ABO VE, AN ADJUSTMENT OF RS. 2,04,41,412/- IS MADE TO RECEIPT AND AN ADJUSTMENT OF RS. 3,06,62,119/- IS MADE TO PAYMENTS . THUS, AN ADJUSTMENT OF RS. 5,11,03,531/- IS REQUIRE D TO BE MADE IN THE INCOME OF THE ASSESSEE AS ABOVE 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. CIT(A) THAT FOR T HE PERIOD 1.4.2004 TO 31.10.2004 COMPARABLE UNCONTROLLED PRICE IS THE RAT E (50:50 RATIO) AT WHICH DHL AND THE NET WORK MEMBERS (UNRELATED THIRD PARTIES) SPLIT THEIR RESIDUAL GROSS PROFIT. IN EVERY MARKET, THE RESIDU AL GROSS PROFIT IS SHARED BETWEEN THE ORIGINAL COMPANY AND THE DESTINATION CO MPANY IN A 50:50 RATIO. IT WAS ALSO EXPLAINED TO THE LD. CIT(A) THA T THE ASSESSEE HAS PROVIDED EVIDENCE TO THE TPO THAT DHL GROUP OF COMP ANIES HAVE ENTERED INTO AGREEMENTS WITH THIRD PARTY STRATEGIC ALLIANCE PARTNERS IN VARIOUS ITA NOS. 9112 /M/2010 & 8119/M/2011 5 COUNTRIES WHERE THE DEUTSCHE POST WORLD NET NETWOR K DOES NOT EXIST. IT WAS SUBMITTED THAT THE TERMS AND CONDITIONS APPLICA BLE TO GROUP COMPANIES ARE THE SAME FOR AGENTS AND THIRD PARTY A FFILIATES. IT WAS FURTHER EXPLAINED THAT W.E.F 1.11.2004, DHL GROUP R EVISED ITS INTER- COMPANY TRANSFER PRICING POLICY FROM THE 50:50 MODE L TO A RATE CARD MODEL WHEREBY DHL LOGISTICS COMPANIES WERE REQUIRED TO SPLIT THE NET REVENUE EARNED ON A PER KILO BASIS AT AN AGREED RAT E IN CASE OF AIR FREIGHT AND ON PER FILE (SHIPMENT) BASIS AT AN AGREED RATE IN CASE OF OCEAN FREIGHT. IN SUPPORT OF ITS CLAIM, THE ASSESSEE PROVIDED THE PROFIT MARGIN EARNED BY THE COMPANY, DURING THE YEAR UNDER THE TWO BUSINESS MODELS. PARTICULARS APRIL 04-OCT,04 NOV.04-MARCH 05 FULL YE AR OP/VAE 58.08% 66.36% 61.96% OP/TC 5.17% 6.34% 5.70% 7. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) HELD AS UNDER: CONSIDERING THE FACT THAT 50:50 MODEL IS AS AN ARM' S LENGTH ARRANGEMENT AND THAT THE RATE CARD MODEL HAS PRODUC ED A BROADLY CONSISTENT PROFITABILITY OUTCOME AND FURTHER HAVING REGARD TO THE FACT THAT THE PRICING IS AGREED BETWEEN THE RELATED PARTIES ON A PRINCIPAL TO PRINCIPAL BASIS, I AGREE WITH THE CONT ENTIONS OF THE APPELLANT THAT RATE CARD IS ALSO AN ARM'S LENGTH AR RANGEMENT. PARAGRAPH 1 OF ARTICLE 9 OF THE OECD MODEL TAX CONV ENTION IS THE FOUNDATION FOR COMPARABILITY ANALYSIS. IT INTRO DUCES THE NEED FOR 'A COMPARISON BETWEEN CONDITION (INCLUDING PRIC ES, BUT NOT ONLY PRICES MADE OR IMPOSED BETWEEN AE AND THOSE WH ICH WOULD BE MADE BETWEEN INDEPENDENT ENTERPRISES'. ON THE FA CTS OF THE CASE THE CONDITIONS WHICH OBTAIN IN THE RATE CARD S YSTEMS IS COMPARABLE TO THAT WHICH WOULD BE MADE BETWEEN INDE PENDENT ENTERPRISES. AS SUCH THE INTERNATIONAL TRANSACTION' S FOR THE PERIOD NOVEMBER 1, 2004 TILL MARCH 31, 2005 WERE UNDERTAKE N ON AN ARM'S LENGTH CONDITIONS/BASIS. THE APPELLANT HAS ES TABLISHED ITA NOS. 9112 /M/2010 & 8119/M/2011 6 THROUGH RATE CARD WHICH IS A CONTEMPORANEOUS DOCUME NT THAT TRANSACTIONS WITH IT'S AE IS AT ARMS LENGTH. IT HAS ALSO SHOWN THAT IT IS AT PAR OR BETTER WITH 50:50 MODEL (CUP) IN PRODU CING CONSISTENT PROFITABILITY OUTCOME. AS SUCH IT IS NOT CONSIDERED NECESSARY TO GO INTO THE ISSUE OF OP/VAE AS THIS PLI RELATES TO DET ERMINATION OF ALP WITH REFERENCE TO TNMM. 8. AGGRIEVED, THE REVENUE IS BEFORE US. AT THE VER Y OUTSET, THE LD. SR. COUNSEL POINTED OUT THAT THE TRIBUNAL IN ASSESS EES OWN CASE IN A.Y. 2004-05 IN ITA NO. 4427/MUM/2010 HAS ACCEPTED THE P ROFIT SHARE IN THE RATIO OF 50:50 BOTH ON PAYMENTS MADE BY THE ASSESSE E AND THE RECEIPTS OF FREIGHT FROM ITS AES.THEREFORE , IT WAS PRAYED , TH AT FOR NEW SHARING POLICY AS PER THE RATE CARD DESERVE TO BE ACCEPTED . 9. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BR ING ANY DISTINGUISHING FACTS ON RECORD. 10. WE HAVE CAREFULLY PERUSED THE ORDER OF THE LOWE R AUTHORITIES AND THE DECISION OF THE TRIBUNAL IN ITA NO. 4427/M/10 F OR A.Y. 2004-05 WHEREIN THE TRIBUNAL AT PARA-6 ON PAGE-5 OF ITS ORD ER HAS HELD AS UNDER: THE SHORT CONTROVERSY BEFORE US IS TO DETERMINE TH E ALP IN RESPECT OF TRANSACTIONS BETWEEN THE ASSESSEE AND I TS AES TOWARDS RECEIPT/PAYMENT OF FREIGHT. THE ASSESSEE SHARED PR OFIT IN THE RATIO OF 50:50 BOTH ON THE PAYMENTS MADE BY IT AND THE RE CEIPTS OF FREIGHT FROM ITS AES. WE HAVE PERUSED THE SUBMISSI ONS AND THE FINDING OF THE LD. CIT(A) ON THE FUNCTIONS PERFORME D, ASSETS EMPLOYED AND RISK UNDERTAKEN BY BOTH THE AES IN SUC H TRANSACTIONS. THE LD. DR COULD NOT CONTROVERT SUCH FINDING THAT THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISK U NDERTAKEN IN BOTH THE AES IS SAME. THE ASSESSEE PAID CERTAIN SU M TO ITS AES ABROAD FOR DOING THE WORK SIMILAR TO WHICH IT DID F OR WHICH IT RECEIVED FREIGHT REVENUE FROM ITS AES. THE CRUX OF THE MATTER IS THAT IN BOTH THE SITUATIONS, THE TOTAL RECEIPTS ARE TAKEN ON ONE HAND, FROM WHICH ALL THE EXPENSES INCURRED IN CONNECTION WITH THE TRANSPORTATION OF CARGO IN BOTH THE COUNTRIES ARE E XCLUDED. THE REMAINING AMOUNT IS DISTRIBUTED BETWEEN THE ENTITY OF ORIGIN ITA NOS. 9112 /M/2010 & 8119/M/2011 7 COUNTRY AND THE ENTITY OF DESTINATION COUNTRY IN EQ UAL SHARE. AS THE ASSESSEE HAS EARNED/PAID REVENUE FROM TO ITS AES IN THE SAME PROPORTION, IN OUR CONSIDERED OPINION, THE TRANSACT IONS HAVE BEEN RECORDED AT ARMS LENGTH PRICE AND THERE WAS NO JUS TIFICATION FOR MAKING SUCH ADDITION. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT BEFORE US , RESPECTFULLY FOLLOWING THE FINDINGS OF THE TRIBUNAL (SUPRA), WE DO NOT FIND ANY REASON WHY THE NEW SHARING AS PER THE RATE CARD SHOULD NOT BE ACCEPTED .WE FIND NO REASON TO INTERFERE WIT H THE FINDINGS OF THE LD. CIT(A). 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 8119/MUM/2011- A.Y 2007-08 ASSESSEES APP EAL 12. THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDE R U/S. 143(3) R.W.S 144C(13) OF THE I.T. ACT DT. 10.10.2011. THE GRIEV ANCE OF THE ASSESSEE READ AS UNDER: 1. THAT THE ASSESSMENT ORDER PASSED IN PURSUANCE TO THE DIRECTIONS ISSUED BY THE DISPUTE RESOLTUION PANEL ( DRP) IS A VITIATED ORDER, AS THE DRP ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION MADE BY THE AO TO THE APPEL LANTS INCOME. 2. THE DRP ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE ADDITION OF RS. 10,42,02,761 TO THE INCOME OF THE A PPELLANT BY HOLDING THAT ITS INTERNATIONAL TRANSACTIONS PERTAIN ING TO RECEIPT OF FREIGHT RECEIPTS AND EXPENSES DO NOT SATISFY THE AR MS LENGTH PRINCIPLE ENVISAGED UNDER THE ACT. IN DOING SO THE LD. DRP HAS GROSSLY ERRED IN AGREEING WITH THE TRANSFER PRICING OFFICERS (TPO) ACTION OF: 2.1. DISREGARDING THE ARMS LENGTH PRICE (ALP) AN D THE METHODICAL BENCHMARKING PROCESS CARRIED OUT BY THE APPELLANT IN THE TRANSFER PRICING (TP) DOCUMENTATION MAINTAINED BY IT IN ITA NOS. 9112 /M/2010 & 8119/M/2011 8 TERMS OF SECTION 92D OF THE ACT READ WITH RULE 10D OF THE INCOME- TAX RULES, 1962 (RULES); 2.2. DISREGARDING THE FACT THAT THE APPELLANT IS A JOINT VENTURE BETWEEN TWO UNRELATED PARTIES; 2.3. NOT ALLOWING THE USE OF MULTIPLE YEAR DATA AS PRESCRIBED UNDER RULE 10B(4) OF THE RULES READ WITH THE OECD TP GUID ELINES, AND DETERMINING THE ARMS LENGTH PRICE ON THE BASIS OF FINANCIAL INFORMATION OF THE COMPARABLES FOR THE YEAR ENDED M ARCH 31, 2007 IDENTIFIED PURSUANT TO A FRESH SEARCH FOR COMPARABL ES PERFORMED DURING THE ASSESSMENT PROCEEDINGS. THE AO/ TPO/ DRP ERRED IN REJECTING THE CONTEMPORANEOUS DOCUMENTATION MAINTAI NED BY THE APPELLANT AS REQUIRED UNDER THE INDIAN TP REGULATIO NS; 2.4. FAILING TO APPRECIATE THE ECONOMIC RATIONALE O F USING OPERATING PROFIT! VALUE ADDED EXPENSES AS THE PRO FIT LEVEL INDICATOR (PLI), AND INSTEAD USING OPERATING PRO FIT/ TOTAL COST AS THE PLI; 2.5. UPHOLDING THE ACTION OF THE AO/ TPO IN REJECTI NG 3 COMPARABLES SELECTED BY THE APPELLANT (BASED ON FRE SH SEARCH) BY CONTENDING THAT THE APPELLANT HAD SELECTED THE SAME ON A CHERRY PICKING BASIS; 2.6. UPHOLDING TO ARBITRARY REJECTION OF 2 COMPARAB LE COMPANIES ON THE GROUND THAT THEY ARE PERSISTENT LOSS MAKERS (I.E., LOSSES FOR CONSECUTIVE 3 YEARS OR MORE) (N E C C LOGISTICS LTD . AND I A L CONTAINER LINE (INDIA) LTD), WHERE NONE OF THE SAID COMPANIES WERE PERSISTENT LOSS MAKERS AS SUCH; 2.7. REJECTING A COMPARABLE COMPANY (TVS LOGISTICS LIMITED) MERELY TO BE CONSISTENT WITH APPROACH OF LAST YEAR (I.E. NOT CONSIDERING THE COMPANY IN SET OF COMPARABLE ITS FI NANCIAL DATA WAS NOT AVAILABLE AT THE TIME OF COMPLETING TP ASSE SSMENT FOR LAST YEAR); 2.8. COMPUTING THE TP ADJUSTMENT ON FREIGHT RECEIPT S (AS AGAINST FREIGHT EXPENSE), MERELY TO DERIVE A LARGER ADJUSTM ENT. HE SHOULD HAVE APPRECIATED THAT THE INDIAN TRANSFER PRICING L AW DOES NOT PRESCRIBE THE MANNER IN WHICH A TRANSFER PRICING AD JUSTMENT NEEDS TO BE COMPUTED UNDER THE TNMM, WHERE THERE ARE MORE THAN ONE INTERNATIONAL TRANSACTIONS. GIVEN THIS, THE TPO/ AO / DRP OUGHT TO ITA NOS. 9112 /M/2010 & 8119/M/2011 9 HAVE ADOPTED THE APPROACH THAT IS IN THE FAVOR OF T HE ASSESSEE (I.E., DETERMINE THE ARMS- LENGTH PRICE OF THE FREIGHT EXPENSES, WHILE KEEPING THE FREIGHT INCOME CONSTANT); 2.9. DENYING THE BENEFIT OF (+1-) 5 PERCENT RANGE M ENTIONED IN PROVISO TO SECTION 92C(2) OF THE ACT WHILE COMPUTIN G THE ALP. THE APPELLANT PRAYS THAT THE BOOK VALUE OF THE INTE RNATIONAL TRANSACTIONS OF FREIGHT RECEIPTS AND EXPENSES, SHOU LD BE HELD TO BE THE ARMS LENGTH PRICE OF THE SAID TRANSACTIONS AS PER THE APPELLANTS TRANSFER PRICING DOCUMENTATION, AND THE ADDITION MADE ON ACCOUNT OF THE ABOVE GROUNDS SHOULD BE DELE TED. 3. THAT THE AO BE DIRECTED TO RE-CALCULATE THE INTE REST LEVIED UNDER SECTION 234B AFTER CONSIDERING THE RELIEF GRANTED B Y THE HONBLE TRIBUNAL IN RESPECT OF THE GROUNDS RAISED BY THE AP PELLANT. 13. AT THE VERY OUTSET, THE LD. SENIOR COUNSEL DREW OUR ATTENTION TO GROUND NO. 2.9 AND SUBMITTED THAT THE LOWER AUTHORI TIES HAVE ERRED IN DENYING THE BENEFIT OF THE PROVISO TO SEC. 92C(2) OF THE ACT WHILE COMPUTING THE ALP. 14. THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES TO THIS SUBMISSION OF THE LD. COUNSEL. 15. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOW ER AUTHORITIES. WE FIND THAT THE TPO HAS MADE THE TP ADJUSTMENT AS FOL LOWS: HEADS ASSESSEES TRANSACTION A.L.P. AS DETERMINED SALES/INCOME(VARIABLE) 5,423,295,827 5,527,498,588 TO AE 1,722,032,063 1,826,234,824 TO NON AE 3,701,263,764 3,701,263,764 PURCHASE/EXPENDITURE(CONSTANT) 5,119,950,526 5,119, 950,526 OPERATING PROFIT/LOSS 303,345,301 407,548,062 ITA NOS. 9112 /M/2010 & 8119/M/2011 10 OP/COST 5.92% 7.96% DIFFERENCE 104,202,761 +/- 5% OF ARMS LENGTH VALUE: 1.05*1,826,234,824=1,917,546,565 0.95*1,826,234,824=1,734,923,083 16. A PERUSAL OF THE AFORESTATED CHART STRONGLY SUP PORT THE SUBMISSION OF THE LD. SR. COUNSEL. IN OUR UNDERSTANDING OF TH E LAW, BENEFIT OF THE PROVISO TO SEC. 92C(2) OF THE ACT SHOULD BE GIVEN TO THE ASSESSEE. WE ACCORDINGLY DIRECT THE AO. GROUND NO. 2.9 IS ALLOW ED. 17. SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSE E QUA GROUND NO. 2.9, WE DO NOT FIND IT NECESSARY TO DECIDE THE SAME GRIEVANCE QUA 2.1 TO 2.8. 18. GROUND NO. 3 RELATES TO THE LEVY OF INTEREST U/ S. 234B OF THE ACT, THOUGH THE LEVY OF INTEREST IS MANDATORY BUT CONSEQ UENTIAL IN THE PRESENT APPEAL. THE AO IS DIRECTED TO RECALCULATE THE INTE REST AS PER PROVISIONS OF LAW. 19. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/02/2014 . 3 . 2& $ 4 56 10.2.2014 2 . 7 SD/- SD/- (I.P. BANSAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 5 DATED 10/02/2014 . . ./ RJ , SR. PS ITA NOS. 9112 /M/2010 & 8119/M/2011 11 3 3 3 3 . .. . +/ +/ +/ +/ 8 &/ 8 &/ 8 &/ 8 &/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. 3 3 3 3 / BY ORDER, , / +/ //TRUE COPY// = == = / > > > > ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI