The DCIT, Gandhinagar Circle, Gandhinagar V. ECI Technology Pvt. Ltd., Gandhinagar

ITA 918/AHD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6045 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 26-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Additional evidence; Question of law
• Section: 10B; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD I BENCH (BEFORE SHRI R.P. TOLANI, VICE PRESIDE NT & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 918/AHD/2015 & C.O. NO. 85/AHD/15 (ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME-TAX, GANDHINAGAR CIRCLE, GANDHINAGAR ECI TECHNOLOGY P. LTD. 903, 9 TH FLOOR, SHALIN, SECTOR-11, GANDHINGAR- 382011 V/S V/S ECI TECHNOLOGY P. LTD. 903, 9 TH FLOOR, SHALIN, SECTOR-11, GANDHINGAR- 382011 DEPUTY COMMISSIONER OF INCOME-TAX, GANDHINAGAR CIRCLE, GANDHINAGAR (APPELLANT) (RESPONDENT) PAN: AACCG1850F APPELLANT BY : SHRI BYOMKESH PANDA, D.R. RESPONDENT BY : SHRI DHINAL SHAH, C.A. ( )/ ORDER DATE OF HEARING : 26 -04-201 7 DATE OF PRONOUNCEMENT : 02 -05-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NO. 918/AHD-2015 & C.O. NO. 85/AHD/2015 ARE APP EAL OF THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE PREFERRED AGAIN ST THE VERY SAME ORDER ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 2 OF THE LD. CIT(A), GANDHINAGAR DATED 15.01.2015 PER TAINING TO A.Y. 2009-10. THE APPEAL AND THE CROSS OBJECTION WERE HEARD TOGET HER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . 2. THE REVENUE HAS RAISED FOLLOWING SUBSTANTIVE GROUND S OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALL OWING/DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S.10B STATING THA T THE CLAIM IS IDENTICAL TO THAT OF A.Y.2007-08 AND 2008-09 WHICH WAS ALLOWED. THE ASSESSEE HAS ALREADY OBTAINED THE APPROVAL IN YEAR 2011 AND WAS FILED BE FORE THE A.O. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALL OWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE TRADE ADVANCES WRITTEN OFF REPRESE NTS ACTUAL BUSINESS LOSS INCURRED BY THE ASSESSEE, WHICH IS INCIDENTAL TO TH E BUSINESS OF THE ASSESSEE. THE ASSESSEE NEED NOT BE IN BANKING BUSINESS IN ORDER T O CLAIM WRITE-OFF OF TRADE ADVANCE, WHICH WAS GIVEN TO A SUPPLIER IN THE ORDIN ARY COURSE OF BUSINESS. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALL OWED OF THE ASSESSEE BY RELYING ON THE DECISION OF HON'BLE CHENNAI INCOME TAX APPEL LATE TRIBUNAL (ITAT) IN THE CASE OF INTIMATE FASHIONS (INDIA) PVT. LTD VS. ACIT (SUPRA) WHICH IS SQUARELY APPLICABLE IN THIS CASE AND FURTHER HELD THAT THE P RICE DIFFERENTIAL PAID TO THE AES BY THE ASSESSEE DUE TO CHANGE IN COPPER PRICES IS B EING AT ARM'S LENGTH UNDER SECTION 92 OF THE ACT. 3. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF WIRING HARNESS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAI MED DEDUCTION U/S. 10B OF THE ACT AT RS. 7,31,57,477/-. THE ASSESSEE WAS A SKED TO EXPLAIN WHY DEDUCTION CLAIMED U/S. 10B OF THE ACT MAY NOT BE DI SALLOWED. ASSESSEE FILED A DETAILED REPLY IN SUPPORT OF ITS CLAIM WHICH DID NOT FIND ANY FAVOUR WITH THE A.O. WHO DISMISSED THE CLAIM OF THE ASSESSEE U/ S. 10BOF THE ACT. ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 3 4. ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT(A) AND REITERATED ITS CLAIM OF DEDUCTION U/S. 10B OF THE ACT. 5. AFTER CONSIDERING THE FACTS QUA THE ISSUE, THE LD. CIT(A) HELD AS UNDER:- I FIND THAT IDENTICAL ISSUE HAD COME UP BEFORE MY PREDECESSOR FOR AY 2007-08 AND AY 2008-09 IN THE APPELLANT'S OWN CASE, WHEREIN THE MATTER WAS DECIDED AS UNDER: '4.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE SU BMISSIONS OF THE ASSESSEE AND THE COMMENTS OF THE AO AND THE ADDL.CI T IN THE REMAND REPORT. THE POSITION OF THE LAW READ WITH INSTRUCTI ONS OF THE CBDT ARE UNAMBIGUOUS. IN FACT THE AO HAS HIMSELF SPELT THEM OUT IN PARA. 10 OF THE ASSESSMENT ORDER. THE POSITION OF LAW ON THIS ISSUE IS AS UNDER: I) AS PER CLAUSE (IV) OF EXPLANATION -2 TO SECTION I0B OF THE ACT, THE UNDERTAKING SHOULD BE APPROVED BY THE BOARD OF APPROVAL (BOA) F OR CLAIMING EXEMPTION U/S.L0B OF THE IT ACT. II) THE CBDT VIDE ITS INSTRUCTION DATED 09/03/2009 HAS MADE IT AMPLY CLEAR THAT THE APPROVA L GRANTED BY THE DEVELOPMENT COMMISSIONER IN THE CASE OF AN EXPORT O RIENTED UNIT WILL BE CONSIDERED VALID, ONCE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL. THE ASSESSEE HAS SHOWN BY FILING THE ADDITIONAL EVI DENCE, THAT THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER HA S BEEN RATIFIED BY THE BOARD OF APPROVAL. THE AO AND THE ADD!. CIT BOT H IN THEIR REMAND REPORT HAVE STATED THAT THE CLAIM OF THE ASSESSEE F OR DEDUCTION U/S.L0B WAS DISALLOWED ONLY FOR THE REASON THAT THE RATIFIC ATION OF THE BOARD OF APPROVAL WAS NOT THERE TILL THE DATE OF ASSESSMENT ORDER. THEY HAVE NOT RAISED ANY OBJECTION AGAINST THE ASSESSEE'S CLAIM F OR DEDUCTION U/S. 106, SUBSEQUENT TO THE FILING OF ADDITIONAL EVIDENCE. TH E RATIFICATION IS NO ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 4 DOUBT OF THE APPROVAL ORIGINALLY GRANTED. IT MEANS THAT THE APPROVAL GRANTED WOULD BE CONSIDERED VALID WITH EFFECT FROM THE DATE APPROVAL WAS GIVEN BY THE DEVELOPMENT COMMISSIONER, THE OBJECTIO N OF THE AO SPELT OUT IN THE ASSESSMENT ORDER HAS BEEN MET. IN THE CI RCUMSTANCES, THE ASSESSEE IS ELIGIBLE FOR THE CLAIM-OF DEDUCTION U/S . I0B. THE GROUND OF APPEAL OF THE ASSESSEE IS ACCORDINGLY, ALLOWED. SINCE, THE APPELLANT HAD ALREADY OBTAINED THE APPRO VAL FROM THE BOARD OF APPROVAL IN YEAR 2011 AND WHICH WAS ALSO FILED BEFO RE THE AO DURING COURSE OF ASSESSMENT PROCEEDINGS, THE GROUND OF AO IN DENYING DEDUCTION UNDER SECTION IOB OF THE ACT DOES NOT ARISE. HENCE, FOLLOWING THE ORDERS OF MY PREDECESSOR FOR AY 2007-08 AND AY 2008-09, DEDUCTION UNDER SECTION IOB OF THE ACT IS ALLOWED TO THE APPELLANT, THE GROUND OF THE APPEAL IS, THEREFO RE, ALLOWED. 6. BEFORE US, THE LD. D.R. COULD NOT BRING TO THE NOTI CE FACTUAL/LEGAL ERROR IN THE FINDINGS OF THE LD. CIT(A). ON THE OTHER HAND, WE F IND THAT THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT HAS DECIDED TH IS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN TAX APPEAL NO. 203 OF 2015. THE RELEVANT PART READS AS UNDER:- 5. HEARD THE LEARNED ADVOCATES APPEARING ON BEHAL F OF THE RESPECTIVE PARTIES AT LENGTH. AT THE OUTSET, IT IS REQUIRED THAT THE ASSE SSEE CLAIMED THE DEDUCTION UNDER SECTION 10B OF THE ACT CLAIMING 100% EOU. IT IS AN ADMITTED POSITION THAT THERE WAS ALREADY A PERMISSION/APPROVAL GRANTED BY THE DEVELO PMENT COMMISSIONER DECLARING/APPROVING THE ASSESSEE AS 100% EOU. HOWEV ER, ON CONSIDERING THE WORD, APPROVED BY THE BOARD OF APPROVAL AS MENTIONED IN S ECTION 10B OF THE ACT AND AT THE RELEVANT TIME THERE WAS NO RATIFICATION OF THE DECI SION OF THE DEVELOPMENT COMMISSIONER BY THE BOARD OF APPROVAL, THE ASSESSIN G OFFICER DENIED THE DEDUCTION UNDER SECTION 10B OF THE ACT. HOWEVER, IT IS REQUIR ED TO BE NOTED AND IT IS NOT IN DISPUTE THAT VIDE CIRCULAR/INSTRUCTION OF THE CBDT DATED 09/03/2009 IT WAS CLARIFIED THAT THE APPROVAL GRANTED BY THE DEVELOPMENT COMMIS SIONER IN THE CASE OF EXPORT ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 5 ORIENTED UNIT SET UP IN AN EXPORT PROCESSING ZONE W ILL BE CONSIDERED VALID, ONCE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL FO R EOU SCHEME. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE PERMISSION/APPROVAL G RANTED BY THE DEVELOPMENT COMMISSIONER HAS BEEN RATIFIED BY THE BOARD OF APPR OVAL, MAY BE SUBSEQUENTLY. THE MOMENT THE DECISION/APPROVAL OF THE DEVELOPMENT COM MISSIONER IS RATIFIED BY THE BOARD OF APPROVAL IT WILL RELATE BACK TO THE DATE O N WHICH THE APPROVAL WAS GRANTED BY THE DEVELOPMENT COMMISSIONER. IF THAT BE SO, IT CANNOT BE SAID THAT THE ASSESSEE WAS NOT A EXPORT ORIENTED UNIT, WHICH WAS ENTITLED TO THE DEDUCTION UNDER SECTION 10B OF THE ACT. INCIDENTALLY IT IS TO BE NOTED THAT IN THE SUBSEQUENT CIRCULAR NO.68 ISSUED BY THE EXPORT PROMOTION COUNCIL FOR EOUS & S EZS DATED 14/05/2009 IT MENTIONS THAT FROM 1990 ONWARDS BOARD OF APPROVAL H AD DELEGATED THE POWER OF APPROVAL OF 100% TO THE DEVELOPMENT COMMISSIONER AN D, THEREFORE, IT CAN BE VERY WELL ARGUED AND SAID THAT THE DEVELOPMENT COMMISSIO NER WHILE GRANTING THE APPROVAL OF 100% EOU EXERCISES DELEGATED POWERS. IN ANY CASE AND APART FROM THE ABOVE WHEN IT IS FOUND THAT AT THE RELEVANT TIME TH E DEVELOPMENT COMMISSIONER GRANTED THE APPROVAL OF 100% EOU IN FAVOUR OF THE A SSESSEE-COMPANY, WHICH CAME TO BE SUBSEQUENTLY RATIFIED BY THE BOARD OF APPROVA L AND AS OBSERVED HEREINABOVE AS SUCH THE RATIFICATION SHALL BE FROM THE DATE ON WHI CH THE DEVELOPMENT COMMISSIONER GRANTED THE APPROVAL, BOTH THE LEARNED CIT(A) AS WE LL AS THE LEARNED TRIBUNAL HAVE RIGHTLY HELD THAT THE ASSESSEE WAS ENTITLED TO DEDU CTION UNDER SECTION 10B OF THE ACT AS CLAIMED. WE CONFIRM THE VIEW TAKEN BY BOTH THE A UTHORITIES BELOW HOLDING THAT THE ASSESSEE WAS ENTITLED TO 100% EOU AS CLAIMED. N O SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT TAX APPEAL. HENCE, THE PRESEN T TAX APPEAL DESERVES TO BE DISMISSED AND IS ACCORDINGLY DISMISSED. 7. A PERUSAL OF THE AFOREMENTIONED FINDINGS OF THE HON BLE HIGH COURT SHOWS THAT THE ISSUE IS NO MORE RES INTEGRA AND HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. RESPECTFULLY FOLL OWING THE SAME, WE DECLINE TO INTERFERE. GROUND NO. 1 IS DISMISSED. ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 6 8. GROUND NO. 2 RELATES TO THE DELETION OF DISALLOWANC E MADE BY THE A.O. ON ACCOUNT OF WRITE-OFF OF TRADE ADVANCES. 9. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED THAT THE ASSESSEE HAS WRITTEN OFF TRADE ADVANCES OF RS. 13.98 LACS IN ITS PROFIT AND LOSS ACCOUNT. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAI M. THE ASSESSEE STATED THAT IT HAS MADE ADVANCE WITH RESPECT TO MANUFACTUR ING OF MOULDS. HOWEVER, DUE TO POOR QUALITY OF THE MOULDS, THE ASS ESSEE CANCELLED THE ORDER AND SINCE THE PARTY DID NOT RETURN THE TRADE ADVANCES, THE SAME WAS WRITTEN OFF IN THE PROFIT AND LOSS ACCOUNT. THE A.O . WAS OF THE OPINION THAT THE AMOUNT CLAIMED TO BE WRITTEN OFF HAS NEVER BEEN OFFERED BY THE ASSESSEE AS ITS INCOME IN PROFIT AND LOSS ACCOUNT. SINCE, THE ASSESSEE IS NOT ENGAGED IN BANKING BUSINESS; THEREFORE, WRITE OFF O F TRADE ADVANCE WAS NOT ALLOWABLE. THE A.O. MADE THE ADDITION OF RS. 13,98, 298/-. 10. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THE C OPY OF THE LEDGER ACCOUNT OF THE SUPPLIER TO DEMONSTRATE THAT THE TRADE ADVAN CES HAVE ACTUALLY BEEN WRITTEN OFF. 11. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) WAS OF THE OPINION THAT THE TRADE ADVANCES WRITTEN OFF REPRESE NTS ACTUAL BUSINESS LOSS INCURRED BY THE ASSESSEE WHICH IS INCIDENTAL TO THE BUSINESS OF THE ASSESSEE AND ACCORDINGLY DIRECTED THE A.O. TO DELETE THE IMP UGNED ADDITION. ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 7 12. BEFORE US, THE LD. D.R. RELIED UPON THE FINDINGS OF THE A.O. LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. THERE IS NO DISPUTE THAT THE ASSESSEE HAS ACTUALLY WRITTEN OFF RS. 13,98,298/- BEING ADVANCE TO THE SUPPLIER. THERE IS ALSO NO DISPUTE RELATING TO THE RETURN OF MOULDS BY THE ASSESSEE ON FINDING THEM NOT SUITABLE FOR THE PURPOSES OF ITS BUSINESS. THE UNDISPUTED FACT IS TH AT THE ADVANCE OF RS. 13,98,298/- WAS GIVEN BY THE ASSESSEE IN ITS ORDINA RY COURSE OF BUSINESS. THEREFORE, ANY WRITE OFF IS A BUSINESS LOSS INCURRE D IN THE ORDINARY COURSE OF ITS BUSINESS. THEREFORE, WE DO NOT FIND REASON TO I NTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS DISMISSED. 13. GROUND NO. 3 RELATES TO THE DELETION OF THE TRANSFE R PRICING ADJUSTMENT OF RS. 5,55,03,842/-. 14. BRIEFLY STATED THE FACTS QUA THE ISSUE ARE THAT DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLOSED DOWN ITS BUS INESS OPERATION. AS MENTIONED ELSEWHERE, THE ASSESSEE WAS MANUFACTURING COPPER WIRE HARNESS. IT HAD SURPLUS RAW MATERIALS WHICH REMAINE D UNUSED. THE SURPLUS RAW MATERIAL CONSISTED OF COPPER WIRES IMPORTED FRO M TWO UNRELATED PARTIES NAMELY COPPERFIELD AND SHENZHEN BAOHING ELE CTRIC WIRE. AS COPPER WIRE IS THE MAIN INGREDIENT OF THE COPPER WIRE. THE PRICE OF THE COPPER WIRE IS DRIVEN FROM PRICE OF COPPER IN THE GLOBAL METAL MARKETS. SINCE THE ASSESSEE COULD NOT HAVE SOLD THESE RAW MATERIALS IN LOCAL MARKET IN INDIA AND SINCE ITS AE WAS ENGAGED INTO SIMILAR BUSINESS, THE ASSESSEE DECIDED TO SELL THESE RAW MATERIALS AT THE PREVAILING MARKET P RICE TO ITS AE. ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 8 15. THE ASSESSEE EXPLAINED THE METHODOLOGY TO WORK OUT DIFFERENTIAL COPPER WIRE PRICE REIMBURSED TO AE. SINCE THE MARKET PRICE OF COPPER HAD REDUCED SUBSTANTIALLY AT THE TIME OF ASSESSEE SOLD ITS RAW MATERIALS TO FROM THE TIME THEY WERE PURCHASED. IT WAS EXPLAINED THAT FOR COMP UTING THE SELLING OF RAW MATERIALS, THE ASSESSEE APPLIED THE SAME METHODOLOG Y AS ADOPTED WHILE PURCHASING THE RAW MATERIALS FROM UNRELATED PARTIES . 16. THE TPO ACCEPTED THIS WORKING OF THE ASSESSEE AND A LSO AGREED THAT PRICES OF RAW MATERIALS WERE BASED ON PRICES OF COPPER QUO TED ON LONDON METAL EXCHANGE. THE TPO ALSO AGREED THAT THE PRICES OF CO PPER HAD REDUCED SIGNIFICANTLY IN THE COPPER MARKET BETWEEN THE TIME THE ASSESSEE PURCHASED ITS RAW MATERIALS AND SOLD TO ITS AE. 17. HOWEVER, THE TPO WAS OF THE OPINION THAT THE ASSESS EE HAS RECEIVED VARYING AMOUNT OF DISCOUNTS FROM ITS SUPPLIERS AND THERE WAS NO BASIS FOR QUANTIFICATION OF THIS DISCOUNT GRANTED BY THE SUPP LIERS. 18. THE TPO CONSIDERED THE ARMS LENGTH PRICE OF THE SAL E TO BE THE COST OF RAW MATERIAL AT RS. 184,4,84,112/- AND MADE AN UPWARD A DJUSTMENT OF RS. 5,55,03,842/-. 19. BEFORE THE LD. CIT(A), THE ASSESSEE ONCE AGAIN EXPL AINED THE FACTUAL MATRIX WHICH WAS DULY CONSIDERED BY THE LD. CIT(A) AND AFT ER EXAMINING THE FACTS IN ISSUE, THE LD. CIT(A) OBSERVED AS UNDER:- ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 9 THE ONLY DISPUTE BETWEEN THE APPELLANT AND THE AO/ TPO AROSE IN RESPECT OF DIFFERENCE IN QUANTUM OF DISCOUNTS GIVEN BY TH E TWO MAJOR SUPPLIERS OF THE APPELLANT AND BASED ON THAT THE SALE PRICE OF MATER IAL WAS ARRIVED AT. THE AO CONTENDED THAT SINCE THE APPELLANT HAD RECEIVED VAR YING AMOUNT OF DISCOUNTS FROM ITS SUPPLIERS DURING THE YEAR UNDER APPEAL AND SINCE THE APPELLANT HAS NOT PROVIDED ANY CALCULATION AND BASIS FOR THE QUANTIFI CATION OF THE DISCOUNTS GRANTED TO IT BY ITS THIRD PARTY SUPPLIERS, THE CALCULATION S OF THE SALE PRICE REMAINS SUBJECTIVE; THE ASSERTION OF THE APPELLANT THAT T HE SALE PRICE IS DETERMINED ON THE BASIS OF PREVAILING LONDON METAL EXCHANGE (LME) PRICE BY FOLLOWING THE SAME METHOD AS WOULD BE APPLICABLE IN THE CASE OF DETERM INATION OF PURCHASE PRICE ON THE BASIS OF PREVAILING LME PRICE BECOMES FALLACIOU S; AND HENCE, THE APPELLANT IS NOT ABLE TO JUSTIFY THE DETERMINATION OF THE ARMS LENGTH PRICE OF REIMBURSEMENT OF PRICE DIFFERENTIAL ON SALE OF THE RAW MATERIAL O N THE BASIS OF THE MARKET PRICE. IT IS SEEN THAT RAW MATERIAL PURCHASED FROM THIRD PART IES, NAMELY, COPPERFIELD AND SHENZHEN BAOHING ACCOUNTED IN BOOKS OF ACCOUNTS AT THE RELEVANT PURCHASE RATE HAVE NOT BEEN DISPUTED BY THE A.O/TPO. ACCORDINGLY, IF THE PURCHASE PRICE OF THE APPELLANT IS NOT DISPUTED BY THE AO / TPO, IT WOULD BE INCORRECT TO CHALLENGE THE DIFFERE NCE IN THE QUANTUM OF DISCOUNT GIVEN BY TWO UNRELATED SUPPLIERS TO THE APPELLANT. FURTHER, I AGREE WITH THE CONTENTION OF THE APPELLA NT THAT THE QUANTUM OF DISCOUNT GIVEN BY SUPPLIERS VARIES DEPENDING ON COM MERCIAL TERMS LIKE QUANTITY OF MATERIAL PURCHASED, LEAD TIME OF DELIVERY ETC. I T IS SETTLED PRINCIPLE THAT AO CANNOT SIT IN THE JUDGMENT FOR COMMERCIAL TRANSACTI ON, AND PARTICULARLY IT IS PURCHASED FROM THIRD PARTY. ACCORDINGLY, CONSIDERIN G THE FACT THAT THE APPELLANT USED TO PURCHASE BULK OF ITS RAW MATERIALS FROM COP PERFIELD, IT IS USUAL THAT IT COULD ASK FOR HIGHER DISCOUNT OF RS 30.72 AS AGAINS T DISCOUNT OF RS 1.17 FROM SHENZHEN BAOHING. HENCE, I FIND THE DIFFERENCE IN T HE/QUANTUM OF DISCOUNT BEING COMMERCIALLY RATIONALE AND LOGICAL. ITA NO. 918/AHD/15 & C.O. NO. 85/AHD/15 . A.Y. 2009-10 10 20. BEFORE US, THE LD. D.R. COULD NOT POINT OUT ANY FAC TUAL ERROR IN THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 21. AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE ORDE RS OF THE AUTHORITIES BELOW AND AFTER UNDERSTANDING THE FACTUAL MATRIX, W E FAIL TO UNDERSTAND HOW THE ASSESSEE IS EXPECTED TO EXPLAIN THE QUANTIF ICATION OF THE VARYING DIFFERENCE IN THE DISCOUNT GIVEN BY TWO UNRELATED P ARTIES. THE ASSESSEE COULD NOT HAVE APPROACHED THE TWO UNRELATED PARTIES AND HAVE ASKED THEM TO EXPLAIN WHY THEY WERE GIVING DISCOUNT TO THE ASS ESSEE. THE UPWARD ADJUSTMENTS MADE BY THE TPO ARE UNCALLED FOR AND, T HEREFORE, CALLS FOR NO INTERFERENCE WITH THE FINDINGS OF THE FIRST APPELLA TE AUTHORITY. GROUND NO. 3 IS ACCORDINGLY DISMISSED. 22. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. 23. SINCE, WE HAVE DISMISSED THE REVENUES APPEAL, THE CROSS OBJECTION OF THE ASSESSEE BECOMES ACADEMIC IN NATURE AND, THEREFORE, CALLS FOR NO ADJUDICATION. ORDER PRONOUNCED IN OPEN COURT ON 02- 05- 20 17 SD/- SD/- (R. P. TOLANI) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 02/05/2017 RAJESH