Income Tax Appellate Tribunal - Delhi
Ibm Daksh Business Process Services ... vs Dcit, New Delhi on 6 February, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHE 'I-1', NEW DELHI
Before Sh. N. S. Saini, Accountant Member
And
Sh. Sudhanshu Srivastava, Judicial Member
ITA No. 6471/Del/2012 : Asstt. Year : 2008-09
IBM Daksh Business Process Services Vs Deputy Commissioner of
Pvt. Ltd., Birla Tower, 1st Floor, 25 Income Tax, Circle-11(1),
Barakhamba Road, Connaught Place, New Delhi
New Delhi-110001
(APPELLANT) (RESPONDENT)
PAN No. AABCD4187D
Assessee by : Sh. G. C. Srivastava, Adv.,
Sh. Suvinay Kr. Dash, Adv. &
Sh. Parichay Solanki, CA
Revenue by : Sh. Sanjay I. Bara, CIT DR
Date of Hearing :24.01.2019 Date of Pronouncement : 06.02.2019
ORDER
Per N. S. Saini, AM:
Thi s i s an appeal filed by the assessee agai nst the orde r of DRP-I, New Del hi dated 03.09.2012 for assessment year 2008-09.
2. Ground No. 1 of the appeal of the assessee reads as under:
"1. Assessment and reference t o Transfer Pricing Officer are bad in law
a) The learned Deputy Commissioner of Income-tax
-- 11(1) ['DCIT" or 'AO' / Additional Commissioner of Income-tax [TPO-I (2)], New Delhi ['ACIT' or TPO'] erred in law and on facts in maki ng addition of INR 314,525,713 to the total income of the Appellant on 2 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
account of adjustment to the arm's length price with respect to Inf ormation Technol ogy ('IT') enabled services of the Appellant wit h its associated enterprises other than IBM W orld Trade C orporation ('IBM WTC') .
b) The AO/TPO erre d in law and on facts as he failed to establish that the Appellant shi fted profits outside India."
3. Thi s ground of appeal i s general in nature and hence does not requi re separate adjudi cati on by us.
4. Ground Nos. 2 to 5 of the appeal of the assessee re ad as under:
"2. Com para bility analysis a dopt ed by the T PO for determination of a rm's length pri ce - from Associated Enterprises other than IBM Worl d Trade Corporation ('IBM WTC') .
a) The AO/ TPO grossly erred on facts and in law in rejecting the filters an d sea rch process adopted by the Appellant in the Transfer Pricing Study. Further, the AO/TPO also erred on fact s and in law by conducting a fresh benchma rking analysis in respect of captive IT enabled services provided by the Appellant and wrongly compa rin g the Appellant s activities with companies operati ng as full-fledged entrepreneurs without consi dering the differences in functions performe d, assets employed and risks assumed by the Appellant vis-a-vis compa rable companies.
b) The AO/TPO erred in law in applying arbitrary filters as crite rion for reje ction of com panies identified by the Appellant in the Transfer Pricing Study such as (i) companies whose data for financial year ('FY) 2007-08 was n ot availa ble, (ii) companies with IT enabled service revenue less than 75% of total operating revenue, (iii) companies with IT enabled service revenue less than INR 1 crore, (iv) 3 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
companies with export sales less that 25% of total revenue, (v) companies with related party transactions greater than 25% of operating revenue,
(vi) companies with different financial year ending (i.e. other than 31 March 2008), and (viii) companies having diminishing revenues / persistent losses during financial year 2007-08.
c) The AO/TPO erre d in consideri ng a set of 'secret data', i.e. dat a which was not available in public domain and not all owing t he Appellant an opportunity to cross examine the data furnished by companies to whom notice under Section 133(6) of the Act were issued.
3. Errone ous data used by the AO/TPO
a) The AO/TPO has e rred in law in using data, which was not contemporaneous and which was not available in the public domain at the time of conducting the transfer pricin g study by the Appellant.
b) The AO/TPO erred in law and on facts in disrega rding the application of multiple- year data while computing the margins of comparable companies.
4. Non-allowance of a ppropriate adjustments to the compa rable companies, by the AO/TPO
a) The AO/TPO and the H onorable Dispute Resolution Panel ('DR P') erre d in law and on facts in not allowing appropriate adjustments under Rule 10B to account for, inter alia, differences in (i) accounting practices, (ii) marketing expendit ure, (iii) research and development expenditure, (iv) policy for charging depreciation an d (v) ri sk profile between the Appellant and the comparable companies;
b) The Honorable DR P thriller e rred in passing a nonspeaking order and not considering the rectification application preferred by the Appellant in 4 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
respect of claim for depre ciation adjustment under Rule 10B.
5. Variation of 5% from the arithmetic mean The AO/TPO e rre d in law in not granting the variation as per proviso to sect ion 920(2) of the Act."
5. As the AR of the assessee has argued these grounds together, hence, they are bei ng dispose d off together as under.
6. The bri ef facts of the case are that the assessee has don e busi ness of provi ding BPO se rvi ces to Fortune 500 compani es i n the transacti on processi ng and customer ca re servi ces segments. The assessee offers remote support servi ces i ncl udi ng customer care and techni cal support through mul ti pl e communi cati on channel s, back-end transacti on processi ng, outbound col l ecti ons, telemarketing web ba sed se rvi ces i ncl udi ng real ti me chat. The uni que co-sou rci ng model and 100 per cent BPO focus enabl ed i t to re-engi neer processes and al so provi de val ue added servi ces. The assessee has shown recei pts from BPO servi ces at Rs.448,80,74,820/-. The assessee empl oyed TNMM method and OP/TC as the PLI. The assessee a rri ved at a set of 11 compani es wi th an average margi n of 14.69%. The a ssessee used mul ti pl e year data. Th e assessee's own margi n was worked out at 10.93% under BPO servi ces segment. Based on t he anal ysi s, the assessee concl uded that i ts i nternati onal transacti ons are at arm's l ength. The Assessi ng Offi cer ref erred the matter to the TPO for determi nati on of the arm's l ength pri ce. The TPO took the 5 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
foll owi ng comparabl es and a rri ved at PBDIT as com para bl es sel ected by him as under:
Sl. No Company Total Income (Rs. Cr) PBIT/Cost (%) 1 Accentia 51.04 44.5 2 Aditya Birla Minacs 183.17 -0.55 3 Asit C Mehta 4.82 9.42 Caliber Point Business 4 Solution(seg) 58 10.97 5 Coral Hub(Vishal Inf) 13.07 51.84 6 Cosmic Global 5.86 24.3 7 Crossdomain Solution P ltd 27.4 26.96 8 Datamatics Financial(BPO Div) 16.72 34.87 9 e4e (earlier known Nitanny) 25.99 16.87 10 Eclerx 123.45 66.5 11 Genesys International 47.52 48.15 Hcl Comnet systems& services 12 ltd(seg) 388.05 32.97 13 ICRA(Seg) 82.29 11.22 14 Infosys BPO 825.08 20.03 15 l-service Ind P ltd 13.39 9.73 16 Mold Tek 17.84 96.66 17 Spanco Ltd(seg) 42.27 8.94 18 Acropetal Technologies Ltd(seg) 20.8 35.3 19 Wipro BPO 1158.8 30.23 20 R System International Ltd(seg) 21.33 4.3 AVG 29.16 "a. Computation of Arm's Length Price:
The arithmetic mean of the Profi t Level indicators i s taken as the a rm's length margin. (Plea se see Annexure E for details of compu tation of PLI of the compa rables). Base d on this, the arm's length price of the IT enabled services rendered by you is computed as under:
Arithmetic mean : 29.16%
Less: Working Capital Adjustment : 1.77%
Arm's Length Price : 27.39%
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Operating C ost Rs.4,046,032,124
Arm's Length Ma rgin 27.39% of the
Operating C ost
Arm's Length Price (AL P) Rs.5,154,240,322
Price sh own in the internationa l Rs.4,488,074,819 transactions Shortfall being adjustment u/ s Rs.666,165,503 92CA The above shortfall of Rs.666,16 5,503/- is treate d as transfer pricing a djustment u/s 92CA.
Based on the above detailed discussion, the arm's length price of the international transacti ons pertaining to providing IT e nabled se rvices is determined at Rs.5,154,240,322/- instead of Rs.4,488,074,819/- cha rged in its international transactions, resulting in an adjustment to the extent of Rs.666,165,503/-."
Thus, he made an addi ti on of Rs.66,61,65,503/-.
7. The assessee carri ed the matter in appeal before the DRP who confi rmed the acti on of the TPO fol l owi ng the deci si on of the DRP in assessee's case for a ssessment year 2009-10 and reasoni ng gi ven therei n.
8. Before us, the AR of the assesse e submi tted that as the matter wi th the Uni ted Kingdom Associ ated Enterpri ses and the Uni ted States of Ameri ca Associ ated Enterpri ses has been settl ed under the Mutual Agreement Procedure as pe r copy forwa rded by the Assessi ng Offi cer on 29.11.2018 in case of Indi a-Uni ted Kingdom Mutual Agreement Resol uti on and copy forwa rded by the AO dated 23.07.2018 in case of Indi a-Uni ted States MAP resol uti on. Therefore , they are n o l onger unde r di spute. He submi tted that in case of BPO se rvi ces from associ ated enterpri ses other than IBM, Worl d Tra de Corporati on 7 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
and IBM Uni ted Ki ngdom Ltd. The determi nati on made i n the Mutual Agreement Procedure wi th UK and US shoul d al so be appl i ed in case of busi ness of BPO wi th other associ ated enterpri ses. For thi s, he rel i ed on the deci si on of Del hi 'I-2' Bench of the Tri bunal i n the case of Fi deli ty Busi ness Servi ces Indi a Pvt. Ltd. Vs DCIT, Ci rcl e-II, New Del hi in ITA Nos. 5872/Del /2011 and 4180/Del /2014 for the assessment years 2007-08 and 2008-09, order date d 13.02.2018 and submi tted that i n the sai d deci si on, the Tri bunal has hel d and di rected the TPO to make adjustment after ta king the net profi t margi n as adopted/ agree d i n the MAP to benchmark the transacti on of non-US AE al so.
9. The departmental repre sentati ve vehemently opposed the submi ssi on of the AR of the asse ssee. He a rgued that as th e busi ness condi ti ons i n other countri es may not be the same as were in the case of UK and US Associ ated Enterpri ses transacti on. Therefore , the net profi t margin adopted i n the UK and US Associ ated Enterpri ses cannot be a dopte d i n case of other associ ated enterpri ses of the assessee.
10. We have heard the ri val submi ssi ons and peruse d the orde rs of the l ower authori ties and materi al s avail abl e on record. In both the yea rs under consi derati on, the assessee i s engaged i n the busi ness of BPO servi ces. Turnover of the assessee du ri ng the assessment year 2008-09 was Rs.448,80,74,820/-. The break-up of the same are as under:
Name of the country AY 2008-09
US/UK MAP 33%
Non-UK/US countries 67%
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11. The enti re transacti on was entered i nto wi th associ ated enterpri ses. The assessee has shown i ncome at the rate of 10.93% in assessment year 2008-09. The TPO, however, determi ned the margi n at the rate of 27.39% i n the assessment year 2008-09.
12. Thereafter, MAP was entere d i nto by the assessee and the department whereby net ma rgi n i n respect of turn over wi th USA and UK was agree d upon at 15.04% for the assessment year 2008-09. Thus, i t i s now settl ed between the parti es that i n respect of turnove r of 33% i n the assessment year 2008-0 9 net margi n i s to be cal cul ated at 15.04%.
13. Thus, the i ssue whi ch i s still i n di spute i s the margi n whi ch i s to be cal cul ated i n respect of turnover of non-USA an d UK countri es whi ch is 67% of the total turnover in the assessment year 2008-09.
14. We find that it i s not i n di spute that the nature of transacti on whi ch was entered i nto wi th associ ated enterpri ses si tuated i n US and UK were sa me as associ ated enterpri ses si tuated i n non-US and UK countri es. The TPO has al so appl i ed same net profi t margi n rate for turnover of non-USA and UK countri es as was appli ed for USA and UK countri es. We, therefore, do n ot fi nd any good reason why the margi n rate agreed upon unde r MAP i n respect of USA and UK busi ness shoul d not be appl i ed for busi ness transacti on of othe r countri es al so. We have no materi al to hol d that the net margi n rate for the non-UK and USA countri es will be di fferent from the net margi n rate of transactions wi th USA and UK. We, 9 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
therefore, set asi de the orders of the l ower authori ti es and di rect the AO to adopt net margi n @ 15.04% for the assessment year 2008-09. Therefore, the ground of appe al of the assessee i s partly all owed.
15. Ground Nos. 6 & 7 of the appe al of the assessee reads as under:
"6. Claim for set off of l osses deri ved from Softwa re Technology Pa rk Unit ('STP') undertaking l ocated at Kolkata against the profit derived by other STP units
a) The Ld. AO has erred in l aw in not foll owing the directions of the Hon'ble DR P regarding adjustment of loss de rived from ST P undertaking located at Kolkata amounting to Rs. 967,426 against the profit of other STP underta kings located at Mumbai, Pune, Bangalore, and NCR while computing 10A deduction of respective ST P underta king, thereby reducing the claim of deduction under section 10A of the Act.
b) The assessment order passed by the Ld. AO is bad in law given the fact that th e direction of the DRP has not been followed.
7. Claim for set off of losses derived from STP undertaking located at K olkata a gainst the income derived from domestic sales.
The Ld. AO erred in disallowing the assessee 's claim for set off of l osses derived from underta king located at Kolkat a against income derived from domestic sales."
16. Facts of the case i n bri ef are th at the Assessi ng Offi cer observed that the acti on of the a ssessee company i n cl ai mi ng exempti on of Rs.1,56 ,93,33,236/- u/s 10A of the Act i n respect of profi t earni ng uni ts by i gnori ng the l osses ofRs.9,67,426/- of STP Kol kata uni t i s not correct as the provi si ons of Secti on 10 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
10A(1) of the Act provi des that "a deducti on of such profi ts and gai ns as deri ved by an undertaki ng from the export of a rti cles or thi ngs or computers soft ware". The use of word "undertaki ng" makes it cl ear that the deducti on u/s 10A of the Act i s avail abl e to the assessee as a wh ol e and that for the purposes the eli gi bl e profi ts shall be the consoli dated profi ts after taki ng i nto account the profi t/l oss incurred by al l the eli gi bl e uni ts. Further, Secti on 70 of the Income Tax Act, 1961 al so provi des for set off l oss of a uni t agai nst the profi ts of the other uni ts of the same assessee . Therefore , the AO obse rved that profi t eli gi bl e for exempti on u/s 10A of the Act avail abl e to the assessee is cal cul ated at Rs.1,56,83,65 ,810/- after adjusti ng the l oss of Kol kata uni t from the profi t of othe r eli gi bl e uni ts.
17. Before us, the AR of the assessee reli ed on the deci si on of Hon'bl e Supreme Court i n the case of CIT Vs Yokogaw a Indi a Ltd. reported i n (2017) 391 ITR 274 has hel d as under:
"16. From a re ading of the rel evant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eli gible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee.
This is also more than clear from the contemporaneous Circula r No. 794 dated 9.8.2000 which states in paragraph 15.6 tha t, "The export tu rnover and the tota l turnover for th e purposes of secti ons 10A and 10 B shall be of the undertaking l ocated in specified zones or 100% Export Oriented Underta kings, as the case may be, and this shall not have any ma terial relationshi p 11 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
with the other business of the assessee outside these zones or units for the purposes of thi s provisi on."
17. If the specific provisions of the Act provide [first proviso to Sections 10A(1); 10A (1A) and 10 A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporane ous Circular of the department (No. 794 dated 09.0 8.2000) understood the situation, it is only logical a nd natural that th e stage of deducti on of the profit s and gains of the business of an eligible undertaking has to be made independently and, therefore, im mediately after the stage of determination of its profit s and gains. At that stage the aggregate of the incomes under othe r heads and the provisions f or set off and carry forwa rd contained in Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior t o the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the tota l income of the assessee from the gross total income. The somewhat discordant use of the expression "tota l income of the assessee" in Section 10A has already been dealt with earlie r and in t he overall scena ri o unfolded by the provisions of Section 10A the aforesaid discord can be reconcile d by underst anding the expression "total income of the assessee" in Section 10A as 'total income of th e undertaking'.
18. For the aforesaid reasons we answer the appeal s and the questions arising the rein, as formulated a t the outset of this order, by h olding that though Section 10A, as amended, is a provision for deduction, the stage of de duction would be while computing the gross t otal income of the eligible undertaking under Chapter IV of the Act and not at the stage of computati on of the total income under Chapter VI. All the appeals shall stand disposed of accordingly."
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18. Therefore, i t was a submi ssi on that the deducti on was all owabl e to the assessee before set off of l oss of Rs.9,67,426/- i ncurred by the STP Kol kata uni t of the assessee.
19. The DR coul d not controvert the submi ssi ons of the AR of the assessee.
20. After consi deri ng the ri val submissi ons and materi al s on record we fi nd that the Hon'bl e Supreme Court has hel d that the stage of deducti on of the profi ts and gai ns of the busi ness of an eli gi bl e undertaki ng has to be made i ndependentl y and, therefore, i mmedi ately after the stage of determi nati on of i ts profi ts and gai ns. At that stage, t he aggre gate of the i ncomes under other heads and the prov i si ons for set off and carry forwa rd contai ned i n Secti ons 70, 72 and 74 of the Act woul d be premature for appli cati on. Therefore, we set a si de the orde rs of the l ower authori ti es and di rect the AO to re-compute the i ncome of the assessee i n li ght of the deci si on of the Hon'bl e Supreme Court ci ted above. Thus, thi s ground of appeal of the assessee i s all owed.
21. Ground No. 8 of the appeal of the assessee reads a s under:
"8. Com putation of deducti on allowable under section 10A of the Act.
a) The Ld. AO e rre d in law an d on facts in reducing communication charges amounting to INR 191,549,668 from export turnove r in computing the deduction allowa ble under section 10A of the Act, without appreci ating the fact that communication charges is not included in export turnover.13 ITA No. 6471Del/2012
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b) Without prejudice to above, t he Ld. AO erre d in law in not foll owing the dire ctions of the Hon'ble DR P regarding re duction of communication charge s from total turnover.
c) The assessment order passe d by the Ld. AO is bad in law given the fact that the direction of the DRP has not been followed."
22. Facts of the case i n bri ef are th at the Assessi ng Offi cer computed the deducti on u/s 10A of the Act all owabl e to the assessee after reduci ng the telecommuni cati on expenses of Rs.19,08,87,950/- pai d in forei gn currency from export turnover.
23. The AR of the assessee submi tted that the i ssue stands covered i n favour of the assesse e by the deci si on of Hon'bl e Delhi Hi gh Court i n the case of Genpact Indi a Vs CIT reported i n 203 Taxmann.com 632 wherei n i t was hel d as under:
"14. Having considere d the argu ments advanced by the counsel for the pa rties, we are in complet e agreement with the decision of the Bombay High Court in the case of Gem Plus Jewellery(supra). In orde r to avoid prolixity, we set out the relevant porti on of the decision of the Bombay High Court in Gem Plus Jewellery and e ndorse the same . The relevant portion of the said decision is as under:
"6. The total turnover of the busi ness carried on by the undertaking w ould consist of the turnover from export and th e turnover from local sales. The export turn over constitutes the numerator in the formula prescribe d by sub-section (4). Export turnov er also forms a constituent element of the denominator inasmuch as the export turnover is a part of the total turnover.
7. The export turnover, in the numerator must have the same meaning as the export turnove r 14 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
which is a constituent element of the tota l turnover in the denominator. The Legislature has provided a definition of the expression "export turnover" in Explanati on 2 t o Se ction 10A by which the expression is de fined to mean the consideration in respect of export by the undertaking of articles, things or compute r software received in, or brought into India by the assessee in convertible foreign exchange but so as not to include inter alia freight, telecommunication charges or insurance attributable to the delivery of the articles, things or software outside India . Therefore, in computing the export turnove r the Legislature has made a specific exclusion of freight and insurance charges.
8. The submission which has bee n urged on behalf of the Revenue is that while freight and insurance charges are liable to be excluded in computing export turnover, a similar exclusion has not been provided in regard t o total turnover. The submission of the R evenue, however, misses the point that the expression "total turnover" has not been defined at all by Parliament for the purposes of section 10A. However, the expressi on "export turnover" has been defined. The definition of "Export turnover"
excludes freight and insurance. Since export turnover has been defined by Pa rl iament and there is a specific exclusion of f reight and insurance , the expression "export turnover" cannot have a different meaning when it f orms a constituent part of the total turnover f or the purpose s of the application of the formula.
Undoubtedly, it was open to Parliament to make a provision t o the cont rary. However, no such provision having been made, the principle which has been enunciated earlier must prevail as a matter of correct statutory interpretation. Any other interpretati on woul d lead to an a bsurdity. If the contention of the Revenue were tobe accepted, the same 15 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
expression viz. "ex port turnover" would have a different connotation in the a pplication of the same formula. The submission of the Revenue would lea d t o a situation wh ere freight an d insurance, though it has been specifically excluded from "export turn over" f or the purposes of the numerator w ould be brought i n as part of the "export turnover" when it forms an element of the total turnover as a denominator in the formula. A construction of a statutory provision which would lead to an absurdity must be avoided." (underlining added)
16. All the points raise d by Mr Sa bharwal stand answered in the reasoning given by the Bombay High Court and Karnataka High Court in the said decisions with which we are in complete agreement."
24. The DR coul d not controvert the submi ssi on of the AR of the assessee.
25. Therefore, respectfull y foll owing the deci si on of the Hon'bl e Del hi Hi gh Court i n the case of Genpact Indi a (supra), we set asi de of the orders of l ower authori ties and di rect the AO to compute deducti on u/s 10A of the Act after deducti ng the Tel ecommuni cati on expenses both from export turnover an d total turnover of the assessee. T hus, thi s ground of appeal of the assessee i s all owed.
26. Ground n o. 9 of the appeal of the assessee rea ds a s under:
"9. Disallow ance of prior period expenditure amounting to INR 25,186,105
a) The Ld. AO erred in law and on fact s in disallowing prior period expenses of INR 25,186,105 even though the said expenses were incurred f or 16 ITA No. 6471Del/2012 IBM Daksh Business Process Services India Pvt. Ltd.
the purpose of business and had crystallized during the FY 2007-08.
b) Without prejudice to the above, if the prior period expenses a re disallowe d, then proper allocation should be made between various units of the assessee (STP, Speci al Economic Zone and Domestic T ariff Area) and deduct ion to be all owed on the enhanced profits for the eligible units."
27. The bri ef facts of the case a re th at the Assessi ng Offi cer di sall owed pri or pe ri od expenses debi ted i n the profi t and l oss account am ounti ng to Rs.25,186,1 05/- as they pert ai ned to the earli er year and not to the year under appeal
28. On appeal , the DRP confi rmed the acti on of the AO. The AR of the assessee submitted that thi s Bench of the Tri bunal i n the case of the assessee i tsel f i n the assessment year 2009-10 vi de order dated 05 .07.2016 passed i n ITA NO. 2666/Del /2014 had restored the matter back t o the fil e of the Assessi ng Offi cer and therefore, the matte r shoul d be restored back t o the fil e of the Assessi ng Offi cer with the very same di recti on as gi ven i n the assessment year 2009-10.
29. The DR had no objecti on to the above submi ssi ons of the AR of the assessee.
30. We fi nd that Tri bunal i n the assessment year 2009-10 hel d as under:
"25. Ground NO. 5 relating to t he issue of alleged prior peri od expenses is rest ored t o the file of the AO for examining/verifying the claim of the assessee and allowing the same if it is found that the payments have crystallized in the yea r unde r appeal. Hence the ground is allowe d for statistical pu rposes."17 ITA No. 6471Del/2012
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31. Hence, we set asi de the orders of the l ower authori ti es and remand thi s i ssue back to the fil e of the AO wi th the very same di recti on as given i n assessment year 2009-10. Thus, thi s ground of appeal of the assessee i s all owed for stati sti cal purposes.
32. Ground Nos. 10, 11 & 12 of the appeal of the assessee read as under:
"10. Levy of Interest under section 234B of the Act The Ld. AO has erred in law and on facts in levying interest under section 234B of the Act amounting to Rs. 107,342,818.
11. Levy of Interest under section 234C of the Act The Ld. AO has erred in law and on facts in levying interest under section 234C of the Act given the fact that no interest is leviable as per returned income.
12. Levy of Interest under section 234D of the Act The Ld. AO has erred in law and on facts in levying interest under secti on 234D of the Act amounting t o Rs. 12,075,131."
33. At the time of heari ng, the AR of the assessee submi tted that chargi ng of i nterest i s consequenti al . Therefore, these grounds of the appeal of the assessee are di smi ssed.
34. Ground No. 13 of the a ppeal of the assessee reads as under:
"13. Initiation of penalty proceedi ngs On the facts and in the circumstances of the case, the learned AO has erred in initiating penalty proceedings under section 271(1)(c) of the Act."18 ITA No. 6471Del/2012
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35. Thi s ground of appeal i s pre-mature and i s accordi ngl y di smi ssed.
36. Ground Nos. 14 & 15 of the appe al of the assessee reads as under:
"14. Directions issued by t he Honour able DRP The Honorable DRP has erred in law and on facts in not taking cognizance of the objections filed by the Appellant in relation to the draft assessment order issued by the AO/ TP order and con firming the draft order of th e A O.
15. Relief The Appellant craves leav e to add to or alter, by deletion, substitution, modification or otherwise, th e above grounds of appeal, either before or during the hearing of the appeal.
The Appellant submits that the above grounds are independent and without prejudice to one anoth er."
37. At the ti me of heari ng, no arguments were advanced by the AR of the assessee on these grounds of a ppeal rai sed before us. Hence, they are di smi ssed for want of prosecuti on.
38. In the resul t, the appeal of the assessee i s partl y all owed. (Orde r Pronounced i n the Open Court on 06/02/2019) Sd/- Sd/-
(Sudhanshu Srivastava) (N. S. Saini)
Judicial Member Accountant Member
Dated: 06/02/2019
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR