Income Tax Appellate Tribunal - Ahmedabad
Liquid Control India (P) Ltd.,, Baroda vs Dy.Cit.,Circle-1(2),, Baroda on 21 November, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD '' I " BENCH - AHMEDABAD
Before Shri S.S. Godara, JM, & Shri Manish Borad, AM.
ITA No. 79/Ahd/2010
Asst. Year: 2002-03
Liquid Controls India (P) Ltd. Vs. ACIT, Circle-1(2), Baroda.
808, VCCI Complex, GIDC -
Makarpura, Baroda.
Appellant Respondent
PAN AAACL 3371J
Appellant by Shri Sanjay R. Shah, AR
Respondent by Shri S. K. Dev, Sr.DR
Date of hearing: 7/9/2016
Date of pronouncement: 21/11/2016
ORDER
PER Manish Borad, Accountant Member.
This appeal of assessee is directed against the order of ld. CIT(A)-V, Baroda, dated 30.10.2009 in appeal No.CAB(A)-V/86/07-08 passed against order u/s 143(3) r.w.s. 147 of the IT Act, 1961(in short the Act), framed on 31.12.2007 by ACIT, Cir-1(2), Baroda.
2. Briefly stated facts as culled out from the records are that the assessee is a private limited company engaged in the business of manufacturing flow meters and trading activities. Return of income was filed on 31.10.2002 declaring total income of Rs.15,77,591/- and assessment u/s 143(3) r.w.s. 147 of the Act was finalized on 30th ITA No. 79/Ahd/2010 2 Asst. Year 2002-03 March, 2006 determining total income at Rs.12,55,363. Subsequently, notice u/s 148 was issued along with reasons against which assessee filed letter dated 1.12.2006 stating that the original return filed on 31.10.2002 be treated as return filed in response to notice u/s 148 of the Act. Accordingly re-assessment u/s 143(3) r.w.s. 147 of the Act was finalized on 31.12.2007 at Rs.94,33,166/- after making addition of Rs.21,78,003/- to the previously assessed income u/s 143(3) r.w.s. 148 of the Act on 31.3.2006.
3. In appeal before the first appellate authority assessee partly succeeded. Aggrieved, assessee is now in appeal before the Tribunal raising various grounds.
4. Ground no.1 which reads as below has not been pressed by the assessee and, therefore, the same is dismissed as not pressed.
1. The learned Commissioner of Income Tax (Appeals) UCIT (A)" erred in fact and in law in confirming the action of the AO in reopening the assessment by invoking the provisions of section 147 of the Income Tax Act, 1961 and completing the assessment, commenced under invalid and improper exercise of powers u/s 147 of the Act.
5. Ground no 2. Reads as follows :-
2. The learned CIT (A) erred in fact and in law in confirming the action of the AO in holding that the following items of income are not derived from industrial undertaking and therefore the Appellant is not entitled to deduction under 80IB on these items of income:
Particular Amount
Interest on Margin Money Deposit 6,56,890
Total 6,56,890
ITA No. 79/Ahd/2010 3
Asst. Year 2002-03
6. At the outset ld. AR submitted that the issue in this ground is as to whether assessee is eligible for deduction u/s 80IB for interest on margin money on fixed deposit is squarely covered by judgment of Hon. Bom. High Court in the case of CIT vs. Jagdish Prasad M. Joshi 318 ITR 420 (Bom) wherein it has been held that interest from fixed deposit in bank and other are interest derived from the business industrial undertaking are eligible for deduction u/s 80IA.
7. Ld. DR could not controvert the submissions made by ld. AR.
8. We have heard the rival contentions and perused the record placed before us. Through this ground assessee has challenged the order of ld. CIT(A) confirming the order of Assessing Officer in not allowing deduction u/s 80IB of the Act for interest income on fixed deposit given as margin money towards loan/limit taken from the bank. Before going further it will be relevant to go through the finding of ld. CIT(A) wherein he has observed as follows :-
5.4 I have carefully considered the facts of the case, submissions of the appellant and the assessment order. Any Industrial undertaking which involves the following additions are eligible for deduction u/s. 80IB.
"(i) it is not formed by splitting up or the reconstruction of a business already in existence:
Provided that this condition shall not apply In respect of an industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section;ITA No. 79/Ahd/2010 4
Asst. Year 2002-03 (it) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
(ill) It manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plat or plants, in any part of India:
Provided that the condition in this clause shall, in relation to a small scale industrial undertaking or an Industrial undertaking referred to in sub-section (4) shall apply as if the words " not being any article or thing specified in the list in the Eleventh Schedule" had been omitted.
Explanation l.-For the purposes of clause (II)t any machinery or plant which was used outside India by any person other that the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely:-
(a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India;
(b) such machinery or plant Is Imported into India from any country outside India; and
(c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee.
Explanation 2.- Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty percent of the total value of the machinery or plant used in the business then, for the purposes of clause (II) of this sub-section, the condition specified therein shall be deemed to have been complied with;
(iv) in a case where the industrial undertaking manufacturers or produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power, " ;
5,4.1. Apparently the AO has disallowed the claim u/s. 80IB on the ground that no primary evidence had been furnished to justify the manufacturing activity. During the course of spot verification at the business premises, the appellant had mentioned that manufacturing had commenced w.e.f. 01/07/1993 and on the ITA No. 79/Ahd/2010 5 Asst. Year 2002-03 basis of the verification, the Department disallowed the claim for A.Y. 2004-05 as it was 11th year of the claim. The Tax Audit Report mentioned that the assessee is engaged to the manufacturing of flow meters and trading activities. Similarly, in the audit report Clause 28 which is also re-produced by the AO on page 5 of the assessment order, the details of items manufactured during the wear and the raw material consumed is also indicated. Further, the statement before the Central Excise reveals that the manufacturing activity was going on during the assessment year. As against the aforesaid details the AO has not led any positive evidence to support his argument that no manufacturing activity was carried out. His arguments that the value of plant & machinery is too low is not firmly founded as he referred to WDV and not the historical cost of plant & machinery, inaccuracy has also crept in the assessment order when he has erroneously mentioned at page 6 of the order that all manufacturing and trading activities are performed by LCIPL which is in fact the appellant. to view of these facts there is no Justification for denial of claim u/s. 80IB. As regards inclusion, of certain items in the profit, the appellant is to provide all the details to AO to show that freight and packing and forwarding charges and insurance income was a part of the business receipts and also there was corresponding entries on the debit side of the P & L Account. Similarly dividend income and interest Income has to be excluded for the purpose of Section 80IB. I am also partly in agreement with AO that there was some trading activities as mentioned in the Audit Report. The assessee Is asked to provide all necessary details for clear bifurcation of trading and manufacturing activities with attendant details of income and allocable expenses, so that only the manufacturing profits are allowed for deduction u/s. 80IB. In the case of Kashmir Art vs. CIT 213 CTR 421 (Del) it is held that interest on the FDRs kept as margin money is not business income. Thus, the same has to be excluded for the purpose of 80IB deduction. Ground No. 2, 3 & 4 are partly allowed and ground No. 5 is dismissed.
9. From going through the findings of ld. CIT(A) we observe that assessee is having some trading activities also along with manufacturing and ld. CIT(A) has directed the Assessing Officer to carry out necessary verification to calculate the profits attributable to the manufacturing activities only which are eligible for deduction u/s 80IB of the Act. As regards the claim of assessee for allowing deduction u/s 80IB for interest on fixed deposit given as margin money towards secured/credit from bank we observe that to the extent if the interest is from such fixed deposit which have been used ITA No. 79/Ahd/2010 6 Asst. Year 2002-03 to get the working limits from bank, judgment of Hon. Bombay High Court in the case of CIT vs. Jagdishprasad M. Joshi (supra) is squarely applicable wherein it was held that profits and gains derived from the business of the industrial undertaking - interest on fixed deposits from bank and other interest income are eligible for deduction u/s 80IA of the Act. However, from going through the assessment order and the order of ld. CIT(A) we observe that assessee has not substantiated his claim along with necessary evidences in order to demonstrate that interest income earned on fixed deposit are with regard to margin money. We are, therefore, of the view that the issue needs to be restored to the file of Assessing Officer to carry out necessary verification with the support of documentary evidences to be provided by assessee in order to prove that fixed deposits on which interest income has been shown are linked with margin money in order to enjoy secured loan/credit limits from banks. Needless to mention that proper opportunity of being heard may be given to the assessee. Accordingly, this ground of assessee is allowed for statistical purposes.
10. Ground no.3 reads as under :-
3. The learned CIT (A) erred in fact in confirming the action of the AO in holding that gross amount of interest is required to be excluded from the profits for the purpose of computing deduction u/s 80IB and no deduction should be granted for expenses incurred for earning the said income.
11. At the outset ld. AR submitted that the issue raised in this ground is squarely covered in favour of assessee by the judgment of ITA No. 79/Ahd/2010 7 Asst. Year 2002-03 Hon. Supreme Court in the case of ACG Associated Capsules (P) Ltd. vs. CIT (2012) 18 taxmann.com 137 (SC) wherein it has been held that net amount of interest only and not gross amount should be excluded from the profits for the purpose of calculating deduction u/s 80IB of the Act.
12. Ld. DR on the other hand relied on the orders of lower authorities but could not controvert the submissions made by ld. AR.
13. We have heard the rival contentions and perused the material on record and the copy of the judgment placed before us. Through this ground assessee has challenged the order of ld. CIT(A) confirming the action of CIT(A) in holding that gross amount of interest is required to be excluded from the profits for the purpose of computing deduction u/s 80IB. We find that ld. CIT(A) has adjudicated this ground along with ground no.2 above in his appellate order. In this ground limited issue before us is that as to whether gross interest or net interest is to be excluded from the profits for the purpose of calculating deduction u/s 80IB of the Act. We find that Hon. Supreme Court in the case of ACG Associated Capsules (P) Ltd. vs. CIT (supra) while adjudicating the issue relating to deduction u/s 80HHC has held as follows :-
Explanation (baa) to section 80 HHC states that 'profits of the business' means the profits of the business as computed under the head 'Profits and Gains of Business or Profession' as reduced by the receipts of the nature mentioned in clauses (1) and (2) of the Explanation (baa). Thus, profits of the business of an assessee will have to be first computed under the head 'Profits and Gains of Business or Profession1 in accordance with provisions of sections 28 to 44D. In the computation of such profits of business, all receipts of income, which are chargeable as profits and gains of business under section 28, will have to be ITA No. 79/Ahd/2010 8 Asst. Year 2002-03 included Similarly, in computation of such profits of business, different expenses which are allowable under sections 30 to 44D have to be allowed as expenses. After including such receipts of income and after deducting such expenses, the total of the net receipts are profits of the business of the assessee computed under the head 'Profits and gains of business or Profession1 from which deductions are to made under clauses (I) and (2) o/Explanation (baa). [Para 9] Under clause (I) o/Explanation (baa), ninety per cent of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in any such profits are to be deducted from the profits of the business as computed under the head 'Profits and Gains of Business or Profession'. The expression 'included any such profits' in clause (I) of the Explanation (baa) to section 80HHC would mean only such receipts by way of brokerage, commission, interest, rent, charges or any other receipt which are included in the profits of the business as computed under the head 'Profits and Gains of Business or Profession'. Therefore, if any quantum of the receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature is allowed as expenses under sections 30 to 44D and is not included in the profits of business as computed under the head 'Profits and Gains of Business or Profession', ninety per cent of such quantum of receipts cannot be reduced under clause (1) o/Explanation (baa) from the profits of the business. In other words, only ninety per cent of the net amount of any receipt of the nature mentioned in clause (I), which is actually included in the profits of the assessee, is to be deducted from the profits of the assessee for determining 'profits of the business of the assessee under Explanation (baa) to section 80HHC. [Para 10] Explanation (baa) has to be construed on its own language and as per the plain natural meaning of the words used in Explanation (baa), the words 'receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits' will not only refer to the nature of receipts but also the quantum of receipts included in the profits of the business as computed under the head 'Profits and Gains of Business or Profession' referred to in the first part of the Explanation (baa). Accordingly, if any quantum of any receipt of the nature mentioned in clause (1) o/Explanation (baa) has not been included in the profits of business of an assessee as computed under the head 'Profits and Gains of Business or Profession', ninety per cent of such quantum of the receipt cannot be deducted under Explanation (baa) to section 80HHC. [Para 11] Therefore, if the rent or interest is a receipt chargeable as profits and gains of business and chargeable to tax under section 28, and if any quantum of the rent or interest of the assessee is allowable as an as an expenses in accordance with sections 30 to 44D and is not to be included in the profits of the business of the assessee as computed under the head "Profits and Gains of Business or Profession", ninety per cent of such quantum of the receipt of rent or interest will not be deducted under clause (1) o/Explanation (baa) to section 80HHC. In other ITA No. 79/Ahd/2010 9 Asst. Year 2002-03 words, ninety per cent of not the gross rent or gross interest but only the net interest or net rent, which has been included in the profits of business of the assessee as computed under the head 'Profits and Gains of Business or Profession', is to be deducted under clause '!' (^Explanation (baa) to section 80HHC for determining the profits of the business, [Para 12] In the result, the appeal is allowed and the impugned order of the High Court is to be set aside. The matter is remanded to the Assessing Officer to work out the deductions from rent and interest in accordance with this judgment. [Para 17]
14. Respectfully following the judgment of Hon. Supreme Court in the above referred case, we are of the view that net amount is to be excluded from the profits for the purpose of computation of deduction u/s 80IB. Accordingly, this ground of assessee is allowed.
15. Ground no.4 of the appeal reads as under :-
4. The learned C1T(A) erred in fact and in law in confirming ihe action ol the AO in making adjustment u/s. 92C r.w.s 92(1) in respect of international transactions and thus confirming addition to the extent of Rs. 15,28,587.
4.1 The learned CIT(A) erred in fact and in law in confirming the action of the AO in:
(i) rejecting the report in Form No. 3CEB despite the fact that all the facts and figures mentioned therein were correct.
(ii) in computing the arm's length price of the international transactions on a basis different than that adopted by the auditors of the appellant-company despite the fact that the auditors had correctly computed arm's length price and had certified the same.
(iii) in computing the arm's length price completely ignoring provisions of section 92C(3) of the Act.
(iv) in rejecting the comparable cases without giving proper reasons for such rejection.
4.2 The learned CIT(A) erred in fact and in law in stating that the appellant has not challenged the inclusion of Daniel Measurements and Control India Ltd. in the list of comparables while working out the comparable operating margin.
ITA No. 79/Ahd/2010 10Asst. Year 2002-03 4.3 The learned CIT(A) erred in fact and in law in determining the comparable operating margin at 5.78 % instead of 4.51 % worked out by the appellant.
4.4 The learned CIT(A) erred in fact and in law confirming the action of the AO in holding that the Operating Margin of the appellant is 3.73 %, though in effect the Appellant's Operating Margin worked out to 4.51 %.
4.5 The learned CIT(A) erred in fact and in law in confirming the action of the AO in not considering the option exercised by the appellant as provided under proviso to section 92C(2) of the Act. The CIT(A) failed to direct the AO not to make any addition despite the fact that the arm's, length price as worked out by the AO and that worked out by the appellant did not exceed the limit of 5 % as stated in proviso to section 92C(2).
16. Brief facts in relation to this ground are that assessee entered into international transaction covered by section 92B of the Act which is supported by report in form 3CEB r.w.s.92E of the Act, As per this report assessee entered into international transaction with its Associated Enterprise (AE) namely- Liquid Controls Inc.(LCI) which is holding company having 26% voting power in assessee company and is associated enterprise in terms of clause (a) of section 92A(2). It will be worthwhile to discuss the product in which assessee deals in. The assessee i.e. LCIPL deals in high accuracy custody transfer liquid measurement and oil delivery equipments including aircraft refueling, LPG delivery equipment which are manufactured by Liquid Control Inc. or LCIPL itself. During the course of assessment proceedings assessee submitted a report on transfer pricing study of LCIPL for FY 2001-02 discussing the details relating to the scope of this study, summary of approach, frame work of transfer pricing regulations, over view of the AE, company overview, industry scenario, functional analysis-objective, functions performed, risks assumed, assets employed, economic analysis and conclusion. As per the reply of ITA No. 79/Ahd/2010 11 Asst. Year 2002-03 assessee dated 16.3.2006 in which assessee has given the basis of selecting the comparables and the operating profit margin for calculating arms length price with regard to following international transaction entered into with AE during the year under appeal :-
i) Import of components of Rs.10781520/-
ii) Import of finished goods of Rs.14555120/-
iii) Export of fabricated items of Rs. 6436799/-
iv) Payment of technical charges to AE for Deputation of technical knowhow by AE Rs.1042744/-
17. As per the transfer pricing report assessee has shown the operating margin profit (O.P./sales) at 3.73% as against average of operating profit margin of comparable companies at (-) 1.95%) and it was claimed by assessee that no adjustment is required to be made for determining the arms length price (ALP) of the various international transaction (I.T.). Thereafter ld. Assessing Officer confronted assessee as to why not the international transaction should be adjusted to have an operating profit/sales margin at 7.27% which is an average of Daniel Measurement and Control (India) Ltd.(5.38%), Bhartia Industries Ltd. (5.68%), Indfos Industries Ltd. (6.28%) and Roop Telsonic Ultrasonix Ltd.(11.75%). These four comparables were taken by Assessing Officer out of various comparables taken by assessee with the only variation that ld. Assessing Officer did not take those comparables having negative operations/sales percentage or the business of the comparables were of much higher magnitude as compared to that of assessee.
ITA No. 79/Ahd/2010 12Asst. Year 2002-03
18. In response to the show cause notice for adjusting international transaction at 7.27% assessee objected the observation of Assessing Officer for not providing working on the basis of which operating margin has been calculated and also objected that Bhartia Industries Ltd., Indfos Industries Ltd. and Roop Telsonic Ultrasonix Ltd. were engaged in manufacturing of items other than those dealt by the assessee. However, Assessing Officer disregarded to the contention of assessee by observing that the list of comparables were provided by assessee itself and Bhartia Industries Ltd. is dealing in electronic devices which is similar to assessee's product & Roop Telsonic Ultrasonix Ltd. is manufacturing electronic devices to measure speed of flow of liquid control level, which is also similar to that of assessee.
19. Ld. Assessing Officer further observed that filters selected by the assessee to choose comparables by eliminating all companies engaged in the business other than manufacturing is incorrect as the assessee is engaged in both the manufacturing and trading activities. Accordingly the Assessing Officer applied the difference of the average operating sales ratio of 7.27% as against operating/sales ratio of 3.73% shown by the assessee and applied the difference of 3.54% [7.27% (-) 3.73%] on the total turnover of the assessee and made addition of Rs.26,39,609/- to the arms length price u/s 92C(3) of the Act.
20. In appeal before ld. CIT(A) challenging the impugned addition of Rs.26,39,608/- assessee also contended that the arms length price ITA No. 79/Ahd/2010 13 Asst. Year 2002-03 calculated by ld. Assessing Officer is not more than 5% of the value of international transaction thereby leaving no question to exercise the option of section 92C of the Act and also appealed that the excess of operating profit/upon sales ratio should have been applied only to the international transaction rather than total turnover of the assessee. Apart from this, assessee made following submissions before ld. CIT(A) against the addition made by the AO.
i. The AO has neither accepted the list of comparables as per original study nor has accepted the list as per revised study. No specific reason is given for rejecting more scientific alternate study. The AO has primarily gone by the original study and has made the following alterations in the list of the comparables:
a. Excluded companies having turnover exceeding Rs. 100 crores on the ground of size, b. Excluded two companies merely on the ground that they have incurred losses, c. Excluded two companies (Bells Controls Ltd. and Mazda Colours Ltd.) due to product dissimilarities included company (Daniel Management and Control India Pvt. Ltd) though data thereof was not available in public domain.
d. Exclusion on the ground of size would be relevant, but if it has the impact of reducing the sample size then caution should be exercised for the same. However, this issue is more or less academic in the present case as even after excluding these comparables the average PLI (Profit Level Indicator) works out to (-2.29%) i.e. less than what was adopted by the Appellant.
ii. The AO excluded two companies i.e. Bells Controls Ltd. and Jyoti Ltd. merely because these companies are incurring losses. It Is ITA No. 79/Ahd/2010 14 Asst. Year 2002-03 submitted that merely because some companies are making losses does not require exclusion of a comparable case unless It is shown by explicit evidence that the losses have affected performance. Further, for working out PLI, the law requires average of the PLI of all comparable used and no exclusion is permitted in working out the averages. Attention is invited to proviso to Section 92C(2) which mandates taking the arithmetic mean but does not permit any cases of exclusion. It is submitted that the exclusions done by AO on the ground of losses is not mandated by Law on this point.
ill. The AO has further excluded 3 comparables on unsustainable ground of non comparability of the product ranges. The AO has however not applied this ground thoroughly in a sense that he has not eliminated Bhartia Industries Ltd. (engaged in manufacturing of Motor Control Gears), Indfos Industries Ltd. (engaged in manufacturing of Hydraulic Systems and also Pressure and Temperature Controllers) and also Roop Telsonic Ultrasonlx Ltd.. (dealing in Accessories to amplifier, Ultrasonic Cleaner and also in Ultrasonic plastic welding machines.) iv. Rather than following systematic base, the AO has already adopted selective approach to identify comparables as it is revealed from wide variation in the PLI of four comparables arrived by the AO.
v. Total transactions with associate enterprise do not exceed even 20% of total amount of similar transaction. In such a situation If addition Is made in the manner as laid In the order then such addition would exceed even gross taxable come offered by the appellant.
21. Ld. CIT(A) observed that out of the four surviving set of comparables are Bhartia Industries Ltd. 5.68%, Indfos Industries Ltd. 6.28%, Daniel Measurement 5.38% and Roop Telsonic 11.75% rejected Roop Telsonic Ultrasonic Ltd. 11.75% operating margin (being much higher) and accepted the remaining three as were ITA No. 79/Ahd/2010 15 Asst. Year 2002-03 having the operating margin between 5.68% to 5.38% and on average took the percentage of 5.78% as against the assessee's margin of 3.73% and accordingly after applying the difference of 2.05% in the total sales sustained addition of Rs.15,28,582/- by observing as follows :-
"6.3. I have carefully considered the facts of the case and the submissions of the appellant. For determination of arm's length price the appellant had provided set of comparables from 11 companies using the 'Prowess' data base. The AO also proposed a comparable case of Daniel Measurement and Control India Pvt. Ltd. (adjusted OP/Sale of 5.38%). The AO sought to disregard 8 of the 11 cases on the ground of higher turn over and negative operating profits. In response to the show cause the appellant argued that company such as Bhartia Industries Ltd., Indfos Industries Ltd., Roop Telsonic Ultrasonic Limited are dealing In completely different products and thus these companies cannot, be comparable cases on lack of functional similarity ground. It Is also pointed out by the appellant that the only company which was truly Similar to the appellant was FMC Sanmar Inds. Ltd. but it incurred tosses during the year. The AO has however, pointed out that Bhartia Industries Ltd., is engaged in manufacture of Electronic control devices and Indfos is in the business of Hydraulic Systems and Control Panels and Roop Telsonic is dealing in liquid level controllers. The AO further eliminated companies having turn over more than 100 crores as the appellant's turn over was around 7.5 crores. Further, the companies with negative margin such Bell Controls Ltd. and Jyoti. Ltd., were taken out of contention as these were dealing in ancillary items and non ferrous castings respectively and are not similar to appellant's products. I am in agreement with the criterias adopted by the AO for short listing the set of comparables. The companies with much higher turn over i.e. >100 crores encounter different set of risk factors and operational logistics as compared to the appellant i.e. in the range of <10 crores. Further, loss making companies also cannot be the right comparables. The appellant not questioned the inclusion of Daniel Measurements and ControLlQdla_Ltd.f in the list of comparable. On this basis the surviving set of companies are:
Name OP/Sales Bhartia Industries Ltd. 5.68 Indfos Industries Ltd. 6.28 Daniel Measurement 5.38 Roop Telsonic 11.75
6.3.1. It is noticed from above that 3 of the 4 comparables are closely bunched in the OP/Sales ratio of 5.3 - 6.3% and in my view this band represents the most probable OP/Sales Margin for comparison with the appellant case. The average ratio of the relevant group is 5.78% and as against that the appellant margin is ITA No. 79/Ahd/2010 16 Asst. Year 2002-03
3.73%. Accordingly, the addition to the extent of difference of 2.05% on the total sale of about Rs.7.4565 crores is Rs.15,28,582/- is confirmed. Ground no.6 is partly allowed."
22. Aggrieved, assessee is now in appeal before the Tribunal.
23. Ld. AR submitted that assessee company which is engaged in the business of manufacturing and sale of positive displacement mass flow meters, pumps and turbine is 100% subsidiary company of Liquid Controls Inc. incorporated in USA (LCI) and part of Idex Corporation Group which has substantial experience, know-how and market presence, the manufacturer of positive displacement , mass flow meters, turbine and pumps etc., Assessee i.e. LCIPL has entered into cross border transactions with the LCI with regard to import of components and finished goods from LCI, export of fabricated items to LCI and payment of technical charges to technicians of LCI. Ld. AR also discussed about the ownership structure , overview of the associated enterprise, industrial scenario, functional analysis along with objects, functions performance, risks assumed, assets employment and its characterization. Submissions have also been made with regard to analysis vis-à-vis mapping of international transaction selection of most appropriate method for calculating arms length price and the reasons for applying transaction net margin method as a most appropriate method with regard to the facts of the case.
ITA No. 79/Ahd/2010 17Asst. Year 2002-03
24. Ld. AR further submitted that net operating profit margin of the sales margin which was calculated by assessee at 3.73% should be substituted by the revised calculation of operating margin of 4.51% With regard to technical charges payment of Rs...10,42,740/- to AE it is stated that the said payment pertains to reimbursement of expenditure incurred by the technical personnel deputed by the AE on the request of the assessee and while applying TNMM method the above has already been considered while deriving the operating margin by the assessee.
25. Ld. AR further submitted that ld. CIT(A) erred in confirming the action of Assessing Officer for applying differential net operating profit margin of total turnover rather than on international transaction. In support of his contention ld. AR relied on the following judgment/decisions :-
1. CIT vs. Ratilal Becharlal & Sons (2016) 65 taxmann.com 155 (Bombay)
2. ITA No.736/Mum/2012 for Asst. Year 2008-09 in the case of Phoenix Mecano (India) P. Ltd. vs. ITO
3. ITA No.6183/Del/2012 for Asst. Year 2008-09 in the case of Chrys Capital Investment Advisors India P. Ltd. vs. DCIT
4. ITA No.2073/Mum/2010 for Asst. Year 2004-05 in the case of ACIT vs. M/s Frost & Sullivan (I) P. Ltd.
Ld. AR also referred to the CBDT Instructions dated 20th May, 2003 on transfer pricing guidelines along with a chart showing that even after considering the additions sustained by CIT(A) in transfer pricing adjustment the same falls in the safe harbor rules of + (-) 5%. In respect of his contention following calculation on applicability of safe ITA No. 79/Ahd/2010 18 Asst. Year 2002-03 harbor rules has been placed at page 97 of the paper book which is as under :-
Option 1 Option 2 International transaction (Rs. In crores) A 3.28 3.17 Assessee's margin (% of sales) B 3.73% 3.73% AO's margin (% of sales) C 7.27% 7.27% Difference to be added to income of assessee D=C-B 3.54% 3.54% ALP @ 103.54% (Rs. In crores) E=A+(A*D) 3.40 3.28 95% of ALP (Rs. In crores) F=E*95% 3.23 3.12 105% of ALP (Rs. In crores) G=E*105% 3.57 3.45 Value of international transaction is within range of +5% 3.28 3.17
26. On the other hand, ld. DR vehemently argued and supported the orders of lower authorities and also to the working of ld. CIT(A). Ld. DR submitted that the appeal of the department has already been dismissed due to low tax effect and submitted that power of TPO to select comparables is not limited to the document but has also the power to other source in order to find out the comparables and urged urge that the order of ld. CIT(A) should be upheld.
27. We have heard the rival contentions and perused the record placed before us. Assessee is aggrieved with the action of ld. CIT(A) sustaining the addition of Rs.15,28,552/- u/s 92C(3) of the Act. We do not consider to reiterate the facts discussed above, but briefly we observe that following transactions were entered into by the assessee ITA No. 79/Ahd/2010 19 Asst. Year 2002-03 i.e. LCIPL as its Associated Enterprise, Liquidity Control Inc (LCI), USA -
i) Import of components of Rs.10781520/-
ii) Import of finished goods of Rs.14555120/-
iii) Export of fabricated items of Rs. 6436799/-
iv) Payment of technical charges to AE for Deputation of technical knowhow by AE Rs.10,42,744/-
We observe that during the course of assessment proceedings assessee has reported an operating profit margin of 3.73% which was later on revised to 4.51% vide letter dated 16.3.2006 showing alternative selection process for comparables. As against this, ld. Assessing Officer calculated an average operating profit margin at 7.27% taking four comparables namely -
Name OP/Sales Bhartia Industries Ltd. 5.68% Indfos Industries Ltd. 6.28% Daniel Measurement 5.38% Roop Telsonic 11.75%
When the matter came up before ld. CIT(A) out of four comparables taken by Assessing Officer, ld. CIT(A) rejected Roop Telsonic having 11.75% operative margin by taking a view that remaining three represent most probable operating and sales margin for comparable assessee's case and accordingly calculated the average ratio of 5.78%.
28. We further observe that the difference of operating profit margin has been applied on the total sales turnover by ld. Assessing Officer ITA No. 79/Ahd/2010 20 Asst. Year 2002-03 as well as ld. CIT(A) wherein it has been urged by assessee that in view of various judicial pronouncements it has been consistently held that differential operating margin should be applied only to the international transaction taken place with Associated Enterprise rather than on the total turnover of the assessee. We further observe that as per revised working given by assessee the operating profit margin has been calculated at 4.51% by making following calculation:-
Computation of Operating Margin of the Assessee:
Particulars Amount (Rs.)
Profit After Tax 1,468,777
Add: Interest & Finance Charges 2,290,723
3,759,500
Add: Provision for Taxation 575,000
4,334,500
Less: Prior Period Adjustments (Net) 314,686
4,019,814
Less: Interest Income
656,890
Opera ting Margini 3,362,924
Sales 74,565,221
Operating Margin (%) 4.51%
29. As against the revised operative margin of 4.51% ld. CIT(A) has upheld 5.78%. On going through the three comparables of which operating profit margin has been taken by CIT(A), we find that Bhartia Industries Ltd. is engaged in the business of electronic device, Indfos Industries Ltd. is manufacturing of Hydraulic Systems and also ITA No. 79/Ahd/2010 21 Asst. Year 2002-03 Pressure and Temperature Controllers and so is Denial Measurement Ltd. We also observe that during the course of assessment in the list of comparables given by assessee it has itself included Bhartia Industries Ltd. Further no objection has been raised before the lower authorities against the inclusion of Danial Measurement Ltd. We are, therefore, of the view that to the extent of selection of comparable we upheld the decision of ld. CIT(A) for taking three companies Bhartia Industries Ltd., Indfos Industries Ltd. & Danial Measurement Ltd.
having average operating profit/sales margin of 5.78%. Now the issue as to whether differential operating profit margin which is in this case is 2.05% is to be applied on the total turnover of assessee or should be restricted only to the international transactions taken place with the Associated Enterprise. We find Hon. Bombay High Court in the case of CIT vs. Ratilal Becharlal & Sons (supra) has held that adjustment arising out of Arm's Length Price (ALP) has to be restricted to only international transactions with Associated Enterprise instead of entire turnover of assessee. Relevant portion of the judgment of Hon.High Court is reproduced below :-
2. The Revenue urges the following questions of law for our consideration:-
"(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the adjustment arising out of the Arm's Length Price (ALP) is to be restricted to only International Transactions with the Associated Enterprise instead of entire turnover of the assessee ?
(ii) Whether on the facts and in the circumstances of the case and in law, the order of the Tribunal is not perverse in view of the fact that considering the mean margin figure of 5.34% as adopted by the Tribunal, the ALP determined by the TPO is Rs.53,68,52,698/- whereas in para 12 of its order, the Tribunal states that the ALP of AE sales as computed by the TPO after applying 5.34% comes to Rs.50,20,74,010/-and assessee's ITA No. 79/Ahd/2010 22 Asst. Year 2002-03 sales to AE is Rs.49,81,00,499/- and there is thus disparity in the figures arrived at though the PIL value of 5.34% for both the TPO and Tribunal remain the same and that there is no basis for its conclusions based on the computation figures so derived?".
3. Re.:- Question No.(i)
(a) During the subject assessment year, the Respondent Assessee had both domestic and international transactions including transactions with Associated Enterprises over and above transaction with independent third parties.
(b) The Tribunal by the impugned order rejected the Revenue's contention that the adjustment arising out of the Arm's Length Price (ALP) has to be made to the entire turnover of the Respondent Assessee instead of restricting the same only to the International Transactions entered into by the Respondent Assessee with its Associated Enterprises. The Tribunal by the impugned order negatived the contention as the same is contrary to the clear mandate for Section 92 of the Act, which permits taxation only of income arising from International Transactions having regard to its ALP.
(c) The Revenue being aggrieved submits that the adjustment has to be made on the entire universe of transactions entered into by the Respondent Assessee and not restricted only to its International Transactions with Associated Enterprise. In support, reliance was placed upon the fact that two appeals filed by the Revenue being Income Tax Appeal No.298 of 2013 (The Commissioner of Income-tax v. Super Diamonds) and Income Tax Appeal No.2068 of 2011 (The Commissioner of Income Tax v. Ankit Diamonds) raising a similar issue have been admitted on 5th May, 2014 and 16th February, 2015 respectively. On the other hand, the Respondent Assessee invites our attention to the decision of this Court in C/7" v. Tara Jewels Exports (P.) Ltd. [Income Tax Appeal No. 1814 of 2013, decided on 5th October, 2013] and C/7~v. Keihin Panalfa Ltd. in ITA No, 11 of 2015 decided on 9th September, 2015, wherein the view taken by the Tribunal in the impugned order has been approved.
(d) Chapter X of the Act inter alia deals with computation of income from international transactions having regard to the ALP. Section 92 thereof specifically brings to charge income arising from International Transactions with an Associated Enterprise to tax on computation of income having regard to the ALP of the transactions entered into between the Associated Enterprises, as the heading of Chapter X itself indicates that these are special provisions relating to avoidance of tax and the mandate is to ensure adjustment in respect of the International Transactions with Associated Enterprise or specified domestic transaction ITA No. 79/Ahd/2010 23 Asst. Year 2002-03 on the determination of ALP. It does not allow adjustment of the income on the basis of determining of ALP in respect of all the Assessee's transactions. If the contention of the Revenue is to be accepted, it would result in taxing non-existing income/profits of transactions entered into between the Respondent Assessee and independent third parties. This in the present fact, even in the absence of an allegation that the transactions with parties other than Associated Enterprise is not at ALP. The transactions with parties other than the International Transactions with Associated Enterprise or in respect of specified domestic transactions are not within the ambit of Chapter X of the Act. In fact, a similar question arose for our consideration in Tara Jewels Exports Pvt. Ltd. (supra) and an identical contention was negatived. So also the Delhi High Court in Keihin Panalfa Ltd. (supra) has negatived a similar contention.
(e) In the facts and circumstances of the present case, the question as proposed would be contrary to the plain meaning and interpretation of Chapter X of the Act. Therefore, question of law as proposed, does not give rise to any substantial question of law. Thus, not entertained.
30. Respectfully following the judgment of Hon. Bombay High Court in the case of CIT vs. Ratilal Becharlal & Sons (supra) we are of the view that differential operating profit margin is to be applied only on the international transaction entered and not the total sales turnover.
30.1 As regards alternate plea of ld. AR that no addition was called for in the case of assessee u/s 92C of the Act , as provisions of section 92CB of the Act relating to the power of Board along with the proviso to section 92C(2) squarely applies to the assessee as the difference in operating profit margin adopted by ld. Assessing Officer vis-à-vis operating profit margin declared by assessee is within the tolerance range of 5%. We observe that assessee has substance in the alternate plea for being covered by proviso to section 92C(2) of the Act. We find that assessee has declared net operating profit margin of 3.73% during the course of assessment proceedings and ITA No. 79/Ahd/2010 24 Asst. Year 2002-03 thereafter has submitted a revised calculation of operating profit margin discussed above in para 28 and calculated at 4.51%. As against this ld. Assessing Officer made addition to the returned income of assessee by applying 7.27% operating profit margin being average of comparables selected by him which was sustained to 5.78% by ld. CIT(A). From going through these figures we find that the difference of operating profit margin at which the international transaction has actually been undertaken as against arm's length price determined by Assessing Officer is within tolerance range of (±) 5% as provided in proviso to section 92C(2) of the Act. We are, therefore, of the view that in the given facts and circumstances, the price at which international transaction has actually been undertaken shall be deemed to be arm's length price and we accordingly set aside the order of ld. CIT(A) sustaining addition of Rs.15,28,582/-, delete the impugned addition and allow the ground of assessee.
31. Ground no.7 reads as under :-
7. The learned CIT(A) erred in fact and in law in not giving any decision on the issue of disallowing Managing Directors remuneration amounting to Rs.
15,69,000.
7.1 The CIT(A) erred in referring the matter back to the AO for verification despite the fact that such powers are not available to the CIT(A) and the CIT(A) ought to have decided the issue on merits.
7.2 The learned CIT(A) erred in fact and in law in confirming the action of the AO in invoking the provisions of section 40A(2) of the Act despite the fact that there is no finding on record that the remuneration paid by me appellant i^ unreasonable or excessive as compared to the market price.
7.3 The learned CIT(A) ought to have followed the order of the Third Member in the case of Jagdamba Roller Flour Mills v. JCIT reported in 117 ITD 9 (Nag).
ITA No. 79/Ahd/2010 25Asst. Year 2002-03
32. Brief facts relating to this ground are that during the year under consideration, Managing Director's (M.D.) remuneration of Rs.31.13,004/- was claimed whereas in the immediately previous year remuneration paid to MD was Rs.15,44,004/-. Assessee justified the payment by submitting that it was mainly on account of bonus of Rs.4,05,000/- and commission of Rs.9,12,000/-. However, Assessing Officer was not satisfied with the reasons and also for abnormal increase in remuneration of the MD and accordingly disallowed Rs.15,69,000/- being unreasonable expenditure. When the matter came up before CIT(A) assessee contended that disallowance has been made by invoking the provisions of section 40A(2)(b) without bringing any comparable or fair market rate. Ld. AR also submitted that MD is employee of the company and the expenses were incurred for business purpose. However, ld. CIT(A) rejected the contention made by assessee and sustained the disallowance of Rs.15,69,000/- being excess remuneration paid to MD by observing as under :-
11.3. I have carefully considered the facts of the case, submissions of the appellant and assessment order. For claim of any business expenditure the onus is cast upon the appellant to justify that it was incurred wholly and exclusively for business purposes. To justify the Managing Director's remuneration the appellant ought to have furnished details of nature and extent of services rendered by the MD. The private sector remuneration is dictated by performance and the appellant ought to have justified the remuneration In terms of services rendered, terms of employment, performance of the company etc. Otherwise, the comparison with the earlier year is a fairly good estimate. The decision cited by the appellant is distinguished of the facts as that in the case the details of nature and extent of service justified the increase in remuneration. The appellant insisted that the details are available and In fact were also discussed with the AO. In view of these facts, the AO Is directed to verify the details provided by the appellant and inter-alia parameters suggested above, to ascertain whether the remuneration is justified. Ground No. 12 is allowed subject to verification by AO.ITA No. 79/Ahd/2010 26
Asst. Year 2002-03
33. Aggrieved, assessee is now in appeal before the Tribunal. Ld. AR submitted that MD was paid a salary inclusive of bonus and commission at Rs.31,13,004/- as against Rs. 15,44,004/- in the immediately preceding F.Y. MD is not a person covered under the provisions of section 40A(2)(b) of the Act which even not disputed by Revenue also. Increase in the remuneration was mainly on account of bonus at Rs.4,05,000/- and commission of Rs.9,12,000/-. Ld. AR further submitted that reasonableness of the expenditure can be doubted only if ld. Assessing Officer has brought on record of any comparable company as well as comparable remuneration payable to MD. Without bringing out any such basis such kind of disallowance should not have been sustained by ld. CIT(A). Ld. AR referred and relied on the 3rd Member decision in the case of Jagdamba Rollers Flour Mill Ltd. vs. ACIT in ITA No.93/Nag/2007 for Asst. Year 2004-05 vide order dated 27th October, 2008 and also relied on the judgment of Hon. Supreme Court in the case of Upper India Publishing House (P) Ltd. vs. CIT in Civil Appeals Nos.2396 & 2397 of 1978 dated 4th December, 1978.
34. On the other hand, ld. DR supported the orders of lower authorities.
35. We have heard the rival contentions and perused the record placed before us. Through this ground assessee is aggrieved with the action of ld. CIT(A) sustaining the disallowance of Rs.15,69,000/- towards the remuneration paid to MD. We observe that during the year under appeal remuneration of Rs.31,13,004/- was paid to MD ITA No. 79/Ahd/2010 27 Asst. Year 2002-03 which inter alia included payment of bonus of Rs.4,05,000/- and commission of Rs.9,12,000/-. In the immediately previous year i.e. F.Y.2000-01 payment to MD was Rs.15,44,004/- . Ld. Assessing Officer was not convinced with the sharp increase in the remuneration and without assigning any reason in his order disallowed the increased remuneration of Rs.15,69,000/-. This was further sustained by ld. CIT(A) also. We observe that ld. Assessing Officer has not brought on record any iota of evidence or comparable or any basis to justify the disallowance and merely taking a basis that salary has increased even when the turnover has not increased cannot be a specific reason for making a disallowance. It is also not the contention of Revenue that the payment has been made to a relative as specified in section 40A(2)(b) of the Act. We find it relevant to discuss the provisions of section 40A(2)(b) of the Act which reads as follows :-
Section 40A(2)(b) in The Income- Tax Act, 1995
(b) The persons referred to in clause (a) are the following, namely:-
(i) where the assessee is an individual any relative of the assessee;
(ii) where the assessee is a company, any director of the firm, association of persons or company, partner of the Hindu undivided family firm, of member if the association or family, or family, or any relative of such director, partner or member;
(iii) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual;
(iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member;
(v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the ITA No. 79/Ahd/2010 28 Asst. Year 2002-03 business or profession of the assessee; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member;
(vi) any person who carries on a business or profession,-
(A) where the assessee being an individual, or any relative of such assessee, has a substantial interest in the business or profession of that person; or (B) where the assessee being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person. Explanation.- For the purposes of this sub- section, a person shall be deemed to have a substantial interest in a business or profession, if,-
(a) in a case where the business or profession is carried on by a company, such person is, at any time during the previous year, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) carrying not less than twenty per cent of the voting power; and
(b) in any other case, such person is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the profits of such business or profession.
1. Prior to its omission, the proviso, as amended by the Finance (No. 2) Act, 1971, w. e. f. 1- 4- 1972, read as under:" Provided that the provisions of this sub- section shall not apply in the case of an assessee being a company in respect of any expenditure to which sub- clause (i) of clause (C) of section 40 applies.' In our view the above provisions contemplate that if the Assessing Officer was of the opinion that such expenditure if excessive or unreasonable having regard to the fair market value of services or facilities for which payment is made then such expenditure can be considered by him to be excessive or unreasonable. However, in the present case no such opinion has been formed by Assessing Officer with justification. It seems to be a mere guess work that as salary doubled but not profits disallowed the same. Such kind of action of assessing authority have been brushed aside in a similar type of case by Hon. Supreme Court in the case of Upper India Publishing House (P) Ltd. vs. CIT (supra) wherein it has been held that ITA No. 79/Ahd/2010 29 Asst. Year 2002-03 expenditure is unreasonable or not is essentially a question of fact and unless it is first held that such expenditure was excessive or unreasonable, the question of applicability of s.40A(2)(a) becomes academic.
36. We further observe that in the case of disallowing the remuneration paid to director being disallowed as excessive or unreasonable was held in favour of assessee by the Co-ordinate Bench in the case of Jagdama Rollers Flour Mill Ltd. vs. ACIT (supra)by observing as under :-
Provisions of s. 40A are non obstante provisions and, therefore, have an overriding effect over the other provisions allowing the deductions. This provision presupposes allowability of the expenditure otherwise. If the expenditure is not allowable under the provisions of ss. 28 to 39 then the question of making disallowance under s. 40A would not arise. It is only in these cases where the deduction is allowable under ss. 28 to 39 but the expenditure is found to be excessive or unreasonable, the disallowance under s. 40A can be made if payment on account of expenditure is made to the persons specified under sub-s. (2)(b) of s. 40A. The expenditure on account of remuneration paid to employees is governed by the provisions of s. 37. According to the said section, the expenditure is allowable if it is incurred wholly and exclusively for the purpose of business. It is not in dispute that such expenditure is otherwise allowable under s, 37. However, a part of the expenditure can be disallowed if it is shown--(i) that the payment was made to the persons specified in cl. (b) of s. 40A(2); and (ii) if it is found that expenditure is excessive or unreasonable, having regard to the fact that the market value of the goods, services or facilities for which the payment is made. No enquiry was made by the AO to ascertain whether the payment was excessive or unreasonable having regard to the fair market value of the services. On the other hand, the AO made the enquiry in a different direction i.e., whether the increase in the salary as compared to the salary paid in last year was justified on facts or not. Such enquiry is not required to be made as per the provisions of s. 40A(2)(a). The scope of enquiry under the above provision is with reference to the fair market value of the services rendered. In the absence of enquiry as contemplated by the provisions of s. 40A(2)(a), no disallowance could have been made or sustained. The onus was on the AO to bring the material on record to prove that the payment made by the assessee was excessive or unreasonable having regard to the fair value of the services rendered. If some material/evidence is brought on record to indicate that payment appeared to be excessive or unreasonable then the onus would shift to the assessee to prove that the payment was not excessive or unreasonable. Since no enquiry as contemplated by the aforesaid provisions was made on this account, it cannot be said that the payment was excessive or ITA No. 79/Ahd/2010 30 Asst. Year 2002-03 unreasonable. Therefore, the disallowance of Rs. 60,000 confirmed by the CIT(A) is not justified.
In the light of above judgment of Hon. Supreme Court and decision of the Co-ordinate Bench and applying the facts of the case on these judgment/decision, we are of the view that in the issue before us there has been no working on the part of Assessing Officer to justify the disallowance and to prove that remuneration paid to MD was excessive or unreasonable. We, therefore, set aside the order of ld. CIT(A) and allow the ground of assessee. Accordingly this ground is allowed.
36. Ground no.8 is consequential.
37. Ground no.9 is premature.
38. Ground no.10 is general in nature which need no adjudication.
39. In the result, assessee's appeal is partly allowed.
Order pronounced in the open Court on 21st November, 2016 (S. S. Godara) (Manish Borad) Judicial Member Accountant Member Dated 21/11/2016 Mahata/-
ITA No. 79/Ahd/2010 31Asst. Year 2002-03 Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File BY ORDER Asst. Registrar, ITAT, Ahmedabad
1. Date of dictation: 16/11/2016
2. Date on which the typed draft is placed before the Dictating Member: 18/11/2016 other Member:
3. Date on which approved draft comes to the Sr. P. S./P.S.:
4. Date on which the fair order is placed before the Dictating Member for pronouncement: __________
5. Date on which the fair order comes back to the Sr. P.S./P.S.:
6. Date on which the file goes to the Bench Clerk: 21/11/16
7. Date on which the file goes to the Head Clerk:
8. The date on which the file goes to the Assistant Registrar for signature on the order:
9. Date of Despatch of the Order: