Income Tax Appellate Tribunal - Mumbai
Kotak India Ltd, Mumbai vs Department Of Income Tax on 17 November, 2014
आयकर अपीलीय अिधकरण, अिधकरण मुंबई Ûयायपीठ मुंबई ।
IN THE INCOME TAX APPELLATE TRIBUNAL "K " BENCH, MUMBAI सव[ौी आई.पी.बंसल, Ûयाियक सदःय. एवं ौी राजेÛि, लेखा सदःय के सम¢ BEFORE SHRI I.P. BANSAL, JM AND RAJENDRA, AM आयकर अपील सं./I.T.A. No.1630/MUM/2009 िनधा[रण वष[ / Assessment (िनधा[ Year : 2004-2005 Kodak India Pvt.Ltd., बनाम/ बनाम The Addl. Comm.m of Income Tax (formerly Kodaka India Ltd.) Range 10(1), Vs. Kalpataru Syndergy, 2 n d Floor, Room No.454, Aaykar Bhavan, Opp. Grand Hyatt, Vakola, MK Road, Mumba i 400 020 Santa Cruz (East), Mumbai 400 055 ःथायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAACK2171J (अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent) आयकर अपील सं./I.T.A. No.1668/MUM/2009 िनधा[रण वष[ / Assessment Year : 2004-2005 (िनधा[ The Addl. Comm.m of Income बनाम Kodak India Pvt.Ltd., बनाम/ Tax Range 10(1), Vs. (formerly Kodaka Indian dLtd.) Room No.454, Aaykar Bhavan, Kalpataru Syndergy, 2 Floor, MK Road, Mumba i 400 020 Opp. Grand Hyatt, Vakola, Santa Cruz (East), Mumbai 400 055 ःथायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAACK2171J (अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent) Assessee by: Shri P. Pardiwala Revenue by : Shri N. Padmanabh सुनवाई कȧ तारȣख / Date of Hearing : 17/11/2014 घोषणा कȧ तारȣख /Date of Pronouncement : 17/11/2014 आदे श / O R D E R 2 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 PER I.P.BANSAL,J.M:
These are cross appeals and are directed against order passed by Ld. CIT(A)XXXII, Mumbai for the assessment year 2004-05. Grounds of appeal raised by the asssessee as well as Revenue read as under:
Grounds of Revenue's Appeal:
i. On the fact and in the circumstances of the case as well as in law ,the Ld.CIT(A) has erred in deleting the adjustment of Rs. 14.86 crores made to the price of international transaction of purchase of trading goods from Associated Enterprises without appreciating the fact that Swadeshi Commercial Co Ltd was not eligible for inclusion in Comparables as the said company was consistently incurring losses and its inclusion would have influenced the conclusions adversely.
ii. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing officer be restored iii. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary Grounds of Assessee's Appeal:
1. The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of Rs.2,50,00,000/- being write off of investments made in Kodak Nepal Pvt. Ltd. The Appellant submits the disallowance is unjustified and is required to be deleted.
2. The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of Rs.2,04,63,000/- being provision for warranty for repair! replacement of damaged parts of equipment/cameras. The Appellant submits the disallowance is unjustified and is required to be deleted.
3. The learned Commissioner of Income-tax (Appeals) erred in confirming the treatment of interest income as "Income from other sources" as against the Appellant's contention that the same is required to be assessed as "Business Income".
4. The learned Commissioner of Income-tax (Appeals) erred in confirming the reduction of 90% of interest income while computing deduction u/s.80-HHC. The learned Commissioner of Income-tax (Appeals) erred in confirming the reduction of 90% of Miscellaneous recoveries Rs.3,49,074/- and reimbursement of expenses Rs.3,65,522/- while computing deduction u/s.80-HHC.
6. The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of Rs.4,07,694/- being expenditure incurred towards Corporate membership/annual subscription of Clubs. The Appellant submits that the learned Commissioner of Income-tax (Appeals) erred in ignoring Orders of the Income-tax Appellate Tribunal in the Appellant's own case on this issue. The Appellant submits that the disallowance is unjustified and is required to be deleted.
7. The learned Commissioner of Income-tax (Appeals) erred in holding that a reference to the Transfer Pricing Officer had been validly made.
3 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5
8. The learned Commissioner of Income-tax (Appeals) erred in holding that adequate opportunity had been granted by the Transfer Pricing Officer before making a Transfer Pricing adjustment.
9. The learned Commissioner of Income-tax (Appeals) erred in confirming that the Transfer Pricing Officer/Assessing Officer can make an adjustment u/s.92CA(3) without providing reasons as to which condition of section 92C(3) had not been satisfied.
10. The learned Commissioner of Income-tax (Appeals) erred in confirming the treatment of exclusion from the closing stock in respect of gain made of foreign exchange fluctuation during the year. The learned Commissioner of Income-tax (Appeals) failed to consider that the Appellant had followed a consistent accounting policy, conforming to Accounting Standards and he should, therefore, have accepted the contentions of the Appellant.
2. The assessee has also filed two sets of additional grounds, one relating to the TP issue and other relating to section 80HHC of the Income Tax Act, 1961(the Act). These additional grounds read as under:
Additional grounds relating to TP:
"1. The Assessing Officer/Transfer Pricing Officer erred in not allowing benefit of 5% margin as envisaged by proviso below section 92C(2) while computing the transfer pricing adjustment in respect of import of finished goods.
2. The Assessing Officer/Transfer Pricing Officer ought to have allowed a standard deduction of 5% from the arithmetic mean of arm's length price determined by him in respect of import of finished goods from Associated Enterprises.
3. The Assessing Officer/Transfer Pricing Officer erred in selecting the following companies as comparable company vis-a-vis the trading segment of the appellant:
a. Bartronics India Ltd.
b. Control Print (India) Limited c. Allied Photographics India Ltd.
4. Without prejudice, the Assessing Officer / Transfer Pricing Officer ought to have granted working capital adjustment in respect of the following companies selected as comparables by him:
a. Bartronics India Ltd.
b. Control Print (India) Limited
5. The Assessing Officer/Transfer Pricing Officer erred in making a transfer pricing adjustment in respect of import of finished goods from Associated Enterprises based on an erroneous working of the said adjustment."
Additional Grounds of Appeal:
"1.The Assessing Officer erred in reducing 90% of the interest income of Rs.2,60,90,335/- from the profits of the business while computing the deduction 4 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 under section 80 HHC, when he had already treated the interest income as "income from other sources."
3. As it can be seen from the above, the common issue raised by both the parties is regarding transfer pricing adjustment.
3.1 In the TP study report the assessee reported following international transactions:
Description Associated Amount of
Enterprise Transaction (Rs.)
Import of Raw material Annexure-2 1,406,301,052
Import of finished goods Annexure 2A 2,560,732,815
Exports of Goods Annexure -2B 308,084,020
Import of Capital Goods Annexure - 2C 11,637,017
Receipt of Technical Services Annexure 2 D 2,443,980
Recover of Expenses Annexure 2-E 34,915,195
Reimbursement of Expenses Anneuxre-2F 690,590
3.2 The dispute in the present appeal is regarding international transaction
listed at Sl.No.2 i.e. regarding import of finished goods. Assessee's margin has been computed at Rs.2.68% as per following table (reference can be made to first page of the order passed by TPO) Particulars Trading (Amount in lakhs) Sales 54189.68 Scrap Sales -
Net Sales 54189.68 Cost of Sales 46521.14 Factory overheads - Salaries, wages and other selling and admin overhead 3743.77 (excluding advertising) Advertising 2177.46 Depreciation 296.40 Operating profits 1450.91 Operating profit % on sales 2.68% 3.3 The TPO selected comparables and as per following table arithmetic mean of comparable was computed at 5.42%.
5 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 S.No. Name of the Company FYE 2004 Operating Margins9(OP/Operating Income)
1. Allied Photographics India Ltd. 10.19%
2. Batronics India Ltd. 20.06%
3. Compunics Information Systems Ltd. 0.37%
4. Control Print (India) Ltd. 14.50%
5. Dhoot Industrial Finance Ltd. 2.48
6. Driveindia.Com Ltd. 3.84%
7. Kishore Trading Co. Ltd. - 0.94%
8. P H I L Systems Ltd. 1.24%
9. SPS International Ltd. 3.07%
10. Tech Pacific (India) Ltd. 0.93%
11. Vipul Dye Chem Ltd. 3.90% Average (Arithmetic mean) 5.42% 3.4 Accordingly, TP adjustment of Rs.14.86 crores was made vide order dated 18/12/2006 passed under section 92CA(3) of the Act. Subsequently, as there were some mistakes in the order dated 18/12/2006, the TPO passed another order under section 92 CA(5) r.w.s. 154 of the Act, copy of which is placed at page 183 and 184 of the paper book, according to which mean margin of the comparables was worked out at 5.11% and accordingly impugned TP adjustment was reduced to Rs.13.18 crores in place of Rs.14.86 crores.
4. It was the submission of Ld. Sr. Counsel that in view of subsequent order passed by TPO under section 154 of the Act, which is dated 31/12/2007, copy of which is placed at page 183 and 184 of the paper book the recomputed mean margin of comparables is 5.11% as against 5.42% worked out in the initial order. It was further submitted by Ld. AR that according to following calculations, if rectified mean margin of comparable is taken against the profit margin of the assessee of 2.68%, then the ALP would be within the safe harbour of +/-5%.
"Assessment Year 2004-05:
Statement showing how assessee's margin falls within +/- 5% range of ALP determined by TPO if only AE purchases are considered:
1. Profit level indicator + OP/Sales
2. Assessee's margin in the trading segment:
Particulars Total Less Sales 100 Operating Cost 97.32 6 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 Profit of assessee 2.68 Therefore, Assessee's profit margin + 2.68% 3. Arms Length Margin of traded goods by TPO: Particulars Total Less Sales 100 Arms Length Price as per TPO @ 5.11% 5.11 Arms Length Operating Cost 94.89
ALP of traded goods + 5% as per proviso below section 92C(2) i.e. 94.89 + 4.74 (5% of 94.89) = 99.63 Therefore, Assessee's transaction is at arms length.
Note:
Operating Cost + Cost of Sales + Salary, other selling and admin Cost (excluding advertisement)+ Advertisement + Depreciation.
4. Applying the above method to the actual figures:
Particulars Amount Amount
(Rs. In Lakhs) (Rs. In Lakhs)
Sales of AE segments (55% of 29,804.50
Rs.54,190 lakhs)
Less Cost of Sales B)
Purchase from AE 25,607
Operating Cost(55% ofRs.6,218 lakhs) 3,419.90
29,026.90
Profirt from AE transactions (A)-(B) 777.60
1,523.01
ALP profit (5.11%) of 29804.50)(C)
Therefore, ALP of Cost of Sales (A) -(C)
28,281.49
Less: Operating cost ( not related to AE)
3,419.90
ALP of Purchase from AE 24,861.59
ALP of Purchase from AE + 5% as per proviso below section 92C(2) i.e. 24,861.59 + 1,243.08 (5% of 24,861.59) = 26,104.67 Therefore, Assessee's purchases from AE is at arms length.
Note: Sales of AE segment and Operating Cost are considered at considered at 55% of the Total Sales of Trading Segment and Operating Cost of Trading Segment as the AE purchases (Rs.25,607 lakhs) are 55% of the total cost of goods sold of the trading segment (Rs.46,521 lakhs). Please refer pages 179 and 182 of the compilation."
7 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 4.1 It was submitted by Ld. AR that without going into the question of exclusion of Swadeshi Commercial Company Ltd. from the list of comparables as contended by the Revenue in its appeal, the assessee is entitled to get relief as per aforementioned calculation as the ALP would fall within the +/-5% range. It was submitted that the assessee has raised this issue in the present appeal in the additional grounds of appeal. It was submitted that the aforementioned additional grounds should be admitted as the consideration of additional ground will not require additional facts to be placed on record. Copy of above calculation was also given to Ld. DR. Ld. DR did not object to such submission of Ld. AR.
4.2 In this view of the situation, we are of the opinion that additional ground raised by the assessee in respect of TP adjustment requires to be admitted and it will serve the interest of justice if the matter is restored back to the file of AO/TPO for verifying the correctness of the aforementioned calculation. Accordingly, we direct so. If the aforementioned calculation submitted by the assessee is found correct then we direct the AO to allow appropriate relief to assessee as per law.
4.3 It may also be mentioned here that it was pointed out by Ld. AR that though assessee is entitled to complete relief on the basis of above calculation, however, in view of various other objections of the assessee on which also the impugned addition can not survive, it should be left open to the assessee to raise those grounds also in the restored proceedings to enable the assessee to contest the impugned addition on other grounds also in case the aforementioned calculation is not found correct/acceptable by the AO/TPO 4.4 We have carefully considered this submission of the Ld. AR and in the interest of justice we hold that in case after verifying the correctness of the aforementioned calculation, if addition survives then the assessee would be entitled to raise other issues which are raised in the grounds of appeal filed before us and after considering the same and after giving the assessee a reasonable opportunity of hearing the AO/TPO would also re-determine the ALP of the impugned transaction as per provisions of law. We direct accordingly.
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5. In view of our above findings on TP issue, we refrain ourselves to give specific finding in respect of each of the grounds taken by both the parties on these issues and for statistical purposes grounds relating to TP issue (sole ground raised by the Revenue and Grounds No.7,8 & 9, in the appeal filed by the assessee and additional grounds filed by the assessee on TP issue) in the appeals filed by both the parties are considered to be allowed for statistical purposes.
Non-TP Issues:
6. Ground No.1 was not pressed by Sr. Counsel, therefore, dismissed being not pressed.
7. Apropos Ground No.2, this issue is discussed by the AO in para-5 of the assessment order. The provision has been made by the assessee for a sum of Rs.204.63 lacs towards warranty for repairing or replacement of damaged parts of equipments and Cameras sold. The AO disallowed the same on the ground that this is merely a provision and it is based on adhoc amounts multiplied by number of pieces sold. According to A.O it can be described as contingent expenditure and cannot be allowed as expenditure. Ld. CIT(A)has sustained the disallowance. The assessee is aggrieved and has preferred Ground No.2.
7.1 It was submitted by Sr. Counsel that from year to year the assessee is making such provision. For A.Y 2003-04 similar addition was deleted by Ld. CIT(A) and Department did not contest the deletion of the same. He submitted that in respect of A.Y 2005-06 also similar addition was made and it was deleted by Ld. CIT(A). The department despite having filed grounds of appeal on other issues did not contest such deletion. Reference in this regard was made to the following documents placed in the paper book-III.
1. Order of Ld. CIT(A) dated 17/3/2010 for A.Y 2003-04 page 1 to 11.
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2. Order of Ld. CIT(A) dated 24/3/2010 for assessment year 2005-06 page 12 to
26.
3.Departmental appeal to ITAT for A.Y 2005-06 page-26A & 26B.
7.2 Referring to the order passed by Ld. CIT(A) in respect of assessment year 2005-06, it was submitted that while giving relief, Ld. CIT(A) has clearly found that warranty given by the assessee has imposed liability on the company which accrues on the date of sale though the liability is to be discharged at a future date. Thus, it is an accrued liability and the estimated expenditure which would be incurred on discharging the same is an allowable expenditure. Ld. CIT(A) has further found that the manner of making the provision is scientific and is based on the appellant's own past experience on warranty expenditure and it is not an adhoc provision. Even if there be difficulty in estimation, that does not convert an accrued liability into a contingent one and in a case where company follows mercantile system of accounting, it is necessary to make such provision in order to ensure that costs are matched against revenue and for accepting such submission of the assessee, Ld. CIT(A) for assessment year 2005-06 has relied upon the decision of Hon'ble Supreme Court in the case of Rotork Controls India Pvt. Ltd. vs. CIT, 314 ITR 62(SC). Thus, it was submitted by Ld. Sr. Counsel that these are the basis on which Ld. CIT(A) had allowed relief in respect of A.Y 2005-06 and despite having filed an appeal against the impugned order of A.Y 2005-06, the Department did not contest the deletion and the only ground taken by the Department in the appeal for A.Y 2005-06 is regarding TP adjustment of Rs.12.61 crores. Ld. Sr.Counsel referred to the decision of Hon'ble Supreme Court in the case of Shiv Sagar Estates, 257 ITR 59 (SC) and contended that in view of the acceptance of deletion by the Revenue for A.Y 2003-04 and 2005-06 the upholding of disallowance for the year under consideration by the Ld. CIT(A) is contrary to law.
7.3 On the other hand, Ld. DR relied upon the order passed by Ld. CIT(A), according to which the impugned addition has been upheld.
10 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 7.4 We have heard both the parties and their contentions have carefully been considered. The impugned order passed by Ld. CIT(A) is dated 26/9/2008. On the said date, when he passed the order, he was not having the benefit of similar issue decided subsequently by Ld. CIT(A) in the case of the assessee in respect of A.Y 2003-04 i.e. immediate preceding assessment year when similar addition was deleted. Similar addition was also deleted in respect of A.Y 2005-06 by order dated 24/03/2010. No appeal was filed by the Revenue in respect of A.Y 2003- 04 and though appeal was filed by the Revenue in A.Y 2005-06 but no appeal has been preferred against deletion of addition of warranty expenses. Keeping in view all these facts, in absence of demonstration that the facts of the present year are different from the facts of earlier and subsequent year, we are of the opinion that Ld. CIT(A) has committed an error in confirming the addition. The addition is liable to be deleted firstly on the ground that similar deletion was not agitated by Revenue in respect of A.Y 2003-04 and 2005-06. Secondly, no material has been brought on record to suggest that the facts of the present year are in any way different from A.Y 2003-04 and 2005-06. Such view is supported by the decision of Hon'ble Supreme Court in the case of CIT vs. Shiv Sagar Estate (supra), therefore, this ground is allowed.
8. Apropos Ground No.5, it was submitted by Ld. Sr. Counsel that the matter may be restored back to the file of AO with a direction to consider netting of the miscellaneous recovery and reimbursement of expenses in the light of decision of Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. vs. CIT, 343 ITR 89, wherein it has been held that only 90% of the net amount of any receipt of the nature mentioned in clause(1), 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 of the Act.
8.1 On the other hand, Ld. DR relied upon the order passed by AO and Ld. CIT(A).
11 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 8.2 We have heard both the parties and their contentions have carefully been considered. After due consideration, accepting the request of Ld. Sr.Counsel we restore this issue to the file of AO for re-adjudication of the same in the light of aforementioned decision of Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd.(supra). We direct accordingly. For statistical purposes this ground is considered to be allowed in the manner aforesaid.
9. Apropos Ground No.6, after hearing both the parties, we found that this issue is covered in favour of the assessee by the decision of Hon'ble Bombay High Court in the case of assessee itself for A.Y 2002-03. It is an order dated 26/8/2009 in IT Appeal (L) No.1907 of 2009, wherein their Lordships have dismissed the Departmental Appeal following the earlier decision of Bombay High Court in the case of OTIS Elevator Company (I) Ltd. vs. CIT, 195 ITR 682 (Bom). Copy of this order is filed at page 27 of paper book III. Accordingly, the addition confirmed by Ld. CIT(A) is deleted and this ground is allowed.
10. Apropos Ground No.10, the issue is covered in favour of the assessee by the earlier orders of the Tribunal. Reference can be made to the following decisions, copy of which are filed in the paper book.
(i) Consolidated decision dated 31/5/2010 in respect of A.Y 1996-97 to 2001-02 in ITA No.4543/Mum/2011, 4574/Mum/2003, 3196/Mum/2002, 3314/Mum/2002 and 8923/Mum/2004, copy of this decision is filed at pages 33 to 53 of the paper book. Relevant paras are para 11 to 15. The relevant observations of the Tribunal are as under:
13. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position.
1.4. We find that the issue in appeal is now squarely covered by Hon'ble Supreme Court's judgment in the case of CIT Vs Woodworth Governor India P.Ltd., 312 ITR 254, wherein Their Lordships have held that additional expenditure on account of foreign fluctuation in respect of purchases and estimated loss on that account at the year end is to be allowed as an "exchange loss in the profit and loss account and is against the cost of raw materials". Their Lordships have given a specific illustration at Page 266 of the report which unambiguously demonstrates the accounting treatment of such loss. It is thus free from any doubt that the estimated contracts which have not matured by the year end is also be allowed as a deduction in 12 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 computation of business income. The reasons is elementary. One of the fundamental accounting principle is that of conservatism which requires all anticipated losses to be taken into account while computing profits and losses of business, but prohibits any anticipated income to be taken into account for the said purpose unless it actually accrues. Hon'ble Supreme Court has recognised this principle in the case of Chainrup Sampatram Vs CIT, 24 ITR 481 and observed that "this is the theory underlying the rule that the closing stock is to be valued at cost price or market price whichever is less". As regards the question whether the said amount is required to be taken into account for computation of closing stock value, we find that once the said expenditure is not to be taken into account for computation of cost of purchases, these cannot be an occasion for excluding the same from trading account by taking it into account for computing the closing stock value. A co-ordinate bench of this Tribunal; in the case of IBM Global Services India P. Ltd. Vs DCIT, 114 ITD 265, has even after taking into mandatory Accounting Standard - 2, held that the value of closing stock is not to include the liability on account of exchange valuation. We are not inclined to take any other view of the matter than the view so taken by the co-ordinate bench which is squarely applicable on the facts of the present case Respectfully following the Hon'ble Supreme Court judgment in the case of Woodworth Governor (supra) and co-
ordinate bench decision in the case of IBM Global Services (supra), we uphold the grievance of the assessee. Accordingly, we direct the Assessing Officer to delete the impugned additions of Rs.25,91,000/- and Rs.1,01,38,710/-. The assessee gets the relief accordingly."
(ii) Order dated 18/5/2011 in ITA No.7306/Mum/2003 in respect of A.Y 2000-01, copy of this order is filed at pages 54 to 73. In this case, following the aforementioned decision, the issue has been decided in favour of the assessee.
10.1 In this view of the situation, after hearing both the parties, respectfully following the aforementioned decision of the Tribunal in assessee's own case, we delete this addition and this ground of the assessee is allowed.
11. Apropos additional ground on non-transfer pricing issue, it was the contention of Ld. Sr.Counsel that while computing business profit for the purpose of deduction under section 80 HHC, computation made by the AO is incorrect as in the manner AO has computed the same it would result into double addition. When it was pointed out that if such is the position, then it is only a matter of rectification by the AO under the provisions of section 154 of the Act. Ld. AR submitted that since now Ld. CIT(A) has confirmed the calculation made by the AO, then AO will not rectify the same. Ld. Sr.Counsel submitted 13 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 that the matter may be restored back to the file of AO with a direction to re- compute the business profit as well as deduction under section 80 HHC with regard to component of interest income after giving the assessee a reasonable opportunity of hearing.
11.1 We have heard both the parties and their contentions have carefully been considered. The deduction under section 80 HHC on interest component has to be computed as per provisions of law. If there is any mistake in computing then the same is required to be corrected. Therefore, we are of the opinion that it will serve the interest of justice if the matter is restored back to the file of AO with a direction to re-compute the deduction under section 80 HHC so as it relates to component of interest income after giving the assessee a reasonable opportunity of hearing. We direct accordingly. This additional ground is considered to be allowed for statistical purposes in the manner aforesaid.
12. In the result, appeal filed by the assessee and Revenue on the TP issues are considered to be allowed for statistical purposes. On non-TP issue the appeal filed by the assessee is partly allowed in the manner aforesaid.
Order pronounced in the open court on 17/11/2014 . आदे श कȧ घोषणा खुले Ûयायालय मɅ Ǒदनांकः 17/11//2014 को कȧ गई ।
Sd/- Sd/-
राजेÛि (RAJENDRA) आई.पी.बंसल (I.P.BANSAL)
लेखा सदःय /ACCOUNTANT MEMBER Ûयाियक सदःय /JUDICIAL MEMBER
मुंबई Mumbai; Ǒदनांक Dated 17/11/2014
14 आयकर अपील सं./I . T . A . N o . 1 6 3 0 & 1 6 6 8 / M U M / 2 0 0 9 ( िनधा[रण वष[ / A s s e s s m e n t Y e a r : 2 0 0 4 - 2 0 0 5 आदे श कȧ ूितिलǒप अमेǒषत/Copy षत of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. ू×यथȸ / The Respondent.
3. आयकर आयुƠ(अपील) / The CIT(A)-
4. आयकर आयुƠ / CIT
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai
6. गाड[ फाईल / Guard file.
आदे शानुसार/ ार BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक उप सहायक पंजीकार ीकार (Dy./Asstt.
Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai व.िन.स.Vm , Sr. PS