Dcit, New Delhi vs M/S. Moser Baer India Ltd., New Delhi on 1 May, 2018

[Cites 47, Cited by 12]

Income Tax Appellate Tribunal - Delhi

Dcit, New Delhi vs M/S. Moser Baer India Ltd., New Delhi on 1 May, 2018

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES: 'I-1', NEW DELHI

BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER
AND SMT. BEENA A PILLAI, JUDICIAL MEMBER

ITA No.883/Del/2008
A.Y. 2003-04
Moser Baer India Ltd. vs. Dy.CIT, Circle 5(1)
43 B, Okhla Industrial Estate New Delhi
New Delhi

ITA No.894/Del/2008
A.Y. 2003-04
Dy.CIT, Circle 5(1) vs. Moser Baer India Ltd.
New Delhi New Delhi

ITA No.988/Del/2013
A.Y. 2005-06
Moser Baer India Ltd. vs. ACIT, Range 5
43 B, Okhla Industrial Estate New Delhi
New Delhi

ITA No.1139/Del/2013
A.Y. 2005-06
ACIT, Range 5 vs. Moser Baer India Ltd.
New Delhi New Delhi

ITA No.4484/Del/2013
A.Y. 2006-07
Moser Baer India Ltd. vs. ACIT, Circle 5(1)
43 B, Okhla Industrial Estate New Delhi
New Delhi

(Appellant) (Respondent)

Assessee by Sh. Upvan Gupta, C.A.

Department by Sh. Sanjay I Bara, CIT, D.R.

Date of Hearing 26.03.2018
Date of Pronouncement 01.05.2018
ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5
ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd.
ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5
ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd.
ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi

ORDER
PER BEENA A PILLAI, JUDICIAL MEMBER

Present Cross Appeals for Assessment Year 2003-04 and 2005-06 by assessee and revenue; and Appeal by assessee for Assessment Year 2006-07 have been filed against orders passed by Ld. CIT (A) as under:

S.No.               ITA No.                     Asst.Yr          Details of           Appeal
                                                                 Impugned             Filed by
                                                                 order
1.       ITA No.883/Del/2008                    2003-04          CIT (A)-20           Assessee
                                                                 28/12/07
2.       ITA No.894/Del/2008                    2003-04          CIT (A)-20           Revenue
                                                                 28/12/07
3.       ITA No.988/Del/2013                    2005-06          CIT (A)-29           Assessee
                                                                 18/12/12
4.       ITANo.1139/Del/2013 2005-06                             CIT (A)-29           Revenue
                                                                 18/12/12
5.       ITANo.4484/Del/2013 2006-07                             DCIT,                Assessee
                                                                 Circle 5 (1)
                                                                 31/05/13
                                                                 under
                                                                 section
                                                                 143
                                                                 (3)/144C


2.     It has been submitted by Ld.AR that                                grounds raised by
assessee and Revenue in their                       respective appeals are more or
less identical on the transfer pricing issues,                                   barring slight
difference in corporate tax issues.
2.1.      For       sake of convenience Ld.AR started arguing for
Assessment Year 2005-06.

                                                                                                  2
             ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

Assessee filed its return of income for year under consideration declaring loss of Rs.1,65,43,08,282/- on 31/10/2005. The case was selected for scrutiny and statutory notices were issued, in response to which representatives of assessee appeared before Ld.AO from time to time and filed requisite details. 2.3. Ld.AO during assessment proceedings observed that assessee is a company engaged in business of manufacture of optical and magnetic, storage media. The product range includes recordable compact discs (CD-R) rewritable compact disc (CD-

RW), pre-recorded CD/DVD, digital versatile discs in optical media and compact cassettes, micro floppy disks and digital audio tapes in magnetic media segment.

2.4. Ld.AO referred case to Transfer Pricing Officer (TPO), as assessee undertook international transactions with its Associated Enterprises (AEs). Ld.TPO observed that assessee has expanded its business in Europe through its Subsidiary. 2.5. Ld.TPO observed that during financial year relevant to Assessment Year 2004-05 assessee along with Imation Corp., entered into joint venture, having shareholding of 49: 51 respectively, and established a company by the name, Global Data Media FZ LLC in Dubai. It was further observed that Global Data Media FZ LLC Dubai (GDM Dubai) is engaged in marketing and distribution of assessee's products.

3 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

Sl. Name of International transactions Amount (Rs.) No.

1. Sale of finished goods 526,01,60,222

2. Sharing of cost 1,65,05,505

3. Reimbursement of expenses paid 3,24,57,516

4. Reimbursement of expenses received 44,82,355 2.6. In transfer pricing report assessee chose GDM Dubai, as tested party and computed arm's length price of international transaction by selecting TNMM as most appropriate method.

Ld.TPO from transfer pricing report observed that assessee aggregated international transactions for benchmarking, using TNMM with operating profit/sales as profit level indicator, the total sale of finished goods amounting to Rs.526 crores between the assessee and GDM Dubai.

2.7. It was observed by Ld.TPO that assessee identified comparables from foreign database which were engaged in marketing or distribution, GDM Dubai was engaged in business of marketing and distribution for products of assessee. Ld.TPO observed that these comparables were operating in different countries were dealing in different currencies and therefore were operating in different economic environment and had marked differences in sales turnover and asset size, apart from product and functional differences.

4 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi 2.8. Assessee was called upon to submit details of sales made by GDM, Dubai to its customers. Assessee vide letter dated 15/11/07 informed Ld.TPO that GDM's sales invoices/party wise details of sales were not available with assessee. Ld.TPO therefore rejected foreign AE as tested party, since vital information regarding sale of products was not provided/ were available, to ascertain whether GDM, Dubai was supplying products through its subsidiaries to Imation Corporation (which is a joint venture partner in M/s GDM), or to other related parties of assessee. This is recorded by Ld.TPO in paragraph 10.2 at page 32-33 of his order that assessee refused to furnish relevant data of tested party selected by it and having regard to decision of this Tribunal in the case of Ranbaxy Laboratories Ltd vs. ACIT reported in 167 Taxmann 30., Ld.TPO rejected submissions of assessee regarding AE as tested party since its details were not easily available in public domain to test comparability. 2.9. It is recorded by Ld.TPO that details were called for in respect of products sold by assessee in domestic market and to submit profitability from exports to Associated Enterprises and to non-Associated Enterprises in response to which, assessee vide order sheet entry dated 18/02/2008 informed that no details of above could be prepared.

2.10. Ld.TPO accordingly rejected transfer pricing studies conducted by assessee by observing as under:

"In view of the above stated reasons, the transfer pricing analysis carried out by the assessee was held as unreliable. The transfer 5 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi pricing methodology of assessee was not found acceptable due to following reasons:-

(i) The selection of GDM as a tested party was incorrect as both sales and cost were controlled transactions. Normally, the profit level indicator should be uncontrolled to ascertain arm's length price.

(ii) Assessee had failed to furnish complete financials of the tested party in spite of several requests made from time to time. It is matter of record that no details of sales made by GDM to other parties was filed.

(iii) Assessee had also not furnished details of internal division wise profitability for application of internal cost plus method/internal TNMM, which are comparatively more reliable and accurate comparable.

(iv) The financials of the tested party was only upto December, 2004, whereas the international transactions of assessee are upto 31st March, 2005. Therefore, all the international transactions relating to sale of goods to GDM were not getting benchmarked by the methodology adopted by the assessee. In fact significant percentage of international transactions was undertaken between January 2005- March2005.

(v) The margin of assessee was compared with independent comparables identified from Capitaline and it was noted that these independent companies which were manufacturing same/similar products had earned higher profit margin as compared to tested party."

6 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi 2.11. Ld.TPO thus selected assessee as tested party. Ld.TPO also held that profit level indicator in case of assessee as tested party should be OP/TC as the denominator of PLI is normally uncontrolled transaction of tested party. Since in the present case costs of assessee are uncontrolled in nature due to the transaction of sale to GDM Dubai, "total cost" was taken as denominator for computing PLI. Ld.TPO selected few comparables classified as manufacturer of computer storage devices. Ld.TPO proceeded to determine ALP by using internal uncontrolled comparables by using TNMM as most appropriate method and OP/TC as PLI. Ld.TPO proposed adjustment to arm's length price amounting to Rs.2,39,28,55,948/-. 2.12. Ld.AO while passing final assessment order observed that assessee claimed exemption under section 10 B of the Act in the profit and loss account amounting to Rs.11,01,40,842/- and Rs.10,54,47,600/-, against export proceeds. Ld.AO called upon assessee to substantiate its claim of deduction under section 10 B of the Act, with reference to remittance of foreign exchange against export proceeds. Assessee was asked to show cause as to why unrealised export proceeds should not be disallowed for purposes of deduction under section 10 B of the Act, more so since assessee failed to produce any order of extension of time for this purpose by RBI.

2.13. Ld.AO after considering submissions made by assessee rejected the claim and denied benefit under section 10 B, as there was no direct and proximate nexus between the said income and manufacturing activity of eligible undertaking.

7 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

2.15. Ld. AO observed during the assessment proceedings that assessee incurred Rs.37,73,17,928/- towards expenditure on royalty and fees for technical services. It was observed that royalty was paid in connection with grant of license/ intellectual property rights to assessee by various parties like Phillips, Hitachi, Thaiyo, Samsung and others for manufacture of products. Ld.AO called for party wise details and observed that total amount paid was to an extent of Rs.46,03,35,350/-, as against expenditure claimed in profit and loss account by assessee. Ld.AO by following decision of Hon'ble Supreme Court in the case of Southern Switchgear Ltd. reported in 232 ITR 359, disallowed 25% of royalty expenses claimed by assessee as per party wise details filed during assessment proceedings. However he allowed depreciation on intangible assets. The addition that was made by Ld.A.O. on account of sale was Rs.8,63,12,878/-. 2.16. Ld. AO observed that assessee during the year earned tax free dividend income of Rs.4,95,93,596/- which was claimed to be exempt under section 10(34) of the Act. It is observed that assessee has also made investments in unquoted shares and mutual funds during the year. As assessee did not suo-moto disallow any expenditure in relation to the earning of exempt 8 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi income, Ld.AO computed disallowance under section 14A read with Rule 8D to an extent of Rs. 9,33,27,335/-.

Thus Ld.AO finalised assessment at Rs.95,47,60,410/- by making various additions in the hands of assessee.

3. Aggrieved by the order of Ld.AO, assessee preferred appeal before Ld. CIT (A). Ld. CIT (A) deleted additions in respect of the miscellaneous income, disallowance of royalty/technical know- how and the disallowance under section 14 A made by Ld. A.O., but upheld addition in respect of transfer pricing adjustment. Aggrieved by the order of Ld. CIT (A) the assessee as well as revenue are in appeal before us.

ITA No.988/Del/2013 (assessee's appeal)

A.Y. 2005-06

1. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding the action of the assessing officer in reducing the export turnover to the extent of Rs.3,53,61,363 being export profits not received within the time allowed by RBI in respect of A-164 Unit at Greater Noida for computing deduction under section 10B of the Income-tax Act. 1961 ("the Act").

2. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding the action of the assessing officer in reducing the gain on account of sale of forward exchange contract of Rs.4,25,37,688 from the profits of the undertaking allegedly on the ground that the same was not derived from the business of the undertaking.

2.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that the aforesaid gain on account of sale of forward exchange contract constituted profit and gains 9 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi derived from the business of the undertaking eligible for deduction under section 10B of the Act.

3. That the Commissioner of Income-tax (Appeals) erred on facts and in law in disallowing a sum of Rs.57,40,656 alleging the same to be incurred for earning exempt dividend income invoking provisions of section 14A of the Act.

3.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in observing that ".................. when the appellant is having both interest bearing and interest free funds, it cannot be said that from which bucket investment in mutual fund has been made as the money in fungible ............"

3.2 That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that since the appellant has taken long term loan of Rs.2,94,35,40,490, it could not be said that the investment in mutual fund to the tune of Rs.1,52,64,47,694 has not been made out of the borrowed funds.

3.3 That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that the funds from internal accruals and equity available with the appellant were invested in mutual funds from which exempt dividend income of Rs.4,95,93,596 was earned.

3.4 That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that expenditure on interest from loans and finance charges aggregating to Rs.9,70,37,073 were incurred by the appellant for purposes of the business of the appellant and were not attributable to earning of the exempt dividend income.

10 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

4. That the Commissioner of Income-tax (Appeals) erred on facts and in law in determining the arm's length price of the appellant's international transactions of sale of finished goods at Rs.705,74,29,198 as against the actual price of Rs. 596,59,80,681 thereby upholding an addition of Rs. 1,09,14,48,517 under section 92CA(3) on that account to the appellant's income. 4.1 That the Commissioner of Income-tax (Appeals) erred on facts and in law in selecting internal TNMM as the most appropriate method by considering appellant as the tested party. 4.2 That the Commissioner of Income-tax (Appeals) erred on facts and in law in not accepting the overseas AE as the tested party, being the least complex of the transacting entities and instead considering appellant as the tested party, thus, violating the basics of Transfer Pricing.

4.3 That the Commissioner of Income-tax (Appeals) erred on facts and in law in rejecting the profit level indicator ('PLI') of operating profit (OP)/Sales by observing that the sales made by the AE ("GDM') is also related party transaction without appreciating the fact that the appellant has computed the PLI on the basis of consolidated financial statement of GDM.

4.4. That the Commissioner of Income-tax (Appeals) erred on facts and In law in rejecting the economic analysis conducted by the appellant and selecting Indian / overseas comparables without 11 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi appreciating that their FAR profile is different as compared to the appellant.

4.5 Without prejudice that the Commissioner of Income-tax (Appeals) erred on facts and in law in computing profitability from sales made to AE and non-AE , by considering incorrect number of units sold for the two segments, ie. 97,69,62,220 units being principal item of product sold as per form 3CEB as sales to AE and 1,15,99,46,265 units being the balancing figure considering total units of principal and non principal item of sold as per form 3CD, as sales to non-AE.

4.6 Without prejudice that the Commissioner of Income-tax (Appeals) erred on facts and in law in computing profitability from sales made to AE and non-AE, by ignoring directly identified royalty expenditure.

4.7 Without prejudice that the Commissioner of Income-tax (Appeals) erred on facts and in law in ignoring profitability of AE and non AE segment computed as per the certificate issued by Chartered Accountant.

4.8 Without prejudice that the Commissioner of Income-tax (Appeals) erred on facts and in law in not allowing benefit of +/- 5% as per proviso to section 92C(2) of the Act.

The appellant craves leave to add, alter, amend or vary from the aforesaid grounds of appeal before or at the time of hearing.

4. Ground No.1 This ground has been raised by assessee against the deduction disallowed by authorities below under section 10 B of the Act amounting to Rs.3,53,61,363/- being export proceeds that were held to be unrealised.

12 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi 4.1.Ld.AR submitted that vide letter dated 23/12/08 assessee submitted evidences regarding realisation of export proceeds after 24/10/05. It was submitted that total export proceeds outstanding as on 24/10/05 amounting to Rs.10,54,47,600 was received by assessee. He placed reliance on Master Circular No. 08/2005-06 dated 01/07/05 (updated on 01/10/05) by the Competent Authority, Reserve Bank of India, at para C.10 (iv) allowed a blanket permission to the 100% Export Oriented Unit (EOU) to realise and repatriate full value of export proceeds within a period of 12 months from the date of exports made on or after 01/09/04. Ld.AR submitted that authorities below have not taken into consideration the fact that vide RBI Master Circular period for realisation of foreign exchange proceeds was extended from 6 months to one year i.e. till 31/03/06. He thus submitted that there is no other allegation in respect of foreign receipts and therefore the reduction in the export proceeds entitled for benefit under section 10 B is uncalled for. 4.2. On the contrary Ld.CIT DR placed reliance upon observations of Ld. AO in paragraph 4.4.

4.3. We have perused the submissions advanced by both the sides in the light of the records placed before us. 4.4. Ld.AO observed that as per the Certificate issued by Chartered Accountant in form 56G, foreign exchange of Rs.11,01,40,842/-and Rs.10,54,47,600/-against export proceeds that was not received in India till the date of signing of audit report i.e. till 24/10/05. This has been recorded by auditors in the notes to Form 56F.

13 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi 4.5. Ld.AR contended before us that said amounts were realised after the date of audit report but within the period allowed by the Master Circular dated 01/07/05 issued by RBI. 4.6 It is observed from the order of Ld.AO that assessee produced evidences of sum of Rs.7,00,86,237/- being received within extended period allowed by RBI post 24/10/05, out of Rs.10,54,47,600/- and evidences of export proceeds amounting to Rs.86,40,995/-out of Rs.11,01,40,842/-. Assessee before us is disputing export proceeds of Rs.3,53,61,363/- disallowed by Ld.AO out of Rs.10,54,47,600/-. In our view, authorities below upheld this addition due to lack of evidence, in respect of the said sum having been realised by assessee even within extended time granted by RBI Circular(supra). On the contrary the claim of the assessee is that the amount was realised within the period allowed by Circular dated 01.07.2005.

4.7. Before us also Ld.AR has not placed evidence on record to substantiate the realisation of export proceeds of Rs.3,53,61,363/ was on or before the period allowed by Circular dated 01.07.2005. We therefore set aside this issue to Ld.AO for granting one more opportunity to assessee to substantiate by way of evidence regarding receipt of said sum on or before the period allowed by Circular dated 01.07.2005 to the satisfaction of Ld.AO. In the event no evidence is provided by assessee, the addition may be upheld.

4.8. In the result the ground raised by assessee stands allowed for statistical purposes.

14 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

· decision of Co-Ordinate Bench Mumbai Tribunal in the case of Haricot India Private Limited versus DCIT in ITA No. 2300/2015 vide order dated 20/01/16 · decision of Co-Ordinate Bench of this Tribunal at Bangalore in the case of ACIT vs. Hanuman Weaving Factory in ITA No. 1112/2012 vide order dated 23/08/13 5.2. On the contrary Ld.CIT.DR submitted by placing reliance upon paragraph 4.6 of the order passed by Ld.AO that exchange gain is not directly linked with activities carried on by assessee and therefore has not been derived from business of assessee.

He thus placed reliance upon the orders of authorities below.

15 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

5.4. It is observed that only activity carried on by assessee is to sell manufactured products through its foreign AE. Therefore it is not correct to say that assessee traded in foreign exchange derivatives. Further authorities below do not dispute that foreign exchange received by assessee was in respect of exports made. Assessing Officer has not brought anything on record to prove that foreign exchange gain was due to any speculative transaction entered into by assessee.

5.5. Under such circumstances we reverse the observations of Ld. CIT (A) and hold that foreign exchange gain earned by assessee was arising out of business of eligible undertaking for purposes of deduction under section 10 B of the Act. 5.6.Accordingly this ground raised by assessee stands allowed.

6. Ground No. 3

This ground has been raised by assessee in respect of disallowance made by Ld.AO under section 14A read with Rule 8D of the Act.

6.1. At the outset Ld.AR submitted that for year under consideration provisions of Rule 8D of I.T. Rules, 1962 are not applicable. He submitted that Rule 8D is prospective in nature and is applicable from Assessment Year 2008-09. He placed reliance upon the decision of Hon'ble Supreme Court in the case of Godrej and Boyce vs. CIT reported in (2017) 81 Taxman.com 111.

16 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

6.3. On the contrary Ld. CIT DR placed reliance upon orders of authorities below.

6.4. We have perused the submissions advanced by both the sides in the light of records placed before us.

6.5. We agree with submissions advanced by Ld.AR in respect of non applicability of Rule 8D for year under consideration. Accordingly we are of considered opinion that Assessing Officer was wrong in computing disallowance under section 14 A as per formula laid down by Rule 8D.

6.6. However as per section 14 A (1) disallowance is called for, the moment assessee earns exempt income, for which no suo moto disallowance has been made by assessee.

6.7. We accordingly set aside this issue back to file of Ld. AO for recomputation of disallowance under section 14 A as per law. 6.8. Accordingly this ground raised by assessee stands allowed for statistical purposes.

7. Ground No. 4

This ground has been raised by assessee in respect of transfer pricing adjustments made by Ld.TPO.

7.1. Ld. AR submitted that in its TP study AE being GDM Dubai was considered as tested party, as it was submitted to have 17 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi simpler functions, with nominal risks and did not own any valuable intangibles, in respect of which data reliable were available. Ld.AR submitted that FAR analysis undertaken by assessee as well as AE were submitted before authorities below and, AE did not have any significant non-routine intangible assets, whereas assessee was economic and legal owner of intangible assets. His arguments were of two fold. · The 1st limb of argument advanced by Ld.AR is in respect of foreign AE being considered as tested party. He submitted that all relevant details required for purposes of benchmarking international transaction in case of tested party were provided before Ld.TPO. However Ld.TPO on basis that assessee failed to furnish sale invoices, rejected foreign AE to be tested party.

· 2nd limb of argument advanced by Ld.AR was by placing reliance upon the decision of Co-Ordinate Bench of this Tribunal in assessee's own case for assessment year 2002- 03 in ITA No. 882/del/2008 vide order dated 14/12/15. Ld. A.R. submitted that as the transaction of assessee with AE is higher than the ALP, no adjustment could be made. He placed reliance upon paragraph 21 of the said order which is reproduced herein below:

"21. Accordingly if the aforesaid adjustment is applied it is seen that the transaction of the assessee with the AE is at the higher than the arm's length price and therefore the adjustment so made and sustained is deleted. Consequently we are not inclined to take up remaining objection raised by the learned counsel other than to hold that we find merit the submission that since the AE 18 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi (GMI) had incurred loss therefore assessee could not be expected to have made more profits than the combined profit made the assessee and its AE i.e. GMI, if it were to make sales directly to the third party customers. The support is drawn from the Delhi Bench of Tribunal in the case of Globe Vantedge (P) Ltd. vs. DCIT (ITA No. 2763 & 2764/D/2009) wherein it is held that adjustment on account of arm's length price of international transactions cannot exceed the maximum arm's length price i.e. the amount received by the associated enterprise from the customer and the actual value of international transactions. The Hon'ble Jurisdictional High Court vide order dated 14.3.2013 (in ITA Nos 1828/2010, 1829/2010 & 1254/2011) had dismissed the revenue's appeal against the said order of the Tribunal. The Special Leave Petition (SLP) of the revenue against the said order has also been dismissed by the Supreme Court vide order dated 2.1.2014. Reliance is also placed on the judgment of Hon'ble High Court in the case of Sony Ericsson Mobile Communications India (P) Ltd. vs. CIT 374 ITR 118 wherein it has been held as under:

"77. As a concept and principle Chapter X does not artificially broaden, expand or deviate from the concept of "real income".

"Real income", as held by the Supreme Court in Poona Electricity Supply Co. Ltd. v. CIT [1965] 57 ITR 521, means profits arrived at on commercial principles, subject to the provisions of the Act. Profits and gains should be true and correct profits and gains, neither under nor over stated. Arm's length price seeks to correct distortion and shifting of profits to tax the actual income earned by a resident/domestic AE. The profit which would have accrued had arm's length conditions prevailed is brought to tax. Misreporting, if any, on account of non-arm's length conditions resulting in lower profits, is corrected."

19 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

Sl. Particulars of information Source of Basis of No. information allocation

1. Duties Audited Actual Financials

2. Increase in stock Audited Actual Financials

3. Raw materials and packing Audited Plant wise * material financials, unit Annual Average wise cost sheets Per Unit Cost of and unit wise Manufacture sales data

4. Stores, spares and tools Audited Raw material consumed financials consumption

5. Power and fuel Audited Machine cycle financials, time basis detailed trial balance and technical details

6. Factory manpower Audited Machine cycle financials and time basis detailed trial balance

7. Depreciation Audited Computed by financials and dividing total 20 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd.

ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi detailed trial depreciation of balance class of product with the quantity of that class of product

8. Manpower cost - Head Audited Allocated to AE office not directly allocable financials and and non-AE to non-AEs detailed trial segments in the balance ratio of factory cost

9. Other Administrative Costs Audited Allocated to AE not directly allocable to financials and and non-AE non-AEs detailed trial segments in the balance ratio of factory cost

10. Freight and Forwarding Audited Allocated to AE expenses financials and non-AE segments in the ratio of factory cost

11. Royalty and technical know Audited On actual basis how Financials between AE and non-AE It was submitted that while preparing segmental accounts Ld.TPO made certain errors and inflated the profit margins in non-AE segment.

7.2. On the contrary Ld. CIT DR submitted as under:

· Regarding 1st limb of argument regarding foreign AE as tested party, he submitted that there is no dispute regarding such a situation, subject to availability of 21 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi complete financials of such tested party. He submitted by placing reliance upon paragraph 10.2-10.3 of Ld. TPO order that assessee failed to furnish entire details in respect of financials of tested party being GDM Dubai. He submitted that only function of GDM Dubai was to market manufactured products of assessee. And therefore sale invoices assumed paramount importance. He further submitted that assessee had not furnished details of profitability in terms of internal division. Further it is observed from limited financials of tested party placed at page 351 of paper book that there were related party transactions entered into by AE which could be separated only on the availability of invoices.

In respect of comparables adopted by assessee it was submitted by Ld.CIT DR that these were foreign comparables for which vital financial details were neither furnished nor were available on public domain as has been observed by Ld. TPO in para 17 at page 65 of his order. · In respect of 2nd limb of argument Ld. CIT DR submits that this issue attained finality regarding arms length price of international transactions cannot exceed maximum arm's length price that is amount received by associated enterprise from customer and actual value of international transactions. However he submitted that Ld.AO may be directed to verify it in respect of complete financials submitted by assessee of its AE vis-a-vis its own audited accounts.

22 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi 7.3. We have perused the submissions advanced by both sides in light of records placed before us.

There is no doubt in respect of selecting AE to be a tested party provided following criteria are met satisfactorily:

· the tested party should be the least complex party to the controlled transactions.

· Availability of most reliable data of tested party and requirement of minimum adjustments being one of the important aspect in selection of tested party. · The financial details of comparables for the purpose of benchmarking the international transaction must be publicly and easily available.

7.4. In the present facts of the case before us it is observed that Ld. CIT (A) has recorded as under:

"13.2. I have carefully gone through various submissions and factual aspects. From the comparison of FAR analysis of GDM and the appellant as given in TP study conducted by the appellant, it appears that GDM is least complex between two options. But the reasons given by the TPO for not selecting GDM as tested party are quite relevant. Unless complete financials are made available before TPO, any meaningful analysis cannot be done. Further, GDM is in existence for too short period which makes it less reliable as compared to the appellant itself. Two companies are using different periods as accounting period which also creates mismatch. There are no strong reasons available why appellant cannot be taken as tested party when this approach can solve above mentioned problems in doing comparability analysis. In 23 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi view of this, I find no fault with TPO's approach of taking appellant as tested party instead of GDM".

7.5. Financials of AE placed at pages 342-358 of paper book being the audited report prepared by independent auditor for the year under consideration, wherein at page 351 policy adopted while preparing consolidated financial statement in respect of trade receivables and revenue recognition is placed, which reads as under:

" Trade receivables Trade receivables are carried at original invoice amount (which in foreign impairment of these receivables. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to original terms of the receivables. A provision is made for the difference between the carrying amount and the recoverable amount. Bad debts are written off during the year in which they are identified.

Revenue recognition Revenue comprises the invoice value of goods sold net of value- added tax and discounts, after eliminating sales within the group. Revenue from sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer."

7.6. Further at page 354 it is observed that he has entered into related party transaction.

7.7. Thus the entire financial analysis is based on sales made by AE and therefore in our considered opinion sale invoices are relevant for purposes of analysing and benchmarking 24 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi transaction with assessee. Ld.AR took plea before us that assessee do not have control over its AE and therefore it is not possible to obtain the financials as called for by Ld.TPO. It is difficult to buy this argument as independent auditor prepared financials after taking into consideration invoices and evidences supporting the amounts and disclosure in financial statements as recorded at page 344. In fact the independent auditor has categorically mentioned that financial statement has been prepared in accordance with International Financial Reporting Standards, which could not have been done without verifying the invoices.

7.8. On perusal of observations by Coordinate Bench of this Tribunal in assessee's own case for assessment year 2002-03 (supra) which has been reproduced in earlier part of this order, it is observed that during assessment year 2002-03, assessee filed before Ld.TPO sufficient evidence to substantiate its claim of ALP not exceeding maximum amount received by Associated Enterprises from customers and actual value of international transactions.

However in the present case having regard to our observation from financials of AE, assessee has failed to establish by way of sufficient evidence before Ld.TPO, regarding actual value of international transaction received by AE. It is also observed from the relevant para 21 (supra) reproduced hereinabove this Tribunal refrained from dealing with the other objections raised by assessee therein since the Hon'ble Bench was convinced with the arguments of Ld.AR regarding actual value of transactions received by AE therein.

25 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

7.10.In the event assessee is not able to provide complete details as recorded hereinabove, Ld.TPO shall consider assessee to be the tested party in the light of arguments advanced by assessee in 2nd limb of his argument, which has attained finality as SLP has been dismissed by Hon'ble Supreme Court in the case of CIT vs. Global Vantage Pvt.Ltd., in cc No. 21808/2013 vide order dated 2/01/2014, wherein Hon'ble Supreme Court upheld decision of Hon'ble High Court in the case of CIT vs. Global Vantage Pvt.Ltd in TA No. 1828/2010 vide order dated 14/03/13. To succeed in this argument assessee shall provide all the details to ascertain the correct value of transaction received by A.E. 7.11. Accordingly this ground raised by assessee stands allowed for statistical purposes.

8. Accordingly appeal filed by assessee stands partly allowed for statistical purposes.

26 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

8. ITANo.1139/Del/2013 (Department's appeal) A.Y. 2005-06

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in concluding that misc. income of Rs.46,1 0,308/- was eligible for calculating deduction u/s 10B of the Act.

2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance made of Rs.11,50,83,837/- on a/c of royalty and technical know-how in view of decision of the Hon'ble Apex Court in the case of Southern Switchgear LtdVs.CIT 232 ITR 359 & Kirlosker Oil Engineer Ltd. VS.CIT [1994] 206 ITR 13 ?

3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the disallowance u/s 14A to Rs.57,40,656/- as against disallowance made by the A.O. u/s 14A at Rs.9,33,27,335/- ?

4. The grounds of appeal are without prejudice to each other.

5. The appellant craves to add, to alter, or amend any ground of the appeal raised above at the time of the hearing.

8.1. Ground No. 1

This ground has been raised by revenue against deletion of miscellaneous income by Ld.CIT (A) by considering it to be eligible for computing deduction under section 10 B of the Act. 8.2. Ld. CIT DR submitted that miscellaneous income has been considered by assessee to be part of total turnover. It was 27 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi submitted that it comprises of write back of credit balances that were no longer payable and insurance claims received. Ld.CIT DR vehemently argued that these are not derived from export activity carried on by assessee, and therefore do not have direct nexus with the industrial undertaking.

8.3. On the contrary Ld.AR placed reliance upon the order of Ld. CIT (A).

8.4. We have perused the submissions advanced by both the sides in light of the records placed before us.

8.5. It is observed from the findings of Ld.CIT (A) that assessee claimed credit balances as deduction in P&L account, in earlier years and hence profits were reduced correspondingly in earlier years. As has been submitted by Ld.AR that amount written off were offered to taxation in immediately preceding assessment year and therefore satisfies the requirement of section 32 (7) of the Act.

8.6. In so far as claim of insurance of Rs.9,63,407/- is concerned, Ld.CIT(A) has observed that Coordinate Bench of Mumbai Tribunal in case of Anil L Shah vs. ACIT reported in 95 TTJ 216 has held that insurance claim etc. have direct nexus with industrial undertaking. And therefore, Ld.CIT(A) directed to include the miscellaneous income for deduction u/s 10B of the Act.

We do not find any infirmity in the observations of Ld.CIT(A) and accordingly the same is upheld.

8.7. Accordingly this ground raised by revenue stands dismissed.

28 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

9.1. Ld.CIT DR submitted that assessee is engaged in business of manufacture and selling of removable storage media being magnetic media. It was submitted that technology in optical media industry is constantly changing and evolving and new formats keep on being invented by different players for which they own IPR. Ld.CIT DR submitted that manufacturer of product has capability to produce product however needs license of such IPR for production and has to pay royalty. Assessee in the present case is using technology licensed by various intellectual property parties like Philips, Hitachi, Taiyo, Samsung among others for manufacture of products against payment of royalty. Ld.CIT DR submitted that as assessee failed to provide details, assessing officer disallowed 25% of total royalty expenditure by placing reliance upon decision of Hon'ble Supreme Court in the case of Southern Switchgear Ltd vs. CIT (supra).

9.2. He submitted that agreement between assessee and parties categorically shows that latter would be granting assessee an indivisible, non-exclusive, non-transferable right and license to use the know-how and technical information for manufacture of product during the term of agreement within specified territory.

29 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

9.3. On the contrary Ld.AR submitted that the ownership of rights in the technical know-how continued to vest with IP owners and therefore assessee acquired only limited rights to exploit the same. He submitted that upon termination of agreement assessee would be required to discontinue usage of technical know-how and therefore did not amount to an enduring benefit to assessee. He thus supported observations of Ld. CIT (A) and placed reliance upon:

· decision of Hon'ble Delhi High Court in the case of CIT versus Hero Honda Motors Ltd reported in 372 ITR 481; · decision of Delhi High Court in the case of CIT versus Sharda Motor Industry Ltd., reported in 319 ITR 109 ; · decision of Andhra Pradesh High Court in the case of CIT versus Ban Thai India Ltd reported in 235 Taxmann 365; 9.4. We have perused submissions advanced by both sides in the light of records placed before us.

9.5. The issue before us is regarding treatment of payment made to various parties with whom assessee entered into a know-how agreement. Assessee during year made payments to various parties which were treated as revenue expenses. Assessee contends that expenditure incurred on acquisition of right to know-how/technical information would not satisfy test of enduring benefit. Assessee placed reliance upon decision of 30 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd.

9.6. Whereas Department contends that right acquired by assessee enabled assessee in trading results in practical and commercial sense and therefore satisfies test for enduring benefits.

9.7. Certain facts as observed by Ld.CIT (A) are that know-how are owned by owners and assessee was granted right to use for period of time till agreement continues to exist. And that upon termination, assessee has to discontinue manufacturing activities and sale of products where the use of such know-how is applicable.

9.8. Further Ld.AO observed that assessee has been using know-how since 2003. Ld.TPO observed that agreements entered into by assessee with these parties have been renewed from time to time automatically and assessee is allowed to sell products manufactured with the help of such know-how worldwide. Further agreement with M/s HP grants assessee an exclusive sub-license to reproduce, use and display the HP trade marks in the territory assigned to assessee and assessee is free as per terms of agreement to contract out the manufacturing of HP branded products to HP approved 3rd parties and to appoint distributors for sale or distribution of HP branded products within the territory.

9.9. From the clauses referred to by Ld.AO in his order, it appears that, assessee acquired merely right to draw upon technical knowledge of foreign companies for a limited purpose of carrying on its business, and that foreign companies did not 31 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi part with any of their assets absolutely for ever or for a limited period of time, that they continued to have the right to use their knowledge and, even after agreements had run their course, their rights in this behalf was not lost, that assessee had not, therefore, acquired any asset or advantage of an enduring nature for benefit of its business and that payments were, therefore, revenue in nature and were deductible.

9.10. Accordingly we do not find any infirmity in the findings of Ld. CIT (A) and the same is upheld.

9.11. In the result the ground raised by revenue stands dismissed.

10. Ground No. 3

Revenue raised this ground in respect of relief granted by Ld.CIT (A) in respect of disallowance under section 14 A. As we have already set aside issue of disallowance under section 14 A to Ld.AO in assessee's appeal, this issue raised by revenue is also set aside for re-computation as directed therein. 10.1. Accordingly this ground raised by revenue stands allowed for statistical purposes.

11. In the result appeal filed by the revenue stands partly allowed for statistical purposes.

Assessment year 2003-04 ITA 883/Del/2008 (Assessee's appeal) Brief facts of the case are as under:

12. Assessee filed return of income for the year under consideration declaring a loss of Rs. 86,15,30,820/-(excluding the loss of Rs.1,09,55,62,820/-which was claimed to be carried forward loss from Greater Noida 100% EOU unit) and a book 32 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi profit of Rs.3,18,15,09,793/- vide return dated 02/12/2003. The return was processed under section 143 (1) of the Act and statutory notices thereafter was issued to assessee in response to which representatives of assessee appeared from time to time and the case was discussed.

12.1. Ld.AO during assessment proceedings observed that assessee is engaged in manufacture of magnetic disk, compact disc recordable and storage units. Assessee company was having units under section 10 A/10 B at Noida Export Processing Zone, a 100% EOU unit at Noida Phase II and at Greater Noida . In original return as well as revised return filed on 31/03/05 assessee claimed loss of Rs.10,95,56,02,820/- from Greater Noida 100% EOU under section 10 B, to be carried forward and in computation of income net profit before tax as per consolidated P&L account was taken at Rs.2,35,98,40,176/- which had included loss from Geater Noida unit. Ld.AO thus observed that assessee was claiming double deduction of loss for Greater Noida unit at Rs.10,95,56,02,820/-. Assessee was asked to show cause as to why claim of carry forward loss of return of this unit should not be disallowed.

12.2. Ld. AO noted from P&L account that assessee debited provision of doubtful debts and advances of Rs.3,88,50,137/-. Assessee was asked to show cause vide letter dated 07/03/06, as to why this should not be disallowed as it is mere provision, that is contingent liability which is not allowable as per IT Act. Assessee vide reply dated 24/03/06, submitted that this amount would not form part of book profit under section 115 JB by claiming that it is an ascertained liability. Ld.AO rejected 33 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi submissions advanced by assessee and made addition in hands of assessee to the extent of provision shown as bad and doubtful. The Ld. AO rejected the assessee's contentions on the ground that assessee claimed it to be ascertained liability but has not given any documentary evidence regarding the actuarial valuation of the same. The Ld.AO was of the opinion that if there are any hopes of getting back part of debt, the debt cannot be categorised as bad debt and that being a provision assessee does not know the exact amount of debt which has become bad. Further Ld.AO was of the opinion that as these debts pertains to 10 A/10 B units, assessee has not established whether these amounts have been offered for taxation as income in any earlier years to be eligible for bad debt.

12.3. Ld.AO observed that assessee treated interest income of Rs.2,17,02,726/- as business income derived from industrial undertaking eligible for grant of exemption under section 10 A/10 B. Assessee was asked to show cause vide letter dt. 07/03/06 as to why interest income should not be treated as income from other sources, as it has not been derived from industrial undertaking and accordingly be disallowed for the purpose of deduction under section 10 A/10 B. In response to the notice assessee vide letter dated 20/03/06 and 28/03/06 briefly submitted that amount relates to deposit for margin money for bank guarantee/letter of credit issued for purpose of export of CD by eligible undertaking or of assessee. It was thus submitted that the said amount was eligible for deduction under section 10A/10 B as they are directly and inextricably linked with export activity carried on by assessee. Ld.AO rejected 34 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi assessee's contention by holding that interest income is not eligible for deduction under section 10 A and 10 B, as it is not part of business profits by placing reliance upon the decision of Nanji Topanbhai & Co. Vs. ACIT reported in 243 ITR 192 (KER), Abad Enterprises vs. CIT reported in 253 ITR 319 (KER), CIT vs. Jose Thomas reported in (2002) 253 ITR 553(Ker), and CIT vs. Cochin Refineries Ltd., Reported in (1994) 43 CTR 103. 12.4. Ld.AO observed from computation of income that assessee claimed long term capital loss of Rs.1,01,779/- from sale of shares. It was observed that assessee took indexation benefit of Rs.94,279/-. Assessee was asked to show cause vide notice dated 07/03/06 as to why benefit of indexation should not be disallowed as per Explanation to Section 73, treating share transaction as speculative, as sales/purchase of shares is not its usual business activity. Assessee accordingly vide its letter dated 20/03/06 briefly submitted that it is not speculative transaction as defined in section 43(5) as sale of shares was done on delivery basis and it is not business activity of the assessee. It was submitted that this was only single transaction entered into by assessee of purchase of shares during the year under consideration.

12.5. Ld. AO rejected contentions of assessee and disallowed indexation of Rs.94,279/-. Ld. AO thus computed the speculative loss of Rs. 7,500/-which was allowed to be carried forward. 12.6. Ld.AO further observed that assessee undertook international transaction with associated enterprise being M/s Glyphics Media Inc. (GMI) USA as under:

35 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi Sl. Description of transaction Method Value (in Rs.) No.

1. Sale of CDs and Floppies CUP 201726762

2. Purchase of CD writer CUP 356534 and printer As the value of international transaction was more than Rs.5 crores, with the approval of Ld.CIT, Delhi, the case was transferred to Transfer Pricing Officer (Ld.TPO) for determining arm's length price.

During the Transfer Pricing proceedings Ld.TPO observed that most appropriate method applied by assessee was CUP in respect of sale of finished products to GMI. The methodology adopted was as under:

I. entire sales to GMI (AE) during financial year 2002-03 were sorted on the basis of packing and memory size; II. comparable sales to all independent uncontrolled parties in Europe were also sorted on the basis of packing and memory size and;

III. average sale price to GMI was adjusted on the account of adjustment for expenses of intermediary, adjustment for geographical differences, freight differentials. 12.7. Ld.TPO accepted adjustment made by assessee on account of freight adjustment but disagreed with adjustment computed 36 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd.

"7.5.3. The contention of the assessee company was that balance expenses are entirely for promoting export sales other than those to GMI. These include salary and allowances, staff welfare expense, rent, printing & stationery, postage telegram, telephone, advertisement and publicity, sales promotion & execution expenses and miscellaneous expenses. It was explained that these are salaries for Marketing Division of MBIL only. However, the fact remains that part of these expenses are for domestic sales also. Total sales during the year were Rs. 1085 crores, out of this, Rs. 20 crores approx. are to GMI leaving Rs.1065 crores to UREs. The domestic turnover was around 13% of the total turnover i.e. Rs.14 crores approximately. The selling & distribution expenses to the extent of 87% [625/675) only are considered as pertaining to exports. This works out to Rs. 2,48,71,844. Total number of CDs and floppies exported to UREs are 66,06,24,848. Selling & distribution expenses per CD for export sales to markets other than USA therefore works out to Rs. O.38/-. This needs to be subtracted from the export prices charged to UREs in accordance with Rule 10B(3) of IT Rules. It may be mentioned here that similar treatment was given to this adjustment in A. Y. 2002-03 under section 92CA(3). 12.8. LD.TPO rejected claim of adjustments on account of geographical differences due to purchasing power parity/general low prices in USA etc were not substantiated by assessee. 12.9. Ld.TPO observed that this was the stand adopted by revenue for assessment year 2002-03 in a similar/identical 37 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi transaction. Ld.TPO computed adjustment in the hands of assessee at Rs.93,87,137/-.

12.10. Ld. AO accordingly passed final assessment order by making adjustment as proposed by Ld. TPO. Against order of Ld.AO, assessee preferred appeal before Ld.CIT (A). The Ld.CIT (A) after considering various submissions advanced by assessee partly allowed the appeal.

12.11. Aggrieved by the order of Ld. CIT (A), assessee as well as revenue are in appeal before us.

ITA 883/Del/2008 (Assessee's appeal) "1.That the Commissioner of Income-tax (Appeals) erred on facts and in law in sustaining the addition of Rs.9387137 to the appellant's income on account of the alleged difference in the arm's length price of the international transactions, upholding the findings in the order passed by the Transfer Pricing Officer (TPO) I other assessing officer.

2. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not holding that the reference made by the assessing officer to the TPO merely on the basis that the value of international transactions exceeded Rs.5 crores was unlawful and not in accordance with section 92CA(1) of the Act.

3. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that reference made by the assessing officer to the TPO under section 92CA(1) of the Act without recording satisfaction that it was necessary or expedient so to do was unlawful and adjustment made by the TPO/assessing officer on the basis of such reference was invalid.

38 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

4. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not holding that the international transactions entered into with the associated enterprise were at arm's length and no adjustment to the prices thereof was called for being made.

5. That the Commissioner of Income-tax (Appeals) erred on facts and in law in disregarding the adjustments made to the prices of international transactions of export to Glyphics Media Inc. (GMI) on account of geographical difference, for determining the arm's length price applying Comparable Uncontrolled Price (CUP) method holding that such adjustments were not correctly made.

6. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the benchmarking analysis in the instant case is to be conducted by taking the wholesale export prices charged by the appellant from GMI as given and then comparing these prices with the arm's length prices computed from the uncontrolled transactions after making the necessary adjustments.

7. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the correct way of making the adjustment on account of selling expenses incurred by GMI was to reduce the average selling and distribution expenses incurred by the appellant from the prices charged from unrelated parties.

8. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that the even if the adjustments on account of (i) selling and distribution expenses incurred by GMI and (ii) geographical differences were to be alternatively made for the prices of export of COs to the unrelated prices, the international 39 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi transactions of export, GMI would still be regarded as being at arm's length price.

9. That the Commissioner of Income-tax (Appeals) erred on facts and in law in rejecting the adjustment made on account of geographical difference for determining the arm's length prices of export to U A being lower than the prices of export to European countries, holding that the details of export to unrelated parties does not reveal any price pattern on the basis of country difference.

10. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that while claiming 10% loading on account of geographical market difference has not brought on record sufficient evidence to substantiate this claim.

11. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that in order to make a comparison of like with like and for application of CUP method, adjustment was ought to be made on account of the geographical differences in the international transactions and comparable uncontrolled transactions.

12. That the Commissioner of Income-tax (Appeals) erred on facts and in law in disregarding the conclusive evidences placed on record by the appellant to justify the adjustment on account of geographical differences in respect of prices of international transactions of export of COs in USA and the prices of export of COs to unrelated parties in European countries.

13. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that the adjustment on account of geographical difference was made on the basis of instances of 40 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi purchase of similar product by an unrelated party in Europe and USA during the relevant previous year.

14. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding the adjustment on account of selling and distribution expenses incurred by the appellant at Rs.O.38 per CD allegedly being selling and distribution expenses incurred in distributing the products in non US locations.

15. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the appellant failed to come up with documentation to show that it treats the US and European market differently.

16. That the Commissioner of Income-tax (Appeals) erred on fact and in law in holding that the appellant did not produce adequate documentation for claiming adjustment on account of purchasing power priority considering the various variables, such as, interest rate, exchange rate, price level, etc.

17. That the Commissioner of Income-tax (Appeals) erred on facts and in law in disregarding prices paid for purchase of CDs in European and US by Imation allegedly on the ground that the same pertains to subsequent year and do not reflect contemporaneous market situation.

18. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that the instances of purchase of COs in Europe and in USA by Imation during the relevant previous year was also placed on record in support of adjustment on account of geographical differences.

19. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the reference to Big Mac Index by the 41 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi appellant is also misplaced. The prices of a burger in US could be lower for a number of reasons.

20. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the adjustment relating to higher cost of performing distribution function in US compared to Europe has already been taken care of through selling and distribution expenses incurred by the appellant.

21. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the reference to lower prices of home electronics and household appliances in US is also misplaced as these belong to different product categories.

22. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that incurrent of loss by a related party does not have a bearing on the determination of arm's length price in the transaction between the appellant and its subsidiary GMI.

23. That the Commissioner of Income-tax (Appeals) erred on facts and in law in enhancing the income of the appellant by a sum of Rs. 7508100 on account of alleged difference in computation of adjustment of the arm's length price of international transactions as per section 92C(2) of the Act.

24. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that, if the arm's length price falls outside the tolerance band. Transfer Pricing adjustment would have to be made for the difference between the arm's length price determined by the assessing officer based on the arithmetical mean of the prices and the price shown by the assessee.

25. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that the TPO was justified in taking the 42 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi arm's length price at the arithmetical mean of prices without allowing for reduction of up to 5% in respect of transactions where the transfer prices fell short of the tolerance band of 95% of the arm's length price.

26. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding that for benchmarking analysis, each international transaction is to be compared with the arm's length price determined and the TPO was correct in following such a methodology.

27. That the Commissioner of Income-tax (Appeals) erred on facts and in law in holding the interest income of Rs.2, 17,02,726/- in respect of deposits kept as margin money for LCs, etc., and income from other sources.

28. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not appreciating that interest income on deposits kept as margin money for LCs., etc., were derived from industrial undertaking and hence eligible for deduction under section 10A/10B of the Act.

29. Without prejudice, that the Commissioner of Income-tax (Appeals) erred on facts and in law in not allowing deduction for interest expense against the above interest income on margin money for LCs, etc., holding that nexus between the two were not established.

30. Without prejudice, that the Commissioner of Income-tax (Appeals) erred on facts and in law in not directing the assessing officer to reduce the deduction under section 10A/10B of the Act by proportionate amount of interest income of Rs.2,17,02,726/- in the ratio of export turnover to total turnover.

43 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

31. That the Commissioner of Income-tax (Appeals) erred on facts and in law in upholding the action of the assessing officer in increasing the book profit computed under section II5JB of the Act to the extent of interest income on margin money on LCs, etc., of Rs.2,17,02,726/-.

The appellant craves leave to add, alter, amend or vary from the above grounds of appeals before or at the time of hearing."

13.1. Ground Nos. 1 to 26

These grounds have been raised by assessee in respect of TP adjustment made by Ld.TPO.

13.2. Ld.AR submitted that only issue that remains to be addressed is in respect of adjustments rejected by Ld.TPO on account of sales and distribution expenses incurred by AE as well as adjustment on account of geographical differences. At the outset Ld.AR submitted that this issue stands covered vide order dated 14.12.2015 in assessee's own case for assessment year 2002-03 in ITA No. 882/Del/2008.

13.3. He has referred to para 19 to 21 of the said order which is reproduced herein below:

"19. From the aforesaid conclusion it is apparent that the CIT(A) has not disputed that geographical adjustment is to be allowed for comparing two sets of transactions. However on the facts of the case of the assessee on the ground as sufficient evidence was not brought on record to substantiate the claim. The question therefore which emerges is that are there sufficient claim of the assessee. The assessee has relied on big map index to contend that US is a lower price market as comparable Europe. It has also been contended that assessee is a recent entrant in US market for 44 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi export of CDs and does not have any presence or brand recognition. It has been stated that products are sold in USA through various shopping malls/super markets which follow just in time (JIT) approach i.e., the retailer would rent out a shelf space to the distributor who is required to supply/place on the shelf his products in specified quantity for sale to the customer. It has been stated that the distributor has to maintain requisite inventory and is to replenish the requisite quantity of CDs as soon as the shelf stock is reduced to a maintain level and the cost of operations for the distributor in USA is much higher. Also, it has been stated that, the distributor in USA is dealing only in CDs exported by the assessee from India and is therefore, incurring significantly higher selling expenses on distribution/resale of products in that country.

20. Having regard to the above we accept the claim of the assessee for adjustment. The CIT(A) or the TPO have not denied or disputed any of the above factual submission to the assessee. A rejection of a claim for general consideration for granting an economic adjustment which on the face of fit is tenable is not a correct way to disregard the facts brought on record. The revenue ought to have appreciated the business and the nature of the market. The observation of the TPO that the export price of 10.4-I- I-0 (Jewel-case CD box) to LG Electronics Inc. in USA was Rs. 13.59 per CD while sale prices of the same product in Poland and German, was Rs. 12.4 per CD is also found to be misconceived and therefore for the reasons stated above we allow the adjustment as claimed by the assessee.

45 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi

21. Accordingly if the aforesaid adjustment is applied it is seen that the transaction of the assessee with the AE is at the higher than the arm's length price and therefore the adjustment so made and sustained is deleted. Consequently we are not inclined to take up remaining objection raised by the learned counsel other than to hold that we find merit the submission that since the AE (GMI) had incurred loss therefore assessee could not be expected to have made more profits than the combined profit made the assessee and its AE i.e. GMI, if it were to make sales directly to the third party customers. The support is drawn from the Delhi Bench of Tribunal in the case of Globe Vantedge (P) Ltd. vs. DCIT (ITA No. 2763 & 2764/D/2009) wherein it is held that adjustment on account of arm's length price of international transactions cannot exceed the maximum arm's length price i.e. the amount received by the associated enterprise from the customer and the actual value of international transactions. The Hon'ble Jurisdictional High Court vide order dated 14.3.2013 (in ITA Nos 1828/2010, 1829/2010 & 1254/2011) had dismissed the revenue's appeal against the said order of the Tribunal. The Special Leave Petition (SLP) of the revenue against the said order has also been dismissed by the Supreme Court vide order dated 2.1.2014. Reliance is also placed on the judgment of Hon'ble High Court in the case of Sony Ericsson Mobile Communications India (P) Ltd. vs. CIT 374 ITR 118 wherein it has been held as under:

"77. As a concept and principle Chapter X does not artificially broaden, expand or deviate from the concept of "real income".

"Real income", as held by the Supreme Court in Poona Electricity Supply Co. Ltd. v. CIT [1965] 57 ITR 521, means 46 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi profits arrived at on commercial principles, subject to the provisions of the Act. Profits and gains should be true and correct profits and gains, neither under nor over stated. Arm's length price seeks to correct distortion and shifting of profits to tax the actual income earned by a resident/domestic AE. The profit which would have accrued had arm's length conditions prevailed is brought to tax. Misreporting, if any, on account of non-arm's length conditions resulting in lower profits, is corrected."

13.4. On the contrary Ld.CIT DR placed reliance upon his arguments advanced for Ground No. 4 in assessment year 2005- 06 (supra).

13.5. We have perused the submissions advanced by both the sides in the light of the records placed before us. 13.6. On perusal of the order passed by this Tribunal for assessment year 2002-03 it is observed that factual matrix prevailed therein is identical to assessment year 2003-04, presently under consideration. There is no dispute by Ld.AO that the associated enterprise incurred loss for year under consideration. Further there is no allegation by Ld.TPO regarding deficiency in absence of any details, for purposes of computing ALP. Further assessee for year under consideration placed reference to Big Mac , as has been referred by this Tribunal in order for assessment year 2002-03 (supra) in assessee's own case(which has been reproduced herein above). It has been submitted that there is no factual changes and the international Transactions are same in both years with similar circumstances.

47 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

Accordingly we delete the adjustments made by Ld. TPO.

14. Ground Nos. 28-30 These grounds have been raised by assessee as interest earned on deposits kept as margin money for LC etc were denied to be income derived from industrial undertaking and hence were held to be not eligible for deduction under section 10 A/10 B of the Act.

14.1. Ld.AR submitted that during the year under consideration assessee earned interest income of Rs.2,17,02,726/- on fixed deposits placed with bank as margin money, for obtaining letter of credit/bank guarantees. The said interest income having direct nexus with eligible undertaking of assesse under the provisions of section 10 A/10 B of the Act, was considered as business profits for purposes of computing deduction.

14.2. Ld.AR submitted that both authorities below denied claim of assessee by holding it to be covered under income from other sources and denied deduction under section 10 A/10 B of the Act. Ld.AR placed reliance upon decision of Full bench of Hon'ble Karnataka High Court in the case of Hewlett Packard Global Soft Ltd., reported in 87 Taxmann.com 182. He submitted that Hon'ble court held that profit and gains of 100% EOU including 48 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi incidental income by way of interest on bank deposits or staff loan would be entitled to 100% exemption of deduction under section 10 A/10 B of the Act. He also placed reference to the decision of Hon'ble Delhi High Court in the case of Riviera Furnishing vs. ACIT reported in 237 Taxmann 520, wherein, interest on FDRs which were under lien with bank for facilitating letter of credit and bank guarantee facilities was held to be qualifying for deduction under section 10 B of the Act. 14.3. On the contrary Ld. CIT DR submitted by placing reliance upon the orders of authorities below that interest earned on LC should be treated as income from other sources. He submitted that it does not have a direct nexus with the export activity and therefore cannot be treated as part of income for the computation of deduction under section 10 A/10 B. 14.4. We have perused the submissions advanced by both the sides in the light of the records placed before us. 14.5. On perusal of the observations of Ld. CIT (A) in para 14.3.9 of his order, it is an admitted fact that assessee is engaged in the business of export of CDs and that interest income has been earned from the deposits made with the bank for obtaining letters of credit. However Ld. CIT (A) has placed reliance upon various decisions as under:

· Hon'ble Supreme Court in the case of Sterling foods reported in 237 ITR 517 · Hon'ble Supreme Court in the case of Orissa Warehousing Corporation reported in 237 ITR 589 · Hon'ble Madras High Court in the case of South India shipping Corporation's reported in 240 ITR 24 49 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi · Hon'ble Kerela High Court in the case of Nanji Topen Bhai & Co vs. ACIT reported in (2002) 23 ITR 192 · Hon'ble Kerala High Court in the case of Joseph Thomas reported in 253 ITR 553 · Hon'ble Kerela High Court in the case of K.Ravinderanathan Nair vs. DCIT reported in 262 ITR 669 · Hon'ble Delhi High Court in the case of CIT vs. Shri Ram Honda Equip reported in (2007) 158 Taxmann 474 14.6. On perusal of all the above referred decisions, it is observed that these were cases where interest was derived by assessee from temporary parking of surplus funds in short-term deposits.

In K. Ravindranathan Nair's case (supra), in dealing with a similar issue, Hon'ble Kerala High Court held as under:

". . .The interest from short-term deposits received by the appellant is not the direct result of any export of any goods or merchandise. The fixed deposit was made only for the purpose of opening letters of credit and for getting other benefits which are necessary requirements to enable the appellant to make the export. From the above it is clear that the interest income received on the short-term deposits though it can be attributed to the export business cannot be treated as income which is derived from the export business. In the above circumstances, even assuming that the bank had insisted for making short- term deposits for opening letters of credit and for other facilities, it cannot be said that the income is derived from the export business. . . ." (p. 673) The above decision in K. Ravindranathan Nair (supra) has been affirmed by Hon'ble Supreme Court by dismissal of Special Leave Petition [order reported in 263 ITR (Statutes) 3]. However Hon'ble Delhi High Court in the case of CIT vs Shri Ram Honda Power 50 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi Equip. (supra) after considering all the aforestated decisions has observed as under:

"20. The other category is where the exporter is required to mandatorily keep monies in fixed deposit in order to avail of credit facility for the export business. The argument on behalf of the assessee is that but for such a stipulation by the bank there was no need for the exporter to keep the money in fixed deposit and therefore the income earned from such fixed deposits bears a direct nexus to the business activity itself. Given the repeated affirmation by the Hon'ble Supreme Court of three judgments of the Kerala High Court on the same issue, we are inclined to follow the view expressed by the Kerala High Court on each of these occasions. We accordingly hold that interest earned on fixed deposits for the purposes of availing credit facilities from the bank, does not have an immediate nexus with the export business and therefore has to necessarily be treated as income from other sources and not business income."

14.7. It is observed from order of Ld.CIT (A) that assessee earned interest from deposits made with banks for obtaining letters of credit. As these letters of credit are utilised for purposes of export activity carried on by assessee, it has to be understood having direct link with export business, as has been appointed by Hon'ble Delhi High Court in the case of Sri Ram Honda Equip (supra), relevant extract has been reproduced herein above. However we observe in the facts of present assessee there are local sales made by assessee and assessee during the year has advanced various loans, as per the profit and loss account. Since there is no bifurcations that has been provided by assessee either 51 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi before us or before the authorities below it cannot be assumed that entire interest income claimed by assessee could be linked with the export activity.

14.8. We accordingly set aside this issue back to Ld.AO to identify interests earned from deposits which have been made with banks for obtaining letters of credit. Assessee is directed to provide entire details regarding letters of credit obtained from bank for its export activities, in lieu of which interest has been earned. Ld.AO shall then verify the details and allow such interest to be included in computation of deduction under section 10 A/10 B which has been earned by assessee on such letters of credit having direct nexus with the deposits made for export activities. In the event assessee is unable to provide relevant details of the letters of credit in view of which interest has been earned, disallowance shall be confirmed.

14.9. Accordingly this ground raised by assessee stands allowed for statistical purposes.

15. Ground No. 31

This ground has been raised by assessee as Assessing Officer increased the book profits for the year under consideration by the amount of interest income that has been disallowed from deduction claimed by assessee under section 10 A/10 B of Act. 15.1. Ld.AR submitted that this ground shall be academic in nature in view of issue raised in ground No. 28-30. 15.2. Ld. CIT DR also supported the view of the Ld.AR. 15.3. We have perused submissions advanced by both sides in the light of records placed before us.

52 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

16. ITA No. 894/Del/08 (revenue's appeal) "1. The order of the Ld.CIT(A) is erroneous and contrary to facts and law.

2. The Ld.CIT(A) erred in holding that provision for bad & doubtful debts at Rs.3,88,50,137/- adjusted by A.O. in the computation of book profit u/s 115 JB of the Act is an ascertained liability while relying on the decision of Hon'ble Delhi High Court in the case of M/s HCL Commet System & Services Ltd. 292 ITR 299, the facts of which are not applicable to the case. Had it been ascertained liability, the assessee company would have made corresponding entries in the books of accounts.

3. The Ld.CIT(A) erred in holding that the proviso to s.73A of the Act is not applicable to assessee company in respect of indexation benefit of Rs.94,279/- against long term capital gains of Rs.1,01,779/- whereas the principal business of the assessee company is not business of banking or granting of loans and advances, sale and purchases of shares of other companies.

4. The Ld.CIT(A) has erred in allowing relief towards book profit enhanced by A.O. by Rs.4,66,60,747/- towards profit u/s 10A by way of exclusion of receipts and expenses of the unit on the 53 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi ground that due to losses no deduction was claimed u/s 10A while relying on the decision of Hon'ble ITAT in the case of assessee company in A.Y. 2001-02 vide order dated 19.6.2007 in ITA 2448/Del/06 which has however, not been accepted by department and appeal has been filed u/s 260A of the Act on this issue.

5. The appellant craves leave to add, alter, or amend any grounds of appeal raised above at the time of hearing."

16.1. Ground No. 1 is general in nature and therefore do not call for any adjudication.

16.2. Ground No. 2 has been raised by revenue against bad debts amounting to Rs.3,88,50,137/-being deleted by holding that these are unascertained liabilities.

16.3. Ld.AR at the outset submitted that Hon'ble Supreme Court in the case of CIT versus HCL Commet Systems & Services Ltd., reported in 305 ITR 409 has held that provisions for bad and doubtful debts being ascertained liability are not required to be added in the matter of computation. He submitted that subsequent to the decision of Hon'ble Supreme Court, an amendment has been made in section 115 JB by Finance Act 2009 with retrospective effect from 2001, and the issue now has to be decided against assessee.

16.4. Ld. CIT DR supported the view of the Ld. AO. 16.5. We have perused the submissions advanced by both the sides on the basis of records placed before us.

16.6. In view of retrospective amendment made in Sec.115 JB by Finance Act, 2009, this issue raised by revenue stands allowed.

54 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

17. Ground No. 3:

This ground has been raised by revenue against indexation that has been granted by Ld. CIT (A) on the sale of shares by assessee of State Bank of Bikaner and Jaipur.

17.1. Ld.CIT DR placed reliance upon observations made by Ld.AO.

17.2. Ld.AR submitted that assessee claimed long term capital loss of Rs.1,01,779 from sale of shares of State Bank of Bikaner and Jaipur. It has been submitted that loss was computed after taking benefit of indexation of Rs.94279/-. Ld.AO treated it as speculative and invoked Explanation to section 73 of the Act, thereby denying indexation to assessee. Ld.AR before us submitted that these are one single transaction entered into by assessee during the year under consideration and solitary transaction of sale/purchase cannot be held to be business activity. He supported the observations of Ld. CIT (A). 17.3. We have perused the submissions advanced by both the sides in the light of the records placed before us. Ld. CIT (A) has observed as under:

"14.2.4. In the instant case, the A.O. has observed that trading in shares is not a primary activity of appellant and the shares were shown as investment in the balance sheet. However, no other evidences have been brought on record by A.O. to come to conclusion that business of dealing in shares was conducted by the appellant. Under these circumstances, it cannot be held that solitary transaction of sale of shares to be part of carrying on 55 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi business of trading in shares. This view is also fortified by another decision of Delhi bench of Tribunal in CIT vs. VIP Growth Fund Ltd. in ITA 2930/del/1993. Under the circumstances and respectfully following the decision of jurisdictional Tribunal, I am of the considered view that the A.O. had erred in treating the sale transaction as speculative business of appellant under explanation to s.73 of the Act. Accordingly, the A.O. is directed to allow long term capital loss at Rs.1,01,779/- instead of Rs.7,500/-. Thus, grounds of appeal no.4, 4.1 and 4.2 succeed."

17.4. It is an admitted position that this is the sole transaction entered into by assessee of sales/purchase of shares in view of which loss has been incurred during the year under consideration. There is no evidence that has been brought on record by department to establish that assessee has been carrying on with activity of sales/purchase of shares. Under such circumstances applicability of Explanation to section 73 has to be construed in a narrow sense, which indicates where the income is derived from business activity of sales/purchase of shares. We therefore do not find any infirmity in the observations of Ld. CIT (A) and uphold the same.

17.5. Accordingly this ground raised by the revenue stands dismissed.

18. Ground No. 4

This ground has been raised by revenue as Ld. CIT (A) allowed claim of assessee in excluding expenses of Rs.77,82,74,563/- and income of Rs.82,49,35,310/- in respect of Greater Noida Unit, which is eligible for deduction under section 10 B from computation of book profits.

56 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

We have perused submissions advanced by both sides in the light of records placed before us.

18.3. It has been submitted by Ld.AR that assessee computed book profits at Rs.2,50,55,084/- on the basis of certificate issued from a chartered accountant. Later on being advised of legal position submitted revised return of income on 31/03/05 computing book profit under section 115 JB of the Act at Rs.15,34,798/- after excluding gross expenditure and income chargeable to which provisions of section 10 A/10 B apply in terms of clause (f) and/or (ii) of section 115 JB. Ld. AO however following order for assessment year 2001-02 held that for purposes of computing book profit under section 115 JB of the Act, amount of deduction under section 10 A/10 B of the Act actually allowed as per normal provisions amounting to Rs. 1,09,00,43,334/- was to be excluded.

Ld. CIT (A) decided the issue by observing as under:

"16.5. I have carefully examine this issue and also considered the submissions made by the appellant and all the relevant material placed on record. The issue relating to the computation of book profit under section 115 JB of the act is well settled in view of the judicial pronouncements quoted by the appellant in its submissions. The jurisdictional Delhi tribunal in the case of appellant itself for assessment year 2001-2 has analysed in detail 57 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi various judicial decisions on this issue and has come to the conclusion that the adjustments in terms of clause (ii)/(f) of explanation to section 115 JB of the act has to be for the amounts credited/debited to the profit and loss account and not the actual deduction of the eligible units under section 10 A/10 B of the act. In the present case the AO had based his entire computation of book profit under section 115 JB of the Act on the basis of computation made in A.Y 2001-02 and the same has been reversed by the ITAT vide order dated 19/06/07 in ITA No. 2448/D/06. Therefore, respectfully following the jurisdictional Tribunal in the appellant's own case, I direct the AO to recompute the book profit under section 115 JB of the act by considering the revised return filed by the appellant taking into account the following:

(i) starting point for computation of book profit should be the net profit taken as per the books of account maintained by the appellant as per the companies law.

(ii) No adjustment is to be made for provision for bad and doubtful debts

(iii) adjustment to the book profit has to be done in respect of all the 3 units eligible for deduction under section 10 A and 10 B of the act by increasing the amounts of expenditure related to the income to win section 10 A/10 B apply, if the same is debited to the profit and loss account.

(iv) Adjustment of the book profit has to be done in respect of all the 3 units eligible for deduction under section 10 A and 10 B of the act by reducing the amount of income to which 58 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi provisions of section 10 A/10 B apply, if the same is credited to the profit and loss account.

(v) No separate treatment to be given to the interest income of Rs. 2, 17, 02, 726/-in computation of book profit as the entire income pertaining to the 10 A/10 B unit is to be reduced from the net profits as per the provisions of explanation (f) (ii) to section 115 JB (2) of the act if the same was credited to the profit and loss account." 18.4. Ld.AR submitted that order of this Tribunal for assessment year 2001-02 has been upheld by Hon'ble Delhi High Court's vide order dated 19/01/12 in ITA No. 263/2008. On perusal of this order we observe that revenue raised issue relating to computation of book profit under section 115 JB of the Act and weather deduction/exemption under section 10 A and 10 B should be taken at Rs.9825.14 Lacs as against Rs. 13,34 3.61 Lacs allowed in original assessment. Hon'ble court observed that, difference arose because assessee in books of accounts, provided for depreciation on straight-line method but while computing taxable income for purpose of the Act, was calculated depreciation as per written down value method. Hon'ble court also observed as under:

"8. In the present case, the findings recorded by the tribunal are that in the books of accounts maintained under the companies act, 1956, the respondent assessee was regularly following straight- line method to compute depreciation. This position is not disputed. Assessing officer in terms of explanation 1 could have recomputed the income disclosed the books of account maintained under companies act, 1956 to the extent permitted and allowed by the 59 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi said explanation. By virtue of clause (f) and (ii) to explanation 1, the assessing officer could not have reworked the differentiation computed by the respondent assessee in the books of account maintained under the companies act 1956.

9. It may be noted here that the only addition made by the assessing officer in the present case was on account of change of method of depreciation from straight-line method, which was the method adopted by the respondent assessee in the books of accounts maintained under the companies act, 1956. The assessing officer adopted and applied the written down value method, which is a method specified under section 32 of the act. This is not permissible in view of the limited mandate and stipulation that explanation 1.

10. In view of the aforesaid position, we have to hold that the order passed by the tribunal does not require interference and accordingly we do not think any substantial question of law arises for consideration."

From the above it is observed that issue before Hon'ble High Court for assessment year 2001-02 was not regarding amount of income to which section 10 A/10 B applies, but was in respect of change of computation adopted by Ld.AO in computing depreciation for that assessment year.

In the present case, we observe that directions of Ld. CIT (A) in recomputing book profits cannot be found fault with. We therefore once again direct Ld. AO to recompute book profit as per the directions, that has been reproduced in paragraph 18.3 herein above.

60 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

18.7. Accordingly this ground raised by revenue stands dismissed.

18.8. In the result appeal filed by revenue stands partly allowed.

19. Assessment year 2006-07 Brief facts of the case are as under:

Assessee filed its return of income declaring loss of Rs.(-) 19,34,62,334/- on 10/11/06. The case was selected for scrutiny and statutory notices were issued in response to which, representatives of the assessee appeared before Ld. AO and filed requisite details as called for. Ld. AO observed that assessee entered into international transaction and accordingly referred the case of assessee to Ld.TPO.

19.1. Ld. TPO after going through various submissions made by assessee observed as under:

"Sales made by GDM:

10.2.1 As mentioned above GDM is a joint venture company of Imation Corp. and MBIL, where Imation Corp. has a major share of 51 %.In this case GDM was selected as a tested party by the assessee, accordingly all financial details of tested party must be available and produced during the transfer pricing proceedings. Vide order sheet entry dated' 02.02.2009, the assessee was specifically asked to submit the details of sales made by GDM Dubai to other global AEs of the assessee. The assessee was also 61 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi asked to state whether GDM Dubai was making third party sales. The assessee was also required to state as to whether sales made by GDM Dubai are controlled transaction or not.

10.2.2. The assessee has furnished reply dated 24.02.2009. In its reply, assessee has conveniently avoided furnishing of above stated information. Assessee has furnished information regarding sales made by the AE of the assessee, i.e. GDM Dubai. In its submission dated 2nd April' 2009, the assessee has stated that GDM has sold goods through its subsidiaries viz. MBI International FZ, LLC Dubai. From the details submitted, it is seen that the AE of the assessee, which was selected as the tested party by the assessee was making controlled transactions with respect to both purchase and sale. Further, the sales made by GDM through its subsidiaries were further sold to related parties. It is not possible to ascertain, whether GDM was supplying products through its subsidiaries to Imation Corporation, which is a joint venture partner of GDM or to other related parties of the assessee. In this situation, correctness of the transfer pricing methodology adopted by assessee can not be ascertained, that too when assessee had not shared complete financial details of the tested party with the TPO. The argument of the assessee that the joint venture partner Imation Corpn. has 51 % share and assessee has 49% share ,and therefore it has no access to financials of M/s GDM cannot be accepted. In joint venture, both the partners share the profits in the ratio of their ownership. Further, by assessee's own admission GDM was established to expand the business of the assessee in the export market. It may be mentioned that in UAE where GDM is located has almost NIL tax. The business structure of the 62 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi assessee which GDM is an important link cannot solely depend on the joint venture partner M/s Imation Corpn.

In these circumstances, the next issue for determination revolves around selection of new tested party in case where assessee has not furnished relevant data of tested party selected by it. Recently ITAT Delhi Bench in the case of Ranbaxy Laboratories Ltd. vs. Addl: Commissioner of Income Tax, Range-IS, New Delhi in {167 Taxmann 30] has examined the issue of selection of tested party where relevant financial data with regard to tested party was not made available and has held as under:-

"The tested party normally should be the party in respect of which reliable data for comparison is easily and readily available and fewest adjustments in computations are needed. It may be local or foreign entity, i:e., one party to the transaction. The object of transfer pricing exercise is to gather reliable data, which can be considered without difficulty by both the parties i.e. taxpayer and the revenue: It is also true that generally least of the complex controlled taxpayer should be taken as a tested party. But where comparable or almost comparable, controlled and uncontrolled transactions or entities are available, it may not be right to eliminate them from consideration because they look to be complex. If the taxpayer wishes to take foreign AE as a tested party, then it must ensure that it is such an entity for which the relevant data for comparison is available in public domain or is furnished to the tax administration.

The taxpayer is not then entitled to take a stand that such data cannot be called for or insisted upon from the taxpayer. "

63 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

11. In order to cross check method adopted by the assessee analysis of internal uncontrolled comparables has been carried out. Assessee had sold products outside India to both AE and non-AEs. Further, assessee had also sold products in the domestic market. The assessee is exporting a major portion of its sale in foreign market. Therefore, the application of internal TNMM would be the most ideal way to benchmark the international transactions undertaken by the assessee. It is undisputed fact that the internal uncontrolled comparable are always preferable, reliable and accurate way to benchmark the international transactions.

12. Summary of reasons for rejecting the transfer pricing studies conducted by the assessee:

The reasons for rejecting the transfer pricing study of the assessee are summarized hereunder:

(i) The selection of GDM as a tested party was incorrect as both sales and cost were controlled transactions. Normally, the profit level indicator should be uncontrolled to ascertain arm's length price.

(ii) Assessee had failed to furnish complete financials of the tested party. It is matter of record that no details of sales made by GDM to other parties was filed. The assessee was specifically asked vide order sheet entry dated 02.02.2009 to furnish details 64 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd.

ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi of sales made by GDM Dubai to other AEs and details of controlled transactions. From the details furnished, it is not possible to ascertain the profitability of the tested party from controlled and uncontrolled transactions, as sales were being made to other associate enterprises, which in turn were making further sales to related parties.

(iii) Assessee had also not furnished details of internal division wise profitability for application of internal cost plus method/internal TNMM, which are comparatively more reliable and accurate comparable.

(iv) The financials of the tested party was only upto December, 2005, whereas the international transactions of assessee are upto 31 st March, 2006.

Therefore, all the international transactions relating to sale of goods to GDM were not getting benchmarked by the methodology adopted by assessee. In fact significant percentage of international transactions undertaken between January 2006-March2006. Therefore, on the basis of detailed discussion made, facts and absence of details regarding controlled transactions made by tested party selected by the assessee, and on the basis of judicial decision cited above, selection of GDM Dubai as tested party is rejected. In the light of above facts, the assessee itself shall be selected as the tested party on the basis of discussions made in the order.

19.2. Ld.TPO rejected foreign AE to be the tested party and applied PLI as OP/TC, since cost being uncontrolled in nature. He proposed adjustment of Rs.94,75,94,843/-towards the international transaction undertaken by assessee.

65 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

19.4. Accordingly Ld. AO passed final assessment order on 31/05/13 under section 143 (3) read with 144C of the Act making addition in respect of international transaction as recommended by DRP.

19.5. Ld.AO made addition in respect of claim of deduction under section 10 B of the Act towards, foreign exchange gain/loss accrued to assessee by virtue of exports made. Ld. AO was of the opinion that the foreign exchange gain/loss due to fluctuation was not inextricably linked to business activity of eligible undertaking and accordingly disallowed it. 19.6. Ld. AO also observed that assessee during the year had incurred Rs.31,54,78,020 towards expenditure on royalty and fees for technical services. It was observed that royalty has been paid in connection with Grant of license/right to assessee by various intellectual property parties like Philips, Hitachi, Taiyo, Samsung for manufacture of products. Ld.AO disallowed same by holding it to be capital expenditure as it gave enduring benefits to assessee.

19.7. Ld. AO observed that assessee had received dividend of Rs.1,37,48,911/-which was claimed exempt under section 10 (34) of the Act. It was observed that assessee had not disallowed any expenditure for purposes of earning exempt income under section 14 A of the Act. Ld.AO accordingly computed disallowance under section 14 A read with rule 8D of the Act at Rs.78,43,390/-.

66 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

20. ITA No.4484/Del/13

1. That the assessing officer erred on facts and in law in completing assessment under section 143(3) read with section 144C of the Income-tax Act, 1961 ("the Act") at a Nil income (after set off of brought forward losses) as against the returned loss of Rs.19,34,62,334 under the normal provisions of the Act.

2. That the assessing officer/TPO erred on facts and in law in making an addition to the extent of Rs. 93,34,07,831 to the appellant's income on account of the alleged difference in arm's length price of the international transactions, on the basis of the finding in the order passed under section 92CA(3) by the Transfer Pricing Officer (TPO).

2.1 That the assessing officer/TPO erred on facts and in law in not appreciating that the international transactions entered into with the associated enterprise were at arm's length and no adjustment to the prices thereof calls for being made. 2.2 That the Assessing Officer/TPO erred on facts and in law in not accepting the overseas Associated Enterprise ("AE") as the tested party, being the least complex of the transacting entities and instead considering appellant as the tested party, therefore violating the fundamentals of Transfer Pricing. 2.3 That the assessing officer/TPO erred on facts and in law in selecting internal TNMM as most appropriate method by considering appellant as the tested party.

67 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

(i) Allocating costs on the basis of the number of units sold;

(ii) Considering incorrect number of units sold for such computation;

(iii) Distributing of increase in stock between AE and Non-AE segment on the basis of sales value instead of sales quantity.

(iv) ignoring the fact that appellant not only produces and sells principal product but also produces and sells the secondary products and the various products produced and sold by the appellant are of different kinds, having different cost and sale price;

(v) ignoring the directly identifiable royalty expenditure.

2.6 Without prejudice, that the assessing officer/TPO erred on facts and in law rejecting the Profit Level Indicator ("PLI") of Operating Profit / Sales ("OP/Sales") allegedly on the ground that the sales made by the associated enterprise, viz. GDM, is a related party transaction without appreciating the fact that the appellant has computed the PLI on the basis of consolidated financial statement of GDM.

2.7 Without prejudice the assessing officer / TPO erred on facts and in law in not appreciating that the adjustment on account of 68 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi international transactions undertaken by the appellant cannot exceed the amount retained by the associated enterprise. 2.8 Without prejudice that the assessing officer / TPO erred in denying the benefit of +/(-) 5% under Section 92C(2) of the Act while making the impugned TP adjustment on account of the alleged difference in the arm's length price of the 'international transactions' .

3. That the assessing officer erred on facts and in law in restricting the deduction under section 10B of the Act in respect of A-164, Noida Unit, at Rs.26,64,82,025 as against Rs.27,41,51,004 claimed by the appellant.

3.1 That the assessing officer erred on facts and in law in reducing profit on sale of forward contract of Rs.1,78,86,099, foreign exchange fluctuation loss of Rs.2,90,79,685 from profits and gains of A-164, Noida Unit, holding the same to be not in the nature of income derived from the business of export of the said undertaking.

3.2 That the assessing officer erred on facts and in law in holding that profit or loss from exchange rate fluctuation are directly linked to the time when export proceeds are realized and, therefore, cannot be said to be incidental to the activities of export and cannot be regarded as income generated from the export business.

3.3 That the assessing officer erred on facts and in law in holding that profit on sale of forward contract cannot be said to be derived from export since the same was only hedging auxiliary activities for export.

69 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

3.5 That the assessing officer erred on facts and in law in not appreciating that the aforesaid income constituted profits and gains derived from the business of the undertaking and were eligible for deduction under section 10B of the Act. 3.6 That the assessing officer erred on facts and in law in reducing foreign exchange loss of Rs.2,90,79,685 from the total turnover while computing deduction under section 1OB of the Act in respect of A-164, Noida Unit.

4. That the assessing officer erred on facts and in law in disallowing a sum of Rs.5,91,52,129 being 25% of expenditure on payment of royalty and fee for technical services of Rs.31,54,78,020 holding the expenditure to the extent to be in the nature of capital expenditure following the decision of the Supreme Court in the case of Southern Switchgear Ltd. : 234 ITR 359. 4.1 That the assessing officer erred on facts and in law in observing that "although the nature of royalty payments is substantially revenue in nature, nevertheless, there is an element of capital cost also, which is linked to acquiring a trademark or a patent rights license for a fixed period, on an exclusive basis in relation to an assigned territory" .

4.2 That the assessing officer erred on facts and in law in not appreciating that the appellant was a mere licensee for use of technical information and technical know- how, etc. and the 70 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi payment of royalty or technical know-how fee did not result in acquisition of capital asset or enduring benefit in the capital field.

5. That the assessing officer erred on facts and in law in making disallowance of Rs.78,43,390 allegedly being expenses to be incurred for earning exempt dividend income of Rs.1,37,48,911 from investment in mutual funds, invoking provisions of section 14A of the Act read with Rule 8D of the Income Tax Rules 1962. 5.1 That the assessing officer erred on facts and in law in not appreciating that expenses to the extent of Rs.1,95,300 were rightly estimated by the appellant as incurred for earning the aforesaid dividend income from the investment made in the Portfolio Management Scheme of the Mutual Fund. 5.2 That the assessing officer erred on facts and in law in holding that investment activity was not passive activity but was well informed and coordinated activity involving input from the various sources and acumen of senior management functionary and hence there was cost in-built into such investment activity. 5.3 That the assessing officer erred on facts and in law in holding that the appropriate cost of composite funds needed to be allocated towards earning of exempt income.

5.4 That the assessing officer erred on facts and in law in applying Rule 8D of the Income Tax Rules 1962 for computing disallowance under section 14A of the Act, not appreciating that the said rule cannot have retrospective operation. 5.5 Without prejudice, that the assessing officer erred on facts and in law in applying sub-section (2) of section 14A without recording his satisfaction about the correctness of the claim of the 71 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5 ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi assessee in respect of the expenditure incurred for earning the said income.

5.6 That the assessing officer erred on facts and in law in alleging that the appellant has failed to co-relate the financial burden for making such investment. Application of Rule 8D was appropriate method for determining the expenditure incurred for making investment in respect of such exempt income has been earned.

5.7 That the assessing officer erred on facts and in law in holding that investment in unquoted shares and mutual funds were made during the year substantially out of the borrowed funds.

5.8 That the assessing officer erred on facts and in law in not appreciating that idle funds available with the appellant were invested in mutual funds from which exempt dividend income of Rs.1,37,48,911was earned.

5.9 That the assessing officer erred on facts and in law in not appreciating that expenditure on interest from loans and finance charges aggregating to Rs.19,25,66,823 were incurred by the appellant for specific purposes for the business of the appellant and were not attributed to earning of the exempt dividend income. The appellant craves leave to add, alter, amend or vary from the above grounds of appeals before or at the time of hearing. 20.1. It has been submitted by Ld.AR as well as Ld. CIT DR that all the above issues stand squarely covered and identical to grounds raised by assessee for assessment year 2005-06. They have reiterated similar arguments in respect of each ground raised by assessee in the present appeal.

72 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

20.4. Ground No. 2 raised by assessee herein is similar to ground No. 4 raised by assessee for assessment year 2005-06. 20.5. Detailed discussion in respect of the arguments advanced by both the sides in respect of this ground has already been dealt vide para 7.8-7.10 herein above. As they are repetitive in nature the same are not reproduced again. We therefore refer to arguments advanced by both the sides therein.

It is observed that based upon arguments advanced, and relevant observations by Ld. TPO (which has been reproduced hereinabove), similar to those that has been observed for assessment year 2005-06, we have set aside this issue back to Ld. TPO with certain directions for production of relevant materials by assessee to establish AE to be less complex for considering it to be the tested party. In the event assessee is able to prove before Ld. TPO by way of sufficient documentation which is publicly available, Ld. TPO shall then consider foreign AE to be the tested party. In terms of computation of PLI, a consistent approach may be taken for assessment year 2005-06 as well as 2006-07 since the facts and circumstances are found to be similar.

20.6. Accordingly this ground raised by assessee stands allowed for statistical purposes.

21. Ground No. 3 73 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

21.1. Both Ld.AR as well as Ld. CIT DR reiterated similar arguments as raised for assessment year 2005-06. 21.2. It is observed that we have decided this issue in favour of assessee for assessment year 2005-06 by holding as under:

"8.4. We have perused the submissions advanced by both the sides in light of the records placed before us. 8.5. It is observed from the findings of Ld.CIT (A) that assessee claimed credit balances as deduction in P&L account, in earlier years and hence profits were reduced correspondingly in earlier years. He submitted that amount written off were offered to taxation in the immediately preceding assessment year and therefore satisfies the requirement of section 32 (7) of the Act. 8.6. In so far as claim of insurance of Rs.9,63,407/- is concerned, Ld.CIT(A) has observed that Coordinate Bench of Mumbai Tribunal in case of Anil L Shah vs. ACIT reported in 95 TTJ 216 has held that insurance claim etc. have direct nexus with industrial undertaking. And therefore, Ld.CIT(A) directed to include the miscellaneous income for deduction u/s 10B of the Act. We do not find any infirmity in the observations of Ld.CIT(A) and accordingly the same is upheld.

21.3. Since the facts and circumstances are same for the year under consideration, vis-a-vis the A.Y. 2005-06, therefore, this issue stands settled in favour of assessee.

74 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi 21.4. Accordingly this ground raised by assessee is allowed for statistical purposes.

22. Ground No. 4 is in respect of disallowance of royalty and fee for technical know-how which was paid by way of licence to various patent holders like Philips, Samsung, Taiyo Hitachi to be capital expenditure in the hands of assessee.

22.1. It is observed that this ground is similar to Ground No.2 of revenue's appeal for assessment year 2005-06. 22.2. Both Ld.AR as well as Ld. CIT DR reiterated similar arguments as submitted for assessment year 2005-06. 22.3. It is observed that we have decided this issue in favour of assessee for assessment year 2005-06 in paragraphs 9.4 - 9.9 of this order. At the cost of repetition, the same is not reproduced herewith.

22.4. Since the facts and circumstances are same for the year under consideration respectfully following the same, this issue stands settled in favour of assessee on the observations made by this bench in paragraphs 9.4- 9.9.

22.5. Accordingly we allow this ground raised by assessee.

23. Ground No. 5

This ground has been raised by assessee against the disallowance of deduction under section 14 A read with Rule 8D of the Act.

23.1. It is observed that this ground is similar to ground number 3 of assessee's appeal for assessment year 2005-06. 23.2. Both Ld.AR as well as Ld. CIT DR reiterated similar arguments as submitted for Assessment Year 2005-06.

75 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

"6.1. At the outset Ld.AR submitted that for the year under consideration Rule 8D is not applicable as it is not retrospective amendment. He submitted that Rule 8D is prospective in nature and is applicable from Assessment Year 2008-09. He thus placed reliance upon the decision of Hon'ble Supreme Court in the case of Godrej and Boyce vs. CIT reported in (2017) 81 Taxman.com 111.

6.2. Ld.AR submitted that for purposes of computing disallowance as per Rule 8D, Assessing Officer has to record satisfaction regarding expenditure that is allocable for earning exempt income, having regards to accounts of assessee. He submitted that there is no such satisfaction that as recorded by Ld.AO and therefore disallowance made by him is without jurisdiction. 6.3. On the contrary Ld. CIT DR placed reliance upon the orders of authorities below.

6.4. We have perused the submissions advanced by both the sides in the light of the records placed before us.

6.5. We agree with submissions advanced by Ld.AR in respect of the non applicability of Rule 8D for year under consideration. Accordingly we are of the considered opinion that Assessing Officer was wrong in computing the disallowance under section 14 A as per the formula laid down by Rule 8D.

6.6. However as per section 14 A (1) disallowance is called for, the moment assessee earns exempt income, for which no suo moto disallowance has been made by assessee.

76 ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

ITA 894/Del/2008 - A.Y. 2003-04 - ACIT vs. Mosar Baer India Ltd. ITA 988/Del/13 - A.Y. 2005-06 Moser Baer India Ltd. vs. ACIT, Range 5 ITA 1139/Del/13 - A.Y. 2005-06 - ACIT, Range 5 vs. Moser Baer India Ltd. ITA 4484/Del/13 - A.Y. 2006-07 - Moser Baer India Ltd. vs. ACIT, Circle 5(1), New Delhi 6.7. We accordingly set aside this issue back to the file of Ld. AO for recomputation of disallowance under section 14 A as per law."

23.4. Since the facts and circumstances are same for the year under consideration, respectfully following the same, this issue is set aside for computation of disallowance in accordance with law.

23.5. Accordingly this ground raised by assessee stands allowed for statistical purposes.

24. In the result, appeal filed by assessee stands allowed for statistical purposes.

Order pronounced in the Open Court on 01.05.2018.

             Sd/-                                                                          Sd/-
   (N.K.SAINI)                                                         (BEENA A PILLAI)
Accountant Member                                                       Judicial Member

Dated: 01.05.2018.

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           ITA No.883/Del/2008 - A.Y. 2003-04 - Moser Baer India Ltd. vs. ACIT, Range 5

1. Appellant

2. Respondent

3. CIT

4. CIT(A)

5. DR

6. Guard File By Order Asst. Registrar ITAT, Delhi Benches, New Delhi 78

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Income Tax Appellate Tribunal - Delhi

Dcit, New Delhi vs M/S. Moser Baer India Ltd., New Delhi on 1 May, 2018