Agilent Technologies India Pvt. Ltd., New Delhi v. ACIT, New Delhi

ITA 3778/DEL/2010 | 2006-2007
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 377820114 RSA 2010
Assessee PAN AABCA9874A
Bench Delhi
Appeal Number ITA 3778/DEL/2010
Duration Of Justice 7 month(s) 19 day(s)
Appellant Agilent Technologies India Pvt. Ltd., New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 25-03-2011
Date Of Final Hearing 25-02-2011
Next Hearing Date 25-02-2011
Assessment Year 2006-2007
Appeal Filed On 06-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER SHRI A.K. GARODIA ACCOUNTANT MEMBER SHRI A.K. GARODIA ACCOUNTANT MEMBER SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.3778/DEL./2010 I.T.A. NO.3778/DEL./2010 I.T.A. NO.3778/DEL./2010 I.T.A. NO.3778/DEL./2010 (ASSESSMENT YEAR : 2006 (ASSESSMENT YEAR : 2006 (ASSESSMENT YEAR : 2006 (ASSESSMENT YEAR : 2006- -- -07) 07) 07) 07) AGILENT TECHNOLOGIES INDIA PVT. LTD. AGILENT TECHNOLOGIES INDIA PVT. LTD. AGILENT TECHNOLOGIES INDIA PVT. LTD. AGILENT TECHNOLOGIES INDIA PVT. LTD. VS. VS. VS. VS. ADDL.CIT ADDL.CIT ADDL.CIT ADDL.CIT RANGE1 RANGE1 RANGE1 RANGE1 TORUPATI PLAZA PLOT NO.11 TORUPATI PLAZA PLOT NO.11 TORUPATI PLAZA PLOT NO.11 TORUPATI PLAZA PLOT NO.11 NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. SECTOR XI 2 SECTOR XI 2 SECTOR XI 2 SECTOR XI 2 ND NDND ND FLOOR FLOOR FLOOR FLOOR DWARKA DWARKA DWARKA DWARKA NEW DELHI NEW DELHI NEW DELHI NEW DELHI- -- -110075 110075 110075 110075 (PAN/GIR NO.AABCA9874A) (PAN/GIR NO.AABCA9874A) (PAN/GIR NO.AABCA9874A) (PAN/GIR NO.AABCA9874A) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SHRI RAHUL K. MITRA CA ASSESSEE BY : SHRI RAHUL K. MITRA CA ASSESSEE BY : SHRI RAHUL K. MITRA CA ASSESSEE BY : SHRI RAHUL K. MITRA CA REVENUE BY : SHRI ASHOK PANDEY CIT(DR) REVENUE BY : SHRI ASHOK PANDEY CIT(DR) REVENUE BY : SHRI ASHOK PANDEY CIT(DR) REVENUE BY : SHRI ASHOK PANDEY CIT(DR) ORDER ORDER ORDER ORDER PER A.D. JAIN JM THIS IS ASSESSEES APPEAL FOR A.Y. 2006-07 TAKING THE FOL LOWING GROUNDS: 1. THAT THE ASSESSMENT ORDER PASSED IN PURSUANCE TO THE DIRECTIONS ISSUED BY THE LEARNED DISPUTE RESOLUTION PANE L ('DRP') IS A VITIATED ORDER AS THE LD. DRP HAS ERRED B OTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION MADE BY THE LD. ASSESSING OFFICER ('AO')/ LD. TRANSFER PRICING OFFICER ( 'TPO') TO THE APPELLANT'S INCOME BY ISSUING A NON-SPEAKING OR DER WITHOUT APPROPRIATE APPLICATION OF MIND AND IN UNDU E HASTE; 2. THE LD. DRP ERRED BOTH ON FACTS AND IN LAW IN CONFIR MING THE LD. AO/ TPO'S ACTION OF MAKING AN ADJUSTMENT OF RS. 106 221 565 TO THE INCOME OF THE APPELLANT BY HOLDI NG THAT ITS INTERNATIONAL TRANSACTIONS DO NOT SATISFY THE ARM'S L ENGTH PRINCIPLE ENVISAGED UNDER THE INCOME-TAX ACT 1961 (' ACT'). IN DOING SO THE LD. DRP HAS GROSSLY ERRED IN AGREEING W ITH THE TPO'S ACTION OF; 2.1. NOT APPRECIATING THE FUNCTIONS-ASSET-RISK ('FAR') PROFILE OF THE APPELLANT AND IN MODIFYING THE PROFI T LEVEL INDICATOR ('PLI') USED BY THE APPELLANT FROM 'OPERATING PROFIT/ VALUE ADDED EXPENSES' TO 'OPERATING PROFIT/ OPERATING COST' ('OP/OC') BY I.T.A. NO.3778/DEL./2010 (A.Y. : 2006-07) 2 INCLUDING THE COST OF GOODS SOLD IN THE APPELLANT'S COST BASE; 2.2. ERRONEOUSLY CONSIDERING OP/OC AS THE PLI DESPITE THE FACT THAT THE DENOMINATOR I.E. 'OPERATING COSTS' USED FOR COMPUTATION OF THE SAID PLI INCLUDES APPELLANT'S INTERNATIONAL TRANSACTION OF PURCHASE OF TRADED GOODS AND SPARES BEING 'CONTROLLED TRANSACTIONS' THEREBY IGNORING THAT THE USE OF SUCH PLI IS NOT IN CONFORMITY WITH THE PRINCIPLES OF TRAN SFER PRICING ANALYSIS; 2.3. REJECTING THE COMPARABLE COMPANIES FOR ARBITRAR Y REASONS WHICH WERE SELECTED BY THE APPELLANT IN ITS TRANSFER PRICING DOCUMENTATION BASED ON A DETAILED FAR ANALYSIS; 2.4. ARBITRARILY ACCEPTING TWO OUT OF THREE COMPAN IES SELECTED IN THE TP ORDER FOR THE IMMEDIATE PREVIOUS ASSESSMENT YEAR (A Y 2005-06) FOR COMPARISON WITH THE APPELLANT; 2.5. ARBITRARILY COMPUTING THE OP/OC MARGINS OF THE SELECTED COMPANIES WITHOUT GIVING DUE CONSIDERATION TO THE FAR PROFILE OF EITHER THE APPELLANT OR THE COMPARABLES AND; 2.5.1. BY HOLDING THAT FOR COMPUTING THE PLI OF ONE COMPANY VIZ. PRIYA INTERNATIONAL LIMITED COST OF MATERIAL PURCHASED SHOULD NOT BE INCLUDED IN THE COST BASE WHILE AT THE SAME TIME INCLUDING COST OF MATERIAL PURCHASED IN THE COST BASE OF THE APPELLANT 2.5.2. ERRONEOUSLY COMPUTING THE OP/OC MARGIN OF ONE COMPANY VIZ. EDUCATIONAL CONSULTANT INDIA LIMITED SELECTED IN THE FINAL COMPARABLE SET; 2.6. HOLDING THAT ONLY CURRENT YEAR (I.E. FY 2005- 06) DATA FOR COMPARABLE COMPANIES SHOULD BE USED FOR COMPARABILITY ANALYSIS DESPITE THE FACT THAT THE SAME WAS NOT NECESSARILY AVAILABLE TO THE APPELLANT AT THE TIME OF PREPARING ITS TP DOCUMENTATION; 2.6.1 WITHOUT PREJUDICE TO THE ABOVE IN CASE CURREN T YEAR DATA IS TO BE USED TO ADJUDICATE ON THE APPELLANT'S TRANSFER PRICES THEN THE LD. DRP OUGHT TO HAVE ALSO CONSIDERED THE RESULTS OF THE FRESH SEARCH CARRIED OUT BY THE APPELLANT USING DATA FOE FY 2005-06 PRESENTED DURING THE PROCEEDINGS BEFORE THE DRP; I.T.A. NO.3778/DEL./2010 (A.Y. : 2006-07) 3 2.7 NOT GIVING A REASONABLE OPPORTUNITY TO THE APPEL LANT OF REFUTING/ REBUTTING THE BASIS ON WHICH ADJUSTMENT WAS MADE BY THE LD. TPO IN THE TP ORDER AND IN NOT CONSIDERING THE CONTENTIONS/ ARGUMENTS/ EVIDENTIARY DATA PUT FORWARD BY THE APPELLANT AND IN NOT SHARING / DISCLOSING THE INFORMATION/ DOCUMENTS/ ANALYSIS CARRIED OUT BY THE LD. TPO ON THE BASIS OF WHICH ALP WAS DETERMINED IN THE TP ORDER; 2.8. DENYING THE BENEFIT OF (+/-) 5 PERCENT [AS PER PROVISO TO SECTION 92C(2) OF THE ACT] AVAILABLE TO THE APPELLANT; 3. THAT ON THE FACTS OF CASE AND CIRCUMSTANCES OF THE C ASE AND IN LAW BOTH LD. DRP/ AO ERRED IN UPHOLDING THE DISA LLOWANCE OF ACTUAL INVENTORY WRITTEN OFF AMOUNTING OF RS. 20 87 932 BY TREATING THE SAME AS CAPITAL IN NATURE WITHOUT APPREC IATING THAT WRITE OFF INVENTORY AROSE IN THE NORMAL COURSE O F BUSINESS AND IS ON REVENUE ACCOUNT AND ERRED IN; 3.1. DENYING THE DEDUCTION OF DEMONSTRATION INVENTOR Y WRITTEN OFF AMOUNTING TO RS. 1414 634/- (OUT OF THE TOTAL DISALLO WANCE OF RS. 2 087 932) BY HOLDING THE SAME IS CAPITAL IN NATUR E; 3.2. DENYING THE DEDUCTION OF SPARE PARTS AND OTHER SM ALL VALUE ITEMS CONSUMED IN THE NORMAL COURSE OF BUSINESS AMOUNTING TO RS. 673 298 (OUT OF THE TOTAL DISALLOWANCE OF RS. 2 087 932) BY WRONGLY TREATING THE SAME AS PART OF DEMONSTRATION INVENTORY WRITTEN OFF; 3.3 WITHOUT PREJUDICE IN NOT ALLOWING THE DEPRECIA TION ON DEMONSTRATION INVENTORY AND OTHER INVENTORY EVEN THO UGH HOLDING IT AS CAPITAL EXPENDITURE AND ALTERNATIVELY NOT ALLOWING THE SAME ON DEFERRED BASIS. 2. AS PER GROUND NO.1 THE LD.DRP HAS NOT PASSED A SPEAK ING ORDER. THE ORDER U/S 144C OF THE I.T. ACT WAS PASSED BY THE DR P ON 29.4.10 UPHOLDING THE ORDER OF THE TPO AND THE ADJUSTMENT OF `106221565/- TO THE INCOME OF THE ASSESSEE. THE ASSESSEE HAD RAISED OBJECTI ONS BEFORE THE DRP. THESE OBJECTIONS WERE DEALT WITH BY THE DRP . THE FIRST OBJECTION RAISED BY THE ASSESSEE WAS THAT OP/VAE WAS A VAL ID PLI BASED ON THE FUNCTIONS-ASSET-RISK (FAR) PROFILE OF THE ASSESSEE. THE DRP OBSERVED THAT RULE 10B OF THE I.T. RULES 19 62 SPECIFIES AS TO WHAT CAN BE CONSIDERED AS A PLI AND THAT AS SUCH THE O BJECTION OF THE ASSESSEE COULD NOT BE ACCEPTED. THE NEXT OBJECTION O F I.T.A. NO.3778/DEL./2010 (A.Y. : 2006-07) 4 THE ASSESSEE BEFORE THE DRP WAS THAT COMPARABLES SUBMITTED IN THE TP DOCUMENTATION HAD BEEN ARBITRARILY REJECTED AND THA T COMPARABLES USED IN THE TP ASSESSMENT OF A.Y. 2005-06 HAD BEEN USED W ITHOUT DUE CONSIDERATION TO THE FAR OF THE COMPARABLES OF THE ASSE SSEE. THE DRP OBSERVED THAT THE TPO HAD REJECTED THE TP DOCUMENTAT ION COMPANIES AND HAD SELECTED COMPARABLE COMPANIES BASED ON DETAILE D ANALYSIS. SUCH REJECTION WAS AS SUCH UPHELD. THE ASSESSEE FURTHER OBJECTED THAT FRESH SEARCH FOR COMPARABLES SHOULD BE CONSIDERED. THE DRP COMMENTED THAT ALL SUBMISSIONS HAD BEEN CONSIDERED IN TO TO AND THE ORDER OF THE TPO SUFFICIENTLY ADDRESSED THE ISSUES. THE LAST OBJECTION RAISED BY THE ASSESSEE WAS THAT THE CURRENT YEAR DATA HAD BEEN USED EVEN THOUGH THE SAME WAS NOT AVAILABLE TO THE ASSESSEE AT THE TIME OF CREATION OF TP DOCUMENTATION. THE DRPS COMMENT WAS THAT AS PER THE PROVISIONS OF THE LAW ONLY CURRENT YEAR DATA NEEDS TO BE USED. 3. IT WOULD BE APPROPRIATE TO REPRODUCE HEREUNDER FOR READY REFERENCE THE AFORESAID SHORT ORDER PASSED BY THE DRP: OFFICE OF OF OF OF THE DISPUTE RESOLUTION PANEL NEW DELHI NAME AND ADDRESS OF THE ASSESSEE M/S AGILENT TECHNOLOGIES INDIA (P) LTD. PLOT NO.10. PHASE-IV UDYOG VIHAR SECTOR 18 GURGAON. ASSESSMENT YEAR 2006-07 PAN AABCA9847A APEAL NO. 58/31.12.2009 DATE OF HEARING 29/04/2010 DATE OF ORDER U/S 144C DIRECTIONS U/S 144C OF THE INCOME TAX ACT 1961 THE ASSESSEE HAS FILED OBJECTIONS TO THE DRAFT ASSESSMENT OR DER ON 31.12.2009 AND THE CASE WAS FIXED BY DRP FOR 29 TH APRIL 2010. BEFORE DRP CASE WAS REPRESENTED BY CAS SH. ANUP SETH G. PUROHIT AND ANKUR BANSAL. THE DRP HAVING CONSIDERED THEIR A RGUMENTS AND MATERIAL ON RECORD DECIDED THE MATTER AS UNDER: I.T.A. NO.3778/DEL./2010 (A.Y. : 2006-07) 5 2. ARMS LENGTH PRICE U/S 92CA(3) THE ASSESSEE COMPANY IS A WHOLLY OWNED SUBSIDIARY OF AGI LENT TECHNOLOGIES EUROPE B.V. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE AND SERVICING OF MEDICAL ANALYTICAL TESTING AND MEASUREMENT EQUIPMENTS. DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE UNDERTOOK VARIOUS INTERNATIONAL TRANSACTIONS AS MENTION ED IN ITS 3CEB REPORT FILED ALONG WITH THE RETURN OF INCOME. ASSESSEE ADOPTED INMM AS THE MOST APPROPRIATE METHOD FOR DETERMINING THE AR MS LENGTH NATURE OF INTERNATIONAL TRANSACTION EXCEPT FOR PAYM ENT OF INTEREST ON LOAN WHERE CUP METHOD WAS USED AND REIMBURSEMENT OF EX PENSES WERE BENCHMARK BASED ON NO SPECIFIC METHOD. THE TPO HAS PROPOSED ADJUSTMENTS TO THE SALES FACILITATI ON TRANSACTION OF THE ASSESSEE. THE TPO HAS REJECTED OP/VAE AS THE PROFIT LEVEL INDICATOR (PLI) RELYING ON RULE 10B OF THE IN COME TAX RULES 1962. AS PER THIS RULE WHAT CAN BE TAKEN AS PLI IS CL EARLY MENTIONED IN VIEW OF THIS THE OBJECTIONS RAISED BY THE ASSESSEE CANN OT BE ACCEPTED AND WE SEE NO REASONS TO INTERFERE WITH THE O RDER OF THE TPO. THE TPO REJECTED THE COMPARABLE COMPANIES USED BY TH E ASSESSEE BASED ON A DETAILED FAR ANALYSIS AS MENTIONED IN T HE ORDER. FURTHERMORE HE UNDERTOOK A SEARCH OF COMPARABLES AND TOOK TWO COMPANIES WHICH WERE USED AS COMPARABLES IN THE IMMEDIA TE PRECEDING YEAR. THE ASSESSEE HAS OBJECTED TO THE INCLUSI ON OF THE NEW COMPARABLES AS WELL. HOWEVER THE TPO ORDER IS SUFFICI ENTLY CLEAR ON THE ISSUE OF REJECTION OF THE COMPARABLES USED BY THE A SSESSEE AS WELL AS REASONS FOR INTRODUCTION OF NEW COMPANIES AS COMPARAB LES. IN VIEW OF THIS THERE IS NO MERIT SEEN IN THE ARGUMENT OF THE ASSESSEE AND THEREFORE WE DO NOT INTERFERE IN THIS MATTER. THE TPO HAS TAKEN THE CURRENT YEAR DATA WHICH IS AGAI N OBJECTED BY THE ASSESSEE. AS PER THE PROVISIONS OF LAW IT IS MANDA TED THAT ONLY THE CURRENT YEAR DATA IS TO BE USED AND THE TPO HAS DO NE SO. WE DO NOT SEE ANY MERIT IN THE OBJECTIONS OF THE ASSESSEE ON THE BASIS OF THE INITIAL REFERENCE TO THE TPO BY THE AO. THIS MATTER IS SETTLED BY THE COURTS AND THE REFERENCE MADE BY THE A O IS VALID. THE ORDER OF THE TPO IS ABUNDANTLY CLEAR THAT THE ASSESSEE W AS GIVEN SUFFICIENT OPPORTUNITY OF BEING HEARD. ASSESSEE WAS BEAR D AT LENGTH. ASSESSEE HAS IN THE SUBMISSION REITERATED THAT HIS FRESH LIST OF 9 COMPARABLES BE CONSIDERED. THE SUBMISSIONS OF THE ASSESSEE ARE CONSIDERED IN TOTAL AND THE ORDER OF THE TPO SUFFICIENTLY ANSWERS ALL THESE OBJECTI ONS BASED ON SOUND REASONING AND AS PER THE PROVISIONS OF LAW. THERE FORE NO DIRECTIONS INTERFERING WITH THE DRAFT ORDER ARE HENC E GIVEN TO THE AO. SD/- SD/- SD/- VIJAY SHARMA J.P. MASSAR GOPAL KAMAL CIT-1 NEW DELHI CIT-NEW DELHI DIT(IT)-I NEW DEL HI I.T.A. NO.3778/DEL./2010 (A.Y. : 2006-07) 6 4. BEFORE US LD.COUNSEL FOR THE ASSESSEE HAS CONTENDED TH AT THE DRP HAS ERRED IN CONFIRMING THE ADJUSTMENT OF `106221 565/- TO THE INCOME OF THE ASSESSEE HOLDING THAT ITS INTERNATIONAL T RANSACTIONS DID NOT SATISFY THE ARMS LENGTH PRINCIPLE; THAT WHILE DOI NG SO THE DRP FAILED TO APPRECIATE THE FAR PROFILE OF THE ASSESSEE; T HAT THE DRP WRONGLY MODIFIED THE PLI USED BY THE ASSESSEE FROM OP/VA E TO OP/OC BY INCLUDING THE COST OF GOODS SOLD IN THE ASSESSEES COST B ASE; THAT THE DRP WRONGLY CONSIDERED OP/OC AS THE PLI IN SPITE OF THE FACT THAT THE DENOMINATOR I.E. OPERATING COSTS USED FOR COMPUT ATION OF THE SAID PLI INCLUDES THE ASSESSEES INTERNATIONAL TRANSACTIONS OF P URCHASE OF TRADED GOODS AND SPARES BEING CONTROLLED TRANSACTIONS THEREBY IGNORING THAT THE USE OF SUCH PLI IS NOT IN CONFORMITY WITH THE PRINCIPLES OF TRANSFER PRICING ANALYSIS; THAT THE DRP ERRED IN AC CEPTING 2 OUT OF 3 COMPANIES SELECTED IN THE TP ORDER FOR THE IMMEDIATEL Y PREVIOUS ASSESSMENT YEAR I.E. A.Y. 2005-06 FOR COMPARISON WITH THE ASSESSEE; THAT THE DRP ERRED IN ARBITRARILY COMPUTING THE OP /OC MARGINS OF THE SELECTED COMPANIES WITHOUT GIVING DUE CONSIDERATION TO THE FAR PROFILE OF EITHER THE ASSESSEE OR THE COMPARABLES; THAT THE DRP ERRED IN HOLDING THAT ONLY THE CURRENT YEAR DATA FOR COMPAR ABLE COMPANIES SHOULD BE USED FOR COMPARABILITY ANALYSIS EVEN THOUGH THE SAME WAS NOT NECESSARILY AVAILABLE TO THE ASSESSEE AT THE TIME OF THE PREPARING ITS TP DOCUMENTATION; THAT THE DRP ERRED IN FAILING TO GIVE A REASONABLE OPPORTUNITY TO THE ASSESSEE TO REFUTE THE BASIS ON WHICH THE ADJUSTMENT HAD BEEN MADE BY THE TPO IN THE TP ORDER AND IN NOT CONSIDERING THE ARGUMENTS AND EVIDENCE BROUGHT ON THE FILE BY THE ASSESSEE AND NOT DISCLOSING THE INFORMATION/DOCUMENTS/ANAL YSIS CARRIED OUT BY THE TPO ON THE BASIS ON WHICH THE ALP WAS DETERMINED IN THE TP ORDER; THAT THE DRP ERRED IN DENYING THE BENEFIT OF (+/- 5%) AVAILABLE TO THE ASSESSEE AS PER THE PROVISO TO SECTION 92 C(2) OF THE ACT; AND THAT THE DRP ERRED IN UPHOLDING THE DISALLO WANCE OF ACTUAL I.T.A. NO.3778/DEL./2010 (A.Y. : 2006-07) 7 INVENTORY WRITTEN OFF AMOUNTING TO `2087932 BY TRE ATING THE SAME AS CAPITAL IN NATURE EVEN THOUGH THE WRITE OFF INVENT ORY AROSE IN THE NORMAL COURSE OF THE BUSINESS OF THE ASSESSEE DUE TO WHICH IT WAS ON REVENUE ACCOUNT. 5. THE RECORD SHOWS THAT THE ASSESSEE HAD FILED BEFORE TH E DRP ALONG WITH ITS OBJECTION THE FACTS AS SUBMITTED TO THE AO CONCERNING THE TP ADJUSTMENT AND THE CORPORATE TAX DISALLOWANCE FACTUAL AND LEGAL ARGUMENTS AGAINST THE ADDITION PROPOSED BY THE A O CONCERNING THE TP ADJUSTMENT AND THE CORPORATE TAX DISALLOWANCE AND THE CASE LAWS RELIED ON BY THE ASSESSEE CONCERNING THE TP ADJUSTME NT AS WELL AS THE CORPORATE TAX DISALLOWANCE. 6. THE DRP HOWEVER HAS DISPOSED OF THE MATTER BY THE AFORESAID SHORT ORDER. APROPOS THE REJECTION OF OP/VAE AS PLI THE ARGUMENTS OF THE ASSESSEE HAVE NOT BEEN DEALT WITH AND IT HAS BEEN ME RELY MENTIONED THAT THE TPO MADE THE REJECTION RELYING O N SECTION 10B OF THE I.T. RULES 1962. 7. APROPOS THE REJECTION OF THE COMPARABLE COMPANIES USED BY THE ASSESSEE THE DRP HAS AGAIN NOT GONE INTO THE OBJECTIO NS RAISED BY THE ASSESSEE AND IT WAS ONLY OBSERVED THAT THE TPO MADE T HE REJECTION ON A DETAILED FAR ANALYSIS BY UNDERTAKING A SEARCH OF COMPARABLE COMPANIES AND TAKING TWO COMPANIES WHICH WERE USED AS C OMPARABLE IN THE IMMEDIATELY PRECEDING YEAR. THE ASSESSEES OBJEC TION TO THE INCLUSION OF THE NEW COMPARABLES WAS NOTED. HOWEVER THE TPOS ORDER IN THIS REGARD WAS MERELY ENDORSED WITHOUT GOING INTO THE DETAILED OBJECTIONS RAISED BY THE ASSESSEE. 8. SIMILARLY THE OBJECTION RAISED AGAINST THE TPO HA VING TAKEN THE CURRENT YEAR DATA WAS ALSO NOT GONE INTO AND IT WAS ON LY OBSERVED THAT THE TPO HAD DONE SO AS PER THE PROVISIONS OF LAW. I.T.A. NO.3778/DEL./2010 (A.Y. : 2006-07) 8 9. THE ASSESSEES OBJECTION REGARDING THE INITIAL REFERE NCE TO THE TPO BY THE AO WAS ALSO DEALT WITH IN A SIMILAR MANNER. 10. IT IS THUS SEEN THAT IN THE PRESENT CASE THE ORDER PASSED BY THE LD.DRP AS DISCUSSED ABOVE IS NON-SPEAKING. THE OBJECTI ONS TAKEN BY THE ASSESSEE HAVE NOT BEEN CONSIDERED. NOW IN M/S SAHA RA INDIA (FARMS) VS. CIT AND ANOTHER 300 ITR 403 (SC) IT HA S BEEN HELD THAT EVEN AN ADMINISTRATIVE ORDER HAS TO BE CONSISTENT WITH THE RULES OF NATURAL JUSTICE. VERY RECENTLY IN VODAFONE ESSAR LT D. VS. THE DISPUTE RESOLUTION PENAL-II & OTHERS 2010-TII-22-HC-DEL-INT L THE JURISDICTIONAL HIGH COURT HAS HELD THAT IT IS OBLIGATO RY FOR A JUDICIAL BODY LIKE THE DISPUTE RESOLUTION PANEL TO PASS A REASONED ORD ER. 12. THEREFORE THE MATTER IS HEREBY REMITTED TO THE DRP TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW BY PASSING A SPEA KING ORDER ON CONSIDERING AND DECIDING THE AFORESAID OBJECTIONS RAISE D BY THE ASSESSEE BEFORE THE TPO THE AO AND THE DRP. THE ASSESSEE IT CANNOT BE GAINSAID SHALL BE PROVIDED PROPER OPPORTUNITY OF HEARING TO SUPPORT ITS CASE. 13. IN THE RESULT FOR STATISTICAL PURPOSES THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 25.03.2011. SD/- SD/- [A.K. GARODIA] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE MARCH 25 2011. SKB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. DRP 4. ADDL.CIT (A) RANGE 1 NEW DELHI. 5. CIT( ITAT) DEPUTY REGISTRAR I.T.A. NO.3778/DEL./2010 (A.Y. : 2006-07) 9 ITAT DELHI BENCHES