D.C.I.T,CIRCLE-2(2), MUMBAI v. M/S. THE INDIAN HOTELS COMPANY LTD., MUMBAI

ITA 6712/MUM/2008 | 2003-2004
Pronouncement Date: 09-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 671219914 RSA 2008
Assessee PAN AAACT3957G
Bench Mumbai
Appeal Number ITA 6712/MUM/2008
Duration Of Justice 5 year(s) 4 month(s) 18 day(s)
Appellant D.C.I.T,CIRCLE-2(2), MUMBAI
Respondent M/S. THE INDIAN HOTELS COMPANY LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-04-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted K
Tribunal Order Date 09-04-2014
Date Of Final Hearing 18-02-2014
Next Hearing Date 18-02-2014
Assessment Year 2003-2004
Appeal Filed On 21-11-2008
Judgment Text
K IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH MUMBAI .. ; BEFORE SHRI P.M. JAGTAP AM AND SHRI VIVEK VARMA J M ./ I.T.A. NO. 6712/MUM/2008 ( / ASSESSMENT YEAR : 2003-04 ./ I.T.A. NO. 2678/MUM/2009 ( / ASSESSMENT YEAR : 2004-05 DY. COMMISSIONER OF INCOME TAX CIR. 2(2) AAYAKAR BHAVAN ROOM NO. 545 5 TH FLOOR M.K. ROAD MUMBAI-400020. / VS. M/S THE INDIAN HOTELS COMPANY LTD. MANDLIK HOUSE 3 RD FLOOR MANDLIK ROAD COLABA MUMBAI-400001. ./ PAN : AAACT3957G ( # / APPELLANT ) .. ( $%# / RESPONDENT ) # & / APPELLANT BY : SHRI A. K. JAIN $%# & / RESPONDENT BY : S HRI SUNIL M. LALA SHRI VARUN SANKHESARA & SHRI HARSH SHAH & + / DATE OF HEARING :18-02-2014 & + / DATE OF PRONOUNCEMENT : / O R D E R PER P.M. JAGTAP A.M . .. THESE TWO APPEALS PREFERRED BY THE REVENUE AGAINST TWO SEPARATE ORDERS PASSED BY THE LD. CIT(A) XIX MUM BAI DATED 17- 9-2008 AND 10-2-2009 FOR ASSESSMENT YEARS 2003-04 A ND 2004-05 INVOLVE SOME COMMON ISSUES AND THE SAME THEREFORE H AVE BEEN 2 ITA NO.6712 /MUM/2008 & 2678/MUM/09 HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SI NGLE COMPOSITE ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE REVENU E FOR A.Y. 2003-04 BEING ITA NO. 6712/MUM/2008. 3. GROUND NO. 1 & 2 OF THIS APPEAL INVOLVE THE ISSU E RELATING TO DISALLOWANCE OF INTEREST AMOUNTING TO RS. 16 83 978 /- RS. 25 90 000/- AND RS. 13 94 869/- ATTRIBUTABLE TO THE INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE TO ITS OTHER GROUP C OMPANIES KTC AND TAJ & TAIDA RESPECTIVELY WHICH HAS BEEN DELETED BY THE LD. CIT(A). 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS FAIRLY AND FRANKLY CONCEDED THAT T HE ASSESSEE HAS NO CASE ON THE ISSUE OF DISALLOWANCE OF RS. 13 94 8 69/- MADE ON ACCOUNT OF INTEREST ATTRIBUTABLE TO THE INTEREST FR EE ADVANCE GIVEN TO M/S TAJ & TAIDA. HE HAS URGED THAT THIS ISSUE MAY T HEREFORE BE DECIDED AGAINST THE ASSESSEE. ACCORDINGLY THE IMPU GNED ORDER OF THE LD. CIT(A) ON THIS ISSUE IS SET ASIDE AND THAT OF THE A.O. MAKING A DISALLOWANCE OF RS. 13 94 869/- IS UPHELD. 5. AS REGARDS THE DISALLOWANCE OF BALANCE INTEREST OF RS. 25 90 000/- AND RS. 16 83 978/- ATTRIBUTABLE TO THE INTEREST FREE ADVANCES GIVEN TO KTC AND OTHER GROUP COMPANIES IT IS OBSERVED THAT SIMILAR DISALLOWANCE WAS MADE IN THE CASE OF T HE ASSESSEE FOR THE EARLIER YEARS. IN A.Y. 1989-90 THIS ISSUE WAS REFERRED TO A THIRD MEMBER AND VIDE THE THIRD MEMBER DECISION REP ORTED AS DCIT VS. INDIAN HOTEL CO. LTD. IN 92 ITD 97 THE SA ME WAS DECIDED IN FAVOUR OF THE ASSESSEE BY A MAJORITY VIEW HOLDIN G THAT THE RELEVANT ADVANCES HAVING BEEN GIVEN BY THE ASSESSEE TO ITS 3 ITA NO.6712 /MUM/2008 & 2678/MUM/09 SUBSIDIARY COMPANY WHOLLY AND EXCLUSIVELY FOR THE P URPOSE OF ITS BUSINESS THE DISALLOWANCE OF INTEREST ATTRIBUTABLE TO THE SAID ADVANCE WAS NOT JUSTIFIED. FOLLOWING THIS THIRD MEM BER DECISION FOR A.Y. 1989-90 THE TRIBUNAL HAS CONSISTENTLY DEC IDED A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN THE SUBSEQUENT Y EARS UP TO A.Y. 2002-03. AS THE ISSUE INVOLVED IN THE YEAR UNDER CO NSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF THE EARLIER YEARS WE RESPECTFULLY FOLLOW THE DECIS ION RENDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER YEARS AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) DELETIN G THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE. GROUND NO. 1 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED WHILE GRO UND NO. 2 IS PARTLY ALLOWED. 6. IN GROUND NO. 3 THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE OF INTE REST AMOUNT OF RS. 1 48 000/- ON SHARE APPLICATION PENDING ALLOTMENT M ADE BY THE A.O. ALLEGING THAT THERE WAS DIVERSION OF BORROWED FUNDS BY THE ASSESSEE FOR NON-BUSINESS PURPOSE. 7. THE AMOUNT PAID BY THE ASSESSEE ON ACCOUNT OF SH ARE APPLICATION MONEY TO SEVERAL COMPANIES WAS HELD BY THE A.O. AS NOT FOR THE PURPOSE OF ITS BUSINESS AND THE INTERES T ATTRIBUTABLE TO THE FUNDS SO DIVERTED WAS DISALLOWED BY HIM AFTER R EJECTING THE CONTENTION OF THE ASSESSEE THAT THE ENTIRE SHARE AP PLICATION MONEY WAS PAID BY IT OUT OF INTEREST FREE FUNDS. ON APPEA L THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND HELD TH AT THE ENTIRE SHARE APPLICATION MONEY HAVING BEEN PAID BY THE ASS ESSEE OUT OF INTEREST FREE FUNDS AVAILABLE AT THE RELEVANT TIME THE DISALLOWANCE OF INTEREST MADE BY THE A.O. WAS NOT JUSTIFIED. 4 ITA NO.6712 /MUM/2008 & 2678/MUM/09 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. AS AGREED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES THIS ISSUE I S SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TR IBUNAL RENDERED IN ASSESSEES OWN CASE FOR EARLIER YEARS. IN A.Y. 1 995-96 IT WAS HELD BY THE TRIBUNAL VIDE ITS ORDER DATED 12 TH SEPTEMBER 2006 PASSED IN ITA NO. 2527/MUM/2002 THAT THERE BEING NO DIVERSION OF INTEREST BEARING FUNDS FOR NON-BUSINESS PURPOSE AS ALLEGED BY THE A.O. THERE WAS NO JUSTIFICATION IN MAKING ANY DISALLOWANCE ON ACCOUNT OF INTEREST PAID ON THE BORROWED FUNDS. IT WAS NOTED BY THE TRIBUNAL THAT THE SHARE APPLICATION MONEY WAS FINAL LY RETURNED TO THE ASSESSEE WITH INTEREST @ 19% AND THE INTEREST S O RECEIVED WAS DULY OFFERED BY THE ASSESSEE IN THE RELEVANT YEAR. A SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN THE SUBSEQUENT YEARS I.E. ASSESSMENT YEARS 1996-97 TO 2002-03. AS THE ISSUE I NVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS ALL THE MATERIA L FACTS RELEVANT THERETO ARE SIMILAR TO THE EARLIER YEARS WE RESPEC TFULLY FOLLOW THE ORDERS OF THE TRIBUNAL FOR THE SAID YEARS AND UPHOL D THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESS EE ON THIS ISSUE. GROUND NO. 3 OF THE REVENUES APPEAL FOR A.Y. 2003- 04 IS ACCORDINGLY DISMISSED. 9. THE NEXT ISSUE RAISED IN GROUND NO. 4 OF THE REV ENUES APPEAL FOR A.Y. 2003-04 RELATES TO THE DELETION BY THE LD. CIT(A) OF THE ADDITION MADE BY THE A.O. ON ACCOUNT OF DISALLO WANCE OF EXPENDITURE OF RS. 53 42 708/- INCURRED BY THE ASSE SSEE ON THE REPLACEMENT OF CARPETS. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. IT IS OBSERVED THAT A SIMILAR DISALLOWANCE ON ACCOUNT OF EXPENDITURE IN CURRED BY THE ASSESSEE ON REPLACEMENT OF CARPETS WAS MADE BY THE A.O. TREATING 5 ITA NO.6712 /MUM/2008 & 2678/MUM/09 THE SAME AS CAPITAL EXPENDITURE IN THE EARLIER YEAR S AND THE TRIBUNAL CONSISTENTLY GAVE RELIEF TO THE ASSESSEE B Y HOLDING THE EXPENDITURE ON REPLACEMENT OF CARPETS AS REVENUE EX PENDITURE. IN A.Y. 1992-93 THE TRIBUNAL VIDE ITS ORDER DATED 10 TH SEPTEMBER 2009 PASSED IN ITA NO. 3530/MUM/1996 UPHELD THE ORD ER OF THE LD. CIT(A) ALLOWING THE DEDUCTION CLAIMED BY THE AS SESSEE FOR EXPENSES INCURRED ON REPLACEMENT OF CARPETS FOLLOWI NG THE ORDERS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN ASSES SEES OWN CASE FOR THE EARLIER YEARS UP TO A.Y. 1991-92. SIMILARLY IN THE SUBSEQUENT YEARS UPTO A.Y. 2002-03 THE TRIBUNAL HA S FOLLOWED ITS ORDERS FOR THE EARLIER YEARS AND DECIDED A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. THE DECISION OF HONBLE RAJASTHAN HI GH COURT IN THE CASE OF CIT VS. LAKE PALACE HOTELS AND MOTELS P. LT D. (2002) 258 ITR 562 WAS ALSO REFERRED TO AND RELIED UPON BY THE TRIBUNAL WHEREIN A SIMILAR ISSUE WAS DECIDED IN FAVOUR OF TH E ASSESSEE. RESPECTFULLY FOLLOWING THESE JUDICIAL PRONOUNCEMENT S WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ALLOWING THE C LAIM OF THE ASSESSEE ON ACCOUNT OF EXPENSES INCURRED FOR REPLAC EMENT OF CARPETS AND DISMISS GROUND NO. 4 OF THE REVENUES A PPEAL FOR A.Y. 2003-04. 11. IN GROUND NO. 5 THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN TREATING THE EXPENDITURE OF RS.3 60 00 638/- INCURRED BY THE ASSESSEE ON THE REPLACEMENT OF LINE N AS REVENUE EXPENDITURE INSTEAD OF CAPITAL EXPENDITURE. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT TH IS ISSUE IS SIMILAR TO THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR D EDUCTION ON ACCOUNT OF EXPENDITURE INCURRED ON REPLACEMENT OF C ARPETS AND THE SAME HAS ALSO CONSISTENTLY DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN EARLIER YEARS. RESPECTFULLY FOLLOWING T HE ORDERS OF THE 6 ITA NO.6712 /MUM/2008 & 2678/MUM/09 TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER YEA RS UPTO A.Y. 2002-03 ON A SIMILAR ISSUE WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ALLOWING THE DEDUCTION CLAIMED BY THE AS SSESSEE ON ACCOUNT OF EXPENDITURE INCURRED ON REPLACEMENT OF L INEN TREATING THE SAME AS REVENUE EXPENDITURE. GROUND NO. 5 OF T HE REVENUES APPEAL FOR A.Y. 2003-04 IS ACCORDINGLY DISMISSED. 13. THE ISSUE RAISED IN GROUND NO. 6 OF THE REVENUE S APPEAL FOR A.Y. 2003-04 RELATES TO THE ADDITION MADE BY THE A. O. ON ACCOUNT OF THREE TRANSFER PRICING ADJUSTMENTS AGGREGATING T O RS. 1 60 85 045/- WHICH HAS BEEN DELETED BY THE LD. CIT (A). 14. DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE HAD ENTERED INTO CERTAIN INTERNATIONAL TRANSACTIONS WIT H ITS AES WITHIN THE MEANING OF SECTION 92 OF THE ACT AND THE SAID T RANSACTIONS WERE DULY REPORTED IN THE TP STUDY REPORT FILED BY THE A SSESSEE IN FORM NO. 3CEB ALONG WITH THE RETURN OF INCOME. A REFEREN CE IN THIS REGARD WAS MADE BY THE A.O. U/S 92 CA(1) TO THE TPO FOR DETERMINING THE ARMS LENGTH PRICE (ALP) OF THESE I NTERNATIONAL TRANSACTIONS. ONE OF THE INTERNATIONAL TRANSACTION S ENTERED INTO BY THE ASSESSEE WITH ITS AE WAS OF LOAN GIVEN BY THE A SSESSEE TO M/S TAJ INTERNATIONAL HOTELS (HK) LTD. (TIHK) OF USD 40 MILLION. THE SAID AE WAS TO BE FINANCED FROM THE EURO-EQUITY ISS UE OF THE ASSESSEE FOR INVESTING IN ST. JAMES COURT HOTELS AN D APARTMENTS ON LONDON. SINCE THE EURO-EQUITY ISSUE WAS DELAYED THE ASSESSEE OBTAINED SHORT TERM BRIDGE LOAN FROM ICICI AND SCIC I TO FINANCE TIHKS INVESTMENTS INTO ST. JAMES COURT HOTEL AND AP ARTMENTS. THE LOAN TAKEN BY TAJ INTERNATIONAL HOTELS (HK) LTD . FROM THE ASSESSEE WAS DULY REPAID BY THAT AE IN THE FINANCIA L YEAR 1995-96 AND EVEN PART OF THE TOTAL OUTSTANDING INTEREST WAS ALSO PAID BY IT TO THE ASSESSEE IN FINANCIAL YEAR 2001-02. THE BAL ANCE AMOUNT OF INTEREST AMOUNTING TO USD 2.362 MILLION WAS RECOVER ED BY THE 7 ITA NO.6712 /MUM/2008 & 2678/MUM/09 ASSESSEE DURING THE YEAR UNDER CONSIDERATION ALONG WITH INTEREST THEREON AT LIBOR AS PER THE APPROVAL GIVEN BY THE R BI. THE TRANSACTION INVOLVING RECEIPT OF SUCH INTEREST WAS BENCH MARKED BY THE ASSESSEE BY FOLLOWING COMPARABLE UN-CONTROLLED PRICE (CUP) METHOD AND THE RBI APPROVAL WAS CITED AS A COMPARAB LE. IT WAS NOTICED BY THE TPO IN THIS REGARD THAT THE ASSESSEE COMPANY HAD ALSO ADVANCED LOAN OF USD 1.5 MILLION TO ANOTHER AE TAJ ASIA LTD. ON INTEREST @ 9% PER ANNUM AND TAKING THIS CASE AS A COMPARABLE HE DETERMINED 9% INTEREST RATE AS ALP INSTEAD OF LI BOR CHARGED BY THE ASSESSEE AND MADE A TP ADJUSTMENT OF RS. 74 21 000/- IN RESPECT OF TRANSACTION INVOLVING RECEIPT OF INTERES T BY THE ASSESSEE FROM ITS AE. 15. ON APPEAL THE LD. CIT(A) AGREED WITH THE STAND OF THE ASSESSEE THAT THE INTEREST RATE CHARGED BY THE ASSE SSEE COMPANY TO ITS ANOTHER AE I.E. TAL COULD NOT BE TAKEN AS COMPA RABLE AS THE SAME WAS A CONTROLLED TRANSACTION. HE ALSO OBSERVED THAT IT WAS NOT APPROPRIATE ON THE PART OF THE TPO TO COMPARE T HE INTEREST ON LOAN WITH INTEREST ON INTEREST. HE AGREED WITH THE CONTENTION OF THE ASSESSEE THAT THE RBI APPROVAL RECEIVED IN RESPECT OF INTEREST TO BE CHARGED FROM TIHK SHOULD BE CONSIDERED AS CUP SINCE IT AMOUNTED TO A DIRECTION GIVEN BY THE RBI TO THE ASSESSEE TO RECEIVE INTEREST ON THE OUTSTANDING AMOUNT OF INTEREST AT LIBOR. THE LD . CIT(A) THEREFORE HELD THAT THE INTEREST CHARGED BY THE ASS ESSEE TO ITS AE TIHK AT LIBOR WAS AT ARMS LENGTH AND THE TP ADJUST MENT MADE BY THE TPO IN RESPECT OF THIS TRANSACTION WAS DELET ED BY HIM. 8 ITA NO.6712 /MUM/2008 & 2678/MUM/09 16. DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE COMPANY HAD PROVIDED LETTERS OF COMFORT TO STANDARD CHARTER ED BANK HSBC AND CITI BANK IN RESPECT OF THE BORROWINGS BY ITS A E NAMELY TAJ MALDIVES PTE. LTD. (TMPL) FOR USD 14 MILLION AND TI KH FOR USD 3 MILLION. THE SAID LETTERS OF COMFORT WERE TREATED B Y THE T.P.O. AS GUARANTEES AND TAKING THE GUARANTEE FEES RATE OF 0. 6% AT ALP HE MADE A TP ADJUSTMENT OF RS. 45 90 000/-. 17. ON APPEAL THE LD. CIT(A) HELD THAT THE COMFORT LETTERS REQUIRED THE ASSESSEE MAINLY TO INTIMATE THE BANKS IN CASE IT DECIDES TO DIVEST/DILUTE ITS STAKE IN THE SUBSIDIAR IES AND THERE WAS NO MENTION/OBLIGATION OR LIABILITY ON THE ASSESSEE TO REPAY THE LOANS IN CASE ITS SUBSIDIARIES FAILED TO DO SO. HE HELD THAT THE LETTERS OF COMFORT THUS COULD NOT BE EQUATED WITH G UARANTEE AND ADDITION MADE BY THE A.O./TPO BY WAY OF TP ADJUSTME NT TREATING THE SAME AS BANK GUARANTEE WAS DELETED BY THE LD. C IT(A). 18. DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE HAD PAID A SUM OF RS. 2 93 68 773/- TO ITS AE IHMS INC. FOR AVAILING OF SALES PROMOTION SERVICES IN THE US. FOR THE SAID SERVICE S THE ASSESSEE COMPANY PAID THE SALES PROMOTION FEES TO IHMS WITH A MARK-UP OF 10% ON COST. IN ITS TP STUDY REPORT THIS TRANSACT ION WAS BENCH MARKED BY THE ASSESSEE BY FOLLOWING TNMM METHOD USI NG INDIAN COMPARABLES. SINCE THE OPERATING MARGIN OF THE ASSE SSEE WAS HIGHER THAN THE ARITHMETIC MEAN OF THE OPERATING MA RGIN OF THE COMPARABLE COMPANIES AS SHOWN IN THE TP STUDY REPOR T THESE INTERNATIONAL TRANSACTIONS INVOLVING PAYMENT MADE F OR AVAILING SALES PROMOTION SERVICES IN THE US WERE CLAIMED TO BE AT ALP BY THE ASSESSEE. THE TPO REJECTED THE ASSESSEES CLAIM OF SELECTING ITSELF AS THE TESTED PARTY AND REQUIRED THE ASSESSE E TO CARRY OUT A FRESH SEARCH FOR COMPARABLES ON A US DATABASE BY TA KING IHMS AS THE TESTED PARTY. AS PER THE REQUIREMENT OF THE TPO THE ASSESSEE 9 ITA NO.6712 /MUM/2008 & 2678/MUM/09 COMPANY CARRIED OUT A SEARCH ON US DATABASE UNDER P ROTEST AND ARRIVED AT A SET OF 16 COMPARABLE COMPANIES. THE A RITHMETIC MEAN OF OP/TC OF THE US COMPARABLE COMPANIES SELECTED BY THE ASSESSEE WAS FOUND TO BE HIGHER AT 11.49% THAT THAT PAID BY THE ASSESSEE TO IHMS. THE TPO HOWEVER REJECTED TWO E NTITIES OUT OF THE 16 ENTITIES SELECTED BY THE ASSESSEE AND SINCE THE AVERAGE OP/TC OF THE REMAINING 14 COMPARABLES WAS 6.78% AS AGAINST 10% PAID BY THE ASSESSEE TO IHMS THE TP ADJUSTMENT OF RS. 40 74 045/- WAS MADE BY THE TPO IN RESPECT OF INTER NATIONAL TRANSACTIONS INVOLVING PAYMENT OF SALES PROMOTION F EES TO ITS AES. 19. ON APPEAL THE LD. CIT(A) HELD THAT THERE WAS N OTHING WRONG ON THE PART OF THE ASSESSEE TO TAKE ITSELF AS TESTE D PARTY SINCE THE DATA OF INDIAN COMPARABLE COMPANIES WAS EASILY AVAI LABLE IN THE PUBLIC DOMAIN. HE HELD THAT THE RELEVANT DATA IN T HE CASE OF US COMPARABLE COMPANIES ON THE OTHER HAND WAS AVAILA BLE TO THE LIMITED EXTENT AND THERE WAS NO JUSTIFICATION GIVEN BY THE A.O./TPO TO TAKE THE AE OF THE ASSESSEE IN US AS A TESTED PA RTY. HE OBSERVED THAT RELIABLE DATA OF THE INDIAN COMPARABLE COMPANI ES WAS AVAILABLE IN THE PUBLIC DOMAIN AND SINCE THE PROFIT MARGIN EARNED BY THE ASSESSEE AT 8.75% WAS HIGHER THAN THAT OF TH E AVERAGE PROFIT MARGIN EARNED BY INDIAN COMPARABLE COMPANIES AT 2.3 6% THE RELEVANT INTERNATIONAL TRANSACTIONS OF THE ASSESSEE COMPANY WITH ITS AE INVOLVING AVAILING OF SALES PROMOTION SERVIC ES FROM ITS AE IN US WERE AT ARMS LENGTH. ACCORDINGLY THE TP ADJUS TMENT MADE BY THE A.O./TPO ON THIS ISSUE WAS DELETED BY THE LD. C IT(A). 20. THE LD. D.R. AT THE TIME OF HEARING BEFORE US STRONGLY SUPPORTED THE ORDERS OF THE A.O./TPO IN SUPPORT OF THE REVENUES CASE THAT THE ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF ALL THE THREE TP ADJUSTMENT IS FULLY JUS TIFIED. HE 10 ITA NO.6712 /MUM/2008 & 2678/MUM/09 SUBMITTED THAT IN CASE OF INTEREST RATE CHARGED BY THE ASSESSEE COMPANY TO ITS AE ON OUTSTANDING INTEREST LIBOR CA NNOT BE TAKEN AS ALP RELYING ON THE RBI APPROVAL SINCE THE SAID A PPROVAL GIVEN IN THE DIFFERENT CONTEXT AND FOR THE SPECIFIC PURPOSE CANNOT BE TAKEN AS SPECIFYING ARMS LENGTH RATE OF INTEREST. HE CON TENDED THAT SUCH ARMS LENGTH RATE OF INTEREST SHOULD BE TAKEN ATLEA ST AT LIBOR PLUS 2% INSTEAD OF LIBOR CHARGED BY THE ASSESSEE. 21. AS REGARDS THE LETTER OF COMFORTS HE INVITED O UR ATTENTION TO THE COPY OF THE SAID LETTER PLACED ON RECORD TO POI NT OUT THAT THE ASSESSEE WAS OBLIGED TO TAKE APPROVAL OF THE CONCER NED BANK BEFORE DISPOSAL OF ITS INVESTMENT/ASSET. HE CONTENDED THAT THIS OBLIGATION CONTAINED IN THE LETTER OF COMFORTS MADE IT AKIN TO GUARANTEE GIVEN BY THE ASSESSEE AND ADDITION ON ACCOUNT OF TP ADJUS TMENT FOR GUARANTEE COMMISSION WAS RIGHTLY MADE BY THE A.O./T PO. 22. AS REGARDS THE TP ADJUSTMENT MADE IN RESPECT OF THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE INVOLVIN G AVAILING OF SALES PROMOTION SERVICES FROM ITS AE IN US HE STRO NGLY RELIED ON THE ORDER OF THE A.O. IN SUPPORT OF THE REVENUES C ASE ON THIS ISSUE. 23. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT INTEREST ON OUTSTANDING INTEREST WAS RECOVERED BY THE ASSESSEE FROM ITS AE AT LIBOR RATE AS PER THE A PPROVAL GIVEN BY THE RBI AND THIS APPROVAL GIVEN BY THE RBI ITSEL F CLEARLY INDICATED CUP. HE CONTENDED THAT THE LIBOR IN ANY CASE HAS BEEN ACCEPTED BY THE TRIBUNAL AS ALP OF THE INTERNATIONA L TRANSACTIONS OF LOANS IN THE FOLLOWING THREE CASES:- 1. HINDUJA GLOBAL SOLUTIONS LTD. VS. ADDL. CIT ITA NO. 254/MUM/2013 2. COTTON NATURALS (I) P. LTD. DCIT ITA NO. 5855/DEL/2012 11 ITA NO.6712 /MUM/2008 & 2678/MUM/09 3. FOUR SOFT LTD. VS. DCIT ITA NO. 1495/HYD/2010 24. AS REGARDS THE LETTER OF COMFORTS ISSUED BY THE ASSESSEE COMPANY FOR THE LOANS AVAILED BY ITS AE THE LD. CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME CANNOT BE REGARDED AS INTERNATIONAL TRANSACTIONS AT ALL. HE SUBMITTED THA T EVEN THOUGH IN THE TP STUDY REPORT THESE TRANSACTIONS WERE IDENTI FIED BY THE ASSESSEE AS INTERNATIONAL TRANSACTIONS A FOOT-NOTE WAS GIVEN INDICATING CLEARLY THAT THE SAME WAS DONE WITHOUT P REJUDICE TO THE ASSESSEES STAND THAT CHAPTER X IS NOT APPLICABLE TO THESE TRANSACTIONS. HE THEN PROCEEDED TO EXPLAIN THE CASE OF THE ASSESSEE AS TO HOW THE TRANSACTIONS INVOLVING ISSUE OF LETTE RS OF COMFORT ARE NOT THE INTERNATIONAL TRANSACTIONS AS PER THE RELEV ANT PROVISIONS OF THE ACT AND ALSO CITED CERTAIN JUDICIAL PRONOUNCEME NTS IN SUPPORT. 25. AS REGARDS THE TP ADJUSTMENT MADE BY THE A.O./T PO IN RESPECT OF THE TRANSACTIONS INVOLVING AVAILING OF S ALES PROMOTION SERVICES BY THE ASSESSEE FROM ITS AE IN US HE SUBM ITTED THAT THESE TRANSACTIONS WERE BENCH MARKED BY THE ASSESSEE IN T HE TP STUDY REPORT BY FOLLOWING TNMM AND TAKING THE ASSESSEE CO MPANY AS A TESTED PARTY. HE SUBMITTED THAT SINCE THE PROFIT MA RGIN EARNED BY THE ASSESSEE FROM ITS INTERNATIONAL TRANSACTIONS WA S HIGHER THAN THE AVERAGE MARGIN OF THE COMPARABLES SELECTED IN T HE TP STUDY REPORT THE PRICE CHARGED IN THESE TRANSACTIONS WAS CLAIMED TO BE AT ALP. HE CONTENDED THAT THE TPO HOWEVER TAKEN THE AE OF THE ASSESSEE IN US AS TESTED PARTY WITHOUT GIVING ANY J USTIFICATION AND MADE TP ADJUSTMENT ON THE BASIS OF PROFIT MARGIN EA RNED BY THE US COMPARABLE COMPANIES OVERLOOKING COMPLETELY THAT THE RELEVANT DATA OF THE SAID COMPARABLES WAS NOT FULLY AVAILABL E. HE CONTENDED THAT THE LD. CIT(A) APPRECIATED THIS POSITION IN TH E RIGHT PERSPECTIVE AND DELETED THE TP ADJUSTMENT MADE BY THE A.O./TPO AFTER HAVING 12 ITA NO.6712 /MUM/2008 & 2678/MUM/09 FOUND THAT THE PRICE CHARGED BY THE ASSESSEE WAS AT ALP AS SHOWN IN THE TP STUDY REPORT SUBMITTED BY THE ASSESSEE AN D THE ALP WORKED OUT BY THE TPO OF THESE TRANSACTIONS ON THE BASIS OF INCOMPLETE AND UNRELIABLE DATA OF US COMPARABLE COM PANIES WAS NOT CORRECT. 26. IN THE REJOINDER THE LD. D.R. SUBMITTED THAT T HE NEW ISSUE RAISED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE LETTERS OF COMFORTS ISSUED BY THE ASSESSEE FOR THE LOANS TAKEN BY ITS AE ARE NOT INTERNATIONAL TRANSACTION HAS NOT BEEN CONSIDER ED BY THE A.O./TPO OR EVEN BY THE LD. CIT(A) ON MERIT. HE CON TENDED THAT IF THE TRIBUNAL IS INCLINED TO ENTERTAIN THIS NEW ARGU MENT OF THE LD. COUNSEL FOR THE ASSESSEE THE MATTER MAY BE SENT BA CK TO THE A.O./TPO IN ORDER TO GIVE THEM AN OPPORTUNITY TO EX AMINE THE SAME. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE IS SUE RELATING TO ARMS LENGTH RATE OF OF INTEREST CHARGED BY THE ASS ESSEE COMPANY TO ITS AE ON THE OUTSTANDING INTEREST IT IS OBSERVED THAT THE SAME IS SQUARELY COVERED BY THE DECISION OF CO-ORDINATE BEN CH OF THIS TRIBUNAL RENDERED IN THE CASE OF HINDUJA GLOBAL SOL UTIONS LTD. VS. ACIT VIDE ITS ORDER DTD. 5 TH JUNE 2013 IN ITA NO. 254/MUM/2013 WHEREIN IT WAS HELD FOLLOWING THE DECISION OF DELH I BENCH OF THIS TRIBUNAL IN THE CASE OF COTTON NATURALS (I) P. LTD. VS. DCIT THAT THE CUP METHOD IS THE MOST APPROPRIATE METHOD TO DE TERMINE THE ARMS LENGTH RATE OF INTEREST OF THE INTERNATIONAL TRANSACTION INVOLVING LENDING OF MONEY BY THE ASSESSEE COMPANY IN FOREIGN CURRENCY TO ITS AE AND LIBOR BEING INTER-BANK RATE FIXED FOR THE INTERNATIONAL TRANSACTION HAS TO BE ADOPTED AS ARM S LENGTH RATE. RESPECTFULLY FOLLOWING THIS DECISION OF THE CO-ORDI NATE BENCH OF THIS TRIBUNAL WE UPHOLD THE IMPUGNED ORDER OF THE LD. C IT(A) DELETING 13 ITA NO.6712 /MUM/2008 & 2678/MUM/09 THE ADDITION MADE BY THE A.O./TPO IN RESPECT OF INT ERNATIONAL TRANSACTION INVOLVING INTEREST CHARGED BY THE ASSES SEE ON OUTSTANDING INTEREST FROM ITS AE. 28. AS REGARDS THE ISSUE OF LETTERS OF COMFORT ISSU ED BY THE ASSESSEE COMPANY FOR THE LOANS TAKEN BY ITS OVERSEA S AES THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED A PRELIMINARY I SSUE THAT THE SAME ARE NOT IN THE NATURE OF INTERNATIONAL TRANSAC TIONS. ALTHOUGH HE HAS MADE AN ATTEMPT TO SUPPORT AND SUBSTANTIATE THIS ARGUMENT RELYING ON THE RELEVANT PROVISIONS OF LAW AS WELL AS CITING CERTAIN JUDICIAL PRONOUNCEMENTS IN SUPPORT IT IS O BSERVED THAT NEITHER THE A.O./TPO NOR THE LD. CIT(A) IN THEIR RE SPECTIVE ORDERS HAVE GIVEN ANY FINDING/OBSERVATION ON THIS ISSUE AL THOUGH THE SAME WAS RAISED BY THE ASSESSEE BEFORE THEM AS A PA SSING REFERENCE. WE THEREFORE AGREE WITH THE LD. D.R. THAT THIS PRELIMINARY ISSUE SHOULD GO BACK TO THE A.O./TPO IN ORDER TO GIVE THEM AN OPPORTUNITY TO EXAMINE THE SAME. ACCORDING LY THIS ISSUE IS RESTORED TO THE FILE OF THE A.O./TPO WITH A DIRE CTION TO DECIDE THE SAME AFTER TAKING INTO CONSIDERATION ALL THE FACTS OF THE CASE IN THE LIGHT OF THE RELEVANT PROVISIONS OF THE ACT AS WELL AS JUDICIAL PRONOUNCEMENT AFTER GIVING THE ASSESSEE A PROPER AN D SUFFICIENT OPPORTUNITY OF BEING HEARD. 29. AS REGARDS THE INTERNATIONAL TRANSACTIONS INVOL VING AVAILING SERVICES BY THE ASSESSEE COMPANY FROM ITS AE IN US FOR SALES PROMOTION SERVICES IT IS OBSERVED THAT THE SAME WE RE BENCH MARKED IN THE T.P. STUDY REPORT SUBMITTED BY THE AS SESSEE BY FOLLOWING TNMM. THE ASSESSEE COMPANY WAS TAKEN AS TESTED PARTY AND SINCE ITS PROFIT MARGIN EARNED FROM THE RELEVAN T TRANSACTIONS AT 8.75% WAS HIGHER THAN THE AVERAGE PROFIT MARGIN OF 2.36% OF THE INDIAN COMPARABLE COMPANIES THE PRICE CHARGED FOR THESE TRANSACTIONS TO ITS AE WAS CLAIMED TO BE AT ALP. I T IS OBSERVED THAT 14 ITA NO.6712 /MUM/2008 & 2678/MUM/09 THE TPO HOWEVER TOOK THE AE OF THE ASSESSEE COMPA NY IN US AS TESTED PARTY WITHOUT GIVING ANY CONVINCING REASON T O JUSTIFY THIS ACTION AND MADE THE TP ADJUSTMENT ON THE BASIS OF H IGHER MARGIN EARNED BY COMPARABLE COMPANIES IN US. AS FOUND BY T HE LD. CIT(A) IN HIS IMPUGNED ORDER THE RELEVANT DATA OF THESE U S COMPARABLE COMPANIES WAS INCOMPLETE AND UNRELIABLE TO JUSTIFY THE TP ADJUSTMENT MADE BY THE A.O./TPO AND THIS FINDING R ECORDED BY THE LD. CIT(A) HAS NOT BEEN REBUTTED OR CONTROVERTE D BY THE LD. D.R. THE LD. D.R. HAS ALSO NOT BEEN ABLE TO POINT OUT AN Y REASON GIVEN BY THE A.O./TPO TO JUSTIFY THE CHANGE OF TESTED PAR TY FROM THE ASSESSEE COMPANY TO THE AE IN US. WE THEREFORE F IND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED O RDER OF THE LD. CIT(A) DELETING THE TP ADJUSTMENT MADE BY THE A.O./ TPO IN RESPECT OF THE INTERNATIONAL TRANSACTIONS INVOLVING AVAILING OF SALES PROMOTION SERVICES BY THE ASSESSEE FROM ITS AE IN U S. GROUND NO. 6 OF THE REVENUES APPEAL FOR A.Y. 2003-04 IS ACCOR DINGLY TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 30. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2004-05 BEING ITA NO. 2678/MUM/2009. 31. AS REGARDS GROUND NO. 1 OF THIS APPEAL IT IS O BSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO DISALLOWANCE OF INTEREST OF RS. 16 05 188/- ATTRIBUTABLE TO THE INTEREST FREE ADVAN CE GIVEN BY THE ASSESSEE COMPANY TO THE OTHER GROUP COMPANIES IS SI MILAR TO THE ONE INVOLVED IN GROUND NO. 1 & 2 OF THE REVENUES A PPEAL FOR A.Y. 2003-04. FOLLOWING OUR CONCLUSION DRAWN IN A.Y. 200 3-04 WE SUSTAIN THE DISALLOWANCE MADE BY THE A.O. ON THIS I SSUE ONLY TO THE EXTENT OF INTEREST IF ANY ATTRIBUTABLE TO THE INT EREST FREE ADVANCE GIVEN BY THE ASSESSEE COMPANY TO M/S TAJ & TAIDA. T HE DELETION BY THE LD. CIT(A) OF THE DISALLOWANCE OF BALANCE INTER EST IS CONFIRMED. THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE IS ACCORDINGLY 15 ITA NO.6712 /MUM/2008 & 2678/MUM/09 MODIFIED AND GROUND NO. 1 OF THE REVENUES APPEAL I S PARTLY ALLOWED. 32. AS REGARDS GROUND NO. 2 IT IS OBSERVED THAT TH E ISSUE INVOLVED THEREIN RELATING TO DELETION BY THE LD. CI T(A) OF THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF INTERES T OF RS. 61 400/- ON SHARE APPLICATION MONEY PENDING ALLOTME NT IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 3 OF THE REVENUE S APPEAL FOR A.Y. 2003-04. FOLLOWING OUR CONCLUSION DRAWN IN A.Y. 20 03-04 WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO. 2 OF THE REVENUES APPEAL FOR A.Y. 2004-05. 33. AS REGARDS GROUND NO. 3 OF THE REVENUES APPEAL FOR A.Y. 2004-05 IT IS OBSERVED THAT THE ISSUE INVOLVED THE REIN RELATING TO DELETION BY THE LD. CIT(A) OF THE DISALLOWANCE OF R S. 95 99 982/- MADE BY THE A.O. BY TREATING THE EXPENDITURE INCURR ED ON REPLACEMENT OF CARPETS IS SIMILAR TO THE ONE INVOLV ED IN GROUND NO. 3 OF THE REVENUES APPEAL FOR A.Y. 2003-04. FOLLOWI NG OUR CONCLUSION DRAWN IN A.Y. 2003-04 WE UPHOLD THE IMP UGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO. 3 OF THE REVENUES APPEAL. 34. AS REGARDS GROUND NO. 4 IT IS OBSERVED THAT TH E ISSUE INVOLVED THEREIN RELATING TO THE DELETION BY THE LD . CIT(A) OF THE DISALLOWANCE MADE BY THE A.O. BY TREATING THE EXPEN DITURE OF RS. 3 49 60 045/- INCURRED BY THE ASSESSEE ON ACCOUNT O F REPLACEMENT OF LINEN AS CAPITAL EXPENDITURE IS SIMILAR TO THE O NE INVOLVED IN GROUND NO. 5 OF THE REVENUES APPEAL FOR A.Y. 2003- 04. FOLLOWING OUR CONCLUSION DRAWN IN A.Y. 2003-04 WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) AND DISMISS GROUND NO. 4 OF THE REVENUES APPEAL. 16 ITA NO.6712 /MUM/2008 & 2678/MUM/09 35. GROUND NO. 5 & 6 OF THE REVENUES APPEAL FOR A .Y. 2004-05 INVOLVE THE ISSUES RELATING TO THE COMPUTATION OF D EDUCTION U/S 80HHD OF THE ACT AND THE SAME READ AS UNDER:- 5. THE LD. CIT(A) HAS ERRED IN EXCLUDING OPERATING FEE OF RS. 32 70 93 451/- FROM TOTAL RECEIPTS OF BUSINESS FOR COMPUTING DEDUCTION U/S 80HHD WITHOUT APPRECIATING THAT THE SAID RECEIPT BEING PART OF TOTAL RECEIPTS OF TH E BUSINESS CANNOT BE EXCLUDED FROM THE PURVIEW OF TOTAL RECEIP TS FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80HHD O F THE I.T. ACT. HE HAS FAILED TO APPRECIATE THE RATIO OF DECISION OF THE APEX COURT IN THE CASE OF CIT VS. LAKSHMI MACHI NE WORKS 290 ITR 660. 6. THE LD. CIT(A) HAS FURTHER ERRED IN EXCLUDING RE CEIPT OF RS. 4 16 04 715/- FROM TAJ LOUNGE FROM TOTAL REC EIPT OF BUSINESS FOR COMPUTATION OF DEDUCTION U/S 80HHD WIT HOUT APPRECIATING THE RATIO OF THE APEX COURT DECISION I N THE CASE LF LAKSHMI MACHINE WORKS (SUPRA). 36. WHILE COMPUTING THE DEDUCTION U/S 80HHD OF THE ACT THE ASSESSEE COMPANY HAD EXCLUDED OPERATING FEES OF RS. 32 70 93 451/- AND RECEIPT FROM TAJ LOUNGE OF RS. 4 16 04 715/- FROM THE TOTAL BUSINESS RECEIPTS. THE A.O. HOWEVER INCLUDED BOTH THESE AMOUNTS IN THE TOTAL BUSINESS RECEIPTS FOR TH E COMPUTATION OF DEDUCTION U/S 80HHD OF THE ACT ON THE PRESUMPTION T HAT THESE RECEIPTS GAVE RISE TO BUSINESS INCOME. ON APPEAL T HE LD. CIT(A) ACCEPTED THE STAND OF THE ASSESSEE ON THIS ISSUE RE LYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. SUDARSHAN CHEMICALS INDUSTRIES LTD. 245 ITR 769 AND DIRECTED THE A.O. TO EXCLUDE BOTH THESE AMOUNTS FROM THE TOTAL B USINESS RECEIPTS OF THE ASSESSEE FOR THE PURPOSE OF DEDUCTI ON U/S 80HHD OF THE ACT. 37. AT THE TIME OF HEARING BEFORE US THE LD. COUNS EL FOR THE ASSESSEE HAS FAIRLY AND FRANKLY CONCEDED THAT THE R ELIANCE OF THE LD. CIT(A) ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF 17 ITA NO.6712 /MUM/2008 & 2678/MUM/09 SUDARSHAN CHEMICALS INDUSTRIES LTD. (SUPRA) TO GIVE RELIEF TO THE ASSESSEE ON THESE ISSUES WAS CLEARLY MISPLACED AS T HE SAME WAS RENDERED IN THE CONTEXT OF INCLUSION OF EXCISE AND SALES TAX IN THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DE DUCTION U/S 80HHC OF THE ACT. HE HAS CONTENDED THAT THE ASSESSE E HAS NO CASE ON MERIT ON THESE ISSUES AND REQUESTED THAT THE SAM E MAY BE DECIDED AGAINST THE ASSESSEE. KEEPING IN VIEW THE S UBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THE IMPUGNED ORDE R OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THESE ISSUE S IS SET ASIDE AND THAT OF THE A.O. IS RESTORED. GROUND NO. 5 & 6 OF THE REVENUES APPEAL FOR A.Y. 2004-05 ARE ACCORDINGLY ALLOWED. 38. AS REGARDS GROUND NO. 7 OF THE REVENUES APPEAL FOR A.Y. 2004-05 IT IS OBSERVED THAT THE ISSUE INVOLVED THE REIN RELATING TO THE TP ADJUSTMENT OF RS. 77 85 779/- MADE BY THE A. O./TPO ON ACCOUNT OF INTEREST CHARGED BY THE ASSESSEE TO ITS AE M/S TIHK IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 6 OF THE REVENUES APPEAL FOR A.Y. 2003-04 WHICH HAS ALREADY BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. FOLLOWING OUR CON CLUSION DRAWN IN A.Y. 2003-04 WE UPHOLD THE IMPUGNED ORDER OF THE L D. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DIS MISS GROUND NO. 7 OF THE REVENUES APPEAL. 39. AS REGARDS GROUND NO. 8 OF THE REVENUES APPEAL FOR A.Y. 2004-05 IT IS OBSERVED THAT THE ISSUE INVOLVED THE REIN RELATING TO THE TP ADJUSTMENT OF RS. 36 12 338/- MADE BY THE A. O./TPO ON ACCOUNT OF NON-CHARGING OF GUARANTEE FEE BY THE ASS ESSEE FROM ITS AE FOR PROVIDING LETTER OF COMFORT TO THE BANKS FO R THE LOANS GRANTED TO THE AES IS SIMILAR TO THE ONE INVOLVED I N GROUND NO. 6 OF THE REVENUES APPEAL FOR A.Y. 2003-04 WHICH HAS ALR EADY BEEN DECIDED B6Y US IN THE FOREGOING PORTION OF THIS ORD ER. FOLLOWING OUR CONCLUSION DRAWN IN A.Y. 2003-04 WE RESTORE THIS I SSUE TO THE FILE 18 ITA NO.6712 /MUM/2008 & 2678/MUM/09 OF THE A.O. WITH THE SAME DIRECTION AS GIVEN IN A.Y . 2003-04. GROUND NO. 8 OF THE REVENUES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 40. AS REGARDS GROUND NO. 9 OF THE REVENUES APPEAL FOR A.Y. 2004-05 IT IS OBSERVED THAT THE ISSUE INVOLVED THE REIN RELATING TO DELETION BY THE LD. CIT(A) OF THE TP ADJUSTMENT OF RS. 15 21 495/- MADE BY THE A.O./TPO ON ACCOUNT OF PAYMENT MADE BY THE ASSESSEE FOR SALES PROMOTION SERVICES AVAILED FROM ITS AE IN US IS SIMILAR TO THE ONE INVOLVED IN GROUND NO. 6 OF THE REVENUES APPEAL FOR A.Y. 2003-04 WHICH HAS ALREADY BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. FOLLOWING OUT CON CLUSION DRAWN IN A.Y. 2003-04 WE UPHOLD THE IMPUGNED ORDER OF THE L D. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DIS MISS GROUND NO. 9 OF THE REVENUES APPEAL. 41. IN THE RESULT BOTH THE APPEALS FILED BY THE RE VENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH APRIL 2014 & 1 2 95452014 & SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 2 DATED 9-4-2014 ../ R.K. SR. PS 19 ITA NO.6712 /MUM/2008 & 2678/MUM/09 ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. ; () / THE CIT (A) - XIX MUMBAI 4. ; /CIT 2 MUMBAI 5. $? + ? / DR ITAT MUMBAI K BENCH 6. / GUARD FILE. / BY ORDER % $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI