Danisco India Pvt. Ltd., Gurugram v. DCIT, Circle-10(1), New Delhi

ITA 7897/DEL/2018 | 2012-2013
Pronouncement Date: 05-05-2021 | Result: Allowed

Appeal Details

RSA Number 789720114 RSA 2018
Assessee PAN AAACD8906D
Bench Delhi
Appeal Number ITA 7897/DEL/2018
Duration Of Justice 2 year(s) 4 month(s) 23 day(s)
Appellant Danisco India Pvt. Ltd., Gurugram
Respondent DCIT, Circle-10(1), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 05-05-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I1
Tribunal Order Date 05-05-2021
Assessment Year 2012-2013
Appeal Filed On 12-12-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1 NEW DELHI BEFORE SHRI AMIT SHUKLA JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI ACCOUNTANT MEMBER I.T.AS. NO.3518/DEL/2017 7896 & 7897/DEL/2018 520 3/DEL/2019 ASSESSMENT YEARS: 2011-12 2010-11 2012-13 2013-1 4 DANISCO INDIA P. LTD. VS. DCIT CIRCLE-7(1) NEW DELHI. TAN/PAN: AAACD8906D (APPELLANT) (RESPONDENT) I.T.AS. NO.7898 & 7899/DEL/2018 6025/DEL/2019 ASSESSMENT YEAR S : 2010 - 11 2012 - 13 2013 - 14 ACIT CIRCLE-7(1) NEW DELHI. VS. DANISCO INDIA P. LTD. TAN/PAN: AAACD8906D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI HARPREET SINGH AJMANI ADV. & SHRI ROHAN KHARE ADV. RESPONDENT BY: SHRI DHEERAJ JAIN SR.D.R. DATE OF HEARING: 10 02 2021 DATE OF PRONOUNCEMENT: 05 05 2021 O R D E R PER AMIT SHUKLA JM:- THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESS EE AS WELL AS CROSS APPEALS BY THE REVENUE AGAINST SEPAR ATE IMPUGNED ORDERS DATED 25.09.2018 09.01.2017 26.09 .2018 AND 17.04.2019 FOR THE ASSESSMENT YEARS 2010-11 20 11-12 2012-13 AND 2013-14 RESPECTIVELY PASSED LD. COMMIS SIONER I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 2 OF INCOME TAX (APPEALS)-XLIV. SINCE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON ARISING OUT OF IDENTICAL SET OF FACTS THEREFORE SAME WERE HEARD TOGETHER AND ARE BEING D ISPOSED OF BY WAY OF CONSOLIDATED ORDER. 2. WE WILL FIRST TAKE UP THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2010-11. THE ASSESSEE IS MAINLY AGG RIEVED BY TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF INTRA G ROUP SERVICES (IGS) LIKE SHARED SUPPORT SERVICES MARKET ING AND SALES SERVICES HOLDING THEM TO BE IN THE NATURE OF SHAREHOLDER/STEWARDSHIP ACTIVITY OF THE AE ON AD HOC BASIS WHEREIN LD. CIT (A) HAS CONFIRMED 30% ON THE COST O F SUCH SERVICES WHEREAS THE REVENUE HAS CHALLENGED DELETI NG THE 70% OF THE ADJUSTMENT ON SAME INTRA GROUP SERVICES AS WELL AS NOT UPHOLDING THE CUP METHOD APPLIED BY THE TPO. 3. IN SUMS AND SUBSTANCE THE CONTROVERSY IS THAT THE APPELLANT HAS AVAILED MANAGEMENT SERVICES FROM AES WHICH COMPRISES OF; (I) TECHNICAL SUPPORT AND ASSISTANCE SERVICES; (II) CORPORATE SUPPORT SERVICES; AND (III) SALES AN D MARKETING SUPPORT SERVICES WHICH ASSESSEE HAD RECEIVED ON CO ST TO COST BASIS WHICH HAVE BEEN BENCHMARKED BY APPLYING TNMM ON ENTITY LEVEL IN TRADING AND MANUFACTURING SEGMENT. WHEREAS THE TPO HAS BENCHMARKED THESE INTRA GROUP SERVICES AT NIL BY TAKING THE CUP METHOD AS THE MOST APPROPRIATE ME THOD WHILST APPLYING BENEFIT TEST HE HELD THAT THESE AR E DUPLICATE IN NATURE AND ALTERNATIVELY ARE IN THE NATURE OF SH AREHOLDER/ STEWARDSHIP ACTIVITY. LD. CIT (A) HAS GRANTED PART RELIEF; FIRSTLY I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 3 HE HAS DELETED THE TRANSFER PRICING ADJUSTMENT IN R ESPECT OF TECHNICAL SUPPORT AND ASSISTANCE SERVICES FOLLOWING THE ITAT ORDER FOR THE ASSESSMENT YEAR 2007-08; AND SECONDLY ON ADHOC BASIS HE HAS CONFIRMED THE ADJUSTMENT OF 30% OF THE COST IN RESPECT TO CORPORATE SUPPORT SERVICES AND M ARKETING AND SALE SUPPORT SERVICES HOLDING THEM TO BE IN THE NATURE OF SHAREHOLDER/STEWARDSHIP ACTIVITY AND BALANCE 70% ST ANDS ALLOWED. AGAINST THIS ORDER BOTH THE REVENUE AND A SSESSEE ARE IN APPEAL. 4. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THIS PRECISE ISSUE HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSE SSMENT YEAR 2009-10 IN ITA NO.2846/DEL/2016 VIDE ORDER DAT ED 07.10.2020. 5. ON THE OTHER HAND LD. DR HAS STRONGLY RELIED UP ON THE ORDER OF THE ASSESSING OFFICER AND PART OF THE LD. CIT (A) ORDER AND AFTER REFERRING TO THE RELEVANT FINDINGS AND OB SERVATIONS GIVEN THEREIN. 6. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF FOOD INGREDIENTS AND IS CLOSELY HELD BY DENISCO A/S DENM ARK. IN FORM 3CEB THE ASSESSEE HAS DISCLOSED INTRA GROUP S ERVICES RELATING TO IT SERVICES AT RS.69 84 388/- AND MANAG EMENT SERVICES AT RS.3 20 61 027/- APART FROM OTHER INTE RNATIONAL TRANSACTIONS. IN RESPONSE TO THE SHOW CAUSE NOTICE ON THE ISSUE OF IGS BY THE TPO THE ASSESSEE COMPANY HAD D ESCRIBED I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 4 THE MAIN SERVICES RECEIVED FROM AES WHICH IT HAS P AID SERVICE FEE IN THE FOLLOWING MANNER:- A) IT SERVICES - DURING THE YEAR UNDER CONSIDERATION DANISCO INDIA HAS MADE PAYMENT FOR THE / IT ALLOCATION CHAR GES TO ITS AE. SUCH PAYMENT WAS MADE ON ACCOUNT OF GLOBAL AGREEMEN T PROCURED BY THE AE FOR THE BENEFIT OF ENTIRE GROUP AND WAS MAINLY TOWARDS INTERNET CONNECTIVITY STANDARD OPERATING S YSTEM SUCH AS MS OFFICE AND IT HELPDESK. THE DETAILED DESCRIPTION OF THE SERVICES UTILIZED BY DANISCO INDIA IN ITS OPERATIONS AND THE IR BENEFIT WAS EXPLAINED AS BELOW: I. INTERNET CHARGES: DANISCO GROUP COMPANIES HAVE A GLOBAL TIE UP WITH THE INTERNET SERVICE PROVIDER FOR OBTAINING INTERNET SERVICES. THUS ALL THE INTERNET SERVICES USED BY D ANISCO INDIA ARE ROUTED THROUGH DENMARK. YOUR GOODSELF WOULD APP RECIATE THE FACT THAT THE COMPANY DURING THE YEAR HAS NOT INCUR RED ANY INTERNET EXPENSES WHICH ARE NORMAL TO ANY OTHER BUS INESS. II. SUPPORT FEES: THIS COVERS INCIDENT HANDLING S UPER USER SUPPORT AND TRAINING AND MINOR CHANGES TO THE MYBI S AND CRM SYSTEM. III. WAN SITE FEES: THIS FEE COVERS THE OPERATION OF DANISCOS GLOBAL WIDE AREA NETWORK; IV. SAP SUPPORT FEE: THIS INCLUDES THE EXPENDITURE INCURRED HANDLING SUPER USER SUPPORT AND TRAINING AND MINO R CHANGES TO THE SAP-TEMPLATE. V. LICENCE FEE: THIS IS THE FEE WITH RESPECT TO LI CENSES FOR BASIC SOFTWARE SUCH AS MS OFFICE WHICH ARE PROCURED GLOBA LLY BY THE GROUP COMPANIES; I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 5 VI. SERVICE DESK: THESE ARE THE CHARGES FOR INTERNA L IT SERVICE DESK FOR RESOLUTION OF IT RELATED PROBLEMS FACED BY THE EMPLOYEES. THIS CAN BEEN SEEN FROM THE DETAILS DESCRIPTION OF SERVICES THAT THE PAYMENTS WERE BASICALLY FOR IT RELATED SERVICES THAT WERE PROCURED BY THE DANISCO GROUP FROM THE THIRD PARTY SEIVICE PROVIDERS AND WERE ALLOCATED TO ALL THE GROUP COMPA NIES INCLUDING DANISCO INDIA AND SUCH SERVICES; TOOLS AR E ESSENTIAL FOR OPERATION OF ANY BUSINESS. THE PAYMENTS FOR IT SERVICES ARE ESSENTIALLY A COST REIMBURSEMENT PAID BY THE COMPANY AND NOT A PAYMENT FOR SERVICES TO AE BUT TO THE EXTERNAL SERVICE PROVIDER S. THE COPIES OF INVOICES SUBSTANTIATING THE ABOVE MENTIONED FACT HA S BEEN ALREADY SUBMITTED VIDE SUBMISSION DATED 23.07.13FOR YOUR KIND CONSIDERATION. B) MANAGEMENT SEIVICES - AS DISCUSSED ABOVE DANISCOGROUP HAS A SHARED SERVICE CENTRES SYSTEM WHICH PROVIDES SPECIFIC SERVICES TO ALL GROUP ENTITIES. BROADLY SPEAKING T HE SEIVICES MAY INCLUDE BUT SHALL NOT BE LIMITED TO: A) CORPORATE SUPPORT SERVICES: UNDER THE CORPORATE SERVICE GROUP DANISCO INDIA RECEIVES FOLLOWING KEY SERVICES: 1) GLOBAL KEY ACCOUNT MANAGEMENT CO-ORDINATION AN D SUPPORT AE OF THE DANISCO GROUP DUE TO ITS CLOSE PROXIMITY PROVIDES SERVICES RELATING TO MAINTAINING RELATIONSHIP WITH GLOBAL KEY CUSTOMERS AND PROVIDING TIMELY SUPPORT TO DANISCO I NDIA WHILE DEALING WITH THESE ENTITIES. THUS DANISCO INDIA DO ES NOT INCUR ANY SEPARATE COSTS RELATING TO THE CLIENT RELATIONS HIP ACTIVITIES AND NEGOTIATIONS. I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 6 2) REGIONAL MANAGEMENT CO-ORDINATION AND SUPPORT UNDER THIS ACTIVITY DAY-TO-DAY MANAGEMENT OF THE D ANISCO GROUP ENTITIES ARE TAKEN PLACE LOCALLY. HOWEVER FR OM A REGIONAL PERSPECTIVE AREA HEADS OF THE RESPECTIVE GROUP ENT ITYS REPORT TO INDIVIDUALS OVERSEAS FOR GETTING GUIDANCE AND ADVIC E WITH RESPECT TO ROUTINE AND COMPLEX FUNCTIONS PERFORMED BY THEM. THE FOREIGN OFFICES PROVIDE SUPPORT ON A WEEKLY BASIS. THIS INCLUDED STRATEGIC AND TECHNICAL DECISIONS SUCH AS BENCHMARK ING OF SALARIES AND NEW PROJECTS UNDERTAKEN ETC. 3) GLOBAL COMMUNICATIONS DANISCO ENTITIES (INCLUDING DANISCO INDIA) RECEIVE INTERNATIONAL SUPPORT FOR BOTH EXTERNAL AND INTERNAL COMMUNICATIO N. ONE OF THE ROLES OF THE GLOBAL COMMUNICATIONS TEAM IS TO ENSUR E THE VALUE OF THE BRAND IS UPHELD THROUGH CONSISTENT COMMUNICA TION. DANISCO INDIA ALSO GETS BENEFIT WITH RESPECT TO THE IR INTERNAL COMMUNICATION. FOR EXAMPLE THE INTRANET IS MANAGED GLOBALLY AND DANISCO INDIA IS ABLE TO OBTAIN INFORMATION FRO M THE INTERNAL DATABASES. DANISCO LNDIA DOESN'T HAVE ANY INDIVIDUA LS THAT ARE DEDICATED TO PROVIDING THESE SERVICES. 4) GLOBAL FINANCE SUPPORT AND FINANCIAL BUSINESS C ONTROLLING THERE ARE VERY LIMITED PEOPLE IN DANISCO INDIA WHO MAKE UP THE FINANCE TEAM. THEREFORE DANISCO INDIA REQUIRES SIG NIFICANT AMOUNTS OF ASSISTANCE FROM OTHER GROUP ENTITIES. IN ' PARTICULAR THERE ARE NO SPECIALIST FINANCE TEAM MEMBERS WHO CA N ADVISE IN THE AREA OF MERGERS AND ACQUISITION OR TREASURY OR FINANCIAL IMPLICATION DUE TO CHANGE IN BUSINESS LINE ETC. THE REFORE DANISCO INDIA RECEIVES SUPPORT FROM THE GLOBAL CORP ORATE FINANCE TEAM. I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 7 5) CORPORATE TAX ADVICE AND LEGAL SERVICE CORPORATE TAX SUPPORT IS PROVIDED GLOBALLY. FURTHER LEGAL SUPPORT IS ALSO RENDERED FROM OVERSEAS. ALL LEGAL CONTRACTS ARE PREPARED THROUGH DANISCO A/S. THESE CONTRACTS RANGE FROM LEA SE CONTRACT WITH CUSTOMERS TO NEW BUSINESS ACQUISITION CONTRACT S. 6) CORPORATE HUMAN RESOURCES ADVICE AND SERVICE THERE ARE TWO SYSTEMS THAT WERE DEVELOPED BY GLOBAL HUMAN RESOURCES ('HR') CALLED 'DIALOGUE' AND 'SPIRIT'. TH ESE PROGRAMME SUPPORT AND ASSIST ALL GROUP ENTITIES WITH STAFF PE RFORMANCE AND APPRAISAL. DANISCO INDIA MAKES USE OF THESE APPLICA TIONS TO ASSIST WITH STAFF DEVELOPMENT AND SUPPORT AND DO NO T INCUR ANY SEPARATE COSTS. B) SALES AND MARKETING - MARKETING CONCEPTS AND ST RATEGIES ARE DEVELOPED BY AES. DANISCO ENTITIES INCLUDING DANISC O INDIA MAKE USE OF ADVERTS CREATED BY AES AND ADJUST THEM TO SUIT THE REQUIREMENTS FOR THE LOCAL MARKET SALES ASSISTANCE IS PROVIDED BY GLOBAL EXPERTS WHO FORM PART OF A GLOBAL SALES T EAM. C) TECHNICAL ASSISTANCE AND SUPPORT - TECHNICAL SE RVICE REQUEST ('TSR') TEAM PROVIDES ONGOING TECHNICAL SUPPORT. TE AM MEMBERS TRAVEL TO VARIOUS DANISCO ENTITIES TO ASSIST THEM W ITH NEW PRODUCT DEVELOPMENT. REQUESTS FOR TECHNICAL ASSISTA NCE ARE LOGGED ON A SYSTEM DESIGNED BY THE TSR TEAM. DUE TO THE HIGHLY SPECIALISED NATURE OF THE INDUSTR Y TECHNICAL EXPERTS ARE REQUIRED TO FOCUS ON NARROW SPECIALISAT ION LINES. THEREFORE IT IS NOT FEASIBLE FOR THE DANISCO INDIA TO EMPLOY INDIVIDUALS DEALING WITH EACH AREA OF SPECIALISATIO N. FURTHERMORE THE INDIVIDUALS IN DANISCO INDIA HAVE LOCAL EXPERTISE WHILE CLIENTS ALSO REQUIRE GLOBAL EXPERTI SE. I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 8 4: CONTEMPORANEOUS DOCUMENTARY EVIDENCE TO SHOW THA T THESE SERVICES HAVE ACTUALLY BEEN RECEIVED BY THE ASSESSE E COMPANY. THE DETAILS OF THE SERVICES RECEIVED SUPPORTED BY T HE CONTEMPORANEOUS DOCUMENTARY EVIDENCE ARE AS FOLLOWS :- THESE DOCUMENTARY EVIDENCES ARE CONTEMPORANEOUS AND DEMONSTRATE THAT THESE SERVICES HAVE ACTUALLY BEEN RECEIVED BY THE COMPANY JUSTIFY THE NEED FOR THE RECEIPT OF SU CH SERVICES FOR WHICH PAYMENT HAS BEEN MADE. THESE DOCUMENTS INCLUD E EMAIL CORRESPONDENCES TO PLACE ON RECORDS THE EVIDENCE AS TO WHEN AND HOW THESE SERVICES WERE REQUISITIONED FROM THE AES. ACCORDINGLY THE COMPANY VIDE THIS SUBMISSION IS LACING FOR YOUR PERUSAL AND CONSIDERATION MULTIPLE DOCUMENTAR Y EVIDENCE ON SAMPLE BASIS TO EXPLAIN IN GRANULAR DETAIL THE SERVICES RENDERED BY THE AE. SHOULD YOUR GOODSELF REQUIRE THE COMPANY WOULD BE PLEASED TO PLACE ON RECORD FURTHER EVIDENCES OF THE BENEFITS R ECEIVED WITH REGARD TO THE COSTS ALLOCATED BY THE AE THE PROVISI ON OF INTRA- GROUP SERVICES TO THE COMPANY. 7. IN THE TPOS ORDER ASSESSEES REPLIES AND THE E VIDENCES FILED HAVE BEEN DISCUSSED IN DETAIL. HOWEVER IN SU MS AND SUBSTANCE TPOS FINDINGS AND OBSERVATIONS HAVE BEEN SUMMED UP BY HIM IN THE FOLLOWING MANNER: IN THIS CASE THE TAXPAYER HAS FAILED TO SUBSTANTIA TE THAT SERVICES HAVE ACTUALLY BEEN RENDERED TO IT AND BENE FIT HAS ACTUALLY BEEN DERIVED BY IT ON THE BASIS OF DOCUMEN TARY EVIDENCE. IN SUPPORT OF ITS CONTENTION THE TAXPAYE R HAS MERELY FURNISHED COPIES CERTAIN MAILS EXCHANGED BETWEEN TH E I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 9 PERSONNEL OF THE GROUP. NONE OF THE ABOVE REPRODUCE D E-MAIL EXCHANGES BETWEEN THE EMPLOYEES ESTABLISH THE REQUIREMENT/SPECIFIC NEED OF THE TAXPAYER FOR THEIR SERVICES THE BENEFIT WHICH HAS ACCRUED TO THE TAXPAYER OR T HAT AN INDEPENDENT PARTY WOULD HAVE BEEN WILLING TO PAY AN OTHER INDEPENDENT PARTY FOR THE SERVICES PURPORTED TO BE RECEIVED BY THE TAXPAYER. THE SERVICES RECEIVED ARE INCIDENTAL BEING IN NAT URE OF LONG ASSOCIATION. IT IS EVIDENT FROM FACTS STATED ABOVE THAT THE TA XPAYER DID NOT FILE ANY EVIDENCE TO SUPPORT A CLAIM THAT T HESE SERVICES WERE ACTUALLY PROVIDED TO THE TAXPAYER AT ITS REQUE ST TO MEET THE SPECIFIC NEED OF THE TAXPAYER AND THAT CERTAIN TANGIBLE AND CONCRETE BENEFITS HAVE ACTUALLY ACCRUED TO THE TAXP AYER. UNDER UNCONTROLLED CIRCUMSTANCES ANY INDEPENDENT ENTERPRISE HAVING SKILLED AND SUFFICIENTLY TRAINED MANPOWER WOULD NOT HAVE BEEN WILLING TO PAY ANY THIRD PARTY TO DO SO. IN MY OPINION SERVICES WHICH ARE INCIDENTAL OR MERE D UPLICITY DO NOT FALL IN THE CATEGORY OF INTRA GROUP SERVICES. HOWEVER WITHOUT PREJUDICE TO THE ABOVE DISCUSSIO N IT MAY NOT BE IMPOSSIBLE HOWEVER FOR A GROUP MEMBER TO BENEFIT INCIDENTALLY FROM SERVICES BEING PROVIDED TO ONE OR MORE FELLOW AFFILIATES. FOR EXAMPLE IN THIS CASE THE TAXPAYER MIGHT BE BENEFITED FROM SERVICES RENDERED BY AE IN GENERAL T O ITS OTHER AES. HOWEVER SUCH INCIDENTAL BENEFITS DO NOT GIVE RISE TO INTRA GROUP SERVICES AND CANNOT BE REGARDED AS GIVING RIS E TO ARRANGEMENT SUBJECT TO ARM'S LENGTH PRICING AS STIP ULATED IN OECD TP GUIDELINES PARAGRAPH 7.13 UNDER CHAPTER VII . THESE FINDINGS LEAD TO AN IRRESISTIBLE CONCLUSION THAT PA YMENTS FOR I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 10 LIAISON SERVICES ALLEGEDLY PROVIDED BY THE AES ARE NOT AT ARMS LENGTH PRICE. MOREOVER IT IS SEEN FROM THE DETAILS CONTAINED I N THE TRANSFER PRICING REPORT OF THE TAXPAYER SUBMITTED U NDER RULE 10D THAT THE TAXPAYER HAD NOT CONDUCTED FAR ANALYSI S IN REGARDS TO THESE ALLEGED SERVICES AND HAD FAILED TO JUSTIFY THE FUNCTIONS PERFORMED BY THE AE FOR THESE PAYMENTS. T HIS IS PROBABLY A REASON THAT THE RECEIPT OF ALLEGED SERVI CES HAVE NOT BEEN BENCHMARKED UNDER ANY OF THE FIVE METHOD PRESC RIBED UNDER THE ACT IN THE TRANSFER PRICING REPORT. FURTHERMORE THE TAXPAYER HAS AT THE TIME OF REQUISITIONING THE SO CALLED SERVICES NOT CARRIED OUT ANY COST- BENEFIT ANALYSIS AT ITS END. NO INDEPENDENT PARTY W OULD AGREE TO INCUR EXPENDITURE WITHOUT INDEPENDENTLY ASCERTAI NING THE VALUE OF THE GOODS/SERVICES INTENDED TO BE AVAILED IN THE MARKET AND THAT TOO AT THE BEST NEGOTIATED PRICES. NO SUCH EFFORT HAS BEEN DEMONSTRATED TO BE MADE AT THE END OF THE TAXPAYER WHICH WEIGHS HEAVILY AGAINST THE NORMAL P RACTICES OF BUSINESS PRUDENCE. 8. ACCORDINGLY TPO HELD THAT PAYMENTS AGGREGATING TO RS.3 90 45 415/- TO ITS AE FOR INTRA GROUP SERVICES HAS TO BE TAKEN AT NIL ON APPLICATION OF CUP METHOD AS NO UNCONTROLLED ENTERPRISES WOULD HAVE PAID ANY AMOUNT FOR SERVICES IT DID NOT TANTAMOUNT TO IGS WITH DEMONSTR ABLE BENEFITS. 9. BEFORE THE LD. CIT(A) THE ASSESSEE IN SO FAR AS PAYMENT OF ALLOCATION OF IT CHARGES TO ITS AE POINTED OUT THAT THIS I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 11 PRECISE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASS ESSEE BY THE ORDER OF THE TRIBUNAL IN CASE OF THE ASSESSEE I TSELF IN ASSESSMENT YEAR 2007-08 IN ITA NO.2444/DEL/2012 ORD ER DATED 17.08.2015. LD. CIT (A) HELD THAT SINCE MATE RIAL FACTS OF THE ISSUE INVOLVED IS SAME IN THE PRESENT YEAR A LSO AND ACCORDINGLY RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL THE IT CHARGES HAVE BEEN DELETED BY HER. FOR THE SA KE OF READY REFERENCE THE ITAT ORDER WHICH HAS BEEN INCORPORATE D IN THE LD. CIT (A) IN THE IMPUGNED ORDER APPELLATE ORDER I S REPRODUCED HEREIN: 9.5 THE ISSUE REGARDING PAYMENT FOR ALLOCATION OF IT CHARGES TO ITS AES HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT BY THE ORDER OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH IN THE CASE OF THE APPELLANT ITSELF FOR AY 2007 - 08 IN IT A NO. 2444/DEL/2012 DATED 17/08/2015 WHERE IT HAS BEEN HE LD AS FOLLOWS: - 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A P RIVATE LIMITED COMPANY REGISTERED IN INDIA AND IS A WHOLLY OWNED S UBSIDIARY OF DANISCO A/S DENMARK. THE ASSESSEE WAS INCORPORA TED ON 21.1.1991 FOR MANUFACTURING AND MARKETING OF FOOD A ND NON- FOOD INGREDIENTS. M/S. DENISCO INDIA IS PRIMARILY E NGAGED IN MANUFACTURING OF ARTIFICIAL FLAVORS FOOD AND NON-F OOD INGREDIENTS AND TRADING OF INGREDIENTS. 4. DURING THE YEAR THE ASSESSEE HADFOLLOWING INTER NATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES: S. NO. DESCRIPTION OF THE AMOUNT IN (INR) METHOD TRANSACTIONS. 1. PURCHASE OF RAW MATERIAL 10 268 532 TNMM 2. PURCHASE OF FINISHED GOODS 92 455 394 TNMM 3. COMMISSION RECEIVED 20 437 822 TNMM 4. ALLOCATION OF INFORMATION 6 162 862 TNMM TECHNOLOGY (IT) COST 5. REIMBURSEMENT OF EXPENSES 57 416 TNMM I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 12 TOTAL 129 382 036/- 5. THE TPO DISCUSSED THE BUSINESS PROFILE OF THE A SSESSEE IN PARA NO. 5. FUNCTIONS ASSETS AND RISKS WERE ANALYS ISED IN PARAGRAPH NOS. 6 AND TRANSFER PRICING APPROACH OF T HE ASSESSEE IN PARAGRAPH NO. 7 OF HIS ORDER. THE ASSESSEE HAD U SED TNMM (TRANSACTIONAL NET MARGIN METHOD) AT THE ENTITY LEV EL AGGREGATING ALL THE TRANSACTIONS. THE ASSESSEE HAD USED SIX COM PARABLES WHO WERE IN THE SIMILAR LINE OF BUSINESS IN INDIA. THE MEAN OP/SALES OF THE COMPARABLES WORKED OUT AT 0.68% AS AGAINST - 0.03 % OF THE ASSESSEE. AS THE ASSESSEE WAS WITHIN PLUS MINUS 5% OF THE ARM'S LENGTH PRICE (ALP) THE ASSESSEE CL AIMED THAT ITS INTERNATIONAL TRANSACTION IS AT ARM'S LENGTH. THE T PO DID NOT AGREE WITH THE ASSESSEE AND DECIDED TO BENCHMARK TH E INTERNATIONAL TRANSACTION INDIVIDUALLY AS AGAINST T HE AGGREGATE APPROACH OF THE ASSESSEE. 6. THE ASSESSEE HAS PAID RS.61 62 872 TOWARDS ALLO CATION OF INFORMATION TECHNOLOGY COST. THE TPO ISSUED SHOW-CA USE NOTICE TO THE ASSESSEE ASKING IT TO JUSTIFY THE PAYMENTS M ADE IN THIS REGARD. THE TPO WAS NOT SATISFIED WITH THE CAUSE SH OWN BY THE ASSESSEE AND CAME TO THE CONCLUSION THAT NO SERVICE S ACTUALLY HAD BEEN RECEIVED AS NO EVIDENCE HAD BEEN FILED IN SUPPORT. HE OBSERVED FURTHER THAT NO COST SHEETS OR CORROBORATI VE AGREEMENTS HAVE BEEN PROVIDED TO DEMONSTRATE THAT THESE SERVIC ES WERE ACTUALLY RECEIVED BY THE ASSESSEE. HE HELD FURTHER THAT IF THE SERVICES HAD BEEN RENDERED AT ALL THOSE MAY BE TER MED AS ANCILLARY SERVICES. NO INDEPENDENT PARTY WOULD PAY ANYTHING FOR SUCH SERVICES UNDER UNCONTROLLED CIRCUMSTANCES. THE TPO THUS HELD THE PAYMENT OFRS.6J 62 872 IS NOTHING BUT A D EVICE OF PROFIT SHIFTING AND ARM'S LENGTH PRICE OF THIS TRAN SACTION SHALL BE DETERMINED AT NIL UNDER CUP METHOD. THE TPO ADDED T HE PAYMENT MADE BY THE ASSESSEE TO ITS AE TO THE ARM'S LENGTH PRICE CHARGED BY THE ASSESSEE. THE LEARNED C1T(APPE ALS) HAS HOWEVER DELETED THIS DISALLOWANCE AGAINST WHICH TH E REVENUE IS IN APPEAL BEFORE US. 7. IN SUPPORT OF THE ISSUE THE LEARNED SENIOR DR H AS BASICALLY PLACED RELIANCE ON THE ORDER OF THE TPO WITH THIS C ONTENTION THAT THE DECISION OF THE IT AT IN THE CASE OF DRESSER RA ND INDIA PVT. LTD. - ITA NO. 8753/MUM/2010 FOLLOWED BY THE LEARNE D I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 13 CIT(APPEALS) IS NOT APPLICABLE IN THE CASE OF THE A SSESSEE. HE ALSO CITED THE FOLLOWING DECISIONS: 1. DELOITTE CONSULTING INDIA PVT. LTD. - ITA NOS.5 79 1272 1273/MUM/2011 & 3910 391L/MUM/2011; 2. GEMPLUS INDIA PVT. - ITA NO. 352/BANG./2009; 3. KNORR-BREMSE INDIA PVT. LTD. -ITA NO. 5097/DEL/ 2011; & 4. PETRO ARALDITE PVT. LTD. - ITA NO. 6217/MUM/201 2. 8. THE LEARNED AR ON THE OTHER HAND TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER ON THE ISSUE. HE SUBMITTED THAT NEC ESSAIY COST TO RUN THE BUSINESS HAS NOT BEEN DISPUTED BY THE TP O. HE REFERRED PAGE NOS. 199 TO 226 OF THE PAPER BOOK I.E . THE COPIES OF INVOICES RAISED BY THE A.E. FOR IT COST PROVIDINGSP ECIFIC NATURE OF EXPENSES IN EACH OF THE INVOICES. THE ASSESSEE HAD ALSO PROVIDED THE BREAK UP OF IT EXPENSES DURING THE YEA R MADE AVAILABLE AT PAGE NO. 232 OF THE PAPER BOOK. HE SUB MITTED FURTHER THAT THE EXPENSES CLAIMED ON ACCOUNT OF ALL OCATION OF INFORMATION TECHNOLOGY (IT) COST WAS REASONABLE LOO KING TO THE TURNOVER OF THE ASSESSEE. THE LEARNED AR CONTENDED THAT SUCH COSTS ARE BASIC OPERATIONAL REQUIREMENT FOR THE DAY TO DAY OPERATIONS AND IF THERE WERE NO GLOBAL REQUIREMENT THEN ASSESSEE WOULD HAVE TO PROCURE ON ITS OWN. ACCORDIN GLY ON AN ARM'S LENGTH BASIS IT WOULD NOT BE FEASIBLE TO EXP ECT ANY INDEPENDENT COMPANY TO PROVIDE SUCH SERVICES ON A F REE OF COST BASIS AS HAS BEEN CONTEMPLATED BY THE LEARNED TPO I N HIS ORDER. SUCH PAYMENTS WERE MADE ON ACCOUNT OF GLOBAL AGREEM ENT PROCURED BY THE A.E. FOR THE BENEFIT OF ENTIRE GROU P AND WERE MAINLY TOWARDS INTERNET CONNECTIVITY STANDARD OPER ATING SYSTEM SUCH AS MS OFFICE SOFTWARE SUPPORT AND IT HELPDESK . THE COSTS HAD BEEN ALLOCATED WITHOUT ANY MARKUP BASED ON THE NUMBER OF HEAD COUNTS USING SPECIFIC IT SERVICES. HE REFERRED PAGE NOS. 227 TO 232 OF THE PAPER BOOK I.E. COPY OF THE RELEV ANT EXTRACTS OF THE SUBMISSIONS BEFORE THE LEARNED TPO AND GIVING T HE DETAILED DESCRIPTION OF THE SERVICES UTILIZED BY THE ASSESSE E IN ITS OPERATIONS AND THEIR BENEFIT WAS EXPLAINED. HE SUBM ITTED THAT THESE SERVICES ARE UTILIZED BY THE ASSESSEE IN ITS OPERATIONS AND ARE CRITICAL FOR ITS EFFICIENT FUNCTIONING. NO THIR D PARTY WOULDPROVIDE THESE SERVICES FREE OF CHARGE. ARM'S L ENGTH PRICE OF I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 14 SUCH SERVICES BY NO STRETCH OF IMAGINATION CAN BE DETERMINED TO BE NIL. THE LEARNED AR POINTED OUT THAT IN ITS OWN CASE OF THE ASSESSEE IN ASSESSMENT YEAR 2006-07 THE LEARNED TP O HAS HELD THE PAYMENT OF IT COST OF RS.40 16 126 AT ARM'S LEN GTH AND NOT DRAWN ANY ADVERSE INFERENCE ON THIS ISSUE. HE SUBMI TTED THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES O F THE CASE DURING THE YEAR AND THUS THE RULE OF CONSISTENCY SH OULD BE APPLIED. HE CONTENDED THAT IF TNMM IS HELD AS THE M OST APPROPRIATE METHOD IT IS NOT PERMISSIBLE TO SINGLE OUT CERTAIN COSTS FOR THE SAKE OF SEPARATE BENCHMARKING ANALYSI S. HE SUBMITTED THAT IN THE PRESENT CASE THERE IS NO DIS PUTE THAT TNMM IS THE MOST APPROPRIATE METHOD FOR ALL OTHER T RANSACTIONS. CONSIDERING THAT I. T. COSTS FORM A PART OF THE COS T BASE IN CALCULATION OF THE PLI (OP/TC) IT WOULD NOT BE APP ROPRIATE TO BENCHMARK SUCH COSTS SEPARATELY UNDER ANOTHER METHO D. THE LEARNED AR CONTENDED THAT THE LEARNED TPO WHILE APP LYING CUP METHOD HAS NOT MENTIONED THE SEARCH PROCESS UNDERTA KEN OR METHODOLOGY ADOPTED IN ORDER TO DETERMINE THE ALP O F THE AFORESAID INTERNATIONAL TRANSACTIONS NOR ARRIVED A T A COMPARABLE UNCONTROLLED PRICE. THE LEARNED TPO HAS NOT FOLLOWE D ANY OF THE THREE STEPS FOR APPLICATION OF CUP METHOD AS MENTIO NED IN RULE 10B(L)(A) OF THE INCOME-TAX RIDES 1962. THE EXPENS ES INCURRED BY THE ASSES SEE INCLUDING EXPENSES FOR I.T. COSTS HAVE FORMED A PART OF THE COST BASE OF THE ASSESSEE. HE PLACED RE LIANCE ON THE FOLLOWING DECISIONS: I) DRESSER RAND INDIA PVT. LTD. - ITA NO.8753/MUM/ 2010; II) AWB INDIA PVT. LTD. -ITANO. 4454/DEL/2011; III) ERICSON INDIA PVT. LTD. - 1TA NO. 5141/DEL/20 11; & IV) MCCANN ERICKSON INDIA PVT. LTD. - ITA NO. 5871/ DEL/2011. 9. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW WE FIND THAT THERE ARE SOME UNDISPUTED FACTS AND THAT NO SUCH PAYMENT IN QUESTION I.E. INFORMATION TECHNOLOGY COS T WAS MADE TO ANY OTHER PARTY AND IN THE ASSESSMENT YEAR 2006- 07 THE LEARNED TPO IN THE CASE OF ASSESSEE ITSELF UNDER AL MOST SIMILAR FACTS HAD HELD THE PAYMENT OF IT COST OF RS.40 16 1 26 AT ARM'S LENGTH PRICE AND HAD NOT DRAWN ANY ADVERSE INFERENC E ON THIS ISSUE. THE CLAIMED EXPENDITURE STATED TO HAVE BEEN INCURRED ON I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 15 INTERNET CHARGES SUPPORT FEES WAN SITE FEES SAP SUPPORT FEE LICENSE FEE AND SERVICE DESK. THE DETAILED DESCRIPT ION OF THE SERVICES UTILIZED BY THE ASSESSEE IN ITS OPERATION AND THEIR BENEFIT EXPLAINED BY THE ASSESSEE ARE BEING REPRODU CED HEREUNDER: 'I. INTERNET CHARGES: DANISCO GROUP COMPANIES HAVE A GLOBAL TIE UP WITH THE INTERNET SERVICE PROVIDERS FOR OBTAININ G INTERNET SERVICES. THUS ALL THE INTERNET SERVICES USED BY DANISCO IND IA ARE ROUTED THROUGH DENMARK. YOUR HONOURS WOULD APPRECIATE THE FACT THAT THE COMPANY DURING THE YEAR HAS NOT INCURRED ANY IN TERNET EXPENSES WHICH ARE NORMAL TO ANY OTHER BUSINESS. II. SUPPORT FEES: THIS COVERS INCIDENT HANDLING US ER SUPPORT AND TRAINING DAY TO DAY OPERATIONAL SUPPORT TO ALL THE USER FOR APPLICATION SUCH AS LOTUS NOTES (FOR EMAIL & SAME T IME COMMUNICATION) MYB1S (USED FOR REPORTING OF ALL TH E BUSINESS DATA SUCH AS SALES FINANCE INVENTORY) CRM (CUSTOM ER RELATIONSHIP MANAGEMENT USED FOR MAINTAINING ALL TH E CUSTOMER RECORDS SALES HISTOIY & OPPORTUNITY PRICING ETC. ) GCMS (GLOBAL COMPLAINT MANAGEMENT SYSTEM FOR ANALYSIS OF CUSTOME R COMPLAINTS BASED ON WHICH CORRECTION ACTION TAKEN) AND VARIOUS KNOWLEDGE DATA BASE REQUIRED FOR BUSINESS III. WAN SITE FEES: THIS FEE COVERS THE OPERATION OF DANISCO'S GLOBAL W IDE AREA NETWORK WHICH ALLOWS DANISCO INDIA TO COMMUNICATE A ND EXCHANGE INFORMATION USING THE GLOBAL NETWORK. IV. SAP SUPPORT FEE: THIS INCLUDES THE EXPENDITURE INCURRED HANDLING USER SUPPORT AND TRAINING AND MINOR CHANG ES TO THE SAP TEMPLATE. THIS ALSO INCLUDES ALL THE SUPPORT FO R COMPANY BUSINESS PROCESS SOFTWARE BASED ON SAP PLATFORM AND THE TECHNICAL SUPPORT FOR LOCAL ERP SYSTEM (NAVISION). V. LICENSE FEE: THIS IS THE FEE WITH RESPECT TO LI CENSES FOR SOFTWARE SUCH AS LOTUS NOTES ADOBE WINDOWS OPERAT ING SYSTEM ALL SERVER APPLICATION NAVISION SOFTWARE L ICENSE PRICING SYSTEM SOFTWARE SAP SOFTWARE BMC REMEDY (PROBLEM REPORTING SOFTWARE) AND ANTIVIRUSES WHICH ARE PROCURED GLOBA LLY BY THE GROUP COMPANIES; VI. SERVICE DESK: THESE ARE THE CH ARGES FOR INTERNET IT SERVICE DESK FOR RESOLUTION OF IT RELAT ED PROBLEMS I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 16 FACED BY THE EMPLOYEES. THEY ARE FIRST LEVEL OF SUP PORT FOR ALL DANISCO INDIA IT RELATED PROBLEMS.' 10. CONSIDERING THE ABOVE SUBMISSIONS THE LEARNED CIT(APPEALS) HAS GIVEN FOLLOWING FINDING ON THE ISS UE IN PARA NO.5.13 OF THE FIRST APPELLATE ORDER: '5.131 DO NOT SEE ANY MERIT IN GOING INTO THE RATIO OF THE INTERNATIONAL CASES QUOTED BY THE TPO AS WELL AS THE GUIDELINES ISSUED BY THE OECD BE CAUSE THE ISSUE INVOLVED IS OF FACTS - WHETHER THE APPELLANT HAS RECEIVED THE SERVICE OR NOT. IN THE ABSENCE OF ANY PAYMENT T OWARDS ANY OTHER ENTITY FOR THE LICENSE FEE FOR SOFTWARE USED AND FOR NETWORKING CHARGES IT IS OBVIOUS THAT THE APPELLAN T HAS RECEIVED THESE SERVICES FROM THE RELATED PARTIES. THE INVOIC ES PRODUCED BEFORE THE TPO CLEARLY MENTIONS THE PURPOSE FOR WHI CH THESE PAYMENTS WERE MADE. THE ALLOCATION KEY BEING THE NU MBER OF USERS FOR ALLOCATING THESE EXPENSES I FIND THAT IT IS A REASONABLE ALLOCATION KEY IN SUCH CIRCUMSTANCES. APPELLANT HAS STATED THAT THERE ARE NO WRITTEN AGREEMENTS BETWEEN AES ON THE ISSUE OF COST SHARING IN NO WAY COMES IN THE WAY OF APPRECIA TING THE FACT THAT THESE IT RELATED CHARGES WERE SHARED BETWEEN T HE AES. THEREFORE FOLLOWING THE RATIO OF DRESSER- RAND IND IA PVT. LTD. (SUPRA) I HOLD THAT THE APPELLANT HAS RECEIVED THE SE SERVICES AND THE ALLOCATION KEY FOR APPORTIONING THE COST IS ARE ASONABLE ONE. 1 DIRECT THE TPO/A.O TO DELETE THE ADDITION MADE IN T HIS REGARD.' 11. IT IS NOT THE CASE OF THE REVENUE THAT THE ABOV E CLAIMED SERVICES ARE NOT REQUIRED TO THE NATURE OF BUSINESS OF THE ASSESSEE NOR IS IT THE CASE OF REVENUE THAT THE CL AIMED PAYMENT FOR SUCH SERVICES WAS MADE BY THE ASSESSEE TO ANY O THER ENTITY. THE LEARNED TPO HAS NOT DRAWN ANY ADVERSE INFERENCE ON THE CLAIM OF THE ASSESSEE THAT BASED ON THE BENCHMARKIN G ANALYSIS UNDERTAKEN THE MARK-UP EARNED BY THE ASSESSEE IS A T ARM'S LENGTH. THE LEARNED CIT(APPEALS) HAS RIGHTLY FOLLOW ED THE DECISION OF MUMBAI BENCH OF THE ITAT IN THE CASE OF DRESSES RAND INDIA (PVT.) LTD. (SUPRA) HOLDING THAT WHILE E VALUATING THE ARM'S LENGTH PRICE OF A SERVICE IT IS WHOLLY IRREL EVANT AS TO WHETHER THE ASSESSEE BENEFITS FROM IT OR NOT; THE R EAL QUESTION WHICH IS TO BE DETERMINED IN SUCH CASES IS WHETHER THE PRICE OF THIS SERVICE IS WHAT AN INDEPENDENT ENTERPRISE WOUL D HAVE PAID FOR THE SAME. UNDER THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 17 THE LEARNED CIT(APPEALS) HAS KEEPING IN MIND THE PREPONDERANCE OF THE PROBABILITY TO RUN THE BUSINES S OF ASSESSEE HAS RIGHTLY ACCEPTED THE CLAIMED EXPENDITURE ON THE NATURE OF THE SERVICES REQUIRED TO RUN THE BUSINESS OF THE ASSESS EE WITH THE DIRECTION TO THE ASSESSING OFFICER TO ALLOW THE SAM E. THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF H IVE COMMUNICATION PVT. LTD. (ITA NO. 306/2011FOLLOWED B Y THE DELHI BENCHES OF THE ITAT IN THE CASE OF MCCANN ERICSON I NDIA PVT. LTD. (SUPRA) HAS HELD THAT THE LEGITIMATE BUSINESS NEEDS OF THE COMPANY MUST BE JUDGED FROM THE VIEW POINT OF THE C OMPANY ITSELF AND MUST BE VIEWED FROM THE POINT OF A PRUDE NT BUSINESSMAN. IT WAS HELD THAT IT IS NOT FOR THE ASS ESSING OFFICER TO DICTATE WHAT THE BUSINESS NEEDS OF THE COMPANY C OULD BE. IT IS THE BUSINESSMAN WHO CAN ONLY JUDGE THE LEGITIMACY O F THE BUSINESS NEED OF THE COMPANY FROM THE POINT OF A VI EW OF A PRUDENT BUSINESSMAN. THE TERM 'BENEFIT' TO A COMPAN Y IN RELATION TO ITS BUSINESS HAS A VERY WIDE CONNOTATIO N. IT WAS FURTHER HELD THAT IT IS NOT FEASIBLE TO EVALUATE TH E PRICE OF EACH SERVICE IN FINANCIAL TERM IN ISOLATED AND STAND ALO NE MANNER FOR EACH SUCH SERVICE OR PART OF THE SERVICE AND HENCE TNMM AT ENTITY IS ACCEPTABLE. THE FIRST APPELLATE ORDER ON THE ISSUE IS WELL SUPPORTED BY THE DECISIONS CITED BY THE LEARNE D AR AND HENCE WE ARE NOT INCLINED TO INTERFERE THEREWITH. T HE SAME IS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. 12. IN RESULT THE APPEAL IS DISMISSED. 9.6 THE MATERIAL FACTS OF THE CASE ARE THE SAME IN THE INSTANT YEAR ALSO. IN ACCORDANCE WITH THE PRINCIPLE OF CONSISTEN CY THE DOCTRINE OF JUDICIAL DISCIPLINE AND RESPECTFULLY FOLLOWING T HE ORDER OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN THE CASE O F THE APPELLANT ITSELF FOR AY 2007-08 IN ITA NO. 2444/DEL /2012 DATED 17/08/2015 THE ADDITION MADE BY THE AO/TPO ON ACCO UNT OF IT CHARGES IS DELETED. 9. AS REGARDS THE MANAGEMENT SERVICES THE SAME WAS BROADLY CATEGORIZED BY THE ASSESSEE IN THE FOLLOWIN G WAY: I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 18 (I) SHARED SUPPORT (RS. 235.48 LAKHS): THE APPELLAN T HAS STATED THAT IT RECEIVES SERVICES IN THE FORM OF ASSISTANCE AD VICE AND GUIDANCE FROM DIVISIONAL AND REGIONAL MANAGEMENT ON ROUTINE AND COMPLEX FUNCTIONS PERFORMED BY KEY ACCOUNT MANAGE RS WHICH MAINTAINED RELATIONSHIP WITH GLOBAL KEY CUSTOMER S AND PROVIDE TIMELY SUPPORT TO THE APPELLANT WHILE DEALING WI TH THESE ENTITIES. IT RECEIVED SERVICES IN THE FIELD OF GLOBAL F INANCE IN THE AREAS OF ACCOUNTING FINANCIAL ANALYSIS DEVELOPING FINANCE MANUALS CORPORATE TAX LEGAL HR ETC. (II) SALES AND MARKETING (RS. 11.65 LAKHS): THE AP PELLANT STATED THAT THE MARKETING CONCEPTS AND SALES STRATEGIES WER E DEVELOPED BY THE AES AND THAT THE ENTITIES OF THE GROUP INCLUDING THE APPELLANT MAKE USE OF THE ADVERTISEMENTS CREATED BY THE AES AND CHANGE THEM TO SUIT THE REQUIREMENTS FOR TH E LOCAL MARKET. SALES ASSISTANCE IS PROVIDED BY GLOBAL EXPERTS WHO FORM PART OF THE GLOBAL SALES TEAM. (III) TECHNICAL ASSISTANCE AND SUPPORT (RS. 73.48 LA KHS): THE APPELLANT HAS STATED THAT THE TECHNICAL SERVICE REQU EST TEAM PROVIDES ONGOING TECHNICAL SUPPORT AND THAT THE TE AM MEMBERS TRAVELLED TO VARIOUS ENTITIES OF THE GROUP TO ASS ESS THEM WITH NEW PRODUCT DEVELOPMENT. IT WAS ALSO STATED THAT REQUEST FOR TECHNICAL ASSISTANCE WHILE LOGGING ON TO S YSTEM DESIGNED BY THE TSR TEAM. 10. ALSO BEFORE THE LD. CIT(A) IT WAS SPECIFICALLY POINTED OUT THAT THE ASSESSEE HAS SPECIFICALLY FILED VARIOUS EV IDENCES TO REBUT THE OBSERVATION OF THE TPO WHICH HAS BEEN INC ORPORATED AND DISCUSSED IN THE ORDER IN DETAIL FOR INSTANCE; FIRSTLY THERE IS NO DUPLICATIVE SERVICES WHICH HAS BEEN REFERRED AND I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 19 INCORPORATED AT PAGES 15 AND 16 OF THE LD. CIT(A) O RDER; SECONDLY ADDITIONAL EVIDENCES WERE FILED TO SHOW ACTUAL RENDITION OF SERVICES WHICH TOO HAS BEEN REFERRED T O IN THE ORDER; THIRDLY COST BENEFIT ANALYSIS OF TECHNICAL SUPPORT SERVICES HAS BEEN DEALT AND REFERRED AT PAGE 43 OF THE ORDER; FOURTHLY COST BENEFIT ANALYSIS OF MARKETING AND SALE SUPPO RT SERVICES HAS BEEN DEALT AT PAGE 46 OF THE ORDER; AN D LASTLY COST BENEFITS ANALYSIS OF CORPORATE SUPPORT SERVICE S IT HAS BEEN REFERRED AT PAGE 50 OF THE ORDER. AFTER DISCUS SING ALL THE EVIDENCES FILED LD. CIT (A) ALSO FORWARDED THESE D ETAILS AND EVIDENCES TO THE ASSESSING OFFICER/TPO FOR THE REMA ND REPORT BY THE LD. CIT (A). IN RESPONSE REMAND REPORT WAS SUBMITTED BY THE ASSESSING OFFICER/TPO. 11. IN SO FAR AS TECHNICAL SUPPORT SERVICES ARE C ONCERNED THE LD. CIT(A) HAS CATEGORICALLY HELD IN PARAGRAPH 9.18 THAT THE EVIDENCES CLEARLY SHOWS THAT TECHNICAL SUPPORT SERV ICES ARE NOT DUPLICATIVE IN NATURE AND ARE ALSO NOT IN THE N ATURE OF SHAREHOLDER/STEWARDSHIP ACTIVITIES. HOWEVER REGARD ING MANAGEMENT SERVICES THOUGH LD. CIT (A) HAS INCORPOR ATED ALL THE EVIDENCES RELATING TO RECEIPT OF MARKETING SALE SUPPORT SERVICES SHARED SUPPORT SERVICES BUT ON ADHOC BAS IS HAS CONFIRMED 30% OF COST INCURRED BY THE APPELLANT UND ER THESE HEADS AFTER OBSERVING AND HOLDING AS UNDER: 9.21 PERUSAL OF THE ABOVE SHOWS THAT NUMBER OF SE RVICES PERTAINED TO THE DEVELOPMENT OF DANISCO SPIRIT 200 9 AMONG THE EMPLOYEES OF THE GROUP AND ALSO FOR THE DEVELOPMENT OF ACTION PLANS ON GLOBAL / REGIONAL / LOCAL LEVEL FOR THE DE VELOPMENT OF I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 20 FINANCIAL SUPPORT SERVICES MANAGEMENT. THE ABOVE EX PENDITURE WOULD LEAD TO DEVELOPMENT OF COMMON CULTURE AMONG A LL THE PERSONS WORKING IN DANISCO ENTITIES ACROSS THE GLOB E. FURTHER THE DEVELOPMENT AND IMPLEMENTATION OF FSS ACROSS TH E ENTITIES IN THE GROUP WOULD LEAD TO CONSOLIDATION OF DATA WH ICH CAN BE USED BY THE GROUP FOR SUPPLY CHAIN MANAGEMENT AS WE LL AS FOR STRATEGIC PURPOSE. SUCH BENEFITS ARE ONLY INCIDENTA L BUT FORM PART OF SHAREHOLDER / STEWARDSHIP ACTIVITY. IT IS ALSO S EEN THAT MARKETING AND SALES SERVICES ALSO NEED TO THE ADOPT ION OF SIMILAR STRATEGIES ACROSS VARIOUS ENTITIES OF THE G ROUP SUCH ACTIVITIES ARE IN THE NATURE OF MONITORING THE AFFA IRS OF THE SUBSIDIARY TO PROTECT THE INTEREST OF HOLDING COMPA NY AS A SHAREHOLDER. THE ACTIVITY OF MONITORING OR ENSURING THE AFFAIRS OF THE SUBSIDIARY IN ACCORDANCE WITH THE ECONOMIC COMM ERCIAL INTEREST OF THE HOLDING COMPANY WOULD NOT QUALIFY T HE TEST OF ECONOMIC OR COMMERCIAL VALUE FOR THE SUBSIDIARY. IT IS ALSO SEEN THAT THE COST ARE ALLOCATED BY THE AE ON THE BASIS OF REVENUE WHICH WOULD LEAD TO A CERTAIN AMOUNT OF ESTIMATION IN THE ALLOCATION OF COST TO THE APPELLANT. IT IS ALSO SEE N THAT THE APPELLANT HAS NOT FURNISHED ANY CERTIFICATE REGARDI NG AN INDEPENDENT EVALUATION OF THE ALLOCATION OF COST BY THE AE. IT IS ALSO NOTICED THAT THERE IS NO INFORMATION ON RECORD WHETHER ANY COST CONSIDERED IN THE NATURE OF SHAREHOLDER / STEW ARDSHIP ACTIVITY WERE ALLOCATED TO THE APPELLANT OR NOT. HO WEVER IT IS ALSO SEEN THAT THE APPELLANT ALSO DERIVES BENEFIT FROM T HE SAME. IT IS ALSO SEEN THAT THE APPELLANT HAS DEDUCTED INCOME TA X AND SERVICE TAX AND TAX ON PAYMENTS MADE TO THE AE AND THAT IF THE COST OF THE SERVICES ARE TAKEN INTO CONSIDERATION W HILE DETERMINING THE NET PROFIT MARGIN OF THE TWO SEGMEN TS THEN THE MARGIN OF BOTH THE SEGMENTS ARE AT ARMS LENGTH. I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 21 9.22 IN VIEW OF THE ABOVE TAKING INTO CONSIDERAT ION THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE FACT THAT ONLY SAMPLE DATA HAS BEEN SUBMITTED BY THE APPELLANT OR SUM EQ UIVALENT TO 30% OF THE COST INCURRED BY THE APPELLANT ON SHARED SUPPORT SERVICES AND MARKETING AND SALES SERVICES ARE HELD TO BE IN THE NATURE OF SHAREHOLDER / STEWARDSHIP ACTIVITY OF THE AE ON ESTIMATE BASIS AND ARE DISALLOWED. THE AO/TPO IS DI RECTED TO DETERMINE THE TRANSFER PRICING ADJUSTMENT ACCORDING LY. 12. AFTER CONSIDERING RELEVANT MATERIAL PLACED ON R ECORD AND THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS WE FIND THAT IN SO FAR AS RECEIPT OF TECHNICAL SUPPORT SER VICES THE ASSESSEE HAD ADDUCED VARIOUS SUPPORTIVE EVIDENCES I NCLUDING ADDITIONAL EVIDENCES WHICH HAS BEEN TAKEN NOTE BY T HE LD. CIT (A) AND THERE WAS CATEGORICAL FINDING THAT TECHNICA L SUPPORT SERVICES WERE NEITHER DUPLICATIVE IN NATURE NOR IN THE NATURE OF SHAREHOLDER/STEWARDSHIP ACTIVITIES. THUS THE AL LEGATIONS OF THE ASSESSING OFFICER/TPO STANDS NEGATED ON THE FAC E OF MATERIAL PLACED ON RECORD. APART FROM THAT THIS PR ECISE ISSUE ALSO STANDS COVERED BY THE JUDGMENT OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 WH ICH HAS BEEN DULY NOTED BY THE LD. CIT (A) AS INCORPORATED ABOVE. THUS ORDER OF LD. CIT (A) ON THIS SCORE IS CONFIRM ED AND ADJUSTMENT ON RECEIPT OF TECHNICAL SUPPORT SERVICES IS DELETED. 13. NOW IN SO FAR AS THE SHARED SUPPORT SERVICES AN D OTHER PART OF MANAGEMENT SERVICES ARE CONCERNED AGAIN TH E ASSESSEE HAS PLACED VOLUMINOUS EVIDENCES WITH REGAR D TO I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 22 MARKET SALES SUPPORT SERVICES WHEREIN IT HAS HIGHLI GHTED KINDS OF SERVICES RECEIVED; HOW THE SERVICES HAS BE EN RECEIVED; BENEFITS DERIVED FROM SUCH SERVICES; AND COST BENEF IT ANALYSIS ETC. ALL THESE EVIDENCES HAVE NEITHER BEEN REBUTTED NOR ANY CONTRARY FACTS AND MATERIAL HAS BEEN BROUGHT ON REC ORD. THUS IN THE WAKE OF THESE EVIDENCES THE ALLEGATION S MADE BY THE TPO HAVE NO LEGS TO STAND. LD. CIT (A) HAS THOU GH APPRECIATED ALL THE EVIDENCES BUT PURELY ON ADHOC BASIS HAS CONFIRMED 30% OF THE COST INCURRED IN SHARED SUPPOR T SERVICES AND MARKETING AND SALES SERVICES HOLDING T O BE IN THE NATURE OF SHAREHOLDER/STEWARDSHIP ACTIVITIES. F IRST OF ALL NONE OF THESE EVIDENCES ACTUALLY GOES TO SHOW THAT THESE ACTIVITIES ARE IN THE NATURE OF SHAREHOLDER/STEWARD ACTIVITIES AND SECONDLY SPECIFIC COST BENEFIT ANALYSIS VIS-- VIS THE NATURE OF SERVICE PROVIDED HAS BEEN GIVEN. THUS ON THESE FACTS THE ADHOC DISALLOWANCE MADE BY THE LD. CIT ( A) CANNOT BE HELD. MOREOVER THE TRIBUNAL PRECISELY ON SIMILA R FACTS HAS DELETED SUCH ADJUSTMENT AFTER OBSERVING AND HOLDING AS UNDER:- 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEA L IS AGAINST THE UPWARD ADJUSTMENT MADE ON ACCOUNT OF PAYMENT MA DE FOR MANAGEMENT SERVICES AVAILED BY THE ASSESSEE. THE AS SESSEE CLAIMED THAT AS IT WAS PART OF AN INTERNATIONAL GRO UP AND IN ORDER TO MAINTAIN INTERNATIONAL STANDARDS CERTAIN INTRA GROUP SERVICES WERE AVAILED BY IT OUT OF COMMON POOL WHE REIN SPECIALIZED SERVICES WERE PROVIDED BY SELECTED ENTI TIES. THE LD.AR FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO T HE DETAILS OF I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 23 THE SERVICES AVAILED UNDER THE HEAD ADMINISTRATIVE SERVICES SALES SUPPORT SERVICE AND TECHNICAL SERVICES & SUPP ORT IN THIS REGARD. IT IS THE CASE OF THE ASSESSEE THAT THE PAY MENT HAS BEEN MADE ON COST TO COST BASIS FOR AVAILMENT OF SUCH SE RVICES. FURTHER THE COST HAS BEEN ALLOCATED OUT OF THE TOT AL COST INCURRED BY AES APPLYING SUITABLE ALLOCATION KEY. THE ASSESS EE HAD FILED EVIDENCES IN SUPPORT BEFORE THE LOWER AUTHORITIES I N THIS REGARD AND EVEN BEFORE US WHICH ARE POINTED TO IN PARAS A BOVE. 19. THE FIRST ISSUE WHICH HAS BEEN RAISED BEFORE US IS THAT WHERE THE SERVICES HAVE BEEN AVAILED BY IT AND THEY ARE C ONNECTED TO THE MAIN ACTIVITIES THEN WHETHER AVAILMENT OF SERV ICES IS TO BE BENCHMARKED ON STANDALONE BASIS AND NOT AGGREGATED WITH THE OTHER INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE? THE SECOND ISSUE WHICH IS ARISING BEFORE US IS AGAI NST THE JURISDICTION OF THE TPO FOR BENCHMARKING THE INTERN ATIONAL TRANSACTION TO DETERMINE THE BENEFIT DERIVED BY THE ASSESSEE OUT OF SERVICES AVAILED AND WHETHER OR NOT THE ASSESSEE HAS AVAILED THE SAID SERVICES. 20. THE ASSESSEE COMPANY WAS SUBSIDIARY OF DANISCO A/S DENMARK WHICH WERE HOLDING 99.99 % SHARES OF ASSES SEE AS ON 31.03.2009. THE DANISCO GROUP WAS ONE OF THE WORLD S LEADING PRODUCERS OF FOOD INGREDIENTS ENZYMES AND BIOBASED SOLUTIONS. IT DEVELOPED AND PRODUCED FUNCTIONAL INGREDIENTS PR IMARILY FOR THE FOOD AND BEVERAGE INDUSTRIES AND ALSO FOR SOME NON-FOOD SECTORS. THE GROUP HAD PRESENCE IN 47 COUNTRIES. IT WAS ACTIVELY ENGAGED IN RESEARCH AND DEVELOPMENT AND HELD MORE T HAN 7 854 ACTIVE PATENTS AND PATENT APPLICATIONS. AS PER ASSESSEE THE GROUP SUPPLIED FOOD INGREDIENT S TO VIRTUALLY ALL INDUSTRIES OPERATING WITHIN THE FOOD INDUSTRY L IKE:- I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 24 * BAKERY * BEVERAGES * CONFECTIONARY * DAIRY * FROZEN DESSERTS * FRUITS PREPARATIONS * FATS AND OILS * PROCESSED MEATS AND SEAFOOD * SOUPS & SAUCES 21. THE ASSESSEE WAS ENGAGED IN TWO SEGMENTS WHEREI N FIRST IS TRADING AND SECOND IS MANUFACTURING. THE ASSESSEE H AS AVAILED MANAGEMENT SUPPORT SERVICES FROM ITS AES WHICH WER E REIMBURSED ON COST TO COST BASIS. THE ASSESSING OFF ICER/TPO HAD MADE ADJUSTMENT ON ACCOUNT OF AVAILMENT OF IT SERVI CES WHICH HAS BEEN DELETED BY THE CIT(A) AND THE APPEAL OF TH E REVENUE DISMISSED FOR LOW TAX EFFECT. AS FAR AS AVAILMENT O F MANAGEMENT SERVICES WERE CONCERNED THE CASE OF THE ASSESSEE W AS THAT THE ENTITIES OF DANISCO GROUP HAD THE EXPERTISE AVAILAB LE WITHIN THE GROUP AND THE COST OF AVAILMENT OF SUCH SERVICES WE RE ALLOCATED TO THE ENTITIES ON COST TO COST BASIS APPLYING SUIT ABLE ALLOCATION KEY. THE SERVICES WERE RENDERED PURSUANT TO THE ARR ANGEMENT BETWEEN THE ASSESSEES AND ITS AES THROUGH COMMON PO OL. THE CASE OF THE ASSESSEE BEFORE US IS THAT THE SERVICES WERE ACTUALLY RENDERED AND THERE WAS NO DUPLICATION OF SERVICES. THE CIT(A) IN ASSESSMENT YEAR 2010-11 AFTER GOING THROUGH LIST OF SERVICES AVAILED BY THE ASSESSEE IN THREE SEGMENTS I.E. ADMI N SEGMENT TECHNICAL SUPPORT SERVICES AND SALES SUPPORT SERVIC ES HAS GIVEN A FINDING THAT NO ADJUSTMENT NEEDS TO BE MADE WITH REGARD TO THE SAME. THE BASIS OF THE DISALLOWANCE MADE IN THE HANDS OF I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 25 THE ASSESSEE IS THAT NO SERVICES HAVE BEEN ACTUALLY RENDERED AND THE SECOND CONTRARY ASPECT IS THAT THERE IS DUP LICATION OF SERVICES. THE ASSESSING OFFICER/TPO CANNOT SIT IN J UDGMENT OVER THE MANNER IN WHICH BUSINESS HAVE TO BE CARRIED ON BY THE BUSINESSMAN. THE DOMAIN OF THE TPO IS LIMITED TO CH ECK WHETHER SERVICES HAVE BEEN AVAILED. THE ASSESSEE REFERRED T O THE EVIDENCES FILED IN THIS REGARD TO AVAILMENT OF SERV ICES. THE COST ALLOCATION SHEET FOR AVAILMENT OF ADMIN SERVICES IS PLACED AT PAGES 136 TO 137 OF THE PAPERBOOK. OUT OF THE TOTAL COST OF DANISCO GROUP OF AMOUNT IN DKK 423165 ASSESSEES S HARE IS AT DKK 1111. THE DETAILS OF TECHNICAL SUPPORT SERVICES AND ITS AVAILMENT ARE PLACED AT PAGES 138 TO 141 OF THE PAP ERBOOK ALONGWITH SUPPORTS AT PAGES 142 TO 153 OF THE PAPER BOOK. SIMILARLY THE ASSESSEE HAS FURNISHED THE DETAILS WI TH REGARD TO THE SALES AND SUPPORT SERVICES AVAILED WHICH ARE TA BULATED AT PAGES 154 & 155 OF THE PAPERBOOK ALONGWITH SUPPORT AT PAGES 166 TO 220 OF THE PAPERBOOK. FURTHER THE CORPORATE SERVICES AVAILED BY THE ASSESSEE ARE TABULATED AT PAGES 222 TO 226 OF THE PAPERBOOK ALONGWITH SUPPORTS AT PAGES 227 TO 360 OF THE PAPERBOOK. IN THE PRESENT SET OF FACTS THE ASSESSE E HAS FILED EXTENSIVE EVIDENCES WITH REGARD TO AVAILMENT OF SER VICES AND IT IS NOT THE JURISDICTION OF THE TPO TO QUESTION WHETHER SUCH AVAILMENT OF SERVICES IS TO BE MADE BY THE ASSESSEE FOR BETTER MANAGEMENT OF ITS BUSINESS. THE ASSESSEE COMPANY IS PART OF AN INTERNATIONAL GROUP AND TO MAINTAIN ITS INTERNAT IONAL STANDARDS SUCH AVAILMENT OF SERVICES FROM THE GROUP ENTITIES IN ORDER TO MAINTAIN INTERNATIONAL STANDARDS FOR CARRY ING ON ITS BUSINESS IS A BUSINESS DECISION AND SUCH DECISION OF THE BUSINESSMAN CANNOT BE QUESTIONED. THE ASSESSING OFF ICER/TPO I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 26 ALSO CANNOT SIT IN JUDGEMENT AS TO WHAT BENEFITS AR E DERIVED BY THE ASSESSEE FROM AVAILMENT OF SUCH SERVICES. 14. APART FROM THAT TRIBUNAL HAS HEAVILY RELIED UPO N THE JUDGMENT OF PUNE BENCH DECISION IN THE CASE OF EMERSON CLIMATE TECHNOLOGIES (INDIA) LTD. VS DCIT (SUPRA) AND CAME TO THE FOLLOWING CONCLUSION. 23. IN THE PRESENT SET OF FACTS WHERE THE ASSESSEE WAS AVAILING SPECIALIZED SERVICES WHICH WERE PROVIDED BY THE AES FROM COMMON POOL AND THE EVIDENCES IN THIS REGARD HAVE B EEN FILED BY THE ASSESSEE AND WHERE THE SERVICES WERE CHARGED ON COST TO COST BASIS THERE IS NO MERIT IN THE ORDER OF THE A SSESSING OFFICER IN QUESTIONING THE AVAILMENT OF SERVICES AND THE BE NEFIT DERIVED BY THE ASSESSEE. IT MAY BE POINTED OUT THAT THE ASS ESSING OFFICER IN THE ALTERNATE HELD THAT THERE WAS DUPLICATION OF SERVICES. THE CIT(A) IN THE FINAL ANALYSIS HELD IT TO BE SHAREHOL DER ACTIVITY. ALL THE ABOVE SAID OBSERVATIONS OF THE AUTHORITIES BELO W ESTABLISH THE AVAILMENT OF SERVICES. WE HAVE ALSO PERUSED THE DATA OF EVIDENCES FILED BY THE ASSESSEE TO ESTABLISH ITS CA SE OF AVAILMENT OF SERVICES; UNDER LAW THE BENEFIT IF ANY ARISES TO THE ASSESSEE OR NOT CANNOT BE QUESTIONED. HENCE THE PAYMENT MAD E BY THE ASSESSEE BEING COST TO COST REIMBURSEMENT OF THE SE RVICES AVAILED FROM COMMON POOL IS DULY ALLOWABLE AS A BUS INESS EXPENDITURE IN THE HANDS OF THE ASSESSEE. THE TPO H AS EXCEEDED HIS JURISDICTION IN HOLDING THE VALUE OF THE SAID I NTERNATIONAL TRANSACTION AT NIL. THE HONBLE DELHI HIGH COURT IN CIT V. EKL APPLIANCES LTD. (SUPRA) HAD HELD THAT BENCHMARKING OF COST TO COST REIMBURSEMENT OF EXPENSES WAS NOT WITHIN THE J URISDICTION OF THE TPO WHILE COMPUTING THE ARMS LENGTH PRICE O F THE INTERNATIONAL TRANSACTION U/S 92CA OF THE ACT. IN S UCH FACTS WE I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 27 DIRECT THE ASSESSING OFFICER/TPO TO ALLOW THE CLAIM OF THE ASSESSEE IN ENTIRETY. THE GROUND OF APPEAL NOS. 1 & 2 ARE ALLOWED. THE GROUND OF APPEAL NOS. 3 & 4 BEING ALTE RNATIVE ARE DISMISSED. THE GROUND OF APPEAL NO.5 BEING PREMATUR E IS DISMISSED. 15. SINCE THERE IS NO MATERIAL CHANGE IN FACTS AND SAME ISSUE IS PERMEATING IN THIS YEAR ALSO THEREFORE F OLLOWING THE AFORESAID DECISION AND ALSO IN THE WAKE OF THE EVID ENCES FURNISHED BY THE ASSESSEE BEFORE THE AUTHORITIES BE LOW SUCH AN ADJUSTMENT CANNOT BE UPHELD AND IS DIRECTED TO BE DELETED. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D. 16. IN SO FAR AS GROUNDS RAISED BY THE REVENUE IS C ONCERNED THE SAME CANNOT BE HELD FOR THE REASON THAT THE LD. CIT(A) AFTER APPRECIATING ALL THE EVIDENCES FILED AND AFTE R CONSIDERING THE COST BENEFIT ANALYSIS OF INTRA GROUP SERVICES H AS DELETED THE ADDITION. ACCORDINGLY THE GROUND RAISED ON THI S SCORE BY THE REVENUE IS ALSO DISMISSED. 17. IN SO FAR AS THE ISSUE WHETHER CUP METHOD IS TO BE APPLIED TO BENCHMARK THE INTRA GROUP SERVICES AS MO ST APPROPRIATE METHOD THE SAME HAS NOT BEEN ANSWERED BY THE LD. CIT(A). SINCE WE HAVE ALREADY HELD ABOVE THAT THE PAYMENT OF INTRA GROUP SERVICES CANNOT BE TAKEN AT NIL AND NO ADJUSTMENT IS CALLED FOR THEREFORE THIS GROUND HAS BECOME PURELY ACADEMIC. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE REVENUE IS DISMISSED. I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 28 19. IN SO FAR AS THE APPEAL FOR THE ASSESSMENT YEAR 2011-12 IN ITA NO.3518/DEL/2017 IS CONCERNED EXACTLY SIMIL AR ISSUES HAVE BEEN RAISED I.E. AVAILING OF SERVICES UNDER MANAGEMENT SERVICES AND BENCH MARKING APPROACH WHEREBY THE TPO HAS BENCHMARKED THESE SERVICES UNDER CUP METHOD WHILE APPLYING THE BENEFIT TEST AND HELD THAT THESE ARE D UPLICATE IN NATURE AND ALTERNATIVELY TO BE IN THE NATURE OF SHA REHOLDER / STEWARDSHIP ACTIVITIES. LD. CIT (A) HAS FOLLOWED TH E APPELLATE ORDER FOR ASSESSMENT YEAR 2009-10 WHICH HAS NOW BEE N SETTLED BY THE HONBLE TRIBUNAL. ACCORDINGLY OUR F INDING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS FOR THIS YEAR ALS O. 20. IN THE RESULT THE APPEAL FOR THE ASSESSMENT YE AR 2011- 12 IS ALLOWED. 21. LIKEWISE IN THE APPEAL FOR THE ASSESSMENT Y EAR 2012- 13 THE SIMILAR ISSUE IS PERMEATING WITH REGARD TO THE IGS WHICH IS SIMILAR TO ASSESSMENT YEARS 2009-10 TO 201 1-12. ACCORDINGLY OUR FINDING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS IN THIS YEAR ALSO. THE REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 IN ITA NO.7899/DEL/2018 IS EXACTLY SAME AND HENCE THE SAME IS ALSO DISMISSED. 22. IN ASSESSMENT YEAR 2013-14 ONE OF THE ISSUES IN VOLVED IS EXACTLY THE SAME THAT IS AVAILING OF SERVICES FROM AE UNDER THE MANAGEMENT SERVICES AND THE LD. CIT (A) HAS FOL LOWED THE EARLIER YEARS ORDERS. THUS IN VIEW OF OUR DETAILE D FINDING GIVEN IN DETAIL IN ASSESSMENT YEAR 2010-11 THIS IS SUE IS DECIDED IN FAVOUR OF THE ASSESSEE. I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 29 23. ANOTHER ISSUE RAISED IN ASSESSEES APPEAL IS IN TEREST LEVIED AT RS.1 16 451/- ON DELAY DEPOSIT OF TDS U/S .201(1A) ON MAKING PAYMENT OF TDS IN RESPECT TO TRANSACTION WITH THIRD PARTIES. THE ASSESSEES CONTENTION HAS BEEN T HAT AMOUNT PAID TO THE VENDORS WAS REFLECTED UNDER P&L ACCOUNT AND ALSO ALLOWED AS A DEDUCTION AND THE PAYMENT OF TDS INCLU DING INTEREST ON DELAYED PAYMENT OF TDS DOES NOT REPRESE NT TAX ON THE INCOME OF THE ASSESSEE ALBEIT IS A TAX OF THE T HIRD PARTY WHICH HAS BEEN PAID BY THE ASSESSEE. LD. CIT (A) HA S DISALLOWED THE CLAIM OF DEDUCTION OF RS.1 16 451/- U/S. 201(1A) BY HOLDING THE SAME IS PENAL IN NATURE. 24. LD. COUNSEL BEFORE US HAS RELIED UPON THE DE CISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMERICAN EXPRESS BANK LTD. (2012) 18 TAXMAN. COM 21; AND CIT VS. PREMNATH MOTORS PVT. LTD. (2002) 120 TAXMAN 544 WHEREIN IT WAS HELD THAT INTEREST LEVIED U/S.201(1A ) IS NOT PENAL BUT COMPENSATORY IN NATURE. HOWEVER LD. COUN SEL FAIRLY POINTED OUT THAT HONBLE MADRAS HIGH COURT IN THE C ASE OF CIT VS. CHENNAI PROPERTIES AND INVESTMENT LTD. (199 9) 105 TQAXMAN 346 HAD DECIDED THE SIMILAR ISSUE AGAINST THE ASSESSEE WHICH HAS BEEN FOLLOWED BY DELHI ITAT IN T HE CASE OF DLF LTD. VS. ADDITIONAL CIT (2019) 106 TAXMAN 294 . 25. ON THE OTHER HAND LD. CIT-DR RELIED UPON THE O RDER OF THE CIT (A). 26. THE FACTS IN BRIEF ARE THAT THE ASSESSEE AFTER DEDUCTING THE TDS WITH RESPECT TO PAYMENT MADE TO THE THIRD P ARTY HAS I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 30 DEPOSITED THE SAME BELATEDLY. THE INTEREST OF RS.1 16 451/- WAS DEBITED IN THE P&L ACCOUNT AND WAS CLAIMED AS B USINESS DEDUCTION WHICH HAS BEEN DISALLOWED. THE RATIO OF T HE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMERICAN EXPRESS BANK LTD. ( SUPRA) AS RELIED UPON BY THE LD. COUNSEL WILL NOT APPLY ON FACTS OF THE ASSESSEE S CASE BECAUSE IN THAT CASE ASSESSEE IN A BONA FIDE MANN ER HAD NOT DEDUCTED THE TAX IN RESPECT OF REIMBURSEMENT MADE T O ITS EMPLOYEES BECAUSE AS PER THE ASSESSEE NO TAX WAS TO BE DEDUCTED. THE ASSESSING OFFICER HAD TREATED THE ASS ESSEE IN DEFAULT U/S. 201(1A) AND LEVIED THE TAX UPON IT AND ALSO LEVIED THE INTEREST U/S. 201(1A) THE TRIBUNAL GAVE A FINDI NG OF FACT THAT THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT THE REIMBURSEMENT OF EXPENSE WAS NOT TAXABLE IN THE HAN DS OF THE EMPLOYEES AND THEREFORE IT HAD GOOD AND SUFFICIEN T REASON NOT TO DEDUCT TAX AT SOURCE. ACCORDINGLY INTEREST LEVIED WAS DELETED. THE HONBLE HIGH COURT ON THESE FACTS HAD OBSERVED AND HELD AS UNDER: 9. WHILE WE ARE NOT INCLINED TO DISTURB THE FINDIN G OF THE INCOME TAX APPELLATE TRIBUNAL THAT THE ASSESSEE HAD ACTED IN A BONA FIDE MANNER WE DO NOT AGREE WITH THE CONCLUSION OF THE INCOME TAX APPELLATE TRIBUNAL THAT THE ASSESSEE CANNOT BE REGA RDED AS BEING AS AN 'ASSESSEE IN DEFAULT' IN RESPECT OF THE SHORT DE DUCTION. IT IS IMPORTANT TO REMEMBER THAT THE QUESTION OF 'GOOD AN D SUFFICIENT REASONS' ONLY ARISES WHEN ONE CONSIDERS THE PROVISO TO SECTION 201(1) OF THE SAID ACT. THAT PROVISO HAS BEEN SPECIFICALLY INTRODUCED TO NEGATE THE POSSIBILITY OF IMPOSITION OF PENALTY UNDER SECT ION 221 IF THE ASSESSING OFFICER IS SATISFIED THAT THE PERSON LIAB LE HAD GOOD AND SUFFICIENT REASONS TO NOT DEDUCT AND PAY THE TAX IN QUESTION. THUS THE I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 31 PROVISO IS TO BE APPLIED ONLY TO THE QUESTION OF PE NALTY. IT WOULD NOT ABSOLVE THE ASSESSEE INSOFAR AS HIS BEING CONSIDERE D AS AN ASSESSEE IN DEFAULT FOR THE PURPOSES OF SECTION 201(1) OF TH E SAID ACT. THEREFORE THIS FINDING OF THE TRIBUNAL IS SET ASIDE. CONSEQUE NTLY QUESTION NO.1 IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE AS SESSEE. 10. INSOFAR AS THE SECOND QUESTION IS CONCERNED I.E . WITH REGARD TO THE INTEREST PAYABLE UNDER SECTION 201(1A) OF TH E SAID ACT THAT IS A MANDATORY PROVISION AS ALREADY HELD BY A DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. ITC LIMITED. [IT APPEAL NO.475 OF 2010 DATED 11.05.2011]. THE SAID DIVISION BENCH OBSERVED AS UNDER:- ************************* HOWEVER LEVY OF INTEREST UNDER SECTION 201(1A) IS NEITHER TREATED AS PENALTY NOR HAS THE SAID PROVISION BEEN INCLUDED IN SECTION 273B TO MAKE 'REASONABLENESS OF THE CAUSE' FOR THE FAILURE TO DEDUCT A RELEVANT CONSIDERATION. SECTION 201(1A) MAKES THE PAYMENT OF SIMPLE INTEREST MANDATORY. THE PAYMENT OF INTEREST UNDER THAT PROVI SION IS NOT PENAL. THERE IS THEREFORE NO QUESTION OF WAIVER OF SUCH INTEREST ON THE BASIS THAT THE DEFAULT WAS NOT INTENTIONAL OR ON ANY OTHE R BASIS. (SEE BENNET COLEMAN & CO. LTD. V. V.P. DAMLE THIRD ITO [1986] 157 ITR 812 (BOM.) AND CIT V. PREM NATH MOTORS (P.). LTD. [200 2] 120 TAXMAN 584 (DELHI).' 27. IN THIS CASE THE ISSUE IS ENTIRELY DIFFERENT. HERE THE ASSESSEE HAS CLAIMED DEDUCTION OF INTEREST ON DELAY ED PAYMENT OF TDS AS BUSINESS EXPENDITURE WHICH OTHER WISE WAS THE STATUTORY DUTY OF THE ASSESSEE TO DEDUCT AN D DEPOSIT THE SAME WITHIN TIME. IT WAS CLAIMED IN THE P&L AC COUNT ON THE GROUND THAT IT IS A BUSINESS EXPENDITURE BECAU SE IT IS A TAX DEDUCTED ON BEHALF OF THIRD PARTY. THIS PRECISE ISSUE HAS I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 32 BEEN DEALT BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENT LTD. (SURPA) WHEREIN HONBLE HIGH COURT HAD OBSERVED AND HELD AS UNDER: THE LIABILITY FOR DEDUCTION OF TAX ARISES BY REASO N OF THE PROVISIONS OF THE ACT. UNDER SECTION 201 THE CONSEQUENCE OF FAIL URE TO COMPLY WITH THE SAME RENDERS THAT PERSON LIABLE TO BE DEEMED AS AN ASSESSEE IN DEFAULT WITH ALL THE CONSEQUENCES ATTACHED THERETO. THE LIABILITY TO PAY INTEREST ON THE AMOUNT NOT DEDUCTED OR DEDUCTED BU T NOT PAID IS DIRECTLY RELATED TO THE FAILURE TO DEDUCT OR REMIT THE AMOUNT. THE AMOUNT REQUIRED TO BE DEDUCTED IS THE AMOUNT PAYABL E AS INCOME-TAX. THE INTEREST PAID FOR THE PERIOD OF DELAY TAKES COL OUR FROM THE NATURE OF THE PRINCIPAL AMOUNT REQUIRED TO BE PAID BUT NOT PAID WITHIN TIME. THE PRINCIPAL AMOUNT HERE WOULD BE THE INCOME-TAX A ND THE INTEREST PAYABLE FOR DELAYED PAYMENT IS THE CONSEQUENCE OF F AILURE TO PAY THE TAX AND IN THE CIRCUMSTANCES IS IN THE NATURE OF A PENALTY THOUGH NOT DESCRIBED AS SUCH IN SECTION 201(1A). THE FACT THAT THE INCOME-TAX REQUIRED TO BE REMITTED IS NOT INCOME-TAX PAYABLE B Y THE ASSESSEE BUT IS ULTIMATELY FOR THE BENEFIT OF AND TO THE CREDIT OF THE RECIPIENT OF THE INCOME ON WHICH THAT TAX IS PAYABLE DOES NOT IN AN Y MANNER ALTER THE CHARACTER OF THE PAYMENT NAMELY ITS CHARACTER AS INCOME-TAX. THE INTEREST PAID UNDER SECTION 201(1A) THEREFORE WOU LD NOT ASSUME THE CHARACTER OF BUSINESS EXPENDITURE AND COULD NOT BE REGARDED AS A COMPENSATORY PAYMENT. INCOME-TAX IS NOT ALLOWABLE AS BUSINESS EXPENDITURE . THE AMOUNT DEDUCTED AS TAX IS NOT AN ITEM OF EXPENDITURE. THE AMOUNT NOT DEDUCTED AND REMITTED HAS THE CHARACTER OF TAX AND HAS TO BE REMITTED TO THE STATE AND CANNOT BE UTILISED BY THE ASSESSEE FOR ITS OWN BUSINESS. THE SUPREME COURT IN THE CASE OF BHARAT C OMMERCE & INDUSTRIES LTD. V. CIT [1998] 230 ITR 733/ 98 TAXMAN 151 REJECTED THE ARGUMENT THAT RETENTION OF MONEY PAYABLE TO THE STA TE AS TAX OR INCOME-TAX WOULD AUGMENT THE CAPITAL OF THE ASSESSE E AND THE I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 33 EXPENDITURE INCURRED NAMELY INTEREST PAID FOR THE PERIOD OF SUCH RETENTION WOULD ASSUME THE CHARACTER OF BUSINESS E XPENDITURE. IT HELD THAT AN ASSESSEE COULD NOT POSSIBLY CLAIM THAT IT W AS BORROWING FROM THE STATE THE AMOUNTS PAYABLE BY IT AS INCOME-TAX AND UTILISING THE SAME AS CAPITALIZATION IN ITS BUSINESS TO CONTEND THAT THE INTEREST PAID FOR THE PERIOD OF DELAY IN PAYMENT OF TAX AMOU NTED TO A BUSINESS EXPENDITURE. THEREFORE THE INTEREST PAID UNDER SEC TION 201(1A) COULD NOT BE ALLOWED AS BUSINESS DEDUCTION. THIS JUDGMENT HAS BEEN FOLLOWED BY THIS TRIBUNAL IN THE CASE OF DLF LTD. (SUPRA) . ACCORDINGLY RESPECTFULLY FOLLOWING THE SAME THIS ISSUE IS DECIDED IN FAVOUR OF THE ASS ESSEE. 28. REVENUES APPEAL FOR THE ASSESSMENT YEAR 2013-1 4 CHALLENGED THE DELETION OF TRANSFER PRICING ADJUSTM ENT IN RESPECT OF TECHNICAL SUPPORT SERVICES AND RESTRICTI NG THE ADJUSTMENT TO 30% OF THE COST IN RESPECT TO SALES A ND MARKETING SUPPORT SERVICES AND CORPORATE SUPPORT SE RVICES. THIS ISSUE HAS ALSO BEEN DEALT BY US IN THE EARLIER YEAR WHEREIN ENTIRE ADJUSTMENT HAS BEEN DELETED. THEREFOR E THIS GROUND OF THE REVENUE IS DISMISSED. 29. THE ANOTHER ISSUE RAISED BY THE REVENUE IS WITH REGARD TO TREATING THE SALES TAX SUBSIDY RECEIPT BY THE AS SESSEE AS CAPITAL RECEIPT INSTEAD OF REVENUE RECEIPT. THE BRI EF FACTS QUA THE ISSUE ARE THAT THE APPELLANT SET UP A NEW INDUS TRIAL UNIT IN GURGAON AND COMMENCED ITS COMMERCIAL PRODUCTION ON JANUARY 2000. IN TERMS OF HARYANA GENERAL SALES TA X RULES 1975 HIGH LEVEL COMMITTEE GRANTED EXEMPTION FROM P AYMENT OF SALES TAX BASED ON FIXED CAPITAL INVESTMENT BY T HE APPELLANT. THE SAID APPROVAL WAS GRANTED FOR A PERI OD OF 11 I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 34 YEARS VIZ. 20.08.2003 TO 19.08.2014. DURING THE REL EVANT PERIOD THE APPELLANT HAS RETAINED SALES TAX OF INR 48 45 551 AND SHOWN IN THE P&L ACCOUNT AS SALES TAX SUBSIDY. IT IS HIGHLIGHTED THAT THE CLAIM OF THE APPELLANT HAS BEE N CONSISTENTLY ALLOWED IN EARLIER YEARS. THE ASSESSIN G OFFICER DISALLOWED THE CLAIM OF THE APPELLANT WHILST HOLDIN G THAT THE SALES TAX SUBSIDY IS IN THE NATURE OF REVENUE RECEI PT. 30. BEFORE US LD. COUNSEL HAS POINTED OUT THAT THI S ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE IN THEIR CONTEXT OF HARYANA SALES SUBSIDY IN THE FOLLOWING JUDGMENT. 1. INDUSTRIES LTD. (2013) 218 TAXMAN 135 (GUJARAT) [CLC PB - PAGE 420-425] 2. CIT V BIRLA VXL LTD. (2013) 215 TAXMAN 117 (GUJ ARAT) [CLC PB - PAGE 426-432] 3. JOHNSON MATTHEY INDIA PVT. LTD. V DCIT ITA NO. 1817/DEL/2014 AND OTHERS ORDER DATED 16.03.2018 (ITAT DELHI) [CLC PB - PAGE 573-639] [RELEVANT - PA RA 14 AT PAGE 591] 4. PEPSI CO INDIA HOLDINGS PVT. LTD. V ACIT ITA NO . 1334/CHANDI/2010 AND OTHERS ORDER DATED 19.11.2018 ITAT DELHI [CLC PB - PAGE 433-572] 31. ON THE OTHER HAND LD. DR HAS STRONGLY RELIED U PON THE ORDER OF THE ASSESSING OFFICER WHO HAS TREATED THE SAME TO BE REVENUE RECEIPT HOLDING THAT THE AMOUNT CREDITED IN THE SALES TAX ACCOUNT OF RS.48 45551/- WHICH HAS BEEN RETAINE D BY THE I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 35 ASSESSEE TOWARDS SALES TAX AND THE REVENUE RECEIPT HAS BEEN ADDED. 32. LD. CIT (A) AFTER CONSIDERING THE FACTS AND THE RULE 28C HARYANA GENERAL SALES TAX RULES WHICH PROVIDES FOR TREATING THE SALES TAX TO BE A CAPITAL SUBSIDY AND ALSO RELY ING UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF PONNI SUGARS AND CHEMICALS LTD. (2008) 306 ITR 392 HELD THAT SALES TAX SUBSIDY RECEIPT WAS A CAPITAL RECEIPT. LD . CIT (A) HAS ALSO TAKEN NOTE OF CBDT CIRCULAR NO. 19 OF 2015 DAT ED 27.11.2015 WHEREIN IT HAS BEEN STATED THAT AS PER C LAUSE XVIII OF SECTION 2(24) OF THE ACT ANY ASSISTANCE IN THE FORM OF SUBSIDY SHALL BE CHARGEABLE TO TAX ONLY AFTER 01.04 .2016. 33. ADMITTEDLY THE ASSESSEE HAD SET UP THE NEW UNI T IN GURGAON HARYANA WHICH COMMENCED ITS COMMERCIAL PRODUCTION ON 07.01.2000 IT HAD RECEIPT ENTITLEMENT CERTIFICATE AS PER RULE 28 OF HARYANA GENERAL SALES TAX RULES FOR AVAILING CONCESSION IN THE FORM OF PAYMENT OF S ALES TAX BASED ON FIXED ASSESSMENT MADE BY THE COMPANY. IT W AS PURELY TOWARDS CAPITAL OUTLAY OF AN INDUSTRIAL UNIT . IT WAS SPECIFICALLY TO BE TREATED AS CAPITAL RECEIPT THE P RIMARY OBJECT AND INTEND FOR GRANTING CONCESSION WAS INDUSTRIAL DEVELOPMENT OF THE STAY AND EMPLOYMENT GENERATION W HO ARE ENTITLED TO THE SALES TAX CONCESSION. THE QUANTUM O F BENEFIT WAS DEPENDING UPON FIXED CAPITAL ASSESSMENT IN SETT ING UP THE NEW INDUSTRIAL UNIT OR IN THE EXISTING INDUSTRI AL UNIT. THESE FACTS ARE COMPLETELY UNDISPUTED. THE PRINCIPL E LAID I.T.AS. NO.3518/DEL/2017 & 7896 TO 7899/DEL/2018 36 DOWN BY THE HONBLE SUPREME COURT IN THE PONNI SUGA R AND CHEMICALS LTD. WHICH HAS BEEN INCORPORATED EXTENSO BY THE LD. CIT (A) IS SQUARELY APPLICABLE. APART FROM THAT AS REFERRED BY THE LD. COUNSEL EXACTLY IN THE CONTEXT OF HARYAN A SALES TAX SUBSIDY VARIOUS JUDGMENTS HAVE COME TREATING IT TO BE CAPITAL RECEIPT. ACCORDINGLY THIS GROUND RAISED BY THE REV ENUE IS ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY 2021 SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 05/05/2021 PKK: