ALSTOM PROJECTS INDIA LTD, MUMBAI v. ADDL CIT RG 1(1), MUMBAI

ITA 8670/MUM/2010 | 2006-2007
Pronouncement Date: 23-07-2013 | Result: Partly Allowed

Appeal Details

RSA Number 867019914 RSA 2010
Assessee PAN AAACA8679F
Bench Mumbai
Appeal Number ITA 8670/MUM/2010
Duration Of Justice 2 year(s) 7 month(s) 10 day(s)
Appellant ALSTOM PROJECTS INDIA LTD, MUMBAI
Respondent ADDL CIT RG 1(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted K
Tribunal Order Date 23-07-2013
Date Of Final Hearing 17-06-2013
Next Hearing Date 17-06-2013
Assessment Year 2006-2007
Appeal Filed On 13-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K MUMBAI . . . . . '# ' $ % BEFORE SHRI I.P. BANSAL JM AND SHRI P.M.JAGTAP AM . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 ALSTOM PROJECTS INDIA LTD. THE INTERNATIONAL 5 TH FLOOR 16 MARINE LINES CROSS ROAD NO.1 OFF MAHARSHI KARVE RD. MUMBAI 400 020. & & & & / VS. ADDITIONAL COMMISSION OF INCOME TAX RANGE 1(1) MUMBAI ( '# ./ ) ./ PAN/GIR NO. : PAN: AAACA8679F ( (* / APPELLANT ) .. ( + (* / RESPONDENT ) (* - ' / APPELLANT BY: S/SHRI SUNIL M. LALA YOGESH THAR & HARSH SHAH + (* . - ' / RESPONDENT BY : SHRI AJEET KUMAR JAIN & . # / DATE OF HEARING :23/07/2013 /0' . # / DATE OF PRONOUNCEMENT :23/07/2013 '1 / O R D E R PER I.P.BANSAL J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST ASSESSMENT ORDER DATED 7/10/2010 PASSED UNDER SECTI ON 143(3) R.W.S. 144C(13) OF THE INCOME TAX ACT 1961 (THE ACT). TH E ASSESSEE HAS FILED CONCISE GROUNDS WHICH READ AS UNDER: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED TRANSFER PRICING OFFICER (HEREINAFTER REFERRED TO AS LD.TPO ) AND THE LEARNED ASSESSING . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 2 OFFICER (HEREINAFTER REFERRED TO AS LD. AO) HAVE ERRED IN PROPOSING AND THE HONBLE DISPUTE RESOLUTION PANEL (HEREINAFTER REFER RED TO AS HONBLE DRP) HAS ERRED IN CONFIRMING (UNDER SECTION 144C(6)) THE AD DITION OF RS. 3.83 CRORES TO THE INCOME OF THE APPELLANT FOR AY 2006-07 UNDER SECTIO N 92CA(3). II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. TPO AND THE LD. AO HAVE ERRED IN PROPOSING AND THE HONBLE DRP HAS ERR ED IN CONFIRMING THE REJECTION OF A COMPARABLE COMPANY NAMELY NICCO COR PORATION LIMITED (FROM THE SET OF COMPARABLE COMPANIES FOR POWER SEGMENT) SOLE LY ON THE BASIS OF THE FINANCIAL RESULTS (I.E. LOSSES INCURRED) OF THE SAI D COMPARABLE COMPANY THEREBY DISREGARDING THE PROVISIONS OF THE RULE 10B(2). III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. TPO AND THE LD. AO HAVE VIOLATED THE PROVISO TO SECTION 92C(2) BY R ESTRICTING THE APPLICABILITY OF VARIATION OF +/- FIVE PERCENT ONLY ON THE INTERNATI ONAL TRANSACTIONS OF PURCHASES UNDERTAKEN BY THE APPELLANT AND NOT APPLYING THE SA ME ON THE INTERNATIONAL TRANSACTIONS OF SALES UNDERTAKEN BY THE APPELLANT. IV. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. TPO THE LD. AO AND THE HONBLE DRP HAVE VIOLATED THE PROVISO TO RU LE 1OB(4) OF THE RULES BY NOT ALLOWING USE OF COMPARABLES DATA RELATING TO T WO YEARS PRIOR TO THE FINANCIAL YEAR 2005-06 IN ADDITION TO FINANCIAL YEAR 2005-06 FOR COMPUTING THE ARMS LENGTH PRICE. V. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. TPO AND THE LD. AC HAVE ERRED IN PROPOSING AND THE HONBLE DRP HAS ERR ED IN CONFIRMING ATTRIBUTION OF THE ENTIRE SHORT FALL OF RS.3.83 CRORES IN THE P ROFIT MARGIN OF THE APPELLANT TO THE TRANSACTIONS WITH ASSOCIATED ENTERPRISES ONLY INSTEAD OF APPORTIONING THE SAME TO ALL TRANSACTIONS OF THE APPELLANT. CONTRAVENTION OF THE HONBLE DRPS DIRECTIONS U/S 1 44C(5) VI. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. AC HAS VIOLATED THE PROVISIONS OF SECTION 144C(13) IN ISSUING THE ASSES SMENT ORDER IN CONTRAVENTION TO THE DIRECTIONS OF THE HONBLE DRP. VII. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED AO/ TPO ERRED IN NOT GRANTING REASONABLE AND ADEQUA TE OPPORTUNITY TO THE APPELLANT BEFORE PASSING ORDER UNDER SECTION 143(3) RWS 144C(13) OF THE ACT AND THE SAID ORDER BEING PASSED IN VIOLATION OF THE PRI NCIPLES OF NATURAL JUSTICE IS LIABLE TO BE QUASHED OR ALTERNATIVELY SET ASIDE. VIII. DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PR OVIDENT FUND: VIII.A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AC ERRED IN DISALLOWING PAYMENTS MADE ON ACCOUNT OF EMPLOYEE S CONTRIBUTION TO PROVIDENT FUND AMOUNTING TO RS. 8 02 850/- (1 81 49 6 + 4 83 5 19 + 1 37 835) ON THE ALLEGED GROUND THAT THE PAYMENTS HAVE BEEN M ADE BEYOND THE GRACE PERIOD. . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 3 VIII.B. HE FAILED TO APPRECIATE AND OUGHT TO HAVE H ELD THAT PAYMENTS FOR RS. 1 81 496 AND RS.4 83 519 WERE MADE BEFORE THE DUE D ATE. BALANCE PAYMENT OF RS.1 37 835 WAS MADE ON 22.11.2005 I.E. BEFORE DUE DATE OF FILING OF RETURN OF INCOME. VIII.C. THE APPELLANT PRAYS THAT THE AFORESAID DISA LLOWANCE OF 8 02 850/- BE DELETED. IX. DISALLOWANCE U/S 40 (A) (IA): IX.A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. AC ERRED IN DISALLOWING A SUM OF RS. 1 71 38 714/- (65 36 243 + 1 06 02 471) U/S 40(A)(IA) ON THE ALLEGED GROUND THAT NO DETAILS OF TDS WERE S UBMITTED DURING ASSESSMENT PROCEEDINGS. IX.B. HE FAILED TO APPRECIATE AND OUGHT TO HAVE HEL D TDS WAS DEDUCTED ON ALL THE ITEMS DISALLOWED BY THE LD. AC. HOWEVER DUE TO VOLUMINOUS NATURE ONLY SAMPLE EVIDENCES WERE SUBMITTED BEFORE THE LD. AC A ND HONBLE DRP. IX.C. THE APPELLANT THEREFORE PRAYS THAT THE LD. AC BE DIRECTED TO DELETE THE AFORESAID DISALLOWANCE. X.SET OFF OF ACCUMULATED LOSSES AND DEPRECIATION AL LOWANCE: X.A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AC ERRED IN DISALLOWING CARRY FORWARD AND SET OFF OF ACCUMULATE D LOSSES OF RS.6 51 53 017/- AND UNABSORBED DEPRECIATION OF RS.1 21 44 325/- AGG REGATING TO RS. 7 72 97 342/- OF ALSTOM TRANSPORT LIMITED ON THE AL LEGED GROUND THAT ACCOUNTANTS CERTIFICATE IN FORM NO. 62 AS PRESCRIB ED UNDER RULE 9C OF THE INCOME-TAX RULES 1962 WAS NOT FURNISHED. X.B. THE APPELLANT THEREFORE PRAYS THAT AFORESAID SET OFF OF UNABSORBED LOSSES AND DEPRECIATION ALLOWANCE BE ALLOWED. OTHER GROUNDS: XI.A. THE ABOVE GROUNDS OF APPEAL ARE ALL INDEPEN DENT AND WITHOUT PREJUDICE TO ONE ANOTHER. XI.B. THE APPELLANT CRAVES LEAVE TO SUPPLEMENT TO CANCEL AMEND ADD AND/OR OTHERWISE ALTER/MODIFY ANY OR ALL THE GROUNDS OF TH E APPEAL STATED HEREINABOVE. 3. SHRI SUNIL M. LALA ARGUED THE MATTER RELATING TO ADDITION MADE ON ACCOUNT OF T.P ADJUSTMENT. HE SUBMITTED THAT ADJUD ICATION OF GROUND NO.5 IS SUFFICIENT TO DEAL WITH THE ISSUE RELATING TO ADDIT ION MADE ON ACCOUNT OF T.P ADJUSTMENT. THE FACTS RELATING TO THIS ADDITION A RE THAT THE ASSESSEES POWER SEGMENT IN RESPECT OF WHICH TP ADJUSTMENT HAS BEEN MADE HAS A TURNOVER OF . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 4 RS.891.21 CRORES. ITS OP/SALE PERCENTAGE IS 6.06%. OUT OF THE AFOREMENTIONED TRANSACTIONS THE ASSESSEE HAD FOUR T RANSACTIONS OF PURCHASES FROM ITS ASSOCIATED ENTERPRISES(AE) TOTALING TO RS. 69.32 CRORES. THEREFORE LD. TPO OBSERVED THAT BENCHMARK NEEDED TO BE THE ARMS L ENGTH PRICE (ALP) OF THE PURCHASES. THE LD. TPO SELECTED 12 COMPARABLE AND THEIR OP/SALES PERCENTAGE WAS COMPUTED AT 6.44%. THE TPO CALCULA TED THE OPERATING COST OF POWER SEGMENT BY APPLYING 6.03% AT RS.837.20 CRORES AS AGAINST THE TURNOVER OF THE ASSESSEE OF RS.891.21 CRORES. IN THIS MANNE R LD. TPO HAS CALCULATED THE ARMS LENGTH OPERATING COST OF THE ASSESSEE AT R S.833.37 CRORES ( 100 - 6.47 = 93.51% OF SALES). THEREAFTER LD. TPO HAD M ADE ADJUSTMENT OF RS.3 83 CRORES (RS.837.20 833.37). THE TPO HAS MADE THIS ADDITION ON THE GROUND THAT IT IS BEYOND 5% OF THE AES COST WHICH IS COMP UTED AT RS.69.32 CORES. ALL THESE FIGURES ARE MENTIONED IN PARA-8 OF THE ORDER OF LD. TPO WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED BELOW: 8. DETERMINATION OF THE ARMS LENGTH PRICE: APILS POWER SEGMENT HAS TURNOVER OF RS.891.21CRORE S. ITS OP/SALES PERCENTAGE IS 6.06%. SINCE THE MAIN TRANSACTIONS WITH AES ARE OF PURCHASES (4 TRANSACTION TOTALING TO RS. 69.32 CRORES (41.25+4.39+13.68+9.99 )) WE NEED TO BENCHMARK THE ARMS LENGTH PRICE OF PURCHASES. THE OP/SALES P ERCENTAGE OF COMPARABLES IS 6.49%. OPERATING COST(OC) OF POWER SEGMENT IS 100- 6.03=93.94% OF SALES OF RS. 891.21 CRORES I.E. RS. 837.20 CRORES WHICH I NCLUDES AE COST OF RS. 69.32 CRORES. THE ARMS LENGTH OPERATING COSTS ARE 100 - 6.49 = 93.51% OF SALES OF RS.891.21 CRORES I.E. RS. 833.37 CRORE THEREFORE THIS CALLS FOR A TRANSFER PRICING ADJUSTMENT OF RS. 837.20 - 833.37 = RS. 3.8 3 CRORES WHICH IS BEYOND 5% OF THE AE COSTS OF RS.69.32 CRORES. 4. FIRSTLY IT IS THE CASE OF THE ASSESSEE THAT LD . TPO WHILE MAKING THE ADJUSTMENT HAS CONSIDERED THE ENTIRE TURNOVER WHERE AS ACCORDING TO WELL ESTABLISHED LAW TP ADJUSTMENT CAN BE MADE ONLY IN R ESPECT OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH ITS AES. SUCH PRO POSITION IS CONTENDED TO BE SUPPORTED BY VARIOUS DECISIONS RELIED UPON BY THE L D. AR AS UNDER: . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 5 SR.NO. NAME CITATION 1. EMERSON PROCESS MANAGEMENT (INDIA) P. LTD. VS. DCIT (2012) 53 SOT 281 2. SMCC CONSTRUCTION INDIA LTD. VS. ACIT (2011) 44 SOT 63 (DEL) 3. II JIN ELECTRONICS (I) (P) LTD. VS. ACIT (2010) 36 SOT 227 (DEL) 4. INDIA JAPAN LIGHTING PVT. LTD. V. DCIT (ITA NO.2 154/MDS/2011) 5. PHONENIX MECANO (INDIA) LTD. V. DCIT (2012) 49 S OT 515 (MUM) 6. ACIT V. SUPER DIAMONDS (2012) 53 SOT 243 (MUM) 7. DCIT V. TWINKLE DIAMONDS (2012) 53 SOT 243 (MUM) 4.1 THE SECOND SUBMISSION OF LD. AR IS THAT EVEN IF THE MEAN MARGIN TAKEN BY TPO IN RESPECT OF COMPARABLES IS ADOPTED AND THE SAME IS APPLIED TO THE TRANSACTIONS OF THE AE THEN ADJUSTMENT WILL COME ON LY TO A SUM OF RS.32.00 LACS WHICH IS MUCH BELOW 5% OF THE TOTAL VALUE O F INTERNATIONAL TRANSACTIONS. HE IN THIS REGARD REFERRED TO THE FO LLOWING CHART A COPY OF WHICH WAS ALSO GIVEN TO LD. DR. DETAILS OF POWER SEGMENT: WORKING OF ADJUSTMENT BY TAKING INTO ACCOUNT ONLY AE RELATED COST ( AND TOTAL COST ON ENTITY LEVEL) POWER SEGMENT PARTICULARS AMOUNT IN CRORES ADJUSTMENT BY THE TPO ON AN ENTITY LEVEL BASIS REVENUE (A) 891.21 NPM OF COMPARABLE (B) 6.49% ALP TOTAL COST (C=A-B) 833.37 ACTUAL TOTAL COST 837.20 ADJUSTMENT AS PER TPO (E=D-C) 3.83 PROPORTIONATE ADJUSTMENT (AS PER COJ) ON AE COST ONLY TOTAL COST SIDE (DEBIT) AE TRANSACTIONS (F) 69.32 ACTUAL TOTAL COST INCLUDING AE AND NON AE COST(D) 837.20 PROPORTIONATE ADJUSTMENT (E+F/D) 0.32 ADJUSTMENT IS WITHIN +/-5% THEREFORE NIL ADDITION TOTAL COST SIDE (DEBIT) AE TRANSACTIONS 69.32 5% OF THE INTERNATIONAL TRANSACTIONS 3.46 PROPORTIONATE ADJUSTMENT ON COST 0.32 SINCE ADJUSTMENT OF 0.32 CRORES IS WITHIN THE 5% VARIA TION RANGE NO ADDITION CAN BE MADE . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 6 4.2 THUS IT WAS PLEADED BY LD. AR THAT NO ADJUSTMEN T SHOULD HAVE BEEN MADE AS THE DIFFERENCE IF ANY IS BETWEEN THE ME AN MARGIN OF COMPARABLE AND OF THE ASSESSEE IS MUCH BELOW OF THE 5% OF T HE INTERNATIONAL TRANSACTIONS. 5. HOWEVER LD. DR RELIED UPON THE ORDERS PASSED BY AO AND LD. DRP. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. SO FAR AS IT RELATES TO CONTENTION THAT TP ADJUSTMENT IS PERMISSIBLE ONLY ON AE TRANSACTIONS T HE SAME IS REQUIRED TO BE ACCEPTED AS IT IS SUPPORTED BY AFOREMENTIONED D ECISIONS. THEREFORE WE HAVE NO HESITATION IN HOLDING THAT LD. TPO WAS WRON G IN MAKING TP ADJUSTMENT ON NON-AE TRANSACTIONS. THE ADJUSTMENT IF ANY SHOULD BE LIMITED TO THE AE TRANSACTIONS. NOW THE QUESTION W ILL ARISE THAT WHETHER THE ADJUSTMENT WILL FALL WITHIN THE SAFE HARBOUR OF +/- 5%. THE COPY OF CHART SUBMITTED BY LD. AR WAS ALSO GIVEN TO LD. DR WHO C OULD NOT DISPUTE THE FACT THAT EVEN APPLYING THE MEAN MARGIN TAKEN BY LD. TPO THE DIFFERENCE IN THE ALP WOULD BE MUCH LESS THAN 5% OF THE AE TRANSACTIO NS. IN THIS VIEW OF THE SITUATION WE HOLD THAT NO TP ADJUSTMENT WAS REQUI RED TO BE MADE AND ADDITION IN THIS REGARD IS DELETED. GROUND NO.5 IS ALLOWED. 6.1 SO FAR AS IT RELATE TO OTHER GROUNDS RELATING TO T.P ADDITION ( GROUND NO.1 TO 4) LD. AR DID NOT PRESS THESE GROUNDS AS REQUIRED RELIEF IS AVAILABLE TO THE ASSESSEE ON ADJUDICATION OF GROUND NO.5 WH ICH IS DECIDED IN FAVOUR OF ASSESSEE. THEREFORE OTHER GROUNDS ARE DISMISSED BEING NOT PRESSED. 7. REST OF THE GROUNDS RELATE TO CORPORATE ISSUES A ND THESE GROUNDS WERE ARGUED BY SHRI YOGESH THAR. IN RESPECT OF GROUND N O.6 & 7 IT WAS SUBMITTED BY LD. AR THAT THESE GROUNDS RELATE TO VIOLATION OF RULE OF NATURAL JUSTICE AS . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 7 ASSESSEE WAS NOT GIVEN REASONABLE AND SUFFICIENT OP PORTUNITY FOR PRODUCING THE RELEVANT MATERIAL TO SHOW THAT NONE OF THE ADDI TIONS WHICH HAVE BEEN CONTESTED IN THIS APPEAL WAS LIABLE TO BE UPHELD. 8. SO FAR AS IT RELATES TO GROUND NO.8 IT IS THE CASE OF LD. AR THAT ALL THE PAYMENTS WHICH HAVE BEEN MADE SUBJECT TO DISALLOWA NCE ARE MADE BEFORE THE DUE DATE OF FILLING RETURN. HE SUBMITTED THAT EVEN IN RESPECT OF EMPLOYEES CONTRIBUTION ACCORDING TO RECENT DECISION OF HONB LE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. NIPSO POLYFABRIKS LTD . 350 ITR 327 (HP) THE PAYMENTS MADE BEFORE THE DUE DATE OF FILING THE R ETURN ARE ALLOWABLE. HE SUBMITTED THAT THE MATTER MAY BE RESTORED BACK TO T HE FILE OF AO FOR VERIFICATION THAT ALL THE PAYMENTS HAVE BEEN MADE B EFORE DUE DATE OF FILING THE RETURN. 9. ON THE OTHER HAND LD. DR RELIED UPON THE ORDER PASSED BY A.O. 10. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. NOW LAW HAS BECOME SETTLED THAT DISALLOWANCE UNDER SECTION 43B CANNOT BE MADE EVEN IN RESPECT OF EMPLOYEES CONTRIBUTION IF THE SAME IS PAID BEFOR E DUE DATE OF FILING THE RETURN. THE CASE LAW RELIED UPON BY LD. AR SUPPORT S SUCH CONCLUSION. THEREFORE WE HOLD THAT NO PART OF PROVIDENT FUND C AN BE DISALLOWED WHETHER IT RELATES TO EMPLOYEES CONTRIBUTION OR EMPLOYERS C ONTRIBUTION IF THE PAYMENT IS MADE BEFORE DUE DATE OF FILING THE RETURN. HERE IT IS THE CASE OF THE ASSESSEE THAT ALL THE PAYMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILING THE RETURN. TO VERIFY SUCH CONTENTION OF THE ASSESSEE THE MATTE R IS RESTORED BACK TO THE FILE OF AO WITH A DIRECTION THAT IF THE PAYMENTS AR E MADE BEFORE DUE DATE OF FILING THE RETURN NO DISALLOWANCE SHOULD BE MADE. WE DIRECT ACCORDINGLY. FOR STATISTICAL PURPOSES THIS GROUND IS CONSIDERED AS A LLOWED IN THE MANNER AFORESAID. . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 8 11. APROPOS GROUND NO.9 IT IS THE CASE OF LD. AR T HAT TDS ON ALL THE ITEMS HAS DULY BEEN DEDUCTED AND PAID. ONLY DUE TO VOLUM INOUS NATURE SAMPLE EVIDENCES WERE SUBMITTED BEFORE THE AO AND LD. DRP. HE THEREFORE SUBMITTED THAT IN THE INTEREST OF JUSTICE MATTER MA Y BE RESTORED BACK TO THE FILE OF AO AS ASSESSEE IS IN A POSITION TO PRODUCE ALL THE EVIDENCES TO SHOW THAT TDS HAS DULY BEEN DEDUCED AND PAID TO THE GOVERNME NT TREASURY FOR THE DISALLOWED AMOUNT. 12. LD. DR RELIED UPON THE ORDERS PASSED BY AO AND LD. DRP. 13. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THEIR SUBMISSIONS WE RESTORE THIS ISSUE TO THE FILE OF AO WITH A DIRECTI ON TO RE-ADJUDICATE THIS ISSUE AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. IF THE AMOUNT OF TDS HAS BEEN DEDUCTED AND PAID TO THE GOVERNMENT TREASURY THEN NO DISALLOWANCE SHOULD BE MADE UNDER SECTION 40(A)(IA ) OF THE ACT. 14. APROPOS GROUND NO.10; THIS ISSUE RELATES TO B ROUGHT FORWARD LOSS AND UNABSORBED DEPRECIATION RELATING TO AMALGAMATED COM PANY NAMELY ALSTOM TRANSPORT LTD. WHICH WAS AMALGAMATED WITH THE ASSE SSEE W.E.F. A.Y 2001-02. TO CLAIM SUCH BROUGHT FORWARD LOSS AND UNABSORBED D EPRECIATION THE ASSESSEE DID NOT SUBMIT CHARTERED ACCOUNTANTS CERTIFICATE A S PRESCRIBED UNDER RULE 9C R.W.S. 72A(2). THE AO REQUIRED THE ASSESSEE TO FURNISH THE SAME. VIDE LETTER DATED 16/10/2009 PHOTOSTAT COPY OF CAS CERT IFICATE IN FORM NO.62 DATED 16/12/2009 WAS SUBMITTED. ACCORDING TO AO AS PER RULE 9C SUCH CERTIFICATE WAS REQUIRED TO BE FURNISHED WITH THE R ETURNS OF INCOME. AS THE RETURN WAS FILED ELECTRONICALLY THE ASSESSEE MAY NO T FIE SUCH CERTIFICATE ALONGWITH THE RETURN THEREFORE AO OBSERVED THAT S UCH CERTIFICATE SHOULD HAVE BEEN READY BEFORE FILING THE RETURN OF INCOME. TH E ASSESSEE DID NOT STATE ANY REASONABLE CAUSE FOR NOT OBTAINING SUCH CERTIFICATE BEFORE DUE DATE OF FILING THE RETURN. THUS AO DISALLOWED A SUM OF RS.6 51 53 0 17/- ON ACCOUNT OF . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 9 ACCUMULATED LOSSES AND A SUM OF RS.1 21 44 325/- ON ACCOUNT OF UNABSORBED DEPRECIATION PERTAINING TO ALSTOM TRANSPORT LTD. 15. IT WAS PLEADED BY LD. AR THAT DURING THE COURSE OF DRAFT ASSESSMENT PROCEEDINGS THE ASSESSEE THOUGH HAD OBTAINED SUCH C ERTIFICATE BEFORE DUE DATE OF FILING THE RETURN BUT THE SAME COULD NOT B E LOCATED. THEREFORE TO FULFILL THE STATUTORY CONDITION CERTIFICATE DATED 1 6/12/2009 WAS SUBMITTED. HOWEVER IN THE PROCEEDINGS BEFORE LD. DRP THE EARL IER CERTIFICATE COPY OF WHICH IS FILED AT PAGE-171 OF THE PAPER BOOK WAS S UBMITTED. LD. AR SUBMITTED THAT THE CONDITION REGARDING FILING OF SU CH FORM ALONGWITH RETURN OF INCOME IS DIRECTORY AND NOT MANDATORY. HE IN THIS REGARD REFERRED TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. CONTIMETERS ELECTRICAL (P) LTD 317 ITR 249 (DEL) WHEREIN IT HAS BEEN HELD THAT PROVISIONS OF SECTION 80IA(7) REQUIRING TO FILE AUDIT REPORT A LONGWITH RETURN OF INCOME ARE NOT MANDATORY BUT DIRECTORY AND IF AUDIT REPORT IS FILED AT ANY DATE BEFORE FRAMING THE ASSESSMENT THEN REQUIREMENT OF SECTION 80 IA(7) WOULD BE MET. LD. AR FURTHER SUBMITTED THAT THE CERTIFICATE DATED 24/10/2006 WAS SUBMITTED TO LD. DRP VIDE LETTER DATED 15/9/2010 C OPY OF WHICH HAS BEEN PLACED AT PAGES 169 TO 170 OF THE PAPER BOOK. IN T HE SAID LETTER IT WAS SUBMITTED THAT THIS FORM COULD NOT BE SUBMITTED DUR ING THE ASSESSMENT PROCEEDINGS AS THE SAME WAS NOT TRACEABLE DUE TO MA NY CHANGES IN THE STAFF AND PERSONS HANDLING THE TAX MATTERS. UNDER THE CI RCUMSTANCES FRESH CERTIFICATE DATED 16/12/2009 WAS OBTAINED AND FILED BEFORE AO UNDER HONEST PLEA THAT THE SAID CERTIFICATE WAS MISPLACED. THE PERMISSION WAS SOUGHT TO SUBMIT THE CERTIFICATE. HE SUBMITTED THAT LD. DRP DID NOT ADMIT SUCH EVIDENCE WITH THE OBSERVATION THAT CERTIFICATE APP EARS TO BE BACK DATED. LD. AR SUBMITTED THAT THE MATTER MAY BE RESTORED BACK T O THE FILE OF AO AS THE ASSESSEE HAS OBTAINED THE AFFIDAVIT FROM THE CONCE RNED CHARTERED ACCOUNTANT TO REFUTE THE ALLEGATION MADE IN THE ORDER OF LD. D RP THAT THE CERTIFICATE APPEARS TO BE BACK DATED. . / ITA NO.8670/MUM/2010 & & & & ' ' ' ' / ASSESSMENT YEAR 2006-07 10 16. ON THE OTHER HAND LD. DR RELIED UPON THE ORDER S OF AO AND LD. DRP. 17. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE CASE WHICH HAVE BEEN DESCRIBED IN DETAIL IN THE AFOREMENTIONED PARA WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE TO THE FILE OF AO WITH A DIRECTION TO RE-ADJUDICATE THE SAME AS PER LAW AFTER GIVING THE ASSESSEE A REA SONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCORDINGLY. FOR STATISTICAL PURPOSES THIS GROUND IS TREATED AS ALLOWED. 18. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 23 /0 7/2013 '1 . /0' #' 2 3&4 23/07/2013 0 . % SD/- SD/- ( . . P.M.JAGTAP ) ( . . / I.P. BANSAL ) '# / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 3& DATED 23/07/2013 '1 '1 '1 '1 . .. . + ;< + ;< + ;< + ;< ='<' ='<' ='<' ='<' / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. + (* / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5.