Bosch Rexroth (India) Ltd., Ahmedabad v. The DY.CIT(OSD),Range-1,, Ahmedabad

ITA 969/AHD/2006 | 2002-2003
Pronouncement Date: 09-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 96920514 RSA 2006
Assessee PAN AAACM9898F
Bench Ahmedabad
Appeal Number ITA 969/AHD/2006
Duration Of Justice 3 year(s) 11 month(s) 19 day(s)
Appellant Bosch Rexroth (India) Ltd., Ahmedabad
Respondent The DY.CIT(OSD),Range-1,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 09-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 09-04-2010
Date Of Final Hearing 05-04-2010
Next Hearing Date 05-04-2010
Assessment Year 2002-2003
Appeal Filed On 20-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING: 8.04.10 DRAFTED ON:8.04.10 ITA NO.969/AHD/2006 ASSESSMENT YEAR : 2002-2003 BOSCH REXROTH (INDIA) LIMITED NR. VATVA RLY. STATION VATVA AHMEDABAD-382 445 VS. THE DY. COMMISSIONER OF INCOME TAX (OSD) RANGE-1 AHMEDABAD. PAN/GIR NO. : AAACM 9898F (APPELLANT) .. (RESPONDENT) ITA NO.1446/AHD/2006 ASSESSMENT YEAR : 2002-2003 THE DY.CIT (OSD) RANGE-1 AHMEDABAD. 3 RD FLOOR JITENDRA CHAMBERS NR. NEW RBI LANE ASHRAM ROAD AHMEDABAD. VS. BOSCH REXROTH (INDIA) LIMITED NR. VATVA RLY. STATION VATVA AHMEDABAD-382 445 PAN/GIR NO. : AAACM 9898F (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI YOGESH SHAH RESPONDENT BY: SHRI B.S.GEHLOT CIT D.R. & SMT. NEETA SHAH SR. D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS)- VI AHMEDABAD DATED 10.03.2006. - 2 - 2. GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) INCLUDING SALES TAX AND EXCISE DUTY IN TOTAL TURNOVER WHILE C OMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. 3. BOTH THE PARTIES AT THE TIME OF HEARING AGREED T HAT THE ISSUE IS NOW STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORD ER OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LAXMI MACHINES WORKS (2007)290 ITR 667 (SC) WHEREIN IT WAS HELD THAT EXCISE DUTY AND SALES TAX ARE NOT INCLUDIBLE IN TOTAL TURNOVER IN THE FORMULA CONTA INED IN SECTION 80HHC(3). RESPECTFULLY FOLLOWING THE DECISION OF T HE SUPREME COURT WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 4. GROUND NO.2 OF THE APPEAL OF THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) NOT ALLOWING DEDUCTION UNDER SECTION 80HHC WITHOUT REDUCING UNAB SORBED DEPRECIATION. 5. BOTH THE PARTIES AGREED AT THE TIME OF THE HEARI NG THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SHIRKE CONSTRUCTION EQ UIPMENT LTD. (2007) 291 ITR 380 (SC) WHEREIN IT WAS HELD THAT SEC. 80H HC IS GOVERNED BY S. 80AB AND UNABSORBED LOSSES OF EARLIER YEARS UNDER S . 72 HAVE TO BE SET OFF - 3 - IN COMPUTING ELIGIBLE PROFITS FOR PURPOSES OF S. 80 HHC. WE ALSO FIND THAT IN THE CASE OF THE ASSESSEE ITSELF IN ASSESSMENT YE AR 2001-02 IN ITA NOS.2543/AHD/2004 AND 2670/AHD/2004 IN THE CROSS AP PEALS FILED BY THE REVENUE AND ASSESSEE VIDE ORDER DATED 29.08.2008 T HE TRIBUNAL ALLOWED THE APPEAL OF THE REVENUE AND RESTORED THE ORDER OF THE LEARNED ASSESSING OFFICER WITH THE DIRECTION TO COMPUTE THE DEDUCTION UNDER SECTION 80HHC OF THE ACT ONLY AFTER SETTING OFF OF BROUGHT FORWAR D LOSSES. THEREFORE WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 6. GROUND NO.3 OF THE APPEAL OF THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) NOT GIVING DIRECTION TO THE LEARNED ASSESSING OFFICER TO ALLOW THE EXPENSES INCURRED AGAINST THE PROVISION MADE FOR AFTER SALES SERVICES IN THE ASSESSMENT YEAR 2001-02 SINCE THE CLAIM WAS NOT ALLOWED IN THAT YEA R IN WHICH PROVISION WAS MADE. 7. ON GOING THROUGH THE MATERIAL ON RECORD AND RIVA L SUBMISSIONS WE DO NOT FIND ANY JUSTIFICATION TO ISSUE ANY DIRECTIO N IN THE MATTER. THIS GROUND WAS NOT SPECIFICALLY RAISED BEFORE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS) AND THERE IS NO FINDING ON THIS ISSUE IN THE IMPUGNED ORDER. SINCE THIS WAS NOT RAISED BEFORE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THEREFORE THERE IS NO QUES TION FOR THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) TO HAVE ISSUED ANY DIRECTION TO THE - 4 - LEARNED ASSESSING OFFICER. THE CLAIM OF DEDUCTION D EPENDS UPON FACTS MATERIAL AND EVIDENCE ON RECORD. NO DIRECTION COULD BE ISSUED WITHOUT ANY BASIS. THERE APPEARS NO GRIEVANCE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THIS GROUND IS MISCONCEIVED AND REJECTED. 8. GROUND NOS.4 AND 5 OF THE APPEAL ARE DIRECTED AG AINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CON FIRMING THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER FOR RS.12 55 500/- BY INVOKING PROVISION OF SECTION 92CA(3) OF THE INCOME TAX ACT 1961. 9. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS DECIDED THIS ISSUE AS UNDER:- 6. AS PER GROUND NO.5 THE APPELLANT HAS OBJECTED TO THE ADDITION OF RS.12 55 500/- U/S.92CA(3) OF THE I.T.ACT. IT WA S OBSERVED BY TPO THAT DURING THE YEAR BRIL HAD INTERNATIONAL TRA NSACTIONS AS PER SECTION 92B OF THE ACT WITH ASSOCIATED ENTERPRI SES. IT WAS FURTHER OBSERVED THAT IN THE AUDIT REPORT THE TOTAL AMOUNT PAID/PAYABLE/RECEIVED/RECEIVABLE AS PER ARM'S LENG TH PRICE COMPUTED BY THE ASSESSEE IS SAME AS TRANSACTION VAL UE SHOWN IN THE BOOKS OF ACCOUNT. BRIL HAS USED COMPARABLE UNCONTRO LLED PRICE METHOD FOR COMPUTING THE ARM'S LENGTH PRICE OF THE PURCHASE OF FINISHED GOODS COST PLUS METHOD FOR COMPUTING THE ALP OF PROVISION OF PRO-ENGINEERING SERVICES AND THE TRANS ACTIONAL NET MARGIN METHOD FOR COMPUTING THE ALP OF REMAINING IN TERNATIONAL TRANSACTIONS. 6.1 IT WAS ALSO OBSERVED THAT BRJL HAS IMPORTED THE FINISHED GOODS FROM THE ASSOCIATED ENTERPRISE WHICH ARE BEING SOL D TO UNRELATED PARTIES IN INDIA. IT WAS FURTHER OBSERVED THAT IN T HE AUDIT REPORT THE ASSESSEE HAS STATED THAT 'IN VIEW OF NATURE OF TRAN SACTIONS IT IS NOT POSSIBLE TO GIVE QUANTITATIVE INFORMATION' THE ASSE SSEE COMPUTED THE ARM'S LENGTH PRICE BY USING COMPARABLE UNCONTRO LLED PRICE - 5 - METHOD. THEREFORE THE TPO ASKED THE ASSESSEE TO SU BMIT DETAILS IN RESPECT OF IMPORT TRADING FROM AES. BY MENTIONING T HEREIN THE COMPONENTS DESCRIPTION IMPORT PRICE NO. OF COMPONE NTS TOTAL IMPORT PRICE ETC. IN THE TP REPORT BRIL HAD MENTIO NED THAT 'FOR THE TRADING ACTIVITIES CARRIED ON BY BANGALORE DIVI SION OF BRIL INTERNAL CUP IS AVAILABLE AS THE GOODS OF THE SAME QUALITY AND STANDARDS ARE SOLD TO THE CUSTOMERS IN INDIA DIRECT LY BY AE. IMPORTED GOODS WERE NEITHER PHYSICALLY-ALTERED NOR ANY VALUE ADDITION HAS BEEN MADE IN INDIA ON SUCH PRODUCTS. T HEY SIMPLY IMPORT THE GOODS FROM THE AE AS PER THE SPECIFICATI ON OF THE CUSTOMER AND SELL IT TO THEM. IT WAS OBSERVED THAT IN THE REPORT BRIL HAS FURTHER MENTIONED THAT THOUGH THE PRICE CH ARGED TO BRIL IS HIGHER THAN THE PRICES CHARGED TO UNRELATED INDI AN CUSTOMERS FOR COMPUTING THE ARM'S LENGTH PRICE AN ADJUSTMENT ON ACCOUNT OF CREDIT PERIOD OF 90 DAYS ALLOWED TO BRIL IN COMPAR ISON TO NO CREDIT PERIOD TO UNRELATED PARTIES IS REQUIRED TO BE MADE TO THE PRICE CHARGED TO UNRELATED PARTIES BY AE. 6.1.1 THE TPO NOTICED THAT PRICE CHARGED FROM BRJL WAS HIGHER THAN THE UNRELATED PARTIES. ON THE BASIS OF FEW INS TANCES PURCHASE ITEMS WHICH WERE GIVEN BY THE APPELLANT TPO FOUND THAT THE ALP IS 94.76% OF THE PRICE PAID BY THE ASSESSEE. CONSIDERI NG THIS RATIO OF TOTAL PURCHASES AS AT ARMS LENGTH THE TPO/AO MADE AN ADDITION OF RS. 12 55 500/- TO THE INCOME OF THE ASSESSEE. 6.2. DURING THE COURSE OF APPELLATE PROCEEDINGS TH E APPELLANT SUBMITTED AS UNDER:- 'DURING THE YEAR UNDER CONSIDERATION APPELLANT HAS ENTERED INTO FOLLOWING TRANSACTIONS WITH THE ASSOCIATED ENTERPRI SES SITUATED OUTSIDE INDIA. PARTICULARS AMOUNT (RS.) PURCHASE OF RAW MATERIAL 19 86 85 211 PURCHASE OF STORES SPARES AND OTHER COMPONENTS 48 15 149 PURCHASE OF FINISHED GOODS 2 39.59 924 SALE OF FINISHED GOODS 3 34.94 304 RECEIPT OF THE COMMISSION 90 25 834 PROVISION OF PRO-ENGINEERING SERVICES 36 44 766 THE LEARNED ASSESSING OFFICER HAS REFERRED THE CASE OF THE APPELLANT TO THE ADDL.CIT TRANSFER PRICING 1 MUMBAI AND HE HAS PASSED ORDER U/S.92CA(3) OF THE ACT ON 11.10.2004. APPELLA NT HAS FILED ITS SUBMISSIONS VIDE ITS SETTERS DATED 1.9.2004 21.9.2 004 AND 29.9.2004 WITH THE TRANSFER PRICING OFFICER. COPIES OF THE SAME ARE ENCLOSED HEREWITH COLLECTIVELY MARKED AS ANNEXURE-F . THE APPELLANT USED COMPARABLE UNCONTROLLED PRICE (CUP) METHOD FOR - 6 - COMPUTING THE ARM'S LENGTH PRICE OF THE PURCHASE OF FINISHED GOODS COST PLUS METHOD FOR COMPUTING THE ALP OF PR OVISION OF PRO-ENGINEERING SERVICES AND THE TRANSACTIONAL NET MARGIN METHOD FOR COMPUTING THE ALP OF REMAINING INTERNATI ONAL TRANSACTIONS. APPELLANT SUBMIT THAT SIMILAR TRANSACTIONS WERE MAD E WITH THE ASSOCIATED ENTERPRISES IN THE EARLIER YEARS WHICH W ERE DULY DISCLOSED IN THE TAX AUDIT REPORT AND THE TRANSACTI ONS WERE DULY ACCEPTED AS AT THE ARM'S LENGTH AND NO ADDITION/DIS ALLOWANCE WAS MADE BY APPLYING SECTION 92 OF THE INCOME-TAX ACT 1961. THE LEARNED TRANSFER PRICING OFFICER WAS SATISFIED WITH THE METHOD APPLIED FOR DETERMINING ALP FOR ALL THE TRANSACTION S OTHER THAN TRADED GOODS. IN RESPECT OF IMPORT OF FINISHED TRADED GOODS THOUG H LEARNED AO ACCEPTED THE COMPARABLE UNCONTROLLED PRICE (CUP) ME THOD AS CORRECT HOWEVER MADE THE ADDITION OF RS.12 55 000 /- BY NOT ACCEPTING THE ADJUSTMENT MADE FOR CREDIT PERIOD AND FURTHER DID NOT ALLOW 5% MARGIN. IT IS SUBMITTED THAT IF THE ADJUSTMENT IS ALLOWED F OR THE CREDIT PERIOD OF THREE MONTHS TO THE APPELLANT AND 5% MARGIN IS A LLOWED THEN THE S A M E A R E W I T H I N T HE RANGE PRESCRIBED AND NO DISALLOWANCE IS REQUIRED TO BE MADE. IT IS SUBMITTED THAT ASSOCIATED ENTERPRISE (AE) IS ALL OWING 180 DAYS CREDIT PERIODS TO US AND INDEPENDENT PARTIES ARE NO T ALLOWED THE PRODUCT BRIL ADJ. FOR INTERES T NET COMPARABL E VALUE WIDIA BFW DRIVES : DKCOI.3-040-7-FW 678.00 20.34 657.66 642.24 643.00 MOTORS MKDO90B-047-KGO- KN 603.00 18.09 584.91 572.00 - CABLES /CONNECTORS IKG4060-10MT 157.00 4.71 1 52.20 140.00 - IKS4374-1 OMT 57.00 1.71 55.29 54.00 - CONTROLS: VTV04.2GN-FW FWA 461 .00 13.83 442.17 436.68 - 7 - CREDIT PERIOD. THOUGH CREDIT IS ALLOWED FOR 180 DAY S WHILE MAKING THE ADJUSTMENT FOR CREDIT PERIOD APPELLANT CONSIDER ED ONLY 90 DAYS CREDIT AND MADE THE ADJUSTMENT FOR 3%. AVERAGE COST OF THE BORROWINGS ARE 12.59% AND THEREFORE ADJUSTMENT IS REQUIRED TO BE MADE FOR 3% (1% FOR EACH MONTH) AND ADJUSTED PRICE WAS WORKED OUT AS UNDER- IT IS SUBMITTED THAT AS PER THE CIRCULAR NO. 12 OF 2001 ISSUED BY THE CBDT MARGIN OF 5% IS TO BE ALLOWED WHILE COMPUTING THE ARM'S LENGTH PRICE. COPY OF THE CIRCULAR IS ENCLOSED HERE WITH MARKED AS ANNEXURE-G. WORKING OF THE ARM'S LENGTH PRICE AFTER APPLYING 5% MARGIN IS AS UNDER: COMPARISON OF THE PRICES ARE AS UNDER: ITEM ADJUSTED PRICES AS SHOWN ABOVE 5% MARGI N COMPARABLE PRICE AFTER 5% MARGIN PRICES CHARGED BY AR ON DIRECT SALE DRIVES 657.66 32.89 624.77 643.00 MOTORS 584.91 29.25 555.66 572.00 CABLES/ CONNECTORS 152.29 55.29 7.61 2.76 144.68 52.53 149.00 54.00 CONTROLS 442.17 22.11 420.06 436.68 FROM THE ABOVE TABLE IT IS QUITE CLEAR THAT AFTER A PPLYING ADJUSTMENT FOR THE CREDIT PERIOD AND 5% MARGIN IN ACCORDANCE W ITH THE CBDT CIRCULAR NO.12 OF 2001 PRICES ARE AT ARM'S LENGTH A ND ADJUSTMENT MADE BY THE TRANSFER PRICING OFFICER IS BAD IN LAW AND REQUIRED TO BE DELETED. WITHOUT PREJUDICE TO ABOVE APPELLANT WOULD LIKE TO STATE AS UNDER: DURING THE ASSESSMENT PROCEEDINGS APPELLANT HAS FIL ED TRADING AND PROFIT AND LOSS ACCOUNT OF THE TRADING ACTIVITIES WHICH SHOWS THAT APPELLANT IS EARNING 31.11% AS GROSS PROFIT AND 10. 58% AS NET PROFITS ON THE TRADING ACTIVITIES. IT IS SUBMITTED THAT WHEN THE APPELLANT IS EARNING THIS HUGE MARGINS IT CANNOT BE SAID THAT PRICES CHARGED BY AE IS NOT AT ARM'S LENGTH PRICE. APPELLA NT ALSO SUBMITTED VIDE ITS LETTER DATED 21.9.2004 THAT APPE LLANT IS SELLING THE PRODUCTS IMPORTED WITH THE HIGH MARGINS. APPELLANT SUBMITTED THAT IT HAS SOLD DRIVES AT RS.69 820 WHICH WAS IMPORTED AT RS.27 798 AND MOTORS AT RS.76 350 WHICH WAS IMPORTED AT RS.24 928. IT IS SUBMITTED THAT WHEN APPELLANT IS EARNING PROFITS WH ICH ARE MORE - 8 - THAN REASONABLE THEN IT CANNOT BE SAID THAT PRICES PAID BY APPELLANT TO ITS AE IS HIGHER. IN ANY EVENT IT IS SUBMITTED THAT TRANSFER PRICING OFFICER HAS MADE THE ADDITION ON THE BASIS OF ASSUMPTION AND PRESUMP TION. ON THE BASIS OF ABOVE : IT WAS SUBMITTED THAT THE ADDITION MADE BY THE TPO/AO BE DELETED.' 6.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND THE FACTS OF THE CASE CAREFULLY. THIS ISSUE HAS BEE N ELABORATELY DISCUSSED BY TPO AT PAGE 3 TO 7 OF THE ORDER. THE APPELLANT'S ARGUMENTS HAS BEEN THAT IT HAS BEEN GRANTED CREDIT PERIOD OF 90 DAYS WHILE OTHER UNRELATED ENTERPRISES WERE NOT GIV EN ANY CREDIT PERIOD BECAUSE OF WHICH THE PRICES CHARGED WAS HIGH ER. THE ARGUMENTS OF THE APPELLATE ARE NEITHER FULLY JUSTIF IED NOR COMPLETELY SUBSTANTIATED. THE APPELLANT HAS MENTIONED THAT IT DID NOT HAVE COMPLETE QUANTITATIVE DETAILS OF VARIOUS ITEMS IMPO RTED FROM AE. THE APPELLANT PROVIDED ONLY FEW INSTANCES OF TRANSA CTIONS WITH UNRELATED ENTERPRISES AND NOT THE COMPLETE RECORDS OF OTHER SIMILAR TRANSACTIONS. ON THE BASIS OF FEW SAMPLES GIVEN BY THE APPELLANT IT WAS NOTICED THAT THE PRICES CHARGED TO THE APPELLAN T WAS HIGHER THAN THE UNRELATED ENTERPRISES OF SIMILAR PRODUCTS 'THERE IS NO EVIDENCE ON RECORD FROM THE CONCERNED AE TO SUBSTAN TIATE THAT THE PRICE DIFFERENCE IS BECAUSE OF CREDIT PERIOD. THE A PPELLANT HAS ALSO NOT USED THE CREDIT PERIOD IN ALL THE TRANSACTIONS. THERE IS NO WRITTEN AGREEMENT BETWEEN THE APPELLANT AND AE TO G RANT CREDIT PERIOD OF 90 DAYS MANDATORILY. IN THE ABSENCE OF AN Y AGREEMENT BETWEEN THE APPELLANT AND AE TO SUBSTANTIATE THE C REDIT PERIOD THE DIFFERENCE IN PRICE CHARGED FROM THE APPELLANT AND THE UNRELATED ENTERPRISES IS NOT EXPLAINED BY THE APPELLANT. CONS IDERING THESE FACTS. I HOLD THAT THE TPO/AO WERE JUSTIFIED IN MAK ING ADJUSTMENTS U/S.92CA(3) OF I.T.ACT. AND ACCORDINGLY THE ADDITIO N IS HEREBY CONFIRMED. THE GROUND OF THE APPELLANT IS DISMISSED . 7. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE THE UNDISPUTED FACTS OF THE CASE ARE THAT ASS ESSEE IMPORTED FINISHED GOODS FROM FRANZ-JOSEF STEGER SALES COORDINATION I NTERNATIONAL WHICH IS - 9 - AN ASSOCIATED ENTERPRISES OF ASSESSEE WITHIN THE ME ANING OF SECTION 92C OF THE ACT. THE TOTAL IMPORT VALUE OF CREDIT GOODS AS PER THE TRANSACTION PRICE ENTERED INTO BOOKS OF ACCOUNT WAS RS.2 39 59 924/-. THE ASSESSEE FURNISHED AUDIT REPORT UNDER SECTION 92E AND AS PER THE SAID AUDIT REPORT ARMS LENGTH PRICE (ALP) DETERMINED ON THE BASIS OF COMPARABLE UNCONTROLLED PRICE METHOD(CUP) WAS SAME WHICH WAS A CTUAL TRANSACTION PRICE MENTIONED IN THE BOOKS OF ACCOUNT. THE LEARNE D ASSESSING OFFICER REFERRED THE ISSUE TO THE TRANSFER PRICING OFFICER (TPO) WHO DETERMINED THE ARMS LENGTH PRICE (ALP) AT A LESSER AMOUNT OF RS.2 27 04 423/- AND THEREAFTER THE LEARNED ASSESSING OFFICER ADDED RS. 12 55 500/- TO THE INCOME OF THE ASSESSEE. 11. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFIC ER BY OBSERVING AS UNDER:- 6.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT AND THE FACTS OF THE CASE CAREFULLY. THIS ISSUE HAS BEE N ELABORATELY DISCUSSED BY TPO AT PAGE 3 TO 7 OF THE ORDER. THE APPELLANT'S ARGUMENTS HAS BEEN THAT IT HAS BEEN GRANTED CREDIT PERIOD OF 90 DAYS WHILE OTHER UNRELATED ENTERPRISES WERE NOT GIV EN ANY CREDIT PERIOD BECAUSE OF WHICH THE PRICES CHARGED WAS HIGH ER. THE ARGUMENTS OF THE APPELLATE ARE NEITHER FULLY JUSTIF IED NOR COMPLETELY SUBSTANTIATED. THE APPELLANT HAS MENTIONED THAT IT DID NOT HAVE COMPLETE QUANTITATIVE DETAILS OF VARIOUS ITEMS IMPO RTED FROM AE. THE APPELLANT PROVIDED ONLY FEW INSTANCES OF TRANSA CTIONS WITH UNRELATED ENTERPRISES AND NOT THE COMPLETE RECORDS OF OTHER SIMILAR TRANSACTIONS. ON THE BASIS OF FEW SAMPLES GIVEN BY THE APPELLANT IT WAS NOTICED THAT THE PRICES CHARGED TO THE APPELLAN T WAS HIGHER THAN THE UNRELATED ENTERPRISES OF SIMILAR PRODUCTS 'THERE IS NO - 10 - EVIDENCE ON RECORD FROM THE CONCERNED AE TO SUBSTAN TIATE THAT THE PRICE DIFFERENCE IS BECAUSE OF CREDIT PERIOD. THE A PPELLANT HAS ALSO NOT USED THE CREDIT PERIOD IN ALL THE TRANSACTIONS. THERE IS NO WRITTEN AGREEMENT BETWEEN THE APPELLANT AND AE TO G RANT CREDIT PERIOD OF 90 DAYS MANDATORILY. IN THE ABSENCE OF AN Y AGREEMENT BETWEEN THE APPELLANT AND AE TO SUBSTANTIATE THE C REDIT PERIOD THE DIFFERENCE IN PRICE CHARGED FROM THE APPELLANT AND THE UNRELATED ENTERPRISES IS NOT EXPLAINED BY THE APPELLANT. CONS IDERING THESE FACTS. I HOLD THAT THE TPO/AO WERE JUSTIFIED IN MAK ING ADJUSTMENTS U/S.92CA(3) OF I.T.ACT. AND ACCORDINGLY THE ADDITIO N IS HEREBY CONFIRMED. THE GROUND OF THE APPELLANT IS DISMISSED . 12. BEFORE US THE MAIN ARGUMENT OF THE ASSESSEE WA S THAT WHILE DETERMINE THE ARMS LENGTH PRICE (ALP) IN ITS CASE BY THE LOWER AUTHORITIES ADJUSTMENT IN RESPECT OF CREDIT PERIOD ALLOWED TO IT BY THE ASSOCIATED ENTERPRISE (AE) WAS NOT MADE. ONCE NECES SARY ADJUSTMENT FOR THE SAME IS MADE THEN IN VIEW OF THE PROVISIONS OF SUB SECTION (2) OF SECTION 92C ARMS LENGTH PRICE (ALP) HAS TO BE TAKE N AS THE SAME AT WHICH TRANSACTION WAS ACTUALLY ENTERED INTO. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE OBJECTE D AGAINST THE SUBMISSION OF THE ASSESSEE AND STATED THAT NO EVIDE NCE WAS FURNISHED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES TO SHOW T HAT ANY CREDIT PERIOD WAS ALLOWED TO THE ASSESSEE AND THE INVOICE RAISED BY ASSOCIATED ENTERPRISE(AE) DOES NOT INDICATE ANY CREDIT PERIOD WAS ALLOWED TO THE ASSESSEE. IN ABSENCE OF SUCH AN EVIDENCE THE LOWER AUTHORITIES WERE JUSTIFIED IN NOT ALLOWING ANY ADJUSTMENT IN RESPECT OF CREDIT PERIOD CLAIMED BY THE ASSESSEE AS ALLOWED TO IT BY THE ASS OCIATED ENTERPRISE(AE). - 11 - 14. WE FIND THAT THE ADJUSTMENT FOR CREDIT PERIOD W AS NOT ALLOWED TO THE ASSESSEE IN DETERMINING ARMS LENGTH PRICE (ALP) O N THE GROUND THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO SHOW THA T CREDIT PERIOD WAS ALLOWED TO IT AND DECLARATION OF ASSOCIATED ENTERPR ISE (AE) TO THE EFFECT THAT MORE PRICE WAS CHARGED FROM THE ASSESSEE IN CO MPARE TO OTHERS ONLY FOR THE REASON THAT CREDIT PERIOD WAS ALLOWED TO TH E ASSESSEE WHICH WAS NOT ALLOWED TO THE OTHERS. 15. THE ASSESSEE HAS SUBMITTED A CERTIFICATE DATED 1.12.2008 ISSUED BY THE ASSOCIATED ENTERPRISE WHEREIN THE ASSOCIATED EN TERPRISE HAS STATED AS UNDER:- BOSCH REXROTH (I) LTD PLOT 96 PHASE III PEENYA BANGLORE INDIA. BOSCH REXROTH AG POSTFACH 1357 97803 LOHR AM MAIN BGM.-DR.-NEBEL-STR.2 97816 LOHR AM MAIN TEL. +49 9352 40-0 WWW.BOSCHREXROTH.COM FRANZ-JOSEF STEGER SALES COORDINATION INTERNATIONA L TEL. 09352/40-4962 FAX 09352/40-4460 FRANZ-JOSEF.STEGER@BOSCHREXROTH.DE CREDIT CONFIRMATION DEAR SIRS THIS IS TO CONFIRM THAT BRC GERMANY HAS GRANTED A TRADE CREDIT OF 120 DAYS TO BOSCH REXROTH (INDIA) LIMITED ON ALL SUPPL IES OF MATERIALS AND COMPONENTS MADE DURING THE CALENDAR YEAR 2001 2002 AND 2003. - 12 - WE FURTHER CONFIRM THAT WE HAVE NOT CHARGED ANY INT EREST TO BOSCH REXROTH (INDIA) LIMITED FOR THE SAID CREDIT PERIOD OR A PART OF THE SAME. WHEN WE SELL OUR PRODUCTS DIRECTLY TO OTHER CUSTOME RS IN INDIA WE INSIST ON SIGHT LC DOCUMENTS AND GIVE NO TRADE CREDIT. THANK YOU YOURS SINCERELY BRC DIVISION F-J STEDER MANAGER SALES- ASIA 16. THE ASSESSEE SUBMITTED THAT THE ABOVE CERTIFICA TE COULD NOT BE FILED BEFORE THE LOWER AUTHORITIES AS THE SAME WAS RECEIV ED LATER ON AND THE LOWER AUTHORITIES NEVER REQUIRED THE ASSESSEE TO FU RNISH SUCH A CERTIFICATE AND HAS DRAWN ADVERSE INFERENCE ONLY DUE TO ABSENCE OF SUCH CERTIFICATE. THE ASSESSEE ALSO POINTED THAT THE FACT OF CREDIT P ERIOD AVAILABLE TO THE ASSESSEE WAS MENTIONED IN THE PURCHASE ORDER OF THE ASSESSEE WHICH WAS FILED BEFORE THE LOWER AUTHORITIES AND THE EVIDENCE NOW FILED WAS ONLY TO SUPPORT THE EVIDENCE WHICH WAS FILED EARLIER. 17. WE FIND THAT THE CERTIFICATE DATED 1.12.2008 NO W FILED BY THE ASSESSEE WAS NOT AVAILABLE BEFORE THE LOWER AUTHORI TIES AND THEREFORE COULD NOT BE TAKEN INTO CONSIDERATION BY THEM FOR D ETERMINING THE ARMS LENGTH PRICE (ALP). IN THE CIRCUMSTANCES IN OUR C ONSIDERED OPINION IT SHALL BE IN THE INTEREST OF THE JUSTICE TO REMIT TH E ISSUE BACK TO THE FILE OF - 13 - THE LEARNED ASSESSING OFFICER AS THE CERTIFICATE NO W FILED GOES TO THE ROOT OF THE MATTER AND REQUIRES VERIFICATION BY THE LEAR NED ASSESSING OFFICER BEFORE ACCEPTING THE SAME. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE LEARNED ASSESSING OFFICE R TO VERIFY THE CERTIFICATE AND THEREAFTER REDECIDE THE ISSUE AFRES H AS PER LAW AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. THUS THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. 18. GROUND NO.1 OF REVENUES APPEAL IS DIRECTED AGA INST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) GIVING RELIEF OF RS.2 95 444/- ON ACCOUNT OF LIQUIDATED DAMAGES. 19. THE BRIEF FACTS ARE THAT THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DEBITED RS.2 95 444/- UNDER THE HE AD LIQUIDATED DAMAGES IN THE PROFIT & LOSS ACCOUNT. THE LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT SIMILAR ISSUE WAS CONSIDERED IN THE E ARLIER YEARS IN THE CASE OF THE ASSESSEE AND THE CLAIM MADE FOR LIQUIDATED D AMAGES PERTAINING TO EARLIER YEAR WAS REJECTED. FOR THE SAME REASON THE LIQUIDATED DAMAGES CLAIMED BY THE ASSESSEE IN THE YEAR UNDER APPEAL WA S DISALLOWED. 20. IN APPEAL THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) OBSERVED THAT THE CLAIM FOR LIQUIDATED DAMAGES WAS ALLOWED IN THE ASSESSMENT YEAR 2001-02 BY HIS PREDECESSOR VIDE OR DER DATED - 14 - 17.06.2004 IN APPEAL NO.CIT(A)-V/WD.1(1)/167/2003-0 4. THE CLAIM OF THE ASSESSEE FOR LIQUIDATED DAMAGES WAS ALSO ALLOWE D BY HIS PREDECESSOR IN ASSESSMENT YEARS 1998-99 AND 1994-95 OBSERVING T HAT THE LIABILITIES CRYSTALLIZED DURING THE YEAR AND THAT IT WAS A NORM AL BUSINESS EXPENDITURE. HE THEREFORE FOLLOWING THE DECISIONS OF THE EARLIE R YEARS IN THE CASE OF THE ASSESSEE DELETE THE ADDITION OF RS.2 95 444/-. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE CLAIM FOR LIQUIDATED DAMAGES ALLOWED BY THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) WAS APPEALED AGAINST BY THE DEPARTMENT BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 1994-95 1996-97 1997-98 1998- 99 AND 2001-02 AND THE TRIBUNAL CONFIRMED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND DISMISSED THE APPEAL OF THE REVENUE. AS THE FACTS IN THE APPEAL OF THE PRESENT YEAR ARE IDENTIC AL THEREFORE THE GROUND OF APPEAL OF THE REVENUE SHOULD BE DISMISSED BY FOLLOW ING THE DECISION OF THE TRIBUNAL IN THE EARLIER YEARS IN THE CASE OF TH E ASSESSEE. 22. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD N OT DISPUTE THE ABOVE SUBMISSION OF THE LEARNED AUTHORISED REPRESEN TATIVE OF THE ASSESSEE. - 15 - 23. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. WE FIND THAT IN THE ASSESSMENT YEAR 1994-95 1996-97 1997-98 1998-99 THE TRIBUNAL IN ITA NOS.2840 2841 2849 AND 2850/AHD/2002 VIDE CON SOLIDATED ORDER DATED 31.08.2007 HELD AS UNDER:- 10. IN ITA NOS.2840 2841 2849 AND 2850/AHD/2002 THE FIRST COMMON GROUND RELATES TO DELETION OF THE DISALLOWAN CE MADE BY THE LEARNED ASSESSING OFFICER IN RESPECT OF LIQUIDATED DAMAGES. THE LEARNED AR OF THE ASSESSEE AT THE OUTSET CONTENDED THAT THIS ISSUE IS DULY COVERED BY THE DECISION OF THIS TRIBUNAL IN IT A NO.918/AHD/1991. THE LEARNED DR HAS CONCEDED THE P OSITION. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AN D PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE O RDER OF THE TRIBUNAL IN ITA NO.918/AHD/1991. THE TRIBUNAL IN PA RA-3 OF THE ORDER HAS HELD AS UNDER:- 21. WE HAVE CONSIDERED AND RIVAL SUBMISSIONS FACT S AND MATERIALS ON RECORD. WE AGREE WITH THE LD. CIT(A) T HAT THE DAMAGE CLAIMED WHICH DOES NOT RELATE TO CONTRAVENTI ON OF ANY STATUTORY RULE HAS TO BE ALLOWED AS AN ADMISSIB LE DEDUCTION. IN THE CASE OF SARDAR PRIT INDER SINGH V . CIT 160 ITR 493 THE HON'BLE PATNA HIGH COURT HELD THAT THE DAMAGES PAID FOR THE DELAY IN SUPPLYING GOODS AND MATERIALS SHOULD BE ALLOWED AS A DEDUCTION. NO MATERIALS HAVE BEEN BROU GHT INTO RECORD TO CONTRADICT THE FINDING OF THE LD. CIT(A) THAT DURING THE YEAR THE ASSESSEE WAS AWARE OF SUCH DAMAGE PAYA BLE BY IT. THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS UP HELD AND THIS GROUND OF THE REVENUE IS REJECTED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E TRIBUNAL WE DISMISS THE GROUND TAKEN BY THE REVENUE. 24. SIMILARLY IN THE ASSESSMENT YEAR 2001-02 IN I TA 2543/AHD/2004 AND ITA 2670/AHD/2004 VIDE ORDER DATED 29.08.2008 TRIBUNAL HELD AS UNDER:- - 16 - 7.1. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE ITAT IN THEIR D ECISION DATED 31.08.2007 IN THE TAXPAYERS OWN CASE FOR THE AY 1 995-96 HELD THAT 3. AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIO NS AND PERUSAL OF THE MATERIAL ON RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW WE FIND THAT THE FIRST GROUND WHICH RELATES TO THE DISALLOWANCE OF LIQUIDATED DAMAGES OF RS.2 88 570 I S COVERED BY THE DECISION OF THE TRIBUNAL IN THE AFORESAID CASE FOR ASST. YEAR 1992-93 WHEREIN THE TRIBUNAL UNDER PARA 6 AND 7 HA S HELD AS UNDER: 6. IN OUR CONSIDERED VIEW THE DECISION OF THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) IS FAIR AND REASONABLE. THE EFFECT OF THE ORDER OF THE CIT(A) I S THAT A DEDUCTION OF RS.74 423/- HAS BEEN ALLOWED IN THE YE AR UNDER APPEAL. BESIDES DIRECTIONS FOR ALLOWANCE ON DEDUCT ION OF RS.1 31 674/- HAVE BEEN GIVEN FOR ALLOWANCE ON DEDU CTION OF RS.1 31 674/- HAVE BEEN GIVEN FOR ALLOWANCE IN THE YEAR OF PAYMENT. SINCE THE DIRECTIONS OF THE CIT(A) ARE JU ST AND REASONABLE WE DECLINE TO INTERFERE. 7. IT MAY BE PERTINENT TO MENTION THAT THE ASSESSEE HAS PLEADED FOR ISSUE OF DIRECTIONS FOR ALLOWANCE OF DE DUCTION IN THE RESPECTIVE YEAR(S) AS AN ALTERNATIVE IN REGARD TO THIS DISALLOWANCE IN REGARD TO THIS DISALLOWANCE. WE HAV E CONFIRMED THE DIRECTIONS OF THE CIT(A) AND THEREFOR E HIS DIRECTIONS SHALL BE CONSTRUED TO BE DIRECTIONS OF T HE TRIBUNAL AS WELL. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E TRIBUNAL WE DIRECT THE LEARNED ASSESSING OFFICER TO ALLOW THE D EDUCTION TO THE ASSESSEE IN RESPECT OF LIQUIDATED DAMAGES IN THE YE AR OF PAYMENT. THUS THE GROUND STANDS DISMISSED. 7.2 IN VIEW OF THE AFORESAID FINDINGS OF THE ITAT ESPECIALLY WHEN IT HAS NOT BEEN DENIED THAT FACTS IN THE YEAR CONSIDERATION ARE SIMILAR TO THE FACTS OBTAINING IN THE AY 1995-96 AN D THE REVENUE HAVE NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISIO N WE DIRECT THE AO TO ALLOW THE DEDUCTION TO THE TAXPAYER IN RESPEC T OF LIQUIDATED DAMAGES IN THE YEAR OF PAYMENT. ACCORDINGLY GROUND NO.1 OF THE APPEAL OF THE REVENUE IS DISMISSED. - 17 - 25. FACTS BEING IDENTICAL AND IN THE ABSENCE OF ANY DISTINGUISHING FEATURES POINTED OUT BY THE LEARNED DEPARTMENTAL RE PRESENTATIVE RESPECTFULLY FOLLOWING THE PRECEDENT WE DISMISS TH IS GROUND OF APPEAL OF THE REVENUE. 26. GROUND NO.2 IN REVENUES APPEAL IS DIRECTED AGA INST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETIN G THE ADDITION OF RS.5 74 895/- ON ACCOUNT OF PROVISION FOR AFTER SAL ES SERVICE. 27. THE BRIEF FACTS ARE THAT LEARNED ASSESSING OFFI CER FOUND THAT THE ASSESSEE HAS DEBITED RS.5 74 895/- AS PROVISION FOR AFTER SALE SERVICE IN THE PROFIT AND LOSS ACCOUNT. THE LEARNED ASSESSING OFFI CER ALSO OBSERVED THAT SIMILAR ISSUE WAS CONSIDERED IN THE EARLIER YEAR AL SO AND CLAIM OF THE ASSESSEE WAS REJECTED. HE FOR THE SAME REASON AS I N THE EARLIER YEARS DISALLOWED THE CLAIM OF THE ASSESSEE. 28. IN APPEAL THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) OBSERVED THAT THE ASSESSEE FILED COPY OF ORDER OF T HE TRIBUNAL IN THE CASE OF THE ASSESSEE PASSED IN ASSESSMENT YEAR 1984-85 A ND ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN ASSE SSMENT YEAR 1998-99 WHEREIN THE ADDITION MADE WAS DELETED. FO LLOWING THE SAID ORDERS THE LEARNED COMMISSIONER OF INCOME TAX(APPE ALS) DELETED THE ADDITION IN THIS YEAR ALSO. - 18 - 29. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE SUBMITTED THAT IN THE ASSESSMENT YEAR 1998-99 THE TRIBUNAL H AD CONFIRMED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) DELETING THE DISALLOWANCE OF PROVISION MADE FOR AFTER SALE SERVI CE. HE FURTHER SUBMITTED THAT IN ASSESSMENT YEAR 2001-02 THE MATT ER WAS SET ASIDE BY THE TRIBUNAL TO THE FILE OF THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS). HE SUBMITTED THAT FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2001-02 THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 30. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT DISPUTE THE SUBMISSION MADE BY THE LEARNED AUTHORISED REPRESENT ATIVE OF THE ASSESSEE. 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. WE FIND THAT THE TRIBUNAL IN THE ASSESSMENT YEAR 2001-02 IN ITA NO.2 670/AHD/2004 VIDE ORDER DATED 29.08.2008 HELD AS UNDER:- 2.2 WE FIND THAT IN THE AFORESAID ORDER DATED 31. 08.2007 THE ITAT IN TAXPAYERS OWN CASE HELD AS UNDER:- 4. THE NEXT GROUND RELATES TO THE DISALLOWANCE OF THE PROVISION MADE FOR AFTER SALE SERVICE AMOUNTING TO RS.8 44 526/-. IN THIS REGARD THE TRIBUNAL IN AY 19 92-93 IN ITA NO.4158/AHD/1995 VIDE ORDER DATED 18.09.2001 UN DER PARA-17 HAS HELD AS UNDER:- - 19 - 17. THE LAST GROUND OF APPEAL IS RELATING TO THE D EDUCTION ON ACCOUNT OF PROVISION FOR AFTER SALES SERVICE. TH E AO DISALLOWED THE CLAIM ON THE GROUND THAT THE ACTUAL EXPENDITURE HAS BEEN INCURRED IN THE SUBSEQUENT ASS ESSMENT YEAR AND THE DEDUCTION WOULD BE PERMISSIBLE IN THE YEAR OF CRYSTALLIZATION OF THE LIABILITY ON ACCOUNT OF WARR ANTY OBLIGATION. THE LD. COUNSEL FOR THE ASSESSEE HAS RE LIED UPON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2010/AHD/1994 FOR ASSESSMENT YEAR 1991-92 PARA 7 OF THE ORDER. IT HAS FURTHER BEEN CLARIFIED BEFORE US THAT THE PROVISION IS BEING MADE BY THE ASSESSEE ON THE BASI S OF ACTUAL EXPENDITURE INCURRED IN THE SUBSEQUENT ASSESSMENT Y EAR RELATING TO THE SALES MADE IN THE RELEVANT PREVIOUS YEAR. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) WE DISMISS THIS GROUND OF APPEAL RAISED BY THE REVENUE. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E TRIBUNAL WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE O RDER OF THE CIT(A) ON THIS ISSUE AND ACCORDINGLY DISMISS THIS G ROUND. 2.2 HOWEVER IN THE CASE UNDER CONSIDERATION THE T AXPAYER FAILED TO SUBSTANTIATE THEIR CLAIM BEFORE THE LD. CIT(A) D ESPITE SUFFICIENT OPPORTUNITY ALLOWED AND INSTEAD STATED BEFORE HIM T HAT IT WAS NOT POSSIBLE TO PRODUCE EVIDENCE IN SUPPORT OF THE CLAI M. BEFORE US THERE IS NOTHING TO SUGGEST THAT THE PROVISION IS B EING MADE BY THE TAXPAYER ON THE BASIS OF ACTUAL EXPENDITURE INCURRE D IN THE SUBSEQUENT ASSESSMENT YEAR RELATING TO THE SALES MA DE IN THE RELEVANT PREVIOUS YEAR AS WAS THE CASE IN AY 1992- 93 MENTIONED BY THE ITAT IN THEIR AFORESAID DECISION WHILE THE R EVENUE HAVE NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISION. ACCORD INGLY IN THE INTEREST OF JUSTICE WE RESTORE THE MATTER TO THE F ILE OF THE LD. CIT(A) WITH THE DIRECTIONS TO RE-EXAMINE THE CLAIM IN THE LIGHT OF AFORESAID DECISION OF THE ITAT AFTER ALLOWING SUFFI CIENT OPPORTUNITY TO THE TAXPAYER TO ESTABLISH THEIR CLAIM AND THEREA FTER ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. THUS GROUND NO.1 IN THE APPEAL OF THE TAXPAYER IS DISPOSED OF AS INDICATED HEREINABOVE. 32. FACTS BEING IDENTICAL RESPECTFULLY FOLLOWING T HE PRECEDENT WE SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED COMMISS IONER OF INCOME TAX(APPEALS) WITH THE SAME DIRECTIONS AS GIVEN IN T HE ASSESSMENT YEAR - 20 - 2001-02 BY THE TRIBUNAL AS QUOTED ABOVE. THUS THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 33. IN THE RESULT APPEAL OF THE ASSESSEE AND THAT OF THE REVENUE BOTH ARE PARTLY ALLOWED AS ABOVE. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 09/04/2010. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 09/04/2010 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VI AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD