Techbooks International Pvt. Ltd., Noida v. ACIT, Noida

MA 244/DEL/2020 | 2012-2013
Pronouncement Date: 23-03-2021 | Result: Dismissed

Appeal Details

RSA Number 24420124 RSA 2020
Assessee PAN AABCT3774A
Bench Delhi
Appeal Number MA 244/DEL/2020
Duration Of Justice 5 month(s) 18 day(s)
Appellant Techbooks International Pvt. Ltd., Noida
Respondent ACIT, Noida
Appeal Type Miscellaneous Application
Pronouncement Date 23-03-2021
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted I2
Tribunal Order Date 23-03-2021
Assessment Year 2012-2013
Appeal Filed On 05-10-2020
Judgment Text
PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2: NEW DELHI BEFORE MS. SUCHITRA KAMBLE JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) MA NO. 244/DEL/2020 (IN ITA NO. 6402/DEL/2016) (ASSESSMENT YEAR: 2012-13) TECHBOOKS INTERNATIONAL PVT. LTD PLOT NO. 37 GAUTAM BUDH NAGAR NOIDA PAN: AABCT3774A VS. ACIT CIRCLE-3 NOIDA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. S. AGGARWAL SR. ADV SHRI R. P. MALL ADV REVENUE BY: SHRI M. BERNWAL SR. DR DATE OF HEARING 15/01/2021 DATE OF PRONOUNCEMENT 23/03/2021 O R D E R PER PRASHANT MAHARISHI A. M. 1. THIS MISCELLANEOUS APPLICATION IS FILED IN ITA NO. 6102/DEL/2016 PASSED FOR ASSESSMENT YEAR 2012-13 ON 06.07.2020. THE MISCELLANEOUS APPLICATION STATES THAT THERE ARE CERTAIN INADVERTENT ERRORS IN THE ORDER OF THE COORDINATE BENCH AND THEREFORE IT IS REQUIRED TO BE RECALLED TO RECTIFY THE ABOVE MISTAKE. 2. THE MISCELLANEOUS APPLICATION OF THE ASSESSEE FROM PARA NO. 2 ONWARDS TO PARA 10 SUBMITS AS UNDER:- 2. IT IS RESPECTFULLY SUBMITTED THAT ON THE PERUSAL OF THE AFORESAID ORDER IT IS NOTED THAT THE FOLLOWING INADVERTENT ERRORS HAVE CREPT IN THE ORDER DISPOSING OFF THE APPEAL. THE APPLICANT THUS PRAYS BY WAY OF INSTANT APPLICATION THAT SUCH MISTAKES WHICH ARE DETAILED HERE BELOW MAY KINDLY BE RECTIFIED IN TERMS OF PROVISIONS OF SECTION 254(2) OF THE ACT. 3. IT IS RESPECTFULLY SUBMITTED THAT IN THE INSTANT APPEAL IN THE MEMO OF THE APPEAL THE ASSESSEE HAS RAISED AS MANY AS SIX GROUNDS OF APPEAL (NOTED IN PARA 2 OF THE ORDER) AND APART FROM THE GROUNDS RAISED IN THE MEMO OF THE APPEAL IT HAS RAISED ADDITIONAL GROUNDS OF APPEAL WHICH HAS ALSO BEEN NOTED IN THE ORDER OF THE HONBLE TRIBUNAL IN PARA 8. THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE NUMBERED AS GROUND NO. 5.1 AND GROUND NO 7. 3.1 IT IS SUBMITTED THAT THE HONBLE TRIBUNAL WAS PLEASED TO ADMIT ADDITIONAL GROUND NO. 5.1 BY HOLDING THAT SUCH GROUND IS LEGAL GROUND AND CAN BE RAISED BY THE ASSESSEE. THE AFORESAID ADDITIONAL GROUND RAISED BY THE ASSESSEE READS AS UNDER: PAGE | 2 5.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED I AO/TPO/DRP ERRED IN NOT CONSIDERING THE BENCHMARKING OF OUTSTANDING I RECEIVABLE BY APPLYING THE AGGREGATED APPROACH THEREBY IGNORING THE FACT 1 THAT WORKING CAPITAL ADJUSTMENT TAKES INTO ACCOUNT THE IMPACT OF | OUTSTANDING RECEIVABLES ON THE PROFITABILITY. 3.2 IT IS RESPECTFULLY SUBMITTED THAT IN RESPECT OF THE AFORESAID ADDITIONAL GROUND WHICH HAS BEEN HELD BY THE HONBLE TRIBUNAL AS PURELY LEGAL GROUND CAN BE RAISED THE ASSESSEE IN ITS CASE SYNOPSIS FILED ON 12.03.2020 HAS SPECIFICALLY SUBMITTED AS UNDER: 3.2.4 WORKING CAPITAL ADJUSTMENT TAKES INTO ACCOUNT THE IMPACT OF OUTSTANDING RECEIVABLES AND THEREFORE THE MOST APPROPRIATE WAY OF BENCHMARKING: A WORKING CAPITAL ADJUSTMENT WAS UNDERTAKEN BY THE ASSESSEE FOR THE COMPARABLE COMPANIES SELECTED IN THE TP REPORT (REFER PAGE 213 OF PAPAR BOOK) RELIANCE IS PLACED ON THE CASE OF KUSUM HEALTHCARE PRIVATE LIMITED VS. ACIT (ITA NO. 6814/DEL/2014) WHEREIN THE HON'BLE ITAT HAS EVALUATED THE NEED TO UNDERTAKE WORKING CAPITAL ADJUSTMENT AND CONCURRED WITH THE CONTENTIONS OF THE ASSESSEE THAT WORKING CAPITAL ADJUSTMENT TAKES INTO ACCOUNT THE IMPACT OF OUTSTANDING RECEIVABLES ON THE PROFITABILITY. THE RELEVANT EXTRACT IS REPRODUCED BELOW FOR YOUR HONOUR REFERENCE: PARA 7 THE APPROPRIATE ADJUSTMENTS NEED TO BE CONSIDERED TO BRING PARITY IN THE WORKING CAPITAL INVESTMENT OF THE ASSESSEE AND THE COMPARABLES RATHER THAN LOOKING AT THE RECEIVABLE INDEPENDENTLY. SUCH WORKING CAPITAL ADJUSTMENT TAKES INTO ACCOUNT THE IMPACT OF OUTSTANDING RECEIVABLES ON THE PROFITABILITY PARA 8 ACCORDINGLY WHILE CALCULATING THE WORKING CAPITAL ADJUSTED OPERATING MARGIN ON COSTS OF THE COMPARABLE COMPANIES THE IMPACT OF OUTSTANDING RECEIVABLES ON THE PROFITABILITY HAS BEEN TAKEN INTO ACCOUNT. IF THE PRICING/ PROFITABILITY OF THE ASSESSEE ARE MORE THAN THE WORKING CAPITAL ADJUSTED MARGIN OF THE COMPARABLES THEN ADDITIONAL IMPUTATION OF INTEREST ON THE OUTSTANDING RECEIVABLES IS NOT WARRANTED. PARA 10 10. THE ABOVE ANALYSIS DEMONSTRATES THAT THE DIFFERENTIAL IMPACT OF WORKING CAPITAL OF THE VIS-A-VIS ITS COMPARABLES HAS ALREADY BEEN FACTORED IN THE PRICING/PROFITABILITY OF THE ASSESSEE WHICH IS MORE THAN THAT WORKING CAPITAL ADJUSTED MARGIN OF THE COMPARABLES. HENCE ANY FURTHER ADJUSTMENT TO THE IS MARGINS OF THE ASSESSEE ON THE PRETEXT OF OUTSTANDING RECEIVABLES UNWARRANTED AND WHOLLY UNJUSTIFIED. THE HONBLE DELHI HIGH COURT CONFIRMED THE DECISION OF THE TRIBUNAL IN 1TA 765/2016. THIS DECISION WAS ALSO FOLLOWED BY HON 'BLE TRIBUNAL IN THE CASE OF BECHTEL INDIA PVT LTD VS. DCIT (ITA 1478/DEL/2015) WHICH HAS BEEN APPROVED BY HONBLE DELHI HI COURT AND HONBLE SUPREME COURT OF INDIA. PAGE | 3 THE HON'BLE IT AT ACKNOWLEDGED THE NEED TO UNDERTAKE WORKING CAPITAL ADJUSTMENT TO BRING PARITY IN THE WORKING CAPITAL INVESTMENT OF THE TESTED PARTY AND THE COMPARABLES RATHER THAN LOOKING AT THE RECEIVABLE INDEPENDENTLY. 3.2.5 WORKING CAPITAL ADJUSTMENT ON TPO/DRP COMPARABLE COMPANIES: AFTER ALLOWING WORKING CAPITAL ADJUSTMENT THE MARGINS WOULD BE AS BELOW: SL NO. COMPANY NAME UNADJUSTED MARGINS ADJUSTED MARGINS 1 ACCENTIA TECHNOLOGIES LIMITED 11.21% 12.61% 2 ACROPETAL TECHNOLOGIES LIMITED (SEGMENTAL) 9.64% 3.25% 3 ECLERX SERVICES LIMITED 61.21% 64.14% 4 EXCEL INFOWAY LIMITED (SEGMENTAL) 41.48% 34.05% 5 INFORMED TECHNOLOGIES INDIA LIMITED 7.10% 8.61% 6 E4E HEALTHCARE BUSINESS SERVICES PRIVATE LIMITED 13.45% 13.45% 7 JINDAL INTELLICOM PRIVATE LIMITED 1.54% 3.73% 8 CALIBER POINT BUSINESS SOLUTIONS LIMITED 9.08% 10.92% 9 MICROGENETICS SYSTEMS LIMITED 20.41% 22.91% ARITHMETIC MEAN 19.46% 19.30% * COMPUTATION HAS BEEN DONE USING INTEREST RATE AS PER DRP DIRECTIONS. 3.2.6 COMPUTATION OF +/- 5% RANGE: PARTICULARS OP/OC +5% -5% OPERATING REVENUE 1 68 37 87 476 1 76 79 76 850 1 59 95 98 102 OPERATING COST 1 45 73 00 531 1 45 73 00 531 1 45 73 00 531 OPERATING PROFIT 22 64 86 945 31 06 76 319 14 22 97 571 OPERATING MARGIN 15.54% 21.32% 9.76% PRAYER IN VIEW OF THE ABOVE FACTS IT IS PRAYED BEFORE THIS AUGUST COURT THAT THE APPELLANT BE GRANTED THE BENEFIT OF WORKING CAPITAL ADJUSTMENT AS THE APPELLANT IS OF THE BELIEF THAT SHOULD SUCH ADJUSTMENT BE ALLOWED THERE WOULD NOT BE ANY ADDITIONAL TAX PAYABLE ON ACCOUNT OF NOTIONAL INTEREST ON OUTSTANDING RECEIVABLES. 3.3 IT IS SUBMITTED THAT IN THE CASE SYNOPSIS THE ASSESSEE IN PARA 3.2.5 HAS ALSO GIVEN A TABLE OF UNADJUSTED MARGIN AND ALSO THE ADJUSTED MARGINS OF THE COMPARABLE ADOPTED BY THE LEARNED TPO/AO IN THE FINAL ORDER OF. INFACT IN THE CASE SYNOPSIS THE ASSESSEE ALSO REFERRED PAGE 213 OF THE PAPER BOOK WHICH IS ANNEXURE-5 OF THE TP REPORT WHEREIN THE ASSESSEE HAS PROVIDED THE WORKING CAPITAL ADJUSTED MARGINS OF THE COMPARABLES. IT WOULD BE SEEN FROM THE TABLE THAT ARITHMETIC MEAN OF THE UNADJUSTED MARGIN OF THE COMPARABLE HAS BEEN COMPUTED AT 19.46% WHEREAS WORKING CAPITAL ADJUSTED MARGIN OF THE COMPARABLE COMES TO 19.30% WHICH IS BELOW THE +1-5% OF THE MEAN MARGIN PROFIT OF THE ASSESSEE AND REQUIRING NO FURTHER ADJUSTMENT AND HENCE IT WAS PRAYED THAT NO SEPARATE ADJUSTMENT IN RESPECT OF THE NOTIONAL INTEREST BN RECEIVABLES IS WARRANTED. 3.4 IT IS HOWEVER SUBMITTED THAT HONBLE TRIBUNAL REJECTED THE AFORESAID ADDITIONAL LEGAL GROUND MAINLY ON THE FOLLOWING REASONS AS CAN BE SEEN FROM PARA 19-20 OF THE ORDER: PAGE | 4 I. TOTAL SHAREHOLDERS FUNDS ARE AVAILABLE WITH ITS ASSOCIATED ENTERPRISE AS AN INTEREST FREE TRADE RECEIVABLE SHOWS THAT OUTSTANDING RECEIVABLE FROM THE ASSOCIATED ENTERPRISE IS NOT AT ALL THE TRANSACTION OF SALE OF GOODS/SERVICES TO THE ASSESSEE; II. THE LEARNED AUTHORISED REPRESENTATIVE COULD NOT SHOW ANY DOCUMENT WHEREBY THE ASSESSEE HAS MADE ANY REQUEST BEFORE THE LEARNED TRANSFER PRICING OFFICER OR BEFORE THE LEARNED DISPUTE RESOLUTION PANEL WITH RESPECT TO GRANTING OF WORKING CAPITAL ADJUSTMENT AND EVEN IN THE TRANSFER PRICING STUDY REPORT SUBMITTED BY THE ASSESSEE WHICH IS PLACED AT PAGE NUMBER 150 - 215 OF THE PAPER BOOK THE LEARNED AUTHORISED REPRESENTATIVE COULD NOT SHOW THAT ASSESSEE HIMSELF HAS CLAIMED ANY WORKING CAPITAL ADJUSTMENT WHILE PREPARING ITS COMPARABILITY ANALYSIS. 3.5 IN RESPECT OF THE FIRST REASON THE HONBLE TRIBUNAL HAS NOTED THAT THE SHAREHOLDERS FUND AVAILABLE IN THE BOOKS OF THE APPELLANT WAS RS. 123 53 55 303/- WHEREAS OUTSTANDING RECEIVABLE FROM ITS ASSOCIATED ENTERPRISE IS RS. 132 48 07 379/- IMPLYING THAT THE TOTAL PROFIT EARNED BY THE ASSESSEE IS ENJOYED BY IS ASSOCIATED ENTERPRISE OUT OF INDIA. THE TOTAL SHAREHOLDERS FUNDS ARE AVAILABLE WITH ASSESSEES ASSOCIATED ENTERPRISE AS AN INTEREST FREE TRADE RECEIVABLE CLEARLY SHOWS THAT OUTSTANDING RECEIVABLE FROM THE ASSOCIATED ENTERPRISE IS NOT AT ALL THE TRANSACTION OF SALE OF GOODS/SERVICES TO THE ASSESSEE. 3.5.1 IT IS RESPECTFULLY SUBMITTED THAT WHILE RECORDING THE AFORESAID FINDING THE HONBLE TRIBUNAL HAS OMITTED TO CONSIDER THE FACTS ON RECORD. IT IS SUBMITTED THAT IN PARA 14 OF THE ORDER THE HON'BLE TRIBUNAL HAS NOTED THAT THE IN THE CONVENIENCE PAPER BOOK THE ASSESSEE HAS FURNISHED THE FINANCIAL STATEMENTS OF THE ASSOCIATED ENTERPRISE DATED 31ST OF DECEMBER 2008 2009 2010 AND 2011 SHOWING THAT ASSOCIATED ENTERPRISE HAS BEEN INCURRING LOSSES OVER THE PERIOD FOR FOUR YEARS BETWEEN 2008 AND 2011. IN FACT THE ASSESSEE HAS ALSO FURNISHED THE TABLE WHEREIN THE PROFIT AFTER TAX [PAT] OF THE ASSOCIATED ENTERPRISE WERE SHOWN TO HAVE INCURRED SUBSTANTIAL LOSSES IN DECEMBER 2008 - DECEMBER 2010 AND THEREFORE IT WAS SUBMITTED BY THE ASSESSEE THAT DUE TO THE ACCUMULATED LOSSES INCURRED OVER PAST FEW YEARS THE ASSOCIATED ENTERPRISE AND GENUINE CASH CRUNCH AND HENCE ON ACCOUNT OF THE LOSSES AND HAD GENUINE CASH CRUNCH AND HENCE ON ACCOUNT OF THE LOSSES AND HAD GENUINE CASH CRUNCH THEREFORE THERE WAS DELAY IN MAKING THE PAYMENT OF THE RECEIVABLES. IT WAS ALSO SUBMITTED AND HAS BEEN NOTED IN THE ORDER THAT DESPITE SEVERE FINANCIAL HARDSHIP THE APPELLANT HAS CONSTANTLY BEEN REMUNERATED ON A COST +15.50 PERCENTAGE MARKUP EVEN WHEN THE ASSOCIATED ENTERPRISES WAS FACING GENUINE BUSINESS DOWNTURN DUE TO STRUCTURAL PRESSURE FACED BY THE TRADITIONAL PUBLISHING INDUSTRY AND THE DELAY IN RECOVERY OF THE OUTSTANDING BY THE ASSESSEE FROM ITS ASSOCIATED ENTERPRISE IS FOR THE BUSINESS REASONS. 3.5.2. IT IS SUBMITTED THAT WHILE RECORDING THE FINDING THAT OUTSTANDING RECEIVABLE FROM ITS ASSOCIATED ENTERPRISE IS MORE THAN THE SHAREHOLDER FUNDS IMPLYING THAT THE TOTAL PROFIT EARNED BY THE ASSESSEE IS ENJOYED BY IS ASSOCIATED ENTERPRISE OUT OF INDIA IT IS SUBMITTED WITH RESPECT THAT THE HON'BLE TRIBUNAL HAS OMITTED TO RECORD ANY FINDING IN RESPECT OF SUCH MATERIAL ON RECORD AS HAS BEEN STATED IN PARA HEREINABOVE. IT IS SUBMITTED THAT HONBLE TRIBUNAL HAS FAILED TO CONSIDER THAT AE WAS INCURRING LOSSES YEAR AFTER YEAR AND IN SUPPORT THE FINANCIALS OF AE FROM YEAR 2008 TO 2010 WAS SUBMITTED. THE HONBLE TRIBUNAL ALSO OMITTED TO CONSIDER THE FACT THAT ASSOCIATED ENTERPRISE WAS FACING GENUINE BUSINESS DOWNTURN DUE TO STRUCTURAL PRESSURE FACED BY THE TRADITIONAL PUBLISHING INDUSTRY THE DELAY IN RECOVERY OF THE OUTSTANDING BY THE ASSESSEE FROM ITS ASSOCIATED ENTERPRISE IS FOR THE BUSINESS REASONS. IT IS SUBMITTED THAT HONBLE TRIBUNAL ALSO OMITTED TO CONSIDER THE FACT THAT DESPITE THE FACTUM OF PAGE | 5 DOWNTURN IN PUBLISHING INDUSTRY THE APPELLANT WAS E-HARJFI.NG A MARKUP OF +15.50%. THEREFORE THE FINDING THAT TOTAL PROFIT EARNED BY THE ASSESSEE IS ENJOYED BY IS ASSOCIATED ENTERPRISE OUT OF INDIA HAS BEEN RECORDED BY OVERLOOKING THE MATERIAL/FACTS ON RECORD. IT IS SUBMITTED THAT WHILE RECORDING THE FINDING THE HONBLE TRIBUNAL HAS INADVERTENTLY OMITTED TO CONSIDER THE AFORESAID SUBMISSIONS/FACTS WHICH WAS ON RECORD AND HAS ALSO BEEN NOTED IN THE ORDER WHICH CONSTITUTE A MISTAKE APPARENT FROM RECORD U/S 254(2) OF THE ACT. 3.5.3 INFACT THE HONBLE TRIBUNAL HAS FURTHER RECORDED THAT WHERE TOTAL SHAREHOLDERS FUNDS ARE AVAILABLE WITH ITS ASSOCIATED ENTERPRISE AS AN INTEREST FREE TRADE RECEIVABLE CLEARLY SHOWS THAT OUTSTANDING RECEIVABLE FROM THE ASSOCIATED ENTERPRISE IS NOT AT ALL THE TRANSACTION OF SALE OF GOODS/SERVICES TO THE ASSESSEE. IT IS SUBMITTED THAT HERE AGAIN HONBLE TRIBUNAL HAS INADVERTENTLY OVERLOOKED THAT ASSESSEE IS PROVIDING ITES SERVICES TO ITS AE AND AMOUNT OUTSTANDING WAS ONLY IN RESPECT OF THE SERVICES PROVIDED AS THE ASSESSEE HAS NEITHER PROVIDED ANY LOAN NOR ANY ADVANCE TO ITS AE AND SUM OUTSTANDING WAS ONLY IN RESPECT OF THE SERVICES PROVIDED AND NOTHING ELSE. INFACT THE HONBLE TRIBUNAL HAS ALSO NOT RECORDED ANY FINDING THAT IF THE OUTSTANDING RECEIVABLE FROM THE ASSOCIATED ENTERPRISE IS NOT IN RESPECT OF SALE OF GOODS/SERVICES THEN WHAT WAS THE NATURE OF SUM OUTSTANDING. IT IS SUBMITTED THAT THERE IS NO ADVERSE FINDING BY THE LEARNED TPO IN THE ORDER NOR THE REVENUE HAS RAISED ANY SUCH CONTENTION AND THE HONBLE TRIBUNAL WHILE OBSERVING AFORESAID DID NOT PROVIDE ANY OPPORTUNITY TO THE ASSESSEE. IT IS FURTHER SUBMITTED THAT WITHOUT PREJUDICE IN THE ABSENCE OF ANY MATERIAL THAT THE CHARACTER OF THE AMOUNT HAD UNDERGONE A CHANGE FROM THE AMOUNTS RECEIVABLE FROM THE DEBTORS TO AN ADVANCE MADE IT IS SUBMITTED IS ALSO A MISTAKE COMMITTED IN THE ORDER AND IS VIOLATIVE OF PRINCIPLE OF NATURAL JUSTICE. 3.6 IN RESPECT OF SECOND REASON GIVEN BY THE HONBLE TRIBUNAL WHILE REJECTING THE ADDITIONAL GROUND NO. 5.1 THE HONBLE TRIBUNAL HAS INADVERTENTLY IGNORED THAT ONCE IT HAS BEEN FOUND BY THE HON'BLE TRIBUNAL THAT SUCH GROUND IS PURELY LEGAL GROUND THEN SUCH GROUND NEEDS TO BE ADJUDICATED ON MERITS AND WHETHER ANY GROUND HAS BEEN RAISED BEFORE THE TPO/DRP IS IRRELEVANT. IT IS SUBMITTED THAT HONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 (SC) HAS CATEGORICALLY HELD THAT EVEN THE GROUNDS WHICH HAVE NOT BEEN RAISED BEFORE THE AUTHORITIES BELOW CAN BE RAISED BEFORE THE TRIBUNAL FOR THE FIRST TIME WHICH GOES TO THE AFORESAID FINDING THE HONBLE TRIBUNAL HAS INADVERTENTLY OVERLOOKED THE SETTLED LEGAL POSITION AND JUDICIAL PRONOUNCEMENTS WHICH CONSTITUTE MISTAKE APPARENT FROM RECORD U/S 254(2) OF THE ACT. 3.7 FURTHER WHILE RECORDING THE FINDING THAT EVEN IN THE TRANSFER PRICING STUDY REPORT SUBMITTED BY THE ASSESSEE WHICH IS PLACED AT PAGE NUMBER 150-215 OF THE PAPER BOOK THE LEARNED AUTHORISED REPRESENTATIVE COULD NOT SHOW US THAT ASSESSEE HIMSELF HAS CLAIMED ANY WORKING CAPITAL ADJUSTMENT WHILE PREPARING ITS COMPARABILITY ANALYSIS HAS OMITTED TO CONSIDER THE CASE SYNOPSIS WHEREIN IN PARA 3.2.5 THE ASSESSEE ALSO REFERRED PAGE 213 OF THE PAPER BOOK WHICH IS ANNEXURE-5 OF THE TP REPORT WHEREIN THE ASSESSEE HAS PROVIDED THE WORKING CAPITAL ADJUSTED MARGINS OF THE COMPARABLE. INFACT BEFORE THE HONBLE TRIBUNAL THE ASSESSEE HAS MADE ITS SUBMISSION WHICH HAS BEEN EXTRACTED HEREINABOVE AND ALL THE SUPPORTING MATERIAL I.E. FINANCIALS OF THE COMPARABLE WERE ALSO ON RECORD. IT IS THEREFORE SUBMITTED THAT REJECTION OF THE ADDITIONAL GROUND NO 5.1 WITHOUT CONSIDERING THE MATERIAL ON RECORD AND JUDICIAL PRONOUNCEMENTS IS A MISTAKE APPARENT FROM RECORD. 3.8 IT IS RESPECTFULLY SUBMITTED THAT APART FROM THE AFORESAID THE HONBLE TRIBUNAL IN PARA 20 OF THE ITS ORDER HAS HELD AS UNDER; PAGE | 6 EVEN OTHERWISE THE ASSESSEE COULD NOT SHOW US WHAT IS THE DIFFERENCE IN WORKING CAPITAL OF THE ASSESSEE COMPARED WITH COMPARABLE COMPANIES. THUS THE ADJUSTMENT OF WORKING CAPITAL WAS NOT AT ALL THERE IN CASE OF ASSESSEE FOR THIS YEAR. 3.8.1 IT IS MOST HUMBLY SUBMITTED THAT AFORESAID FINDING OF THE HONBLE TRIBUNAL IS CONTRARY TO THE MATERIAL ON RECORD. IT IS SUBMITTED THAT IN THE CASE SYNOPSIS AS HAS BEEN EXTRACTED HEREINABOVE AND FINANCIALS OF THE COMPARABLES WHICH WAS ON RECORD IT HAS BEEN CONTENDED THAT THERE ARE DIFFERENCE BETWEEN THE WORKING CAPITAL OF THE ASSESSEE AND THAT OF THE COMPARABLES AND WORKING CAPITA! OF THE ASSESSEE AND THAT OF THE COMPARABLES ARE NOT SAME AND ACCORDINGLY ADJUSTED MARGIN OF THE ASSESSEE AND THAT OF COMPARABLES WERE GIVEN. INFACT THE LEARNED / DR REQUESTED THAT SAME CAN BE EXAMINED BY THE ID. TPQ AND IT APPEARS WHILE RECORDING THE AFORESAID FINDING SAME HAS BEEN LOST SIGHT OFF WHICH CONSTITUTE A MISTAKE APPARENT FROM RECORD WHICH IT IS MOST HUMBLY PRAYED THAT SAME BE RECTIFIED. 4. FURTHER IN THE ADDITIONAL GROUND NO. 7 THE ASSESSEE HAS CONTENDED THAT ECLREX SERVICES LTD AND EXLE INFOWAYS LIMITED ARE NOT COMPARABLE TO THE APPELLANT IN TERMS OF FUNCTIONS RISKS AND ASSETS AND IN RESPECT OF SUCH ADDITIONAL GROUND THE HONBLE TRIBUNAL HAS HELD THAT ADJUDICATION OF SUCH GROUND REQUIRES THE INVESTIGATION OF THE FRESH FACTS. IT WAS FURTHER HELD THAT THE LEARNED ASSESSING OFFICER HAS NOT MADE ANY ADJUSTMENT WITH RESPECT TO THE ITES SEGMENT OF THE ASSESSEE AND THEREFORE TESTING OF THE COMPARABILITY OF THOSE TWO COMPARABLES MENTIONED IN THE GROUND NUMBER SEVEN BY THE LEARNED AUTHORISED REPRESENTATIVE/ASSESSEE IS MERELY AN ACADEMIC EXERCISE. 4.1 IT IS SUBMITTED THAT AFORESAID FINDING RECORDED BY THE HONBLE TRIBUNAL IN RESPECT OF ADDITIONAL GROUND NO 7 HAS BEEN RECORDED BY OMITTING TO CONSIDER THE MATERIAL ON RECORD AS IN THE OBJECTIONS BEFORE THE LEARNED DRP THE ASSESSEE VIDE ITS OBJECTIONS NO. 7 & 9 HAS SPECIFICALLY RAISED SUCH CONTENTION AND HAS ALSO MADE ITS DETAILED SUBMISSIONS AND HENCE THE FINDING THAT ADJUDICATION OF SUCH GROUND REQUIRE CONSIDERATION OF THE FRESH FACTS IS CONTRARY TO MATERIAL ON RECORD. FURTHER THE FINDING THAT SINCE NO ADJUSTMENT HAS BEEN MADE IN ITES SEGMENT AS SUCH TESTING THE COMPARABILITY OF THOSE TWO COMPARABLES IS MERELY AN ACADEMIC EXERCISE IS AGAIN HAS BEEN RECORDED WITHOUT APPRECIATING THE SUBMISSIONS WHEN THE ASSESSEE HAS SUBMITTED IN ADDITIONAL GROUND NO. 5 THAT IF WORKING CAPITAL ADJUSTMENT IS GRANTED TO THE ASSESSEE IT TAKES CARE OF THE OUTSTANDING DEBTORS THEREFORE SEPARATE ADJUSTMENT WITH RESPECT TO OUTSTANDING DEBTORS OF ASSOCIATED ENTERPRISE BEYOND SPECIFIED PERIOD CANNOT BE CONSIDERED AS A SEPARATE INTERNATIONAL TRANSACTION AND ALP CANNOT BE DETERMINED AND IN RESPECT OF SUCH GROUND FOR DETERMINING THE MEAN MARGIN OF THE COMPARABLE WITH WORKING CAPITAL ADJUSTMENTS THE COMPARABLES ADOPTED SHOULD BE COMPARABLE TO THE ASSESSEE ON THE PARAMETERS OF FAR AND SINCE THE AFORESAID TWO COMPARABLES ARE NOT COMPARABLE AS SUCH AFORESAID COMPARABLES SHOULD BE EXCLUDED WHILE TESTING THE ALP AFTER THE GRANT OF WORKING CAPITAL ADJUSTMENTS. IT IS SUBMITTED THAT AFORESAID FINDING OF THE HONBLE TRIBUNAL WHILE NON ADMITTING THE AFORESAID GROUNDS OF APPEAL BY OVERLOOKING THE MATERIAL ON RECORD AND BY MISCONSTRUING THE SUBMISSIONS OF THE APPELLANT IS A MISTAKE APPARENT FROM RECORD AMENABLE U/S 254(2) OF THE ACT. 5. IT IS FURTHER SUBMITTED THAT IN SUPPORT OF THE ADDITIONAL GROUND NO. 5.1 THE APPLICANT HAS REFERRED TO THE ORDER OF THE HONBLE TRIBUNAL IN THE CASE OF KUSUM HEALTHCARE PRIVATE LIMITED VERSUS ACIT (ITA NUMBER 6814/DEL/2014] WHICH WAS ALSO UPHELD BY THE HONBLE DELHI HIGH COURT IN 1TA NO. 765/2016 VIDE A JUDGMENT DATED 25/04/2017 WHEREIN CREDIT PERIOD FOR THE DEBTORS IN THE SALE CONTRACT WITH UNRELATED ENTITIES WAS 180 DAYS WHEREAS IN THE CASE OF THE AES THEY WERE ALLOWED TO LINGER FOR PAGE | 7 LONG AND HENCE THE SAID RECEIVABLES QUA THE AE WAS TREATED AS A SEPARATE INTERNATIONAL TRANSACTION. THE HONBLE TRIBUNAL DELETED THE ADJUSTMENT BY HOLDING THAT THE DIFFERENTIAL IMPACT OF WORKING CAPITAL OF THE ASSESSEE VIS-A-VIS ITS COMPARABLES HAD ALREADY BEEN FACTORED IN THE PRICING/PROFITABILITY WHICH WAS MORE THAN THE WORKING CAPITAL ADJUSTED MARGIN OF THE COMPARABLES AND THEREFORE ANY FURTHER ADJUSTMENT TO THE MARGINS OF THE ASSESSEE ON THE PRETEXT OF OUTSTANDING RECEIVABLES IS UNWARRANTED AND WHOLLY UNJUSTIFIED. THE HONBLE HIGH COURT UPHELD THE FINDING THE HONBLE TRIBUNAL BY HOLDING AS UNDER: 10. THE COURT IS UNABLE TO AGREE WITH THE ABOVE SUBMISSIONS. THE INCLUSION IN THE EXPLANATION TO SECTION 92B OF THE ACT OF THE EXPRESSION RECEIVABLES DOES NOT MEAN THAT DE HORS THE CONTEXT EVERY ITEM OF RECEIVABLES APPEARING IN THE ACCOUNTS OF AN ENTITY WHICH MAY HAVE DEALINGS WITH FOREIGN AES WOULD AUTOMATICALLY BE CHARACTERISED AS AN INTERNATIONAL TRANSACTION. THERE MAY BE A DELAY IN COLLECTION OF MONIES FOR SUPPLIES MADE EVEN BEYOND THE AGREED LIMIT DUE TO A VARIETY OF FACTORS WHICH WILL HAVE TO BE INVESTIGATED ON A CASE TO CASE BASIS. IMPORTANTLY THE IMPACT THIS WOULD HAVE ON THE WORKING CAPITAL OF THE ASSESSEE WILL HAVE TO BE STUDIED. IN OTHER WORDS THERE HAS TO BE A PROPER INQUIRY BY THE TPO BY ANALYSING THE STATISTICS OVER A PERIOD OF TIME TO DISCERN A PATTERN WHICH WOULD INDICATE THAT VIS-A-VIS THE RECEIVABLES FOR THE SUPPLIES MADE TO AN AE THE ARRANGEMENT REFLECTS AN INTERNATIONAL TRANSACTION INTENDED TO BENEFIT THE AE IN SOME WAY. 11. THE COURT FINDS THAT THE ENTIRE FOCUS OF THE AO WAS ON JUST ONE AY AND THE FIGURE OF RECEIVABLES IN RELATION TO THAT AY CAN HARDLY REFLECT A PATTERN THAT WOULD JUSTIFY A TPO CONCLUDING THAT THE FIGURE OF RECEIVABLES BEYOND 180 DAYS CONSTITUTES AN INTERNATIONAL TRANSACTION BY ITSELF. WITH THE ASSESSEE HAVING ALREADY FACTORED IN THE IMPACT OF THE RECEIVABLES ON THE WORKING CAPITAL AND THEREBY ON ITS PRICING/PROFITABILITY VIS-A-VIS THAT OF ITS COMPARABLES ANY FURTHER ADJUSTMENT ONLY ON THE BASIS OF THE OUTSTANDING RECEIVABLES WOULD HAVE DISTORTED THE PICTURE AND RE-CHARACTERISED THE TRANSACTION. THIS WAS CLEARLY IMPERMISSIBLE IN LAW AS EXPLAINED BY THIS COURT IN CIT V. EKL APPLIANCES LTD. (2012) 345 ITR 241 (DELHI). 12. CONSEQUENTLY THE COURT IS UNABLE TO FIND ANY ERROR IN THE IMPUGNED ORDER OF THE ITAT GIVING RISE TO ANY SUBSTANTIAL QUESTION OF LAW FOR DETERMINATION. THE APPEAL IS ACCORDINGLY DISMISSED. 5.1 IT IS SUBMITTED THAT APART FROM THE AFORESAID THE ASSESSEE HAS ALSO CITED THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VERSUS EKL APPLIANCES LTD (ITA NUMBER 1068/2011). THESE JUDGEMENTS WERE NOT MERELY CITED BUT RELEVANT CONTENTS AND ESTABLISHED PRINCIPLES OF LAW WERE PLACED BEFORE THE HONBLE BENCH. THESE CITED JUDGEMENTS WERE NOT CONSIDERED BY THE HONBLE ITAT WHILE DISPOSING THE ADDITIONAL GROUND NO. 5.1 WHICH IS ALSO A MISTAKE APPARENT FROM RECORD. IT IS SUBMITTED THAT IT IS SETTLED LAW THAT NON CONSIDERATION OF THE HIGH COURT AND APEX COURT JUDGMENT IS MISTAKE APPARENT FROM RECORD AND SO HAS TO BE RECTIFIED. RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: I. ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD REPORTED IN 305 ITR 227 (SC) II. CIT VS. SUBODHCHANDRA S. PATEL 265 ITR 445 (GUJ) III. BHAGHEERATHA ENGINEERING LTD. VS. CIT 227 ITR 504 (KER) IV. SOUTH INDIA CORPORATION LTD. VS. ACIT 360 ITR 039 (KER) PAGE | 8 V. R.M. EXPORTS VS. CIT [2014] 264 CTR 206 (PUNJAB & HARYANA). 6. IT IS FURTHER SUBMITTED THAT IN THE INSTANT CASE IN THE MEMO OF THE APPEAL THE APPLICANT HAS RAISED FIVE GROUNDS OF APPEAL (GROUND NO. 6 WAS ONLY CONSEQUENTIAL) BY CONTENDING AS UNDER: I. OUTSTANDING RECEIVABLES FROM THE RELATED PARTIES IS NOT AN INTERNATIONAL TRANSACTION WITHIN THE MEANING OF SECTION 92B(1) OF THE ACT (GROUND NO. 2). II. RE-CHARACTERIZING THE TRANSACTION OF TRADE RECEIVABLES AS UNSECURED LOANS ADVANCED TO THE AE'S AND CHARGING INTEREST ON THE SAME IS INCORRECT IN LAW (GROUND NO. 3). III. WHILE BENCHMARKING THE TRANSACTION CUP METHOD HAS BEEN APPLIED WITHOUT UNDERSTANDING THE BUSINESS MODEL/CONTRACTUAL TERMS OF THE APPELLANT (GROUND NO. 4). IV. AND FURTHER NO SUITABLE ADJUSTMENTS TO ACCOUNT FOR DIFFERENCES IN THE RISK PROFILE OF THE APPELLANT VIS- A-VIS THE COMPARABLE COMPANIES HAS BEEN GRANTED (GROUND NO. 5). 6.1 IT IS SUBMITTED THAT WHILE DISPOSING OFF THE APPEAL OF THE APPELLANT THOUGH IN PARA 22 IT HAS BEEN STATED THAT GROUND NUMBER [1]- [5] OF THE APPEAL ALONG WITH THE ADDITIONAL GROUND NUMBER 5.1 ARE DISMISSED HOWEVER SUCH GROUNDS AS HAS BEEN RAISED IN THE MEMO OF THE APPEAL HAS NOT BEEN DISCUSSED OR ADJUDICATED IN THE ORDER AND THE APPEAL OF THE APPELLANT HAS BEEN DISPOSED OFF ONLY WHILE DISCUSSING THE ADDITIONAL GROUND NO. 5.1. IT IS SUBMITTED THAT IN IN GROUND NO 4 THE APPLICANT HAS CONTENDED COMPARABLES SELECTED BY THE LEARNED TPO FOR THE PURPOSE OF DETERMINATION OF THE ARMS LENGTH PRICE WERE WRONGLY SELECTED. IT WAS SUBMITTED THAT THE COMPARABLE SELECTED BY THE TPO WERE NOT CARRYING OUT THE ACTIVITIES IN WHICH THE ASSESSEE IS ENGAGED IN. THAT THE ASSETS EMPLOYED BY THE ASSESSEE AND THAT OF COMPARABLES WAS ALSO NOT SAME AND HENCE REQUIRE ADJUSTMENT. IT WAS ALSO SUBMITTED THAT THERE IS VIDE VARIATION IN THE PROFIT MARGINS OF THE COMPARABLES AND HENCE SUCH COMPARABLES WERE NOT COMPARABLE AS HAS BEEN HELD BY THE HIGH COURT OF DELHI IN THE CASE OF RAMPGREEN SOLUTIONS PVT LTD VS CIT REPORTED IN [2015] 377 ITR 533 (DELHI). 6.2 THAT IT IS SUBMITTED THAT NON-DISPOSAL OF GROUNDS OF APPEAL RAISED BY THE ASSESSEE IS MISTAKE APPARENT FROM RECORD MORE PARTICULARLY WHEN SUCH GROUNDS ARE VITAL FOR THE DISPOSAL OF THE APPEAL. IN SUPPORT OF THIS CONTENTION FOLLOWING JUDGEMENTS ARE HEREBY BEING RELIED UPON WHEREIN IT HAS BEEN HELD THAT GROUNDS NOT CONSIDERED OR ADJUDICATED IN THE ORDER IS A MISTAKE APPARENT FROM RECORD WHICH IS TO BE RECTIFIED U/S 254(2) OF THE ACT: CIT VS. KESHAV FRUIT MART (1993) 199 ITR 771 (ALL) CIT VS. KM SUGAR MILLS P LTD. 275 ITR 247 (ALL) ITO VS. ITAT 58 ITR 634 (ALL) LAXMI ELECTRONIC CORPON LTD. VS. CIT 188 ITR 398 (ALL) CIT VS. MITHALA ASHOK KUMAR 158 ITR 755(MP) JAINARAIN JEEVRAJ VS. CIT 121 ITR 358 (RAJ) PAGE | 9 KESORAM INDUSTRIES LTD. VS. CIT 271 ITR 501 (CAL) 7. THESE VITAL FACTS WERE UNNOTICED BY HON'BLE ITAT WHILE DISPOSING THE APPEAL WHICH IS A MISTAKE APPARENT FROM RECORD. IN FACT THE HON'BLE SUPREME COURT AND VARIOUS HIGH COURTS HAVE BEEN ALL ALONG HOLDING THAT HONBLE TRIBUNAL SHOULD CONSIDER ALL THE EVIDENCES IN FAVOUR OF AND AGAINST THE ASSESSEE. IN THIS REGARD REFERENCE CAN BE MADE TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF SHRI UDHAVDAS KEWALRAM VS. CIT 66 ITR 462 WHEREIN IT HAS HELD THAT IT IS OBLIGATORY FOR THE ITAT TO CONSIDER ALL RELEVANT FACTS AND GIVE ITS FINDINGS ON ALL PLEAS RAISED IN THE LIGHT OF THE EVIDENCES AND APPLICATION OF LAW. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. ITAT 172 ITR 15 8.IN WHICH IT WAS HELD THAT MATERIAL FOR DETERMINING THE AMOUNT OF TAX IS PRESSED AND NOT CONSIDERED WOULD CERTAINLY CONSTITUTE A MISTAKE APPARENT FROM THE RECORD WITHIN THE MEANING OF SECTION 254 (2) OF THE ACT AND IF THE SAID MISTAKE BEING POINTED OUT BY THE ASSESSEE THE TRIBUNAL IN THE CIRCUMSTANCES REFERRED TO ABOVE HAS TO AMEND ITS ORDER. 8. THE ASSESSEE AT THIS JUNCTURE SEEKS TO RELY UPON THE JUDGMENT OF APEX COURT IN THE CASE OF HONDA SIEL POWER PRODUCT LTD. VS. CIT REPORTED IN 295 ITR 466 WHEREIN IT WAS HELD THAT IF A PREJUDICE HAD RESULTED TO THE PARTY WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNALS MISTAKE ERROR OR OMISSION AND WHICH ERROR IS MANIFEST ERROR THEN THE TRIBUNAL WOULD BE JUSTIFIED IN RECTIFYING ITS MISTAKE WHICH HAD BEEN DONE IN THE PRESENT CASE. IT IS SUBMITTED THAT APPLYING THE RATIO LAID DOWN IN THE AFORESAID JUDGMENT IT WOULD BE SEEN THAT THERE IS A FUNDAMENTAL MISTAKE WHICH IS MANIFEST IN THE ORDER OF THE TRIBUNAL AND THEREFORE THE SAME DESERVE TO BE RECTIFIED IN TERMS OF PROVISIONS CONTAINED IN SECTION 254(2) OF THE ACT. 9. IN FACT AFTER ANALYZING THE AFORESAID JUDGMENT OF HONDA SIEL POWER PRODUCT LTD. VS. CIT (SUPRA) THE FULL BENCH OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF LACHMAN DASS BHATIA HINGWALA (P.) LTD. VS. ACIT REPORTED IN [2011] 330 ITR 243 (DELHI) HAS HELD AS UNDER: THUS UNDERSTOOD IT IS CLEAR AS CRYSTAL THAT THEIR LORDSHIPS HAVE HELD THAT THE FUNDAMENTAL PRINCIPLE IS THAT NO PARTY APPEARING BEFORE THE TRIBUNAL SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED BY THE TRIBUNAL AND NO PREJUDICE IS CAUSED TO EITHER OF THE PARTIES BEFORE THE TRIBUNAL WHICH IS ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE OMISSION OR COMMISSION AND IF THE SAME ERROR IS A MANIFEST ERROR THEN THE TRIBUNAL WOULD BE JUSTIFIED TO RECALL. THE LINE OF DECISIONS MHICH HAVE BEEN RENDERED BY THIS COURT HAVE PROCEEDED ON THE BASIS OF REVIEW THE LIMITED POWER OF RECALL AS PROVIDED UNDER RULE 24 OF THE INCOME-TAX APPELLATE TRIBUNAL RULES 1963 AS REGARDS THE EXERCISE OF POWER WHICH CANNOT BE EXERCISED DIRECTLY OR EXERCISED INDIRECTLY AND THAT EVEN IF THERE IS ANY IRREGULARITY CAUSED THAT WOULD NOT CLOTHE THE TRIBUNAL WITH THE POWER OF REVIEW AS IT MAY ULTIMATELY RESULT IN REHEARING OF THE APPEAL. THUS THE ENTIRE STREAM OF DECISIONS HAS GONE BY THE CONCEPTS WHICH ARE FUNDAMENTALLY FOUNDED ON THE POWER OF REVIEW REHEARING AND THE LIMITED CONCEPT OF RECALL. BUT WHAT HAS BEEN STATED BY THE APEX COURT IN HONDA SIEL POWER PRODUCTS LTD. 'S CASE (SUPRA) IS BASED ON THE DOCTRINE OF PREJUDICE. THEIR LORDSHIPS HAVE CLARIFIED THAT THEY WERE NOT PROCEEDING ON THE DOCTRINE OR CONCEPT OF INHERENT POWER. ANALYZED FROM THIS PERSPECTIVE. THERE CAN BE NO TRACE OR SHADOW OF DOUBT THAT THE SAID DECISION IS AN AUTHORITY FOR THE PROPOSITION THAT THE TRIBUNAL IN CERTAIN CIRCUMSTANCES CAN RECALL ITS OWN ORDER AND SECTION 254(2) OF THE ACT DOES NOT TOTALLY PROHIBIT SO. [EMPHASIS SUPPLIED] PAGE | 10 10. IT IS FURTHER SUBMITTED THAT THE APPLICANT HAS NOT FILED ANY OTHER MISCELLANEOUS APPLICATION UNDER SECTION 254(2) OF THE ACT AGAINST THE ORDER DATED 06.07.2020 EXCEPT THE INSTANT MISCELLANEOUS APPLICATION. 3. SHRI C. S. AGGARWAL LD SR. ADVOCATE ON BEHALF OF THE ASSESSEE SUBMITTED THAT TRIBUNAL HAS ADMITTED THE ADDITIONAL GROUNDS OF THE ASSESSEE WITH RESPECT TO WORKING CAPITAL ADJUSTMENT AND THE IMPACT OF OUTSTANDING RECEIVABLES HOWEVER ON THE MERITS THE COORDINATE BENCH REJECTED THE GROUND AS STATED IN PARA 3.4 OF THE MA. HE FURTHER SUBMITTED THAT THE TRIBUNAL FAILED TO CONSIDER THAT ASSOCIATED ENTERPRISES HAS INCURRED SUBSTANTIAL LOSS AND DUE TO ACCUMULATED LOSSES THERE WAS CASH CRUNCH AND THEREFORE THERE WAS DELAY IN MAKING PAYMENT BY THE ASSOCIATED ENTERPRISES TO THE ASSESSEE FOR BILLS OF ASSESSEE AND THUS SUCH DELAY IS ON ACCOUNT OF BUSINESS REASONS. HE OTHERWISE SUBMITTED THAT ASSESSEE WAS EARNING A MARKUP OF 15.50% AND THEREFORE THE FINDING OF THE COORDINATE BENCH IS BY OVERLOOKING THE MATERIAL/ FACTS ON RECORDS AND THUS THERE IS A MISTAKE APPARENT FROM THE RECORD. THE LD AR FURTHER STATED THAT EVEN OTHERWISE IN PARA NO. 3.8 SHOWS THAT CLAIM OF THE ASSESSEE WAS REJECTED ON MERITS. HE SUBMITTED THAT THE ASSESSEE SUBMITTED FINANCIAL STATEMENT OF THE COMPARABLES AND THERE ARE DIFFERENCE BETWEEN WORKING CAPITAL OF THE ASSESSEE AND THE COMPARABLES OF THE ASSESSEE. HE FURTHER STATED THAT THE CITED CASES BEFORE THE COORDINATE BENCH IN CASE OF KUSUM HEALTHCARE PVT. LTD VS. ACIT IN ITA NO. 765/2016 DATED 25.04.2017 AND CIT VS. EKL APPLIANCES LTD IN ITA NO. 1068/2011 WERE NOT CONSIDERED. HE FURTHER REFERRED PARA NO. 6 OF THE MA STATING THAT GROUND NO. 1 TO 5 WERE NOT ADJUDICATED AND THE TITLE APPEAL OF THE ASSESSEE WAS DISMISSED AFTER DISCUSSING ADDITIONAL GROUND NO. 5.1. HE THEREFORE REITERATED THAT THE ORDER PASSED BY THE COORDINATE BENCH REQUIRES TO BE RECALLED. HE ALSO SUBMITTED A BRIEF NOTE ON THE ISSUE. 4. THE LD DR VEHEMENTLY STATED THAT COORDINATE BENCH HAS EXTENSIVELY NOTED THE FACTS OF THE CASE IN PARA NO. 17 TO 20. HE FURTHER STATED THAT THE ISSUE WAS SQUARELY COVERS AGAINST THE ASSESSEE AS PER ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CASE. IN PARA NO. 22 ALSO THE COORDINATE BENCH HAS CONSIDERED THE ORDER OF THE DRP WHERE CERTAIN CREDITS HAVE BEEN GIVEN. IN PARA NO. 21 THE COORDINATE BENCH HAS FURTHER STATED THAT ALL THE DECISIONS SUBMITTED BEFORE IT DO NOT APPLY IN VIEW OF THE DISTINGUISHING FEATURE MENTIONED IN PARA 17 TO 20 OF THE ORDER. FOLLOWING THE ORDER OF THE COORDINATE BENCH IN ASSESSEES CASE CANNOT MAKE THE ORDER ERRONEOUS. THUS HE SUBMITTED THAT THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE DESERVES TO BE DISMISSED. 5. WE HAVE CAREFULLY CONSIDERED THE CONTENTS OF THE MISCELLANEOUS APPLICATION AS WELL AS THE ORDER OF THE COORDINATE BENCH DATED 06.07.2020. WE DEAL WITH EACH OF THE REASONS STATED IN THE NOTE SUBMITTED BY THE LEARNED SENIOR ADVOCATE TO SHOW THAT THERE IS A MISTAKE APPARENT FROM THE RECORD IN THE ORDER OF THE COORDINATE BENCH AS UNDER :- PAGE | 11 6. THE FIRST REASONS STATED IN PARA NUMBER 1.2 OF THE NOTE OF THE LEARNED THAT AR SAYS THAT THE COORDINATE BENCH HAS FAILED TO CONSIDER THE FINANCIAL STATEMENT OF THE ASSOCIATED ENTERPRISES. THE COORDINATE BENCH CONSIDERED THE FINANCIAL STATEMENTS OF THE ASSOCIATED ENTERPRISE WHICH WERE PLACED BY THE ASSESSEE TO SHOW THAT THE FINANCIAL CONDITION OF THE ASSOCIATED ENTERPRISE WAS NOT GOOD AND THEREFORE THE ASSOCIATED ENTERPRISE WAS NOT PAYING PRICE OF THE SERVICES OF THE ASSESSEE. IN THE TRANSFER PRICING ANALYSIS WE WERE SUPPOSED TO LOOK AT THE OPERATING MARGIN OF THE ASSESSEE AND IN ANALYZING THE COMPARABLE PRICES THE FINANCIAL CONDITION OF THE ASSOCIATED ENTERPRISE WAS NOT AT ALL REQUIRED TO BE CONSIDERED. FURTHER THE ASSOCIATED ENTERPRISE AS WE HAVE ALREADY HELD IN THE ORDER THAT HAS TAKEN AWAY THE WHOLE MONEY FROM THE ASSOCIATED ENTERPRISE WHICH WAS LYING AS RESERVE AND SURPLUS IN THE HANDS OF THE ASSESSEE. WE DO NOT NOW HESITATE TO STATE THAT THE ASSOCIATED ENTERPRISE HAS WITHDRAWN THE FULL RESULTS ARE AVAILABLE WITH THE ASSESSEE IN THE FORM OF OUTSTANDING ADVANCES WHICH ARE REALLY IN THE FORM OF DIVIDEND PAYMENT TO THE ASSOCIATED ENTERPRISE FROM INDIA. THEREFORE IN OUR VIEW IT IS IMMATERIAL WHETHER THE ASSOCIATED ENTERPRISE IS MAKING A LOSSES OR IT IS MAKING OF PROFIT FOR WORKING OUT THE OPERATING MARGIN OF THE ASSESSEE. 7. THE SECOND CONTENTION RAISED BY THE ASSESSEE IS THAT COORDINATE BENCH HAS INADVERTENTLY OVERLOOKED THAT ASSESSEE IS PROVIDING ITES SERVICES TO ITS ASSOCIATED ENTERPRISE AND AMOUNTS OUTSTANDING WAS ONLY IN RESPECT OF THE SERVICES PROVIDED AND THAT IT HAD NOT MADE ANY LOAN OR HAD MADE ANY ADVANCES TO ITS ASSOCIATED ENTERPRISE AND THE SUM OUTSTANDING WAS ONLY IN RESPECT OF SERVICES PROVIDED AND NOTHING ELSE. WE FAILED TO UNDERSTAND WHY THE DISTINCTION IS REQUIRED TO BE MADE FROM SALE OF GOODS OR SALE OF SERVICES. ACCORDING TO US FACT THAT IT IS FOR SERVICES OR GOODS. ACCORDING TO US ASSESSEE HAS MADE ADVANCES TO THE AE FOR MORE THAN USUAL CREDIT PERIOD. IN FACT IT IS AN ADVANCE OF THE FULL RESERVE AND SURPLUS AVAILABLE WITH THE ASSESSEE TO ITS ASSOCIATED ENTERPRISE. IT IS IMMATERIAL WHETHER THE ASSESSEE HAS OBTAINED ANY LOAN OR HAS NOT TAKEN ANY LOAN. THEREFORE THIS CONTENTION IS REJECTED. 8. IN PARAGRAPH NUMBER (III) THE NOTE STATES THAT THE COORDINATE BENCH DID NOT RECORD THAT SUCH AN AMOUNT HAD THE CHARACTER OF MAKING ADVANCES IS INTEREST FREE LOAN WHICH HAS BEEN THE THE MATERIAL STATEMENT FOR NOT GRANTING ANY WORKING CAPITAL ADJUSTMENT. THE WORKING CAPITAL ADJUSTMENT IS REQUIRED TO BE GIVEN DIFFERENCE IN THE WORKING CAPITAL EMPLOYED BY THE DIFFERENT COMPARABLES COMPARED TO THE ASSESSEE. IN THE CASE OF THE ASSESSEE WE HAVE ALREADY HELD THAT OUTSTANDING OF ASSOCIATED ENTERPRISE WAS A DEVICE EMPLOYED BY THE ASSESSEE IN CONNIVANCE WITH ITS ASSOCIATED ENTERPRISE TO WITHDRAW THE FULL RESERVE AND SURPLUS AVAILABLE IN INDIA WHICH OTHERWISE COULD NOT HAVE BEEN WITHDRAWN WITHOUT PAYING DIVIDEND DISTRIBUTION TAX BUT HAS BEEN WITHDRAWN BY THE MAKING A DEVICE OF KEEPING THE OUTSTANDING RECEIVABLE FROM PAGE | 12 ASSOCIATED ENTERPRISE TO THE EXTENT OF RESERVE AND SURPLUS AVAILABLE WITH THE ASSESSEE. THEREFORE THIS CONTENTION ALSO DESERVES TO BE REJECTED. 9. WITH RESPECT TO THE DEMONSTRATION BY THE ASSESSEE BEFORE THE LEARNED ASSESSING OFFICER FOR GRANTING OF ANY WORKING CAPITAL ADJUSTMENT WE DO NOT FIND ANY ERROR IN THE ORDER OF THE COORDINATE BENCH AS IT HAS CONSIDERED ALL THE ASPECTS OF THE WORKING CAPITAL ADJUSTMENT REQUESTED BY THE ASSESSEE. IN FACT WHEN THE ASSESSEE COULD NOT SHOW THAT THE AMOUNT OUTSTANDING FROM ITS ASSOCIATED ENTERPRISES IS TOWARDS OUTSTANDING SERVICE BUSINESS OR IS A METHODOLOGY TO ALLOW THE ASSOCIATED ENTERPRISE ENJOYMENT OF FOUR RESERVE AND SURPLUS AVAILABLE IN INDIA. WE HAVE HELD THAT ASSESSEE HAS ALLOWED THE ASSOCIATED ENTERPRISE TO ENJOY THE RESERVE AND SURPLUS AVAILABLE WITH AN INDIAN ENTITY WITHOUT PAYING DIVIDEND DISTRIBUTION TAX THUS THERE IS NO WORKING CAPITAL ADJUSTMENT REQUIRED TO BE MADE IN THE COMPARABILITY ANALYSIS. THUS THE CONTENTION RAISED BY THE ASSESSEE DESERVES TO BE REJECTED 10. THE COORDINATE BENCH HAS FOLLOWED THE ORDER IN THE CASE OF THE ASSESSEE FOR EARLIER YEARS NOTED IN PARA 16. THAT DECISION HAS BEEN FOLLOWED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE. THE COORDINATE BENCH IN FURTHER PARA 2 STATED THAT THE PECULIAR FACTS OF THE CASE NOTED BY THE COORDINATE BENCH IN PARA NO. 17 TO 20 ARE SO STARTLING THAT DECISION RELIED UPON BY THE LD AR DOES NOT APPLY TO THE FACTS OF THE PRESENT CASE. THUS ALL THE DECISIONS PLACED BEFORE THE COORDINATE BENCH WERE CONSIDERED AND IN VIEW OF THE PECULIAR FACTS OF THE CASE OF THE ASSESSEE WERE HELD TO BE DISTINGUISHABLE. 11. VIDE PARA NUMBER D IT HAS BEEN STATED THAT SUM OF THE GROUNDS HAVE NOT BEEN CONSIDERED. ALL THESE GROUNDS ARE RELATED TO THE WORKING CAPITAL ADJUSTMENT. THUS ALL THE GROUNDS OF THE APPEAL WERE ALSO ON THE SAME ISSUE OF ADJUSTMENT ON ACCOUNT OF OUTSTANDING RECEIVABLES. ALL THESE GROUNDS WERE CONSIDERED AND DECIDED AGAINST THE ASSESSEE AS THE MAIN ISSUE HAS ALREADY BEEN DECIDED AGAINST THE ASSESSEE FOR THE REASON THAT THE OUTSTANDING RECEIVABLE FROM ITS ASSOCIATED ENTERPRISE DOES NOT DESERVE TO BE CONSIDERED FOR GRANTING ANY WORKING CAPITAL ADJUSTMENT TO THE ASSESSEE. 12. THUS WE DO NOT FIND ANY ERROR IN THE ORDER OF THE COORDINATE BENCH IN FOLLOWING THE DECISION OF COORDINATE BENCH IN ASSESSEES OWN CASE. THAT BINDS US AND HAS BEEN FOLLOWED. 13. IN VIEW OF THIS WE DO NOT FIND ANY MISTAKE APPARENT IN THE ORDER OF THE COORDINATE BENCH. HENCE THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 /03/2021. SD/- SD/- (SUCHITRA KAMBLE) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23/03/2021 PAGE | 13 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE | 14 DATE OF DICTATION 23.03.2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23.03.2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 23.03.2021 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS 23.03.2021 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 23.03.2021 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 23.03.2021 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 23.03.2021 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.03.2021 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER