TaxTMI 
TaxTMI 
2013 (9) TMI 599
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.... Thus, the addition made on surmises and conjectures must be deleted. 2. The assessing authorities including the Dispute Resolution Panel erred in law and on facts in making an addition of Rs. 21,66,50,451 on account of undisclosed speculation business income though no evi dence of any nature whatsoever was found at the time of search showing that the appellant was engaged in such activities. Thus, the addition made on surmises and conjectures must be deleted. 3. The assessing authorities including the Dispute Resolution Panel erred in law and on facts in making a disallowance of Rs. 2,38,70,600 out of the advertisement and publicity expenses on surmises and con jectures without appreciating the exigencies of the business. Thus, the addition made on surmises and conjectures must be deleted. 4. The assessing authorities including the Dispute Resolution Panel erred in law and on facts in making an addition of Rs. 1,13,71,759 on account of alleged inflation in purchase price of raw spices by ignor ing the evidences on record. Thus, the addition made on surmises and conjectures must be deleted. 5. The assessing authorities including the Dispute Resolution Panel erred in law and....
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....and undertaken are bad in law and on facts for the specific reasons mentioned below, also communicated to the Transfer Pricing Officer vide letter dated Janu ary 12, 2009, besides other reasons submitted later on : (i) The proceedings initiated referred to some name, which was a non-existent assessee. (ii) The same did not refer to each transaction for which the arm's length price was to be determined. (iii) The same was referred only for the sake of seeking exten sion of the limitation to complete the assessment by December 31, 2008. (iv) The reference was also not enterprise specific. (v) The international transactions were of a small amount of which no reference was desired as per the Central Board of Direct Taxes instructions. (c) The transfer pricing order computing the arm's length price at a higher figure than the actual figures is bad in law and on facts as the same does not consider the facts that the entire arm's length sales were made to wholly owned subsidiaries of the appellant and those subsidiaries were working as an extension of the appellate to further sales and not as a competitor of the overseas buyers ; and d....
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....corded at the back of the appellant is bad in law and must be annulled." I. T. A. No. 4577/Del/2010 (assessment year 2006-07) : 1. The assessing authorities including the Dispute Resolution Panel (DRP) erred in law and on facts and also by ignoring the evi dence on record in making an addition of Rs. 14,00,00,000 on account of alleged undisclosed profit though no evidence of any nature what soever was found at the time of search showing that the appellant was engaged in any activities outside the books of account. Thus, the addition made on surmises and conjectures must be deleted. 2. The assessing authorities including the Dispute Resolution Panel erred in law and on facts in making an addition of Rs. 25,01,66,669 on account of undisclosed speculation business income though no evi dence of any nature whatsoever was found at the time of search showing that the appellant was engaged in such activities. Thus, the addition made on surmises and conjectures must be deleted. 3. The assessing authorities including the Dispute Resolution Panel erred in law and on facts in making a disallowance of Rs. 2,11,27,739 out of the advertisement and publicity expenses on surmises and con jec....
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....elhi is bad in law and on facts as the same was passed without approval of the Director of Income-tax (Transfer Pric ing) in spite the Central Board of Direct Taxes Instruction No. 3 dated May 20, 2003 rendering the said order void ab initio. (b) The transfer pricing proceedings initiated and undertaken are bad in law and on facts for the specific reasons mentioned below, also communicated to the Transfer Pricing Officer vide letter dated January 12, 2009, besides other reasons submitted later on : (i) The proceedings initiated referred to some name, which was a non-existent assessee. (ii) The same did not refer to each transaction for which the arm's length price was to be determined. (iii) The same was referred only for the sake of seeking exten sion of the limitation to complete the assessment by December 31, 2008. (iv) The reference was also not enterprises specific. (v) The international transactions were of a small amount of which no reference was desired as per the Central Board of Direct Taxes instructions. (c) The transfer pricing order computing the arm's length price at a higher figure than the actual figures is b....
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.... of the appellant on all the issues rather contains an incorrect averment that no argument or information was submitted by the appellant. Thus, the same has to be annulled. 10. The assessment order framed without allowing an opportu nity to cross-examine the evidence collected and statements recorded at the back of the appellant is bad in law and must be annulled. I. T. A. No. 4578/Del/2010 (assessment year 2007-08) : 1. The assessing authorities including the Dispute Resolution Panel (DRP) erred in law and on facts and also by ignoring the evi dence on record in making an addition of Rs. 9,02,38,560 on account of alleged undisclosed profit though no evidence of any nature what soever was found at the time of search showing that the appellant was engaged in any activities outside the books of account. Thus, the addition made on surmises and conjectures must be deleted. 2. The assessing authorities including the Dispute Resolution Panel erred in law and on facts in making an addition of Rs. 30,00,00,000 on account of undisclosed speculation business income though no evi dence of any nature whatsoever was found at the time of search showing that the appellant was engaged in su....
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....horities including the Dispute Resolution Panel erred in law and on facts in making the addition of Rs. 73,000 towards unexplained advances on the basis of some statement of an accountant of some other firm that too in its case and not of the appellant recorded without providing a copy of the same to the appellant and also without affording opportunity of cross-examina tion of the said person to it. Thus, the said addition is bad in law and must be deleted. 9. The assessing authorities including the Dispute Resolution Panel erred in law and on facts in making the addition of Rs. 5,14,66,456 on account of arm's length pricing that too on an export turnover of Rs. 8,89,40,732 to the associated enterprises, which is challenged on the following grounds : (a) The transfer pricing order computing the arm's length price at a higher figure than the actual figures passed by the Transfer Pric ing Officer, Deputy Commissioner of Income-tax, Transfer Pricing Officer 1(6), New Delhi is bad in law and on facts as the same was passed without approval of the Director of Income-tax (Transfer Pric ing) in spite the Central Board of Direct Taxes Instruction No. 3 dated May 20, 2003 ....
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....he associate enterprises were supplied a very large quantity as compared to the other buyers. In a nutshell the entire exercise to compute the impugned arm's length price and the alleged difference by the Transfer Pricing Officer is incorrect and must be struck down. (f) The Transfer Pricing Officer/Assessing Officer/Dispute Resolution Panel has erred in law and on facts in rejecting the trans actional net margin method of computing the export price and sub stituting the same with comparable uncontrolled price though in the case of the appellant transactional net margin method is the most suitable method considering the factors and circumstances of the wholly owned subsidiaries overseas who are working to establish new market overseas for the products of the appellant and all such expenses were the sole responsibility of the appellant. 10. The directive order dated August 31, 2010 of the Dispute Resolution Panel is bad in law and on facts as it does not mention the submissions of the appellant on all the issues rather contains an incorrect averment that no argument or information was submitted by the appellant. Thus, the same has to be annulled. 11. The assessment o....
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.... per Annexure A-II/O-3 from business premises at 139, Udyog Vihar, Phase-I, Gurgaon. These printed statements contained all India sales report of MDH Ltd. for the years 2000-01 to 2005- 06 month-wise for each state in the country. The total sales as per these reports are tabulated on page 7 of assessment order as under : Financial year Turnover (Rs.) 2000-01 94,63,07,936 2001-02 111,45,48,904 2002-03 129,36,49,261 2003-04 146,44,65,482 2004-05 156,78,66,369 2005-06 181,90,67,134 As against this, the sales turnover declared by the assessee in its Income-tax returns for the relevant assessment year were as under : Assessment year Turnover (Rs.) 2001-02 79,33,60,172 2002-03 88,21,35,772 2003-04 103,99,58,000 2004-05 121,22,34,000 2005-06 128,61,99,000 2006-07 148,51,76,310 2007-08 178,10,24,213 5. From the abovenoted figures, the Assessing Officer noted that the turnover declared by the assessee in the return of income for the various assessment year cited above were less than the figures finding mention in this "All India Sales Report for MDH Ltd." in each assessment year by the substantial margin as below : Assessmen....
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....d. However, the evidence pointed to the fact that those purchases were cash purchases made for MDH Ltd. The facts that the details contained only the name of supplier such as SCS, RJCS, etc. but no name of the purchaser clearly showed that the only purchaser was MDH Ltd., whose name was not considered necessary to be recorded by Shri Arora as all the purchases were meant for the assessee-company. The availability of a huge amount of cash more than Rs. one crore with Shri Arora was also a pointer to the fact that he was handling the unaccounted cash of MDH Ltd. as he himself was a dedicated supplier of the assessee-company and his financial standing could not explain the huge cash found. 8. The Assessing Officer further observed that existence of unaccounted purchases was not only confined to the financial year 2005-06 alone as evidenced for unaccounted sales were found for all the years from 2000-01 to 2006-07. On a query by the Assessing Officer it was submitted by the assessee that the necessary enquiries regarding Annexure A-6/H-6 seized from the premises of Shri Prem Kumar Arora were made. It was explained that Annexure A-6/H-6 was a note pad which contained the details of all....
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....-6 and pages 14-22 of A-4/O- 18 showed that the assessee-company had used cash to make purchases through its suppliers. This modus operandi was noticed in the financial years 2003-04, 2004-05 and 2005-06. Therefore, existence of unaccounted purchases in the financial years 2004-05, 2005-06 and 2006-07 was not merely a strong possibility but a fact that could not be easily brushed aside. 10. The Assessing Officer further observed that in the completed assessments a procedure to determine the estimated income has been followed. The unaccounted yearly purchase was arrived at on estimate basis taking the unaccounted purchase for the months of April and May, 2005 (assessment year 2006-07) found recorded in the seized material totalling Rs. 3,35,19,690. The yearly figure of unaccounted purchase was arrived at by multiplying it with sales ratio of the sales declared in the return of income divided by the total sales relating to the period in which the unaccounted purchases were found. The Assessing Officer for the assessment year 2006- 07 estimated unaccounted purchases at Rs. 17,41,73,225. 11. The Assessing Officer further noted that evidence contained in the papers was actually used b....
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....dition made by the Assessing Officer was confirmed. 13. Before us the learned authorised representative for the assessee submitted that the issue was squarely covered by the earlier decision of the Income-tax Appellate Tribunal wherein additions made by the Assessing Officer on estimate basis were deleted. On the other hand, the learned Commissioner of Income-tax-Departmental representative submitted that there was difference between All India MIS Sales Report and sales recorded in the books of account. During the course of search at the premises of Shri Prem Kumar Arora a note pad was found on which Shri Arora, the supplier of raw material to the assessee-company has made notings in respect of unaccounted supplies made to the assessee. He further submitted that unaccounted cash was found in the premises of Shri Prem Kumar Arora, the supplier to the assessee-company. The cash found with Shree Prem Arora was that of the assessee. The learned Commissioner of Income-tax-Departmental representative supported the order of the Assessing Officer strongly. 14. We have heard both parties and gone through the material available on record. We find that this issue is squarely covered by the ....
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....000 was allowed. On the balance of Rs. 31,500 cash discount at the rate of 2 per cent. amounting to Rs. 630 was allowed. On the balance of Rs. 30,870 sales tax at the rate of 10 per cent. was charged amounting to Rs. 3,087. Thus the total sale price is at Rs. 33,957. This amount goes to the books of account, as sale of the product as against Rs. 37,500 goes to the MIS report. Simi larly, bill No. L-0249 dated July 3, 2000 is for Rs. 1,92,012 and goes to MIS report. After allowing trade discount, cash discount and levy of sales tax, the sales are at Rs. 1,73,870.71. The amount of Rs. 1,92,012 goes to MIS report and Rs. 1,73,870.71 to books of account. Similar is the position in respect of invoice No. L-0250 dated July 3, 2000. The product value which goes to MIS report is Rs. 3,815 whereas the sales recorded in the books of account are at Rs. 3,536.81. Likewise, we have also gone through the sales in respect of Haryana, as per ledger account of M/s. Anurag and Company, in the books of account of the assessee. The total sales as per product value is of Rs. 1,23,14,799 con sisting of local sales (spices) at Rs. 1,20,43,691 ; local sales (hawan) at Rs. 90,190 ; local sales (aggarbatti)....
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....he order observed as under : 'I have considered the submissions of the appellant and do not find justification in the same in as much as evidence found at the premises of Mr. Prem Kumar Arora cannot be taken as any basis to hold that the assessee made unaccounted purchases. I have perused the seized paper, the same does not contain any name of the appellant. Neither in the statement, Mr. Prem Kumar Arora has alleged that such transactions pertained to the appellant. In fact, in the affidavit filed before me, the same cannot be relied upon. In fact, at that time, the paper does not pertain to the business of the appellant-company. It is well settled position of law that document found from the third person cannot be applied against the appellant and the burden lays upon the Department to show that same reflects transactions of the appellant company. Reliance is placed on the judgment in the case of Sukhdayal Rambilas v. CIT reported in [1982] 136 ITR 414 (Bom) wherein it has been held that what is apparent is not real, the burden to establish this is on the person who alleges this. Similar view has been expressed in the case of CIT v. Daulat Ram Rawatmull repored in [1973] 87 ....
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....asis of undisclosed sales determined as per AISR report and as per books of account he applied gross profit rate of 2.45 per cent to sustain the addition. We have already held that there is no difference between the sales recorded in MIS reports and as per books of account. Therefore, no addition on account of undisclosed profit can be made. We accordingly delete the addition in all the four years." 15. Since the issue in the assessment years 2005-06, 2006-07 and 2007-08 is identical to that of the earlier assessment years, respectfully following the decision of the Income-tax Appellate Tribunal dated October 29, 2010, the additions made by the Assessing Officer at Rs. 11,00,00,000 for the assessment year 2005-06 ; Rs. 14,00,00,000 for the assessment year 2006-07 ; and Rs. 9,02,38,560 for the assessment year 2007-08 are deleted. 16. The next issue for consideration relates to addition of Rs. 21,66,50,451 in the assessment year 2005-06 ; Rs. 25,01,66,669 for the assessment year 2006-07 ; and Rs. 30,00,00,000 in the assessment year 2007-08. The additions have been made by the Assessing Officer on the ground that the assessee had earned undisclosed speculation business income. The A....
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....essee-company depending upon the actual requirements of inventory in the manufacturing process. The Assessing Officer further noted that the assessee was also engaged in speculation in gold trading reflected at pages 20 and 21 to Annexure AA-O1 for the period April 13, 2004 to October 1, 2004. For this limited period of 8 months the total turnover done by the assessee was in the range of Rs. 2 crores to Rs. 3 crores. In this connection, Shri Vijay Kumar, jeweller was summoned to verify the transactions of M/s. MDH Ltd in the entire period 2000-01 to 2006-07. The assessee was asked to explain the contents of the transactions recorded on pages 20 and 21 of AA-4-01 during the assessment proceedings for the assessment years 2001-02 to 2004-05. It was submitted by the assessee that pages 20 and 21 of Annexure AA-4 contained the statement of account of gold ornaments of MDH from April 1, 2004 to October 31, 2004 received from M/s. Vijay Kumar Jewellers, Karol Bagh, New Delhi. The assessee-company had introduced the scheme of giving out gold chains to its parties as incentive for increasing its sales. Accordingly, MDH Ltd. had engaged the services of the said jeweller to make these gold c....
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....ing gold and alloy separately for the purpose. The explanation offered by the assessee was found to be misleading. The Assessing Officer further noted that a major element in the purchase transactions was a speculative profit in which deliveries were not taken and rate differences had accrued and arisen in the hands of the assessee-company but the same was not reflected in the books of account. The clinching evidence contained on pages 14 to 22 and in particular page 19 showed generation of unaccounted cash by systematic inflation of purchases through the suppliers and the commission agents and utilisation of the cash to make purchases in the peak season and generation of profits through rate differences by taking advantage of the rising price spiral as the peak season of procurement slowly tapers off with the lesser supplies and increasing prices. The evidence on these pages related to the years 2003-04, 2004-05 and 2005-06 but the modus operandi clearly showed that the assessee was doing this as a matter of business practice. The Assessing Officer also relied on the statement of Shri Sushil Trehan. Further the directors of the assessee-company had admitted income of Rs. 30 crores....
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.... the course of search proceedings. Speculative trading in dhania has been carried through M/s. Radhey Shyam and Co., Ramganj Mandi. He also noted that speculative trad ing was also done in haldi and chillies through Karni Sons, M/s. Karni Enterprises and M/s. Jitesh Kumar Bhupesh Kumar and Co. and also one Bal Kishan. He also noted that various documents seized from the possession of Shri Sushil Trehan contained details of undisclosed speculative transactions undertaken with its suppliers by the assessee. Further seized material also revealed that the assessee had indulged in the undisclosed speculation business in gold trading with M/s. Vijay Kumar Jewellers, Karol Bagh, New Delhi, during the period from April 1, 2004 to October 31, 2004. The Assessing Officer also noted that there was no need to maintain stock of gold with private jeweller since the direct purchases of ornaments could be made instead of buying gold and allow separately than getting it manufac tured, which shows its involvement in speculative trading. He also observed that the seized document show the generation of unac counted cash and utilisation in making purchases in the peak season than generated profit throu....
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....that too of such a large sum of Rs. 30 crores in the particular financial year 2006-07 and other amounts as have assessed in other years without any evidence. The Assessing Officer had placed reliance on statement of directors of the company for making addition though the same were retracted by them immediately thereafter during the continuation of search pro ceedings on November 28, 2006. The learned Commissioner of Income-tax (Appeals), after considering the submissions of the asses see deleted the addition. He accepted the contention of the assessee as correct. He observed that the Assessing Officer had made addition in the assessment years 2001-02 to 2004-05 relying on surrender of income in the assessment year 2007-08. He also noted that no addi tion can be made by alleging that the assessee also must have earned similar income that too in the earlier years without any evidence of nature on record. As regards the allegation of parallel cash balance on the basis of page 40 of Annexure A-3/O-2, the learned Commissioner of Income-tax (Appeals) observed that the assessee has explained its nature and got it tallied with the entries in the regular bank account statement maintained w....
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....gold on the basis of which it could be presumed that the asses see was engaged in speculative business. The surrender made by the directors during the course of search was retracted immediately thereafter. If the Revenue wanted to rely on the surrender made by the directors, necessary evidence should have been brought on record to justify that the surrender made by the assessee was correct. Income cannot be assessed on presumption basis. When the retraction for the assessment year 2007-08 was made, the same figure cannot be taken for estimating the speculative business for the assessment years 2001- 02 to 2004-05. No addition can be made without any supporting evi dence. In the instant case, the Assessing Officer has presumed that the assessee might have done speculative business in agricultural commodity and gold in the assessment years under consideration. Therefore, in our considered opinion, the learned Commissioner of Income-tax (Appeals) was justified in deleting the addition. Accord ingly, we do not find any infirmity in the order passed by the learned Commissioner of Income-tax (Appeals) deleting the addition for all the assessment years." 21. Since the issue involved in t....
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....partment has filed appeal before the Income-tax Appellate Tribunal and has contested the deletion of disallowance by the Commissioner of Income-tax (Appeals). The Dispute Resolution Panel in order to protect the interests of the Revenue upheld the disallowances in the assessment years 2005-06, 2006-07 and 2007-08. 23. Before us the learned authorised representative for the assessee submitted that this issue is squarely covered by the decision of the Income-tax Appellate Tribunal in the case of the assessee for the assessment years 2001-02 to 2004-05. On the other hand, the learned Commissioner of Income-tax-Departmental representative supported the order of the Assessing Officer. For disallowance under section 40A(2)(a) the learned Commissioner of Income-tax-Departmental representative placed reliance on the decision in the case of CIT v. Shatrunjay Diamonds [2003] 261 ITR 258 (Bom) for the proposition that burden was on the assessee to establish that price paid by it was not excessive or unreasonable. He also placed reliance on the decision of the hon'ble Madras High Court in the case of CIT v. NEPC India Ltd. [2008] 303 ITR 271 (Mad) and the decision in the case of CIT v. Pa....
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....s) is justified in deleting the addition. Merely because Mr. Dharam Pal Gulati name comes to prominence, it cannot be said that the expen diture was not incurred for the purpose of business. The issue is cov ered in favour of the assessee by the decision of the Income-tax Appellate Tribunal, Mumbai Bench in the case of Star India P. Ltd. v. Addl. CIT [2009] 311 ITR (AT) 235 (Mum) wherein it has been held that advertisement expenses incurred for the business purposes are allowable and it does not matter that other party is also benefited by such advertisement." 25. Since identical issue is involved and no evidence on the basis of which contrary decision could be taken was brought on record, we respectfully following the decision of the Income-tax Appellate Tribunal, delete the addition on account of advertisement expenditure for all the three years. 26. The next issue for consideration relates to addition made on account of inflation of purchase price of raw spices. The Assessing Officer made the following additions : Assessment year Addition (Rs.) 2005-06 1,13,71,759 2006-07 1,25,43,293 2007-08 1,32,63,588 27. During the course of search operation Annexure ....
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.... being invoiced. Further, the utilisation of surplus generated was also in accordance with the directions of the directors of the assessee-company. Therefore, income earned in this process belonged to the assessee-company and should be taxed as income in its hands. The Assessing Officer estimated income by multiplying the quantity of haldi and chillies purchased by the assessee by Rs. 3 and Rs. 5 respectively. For the assessment years 2005-06, 2006-07 and 2007-08, the inflation in the purchase price was determined as under : (Rs.) Haldi 713613 kgs. x Rs. 3.00 21,40,839 Chillies 1846184 kgs. x Rs. 5.00 92,30,920 Total 1,13,71,759 Assessment year 2006-07 (Rs.) Haldi 713226 kgs. x Rs. 3.00 21,39,678 Chillies 2080723 kgs. x Rs. 5.00 1,04,03,615 Total 1,25,43,293 Assessment year 2007-08 (Rs.) Haldi 859361 kgs. x Rs. 3.00 25,78,083 Chillies 2137101 kgs. x Rs. 5.00 1,06,85,505 Total 1,32,63,588 28. The Assessing Officer proposed addition of the abovementioned amounts in the hands of the assessee in the draft orders for the assessment years 2005-06, 2006-07 an....
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..... The learned Commissioner of Income-tax-Departmental representative placed reliance on the decision of the hon'ble Delhi High Court in the case of CIT v. A. K. Jain [2012] 349 ITR 236 (Delhi) for the proposition that even if income has been assessed in the hands of a third person because of the declaration made in the return, income must be assessed and taxed in the hands of real owner or recipient or person, who had made the investment. He also placed reliance on the decision of the hon'ble Supreme Court in the case of ITO v. Ch. Atchaiah [1996] 218 ITR 239 (SC). 31. We have heard both parties and have gone through the material available on record. We find that this issue is squarely covered by the decision of the Income-tax Appellate Tribunal dated October 29, 2010 for the assessment years 2001-02 to 2004-05. We have gone through the statement given by Shri Rajiv Gulati. In his statement Shri Rajiv Gulati stated that Shri Sushil Kumar Trehan was looking after supplies of raw-material to M/s. MDH Ltd. It was also stated that there was no practice in MDH Ltd. to inflate the purchase price. Shri Sushil Kumar Trehan was doing on his own account and initially to escape the l....
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....sment years 2001-02, 2002-03 and 2003-04 is based on mere suspicion and presumption and is not supported by any evi dence found during the course of search that Shri Sushil Trehan has earned commission on purchase of haldi and chilly in these years also. The Assessing Officer had added the same amount in all the four years. Since, the income has been assessed in the hands of Shri Sushil Trehan, the amount to that extent is in nature of commission income and becomes the expenditure in the hands of the assessee particularly when no evidence suggesting that over invoicing was done at the instance of the assessee was found. Moreover the same income cannot be taxed twice, once in the hand of Sushil Trehan as his income and again in the hands of the assessee by way of dis allowance of the expenditure. Therefore, in our considered opinion, no addition can be sustained in the hands of the assessee. Accord ingly, we delete the addition in all the years under consideration." 32. The abovementioned view of the Tribunal is supported by the following decisions : (i) In the case of CIT v. Shiv Prakash Aggarwal [2008] 306 ITR 324 (Delhi) a search was conducted at the premises of the assessee wh....
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....itted in the return of income. Since the issue is squarely covered by the decision of the Income-tax Appellate Tribunal, in our considered opinion, addition cannot be made in the hands of the assessee. Following the decision of the Income-tax Appellate Tribunal for the earlier years. We delete the additions in the assessment years under consideration. 34. The next issue for consideration which is common for all the three years relates to addition towards inflation in expenses based on documents seized under annexure A-4/O-18. The Assessing Officer examined the entries found recorded on pages 51, 52 and 89 of annexure A-4/O-18. The assessee purchased chillies from M/s. B.D. Patil Industries, Vinayak Traders, M/s. B. D. Patil Sons and Shri Someshwar Commission Company. There was inflation of prices at Rs. 5 per kg. for chillies. The Assessing Officer found inflation of purchases in the assessment year 2005-06 at Rs. 54,48,600. On a query raised by the Assessing Officer it was stated that page 52 on the letter head of M/s. B.D. Patil Industries had been explained by Shri Sushil Kumar Trehan and declared unaccounted income noted therein. Further it was stated that no adverse cognizanc....
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....ission received by Shri Sushil Kumar in the supplies of haldi and chillies to the assessee. It was also submitted that Shri Sushil Kumar Trehan, son-in-law of the managing director of the company, was in-charge of procuring supplies of haldi and chillies for the assessee. He was not paid any remuneration for the services rendered by him. In the process of procuring the supplies of chillies and haldi for the assessee Shri Sushil Kumar Trehan received secret commission at Rs. 5 per kg. for chillies and Rs. 3 per kg. for haldi for himself. He had surrendered amount of secret commission in his return of income. Therefore, no addition could be made in the hands of the assessee. However, the Dispute Resolution Panel was of the view that the explanation offered by the assessee was an afterthought. The disclosure of unaccounted income in the hands of Shri Sushil Kumar Trehan could be for any reason but it did not explain in anyway the action of the assessee in inflating its purchase of chilli and haldi. The fact remained that Shri Trehan was neither a director nor an employee of the assessee-company. In fact the price of chilli and haldi at the prevailing market rate on the date of all the....
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....rial like chillies, haldi and jeera, etc. It has further been submitted that the Dispute Resolution Panel on one hand has held that no evidence was shown to prove that Shri Sushil Kumar Trehan worked for the procurement of haldi and chillies. On the other hand, it puts an allegation that kick-back was received by the assessee and then in the next line it puts an allegation that kick-back was received by the directors of the company. Therefore, the findings of the Dispute Resolution Panel are contradictory and cannot be relied upon. It was further submitted that income on the basis of pages 40, 51 and 89 has been declared by Shri Sushil Kumar in his return of income under section 153A of the Act. Therefore, the same cannot be added in the hands of the assessee. The learned authorised representative of the assessee further submitted that the Assessing Officer had made addition of Rs. 1,13,71,759 for over invoicing of chillies and haldi by considering the quantity of the said items purchased during the entire year by the assessee-company. Thus the addition again made for over invoicing of purchase of chillies and haldi on the basis of seized material referring to the intermediate peri....
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....e confirmed the disclosure given by Shri Sushil Kumar Trehan. The fact that the directors of the company admitted to such discrepancies in the records and in the statements given by them where not only they admitted the discrepancy in the record of the assessee but also giving huge disclosure of undisclosed income. 38. We have heard both parties and gone through the material available on record. During the course of search Shri Sushil Kumar Trehan has admitted that he was purchasing haldi, chillies and jeera on behalf of the assesseecompany. There is no dispute about the fact that those papers containing over invoicing were found from his custody. It is also a fact that Shri Sushil Kumar Trehan was not paid any remuneration. Shri Rajiv Gulati in his statement admitted that there was no such practice in MDH Ltd. to inflate the purchases. He also admitted that those transactions were made by Shri Sushil Kumar on his own account and initially to escape the liability of tax on the basis of those papers, he made statement that purchase inflation was on account of purchases done by MDH Ltd. It was further stated by Shri Rajiv Gulati that income arising from those papers was admitted by ....
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....e. We accordingly delete the addition of Rs. 54,48,600. 40. Ground No. 5(b) relates to addition of Rs. 35,99,840 made on the basis of pages 14 to 22 of Annexure A-4/O-18 for purchase inflation in haldi and chillies. During the course of search loose papers containing purchases made from Karni Sons, Jitesh Kumar Bhupesh Kumar, Karni Enterprises were found. These documents pertain to purchases of haldi and chillies made on behalf of MDH Ltd. The Assessing Officer on the basis of entries recorded on loose papers of Annexure A-4/O-18 made the additions as below : Sl.No. Page No. Name of the person Amount 1. 14 Karni Sons 19,03,530 2. 15 Jitesh Kumar Bhupesh Kumar 7,02,810 3. 19 Karni Enterprises 5,00,000 4. 21 Jitesh Kumar Bhupesh Kumar 4,93,500 Total 35,99,840 41. During the course of assessment proceedings, it was submitted by the assessee that these papers were found from the possession of Shri Sushil Kumar from the premises of Mata Chanan Devi Hospital. The entries recorded on the said papers have been owned up by Shri Sushil Kumar and have been declared in his return of income. These entries relate to over invoicing by Rs. 5 in....
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....The assessee had inflated the purchases and therefore, the Assessing Officer had issued questionnaire to the assessee. The assessee's explanation was not found to be acceptable. Therefore, the Assessing Officer as well as the Dispute Resolution Panel were justified in making the addition in the hands of the assessee. 44. We have heard both parties and gone through the material available on record. The facts relating to this ground are identical to the ground relating to addition of Rs. 54,48,600. For the same reasons it is held that no addition can be made in the hands of the assessee when Shri Sushil Trehan has owned up the papers found in his possession. He was collecting Rs. 5 and Rs. 3 per kg. in respect of chillies and haldi without the knowledge of management. Moreover, this addition is also part of addition of Rs. 1,13,71,759. Therefore, the addition of Rs. 35,99,840 amounts to double addition. Therefore, in our considered opinion addition is not required in the hands of the assessee. We, therefore, delete the addition of Rs. 35,99,840. 45. The next issue for consideration relates to addition of Rs. 37,35,000 on account of unexplained investment by way of donations for....
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.... per section 292C of the Act was that the paper belonged to the assessee and its contents were proved. The Assessing Officer therefore, made the addition of Rs. 37,35,000 (Rs. 21,75,000 + Rs. 15,60,000). 46. The assessee raised objection before the Dispute Resolution Panel. The Dispute Resolution Panel rejected the objections raised by the assessee on the ground that the addition made was based on seized papers. 47. Before us it was submitted that pages 41-42 of Annexure A-4/O-18 contain details of donations collected by Mahashay Chunni Lal Charitable Trust and the same were found from the premises of Mata Chanan Devi Hospital from the possession of Shri Sushil Trehan who had owned up the said documents and had given cash donations of Rs. 11.3 lakhs and Rs. 28.75 lakhs noted therein out of his undisclosed income. The cash book of Shri Sushil Kumar Trehan for such period clearly shows that all donations totalling into Rs. 52.85 lakhs (Rs. 11.3 lakhs + Rs. 28.75 lakhs + Rs. 12.80 lakhs) had been recorded as paid out of undisclosed income declared by him under section 153A of the Act. As regards the amount of Rs. 5 lakhs it was submitted that the same was paid through bank account o....
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....rs. As regards the amount of Rs. 5 lakhs, pages 540 and 541 are receipts of Rs. 5 lakhs which has been received by demand draft No.767248 dated March 5, 2004 from Mahashay Chunni Lal Charitable Trust. We have also gone through the bank statement of Mahashay Chunni Lal Charitable Trust with Syndicate Bank which gives the details of Rs. 5 lakhs debited to the account of Rs. 5,00,000 has been paid on October 19, 2004 from the bank account of Mahashay Chunni Lal Charitable Trust. Therefore, Rs. 5,00,000 payment pertained to Mahashay Chunni Lal Charitable Trust. There is nothing on record to suggest that these amounts had been paid by the assessee. Thus the source of income of Rs. 10.60 lakhs which is part of Rs. 11.30 lakhs and Rs. 21.75 lakhs which is part of Rs. 28.75 lakhs falls in the assessment year 2004-05 and Rs. 5,00,000 was paid from bank account of Mahashay Chunni Lal Charitable Trust. Therefore, no addition can be made in the hands of the assessee-company. The Assessing Officer has invoked the provisions of section 292C for the presumption that the said papers were seized from the possession of the assessee and contents thereof were correct. Section 292C was inserted by the ....
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....tatement recorded on oath on date of search had admitted while replying question No. 23 that expenses in school building were out of books. The Assessing Officer further observed that in the past completed assessment it had been held that on the basis of seized record that M/s. MDH Ltd. was inflating expenses and investing in properties. Mahashya Dharam Pal was the main person behind the trust. The Assessing Officer further observed that Mahashya Dharam Pal was also chairman and main deriving force behind the assessee-company. All other companies were dependent on the assessee-company for their activities. Therefore, the Assessing Officer concluded that Shri Sushil Kumar Trehan had been made fall guy that is how he had owned up all the transaction. The Assessing Officer therefore, made addition of Rs. 44,98,279 (Rs. 17,57,274 + Rs. 27,41,005). 52. The assessee objected to the proposed addition before the Dispute Resolution Panel. Before the Dispute Resolution Panel it was submitted by the learned authorised representative for the assessee that school belongs to Mahashya Chunni Lal Charitable Trust and if any addition is required to be made on account of these papers, should be mad....
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....fore, submitted that addition for utilisation of donations received by the trust in the hands of the assessee should be deleted because those transactions do not pertain to the assessee and addition of the said amount will lead to double addition. 54. We have heard both parties and gone through the material available on record. Page 45 of Annexure A-4/O-18 placed at page 424 of the paper book contains details of Rs. 27,41,005. This page does not contain name of the person from whom the money of Rs. 27,41,005 had come for investment in school building. Pages 46 to 49 contain details of expenditure of Rs. 17,57,274. There is no name of any person from whose account the money has come for investment in school building. There is no indication on these pages that amount of Rs. 44,98,279 has come from the account of the assessee-company. Therefore, no addition can be made in the hands of the assessee-company. The contention of the assessee that amount has been spent out of undisclosed income earned by Shri Sushil Kumar Trehan has been brushed aside merely on presumption that the amount of Rs. 44,98,279 has come from the coffers of the company. Since the school is owned by Mahashaya Chun....
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....aders a supplier of the assessee (Gurgaon office account of the assessee) and page 552 of the paper book is the copy of account of M/s. Vinayak Traders (Delhi office account) of the assessee. It was submitted that the closing balance of Rs. 34,44,461 in Gurgaon office account as on December 7, 2005 and the closing balance of Rs. 1,22,17,083 in the Delhi office account as on December 6, 2005 is reflected on letter dated December 9, 2005 and the sum of Rs. 50,00,000 is the sum total of two entries of Rs. 25 lakhs each which is the capital contribution of Mahashayaji which is a reference to the managing director of the company who is known as Mahashayaji and Rajivji which is a reference to the director of the assesseecompany. The Dispute Resolution Panel however noted that the submissions of the authorised representative that these were the closing balance of the account of M/s. Vinayak Traders dealing with the assessee's Gurgaon office and Delhi office were found to be correct. The closing balances were actually reflected on pages 79 and 80 of the seized documents itself which were the account of M/s. Vinayak Traders in the assessee's Gurgaon and Delhi office. Both these acco....
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....ax-Departmental representative has submitted that the Assessing Officer proposed addition of Rs. 1,56,61,544 based on entries of Rs. 1,22,17,083 against New Delhi and Rs. 34,44,461 against Gurgaon on the basis of entries recorded on page 82 of the seized material a letter dated December 9, 2005 from M/s. Vinayak Traders. However, the Dispute Resolution Panel noted that the authorised representative has not been able to show with reference to books of account the amount of Rs. 25 lakhs each totalling to Rs. 50 lakhs paid to M/s. Vinayak Traders on account of capital contribution by Mahashyaji and Rajivji. Accordingly, the assessee's contention regarding the amount of Rs. 50 lakhs was to be rejected. The Assessing Officer in view of the Dispute Resolution Panel's order made the addition of Rs. 50 lakhs. The learned Commissioner of Income-tax-Departmental representative submitted that the Dispute Resolution Panel has upheld the addition and therefore, the addition has to be upheld. It was also submitted that the decision of the Income-tax Appellate Tribunal Mumbai in the case of Dredging International N.V. v. DIT (International Taxation) [2012] 14 ITR (Trib) 299 (Mumbai) is no....
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....n should have been in the hands of the partners and not in the hands of the assessee. Accordingly no addition can be made in the hands of the assessee. 62. In the draft assessment order the Assessing Officer has proposed addition of Rs. 1,56,61,544 which was based on the outstanding amount in respect of MDH Delhi and MDH Gurgaon. The Dispute Resolution Panel has not approved the addition of Rs. 1,56,61,544. However, they have approved the addition of Rs. 50 lakhs credited to the account of the partners. According to the learned authorised representative for the assessee the Dispute Resolution Panel cannot suggest fresh addition other than referred to by the Assessing Officer. Under section 144C(8) the Dispute Resolution Panel has power to confirm, reduce or enhance the variation proposed in draft order. However, the Finance Act, 2012 has inserted the Explanation to section 144C(8) with retrospective effect from April 1, 2009 that the Dispute Resolution Panel has power to consider any matter arising out of the draft assessment order. Hence we do not find any infirmity in the order directing the addition of Rs. 50,00,000. Hence, the legal issue raised by the assessee is rejected. 6....
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.... draft assessment order on this ground. 65. Before us the learned authorised representative of the assessee submitted that school at Byadgi belongs to Mahashaya Chunni Lal Charitable Trust which is a separate assessee being assessed by the same Assessing Officer. If the valuation of the said property owned by the said trust is found to be higher than the addition could be made in the hands of the said trust and not in the hands of the assessee. It was also submitted that notice under section 148 was issued by the Assessing Officer for the assessment year 2005-06 to the said trust. Thus, the said pages do not pertain to the assessee and therefore, no addition of the said amount can be made in the hands of the assessee. It was further submitted that pages 45 to 49 of Annexure A-4/O-18 show some amount other than recorded in books has been incurred on the said school for which addition of Rs. 44,98,279 has been made in the assessment year 2005-06. Therefore, the addition of Rs. 51,44,224 includes the addition of Rs. 44,98,279. It was also submitted that investment in the school building was made by Shri Sushil Trehan out of undisclosed income offered for taxation. The learned authori....
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....incurred expenditure on construction of school building at Byadgi. On the contrary Shri Sushil Kumar has owned up the expenditure out of his undisclosed income. We have also gone through the reasons recorded under section 148 for reopening of the case of the trust. As per reasons recorded proceedings under section 147 have been initiated on the basis of valuation report of the school building at Rs. 75,86,800. The amount of Rs. 75,86,800 has been bifurcated in two assessment years, i.e., Rs. 36,26,490 in the assessment year 2005-06 and Rs. 39,60,310 in the assessment year 2006-07. From these facts it is clear that the Assessing Officer has issued notice under section 148 for the assessment year 2005-06 to the assessee. The amount of Rs. 36,26,490 which according to him has escaped assessment in the assessment year 2005-06. The Assessing Officer has also allotted Rs. 39,60,310 to the assessment year 2006-07. We have also gone through the balance-sheet of school as on March 31, 2006 wherein school building expenditure was shown at Rs. 24,41,776. Since the school belongs to Mahashaya Chunni Lal Charitable Trust, no addition in the hands of the assessee can be made based on valuation r....
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.... A-4/O-18. We find that the entrees on page 51 relate up to May 15, 2004. Some of the entries relate to year ended on March 31, 2004. Thus the amount expended on construction of school building relate to the assessment years 2004-05 and 2005-06. The source of income is commission of Rs. 5 per kg of chilies charged by Sh. Sushil Trehan on purchases made by him for MDH Ltd. This commission has been assessed in his hands. The Assessing Officer has taken the additions for the assessment year 2007-08 in view of the presumptive provisions of section 292C of the Act. Under section 292C where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132, it may, in any proceeding under this Act, be presumed (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person ; (ii) that the contents of such books of account and other documents are true ; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the hand....
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....and chillies and was also indulging speculation of agricultural commodities, gold, etc., the Assessing Officer concluded that cash was generated by various means. Since the assessee was not able to explain entries relating to cash account recorded on page 40, the Assessing Officer added the amount of Rs. 12,46,90,000 as unexplained income. 73. The assessee objected to addition proposed by the Assessing Officer before the Dispute Resolution Panel. The objections raised were treated of general nature by the Dispute Resolution Panel and the proposed addition was approved. 74. Before us the learned authorised representative of the assessee submitted that objections raised are placed at pages 1060 to 2062. The Dispute Resolution Panel rejected the objections without considering them. The learned authorised representative for the assessee further submitted that daily operating/available balances in HDFC bank account at Ludhiana branch of the assessee were recorded by an accountant in Gurgaon to plan the amount available for disbursements. In HDFC Ludhiana branch the buyers in Punjab territory were depositing cheques directly. This exercise was undertaken by him on telephone daily to us....
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....on August 22, 2006, Rs. 4,00,000 stated just above it represents the value of the post-dated cheque dated August 22, 2006 deposited on August 21, 2006 in the bank, but which was not readily available for use on August 21, 2006 as explained. The same is squarely verifiable from the copy of the bank statement of the relevant dates fur nished herewith. Further, the sum of Rs. 19,43,739.55 stated right on top of the said two sums is the balance after reducing Rs. 25,000 for cheque issued but not yet presented on August 21, 2006 from the said available balance of Rs. 19,68,739.55. In fact, the two cheques of Rs. 7,500 and Rs. 25,000 issued prior to August 21, 2006 were presented for payment in the bank on August 21, 2006 and August 22, 2006, respectively. Even these have been stated in column '1' and can also be verified from the bank statement. Accordingly, in the explanatory statement prepared for recon ciling the balances as per the bank statement and as per the seized loose paper, the said transactions for August 21, 2006 have been reconciled as under : Particulars Amount (Rs.) Opening balance as on August 21, 2006 as per bank statement 19,76,239.55 Add : Cheque d....
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....tries recorded on page 40 of Annexure A-3/O-2 relate to the bank account with HDFC Bank Ludhiana. The cash deposits taken on different dates tallied with the bank statement. For example on August 24, 2006 the opening balance is Rs. 14,43,739.55 which is closing balance on August 23, 2006. The deposit of Rs. 7,00,000 on August 23 which is mentioned on August 24 suggesting that the accountant was ascertaining the availability of cash for the use. Similarly the cash deposits as per these entries are reflected in the bank account. The assessee has explained the entries the manner in which the accountant was recording on the page. Therefore, the entries recorded are in respect of availability of cash for use in HDFC Bank Ludhiana and do not represent cash available with the assessee as alleged by the Assessing Officer. We therefore, are in agreement with the contention of the assessee that the entries recorded on page 40 to Annexure A-3/O-2 are in respect of HDFC Bank Ludhiana. The accountant has made entries in order to know the availability of cash on a particular date. Accordingly, no addition can be made in the hands of the assessee. The Assessing Officer had not referred to page 40....
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....as 4495 cases. However, pages 45 to 47 showed a stock of 5801 cases as on November 20, 2007 and as on October 26, 2008-5001, 569 pieces. The assessee gave the reply as in respect of pages 78 to 82. During the course of search there was huge discrepancies alleged to have been detected during physical stock taken by the search parties in the factories at Kirti Nagar, Gurgaon, Ghaziabad, etc. Stock of raw-material and work-in-progress which was more than that disclosed in the books of account which was confronted to the director Shri Rajiv Gulati who had agreed to the discrepancies and had surrendered Rs. 10 crores in the assessment year 2007-08 on account of such discrepancies. Another question was put to Shri Rajiv Gulati according to which (question No. 22) while conducting search and survey operations at the business premises some papers/documents, records/computer, etc. containing incriminating documents were found which were related to the business transactions. After examining the record it was found that none of business transactions were reflected in the books of account. Shri Rajiv Gulati after going through the records accepted that there was some discrepancy and he offered....
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.... and was not substantiated by the assessee which is incorrect assertion. The assessee has raised objection to this finding of the Dispute Resolution Panel vide letter dated September 22, 2010, a copy of which is placed at pages 1060 to 1062 of the paper book indicating the evidence placed on record of the Dispute Resolution Panel by the assessee to substantiate its contention. Thus, the Dispute Resolution Panel rejected the objections of the assessee without considering the submissions of the assessee. As regards page 3 of Annexure A-6/O-1 it was submitted that the figure related to expected demand and supply position of various masalas noted down by the production personnel to plan the product-wise production. The Assessing Officer brushed aside the explanation offered by the assessee as sham explanation. As regards pages 78 to 82 of Annexure A-6/O-1 the learned authorised representative for the assessee submitted that the Assessing Officer had noted that there was nothing on record to suggest that verification had taken place since the order sheet did not record so. The learned authorised representative for the assessee submitted that the assessee could not be blamed for the defa....
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....e made on account of surrender made by the director. The assessee placed reliance on Instruction F. No. 286/2/2003-IT (Inv.II) of Central Board of Direct Taxes issued on March 10, 2003. On the other hand learned Commissioner of Income-tax (Departmental representative) submitted that the assessee during the course of search had admitted undisclosed income in the group to the extent of Rs. 51 crores. However, the assessee and its directors have retracted the surrender made during the course of search under section 132(4). It was submitted that once surrender has been made, retraction is not permitted in view of the judicial pronouncements. He placed reliance on the decision of the Kerala High Court in the case of CIT v. O. Abdul Razak [2011] 337 ITR 267 (Ker) for the proposition that voluntary surrender made could not be retracted. The retraction made by the assessee was a self serving and afterthought and no reliance could be placed on the same to disbelieve clear admissions made in statement recorded under section 132(4) of the Act. He also placed reliance on the decision of the Allahabad High Court in the case of Dr. S. C. Gupta v. CIT [2001] 248 ITR 782 (All) for the proposition ....
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....mal practice the stock inventory is done at the time of search and survey and the difference if any is worked out on the basis of such inventory. In the case of the assessee no discrepancy on the basis of such inventory of stock of the assessee at various premises was made. The assessee has relied on the Central Board of Direct Taxes Instruction No. F. No. 286/2/2003-IT (Inv. II), dated March 10, 2003 which reads as under : "Instances have come to the notice of the Board where the asses sees have claimed that they have been forced to confess the undis closed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing the returns of income. In these circumstances, such confessions during the course of search and seizure and survey operations do not serve any useful pur pose. It is, therefore, advised that there should be focus and concen tration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, where recording statement during the cou....
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....spute Resolution Panel rejected the objection raised by the assessee on the ground that it was of general nature and no evidence was brought on record in support of the contention of the assessee that the addition was not to be made in the hands of the assessee. 87. Before us the learned authorised representative for the assessee submitted that the assistant accountant of M/s. Satvik Traders was not authorised to give statement on behalf of the assessee. Further no cross- examination of the said person was allowed to the assessee. The statement of third party has been relied upon without cross-examination, that too as regards M/s. Satvik Traders, a separate assessee. The premises where survey took place do not belong to the assessee. Therefore, no addition can be made in the hands of the assessee. 88. We have heard both the parties and gone through the material available on record. The accountant of M/s. Satvik Traders had stated that he was accepting certain amount without recording it in the books of account. If that is the case, addition should be made in the hands of M/s. Satvik Traders and not in the hands of the assessee. No material has been brought on record to suggest th....
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....y the assessee regarding the approval of the Director of Income-tax, reference to circular, method adopted by the Transfer Pricing Officer for computing the arm's length price, etc., and has rejected the objection of the assessee merely by stating that the assessee has made general submissions regarding the arm's length price determined by the Transfer Pricing Officer and has not pointed out anything on the basis of which order of the Transfer Pricing Officer could be faulted with. The Dispute Resolution Panel has referred only one of the subsidiaries, i.e., Mark and Spices Ltd. and has not referred to the other subsidiary company in its order. Thus, the directive order is devoid of merit and the assessment passed on the basis of such order should be cancelled. It was also brought to our notice that the assessee had raised an objection regarding non-disposal of all the objections before the Dispute Resolution Panel vide letter dated September 22, 2010. 92. The learned authorised representative for the assessee further submitted that proper approval from the Director of Income-tax (TP) has not been taken by the Assessing Officer as can be seen from the letters placed on rec....
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....e total value of invoice with total number of cartons) ignoring that the said cartons does not have same/comparable items (pages 933 to 955 of the paper book). The said average was then compared with the average computed for the bills raised on uncontrolled party during the same period and then the difference therein was multiplied with the number of cartons to arrive at the amount of addition. Thus the Transfer Pricing Officer has compared two incomparable figures to arrive at arm's length price which is not permissible at all. The Transfer Pricing Officer was duty bound to consider the rates of each product as given in the bills, copies of which were placed on his record and were also examined by him as is mentioned in his order. The Transfer Pricing Order computing the arm's length price at a higher figure than the actual figures is bad in law and on facts as the same does not consider the fact that the entire arm's length sales was made to wholly owned subsidiaries of the assessee which were working as an extension of the assessee for further sales of the produce and not as competitor of the overseas buyers. 95. It is on record that the said subsidiaries were not s....
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....the quantity supplied to associate enterprises and non associate enterprises while computing the arm's length price. 96. The Transfer Pricing Officer/the Assessing Officer has erred in law and on facts in rejecting the transactional net margin method of computing the exports price and substituting the same with comparable uncontrolled price though in the case of the assessee transactional net margin method is the most suitable method considering the factors and circumstances of the wholly owned subsidiaries overseas who are not undertaking any business other than for the goods supplied by the assessee and are working to establish new market overseas for the products of the assessee and all such expenses were the sole responsibility of the assessee. In a nutshell the entire exercise to compute the impugned arm's length price and the alleged difference by the Transfer Pricing Officer is incorrect and must be struck down. 97. On the other hand the learned Commissioner of Income-tax (Departmental representative) submitted that the assessee had not given comparables on the plea that product mix was entirely different and there were no comparables in public domain. He further s....