TMI Blog2011 (1) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... 05-2009. 2. Facts in brief. The assessee is a company and is in the business of manufacture, distribution, marketing and sale of flavours. It filed its return of income electronically on 25-11-2006, declaring total income of Rs. 2,56,14,300. The AO completed the assessment on 31-12-2008, determining the income at Rs. 23,06,37,110. While doing so, the AO made the disallowances/additions, inter alia , on account of : ( a )CENVAT u/s 145( a ). ( b )Disallowance u/s 14A. ( c )Addition on account of transfer Pricing Adjustment u/s 92C(3). Deduction u/s 80-IB was disallowed. 3. The first appellate authority granted part relief. Revenue filed this appeal on the following grounds: 1. On the facts and in the circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be set aside to the file of the AO for fresh adjudication in line with the judgment of the jurisdictional High court in the case of Godrej Boyce Mfg. Co. Ltd. v. Dy. CIT . 5. Coming to ground No. 4, Mr. Narendra Singh took this Bench through the order of the AO and submitted that the assessee has chosen to arrive at the weightage average of the enterprise level profits of 13 comparables and then apply such enterprise level average profits to the international transaction to demonstrate that the international transaction is done at the arms length price. He submitted that the entire system adopted by the assessee is legally fouled and unsustainable in law. He submitted that if the profit margins are adopted at enterprise levels, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst appellate authority. 6. The learned counsel for the assessee Mr. Kanchan Kaushal, appearing along with Mr. Dhanesh Bafna, on the other hand, submitted as follows. 7. On ground No. 1, he relied on the order of the CIT(Appeals). On ground No. 2 he submitted that the CIT(Appeals) was right in holding that the AO was wrong in disallowing the deduction u/s 80-IB on the sole ground that the Chartered Accountant who gave a certificate u/s 44AB is different from the Chartered Accountant who had issued a certificate in Form No. 10CCA for claiming deduction u/s 80-IB. He pointed out that there is no provision in law that the audit of accounts and the issue of certificate in Form No. 10CCA should be done by the same Chartered Accountant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, then also no adjustment is called for u/s 92C. He relied on the decision of the Mumbai Bench of the Tribunal in the case of Tej Diam ( supra ) and submitted that the Bench has held that the adjustments can be made only to international transactions and not to domestic transactions. Similarly he relied on the decision of I-Bench of the Tribunal in the case of Starline ( supra ). He also relied on the decision of the Delhi Bench of the Tribunal in the case of IL Jin Electronics (I) (P.) Ltd. v. Asstt. CIT [2010] 36 SOT 227 and pointed out that the Bench has clearly held that applying the operating profit on total sales is not justified and at best it can be applied to the proportionate sales made out of raw material imported fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be set aside to the file of the AO in the line with the decision of the Tribunal in the case of Tej Diam ( supra ). 11. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below as well as the case law cited, we hold as follows. 12. On ground No. 1, the first appellate authority at para 2.4 of his order held as follows : "2.4 I agree with the above judgments of Hon ble Supreme Court and more specifically in the context of provisions of section 145A, with the judgment of Hon ble Tribunal in the case of Roha Dye Chem Ltd. , and hold accordingly. The AO is accordingly directed to make adjustment in the values of op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ground No.4, both the assessee as well as the AO have not followed the statutory requirements. The provisions of the Act and Rules have been totally ignored. Enterprise level operating profits are sought to be imposed as margins earned on an international transaction with an associated concern. This, in our considered opinion, cannot be approved by us. Though the issue is not in dispute, between the parties, then the same is patently illegal, the Tribunal cannot give its stamp of approval for the same. It is the duty of the Tribunal to ensure that the provisions of the Act and the Rules are followed and just because the Revenue as well as the assessee agreed not to follow the Act and the Rules and do not dispute the same before the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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