TMI Blog2019 (1) TMI 1567X X X X Extracts X X X X X X X X Extracts X X X X ..... ame is higher than that of the comparable companies at 4.04% in the manufacturing segment and 4.46% in the distribution segment. TNMM has undisputedly been satisfied. Since the operating margins of the assessee are in excess of the selected comparable companies, no adjustment on account of AMP expenses is warranted - decided in favour of assessee. TP adjustment - payment of royalty - selection of comparable - HELD THAT:- As decided in assessee's own case [ 2013 (6) TMI 217 - ITAT DELHI] we direct the TPO to determine the Arm s Length royalty @ 4.05%. Transfer Pricing adjustment on account of Allocation of Asian Region Office Expenses - determination of ALP of intra group services - Revenue contends that the assessee has not adduced evidence sufficient to justify the need, benefit and arm s length nature of intra group service charges paid to its AE - HELD THAT:- As in the light of the decision of CIT vs Lumax Industries Limited [ 2015 (10) TMI 2509 - DELHI HIGH COURT] we are of the opinion that once the assessee has satisfied the TNMM method i.e. the operating margins of the assessee are higher than those of the comparable companies [as mentioned elsewhere], no separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid in financial years 2005-06, 2006-07 and 2007-08 - employment equal to or more than 300 days in the subsequent year - AO has allowed the deduction in A.Y 2005-06 but disallowedin A.Y 2006-07 and 2007-08 - Scope of amendment - HELD THAT:- There is no dispute that he assessee satisfies all the conditions for claiming deduction u/s 80JJAA. The claim of the assessee is that the workmen who joined in the preceding year in which such workmen worked for less than 300 days should be considered provided that the period of employment of such workmen is equal to or more than 300 days in the relevant previous year. What the assessee contends is that new workmen, who did not fall in the category of regular workmen , on account of employment being for less than 300 days in the year of appointment, should be considered as regular workmen in the subsequent year, provided such workmen continue to be employed with the company and the total period of their employment is equal to or more than 300 days in the subsequent year. Thought this contention of the assessee has been take care of by the second proviso, but the same has been given effect from 1.4.2019. If the effect of the second prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivate Ltd. Company, engaged in trading, manufacturing, marketing and sale of electronics, home appliances and I.T. products. For the year under consideration, assessee has disclosed total sales of ₹ 69,52,69,05,000/-. The assessee has also disclosed Other Income of ₹ 2,03,43,86,000/-. Net profit was at ₹ 3,51,82,77,000/-. The assessee has claimed exempted income of ₹ 20,33,38,565/- u/s 10B of the Act and deduction of ₹ 44,50,635/- u/s 80JJAA of the Act. 5. The assessee had made international transactions with Associated Enterprises [AEs], namely : (i) Arcelik-LG Klima San Ve Tic A.S., Turkey (ii) Hitachi LG Data Storage INC, Japan. (iii) LG Alina Electronics, Russia. (iv) LG Chem Ltd, Korea (v) LG CNS INC, Korea, etc 6. Accordingly, a reference was made to the TPO for determining the ALP of international transactions. The TPO proposed to make an adjustment of ₹ 3,20,72,55,985/-. Based on the TPO s recommendation, draft assessment was passed on 30.12.2011 wherein the assessment was completed making an adjustment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Value of sales 8605,67,65,713 AMP / Sales of the comparables 4.93% Arms Length Price (as per Bright Line) 424,25,98,549 Expenditure on AMP by the appellant 689,60,79,670 Expenditure in excess of bright line 265,34,81,121 Mark-up at 12.5% on excessive AMP as per DRP direction 33,16,85,139 Reimbursement that appellant should have received. 298,51,66,260 Reimbursement that appellant has received. 33,55,48,510 Adjustment to assessee s income 264,96,17,750 9. Before us, the ld. AR has vehemently stated that the TPO has proceeded by inferring the expenses of international transaction by applying BLT by drawin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red merely on the basis of BLT. For this proposition, we draw support from the judgment of the Hon'ble Delhi High Court in the case of Maruti Suzuki India Ltd 381 ITR 117. 13. In this case, the Hon'ble High Court held that existence of an international transaction needs to be established de hors the Bright Line Test. The relevant finding of the Hon ble High Court reads as under: 43. Secondly, the cases which were disposed of by the judgment, i.e. of the three Assessees Canon, Reebok and Sony Ericsson were all of distributors of products manufactured by foreign AEs. The said Assessees were themselves not manufacturers. In any event, none of them appeared to have questioned the existence of an international transaction involving the concerned foreign AE. It was also not disputed that the said international transaction of incurring of AMP expenses could be made subject matter of transfer pricing adjustment in terms of Section 92 of the Act. 44. However, in the present appeals, the very existence of an international transaction is in issue. The specific case of MSIL is that the Revenue has failed to show the existence of any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely on AMP in order to promote the brand of SMC. As far as the legislative intent is concerned, it is seen that certain transactions listed in the Explanation under clauses (i) (a) to (e) to Section 92B are described as 'international transaction'. This might be only an illustrative list, but significantly it does not list AMP spending as one such transaction. 61. The submission of the Revenue in this regard is: The mere fact that the service or benefit has been provided by one party to the other would by itself constitute a transaction irrespective of whether the consideration for the same has been paid or remains payable or there is a mutual agreement to not charge any compensation for the service or benefit. Even if the word 'transaction' is given its widest connotation, and need not involve any transfer of money or a written agreement as suggested by the Revenue, and even if resort is had to Section 92F (v) which defines 'transaction' to include 'arrangement', 'understanding' or 'action in concert', 'whether formal or in writing', it is still incumbent on the Revenue to show the existence of an 'un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XX 34. The TP adjustment is not expected to be made by deducing from the difference between the 'excessive' AMP expenditure incurred by the Assessee and the AMP expenditure of a comparable entity that an international transaction exists and then proceed to make the adjustment of the difference in order to determine the value of such AMP expenditure incurred for the AE. 35. It is for the above reason that the BLT has been rejected as a valid method for either determining the existence of international transaction or for the determination of ALP of such transaction. Although, under Section 92B read with Section 92F (v), an international transaction could include an arrangement, understanding or action in concert, this cannot be a matter of inference. There has to be some tangible evidence on record to show that two parties have acted in concert . XXX 37. The provisions under Chapter X do envisage a separate entity concept . In other words, there cannot be a presumption that in the present case since WOIL is a subsidiary of Whirlpool USA, all the activities of WOIL are in fact dictated by Whirlpool USA. Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian subsidiary amounts to rendering of a service to its foreign AE for which arm s length compensation was payable by foreign AE to its Indian subsidiary. 17. It is the say of the ld. DR that the functions carried out by the assessee are in the nature of development, enhancement, maintenance, protection and exploitation of the relevant intangibles and thus, the assessee deserves compensation. 18. The case of the ld. DR is that the act of incurring of AMP expenses by the assessee is not a unilateral act and is an international transaction for following reasons:- i) Though, the AMP expenditure may be for the purpose of business of the assessee but it is in performance of function of market development for the brands and products of the AE that enhances the value of the marketing intangibles owned by the foreign AE, and hence there is a transaction of rendering of service of market development to the AE. ii) The short term benefit of the transaction accrues both to assessee and AE in terms of higher sales but long term benefit accrues only to the AE. iii) The benefit to the AE is not incidental but sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to incur higher expenditure on AMP in order to render a service of brand building. Such inference would be in the realm of assumption/surmise. In our considered opinion, for assumption of jurisdiction u/s 92 of the Act, the condition precedent is an international transaction has to exist in the first place. The TPO is not permitted to embark upon the bench marking analysis of allocating AMP expenses as attributed to the AE without there being an agreement or arrangement for incurring such AMP expenses. 22. The aforesaid view that existence of an international transaction is a sine qua non for invoking the transfer pricing provisions contained in Chapter X of the Act, can be further supported by analysis of section 92(1) of the Act, which seeks to benchmark income / expenditure arising from an international transaction, having regard to the arm s length price. The income / expenditure must arise qua an international transaction, meaning thereby that the (i) income has accrued to the Indian tax payer under an international transaction entered into with an associated enterprise; or (ii) expenditure payable by the Indian enterprise has accrued / arisen under an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Considering the aforesaid contention of the Revenue, we are of the considered view that the Hon'ble High Court in the case of Maruti Suzuki India Ltd [supra] held that the findings of the Hon'ble High Court with regard to existence of international transaction was only with respect to the case of three limited risk distributors namely, Sony Ericsson, Canon and Reebok etc., wherein the existence of international transaction was admitted and not in dispute. The Court accordingly held that such findings in the case of Sony Ericsson cannot be applied to the case of the manufacturers. 26. The Hon'ble High Court held as under: 43. Secondly, the cases which were disposed of by the Sony Ericsson judgment, i.e. of the three Assessees Canon, Reebok and Sony Ericsson were all of distributors of products manufactured by foreign AEs. The said Assessees were themselves not manufacturers. In any event, none of them appeared to have questioned the existence of an international transaction involving the concerned foreign AE. It was also not disputed that the said international transaction of incurring of AMP expenses could be made subject matter of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic ownership of the brand/logo/trademark in question, in the case of long term right of use of the same. This principle also squarely covers the present case. The assessee has a long term agreement for the use of the trademark LG in India. This clearly evidences the fact that the economic benefit arising out of the alleged promotion of the AE s logo is being enjoyed by the assessee. There is a clear opportunity and reasonable anticipation for the assessee to benefit from the marketing activities undertaken by it. This is clearly evidenced by the significantly higher profits made by assessee compared to its industry peers and also the very sizeable year on year increase in its turnover. In view of the aforesaid, it is respectfully submitted that the economic ownership of the trademark LG rests with the assessee. The Hon ble High Court in the case of Sony Ericsson Mobile Communications India Pvt Ltd (supra) disagreed with the finding of the Special Bench that the concept of economic ownership is not recognized under the Act. The relevant observations in paras 151 to 154 of the judgement are reproduced hereunder: 151. Economic ownership of a trade name or trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of promotion of such brand, benefit is only received by the Indian entity. It wa submitted that the economic ownership of the brand rests with the assessee and accordingly, the assessee cannot be expected to seek compensation for the expenditure incurred on the asset economically owned by it. No Transfer Pricing adjustment on account of AMP expenses would be warranted. The aforesaid test is fully satisfied in the case of the assessee and the Transfer Pricing adjustment on account of AMP expenses made by the TPO is liable to be deleted. 30. The assessee being a full-fledged manufacturer, entire AMP expenditure is incurred at its own discretion and for its own benefit for sale of LG products in India. In the case of the appellant, the advertisements are aimed at promoting the sales of the product sold under trademark LG manufactured by the assessee and not towards promoting the brand name of the AE. In such circumstances, the alleged excess AMP expenditure does not result in an international transaction and the assessee cannot be expected to seek compensation for such expenses unilaterally incurred by it from the AE. 31. The Revenue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of the Hon'ble Jurisdictional High Court of Delhi In the case in hand, the operating profit margin of the assessee is at 5.01% in the manufacturing segment and 4.52% in the distribution segment and the same is higher than that of the comparable companies at 4.04% in the manufacturing segment and 4.46% in the distribution segment. TNMM has undisputedly been satisfied. Since the operating margins of the assessee are in excess of the selected comparable companies, no adjustment on account of AMP expenses is warranted. 34. Considering the facts of the case in hand in totality, we are of the view that the Revenue has failed to demonstrate by bringing tangible material evidence on record to show that an international transaction does exist so far as AMP expenditure is concerned. Therefore, we hold that the incurring of expenditure in question does not give rise to any international transaction as per judicial discussion hereinabove and without prejudice to these findings, since the operating margins of the assessee are in excess of the selected comparable companies, no adjustment is warranted. Ground Nos. 3 to 3.34 of the assessee are allowed. 35. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mar-99 Showcase of Reach-in-type and open type reach-in-cooler and open freezer 5% 5% 5 Victor Company of Japan Mirc Electronics Limited Apr-03 Colour Television Receiver Set and Sub-assemblies 5% 5% 7 SRS Labs Inc Salora International Limited Apr-03 Speaker 5% 3 Vilter Manufacturing Corporation Frick India limited Jan-03 Refrigeration Compressors 5% 8% 5 37. Out of the aforesaid 8 comparables, DRP/TPO considered only 3 comparables engaged in manufacture of colour television, viz., Toshiba Corporation, Japan, Kenwood Design Corporation and Vict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding a tenant requiring the premises for a short-term. The rate of rent in a former case will be lower for a variety of reasons, such as, not undergoing the process of finding a tenant every now and then, fear of the property remaining vacant for some time after the exit of the first tenant and incurring costs at the time of each let out. Difference between the rent charged by the landlord or paid by the tenants in the afore discussed two situations is nothing but a discount allowed to a tenant of long- term on the available market rate of rent. This analogy can be applied to the present facts by considering the discount which a licensor with a perpetual license may allow or the premium which a licensor with a fixed term license may charge. It can be seen that the TPO downgraded 2% on this score and reduced the unadjusted comparable rate of 3.5% to the adjusted 1.5%. To put it differently, the TPO treated the premium charged by the comparable licensors on account of fixed term licenses at 57% (2/ 3.5*100), or in other words, the discount at such rate to the prevalent market rate on account of perpetual license. However, the DRP treated such discount for perpetual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial and treasury Legal and tax advisory Investment research analysis Supply Chain Management Global procurement Supply chain management Logistic management After Sales Services Technical Call Centre 44. In consideration for the aforesaid services, the regional head quarter charged fees on the basis of cost plus mark up of 5%, and accordingly, the assessee paid a sum of ₹ 4,59,20,550/-. 45. The Revenue alleges that the assessee is not even in possession of the information with regard to the utilisation of intra-group services of marketing and finance and, hence, it is not in a position to co-relate the exact application of the above mentioned services and benefit derived by the segment/ division of the company on account of intra group service charges and is only making a vague representation of deriving benefit. The Revenue further contends that the assessee has not adduced evidence sufficient to justify the need, benefit and arm s length nature of intra group service charges paid to its AE. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allegation that these are share holder services, we do not find any merit in this argument of the Revenue. Services are provided by LG Electronics Singapore Pte Ltd, which is not a shareholder of the assessee company and was created to provide managerial support services to various entities in the region, in the form of undertaking market research, market performance analysis, conducting consumer interviews engaging the services of third party consultants for undertaking market/industry analysis, provision of supply chain management services, provision of after sale services etc. and such activities cannot be termed as share holder activity. 51. We find that the assessee engaged a third party consultant to determine the arm s length price of the services provided by the RHQ. The consultant determined ALP at ₹ 6,521/- per hour as against the comparable uncontrolled price of ₹ 11,670/- per hour. Since the hourly rate charged by RHQ is lower than comparable hourly rate of third parties transaction of regional head quarter charges meets the arm s length test. 52. The Revenue has made the adjustment holding that the assessee was not required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, but is also contrary to the Rules. Depending upon the method selected, net profit or gross profit of the assessed has to be compared with profit margins of related enterprise. The formula prescribed under the Rules does not accept the ratiocination adopted and applied by the TPO. 54. The Hon ble Delhi High Court in the case of CIT vs Lumax Industries Limited ITA No 102/2014 held that the Transfer Pricing provisions do not authorize disallowance of any expenditure on the basis that it was not necessary for the assessee to incur the expenditure. The Hon ble Court held as under: 16. On the question of addition made by the AO on account of ALP for the payment of royalty, learned counsel for the Assessee has rightly referred to the decision in Commissioner of Income Tax v. Sony Ericsson Mobile Communication (2015) 374 ITR 118 where the determination of the ALP of the royalty paid as Nil was not approved. The Court's attention has also been drawn to the decision in Commissioner of Income Tax v. EKL Appliances Limited (2012) 345 ITR 241 wherein it was held that Rule 10B (1) (a) did not authorize disallowance of any expenditure on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57. Same view was taken by the Hon'ble Delhi High Court in the case of Magneti Marelli Powertrain India Pvt. Ltd. ITA No 350/2014 wherein the Hon ble High Court held as under: 17. As far as the second question is concerned, the TPO accepted TNMM applied by the assessee, as the most appropriate method in respect of all the international transactions including payment of royalty. The TPO, however, disputed application of TNMM as the most appropriate method for the payment of technical assistance fee of 38,58,80,000 only for which Comparable Uncontrolled Price ( CUP ) method was sought to be applied. Here, this court concurs with the assessee that having accepted the TNMM as the most appropriate, it was not open to the TPO to subject only one element, i.e payment of technical assistance fee, to an entirely different (CUP) method. The adoption of a method as the most appropriate one assures the applicability of one standard or criteria to judge an international transaction by. Each method is a package in itself, as it were, containing the necessary elements that are to be used as filters to judge the soundness of the international transaction in an ALP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to overseas marketing services. The ld. AR pointed out that the directions issued were in relation to the analysis of evidences submitted for Allocation of Asia Region Office expenses. 63. We find that the facts have not been properly appreciated by the lower authorities. It appears that the evidences furnished by the assessee have been considered in the light of allocation of expenses by RHQ. In the interest of justice and fair play, we restore this issue to the file of the TPO. The assessee is directed to furnish evidences specifically mentioning the issues under consideration and the TPO is directed to verify the same and decide the issue afresh after giving reasonable opportunity of being heard to the assessee. Ground Nos. 6 to 6.1 are allowed for statistical purposes. 64. Ground No. 7 relates to segregation of closely linked transactions. 65. This issue is covered by our findings given in Ground Nos 3 to 6 and, therefore, goes in favour of the assessee and against the Revenue. 66. Ground Nos. 8 to 8.1 relate to addition on account of Sales-tax subsidy of ₹ 46,29,42,435/- holding the same to be reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idy in the form of sales tax exemption, in order to compensate the investment made for setting up the unit in the State of U.P. The total amount of exemption initially granted was ₹ 203,73,53,192, which was to be utilized within a period of 15 years, commencing from 27.3.1998 to 26.3.2013. 71. In accordance with the aforesaid Policy, the assessee sold the products manufactured in the aforesaid unit at the same price (Dealer Price), at which products manufactured at other units (non-exempt units) were sold, which is inclusive of sales tax. The modus operandi followed is described hereunder: 72. The assessee sells the products at dealer price (DP) across the country, which is uniform in the State of U.P. and other States. This price is inclusive of sales tax. As per the said exemption, the appellant is not required to pay sales tax on sale in U.P. and is eligible to retain the entire selling price, i.e., DP inclusive of sales tax. However, by selling the products in states other than U.P., the appellant is required to deposit the corresponding sales tax with the State Government. Thus by selling the goods at the same DP in State of U.P. and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA No. 1404/DEL/2007 has held as under: 9. We have heard both the parties and gone through the material available on record. In this case the assessee had collected sales tax as a part of dealers' price. At the year end the sales tax portion, which formed the part of dealers' price had been bifurcated and has been claimed as capital subsidy. We have also gone through the Notification No. 1179 dated 31.03.1995 issued by the State Government of Uttar Pradesh. The State Govt. has provided sales tax exemption with an objective to promote the development of certain industries which have been set up or undertaken modernisation, diversification, backward integration by way of fixed capital investment of ₹ 50 crores or more. The exemption of from sales tax or benefit of reduced rate of tax is available to those units which have started production or have carried out expansion or modernisation or backward integration etc. between 1.12.1994 and 31.03.2000. Para 2 of the notification specifies that the exemption or reduction in the rate of sales tax including the additional tax would not be more than 5 per cent of sale of goods. In case where tax rate was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to collect sales tax from its customers. The assessee has been exempted from collecting the sales tax from customers on the sales made with effect from 27th March, 1998. In fact, the ld. counsel for the assessee made a statement at the bar, during the course of hearing, that neither the Notification has authorized the assessee to collect sales tax nor the assessee had collected the sales tax as such. The assessee had included the element of sales tax in the dealers' price as a sale price of the product. In the States other than Uttar Pradesh, the sales tax so collected as a part of dealers' price has been paid to respective State Governments, whereas in the case of the assessee, since the assessee was not liable to pay sales tax, as exemption has been provided to the extent of 200 per cent of fixed capital investment, the sales tax element which is embedded in the sale price have been retained by the assessee as excess sales consideration. At the year-end the assessee has allocated the sales tax element from dealer s price and has claimed the same as capital subsidy. Therefore, the collection of dealers' price has been made in the ordinary course of trading activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rranty thereby the income stand increased by this element of service warranty being income embedded in the sales price. The contention of the assessee did not find any favour with the Assessing Officer who was of the firm belief that there is no definite element to the liability and disallowed ₹ 38,02,141/-. 84. When the matter was agitated before the DRP, the DRP observed that similar issues arose in A.Ys 2002-03 to 2007-08 wherein similar disallowances have been deleted by the CIT(A). Since the Revenue s appeals were pending before the Hon'ble High Court of Allahabad, the DRP confirmed the findings of the Assessing Officer. 85. We do not find any force in the findings of the DRP. When in A.Ys 2002-03, 2003-04, 2004-05 and 2007-08 this issue has been settled in favour of the assessee and against the Revenue, we do not find any reason why the same should not be followed for the year also. Respectfully following the findings of the coordinate benches, we direct the Assessing Officer to delete the addition of ₹ 38,02,141/-. Ground No. 9 is allowed. 86. Ground Nos 10 10.1 pertain to disallowance of payment of royalty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the claim of deduction pertaining to A.Y 2006-07 and 2007-08 amounting to ₹ 29.06 lakhs. 94. Before us, the ld. AR contended that due to the amendment in section 80JJAA of the Act, the assessee is very much entitled for the claim of deduction. It is the say of the ld. AR that the only dispute is whether workmen who joined the assessee company in the earlier years and worked for less than 300 days in that year and therefore, were not regarded as regular workmen in that year. It is the say of the ld. AR that if the amendment is considered in its true perspective, such workmen will be considered as regular workmen in the subsequent years in which their period of employment becomes equal to or more than 300 days. 95. Per contra, the ld. DR stated that the amendment brought in section 80JJAA is w.e.f. 1.4.2019 and, therefore, the same is not applicable for the year under consideration. 96. We have carefully considered the orders of the authorities below qua the issue. There is no dispute that he assessee satisfies all the conditions for claiming deduction u/s 80JJAA of the Act. For our convenience, section 80JJAA reads as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year. 99. In our considered opinion, this amendment i.e. second proviso is clarifactory in nature and is intended to remove the anomaly so as to advance legislative intention of providing incentive to new worker for more than 300 days and must be given retrospective effect. For this proposition, we draw support from the judgment of the Hon'ble Supreme Court in the case of Allied Motors Pvt. Ltd Vs. CIT 224 ITR 677 [SC]. The relevant finding of the Hon'ble Supreme Court reads as under: In the case of Goodyear India Ltd. v. State of Haryana and Anr. (188 ITR 402) this court said that he rule of reasonable construction must be applied while construing a statute. Literal construction should be avoided if it defeats the manifest object and purpose of the Act. Therefore, in the well known words of Judge learned Hand, one cannot make a fortress out of the dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rued as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained. 100. Similar view was taken by the Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusions Ltd 319 ITR 306 wherein the Hon'ble Supreme Court held that where a proviso in section is inserted to remedy unintended consequences to make section workable the proviso which supplies obvious omission therein in required to be read retrospectively in operation particularly to give effect to section as a whole. 101. Same view was followed by the Hon'ble Supreme Court in the case of CIT Vs. Kolkata Export Company 404 ITR 654. 102. Respectfully following the ratio laid down by the Hon'ble Supreme Court [supra] we direct the Assessing Officer to allow claim of deduction u/s 80JJAA of the Act as claimed by the assessee. 103. Ground Nos. 13 13.1 pertain to levying of interest u/s 234B and 234C of the Act. 104. Levy of penalty is mandatory though consequential to our decision. The Assessing Officer is directed to levy interest as per provisions of the law. Interest u/s 234C to be charged on the returne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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