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TMI Blog2016 (9) TMI 1650X X X X Extracts X X X X X X X X Extracts X X X X ..... spose of them by this common order. First we take up Revenue's appeal ITA No.181/Kol/2010 for A.Y 04-05. 3. Revenue has raised following grounds as under:- "1. That on the facts and in the circumstances of the case, Ld. CIT(A) erred in deleting the addition of Rs. 50,15,212/- made by the TPO due to adjustment of arm's length price adopting RPM method being the most appropriate having regard to the facts and circumstances of each particular transaction after giving reasonable opportunity to the assessee. 2. On the facts and in the circumstances of the case, Ld. CIT(A) erred in directing not to include service charge amounting to Rs. 90 lakhs in total turnover while computing deduction u/s. 80HHC of the IT Act. 3. That on the facts and in the circumstances of the case, Ld. CIT(A) erred din allowing deduction of customs duty of Rs. 11,77,331/- which was adjusted against advance license benefit available to the company rather than payment thereby violating the provision of sec. 43B of the IT Act. 4. That on the facts and in the circumstances of the case, Ld. CIT(A) erred in accepting additional evidence which is a violation of Rule-46(A) of IT Rules, 1962. 5. That the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -04 used the CPM method for the export to AE and RPM method for the Export from AE. So the AO adopted the CPM method and worked out the ALP for the exported goods as under:- The manufacturing details submitted by the assessee are as under:- Total Domestic sales Export to AEs Export to non-AEs Net sales 2,288,221,250 2,024,504,485 37,986,395 80,760,331 Other income 45,519,716 Raw material consumption 1,616,195,407 1,400,627,381 32,271,826 63,842,458 Gross profit 672,025,843 623,877,104 5,714,569 16,917,873 GP on sales 29% 31% 15% 21% GP on cost 42% 45% 18% 26% It was observed that the overall GP margin is 42% on total costs of the assessee. However on export to AEs, the GP on cost is only 18% as compared to 26% earned on the export to non-AEs. The AO further observed that the functions performed by the assessee are similar in both the cases of exports to AE and non-AE. Therefore the GP margin should be similar. The assessee objected on the assumption of the AO and stated that the products are different for export to AE and non-AEs. However the AO rejected the plea by observing that the assessee himself used CPM for AY 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trading goods. Hence, RPM is the most appropriate method in the given facts. In view of the above, the AL GP margin on sales in respect of imports is considered as 23%. After giving 5% relief, adjusted ALPO is 18% only. The GP margin shown by the assessee is only 13%. 5. Aggrieved, assessee preferred an appeal to ld. CIT(A) whereas assessee submitted that the TPO rejected the transfer pricing study without finding out any deficiency in it. The finding of the AO that the assessee has used the CPM method in the AY 2003-04 is incorrect as the assessee has used only TNMM method for that year. The justification given by the AO for adopting the CPM method that the transaction with AE is less than 5% of the total volume of the business is not tenable as his logic is not based on any provision of law or any precedent of case. He has applied this logic on his own whimsy, conjecture, premises. Without prejudice to above the TPO has applied the CPM method incorrectly without determining the direct and indirect cost. The TPO has taken only raw material consumption and has not taken the other cost associated with the production. As per the CPM method the product similarity is also required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reasons that earlier accepted method was not appropriate. In the appellant's case the TDPO rejected the assessee's reliance on TNMM method on the ground that in the immediate preceding year the assessee had adopted CPM & RPM methods for determining ALP with AEs whereas in the year under consideration assessee had adopted TNMM method to justify its transactions with AEs. In the light o these observations TPO proposed adjustments to ALP by adopting CPM & RPM methods which according to him were followed by the assessee in the earlier year. In other words TPO justified adoption of CPM & RPM methods on the rule of consistency & thereby rejected assessee's TP report which was based on TNMM method. In my opinion the TPO was not justified in rejecting TNMM method for the reasons set out in his order because in the immediately preceding year also, assessee had adopted the same method; justifying its international transactions with AEs by following TNMM. 8. Now coming to the merits of the adjustments carried out, I note that in respect of Exports to Associated Enterprise, TPO proposed upward revision in the export price by Rs. 9,68,154/- because in his opinion profit margin disclosed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .20% 4.84% 4.36% 10. from the comparative analysis, it is noted that if incidence of manufacturing cost, royalty on sales & commission was taken into account then assessee's profit margin in respect of exports to AEs was higher at 4.84% against profit margin of 4.36% in respect of exports to non AEs. It appeared that in his order the TPO took into account only the direct material consumption cost but failed to consider the proportionate manufacturing cost, royalty & commission payments. From the facts as are brought on record I find force in the A/R's argument that profit margin in Exports to AEs was higher than the profit margin in exports to Non AEs. In his report u/s 92CA(3) TPO failed to consider the cost & manufacturing sales overheads. I have therefore no hesitation in holding that TPO did not correctly work out the ALP in respect of exports to AEs. If he had taken into account the costs and expenses associated with exports made to unrelated parties, the profit margin of the appellant in exports to AEs compared favourably as opposed to profit margin in exports to unrelated parties. For the aforesaid reasons therefore I do not find merit in the upward adjustments of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47,002/-. These purchases inter alia included 3 products viz., press chemicals, blankets & machines. The products procured from unrelated parties & sold to unrelated parties were other than printing ink. It appeared from the comparative statement that purchases from unrelated parties were imported as from the comparative statement that purchases from unrelated parties were imported as well as sourced locally. Profit margins varied substantially form product to product and also depending whether the product was sourced locally or imported. For example, in the case of sale of press chemicals, the assessee earned profit margin of 32% from locally sourced press chemicals whereas in the case of imported press chemicals profit margin was only 14%. In the case of imported blankets sold to unrelated parties locally profit margin was 29% and in respect of machines procured locally & sold to unrelated parties locally profit margin was 9%. The overall profit margin in trading operations involving 3 products other than printing ink was 23%. From analysis of these facts & figures, I however find that in respect of each product profit margins varied substantially & profit margin of 23% did not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material or infirmity in the report furnished by the assessee before AO; I find no justification in the adjustments carried made by the TPO in respect of material imported from AEs and sold to unrelated parties. The addition of Rs. 40,47,058/- is therefore ordered to be deleted. 14. Since on the facts of the case I have held that adjustments carried out by AO to the ALP with AEs were unjustified & the relief is allowed; the objections raise by the appellant against reference made to TPO for determination of ALP without complying the conditions prescribed in the Act; are now of academic interest only. I therefore do not deem it necessary to adjudicate the grounds challenging the AO''s reference for determination of ALP by the TPO." Being aggrieved by the order of the ld. CIT(A) Revenue is in appeal before us. 6. Before us ld. DR submitted that the TPO noted that the assessee has justified all the transactions under the TNMM. He found that the volume of import and export transactions with the AEs (RS. 10A crores) was not substantial (less than 5%) as compared to turnover. He felt that due to this small volume, net profit from the transactions would not give a correct picture for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions were less than 5% of the turnover. Further, he intended to analyze the two segments viz. manufacturing and trading segments, separately. This is clearly mentioned in the last Para of page 2 of the TPO's order. The reference to the use of CPM and RPM in earlier year was not made in the context of rejection of the TNMM. It was made while justifying these two methods as the most appropriate method for the two respective functions of the assessee. To appreciate this distinction, it is felt necessary that the whole process of arriving at the ALP of an international transaction in the case of the assessee be summarized. Section 92D requires any person who has entered into an international transaction to keep and maintain such information and documents in respect thereof as may be provided. Rule 10D of the IT Rules prescribes in a detailed manner the information and documents which have to be kept and maintained by the assessee. The methods considered for determination of the ALP of an international transaction and the actual working of computation of ALP is a part of such information. On receiving a reference from the AO u/s 92CA(l) of the Act, the TPO initiated proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentions the factors which have to be taken into account while selecting the most appropriate method. As mentioned earlier, duty has been cast on the assessee to analyse the Methods and show the working of ALP. In Part-V of the Report mentioned above, the Methods prescribed by the Act have been analyzed. The assessee has rejected CUP and the PSM and even the TPO does not have any information or document in his possession to apply these methods. Thus, the only Methods left for analysis are the CPM, RPM and TNMM. As per Rule 10B(1)(C), CPM has to be applied to an entity which is involved in production of some property or services. As the assessee has a manufacturing function, this Method can be applied for international transactions carried out under that function. On page 33 of the Report, the assessee accepts that CPM could have been applicable in case of export of manufactured goods, but has rejected this Method on the ground that (Para 5.19): " ... since exports to unrelated parties is very small, hence trying to compare margins at the gross level for related and unrelated party will not be correct because of the volume and different geographical locations. " Similarly, as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h requires taking into account (in respect to both controlled and uncontrolled transactions): i. Characteristics of the property transferred ii. Functions performed, assets used etc iii. Contractual terms iv. Conditions prevailing in the markets in which the parties to both controlled and uncontrolled transactions are operating. It needs to be mentioned here that, these requirements are common to all the Methods described in Rule 10BB(1). Thus, the assessee failed to draw any distinction between the international transactions carried out under the manufacturing function taking into account assets used and risks assumed on one hand and international transactions carried out under the trading function taking into account the assets used and risks assumed. The TPO examined the Report submitted by the assessee. It needs to be highlighted here that the AO or the TPO is not burdened with the responsibilities mentioned in section 92D read with Rule 10D. Section 92C(3) of the Act simply mentions that if during the course of proceedings, on the basis of information or documents in his possession, the AO or the TPO is of the opinion that, inter alia, the price charged or paid in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the details of gross margins for the two segments were called from the assessee itself. The sheet supplied by the assessee to the TPO in this regard is enclosed as Annexure 2 to this submission. If additional details were submitted by the assessee with regard to computation of gross margins, the same should have been remanded to the AO /TPO for comments. Thus, the nature of these additional manufacturing costs remained un-examined from the TPO's side. Further, it is seen that royalty and commission payments are included in the cost side for sales to unrelated parties. These are operational costs and not costs of production. Even if there are no sales, there would be cost of production and the gross margin would be a loss, but there would not be any royalty or commission payment on the basis of percentage of sales. On these grounds, it is pleaded that the decision of Ld. CIT(A) is erroneous. So far as the computation of ALP under the RPM in case of trading function is concerned, Ld. CIT(A) has dealt with it in para 11 to 13 of the appellate order. The main issues highlighted therein is that whereas the assessee imported printing inks from the AEs for sale in domestic mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying the TNMM Meth to be "at arm's length" (ALP). However as regards the export of manufactured products & import of various goods for trading, the TPO rejected the assessee's computation and evaluation of arm's length pricing. The TPO without pointing out any defect in the benchmarking exercise or in the reasons stated by the transfer pricing auditor in the transfer pricing report for taking the TNMM Method to be the most appropriate method baldly alleged that since the volume of import & export transactions with the AEs was not substantial (being less than 5%), TNMM Method was not reliable. Apart from the foregoing reservation which is clearly not the decisive parameter for choosing the most appropriate method, the TPO in the entire transfer pricing assessment framed ix] s 92CA(3) failed to point out any infirmity or fallacy in the benchmarking exercise or the comparables used by the assessee. Even in his written arguments the D/R has merely reiterated the TPO's stand that since the volume of the import & export transactions was not substantial the TNMM Method was not suitable. In this regard it is submitted that nowhere does Rule 10B of the I.T. Rules, 1962 require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r benchmarking the commission income. Similarly royalty payment of Rs. 30.68 million to AE was only 1.21% of the total expenses debited to P&L AI c. Even this transaction was benchmarked applying TNMM Method. The TPO accepted the assessee's benchmarking exercise and the application of TNMM Method in respect of royalty payment was accepted as well. In the circumstances the assessee fails to understand that if the application of TNMM was found justifiable by the TPO in respect of commission received and royalty paid which were admittedly less that 5% of the total turnover expenses then why only the transactions referred to in (a.) & (c) of the above client the TPO & the D/R found the same TNMM to be inappropriate on the ground that these were not substantial. Such selective &; contradictory approach adopted by the TPO was therefore unjustified and bad in law. This further proves that the allegation of the TPO that TNML method could not be applied to imports I exports from AEs since it constituted less than 5% of total turnover was ex-facie fallacious. It is also pertinent to mention that similar quantum of imports/exports from AEs were made in the earlier AY 2003-04 and the subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 92C( 1) was found or considered more suitable or for that matter more reliable than the TNMM Method. It appears from the TO Order that the TPO proceeded to arbitrarily apply the "Cost Plus Method" for benchmarking "Export of manufactured goods" and "Resale Price Method" for "Trading of various goods". The TPO made factually incorrect statement in the impugned order for holding that "CP Method" and the "RP Method" were the most suitable methods for benchmarking "Export of manufactured goods" and "Trading of various goods" respectively. The TPO ignored the fact that both of the aforesaid methods failed to satisfy the decisive parameters laid down in Rule 10B of I.T. Rules, 1962 which were relevant & pertinent before proceeding to apply these methods. On Pages 55 & 56 of the Paper Book [ Pages 33 & 34 of the Transfer Pricing Report for FY 2003-04 ] the Transfer Pricing Auditor has elaborately set out the reasons as to why the CP Method & the RP Method could not be applied for benchmarking the ALP. The TPO however failed to distinguish the reasoning furnished by the Transfer Pricing Auditor and arbitrarily applied CP Method & RP Method. Furthermore even the benchmarking exercise co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premise of the TPO's contention which is supported by the D/R in his arguments are factually incorrect and patently wrong. The assessee reiterates that it had applied TNMM Method to justify the arm's length price in AY 2003- 04 and not the CP or RP Method as alleged. 9. At page 2 of his written arguments by the D/R; has further stated that the TPO did not reject the TNMM Method on the ground that CP Method & RP Method was used by the assessee in earlier year. In D/R's view therefore the Id. CIT(Appeals)'s findings to that extent was erroneous. The D/R has justified the TPO's order by stating that the reference to the use of CPM & RPM in earlier year was made not to reject the TNMM but to justify the TPO's findings that the alternate methods i.e. RPM & CPM were most appropriate methods than TNMM. The appellant submits that the statement of the D/R is self contradictory and based on twisted logic. It seems to be a ploy or ruse to create unnecessary & unwarranted confusion in the minds of the hon'ble membeRs. On one hand the D/R admits that the reference to earlier year's TP order was to justify application of CP & RP Method but then contradicts himsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eject the bench-making exercise carried out by the assessee without even the need to substantiate it with reference to the true facts, details & documents of the asses Such argument of the D/R is blatantly erroneous and contrary to the provisions of law and also the principles of natural justice. Before the Id. CIT(Appeals), the assessee without prejudice to its primary contention that TNMM Method was in most appropriate method had successfully made out the case that even the CP Method & RP Method was applied to the assessee's case, even then international transactions with its AEs were at arm's length. In support of investments the assessee had relied on the facts & figures which were availing the audited accounts. The Id. CIT(Appeals) after considering the explains & calculations furnished by the assessee accepted its contention and the: deleted the upward adjustment proposed by the TPO on being satisfied t factually the TPO had wrongly computed the ALP because he had not taken into account the true; correct and the relevant facts. 9.2 The Ld. D/R in his written arguments has bier tried to find faults & errors in the aforesaid benchmarking exercised out by the CIT(Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "show cause" notice requiring the assessee to furnish the statement giving details of direct & indirect costs, factory overheads and post manufacturing expenses incurred in relation to its exports to AEs & non-AEs. The TPO also never show caused the assessee to explain as to why TNMM should be rejected or for that matter why CPM should not be applied to its case. The assessee was kept in complete dark and was never informed by the TPO that he was proposing to benchmark the ALP applying CP Method. It is only after the assessee received the TPO's order u/s 92CA(3) that the assessee became aware that the TPO had chosen to arbitrarily apply the CPM Method in respect of export of manufactured goods. The TPO while applying the CP Method suo moto equated the "gross margins" as being difference between the export sales value & corresponding cost of raw materials consumed. From the plain reading of the TO Order it appears that the TPO was of the considered opinion that "gross profit margin" was the difference between the export sales value & cost of raw materials consumed and no other associated costs was required to be considered in arriving at the G.P. margin. The TPO was all along we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost heads are included for determination of the 'cost of goods sold'. It was explained before the CIT(A) that the AO& TPO had erroneously considered only the cost of raw materials and omitted to consider the other relevant expenses/ overheads for the purposes of computing the "cost of goods sold". It was in this background that the assessee furnished a statement before the CIT(Appeals) containing its version of computation of gross profit margin on export of manufactured goods. The D /R in his written arguments has however tried to project as if the assessee had intentionally tried to conceal true facts at the stage of assessment and deliberately furnished different statements before the TPO & CIT(Appeals) respectively. The D/R has therefore suggested that the same should have been remanded back. The assessee submits that the said allegation of the D /R is completely unjustified. Before the TPO, the assessee had furnished the details of sales & cost of material consumption because only so much of the data was requisitioned by him. It was the TPO's own understanding that for applying CP Method, the gross profit margin was to be computed only with reference to sales & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of raw materials" as the complete "cost of production". Before the CIT(Appeals), errors committed by the TPO were pointed out. The assessee also furnished the correct computation of "gross profit" margin which should have been applied by the TPO himself in the context of CP Method for benchmarking export of manufactured products. Comparing the calculation of the profits margin as done by the TPO and by the assessee, the Ld. CIT(A) found merit in assessee's calculation of the profit margin. The Ld.CIT(A) found that if the TPO had correctly computed the ALP of the international transactions with AEs then the assessee's profit margin was 4.84% whereas the profit margin earned by the assessee on exports made to in AEs was 4.36%. The Ld. CIT(A) therefore held that on account of adoption of wrong facts and data the ALP computed by the TPO in case of transactions with non AEs was erroneous and hence no adverse inference could be drawn against the assessee on the basis of such wrong computation. The CIT(A) accordingly allowed relief to the assessee. The Hon'ble ITAT will therefore appreciate that it was not a case where the assessee filed additional evidence or had furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A).; 9.2 It is also imperative to note that even though in his order the CIT(A) has pointed out specific infirmities & mistakes committed by the TPO in determining ALP of non-AE transactions the D/R in his written arguments has nowhere even attempted to justify the manner in which CP Method was applied by the TPO. In fact the D/R conceded that Rule 10B required inclusion of both direct & indirect cost of production for application of CP method. This therefore shows that the D/R did not have any adverse material with him to counter the CIT(A)'s findings rendered on merits. The assessee submits that the arguments placed by the D/R needs to be rejected as he has not been able to point out or establish any factual infirmity or falsity in the findings recorded by the CIT(A). In the written arguments the D/R has further submitted that the assessee had erroneously included the royalty & commission paid as part of "manufacturing costs" while determining ALP under the CP Method. The D/R contended that even if there are no sales, there would still be cost of production and thereby the gross margin will be a loss. However in absence of any sale there would be no expenditure of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A). It was never the assessee's case that these 2 expenses were to be considered as part of production cost. In the first instance it is submitted that the assessee never included the royalty & commission as part of manufacturing costs of the assessee. Instead the same were excluded from value of export sales made to unrelated parties to make them comparable to the sales made to AEs and accordingly ascertain the arm's length value of an uncontrolled transaction. This is done by the assessee in conformity with both Rule 10B & 10C of the LT. Rules, 1962. Therefore the allegation of the D/R that the assessee had treated it to be manufacturing costs is erroneous & incorrect. Reference in this regard is made to Clause (1) of Rule 10B which in respect of CP Method clearly stipulates that both direct & indirect costs will have to be considered and such cost of goods sold will have to be appropriately marked up to ascertain the arm's length value. Such mark-up would be the gross profit mark-up which one would earn in a comparable uncontrolled transaction. The term comparable "uncontrolled transaction" has been defined in sub-clause (3) of Rule 10B which reads as follows: "An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to unrelated parties so as to arrive at the comparable arm's length value of uncontrolled transactions in conformity with Rule 10B & Rule 10C of IT Rules, 1962. Accordingly the normal gross profit mark-up was computed only after excluding the royalty & commission costs. The D/R however failed to appreciate the foregoing facts of the case and wrongly alleged that the assessee treated commission & royalty to be manufacturing costs. The assessee therefore submits that the royalty & commission which were paid on sales to unrelated parties were rightly deducted by the Id. CIT(A) while computing the gross profit margin. The computation of the assessee and the Id. CIT(A) was therefore in conformity with Clause (1) & (3) of Rule 10B of the LT. Rules, 1962. The allegations of the D/R are therefore factually & legally unjustified and therefore devoid of any merit. As regards computation of ALP under the RP Method in respect of traded goods, it is submitted that the TPO had determined the ALP by making comparison of dissimilar products having different applications & uses and therefore having different profit margins. The TPO however GP rate of materials (printing inks) imported from A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unrelated parties for Rs. 2.02 crores yielding profit margin of 14%. Without prejudice to the assessee's contention that the aforesaid margins would require turnover adjustment and working capital adjustment, it is submitted that the margin was 13% earned from transactions with related parties was found comparable to margin of 14% earned from uncontrolled transactions and was therefore held to be at arm's length by the CIT(A). The difference in margin of 1% was well within the permitted range of +/ - 5% allowed in second proviso Section 92C of the Income-tax Act, 1961. In the circumstances it shall be appreciated that both the assessee and the Id. CIT(A) had benchmarked the trading of imported printing inks to trading of imported press chemicals as required by the D/R in his written submissions. On comparison it was found to be at arm's length. Therefore there is no dispute between the assessee and D/R on this particular issue. In the written submissions the D/R had nothing adverse to state in the context of computation of ALP under RPM Method as contended by the assessee and applied by the Id. CIT(A). In the circumstances the appeal of the Revenue to the extent of TP a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re determined; (ii) The amount of a normal gross profit mark-up to such costs (computed according to the same accounting norms) arising from the transfer or provision of the same or similar property or services by the enterprise, or by an unrelated enterprise, in a comparable uncontrolled transaction, or a number of such transactions, is determined; (iii) The normal gross profit mark-up referred to in sub-clause (ii) is adjusted to take into account the. functional and other differences, if any, between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect such profit mark-up in the open market; (iv) The costs referred to in sub-clause (i) are increased by the adjusted profit mark-up arrived at under sub-clause (iii); (v) The sum so arrived at is taken to be an arm's length price in relation to the supply of the property or provision of services by the enterprise." From bare perusal of the above Rule it is evident that for applying CP method, one has to compute the cost of production which shall include both direct & indirect costs. The TPO was therefore clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly, directed the AO to exclude the 90% of fees for services from the total turnover of the assessee by observing as under:- "..... I however find that the identical questions were considered by the Income Tax Appellate Tribunal, Kolkata in the assessee's own case for AY 2003-04 in ITA No. 499/Kol/2007 & MA No. 73/Kol/2008 dated 30th April, 2008 & dated 24th December, 2008 respectively. The Tribunal held that in working out "profits of the business" 90% of service charges received from subsidiary company were liable to be reduced in terms of Explanation (baa) to Sec. 80HHc. In the light of the finding of the Tribunal I uphold the order of the AO reducing 90% of the service charges income from the profits & gains of business while arriving at profits of the business u/s. 80HHC. The Tribunal however held that the income from service charges was not includible in the total turnover for the purpose of computing deduction u/s. 80HHC. Following the order of the Tribunal for AY 2003-04 I direct the AO to exclude service charges income of Rs. 90 lakhs from the total turnover. The AO shall accordingly recomputed the deduction u/s. 80HHC." Being aggrieved by this order of Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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