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TMI Blog2013 (8) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... ection to the revised grounds of appeal filed by the Revenue and therefore, the appeal was heard on the revised grounds of appeal filed on 4.2.2013 and disposed of accordingly. 3. Ground No.1 & 5 of the appeal are general in nature and hence, requires no specific adjudication by us. 4. Ground No.2 of the appeal is directed against the order of the ld. CIT(A) in deleting the addition of ₹ 14,60,477/- made towards consultancy charges. 5. The brief facts of the case are that the assessee paid consultancy charges to Mr. Yu Ching Lee in China for the services rendered in China with regard to export of their materials to Chinese customers. The Assessing Officer held that the expenditure pertains to the joint venture company and not to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consultant was not a joint venture partner of the assessee and the expenditure was incurred by the assessee for the business and therefore, the apprehensions of the Assessing Officer are unfounded. The ld. CIT(A) further observed that moreover the issue has been decided in favour of the assessee in assessment years 2003-04 and 2004-05 and therefore, the ground was decided in favour of the assessee. 9. The ld.D.R relied on the order of the Assessing Officer. 10. The ld. AR of the assessee filed before us a copy of the order of this Tribunal in assessee's own case for assessment year 2004-05 initn 1468/Mds/2009, order dated 10.6.2010 and pointed out that the Tribunal restored the matter back to the file of the Assessing Officer on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine business expenditure of the assessee and the same was paid in relation to consultancy services rendered in relation to the export business of the assessee. No material was brought on record by the Revenue to show that consultancy charges paid in question does not relate to the aforesaid export business of the assessee. Further, the assessee also filed before the Assessing Officer and the ld. CIT(A) copy of invoice for payment of consultancy charges, a copy of which has been placed before us at page 4 of the paper book, in support of the contention that the amount paid was towards business expenditure of the assessee. It is not in dispute that the assessee was engaged in the business of exporting of bulk pharma products and process durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales. The non-EOU units undertake considerable Research & Development activities for which it has obtained approval from the Department of Scientific and Industrial Research. Thus, the expenditure levels in the non-EOU Units are very high and these expenditures are not comparable with the expenditure incurred by the EOU units. It was further submitted that separate books of account were maintained by both the EOU and the non-EOU units which have been subjected to audit by professional accountants. It was further submitted that section 10B clearly provides for deduction in respect of the profits of each undertaking and not in respect of the total income of an assessee. The Assessing Officer adjusted the brought forward losses of the EOU unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re computing deduction. A similar view was also held in Changepond Technologies (P) Ltd vs ACIT [2008] 119 TTJ 18 (Chn) and Enercon Wind Farms (Krishna) Ltd. vs ACIT [2208] 21 SOT 29 (Mum). 16. The ld. CIT(A) decided the issue in favour of the assessee by observing as under: "3.10. The ground is therefore, decided in favour of the appellant. However. Since the transfer cost of materials between the EOU and the non-EOU units has been wrongly recorded the deduction u/s 10B should be restricted to the profits of the EOU units after recording the transfer cost of materials at the correct cost. This is extracted as hereunder: Assessment year 2005-06 Financial Year 2004-05 Difference between Transfer Price & Cost Price of Goods transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had charged interest at LIBOR plus 1% on the advances made by it to its AE. The TPO while determining the Arm's Length Price (ALP) of the transaction had made adjustment by applying the PLR on the monies advanced. 20. Before the ld. CIT(A) the assessee submitted that interest in an international financial transaction could expenditure charged on par with the market rates prevalent among foreign banks, foreign institutions and business enterprises while dealing with Indian entities. For such transactions, the rates charged cannot be related to the rates prevalent in the domestic market. The assessee further submitted that while determining ALP an international transaction cannot be compared with a domestic transaction. Since the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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