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TMI Blog2023 (5) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... d enterprises, no prudent person would have given huge loans to a third party and reduce the same by making a provision for bad and doubtful loans and advances. ALP of the same under the comparable uncontrolled price method or other method would be NIL. Thus, even for this reason, we cannot accept the argument that TP adjustment should not be made merely because of reduction of receivables by making provision for doubtful loans and advances. As genuineness of the loans given and the subsequent provision made for the same is under question by the `Project Spirit report . In view of the above, we confirm the findings of the TPO in making the TP adjustment on interest free loans given to AEs. Fee Imputed on corporate guarantee extended to subsidiaries - Tribunal in assessee s own case for assessment year 2013-2014 [ 2022 (4) TMI 1408 - ITAT BANGALORE ] had reduced the rate of corporate guarantee commission to 0.5% of the corporate guarantee given - HELD THAT:- In view of the above order of the Tribunal in assessee s own case, which is identical to the facts of the instant case, we direct the TP addition to be restricted at 0.5% of the corporate guarantee given by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 [ 2020 (6) TMI 135 - ITAT BANGALORE ] which is identical to the facts of the instant case, we restore the matter to the A.O. The A.O. is directed to examine the issue afresh. - IT(TP)A No.3091/Bang/2018 : - - - Dated:- 22-11-2022 - Shri George George K, JM And Shri Laxmi Prasad Sahu, AM For the Appellant : Sri.Percy Pardiwala, Senior Counsel and Sri.Ankur Pai, Advocate For the Respondent : Sri. Manjunath Karkihalli, CIT DR ORDER PER GEORGE GEORGE K, JM : This appeal at the instance of the assessee is directed against final assessment order dated 10.10.2018 passed u/s 143(3) r.w.s. 144C(13) of the I.T.Act. The relevant assessment year is 2014-2015. 2. The brief facts of the case are as follows: The assessee is a company, engaged in the manufacture and sale of alcoholic beverages. For the assessment year 2014-2015, the return of income was filed by the assessee on 30.11.2014 declaring total income of Rs.387,70,39,200. The assessment was selected for scrutiny and notice u/s 143(2) of the I.T.Act was issued on 08.09.2015. During the course of assessment proceedings, the matter was referred to the Transfer Pricing Officer (TPO) to determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.31,15,00,900 10,58,79,156 5. Grounds of appeal relating to the disallowance u/s 36(1)(iii) of the Act Adjustment amount Rs.73,77,81,361 25,07,71,885 6. Grounds of appeal relating to advertisement and sales promotion expenditure Adjustment amount Rs.24,94,05,093 Rs.8,47,72,791 7. Grounds of appeal relating to disallowance / adjustments pursuant to findings of the project spirit report. Rs.3,56,55,510 on disallowance Rs.28,06,21,440 on DDT and interest of Rs.15,43,41,791 u/s 115P of the Act. 8. Grounds of appeal relating to short credit of tax deducted at source / tax collected at source Rs.37,78,149 37,78,149 9. Grounds of appeal relating to levy of interest u/s 234B of the Act Rs.203,53,26,920 2,03,53,26,920 Total tax effect 6,36,45,96,039 We shall adjudicate the above issues / grounds as under: Notional interest imputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putation of interest is not correct. Libor plus 162 basis points to be adopted. 7.7.1 It is to be mentioned that the above arguments were also made before the Tribunal in assessee s own case for the AY 2012- 13. The co-ordinate bench in IT(TP)A No 489/Bang/2017 (order dated 29.05.2020) considered all the arguments and held that TP adjustment on interest free advances is to be made. As regards the computation of TP adjustment based on LIBOR, the Tribunal restored the said issue to the file of AO/TPO with a direction to examine the claim of the assessee by duly considering the decisions relied on by the assessee in the set aside proceedings. The relevant finding of the Tribunal on identical facts in assessee s own case for assessment year 2012-2013, read as follows:- 26. We heard the parties on this issue and perused the record. Admitted fact is that the assessee has given interest free loans to its AE located in British Virgin Islands. It is stated that, in the earlier years also, the assessee has given such kinds loans, but no adjustment was made by the TPO. However, the principle of resjudicata shall not apply to the income tax proceedings and hence there cannot be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act as under:- total income means the total amount of income referred to in section 5, computed in the manner laid down in this Act. Though section 5 defines Scope of total income , yet the total income has to be computed in the manner laid down in the Act. The term income is defined in sec. 2(24) in an inclusive manner. The said income, when computed in the manner laid down in the Act becomes total income . Hence there is difference between the expression income and total income . The Income tax Act contains certain legal fictions/deeming provisions like sec. 40A(3), 40(a)(ia) etc., The Ld A.R, during the course of arguments also pointed out that sec. 50CA, 50D, 45(4) contain deeming provisions. While computing total income, the real income is adjusted by including therein various legal fictions/deeming provisions incorporated in the Income tax Act. After this process only, the total income is arrived at. Sec.92(1) states that any income arising from an international transaction shall be computed having regard to the arms length price. U/s 92C(4), the AO may compute the total income of the assessee having regard to the arms length price so determined. Hence, if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e commercial expediency, therefore, have no relevance in computation of arm's length price of loan given to an associated enterprise. Similarly, learned counsel's contention that a notional income cannot be taxed, and reliance on Shoorji Vallabhdas Co.'s case (supra) in this regard, is wholly misplaced because that proposition is in the context of tax laws in general, whereas, transfer pricing provisions, being anti abuse provisions with the sanction of the statute, come into play in the specific situation of certain transactions with the associated enterprise. The general provisions of the law have to give way to these specific anti abuse provisions. While a notional interest income cannot indeed be brought to tax in general, the arm's length principle requires that income is computed, in certain situations, on the basis of certain assumptions which are inherently notional in nature. When the legal provisions are not in pari materia, as the provision of normal computation of income and the provision of computation of income in the case of international transactions between the associated enterprises, what is held to be correct in the context of one set of legal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, and it was in this context that the Tribunal observed that legally binding joint venture arrangements cannot be disregarded by the revenue authorities. This observations, taken out of the context, cannot be interpreted to mean that an arm's length price of an interest free loan cannot be adopted for ascertaining income from loan transaction. 39. In our considered view, the assessee is not really correct in contending that when the assessee has not reported any income from a particular international transaction, the ALP adjustment cannot compute the same. The computation of income on the basis of arm's length price does not require that the assessee must report some income first, and only then it can be adjusted for the ALP. Section 92(1) is not an adjustment mechanism; it is a computation mechanism. The arm's length price principle requires that an arm's length price is assigned to the transactions between the associated enterprise, and if the income in computed, if any, on the basis of the arm's length price so assigned. As regards reliance on the Vodafone India Services (P.) Ltd.'s case (supra), that deals with a situation in which the internation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92(1) of the Act, even if no interest income is contemplated between the parties. It can be noticed that the Special bench has specifically addressed the case of charging of Zero interest or no interest and held that so long as the transactions fall under the category of international transactions , the arms length principle has to be applied. We may look at another instance also. The new definition of International transaction shall also include the purchase, sale, transfer, lease or use of tangible property including building, transportation vehicle, machinery, equipment, tools, plant, furniture, commodity or any other article, product or thing The purchase transaction is in the nature of expenditure and the same, per se, does not produce any income. Yet the purchase transaction is included under the definition of International transaction . The purpose of the same is explained hereafter. The product purchased by an assessee from its AE shall produce income, only when it is sold. However, if an assessee purchases certain article or product from its AE, then the said purchase transaction is reported as an International Transaction and the same is also tested under Arm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) did not consider binding decision rendered by the Special bench of ITAT, Kolkatta and hence the above said decisions so rendered by the Mumbai bench are per-incurium and cannot be followed. Various other decisions relied upon by Ld A.R are related to the computation of income under general provisions of the Act, whereas Chapter X is Special provision relating to Avoidance of Tax. As held by the Special bench, the general provisions have to give way to the special provisions. The Special bench has also observed that the decision rendered by Hon'ble Bombay High Court in the case of Vodafone India Services (P) Ltd (supra) has been rendered in a different context. So is the case with the decision rendered by Hon'ble Delhi High Court in the case of Maruti Suzuki Ltd (supra). 32. In view of the above, we hold that the tax authorities are justified in invoking the provisions of Chapter X to the impugned loan transactions. 33. The Ld A.R also argued that the loan transactions are in the nature of quasi equity, since the impugned loans are intended to be converted into equity capital. The fact remains that, during the year under consideration, the impugned transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such a transaction between independent enterprises is at all hypothetically possible, the arm's length interest on such funding will be 'nil' under the CUP method. Further, it was held that if there has to be an arm's length consideration under the CUP method, other than interest, for such funding, it has to be net effective gains (direct and indirect), attributable to the risks assumed by the sponsorer of the SPV, of the SPV in question. The said decision rendered was on its peculiar facts and the Tribunal decided the issue on first principles without relying on any of the decided cases. The Hon ble Mumbai ITAT has come to a categorical finding that when borrower has no discretion of using funds gainfully, commercial interest rates do not come into play at all, whereas in the instant case, assessee has not been able to establish that borrower has no discretion of using funds gainfully. In the present case, as mentioned earlier, the coordinate bench in assessee s own case for the earlier assessment year has considered all the facts, arguments, decisions and passed a very elaborate order. It is not in dispute that the facts are same in this year as compared to earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Fair Trade (now called Competition and Markets Authority, UK), in January 2014, the Company's Board of Directors decided to initiate a process based on the outlined time-table provided in connection with the decision of the OFT to explore a potential sale of all or part of Whyte and Mackay. As a culmination of this process, subsequent to the year end, on 9 May 2014 the Company's wholly owned subsidiary, United Spirits (Great Britain) Limited (seller or USGBL) entered into a Share Sale and Purchase agreement (SPA) with Emperador UK Limited and Emperador Inc. in relation to the sale of the entire issued share capital of Whyte and Mackay Group Limited (WMG) for an Enterprise Value of 430 Million (calculated with a normalized level of working capital) from which deduction has been made for the payment of a warranty and indemnity insurance premium of 0.85 Million agreed between the seller and the purchaser. The Company has also obtained an opinion from a leading merchant banker and considers that the Enterprise Value is fair from a financial point of view of the Company. (ii) The aggregate consideration for the sale of share capital of WMG payable to USGBL is approxima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of entire issued share capital of W M group by USGBL to Emperador UK Limited was completed on 31.10.2014. It was submitted that with the above sale, W M group and its 45 subsidiaries have ceased to be subsidiaries of the Company and it has resulted in provision towards recoverability of the investments and loans given for W M group. 6.3.2 The learned Senior Counsel argued that when the principal itself is not recoverable, there is no question of charging interest on such irrecoverable amounts. The decisions in UCO Bank v CIT [1999] 237 ITR 889 (SC) Godhra Electricity Co Ltd v CIT [1997] 91 Taxman 351 (SC), ACIT v Bombay Dyeing Mfg Co Ltd. [2018] 94 taxmann.com 486 (Mumbai Trib) and Hilti Manufacturing India Pvt. Ltd v ACIT ITA No.1565/Mum/2017 dated 12.7.2021 were relied on by the learned Senior Counsel in support of the contention that TP adjustment for interest on AE receivables should not be made in view of the above facts and Circumstances of the case. 6.4 We have heard rival submissions and perused the material on record. The impugned addition is made by the TPO under the provisions of Chapter X of the Act relating to computation of income from international tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ldings BYI (the entity receiving the loan amount for acquisition of W M). Hence, the provision made for doubtful loans and advances cannot be accepted when the transaction of loan given itself is under question. Consequently, the reduction of loans given to AEs due to provision for doubtful loans and advances have to be disregarded under the provisions of Chapter X of the Act relating to computation of income arising out of international transactions having regard to the arm's length price. 6.4.2 Even if the reduction of loans and advances to AEs by making provision for doubtful loans and advances is to be accepted, the same would be subject to the mandate of computation of arm's length price. The term 'arm's length price' is defined in section 92F(ii) to mean a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions. In the present case, provision for doubtful loans and advances is made in respect of receivables from AEs. In an uncontrolled condition and between persons other than associated enterprises, no prudent person would have given huge loans to a third party and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any guarantee commission. The TPO computed the TP adjustment of Rs. 122,24,28,300 calculated at 3% of corporate guarantee given amounting to Rs. 4074,76,10,000. The DRP confirmed the TP addition made by the TPO. The learned AR argued that corporate guarantee was not an international transactions, it was given out of commercial expediency and as a part of shareholder activity. It was thus argued that TP adjustment should not be made for the corporate guarantee given. It was also argued that without prejudice, the TP adjustment should be restricted to 0.5% of the corporate guarantee given. The assessee also relied on the decision of the Bombay High Court in CIT v Asian Paints India Ltd [2016] 75 taxmann.com 152 and contended that the adjustment if any should be restricted to 0.2% as held in the above decision. The learned DR relied on the TPO, DRP orders and justified the addition. 8.6.1 The Bombay High Court in CIT v Everest Kento Cylinders Ltd [2015] 378 ITR 57 dismissed the revenue s appeal and upheld the charging of guarantee commission at 0.5% on the corporate guarantee. Thus, the contention of the learned AR that TP adjustment should not be made cannot be accepted. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material on record, we find that the assessee was not allowed sufficient opportunity of hearing in connection with the impugned addition. The submissions of the assessee before the DRP has also not been considered and addressed on merits. We thus set aside the impugned TP adjustment of Rs. 68,60,16,563 and restore the issue to the file of the AO/TPO for proper consideration of facts and to decide as per law after allowing sufficient opportunity of hearing to the assessee. 9.6 In the result, grounds 3.1 to 3.3 are allowed for statistical purposes. 8.1 Since the facts raised in ground 3 is identical to the facts considered by the Tribunal in assessee s own case for assessment year 2013-2014, we restore the impugned TP adjustment to the files of the AO / TPO. The AO / TPO is directed to decide the issue afresh after affording a reasonable opportunity of hearing to the assessee. It is ordered accordingly. 8.2 In the result, ground 3 is allowed for statistical purposes. Disallowance u/s 14A of the I.T.Act (Ground 4) (Corporate Tax Issue) 9. The Assessing Officer by invoking the provisions of section 14A of the I.T.Act, had disallowed a sum of Rs.31,15,900. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the value of investments, then no disallowance u/r 8D(2)(ii) out of interest expenditure is called for. (b) In the alternative, the assessee has also submitted that the loan funds were taken for specific purposes and utilised the same for those purposes. Accordingly, it was contended that, when the assessee would be able to show the nexus between the interest expenditure and its utilization for specific purposes, no interest disallowance is called for. In this regard, it is stated that it has paid interest on security deposits, cash credits/overdrafts, working capital demand loan, bill discounting facilities. When the disallowance is worked out under rule 8D(2)(ii), this contention of the assessee would loose its significance. (c) The Ld A.R submitted that, for the purpose of computing average value of investments, the AO should consider only those investments which have actually yielded exempt dividend income. We notice that this argument of the assessee finds support from the decision rendered by the Special bench in the case of Vireet Investments P Ltd (165 ITD 27)(Delhi-SB). Accordingly, we direct the AO to exclude investments, which did not yield exempt income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the material on record. The AO made a disallowance of Rs.138,05,93,276 under section 36(1)(iii) for the reason that the interest bearing funds have been given as interest free loans to various related parties including AEs. The DRP upheld the disallowance made by the AO with a direction that the disallowance of interest by the AO to the extent of TP adjustment in relation to this interest free loan should be only on protective basis. Following the directions, the AO in the final assessment order, made an addition of Rs.140,46,63,276 and a protective addition of Rs. 26,77,06,867 under section 36(1)(iii) of the I.T.Act. 11.5.1 The Tribunal in appellant s own case for the AY 2012- 13 in IT(TP)A No. 489/B/2017 order dated 29.5.2020 considered similar issue and held as follows:- 42. We heard Ld D.R and perused the record. From the arguments of the ld A.R, we notice that the own funds available with the assessee is in excess of the aggregate amount of interest free advances and hence the decision rendered by Hon'ble Supreme Court in the case of Reliance Industries Ltd (supra) shall apply to the facts of the present case, in which event, no interest disallowance i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33,55,403 [36,91,12,995 + 7,42,42,408] for the reason that these expenses are brand promotion expenditures of USL logo, it promotes the brand the assessee, gives enduring benefit and hence capital in nature. The DRP confirmed the action of the AO. 12.6.1 Similar issue has been considered by the Tribunal in assessee s own case for the AY 2012-13 in IT(TP)A No. 489/B/2017 order dated 29.5.2020 wherein it was held as under:- 45. We have heard Ld D.R on this issue and perused the record. We notice the issue relating to allowability of expenditure incurred on sponsorship of sports event was considered by the Mumbai bench of ITAT in the case of Samudra Developers Pvt Ltd (ITA 5974/Mum/2013 dated 26- 04-2017) and it was held that the same is allowable as revenue expenditure. For the sake of convenience, we extract below the operative portion of the order passed by Mumbai bench of Tribunal on an identical issue:- 3. Second ground of appeal pertains to deleting the disallowance on account of sponsorship fees and management fees. In the earlier part of our order, we have mentioned the facts about the various disallowances made by the AO including the capitalisation of spo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed a very small proportion under the head sponsorship expenses. Such an expenditure is for advertising the brand name of the Group. Being a recurring expenditure, it had to be allowed as revenue expenditure. We find that in the case of Delhi Cloth and General Mills Co.Ltd.(supra)the Hon'ble Court had held that expenditure incurred for organizing sports events are allowable items of revenue expenditure as such events publicise the names of the sponsor. The AO was not justified in capitalising the expenses. The entire expenditure was rightly allowed by the FAA as revenue expenditure. After going through the details of expenditure incurred by assessee under the head managerial expenses, we are of the opinion that it had not got any enduring benefit from the expenditure incurred nor did the expenditure create any capital asset. Therefore, we do not want to interfere with the order of the FAA. Considering the above, we decide second ground of appeal against the AO. 46. The Delhi bench of Tribunal has also examined an identical claim in the case of M/s Pepsico India Holdings Pvt Ltd (supra) and the same was allowed as revenue expenditure with the following observations:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. Copy of the order under section 195 of the Act and the approval received from the Ministry of Youth Affairs and Sports has been enclosed at pages 247 to 249 and 224 of the paperbook respectively. He further submitted that the expenditure was wholly and exclusively for the business of the assessee company and had not been disputed by the revenue. Any incidental benefit that may arise to any other person or entity cannot be a bar for allowance of expenditure under section 37 of the Act, as per the settled position of law. Reference in this regard was made to the decisions of the Hon'ble Supreme Court of India in CIT vs. Chandulal Keshavlal Co. [1960] 38 ITR 601 (SC), Sasson J. David and Co. P. Ltd vs. CIT 118 ITR 261(SC) and SA Builders Ltd. vs. CIT 288 ITR 1(SC). He further submitted that the Revenue cannot step into the shoes of an assessee to determine the commercial expediency of an expenditure incurred by it. 90. On the other hand, the learned DR relied upon the order of the AO and the DRP in support of his contentions. 91. After considering the rival submissions and on perusal of the impugned orders, we find that, here the disallowance of Rs.3,85,15,497 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable as expenditure. The allowability of brand promotion expenses was examined by Hon'ble Delhi High Court in the case of Modi Revelon P Ltd (supra) and the relevant discussions made by the High Court are extracted below:- 22. As far as the second aspect, i.e. expenditure for promotion of the brand is concerned, there is no doubt that the dealer's functions extend to advertising the products of the assessee, manufactured by the sister concern. On this aspect, Section 37 of the Income-tax Act would be relevant. The said provision reads as follows: SECTION 37 GENERAL: (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession . Explanation : For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee could claim only a proportion of such expenses, since advertising expenses were to be borne by the sister concern dealer, and that the proportion was in respect of its territory, was not upheld. This Court does not see any fallacy in the Tribunal's approach or reasoning, on this aspect. One is not unmindful of the concerns of a business which engages in sale of consumer items, and faces continuous competition. Brand promotion enhances the visibility of given products or services, and are often perceived as conferring a competitive advantage on those who adopt those strategies or schemes. Expenditure towards that end is based on pure commercial expediency, which the revenue in this case, ought to have recognised, and allowed. The revenue's arguments on this point too are insubstantial. 48. The observations made by the Hon ble jurisdictional Karnataka High Court in the case of CIT vs. ITC Hotels (2014)(47 taxmann.com 215) on the concept of enduring benefit is relevant here and the same is extracted below:- 6. The first substantial question of law relates to a sum of Rs.10 lakhs, which were paid by the assessee as a license fee for the use of cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formulated by the Courts may be referred to as they might help to arrive at a correct decision of the controversy between the parties. One celebrated test is that laid down by Lord Cave L.C. in Atherton Vs. British Insulated Helsby Cables Ltd. (1925) 10 Tax Cases 155 (HL), where the learned Law Lord stated : ...when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite condition) for treating such an expenditure as properly attributable not to revenue but to capital . This test, as the parenthetical clause shows, must yield where there are special circumstances leading to a contrary conclusion and, as pointed out by Lord Radcliffe in CIT v. Nchanga Consolidated Copper Mines Ltd. [1965] 58 ITR 241 (PC) : TC16R.991, it would be misleading to suppose that in all cases, securing a benefit for the business would be, prima facie, capital expenditure so long as the benefit is not so transitory as to have no endurance at all. There may be cases where expenditure, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue and direct him to allow the impugned sponsorship expenses as revenue expenditure. 12.6.2 Following the above order the ITAT in assessee s own case for assessment year 2012-2013 (supra), we allow deduction of sales promotion and advertisement expenses of Rs. 44,33,55,403. As the entire expenses are allowed as revenue expenditure, the question of depreciation does not arise. 12.7 Hence grounds 6.1 to 6.7 and grounds 7.1 to 7.7 are allowed. 11.1 In view of the above order of the Tribunal for assessment year 2013-2014 and 2012-2013 (supra), we direct the A.O. to grant deduction of sales promotion and advertisement expenses as a revenue expenditure. It is ordered accordingly. 11.2 In the result, ground 6 is allowed. Disallowance of payment on Project Spirit Report (Ground 7) (Corporate Tax Issue) 12. We find an identical issue was considered by the Tribunal in assessee s own case for assessment year 2013- 2014 (supra), wherein the issue was restored to the A.O. to make proper inquiry and decide the matter afresh in accordance with law. The relevant finding of the Tribunal in assessee s own case for assessment year 2013-2014 (supra), reads ..... X X X X Extracts X X X X X X X X Extracts X X X X
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