TRANSPORTER INDUSTRY INTERNATINAL GMBH,MUMBAI vs. DY CIT INTERNATIONAL TAXATION, CIRCLE-4(1)(2), MUMBAI

This is an appeal preferred by the assessee company against the order of the AO/DCIT, Circle-4(1)(2), Mumbai r.w.s 144C(13) of the Income Tax Act, 1961 (hereinafter “the Act”) dated 25.04.2021 pursuant to the direction of the Ld. Dispute Resolution Panel (DRP) dated 18.03.2021.

Ground no. 1 is general in nature, so dismissed. 3. Ground no. 3 is a legal issue which has been raised by the assessee challenging the action of the Transfer Pricing Officer (TPO) to have passed the Transfer Pricing (TP) order, after the due date prescribed in section 92(3A) r.w.s 153 of the Act. Therefore, the assessee is challenging the action of the TPO in passing Transfer Pricing Order after limitation period by citing the decision of the Hon’ble Madras High Court (DB) in the case of M/s. Saint Gobain 2 A.Y. 2016-17 Transporter Industry International India (P) Ltd. (444 ITR 636) (Mad) and the decision in the case of M/s. Pfizer Healthcare India Pvt. Ltd. (2021) (433 ITR 28) (Mad).

First of all we will deal with the legal issue which has been raised by the assessee company challenging the action of the TPO to have passed the TP order, after the limitation time prescribed in section 92(3A) r.w.s. 153 of the Act. Drawing our attention to the following chart placed below, the Ld. AR of the assessee Shri Nikhil Tiwari submitted that the relevant assessment year under consideration is AY. 2016-17 and the period of limitation Prescribed for making an order of assessment as per section 153 of the Act was “twenty one (21) months from the end of the assessment year”. And the said period gets extended by a period of twelve (12) months in case AO makes reference to the TPO u/s 92CA of the Act. And since in this case, the AO has made reference to the TPO, the assessment should be completed on or before the extended date (i.e. after taking into consideration the extended period also of twelve (12) months which in this case would be 31.12.2019). Further, according to Ld. AR, as per section 92CA(3A) of the Act, the TPO has to pass an order under sub- section 3 of Section 92CA of the Act at any time before sixty (60) days’s prior to the date on which the period of limitation as referred to in section 153 of the Act i.e sixty (60) days prior to 31.12.2019; and since the TPO has to pass the order on a date prior to date on which period of limitation expires that date would by excluding the date of 31.12.2019 i.e. 30.12.2019; so accordingly TP order need to be passed on or before 31.10.2019. However, according to Ld. AR, since in this 3 A.Y. 2016-17 Transporter Industry International case, the TP order has been passed (electronically signed) on 01.11.2019 [though in the caption of TP order it is dated 31.10.2019] it is barred by limitation being beyond the date 31.10.2019, and so bad in law. Per contra the Ld. DR pointed out that the TP order has been passed on 31.10.2019 [as seen in the caption of TP order], so it has been passed well within the limitation period and so order of TPO is valid. In his re-joinder, the Ld. AR on this crucial point drew our attention to the foot note of TP order wherein it is clarified that if the order is digitally signed order, then the date of digital signature must be taken as date of document, and in the instant case it can be seen at the bottom of the last page of T P order that it has been digitally signed on Nov 01, 2019 “Signed SAMPADA RAO MAHALAKSHMI MAKE Date: Friday, Nov 01, 2019, 12:25AM”. So we find that the TP order in this case has been passed on 01.11.2019 and not on 31.10.2019 as shown in the caption of the T.P. order. The chart which the Ld. AR referred as observed by us (supra) gives the relevant dates/date of events which would give a bird’s eye view of the aforesaid facts on the legal issue raised before us. Sr. Particular Assessee No. A Assessment Year 2016-17 B Period of limitation for making an order of 21 months from the end of assessment year assessment as per Section 153 of the Act (31.12.2018) C Extension of period of limitation in case 12 months (31.12.2019) reference is made under section 92CA of the Act D Proceeding for assessment should be 31.12.2019 completed on/before this date E A date prior to the date on which period of 30.12.2019 limitation expires F Sixty day period expires on 01.11.2019 G Transfer Pricing Officer’s order to be 31.10.2019 passed any time on/before this date H Date on which Transfer Pricing Officer’s 01.11.2019 4 A.Y. 2016-17 Transporter Industry International order is passed Notes 1. Calculation of break up of sixty December: 30 days (excluding 31.12.2019) November: days 30 days

In order to support the legal issue against the passing of TPO’s order being hit by limitation, the Ld. AR refers to the decision laid by the Hon’ble Madras High Court in the case of M/s. Pfizer Healthcare India Pvt. Ltd. (supra) which we note was also for AY. 2016-17 (i.e. relevant assessment year in this present case also) and it is noted to squarely cover the issue raised by him. The Hon’ble High Court decision; which reads as under: - “4.1 The writ petitioner is a private limited company, engaged in the business of manufacturing generic drugs, exporting the same to group entities and contract research and development services for pharmaceutical products. For the assessment year 2016-2017, they filed their return of income on 30-11-2016. On receipt of the same, a notice dated 18-7-2017 was issued to the writ petitioner under section 143(2) of the Act. Subsequently, a reference was made by the second appellant to the first appellant for determining the arm's length price of the international transactions reported in Form No. 3CEB. On 10-12-2018, a notice under section 92CA(2) of the Act was issued by the first appellant calling upon the writ petitioner to furnish certain particulars. The first appellant, thereafter, passed the order under section 92CA(3) of the Act on 1-11-2019, which according to the writ petitioner, was passed, after the time limit prescribed for passing such order until 31-10-2019. Therefore, the order dated 1-11-2019 passed by the first appellant is beyond the period of limitation as stipulated under section 92CA(3A) of the Act.”

According to Ld. AR, the aforesaid order of the Hon’ble High Court has been affirmed by the Hon’ble Madras High Court (DB) decision in the case of M/s. Saint Gobain India (P) Ltd. (supra) which reads as under: - “28. The word "date" in section 92CA(3A) would indicate 31-12-2019. But the preceding words "prior to" would indicate that for the purpose of calculating the 60 days, 31-12-2019 must be excluded. The usage of the word "prior" is not without significance. It is not open to this court to just consider the word "to" by ignoring "prior". The word "prior" in the present context, not only denotes the flow of direction, but also actual date from which the period of 60 days is to be calculated. It is settled law that while interpreting a statute, it is not for the courts to treat any word(s) as redundant or superfluous and ignore the same. In this connection, it is pertinent to 5 A.Y. 2016-17 Transporter Industry International note the judgment of the Apex Court in Grasim Industries Ltd. v. Collector of Customs 2002 taxmann.com 1803, wherein, it was held as follows : "10. No words or expressions used in any statute can be said to be redundant or superfluous. In matters of interpretation one should not concentrate too much on one word and pay too little attention to other words. No provision in the statute and no word in any section can be construed in isolation. Every provision and every word must be looked at generally and in the context in which it is used. It is said that every statute is an edict of the legislature. The elementary principle of interpreting any word while considering a statute is to gather the mens or sententia legis of the legislature. Where the words are clear and there is no obscurity, and there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for the court to take upon itself the task of amending or alternating (sic altering) the statutory provisions. Wherever the language is clear the intention of the legislature is to be gathered from the language used. While doing so, what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results in rejection of words has to be avoided. As stated by the Privy Council in Crawford v. Spooner [(1846) 6 Moore PC 1 : 4 MIA 179] "we cannot aid the legislature's defective phrasing of an Act, we cannot add or mend and, by construction make up deficiencies which are left there". In case of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary for deciding the particular case. This principle is too well settled and reference to a few decisions of this Court would suffice. (See : Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests [1990 Supp SCC 785 : AIR 1990 SC 1747] , Union of India v. Deoki Nandan Aggarwal [1992 Supp (1) SCC 323 : 1992 SCC (L&S) 248 : (1992) 19 ATC 219 : AIR 1992 SC 96] , Institute of Chartered Accountants of India v. Price Waterhouse [(1997) 6 SCC 312] and Harbhajan Singh v. Press Council of India [(2002) 3 SCC 722 : JT (2002) 3 SC 21] .)"

The language employed is simple. 31-12-2019 is the last date for the assessing officer to pass his order under section 153. The TPO has to pass order before 60 days prior to the last date. The 60 days is to be calculated excluding the last date because of the use of the words "prior to" and the TPO has to pass order before the 60th day. In the present case, the word "before" used before "60 days" would indicate that an order has to be passed before 1-11-2019 i.e on or before 31-10- 2019 as rightly held by the Learned Judge.

Even considering for the purpose of alternate interpretation, the scope of section 9 of the General Clauses Act, it is to be noted that an inverted calculation of the period of limitation takes place here. If the last date is taken to be the first date from which the period of 60 days is to be calculated, reading down the provision with the use of the word "from", which denotes the starting point or period of direction in general parlance, would mean that 60 days "from the last date". Even going by section 9 of the General Clauses Act, when the word "from" is used, then, that date is to be excluded, implying here that 31-12-2019 must be excluded. After excluding 31- 6 A.Y. 2016-17 Transporter Industry International 12-2019, if the period of 60 days is calculated, the 60th day would fall on 1-11-2019 and the TPO must have passed the order on or before 31-10-2019 as orders are to be passed before the 60th day. Therefore, either way the contention of the Revenue is a fallacy and has no legs to stand.

Therefore, we find that the decision of the Hon’ble Madras High Court in the case of M/s. Saint Gobain India (P) Ltd. (supra) is squarely applicable in the case because in that case also the Hon’ble Division Bench of the High Court was dealing with the case of the assessee for AY. 2016-17; and assessee’s case also is that of the AY. 2016-17; and therefore the issue and facts being similar, we hold that TPO ought to have passed the order on or before on 31.10.2019, And since he has passed the order on 01.11.2019, the order of the TPO is bad in law, since it has been passed beyond the limitation period prescribed by the Act and so the TP order is barred by limitation. And so is non-est in the eyes of law.

Now coming to the merits of the ‘Corporate Issues’ raised by the assessee, we note that the assessee is an ‘eligible assessee’ as defined u/s 144C of the Act, therefore the same needs to be adjudicated and it was fairly pointed out by the Ld. AR that the decision in M/s. Atos India Pvt. Ltd. does not apply because assessee is a ‘Foreign Company’.

This first issue is against the action of the AO making an addition of 15% Mark-up on reimbursement of expenses received by the assessee/Foreign Company for expenses relating to registration of Patents and Trademark for the Indian Subsidiary. The facts as well as the decision as noted by the DRP in this regard is as under: - 7 A.Y. 2016-17 Transporter Industry International “11.3.1 Vide this ground applicant has agitated against addition of Rs. 34,61,520/- claimed by the applicant as reimbursement for registration expenses of patents and trademarks. In para 6 of the Draft Assessment Order the Ld. AO had mentioned that the assessee company had received Rs. 34,61,520 from TII India Pvt Ltd. as registration expenses for patent and trademarks. During the course of assessment proceedings the Ld. AO called the necessary details and held that the payments was in lieu of use of patents and trademarks. Therefore, same is taxable as royalty u/s 9(1)(vi) of the Act. During course of proceedings before DRP the applicant submitted that the payments were not received in lieu of use of trademarks for patents. Rather these were legal and registration charges incurred by the Appellant for registration of patents and trademarks in Germany without any element of service being provided by the appellant to TII India. During the course of proceedings before DRP, the appellant submitted the debit notes raised by the appellant on TII India. The debit notes were raised on cost basis by the appellant. Along with the debit notes as already submitted before the learned AO, the appellant has filed herewith the invoices copies of the registration related. Necessary evidences regarding nature of expenses incurred were submitted by the applicant as additional evidences which were forwarded to the AO for necessary verifications. 11.3.2 Since consideration of additional evidences was necessary for ascertain ng the true nature of expenses. Therefore, some were admitted during remand proceedings the Ld. AO had reiterated the same arguments. We have considered the written submissions of the applicant, evidences produced and remand report of the AO. From perusal of the evidences 8 A.Y. 2016-17 Transporter Industry International furnished it is evident that the amount under consideration was not received for use of trademarks for patent. Rather these were the payments made to authorities responsible for registration of trademarks for patents. Apart from it, if also consists of legal charges said for the registration of patents and trademarks. Therefore, it can't be treated as royalty. Hence, AO is directed not to treat the receipt as royalty. 11.3.3 We have also considered the fact that services of assessee company and its staff were utilized for the business of its AE. Applicant has not charged any markup on facilitation of registration of patents and trademark. Therefore, we direct the AO to charge 15% markup for services provided to its AE by the applicant in this regard.”

Pursuant thereto, the AO has made an adjustment of Rs.5,19,228/- (15% of Rs.34,61,520/-). Aggrieved by the aforesaid action of the AO, the assessee is before us.

Assailing the action of the AO, giving effect to the Ld. DRP order, the Ld. AR submitted that the assessee had shown in its Form no. 3CEB (report furnished u/s 92E of the Act relating to the International transaction and specified domestic transaction) wherein at item no. 19, the description of the transaction i.e. registration expenses for Patent and Trademark is reflected i.e. the amount paid to the assessee Foreign Company from Indian Subsidiary M/s. TII India Pvt. Ltd. to the tune of Rs.34,61,520/-. According to the Ld. AR, the AO in the present case has referred the International Transaction to the TPO for determination of Arm’s Length Price (ALP) with reference to 9 A.Y. 2016-17 Transporter Industry International the International Transaction reported in Form 3CEB filed by the assessee which has been acknowledged by the TPO at Paragraph No. one (1) of his order. According to the Ld. AR, despite the reference made by AO, the TPO has not made any adjustment on this transaction with Associate Enterprise (AE) (M/s. TII India) which decision of the TPO was binding on the AO. And therefore, the adjustment made by him (AO) was bad in law. Further, according to the Ld. AR, since the DRP has held the action of the AO treating the amount paid by M/s. TII India Pvt Ltd. to the assessee Foreign Company as ‘Royality’ as erroneous, but still the DRP’s action of directing the AO to charge 15% mark-up for services providing to its AE by the assessee Foreign Company is erroneous and cited the decision of the jurisdictional High Court in the case of M/s. Lever India Exports Ltd. (292 CTR 393) (Bom) wherein it was held that Adhoc determination of the ALP by the TPO dehors section 92CA of the Act cannot be sustained. And further the Hon’ble High Court clarified that the TPO was bound to determine to ALP of an International Transaction in terms of Chapter – X read with rule 10A to 10E of the Income Tax Rules, 1962 (hereinafter “the Rules”). And in that case, the Hon’ble High Court held that since the TPO has not fixed the mark up of the International transaction by adopting appropriate method prescribed by any Act/Rules, the Adhoc determination of the ALP was bad in law and held as under: - “7. We note that the Tribunal has recorded the fact that the respondent assessee has launched new products which involved huge 10 A.Y. 2016-17 Transporter Industry International advertisement expenditure. The sharing of such expenditure by the respondent assessee is a strategy to develop its business. This results in improving the brand image of the products, resulting in higher profit to the respondent assessee due to higher sales. Further, it must be emphasized that the TPO's jurisdiction was to only determine the ALP of an International Transaction. In the above view, the TPO has to examine whether or not the method adopted to determine the ALP is the most appropriate and also whether the comparables selected are appropriate or not. It is not part of the TPO's jurisdiction to consider whether or not the expenditure which has been incurred by the respondent assessee passed the test of Section 37 of the Act and/or genuineness of the expenditure. This exercise has to be done, if at all, by the Assessing Officer in exercise of his jurisdiction to determine the income of the assessee in accordance with the Act. In the present case, the Assessing Officer has not disallowed the expenditure but only adopted the TPO's determination of ALP of the advertisement expenses. Therefore, the issue for examination in this appeal is only the issue of ALP as determined by the TPO in respect of advertisement expenses. The jurisdiction of the TPO is specific and limited i.e. to determine the ALP of an International Transaction in terms of Chapter X of the Act read with Rule 10A to 10E of the Income Tax Rules. The determination of the ALP by the respondent assessee of its advertisement expenses has not been disputed on the parameters set out in Chapter X of the Act and the relevant Rules. In fact, as found both by the CIT (A) as well as the Tribunal that neither the method selected as the most appropriate method to determine the ALP is challenged nor the comparables taken by the respondent assessee is challenged by the TPO. Therefore, the ad-hoc determination of ALP by the TPO dehors Section 92C of the Act cannot be sustained.”

It is important to take note of the word "shall" used in the section. No doubt that under the General Clauses Act, shall can be used as may or vice versa, but the Hon'ble Supreme Court of India in the case of CIT v. Anjum M.H. Ghaswala, [2001] 252 ITR 1/119 Taxman 352, sitting in Constitution Bench explained the exact premise of the word "shall". The case was pertaining to the levy of interest under section 234B on Chapter XIXA of the Income-tax Act, i.e. Settlement Commission. In the decision, the Hon'ble Supreme Court held, 'Nextly, the Commission has elaborately discussed the object of introduction of Chapter XIX-A in the Act, the history behind the introduction and schematic rationalisation of the provisions of Chapter XIX-A brought about through Finance Act, 1987 to hold that in exercising its power under Chapter XIX-A it has almost an unbridled power to arrive at a settlement. This exercise of purposive interpretation by looking into the object 12 A.Y. 2016-17 Transporter Industry International and scheme of the Act and legislative intendment would arise, in our opinion, if the language of the Statute is either ambiguous or conflicting or gives a meaning leading to absurdity. We do not find any such problem in the provisions of the Act to which we have already referred to Sections 234A, 234B and 234C in clear terms impose a mandate to collect interest at the rates stipulated therein. The expression "shall" used in the said Section cannot by any stretch of imagination be construed as "may". There are sufficient indications in the scheme of the Act to show that the expression "shall" used in Sections 234A, 234B and 234C is used by the Legislature deliberately and it has not left any scope for interpreting the said expression as "may".' 66. By the use of the word "shall", for computing the ALP in one of the following methods, the Legislature has cast an embargo that no seventh method could be adopted by the TPO for computing the ALP. Even the Special Bench of the ITAT in the case of LG Electronics India (P.) Ltd., (supra), in paras 22.10 and 22.11, pages 128 and 129, observes, "As regards the contention that methods are tools for determining the ALP, we find that there is dispute that there is no dispute the main purpose of Chapter X is to determine the ALP of an international transaction, but such determination can be done only by way of the methods specified by the statute. When the Legislature has specifically enshrined a provision under section 92C requiring the computation of ALP by any of the prescribed methods, it does not fall in the realm of the TPO or for that matter any other authority to breach such mandate and apply or direct to apply any other method. Going by the dictate of the provision as subsists under sub-section (1) of 13 A.Y. 2016-17 Transporter Industry International section 92C, there can be absolutely no doubt on adoption of any single method of those set out in section. Rule 10B has specified a set procedure to be followed for determining the ALP distinctly under the five methods. It is equally not permissible to invent a new procedure and try to fit such procedure within any of the existing procedures prescribed as per these methods. No one is authorized to add one ore more new steps in the prescribed procedure or to substitute any other mechanism with the prescribed under the rule. It is neither possible to invent a method nor to substitute a new methodology in place of the one prescribed in the rule."

We cannot accept the arguments of the DR that the word any has been used in section 92C(1), which could give leeway to the TPO to ascribe to a non-specific method. Word any, is founded on the suffix, "of the following methods being the most appropriate method". Therefore, the ambit of the word any in section 92C(1) has been restricted within the precinct of the five specific methods. This gathers strength from the fact that even in the Rules, relevant Rule 10B provides with the similar wordings.

Taking into account the clear and unambiguous wordings of the provisions of the Income-tax Act and Rules and respectfully following the decision of the Special Bench in the case of LG Electronics India (P.) Ltd. (supra), we hold that even on this legal issue, the assessee succeeds.”

It was brought to our notice that the aforesaid decision of the Tribunal on the aforesaid issue was not challenged by the Revenue before the Hon’ble Bombay High Court which fact was noticed by the Hon’ble High Court in the appeal filed by the revenue i.e. CIT Vs. 14 A.Y. 2016-17 Transporter Industry International Kodak India Pvt. Ltd (supra) wherein at para no. 10, it was observed by the Hon’ble High Court as under: - “10. We must also record the fact that the ALP was arrived at by the Transfer Pricing Officer (TPO) by not adopting any of the methods prescribed under Section 92C of the Act. The method to determine the ALP adopted was not one of the prescribed methods for computing the ALP. It was not even any method prescribed by the Board. At the relevant time, i.e. for A.Y. 2008-09 Section 92C of the Act did not provide for other method as provided in Section 92C(1)(f) of the Act. The impugned order of the Tribunal holds that the method adopted by the Revenue to determine the ALP was alien to the methods prescribed under Section 92C of the Act. In the above circumstances, the Tribunal declined to restore the issue to the Assessing Officer for re-determining the ALP by adopting one of the methods as listed out in Section 92C of the Act. This finding of the Tribunal has also not been challenged by the Revenue.”

In the light of the aforesaid judicial precedents, it was contended by Ld. AR that the Ld. DRP direction to the AO to mark-up 15% for services provided by the assessee to its AE/M/s TII India Pvt. Ltd. is erroneous, since this issue of International transaction was referred to TPO to determine the Arm’s Length Price (ALP) which been accepted by the TPO; and therefore, no adjustment could have been ordered by the Ld. DRP that also on Adhoc basis after having found that AO’s action of treating it as Royalty was incorrect. According to us, the Adhoc mark-up directed by Ld. DRP cannot be accepted since the Ld. DRP did not follow any method prescribed u/s 92C of the Act for determining the ALP of International Transaction between two Associated Enterprises u/s 92B of the Act. And it is trite that the ALP 15 A.Y. 2016-17 Transporter Industry International has to be determined as per section 92C of the Act. And further for any comparability analysis, the Ld. DRP ought to have followed the mandate under Rule 10B(1)(a) of the Rules, i.e. one of the method prescribed u/s 92C of the Act needs to be used while determining the ALP as held by the Hon’ble Bombay High Court in the case of Kodak India Pvt. Ltd (supra). Therefore, the action of Ld. DRP directing mark-up of 15% without adhering to the methods prescribed u/s 92C of the Act, cannot be countenanced since it would breach the ‘Rule of law’ and makes the order arbitrary. Therefore, this ground of appeal of the assessee is allowed and the addition made by AO pursuant to such a direction of Ld. DRP of Rs.5,19,228/- is directed to be deleted.

We have heard both the parties and perused the records. We note that the assessee (foreign company) has claimed Rs.1,81,61,306/- as reimbursement from its subsidiary Indian company M/s. TII India on the ground that these were expenses incurred on behalf of the Indian subsidiary for setting up the company in earlier years. Even though, the Ld. DRP has called for the remand report twice, the AO’s struck to the stands that the assessee has not been able to prove the nature of the expenses as reimbursement for the purpose of setting up of the subsidiary company (M/s TII India). According to the AO, the third party invoices submitted by the assessee company did not have the detail about the nature of expenses incurred. And therefore, he held it to be in the nature of managerial/consultancy and therefore treated 21 A.Y. 2016-17 Transporter Industry International the same as fees for technical services. The Ld. DRP also after going through the additional evidences and remand report was of the same view and upheld the action of the AO. Before us, the assessee has brought to our notice that the assessee during the proceedings before the Ld. DRP has filed the following documents which is given in the following chart below: - Sr.No Third Party Details Invoice Page No. English Amount in German Copy Copy Euro reimbursed B1 Construction management invoice -debit note 1 SKP India 5915 166 169 SKP India 2325 170 171-172 F. Ladenburger 3500 173 174 Semco Tec 2824 176 177-178 SKP India 15303 179 180-181 EIM GmbH 35000 182 183 MPS 3445 184 185 MPS 20000 188 189 Sub Total- INR 64,02,934(Ex Rate 72.50 88315 264 INR/Euro) B2 Construction management invoice -debit note 2 F. Ladenburger 7000 190 192 F. Ladenburger 7000 193 195 MPS 16840 196 205 MPS 19213 206 210 MPS 16258 211 214 MPS 16809 215 218 MPS 15442 219 222 MPS 15079 223 224 MPS 14609 225 228 MPS 15558 229 232 MPS 10102 233 238 MPS 8267 239 240 Sub Total (INR 1,17,58,372 (Ex 1,62,181 265 Rate 72.50 INR/Euro) Total B1 +B2 (INR 1,81,61,306) 2,50,497/-

After going through the documents submitted before us, we note that other than the expenses of Euro 5,900/- raised by cross border consultancy which has given the nature of expenses as “being advance towards statutory expenses to be incurred for incorporation of subsidiary company of assessee dated 21.06.2013’ a perusal of the other invoices, it is not discernable as to whether the expenses pertains 22 A.Y. 2016-17 Transporter Industry International to the subsidiary company or not. And without ascertaining the nature of the expenses, it is not possible to determine whether the claim of assessee that it is only reimbursement is possible. However, since the Ld. AR pleaded that provided an opportunity is given to the assessee, it would be able to bring in evidence to show that the expenses have been made for the purpose of setting up of the business of the subsidiary company. Therefore, we set aside this issue back to the file of the AO for deciding this issue afresh after giving an opportunity to the assessee. This issue is allowed for statistical purposes.

Since the legal issue has been answered in favour of the assessee and against the revenue ground no. 2, 4 to 8 of the assessee has become infructuous and academic. Accordingly, it is not adjudicated.