Income Tax Appellate Tribunal – Mumbai
Asst Cit 5(2)(1), Mumbai vs Kec International Ltd, Mumbai on 10 July, 2019 IN THE INCOME TAX APPELLATE TRIBUNAL “K”, BENCH MUMBAI BEFORE SHRI C.N. PRASAD, JM & SHRI M.BALAGANESH, AM ITA No.5611/Mum/2015 (Assessment Year :2010-11) Asst. Commissioner of Vs. M/s. KEC International Ltd. Income tax 5(2)(1), 463, CEAT Mahal th Room No.571, 5 Floor Dr. Annie Besant Road Aayakar Bhavan Worli, Mumbai – 400 030 M.K.Road, Mumbai – 400 020 PAN/GIR No. AACCK5599H (Appellant) .. (Respondent) Revenue by Shri Saurabh Deshpande Assessee by Shri Anuj Kisnadwala Date of Hearing 12/04/2019 Date of Pronouncement 10/07/2019 आदे श / O R D E R PER M. BALAGANESH (A.M): This appeal in ITA No.5611/Mum/2015 for A.Y.2010-11 arises out
of the order by the ld. Commissioner of Income Tax (Appeals)-56,
Mumbai in appeal No.CIT(A)-56/Trf/2014-15/162-F dated 30/09/2015 (ld.
CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s.
144C(13) of the IT Act, 1961 of the Income Tax Act, 1961 (hereinafter
referred to as Act) dated 29/04/2014 by the ld. Addl. Commissioner of
Income Tax, Range-8(2), Mumbai (hereinafter referred to as ld. AO).
ITA No.5611/Mum/2015 M/s. KEC International Ltd., 2. The Ground No. 1(a) to be decided in this appeal is as to whether
the ld. CIT(A) was justified in deciding that the performance guarantee
provided by the assessee to a third party was not an international
transaction in the facts and circumstances of the case. The inter
connected issue involved therein is as to whether the ld TPO was justified
in making an adjustment to Arm‟s Length Price (ALP) on the said issuance
of performance guarantee in the facts and circumstances of the case.
3. The brief facts of this issue are that the assessee filed its original
return of income for the A.Y.2010-11 on 15/10/2010 declaring total
income of Rs. Nil under normal provisions of the Act after claiming the set
off of brought forward losses to the tune of Rs.191,37,75,081/- and book
profit u/s.115JB of the Act at Rs.273,94,82,293/-. Later the assessee filed
revised return of income on 31/03/2012 declaring total income at Rs. Nil
under normal provisions of the Act after claiming set off of brought
forward losses to the tune of Rs.196,30,61,287/- and book profit
u/s.115 JB of Rs.273,94,82,293/- and computed the tax liability thereon.
The assessee is engaged in the business of design, fabrication,
galvanising and testing of transmission line towers and telecom towers;
all types of masts; erection of complete transmission lines & telecom
towers, supply and erection of Sub-station structures and overhead
equipment for railway electrification and managing infrastructure sites for
telecommunication services. During the year, the assessee company
acquired business of manufacturing and trading of power cables, optical
fibre cables, jelly filled telephone cables, networking / datacom cables,
house wiring cables and turnkey contractors.
3.1. KEC Global FZ LLC (hereinafter referred to as “KEC Global” or “AE”)
is a wholly owned subsidiary of the assessee company. During the year
under consideration, the assessee provided guarantees on behalf of KEC
Global to customers of KEC Global. The details of guarantees provided by
3 ITA No.5611/Mum/2015 M/s. KEC International Ltd., the assessee were filed by the assessee before the ld. TPO vide letter
dated 22/11/2013. The details are as under:-
i) Performance Guarantee (indemnity against loss) provided to
Bahwan Engineering Company LLC on behalf of AE During the year under consideration, Bahwan Engineering Company LLC
(BEC) had entered into sub-contract agreement with KEC Global (AE) to
construct 132/33 KV Grid Station & Associated Transmission System in
Y1T1 Area, Muscat Governorate. As a pre-condition for execution of the
sub-Contract, BEC has requested KEC Global to provide the assessee‟s
indemnity against all liabilities, claims, damages or costs which Bahwan
Engineering Company LLC may be subjected to, while KEC Global (AE) is
performing the sub-contract works. Accordingly, the assessee had
executed the Deed of Indemnity dated 28/11/2009 in favour of Bahwan
Engineering Company LLC providing an indemnity against all liabilities,
claims, demands, damages or costs caused by KEC Global‟s (AE‟s) failure
to perform in all its duties and applications amounting to Omani Riyal
Rs.1,69,84,500/- (INR 198,17,46,365).
3.2. In other words, the assessee had given performance guarantee to
Bahwan Engineering Company LLC on behalf of its AE guaranteeing the
performance of duties and applications that would be done by its AE and
in the event of any such failure of performance by the AE, the assessee
would indemnify Bahwan Engineering Company LLC against all liabilities,
claims, demands, damages etc., Subsequent to the Deed of Indemnity,
the assessee had also entered into agreement dated 28/11/2009 with its
AE stating that in the event of indemnity provisions being invoked by
Bahwan Engineering Company LLC on failure of performance by the AE,
then the entire sub-contract shall be assigned to the assessee
substituting them in place of AE as a Sub-Contractor to Bahwan
Engineering Company LLC. The assessee while providing such
4 ITA No.5611/Mum/2015 M/s. KEC International Ltd., performance guarantee to BEC did not incur any charges or cost
whatsoever and accordingly, no commission was charged by the assessee
to its AE for providing the said performance guarantee.
3.3. The ld. TPO sought to treat this performance guarantee as an
international transaction and resorted to make adjustment to arm‟s length
price (ALP) thereon for which purpose, a show cause notice was issued to
the assessee. The assessee responded that in the case of assignment of
the contract in the name of the assessee pursuant to failure of the AE to
perform its duties and obligations as a sub-contractor to Bahwan
Engineering Company LLC, the payments and amount receivable that are
due to the AE would come naturally to the assessee company which
would be a larger benefit that would be derived by the assessee than
charging performance guarantee commission from its AE. It was also
submitted that the entire profit on the contract assigned by the Bahwan
Engineering Company LLC in favour of the assessee would automatically
come to the assessee company and there is absolutely no risk involved for
the assessee in this transaction of issuance of performance guarantee to
Bahwan Engineering Company LLC on behalf of its AE. Accordingly, the
assessee pleaded that it was justified in not charging any commission
from its AE for issuing the said performance guarantee.
3.3. The ld. TPO however, did not agree to this contention of the
assessee and stated that in case of default committed by the AE in not
performing its duties and obligations in the Sub-contract work allotted to
AE, then the assessee had to step-in as the entire sub-contract would
come to the assessee company and the assessee has to put all resources
in place for executing the contract or as to find another sub-contractor to
complete the contract. In such circumstances, the assessee company had
to take the risk which needs to be compensated to the assessee by its AE.
Accordingly, the ld. TPO treated this issuance of performance guarantee
5 ITA No.5611/Mum/2015 M/s. KEC International Ltd., transaction as an international transaction and proceeded to benchmark
the same by applying the bank guarantee commission. For this purpose,
the ld. TPO adopted the comparable guarantee commissions charged by
Allahabad Bank and HSBC Bank to various comparables which are listed
out in page 4 of his order and arrived at the mean guarantee commission
percentage thereon at 1.04%. The ld. TPO applied the said 1.04% on the
outstanding performance guarantee amount of Rs.198,17,46,365/- for a
period of 121 days i.e. from 26/11/2009 to 31/03/2010 and made an
adjustment to arm‟s length price (ALP) on outstanding performance
guarantee in the sum of Rs.69,45,342/-.
3.4. The ld. CIT(A) held that since there is no cost involved to the
assessee in issuing performance bank guarantee, the said issuance of
performance bank guarantee would be outside the ambit of an
international transaction within the meaning of Section 92B(1) of the Act
read with its explanation thereof.
4. Aggrieved, the revenue is in appeal before us.
5. We have heard the rival submissions. At the outset, we find that
the assessee had only given performance guarantee in favour of Bahwan
Engineering Company LLC on behalf of its AE nearly to indemnify the
losses, claims, damages, if any, that may arise pursuant to non-
performance of duties and obligations by the AE in execution of the
contract allotted to them. Admittedly, the assessee has not charged any
commission from its AE for issuance of this performance guarantee. We
find that assessee had also parallelly entered into another agreement with
its AE wherein in the event of AE failing in execution of the contract and
the performance guarantee issued by the assessee gets invoked by
Bahwan Engineering Company LLC, then the contract which is
awarded to the AE gets assigned in favour of the assessee,
wherein the assessee would be obligated to execute the contract
on its own by using its own infrastructure, which would in turn
6 ITA No.5611/Mum/2015 M/s. KEC International Ltd., result in assessee deriving the entire contractual revenue and
huge profits there from. In these circumstances, there is absolutely no
risk involved for the assessee in issuing the performance guarantee on
behalf of its AE, warranting charging of any commission to mitigate that
risk. Hence, we hold that assessee was fully justified in not charging any
commission from its AE in the subject mentioned performance guarantee
transaction. Hence, there is no need to make any adjustment to arm‟s
length price thereof. In view of this decision in the peculiar facts and
circumstances, the issue as to whether issuance of performance
guarantee would fall within the ambit of an international transaction or
not is left open and no decision is given herein. Hence, the various
decisions quoted by the ld. Counsel for both the sides need not be gone
into. Accordingly, the addition made in the sum of Rs.69,45,342/- is
hereby directed to be deleted. Accordingly, the ground No.1(a) raised by
the revenue are partly allowed.
5.1. The ground Nos.1(b) & 2(a) raised by the revenue are with regard
to the action of the ld. CIT(A) deleting the adjustment to arm‟s length
price in respect of performance bank guarantee issued to Chandian
Company for Water & Electricity (CCWE).
6. The brief facts of this issue are that during the year under
consideration, Bank of India at the request of the assessee had provided
performance guarantee dated 28/08/2009 to CCWE for an amount of
Euro 1003126 (INR 6,07,36,972) on behalf of AE. Actually the said
guarantee was given in the name of Al Sharif Group for Cont. & Dev.
(Holding) Ltd, The entrepreneur (through AE). CCWE is a customer of the
wholly owned subsidiary of assessee i.e. KEC Global (AE), who had given
a contract to the AE. However, the CCWE, as a pre-condition for
execution of contract had asked the AE to provide performance bank
7 ITA No.5611/Mum/2015 M/s. KEC International Ltd., guarantee. Hence, to fulfil the said condition, the assessee had provided
bank guarantee to CCWE on behalf of AE. In respect of the same, the
assessee submitted the copy of guarantee before the ld. TPO. For the
purpose of issuance of this bank guarantee, Bank of India charged 0.93%
as guarantee commission to the assessee. The very same guarantee fee
of 0.93% was recovered by the assessee from its AE. Hence, there was
no extra cost, profit or losses incurred or earned by the assessee in these
6.1. The ld. TPO observed that Bank of India had given guarantee to
the AE based upon the credit rating of the assessee. The credit rating in
the present case of the assessee is A+ . As against this, guarantee fees
charged by the bank for an identical credit arrangement with the AE will
depend upon the credit rating of the AE. In this case, the AE being a
newly floated entity, the credit rating is very low. The ld TPO observed
that as the credit rating of the assessee is better than that of the AE,
hence the execution of performance bank guarantee in favour of CCWE
on behalf of the AE results in transfer of benefit to the AE by the bank.
Accordingly, the same requires to be benchmarked in accordance with
Indian transfer pricing regulations. For this purpose, the ld. TPO identified
bank guarantees given by Allahabad Bank and HSBC bank with six
customers and arrived at the average guarantee commission thereon at
1.04%. The ld. AO made an adjustment to the arm‟s length price in
respect of this transaction by applying this average guarantee commission
of 1.04% on the outstanding guarantee amount of Rs.6,07,36,972/- and
from that reduced the guarantee fee recovered by the assessee from its
AE at 0.93%, and made adjustment to the differential sum of Rs.39,354/-
(Rs.3,72,276-Rs.3,32,722) to the ALP of the international transaction in
respect of performance bank guarantee.
ITA No.5611/Mum/2015 M/s. KEC International Ltd., 6.2. The assessee contended before the ld. CIT(A) that the ld. TPO
while considering the rates of guarantee commission charged by the
respective banks with regard to the comparable cases, completely ignored
the credit ratings of the entities to whom the banks had issued the said
guarantees. Accordingly, it was argued that the ld. TPO had erred in
arriving at comparable rate for benchmarking the said transaction. The
assessee also contended that the adoption of rate of guarantee
commission is nothing but application of comparable uncontrolled price
(CUP) method. As per Rule 10B(2) of the IT rules, CUP method compares
the price charged for property or services transferred in a controlled
transaction to the price charged for property or services transferred in a
comparable uncontrolled transaction in comparable circumstances. Where
it is possible to locate comparable transaction, CUP method is the most
direct and reliable way to apply arm‟s length principle. The assessee
pleaded that the ld. TPO had ignored the rate of commission of 0.93%
which was charged by the Bank of India to the assessee while issuing
guarantee to CCWE. In the case of the assessee, this rate could be
considered as most direct comparable uncontrolled transaction to
benchmark the rate of guarantee commission. Further, it was argued that
the rates adopted by the ld. TPO could not be assumed as comparable in
the business of any specific information regarding the comparability
analysis of the same. It was also submitted that the banks ascertained
the rate of guarantee commission based on the creditworthiness of the
entity in whose favour the same is issued. The determination of
creditworthiness of an entity depends on several factors like profitability
ratios, capital structures, economies of scale etc. The ld. TPO had
completely ignored the credit ratings of the entities to whom the banks
had issued the guarantees vis-a-vis the credit ratings of the assessee
while calculating the arm‟s length rate of guarantee commission thereby
not taking into account the comparability analysis of the comparable. The
9 ITA No.5611/Mum/2015 M/s. KEC International Ltd., assessee pleaded that the ld. TPO had considered the rate charged by the
banker of the third parties as ALP to benchmark the transaction of the
assessee with AE. In this case, the internal direct comparable is available
which is properly comparable for benchmarking. Hence, the rate charged
by the bank at 0.93% is directly comparable in case of issuance of
guarantee to CCWE. Further, the assessee had already recovered the said
rate of 0.93% charged by Bank of India from its AE. This rate is nothing
but the comparable uncontrolled rate of commission in case of transaction
of issuance of guarantee. The ld. CIT(A) accepted to the aforesaid
contentions of the assessee and stated that 0.93% is the arm‟s length
rate of commission in the subject mentioned transaction and hence, no
further adjustment need to be made for the same as the said rate of
0.93% had been duly recovered by the assessee from its AE.
7. Aggrieved, revenue is in appeal before us.
8. We have heard rival submissions. The primary facts stated
hereinabove remain undisputed and hence, the same are not reiterated
for the sake of brevity. We find that the ld. CIT(A) had rightly appreciated
the contentions of the assessee which are stated hereinabove and the
same are not reproduced hereunder for the sake of brevity. It is well
known in the financial market that the banks ascertain the rate of
guarantee commission for each party based on its creditworthiness and
the said creditworthiness would depend on several factors such as
profitability ratios, economies of scale, number of years of relationship of
the bank with those customers, future potential of that customer which in
turn would enlarge the business of the bank, tangible and immovable
securities offered by the customer, if any etc., Hence, the rate of
commission issued by the bank for its customers would vary from one
customer to another customer and accordingly, the same cannot be used
10 ITA No.5611/Mum/2015 M/s. KEC International Ltd., as a benchmark for the purpose of comparability. In the instant case, the
assessee‟s credit rating is A+ as given by a reputed credit rating agency
CARE. The rate of 0.93% charged by the bank includes the commission
rate of 0.25% + 0.68% for the Export Credit Guarantee Corporation
(ECGC) cover. The credit rating of the AE was not done in the instant
case. It is not in dispute that the said guarantee rate of 0.93% which is
charged by the bank on the assessee for issuing the bank guarantee in
favour of CCWE on behalf of its AE, had been duly recovered by the
assessee from its AE. Hence, it is only a case of recovery of cost by
assessee without any margin. We are inclined to accept the argument of
the ld. AR that in the instant case, 0.93% of guarantee commission
charged by Bank of India could be considered as the most direct
comparable uncontrolled transaction to benchmark the rate of guarantee
commission. In any case, the average rate adopted by the ld. TPO at
1.04% is only an external data in the form of third party guarantees
issued by the bank. When internal comparable uncontrolled price is
available that should be considered as the most direct and reliable way to
apply the arm‟s length principle. In any case, there is absolutely no loss to
the assessee and no bearing on the profits or losses as the entire cost of
0.93% has been duly recovered by the assessee from its AE. Hence, the
action of the ld. CIT(A) in holding no further adjustment to ALP is
required in respect of the subject mentioned guarantee commission
transaction and consequently directing the deletion of addition of
Rs.39,354/- thereof, requires no interference. Accordingly, Ground
No.1(b) and 2(a) raised by the revenue are dismissed.
8.1. Ground No.2(b) raised by the Revenue is with regard to the action
of the ld. CIT(A) in holding that the guarantee commission recovered by
the assessee at 0.93% from its AE was at arm‟s length in respect of bank
guarantee given to CCWE for releasing the advance payment.
ITA No.5611/Mum/2015 M/s. KEC International Ltd., 9. The brief facts of this issue are that the assessee company had
given advance payment guarantee to CCWE on behalf of AE of the
assessee for a total amount of Euro 20,06,252/- (INR 12,14,73,944). This
guarantee was required by CCWE, who has given contract to the AE,
before giving any advance to the AE. In effect, this bank guarantee was
issued to CCWE for securing the advance payment from CCWE by the AE.
The assessee submitted before the ld. TPO that the bank had charged
0.93% as the guarantee commission and there was no formal guarantee
agreement entered in this regard. The assessee stated that the Credit
Rating issued by CARE is A+ and Credit Rating of the AE was not done.
The assessee pleaded that no benchmarking was done by the assessee as
executing guarantee in favour of a bank on behalf of the AE was not an
international transaction in the opinion of the assessee. The assessee also
stated that the Corporate bond rates for United Arab Emirates (UAE) were
not available. However, it contended that rate of interest on borrowings
made in the country in which the AE is situated is quite low in comparison
with bond rate prevailing in India. Therefore, Indian Corporate Bond rates
should not be applied for benchmarking. The assessee also pleaded that
the bank had charged the assessee 0.93% for issuing this bank guarantee
to CCWE on behalf of its AE for securing the advance payment for
executing the contract. The assessee also submitted that this guarantee
fee of 0.93% had been duly recovered by it from its AE and hence, there
is no impact on profit or loss of the assessee.
9.1. The ld. TPO considered the issuance of said guarantee as a
corporate guarantee given by Bank of India to CCWE to enable them to
release the advance payment to the AE of the assessee. He observed that
in the absence of any credit rating of AE and as the AE is an operating
company, the credit rating of AE is taken at “BBB” whereas the assessee
credit rating is A+. In an uncontrolled transaction like this between
12 ITA No.5611/Mum/2015 M/s. KEC International Ltd., unrelated parties, guarantee fee would have been charged taking into
account creditworthiness of the AE, margins, security or any other
consideration relevant for deciding the financial stability of the AE. The ld.
TPO observed that the guarantee income would have accrued to the
assessee if the said amounts were given to unrelated parties in the similar
circumstances as that of its AE‟s. The ld. TPO applied the CUP method
for benchmarking this transaction and determined the arm‟s length price
thereon as under:-
“(B) Methodology: Application of this method begins by quantifying the benefit received by the guaranteed entity. This accomplished by: determining the credit rating of the guaranteed entity on a stand-alone basis (without reference to the rest of the multinational company of which it is a part);
determining the, corporate bond yield that corresponds to the credit rating of the guaranteed entity had it been a standalone entity;
determining the corporate bond yield that corresponds to the guarantor’s credit rating; and Annualised Average yield (%) Rating Financial Year 2009-10 1-2 2-3 5 years years years AAA 6.81 7.55 8.25 AA+ 7.2 7.98 8.71 AA 7.43 8.21 8.94 AA- 7.77 8.49 9.24 A+ 8.16 8.89 9.62 A 8.63 9.38 10.15 A- 9.46 10.38 11.06 BBB+ 9.77 10.73 11.43
13 ITA No.5611/Mum/2015 M/s. KEC International Ltd., BBB 10.68 11.60 12.28 BBB- 11.86 12.69 13.37 • computing the difference or spread between these two yields.
The CUP rate for guarantee fee is arrived at as below. Credit rating of Guarantor (i.e. the taxpayer) „A‟ Yield or interest rate for 2-3 year unsecured bond 8.89 Credit rating of AE (as discussed above) „BBB‟ Yield or interest rate for 5 year unsecured bond 11.60% p.a.
Benefit to AE on account of Guarantee given by the taxpayer Particulars CCWE V:0|ifstanding Guarantee Amount in foreign 2006252 Euros currency Outstanding Guarantee Amount in INR 12,14,73,944 No. of days the guarantee is outstanding 215 during (28.8.2009 to The year 31.3.2010) Arms Length Guarantee Fee 2.71% Arms Length Price on the outstanding 1939090 corporate guarantee (INR) Guarantee fee charged @ 0,93% from the AE 6,65,444 Adjustment oh a/c of Corporate guarantee 1273646 9.2. Accordingly, the ld. TPO made adjustment of Rs.12,73,646/- on
account of issuance of corporate guarantee.
9.3. The assessee pleaded that the ld. TPO had adopted two different
rates for benchmarking the bank guarantees given by the assessee. It
may be noted that the two bank guarantees, one is performance bank
14 ITA No.5611/Mum/2015 M/s. KEC International Ltd., guarantee and other is advance payment guarantee were given to CCWE
on behalf of AE of the assessee. The bank had charged the assessee the
same rate of 0.93% for both the cases as guarantee commission. The
assessee pleaded that there is no much difference with regard to the said
two guarantees and being identical in nature, the ld. TPO had adopted
two different principles to benchmark the said transactions. The ld. CIT(A)
observed that advance payment guarantee and also the performance
guarantee are identical in nature. Hence, both the guarantees being
identical in nature, the arm‟s length rate of commission in case of both
the guarantees should be the same. Accordingly, he held that the ALP of
guarantee commission should be 0.93% in case of advance payment
guarantee also and held that no further adjustment towards that rate
would be required.
10. Aggrieved, the revenue is in appeal before us.
11. We have heard the rival submissions. The findings given
hereinabove in respect of performance guarantee to CCWE by us would
hold good for this bank guarantee also. Accordingly, we hold that the
finding of the ld. CIT(A) and consequently deletion of adjustment on
account of bank guarantee of Rs.12,73,646/- does not call for any
interference. Accordingly, the Ground No.2(b) raised by the revenue is
Corporate Tax Issues:-
12. The Ground No.3 raised by the revenue is with regard to the action
of the ld. CIT(A) in allowing the depreciation of Rs.65,31,55,951/- on the
actual cost of assets of the power transmission business acquired by the
assessee. The grounds raised by the revenue in this regard as under:-
ITA No.5611/Mum/2015 M/s. KEC International Ltd., “3(a). Whether on the facts and circumstances of the case, the Ld. C1T(A) was justified in allowing the depreciation of Rs. 65,31,55,991/- which was claimed on the actual cost of assets of the power transmission business acquired by the assessee.
3(b). Whether on the facts and circumstances of the case, the Ld. C1T(A) had failed to appreciate that the transfer of assets to the assessee company was by way of demerger falling within the definition given under section 2(19AA) of the Income Tax Act and, therefore, the written down value of the transferred assets in the hands of the assessee company is the written down value of the said assets prior to the demerger.
3(c). Whether on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer restricting the depreciation claim of the assessee to Rs. 41.79.82.080/- as against the claim of Rs. 65,31,55,991/- made by the assessee.”
12.1. Ground No. 4 & 5 raised by the revenue are with regard to action of the ld. CIT(A) in allowing the mark to market loss arising of foreign exchange contracts which was outstanding at the end of the year. The revenue has raised the following grounds in this regard:-
4. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the mark to market loss arising on the foreign exchange contracts which were outstanding as at the year end is an accrued loss and not a notional loss.
5. On the facts and in the circumstances of the case, the Ld. C1T(A) erred in holding that the mark to market loss arising on the foreign exchange contracts which were outstanding as at the year end is an accrued loss and is not contingent, unascertained or notional in nature and, hence, no adjustment could be made to the book profit under clause (c) of the Explanation (1) to” section 115JB(2).
12.2. At the outset we find both the parties agreed that this issue is already covered by the decision of this Tribunal in assessee‟s own case in earlier years. We find that the ld. CIT(A) had granted relief to the
16 ITA No.5611/Mum/2015 M/s. KEC International Ltd., assessee by following the earlier orders of this Tribunal by observing as under:-
5.1 The facts of the case and the observations/findings of the A.O. are summarized as under:
1. During the year under consideration, the appellant had claimed depreciation of Rs. 65,31,55,991/- in respect of assets acquired by it, in A.Y. 2006-07, upon acquisition of Power Transmission business (“PTB”), from KEC infrastructure Limited (“the Transferor Company”), pursuant to Court approved Scheme of Arrangement (“the Scheme” or “the Arrangement)
2. The AO restricted the claim for depreciation to Rs. 41,79,82,0807- instead of Rs. 65,31,55,9917-, following the order of the earlier years, wherein, it was alleged that the transfer under the Scheme was by way of “demerger”, falling within the definition given under section 2(19AA) of the Act and accordingly, the written down value (WDV) of the transferred assets in the hands of the Appellant is the WDV of the said assets immediately prior to demerger. Thus, the appellant is into appeal for the aforesaid addition.
5.2 During the course of appellate proceedings, detailed submissions were made as follows:
“In this regard, the Appellant most humbly submits that: ‘
1. The assets were acquired by the Appellant pursuant to a court approved Scheme of Arrangement.
2. The court approved scheme under section 391 to 394 of the Companies Act, 1956 did not satisfy the conditions laid down under section 2(19AA) of the Act.
3. Under the court approved Scheme, the shares were issued to the transferor company and not to the shareholders of the transferor company as laid down by section 2(19AA) of the Act.
4. Further the transfer to the Appellant was for a lump sum consideration and no values either market value or book value were ascribed to individual assets.
5. Since the assets were not transferred at book values, the condition for the transfer under a Scheme of Arrangement to qualify as ‘demerger’ within the meaning of 11 section 2(19AA) of the Act was not satisfied.
6. Clearly, the conditions specified in section 2(19AA) of the Act were not satisfied and therefore, the acquisition of the assets was not pursuant to a demerger.
7. Since the transaction could not be said to be a demerger, Explanation 2A and 2B to section 43(6) of the Act and explanation 7A to section 43(1) of the Act cannot be invoked.
8. the AO had in the assessment order of KEC Infrastructure Limited alleged the said transaction is a transfer by way of slump sale and a completely contrary view cannot be taken in the Appellant’s case.
ITA No.5611/Mum/2015 M/s. KEC International Ltd., The learned AO failed to explicate as to how the transfer would fall within
the meaning of demerger as given under section 2(19AA) of the Act and as
how all the condition specified under section 2(19AA) of the Act were
The Appellant further submits that the AO without assigning any cogent
reasons has wrongly concluded that the court approved scheme was a
device to reduce the income-tax liability and thereby wrongly invoked
Explanation 3 to section 43(1) of the Act.
The Appellant humbly submits that the Scheme had undergone detailed
scrutiny by the Hon‟ble Mumbai High Court, several Financial
Institutions which were principal shareholders of the company, its
Bankers, Secured and Unsecured Creditors, the Registrar of Companies
and several other governmental and non-governmental agencies. The
Hon‟ble High Court and all the above institutions/ offices have granted
their permission /accord in the reorganization of business only after
considering the object of the Scheme.
If the said transaction was merely to reduce income tax liability, the above
offices would not have accorded their assent to such Scheme as these
parties included several Banks and Government Departments.
The Appellant further submits that the main intention of the Scheme was to
achieve A further growth and efficiency, and to address the following
(a) Achieve greater focus on business operations
(b) Unlock the value of investments made / extended to group companies
(c) Unlock the value of “core power transmission business”
(d) Address the concerns of lenders and other stakeholders by separating
core and non -core businesses
(e) Unlock the value and potential in surplus real estate by the Company
(f) Improve dampening of return ratios
(g) Improve important indicators of growth such as Return on capital
employed and return on net worth
(h) Improve credit rating for core business and chart out growth initiatives
through expansion and acquisitions.
Further, the restructuring was carried out under a Composite Scheme of
Arrangement under provisions of Sections 391 -394 of the Companies Act,
1956. In order to implement the scheme, approvals/ sanction were
obtained as under:
(a) Board of directors;
(b) Shareholders of the Company under a court-convened meeting;
(c) Secured creditors of the Company under a court-convened meeting;
(d) Unsecured creditors of the Company under a court-convened meeting;
(e) Bombay High Court;
ITA No.5611/Mum/2015 M/s. KEC International Ltd., (j) Stock exchanges where the shares of the Company are listed;
(g)Regulatory bodies such as Registrar of Companies, Regional Director
and Official Liquidator (in case of Bespoke Finvest Limited) Since the Court Approved Scheme which has undergone detailed scrutiny
by several governmental/non-governmental agencies it cannot be rendered
as a colorable device merely on the basis of conjectures and surmises.
The Appellant further submits that the issue relating to the above ground
has been decided in the favour of the Appellant for Assessment Year 2006-
07 by the Hon’ble Mumbai Tribunal vide order dated 04.06.2010 
41 SOT 43 (MUM.). A photocopy of the said Order is enclosed in the
paper book. The relevant extract of the decision of Mumbai Tribunal is
“27. This brings us to the revenue’s appeal which is on two issues, the first
being the direction of the ClT(Appeals) to allow depreciation at Rs, 87.76
crores as against depreciation of Rs, 15.98 crores allowed by the
Assessing Officer and the second being deletion of disallowances made
under the pvoviso to section 40(a) and section 43B by the CIT (Appeals).
28. After hearing rival contentions, we hold as follows.
29. On the first ground, the revenue has not disputed the findings of the
first appellate authority that the transfer in question is a case of slump
sale and not a case of demerger. The valuation has also not been disputed.
Under these circumstances, for the reasons noted in the assessee’s appeal,
we have to necessarily uphold the order of the first appellate authority and
dismiss ground No, 1 of the revenue.
Also the issue relating to the above ground has been decided in the favour
of the Appellant by the Hon’ble CIT(A) vide its orders dated 29.10.10,
23.08.13 and 11.07.12 for Assessment “Years 2007-08 to 2009-10
Photocopies of the said Orders are enclosed in the paper book.
In view of the above, the Appellant prays that the AO be directed to allow
the depreciation as claimed by the Appellant in its Return of Income.” 5.3 The issue stands covered by the decision of the Hon’ble Mumbai
Tribunal in Appellant’s own case for A.Y. 2006-07 and by the Hon’ble
CIT(A) in Appellant’s own case for A.Ys 2007-08 to 2009-10.
Subsequently, this issue is also being upheld by the Hon’ble Mumbai
Tribunal vide its order for A.Ys 2007-08 to 2009-10.
Thus, in view of the above the aforesaid ground is allowed.
ITA No.5611/Mum/2015 M/s. KEC International Ltd., 12.3. Respectfully following the Co-ordinate bench decision of this
Tribunal in assessee‟s own case supra, the ground raised in 3(a), 3(b)&
3(c) raised by the revenue are dismissed.
12.4. With regard to addition made towards mark to market loss of
foreign exchange contracts outstanding at the end of the year, both the
parties before us agreed that this issue is also covered by the decision of
this Tribunal in assessee‟s own case in earlier year which was relied upon
by the ld. CIT(A) by observing as under:-
6.2 During the course of appellate proceedings, detailed submissions were made as follows:
“It is pertinent to note that the said issue relating to the above ground has been decided in the favour of the Appellant by the Hon’ble CIT(A) vide order dated 11.07.12 for Assessment Year 2009-10. Thus, the Appellant prays that the MTM losses arising on account of forward contracts entered into by the Appellant be considered as an accrued loss to the Appellant and thereby allowed as deduction while computing the taxable income. The relevant extract of the CIT(A) Order is reproduced hereunder:
“Thus, from the ratio of the above cited decision, it is quite clear that loss accruing on mark to market valuation of hedging contract is an accrued loss.”
Further in this regard, the Appellant humbly submits that the forward contract is an agreement between two parties, requiring the delivery at some specified future date of a specified amount of foreign currency by one of the parties, against payment in domestic currency to the other party, at the price agreed upon in the contract. The rate of exchange applicable to the forward contract is called the forward exchange rate and the market for forward transactions is known as the forward market. Thus, in case of a forward contract, assessee enters into a legally binding, enforceable contract for purchase of foreign currency on a future date at the pre-determined rates. The date and the rate of purchase of the foreign currency are decided at the time of entering into contract. The difference between the forward contract and the exchange rate on the date of entering into the contract has to be recognized as income or expenses, which is ascertained and definite, in terms of the contract and cannot be regarded as notional or contingent. It is a debt owed by the Appellant, which accrued on the date of entering into the forward contract itself. The expenditure under the accrual system of
20 ITA No.5611/Mum/2015 M/s. KEC International Ltd., accounting had, thus, crystallized on the date of the contract and therefore
the same has been rightly claimed by the Appellant.
Reliance in this regard is placed on the decision of Hon’ble Delhi High Court
in CIT v/s. Woodward Governor India Pvt. Ltd. (294 ITR 451), which has
been subsequently affirmed by the Hon’ble Supreme Court in 312 ITR 254, (a
copy of the said decision is enclosed in the compilation of case laws) wherein
it has been categorically held that the increase in the liability of the assessee
on account of the fluctuation in the rate of foreign exchange remaining on
the last day of the financial year cannot be disallowed by treating the same
as notional or contingent, since the loss arising to the assessee due to such
increase in the liability, accrues to the assessee in that year itself. The
relevant extract of the decision is reproduced hereunder:
“The liability arose out of contracts already concluded. The liability already
stood accrued the minute the contract was entered into. The mere
postponement of the payment to a different date cannot extinguish the
liability and render it notional or contingent. Even if the liability was
discharged at a future date, it would nevertheless be a liability which was
certain and not contingent. The main ingredient of a contingent liability was
that it depended upon the happening of a certain event. The change in the
value of foreign currency in relation to Indian currency was a fait accompli
and not a notional one. Therefore the increase in liability due to foreign
exchange fluctuation as per the exchange rate prevailing on the last date of
the financial year was allowable as a deduction and was not a notional or a
contingent liability……The decision of the Supreme Court, in Bharat Earth
Movers Ltd. v. CIT  245 ITR 428/112 Taxman 61, settled the position.
That decision explains that what should be certain is the incurring of the
liability and it being estimated with reasonable certainty, even if the exact
quantification is not feasible. Even if the liability is discharged at a future
date, it will nevertheless be a liability which is certain and not contingent.
This approach is consistent with and informed by the accounting practices in
the mercantile system, with further guidance from the accounting standards
of the ICAl which have received judicial acknowledgement.’ From the foregoing decision, it is a settled legal position that any loss arising
as on the year-end due to exchange fluctuation of any liability would be
regarded as an accrued loss/gain (as against a contingent/notional loss/gain)
of that year irrespective of whether the payment for such liability is made in
the subsequent financial year.
Also, reliance is placed on the following judgements which relying on the
decision of Supreme Court in the case of CIT v/s. Woodward Governor India
Pvt. Ltd. had held that the loss incurred by the assessee on account of
variation of the contract on the last date of the accounting period and before
the date of maturity of the forward contract was an allowable deduction,
21 ITA No.5611/Mum/2015 M/s. KEC International Ltd., a. Decision of the Mumbai Special Bench has in the case of DCIT v. Bank of
Bahrain & Kuwait (41 SOT290)
b. Decision of Delhi Tribunal in the case of Bechtel India (P.) Ltd v/s. CIT
 33 taxmann.com 213 (Delhi – Trib.).
c. Decision of the Bangalore Tribunal in the case Quality Engineering &
Software Technologies (P) Ltd. v/s DCIT  52 taxmann.com (Bangalore
d. Decision of Supreme Court in the case of Oil & Natural Gas Corpn. Ltd.
v/s. CIT189 TAXMAN292 (SC) “Applying these factors on the facts of that case, it was held that the “loss”
suffered by the Assessee, maintaining accounts regularly on mercantile
system and following accounting standards prescribed by the Institute of
Chartered Accountants of India (ICAI), on account of fluctuation in the rate
of foreign exchange as on the date of balance-sheet was an item of
expenditure under section 37(1) of the Act, notwithstanding that the liability
had not been discharged in the year in which the fluctuation in the rate of
foreign exchange occurred.
11. We are of the opinion that the ratio of the said decision, with which we
are .in respectful agreement, squarely applies to the facts at-hand and,
therefore, the loss claimed by the assessee on account of fluctuation in the
rate of foreign exchange as on the date of balance-sheet is allowable as
expenditure under section 37(1) of the Act.”
Further, it is submitted that since the Accounting Standards mandatorily
requires the Appellant to provide for such MTM losses, such accounting
treatment needs to be considered even for the purposes of determining the
allowability of deduction for such provision under the Act. In the present
case too, the Appellant has been actually providing for such MTM losses in
its Books of Account in accordance with the applicable Accounting
Standards and accordingly, even for this reason, the deduction would be
allowable to the Appellant while computing its taxable income.
Thus, the Appellant prays that the MTM losses arising on account of forward
contracts entered into by the Appellant be considered as an accrued loss to
the Appellant and thereby allowed as deduction while computing the taxable
6.3 The issue stands covered by the decision of the Hon’ble CIT(A) in
Appellant’s own case for A.Y. 2009-10. Subsequently, the order of CIT(A) on
this issue is also being upheld by the Hon’ble Mumbai Tribunal vide its order
for A.Y 2009-10.
6.4 Thus, from the above facts and case of the above ground and from the
ratio of the above cited decisions, it is quite clear that loss accruing on mark
to market valuation of hedging contract is an accrued loss.
In view of the above the aforesaid ground is allowed.
ITA No.5611/Mum/2015 M/s. KEC International Ltd., 12.5. Respectfully following the Co-ordinate bench decision of this
Tribunal in assessee‟s own case supra, the ground raised in 4 & 5 raised
by the revenue are dismissed.
13. Ground No. 6 & 7 raised by the revenue is with regard to the action
of the ld. CIT(A) directing the ld. AO to delete the disallowance made
towards provision for doubtful debts and advances in the sum of
Rs.4,63,28,957/- both under normal provisions of the Act as well as in
computation of book profit u/s.115JB of the Act.
14. The brief facts of this issue are that the ld. AO observed from the
profit and loss account of the assessee that assessee has made a
provision of doubtful debts amounting to Rs.4,42,58,139/- and provision
for doubtful advances of Rs.20,70,818/- during the year. These amounts
were reduced from the debtors and advances figure on the asset side of
the balance sheet. The assessee submitted that it is eligible to claim the
deduction for this amount u/s.36(1)(vii) of the Act on the basis of decision
of Hon‟ble Supreme Court in the case of Vijaya Bank reported in 323 ITR
166. The ld. AO however, disregarded the contentions of the assessee
stating that the assessee has not complied with the requirement of
Section 36(2)(i)(b) of the Act and hence, it is not eligible for deduction of
claim of bad debts in the instant case. Accordingly, the ld. AO disallowed
the same of Rs.4,63,28,957/- towards provision for doubtful debts and
advance both under normal provisions of the Act as well as in the
computation of book profits u/s.115JB of the Act based on amendment
brought in Explanation-1 of Section 115JB (2) of the Act by Finance Act,
2009 with retrospective effect from 01/04/2001. The assessee pleaded
before the ld. CIT(A) that the disallowance was made by the ld. AO on
23 ITA No.5611/Mum/2015 M/s. KEC International Ltd., the understanding that assessee company had debited the profit and loss
account with the provision for doubtful debts of Rs. 4,42,58,139/- and
provision for doubtful advances of Rs.20,70,818/-. It was submitted that
this position is factually incorrect. It was pleaded that the increase in the
respective ledger accounts during the year was due to take over of the
assets and liabilities of RPG Cables Ltd., in pursuance of its merger with
the assessee company. The assessee also stated that since no showcause
notice was issued by the ld. AO, in this regard, the assessee could not
submit entire details and the picture before the ld. AO and hence, the
same were submitted before the ld. CIT(A). The assessee submitted a
statement showing the movement of provision for doubtful debts and
advances during the year under consideration to drive home the point
that there was no debit of Rs.4,42,58,139/- and Rs.20,70,818/- in its P &
L account. The assessee also drew the attention of notes of accounts
Point No.28 in schedule 19 and the statement showing the movement of
provision for doubtful debts and advances during the year. On due
appreciation of the same, the ld. CIT(A) observed that there is no debit
made to the profit and loss account of the assessee and hence, the entire
basis of the ld. AO for making the said disallowance fails and accordingly
deleted the same both under normal provisions as well as under
computation of book profit u/s.115JB of the Act.
15. Aggrieved, the revenue is in appeal before us on the following
“6. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in allowing deduction of the provision for doubtful debts of Rs. 4,42.58,139/- and the provision for doubtful advances amounting to Rs. 20,70,818/-.
7. On the facts and in the circumstances of the case, the Ld. C1T(A) erred in holding that no adjustment could be made to the book profit under clause (i) of the Explanation (1) to section 115JB(2) on account of the provision for doubtful debts & advances amounting to Rs.4,63,28,957/-“.
ITA No.5611/Mum/2015 M/s. KEC International Ltd., 16. We have heard rival submissions and perused the material available
on record including the paper book of the assessee. We find from the
audited financial statements for the year ended 31/03/2010 (enclosed in
pages 1 to 29 of the paper book), the assessee had claimed total
expenditure under the head of other expenses to the tune of
Rs.36,204.10. lakhs. The break-up of the same is provided in schedule 16
of the said financial statements. On perusal of the break-up in schedule
16, we find that assessee had actually shown the provision for doubtful
debts (net) in negative figure of Rs.772.22 lakhs (which in effect
represents income and not an expenditure). This itself goes to prove that
there was no debit of any doubtful debts and advances in the P & L
account warranting any disallowance thereof. We find from the notes of
accounts in point No.28, the Directors of the company and the auditors
thereof had observed as under:-
“Provision for doubtful debts and for doubtful advances as at the year end include Rs.442.59 lacs and Rs.20.71 lacs respectively relating to the Sundry Debtors / Loans and Advances transferred to the Company in terms of the Scheme of Amalgamation referred to in Note 1 above.”
16.1. The note No.1 to the notes of accounts explaining the entire scheme of amalgamation as reproduced in the audited financial statements in page 15 of the paper book is also reproduced hereinbelow for the sake of convenience:-
1 Scheme of Amalgamation:
1.1. A Scheme of Amalgamation (the Scheme) between RPG Cables Limited (RPGCL) and the Company and their respective shareholders under section 391 to 394 of the Companies Act, 1956 was sanctioned by the Hon’ble High Court of Judicature at Bombay on 26tfl February, 2010 and at Karnataka, Banglore on 17* March, 2010. The Scheme, which has become operative from 31st March, 2010 upon filing of the certified copies of the Orders of the Hon’ble High Courts with the Registrar of Companies
25 ITA No.5611/Mum/2015 M/s. KEC International Ltd., in the respective States, is effective from 1st March, 2010 (The Appointed date).
1.2. Pursuant to the Scheme, with effect from the Appointed date RPGCL (Transferor Company) is amalgamated in the Company, as a going concern, with all its assets, liabilities, properties, rights, benefits and interest therein subject to existing charges thereon in favour of banks and financial institutions.
1.3. In consideration for the amalgamation, for every 20 fully paid-up equity shares of Rs. 10 each of RPGCL, 1 fully paid-up equity share aggregating 20,73,068 fully paid-up equity shares of Rs. 10 each of the Company have been issued and allotted on 26th April, 2010, to the shareholders of RPGCL whose names appeared in the Register of Members, as on 19th April, 2010, being the record date. 1.4. All the staff, workmen and employees of RPGCL in service as on 1st March, 2010 have become staff, workmen and employees of the Company without any break in their service.
1.5. In terms of the Scheme, the Company recorded all the assets and liabilities appearing in the books of account of RPGCL and transferred to and vested in the Company at their fair values as on 1st March, 2010. For this purpose the fair value of Fixed Assets is as certified by the independent valuers and for other assets including investments is based on the management’s assessment of its recoverability. The difference of Rs. 8,497.87 lacs between the fair value of net assets of RPGCL transferred to the Company, and the value of equity shares allotted by the Company as per paragraph 1.3 above has been credited to ‘Capital Reserve’. 1.6. The amalgamation has been accounted for under the Purchase method as prescribed in Accounting Standard (AS- 14)-” Accounting for Amalgamations”.
16.2. We find from the revised statement of computation of total income
filed before the ld. AO which has been taken due cognizance by the ld.
AO while framing the assessment, under the caption of „provision for
doubtful debts‟ that the assessee had reflected the figure as „nil‟. This
itself again goes to prove that there was no debit to the profit and loss
account in the sum of Rs. 4,63,28,957/- as alleged by the ld. AO while
making the disallowance. We find from page 31 of the paper book that
assessee had reduced the following sums from the net profit as per profit
and loss account for the purpose of determining the profits and accounts
of the business.
ITA No.5611/Mum/2015 M/s. KEC International Ltd., (i) Bad debts written off out of provision for Doubtful debts Rs. 11,26,55,000/-
(ii) Provision for doubtful debts written back (since the provision was not allowed as Deduction in earlier year while creating The provision) Rs.7,72,21,516/-
16.3. We also find that the said computation of total income was duly
supported by detailed notes which were also filed before the ld. AO,
which is not in dispute before us. The relevant note No.4 in respect of
provision for doubtful debts and advances is as under:-
4. PROVISION FOR DOUBTFUL DEBTS & Advances: Rs. 4.63,28,957. The Company has made the provision for doubtful debts amounting to Rs. 4,42,58,139 and provision for doubtful advance of Rs.20,70,818 during the year.
Those amounts were reduced from the debtors and loans advance on the asset side of the Balance sheet. It is, submitted that the Company is eligible to claim the deduction for this amount under section 36(1)(vii) relying upon the decision of the Gujarat High Court in the case of Vithaldas Dhanjibhai Bardanwala (130 ITR 95). Supreme court decision in the case of Vijaya Bank ( 323 ITR 166). In the Banks case it was clarified by the Supreme Court that “pursuant to inserted w.e.f 1.4.89 a mere provision for bad debt is not entitled to Deduction u/s 36 (1) (vii) . However in present case , besides debiting the profit and loss account and creating a provision for bad and doubtful debt , the assessee correspondingly / simultaneously obliterated the said provision by reducing the corresponding amount from the debtors account in the Balance sheet. Consequently, at the end of the year the figure in the loans and advances or debtor on the asset side of the balance sheet was shown net of the provision for impugned bad debt. ……….. The AO’s insistence that the individual account of the debtors should be written off was not acceptable because (a) it was based on a mere apprehension that the assessee might claim deduction twice over and it was open to the AO to check whether the assessee was claiming double deduction (b) if the individual account were closed , the debtors could in recovery suits rely on the Bank statement and contend that no amount is due and payable to the assessee and (c) the AO was empowered by Section 41 (1) to tax the recovery. ”
ITA No.5611/Mum/2015 M/s. KEC International Ltd., Based on above observation of the Supreme Court the amount written off and also reduced from the Debtors and Loans account in the Balance sheet are allowable deduction in computing income for the year.
4.a) Computation of Book Profit for the purpose of Section 115 JB . In view of r the explanation inserted in section 36 (1) (vii) the assessee are now required to debit the profit and loss account but also simultaneously required to reduce the loans and advances or debtors from the assets side of the balance sheet to the extent of corresponding amount so that at the end of the year advances/ debtors from the assets side of the Balance sheet shown net of the provision for the impugned bad debt/ advance. The above requirement is satisfied in respect of Rs. 4,63,28,957 written off by us during the year. In the light of the Supreme court decision in the case of Vijaya Bank ( 323 ITR 166) the amount written off being ascertain liability allowed in normal computation of income. Therefore in computing the book profit of the year as per provisions of Section 115 JB said amount Rs. 4,63,28,957 not added to the book Profit.
4.b) Deduction of Provision for Doubtful Debt written back In computing the Book Profit u/s 115 JB in the Chartered Accountant Certificate in Form No.29B a deduction of an amount of Rs 18,98,76,516 allowed. However same are not consider by the company as deduction in computing the book profit as per the Revised return of income submitted herewith. The book profit as per Return and CA certificate defer to that extent.
16.4. We find that this note No.4(a) had created all the confusion which
is not in consonance with the profit and loss account of the assessee
(audited financial statements) and the revised computation of total
income of the assessee. However, the note No.4(b) is relevant for the
computation of total income which has already been discussed
hereinabove, which in any case is not in dispute before us. We find that
the ld. CIT(A) had categorically observed from the ledgers of provision for
doubtful debts and advances that there was absolutely no debit to the P
& L account in the sum of Rs.4,63,28,957/- warranting any disallowance
thereof. This finding of the ld. CIT(A) has not been controverted by the
ld. DR before us. Hence, we do not find any infirmity in the order of
CIT(A) granting relief to the assessee in this regard. Accordingly, the
ground No.6 & 7 raised by the revenue are dismissed.
ITA No.5611/Mum/2015 M/s. KEC International Ltd., 17. In the result, appeal of the Revenue is partly allowed. Order pronounced in the open court on this 10/07/2019 Sd/- Sd/- (C.N. PRASAD) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated 10/07/2019
KARUNA, sr.ps Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, (Asstt. Registrar) ITAT, Mumbai