TNMM Trumps RPM for Distributors Performing Value-Added

TNMM Trumps RPM for Distributors Performing Value-Added Services; Double Taxation Issue Remanded for AO Verification

Issue

Whether Resale Price Method (RPM) can be applied instead of Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM) when a distributor carries out extensive post-import value additions on medical equipment.
Whether an amount credited to the profit and loss account as “sundry balances written back” and offered to tax under Section 41(1) was impermissibly subjected to double taxation during processing under Section 143(1).

Facts

Assessee Profile: The assessee is a joint venture entity engaged in importing, distributing, and providing maintenance/repair services for healthcare products, medical equipment, films, and consumables manufactured by its Associated Enterprise (AE).
Transfer Pricing Methodology: The assessee selected TNMM as the Most Appropriate Method (MAM) to benchmark its international transactions of importing equipment and consumables from its AE.
TPO Intervention: The Transfer Pricing Officer (TPO) rejected TNMM and applied RPM on the premise that the assessee was predominantly a product distributor.
Value-Addition Claim: The assessee established that it was not a bare reseller, as it performed extensive value-added activities including local accessory integration, package configuration, regulatory compliance, installation, software/license activation, system testing, application training, and ongoing maintenance through trained engineers.
Comparables & Margin Acceptance: The TPO accepted the comparable companies chosen by the assessee and pointed out no defects in the comparability analysis or margin computation under TNMM, but simply changed the benchmarking methodology to RPM without an independent search.
Double Taxation Claim: The assessee had credited an amount to its profit and loss account under “sundry balances written back” and offered it to tax under Section 41(1). However, the central processing unit (CPC) added the amount again during Section 143(1) processing, creating a double tax burden.

Decision

TNMM Confirmed as MAM: The Tribunal held that RPM cannot be treated as the MAM when a reseller adds value to imported products. Since the assessee performed significant value-addition to render complex medical equipment operational, it was not a mere reseller.
TPO’s Rejection Unfounded: Because the TPO accepted the assessee’s comparables and failed to point out flaws in the TNMM analysis, substituting the method to RPM without independent justification was unsustainable. The TP adjustment based on RPM was deleted.
Remand on Double Taxation: The issue regarding the double taxation of written-back sundry balances under Section 41(1) was remanded to the Assessing Officer (AO) to verify whether the amount had been added twice and to delete any duplicate addition.
Outcome: Transfer pricing issue decided in favor of the assessee; remission of liability issue remanded to the AO.

Key Takeaways

RPM Inapplicable to Value-Adding Distributors: Resale Price Method (RPM) is suitable primarily for simple distribution activities where goods are resold without substantial modification or extensive post-import technical integration.
Value Addition Justifies TNMM: Complex post-import services (software activation, custom configuration, technical assembly, and ongoing engineering support) alter the operational profile of a reseller, making TNMM the appropriate benchmarking method.
Burden on TPO to Reject MAM: The TPO cannot arbitrarily change the taxpayer’s chosen Transfer Pricing method without establishing specific flaws in the comparability analysis or margin computations under that method.
Protection Against CPC Processing Errors: Taxpayers subjected to double taxation arising from automated Section 143(1) adjustments on items already disclosed in profit and loss statements are entitled to verification and relief upon remand.

IN THE ITAT MUMBAI BENCH ‘K’

Konica Minolta Healthcare India (P.) Ltd.

Deputy Commissioner of Income-tax

Ms. Kavitha Rajagopal, Judicial Member
and Vikram Singh Yadav, Accountant Member

IT APPEAL No. 4183 (Mum) OF 2024
[Assessment year 2020-21]

JULY 14, 2026

Anish Thacker and Pranay Gandhi for the Appellant. Bhagirath Ramawat, Sr. DR for the Respondent.

ORDER

Ms. Kavitha Rajagopal, Judicial Member.- This appeal is filed by the assessee challenging the final assessment order passed by the Ld. Assessing Officer (‘the AO’, for short) u/s 143(3) r.w. 144C 913) r.w. Section 144B of the Income Tax Act, 1961 (‘the Act’ for short) dated 27/06/2024.

2. The assessee has raised the following grounds of appeal. “General:

erred in computing the total income of INR 33,77,94,040 as against the returned income of INR 13,28,52,330 under the normal provisions of the Act; 1.

Final assessment order barred by limitation:

erred in not passing the final assessment order within the time limit prescribed under section 153 of the Act which is the outer time limit for passing the final assessment order and hence, the assessment proceedings is time barred and liable to be quashed;

Transfer pricing:

erred in making a transfer pricing adjustment of INR 20,39,22,414 on account of downward adjustment to the arm’s length price in respect of the international transaction of import/purchase of medical equipment, films and consumables from AE;

Selection of method

erred in not accepting the Transactional Net Margin Method (‘TNMM’) adopted by the Appellant as the most appropriate method for determination of its arm’s length price in connection with its international transaction in question relating to import of goods from its AE;

erred in adopting Resale Price Method (‘RPM’) as the most appropriate method and thereby applying gross profit to sales as the profit level indicator (‘PLI’) for benchmarking the international transaction undertaken by the Appellant, without appreciating the facts that the Appellant undertakes significant functions over and above the functions of a pure distributor;

erred in not appreciating the functions performed, assets employed and risks assumed (‘FAR analysis’) undertaken by the Appellant basis which the most appropriate method was determined by the Appellant for determination of its arm’s length price in connection with its international transaction in question relating to import of goods from its AE;

erred in considering the following companies as comparable even though the same failed the related party transactions (‘RPT’) filter (i.e their RPT exceeds 25% of the companies):

–

Roche Diagnostics India Private Limited

–

Smith’s Medical India Private Limited

without prejudice to the above, erred in not appreciating that the product level comparability is required to adopt RPM as the most appropriate method and accordingly, the comparable companies considered do not qualify the product level comparability required for adoption of RPM;

Principle of Consistency

erred in not accepting the method adopted by Appellant i.e. TNMM, which has been duly accepted by the learned TPO in the previous assessment years;

Corporate Tax:

10.

erred in doubly taxing the amount of INR 10,16,656 credited to profit & loss account and offered to tax under section 41 without appreciating the facts of the case.

Levy of Interest and initiation of penalty proceedings:

11.

has erred in proposing to levy interest u/s 234A, 234B, 234C & 234D of the Act;

12.

has erred in law in initiating penalty proceedings under Section 270A and 271AA of the Act;

The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal”

3. Brief facts of the case are that, the assessee is a joint venture between KMI and EM PAX Technology Pvt. Ltd., India (hereinafter referred to as EM PAX’) which is engaged in the business of distribution of healthcare products, equipments and consumable manufactured by Konica Minolta Inc.and also provides Annual Maintenance/Comprehensive Maintenance/Extended Warranty/Repair services to local customers for the healthcare products sold by it since June, 2010. The assessee filed its original return of income on 11/02/2021 declaring total income at Rs. 13,28,52,330/- and the same was processed u/s 143(1) of the Act. The assessee’s case was selected for scrutiny under CASS for the following reasons:-

Credit of Brought Forward TDS

ii.

High risk International Transactions.

4. The Ld. A.O. issued notices u/s 143(2) and 142(1) which was duly issued and served upon the assessee. As the assessee had entered into international transactions with its Associated Enterprise, the ld. AO made a reference under section 92CA(1) of the Act to the ld. Transfer Pricing Officer (‘TPO’, for short) for determination of the arm’s length price (‘ALP’, for short) of such international transactions vide reference dated 26.11.2021. It was observed that the assessee had entered into international transactions aggregating to approximately Rs. 108.35 crore with its Associated Enterprise in which the principal international transaction comprised purchase of finished medical equipment, films and consumables amounting to Rs. 107.55 crore. Besides the said transaction, the assessee had entered into transactions relating to repair charges and reimbursement of exhibition and stall expenses. In its Transfer Pricing Study Report, the assessee had benchmarked the international transaction relating to purchase of finished goods by adopting the Transactional Net Margin Method (“TNMM”, for short) as the Most Appropriate Method (‘MAM’, for short) and was selected as the tested party and its operating profit margin was compared with that of functionally comparable independent companies. Based upon such analysis, the assessee concluded that the international transactions were at arm’s length.

5. The Ld. TPO initiated proceedings under section 92CA by issuing notices under sections 92CA(2) and 92D(3) requiring the assessee to furnish detailed information regarding its international transactions, transfer pricing documentation, functional analysis, economic analysis and supporting evidence. The assessee furnished all the information called for. Upon examination of the Transfer Pricing Study Report, the ld. TPO formed a prima facie view that the assessee was predominantly engaged in distribution activities and that the Resale Price Method (“RPM”), instead of TNMM, constituted the Most Appropriate Method for benchmarking the purchase of finished goods from the Associated Enterprise (AE in short). According to the ld. TPO, the revenue earned by the assessee from maintenance contracts and allied services constituted only a small percentage of the total turnover and, therefore, such activities did not materially alter the character of the assessee as a distributor of imported medical equipment. On this basis, the ld. TPO issued a detailed show cause notice proposing to reject the benchmarking undertaken by the assessee under TNMM and proposing to benchmark the transaction by applying the Resale Price Method. In response to the show cause notice, the assessee filed elaborate written submissions explaining the nature of its business operations and demonstrating that it performed significant functions extending well beyond those ordinarily undertaken by a routine distributor. The assessee explained that the medical equipment imported from the AE did not constitute ready-to-use products capable of being sold directly to customers. The equipment required extensive package configuration depending upon the customer’s requirements. Several accessories were procured locally and integrated with the imported equipment before the products could be supplied to customers. The assessee further explained that each sale involved substantial pre-delivery regulatory compliances, including verification of statutory approvals such as PNDT and AERB certifications wherever applicable. The assessee was responsible for coordinating delivery, installation and commissioning of sophisticated medical equipment through trained engineers. It also undertook installation of specialised software, activation of licences, integration of locally procured components, installation of recovery software, system configuration and testing before the equipment became operational.

6. The assessee submitted that after installation, its engineers imparted detailed application training and demonstrations to hospital personnel, technicians and end users for operation of the medical equipment. Thereafter, throughout the warranty period and under annual maintenance contracts, the assessee rendered preventive maintenance services, corrective maintenance services, breakdown support, remote troubleshooting, replacement of spare parts wherever required and continuous technical support. These activities, according to the assessee required specialised technical personnel, significant assets and substantial entrepreneurial functions, thereby distinguishing the assessee from a routine distributor contemplated under the Resale Price Method.

7. The assessee accordingly submitted that TNMM appropriately captured the overall profitability arising from the integrated distribution and technical support functions carried out by it and that adoption of RPM would ignore the extensive value-adding activities undertaken after importation of the medical equipment. The assessee also pointed out that TNMM had consistently been accepted by the Transfer Pricing Officer in earlier assessment years in respect of identical business operations and substantially similar international transactions. The Ld. AO thus passed the draft assessment order dated 31.08.2023.

8. Being aggrieved by the variations proposed in the Draft Assessment Order, the assessee filed objections before the Hon’ble Dispute Resolution Panel under section 144C(2) of the Act challenging the transfer pricing adjustment in its entirety. The assessee also filed detailed written submissions, documentary evidence and additional explanations in support of its objections and was represented during the course of hearings before the Hon’ble Panel.

9. The moot issue of assessee before the Hon’ble DRP was that the learned Transfer Pricing Officer had fundamentally erred in rejecting the TNMM adopted by the assessee as the Most Appropriate Method for benchmarking the international transaction relating to purchase of finished medical equipment, films and consumables from its Associated Enterprise. It was submitted that the Ld. TPO had ignored the detailed Functional, Asset and Risk (“FAR”) analysis furnished during the course of the transfer pricing proceedings and had erroneously proceeded on the assumption that the assessee was merely engaged in routine distribution activities.

10. The assessee reiterated that it was not a pure distributor of products imported from its Associated Enterprise. It was pointed out that the imported medical equipment could not be sold in the condition in which it was imported and required substantial technical intervention before being supplied to customers. The assessee emphasised that it undertook package configuration by integrating locally procured accessories, carried out installation and commissioning of sophisticated diagnostic equipment, obtained and complied with statutory regulatory requirements, installed specialised software and licences, conducted demonstration of equipment, imparted application training to medical personnel, rendered preventive and corrective maintenance services throughout the warranty period and under maintenance contracts, maintained an inventory of spare parts and employed a team of technically qualified engineers for rendering continuous after-sales support. According to the assessee, these integrated functions materially distinguished its business model from that of an ordinary reseller and justified the adoption of the Transactional Net Margin Method.

11. The assessee further submitted that the ld. TPO had accepted the very same functional profile in earlier assessment years and had consistently accepted the Transactional Net Margin Method as the Most Appropriate Method. There being no material change either in the nature of the assessee’s business or in the character of the international transactions, it was contended that there existed no justification for departing from the settled position accepted by the Department in the earlier years. The assessee accordingly invoked the well-recognised principle of consistency.

12. Without prejudice to the aforesaid submissions, the assessee also challenged the benchmarking exercise undertaken by the learned Transfer Pricing Officer under the Resale Price Method. It was contended that the learned Transfer Pricing Officer had adopted the gross profit margins of the comparable companies without carrying out the adjustments mandated under the Income-tax Rules and had mechanically adopted the comparable companies originally selected by the assessee for application under the Transactional Net Margin Method. The assessee further questioned the comparability of certain companies selected by the Transfer Pricing Officer and, by way of an additional ground, specifically objected to the inclusion of Roche Diagnostics India Private Limited and Smiths Medical India Private Limited on the ground that the related party transactions of such companies exceeded the permissible threshold, thereby rendering them unsuitable as comparable companies.

13. Apart from the transfer pricing issues, the assessee also objected to the Ld. AO adopting the income determined under section 143(1)(a) as the starting point in the Draft Assessment Order instead of the income returned by the assessee. The assessee further challenged the initiation of penalty proceedings and levy of consequential interest. An additional objection was also raised that an amount of Rs.10,16,656, which had already been credited to the Profit and Loss Account and offered to tax under section 41 of the Act, had again been subjected to tax, resulting in double taxation.

14. The Hon’ble DRP considered the Draft Assessment Order, the ld. TPO’s order, the detailed written submissions of the assessee, the documents placed on record and the oral submissions advanced during the course of hearing. The Hon’ble DRP observed that the primary controversy centred around the selection of the Most Appropriate Method and, therefore, considered the objections relating to the rejection of the Transactional Net Margin Method and adoption of the Resale Price Method together.

15. The Hon’ble DRP concurred with the reasoning adopted by the ld. TPO and held that the assessee’s predominant activity remained distribution of medical equipment imported from its Associated Enterprise and further observed that the ld. TPO had not disturbed the comparable companies selected by the assessee but had merely substituted the benchmarking methodology by applying the Resale Price Method in place of the Transactional Net Margin Method. The Hon’ble DRP was of the view that the Transfer Pricing Officer was justified in doing so and rejected the assessee’s contention that the Transactional Net Margin Method ought to have been retained.

16. The Hon’ble DRP further rejected the assessee’s contention founded upon the principle of consistency and held that acceptance of the Transactional Net Margin Method in earlier assessment years did not preclude the Ld. TPO from adopting a different method if, according to him, such method constituted the Most Appropriate Method for the assessment year under consideration. The Hon’ble DRP thus affirmed the rejection of the TNMM and upheld the adoption of the Resale Price Method by the ld. TPO.

17. Consequently, the Hon’ble DRP declined to interfere with the transfer pricing adjustment of Rs.20,39,22,414 proposed by the ld. TPO and incorporated by the ld. AO in the Draft Assessment Order. Hon’ble DRP also disposed of the remaining objections in accordance with the observations contained in its directions issued under section 144C(5) of the Act.

18. Pursuant to the directions issued by the Hon’ble DRP, the ld. AO passed the Final Assessment Order under section 143(3) read with section 144C(13) of the Act, giving effect to the directions of the Hon’ble DRP. The transfer pricing adjustment of Rs. 20,39,22,414 was sustained and added to the returned income of the assessee.

19. We have heard the rival submissions and perused the orders of the ld.TPO, the Ld. AO, the Hon’ble DRP along with the Transfer Pricing Study Report and other documents filed by the assessee. The moot issue which requires adjudication is whether the ld. TPO was justified in rejecting the TNMM adopted by the assessee for benchmarking the international transaction of import of medical equipments from its AE and, instead, adopting RPM as the MAM. The Ld. AR for the assessee contended that the assessee is not a routine distributor, but, undertakes substantial value addition after importing of the medical equipments as the same cannot be sold in the same condition in which it was imported. The ld. AR further reiterated that the assessee undertakes various processes such as package configuration, procuring locally sourced accessories, installation and commissions the equipment, integrate software, ensures compliance with statutory requirements, imparts application training to doctors and technicians, demonstrates, renders warranty services, comprehensive maintenance contract, annual maintenance contracts, repairs, replacement of spare parts and provides continuous technical support through specialised engineers. The ld. AR further argued that the functions undertaken by the assessee distinguished it from being a mere distributor and, hence, the RPM is inherently unsuitable. The ld. AR also submitted that the ld. TPO has accepted the comparable selected by the assessee and has merely rejected TNMM by RPM without pointing out any defect in the functional analysis or economic analysis carried out by the assessee. The ld. AR stated that TNMM has been accepted by the Revenue in assessee’s own case for preceding years and as there being no change in the business model or in the FAR profile, rejection of TNMM is unsubstantiated. The ld. AR relied on a catena of decisions in support of his contention.

20. The Ld. DR, on the other hand, controverted the said fact and stated that the assessee’s principal activity was to import and resale of medical equipments and the service income earned from maintenance contract constitutes very small percentage of the total turnover of the assessee, thereby substantiating that the dominant activity of the assessee was that of a distributor for which RPM is the MAP as per Rule 10B(1)(b) of the IT Rules. The ld. DR further controverted that there cannot be a similar approach in all the years as contended by the ld. AR as the rule of res judicata is not applicable in such proceedings. The ld. DR relied on the order of the lower authorities.

21. In view of the above factual matrix of the case, it is observed that the assessee has earned revenue from maintenance service which the Revenue contends that was very minimal when compared to the total turnover of the assessee which, in our considered opinion, the said reasoning cannot substitute the statutory requirement of a comprehensive FAR analysis which also substantiates the fact that the assessee was not mere distributor. Further, the assessee has been contending that it was providing services for which the revenue was Rs.4,96,93,222/- which was relate to chargeable maintenance services provided by the company which also corroborates that the number and value of services provided to the customer was enormous and not miniscule. The assessee is also said to have furnished various documentary evidences to substantiate the fact that value addition to the process of sale has been undertaken by the assessee which is the most distinguished feature of a mere reseller from that of the assessee which was rendering various services starting from packaged configuration, delivery and installation to software and licensing processes along with demo and application training for use of the most complex medical equipments which was dealt with by the assessee.

22. The Revenue’s stand that the assessee was undertaking limited risk is also negated by the assessee stating that the assessee is a normal risk entity involving in market risk, product/service liability risk, credit risk, inventory risk and price volatility risk, which no reseller would normally incur in case of mere resale transactions. It is further observed that the ld. TPO has failed to demonstrate the functional comparability for applying RMP where the assessee was not merely selling medical devices, but also films and further that the amount of resale price margin will be influenced by the level of activities performed by the reseller which may vary widely depending upon the services rendered by the reseller and also whether he take full risk of ownership along with the risks involved in advertising, marketing, distributing and carrying the goods, financing stocks and other connected services wherein a controlled transaction the reseller does not carry on any substantial commercial activities and merely transfers goods to the third party.

23. The lower authorities have failed to demonstrate on this aspect as to how the assessee is just a mere reseller restricted only to reselling the imported goods without any value addition. It is further observed that the lower authorities have failed to take into consideration that the assessee has been adopting TNMM for past 11 years for determining the Arm’s Length Price (ALP) in its Transfer Pricing Study Report with regard to the international transaction carried out by the assessee. Pertinently, the Ld. TPO/AO has erred in applying RPM on the basis of uncontrolled comparable companies which were selected by them as the functional profile of those uncontrolled companies were different from the functional profile of the assessee which nevertheless make the benchmarking done by the Ld. TPO to be not appropriate as much as not in accordance with the provisions of the Act. On the basis of the TP Study Report and other documentary evidences placed before us, we deem it fit to hold that the assessee has substantiated that it performs functions extending beyond those of that of a regular distributor where the documentary evidences establish that the imported equipments requires various processes such as package configuration, integration of locally procured accessories, installation, application training, warranty services, etc. through trained technical engineers of the assessee which extends not just at the time of sale of the equipments, but also throughout the usage of the said equipments by the end user including the extended warranty period and even thereafter. The ld. AO/TPO has failed to distinguish this aspect of the assessee’s transaction with that of the regular distributor. There is no iota of doubt that the assessee has added value to the produce which has been imported for the purpose of putting in use the said equipments which are merely not the plug and play model unlike various other distributors.

24. We also draw support from the decision of the Coordinate Bench relied upon by the ld. AR in the case ofthe ITO v. L’Oreal India (P) Ltd. 53 SOT 263 (Mumbai) which has reiterated that RPM is a standard method as per OECD Guidelines in case of distribution and marketing activities, but, only to the extend that there are no further processing to the said product by way of value addition. It further held that TNMM is the MAM when the assessee buys products from its AEs and sells it to unrelated parties by further adding value to the said product or which requires further processing which has to be undertaken by the distributor. The decision of the Coordinate Bench was also upheld by the Hon’ble jurisdictional High Court in its decision CIT v. New Woodlands Hotel (P.) Ltd. (Madras) (Bombay High Court) dated 7^th November, 2014. The said proposition is also reiterated by the decision of the Hon’ble Delhi High Court in the case of Pr. CIT v. Burberry India (P.) Ltd. (Delhi) which had also followed the decision in the case of L’Oreal India (P) Ltd. (supra), thereby holding that ‘the RPM shall be the MAM in case of distribution or marketing activities especially when goods are purchased from associated entities and there are sales effected to unrelated parties without any further processing.’ We place reliance on the decision of the Hon’ble Delhi High Court in the case of Sony Ericson Mobile Communication India Ltd. v. CIT 374 ITR 118 (Delhi), where the relevant extract of the said decision is cited and which is reproduced hereinbelow for reference:-

“The RP Method losses its accuracy and reliability where the reseller adds substantially to the value of the product or the goods are further processed or incorporated into a more sophisticated product or when the product/service is transformed.”

25. From the above observation, there has been a catena of decisions of the Hon’ble High Courts where it has been held that RPM is not the MAM when the reseller has added value to the product in any form and whether it is substantial or not varies from the facts of each case. In the present case, we consider that the assessee dealing with complex medical equipment has made value addition for the purpose of making such equipment workable which in our view, is that the assessee is not a mere reseller and, hence, the adoption of RPM is not substantiated. As the Department in the earlier years has taken TNMM as the MAM, we do not find any justification in deviating from the same in the failure of the Revenue to corroborate by TNMM is faulted with. Equally significant is the fact that the Ld. TPO has accepted the very same comparable companies selected by the assessee and has merely substituted the benchmarking methodology without carrying out any independent search and with no defect being pointed out either in the comparability analysis or in the computation of the operating margins under TNMM, such an approach does not justify rejection of the MAM adopted by the assessee.

26. On the above observation, we deem it fit to hold that TNMM adopted by the assessee is the MAM for benchmarking the international transaction relating to purchase of medical equipments from its AE. The transfer pricing adjustment made by the Ld. AO/TPO being entirely founded upon adoption of RPM is, hence, unsustainable. Grounds No.4 to 6 and 9 raised by the assessee are hereby allowed on the above terms.

27. Ground No.7 pertains to the exclusion of comparable companies on account of RPT filter. The assessee’s contention is that the comparable Roche Diagnostics India Pvt. Ltd. And Smiths Medical India Pvt. Ltd., should be excluded due to the failure of RPT filter which objection was rejected by the Hon’ble DRP on the ground that the assessee has failed to specify as to the failure of RPT filter in its own Transfer Pricing Study Report and, further, the assessee has not raised this issue before the Ld. TPO during the transfer pricing proceeding. Since this issue has not been dealt with by the Ld. TPO, we deem it fit to remand this issue to the Ld. TPO/AO to see as to whether it exceeds the threshold limit of 25% and since the assessee has not specified this in its Transfer Pricing Study Report, this issue must be decided by the ld. AO/TPO afresh, after providing adequate opportunity of hearing to the assessee. Ground No.7 is hereby decided accordingly.

28. Ground No.8 is rendered academic in nature and ground No.10 pertains to double taxation of Rs.10,16,656/- which was already offered in its return of income. The assessee contends that the ld. AO in the draft and final assessment order had started assessing the income at Rs.13,38,71,630/- after considering an adjustment of Rs.10,19,300/- made by processing the return under Section 143(1) of the Act which comprised of Rs.10,16,756/- under Section 41(1) of the Act and Rs.2,644/- under Section 36(1)(va) of the Act. The assessee contends that the assessee had already offered the amount of Rs.10,16,656/- as “Sundry balances written back” in its return of income which was not considered by the Ld. AO.

29. After hearing the rival contentions, we deem it fit to remand this issue back to the file of the ld. AO for verification of the fact as to whether the assessee has already offered the said amount in its return of income. The ld. AO is directed to examine whether this amount has already been added back in the intimation issued by the CPC under Section 143(1) of the Act and deleted the same in case the same has been added. Hence, ground No.10 is allowed for statistical purpose.

30. Grounds No.11 and 12 are consequential in nature and requires no separate adjudication.

31. Grounds No.1 to 3 are general in nature and, hence, requires no adjudication. In the result, the appeal filed by the assessee is hereby partly allowed.