1. Cross Appeals for assessment year 2003-04, are directed against the impugned order dated 11th March 2010, whereas the Revenue's appeal for assessment year 2005-06, is directed against the impugned order dated 17th March 2011, and both the orders are passed by the learned Commissioner (Appeals)-XV, Mumbai, for the quantum of assessment passed under section 143(3) of the Income Tax Act, 1961 (for short "the Act"). Since the issues involved are common and inter-connected in all these appeals, therefore, these were heard together and, as a matter of convenience, these appeals are being disposed off by way of this consolidated order.

2. Learned Counsel for the assessee submitted before us that in assessment year 2005-06, the learned Commissioner (Appeals) has passed a very detailed order after discussing and analysing the issue relating to transfer pricing adjustment, has passed a very detail order for coming to his conclusion regarding transfer pricing adjustment in favour of the assessee. Therefore, he pleaded that appeal for assessment year 2005-06 be taken up first. Learned Departmental Representative did not object to this contention of the learned Counsel for the assessee.

3. In Revenue's appeal in ITA no.4444/Mum./2011, for assessment year 2005-06, following grounds have been raised:-

"1. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition made by the TPO/AO on account of sale of films amounting to Rs. 3,38,93,862/-, and ignoring the fact that the global average price adopted by the TPO/AO for UK & USA is a good comparable price."

"2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in reducing the adjustment of Rs. 61,12,632/-made by the TPO/AO on account of commission paid to GPIL (AE) to Rs. 11,60,682/-, and n not appreciating the fact that safe harbor of (+/-) 5% is not allowed under CUP method."

"3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of interest of Rs. 28,52,000/- related to capital W.I.P. u/s. 36(1)(iii) of the I.T. Act, 1961, without appreciating the fact that the provision of section 36(1)(iii) states that the amount of interest paid in respect of capital borrowed for acquisition on an asset for extension of existing business or profession for any period beginning from the date on which the capital was borrowed for acquisition of the assets till the date on which such asset was first put to use, shall not be allowed as deduction."

4. Relevant facts, apropos the issue arising out of grounds no.1 and 2, relating to transfer pricing adjustment made in respect of the transactions undertaken with the Associate Enterprises (for short "A.E") are that the assessee is engaged in the business of manufacture and sale of plain polyester films, sun control films, metalized films and other verities of polyester films. The assessee is selling its products not only at the local level but also involved in export to various countries. Insofar as sale to countries like Russia, South Arabia, Turkey, Singapore, Japan and other parts of the world are concerned, the assessee has been selling directly to the third parties through non-A.E. foreign agents. As regards U.S. and U.K. markets are concerned, the assessee has set-up wholly owned subsidiary namely GPIL in U.K. (Garware Polyester International Ltd.) GPF, U.S.A., (Global Pet Films IMC), to undertake the marketing, promotion, business development and distribution of assessee's products. These A.Es have been appointed as assessee's sole selling agent, not only to perform the sales but also to provide other services such as market development, sales promotion, new product development, etc., in their respective territories. For the assessment year 2005-06, the assessee has undertaken following international transactions with it's A.Es.