Tribunal Orders Use of TNMM for 2016-18, Corrects Prior Oversight, Rejects Revenue's CUP Method Argument.

The Tribunal allowed the assessee's appeals, directing the Assessing Officer/Transfer Pricing Officer to apply the aggregation and Transactional Net Margin Method (TNMM) for the assessment years 2016-17 and 2017-18. The Tribunal acknowledged a mistake in not considering a prior order dated 24/09/2021 and modified its previous order to align with that decision. The Revenue's argument for using the Comparable Uncontrolled Price (CUP) method was rejected. The Tribunal instructed the officers to finalize computations according to the law, considering the comparables list submitted by the assessee.

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Issues involved:
The issues involved in the judgment include the recall of a common order of the Tribunal dated 15/02/2023, passed in ITA Nos. 249/Hyd/2021 & 132/Hyd/2022 for the assessment years 2016-17 & 2017-18, concerning the segregation of international transactions, application of Comparable Uncontrolled Price (CUP) and other methods versus Transactional Net Margin Method (TNMM), and rectification of mistakes in the order.

Recall of Common Order:
The assessee filed two Miscellaneous Applications seeking to recall the Tribunal's common order, stating that a mistake had occurred in not considering a subsequent order dated 24/09/2021, which was followed in the assessee's own cases for previous assessment years. The AR argued for rectifying this mistake by recalling the common order dated 15/02/2023.

Transfer Pricing Methodology:
The matter involved the determination of the Most Appropriate Method (MAM) for transfer pricing and the analysis of transactions under transfer pricing provisions. The Tribunal had previously remanded the issue to the Transfer Pricing Officer (TPO) for reconsideration, leading to subsequent litigation rounds where the Bench accepted the aggregation and TNMM methods. The AR highlighted the need to rectify the omission of considering the order dated 24/09/2021 in the Tribunal's decision.

Rectification of Mistake:
After hearing arguments from both sides, the Tribunal acknowledged the mistake in not recognizing the order dated 24/09/2021 and the view taken by a Co-ordinate Bench in the assessee's earlier case, deeming it a mistake apparent on the face of the record. Consequently, the Tribunal modified the order, substituting specific paragraphs to align with the observations and decisions made in the order dated 24/09/2021.

Revenue's Contentions:
The Revenue contended that the direct method, i.e., CUP, should prevail over indirect methods like TNMM, citing precedence. However, the Tribunal rejected this argument, emphasizing that in the second round of proceedings, the Bench had already rejected contentions against aggregation and TNMM, allowing the assessee's approach and directing the TPO to finalize the computation accordingly.

Final Decision:
The Tribunal directed the Assessing Officer/TPO to apply the aggregation and TNMM methods, finalize the consequential computation in compliance with the law, and consider any relevant details provided by the assessee regarding the comparables list submitted in TNMM. The appeals were allowed in accordance with the specified terms, addressing the issues raised in the appeals for the respective assessment years.

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