2014 (1) TMI 74

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....vel Indicator (PLI) under Transactional Net Margin Method (TNMM). Second part of this appeal is against non-applicability of principle of res judicata. 3. Briefly stated the facts of the case are that the assessee is engaged in IT enabled services. It entered into certain international transactions with its Associated Enterprises (AEs). The assessee applied TNMM as the most appropriate method for determining Arm's Length Price (ALP) with Operating profit to Total Costs as its PLI. Certain comparable cases were selected by the assessee in its transfer pricing study, on which basis it was shown that the price charged or paid from or to the AEs was at ALP. The Transfer Pricing Officer (TPO) restricted the list of such comparables. Eventuall....

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....rt by stating that it was the assessee who came out with the ratio of Cash profit/Operating cost as PLI for assessment year 2007-2008, which was accepted as such. Based on the TPO's remand report and the assessee's working, the learned CIT(A) ordered to delete the addition of Rs. 10.38 crore. 4. We have heard the rival submissions and perused the relevant material on record. Insofar as the question of taking up Cash profit to Total cost as PLI for the first time before the learned CIT(A) is concerned, we find no embargo in it. It is obvious that the assessee demonstrated through its TP study that the price charged or paid to its AEs was at the ALP. The TPO made certain exclusions from the list of comparables which led to the making of TP....

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....tor in the PLI should not be allowed. In the opposition, the learned Counsel for the assessee brought to our attention the order passed by the TPO in assessee's own case for the assessment year 2007-2008 accepting Cash profit/Operating cost as the PLI. Similar position was demonstrated in respect of the order passed by the TPO for assessment year 2008-2009 also. 6. The further contention of the learned Departmental Representative that the principle of res judicata is not applicable in case of different years, is no doubt correct. Since the learned CIT(A) has allowed the claim of exclusion of depreciation by considering the fact that in subsequent assessment year i.e. 2007-2008 TPO has accepted the same, therefore, the principle of consis....