TaxTMI 
TaxTMI 
2014 (11) TMI 722
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....cessed u/s 143(1). The case was selected for scrutiny after issuance of notice u/s 143(2) and questionnaire etc. u/s 142(1). The record shows that the assessee is a 100% subsidiary of Destination of the World Holding Establishment, Liechtenstein and engaged in the business of rendering inbound, outbound and domestic travel services to India, Nepal and Bangladesh. Inbound services are rendered to individuals and groups through local offices situated in different parts of India. Out bound services comprised of meetings, conventions and exhibitions and travel to various destinations of the world. The domestic travel services are rendered through online reservations system to individuals and groups. 3. The international transactions undertaken by the assessee in the year under consideration were as under:- S.No. Description of transaction Method Value (in Rs.) 1. Outbound Travel Related Services RPM 189270828 2. Inbound Travel Related Services CPM 28059984 3. Royalty for use of trade mark - 5004852 4. Charge Back of Expenses by Assessee -- 5064668 5. Charge Bank of Expenses to Assessee -- 911330 3.1. The assessee applied the r....
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....so of the view that the segmental accounts were drawn 'without any explained or disclosed allocation key' and therefore could not be relied upon to determine the segmental results. Consequently, the TPO disregarding the segmental accounts and rejecting the transaction wise benchmarking done by the assessee in the transfer pricing documentation applied Transactional Net Margin Method (TNMM) considering OP/Sales as PLI at entity level and comparing such margin earned by the assessee using external comparables namely, Shree Raj travels, Bulls & Bears Finance limited and Indo Asia Leisure Services Limited whose mean PLI (OP/OC%) was 2.12%. 4. Aggrieved by this, the assessee came in appeal before the First Appellate Authority wherein it was contended that the assessee has three segments namely, (a) Inbound services consisting of customers coming to India from foreign destination who make bookings through a local travel agent for hotel reservations and other ground services, who purchase these booking from Destination of the World (DOTW)'s local offices at the rates reflected in the website. DOTW's local office in turn buys the booking from the India offices of DOTW at rates reflected....
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....ring the same with internal uncontrolled transactions undertaken in same or similar economic scenario. No argument has been made by the ld. DR that economic scenarios of controlled and uncontrolled transactions were different. Therefore, it is held that the transfer pricing analysis should have been done by taking recourse to internal uncontrolled transactions. 6.2 The second question is-whether, the method employed by the assessee should have been accepted by the AO? The case of the ld. DR is that segmental accounts have not been maintained and the TPO has given a clear finding that segmental accounts have been drawn in such a manner as to hide the entity level loss. We find that no particular fact has been mentioned in this regard except that there is a loss incurred by the assessee in the overall transactions. The other arguments of the ld. DR is that separate segmental accounts have not been maintained, which leaves a scope for justifying the transactions on cost plus and re-sale method. Such a situation will not arise if TNMM is used, which means that the profitability of controlled and uncontrolled transactions have to be examined in respect of both the segments. The case ....
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....fic way of maintaining the accounts with the help of IT Tools and costs are simultaneously booked and the revenue is booked. In the absence of any concrete evidence to show that the books of accounts or the segmental accounts are manipulated, there is no ground to reject the segmental accounts prepared by the appellant. In view of the facts and circumstances of this case, the international transaction undertaken by the appellant is held to be at arm's length. Therefore, this ground of appeal is allowed." 6. Aggrieved by this, the Revenue is in appeal before the Tribunal however right at the outset it was contended by the Ld. AR that the point at issue is fully covered in favour of the assessee by the order of the Tribunal in assessee's own case, copy of the said order relied upon by the CIT(A) was filed before the Bench. Specific attention was invited to the chart appearing in para 4.8 of the impugned order so as to contend that both in Inbound and Outbound segments the margins earned from the AE were higher. The Ld. CIT DR confronted with the order of the Tribunal and on perusing the material available on record submitted that he would rely upon the order of the TPO/assessment ....