TaxTMI 
TaxTMI 
2013 (11) TMI 1703
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....,277 without netting of the same against the interest paid amounting to Rs. 4,06,17,5821- ; and (b) Duly entitlement pass book receipts of Rs. 4,93,68,1361-. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of Jt. Commissioner of Income Tax I AO/TPO in making adjustment by applying CUP method in case of exports of manufactured goods on account of following: (i) Applied Comparable Uncontrolled Price ('CUP") method selectively for certain international transactions of exports, without rejecting Transactional Net Margin Method ("TNMM") method. (ii) Confirmed the order passed by the TPOIAO without appreciating that none of the conditions set out in section 92C (3) of the Act are satisfied in the case. (iii) Not appreciated the fact that geographical difference causes significant variation in the pricing of International transaction. (iv) Ignored the differences in sales volume while applying the CUP method and restricted the volume discount to 5%. The appellants crave leave to add, to amend or alter the foregoing grounds of a....
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....ually included in the profit of the assessee is to be deducted from the profits of the assessee for determining "profit of the business" of the assessee under Explanation (baa) to section 80 HHC of the Act. 3.1 Ld. DR did not raise any objection regarding this contention of the assessee. Therefore, after hearing both the parties on this issue, so as it relates to the ground regarding exclusion of net interest is restored to the file of AO with a direction to reduce net amount of interest from the profit in accordance with the aforementioned decision of Hon'ble Supreme Court in the case of ACG Associated Capsules Pt. Ltd. (supra). This part of the ground is considered to be allowed for statistical purposes in the manner aforesaid. 4. So far as it relates to Ground No.1(i)(b) i.e. regarding duty entitlement pass book receipts the said part of the ground was stated to be covered by the decision of Hon'ble Supreme Court in the case of Topman Exports vs. CIT, 342 ITR 49(SC). After hearing both the parties and accepting the submissions of Ld. AR, the issue is restored to the file of AO with a direction to recalculate deduction under section 80HHC of the Act on the issue of DEPB as ....
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....ngth Price are given below: (ii) For the products HOSTAPERM BLUE CBR. HOSTAPERM GREEN GNX, PV FAST GREEN GNX, PERMANENT YELLOW DHG SPL PERMANENT YELLOW P0, PERMANENT ORANGE G-IN. PERMANENT RED F4R-JN, HANSA YELLOW 1OG-IN, BLUE FINE PASTE 611. VERNATAN 2A and HOSTAPERM BLUE BG. the sales to AE's and non-AE's are in different countries. In the analysis, like last year, all the sales are taken together, irrespective of the country of sale and quantity sold to individual entities. Further, after applying 5% range to the Weighted Average Price (hereinafter: WAP) of sales made to unrelated parties, as mentioned under section 92C(2) of the Income Tax Act, 1961 it is observed that the WAP charged to related parties is at Arm's length and therefore no adjustment is made in case of the above mentioned products. (iii) For the following products WA? charged to unrelated parties is not within 5% range of the WA? charged to unrelated parties i.e. average realization in case of related parties is lower than that in case of unrelated parties. a. HOSTAPERM GREEN ON b. PERMANENT RUBINE CA-E c. .ACID ORANGE 1O (iv) For the products HOSTAPERM GREEN....
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....oned additions were challenged in the appeals filed before Ld. CIT(A). In ground No.10 to 14 the assessee had agitated the aforementioned TP adjustmentS. In Ground No.10, the assessee objected the method which was applied by the TPO as CUP against TNMM applied by the assessee. In ground No.11, the assessee sought rebate on account of volume difference between turnover relating to AE's and uncontrolled parties. In ground No.12, the assessee sought rebate on account of geographical regions as the sales of the assessee were spread to Thailand and China. In ground No.13, the assessee sought rebate on account of functional difference in the transactions and in Ground No.14, the assessee sought 5% safe harbour as per proviso to section 92C(2) of the Act. Briefly; Ld. CIT(A) has upheld the application of most appropriate method as CUP. Ld. CIT(A) after considering the submissions of the assessee has granted the rebate on account of volume difference @5%. Ld. CIT(A) did not accept the submissions of the assessee regarding rebate on account of geographical regions and functional difference. However, Ld. CIT(A) has provided the benefit of safe harbour to the assessee under proviso to section....
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....'s Length" 5.6 In view of the above, it was the case of Ld. AR that if the volume discount is given as was given to the assessee by TPO in assessment year 2002-03 then 20% volume discount is required to be given in respect of product named as HOSTAPERM GN. It was the submission of Ld. AR that in view of rule of consistency, the assessee is entitled to such relief which has wrongly been denied by Ld. CIT(A). He submitted that Ld. CIT(A) was wrong in restricting the discount benefit in this regard only to the extent of 5%, whereas the assessee is entitled to get it @20%. It was also the contention of Ld. AR that 20% discount on account of volume is a usual discount and has been accepted by the Tribunal in the case of Intervet India Pvt. Ltd. vs. ACIT, 39 SOT 93(Mum) and reference was made to the following observations: "51. As far as the adjustment on account of volume factor difference in the market conditions and economic development level is concerned, the Transfer Pricing Officer has allowed the adjustment to the extent to 10 per cent while the appellant has sought for an adjustment of 50 per cent. There is no doubt that the claim of the appellant is rather excessive, wh....
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....so relied upon the decision in the case of M/s. Onward Technologies Ltd. vs. DCIT order dated 30/04/2013 in ITA No.7985/Mum/2010, copy of which was furnished before us. This case was relied upon by Ld. DR to contend that principle of res judicata does not apply to Income Tax proceedings and different view could be taken if the earlier order is contrary to the statutory provisions of having no approval from any judicial forum. Thus, it was pleaded by him that the assessee's plea for Rule of Consistency should not be accepted. 5.9 Arguing the second ground of appeal raised in the Revenue's appeal, it was submitted by Ld. DR that Ld. CIT(A) was wrong in upholding CUP method instead of TNMM. Thus, it was pleaded by Ld. DR that TP Adjustment made by TPO should have been confirmed. 6. We have heard both the parties on this issue and their contentions have carefully been considered. We have also carefully gone through the case law and documents relied upon by both the parties. The main contention of the assessee in this regard is grant of 20% discount on volume difference.. This contention of the assessee is supported by the arguments that in immediate preceding assessment year TPO ....
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....preme Court in Radhasoami Satsang vs. CIT (1992) 193 ITR 321 (SC) and the Hon'ble jurisdictional High Court in CIT vs. Arthur Andersen & Co. (2009) 318 ITR 229 (BoM) by holding that the decision made in earlier years is binding in subsequent years and should be followed. From the above decisions, it follows that a delicate balance needs to be maintained between the principle of consistency and the rule of res judicata depending upon the facts and the governing legal position prevailing in each case. At the same time, we want to highlight that the doctrine of estoppel together with its exceptions cannot be ignored. It is trite that there can be no estoppel against the provisions of the Act or the binding interpretation given to such provisions by the judicial forums. This rule has been cited with approval by several courts including the Hon'ble Supreme Court in CIT vs. V.MR.P. Firm (1965) 56 ITR 67 (SC). Where the facts of a case prima facie show that the authorities took a clearly incorrect view on the provisions of the Act in an earlier year, whether favoring the assessee or the Revenue, it cannot be argued in the subsequent year that the same incorrect approach should be repeated....
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....e duty entitlement pass book do not represent the real income of the asses- see. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the Revenue. In Radhasoami Satsang v. CIT [1992] 193 1TR 321 (SC) this court did not 29 think it appropriate to allow the reconsideration of an issue for a subsequent assessment year if the same "fundamental aspect" permeates in different assessment years. In arriving at this conclusion, this court referred to an interesting passage from Hoystead v. Commissioner of Taxation [1926] AC 155 (PC) wherein it was said (page 328 of 193 1TR) "Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authorit....
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....6.3 So far as it relates to contention of Ld.AR regarding discount on account of geographical difference; though similar submissions were raised assessee before Ld. CIT(A), but it has not been shown that how much impact was on account of geographical difference. No figures were given to AO or Ld. CIT(A) also to show such impact and nothing was produced before us to enable us to look into substance of such arguments. Therefore, such arguments of Ld. AR cannot be accepted. 6.4 So far as it relates to ground No.2 of revenue's appeal, it is observed that TPO himself has applied CUP method for determining the ALP of international transaction and if TPO himself has applied that method, Revenue does not have right to agitate the same as the method applied by the TPO has been upheld by Ld. CIT(A). Therefore, this ground of the Revenue is rejected. 6.5 It may be mentioned here that no other arguments were addressed by both the parties apart from which are mentioned above. 6.6 In view of above discussion the second ground of the assessee's appeal is partly allowed in the manner aforesaid and Ground No.2 of the Revenue's appeal is dismissed. 7. Apropos Ground No.1 of Revenue's app....