TaxTMI 
TaxTMI 
2020 (10) TMI 419
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....en subject to transactional net margin method under Rule 10B(1)(e) read with Rule 10C? ii. Whether the application of CUP method under Rule 10B(1)(a) is correct when the comparative data in relation to the price for exports to AE as against a non AE is very different because of the differences in the geographic markets of sale? and iii) Whether the Tribunal was right in not appreciating the legal argument that application of external CUP method under Rule 10B(1)(a) is not possible for cases wherein sale price per product are compared as the comparative data for the export prices is not available in public domain?' 3. We have heard Mr.Sandeep Bagmar, learned counsel appearing for the appellant and Mr.M.Swaminathan, learned senior standing counsel appearing for the respondent. 4. The Tribunal by the impugned order disposed of the appeal by following the assessee's own case for the assessment year 2009-2010 in ITA No.770/Mds/2014 dated 16.11.2016. Against the said order, the appellant / assessee had filed Tax Case Appeal before this Court in TCA No.739 of 2017 raising the following substantial questions of law:- '1.Whether the finding of th....
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....earned counsel appearing for the respondent / revenue that the Division Bench of this Court has infact decided the assessee's appeal and the relevant portion of the Judgment reads as follows: '3. The learned Tribunal, in the case of the Assessee, which is a manufacturer of various kinds of threads, has held in paragraph 12 of its order, referring to the order for the previous Assessment years, wherein it had clearly decided that for international transactions, CUP method (Comparable Uncontrolled Price Method) was appropriately used for making Transfer Pricing Adjustment (for short, TP Adjustment) under Section 92C of the Income Tax Act, in comparison to TNM Method (Transactional Net Margin Method) under the said provision, and for recalculating TP adjustment for the present AY 2009-10, the matter was remitted back to the learned Transfer Pricing Officer. Paragraph 12 of the order of the learned Tribunal dated 16 November 2016, is quoted below for ready reference. "12. In our opinion, the decision of the T ribunal is clear in that C UP method was appropriately used in preference to TNM method. The only modification suggested by the Tribunal was to consider ....
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....ss of transactions. In our opinion, when uncontrolled comparables are available internally on some of the items which was sold to Associated Enterprise then such comparables would form a separate class of its own. TPO had considered forty nine thread types for which there were internal uncontrolled transactions available for comparison. TPO had not made an adjustment for any of the other varieties of thread sales made by the assessee to its Associated Enterprise. Nevertheless, we do find that at least for eight items among these forty nine thread types, mentioned at Sl.No.27, 28, 30, 35, 37, 38, 39 & 44, there was negative differences adjustment which were ignored by the TPO, in the work out at annexure A of its order. When a class of items are considered for adjustment, the negative effect of some of the items therein cannot be ignored. As for contention of the assessee is that there were geographical difference between supplies made to Associated Enterprise and Non Associated Enterprise, there is a clear finding by the ld. DRP that assessee was catering to Asian countries and Associated Enterprise were located in Sri Lanka, Mauritius, Pakistan and Egypt and Non Associate....
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....ts agent. Ld. Assessing Officer had given a clear finding that no services in the nature of procurement of any orders were discernable from the e-mail correspondence between the assessee and M/s. TCA. Argument of the assessee before ld. TPO and ld. DRP was that primary role of M/s. TCA was to indentify the requirements of the assessee and get orders. However, no evidence whatsoever was produced by the assessee in support of this contention. It was for the assessee to show the services it had received from M/s. TCA. When the supplies were all to group concerns, we cannot fathom what marketing services could have been done by M/s. TCA. No doubt, Hon'ble Delhi High Court in the case of M/s. EKL Appliances Ltd (supra) had held that legitimate business needs of the assessee should be understood from the point of a prudent businessman and it was not for the Assessing Officer to dictate what the business needs. There can be no quarrel on this view taken by the Hon'ble Delhi High Court. Nor can there be any quarrel on the view taken by the same Court that ld. TPO should not question how to conduct the business. These judgments cannot in our opinion be extra-polated to mean that th....
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.... 2032/MDS/2011 (AY 2006-07 and AY 2007-08) (M/s.Madura Coats Pvt. Ltd. vs. Assistant Commissioner of Income Tax). 11/22 Dt.14.09.2020 in T.C.A.No.739 OF 2017 M/s. Madura Coats Pvt Ltd. vs. Dy.Commr. Of I.T. 6. Paragraph 12 of the previous order passed by the learned Tribunal on 21 December 2012 is quoted below for ready reference : 12. In view of the above, we are of the considered opinion that the matter requires fresh adjudication. The order passed by the DRP is in subsequent years to the order of CIT(A), the orders passed by CIT(A) in assessment year 2002-03 to 2005-06 will have bearing in later years. We therefore, remit the matter back to the CIT (A) for the assessment years 2006-07 and 2007-08 for deciding the matter afresh by passing a detailed and speaking order. The CIT(A)/DRP while adjudicating the matter afresh shall interalia take into account external comparables while determining the international pricing. The counsel for the Assessee has made a statement at the Bar that the Assessee would provide details of international comparables. The CIT(A)/DRP shall also take into consideration the different market conditions. The market conditions does not mean geograp....
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....peals before the learned Tribunal itself which are also pending there. He submitted that for such previous years, since CUP Method was again adopted by the learned authorities like CIT (Appeals) or Dispute Resolution Panel, the Assessee being dissatisfied with the same, has again preferred appeals before the learned Tribunal and even those appeals are pending before the learned Tribunal. 9. Mr.Swaminathan, learned Counsel for the Revenue, fairly submitted that for previous years also, though there was no specific and categoric finding by the learned Tribunal that CUP Method is the most appropriate method for the authorities to adopt in the case of the Assessee, but the Tribunal has observed so in paragraph 12 of the impugned order, for the present Assessment Year 2009-10, as quoted above. 10. On the second issue regarding allowing commission paid to M/s.The Central Agency, Mr.Sandeep Bagmar, learned counsel for the Assessee, argued that for all the previous years, such expenditure or commission paid the same to M/s.The Central Agency was allowed as 'Business Expenditure', on the basis of similar evidence produced before the authorities below, but the learn....
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....ed by Tribunal, which was not the correct reading of the previous order dated 21.12.2012. 15. A bare reading of paragraph 12 of the order passed by the learned Tribunal for the previous years dated 21.12.2012 would also show that it was an open remand and no specific method was finalized by the Tribunal in the previous order of the appeal for previous assessment years. This misreading of the previous order by the learned Tribunal while passing the present impugned order on 16.11.2016 has resulted in multiplicity of the litigation and after remand also, as stated by the learned counsel for the Department before us, a second round of appeals has again come up before the learned Tribunal itself, which appeals are said to be pending before the learned Tribunal as of now. 16. We are therefore constrained to observe that the Tribunal, being the final fact finding body, ought to have finalized the said exercise of final fact finding at its own level, instead of remanding cases again and again, which in our opinion defeats the very purpose of expeditious disposal of TP adjustments in the case of international transactions u/s 92C of the Act, read with relevant Rules frame....
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....ssioner of Income Tax (Appeals), in previous order, and that too by committing a mistake of misreading of the previous order dated 21.12.2012 and holding that CUP Method was already decided to be the only appropriate method, whereas the Assessee has been contending otherwise throughout, and is aggrieved by the adoption of the CUP method and was pressing of TNM Method. In the facts and circumstances of the case, and Assessee is again in the second round of appeals before the learned Tribunal against the orders passed by the authorities below on the remand made by the previous order dated 21.12.2012. 18. Like we are seeing in the present case, it was expected of the learned Tribunal also to realize the consequences of an open remand made or a remand made to the authorities below only for re-computation with the appropriateness of the method decided finally at its own end. The multiplicity of the litigation and rounds of appeal, what we have described as a shuttle game, should have been seen by the learned Tribunal and therefore, we expect at least from now on, the learned Tribunal will decide on the issue of the appropriateness of the method for TP adjustments, whil....