TaxTMI 
TaxTMI 
2023 (10) TMI 212
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....er of ITAT dated 29.08.2017 and restore the order of the Assessing Officer. (ii)To decide the substantial question of law as formulated in para 2 here in above. (iii) To formulate and decide any other amended question of law that may arise out of the order of the Tribunal and (iv) To pass any order/orders as is deemed fit and proper." 3. The substantial questions of law as proposed by the appellant/revenue in para 2 of the Memo of Appeal for determination of this Court were as follows: "2.1 Whether ld. ITAT is legally justified in directing both, the assessee and the Assessing Officer to use internal Transactional Net Margin Method (TNMM) under Section 92C of the Income Tax Act, 1961 read with Rule 10B of the Income Tax Rules 1962 even when the internal TNMM was not used by the assessee in its transfer pricing report and record of Functional Assets & Risk Analysis (Far Analysis) was not available? 2.2 Whether under the provisions of Section 92C of the Act read with Rule 10B of the Rule, the ld. ITAT is justified in holding internal TNMM as the most appropriate method even when the transfer pricing documentation using internal TNMM wer....
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....ng the true comparability. The TPO held that external Transactional Net Margin Method (TNMM) in respect of international transactions is the most appropriate method and accordingly directed to enhance the income of the respondent/assessee by Rs.28,87,81,961/- for Assessment Year 2008-09. 4.4 Accordingly, draft assessment order dated 12.12.2011 was prepared by the Assessing Officer under Section 143(3) of the Act, thereby determining the total taxable income as Rs.22,42,12,556/- and the said draft assessment order was forwarded by the Assessing Officer under Section 144C of the Act to the respondent/assessee, granting it an opportunity to oppose the proposed variation(s). 4.5 The objections to the draft assessment order were filed by the respondent/assessee before the Dispute Resolution Panel (DRP), which although concurred with the views of the TPO as regards method applied for determination of arm's length price, but reduced the TP adjustment to Rs.9,57,51,817/- and accordingly final Assessment Order dated 30.10.2012 was passed, declaring the income of the respondent/assessee for the relevant year to be Rs.3,11,82,412/-. 4.6 Feeling aggrieved with the order of the DRP, th....
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....unication to their counsel have taken a view that since the assessment consequent upon remand back resulted in "huge" reduction of transfer pricing adjustment, the present appeal "is quite maintenable (sic.) and cannot be withdrawn". 7. In the above backdrop, learned counsel for appellant/revenue contended that the present appeal deserves to be allowed, thereby quashing the order dated 29.08.2017 impugned in the present proceedings as well as the subsequent order dated 31.10.2019. It was contended by learned counsel for appellant/revenue that since in the original proceedings which led to the impugned order, neither the respondent/assessee nor the Assessing Officer sought to apply internal TNMM as MAM, the learned Tribunal had no authority to direct application of the same and therefore, the impugned order is not sustainable. On the other hand, learned counsel for respondent/assessee contended that the order dated 29.08.2017 impugned in the present appeal having been already given effect to, now nothing survives in this appeal. Further, placing reliance on judicial pronouncements rendered by coordinate benches of this court, including in the cases titled Pr. Commissioner of Inco....
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....onding right) to apply the correct legal principle. Thus, the use of one method in transfer pricing report does not estop the assessee from later claiming that another method is the most appropriate one, provided that is indeed the correct position". 9. In the present case also, as mentioned above, the grievance of the revenue, conveyed through learned counsel is that the learned Tribunal could not have applied internal TNMM as MAM because neither the respondent/assessee nor the Assessing Officer had considered that method to be the most appropriate method. However, on behalf of the appellant/revenue it was not demonstrated as to how change in MAM would produce better or more appropriate arms length price in the facts of the present case. 10. On the other hand, in the impugned order dated 29.08.2017, the learned Tribunal gave detailed reasons for arriving at a conclusion that internal TNMM and not CUP method would be the most appropriate method. The learned Tribunal observed that the respondent/assessee had demonstrated the kind of services rendered by it to its AEs as well as non-AEs by placing reliance on agreements and it was argued before the Tribunal that the assessee de....