TaxTMI 
TaxTMI 
2019 (1) TMI 2063
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....by the Honourable Dispute Resolution Panel [ in short the ld DRP] vide directions dated 30.3.2017 for the Assessment Year [ in short the Asst Year] 2013-14. 2. At the outset, the ld AR argued that once the Ground Nos. 8 & 9 raised by the assessee is adjudicated and if it goes in favour of the assessee, then the other grounds raised by the assessee on computation of income would become academic as the assessee would be through with its margins and that no further transfer pricing adjustment would be warranted. The ld DR before us fairly agreed for adjudication of Ground Nos. 8 & 9 first. For the sake of convenience, the Ground Nos. 8 & 9 raised by the assessee are reproduced below:- 8. On the facts and in the circumstances of the....
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....ms, distribution and handling; documentation including bills of lading; supply chain management; and other advisory services. The Assessee is primarily a freight forwarder providing logistics solutions to global customers of Maersk group and is engaged in an intermediary role between the customers and various transport related service providers on behalf of customers on a contract basis. It was explained to the TPO that in freight forwarding activity, generally two Darnco entities are involved in any transaction, the originating entity (i.e. entity originating the shipment) and the destination entity (i.e. entity receiving the shipment). The Assessee operates at either leg - i.e., as the originating entity as well as the destination entity.....
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....of expenses 52,18,335 29,66,791 6. Payment of network fee 8,46,91,990 -- 5. The ld TPO observed that for the purpose of benchmarking, the assessee had selected itself as tested party. The assessee submitted that the above international transactions are inextricably li9nked and are wholly necessary for logistics business and accordingly had aggregated the same and carried out a common benchmarking analysis under Transactional Net Margin Method (in short TNMM). The ld TPO accepted the TNMM as the Most Appropriate Method (MAM in short) but adopted the Profit Level Indicator (in short PLI) of the assessee at Net Profit Margin by rejecting the PLI adopted by the assessee as Operating Profit (OP) / Value Added Expenses (VAE).....
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....e ld DRP among other observations categorically observed in page 15 of its order in para 3.2.11 as under:- "3.2.11 So far as assessee's contention that adjustment may be restricted to the international transactions with AE only is concerned, the issue of entity level adjustment versus transaction level adjustment is pending before Hon'ble Supreme Court which has admitted SLP filed by the Department in the case of CIT v. Firestone International Pvt. Ltd. [ITA No.1354 of 2013] - TS-401-HC-2015 (BOM)-TP against the decision of the Hon'ble High Court holding that transfer pricing adjustment should be made with reference to the international transaction and not with reference to the entity level turnover. Since, there is a chance ....
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....he Hon'ble High Court is as under:- "Whether in law and on the facts of the instant case, was the Tribunal justified in holding that while computing the ALP of international transactions the AO/TPO is precluded from taking into consideration transactions with Non Associate Enterprises, while arriving at the ALP using the Net Transactional Margin Method (TNMM) ; whereas Rule 10B(1)(e) mandates the consideration of profit margins with unrelated enterprises? " It was observed in the said order by the Hon'ble High Court as under:- "6. The question as proposed by the revenue does not seems to arise from the impugned order of the Tribunal nor is the method of determination of ALP on application of TNMM arriving at....
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....16. 9.2. We find that the ld DRP had also taken cognizance of the aforesaid principle and had merely stated that the revenue's Special Leave Petition on the said issue is pending before the Hon'ble Apex Court and that since the appeal power to tribunal had been withdrawn against the order of ld DRP for the revenue, this issue was decided against the assessee. We find that as on date, the issue is covered by the order of the Hon'ble Jurisdictional High Court in favour of the assessee which would be binding on this tribunal. Respectfully following the aforesaid judicial precedents on the impugned issue before us, we direct the ld TPO to recomputed the ALP of the international transactions of the assessee by considering only the transaction....