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TMI Blog2013 (2) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... d recompute the OPM from the list of comparables adopted by the TPO, the average OPM comes to 18.91% whereas the Net Profit Margin of the assessee is 18.11%. Do not any reason for TP adjustment. In favour of assessee - IT APPEAL NO. 3514 (MUM.) OF 2010 - - - Dated:- 29-8-2012 - D.K. AGRAWAL AND N.K. BILLAIYA, JJ. Ajeet Kumar and Pragati Kumar for the Appellant. Vijay Mehta for the Respondent. ORDER N.K. Billaiya, Accountant Member - This appeal by the Revenue is directed against the order of Ld. CIT(A)-15 Mumbai dt.12.2.2010 for assessment year 2005-06. 2. The Revenue has raised following substantive grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee is eligible for deduction u/s. 10A of the I.T. Act when the assessee company has been formed by hiving off the Sonata Software Division a part of the erstwhile company, Indian Organic Chemicals Ltd. from an already existing company and other conditions laid down u/s. 10A were also not satisfied. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee is eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me view has been followed by the Tribunal for subsequent assessment years till A.Y. 2004-05. We find that the Ld. CIT(A) has allowed assessee's appeal following the finding of the Tribunal. The Ld. DR could not controvert by bringing any material on record. Respectfully following the decision of the Tribunal in assessee's own case, order of the Ld. CIT(A) is confirmed. Ground No. 2 is according dismissed. 8. Ground No. 3 relates to the allowance of the claim of unbilled software income of Rs. 2,92,82,531/-. The Ld. Counsel for the assessee pointed out that similar issue had come up before the Tribunal in assessment year 2002-03 to 2004-05. 9. We have perused the orders of the Tribunal in ITA No. 2289 4337/M/06 pertaining to assessment year 2002-03 2003-04. We find that the Tribunal has decided the issue in favour of the assessee. We also find that the Ld. CIT(A) has allowed the appeal on this ground following the decision of the Tribunal in earlier years. Respectfully following the decision of the Tribunal and also finding that no contrary material has been brought on record by the Ld. DR, finding of the Ld. CIT(A) are confirmed. Ground No. 3 is accordingly dismissed. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Aggrieved by this finding of the Ld. CIT(A), Revenue is in appeal before us. The Ld. Departmental Representatives supporting the findings of the TPO argued that on the facts of the case TNMM Method is the most appropriate method for determining the ALP in respect of the transaction entered by the assessee with its AE ODSI. The Ld. DR further submitted that CPM method adopted by the assessee was not appropriate on the facts of the case. Ld. DR submitted that the TPO has rightly pointed out that this method (CPM) was not found suitable as these averages did not factor in the difference in the skill sets/level of employees engaged in performing work for the AE and non AE. The Ld. DR concluded that the adjustment made by the TPO deserved to be confirmed. 15. The Ld. Counsel for the assessee pointed out that the law does not provide any hierarchy of method to be adopted in the determination of ALP. He further pointed out that on the same set of facts for A.Y. 2004-05 and 2006-07, no adjustments have been made in the case of the assessee. Therefore, the Revenue cannot take a different view for the year under consideration on the same set of facts. For this proposition, the Ld. Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with its transaction with ODSI. Where an assessee has followed one of standard methods of determining ALP, such a method cannot be discarded in preference over transactional profit methods, unless revenue authorities are able to demonstrate fallacies in application of standard methods. The transaction profit method should be applied only when standard or traditional methods are incapable of being properly applied in the facts of the case because while traditional methods seeks to compute the prices at which international transactions would normally be entered into by the associated enterprises but for their interdependences and relationships, transactional profit methods seek to compute the profits that the tested party would normally earn on such transactions with unrelated parties. For this proposition, we derive support from the decision of ITAT, Pune Bench in the case of MSS India (P) Ltd. (supra). While there is no particular order or priority of methods which the assessee must follow and no method can invariably be considered to be more reliable than others, TNMM and Profit Split Method (PSM) are treated as methods of last resort which are pressed into service only when the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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