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TMI Blog2014 (11) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... /air craft only upon receipt of confirmed orders from the customers - From the various agency agreements between Geo-logistics group and unrelated parties produced by the assessee, the terms and conditions are substantially same - The profit split information contained in all the agreements is typical to the industry - the four companies rejected by the TPO are functionally comparable to the assessee and therefore should have been retained in the comparable study. The geographical difference is not material so far as it applies to the logistics industry - From the various agreements it was found that there is splitting of gross profit equally at 50:50 even in Pakistan, Bangladesh and Sri Lanka which fall under the same geographical region – there was no infirmity in the CUP method adopted by the assessee – Decided in favour of assessee. - IT (TP) A. 1181/Mum/2014 - - - Dated:- 19-11-2014 - Shri R. C. Sharma And Shri Vivek Varma,JJ. For the Appellant : Shri Dhanesh Bafna For the Respondent : Shri Vyas J. Parshdnand ORDER Per Vivek Varma, JM: Instant appeal is assessee against the order passed by DRP-I, under section 144C(5), dated 09.12.2013. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in proviso to section 92C(2) of the Income Tax Act, 1961 ( the Act ) while computing the ALP. The appellant prays that the book value of the international transactions of freight receipts and expenses be held to be the arm s length price of the said transactions as per the Appellant s Transfer Pricing documentation, and the addition made on account of the above grounds be deleted. On the facts and circumstances of the case and in law, the AO and DRP have erred in levying interest of ₹ 41,06,495/- under section 234D of the Act. The above grounds are without prejudice to each other. The appellant craves leave to alter, amend or withdraw all or any of the above grounds . 2. At the time of hearing, the AR submitted that the issues as per GOA are covered by the various orders of the ITAT in its own cases in preceding assessment years: Asst. year ITA No. Date of an Order 2004-05 2000/Mum/2010 25.01.2012 2005-06 6004/Mum/2010 25.01.2012 2006-07 8146/Mum/2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in favour of the assessee in respect of A.Y 2007-08 following the earlier order dated 25/1/2012. It was explained by Ld. AR that grounds on which TP adjustment has been made for the year under consideration are similar to the ground in making similar addition in respect of earlier assessment years. This conclusion of Ld. A.R has not been controverted. Therefore, we hold that this issue is covered in favour of the assessee. For the sake of completeness relevant portion of the order of the Tribunal in respect of assessment year 2007-08 is reproduced below: 11. At the outset the ld counsel appearing for the appellant submitted that the facts and circumstances of the year under appeal are identical to the facts as they were for the AY 2004 -05 , AY 2005-06 2006-07 and accordingly prayed that the order of the tribunal for these years should be followed. The ld DR submitted that for the AY 2006 -07 the tribunal has restored the matters back to the files of the DRP and there fore requested that the issues in the present appeal may also be restored back to the files of the DRP. The ld counsel retorted that the order of the DRP for the AY 2006 -07 was laconic and not a speaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinates with third party service providers and does not own any transportation assets such as trucks, ships, air crafts or any other transportation assets of similar nature and it owns only office premises and computers. The above submission of the ld. counsel for the assessee could not be controverted by the ld. D.R. We find force in the submission of the ld. counsel for the assessee that both the origin company and the destination company assume comparable risks with the risk of bad debts being minimal and that there is no inventory risk since the assessee company enters into a contract with the shipping line/air line for booking space on a ship/air craft only upon receipt of confirmed orders from the customers. From the various agency agreements between Geo-logistics group and unrelated parties produced by the assessee, we find the terms and conditions are substantially same. The profit split information contained in all the agreements is typical to the industry. We also find merit in the submission of the ld. counsel for the assessee that the TPO in his TP study report has considered certain companies which are not available in the public domain being private limited companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. Applying the transactional profit split in this manner ensures that both income and expenses of the MNE are attributed to the relevant associated enterprise on a consistent basis. However. occasionally, it may be appropriate to carry out a spilt of gross profits and then deduct the expenses incurred in or attributable to each relevant enterprise (and excluding expenses taken into account in computing gross profits). In such cases, where different analyses are being applied to divide the gross income and the deductions of the MNE among associated enterprises, care must be taken to ensure that the expenses incurred in or attributable to each enterprise are consistent with the activities and risks undertaken there, and that the allocation of gross profits is likewise consistent with the placement of activities and risks. For example, in the case of an MNE that engages in highly integrated worldwide trading operations. involving various types of properly, it may be possible to determine the enterprises in which expenses are incurred (or attributed), but not to accurately determine the particular trading activities to which those expenses relate. In such a case, it may be appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2004 -05 2005 -06, we allow the appeal filed by the assessee and hold that the additions on account adjustment in arm s length price to the tune of ₹ 110700000.00 is uncalled for and accordingly the adjustment is rejected on the facts of the case discussed here in above . The submissions of the ld DR that the matter be restored back to the files of the DRP as was done in AY 2006 07 does not hold any water as we find that for the year under consideration the DRP has passed a speaking order where as in AY 2006 -07 the order of the DRP was laconic as found by the tribunal while deciding the appeal for the AY 2006 07 and therefore we reject the submissions of the ld DR . Respectfully following the aforementioned decision in the case of assessee itself for A.Y 2006-07 we delete the T.P adjustment 4. As there is no change in the facts, as coming from the preceding year, we, respectfully, therefore, following the decision, do not find any reason to deviate from the decision as above by the coordinate Bench and allow the grounds of appeal, as filed by the assessee. 5. Accordingly, the order of the DRP is set aside and the AO is directed to allow the claim of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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