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TMI Blog2014 (11) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... Diva Singh And Shri T. S. Kapoor,JJ. For the Appellant : Sh. Ajay Vohra, Neeraj Jain, Advs. & Sh. Puneet Chugh, Abhishek Aggarwal, CAs For the Respondent : Sh. Yogesh Kumar Verma, CIT DR ORDER Per Diva Singh, JM This is an appeal filed by the Revenue against the order dated 28.01.2013 of CIT(A)-XX, New Delhi pertaining to 2007-08 assessment year on the followings grounds:- 1. "Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of ₹ 1,53,03,888/- on account of Arm's Length Price of international transaction made by the Assessing Officer/TPO? 2. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing." 2. The relevant facts of the case are that the assessee filed his return on 31.10.2007 declaring a loss of ₹ 2,80,58,787/- which was processed u/s 143(1). The case was selected for scrutiny after issuance of notice u/s 143(2) and questionnaire etc. u/s 142(1). The record shows that the assessee is a 100% subsidiary of Destination of the World Holding Establishment, Liechtenstein and engaged in the business of rendering inbound, outbound and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O did not accept the claim of the assessee. Analyzing the method employed by the assessee, he was of the view that there is not much difference in inbound and outbound activities of the company and the assets utilized in both the segments were similar. He further held that the transfer pricing report did not furnish any risk analysis in the two segments. He was also of the view that the segments drawn were also not accurate since no separate segmental details were mentioned in the audited accounts certified by the chartered accountants. He also observed that the Profit and Loss account also does not mention two different lines of business as claimed in the transfer pricing report. As a result, the TPO concluded that the segmental information has been created to arbitrarily allocate the cost and there by reduce the losses. He was also of the view that the segmental accounts were drawn 'without any explained or disclosed allocation key' and therefore could not be relied upon to determine the segmental results. Consequently, the TPO disregarding the segmental accounts and rejecting the transaction wise benchmarking done by the assessee in the transfer pricing documentation applied Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he most appropriate method. He used Indo-Asia Leisure Services and Shri Raj Travels & Tours as the comparables. Exactly on the same facts and circumstances of the appellant's own case, the Hon'ble ITAT in the AY 2006-07 has held that the internal TNMM should be used in this case. The relevant portion of the Hon'ble ITAT decision in ITA No.-5534/Del/2010 dated 08.07.2011 is reproduced below:- "6. We have considered the facts of the case and submissions made before us. On the basis of the same, the first question which requires decision according to us is whether, the AO was justified in taking recourse to external comparables when internal comparables were available? 6.1…….. Therefore, it is held that in the first instance, the attempt should be made to determine arm's length price of controlled transactions by comparing the same with internal uncontrolled transactions undertaken in same or similar economic scenario. No argument has been made by the ld. DR that economic scenarios of controlled and uncontrolled transactions were different. Therefore, it is held that the transfer pricing analysis should have been done by taking recourse to internal uncontrolled transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken with associated enterprises in the outbound segment is higher (loss is lower) than the transactions undertaken with the third parties. Further, the price charged in inbound segment falls within the +/-5% range of the price charges in uncontrolled segment. In view thereof, it is submitted by the appellant that the international transactions undertaken by the appellant satisfied the arm's length principle, even if 'TNMM is to be applied as the most appropriate method. The appellant has explained how these segments are created and the costs are allocated. The audited account does not provide the segmental results as it is not applicable as per the accounting standards. However, that does not invalidate the segmental accounts prepared by the appellant in the TP study. As per the submission of the appellant, it is a scientific way of maintaining the accounts with the help of IT Tools and costs are simultaneously booked and the revenue is booked. In the absence of any concrete evidence to show that the books of accounts or the segmental accounts are manipulated, there is no ground to reject the segmental accounts prepared by the appellant. In view of the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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