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TMI Blog2015 (5) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... TPO/AO could have refused to follow the logic and consider the comparable profits from non-AE transactions in both segments is in issue. All that the ITAT did, in our view, was to cure this defect or anomaly and direct the AO to consider the margin of commission in each segment while determining the ALP. We at the same time clarify that the AO - who is now directed to carry out the exercise shall do so by applying principles in Rule 10(B) of the Income Tax Rules. The appeal is disposed of but in terms of above directions. It is clarified that this Court is not in any way disturbing the Tribunal’s direction to determine the rate of commission in either segment. - ITA 83/2015 - - - Dated:- 5-5-2015 - S. Ravindra Bhat And R. K. Gauba,JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination; (3) made adjustment in respect commission segment business by adopting the margin of profit for trading with non-AE of the assessee. The assessee approached the ITAT contending that the AO s order disturbed the consistent view adopted by the Revenue for past years whereby the TNMM was accepted. It was also contended that the TPO - and consequently the AO fell into error in not accepting the clubbing of transactions suggested by the assessee. Most importantly the assessee was aggrieved by comparison of what was facially incomparable i.e. after rejection of the AO s method of comparing two transactions which was deemed to be dissimilar in the first instance. 3. The ITAT in the impugned order discussed the nature of transactions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The ld. AR also candidly admitted that the order for the current year is replica of the earlier years order passed except for the change in figures. The position which, therefore, admittedly emerges is that the facts and circumstances of the instant year are mutatis mutandis similar to those of the preceding two years. The appeal of the assessee for the AY 2007- 08, in which transfer pricing adjustment was made under similar circumstances, came up for consideration before the Tribunal in ITA No.5095/Del/2011. Vide order dated 31.01.13, the Tribunal has held that the 'Indenting transactions' are different from 'Trading transactions' in terms of functional differences, risks undertaken and assets employed, and hence both ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as commission businesses are functionally different from each other, apart from having varying risks and capital employed. We hold that the commission percentage from AE transactions should be benchmarked on the basis of commission rate from non-AE transactions under the 'Indenting business' and the addition on account of transfer pricing adjustment, if any, should be made in consonance with the view taken by the tribunal in the immediately two preceding years. 6. The ld. AR tried in vain to impress upon us that the view taken by the tribunal in the preceding two years should not be followed and the application of TNMM as employed by the assessee should be accepted leading to no addition on account of TP adjustment. To buttress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; segment and then apply the same rate to the FOB value of goods in AE transactions under the 'Indenting business' segment, as was directed in the earlier years. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in such proceedings. 4. We have heard counsel for the Revenue, who urges that Berry ratio, which was suggested by the assessee is alien to Indian law. She also urged that the application of TNMM method is a matter of debate since for the previous year the question of law has been framed and is pending consideration by this Court. 5. This Court notices at the outset that the issue which it is concerned with is AY i.e. 2009-2010 involves extremely restricted one. Having clubbed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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