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TMI Blog2014 (2) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... nal TNMM comparables. In the interest of justice and fair play, we restore this issue back to the files of the TPO. The TPO is directed to consider the internal comparable TNMM. The assessee is directed to provide necessary details to the TPO. Being fair to both parties, we allow the assessee to bring forth additional comparables and direct the TPO to accept/reject the same after necessary examination/verification as per the provisions of law. - Decided in favour of assessee for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to same. 5. On the facts and in the circumstances of the case and in law the Learned CIT(A) has erred in not granting an opportunity to the Appellant to file additional grounds with regard to acceptability of additional comparables and Internal TNMM. 6. On the facts and in the circumstances of the case and in law the Learned CIT(A) has erred in not considering the submissions of the Appellant with regard to acceptability of Transactional Net Margin Method by comparing the margins of the Appellant from the transactions with associated enterprises with that of third party transactions ('Internal TNMM'), merely on the reason of non- availability of Grounds of Appeal with regard to same. 7. On the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise (AE) is only in the form of Telecom ancillary services provided by the assessee to its associated companies i.e. group companies. During the year under consideration, the assessee entered into following international transactions with its AE. S. No. Name and address of Associated Enterprises (AEs) Description of transaction with AEs Amount paid/payable Received/ Receivable as per books of account (Rs.) 1 Cable & Wireless Global Ltd. -UK, 124 Theobaids Road, London WCIX8RX United Kingdom Data and voice network designing, integration & implementation, Network management/sale of telecom equipments 1,30,650,615 2 Cable & Wireless Global Business Services Pty Ltd. Australia Level 12, 3 Spring Street, Sydney, NSW 2000 Data and vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (C/A X 100) 8.00% (49.20)% 9. The TPO sought clarification from the assessee in respect of these five comparables. The assessee was asked to submit updated margin of WTI advanced Technology Ltd. Assessee failed to update the same. The updated margin of remaining 4 comparables gave operating margin of 8.9%. According to the TPO M/s. Canvasm Technologies Ltd. failed to meet 25% related party transaction filter as almost 100% of this concerns transaction is with its Associated Enterprises. The TPO did not accept the same as a comparable for the purpose of benchmarking transaction. 10. During the course of the proceedings, the assessee rejected one of its own comparables which was selected by it earlier which pertains to Zenith Infotech Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the Ld. CIT(A) after considering the facts and the submissions at para-xii on page-16 of its order held that : " the contention of the appellant to exclude Zenith Infotech Ltd from the set of comparables is not found to be acceptable" 12. Aggrieved, assessee is before us. The Ld. Counsel for the assessee strongly contended that when internal TNMM were available, there was no reason to go for external comparable TNMM. For this proposition, the Ld. Counsel relied upon the decision of the Mumbai Tribunal in the case of Technimont Icb India (P) Ltd. 138 ITD 23. The Ld. Counsel strongly submitted that at the time of the original TP study, the complete details in respect of M/s. Zenith Infotech was not available though the same was taken as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ape of an uncontrolled transaction of the same assessee, it is likely to have higher degree of comparability vis-à-vis comparables identified amongst the uncontrolled transactions of third parties. The underlying object behind computing ALP of an international transaction is to be find out the profits which such enterprise would have earned if the transaction had been with some third party instead of related party. When the data is available showing profit margin of that enterprise itself from a third party, it is always safe and advisable to have recourse to such internal comparable case. The reason is patent that the various factors having bearing on the quality of output, assets employed, input cost etc. continue to remain by and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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