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TMI Blog2018 (5) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions have altogether been ignored by Ld. TPO as well as Ld. DRP, since the same, prima facie, has been submitted by the assessee after passing-off of the order by Ld. TPO - remit this matter back to the file of Ld. AO / TPO for due consideration and re-adjudication Use of multiple year data - Held that:- No force in the same since it is settled proposition and also in terms of Rule-10B(4), single year data of impugned AY has to be given preference to benchmark the transactions as against data of earlier years. This ground raised in all the three years fails. - I.T.A. No. 1126/Mum/2013, I .T.A. No.7437/Mum/2012 And 7666/Mum/2013 - - - Dated:- 4-5-2018 - SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM For The Assessee : Girish Dave, Ketan Ved and Ninad Patade, Ld. AR s For The Revenue : Jayant Kumar, Ld. CIT DR ORDER Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeals by assessee for Assessment Years [AY] 2007-08 to 2009-10 contest separate orders of lower authorities. Since common issues are involved, all the appeals are being disposed-off by way of this common order for the sake of convenience brevity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 3. Receipt of Sale Support Services 2.01 TNMM 4. Payment for project expenses and technical services 1.72 At Cost 5. Payment of interest on ECB 0.13 CUP The methodology adopted by the assessee for transactions Listed at Serial Number 1 5 has been accepted by Ld. TPO and no adjustment has been proposed against these transactions. The TP adjustment against purchase of fixed assets as suggested by Ld. TPO has been deleted by Ld. DRP and it has been submitted that no appeal has been preferred by the revenue against the same. As evident from grounds of appeal, the issue under appeal is related with determination of ALP of project expenses and sales support services. 3.3 The assessee provided sales support services amounting to ₹ 2.01 Crores to its AE situated at Singapore to promote its products in India. These services were mostly in the nature of Management Information System [MIS] and forwarding o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Support Services has been confirmed whereas adjustment on account of fixed assets was deleted by Ld. DRP since adequate evidences were adduced by the assessee to support its submissions. Incorporating the aforesaid adjustments, final assessment order dated 28/10/2011 has been passed by Ld. AO wherein TP adjustments aggregating to ₹ 246.83 Lacs has been carried out on account of Sales Support Services Project Expenses. Aggrieved, the assessee is in further appeal before us. 4. The Ld. Authorized Counsel for Assessee [AR], drawing our attention to the documents placed in the paper-book, assailed the stand of lower authorities, inter-alia, on the ground of violation of principle of natural justice by submitting that various evidences submitted by the assessee were not properly considered while arriving at the said adjustment. It has further been contended that enhancement has been made by Ld. DRP without providing adequate opportunity of being heard to the assessee in violation of statutory provisions and therefore the matter require reconsideration by lower authorities. Per Contra , Ld Departmental Representative [DR] submitted that the assessee did not file t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cost-to-cost basis . The Ld. TPO, while accepting the stand of the assessee, made a TP adjustment of ₹ 82.96 Lacs against the same for want of documentary evidences. The Ld. DRP, altogether taking a different view, enhanced the said adjustment viewing the transactions as part of shareholders activities . The aforesaid enhancement has, prima facie , been made without affording adequate opportunity of being heard to the assessee in violation of principle of natural justice. The revenue is unable to controvert the aforesaid fact. 7.2 Proceeding further, we find that no plausible reasoning has been adduced by Ld. DRP while arriving at the conclusion that the expenditure incurred by the assessee was part of shareholders activities and would bring benefit only to its AE particularly when the assessee has consistently submitted that the aforesaid expenditure was directly related to the project being set up by the assessee at Ranjangaon, Pune and the same was reimbursed to its AE on cost to cost basis. These expenditure primarily included expenditure towards project management and procurement of material to set up the project. As per settled legal position, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the assessee in terms of statutory provisions, the same shall be granted to the assessee. This ground raised in all the three years stands allowed for statistical purposes. Ground No. 5 is consequential in nature and do not require any specific adjudication. Ground No. 6 is general in nature. All the grounds stands disposed-off in terms of our above order. 9. Resultantly, the appeal stands partly allowed for statistical purposes in terms of our above order. 10. The assessee, in AY 2008-09, has been saddled with similar TP adjustment of ₹ 391.82 Lacs against Project expenses by Ld. TPO, viewing the same as part of shareholders activities . The Ld. DRP has provided partial relief against the same to the extent of ₹ 58.69 Lacs, being interest expenses since the same was separately benchmarked by the assessee. Resultantly, the net TP adjustment as sustained by Ld, DRP amounts to ₹ 333.13 Lacs which has been confirmed primarily by placing reliance on the stand of Ld. DRP in AY 2007-08. Similarly, in AY 2009-10, Ld. TPO, on similar reasoning, has proposed the aforesaid adjustment of ₹ 138.75 Lacs and the same has been confirmed by Ld. DRP. Sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted by the revenue in AY 2007-08 and therefore, the same should be adopted in this year also. Per Contra , Ld. DR submitted that the assessee was not into pure trading activity but dealing in highly sophisticated branded goods. To promote the products, it was incurring heavy marketing expenditure for its AE since the product was at introduction stage in the market and therefore, the aforesaid related costs were factored into gross profit margins earned by the assessee and therefore, RPM method could not be applied under the circumstances since the comparables selected by the assessee may not be operating under the similar business conditions or exposed to same business environment. Our attention has been drawn to the financial statements of the assessee to support the submissions. 14.1 We have given thoughtful consideration to the same. So far as the rule of consistency is concerned, we find that the benefit of the same could not be granted to the assessee since AY 2007-08 was the first year of commercial operations of the assessee and the methodology adopted by the assessee to benchmark these transactions in AY 2007- 08 has been accepted by Ld. TPO without any el ..... 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