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TMI Blog2018 (6) TMI 1565X X X X Extracts X X X X X X X X Extracts X X X X ..... verification that the margins shown by tested party i.e. foreign associated enterprise was at arm's length price of margins shown by comparables selected by the assessee, the matter was remitted back to the file of Assessing Officer / TPO for verification. The issue arising in the present appeal before us is similar to the issue which arose in earlier year and since the international transactions undertaken by the assessee were identical to the international transactions undertaken in earlier years, hence following the same parity of reasoning, we hold that TNMM method was the most appropriate method to be applied to benchmark arm's length price of international transactions of fees paid for advisory and other services by taking foreign associated enterprise as tested party. AO is directed to benchmark the transactions by taking margins of foreign comparables which were selected by the assessee in earlier year and even in the year under consideration. However, to verify the claim of assessee that the margins shown by assessee and the mean margins shown by the comparables were within +/- 5% range, the Assessing Officer is directed to comply with the directions of Tribunal as in earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer ('Ld.TPO') erred in determining the arm's length price of the international transaction pertaining to payment of fees for advisory and other services by the Appellant to its associated enterprises (AEs) as 'Nil' as against ₹ 9,57,57,501/- determined by the Appellant and thereby making a TP adjustment of ₹ 9,57,57,501/-. The Appellant prays that the book value of the international transaction be accepted to be the arm's length price of the said transaction and the above TP adjustment be deleted. 2.1 On the facts and in the circumstances of the case, and in law, the Hon. DRP/Ld. AO/Ld. TPO while making a TP adjustment on account of payment of fees for advisory and other services erred in: i. ignoring that the Appellant had supported the claims with appropriate evidences; ii ignoring that there was commercial rationale and expediency in availing the services from the AEs; iii. ignoring that the Appellant is not required to establish the benefits arising out of the said services; and iv. determining the arm's length price of the transaction under Comparable Uncontrolled Price(CUP) Method without identifying any valid comparable un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance additional depreciation of 10% amounting to ₹ 21,56,824/- claimed under section 32(1)(iia) of the Act on the assets which has been added to the block of Plant and Machinery during FY 2011-12 relevant to A.Y.2012-13. The Appellant prays that the claim of balance addition depreciation as claimed by the Appellant be allowed.". 3. The appeal of the assessee along with stay application moved by assessee is being decided by this consolidated order for the sake of convenience. 4. The Ld. AR for the assessee at the outset pointed out that the issue raised in the present appeal is squarely covered by the earlier order of Tribunal on similar issue. He relied on the orders of Tribunal in ITA No.2182/PUN/2013 relating to assessment year 2009-10, ITA No.211/PUN/2015 relating to assessment year 2010- 11 decided by consolidated order dated 29.12.2017 & in ITA No.359/PUN/2016 and 2847/PUN/2016 along with SA No.45 & 46/PUN/2018 relating to assessment year 2011-12 and 2012-13 respectively vide order dated 25.04.2018. 5. The ground of appeal No.1 raised by assessee is general in nature and hence, the same is dismissed. 6. The ground of appeal No. 2 raised by assessee is on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of assessee as the DRP dismissed the objections raised by the assessee against draft assessment order made by the Assessing Officer. 10. We find that similar issue of adjustment, if any, on account of payment of fees for advisory and other services by the assessee to its associated enterprises, arose before the Tribunal in assessee's own case in ITA No.2182/PUN/2013, relating to assessment year 2009-10 and vide consolidated order with appeal in ITA No.211/PUN/2015, relating to assessment year 2010-11, vide order dated 29.12.2017, the issue was deliberated upon vide paras 17 to 30. The Tribunal held that TNMM method was the most appropriate method to be applied to benchmark international transactions undertaken by the assessee by taking foreign associated enterprises as tested party and further, the Tribunal held that the said transaction of fees paid for advisory and other services was to be benchmarked by comparing the margins of tested party i.e. foreign associated enterprises with margins of external comparables selected by the assessee, who were also engaged in providing similar advisory and related services to its entities. However, for the limited purpose of ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer pricing proceedings, TPO carried out a fresh search for appropriate comparable companies and also applied additional/modified filters for selection of comparable companies. Accordingly, he rejected all the comparable companies selected by the assessee in the TP study except 1. The TPO finally selected four companies as comparables which read as under: Sr. No. Name of Comparable Company OP/TC As per TPO 1. Microgenetic Systems Ltd. 16.25% 2 BNR Udyog Ltd. ( Seg.) 27.25% 3. e4e Healtcare Services Ltd. 18.15% 4. Ninestars Information Technologies Ltd. 22.29% Arithmatic Mean Margin (ALP) 20.99% 13. Thus, the TPO determined the ALP at 20.99% and made an adjustment of ₹ 33,51,593/- to the assessee's transfer price. 14. The DRP in its Directions rejected, inter alia, the TPO's filter of rejecting exceptionally high/low margin which led to inclusion of 3 companies i.e. Excel Infoways Limited, Ace BPO Services Pvt. Ltd. and Crystall Voxx Ltd. Further, the DRP also modified the turnover filter applied by the TPO which led to exclusion of 2 companies selected by the TPO i.e. e4e Healtcare Services Ltd. and Ninestars Information Technologies Ltd. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause of the factum of fluctuating margins, could not be selected as functionally comparable to the assessee. Following the same parity of the reasons, we hold that the said concern i.e. Excel Infoways Limited, because of different factors and also fluctuating margins is to be excluded from final set of comparables. Accordingly, we hold so. The Assessing Officer is directed to recompute mean margin of the comparables and determine ALP of the international transactions of provision of Oracle support services (ITes) by the assessee to its AEs after affording reasonable opportunity of hearing to the assessee. Thus, ground No. 3 raised in appeal by assessee is allowed. 20. The ground of appeal No. 4 raised by assessee is not pressed and hence, the same is dismissed as being not pressed. 21. The issue raised in ground of appeal No. 5 is against disallowance of balance additional depreciation of 10% amounting to ₹ 21,56,824/- claimed under section 32(1)(iia) of the Act on the assets which had been added to the block of Plant & Machinery during financial year 2011-12 relevant to 2012-13. 22. Briefly in the facts relating to the issue, the assessee had purchased certain asset of Pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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