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TMI Blog2014 (1) TMI 1861X X X X Extracts X X X X X X X X Extracts X X X X ..... l and unless the facts and circumstances governing the situation and legal position are identical in each case. Once the issue has been decided on merits by considering the relevant facts and material then the same cannot be reviewed in the garb of rectification of mistake u/s 254(2). The Tribunal cannot re-evaluate or re-appreciate the evidence and facts in the proceedings u/s 254(2). Only a mistake which is wide apparent, manifest and patent on the face of the order can be rectified u/s 254(2) and not something which can be involved serious circumstances of disputes of question of facts or law can be established by long drawn process of reasoning on the point. Relief sought in the Miscellaneous Application would certainly amount to review of earlier order which is beyond the jurisdiction of the Tribunal and scope of Section 254(2) - Decided against assessee - Miscellaneous Application No. 203/Mum/2013 (Arising from ITA No. 7985/Mum/2010 A. Y - 2006-07) - - - Dated:- 17-1-2014 - Shri Sanjay Arora And Shri Vijay Pal Rao, JJ. Assessee by Shri Yogesh A. Thar Revenue by Shri Ajit Kumar Jain ORDER Vijay Pal Rao, This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said that the A.O has not considered and decided the issue of foreign party as a tested party. He has relied upon the decision of third Member in case of 98 ITD 285. 4. We have considered the rival submissions and carefully perused the relevant record as well as the impugned order. The grievance raised by the assessee in the Miscellaneous Application against the finding of the Tribunal on the issue whether a foreign party/AE of the assessee can be a tested party for determination of ALP. As regards the first contention of the Ld. A.R that the TPO has not considered the contention of the assessee that foreign party can be a tested party, we note that when the ALP determined by the assessee was rejected by the TPO on the ground that it is not as per the provisions of Section 92, this itself shows that the computation of the ALP by considering the foreign party as tested party was found not as per the provisions of Section 92. Therefore, we do not find any merit in the said contention of the assessee. The Tribunal in the impugned order has elaborately discussed and analysed the Transfer Pricing provision as contained u/s 92 of the Income Tax Act as well Rule 10B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (2) of section 92C, the arm s length price in relation to an international transaction shall be determined by any of the following methods, being the most appropriate method. The mechanism for determining ALP under TNMM has been enshrined under clause (e), which states that: (i) the net profit margin realised by the enterprise from an international transaction entered into with an associated enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to an other relevant base; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base; (iii) the net profit margin referred to in sub-clause (ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of net profit margin in the open market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e substituted with anything other than from the international transaction, that is, a transaction, that is, a transaction between the associated enterprises. So, it is the profit actually realized by the Indian assessee from the transaction with its foreign AE which is compared with that of the comparables. There can he no question of substituting the profit realized by the Indian enterprise from its foreign AE with the profit realized by the foreign AE from the ultimate customers for the purposes of determining the ALP of the international transaction of the Indian enterprise with its foreign AE. The scope of TP adjustment under the Indian taxation law is limited to transaction between the assessee and its foreign AE. It can neither call for also roping in and taxing in India the margin from the activities undertaken by the foreign AE nor can it curtail the profit arising out of transaction between the Indian and foreign AE at arm s length. The contention of the Id. AR in considering the profit of the foreign AE as profit A for the purposes of comparison with profit of comparables, being profit B , to determine the ALP of transaction between the assessee and its foreign AE, mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 92 read with section 92C it is crystal clear that the ALP is to be determined by any one of the prescribed methods, which is most appropriate under the facts of the case. It is only the choice of one of the prescribed methods which has been left to the assessee or the authorities. It is neither open to the assessee nor the TP0 to discard the prescribed methods and invent a new method or apply any other yardstick for determining the ALP. Coming hack to the factual context prevailing before us, it is noticed that the Id. AR is accentuating on considering the overall profit of the group as a whole for the determination of the ALP in respect of the international transactions, which course of action has not been prescribed by the Act or rules under any of the methods governing the assessment year under consideration. As the argument advanced by the Id. AR that the profit of the group of AEs should be kept in view and in no case the TP adjustment should have the effect of breaching the overall profit earned by all the AEs taken as one unit, has no statutory mandate and is not stipulated under any of the prescribed methods. As such, the same is liable to he jettisoned as sans meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in subsequent years and should be followed. From the above decisions, it follows that a delicate balance needs to he maintained between the principle of consistency and the rule of res judicata depending upon the facts and the governing legal position prevailing in each ease. At the same time, we want to highlight that the doctrine of estoppel together with its exceptions cannot be ignored. It is trite that there can he no estoppel against the provisions of the Act or the binding interpretation given to such provisions by the judicial forums. This rule has been cited with approval by several courts including the Hon ble Supreme Court in CIT vs. V. MR.P Firm (1965) 56 ITR 67(SC). Where the facts of a case prima facie show that the authorities took a clearly incorrect view on the provisions of the Act in an earlier year, whether favouring the assessee or the Revenue, it cannot be argued in the subsequent year that the same incorrect approach should be repeated. The Hon ble Delhi Court in CWT Vs Meattles (P) Ltd. (1984) 156 ITR 569 (Del) has held that the Revenue authorities cannot be stopped from taking a correct view of statutory provisions in a later year. 16.3 We have el ..... X X X X Extracts X X X X X X X X Extracts X X X X
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