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TMI Blog2019 (10) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany. 2] The learned AO / DRP erred in making an adjustment of Rs. 2,96,64,875/- by adopting the Comparable Uncontrolled Price (CUP) Method for determining the Arm's Length Price (ALP) in respect of some of the international transactions pertaining to export of finished goods. 2.1] The learned AO / DRP erred in holding that the CUP method was the most appropriate method for determining the ALP in respect of some of the transactions of export of goods merely on the basis that the data pertaining to similar transactions with third parties were available. 2.2] The learned AO / DRP failed to appreciate that there were various differences on account of functional, transactional, geographical, volume, timing, business risks, etc. in respect of alleged comparable transactions which ought to have been considered and since suitable adjustments were not possible, there was no reason to adopt the CUP method for determining the ALP. 2.3] The learned AO / DRP failed to appreciate that the Transactional Net Margin Method ('TNMM') was the most appropriate method for determining the ALP in respect of export of goods to AE and the net profit margin of the assessee was compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the learned TPO / DRP failed to appreciate that in respect of certain products imported by the assessee, it had paid lesser price to the AE as compared to non AE and hence, this amount should have been adjusted and only the net amount could be added. 6] The learned AO / DRP erred in not appreciating that in the earlier years, Hon'ble ITAT had rejected the CUP method as the most appropriate method for determining the ALP of the international transactions of export of finished goods and import of goods and since all the facts are similar in this year, there was no reason to adopt the CUP method in this year for determining the ALP. 7] The learned AO / DRP has erred in disallowing an amount of Rs. 33,67,695/-, being a claim of additional depreciation u/s. 32(1)(iia) of the Act on Tooling, without appreciating that Tooling was integral part of 'Plants & Machinery' and hence, entitled for additional depreciation u/s. 32(1)(iia). 7.1] The learned AO / DRP erred in not appreciating that the various assets like tools, dyes, moulds castings etc. which formed part of Tooling are part and parcel of 'Plant and Machinery' owned by the appellant company and simply be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court had affirmed the aggregation approach applied by the assessee and also in holding that TNMM method was most appropriate method. He then, pointed out that in case grounds of appeal No.2 and 3 are decided in favour of assessee, then grounds of appeal raised vide grounds of appeal No.4 to 6 would become academic in nature. Vis-à-vis ground of appeal No.7, it was case of assessee that it was engaged in the manufacture of connectors and had purchased certain tools, which admittedly were part of plant & machinery. The assessee had sought additional depreciation under section 32(1)(iia) of the Act. However, the Assessing Officer had disallowed the claim of assessee. He further pointed out that while disallowing the same, the Assessing Officer had followed the decision in earlier year i.e. assessment year 2011-12. He then, referred to the order of CIT(A) relating to assessment year 2011-12 and pointed out that the claim of additional depreciation on tools was allowed by him holding it to be same as in the case of plant & machinery. The CIT(A) also referred to the amendment by Finance Act, 2005 and pointed out that there was no requirement of any expansion for allowing the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment of Rs. 81,531/-. 7. We find that similar issue has arisen in the case of assessee starting from assessment year 2005-06. The Tribunal vide order dated 06.11.2015 in ITA No.449/PN/2014, relating to assessment year 2009-10 on similar issue had referred to the order of Tribunal in earlier years relating to assessment years 2006-07 to 2008-09 decided vide consolidated order dated 30.05.2014 and had extensively deliberated upon the issue whether CUP method is to be applied for benchmarking international transactions of assessee and / or whether the assessee was correct in aggregating the transactions under the head 'Manufacturing Segment' and by applying TNMM method on aggregation basis compared the margins with other comparables picked up by the assessee. 8. Similar principle was also applied by the Tribunal in assessment year 2005-06 in ITA No.678/PN/2013, order dated 27.04.2015. The Tribunal while deciding the appeal of assessee in assessment year 2008-09 has referred to the findings of Tribunal in earlier year in paras 13 and 14 at pages 8 to 17 and had held that since the issue was identical to the issue decided in earlier years and following the same parity of reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appropriate method. Further, the Hon'ble High Court has applied similar reasoning while deciding appeal of assessee relating to assessment year 2005-06 in ITA No.1388/2015, vide judgment dated 18.04.2018 and the appeal of Revenue has been dismissed. In the totality of the above said facts and circumstances, where the issue stands covered by the order of jurisdictional High Court in the case of assessee itself, there is no merit in the orders of authorities below in making aforesaid transfer pricing adjustment in the hands of assessee both with respect to exports to associated enterprises and with respect to imports from associated enterprises. It may be pointed out that majority of transactions have been accepted to be at arm's length price by the TPO by applying TNMM method, only in respect of few transactions, the TPO had applied CUP method. There is no merit in the order of TPO in this regard and reversing the final order passed by Assessing Officer, we allow the claim of assessee and direct the Assessing Officer to delete the transfer pricing adjustment made in the hands of assessee. The grounds of appeal No.2 and 3 are thus, allowed. The grounds of appeal No.4 to 6 are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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