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TMI Blog2016 (5) TMI 1516X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income declaring income of Rs. 2,68,67,560/-. As the assessee had entered into international transactions with its AE, therefore, the matter was referred to the TPO by the AO, who proposed an increase of Rs. 2,50,54,274/- in the income of the assessee. The AO has pointed out that Hon'ble Delhi High Court had quashed the order of TPO on 19.12.2008 and as per the directions the order of TPO was again passed on 26.12.2008 and the same increase in the total income was made. Ld. CIT(A) while partly allowing the assessee's appeal, deleted the addition made on account of TP adjustment. Being aggrieved, the department is in appeal before us and has taken following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the learned CIT(Appeals), New Delhi has erred in deleting the addition of Rs. 2,50,54,274/- made by the AO on account of TPO adjustments. 2. The Ld. CIT(A) erred on facts by applying the TNMM method as against the CUP method correctly adopted by the TPO & the AO as per OECD guidelines. The ld. CIT(A) has also ignored the findings recorded by the TPO." 3. At the outset ld senior counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sier de justice"); "- ...... . c) notarial acts;" 6. Ld. counsel has also filed a note on the said Article which is reproduced hereunder: "Purpose of the Convention The Apostille Convention facilitates the circulation of public documents executed in one State party to the Convention and to be produced in another State party to the Convention." It does so by replacing the cumbersome and often costly formalities of a full legalisation process (chain certification) with the mere issuance of an Apostille (also called Apostille Certificate or Certificate). The Convention has also proven to be very useful for States that do not require foreign public documents to be legalised or that do not know the concept of legalisation in their domestic law: the citizens in these States enjoy the benefits of the Convention whenever they intend to produce a domestic public document in another State party which, for its part, requires authentication of the document concerned. Public documents The Convention applies only to public documents. These are documents emanating from an authority or official connected with a court or tribunal of the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finished goods from KDDL for resale. Taratec SA acts as an agent catering to the requirements of KDDL for purchase of raw material/ components and for export sales of finished goods." 10. The assessee had undertaken following international transactions: S.No. International Transactions Method used to justify the arms' length price Value (in Rs.) 1 Purchase/import of raw material. TNMM 2,932,229 2 Sale of finished goods TNMM 55,961,550 3 Commission provided to AE TNMM 15,944,254 4 Handling charges provided to AE CUP 2,214,955 5 Payment of interest on loan CUP 110,379 11. The assessee in its TP study had applied TNMM method as the most appropriate method for bench marking the international transaction viz. purchase of raw-material, sale of finished goods, payment of commission, wherein Taratec SA acted as a mere intermediary reseller or agent. As regards other transactions, the assessee had applied CUP as the most appropriate method for the bench marking. 12. The operating results of the assessee were computed at 11.40% which was greater than 0.189% of the trading transactions with unrelated parties. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 25,054,274/- The Assessee(a+b) 16. At present as we are deciding on the admissibility of additional evidence, we are not going into details of various issues and are confining ourselves to the issue of commission paid by assessee, the ALP of which has been determined at NIL by ld. TPO. The facts in this regard are that during the FY 2004-05, the assessee had purchased brass circles/ blanks for manufacture of watch dials etc. from Taratec SA and also sold watch dials etc. to the same AE. The assessee had also sold goods to unrelated customers. The assessee's claim was that the sale of goods to unrelated customers was through Taratec SA on which commission was paid to the AE. Thus, the assessee was involved in both direct and indirect sale of finished goods, such as watch dials, strips and other parts of watches to its AE as well as unrelated customers in Switzerland. Total sales aggregating to Rs. 559.61 lakhs in value were directly made to Taratec SA and Rs. 1088.68 lakhs in value were sold to unrelated customers through Taratec SA. The assessee's claim was that it was in the business of watch components and focusing on export to Switzerland a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional evidence. 20. After going through the decision in the case of Hughes Systique (supra), we are of the opinion that it would be in the interest of justice to admit the additional evidence filed by assessee in the form of affidavit because this affidavit has come in possession of assessee after the proceedings were over for both the assessment years in question. We, therefore, set aside the order of ld. CIT(A) for AY 2005-06 and restore the matter to the file of ld. AO/TPO to decide the ALP of the commission paid by assessee after taking into consideration the affidavit of Ernst Huber, Director of Taratec SA. Accordingly, department's appeal for AY 2005-06 stands allowed for statistical purposes. 21. Now coming to the assessee's appeal for AY 2006-07, as the facts are identical except that ld. DRP has decided the issue against assessee, we admit the additional evidence filed by assessee and restore the matter to the file of ld. AO/ TPO to decide in terms of our observations for A.Y. 2005-06. 22. The grounds relating to TP issues raised by assessee are allowed for statistical purposes. 23. As far as corporate issues raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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