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TMI Blog2020 (10) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 21.12.2012 and holding that CUP Method was already decided to be the only appropriate method, whereas the Assessee has been contending otherwise throughout, and is aggrieved by the adoption of the CUP method and was pressing of TNM Method. Assessee is again in the second round of appeals before the learned Tribunal against the orders passed by the authorities below on the remand made by the previous order dated 21.12.2012. As expected of the learned Tribunal also to realize the consequences of an open remand made or a remand made to the authorities below only for re-computation with the appropriateness of the method decided finally at its own end. The multiplicity of the litigation and rounds of appeal, what we have described as a shuttle game, should have been seen by the learned Tribunal and therefore, we expect at least from now on, the learned Tribunal will decide on the issue of the appropriateness of the method for TP adjustments, while deciding all the pending appeals before it, as far as this Assessee is concerned and also other Assessee by recording its own reasons and taking into account the relevant evidence and materials on record, and if necessary, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.11.2016. Against the said order, the appellant / assessee had filed Tax Case Appeal before this Court in TCA No.739 of 2017 raising the following substantial questions of law:- '1.Whether the finding of the DRP and the Tribunal that the decision of the Tribunal in the appellants' own case for the earlier years has held that CUP method was appropriately used in preference to TNMM is perverse? 2. Whether the Tribunal was right in holding that transactional net margin method should not be applied for benchmarking/ computing arms length price in respect of 0.88% of a transaction when 99.12% of the international transaction forming part of same class have been subject to transactional net margin method under Rule 10B(1)(e) read with Rule 10C? 3. Whether the application of CUP method under Rule 10B(1)(a) is correct when the comparative data in relation to the price for exports to AE as against a hon-AE is very different because of the market, mode of delivery, geography location and volume of sale? 4. Whether the TPO can arrive at NIL arms length price without even rejecting the arms length price arrived by the Appellant and without even mandatorily applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the decision of the T ribunal is clear in that C UP method was appropriately used in preference to TNM method. The only modification suggested by the Tribunal was to consider the external comparables also and this direction was given noting, the submissions of the assessee that external comparables could be placed 4/22 Dt.14.09.2020 in T.C.A.No.739 OF 2017 M/s. Madura Coats Pvt Ltd. vs. Dy.Commr. Of I.T. on record for determining the Arms Length Price under CUP method, if it was given an opportunity. The above decision was available with the DRP when it was dealing with the matter for the impugned assessment year. That assessee could not furnish any external comparable has been specifically noted by the ld. DRP at para 2.7 of its order. Hence, in our opinion assessee cannot say that ld. DRP had not taken proper cognizance of the Tribunal order for the earlier years. Apart from this, what we find is that there were forty nine number of items in which internal comparables which were totally uncontrolled were readily available. No doubt, it is true that Pune bench in the case of Amphenol Interconnect India P. Ltd (supra) held that CUP method was not appropriate for evaluatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng by the ld. DRP that assessee was catering to Asian countries and Associated Enterprise were located in Sri Lanka, Mauritius, Pakistan and Egypt and Non Associated Enterprises were located in Srilanka, Bangladesh, Malawi etc with not much of a geographical difference. Viz-a-viz volume discount mentioned by the ld. Authorised Representative, ld. DRP had given a clear finding that there were substantial sales in alteast in five items falling in the table appearing in para 2.10 of its order. Considering all these, we are t he opinion that lower authorities were justified in selecting CUP method over TNM method. However, as mentioned by us, computation of the Arms Length Price adjustment required on forty nine number of items mentioned in the order of TPO requires to be reworked, so that negative amounts are also considered for aggregation and for working out the Arms Length Price adjustment that is required. For this limited purpose of recalculation, we remit the issue back to the file of the Assessing Officer/TPO. 4. The second issue raised before us, arising from the same order of the learned Tribunal, is with regard to some commission paid to M/s.The Central A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court that ld. TPO should not question how to conduct the business. These judgments cannot in our opinion be extra-polated to mean that there rested no onus on the assessee, to show the business purpose for which payments were effected by it. Commercial necessity of a payment is something which is well within the power of an assessee to decide considering its business interest. However, it cannot say that such commercial necessity or expediency has to be presumed. Assessee was bound to show the agency services rendered by M/s. TCA which it failed to do. Mere raising of bills cannot give rise to presumption of rendering any services. As already noted by us the orders on which commission was paid was only on items sold to group concerns and not to any third parties. There is much strength in the argument of the ld. Departmental Representative that in such a situation onus of the assessee was much more than in a scenario where orders on which commission was received were on supplies to third parties. Assessee had failed to discharge this. Consolidation of fragmented orders could have been done by the assessee itself and did not require services of an Associated Enterprise or kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A)/DRP shall also take into consideration the different market conditions. The market conditions does not mean geographical condition alone but also includes the size of the market, demand and other relevant factors influencing the market conditions as a whole. 13. For the Assessment Year 2003-04 and 2004-05 the Revenue has raised additional ground of export incentive provide to the Assessee under Section 80HHC. The D.R. Has fairly conceded that now this issue is squarely covered in favour of the Assessee by the judgment of the Hon'ble Hon'ble Supreme Court of India in the case of Topman Exports vs. CIT, reported as 342 ITR 49(SC). Accordingly, we dismiss this ground of appeal of the Revenue. 7. The learned counsel for the Assessee, Mr.Sandeep Bagmar, therefore, submitted that there was no clear finding of the learned Tribunal in the previous order dated 31 December 2012, for the previous assessment years, that only CUP Method should be adopted for TP adjustment and not TNM Method, which the Assessee wanted to adopt, looking at the nature of business. The Assessee also undertook before the learned Tribunal that it would supply the data relating to other externa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure', on the basis of similar evidence produced before the authorities below, but the learned Tribunal, for the first time, for the AY 2009-10, has disallowed the same on its own wrong assumption that no such evidence of actual agency services was available on record. He therefore submitted that even this issue deserves to be remanded back to the learned Tribunal for deciding the same on the basis of available materials and evidence on record, as the Assessee had incurred those expenditure actually and there was commercial expediency for incurring the same and such a decision about commercial expediency lies only with the Assessee and not with the Assessing Authority. 11. On the said issue, Mr.Swaminathan submitted that the Tribunal may be permitted to look into the past history of the Assessee and depending on the materials and evidence on record, the Tribunal may decide the issue afresh, in accordance with law. 12. We have heard the learned counsel on both sides and perused the materials on record. 13. While we make it clear that in our opinion, which method will be most appropriate to be adopted for TP Adjustment by the Authorities of the Department, is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternational transactions u/s 92C of the Act, read with relevant Rules framed under the provisions of the Act, as such huge delays upon remand/ reassessment or re-adjudication, and then again, second round of appeal before the Tribunal, unnecessarily projects a very bad image of delays by the Revenue Department on the international scenario, where the expectations of the Revenue Department in India is of expeditious adjudication and not a remand and re-adjudication and then second round of appeals, as if it was a shuttle game between the Assessee and the Revenue Authorities. With the Revenue Authorities as well as the final fact finding Appellate Forum, are two places where the issues like this are expected to achieve a finality. 17. We do not want to make any kind of adverse comments in this regard, having high respect for a final fact finding body like the Income Tax Appellate Tribunal, under the Income Tax Act, but we leave it for the learned Tribunal, with a request to decide the issue on merits, on the issues of TP Adjustments, giving a finality on the basis of materials and evidence before it. It is needless to say that the learned Tribunal itself enjoys the power of a C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appropriateness of the method for TP adjustments, while deciding all the pending appeals before it, as far as this Assessee is concerned and also other Assessees by recording its own reasons and taking into account the relevant evidence and materials on record, and if necessary, by calling additional evidence before it, with regard to the external comparables, from both the sides. We do not expect a further open remand by the learned Tribunal on the said issue any more because such decision of the learned Tribunal is likely to affect not only the years under consideration before the learned Tribunal but also the future assessment years, as the Assessee continues to remain in the same business for such future years also. 19. As far as the second question is concerned about allowing of the commission paid to M/s.The Central Agency as 'Business Expenditure', we leave it free for the Tribunal to look into the past history of the Assessee about the allowability of the said expenditure, and as such expenditure for the previous years has been consistently allowed by the Revenue Authority below, and there was no contrary finding by the learned Tribunal for the previous y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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