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TMI Blog2018 (10) TMI 1981X X X X Extracts X X X X X X X X Extracts X X X X ..... stency should have been adopted by the authorities below as held in the case of Racold Thermo Ltd. [ 2015 (10) TMI 1747 - ITAT PUNE] The decision rendered in Fritidsresor Tours and Travels India P. Ltd [ 2015 (11) TMI 1884 - ITAT DELHI] is also applicable to the present case, as in that case, the assessee was engaged in the same line of business and CPM has been accepted by the Co-ordinate Bench of Tribunal, as most appropriate method, as reproduced above. Respectfully following the above decisions, we allow the appeal of the assessee. - ITA No. 6722/Del/2015 - - - Dated:- 24-10-2018 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For the Appellant : S/Sh. R.S. Singhvi Satyajeet Goel For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to proper allocation of costs and use of comparables. 2. The only issue involved in this appeal is in respect of adoption of appropriate method for determining the ALP of international transactions. The brief facts of the case are that the assessee filed return of income on 27.09.2011 declaring a loss of Rs.1,24,26,869/-. The case was selected for scrutiny. In the scrutiny proceedings, it was observed that the assessee had undertaken international transactions of Rs.16,02,26,577/-. The assessee had adopted CPM method as the most appropriate method for determination of PLI by GP/OC. The assessee company is engaged in the business of sale of packages for leisure travel where two or more components of travel such as flights, hotels, car r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. Accordingly, the Assessing Officer made the final order by making upward adjustment of Rs.3,01,29,754/-. Aggrieved, the assessee is in appeal before the Tribunal. 3. The ld. AR of the assessee submitted that the TPO has wrongly not accepted the CPM as adopted by the assessee on year to year basis. The facts are similar in the preceding and subsequent years and he placed before us assessment orders for preceding assessment year 2010-11 and succeeding assessment year 2013-14 in which CPM has been accepted by the Revenue as most appropriate method for determining ALP. Therefore, CPM should be accepted by the Revenue. He also relied on the following case laws, which are placed in the paper book : (i). CIT vs. L oreal India P. Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has accepted the method adopted by the assessee for benchmarking its international transactions with its associate enterprises, in the absence of any reasons brought on record, there is no merit in deviating or taking stand contrary to the stand accepted in both the preceding and succeeding years, while benchmarking the international transactions in the hands of the assessee. (iii). DCIT v. Fritidsresor Tours and Travels India P. Ltd., 157 ITD 495 (Delhi-Trib) The second reason for not countenancing the impugned order is that the Commissioner (Appeals) has accepted the yardstick of comparing the assessee s ratio of 'Net profit to Total costs' with the similar ratio of two comparables. Ratio of 'Net profit to total costs&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational transactions is at arm's length. In common parlance, the term 'Net profit' refers to the profit of the assessee after depreciation, interest and taxes. But in the context of TNMM, this term restricts itself to 'Net operating profit', which means the profit from business activity after considering all direct and indirect costs and excluding non operating incomes and expenses. To put it simply, it refers to the determination of profit by ignoring non-operating costs and revenues and also extraordinary and exceptional items which are nonrecurring in nature. The logic in considering net operating profit margin is simple that the items of income/expense which are not concerned with the business operation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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