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TMI Blog2014 (11) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be rejected. No such reason has been given except stating that either the segmental results are unaudited or they have been prepared later on or for the purpose of TP study. Taking into account these facts and submissions which are supported by the case laws relied upon by Ld. AR, we are of the opinion that it would meet the interest of justice if the matter is restored back to the file of AO/TPO with a direction to re-determine the ALP of these international transaction separately after verifying the segmental results of the assessee. Needless to observe that in the whole process of re-determination of ALP with regard to impugned transactions, the assessee will be provided with reasonable opportunity of hearing and placing evidence on record to support its case. After re-determination of ALP of the impugned international transaction in the manner described above, Ld. AO/TPO will give appropriate relief as per proviso to section 92C(2) as it is applicable for the year under consideration after giving the assessee a reasonable opportunity of hearing. - SHRI I.P. BANSAL, JM AND RAJENDRA, AM For the Appellant : S/Shri Kanchan Kaushal, Dhanesh Bafna, Aliasgar Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant s international transactions; and h. denying the working capital adjustment and other economic adjustments to the Appellant 2) On the facts and circumstances of the case, and in law, the learned AO be directed to grant the benefit of +/- 5% range as per proviso to Section 92C(2) of the Act. 3) On the facts and circumstances of the case, and in law, the Learned AO erred in granting Minimum Alternate Tax credit u/s 115JAA of the Act. 4) On the facts and circumstances of the case, and in law, the Learned AO erred in not granting credit of Rs. 41,112/- (Rs. 38,790/- and Rs. 2,322/-) being the amount recovered in the intimation u/s. 143(1) of the Act for Assessment Year 2010-11. 5) On the facts and circumstances of the case, and in law, the Learned AO erred in levying interest of Rs. 13,964/- u/s 220(2) of the Act. 6) On the facts and circumstances of the case, and in law, the Learned AO erred in computing interest u/s 234B and 234C of the Act. 2. During the course of hearing Ld. AR pressed only Ground-1 (b) to (e) and consequential ground No. 2. 3. As per TP report filed by the assessee copy of which is placed at page 35 to 80 of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover but the assessee. failed to demonstrate whether the same were verifiable. The direct expenses are claimed to be on the actual basis but in view of the segmental accounts being unaudited there is no way to determine the accuracy of such accounts. Therefore, the same are rejected and the entity level PLI will be used for determining the ALP. 2. The functions performed by the assessee for third party (with Cable and Wireless UK) for the purpose of internal TNMM are quite different from those it performs for its AE. Therefore, the internal TNMM is rejected. 3.3 Thereafter by taking above transactions together which are mentioned at Sl. No.1 2 the TPO selected 21 comparables and arithmetic mean of these comparables was arrived 28.57%. Applying the same he worked out TP adjustment of Rs. 12,76,01,546/-. 3.4 It may also be mentioned here that during the course of hearing before TPO the assessee inter-alia other submissions has also submitted two letters which are dated 21/09/2011 and 05/10/2011, copies of which are filed in the paper book at pages 150 to 151 and 152 to 193 respectively. With the letter dated 21/09/2011 the assessee submitted the basis of allocation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and Loss Account (Amount in INR) Computation of Arm s Length Price (Amount in INR) Service Income 178,082,176 181,191,160 Total Cost (TC) 158,550,193 158,550,193 Operating Profit (OP) 19,531,983 22,640,968 OP/ TC 12.32% 14.28% Arm s length price 181,191,160 Transaction value (TV) 178,082,176 Application of the range-TVx1.05 186,986,285 Application of the range TV x 0.95 169,178,067 Since the arm s length price of network management services of the assessee is within the 5% range of transaction value available as per proviso to Section 92C(2) of the Act, the international transaction vis- -vis network management services meets the arm s length standard required under the Indian transfer pricing regulations. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered by the assessee together on the basis of internal comparables of non-AE transactions by their functional nature are different and distinct. To demonstrate so he has submitted before us the functional analysis of these transactions as under: a. Communication network operations and engineering services (NMS) -Rs. 17,80,82,176. The activities rendered under this head are as follows : i. Network Operation Related - There are broadly three sets of activities tinder network operations that AEs outsourced to TCTSL. These are - - Customer Support - To provide support to global clients in terms of complaint management, first line analysis, event notification and service modification requests, etc. - Global provisioning - To cater to post sales provisioning of the service layer for customers (say, new orders) in terms of toll free circuits, TDM voice and wireless orders, etc. - Network Operation Centre (NOC) - To monitor and manage the global IP, voice and transport network for AEs and its global customers. It includes activities related to fault and traffic management, customer configuration, ii. Network Engineering related - TCTSL would carry out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any error in the segmental audited accounts submitted by the assessee except stating that the details are not verifiable which is contrary to the legal proposition laid down in aforementioned decisions. It was further submitted by Ld. AR that in this view of the situation, it would meet the interest of justice if the matter is restored back to the file of TPO/DRP with a direction to verify and examine the segmental accounts submitted by the assessee and also to determine the nature of the transactions which functionally are different from each other and by taking results of segmental accounts a fresh comparison should be made on the basis of segmental activities. Thus, it was pleaded by Ld. AR that an appropriate relief may be provided to the assessee. 6. On the other hand, Ld. DR supported the order passed by TPO as well as by Ld. DRP. He submitted that before TPO assessee did not submit audited segmental account, therefore, TPO was right in rejecting such submission of the assessee. Ld. DR also submitted that Ld. DRP also did not commit any error in rejecting the submissions of the assessee for the reasons stated in the order of Ld. DRP. 7. We have heard both the parties an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO/TPO with a direction to re-determine the ALP of these international transaction separately after verifying the segmental results of the assessee. Needless to observe that in the whole process of re-determination of ALP with regard to impugned transactions, the assessee will be provided with reasonable opportunity of hearing and placing evidence on record to support its case. With these directions the issues contested before us in Ground No.1(b) to (e) are restored to the file of AO/TPO. Since, other grounds in Ground No.1 were not pressed, they are dismissed being not pressed. 8. Apropos Ground No.2, we may mention that after re-determination of ALP of the impugned international transaction in the manner described above, Ld. AO/TPO will give appropriate relief as per proviso to section 92C(2) as it is applicable for the year under consideration after giving the assessee a reasonable opportunity of hearing. This ground is also considered to be allowed for statistical purposes. 9. Apropos Ground No. 3, 4, 5 6 it may be mentioned here that during the course of hearing it was observed by the Bench that since neither AO nor Ld. CIT(A) have specifically discussed these issues, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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