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TMI Blog2024 (2) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... justment. We are therefore of the considered view that it would be deemed fit to direct the Ld. AO/ Ld.TPO to consider all the directions of the Ld. DRP while drafting the final assessment order. Accordingly, this legal ground raised by the assessee is partly allowed for statistical purposes. Selection of MAM [ Most appropriate method] - changing the method from TNMM to CUP which was rejected by the Ld. DRP - HELD THAT:- The principle of Res Judicata is not applicable to tax proceedings but at the same time, when there is no change in the facts, then it is the requirement of law that consistency should be maintained and the method will be adopted by the assessee for benchmarking its international transaction should not be disturbed. The assessee has adopted the TNMM during the earlier and subsequent assessment years as Most Appropriate Method. In the absence of any reasoning brought on record, there is no merit in deviating or taking a stand contrary to the accepted method in both the preceding and succeeding years. We therefore find merit in the arguments of the Ld. DR and in the present case, since there is no change in the facts and circumstances which merits deviating fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Briefly stated the facts of the case are that the assessee, M/s. Teejay India Private Limited (formerly known as M/s. Ocean India Private Limited) is engaged in the business of manufacturing and exporting of knitted fabrics / apparels at Brandix APSEZ, Atchutapuram, Visakhapatnam. The assessee filed its return of income for the AY 2012-13 admitting a loss of Rs. 38,59,95,609/- on 28/09/2012. Subsequently, the return was selected for scrutiny under CASS and notice u/s. 143(2) was issued and served on the assessee on 30/08/2013. Subsequently, due to change in the incumbent another notice u/s. 143(2) r.w.s 129 of the Act was issued on 16/09/2015. In response to the notices, the assessee s Authorized Representative appeared from time to time and furnished the information called for. The Ld. AO during the course of the assessment proceedings found as per the Form 3CEB that the assessee-company has entered in to international transactions with its Associated Enterprises [AEs] as detailed below: Nature of transaction Amount (Rs) Export of finished goods 32,00,34,704 Receipt towards sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization of capacity by the assessee to eliminate the affect of difference between the assessee and the comparable companies. Further, the assessee also raised objections with regard to treatment of certain expenditure as operating or non-operating in nature. Further, the assessee also objected that the Ld. TPO has erred in not providing appropriate adjustment towards differences on account of working capital between the assessee and the comparable companies. Considering the above submissions, the Ld. DRP partly rejected the objections raised by the assessee and partly directed the Ld. AO / TPO to compute the Arithmetic Mean as directed in DRP s directions dated 31/10/2016. Considering the directions of the Ld. DRP, the Ld. AO passed the final assessment order on 5/12/2016 confirming the adjustment made by the Ld. TPO for Rs. 12,88,76,471/-. Aggrieved by the final assessment order of the Ld. AO, the assessee is in appeal before us by raising the following grounds of appeal: 1. That the order of the Ld. AO in relation to AY 2012-13 to the extent prejudicial to the appellant, is arbitrary, contrary to law, facts and circumstances of the case and liable to be quashed. 2. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.9. That the Ld. AO / TPO erred in not considering the comparable uncontrolled price (CUP) analysis submitted before the Hon ble DRP substantiating that the losses incurred be attributed to the extraordinary circumstances during the year; 3.10. The appellant craves to plead before this Hon ble Tribunal that if the Transactional Net Margin Method (TNMM) is not applied as the most appropriate method for testing the arm s length nature of the international transactions entered into by the appellant with its AEs after considering the appropriate adjustments claimed by the appellant with regards to the various peculiar economic conditions, the Ld. AO / TPO ought to apply the CUP method given the availability of similar products sold to the associated enterprises and third parties. The appellant craves to plead to include the CUP details furnished along with the additional grounds of appeal providing the international transactions of the appellant relating to manufacturing of fabric meeting the arm s length standard. 4. Grounds No.1 2 are general in nature and therefore they need no adjudication. 5. With respect to additional Ground No.3.8 , the assessee has raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that it has requested for changing the method from TNMM to CUP which was rejected by the Ld. DRP. The Ld. AR submitted that for the AY 2011-12, this Bench of the Tribunal has accepted the CUP method as Most Appropriate Method in the assessee s own case. The Ld. AR further submitted that as per the OECD guidelines, the assessee is allowed to change the Method if it is considered as an appropriate method. In this connection, the Ld. AR relied on the decision of the Hon ble Delhi High Court in the case of Matrix Cellular International Services Private Limited (ITA 484/2017). The Ld. AR further submitted that the rate per unit of the fabric sold to AEs is Rs. 3.81 as against the average rate per unit sold to Non-AEs stood at Rs. 3.56. The Ld. AR further submitted that the Revenue has not appealed against the Tribunal order for the AY 2011-12 and hence the issue is settled and therefore adopting the CUP Method for the impugned assessment year is valid. Per contra, the Ld. DR submitted that the assessee has selected TNMM as Most Appropriate Method in its TP study report. The Ld. DR also referred to the assessee s own case in ITA No. 154 155/Viz/2022 wherein under similar fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the objections raised before the Ld. DRP were not considered and rejected by the Ld. DRP. He therefore pleaded that appropriate adjustment shall be made with respect these grounds. Per contra, the Ld. DR relied on the order of the Ld. DRP and the Ld. Revenue Authorities. 10. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. On perusal of the directions of the Ld. DRP dated 31/10/2016, we find that the Ld. DRP has observed and rejected the objections raised by the assessee with respect to multiple / prior year data and comparable companies while determining the ALP in relation to the assessee that the assessee has failed to establish that the use of data of earlier FYs could result in more reliable results. Further, the Ld. DRP also relied on various judicial pronouncements and Rule-10B(iv) of the IT Rules, 1962. The assessee also failed to produce any data to establish its objections raised before the Ld. DRP, even before us. Further, the Ld. DRP also rejected the objections of the assessee with regard to peculiar economic conditions faced by the assessee by observing that any such differ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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