TaxTMI 
TaxTMI 
2011 (9) TMI 196
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....interest charged u/s 234B and s. 234D of the Act be deleted. 2.1 Charging of interest u/s 234B of the Act is mandatory and consequential in nature and, thus, this ground is not maintainable and, accordingly, dismissed as not maintainable. The levy of interest u/s 234D is a legal ground which is chargeable for the AY 2006-07, following the finding of the Hon'ble Delhi E Special Bench in the case of ITO v. Ekta Promoters P. Ltd. reported in [2008] 113 ITD 719. It is ordered accordingly. 2.2 The assessee company's assertions that the lower authorities erred in passing the impugned orders - (i) without considering all the submissions and/or without appreciating properly the facts and circumstances of the case and the law applicable; (ii) in a mechanical manner and without application of mind; (iii) at the fag end of the limitation period; and (iv) without affording a proper opportunity of being heard to the assessee are found to be wanting as the records testify that the assessee company was provided with as many as eighteen opportunities during the course of assessment proceedings by the Ld. AO and at a glance at the impugned orders of the L....
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....and, accordingly, directed the AO to make the adjustment on the basis of the revised working of the TPO at Rs. 222.13 crores (260.63 crores - ALP of Rs.38.50 crores). The AO passed the final order on 20.10.2010 in pursuance of the directions of the DRP dated 30-9-2010. 6. Agitated, the assessee has come up with the present appeal against the adjustment made by the TPO which was upheld by the DRP to the valuation of IPR sold by the assessee to its AE - Tally Dubai - and incorporated by the AO in his final order cited supra. 6.1 During the course of hearing, the submissions made by the Ld. A.R are summarized as under: (1) The assessee challenges the legality of reference to TPO the AO without forming 'a considered opinion': The assessee challenges the legality of the reference made by the AO to the TPO as according to the Ld. AR, a reference has been made by the AO to the TPO without forming "a considered opinion" on the issues under reference. The AO referred the matter to TPO, following CBDT Instruction No. 3 of 2003 dated 20/5/2003. The said instruction provides that the AO after forming prima-facie belief on the details a....
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....ear, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the Commissioner, refer the computation of the arm's length price in relation to the said international transaction under section 92C to the Transfer Pricing Officer. (2) ........................... (3) ........................... (4) On receipt of the order under sub-section (3), the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) of section 92C in conformity with the arm's length price as so determined by the Transfer Pricing Officer.] (5) ........................... (6) ........................... (7) ........................... Sub-section(4) of section 92CA has been amended by Finance Act, 2007 w.e.f. 1.6.2007 and prior to its substitution, sub-section(4) read as under : "(4) on receipt of the order under sub-section(3), the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) of section 92C having regard to....
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....nt into section 92CA (1). However, it will suffice if the Assessing Officer forms a prima facie opinion that it is necessary and expedient to make such a reference. One possible reason for the absence of such a requirement of formation of a prior considered opinion by the Assessing Officer is that the Transfer Pricing Officer is expected to perform the same exercise as envisaged under : Section 92C (1) to (3) while determining the ALP under section 92CA (3). The latter part of section 92CA(3) unambiguously states that the Assessing Officer shall "by order in writing, determine the arm's length price in relation to the international transaction in accordance with sub-section (3) of the section 92C." It will be pointless to have a duplication of this exercise at two stages one after the other. On the other hand, the scheme is that after the Transfer Pricing Officer determines the ALP the matter revives before the ALP at section 92C(4) stage where, in terms of section 92CA(4) the Assessing Officer will compute the total income "having regard to" the ALP determined by the Transfer Pricing Officer. The two aspects require to be taken note of in this context. The Assessing Officer will....
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....ny misuse of such exercise of discretion can be corrected by way of judicial review by statutory appellate authorities and ultimately the courts. (b) The words "necessary and expedient" occurring in other provisions of the Act and other statutes have been interpreted judicially to admit of a strict construction permitting the power to be used only in the manner and subject to the conditions stipulated in the provision. (c) The words "necessary and expedient" posit the formation of an opinion by the Assessing Officer of the need to make such a reference. However, a reading of section 92C and section 92CA does not indicate that the Assessing Officer is required to form a prior considered opinion after considering all the available materials even before making a reference to the Transfer Pricing Officer. A prima facie opinion would suffice at the stage of making the reference. (d) The Transfer Pricing Officer is expected to perform the same exercise as envisaged under section 92C(1) to (3) while determining the ALP under section 92CA(3). (e) The Assessing Officer is not bound to accept the ALP as determined by the Transfer Pricing Officer.....
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....onsidered opinion before making reference to the TPO. It is, therefore, submitted that the Hon'ble Bench shall ascertain whether the AO has formed a considered opinion before making reference to the TPO u/s.92CA(1) of the Income-tax Act, 1961 and the Commissioner has accorded his approval for the reference after due consideration as the mechanical approval can not be considered to be valid approval under the Act. (2) The TPO followed excess earning method which is not a prescribed method under the Act or Rules: - that the TPO has followed excess earning method and not Comparable Uncontrolled Price Method (CUP) as there was no comparables available with reference to the IPR sold by the Assessee. The Excess Earning Method is part of the Draft guidance not issued by the International Valuation Standard Council in April, 2009, that the TPO determined the ALP following the Excess Earning Method and made adjustment to the sale value of the IPR. However, as per section 92C of the Act the ALP in relation to an international transaction has to be determined with reference to the prescribed method the relevant part of section 92C of the Act. &nb....
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....pplied and value of IPR declared by the assessee shall be accepted as ALP. The CUP presupposes an existence of comparable transaction and in the absence of any such comparable the CUP method cannot be applied for determination of ALP, that there is no other method which can be applied for determination of ALP, the provision relating to determination of ALP can not be applied to the transaction of the assessee. - relies on the ruling of the Supreme Court in the case of CIT v. Official Liquidator, Palai Central Bank Ltd. [150 ITR 544] wherein it was held that if the provision of a particular Act are incapable of its application, the charge of such section fails and the same can not be applied. The Hon'ble Court was dealing with application of provisions contained in Super Profits Tax Act, 1963 in respect of the company in liquidation subsequent to the date of its winding up. The court following its earlier judgment has held as under : "In CIT v. B. C. Srinivasa Setty [1981] 128 ITR 294, this court pointed out that under the scheme of the I. T. Act, 1961, charge of tax will not get attracted unless the case or trans....
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....stimation of future revenues is sales of AY 2005-06, non-consideration of such sales returns grossly inflates the future earnings potential derived from the model adopted by the TPO (iv) Compounded Annual Growth Rate (CAGR) is a function of two variables in a given range, i.e the first and last variable. Values within the given range, i.e. other than the first and last value, do not have a bearing on the CAGR. This being the case, CAGR is not a good metric to measure growth, especially so in the case of the Appellant where growth has been uneven, erratic and also negative in a few years; (v) The choice of CAGR adopted by the learned TPO is whimsical, illogical and wholly unfounded (vi) Useful life of the IPR, which is inextricably linked with technology, has been wrongly estimated by the TPO to be six years whereas in reality, useful life is inarguably less than three years. Inherent flaws in the IPR, which could potentially cripple and further reduce the useful life of the IPR, have not been taken cognizance of by the TPO (vii) The TPO has followed the principles of convenience rather than established and well settled principles in determining the disco....
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....ulated below. Table -3 COMPARISON OF ACTUAL REVENUES WITH TPO'S ESTIMATED REVENUES Assessment year Indian License Revenue Global Revenue TPO's Estimates No. of Times Overvalued 2007-08 18,63,30,924 27,73,70,160 287,19,63,050 10 2008-09 86,98,16,178 99,65,09,130 345,75,56,316 3 2009-10 94,66,53,438 102,48,61,182 416,25,52,049 4 2010-11 91,70,80,310 91,70,80,310 501,12,96,411 5 As can be seen from the above, as per the TPO, the assessee would have cumulative turnover of around Rs. 2,880 crores. As per the TPO in AY 10-11, the appellant would have had Rs. 501 crores of turnovers. In reality the turnover is Rs. 91.70 crores. There is no product company in India which has turnover of 500 crores to 700 crores. The figures being unrealistic are liable to be rejected; that instead of adopting unrealistic projections, the actual sales figure available from the audited financial statements should be adopted. - With respect to appellant's contention that actual sales figure should be adopted, the TPO has contended that to arrive at sale price of IPR ....
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....n this regard, the appellant submits that the sale of Tally licenses is to third parties and not to related parties as contended by the TPO. What is sold by the appellant is IPR. IPR generates license revenues. Therefore to value IPR what needs to be considered is revenue from Tally licensees which are sold to third parties. The other related party transactions have no relevance for this purpose. The situation in AY 2006-07 is similar to situation in all the years considered by the TPO. Therefore this reason of the TPO is baseless. With respect to TPO's contention that the transaction involving IPR took place in this year and therefore current year data is excluded, the appellant submits that since the sale is in current year, it is more so important to consider current year sales. This is also in accordance with provisions of Rule 10B(4) which mandates use of current year data which should be used to estimate future revenues. - that the sales for A. Y. 2005-06 are considered by the TPO at Rs. 198.15 crores. The TPO has considered this year as the base for computing CAGR and future revenues. It can be noticed from the table above that there is a substantia....
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....akes care of all possible adverse effects on future cash flows. - With respect to TPO's contention that sales return have been taken care of, the appellant submits that sales returns have not been reduced from the year to which they pertain.. Therefore the question of same being considered does not arise. Going by TPO's own admission that sales return and that sale of A. Y. 2005-06 should be accordingly adjusted. - With respect to TPO's contention on CAGR, the appellant submits that if CAGR of 90.80% is adopted, the total sales projection as per TPO's method would be Rs. 37,535.55 crores. This reflects the absurdity of the TPO's calculation. CAGR of 90.80% is not possible in real life. This ought to have put the TPO on guard to make further analysis and investigation. Instead the TPO states that he has been lenient. The law of transfer pricing is not based on concession. Benevolence would not lend credence to an order otherwise bereft of legal substance or basis. The order is therefore bad in law. - attention was drawn to Illustrative CAGR chart submitted during the course of hearing. The assessee submits....
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....ar intervals to suit the market requirements. In case newer versions are not released, the demand for the products will fall. What was transferred is IP of the existing products, i.e Tally 7.2. The market for the existing product is not six years. Its life is much shorter. The base product without upgrades and newer versions would not sell in the market. The accounting packages have to continuously evolve. Continuous development is the key to ensure suitability of the package to adapt to changing requirements of the user. Their shelf life is very short. Competition in the field is intense. Obsolescence is fast paced. Client loyalty is fickle. Under the circumstances the IPR of an accounting package has hardly any value. The appellant therefore submits that useful life of IPR should be considered at three years and accordingly future revenues should be estimated for three years. Attention was drawn to the preamble (also extracted by the TPO on page 142 of the TP Order) of the Intellectual Property Sale Agreement with the JV Partner (Global Capital Partners, Dubai - an unrelated party and majority....
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....ter insight into customer and geographical requirements from the market standpoint. The assessee's products targets small and medium businesses. Most of them are run by individuals or small firm. Understanding their individual and multitude requirements and preferences and translating that into product requires deep study. (iii) In the initial years, the Tally product was just an accounting package. To expand the market, various others features were required to be integrated. Medium sized businesses require features like inventory, payroll, e-TDS, service tax returns, cost centres, FBT etc. The customers want one-stop solution for all the requirements. When assessee sold the IP, version 7.2 was in vogue. In the latter versions, the product consisting of FBT, VAT Returns, interest calculations, stock valuation, service tax returns etc feature were released. Adding these features required in depth study of requirements, innovative design and development techniques. The same required funds. The appellant therefore formed a JV with the Global Capital Partners. The JV partners arranged a loan of USD 5,110,500 to the Associated Enterprise of the Appellant. The same was used for de....
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....remium of Bench Mark BSE Index has been considered. In this regard, the appellant submits that it is engaged in the business of software development and comparing return of BSE Index which is composition of companies from various industries is not appropriate. The Risk Premium should be based on return of companies engaged in software industry. Therefore the appellant submits that "Market Return on Capital Employed" from Capitaline Database of software industry (Medium and Small Companies) being 11.61% should be adopted. Rate of Inflation The TPO has considered the average inflation rate at 4%. It is stated that the inflation rate is on the basis of RBI's future projection of inflation (page 167 of the TP Order). There is no further substantiation. In this regard, the appellant submits that the inflation rate as adopted by the TPO is on the lower side. The appellant submits that inflation rate should be considered at 5.45% being average of A.Y. 2005-06 and 2006-07. This is based on Economic Survey 2009-10 Calculation of Working Capital &nb....
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....cumstances of the case, the IPR being transferred at WDV is to be considered as at arm's length. To support its contention, the appellant relies on the Bangalore ITAT decision in the case of Intel Asia Electronic Inc v ADIT 2011-TII-14-ITAT-BANG-TP. In this case, the assessee had sold its PE as a going concern to its AE. The Hon'ble ITAT held that the only reasonable approach would be value the assets by applying the depreciation rates as provided by the Income Tax Act. The relevant extracts are as follows: "12. To break the ice in such a situation, the only reasonable approach would be to value the assets by applying the depreciation rates as provided by the Income Tax Act for it is more dynamic and so schemed to bring in a notional charge on the profit and loss account to arrive at the actual income of an assessee keeping in view of the depletion of the assets". Based on the above, the appellant submits that the IPR being transferred at WDV is to be considered as at arm's length. During the course of hearin....
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....ased on the above changes, the ALP comes to Rs. 14.70 crores Method VI - Following changes made to TPO's computation: Implicit period changed 01.04.99 to 31.01.06 (upto date of sale of IPR). Actual sales (of Tally Dubai) figures for AY 2007-08 to 2010-11 considered. Sales for AY 2011-12 and AY 2012-13 are estimated based on CAGR computed based on AY 2000-01 to AY 2010-11. Changes in working capital as detailed above made. Discount rate considered at 23.14% after considering changes in Beta, Risk Premium and Inflation rate as detailed above. Working capital changes as detailed above. Based on the above changes, the ALP comes to Rs. (12.64) crores - that under every method the arm's length price is less than Rs. 38.50 crores being the price received (Rs. 11.81 crores being sale price + Rs. 26.69 crores amounts received towards improvement till the date of sale). Therefore, the additions made by the TPO are without basis. 6.2 The Ld. A R came up with various case laws in support of hi....
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....that requires the AO to first form a considered opinion in the manner indicated in s. 92C (3) before he can make a reference to the TPO. In our view, it is not possible to read such a requirement into s. 92CA(1). However, it will suffice, if the AO forms a prima facie opinion that it is necessary and expedient to make such a reference. One possible reason for the absence of such a requirement of formation of as prior considered opinion by the AO is that the TPO is expected to perform the same exercise as envisaged under s. 92C(1) to (3) while determining the ALP under s.92CA(3). The latter part of s.92CA (3) unambiguously states that the AO shall by an order in writing; determine the arm's length price in relation to the international transaction in accordance with sub-section (3) of s.92C. it will be pointless to have a duplication of this exercise at two stages one after the other. On the other hand, the scheme is that after the TPO determines the ALP the matter revives before the ALP at the s.92C (4) stage where in terms of s.92CA(4) the AO will compute the total income having regard to the ALP determined by the TPO". (2) Thus, even as per the decision of Sony India....
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....nterpret the relevant statutory provision and instructions and, therefore, rushed to the Court. We are unable to agree with above submission of Shri Vohra. It is not possible for us to hold that instructions issued by CBDT u/s 119 of the Act to regulate assessment proceeding can be treated as a waste paper by officers functioning under the Board (CBDT). If such a view is taken, it would lead to chaos in the country. If various guidelines issued by CBDT for administration of Income-tax Department and for regulation of assessment etc., are not adhered to or made optional, then all schemes of assessment may fail and jeopardize the working of the department. This is neither the law of land not there is any justification to accept such an argument. We are, therefore, of the view that assessing officer, in the light of instruction of CBDT, was duty bound to refer the matter to TPO, having regard to the purpose of specialized cell created by the revenue department to deal with complicated and complex issue arising under the transfer pricing mechanism. This case itself is a good example as to how department can be hoodwinked unless case is properly examined by persons having knowledge of p....
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.... see no infirmity in referring the matter to TPO without forming "a considered opinion". In the light of the above reasoning, the first legal point raised by the assessee, namely, the reference to the TPO by the AO without forming "a considered opinion" does not stand the test of law and cannot be sustained, and, therefore, this plea of the assessee is rejected. It is ordered accordingly. II. The TPO adopted a non-statutory method for valuating IPR, which is a method not known to law. 8.4 The other legal grievance of the assessee being that the TPO has followed Excess Earning Method and not Comparable Uncontrolled Price Method (CUP) as there was no comparables available with reference to the IPR sold by the Assessee. It was submitted that the TPO wrongly relied on an exposure draft of the International Valuation Standard, which is a non-statutory body, and moreover, the draft is dated 2009, after the date of sale of Tally by the assessee in 2006. It is further submitted that the TPO determined the ALP following the Excess Earning Method and made adjustment to the sale value of the IPR. However, as per section 92C of the Act, the ALP in relation to an international transaction has....
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...., the Revenue came up with an answer that - (i) In the absence of uncontrolled independent comparable companies, the TPO tried to apply internal CUP method, wherein it is seen what is the price for which the same product would have been sold by the taxpayer to an independent entity. All the data considered by the TPO from FY 1999-2000 to 2004-05 is based on uncontrolled transactions between the taxpayer and independent entities. For the same reason, the TPO did not consider the data for the FY 2005-06, as there are substantial related party transactions during FY 2005-06 with its associated enterprises; (ii) in fact, the Hon'ble Tribunal upheld that valuation method can be adopted to arrive at the CUP price in the case of Intel Asia Electronics Inc. v. ADIT (2011-TTI-14-ITAT-BANG-TP). 8.6 Rival submissions are carefully considered. It is to be pointed out in this case the sale of IPR is not a routine transaction involving regular purchase and sale. The assessee itself admits that there is no comparable and the assessee has arrived at the sale consideration at Rs.38.50 crores based on its own valuation. The TPO has used an established method (Excess Earni....
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.... at the time of sale. For example, if a mango orchard is sold to a buyer and there is a crop failure for the next two to three years due to heavy rains at the time of flowering, this risk is that of the buyer and in no way determines the price on the date of sale, as these events are not comprehended at the time of sale; Further, even if the Hon'ble Tribunal considers actual revenues, the revenues of assessee company along cannot be considered as subsequent to the sale of Tally Software, the taxpayer is responsible for selling in Asia alone. As the taxpayer has distributors all over the world and these distributors are buying directly from the AE, after January, 2006, it was pleaded that the Bench be pleased to afford an opportunity to verify the figures submitted by the taxpayer. II. It was contended by the assessee that the TPO had erred in excluding license revenues for the period 1.4.2005 to 31.1.2006 in computing the value of the IPRs. Since the IPRs were sold on 31.1.2006, license revenues till the date of sale of IPRs have to be considered in determining the value of the IPRs. It was countered by the Revenue that all the data considered by the TPO from FY 1999-2000 to 200....
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....t rate [WACC] to arrive at the present value of working capital requirements. The SBI's PLR rate for short term working capital loans for the FY 2005-06 at 10.25% per annum is considered as return on working capital. Based on the above rate, the return on net present value on working capital value has been arrived at. D = Return on human capital: The average employee cost as percentage of sales for the FY 1999-2000 to FY2004-05 has been considered and applied for future years to arrive at the estimated cost of human capital. Such exercise is done for the future years from FY2006-07 to 2011-12. The said cost of human capital is discounted to the present value using the above discounting factor (WACC) for each of the future years. The value of intangible assets sold = Net discounted cash flow after considering the cost of improvement (A) - return on fixed assets(B) - return on working capital (C)-return on human capital (D). (A) Rs. 666,92,37,810 Less: Return on fixed assets 100,27,51,104 Return on working capital(C) 57,32,27,882 Return on Human Capital (D) 7,86,25,072 The value of intangible Rs. 501,46,33,752 Price received vis-a-vis the arms Length Price: The consider....
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....urse of hearing, came up with alternative computation as detailed in its submission cited supra . According to various method adopted, the arm's length price was less than what was the price received as admitted by the assessee at Rs. 38.50 crores. It is true that it is difficult to value business more particularly to value a closely-held concern because each company has its own unique characteristics. Often, consideration has to be given to the future profits the company will be able to earn. The valuation may be influenced by the reason for it. For example, a different approach may be appropriate for divorce litigation compared to the price to pay for a targeted company compared to valuation for estate tax purposes. Thus, valuation depends on the purpose at hand. The valuation process is an art and not a science, since everyone's perception is slightly different. In litigation matters, the valuation method selected should be logically consistent, reasonable, cost-effective and simply explained. 10.2 The excess earning method is the method that is adopted by the TPO. We see no infirmity in adoption of this method for the simple reason that the relevant data is available with reas....
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....e taxpayer, there is no active market in identical or near similar intangible asset. Therefore, the IPR sold by the taxpayer is to be valued primarily using an income capitalization method. In the Income Capitalization method, the TPO used the Excess Earnings Method (EEM) as described above. This is because qualitative and subjective adjustments are required to apply the transaction data from the non-identical assets, which adversely affect reliability. To sum up, the intangibles i.e. the sale of the Tally software products along with its copyright and trade marks are valued by the following steps under Excess Earnings Method: Step 1 : Estimating future turnover till 2012 based on the past performance as well as the data available in the public domain. Step 2 : The cash flows (EBIDTA - earning before interest-tax, depreciation and amortization) are estimated in the future years based on the performance of the taxpayer in terms of EBIDTA to sales from F.Y. 1999-2000 to F.Y. 2004-2005. The data for the FY 2005-2006 was not considered as the intangibles is transferred during the year and there are related party transactions during the year which may initiate the reliability of th....
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....004-05. Based on the past history, the same ratio is applied for the future years and discounted at the above discount rate (WACC) to arrive at the present value of working capital requirements. The State Bank of India's PLR rate for short term working capital loans for the FY 2005-06 at 10.25% per annum is considered as return on working capital. Based on the above rate, the return on net present value on working capital value has been arrived at. Step 8 : (D) RETURN ON HUMAN CAPITAL The average employee cost as percentage of sales for the FY 1999-2000 to FY 2004-05 has been considered and applied for future years to arrive at the estimated cost of human capital. Such exercise is done for the future years from FY 2006-07 to 2011-12. The said cost of human capital is discounted to the present value using the above discounting factor (WACC) for each of the future years. To consider the return on human capital, various article have been read. As for the Annual Report of the Infosys Technology Ltd. for the FY 2005-06, the company earned 5% return on its human capital. The same return has been applied in the case of the tax payer on the above arrived value o....
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....Tally licenses which were sold to third parties. The other related party transactions have no relevance factors. The situation in the AY 2006-07 was similar to situation in all the years considered by the TPO. Therefore, it was claimed by the assessee that the reasoning of the TPO was baseless. Refuting the TPO's reasoning that the transaction involving IPR took place in this year and, therefore, current year data was excluded, the assessee submitted that since the sale was in the current year, it was more so important to consider the current year's sales which, according to the assessee, in consonance with the provisions of rule 10B (4) which mandate use of current year's data. It was, therefore, contended by the assessee that the current year data should have been used to estimate future revenues. There is force in the contention of the assessee that the sale data for the period from April, 2005 to Jan 2006 was vital to arrive at correct projection which reflects the true earning potential of the IPR at the time of sale. Therefore, in the course of this order, we are directing the TPO to include the figure for AY 2006-07 for arriving at the value of ALP. 10.4 In the AY 2005-06, ....
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....TPO. The TPO has considered 3 companies as comparable to the assessee's segment of distribution of products. These companies are Lifetree Convergence Limited, Exensys Software Solutions Limited and Sankhya Infotech Limited (page 139 of the TP order). Out of these three, only Sankhya Infotech's Beta has been considered. Why the other two companies are not considered is not clear. We are of the view that Beta should be computed after considering all the three companies. The average Beta of the three companies, it was submitted, would be 1 and the computation of Beta is furnished at page 408 to 414 of the paper book (submitted by the assessee). This computation needs to be examined by the TPO. While calculating the working capital, the TPO has not considered the cash and bank balances and other current assets (except inter-corporate deposits) and provisions. Further, it is directed that the sale returns of Rs. 111.04 crores has to be reduced from the sundry debtors while calculating the working capital. We are of the view the same should also be considered while computing working capital ratio. 11. Taking into account the rival submissions, diligent perusal of the relevant records an....
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....ction has no relevance for this sale of Tally license. Hence, the current year data i.e., AY 2006-07 has to be included as they relate to third party transactions and the projections have to be made for the future years based on the revenues of AY 2006-07 which is also in accordance with the provisions of rule 10B(iv) which mandate the use of current year data. The projection has to be made for next six years which has rightly been adopted by the TPO. Further, the assessee's contention to adopt the actual revenues for the future years which are available now cannot be accepted now for a simple reason that the ALP was calculated on the date of sale which was in January, 2006 itself and also under EEM future revenues will be projected based on the previous year data keeping the current year's data as the base which has got no relevance on the actual revenues during the future years. We also make it clear that the actual CAGR shall be adopted by the TPO without any discount. (ii) Estimation of future cash flows: We are in agreement with the method adopted by the TPO in estimating the cash flows except that the revenues for the AY 2006-07 has to be considered and is to be ....