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TMI Blog2014 (11) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in deleting the addition of Rs. 1,53,03,888/- on account of Arm's Length Price of international transaction made by the Assessing Officer/TPO? 2. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing." 2. The relevant facts of the case are that the assessee filed his return on 31.10.2007 declaring a loss of Rs. 2,80,58,787/- which was processed u/s 143(1). The case was selected for scrutiny after issuance of notice u/s 143(2) and questionnaire etc. u/s 142(1). The record shows that the assessee is a 100% subsidiary of Destination of the World Holding Establishment, Liechtenstein and engaged in the business of rendering inbound, outbound and domestic travel services to India, Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f unrelated party at 9.18%. The international transactions were claimed to be at Arm's Length Price. 3.2.1. Similarly in respect of the travel related services in the inbound segment, the assessee applied Cost Plus Method with gross profit to cost (CP/Total cost) and PLI. The profit margin earned by the assessee on international transaction was compared with similar uncontrolled transactions. Since the assessee was engaged in the sale of similar services to unrelated parties it was submitted that the gross margin earned in the case of the International Transaction is 4.76% and that in unrelated segment is 6.25%. It was submitted that since the profit margin was within the range of +/- in terms of proviso to section 92C(2) of the Act, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls & Bears Finance limited and Indo Asia Leisure Services Limited whose mean PLI (OP/OC%) was 2.12%. 4. Aggrieved by this, the assessee came in appeal before the First Appellate Authority wherein it was contended that the assessee has three segments namely, (a) Inbound services consisting of customers coming to India from foreign destination who make bookings through a local travel agent for hotel reservations and other ground services, who purchase these booking from Destination of the World (DOTW)'s local offices at the rates reflected in the website. DOTW's local office in turn buys the booking from the India offices of DOTW at rates reflected on it's website. DOTW India in turn purchases hotel reservations and ground services, etc. in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indo-Asia Leisure Services and Shri Raj Travels & Tours as the comparables. Exactly on the same facts and circumstances of the appellant's own case, the Hon'ble ITAT in the AY 2006-07 has held that the internal TNMM should be used in this case. The relevant portion of the Hon'ble ITAT decision in ITA No.-5534/Del/2010 dated 08.07.2011 is reproduced below:- "6. We have considered the facts of the case and submissions made before us. On the basis of the same, the first question which requires decision according to us is whether, the AO was justified in taking recourse to external comparables when internal comparables were available? 6.1........ Therefore, it is held that in the first instance, the attempt should be made to determine arm's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order. Having considered these facts and submissions, we are of the view that the assessee has not been able to show, on the basis of FAR analysis, that there are material difference in inbound and outbound services. However, the profitability in the two segments may be different due to geographical area of the service. Therefore, we are of the view that it will be more appropriate on the facts of this case to compute arm's length price in respect of two segments separately on TNMM. The figures furnished in the table in paragraph no. 5 have not been vetted by the AO or the ld. CIT(Appeals). In view thereof, the matter is restored to the file of the AO to examine the figures supplied by the assessee and thereafter arrive at the arm's len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue is booked. In the absence of any concrete evidence to show that the books of accounts or the segmental accounts are manipulated, there is no ground to reject the segmental accounts prepared by the appellant. In view of the facts and circumstances of this case, the international transaction undertaken by the appellant is held to be at arm's length. Therefore, this ground of appeal is allowed." 6. Aggrieved by this, the Revenue is in appeal before the Tribunal however right at the outset it was contended by the Ld. AR that the point at issue is fully covered in favour of the assessee by the order of the Tribunal in assessee's own case, copy of the said order relied upon by the CIT(A) was filed before the Bench. Specific attention was inv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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