TMI Blog2015 (10) TMI 1379X X X X Extracts X X X X X X X X Extracts X X X X ..... play have been violated. The impugned order is set aside, the file is remitted back to the Assessing Officer with a direction to re-determine ALP after adopting external comparables and suitable method to determine ALP of the transactions with the AE. Needless to say that, while determining ALP, the Assessing Officer shall only take into consideration the international transactions with AE and not the transactions with un-related parties. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee and thereafter, pass denovo assessment order in accordance with law. - Decided in favour of assessee for statistical purposes. - IT APPEAL NO. 1565 (MDS.) OF 2013 - - - Dated:- 20-6-2014 - DR. O.K. NARAYANAN, AND VIKAS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2009. During the relevant period, the assessee had entered into international transactions exceeding `15.00 Crores with AE, therefore, the case of the assessee was referred to Transfer Pricing Officer [TPO] to determine Arm's Length Price [ALP] of the said transactions. The assessee had adopted cost plus method with a markup cost of 15%. The TPO rejected the TP documents of the assessee and the method adopted by the assessee to determine ALP. The TPO determined the ALP of the international transactions by following Transaction Net Margin Method [TNMM]. The TPO selected comparables and determined the ALP of AE sales at Rs. Crores as against ₹ 2.83 Crores arrived at by the assessee. The PLI of the assessee was 3.79%, whereas, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Arm's Length Price was arrived at in the order under section 92CA of the Income-tax Act, 1961. 5. The Learned Commissioner of Income Tax (Appeals)-VI also failed to give a finding on the appellant's submission that the business of the appellant was totally different from the business of the comparable companies considered by the Transfer Pricing Officer in arriving at the Arm's Length Price and in the process disregarded the justification given by the appellant based on the business profile of the companies taken as comparables by Transfer Pricing Officer as to why those companies could not be considered as comparable. 6. The Learned Commissioner of Income Tax (Appeals)-VI failed to consider the submission of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PO without appreciating the fact that the nature of business of the assessee is entirely different from the business of comparables adopted by the TPO. No valid reason what-so-ever has been given for rejecting the method adopted by the assessee in determining ALP. The assessee was not provided with the final list of comparables considered by the TPO. In order to support his contentions the ld. Counsel for the assessee relied on the judgment of the Hon'ble jurisdictional High Court in W.P.No.23564 of 2011 in the case of Polaris Software Lab Ltd. v. DRP decided on 15-11-2011. 4. On the other hand, Shri Shaji P.Jacob, appearing on behalf of the Revenue vehemently supported the order of CIT(Appeals) and prayed for dismissal of the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble High Court has observed as under: 11. A perusal of the transfer pricing report furnished by the petitioner shows that it contains necessary details as to the working of its transfer pricing in accordance with the requirement under law. Contrary to the assertion of the respondents that the second respondent had furnished the details in its notice issued on 17.9.2010, a perusal of the said proceedings show that while the said authority referred to the total number of companies taken for comparison as 801 and the search process carried on under the head of 'industry' to result in filtering of 28 companies as comparable cases, the notice makes no reference to the request made by the petitioner on the details sought for. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have not been addressed. Thus, the principles of natural justice and fair play have been violated. The impugned order is set aside, the file is remitted back to the Assessing Officer with a direction to re-determine ALP after adopting external comparables and suitable method to determine ALP of the transactions with the AE. Needless to say that, while determining ALP, the Assessing Officer shall only take into consideration the international transactions with AE and not the transactions with un-related parties. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee and thereafter, pass denovo assessment order in accordance with law. The appeal of the assessee is allowed for statistical purposes. - - Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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