TMI Blog2016 (5) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... rating cost was urged for the first time in appeal before the CIT(A). However as the impugned order records all the materials/details relevant to determine the TNMM on application of ratio of cash profit to operating cost was on record before the Assessing Officer. No fresh documents were brought on record before the CIT (A). It was only on the basis of documents which were already on record and were subject matter of examination by the TPO. Thus the TPO in his remand report found that in the facts of this case the ratio of cash profit to operating cost to determine the ALP was correctly raised by the respondent-assessee. Therefore question no.(i) as framed does not give rise to any substantial question of law. Applicability of principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that no such claim was made before the TPO/AO before whom the ratio of operating profit to the total cost was applied by the assessee itself as provided under Rule 10B(1)(d) of the Income Tax Rules? (ii) Whether the Tribunal was correct in law in applying the principle of res judicata referring to the findings of the Transfer Pricing Officer in a later assessment year i.e. A.Y. 200708, without appreciating that the principle of res judicata is not applicable to Income Tax proceedings and a finding of later assessment year cannot be applied to the facts of the 200506 assessment year? 3. Regarding Question No.(i): (a) The respondentassessee is engaged in Information Technology enabled services. During the subject asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of cash profit to operating cost as the PLI . The CIT (A) called for the remand report from the TPO. The TPO in his remand report agreed that the respondents working for determining the PLI on the basis of cash profit to operating cost is appropriate in the present facts for comparison with the six comparables. Thus the CIT (A) on the basis of the remand report of the TPO allowed the appeal deleting the addition of ₹ 10.38 crores made by the Assessing Officer on account of TP adjustment. (c) Being aggrieved the Revenue carried the issue in appeal to the Tribunal. The Tribunal by the impugned order upheld the finding of the CIT (A). It further also noted the fact that for the subsequent Assessment Years i.e. 200708 and 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial question of law. Thus not entertained. 4. Regarding Question No.(ii): (a) Mr. Suresh Kumar, learned counsel for the Revenue urges the fact that the ratio of cash profit to operating cost were applied by the TPO for the subsequent years i.e. A.Y.200708 and 200809 cannot be the basis to adopt it for the subject assessment year. This on the ground that the principle of res judicata is inapplicable to tax matters. (b) We find that before the Tribunal, the Revenue contended that the adoption of ratio of cash profit to operating cost is not permissible under the TNMM method. In the above context, the impugned order observed that the ratio of cash profit/operating cost in application of the TNMM method was infact accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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