TMI Blog2014 (7) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order. Being satisfied with the reasoning and finding arrived at therein the departmental ground is dismissed. - I.T.A. No. 1635/Del/2013 - - - Dated:- 31-7-2014 - SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S.KAPOOR, ACCOUNTANT MEMBER For the Appellant : Sh. Ajay Vohra, Neeraj Jain, Advs. Sh. Puneet Chugh, Abhishek Aggarwal, CAs For the Respondent : Sh.Yogesh Kumar Verma, CIT DR ORDER PER DIVA SINGH, JM This is an appeal filed by the Revenue against the order dated 28.01.2013 of CIT(A)-XX, New Delhi pertaining to 2007-08 assessment year on the followings grounds:- 1. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting the addition of ₹ 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 ₹ 2,80,58,787/- which was processed u/s 143(1). The case was selected for scrutiny after issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 was claimed that it is demonstrated that the international transaction was at arms length price. 3.3. However the TPO did not accept the claim of the assessee. Analyzing the method employed by the assessee, he was of the view that there is not much difference in inbound and outbound activities of the company and the assets utilized in both the segments were similar. He further held that the transfer pricing report did not furnish any risk analysis in the two segments. He was also of the view that the segments drawn were also not accurate since no separate segmental details were mentioned in the audited accounts certified by the chartered accountants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) deleted the addition relying upon the view taken in assessee s own case by the Tribunal in the immediately preceding assessment year. For ready-reference specific para 4.7 and 4.8 are reproduced hereunder:- 4.7. I have gone through the submission of the appellant as well as order of the TPO. The TPO has not accepted the segmental accounts created by the appellant in the transfer pricing report. For the AY 2006-07 also, the appellant had relied on the internal TNMM based on the inbound and outbound segments with Associated Enterprises (AEs) and non AEs comparison. The TPO rejected the method employed by the appellant and used TNMM using external as the most appropriate method. He used 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the AO to examine the figures supplied by the assessee and thereafter arrive at the arm s length price after hearing the assessee. 4.8. In view of the categorical finding of the Hon ble ITAT in the appellant s own case for the AY 2006-7 on the same facts and circumstances the ratio of the case is applicable to the AY 2007-08 also-which is immediately succeeding assessment year. Respectfully following the order of the Hon ble ITAT, the segmental accounts as presented by the appellant is examined. For the sake of convenience, the same is reproduced below:- Particulars Total Outbound Inbound A.E. Non A.E. A.E. Non A.E. Service Income 380,984,858 209,333,536 14,742,537 28,059,984 128,848,801 Total income(a) 380,984,858 209,333,536 14,742,537 28,059,984 128,848,801 Direct Cost 350,178,310 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elp of IT Tools and costs are simultaneously booked and the revenue 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 invited to the chart appearing in para 4.8 of the impugned order so as to contend that both in Inbound and Outbound segments the margins earned from the AE were higher. The Ld. CIT DR confronted with the order of the Tribunal and on perusing the material available on record submitted that he would rely upon the order of the TPO/assessment order. However no distinguishing facts, circum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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