TMI Blog2020 (9) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, and Assessee is again in the second round of appeals before the learned Tribunal against the orders passed by the authorities below on the remand made by the previous order dated 21.12.2012. As expected Tribunal also to realize the consequences of an open remand made or a remand made to the authorities below only for re-computation with the appropriateness of the method decided finally at its own end. The multiplicity of the litigation and rounds of appeal, what we have described as a shuttle game, should have been seen by the learned Tribunal and therefore, we expect at least from now on, the learned Tribunal will decide on the issue of the appropriateness of the method for TP adjustments, while deciding all the pending appeals before it, as far as this Assessee is concerned and also other Assessees by recording its own reasons and taking into account the relevant evidence and materials on record, and if necessary, by calling additional evidence before it, with regard to the external comparables, from both the sides. We do not expect a further open remand by the learned Tribunal on the said issue any more because such decision of the learned Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arrived by the Appellant and without even mandatorily applying the provisions of Section 92 and 92C wherein the TPO is bound compute the arms length price as per the methods prescribed under Rule 10B? 5. Whether the TPO has the jurisdiction to question the commercial expediency in relation to expenditure incurred by the Appellant for its business purpose? 6. Whether the TPO has the jurisdiction to decide how the assessee should conduct its business and regarding the necessity or otherwise of incurring the expenditure in the interests of its business? 7. Whether the TPO, DRP and Tribunal erred in not appreciating that the The Central Agency ( TCA ) renders various services to the Appellant such as demand and supply management, forecasting of monthly / quarterly / annual demand, rolling forecasts, raising of the purchase orders, acting as a central coordination agent in connection with the supply chain? 8. Whether the TPO, DRP and Tribunal were correct in disallowing the commission expenditure incurred by the Appellant contending that such expenditure has not resulted in any benefit to the Assessee instead of computing Arms Length Price under Sections 92 and 92C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of Sec. 92C(1) of the Act, which is reproduced hereunder:- 1) The arm s length price in relation to an international transaction or specified domestic transaction shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as the Board may prescribe, namely : (a) comparable uncontrolled price method ; (CUP) (b) resale price method ; (RPM) (c) cost plus method ; (CPM) (d) profit split method ; (PSM) (e) transactional net margin method ; (TNMM) (f) such other method as may be prescribed by the Board . A reading of the above, clearly indicate that the most appropriate method has to be selected having regard to the nature of transactions or class of transactions. In our opinion, when uncontrolled comparables are available internally on some of the items which was sold to Associated Enterprise then such comparables would form a separate class of its own. TPO had considered forty nine thread types for which there were internal uncontrolled transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise to any presumption of rendering the actual service and therefore, the payment of such commission to M/s. The Central Agency was not an allowable expenditure. The relevant portion of the order of the learned Tribunal in the impugned order in this regard are also quoted below for ready reference :- What the assessee was bound to pay was commission based on net invoice value. What the agent was supposed to do was promote the sale of the assessee. Finding of the ld. TPO is that no such services were rendered by the TCA to the assessee. It is not disputed that invoices were raised by the TCA on the assessee, based on the net value of the order. It is also not disputed that supplies were made by the assessee only to its group concerns. The question that is to be addressed is whether TCA had procured the orders for the assessee as its agent. Ld. Assessing Officer had given a clear finding that no services in the nature of procurement of any orders were discernable from the e-mail correspondence between the assessee and M/s. TCA. Argument of the assessee before ld. TPO and ld. DRP was that primary role of M/s. TCA was to indentify the requirements of the assessee and get orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the it from its Associated Enterprise. Further, the payment was not agency commission but management commission fees. In the host of other judicial decisions relied by the ld. Authorised Representative also the question dealt was on the management fees and not on agency commission. In these circumstances, we do not find any reason to interfere with the orders of the lower authorities. Ground No.3 stands dismissed. 5. The learned counsel for the Assessee Mr. Sandeep Bagmar, drew our attention to the previous order of the learned Tribunal dated 21 December 2012, by which the learned Tribunal decided the appeals for preceding years viz., ITA Nos.2207, 2212 and 2213 / Mds / 2007 [AY 2002-03 to 2004-05] ( Asst. Commissioner of Income Tax vs. M/s.Madura Coats Pvt. Ltd.) as well as ITA Nos.19 2032 / MDS/2011 (AY 2006-07 and AY 2007-08) (M/s.Madura Coats Pvt. Ltd. vs. Assistant Commissioner of Income Tax). 6. Paragraph 12 of the previous order passed by the learned Tribunal on 21 December 2012 is quoted below for ready reference : 12. In view of the above, we are of the considered opinion that the matter requires fresh adjudication. The order passed by the DRP is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the present remand by the learned Tribunal for AY 2009-10 shall also be held to be only an open remand, leaving it free for the learned TPO to decide once again as to which is the most appropriate method to be adopted in the facts and circumstances of the case, for TP Adjustment, whether CUP method or TNM Method and then make T.P. Adjustments, if any. 8. On the other hand, the learned counsel for the Revenue Mr. Swaminathan, also submitted that in pursuance of the previous remand order of the learned Tribunal dated 21 December 2012, for the previous assessment years, as stated above, for some of the assessment years, orders have been passed by the TPO/DRP below, and again the Assessee has preferred appeals before the learned Tribunal itself which are also pending there. He submitted that for such previous years, since CUP Method was again adopted by the learned authorities like CIT (Appeals) or Dispute Resolution Panel, the Assessee being dissatisfied with the same, has again preferred appeals before the learned Tribunal and even those appeals are pending before the learned Tribunal. 9. Mr.Swaminathan, learned Counsel for the Revenue, fairly submitted that for previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Be that as it may, in our opinion, the only observation which we, in the present appeal, intend to make is that there is obviously a misreading of the previous order dated 21 December 2012, passed by the learned Tribunal for the previous Assessment Years, while deciding the present appeal for AY 2009-10. While the earlier order made an open remand to the authorities below to decide as to which is most appropriate method to be adopted, CUP Method or TNM Method, the learned Tribunal, by the impugned order dated 16 November 2016 for AY 2009-10 has apparently, fallen into error, in holding that the CUP Method as the appropriate method and that this issue was already decided by Tribunal, which was not the correct reading of the previous order dated 21.12.2012. 15. A bare reading of paragraph 12 of the order passed by the learned Tribunal for the previous years dated 21.12.2012 would also show that it was an open remand and no specific method was finalized by the Tribunal in the previous order of the appeal for previous assessment years. This misreading of the previous order by the learned Tribunal while passing the present impugned order on 16.11.2016 has resulted in multiplicit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public domain available for comparison, to decide as to which is the most appropriate method to be adopted looking to the nature of business etc. as in Section 92C of the Act. Of course, the mathematical computation work could have been left to the Adjudicating Authorities below, or done by the Tribunal itself with the assistance of Counsels/Assessees etc. As far as the appropriateness of the method to be adopted for TP adjustments was required to be done, in our considered opinion, the Tribunal should not have remanded the matter back to the authorities below and that too to the two different authorities, viz., Dispute Resolution Panel and Commissioner of Income Tax (Appeals), in previous order, and that too by committing a mistake of misreading of the previous order dated 21.12.2012 and holding that CUP Method was already decided to be the only appropriate method, whereas the Assessee has been contending otherwise throughout, and is aggrieved by the adoption of the CUP method and was pressing of TNM Method. In the facts and circumstances of the case, and Assessee is again in the second round of appeals before the learned Tribunal against the orders passed by the authorities below ..... X X X X Extracts X X X X X X X X Extracts X X X X
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