TMI Blog2023 (2) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... f 40% instead of 29.50% allowed by him. The contention of the assessee with respect to ground is rejected in view of the decision of the co-ordinate Bench in assessee s own case for earlier years. DRP direction to adopt a weighted average methodology in computing the arithmetic mean of non-Associated Enterprises transaction for arriving at Arm s Length Price of brokerage charged for clearing house and DVP trades - HELD THAT:- Only arithmetic mean of the prices of brokerage should be taken and not weighted average of such prices todetermine Arm s length price of the International Transaction. Directions of the LD DRP are unsustainable in law. - ITA No. 1715/Mum/2016, ITA No. 1794/Mum/2016, CO No. 145/Mum/2016 Arising in ITA No. 1794/Mum/2016, - - - Dated:- 15-12-2022 - SHRI PRASHANT MAHARISHI, AM AND SHRI PAVAN KUMAR GADALE, JM For the Assessee : Shri Sunil M. Lala, AR For the Revenue : Samuel Pitta, DR: ORDER PER PRASHANT MAHARISHI, AM: 01. These are two appeals and one cross objection in case of the assessee M/s Morgan Stanley India Company Private Limited [ the Assessee/ Appellant] for the same assessment year. ITA No.1794/Mum/2015 is filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income. 2.3 Without prejudice to the above, the learned AO in considering the investment made by the Appellant in the shares of subsidiary company/group companies and Bombay Stock Exchange Limited while computing the disallowance under Rule 8D(2)(ii) of the Rules. Ground 2: Short grant of credit for Taxes Deducted at Source (TDS) 3. The learned AO has erred in granting credit for TDS amounting to only for Rs 17,09,87,733 as against the amount to which the Appellant is entitled to i.e. Rs 17,24,18,686. Ground 3: Non grant of deduction under section 80G of the Act 4. The learned AD has erred in law and on facts in not granting deduction amounting to Rs 1,25,000 under section BOG of the Act for the donation of Rs 2,50,000 made to Marathi Vidnyan Parshat Each of the grounds of appeal referred above is separate, and may kindly be considered independent of each other . The Appellant craves leave to add to, alter, amend or withdraw all or any of the Grounds of appeal herein above and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appeal as per law. 03. The grounds of appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the significantly higher volume of transactions of the Respondent with the AEs as compared to the independent clients 1.2. In not accepting the Respondent's contention that the Transactional Net Margin Method is the most appropriate method for determining the ALP for the brokerage received from trades executed for the AES.1.3. In not determining the ALP of the aforesaid transaction in accordance with section 92CA (1) and section 92CA (2) of the Act as required under section 92CA(3) of the Act. The Respondent craves leave to add to, alter, amend or withdraw all or any of the above Ground of Cross Objection herein and to submit such statements, documents and papers as may be considered necessary either at or before the of this appeal as per law. 05. Briefly stated facts of the case are that the assessee company is a financial services company with a leading market position in Indian stock broking business with several large investors as its major clients. It is also engaged in providing institutional equity sales and trading services to both domestic and overseas institutional clients. As the assessee has entered into an international transaction as submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P brokerage rate of 0.17%. Similarly, he worked out the brokerage rate for delivery versus payment. He granted 29.50% of arithmetic mean brokerage as an adjustment for sales and marketing of clearing house and DVP trades. He refused to give any adjustment on volumes. Thus, he computed the Arm s Length Price for CH trade considering arithmetic mean of CUP brokerage at 0.22% granting adjustment on account of marketing cost at 29.50% and therefore, reaching at adjusted Arm s Length Price brokerage rate of 0.1551% of the contract value. Accordingly, he computed the transfer pricing adjustment of ₹2,05,39,673/-. On the DVP trades, he computed the CUP rate of brokerage at 0.2167%, granted adjustment for selling and marketing cost of 29.50% and rejected the adjusted Arm s Length Price mean brokerage rate of 0.1527% and accordingly, made an adjustment on DVP trade of ₹57,621/-. Thus, total TP adjustment was proposed by the order under Section 92CA(3) of the Act dated 27th January, 2015 of ₹2,05,97,294/-. 06. The learned Assessing Officer noted that the assessee has received dividend income of ₹5,20,000/- and assessee has made a Suo moto disallowance under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partial relief directing the learned Assessing Officer to verify and excludes investment which gives rise to taxable income for computing disallowance. 09. On the basis of the above direction, the learned Transfer Pricing Officer vide letter dated 19th January, 2016, furnished revised transfer pricing adjustment amounting to ₹17,34,651/-. Based on this, assessment order under Section 144C read with section 143(3) of the Act was passed on 28th January, 2016, wherein transfer pricing adjustment of ₹17,34,561/- and disallowance under Section 14A of the Act of ₹1,70,70,056/- was made and total income was assessed at ₹330,57,25,166/-. 010. Both the parties are aggrieved with the above order and therefore, are in the appeal and cross objection before us. 011. The learned Authorized Representative submitted the chart on both the appeals and its CO, a paper book containing 503 pages and 5 orders of the co-ordinate Bench in assessee s own case from A.Y. 2002-03, 04-05, 05-06, 06-07 and 10-11 contained in a 97 page paper book. 012. The learned Authorized Representative first came to the appeal no. 1715/Mum/2016. The ground no. 1 of the appeal is with respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned Authorized Representative submitted that ITAT in A.Y. 2002-03, 2004-05, 2005-06 and 2006-07 has agreed with the contention of the assessee and granted allowance to the extent of 40% of the CUP price. 021. No other grounds on transfer pricing were pressed. 022. The learned Departmental Representative agreed that ITAT has granted 40% of the CUP rate on account of research cost and volume adjustment to the assessee. 023. On careful consideration of the rival contentions, respectfully following the decision of the co-ordinate benches in assessee s own case, where assessee is granted 40% deduction on account of research cost volume adjustment, we direct the learned Transfer Pricing Officer/ Assessing Officer to grant the deduction on this count at the rate of 40% instead of 29.50% allowed by him. The contention of the assessee with respect to ground no. 1.1.1 is rejected in view of the decision of the co-ordinate Bench in assessee s own case for earlier years. 024. In the result, Cross Objection filed by the assessee is partly allowed. 025. Now, we come to the appeal of the Revenue in ITA No.1794/Mum/2016. 026. The learned Departmental Representative subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r earlier years the above issue has already been decided. He referred to the decision of the co-ordinate Bench in assessee s own case. He first referred to the decision in A.Y. 2002-03 wherein in paragraph no.23 the argument of the learned Authorized Representative was recorded. He further, referred to three different decisions also incorporated therein. He also referred to paragraph no.28 of that order where the order of the learned CIT (A) is extracted and at page no. 9 of that order, CIT (A) has upheld the weighted average holding that it is a well-established commercial principle. He referred to paragraph no.29 of the said order and submitted that the co-ordinate Bench upheld the order of the learned CIT (A) accepting the weighted average rate. Therefore, now revenue cannot question the same. He further submitted that in all other subsequent decision of the co-ordinate Bench in assessee s own case accepted the above methodology and therefore, same should be accepted based on principle of consistency and binding nature of judicial precedence. He further referred to the authoritative commentary of Kanga Palkhivalaon the Income Tax and submitted that judicial precedent should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applied in case of the assessee where Tribunal has decided the issue in assessee s own case in several years. He submitted that law of consistency, law of binding precedents clearly suggests that basically the assessee s own case should be followed. 029. Countering the argument of the learned Authorized Representative, the learned Departmental Representative vehemently submitted that any decision which is contrary to the law i.e. the express provision of the law laying down the rule in unambiguous terms should be followed. All these decisions are did not consider the first proviso to section 92C(1) of the Act, does not have any binding value. He submitted that none of the decision cited by the learned Authorized Representative deals with the proviso. None of the decision have expressed or considered the unambiguous provisions of the law. He therefore submitted that if the provision of the law is clear and unambiguous, it should be incorporated independently. Any contrary decision should be ignored. Therefore, according to him all the above decisions of the assessee by the ITAT should be ignored and simple provision of the law which does not have any possibility of any diverge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Statutes is to construe them according to plain, literal and grammatical meaning of the words. If that is contrary, to or inconsistent with any express intention or declared purpose of the Statute, or if it would involve any absurdity, repugnancy or inconsistency, the grammatical sense must then be modified, extended or abridged, so far as to avoid such an inconvenience, but no further. The onus of showing that the words do not mean what they say lies heavily on the party who alleges it must advance something which clearly shows that the grammatical construction would be repugnant to the intention of the Act or lead to some manifest absurdity. 036. In Visitor Amu v. K.S.Misra reported in (2007) 8 SCC 594, the Hon'ble Supreme Court held that, It is well settled principle of interpretation of the statute that it is incumbent upon the Court to avoid a construction, if reasonably permissible on the language, which will render a part of the statute devoid of any meaning or application. The Courts always presume that the legislature inserted every part thereof for a purpose and the legislative intent is that every of the statute should have effect. The legislature is dee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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