9911796707
TMI Blog2023 (7) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the appellant/revenue, the impugned order passed by the Tribunal was received by the appellant/revenue on 06.06.2019. 3.1 We may note that the affidavits accompanying the appeals indicate that they were sworn on 17.08.2020. Prima facie, there is delay in filing the appeals as well. 3.2. The above-captioned applications [i.e., CM Nos. 1876/2023 & 1880/2023], though, seek condonation of delay, only in re-filing the appeals. 3.3. Interestingly, the re-filling applications are also dated 17.08.2020 and are accompanied by an affidavit which has been sworn on the same date. 4. According to us, there is complete lack of clarity on the part of the appellant/revenue, as to whether they are seeking condonation of delay in filing the appeals or re-filing the appeals. 5. That being said, there is a considerable delay, even if one were to take into account the fact that Covid-19 had kicked in. Insofar as this court was concerned, there was disruption in work in and about March 2020 and thereafter. 6. Mr C.S. Aggarwal, learned senior counsel, who appears on behalf of the respondent/assessee, points out that the applications for condonation of delay in re-filing were filed only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of indenting transactions with the non AEs as held by the Tribunal has not found judicial favour with the Hon'ble High Court and matter has been remanded back for further examination of similarity between the two transactions and to conduct further in depth inquiry to examine the high degree of comparability of relevant control and uncontrolled transactions. Further, if the average rate of commission on such transactions was to be applied to the FOB value of goods involved in the indenting transactions with the AEs, then this Tribunal has to satisfy itself that there is no significant variation in the rate of commission between different products. From the perusal of the indenting transactions undertaken by the assessee with AE and non AE under various product segments, it is discerned that, for instance in the product segment 'Automotive', the assessee has undertaken 249 transactions with AE and only 4 with non AE and in the Assessment Year 2007-08 the volume of transaction, FOB value wise is 'Nil' in the case of non AE; and the commission earned with the AE is Rs. 7,50,43,686/- and with the non AE it is only Rs. 9,672/-. Similarly the products dealt with AE in aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it depends upon the negotiation based on volumes, value and other contractual terms. Further different market and geographical location also affects the pricing factors and therefore, if there are differences on account of these factors CUP cannot be held to be the most appropriate method for bench marking the arm's length price. Here in this case, under the indenting segment there are various dissimilarities in the transaction with the AE and non AE as discussed above and for this reason alone the average commission earned cannot be the benchmarking factor for determining the ALP, and therefore, we hold that neither the CUP method can be applied nor the transaction with the AE and non AE can be taken for the purpose of comparability analysis. Thus, we reject the CUP method by taking the average commission earned in the transaction with the AE and non AE. 17. Now, in these circumstances, we have to see whether TNMM can be considered as most appropriate method. First of all, it has been brought on record before us that right from the Assessment Years 2003-04 to 2006-07, TNMM has been accepted as the most appropriate method by the TPO. However, instead of 'berry ratio' as PLI, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erived by the assessee is mainly depended on its operating expenditure as the value of goods does not enter in its financial. As a low risk service provider, it seeks to obtain adequate return on its operating expenses as the operating expenses incurred represents the value added carried on by the assessee. In other words, the operating expenses adequately and sufficiently represents the functions performed and the risk undertaken by the assessee. Thus, we hold that the 'berry ratio' should be accepted as the most appropriate PLI for taking as base under TNMM while determining the ALP of the Indian transaction for all the five years under appeal. 19. Accordingly, we remand the matter back to the file of the TPO to examine and benchmark the international transaction by adopting TNMM as the most appropriate method by taking 'berry ratio' as PLI. The assessee has to substantiate its margin by bringing comparable uncontrolled transactions to demonstrate that its commission earned in this segment is at arm's length; and the TPO shall examine the same and decide accordingly. Needless to say that TPO shall give due and effective opportunity to the assessee to substantiate its ALP as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iametric change in circumstances and facts, as recorded by the Tribunal in its order dated 22.10.2018. 14. At this stage, we may also note that Mr C.S. Aggarwal says that insofar as AY 2012-13 is concerned, there is an upward adjustment of Rs. 1,16,22,485/-. 14.1 Therefore, according to Mr C.S. Aggarwal, if this adjustment is taken into account, the tax impact would be less than the prescribed monetary threshold limit. In other words, the appeal, i.e., ITA No. 23/2023 could not have been lodged. 15. Mr Vipul Agarwal, however, says that the fate of the said appeal will not be determined on the basis of tax impact since this is not an appeal that pertains to deletion of the adjustment made. 15.1 This aspect of the matter will be examined on the next date of hearing. 16. We may also note that Mr C.S. Aggarwal has laid stress on the fact that a Bilateral Advance Pricing Agreement (BAPA) has been executed between the respondent/assessee and Central Board of Direct Taxes (CBDT). 17. The record shows that BAPA was executed on 02.08.2016. Therefore, it is Mr C.S. Aggarwal's contention that the parties are governed by the said agreement. 18. Since Mr Vipul Agarwal seeks a shor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
