9911796707
TMI Blog2025 (5) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the learned assessing officer noticed that the appellant has entered into international transactions with Associated Enterprises (AEs) and a reference was made to the Transfer Pricing Officer (TPO) for the computation of Arm's Length Price (ALP) u/s. 92CA(1) of the Act. The TPO, vide order dated 08.05.2023 passed u/s. 92CA of the Act, determined upward transfer pricing adjustment at Rs. 15,93,35,145/-. The draft assessment order dated 26.09.2023 was accordingly passed, against which objections filed by the appellant were disposed off by DRP on 18.06.2024. Pursuant to the directions of DRP impugned assessment order dated 22.07.2024 was passed u/s. 143(3) r.w.s 144C(13) and 144B of the Act. 3. Aggrieved assessee has filed present appeal against the impugned order on the following grounds: "The Appellant craves to prefer an appeal against an order dated 22 July 2024 passed by the Assessment Unit, Income Tax Department passed under section 143(3) r.w.s. 260 read with section 144B of the Income tax Act, 1961 ("the Act") in pursuance to the directions dated 18 June 2024 issued by the Hon'ble Dispute Resolution Panel ('DRP") u/s 144C(5) of the Act, for the aforesaid assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R for the respondent revenue. 5. Learned representative for the appellant assessee has submitted that in earlier years, revenue has consistently accepted the Transactional Net Marginal Method (TNMM) as most appropriate method relating to the export of goods to AE. However, in the present assessment year, revenue has applied Comparable Uncontrolled Price (CUP) method without any change of law or facts. Learned AR has referred order dated 19.04.2023 passed by the coordinate Mumbai bench of this Tribunal in ITA No. 748/MUM/2022 for the relevant A.Y. 2017-18 in assessee's own case and prayed to delete the aforestated transfer pricing adjustment based on comparable uncontrolled method (CUP). 6. Learned DR has submitted that each assessment order, being a unit, what has been decided in one year, may not apply in the following year. Learned DR has referred Radhasoami Satsang V. CIT, [1992] 193 ITR 321(SC) in support of his arguments and supported the impugned order. 7. It is pertinent to mention that the appellant assessee, vide application dated 12.11.2024 requested to withdraw ground of appeal no. 2.1, challenging the validity of the final assessment order u/s. 143(3) r.w.s 144C (13) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pricing study report on the ground that the transaction between the AE and non-AE was not comparable on account of difference such as, difference in geographical location, volume of sales, currency of transaction, commission and sales promotion incurred. 10. We notice that for A.Y. 2010-11 and 2011-12, the Ld. AO/TPO had accepted internal TNMM benchmarking analysis conducted by the appellant, whereas for A.Y. 2020-21, the TPO has not provided any reasoning for rejection of TNMM as the most appropriate method. Learned DRP Pannel, referring earlier orders, passed by it in assessee's own case for A.Y. 2012-13 to 2014-15, rejected the assessee's objections. However for A.Ys 2012-13 and 2013-14, the Tribunal, vide order dated 06.03.2018 passed in ITA Nos. 638 and 4643/Mum/2017, has accepted TNMM method as applied by the appellant as most appropriate method. 11. This issue has further been elaborately dealt in details by the coordinate bench of this Tribunal, vide order dated 19.04.2023 passed in ITA No. 748/MUM/2022 for A.Y. 2017-18 in assessee's own case. The relevant paras 9 to 11 are reproduced as under: "9. We have considered the rival submissions on the transfer pricing adjustm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argin also, the PLI of the assessee come to 15.21% which was higher than the PLI of the two comparable companies. Hence, from this analysis of updated comparables also, the transaction was found to be at arm's length. At this juncture, the Transfer Pricing Officer changed his tracks. He observed that no verifiable data has been provided to substantiate the method used. He further held that CUP would be a more appropriate method to benchmark the sale transaction. The assessee objected to the same. In the objections, the assessee also relied upon the OECD Guidelines and the ITAT decision in the case of Welspun Zucchi Textiles Ltd. v Asstt. CIT [2014] 151 ITD 353/43 taxmann.com 314 (Mum. - Trib.). However, the Transfer Pricing Officer summarily rejected and held that the application of TNMM is the method of last resort when the comparable price method cannot be applied. However, he noted that in the assessee's case since the comparable price for the same or similar products to the third parties has been provided by the assessee, the same has to be considered for bench-marking this transaction. Accordingly, Transfer Pricing Officer proceeded to apply the CUP method for bench-ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in T.P. report assessee has benchmarked the transaction under TNMM, no verifiable data has been provided to substantiate the method used. Hence, from the above discussion, we find that no cogent reason has been pointed out by the authorities below that the TNMM method applied earlier was not in accordance with the mandate of law as above. It is settled law that res judicata does not apply to taxation proceedings but it has fairly often been held by the higher courts including by the Hon'ble Apex Court that the consistency should be maintained in the assessment proceedings. A consistently applied method can be changed only if there is a change in facts and law. In the present case, we find that there is no such case has been made out. Rather the Transfer Pricing Officer has proceeded to examine the issue on the basis of TNMM method. He has ordered for updated data of comparable. Thereafter, when even on the basis of updated data, the international transaction was found to be at arm's length, he laconically held that CUP method would be preferred. The DRP had summarily upheld the change from TNMM to CUP method without assigning any cogent reason whatsoever. By no means it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing addition was made during the Assessment Year 2017-18 before us are identical to those prevailing in Assessment Year 2012-13 to 2014-15. Therefore, respectfully following the above decision in the case of the Assessee, we hold that TNMM method as adopted by the Assessee was the most appropriate method for benchmarking the international transaction of sale/exports of goods. Accordingly, transfer pricing adjustment of INR 16,59,51,699/- made by the Assessing Officer is set aside, and the issue is remanded back to the file of Assessing Officer for determination of ALP of the transaction of export of finished goods by the Appellant to its AE (i.e. OmniActive Health Technologies Inc., USA) as per TNMM method as adopted by the Appellant. It is clarified that no transfer pricing addition would be made in case the submission of the Appellant that the Appellant's margins in AE Segment are higher than the margins in non-AE Segment is found to be correct. In terms of the aforesaid, Ground No. 1 to 1.4 are allowed for statistical purposes." 12. We note that the DRP has rejected appellant's objections vide order dated 18.06.2024 merely by referring some of its earlier orders. There is neith ..... X X X X Extracts X X X X X X X X Extracts X X X X
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