M/s Cisco Systems Capital (India) Private Limited , Bangalore V. Additional Commissioner of Income Tax Special Range-2 , Bangalore

ITA 149/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1142 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 25-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; International transaction; Set aside
• Section: 143(3); 144C; 22

Judgement Text

IT(TP)A NO.149(B)/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCHES : C, BENGALURU BEFORE SHRI A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI P.K.GADALE, JUDICIAL MEMBER IT(TP)A NO.149(BANG)/2019 (ASSESSMENT YEAR : 2014-15) M/S CISCO SYSTEMS CAPITAL (INDIA) PRIVATE LTD., BRIGADE SOUTH PARADE, NO.10, M.G.ROAD, BANGALORE-560 001 PAN NO.AACCC4552A APPELLANT VS THE ADDL. COMMISSIONER OF INCOME TAX, SPECIAL RANGE-2, BANGALORE. RESPONDENT APPELLANT BY : SHRI RAJAN VORA, CA REVENUE BY : SHRI PRADEEP KUMAR, CIT DATE OF HEARING : 26-02-2020 DATE OF PRONOUNCEMENT : 29.05.2020 O R D E R PER A.K.GARODIA,: AM THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ASSESSMENT ORDER DATED 20-11-2018 PASSED BY THE AO U/S 143(3) R.W.S.144C (13) OF THE IT ACT, 1961. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER; BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, CISCO SYSTEMS CAPITAL (INDIA) PRIVATE LIMITED (HEREINAFTER REFERRED TO AS 'CISCO CAPITAL INDIA' OR 'THE APPELLANT'), RESPECTFULLY CRAVES LEAVE TO PREFER AN APPEAL AGAINST THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE 'LEARNED AO') DATED NOVEMBER 20, 2018 UNDER SECTION 143(3) READ WITH SECTION 144C(13) OF THE INCOME-TAX ACT, 1961 ('THE ACT') PURSUANT TO THE DIRECTIONS DATED SEPTEMBER 28, 2018 ISSUED BY THE DRP U/S 144C (5) OF THE ACT ('THE IMPUGNED ORDER') INTER-ALIA ON THE FOLLOWING GROUNDS: IT(TP)A NO.149(B)/2019 2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW: A. GROUNDS OF APPEAL RELATING TO CORPORATE TAX MATTERS 1. THE LEARNED AO HAS ERRED IN LAW AND IN FACT BY DISREGARDING THE OWNERSHIP STATUS OF CISCO CAPITAL INDIA IN RELATION TO THE ASSETS LEASED OUT BY IT UNDER FINANCE LEASE, THEREBY DISALLOWING THE CLAIM FOR DEPRECIATION MADE BY CISCO CAPITAL INDIA IN THE RETURN OF INCOME. 2. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEARNED AO HAS ERRED IN LAW AND IN FACT, BY NOT ALLOWING DEPRECIATION ON THE OPENING WRITTEN DOWN VALUE (`WDV') OF THE BLOCK OF ASSETS LEASED OUT UNDER FINANCE LEASE ARRANGEMENT, PURSUANT TO ALLOWANCE OF DEPRECIATION ON THE SAME BLOCK OF ASSETS FOR SOME OF THE PRIOR YEARS. B. GROUNDS OF APPEAL IN RELATION TO TRANSFER PRICING MATTERS 3. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY REJECTING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT IN RELATION TO THE IMPORT OF LEASING EQUIPMENT TRANSACTION WHICH CAN ADDITIONALLY BE CORROBORATED BY ANALYSIS UNDER COMPARABLE UNCONTROLLED PRICE (`CUP') METHOD. 4. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACTS, BY MAKING A TRANSFER PRICING ADJUSTMENT IN RESPECT OF INTERNATIONAL TRANSACTION PERTAINING TO PURCHASE OF FIXED ASSETS WHICH IS A CAPITAL TRANSACTION AS AGAINST THE APPLICABLE TRANSFER PRICING PROVISIONS PROVIDING FOR ADJUSTMENT IN RELATION TO INCOME ARISING OUT OF ANY INTERNATIONAL TRANSACTION. 5. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACTS, BY MAKING A TRANSFER PRICING ADJUSTMENT IN RESPECT OF INTERNATIONAL TRANSACTION PERTAINING TO PURCHASE OF FIXED ASSETS RESULTING IN DISALLOWANCE OF DEPRECIATION WHICH HAS ALREADY BEEN DISALLOWED BY THE LEARNED AO UNDER CORPORATE TAX ADJUSTMENT, AMOUNTING TO DOUBLE DISALLOWANCE OF THE SAME EXPENDITURE. 6. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACTS, BY MAKING A TRANSFER PRICING ADJUSTMENT IN RESPECT OF INTERNATIONAL TRANSACTION PERTAINING TO PURCHASE OF FIXED ASSETS WHICH FORMS THE INTEGRAL COST BASE FOR THE DETERMINATION OF THE REVENUES OF CISCO CAPITAL INDIA THEREBY TRIGGERING THE SECTION 92(3) OF THE ACT. 7 THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY NOT APPRECIATING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT READ WITH THE RULES, IT(TP)A NO.149(B)/2019 3 REJECTING THE TRANSFER PRICING APPROACH AND THE COMPARABLES IDENTIFIED BY THE ASSESSEE IN ITS TRANSFER PRICING DOCUMENTATION REPORT MAINTAINED, CONDUCTING A FRESH ECONOMIC ANALYSIS FOR THE DETERMINATION OF THE ALP IN CONNECTION WITH THE IMPUGNED INTERNATIONAL TRANSACTION AND HOLDING THAT THE ASSESSEE'S INTERNATIONAL TRANSACTION IS NOT AT ARM'S LENGTH. 8. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY ACCEPTING CERTAIN COMPANIES BASED ON UNREASONABLE COMPARABILITY CRITERIA. A) GALADA FINANCE LIMITED B) SHALIBHADRA FINANCE LIMITED C) SUNDARAM FINANCE LIMITED D) TRISHAKTHI ELECTRONICS & INDUSTRIES LIMITED 9. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY REJECTING CERTAIN COMPANIES BASED ON UNREASONABLE COMPARABILITY CRITERIA. A) ARMAN FINANCIAL SERVICES LIMITED B) FEDBANK FINANCIAL SERVICES LIMITED C) ISF LIMITED D) MAHAVEER FINANCE INDIA LIMITED E) MUTHOOT CAPITAL SERVICES LIMITED 10. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY DETERMINING THE ARM'S LENGTH MARGIN/PRICE USING ONLY FY 2013-14 DATA, WHICH WAS NOT AVAILABLE TO THE ASSESSEE AT THE TIME OF COMPLYING WITH THE TRANSFER PRICING DOCUMENTATION REQUIREMENTS. 11. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY REJECTING THE USE OF MULTIPLE YEAR DATA FOR TRANSFER PRICING ANALYSIS IN TRANSFER PRICING DOCUMENTATION REQUIREMENTS. ITA NO.149(B)/2019 4 12. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACTS, BY EXCLUDING DEPRECIATION FROM COST BASE AND CITING OPERATING PROFIT BEFORE TAX (`PBT)/CAPITAL EMPLOYED COMPUTED BY THE ASSESSEE AS INCORRECT AND RE-COMPUTING PROFIT BEFORE DEPRECIATION AND TAX ('PBDT')/CAPITAL EMPLOYED AS THE PROFIT LEVEL INDICATOR ('PLI'). 13. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACTS, BY CONSIDERING PROVISION FOR NON-PERFORMING ASSETS (`NPA') AS OPERATING FOR THE COMPUTATION OF PLI OF THE ASSESSEE AND THE COMPARABLE COMPANIES. 14. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACTS, BY INCLUDING CERTAIN NON-OPERATING EXPENDITURE AND NON-OPERATING INCOME AS OPERATING FOR THE COMPUTATION OF PBDT OF THE COMPARABLE COMPANIES. 15. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACTS, BY ERRONEOUSLY COMPUTING THE CAPITAL EMPLOYED FOR THE PURPOSE OF COMPUTING RETURN ON CAPITAL EMPLOYED OF THE ASSESSEE AND THE COMPARABLE COMPANIES. 16. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACTS, BY ERRONEOUSLY COMPUTING THE RETURN ON CAPITAL EMPLOYED (`ROCE') FOR THE VARIOUS COMPARABLE COMPANIES SELECTED BY THE LEARNED TPO. 17. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY REJECTING CERTAIN COMPARABLE COMPANIES IDENTIFIED BY THE ASSESSEE USING THE RATIO OF LEASING INCOME TO TOTAL INCOME LESS THAN 40% AS A COMPARABILITY CRITERION. 18. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY REJECTING CERTAIN COMPARABLE COMPANIES IDENTIFIED BY THE ASSESSEE USING RATIO OF MANUFACTURING MORE THAN 25% OF THE TOTAL INCOME AS A COMPARABILITY CRITERION. 19. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY NOT ADOPTING THE FILTER OF TRADING ACTIVITY LESS THAN 5% OF THE TOTAL REVENUE TO REJECT COMPANIES AS ADOPTED BY THE ASSESSEE IN ITS TP DOCUMENTATION. 20. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND IN FACT, BY NOT ADOPTING THE FILTER OF FEE BASED INCOME GREATER THAN 75% OF THE SALES AS A COMPARABILITY CRITERION FOR REJECTION OF COMPANIES AS ADOPTED BY THE ASSESSEE IN ITS TP DOCUMENTATION. ITA NO.149(B)/2019 5 21. THE LEARNED TPO/ AO HAVE ERRED, IN LAW AND FACT, IN COMPUTING THE ALP WITHOUT GIVING BENEFIT OF THE 3% RANGE AS MAY BE APPLICABLE. THE APPELLANT SUBMITS THAT EACH OF THE ABOVE GROUNDS IS INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, SO AS TO ENABLE THE HON'BLE TRIBUNAL TO DECIDE ON THE APPEAL IN ACCORDANCE WITH THE LAW. 3. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND NUMBERED AS 22 WHICH READS AS UNDER; BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. CISCO SYSTEMS CAPITAL (INDIA) PRIVATE LIMITED (HEREINAFTER REFERRED TO AS 'CISCO CAPITAL INDIA' OR THE 'APPELLANT'). RESPECTFULLY CRAVES LEAVE TO FILE ADDITIONAL GROUNDS OF APPEAL IN ADDITION TO THE GROUNDS OF APPEAL FILED PREVIOUSLY BY THE APPELLANT ON JANUARY 25. 2019. WHICH ARE DETAILED HEREIN BELOW: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW: 22. WITHOUT PREJUDICE TO THE FACT THAT APPELLANT'S TRANSFER PRICING ANALYSIS IS CORRECT AND SHOULD NOT BE REJECTED, IF AN ADDITION IS PROPOSED TO THE TAXABLE INCOME OF THE APPELLANT. THE APPELLANT SUBMITS THAT SUCH ADDITION (IF ANY) SHOULD BE RESTRICTED IN PROPORTION TO THE VALUE OF THE INTERNATIONAL TRANSACTION WITH THE ASSOCIATED ENTERPRISE (`AE') VIS-A-VIS THE TOTAL PURCHASES OF THE APPELLANT DURING THE YEAR (WHICH COMPRISES OF UNCONTROLLED TRANSACTIONS). THE APPELLANT CRAVES, TO CONSIDER EACH OF THE ABOVE GROUNDS OF APPEAL WITHOUT PREJUDICE TO EACH OTHER AND CRAVES LEAVE TO ADD. ALTER. AMEND. VARY. OMIT OR SUBSTITUTE THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. SO AS TO ENABLE THE HON'BLE TRIBUNAL TO DECIDE ON THE APPEAL IN ACCORDANCE WITH THE LAW. 4 IN THE COURSE OF HEARING, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR EARLIER YEARS I.E. AY: 2011- 12 & 2013-14 IN IT(TPA NOS.219/B/2018 & 688/B/2016 DATED 07-06-2019 IS AVAILABLE ON PAGES 293-304 OF THE PAPER BOOK AND OUR ATTENTION WAS DRAWN TO PARA-7 & 8 OF THIS TRIBUNAL ORDER AVAILABLE ON PAGE-295 OF THE PAPER BOOK. IT WAS SUBMITTED THAT THE ISSUE INVOLVED IN GROUND NO.1 & 2 IN THE PRESENT YEAR WAS ALSO DECIDED IN THIS EARLIER TRIBUNAL ORDER FOR EARLIER TWO YEARS. HE ITA NO.149(B)/2019 6 POINTED OUT THAT IN THE EARLIER YEARS, THE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISION AND IN THE PRESENT YEAR ALSO, THIS ISSUE SHOULD BE RESTORED BACK TO THE FILE OF THE AO WITH SIMILAR DIRECTION. 5 REGARDING THE REMAINING GROUNDS IN RESPECT OF TP ISSUES, IT WAS SUBMITTED THAT PARA-24-27 OF THIS TRIBUNAL ORDER AVAILABLE ON PAGES-302- 303 OF THE PAPER BOOK ARE RELEVANT. IN THIS REGARD, HE POINTED OUT THAT REGARDING TP ISSUE ALSO, THE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION IN THAT YEAR. HENCE, IN THE PRESENT YEAR ALSO, THE TP ISSUE ALSO SHOULD BE RESTORED BACK TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS. 7. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER GROUND NO.1 & 2 RAISED BEFORE US IN THE PRESENT YEAR, THIS IS THE GRIEVANCE OF THE ASSESSEE THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE FOR DEPRECIATION IN RELATION TO ASSETS LEASED OUT BY THE ASSESSEE GIVEN UNDER FINANCE LEASE AND HE ALSO RAISED CONTENTION IN GROUND NO.2 THAT THE AO WAS NOT ALLOWING DEPRECIATION ON THE OPENING WRITTEN DOWN VALUE (WDV)OF THE BLOCK OF ASSETS LEASED OUT UNDER FINANCE LEASE AGREEMENT. AS PER THE TRIBUNAL ORDER IN ASSESSES OWN CASE FOR EARLIER YEARS I.E. AY: 2011-12, SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL AS PER PRA-7 & 8 OF THIS TRIBUNAL ORDER AVAILABLE ON PAGE-295 OF THE PAPER BOOK AND HENCE, FOR READY REFERENCE, THESE PARAS OF THIS TRIBUNAL ORDER ARE RE-PRODUCED HEREIN BELOW: 7. BE IT AS IT MAY, AS AT PAGE 18 OF THE FINAL ASSESSMENT ORDER FOR THE AY 2011-12. THE AO RECORDS THAT THE ASSESSEE WAS ASKED TO PRODUCE COPIES OF AGREEMENTS AND THAT THE ASSESSEE HAD ONLY PRODUCED A FEW OF THEM. WE AGREE WITH THE ARGUMENT OF THE ID. DR THAT AT LEAST SOME MORE AGREEMENTS HAVE TO BE PRODUCED FOR EXAMINATION BEFORE THE AO. SO THAT THE SUBMISSIONS OF THE ASSESSEE THAT, THE TERMS ITA NO.149(B)/2019 7 OF THE AGREEMENT IN THESE FINANCIAL LEASES ARE SIMILAR TO THE TERMS OF THE AGREEMENT CONSIDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF ICDS LTD. (SUPRA) IS CORRECT OR NOT. 8. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. THE ASSESSEE IS DIRECTED TO PRODUCE COPIES OF THOSE AGREEMENTS WHICH THE AO MAY CALL FOR. THE AO SHALL EXAMINE THESE AGREEMENTS AND IF THE TERMS & CONDITIONS MENTIONED IN THESE AGREEMENTS ARE SIMILAR TO THE TERMS AND CONDITIONS MENTIONED IN THE AGREEMENTS CONSIDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF ICDS LTD. (SUPRA) AND IF THERE ARE NO MATERIAL VARIATIONS IN THE CONTRACTS, THEN DEPRECIATION HAS TO BE GRANTED TO THE ASSESSEE AS CLAIMED. WITH THESE OBSERVATIONS. WE SET ASIDE THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW. 9. IT IS SEEN THAT IN THE ASSESSMENT YEAR 2011-12, IT IS NOTED BY THE TRIBUNAL IN PARA-7 OF THE TRIBUNAL ORDER RE-PRODUCED ABOVE THAT THE ASSESSEE WAS ASKED TO PRODUCE COPIES OF AGREEMENT BUT THE ASSESSEE HAS PRODUCED A FEW OF THEM AND THE TRIBUNAL CONSIDERED IT PROPER THAT AT LEAST SOME MORE SHOULD BE PRODUCED FOR EXAMINATION BEFORE THE AO AND THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISION IN THE LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF ICDS VS CIT (CIVIL APPEAL NO.3282 OF 2008) WITH DIRECTION THAT IF THE TERMS AND CONDITIONS MENTIONED IN THE LEASE AGREEMENT ARE SIMILAR TO THE TERMS AND CONDITIONS THAT ARE MENTIONED BY THE HONBLE APEX COURT IN THE CASE OF ICDS VS CIT(SUPRA) AND IF THERE IS NO MATERIAL VARIATION IN THE CONTEXT THEN DEPRECIATION HAS TO BE GRANTED TO THE ASSESSEE AS CLAIMED. IN THE PRESENT YEAR ALSO, WE RESTORE THIS MATTER BACK TO THE FILE OF AO FOR FRESH DECISION WITH SIMILAR DIRECTION. GROUND NO.1 & 2 STANDS ALLOWED FOR STATISTICAL PURPOSES. 10. NOW WE DECIDE THE TP ISSUE. WE FIND THAT IN THE EARLIER YEAR I.E. ASSESSMENT YEAR 2011-12, SIMILAR TP ISSUE WAS THERE BEFORE THE TRIBUNAL WHICH WAS DECIDED BY THE TRIBUNAL AS PER PARA-24-27 OF THIS TRIBUNAL ITA NO.149(B)/2019 8 ORDER WHICH ARE AVAILABLE ON PAGES 302 -303 OF THE PAPER BOOK AND HENCE, WE REPRODUCE THESE PARAS ALSO FOR READY REFERENCE; 24. AFTER HEARING THE RIVAL CONTENTIONS, WE ARE OF THE CONSIDERED OPINION THAT THE ARGUMENT OF THE ID. COUNSEL FOR THE ASSESSEE THAT THE ALP OF THE EQUIPMENT PURCHASES AND IMPORTED BY THE ASSESSEE CANNOT BE DETERMINED BY COMPUTING THE 'ROCS' AT THE ENTITY LEVEL BY USING TNMM AS THE MAM. THE ASSESSEE STATES THAT ONLY 16.51% OF ITS TOTAL TRANSACTIONS WERE FROM THE AE DURING THE YEAR. THE PLI WAS CALCULATED ON THE ENTIRE ASSETS GIVEN ON LEASE (OPERATING AND FINANCE) AND THE ADJUSTMENT OF RS.50.72 CRORES PERTAIN TO THE ENTIRE TRANSACTION AND WAS NOT PROPORTIONATE TO THE PURCHASE AND IMPORT OF EQUIPMENT FROM AE. THE ID. DR AGREES THAT A MISTAKE HAS CREPT INTO THE COMPUTATION OF ALP FOR THE PURPOSE OF DETERMINATION OF THE TP ADJUSTMENT, AS IT IS WELL SETTLED THAT THE ADJUSTMENT CAN BE RESTRICTED TO ONLY QUANTUM OF INTERNATIONAL TRANSACTION WITH THE AE. 25. WE FIND STRENGTH IN THE ARGUMENT OF THE ASSESSEE THAT THE PURCHASE PRICE OF THE EQUIPMENT CANNOT BE DETERMINED BASED ON 'ROCE' ADOPTING TNMM AS THE MAM. THIS DOES NOT APPEAR TO BE A CORRECT METHOD. CUP IS A MORE DIRECT METHOD AND WHEN INTERNAL CUP IS AVAILABLE FOR DETERMINATION OF ALP, IT WOULD BE THE MOST DIRECT METHOD AND THIS, IN OUR VIEW, HAS TO BE ADOPTED AS THE MAM. 26. IT IS ALSO SUBMITTED THAT THE COST OF IMPORTED EQUIPMENT IS THE BASIS ON WHICH THE ASSESSEE DETERMINES THE RATE OF RETURN TO BE CHARGED FROM THE ULTIMATE CUSTOMER AND THAT IF THE PRICE OF THE PURCHASE IS INFLATED, THEN THE RATE OF RETURN WOULD ALSO BE HIGH. THE ID. COUNSEL FURTHER SUBMITTED THE ONLY ADJUSTMENTS THAT COULD BE MADE IS ON ACCOUNT OF DEPRECIATION ON THESE ASSETS, AS THIS IS THE ONLY ITEM OF EXPENDITURE THAT AFFECTS THE PROFIT & LOSS ACCOUNT. WE WOULD NOT EXPRESS ANY VIEW ON THIS ARGUMENT. 27. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE ITA NO.149(B)/2019 9 LAW. THE AO SHALL, WITHOUT BEING INFLUENCED WITH THE METHODOLOGY ADOPTED BY THE ASSESSEE IN ITS TP STUDY, INDEPENDENTLY DECIDE AS TO WHAT IS THE MAM FOR DETERMINATION OF ALP FOR THE INTERNATIONAL TRANSACTION OF PURCHASE OF EQUIPMENT FOR FINANCIAL LEASE FROM AE. THE AO SHALL CONSIDER EACH AND EVERY ARGUMENT OF THE ASSESSEE AND GIVE HIS CONCLUSIONS ON THE ARGUMENT. WITH THESE OBSERVATIONS, WE SET ASIDE THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW. 11. IN THE PRESENT YEAR, NO DIFFERENCE IN FACTS IS POINTED OUT BY ANY SIDE AND HENCE, RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER IN ASSESSEES OWN CASE IN EARLIER YEAR, WE RESTORE THIS MATTER ALSO TO THE FILE OF AO FOR FRESH DECISION WITH SIMILAR DECISION AS WERE GIVEN BY THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEAR AS PER PARAS -24-27 RE-PRODUCED ABOVE. ACCORDINGLY, ON TP ISSUE ALSO, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (P.K.GADALE ) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTA NT MEMBER PLACE: BANGALORE DATED: 290.05.2020 * AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6.GUARD FILE BY ORDER ASST.REGISTRAR