Schneider Electric Infrastructure Limited, Vadodara V. Dy.CIT, Circle-2(1)(1), Vadodara

ITA 361/AHD/2022

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The case involves Schneider Electric Infrastructure Limited, which appealed against the orders of the Deputy Commissioner of Income-tax and the Dispute Resolution Panel concerning transfer pricing adjustments for the assessment year 2018-2019. The primary issues revolved around the arm's length pricing of transactions involving the purchase of raw materials and components, reimbursement of expenses, and payment of trademark fees to associated enterprises. The Tribunal examined the methods used for determining the arm's length price and found discrepancies in the application of these methods by the lower authorities. The Tribunal's decision was influenced by precedents set in earlier years for similar transactions involving the same parties.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135842 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 04-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 18-09-2022
• Other Referred Cases: General Motors India (P.) Ltd. vs. Deputy Commissioner of Income-tax/Assistant Commissioner of Income-tax, Sulzer Pumps India Ltd. vs. Addl CIT, Virtusa Consulting Services Pvt. Ltd. Vs. DCIT, Tecnimont ICB (P.) Ltd. vs. Addl CIT, ACIT vs. Ishwar Manufacturing Co. Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEASSESSEEBUTVEHEMENTLY; FORTHEASSESSEETHATFOREIGNPARTIESWERETHELEASTCOMPLEXPARTIESANDWEREFIT; FORTHEASSESSEETHATWHATEVERADJUSTMENTSNEEDSTOBEMADEBYTHEREVENUEAUTHORITIES; SHRISANJEEVKUMARDEV
• Assessee Lawyers: SHRIROHITTIWARIWITH; NR.; PERTAININGTO; SELECTINGITSELFASTHETESTED; .PERTAININGTOREIMBURSEMENTOF; .BEFOREPARTING; WENOTETHATTHEAUTHORITIESBELOWHAVEAGGREGATEDTHEFOLLOWING

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’D’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRISIDDHARTHANAUTIYAL,JUDICIALMEMBER आयकरअपीलसं./ITANo.361/AHD/2022 धििाधरणवरध / Asstt.Year:2018-2019 SchneiderElectricInfrastructure Limited, Milestone87, VadodaraHalolHighwayVillage KotambiPostOffice,Jaroad, Vadodara-391510 PAN:AAPCS6078Q Vs. D.C.I.T, Circle-2(1)(1), Vadodara. (Applicant)(Respondent) Assesseeby:ShriRohitTiwariwith MsTanya,A.Rs Revenueby:ShriSanjeevKumarDev,CIT.D.R सुिवाईकीतारीख/DateofHearing:05/07/2023 घोरणाकीतारीख/DateofPronouncement:03/10/2023 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedCommissionerofIncometax(DRP-2),Mumbai-1 Ahmedabad,arisinginthematterofassessmentorderpassedunders.144C(5)of theIncomeTaxAct,1961(here-in-afterreferredtoas"theAct")relevanttothe AssessmentYear2018-2019. ITAno.361/AHD/2022 A.Y.2018-19 2 2.Theassesseehasraisedfollowinggroundsofappeal: 1.Thatonthefactsandcircumstancesofthecaseandinlaw,theorderpassedbytheLd. AOunderSection143(3)readwithsection144C(13)readwithsection144BoftheActis badinlawandliabletobequashedtotheextentitconfirmstheadditions/disallowances madeintheassessmentorder. 2.ThattheLearnedDisputeResolutionPanel("Ld.DRP")ignoredthejudicial pronouncementsanderredindismissingthegroundsofobjectionsraisedbytheAppellant andupholdingtheadjustmentproposedbytheLd,AO/LearnedTransferPricingOfficer ("Ld.TPO")withoutprovidinganycogentreasonsforthesame. 3.Thatonthefactsandcircumstancesofthecaseandinlaw,theLd.AO/Ld,TPO/Ld. DRPerredinenhancingtheincomeoftheAppellantby1NR9.22,28,801pertainingto purchaseofrawmaterialsandcomponentsthatdonotsatisfythearm'slengthprinciple envisagedundertheActandindoingso,havegrosslyerredin: 3.1.erroneouslyrejectingtheeconomicanalysisundertakenbytheAppellantinthe TransferPricing("TP")documentationmaintainedbyitintermsofsection92Dofthe Income-taxAct,1961(theAct")readwithRule10DoftheIncome-taxRules,1962 (''Rules"); 3.2.erroneouslyrejectingtheselectionofforeignassociatedenterprise("AE")astested partyforcalculationofthearm'slengthpricebytheAppellantintheTPdocumentation maintainedbyitintermsofsection92DofcheActreadwithRule10DoftheRules; 3.3.notappreciatingthefunctional,assetandriskprofileoftheAppellantwithrespectto impugnedinternationaltransactionof"purchaseofrawmaterialandcomponents'" (licensedmanufacturingsegment)vis-a-visinternationaltransactionof"saleoffinished goods"(contractmanufacturingsegment); 3.4.erroneouslybenchmarkingtheimpugnedinternationaltransactionof"purchaseofraw materialandcomponents"byadoptingthebenchmarkingapproachusedintheTPreport fortheinternationaltransactionof"saleoffinishedgoods".Indoingso,theLd.AO/Ld. TPO/Ld.DRPerredinnotappreciatingthattheAppellantoperatesasacontract manufacturerinthe"saleoffinishedgoods"transaction; 3.5.notappreciatingtheapplicationofInternalTransactionalNetMarginMethodfor comparingthemarginearnedbytheAppellantinlicensemanufacturingAEsegmentvis-a- vismarginearnedbytheAppellantinlicensemanufacturingNon-AEsegment; 3.6.rejectingthefreshsearchfurnishedbytheAppellantbyselectingitselfasthetested partyonawithoutprejudicebasis; 3.7.disregardingworkingcapitaladjustmentindeterminingthearm'slengthprofitmargin; and 4.Thatonfactsandcircumstancesofthecaseandinlaw,theLd.TPO/Ld.DRPhave erredinenhancingtheincomebyINK14,97,50,987inrelationtoreceiptofdata managementandotherrelatedservicefeespaidbytheAppellanttoitsAEsbyrejecting theTPdocumentationmaintainedbytheAppellantandarbitrarilydeterminingarm'slength priceas"Nil 1 byapplyingComparableUncontrolledPriceMethod("CUP")Method.Indoing so,Ld.TPO/Ld.DRPhavegrosslyerredin: ITAno.361/AHD/2022 A.Y.2018-19 3 4.1.consideringthedatamanagementchargespaidbytheAppellantas"receiptof managementsupportservices"; 4.2.disregardingthedocumentaryevidencessubmittedbytheAppellanttodemonstrate theactualreceiptofdatamanagementandotherrelatedservicesandthebenefitsarising thereof; 4.3.rejectingtheeconomicanalysisundertakenbytheAppellantintheTPdocumentation maintainedbyitintermsofsection92DoftheActreadwithRulelODoftheRules;and 4.4.challengingthecommercial/businesswisdomoftheAppellantinrelationtopayment inrespectofdatamanagementandotherrelatedservices. 5.Thatonfactsandcircumstancesofthecaseandinlaw,theLd.TPO/Ld.DRPhave erredinenhancingtheincomebyINR22,25,141inrelationto"purchaseoffixedassets" andproposedtobenchmarkthesamebyaggregatingthemwiththeinternational transactionpertainingto"purchaseofrawmaterialandequipment' 1 .Indoingso,theLd. TPO/Ld.DRPhavegrosslyerredinrejectingtheeconomicanalysiscarriedoutbythe AppellantinitsTPdocumentationwhereinthetransactionswereseparatelybenchmarked using"othermethod'". 6.Thatonfactsandcircumstancesofthecaseandinlaw,theLd.TPO/Ld.DRPhave erredinenhancingtheincomefay(NR43,01,134inrelationto"paymentoftrademark fees".Indoingso,theLd.TPO/Ld.DRPhavegrosslyerredin: 6.1.AllegingthattheAppellanthasincurreddoubleexpensesbypayingtrademarkfees andbeinginvolvedintheactivitiesofadvertisement^marketingandpromotion,which contributetothebrandnameof'Schneider'; 6.2.Benchmarkingtheinternationaltransactionof"paymentoftrademarkfees"by aggregatingthesamewithinternationaltransactionof''purchaseofrawmaterials". Accordingly,theLd.TPO/Ld.DRPhavegrosslyerredinrejectingtheeconomicanalysis carriedoutbytheAppellantinitsTPdocumentationwhereinthetransactionswere separatelybenchmarkedusing"comparableuncontrolledpricemethod";and 7.Thatonfactsandcircumstancesofthecaseandinlaw,theLd.TPO/Ld.DRPerredin enhancingtheincomeoftheAppellantbyINR26,87.354pertainingtoreimbursementof expensesreceivedfromtheAEsbyrecharacterizingtheinternationaltransactionas "provisionofsupportservices",therebyimputingamarkupof5%onthecostofthe reimbursementswithoutprovidinganydetailed/cogentreasonsforthesame. 8.ThattheLd,AOalsoerredinproposingtomechanicallyinitiatepenaltyproceedings undersection270A&271AAoftheAct,ontheadditionsmadeinthefinalassessment order,withoutappreciatingthefactthattheAppellanthasmadeavailableeverydocument orinformationrequestedbytheLd.TPO/Ld.DRPduringtheassessmentproceedings, whereby,noneoftheconditionsforlevyingpenaltyundertheaforementionedsectionsare applicableontheAppellantTheabovegroundsarewithoutprejudicetoeachother. TheAppellantcravesleavetoalter,amendorwithdrawalloranyobjectionshereinoradd anyfurthergroundsasmaybeconsiderednecessaryeitherbeforeorduringthehearing. ITAno.361/AHD/2022 A.Y.2018-19 4 3.The1 st and2 nd issuesraisedbytheassesseeinitsgroundsofappealare generalinnature.Therefore,thesamedoesn’trequireanyseparateadjudication. Thus,wedismissthesameasinfructuous. 4.The3 rd issueraisedbytheassesseeisthattheLd.DRPerredinconfirming theproposeddownwardadjustmentamountingtoRs.9,22,28,801/-madebythe AO/TPOonaccountofrawmaterialsandcomponentspurchasedfromtheAEs whichwasnotinaccordancewiththearm’slengthprinciples. 5.Thefactsinbriefarethattheassesseeisalimitedcompanyandengaged inthebusinessofmanufacturingpowerdistributionequipment.Theassessee duringtheyearmadeimportsofRawmaterialsandcomponentsamountingtoRs. 229,48,75,839/-fromitsAEs(30differententities)basedindifferentregionsof theworldbeingAsiapacificregion,Europeanregion,Americaregion.The assesseeintheTransferPricingStudyReport(TPSR)adoptedTNMMasthemost appropriatemethodtoarmlengththetransaction.TheAEsbasedinFrance& Germanyfromwhomtheassesseemadeimportsofrawmaterialtothetuneof 24.33%&33.49%respectivelywereselectedastestedpartyandcomparables wereselectedfromEuropeanregion.Thereasonforselectingthecomparables fromtheEuropeanregionwasstatedthatitimportedmorethan90%fromthat regiononlyhencecomparableswereselectedfromthatregion.ThePLIofthe testedpartywascalculatedtakingthebaseofoperatingprofitdividedbytotal costformula.Theassesseethusworkedoutthemarginofthetestedpartyat5% andreachedoutatALP(i.e.costplusmark-up5%).Theassesseeinthisregard submittedthatthecostplus5%mark-upwasfollowedupuniformlyacrossthe variousSchneiderGroupEntitiesasspecifiedinSchneiderGroupTransferPricing Policy. 6.TheTPSRsubmittedbytheassesseeasdiscussedabovewasrejectedby theTPOforthereasonsummarizedasunder: ITAno.361/AHD/2022 A.Y.2018-19 5 a-ThattheassesseeinitsTPSRmentionedthat5%mark-upchargedoncost ofrawmaterialbyAEsisthegrouppolicy.Buttheassesseehasnot furnishedtheGroupTransferPricingPolicyduringproceedings. b-Thattheassesseehaspurchasedtherawmaterialsandcomponentsfrom 30entitiesspreadallovertheworldwhereastodeterminetheALP,only twotestedpartieswereselected(i.e.GermanyandFrance)fromwherethe assesseewasprocuringtherawmaterialsandcomponentstothetuneof 60%outof100%ofrawmaterialsandcomponentsprocurement. c-Theassesseehasnotbroughtanythingonrecordlikefinancialstatements, auditor’sreportevidencingthattheselectionoftestedpartiesbeingforeign AEsbasedonFARanalysisareleastcomplex. d-Thattheassesseehasnotprovidedthedatarelatingtothecalculationof PLIofanyofthetestedpartiesandcostincurredbytheAEstowardsthe rawmaterialsandcomponentsonwhich5%mark-upwasadded. e-Thattheassesseewasunabletodemonstratethematrixofacceptanceand rejectionofcomparablecompanieswithreasoningaswellasthebasisof selectingtheforeigncompaniesascomparablecompaniestodeterminethe ALPofthetransactionindispute. f-Thedatausedbytheassesseeinselectingthecomparablecompanieswas forcalendaryearandnotforthefinancialyearasfollowedinIndiaaswell asthedatawithrespecttohalfofthecomparablecompanieswasnotof thelatestyear. g-Thebusinesscodesselectedbytheassesseetoextractthecomparable companieswasnotlikethebusinessofit(theassessee)andrejectionof thecompanieswhicharefunctionallydissimilarbasedonqualitative analysisduringthesearchprocessforselectionofcomparablecompanies wasnotjustifiedbasedonanyreasonashowthecompaniesare functionallydissimilar. h-TheassesseeexcludedtheGovernmentcompaniesalongwithTypeC– IndustrialCompaniesbyapplyingthesearchcriteriabasedonshareholders ITAno.361/AHD/2022 A.Y.2018-19 6 butnojustificationfornotconsideringTypeC-Industrialcompanieswas furnished. i-Theassesseehasappliedthesearchcriteriaofturnoverconsideringthe SEILtorejectthecompanieswhichhaveturnoverlessthan$10million whereasthetestedpartiesareforeignAEs.Thus,therejectionofthe comparablescannotbedonetakingintoconsiderationthefinancialsofSEIL. Further,theassesseehasnotfurnisheddetailsoftheturnoveroftheAEs forthefinancialyearindispute. j-Themarginworkedoutbytheassesseeofcomparablecompanieswas doubtfulasthefinancialsofsuchcomparablecompanieswerenotfurnished. k-Thecategorizationmadebytheassesseebetweenlicensemanufacturing andcontractmanufacturingsegmentwasonlytomisleadasthetangible andintangibleassetswerethesameforboththefunctionsandpaidthe trademarkfeestotheAEswhichcannotbepossibleincaseofcontract manufacturingsegment. l-Thattheassesseehasnotmaintainedtherequisitedocumentsasspecified insection92Dreadwithrule10DAoftheIncomeTaxRules. 6.1TheassesseebeforetheTPOalsofurnishedalternateworkingofTPSRby thetreatingitselfastestedparty.TheTPOrejectedthesamebyholdingthatthe workingoffreshsearchconductedbytheassesseeaftertreatingitselfastested partywasfurnishedatthefag-endofassessmentperiodi.e.29-07-2021where timelimitwasexpiringon31-07-2021.Further,inthefreshworkingtheactivityof certaincomparablesdidnotmatchwiththeactivityoftheassessee.Theprocess ofsearchandaccept-rejectmatrixwasalsonotdemonstrated. ITAno.361/AHD/2022 A.Y.2018-19 7 6.2TheassesseeinthesubmissionbeforeTPOalsorequestedtoprovide workingcapitaladjustmentbutthesamewasalsorejectedbytheTPO.Inthis regardtheTPOnotedthattheassesseeitselfhasnotmadesuchadjustmentwhile computingALPoftheothertransactionsuchassaleoffinishedgoods.Thesudden realizationthatcertainadjustmentonaccountofworkingshouldbemadeinthis particulartransactiononlyisafterthoughttobringmarginshownbyitcloserto theALP. 6.3TheAO/TPO,thus,intheabsenceofproperdetailsanddocuments,after adoptingtheassesseeastestedparty,comparedthemarginoftheassesseewith thecompaniesselectedbytheassesseewithrespecttothetransactionsforsale offinishedgoodstoitsAEs(i.e.forcontractsegment).Accordingly,theAO/TPO hascomputedthePLIofthecomparablesbyfollowingtheformulaOP/ORwhichis availableonpage57ofTPOorder.TheTPO,thus,computed35 th percentileat 3.33%and65 th percentileat8.43%withMedianat5.65%onlyofthecomparable companies.Thus,theAO/TPOaccordinglyhasworkedouttheproposed downwardadjustmentamountingtoRs.18,43,59,798/-pertainingtopurchaseof rawmaterialscomponents.TherelevantobservationoftheTPOisavailableon pages56to59para10.1to10.5ofTPOorder. 7.TheAggrievedassesseeraisedtheobjectionbeforetheLd.DRP.The learnedDRPhasprovidedpartialrelieftotheassessee.Therelevantobservation ofthelearnedDRPinthisregardisextractedasunder: 6.Wehaveconsideredthesubmissionsoftheassessee.WehavealsoperusedtheTPO's order.Itistobementionedthattheissueinvolvedinthegroundofobjectionno.2also cameupfordirectionsbeforetheDRPinAY2017-18.TheDRPhaveconsideredtheissue andgavedirections.TherelevantportionofthedirectionsinAY2017-18isreproducedas under: 7.Wehaveperusedthedraftassessmentorder/TPO'sorder.Wehaveconsideredthe writtenandoralsubmissionsoftheassessee. Brieflystatedthefactsrelatingtoobjectionno.2arethattheassesseeenteredinto multipleinternationaltransactionswithAES.Theobjectionno.2pertainstopurchaseof rawmaterialandcomponentsfromAESamountingtoRs.157,51.70.571/-Theassessee adoptedTNMMtobenchmarkthetransactionwiththeforeignAEsastestedparties.The ITAno.361/AHD/2022 A.Y.2018-19 8 TPOobservedthataspertheTPSR,theAEScharged5%markuponthecostofraw materialcomponentsbasedonclaimedglobaltransferpricingpolicy.TheTPOstatedthat theimpugned'globaltransferpricingpolicywasnotfurnishedtosupporttheTPSR.The TPOobservedthattheassesseehadtakentheAESbasedinFranceandGermanyas testedpartiesbecauseithadimported42.2%and17.9%ofrawmaterialandcomponents fromthem,disregardingtheotherAESbasedinEurope,Asia,Australia,US,etcwithout providingreasonablereasons.TheTPOobservedthattheassesseehadselectedcodesof dissimilarbusinessestofindcomparables.TheTPOobservedthatcertaincompanieswere rejectedonthebasisofunclearshareholdercriteria.TheTPOobservedthatturnoverfilter oflessthan$10millionwasappliedinconnectionwiththeassessee'sturnover,whenthe testedpartiesweretheAESTheTPOobservedthattheassesseehadnotgivenaccept/ rejectmatrix.TheTPOobservedthattheassesseedidnotdemonstratesearchprocess withthedatabasetoderivecomparables.TheTPOfurtherobservedthatsaleoffinished goodstheassesseehadtakentheIndianentityasthetestedpartytodecidethearm's lengthpriceofthesaleswithTNMM.TheTPO,therefore,wantedtochangethe benchmarkingoftheinternationaltransactionsofpurchaseofrawmaterialand components.Ontheotherhand,theassesseedefendeditsTPSR.TheTPOresponded pointwisewithreasonsforrejectionofeachargumentindefenceoftheTPSRbythe assessee,inpara5.2to5.12oftheTPO'sorder.Theassesseealsomadeafreshsearch consideringitselfasthetestedparty.TheTPOfounddefectsinthefreshsearchinpara 5.10oftheTPO'sorder. AfterperusingthereasonsgivenbytheTPOandtheargumentsoftheassesseebeforethe TPOaswellastheDRP,weareoftheconsideredopinionthattheapproachoftheTPO hasmerits.Therefore,thegroundofobjectionno.2(sub-grounds2.1to2.8)is dismissed." 7.Weareoftheconsideredviewthatthematerialfactsandcircumstancesaswellasthe applicablelawhavenotundergoneanychangewhencomparedtotheearlieryearwhere theDRPhadanoccasiontodecidetheissueunderconsideration.Therefore,respectfully followingthedirectionsoftheDRPinAY2017-18,thesubgrounds2.1to2.6ofthe groundofobjectionno.2aredismissed. Asfarasthesubground2.7isconcerned,weareoftheconsideredopinionthatthe impugnedTPadjustmentshouldrelateproportionatelytorelatedparty(AEs)transactions. TheTPOisdirectedtoadoptRs.9,87,55,076/-astheTPadjustmentinsteadofRs. 21,13,76,446/-afterrulingoutanymistakeintheTPadjustmentcomputationpresented beforeus.Thesubground2.7isdisposedoffaccordingly. 8.BeingaggrievedbytheorderofthelearnedDRPtheassesseeisinappeal beforeus. 9.ThelearnedARbeforeusfiledtwopaperbooks(VolumeI&II)running frompages1to1160andcontendedtheTribunalintheowncaseoftheassessee intheimmediatelyprecedingassessmentyearhasdecidedtheissueinfavourof theassessee.Accordingly,itwasprayedbythelearnedARthattheissueonhand raisedbytheassesseeshouldbedecidedinitsfavour. ITAno.361/AHD/2022 A.Y.2018-19 9 10.Ontheotherhand,learnedDRbeforeuscouldnotcontrovertthe argumentsadvancedbythelearnedARfortheassesseebutvehemently supportedtheorderoftheauthoritiesbelow. 11.Wehaveheardtherivalcontentionofboththepartiesandperusedthe materialsavailableonrecord.Attheoutset,wenotetheissueraisedbythe assesseeinthecurrentappealisidenticaltotheissueraisedbytheassesseeinits ownappealforA.Y.2017-18bearingITANo.64/Ahd/2022.Therelevantground ofappealoftheassesseeforA.Y.2017-18hasbeendecidedbythistribunalvide orderdated07-12-2022infavouroftheassessee.Therelevantfindingofthe Tribunalinthisregardreadsasunder: 10.Wehaveheardtherivalcontentionsofboththepartiesandperusedthematerials availableonrecord.Thefactsofthecasehavebeenelaboratedinthepreceding paragraphwhicharenotindispute.Therefore,forthesakeofbrevityandconvenience,we arenotinclinedtorepeatthesame.Admittedly,theassesseehastreatedtheforeignAEs asthetestedpartytobenchmarkthetransactionsforitspurchaseofrawmaterialsand componentsfromtheAE’swhichwasnotacceptedbytheauthoritiesbelow.Thusthe1st controversythatarisesforouradjudicationwhethertheforeignAE’scanbetreatedasthe testedpartyinthegivenfactsandcircumstances. 10.1Inthisregardwenotethattheselectionofthetestedpartyisamatterofdispute sincebeginningoftheintroductionoftransferpricingundertheAct.Itisforthereason thattheActdoesnotdefinetheconceptof‘TestedParty’. 10.2However,OECDhasdefinedindetailtheconceptoftestedpartyinitsguidelinesfor MultinationalEnterprisesandTaxAdministration.Furtherthesamehasalsobeendefined inUNManual. 10.3TheOECDGuidelinesdefines‘testedparty’as“theonetowhichatransferpricing methodcanbeappliedinthemostreliablemannerandforwhichthemostreliable comparablecanbefound,i.e.itwillmostoftenbetheonethathasthelesscomplex functionalanalysis.”UNManualdefinestestedpartyinthesimilarmanner.ATestedparty shouldhavethefollowingattributes: 1-Availableofreliableandaccuratedataforcomparison 2-LeastComplex(amongstthepartiestothetransaction) 3-Dataavailablecanbeusedwithminimaladjustments. 10.4Inthelightoftheaforesaiddiscussion,weanalyzethefactsofthepresentcaseand notethattheassesseehascarriedthedetailedeconomicanalysiswhilebenchmarkingthe transactionsenteredwithitsAEs.Thisfactcanbeverifiedfromthenecessarydetailsof TPSRplacedonpages22to34ofthepaperbook.Underthiseconomicanalysis,the assesseealsoclaimsthatthegroupi.e.SEILcharges5%markuponthecostofraw materialsuppliedbytheAEsasthegrouppolicyandfurtherfurnishesthedetailsof17 comparablesintheformofthetablescontainingthefinancialdataintheformof percentagesfordifferentyearsi.e.2014,2015and2016.However,wefindthatthis ITAno.361/AHD/2022 A.Y.2018-19 10 economicanalysiswassufferingfromcertaindefectswhichhasbeenhighlightedbythe TPOinhisorderandthesamehasalreadybeenelaboratedintheprecedingparagraph.As suchwefindthattheassesseehasfailedtofurnishsufficientdocumentaryevidenceinthe formoffinancialstatementsoftherelevantyearoftheforeignAE’stosubstantiatethe margin.Therewasnogrouptransferpolicyfurnishedbytheassessee.Theassesseehas consideredthefinancialstatementsof2AEsbasedinGermanyandFrancewherefromit wasprocuringtherawmaterialandcomponentstothetuneof60%only.Itimpliesthat thefinancialsofotherAE’sbasedindifferentregionsincludingtheEuropewerenot considered.ThustheTPOdisagreedwiththecontentionoftheassesseefortreatingthe foreignAE’sasthetestedpartywhichwassubsequentlyconfirmedbytheLd.DRP.Even atthetimeofhearing,thelearnedARappearingonbehalfoftheassesseehasnot broughtanythingonrecordcontrarytothefindingoftheauthoritiesbelow.Inviewofthe aboveandintheabsenceofnecessaryinformations,wedisagreewiththecontentionsof theLd.ARfortheassesseethatforeignpartiesweretheleastcomplexpartiesandwerefit tobeselectedastestedparty.ThoughtheassesseehasfurnishedtheFARAnalysisofthe foreignAE’svizavizoftheassesseeintheTPSRbutsameisnotenoughtodecidethe testedpartyuntilandunlessthereliabledataisbroughtonrecord.Inotherwords,the financialdatareflectingthetransactionisequallyimportanttodeterminethePLIofthe testedpartyvizavizthecomparables. 10.5Inholdingso,wealsodrawsupportandguidancefromtheorderofthecoordinate benchofthistribunalinthecaseofGeneralMotorsIndia(P.)Ltd.vs.Deputy CommissionerofIncome-tax/AssistantCommissionerofIncome-taxreportedin37 taxmann.com403whereitwasheldthattestedpartyshouldbetheleastcomplexentity forwhichreliabledatainrespectofitselfandinrespectofcomparablesisavailable.The Tribunalacceptedthattestedpartycouldbethelocalentityoraforeignassociate enterprise(AE).Thus,oncetheforeignAE’shavebeenrejectedtobetreatedasthetested party,theassesseeshouldbetreatedasthetestedpartytodeterminetheALPofthe transactionsrepresentingtheimportofrawmaterialandcomponentsfromtheassociated enterprises.TheassesseeaccordinglyhasworkedoutitsPLIat2.29%aftermakingthe adjustmentofthefollowingitems: a-Provisionfordoubtfuldebtsandthelitigationexpenses b-Provisionfortheforexlosses c-Adjustmentofworkingcapital. 10.6TheassesseePLIwascomparedwiththePLIofcomparableswhichwasselectedby theassesseeaselaboratedintheprecedingparagraph.ThePLIoftheassesseewasfalling withintherangeof35thand65thpercentile(i.e.-0.23%and4.76%)ofthecomparables thusitwasallegedbytheassesseethatthedifferencebetweenthePLIoftheassesseeviz avizofthecomparablesasdiscussedaboveiswithintherangeasprescribedunderthe Act.Thusitwascontendedbytheassesseethatithascarriedoutthetransactionsforthe purchaseofrawmaterialandcomponentsattheArmLengthPriceandthereforeno adjustmentofwhatsoeveriswarranted. 10.7However,theTPOhasrejectedthecontentionoftheassesseeandhasadoptedthe comparablesselectedbytheassesseeforitscontractmanufacturingactivityand determinethePLIofthecomparablesat5.7%.AssuchthePLIoftheassesseevizavizof thecomparablecompanieshaveallbeenelaboratedintheprecedingparagraph. 10.8ThequestionariseswhethertheactionoftheTPOwascorrecttoadoptthe comparableselectedbytheassesseeforitscontractmanufacturingactivityforthepurpose ofcomparingthemarginwiththePLIoftheassesseetodeterminetheALP.Theanswer standsinnegative.Itisforthereasonthatthecomparableselectedbytheassesseewere basedontheimportofrawmaterialswhereasthecomparableusedbytheTPOwere basedonsaleoffinishedgoods.Assuchthebasis/methodologyforselectionof ITAno.361/AHD/2022 A.Y.2018-19 11 comparableswithrespecttopurchaseofrawmaterialsandcomponentsvizavizsaleof finishedgoodscannotbethesame.Thus,theentirebasisadoptedbytheTPOfor comparingthePLIoftheassesseewithrespecttotheimportofpurchasesofraw materialsandcomponentsvizavizsalesoffinishedgoodsisbaselessanddevoidofany merit.Itisforthereasonthatboththetransactionsaredifferentandindependenttoeach otherandthereforenonexusofwhatsoeverbetweenthemcouldbeestablished.Thisfact wasverymuchbroughttothenoticeoftheTPOduringtheassessmentproceedingsbythe assesseevideletterdated25thJanuary,2021.Therelevantextractofthesubmissionof theassesseeisreproducedasunder: “SectionV:Incorrectapplicationofbenchmarkinganalysisusedforsaleoffinished goodstodeterminetheALPforthetransactionpertainingtopurchaseofraw material Attheoutset,theAssesseewouldliketohumblysubmitthatyourgoodselfhas grosslyerredinadoptingthebenchmarkanalysisofsaleoffinishedgoodsfor benchmarkingtheinternationaltransactionofpurchaseofrawmaterials. Whiledoingso,yourgoodselfhasfailedtoappreciatethattheAssesseehasbeen characterizedasacontractmanufacturerfortransactionofsaleoffinishedgoods. Ontheotherhand,theAssesseehasbeenperformingthefunctionsofalicenced manufacturerwithrespecttorawmaterialandcomponentsprocuredfromitsAEs. Inlightsoftheabove,theAssesseehumblysubmitsthatthebenchmarking analysisofboththetransactioncannotbesimilarandseparateanddistinct benchmarkinganalysisoughttobeperformedforbenchmarkinginternational transactionofpurchaseofrawmaterials,inordertosubstantiatethesaid argument,theAssesseewouldnowliketodetaildifferenceinfunctional,assetand riskprofileofacontractmanufacturervis-a-vislicensedmanufacturerthereby justifyingthefactthatseparateanddistinctbenchmarkinganalysisoughttobe performed. Licensedmanufacturer Alicensedmanufacturerproducesgoodsunderalicenceagreement,using manufacturingintangiblesownedbythelicensor,suchaspatents,productdesigns, manufacturingprocessandknow-how.Thelicencedmanufacturerpaysroyalties fortheuseofthelicencedintangibles,typicallybuysrawmaterialsandsemi- finishedgoodsonitsownaccountandholdsinventoriesoftherawmaterialsand finishedgoods.Therefore,itbearstherisksassociatedwithbothholding inventoriesandsellingproducts,includingdemandandpricingrisk.Thelicenced manufacturertypicallyownsplantandequipmentnecessaryformanufacturing operationsandinvestsintrainingitslabourforce. Figure1–LicensedManufacture ITAno.361/AHD/2022 A.Y.2018-19 12 Contractmanufacturer Acontractmanufacturerontheotherhandassumeslesserrisksthanatypical licencedmanufacturer.Thecontractmanufacturerproducesgoodsfora manufacturingprincipalthatdirectlybearsdemandandfinalcustomerpricingrisk. Thecontractmanufactureriscompensatedbytheprincipaltypicallythrougha returntoenablethecontractmanufacturertoearnanarm's-lengthmark-upon totalcosts.Inaddition,itissubmittedthatiftheproductsmadebythecontract manufacturercomplywiththeprincipal'sproductandqualityspecifications,the principalusuallyguaranteetopurchasethegoods.Therefore,thecontract manufacturermaybearrelativelylimitedrisksassociatedwithholdingfinished goodsandsellingthem,comparedwithalicencedmanufacturer. Figure2:Contractmanufacturer Table1:CategorizationofSEIL CharacterizationDescriptionSEIL'sfunctions ITAno.361/AHD/2022 A.Y.2018-19 13 LicensedManufacturer Producesgoodsundera licenceagreement. Paysroyaltyforusing manufacturingintangibles ownedbythelicensor. Bearstherisksassociated withbothholding inventoriesandselling products.including demandandpricingrisk. Typicallyownsplantand equipmentnecessaryfor manufacturingoperations andinvestsintrainingits labourforce- SEILprocuresrawmaterials andcomponentsforthe manufacturingofpower distribution&automation equipment. SEILisresponsiblefor maintainingtheinventory. Thefunctionsperformedin thisregardincludes scheduling,warehousing, maintenanceofstockasper forecastingandrequirement ofcustomersetc. Asthemanufacturedproducts producedbySEILaresoldto end-customers,SEILfacesthe entirepricerisk. SLILownsandutilizesits manufacturingfacilities, distributinginfrastructure, officepremises,warehousing facilities,plant&equipment communicationfacilities, furnitureandfixturesetc.for thepurposeofitsbusiness.  ContractManufacturerProducesgoodsfora manufacturingprincipal. Principalbearsdemand andfinalcustomerpricing risk. Earnsanarm's-length mark-uponiota!costs. Bearslimitedrisks associatedwithholding finishedgoodsandselling them. SEILmanufacturesproducts foritsAEsonly. SalesaremadetoAEsat inter-Companyprices,which aregenerallybasedoncost plusmark-uponaperunit basis. TheAEssellsitsproductsin theopenmarketandbears thecompetitivepricing pressuresandrisks. TheAssesseewouldfurtherliketoplacerelianceonSulzerPumpsIndiaLtd, MumbaiV.AddlCIT10(3),Mumbtii[ITA1453/MUM/2014],whereintheMumbai ITATupheldthedistinctionbetweenacontractmanufacturerandalicensed manufacturer. "9.Weheardthepartiesandperusedtherecord.Wenoticethatthetax authoritieshaveconsideredtheassesseeasa"ContractManufacturer"and accordinglydisallowedtheRoyaltyandTechnicalknowhowexpenses.Inthe writtensubmissions,theassesseehasdemonstratedllmtthepurposeofobtaining approvalforsalesfromitsAEistoavoidcompetitionbetweentheAEs.The assesseehasalsosubmittedthatoutofthetotalexportsalesofRs.87.63crores. theexportsmadetoAEswasonlyRs.37.70croresandtheremainingexportshave beenmadetonon-AEs.Hadtheassesseebeenacontractmanufacturer,itcould nolhavesoldthegoodstonon-AEs.Accordingly,itwassubmittedthatthe restrictionsplacedbytheAEIntheagreemententeredwiththeassesseewaswith ITAno.361/AHD/2022 A.Y.2018-19 14 theobjectiveofensuringsmoothbusinessoperations.Wefindmeritinthesaid contentionsoftheassessee.Iftheassesseewasreallyacontractmanufactureras consideredbythetaxauthorities,itwouldbegettingonlyafixedamountofprofit andfurtheritwouldnotbeabletoexportgoodsonitsownaccount.Thefacts availableonrecordwouldshowthattheassesseehasbeensellinggoodstoNon- AEsalso.AccordinglyweholdthattheassesseeshouldbeconsideredasaLicence Manufacturerinthefactsandcircumstancesofthecase." (Emphasissupplied) Inthisregard,theAssesseesubmitsthatallthefinishedgoodsmanufacturedby theassesseearesolddirectlytoitsAEs,therebybearrelativelylimited/norisks, indicatingthatwithrespecttothesalestransactions,theAssesseeisacontract manufacturer.Whereasasalicensedmanufacturer,theAssesseehastwo segments,viz.AEandNon-AE(referPage148oftheTPstudysubmittedvide submissiondatedJune10,2019)andundertakingthefunctionsofalicence manufacturer. Further,theeconomicanalysisundertakentobenchmarkbothcategorizationsalso varysignificantly.Suchas,whileconductingasearchforcompatiblesfunctionally similartoalicensedmanufacturer,therelevantfilterstobeappliedwould generallyincludeselectingcomparablecompanieshavinginventory/sales>15%, selectingcomparablecompanieshavingnetfixedassets/sales>15%and selectingcomparablecompanieshavingresearchanddevelopmentexpenses/ sales<5%.Therefore,theAssesseehumblysubmitsthatboththeaforesaid transactionsarenotidenticalinnature.” 10.9.Inviewoftheabove,theactiontakenbytheTPOwhichwassubsequentlyconfirmed bytheLd.DRPisnotmaintainableinthegivenfactsandcircumstances. 10.10NowtheaspectthatemergesisthiswhethertheTPOwasrightinrejectingthe comparablesselectedbytheassesseewithrespecttoitstransactionsofpurchasesofraw materialsandcomponentsfromtheAE’s.Inthisconnectionwenotethattheassesseehas giventhenecessarydetailsduringtheassessmentproceedings.Thisfactbeverifiedfrom thepages66to89oftheorderoftheld.DRP.Intheabsenceofanyspecificdefect pointedoutbytheauthoritiesbelowwithrespecttocomparableselectedbytheassessee, wearenotinagreementwiththedecisionoftheauthoritiesbelowforselectingtheother comparablewhichwerechosenbytheassesseeforitssaleoffinishedgoodsofitscontract manufacturingunit.Inholdingso,wedrawsupportandguidancefromthejudgmentof Hon’bleDelhiITATinthecaseofFrigoglassIndia(P.)Ltd.vs.DeputyCommissionerof Income-taxreportedin45taxmann.com101whereitwasheldasunder: “OnceassesseehasgivenamethodologyforworkingofALPonselectionofa particularmethodsupportedbyappropriatecomparables,theworkingcanbe dislodgedbyTPOonthebasisofcogentreasonsandobjectivefindings.Inthis caseexcepttheoreticalassertionsandgeneralizedobservations,noobjective findingshavebeengiventocometoareasonedconclusionthatassessee's adoptionofCPMformanufacturingsegmentandRPMfortradingsegmentwas factuallyandobjectivelynotcorrect.ThustherejectionofmethodsbyTPOas adoptedbyassesseeisbereftofanycogencyandobjectivity.Thesameisawork ofguessingandconjectured.SimilarlytheTNMmethodappliedbytheTPOsuffers fromthesameinherentaberrationsasmentionedabove.Inthesecircumstances theassesseemethodsofCPMandRPMrespectivelyworkedbyapplying appropriatecomparablesistobeupheld.ThustheALPworkingreturnedbythe assesseeisupheld.[Para5]” 10.11Movingfurther,admittedlytheassesseehascategorizeditssegmentsinfour compartmentswhichhavebeendiscussedintheprecedingparagraph.Theassessee furtherhasmadetwocompartmentsunderthecategoryoflicensemanufacturingwhich ITAno.361/AHD/2022 A.Y.2018-19 15 wasbasedonthebasisofpurchasesforrawmaterialsandcomponentsfromassociated enterpriseandnon-associatedenterprise. 10.12Allthesesegmentsweredulyreportedunderthetransferpricingstudyreportand thisfactcanbeverifiedfromthepage148ofthepaperbook.Thisfactwasalsoaccepted bytheTPOinhisorderthatthereexistsaseparateAESegmentunderlicense manufacturing.AsperthejudgmentofHon’bleMadrasHighCourtinthecaseofVirtusa ConsultingServicesPvt.Ltd.Vs.DCITreportedin124taxmann.com309,thetransfer pricingreportisconsideredasoneoftheauthenticdocumentwhichcannotbeignored whiledeterminingtheALPuntilandunlesssomeadversematerialisavailableonrecord. Therelevantextractoftheorderisreproducedbelow: “Asalreadypointedout,itisnotacasewheretherewerenomaterialproducedby theassesseetoestablishthefunctionalriskassumedbytheforeignAEs.The materialwasavailablebeforetheTPObuttheTPOnon-suitedtheassesseeonthe groundthatsuchcontentionbyreferringtotheforeignAEsastestedpartywas notpartofTPdocumentation.Thisfindingisincorrect.Interestinglyinthecaseof inthecaseonhandtheTPOrejectedthedataplacedbytheassesseeintheirTP documentationandundertookafreshsearchforexternalcomparablesandarrived atafinallistof12comparables.Therefore,whentheTPOhimselfhasnot attachedanysanctitytotheTPdocumentationassubmittedbytheassessee, couldnothaveforeclosedtheassesseefromcanvassingtheissuethatthe subsidiariesareleastcomplexentitieswhichshouldbetakennoteof.” 10.13Applyingtheaboveprincipleinthecaseonhand,wenotethat,theassesseebefore theLd.DRPhastakeninternalTNMMmethodandcomparedthemarginofAEsegment withnon-AEsegmentunderlicensemanufacturing.Theassesseeregardingthishasplaced therelianceonRule10B(1)(e)oftheRules.Therelevantsubmissionoftheassessee beforetheDRPisextractedonpages59to66intheorder. 10.14However,wenotethattheLd.DRPwithoutconsideringtheselectionofinternal TNMMbytheassesseeandwithoutpointingoutanydefectthereinhasupheldtheorderof theTPO.Therefore,firstweneedtounderstandwhetherselectionofinternalTNMMby theassesseeisinaccordancetotheprovisionsofrule10Boftherules. 10.15Beforegoingtotheparticularissue,wefeeltorefertheprovisionsofrule10B(1)(e) oftheruleswhichreadsasunder: 10B.(1)Forthepurposesofsub-section(2)ofsection92C,thearm'slength priceinrelationtoaninternationaltransaction[oraspecifieddomestic transaction]shallbedeterminedbyanyofthefollowingmethods,beingthemost appropriatemethod,inthefollowingmanner,namely:— (a)============ (b)===== (e)transactionalnetmarginmethod,bywhich,— (i)thenetprofitmarginrealisedbytheenterprisefroman internationaltransaction[oraspecifieddomestic transaction]enteredintowithanassociatedenterpriseis computedinrelationtocostsincurredorsaleseffectedorassets employedortobeemployedbytheenterpriseorhavingregardto anyotherrelevantbase; (ii)thenetprofitmarginrealisedbytheenterpriseorbyan unrelatedenterprisefromacomparableuncontrolledtransaction oranumberofsuchtransactionsiscomputedhavingregardto thesamebase; ITAno.361/AHD/2022 A.Y.2018-19 16 (iii)thenetprofitmarginreferredtoinsub-clause(ii)arisingin comparableuncontrolledtransactionsisadjustedtotakeinto accountthedifferences,ifany,betweentheinternational transaction[orthespecifieddomestictransaction]andthe comparableuncontrolledtransactions,orbetweentheenterprises enteringintosuchtransactions,whichcouldmateriallyaffectthe amountofnetprofitmarginintheopenmarket; (iv)thenetprofitmarginrealisedbytheenterpriseandreferredto insub-clause(i)isestablishedtobethesameasthenetprofit marginreferredtoinsub-clause(iii); (v)thenetprofitmarginthusestablishedisthentakeninto accounttoarriveatanarm'slengthpriceinrelationtothe internationaltransaction[orthespecifieddomestictransaction]; 10.16Sub-clause(i)providesthatfirstnetprofitrealizedbytheenterprisefroman internationaltransactionshouldbecomputed.Subclause(ii)providesthatnetprofit realizedfromuncontrolledtransactionsshallbecomputed.Theprofitfromuncontrolled transactionscanberealizedbythe(i)enterpriseor(ii)unrelatedenterprisefrom comparableuncontrolledtransaction.ThustheRulesrecognizeandaccepttheadoptionof netprofitrealizedbytheenterprisefromcomparableuncontrolledtransaction.Sucha resultshouldbepreferredovernetprofitrealizedbyunrelatedpartiesfromcomparable uncontrolledtransaction.Thisisbecause,suchanalysisismoremeaningfulastherelevant data,factsandfeaturesofboththesegmentsareavailableandaremorereliable.Onthe followingdecisions,ithasbeenheldthatinternalcomparablesaretobepreferred:- a.AbhishekAutoIndustriesLtd.v.Dy.CIT[2011]9taxmann.com27(Delhi)- heldthatinternalCPMisbetterthanexternalTNMM b.Asstt.CITv.SchlafhorstMarketingCo.Ltd.[2011]13taxmann.com104/47 SOT120(Mum.)(URO)-heldthatinternalTNMMtobeadopted c.Asstt.CITvBirlaSoftLtd.[2011]12taxmann.com31/46SOT437(Delhi)- internalTNMMaccepted d.DestinationoftheWorld(Subcontinent)(P.)Ltd.vAsstt.CIT[2011]12 taxmann.com310/47SOT1(Delhi)-heldthatpreferenceshouldbegivento internalcomparison. 10.17InthelatestorderoftheMumbaiTribunalinthecaseofTecnimontICB(P.)Ltd.v. Addl.CIT[2012]138ITD23/24taxmann.com28(Mum.)(TM),theHon'bleThirdMember wasconsideringthefollowingissueonadifferenceofopinion:- "Whetherinthefactsandcircumstancesofthecase,thenetmarginrealizedfroma transactionwithanAssociatedEnterprise(AE)foundandacceptedatArm'sLengthPrice (ALP)canbetakenasacomparablebeinganinternalcomparableforcomputationof (sicarm)ALPofaninternationaltransactionwithanotherAE?" 10.18TheHon'bleThirdMemberobservedthattheinternaluncontrolled transaction/comparableistobegivenpreferencetotheexternalcomparables.The relevantfindingoftheHon'bleTribunalatpara10readsasfollows:- "10.Clause(i)ofRule10B(e)stipulatesthatnetprofitmarginfroman internationaltransactionwithanAEiscomputedinrelationtocostincurredor saleseffectedorassetsemployedetc.Clause(ii)ismaterialforthepresent purpose.Itprovidesthatthenetprofitmarginrealizedbytheenterpriseorbyan unrelatedenterprisefromacomparableuncontrolledtransactionoranumberof suchtransactionsiscomputedhavingregardtothesamebase.The'base'ofthis provisiontakesonebacktoclause(i)whichreferstocostincurredorsales effectedorassetsemployedortobeemployed.Onsplittingclause(ii)intotwo parts,itdivulgesthatthereferenceismadetointernalandexternalcomparables. Onepartofclause(ii)refersto'thenetprofitmarginrealizedbytheenterprise...... ITAno.361/AHD/2022 A.Y.2018-19 17 fromacomparableuncontrolledtransaction'andtheotherparttalksof'thenet profitmarginrealized.......byanuncontrolledenterprisefromacomparable uncontrolledtransaction'.Ittranspiresthatwhereasthefirstpartreferstothe profitmarginfrominternalcomparableuncontrolledtransactions,thesecondpart referstoprofitmarginfromanexternalcomparableuncontrolledtransaction.Thus itisdiscerniblethatwhatistobecomparedunderthismethodisprofitfroma comparableuncontrolledtransaction.Theword'comparable'mayencompass internalcomparableorexternalcomparable.Thereiscueintheruleitselfasto preferencetobegiventointernalcomparableuncontrolledtransactionsvis-à-vis externallycomparableuncontrolledtransactions.Itisbecausethedelegated legislaturehasfirstlyreferredtothenetprofitmarginrealizedbytheenterprise (internal)fromacomparableuncontrolledtransactionand,thereafter,itpoints towardsnetprofitmarginrealizedbyanunrelatedenterprise(external)froma comparableuncontrolledtransaction.Thuswherepotentialcomparableisavailable intheshapeofanuncontrolledtransactionofthesameassessee,itislikelyto havehigherdegreeofcomparabilityvis-àviscomparablesidentifiedamongstthe uncontrolledtransactionsofthirdparties.Theunderlyingobjectbehindcomputing ALPofaninternationaltransactionistofindouttheprofitswhichsuchenterprise wouldhaveearnedifthetransactionhadbeenwithsomethirdpartyinsteadof relatedparty.Whenthedataisavailableshowingprofitmarginofthatenterprise itselffromathirdparty,itisalwayssafeandadvisabletohaverecoursetosuch internalcomparablecase.Thereasonispatentthatthevariousfactorshaving bearingonthequalityofoutput,assetsemployed,inputcostetc.continueto remainbyandlargesameincaseofaninternalcomparable.Theeffectof differenceduetosuchinherentfactorsoncomparisonmadewiththethirdparties, getsneutralizedwhencomparisonismadewithinternalcomparable.Ex consequenti,itfollowsthataninternalcomparableuncontrolledtransactionis morenoteworthyvis-à-visitscounterparti.e.externalcomparable". 10.19Intheinstantcase,theassessee,hasappliedtheinternalTNMMmethodasmost appropriateandfromtheaforesaidrulewenotethattherule10Boftheruleshastobe applytoselectthemethodforthepurposetodeterminetheALPandTNMMmethodcould beappliedasinternalaswellasexternal. 10.20Atthisjuncture,wearealsoinclinedtodealwithonemoresituationi.e.whetherthe marginshownbytheassesseeunderthecontractmanufacturingcanbecomparedwith thelicensemanufacturing.Inthisregard,wefindthattheriskinvolvedundercontract manufacturingislessandtheassesseeisalsonotrequiredtomaintaintheinventoryatits ownriskwhereasinthecaseoflicensemanufacturingtheassesseehastomaintainits owninventoryandgreaterriskisattachedunderthissegment.Thus,weareoftheview thattheprofitmarginofthecontractmanufacturingsegmentcannotbecomparedwith thelicensemanufacturing.Assuchanapplecanbecomparedwithanotherapplethatis theunderlyingtheory/conceptofthetransferpricingprovisions.Inthisconnectionwe drawourattentiontotheorderofITATChandigarhinthecaseofACITVs.Ishwar ManufacturingCo.Pvt.Ltd.reported67taxmann.com152whereinitwasheldthatFor makingacomparativeanalysis,applesaretobecomparedwithapplesandnot withoranges. 10.21Inviewoftheabove,wearenotconvincedwiththeorderoftheauthoritiesbelow foradoptingthemarginofthecontractmanufacturingascomparabletodeterminetheALP withrespectthepurchaseofrawmaterialsfromtheAE’sundertheactivityoflicense manufacturing. ITAno.361/AHD/2022 A.Y.2018-19 18 10.22Beforeparting,wenotethattheauthoritiesbelowhaveaggregatedthefollowing transactionsforthepurposeofdeterminingtheALP: i.Purchaseofrawmaterialsandcomponents ii.Purchaseoffixedassets iii.Purchaseofintangibleassets iv.Paymentoftrademarkfees 10.23Oncewehaveacceptedthetransactionshownbytheassesseefortheimportofraw materialsandcomponentsatthearmlengthprice,noadjustmentwithrespecttoother transactionsaggregatedwiththetransactionsindisputeisrequiredtobemade.Inother words,theimpugnedtransactionsdiscussedabovehavetobetreatedatarmlengthprice asapplicableforthepurchaseofrawmaterialsandcomponents. 10.24Withoutprejudicetotheabove,itwasalsocontendedbeforeusbythelearnedAR fortheassesseethatwhateveradjustmentsneedstobemadebytherevenueauthorities shouldbewithrespecttotheinternationaltransactionswiththeAEwhichareindispute. Assuchtherevenuecannotconsiderallthetransactionsforthepurposeofmakingthe additiontakingtherateoftheALP.WefindforceintheargumentofthelearnedARfor theassesseeandaccordinglydirecttherevenuetomaketheadjustmentswithrespectto theinternationaltransactionswiththeAE’swhichareindispute.However,weare conscioustothefactthatthedirectionatthisstagewillnotmakeanydifferencetothe assesseeforthereasonthattheappealhasbeendecidedinfavouroftheassessee. However,wehaverecordedthisobservationforthestatisticalpurposes. 10.25Inviewoftheaboveandafterconsideringthefactsintotalitywereversethefinding ofthelearnedDRPanddirecttheAOtodeletetheadditionmadebyhim.Hencethe groundofappealoftheassesseeisallowed. 11.1Beforeus,nomaterialhasbeenplacedonrecordbytheRevenueto demonstratethatthedecisionofTribunalasdiscussedabovehasbeensetaside/ stayedoroverruledbytheHigherJudicialAuthorities.Beforeus,Revenuehasnot placedanymaterialonitsrecordpointingoutanydistinguishingfeatureinthe factsofthecasefortheyearunderconsiderationandthatofearlieryearnorhas placedanycontrarybindingdecisioninitssupport.Thus,respectfullyfollowingthe orderthistribunalintheowncaseofassessee,weherebysetasidethefindingof thelearnedDRPanddirecttheAO/TPOtodeletetheenhancementofincomeon accountofTPadjustmentinthetransactionofimportofRawmaterialand components.Hencethegroundofappealoftheassesseeisherebyallowed. 12.ThenextissueraisedbytheassesseevidegroundNos.4to4.4isthatthe Ld.TPO/Ld.DRPhaveerredinenhancingtheincomebyINR14,97,50,987/-in relationtoreceiptofdatamanagementandotherrelatedservicefeespaidbythe ITAno.361/AHD/2022 A.Y.2018-19 19 AppellanttoitsAEsbyrejectingtheTPdocumentationmaintainedbythe Appellantandarbitrarilydeterminingarm’slengthpriceas‘Nil’byapplying ComparableUncontrolledPriceMethod(“CUP”)Method. 13.Thenecessaryfactsarethattheassesseeintheyearunderconsideration hasmadeapaymentamountingtoRs.14,97,50,987/-withrespecttotheservices availedinrelationtodatamanagementandotherrelatedservicesfromSchneider ElectricIndustriesSAS,FranceanAE.Theassesseefurthersubmitsthatthe servicesavailedwereInformationTechnologyServicessuchassupportforonline orweb-basedtools,softwarelicenses,assistanceinsmoothfunctioningforIT productsanddatabaseetc. 14.Theassesseefurthersubmittedthatsuchservicesarealsoprovidedbythe variousgroupentitiestoothergroupentities.Itisthegrouppolicythatthecost incurredbytheserviceproviderentitiesintheprocessofprovidingimpugned servicestothegroupcompaniesgetscentralizedsubsequentlytheimpugnedcost allocatedtotheservicereceiverentities/AEsbyadoptingcertainallocations method.Accordingly,alltheservicereceiverentitiesreimbursethecosttothe serviceproviderentityalongwithmarkupof6%. 15.However,theAOfoundthatassesseefailedtoestablishbasedonevidence thatithasreceivedservicesfromAEagainsttheimpugnedpayment.The4 imagesprovidedbytheassesseeinsupportofreceiptofserviceswhichwerealso providedintheimmediatepreviousassessmentyear.Further,theseimagesarein theformofscreenshotsderivedbysimplewebsearch,homepageofassessee website.Hence,theseimageswerenotevidencethatithadreceivedanyservices. TheTPOfurtherfoundthattheassesseehasnotprovideddetailsofcostincurred bytheAEsinprovidingimpugnedserviceswhatwerethecostactuallyincurred. Therewasnobasisforallocatingthecostandthemarkupof6%provided.Thus, theTPOintheabsenceofnecessarydetailsrejectedtheALPworkingprovidedby ITAno.361/AHD/2022 A.Y.2018-19 20 theassesseetodeterminetheALPofimpugnedservicesatRs.NIL.Accordingly, theproposedanupwardadjustmentofRs.14,97,50,987/-tothetotalincomeof theassessee. 16.TheAggrievedassesseeraisedtheobjectionbeforetheLd.DRP.The learnedDRPhasconfirmedtheadjustmentproposedbytheTPO/AO.Therelevant observationoflearnedDRPinthisregardisextractedasunder: 10.Wehaveconsideredthesubmissionsoftheasseessee.Wehavealsoperusedthe TPO’sorder.Itistobementionedthattheissueinvolvedinthegroundofobjectionno.3 alsocameupfordirectionsbeforetheDRPinAY2017-18.TheDRPhaveconsideredthe issueandgavedirections.TherelevantportionofthedirectionsinAY2017-18is reproducedasunder. 10.Wehaveperusedthedraftassessmentorder/TPO'sorder.Wehavealsoconsidered thewrittenandoralsubmissionsoftheassesseeinthisregard. Brieflystatedthefactsoftheissuearethattheassesseehasclaimedtohavereceived datamanagementandotherrelatedservicesfromM/s.SchneiderElectricIndustriesSAS, France(theAE),whichareinthenatureofinformationtechnologyservicessuchas supportforonlineorweb-basedtools,softwarelicences,assistanceandsmooth functioningforITproductsanddatabase,etc.TheAEchargedmarkupof6%.TheTPO observedthattheassessesdidnotprovidebasisofcosttotheAEandreceiptofservices bytheassesseeTheTPOobservedthattheassesseeprovidedonlyfourimagesasthe evidenceforthereceiptofservices,towhichtheTPOstatedthatthesewerenotsufficient toprovetheexistenceofreceiptofservices.TheTPOfurtherpointedoutthattheinvoice submittedforclaimoftheservicesreceived/renderedwasinfactfromM/s.Schneider ElectricIndiaPvt.Ltd.,whichwasentirelydifferententitythantheclaimedserviceprovider, ie,theAE.TheTPOpointedoutthattheassesseecouldnotproduceanyworthwhile evidencetosupportitsclaim.Ontheotherhand,theassessee,defendeditsclaimof receiptoftheimpugnedservicesbeforetheTPOaswellastheDRP AfterconsideringallthematerialonrecordandthereasoningoftheTPOwhichare recordedinpara6(6.1to6.6)ofhisorder,weareoftheconsideredopinionthatthereis noreasondeviatefromthefindingsoftheTPO.Therefore,thegroundobjectionno.3is dismissed." 11.Weareoftheconsideredviewthatthematerialfactsandcircumstancesaswellasthe applicablelawhavenotundergoneanychangewhencomparedtotheearlieryearwhere theDRPhadanoccasiontodecidetheissueunderconsideration.Therefore,respectfully followingthedirectionsoftheDRPinAY2017-18,thegroundofobjectionno.3(sub grounds3.1to3.3)isdismissed. 17.Beingaggrievedbytheorderoftheld.DRP/TPO/AO,theassesseeisin appealbeforeus. ITAno.361/AHD/2022 A.Y.2018-19 21 18.ThelearnedARbeforeuscontendedtheTribunalintheowncaseofthe assesseeintheimmediatelyprecedingassessmentyearhasdecidedtheissuein favouroftheassessee.Accordingly,itwasprayedbythelearnedARthatthe issueonhandraisedbytheassesseeshouldbedecidedinitsfavour. 19.Ontheotherhand,learnedDRbeforeuscouldnotcontrovertthe argumentsadvancedbythelearnedARfortheassesseebutvehemently supportedtheorderoftheauthoritiesbelow. 20.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialavailableonrecord.Attheoutset,wenotethattheissueraisedbythe assesseeinthecurrentappealisidenticaltotheissueraisedbytheassesseein theownappealforAY2017-18bearingITANo.64/Ahd/2022.Therelevant groundofappealoftheassesseeforA.Y.2017-18hasbeendecidedbythis tribunalvideorderdated07-12-2022infavoroftheassessee.Therelevantfinding ofthetribunalinthisregardreadsasunder: 18.Wehaveheardtherivalcontentionsofboththepartiesandperusedthematerials availableonrecord.Theassesseeintheinstanthasavailedtheservicesofdata managementandotherrelatedservicesfromitsAEswhichareinthenatureofITrelated services.Theassesseetosubstantiatetheserviceavailedhassubmittedtherelevant documentsandinformationwhichisdiscussedintheprecedingparagraphandalso furnishedthebreak-upofcostaswellasallocationofcostincurredbytheAEsbeforethe Ld.DRP.TheassesseehasappliedtheTNMMmethodasMAMtodeterminetheALPfor theaforesaidtransactionandfoundtheALPascostplus6%markup.Further,the assesseehascontendedthattheTPOhasappliedCUPmethodasmostappropriate methodfordeterminationofALPofthesaidservices,withoutgivinganycogentreasons andhasdeterminedtheALPofmanagementsupportandotherrelatedservicesreceived bytheassesseeatNIL,takingtheviewthatnoindependentpartywouldhavemadethe paymentintheuncontrolledcircumstances.Theassesseehassubmittedthatthesaid actionoftheTPOisarbitraryandisnotinlinewithrule10B(1)(a)oftheRuleswhichlays downtheneedfor'comparableuncontrolledtransactions'whileapplyingtheCUPmethod. 18.1Itispertinenttomentionherethatthereisnodisputeonthelegalpropositionthatif theTPOfindsthatthemethodappliedbytheassesseeisnotappropriate,itcancarryout hisownanalysishoweverhehastofollowthemethodologyasprovidedinChapter-Xof theIncome-taxAct. 18.2ItmayfurtherbenotedthatthestartingpointforapplyingtheCUPmethodasper thetransferpricingprovisionsisavailabilityofthepriceofthesameproductorservicein uncontrolledconditionsandaccordingtothattheALPoftheproductorservicecanbe ascertained.Thus,theactionoftheTPOofapplyingCUPmethodandatthesame consideringthevalueofsuchtransactionasNilinabsenceofcomparableuncontrolled ITAno.361/AHD/2022 A.Y.2018-19 22 transactions,isinitselfcontradictoryandwithoutanybasis/logic.Therefore,the contentionoftheTPOtoapplyCUPmethodasMAMisnottenableunderthelaw. 18.3Movingfurtherwenotethattheentiregroundsconsistsoftwoissues,whetherinfact theserviceswererenderedandavailedbytheassesseeandifso,whetherthemark-upof 6%canbeconsideredascomparablewiththemarketaverages.Cullingfromthedetails filedandargumentsofboththeparties,wefindthatthereisnodisputeaboutavailingof theservices.Theevidencesincludetheinvoices,agreementsalongwithdetailsofcost allocationsubmittedatpagenos.509to528ofthepaperbook.Hence,itcannotbesaid thattheserviceshavenotbeenprovidedtotheassessee.Withregardtothemark-upof 6%paidbytheassessee,wefindthattheeconomicanalysissubmittedbytheassesseein TPSRavailableinthepaperbookisacceptable.Hence,weholdthatnoadjustmentis calledforwhiledeterminingtheALPonaccountofpaymentforIntraGroupServicesinthe formofDataManagementandOtherRelatedServices. 20.1Beforeus,nomaterialhasbeenplacedonrecordbytheRevenue demonstratingthatthedecisionofTribunalasdiscussedabovehasbeensetaside /stayedoroverruledbytheHigherJudicialAuthorities.Beforeus,Revenuehas notplacedanymaterialonitsrecordpointingoutanydistinguishingfeatureinthe factsofthecasefortheyearunderconsiderationandthatofearlieryearnorhas placedanycontrarybindingdecisioninitssupport.Thus,respectfullyfollowingthe orderofthistribunalintheowncaseofassessee,weherebysetasidethefinding ofthelearnedDRPanddirecttheAO/TPOtodeletetheenhancementofincome onaccountTPadjustmentinthetransactionasdiscussedabovei.e.Data ManagementFees.Hence,thegroundofappealoftheassesseeisherebyallowed. 21.ThenextissueraisedbytheassesseevidegroundNos.5to6isthatthe Ld.TPO/Ld.DRPhaveerredinenhancingtheincomebyRs.22,25,141/-andRs. 43,01,134/-inrelationtopurchaseoffixedassetsandpaymentofTrademarkFee respectivelybyaggregatingthesamewiththetransactionofpurchaseofRaw Materialsandcomponents. 22.Attheoutset,wefindthattheissueraisedbytheassesseeinthecaptioned groundofappealwasalsothereintheappealfiledbytheassesseeinitsowncase forA.Y.2017-18inITANo.64/Ahd/2022.IntheA.Y.2017-18,theTPO/AOalso benchmarkedtheimpugnedtransactionbyaggregatingthesamewiththe ITAno.361/AHD/2022 A.Y.2018-19 23 transactionofpurchase/importofRawMaterials&Components.Thus,inour consideredview,thereisnochangeinfactsfromtheassessmentyear2017-18. ThetribunalwhiledealingwithissueintheA.Y.2017-18providedtherelieftothe assesseebyobservingasunder: 10.22Beforeparting,wenotethattheauthoritiesbelowhaveaggregatedthefollowing transactionsforthepurposeofdeterminingtheALP: i.Purchaseofrawmaterialsandcomponents ii.Purchaseoffixedassets iii.Purchaseofintangibleassets iv.Paymentoftrademarkfees 10.23Oncewehaveacceptedthetransactionshownbytheassesseefortheimportofraw materialsandcomponentsatthearmlengthprice,noadjustmentwithrespecttoother transactionsaggregatedwiththetransactionsindisputeisrequiredtobemade.Inother words,theimpugnedtransactionsdiscussedabovehavetobetreatedatarmlengthprice asapplicableforthepurchaseofrawmaterialsandcomponents. 10.24Withoutprejudicetotheabove,itwasalsocontendedbeforeusbythelearnedAR fortheassesseethatwhateveradjustmentsneedstobemadebytherevenueauthorities shouldbewithrespecttotheinternationaltransactionswiththeAEwhichareindispute. Assuchtherevenuecannotconsiderallthetransactionsforthepurposeofmakingthe additiontakingtherateoftheALP.WefindforceintheargumentofthelearnedARfor theassesseeandaccordinglydirecttherevenuetomaketheadjustmentswithrespectto theinternationaltransactionswiththeAE’swhichareindispute.However,weare conscioustothefactthatthedirectionatthisstagewillnotmakeanydifferencetothe assesseeforthereasonthattheappealhasbeendecidedinfavouroftheassessee. However,wehaverecordedthisobservationforthestatisticalpurposes. 10.25Inviewoftheaboveandafterconsideringthefactsintotalitywereversethefinding ofthelearnedDRPanddirecttheAOtodeletetheadditionmadebyhim.Hencethe groundofappealoftheassesseeisallowed. 23.Beforeus,nomaterialhasbeenplacedonrecordbytheRevenue demonstratingthatthedecisionoftheTribunalasdiscussedabovehasbeenset aside/stayedoroverruledbytheHigherJudicialAuthorities.Beforeus,Revenue hasnotplacedanymaterialonrecordtopointoutanydistinguishingfeaturein thefactsofthecasefortheyearunderconsiderationandthatoftheearlieryear norhasplacedanycontrarybindingdecisioninitssupport.Thus,respectfully followingtheorderthistribunalintheowncaseofassessee,weherebysetaside thefindingofthelearnedDRPanddirecttheAO/TPOtodeletetheenhancement ofincomeonaccountTPadjustmentinthetransactionofimportofRawmaterial andcomponents.Hencethegroundofappealoftheassesseeisherebyallowed. ITAno.361/AHD/2022 A.Y.2018-19 24 24.ThelastissueraisedbytheassesseevidegroundNo.7isthattheLd. TPO/Ld.DRPerredinenhancingtheincomeoftheAppellantbyINR26,87,354/- pertainingtoreimbursementofexpensesreceivedfromtheAEsbyre- characterizing“reimbursementofexpensesreceived”as“provisionofsupport services”therebyimputingamarkupof5%onthecostofthereimbursements withoutprovidinganydetailed/cogentreasonforthesame. 25.Thefactsarethattheassesseeduringtheyearincurredcertainexpenditure innatureoftravel,lodging,employeecost,communicationetconbehalfofitsAEs foranamountaggregatingtoRs.5,37,47,077/-.Theimpugnedcostincurredby theassesseewerereimbursedbytheAEstotheassesseeoncost-to-costbasis. TheTPO/AOwasoftheviewthattheassesseewhilecarrying/incurringcoston behalfAEsmusthavealsoincurredotherexpensesintheformofadministrative, managerial,manpoweretc.Therefore,theAO/TPOclassifiedthesameassupport servicesrenderedbytheassesseetoitsAEs.Accordingly,theAO/TPOworkedout theALPbyaddingthemarkupof5%onthecost.Hence,theAO/TPOmadean upwardadjustmentofRs.26,87,354/-tothetotalincomeoftheassessee. 26.TheAggrievedassesseeraisedtheobjectionbeforetheLd.DRP.The learnedDRPhasconfirmedtheadjustmentproposedbytheTPO/AO.Therelevant observationoflearnedDRPinthisregardisextractedasunder: 22.Wehaveconsideredthesubmissionsoftheassessee.Wehavealsoperusedthedraft assessmentorder.Itistobementionedthattheissueinvolvedinthegroundofobjection no.6alsocameupfordirectionsbeforetheDRPinAY2017-18.TheDRPhaveconsidered theissueandgavedirections.TherelevantportionofthedirectionsinAY2017-18is reproducedasunder: "19.Wehaveperusedthedraftassessmentorder/TPO'sorderandconsideredthewritten andoralsubmissionsinthisregard. Brieflystatedfactsoftheissuearethattheassesseehadincurredcertainexpensesina natureoftravel,lodging,employeecost,communicationetc.onbehalfoftheAES amountingtoRs.3,36,97,775/-,whichwerereimbursedtoitbytheAEs.TheTPO observedthattherewouldhavebeenvariousothercoststhatwouldhavebeenincurred bytheassessinordertoperformtheactivitiesforwhichtheexpenseshadbeenincurred ITAno.361/AHD/2022 A.Y.2018-19 25 onbehalfoftheAEs.Theassesseedefendeditsclaim.TheTPOinpara8.3to8.5narrated hisreasoningforcharging5%markupforbenchmarkingthereimbursements. Wehaveconsideredallthematerialonrecordandwedonotfindanyreasontointerfere withthefindingoftheTPOinthisregard.Therefore,thegroundofobjectionno.6is dismissed." 23.Weareoftheconsideredviewthatthematerialfactsandcircumstancesaswellasthe applicablehavenotundergoneanychangewhencomparedtotheearlieryearwherethe DRPhadanoccasionto 27.Beingaggrievedbytheorderoftheld.DRP/TPO/AO,theassesseeisin appealbeforeus. 28.ThelearnedARbeforeusfairlysubmittedthatTribunalintheowncaseof theassesseeintheimmediatelyprecedingassessmentyearhasdecidedtheissue againsttheassessee.Accordingly,thelearnedARlefttheissueatthediscretionof thebench. 29.Ontheotherhand,learnedDRbeforeusvehementlysupportedtheorder oftheauthoritiesbelow. 30.Wehaveheardtherivalcontentionofboththepartiesandperusedthe materialavailableonrecord.Attheoutset,wenotetheissueraisedbythe assesseeinthecurrentappealisidenticaltotheissueraisedbytheassesseeinits ownappealforA.Y.2017-18bearingITANo.64/Ahd/2022.Therelevantground ofappealoftheassesseeforA.Y.2017-18hasbeendecidedbythistribunalvide orderdated07-12-2022againsttheassessee.Therelevantfindingofthetribunal inthisregardreadsasunder: 26.Wehaveheardtherivalsubmissionsofboththepartiesandperusedthematerials availableonrecord.Theissueinthepresentgroundiswithrespecttotheadjustment madeonaccountofreimbursementofcost.Beforeus,itisanassessee'ssubmissionsthat theexpenseswhichwerereimbursedofallexpenditurewhichwereinter-aliaincurredby theassesseeonbehalfoftheAEsandthesamehavebeenreimbursedtothethirdparties andforwhichnovalueadditionhasbeendonebytheassessee.Itisfurtherassessee's submissionsthatthereimbursementareoncosttocostbasisandtransactionswere undertakenonlytoprovideadministrativeassistancetotheAEs.Theaforesaidcontentions oftheARhavenotfoundtobefalseastherelevantdetailsfortheexpensesincurredand ITAno.361/AHD/2022 A.Y.2018-19 26 reimbursedofexpenseshasbeenfurnishedbeforetheauthorities.Aspertheassessee,no mark-upiswarrantedonpassthroughcostswhichareinteraliaincurredbytheassessee andarereimbursementofprimarythirdpartyexpensesinitiallyincurredbytheassessee forwhichnovalueadditionisdonebytheassesseeandwhicharesubsequently reimbursedbytheAEsoncosttocostbasis.Beforeusnomaterialhasbeenplacedby Revenuetodemonstratethatvalueadditionhasbeendonebytheassesseeandisnotin thenatureofreimbursementofprimarythirdpartyexpenseswhichwereinitiallyincurred bytheassessee.Admittedly,therewasnovalueadditiondonebytheassesseeby incurringthecostonbehalfoftheAEwhichwassubsequentlyreimbursed.However,such transactionfallswithinthedefinitionofinternationaltransactionwiththeAEandtherefore thesameneedstobebenchmarked.Anonassociatedpartywillnotincuranycostwithout havinganybenefitfromtheparty.Indeed,theassesseemusthaveemployeditsresources inprovidingadministrativeservicestotheAEandthereforeweareoftheviewthatthe assesseeshouldhavechargedsomeamountoffeesonaccountofsuchtransaction. However,theassesseeinthegivencasehasnotdeterminedtheALPofthetransactionin hand,thereforethesamewasbenchmarkedbytheAO/TPOonreasonablebasis.Assuch itwastheonusupontheassesseetobench-markthetransactionsinhandbutitfailedto doso.Hence,wedonotfindanyinfirmityintheorderoftheauthoritiesbelow.Thus,the groundofappealoftheassesseeisherebydismissed. 31.Beforeus,nomaterialhasbeenplacedonrecordbythelearnedARforthe assesseethatthedecisionofTribunalasdiscussedabovehasbeensetaside/ stayedoroverruledbytheHigherJudicialAuthorities.Beforeus,learnedARhas notplacedanymaterialonrecordpointingoutanydistinguishingfeatureinthe factsofthecasefortheyearunderconsiderationandthatofearlieryearnorhas placedanycontrarybindingdecisioninitssupport.Thus,respectfullyfollowingthe orderofthistribunalintheowncaseofassessee,weconfirmthefindingofthe learnedDRP.Hencethegroundofappealoftheassesseeisherebydismissed. 32.Intheresult,theappealfiledbytheassesseeisherebypartlyallowed. OrderpronouncedintheCourton03/10/2023atAhmedabad. Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated03/10/2023 Manish