Citizen Watches (India) Pvt. Ltd., Bangalore V. Asst.C.I.T., Bangalore

ITA 406/BANG/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7717 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-04-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K R VASUDEVAN SMT NEERA
• Keywords: Transfer pricing; Business expenditure; Opportunity of being heard; International transaction; TDS

Judgement Text

IT(TP)A.497, 406/B/2015 PAGE - 1 CO.124/BANG/2016 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER 1. I.T(TP).A NO.406/BANG/2015 (ASSESSMENT YEAR : 2010-11) CITIZEN WATCHES (INDIA) P. LTD, 299, 6 TH MAIN, HAL II STAGE, INDIRANAGAR, BENGALURU 560 038 .. APPELLANT PAN : AAACC4712A V. ASST.COMMISSIONER OF INCOME-TAX, CIRCLE 2(1)(1), BENGALURU .. RESPONDENT 2. I.T(TP).A NO.497/BANG/2015 (ASSESSMENT YEAR : 2010-11) (BY THE REVENUE) 3. CROSS OBJECTION NO.124/BANG/2016 (IN I.T(TP).A NO.497/BANG/2015) (ASSESSMENT YEAR : 2010-11) ASSESSEE BY : SHRI. K. R. VASUDEVAN, ADVOCATE REVENUE BY : SMT. NEERA MALHOTRA, CIT -DR HEARD ON : 23.04.2019 PRONOUNCED ON : .04.2019 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THESE ARE CROSS APPEALS RAISED BY THE ASSESSEE AND THE REVENUE AND A CROSS OBJECTION BY THE ASSESSEE AGAIN ST THE APPEAL OF THE REVENUE, FOR THE ASSESSMENT YEAR 2010-11. IT(TP)A.497, 406/B/2015 PAGE - 2 CO.124/BANG/2016 IT(TP)A.406/BANG/2015 BY THE ASSESSEE A. Y. 201 0-11 : 02. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS : THE OTHER GROUNDS ARE NOT PRESSED AND AN ENDORSEMEN T WAS MADE TO THAT EFFECT BY THE LD. AR ON THE PAPER BOOK. 03. WITH RESPECT TO GROUND NO.2, IT WAS SUBMITTED B Y THE LD. AR THAT THE CASE OF THE ASSESSEE IS COVERED BY THE DEC ISION OF THE IT(TP)A.497, 406/B/2015 PAGE - 3 CO.124/BANG/2016 TRIBUNAL IN ASSESSEES OWN CASE, FOR THE ASSESSMENT YEAR 2009-10, VIDE ORDER DT.06.07.2018. SINCE THERE IS NO CHANGE IN FACTS FOR THE PRESENT YEAR, THEREFORE GROUND NO.2 OF THE ASSESSEE IS REQUIRED TO BE ALLOWED. HE HAS DRAWN OUR ATTENTION TO PARA 6.4.1 TO 6.4.3 OF THE ORDER, TO THE FOLLOWING EFFECT : 6.4.1 WE HAVE HEARD THE LEARNED AUTHORISED REPRESEN TATIVE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE AND CON SIDERED THE DETAILS, DOCUMENTS AND MATERIAL ON RECORD; INCLUDIN G THE JUDICIAL PRONOUNCEMENTS. THE FACT NOT DISPUTED IS THAT THE A SSESSEE IS PERFORMING ONLY TRADING FUNCTIONS. AS POINTED OUT B Y THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE, THE ONLY REASON THAT THE TPO HAS CITED IN HIS ORDER UNDER SECTION 92CA OF THE AC T IS THAT THE LOSSES INCURRED BY THE ASSESSEE AS BEING INDICATIVE OF CAR RYING OUT OF VALUE ADDED FUNCTIONS. IN OUR VIEW, THIS PRESUMPTION BY T HE TPO IS NOT BORNE OUT BY THE FACTS ON RECORD. THE DETAILS OF EXPENSES IN THE ASSESSES PROFIT AND LOSS ACCOUNT DO NOT INDICATE OR ESTABLIS H THAT ANY VALUE ADDED FUNCTIONS HAVE BEEN CARRIED OUT BY THE ASSESS EE. EXPENSES INCURRED ON PACKING MATERIAL CANNOT BE SAID TO CREA TE ANY VALUE ADDITION TO THE PRODUCT. 6.4.2 THE ISSUE OF THE MAM TO BE APPLIED TO TRADERS / DISTRIBUTORS HAS BEEN CONSIDERED AND DECIDED IN THE JUDICIAL PRONOUN CEMENTS CITED BY THE ASSESSEE (SUPRA). IT HAS BEEN QUITE CONSISTENTL Y HELD THAT RPM IS THE MAM FOR A TRADER / DISTRIBUTOR, IF THERE IS NO VALUE ADDITION TO THE PRODUCTS. THE DECISION OF THE ITAT, MUMBAI BENCH I N THE CASE OF ITO VS. L'OREAL INDIA PVT LTD (SUPRA) HAS BEEN AFFIRMED BY THE HONBE BOMBAY HIGH COURT. IN THE SAID DECISION IN THE CASE OF L'OREAL INDIA PVT. LTD. (SUPRA) AT PARAS 18 & 19 THEREOF IT HAS B EEN HELD AS UNDER :- 18. THE ONLY QUESTION FOR OUR CONSIDERATION IS AS T O WHETHER TO DETERMINE ALP IN RESPECT OF BUSINESS ACTIVITY RELAT ING TO DISTRIBUTION SEGMENT OF THE ASSESSEE WITH THE AE IS TO HE CONSID ERED BY RPM OR TNMM. WE OBSERVE THAT TPO HAS APPLIED TNMM AND HAS SUGGESTED ADJUSTMENT OF RS. 4.90,07.000 BY SHOWING DESIRED PR OFITS MARGIN OF COMPARABLE COMPANIES AT 0.36% ON S*S AS THE OPERATING MARGIN OF THE ASSESSEE SHOWN IS (-) 19.84%. ACCORDINGLY. TPO COMPUTED THE ALP IN THE PURCHASE OF FINISHED GOODS AT RS. 2,70,9 1,000 AS AGAINST ACTUAL VALUE OF RS. 760.88,729 SHOWN BY THE ASSESSEE. WE OBSERVE THAT 'FPO STATED THAT THE ASSESSEE HAS ADOP TED RPM FOR DETERMINING THE ALP FOR THE IMPORT OF FINISHED GOOD S. HE HAS STATED IT(TP)A.497, 406/B/2015 PAGE - 4 CO.124/BANG/2016 THAT THE ASSESSEE HAS DETERMINED GROSS PROFIT MARGI N BY TAKING DIFFERENCE BETWEEN COSTS OF PURCHASE OF VALUE OF SA LES. THE ASSESSEE HAS STATED THAT THE GROSS PROFIT MARGIN IN THE DIST RIBUTION ACTIVITY WAS 40.80% VIS--VIS COMPARABLE COMPANIES IDENTIFIED BY THE ASSESSEE, EARNED MARGIN OF 14.85%. HOWEVER. TPO SUG GESTED THAT AS PER RULE 10B(2) OF INCOME TAX RULES, FOR THE PUR POSE OF DETERMINING ALP, THE COMPARABLE TRANSACTION CONSIDE RED BY THE ASSESSEE MUST BE SIMILAR TO THE INTERNATIONAL TRANS ACTION IN TERMS OF SIMILARITY IN THE CHARACTERISTICS OF THE PRODUCT AN D THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS ASSUMED IN THE CONTROLLED TRANSACTION AND THE UNCONTROLLED TRANSACTION MUST A LSO BE SIMILAR. ACCORDINGLY, TPO DID NOT AGREE WITH THE COMPARABLE COMPANIES CONSIDERED BY THE ASSESSEE. HE ALSO STATED THAT RPM COULD BE AN APPROPRIATE METHOD ONLY WHEN THERE IS NO VALUE ADDI TION UNDERTAKEN BY THE DISTRIBUTOR. THE TPO CONSIDERED T HE SELLING AND DISTRIBUTION EXPENSES IN MARKETING AND STATED THAT THERE IS A VALUE ADDITION BY THE ASSESSEE AND THUS TMMM IS THE MOST APPROPRIATE METHOD. THE TPO DID NOT ACCEPT THE ADJUSTMENT GIVEN BY THE ASSESSEE END, ACCORDINGLY, MADE THIS ADDITION. 19.DURING THE COURSE OF HEARING, ID D.R. ALSO SUPPORTED THE METHOD CONSIDERED BY TPO AND REFERRED TO PARA 2.29 OF OECD PRICE GUIDELINES 2010 AS STATED HEREINABOVE. ON THE OTHER HAND, ID A.R.JUSTIFIED THE RPM METHOD ADOPTED BY IT AND ALSO REFERRED TO ORDER OF TPO IN THE PRECEDING ASSESSMENT, YEARS AS WELL A S SUCCEEDING ASSESSMENT YEARS TO THE ASSESSMENT YEAR UNDER CONSI DERATION TO SUBSTANTIATE THAT RPM IS THE MOST APPROPRIATE METHO D TO DETERMINE ALP. HE SUBMITTED THAT THE ASSESSEE MADE ADJUSTMENT FOR MARKETING AND SELLING EXPENSES TO THE PROFITS TO MAKE IT COMP ARABLE TO THE COMPARABLE COMPANIES' PROFITS. WE AGREE WITH ID CIT (A) THAT THERE IS NO ORDER OF PRIORITY OF METHODS TO DETERMINE ALP. R PM IS ONE OF THE STANDARD METHOD AND OECD GUIDELINES ALSO STATES THA T IN CASE OF DISTRIBUTION AND MARKETING ACTIVITIES WHEN THE GOOD S ARE PURCHASED FROM AES WHICH ARE SOLD TO UNRELATED PARTIES, RPM I S THE MOST APPROPRIATE METHOD. IN THE CASE BEFORE US, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEC BUYS PRODUCTS FROM ITS AES A ND SELLS TO UNRELATED PARTIES WITHOUT ANY FURTHER PROCESSING. F URTHER, THE ASSESSEE HAS ALSO PRODUCED CERTIFICATES FROM ITS AE S THAT MARGIN EARNED BY AES ON SUPPLIES TO THE ASSESSEE IS 2% TO 4% OR EVEN LESS. THE DEPARTMENT HAS NOT DISPUTED THE ABOVE CERTIFICA TES. THEREFORE, THE TPO'S CONTENTION THAT AES HAVE EARNED HIGHER PR OFIT IS NOT BASED ON FACTS. ON THE OTHER HAND, WE AGREE WITH ID CIT(A ) THAT THE MARGIN OF PROFIT EARNED BY AES THEMSELVES IS ALSO REASONAB LE AND, IT(TP)A.497, 406/B/2015 PAGE - 5 CO.124/BANG/2016 THEREFORE, IT COULD NOT BE SAID THAT THERE IS SHIFT OF PROFITS BY THE ASSESSEE TO ITS AES AT OVERSEAS. CONSIDERING THE FA CTS OF THE CASE AND ALSO THE ORDER OF TPO THAT RPM METHOD HAS BEEN ACCE PTED IN THE PRECEDING AS WELL AS SUCCEEDING ASSESSMENT YEARS T O THE ASSESSMENT YEAR UNDER CONSIDERATION IN RESPECT OF DISTRIBUTION SEGMENT OF THE ASSESSEE, WE DO NOT FIND ANY INFIRMIT Y WITH THE ORDER OF ID CIT(A) IN DELETING THE ADDITION OF RS. 4,90,07.000 MADE BY THE AG. GROUND NO. 2 IS ACCORDINGLY REJECTED BY UPHOLDING THE ORDE R OF ID CIT(A). 04. PER CONTRA THE LD. DR FAIRLY CONCEDED THAT THE RE IS NO CHANGE IN FACTS OF THE CASE. HOWEVER, SHE SUBMITTE D THAT THE DEPARTMENT HAS NOT ACCEPTED THE ORDER OF THE TRIBUN AL. 05. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. AS THE FACTS AND CIRCUMSTANCES FOR THE PRE SENT ASSESSMENT YEAR ARE SIMILAR TO THE FACTS AND CIRCUMSTANCES OF THE A SSESSMENT YEAR 2009- 10, THEREFORE RESPECTFULLY FOLLOWING THE DECISION O F THE COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR THE EARLIER AS SESSMENT YEAR 2009- IT(TP)A.497, 406/B/2015 PAGE - 6 CO.124/BANG/2016 10, WE ALLOW GROUND NO.2 OF THE ASSESSEES APPEAL. AS A RESULT, THEREOF THE TPO IS DIRECTED TO APPLY RPM AS THE MAM FOR THE PURPOSES OF BENCH MARKING / DETERMINING THE ALP OF THE INTERNAT IONAL TRANSACTIONS. 06. GROUND NO.3 OF THE ASSESSEES APPEAL PERTAINS T O SUBVENTION CHARGES IN RESPECT OF MARK-UP EXPENSES INCURRED BY THE ASSESSEE AND REIMBURSED BY THE AE. IN THIS REGARD THE LD. AR HA S SUBMITTED THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EAR LIER ASSESSMENT YEAR 2009-10 (SUPRA), IN PARA 7.1 TO 7.4.2 HAS DECIDED T HE ISSUE IN FAVOUR OF THE ASSESSEE, AND THEREFORE THIS ISSUE IS ALSO BE D ECIDED IN FAVOUR OF THE ASSESSEE. 07. PER CONTRA, THE LD. DR VEHEMENTLY OPPOSED THE S UBMISSION OF THE LD. AR AND HAS DRAWN OUR ATTENTION TO THE DECIS ION OF THE DELHI TRIBUNAL IN THE MATTER OF SEAGRAM MANUFACTURING P. LTD V. ACIT [69 TAXMANN.COM 385, WHEREIN AT PARA 39 & 40, IT WAS HE LD AS FOLLOWS : 39. WE ARE FURTHER IN AGREEMENT WITH THE FOLLOWING FIN DINGS OF LD. CIT(A): 'IN VIEW OF THE FOREGOING ANALYSIS, I AM INCLINED T O AGREE WITH THE FINDINGS OF THE TPO THAT THE REIMBURSED EXPENSES SH OULD BE PART OF THE COST BASE OF THE APPELLANT FOR COMPUTING RETURN ON THE TOTAL COST, FOR THE FOLLOWING ADDITIONAL REASONS, IN ADDITION T O WHAT HAS BEEN CITED BY THE TPO: (I) THE RESOURCES OF THE ENTIRE ENTERPRISE OF THE APPELLANT HAD BEEN PUT TO USE FOR DISCHARGING THE COMPREHENSIVE FUNCTIONS ASSIGNED TO THE APPELLANT AS PER THE AGREEMENT. (II) SALES PROMOTION ACTIVITIES OF SIMILAR NATURE WERE ALSO ORGANIZED FOR THE DOMESTIC SEGMENT OF THE APPELLANT AND CLAIM OF SUCH EXPENSES HAVE BEEN ALLOWED AS BUSINESS EXPENSES. THERE IS NO REASON AS TO WHY A SEPARATE TREATMENT IS TO BE GIVEN TO THE REIMBURSED AMOUNTS IN THE SEGMENTED ACCOUNTS AS IT(TP)A.497, 406/B/2015 PAGE - 7 CO.124/BANG/2016 BOTH THESE EXPENSES AIM AT ACHIEVING SIMILAR RESULTS. IN ANY CASE, THE REIMBURSED EXPENSES DID IMPACT THE SALES OF THE AE POSITIVELY. (III) THE APPELLANT HAS BEEN USING THE SAME AGENCIES FOR THE SALES PROMOTION PURPOSES BOTH FOR THE DOMESTIC SEGMENT AS WELL AS FOR THE AE SEGMENT. CREDITS ARE EXTENDED TO SMPL ON ITS OWN CREDIBILITY OR STANDING AND NOT ON THE BASIS OF THE CREDIBILITY OF THE AE. THIS MAKES THESE EXPENSES AN INTEGRAL PART OF THE MARKET SUPPORT FUNCTION. (IV) PERUSAL OF SOME OF THE ADVERTISING BILLS REVEALS TH AT THE APPELLANT WHILE MAKING PAYMENTS COLLECTED TDS. ALL OBLIGATIONS RELATING TO COLLECTION OF TDS, OBTAINING TAN, FILING TDS RETURNS AND ALL OTHER CONSEQUENTIAL LEGAL OBLIGATIONS ARE MET BY THE APPELLANT IN ITS OWN RIGHT AS AN INDEPENDENT ENTITY . RESOURCES OF THE ENTIRE ENTERPRISE ARE USED TO MEET SUCH LEGAL OBLIGATIONS AND SUPPORT THE MARKET SERVICE FUNCTION. UNDER THESE CIRCUMSTANCES, THE APPELLANT IS ENTITLED TO GET A MARK-UP ON THE ACTUA L COST INCURRED INCLUSIVE OF REIMBURSED EXPENSES. (V) UNDER TNMM, THE APPROPRIATE COST BASE IS TO BE TAKEN INTO ACCOUNT WHILE DETERMINING THE ARM'S LENGTH NATURE, OF COMPENSATION RECEIVED FOR DISCHARGING A PARTICULAR FUNCTION. EXCLUSION OF A RELEVANT COST ITEM WOULD DISTORT THE BENCH MARKING ANALYSIS VIS-A-VIS THE RESULTS OF THE COMPARABLES. NO SUCH EXCEPTIONS HAVE BEEN BROUGHT OUT BY THE APPELLANT FOR THE COMPARABLES.' 40. IN VIEW OF ABOVE DISCUSSION THIS GROUND IS DISMISS ED. 08. ON THE BASIS OF THE ABOVE, THE LD. DR SUBMITTED THAT THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN THE EARLIER YEAR (SUPRA) HELD THAT THE SUBVENTION CHARGES ARE TAKEN CARE OF, IF THE TN MM IS APPLIED, HOWEVER AS THE TRIBUNAL IS CHANGING THE METHOD I.E ., INSTEAD OF TNMM, RPM METHOD IS APPLIED BY THE TRIBUNAL IN THE EARLIER ASSESSMENT YEAR AND ALSO IN THE PRESENT ASSESSMENT YEAR, THEREFORE, THE IT(TP)A.497, 406/B/2015 PAGE - 8 CO.124/BANG/2016 DECISION OF THE TRIBUNAL WILL NOT BE A BINDING PREC EDENT FOR THE PURPOSES OF SUBVENTION CHARGES AND THE SUBVENTION C HARGES ARE REQUIRED TO BE DECIDED IN THE LIGHT OF THE DECISION IN SEAGRAM MANUFACTURING P. LTD (SUPRA). IT WAS FURTHER SUBMITTED THAT THE TPO HAD NOT EXAMI NED THE SUBVENTION CHARGES IN THE TP DOCUMENT OF THE ASSESSEE WHEREIN THE ASSESSEE HAD APPLIED RPM METHOD. THEREFORE A FRESH BENCH MARKI NG ANALYSIS IS REQUIRED TO BE DONE BY THE AUTHORITIES BELOW BY APP LYING RPM METHOD. 09. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE DRP IN THE ORDER ON THIS ASPECT AT PAG E 9 HAS MENTIONED AS UNDER : HAVING HEARD THE OBJECTION, WE PERUSED THE ORDER OF THE HON ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 AND IT IS NOTICED BY US THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, FURTHER, ONCE THE TNMM IS APPLIED AT THE ENTITY LEVEL, THE COST, (INCLUDING THE COST CLAIMED TO BE REIMBURSEME NT) HAS TO BE CONSIDERED AS PART OF THE OPERATING COST AND THE RE VENUE RECEIVED AGAINST SUCH COST HAS TO BE CONSIDERED AS PART OF T HE OPERATING REVENUE AND ON PERUSAL OF THE ORDER OF THE TPO, IT IS NOTICED BY US THAT HE HAS INCLUDED THE SUBVENTION CHARGES IN THE REVENUE AND ALSO IN THE OPERATING COST WHILE DETERMINING THE AD JUSTMENT U/S.92CA OF THE ACT. IN SUCH CIRCUMSTANCES, IN OUR VIEW NO SEPARATE MARK-UP NEED TO BE COMPUTED ON THE SUBVENT ION CHARGES, ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE ADJUSTMENT MADE IN THIS ACCOUNT. FROM A PERUSAL OF ORDER OF DRP AND ALSO FROM THE OR DER OF THE TPO MORE PARTICULARLY IN PARA 7.2 WHEREIN THE DETAILS O F EXPENSES REIMBURSED BY THE ASSESSEE TO ITS AE ARE GIVEN THAT THERE IS NO BENCH MARKING OF SUBVENTION CHARGES BY THE TPO AFTER APPL YING THE RPM AS THE MAM. IN FACT, THE TPO AFTER REJECTING THE TP S TUDY OF THE ASSESSEE IT(TP)A.497, 406/B/2015 PAGE - 9 CO.124/BANG/2016 EMBARKED UPON APPLYING THE TNMM METHOD AND THERE WA S NO OCCASION FOR HIM TO FIND OUT THE CORRECTNESS OF THE TP STUDY OF THE ASSESSEE WHEREIN THE ASSESSEE HAD APPLIED THE RPM. IN VIEW OF THE ABOVE NOTED FACTS AND IN VIEW OF THE FACT THAT WE A RE REMANDING THE MATTER TO THE FILE OF THE TPO FOR FRESH BENCH MARKI NG BY TAKING RPM AS THE MAM, WE ALSO REMAND THIS ISSUE TO THE FILE O F THE TPO TO EXAMINE THE INTERNATIONAL TRANSACTIONS, AFTER CONSI DERING THE RPM AS THE MAM. NEEDLESS TO SAY WHILE DOING SO, THE TPO S HALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AND SHALL CONSIDER ALL THE BINDING DECISIONS OF THE TRIBUNAL AS WELL AS OF THE HIGH COURT INCLUDING THE DECISION IN SEAGRAM MANUFACTURI NG P. LTD REFERRED BY THE LD. DR. THE TPO SHALL PASS A DETAILED SPEAK ING ORDER AFTER CONSIDERING THE MATERIAL / SUBMISSIONS FILED BY THE ASSESSEE. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSE. IT(TP)A.497/BANG/2015 BY THE REVENUE A, Y 2010- 11 : 10. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : IT(TP)A.497, 406/B/2015 PAGE - 10 CO.124/BANG/2016 ALL THE ABOVE GROUNDS PERTAIN TO APPLICATION OF TNM M AS MAM BY THE LOWER AUTHORITIES WHICH RESULTED INTO EXCLUSION / INCLUSION OF COMPARABLES, AS WELL AS MARK-UP OF THE SUBVENTION C HARGES. 11. THE LD. AR HAS DRAWN OUR ATTENTION TO THE REVEN UES APPEAL, AS WELL AS ASSESSEES APPEAL, IN THE ASSESSEES OWN CA SE FOR A. Y. 2009- 10, WHEREIN GROUND NO.2 WAS DECIDED BY THE TRIBUNAL WITH THE FOLLOWING OBSERVATION : 11.3 WE HAVE HEARD THE LEARNED AUTHORISED REPRESEN TATIVE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. FROM AN APPRAISAL OF THE RECORD BEFORE US, WE FIND THAT THE DRP HAS NOT SAID THAT THE MARK UP HAS BEEN DETERMINED U NDER TNMM. IT HAS ONLY MENTIONED THAT SUCH AN ADDITION IS TAKEN CASE OF IF TNMM IS ADOPTED AS THE MAM. BE THAT AS IT MAY, SINCE WE HAVE ALREADY HELD THAT MARK UP ON SUBVENTION CHARGES IS NOT TENABLE AND IS LIABLE TO BE DELETED (SUPRA), THIS ISSUE BECOMES ACADEMIC IN NATURE. CONSEQUENTLY GRO UND NO.2 OF REVENUES APPEAL IS DISMISSED. 12. AS WE HAVE ALREADY HELD THAT RPM IS THE MAM, TH EREFORE THE APPLICATION OF TNMM, THEREFORE, THE GROUNDS PERTAIN ING TO THE REJECTION OR INCLUSION OF VARIOUS COMPARABLES BY AP PLYING THE TNMM METHOD BY THE DRP / TPO WOULD NOT BE AVAILABLE TO T HE PARTIES BEFORE US. THEREFORE, IN OUR VIEW, THE GROUND 2 OF THE REV ENUES APPEAL IS REQUIRED TO BE REJECTED BEING ACADEMIC IN NATURE. 13. GROUND NOS.3 TO 5 PERTAIN TO EXCLUSION OF THREE COMPARABLES, NAMELY M/S. BOSE CORPORATION INDIA P. LTD, M/S. GEM INI COMMUNICATION LTD AND M/S. SOFTCELL TECHNOLOGIES LT D. THESE GROUNDS DO NOT SURVIVE AFTER CHANGE IN METHOD AS WE HAD HELD THAT RPM IS THE MAM AND THESE GROUNDS ARISE ONLY IF TNMM IS FOUND TO BE THE MAM. THESE GROUNDS ARE ONLY ACADEMIC IN NAT URE AND HENCE DISMISSED. IT(TP)A.497, 406/B/2015 PAGE - 11 CO.124/BANG/2016 CROSS OBJECTION NO.124/BANG/2016 BY THE ASSESSEE - A. Y. 2010-11: 13. IN VIEW OF OUR FINDINGS IN THE ASSESSEES AND R EVENUES APPEAL IN THE SUPERCEDING PARAGRAPHS, THE CROSS OBJECTION OF THE ASSESSEE, BECOMES ACADEMIC AND HENCE IT IS DISMISSED. 14. TO SUMMARISE : ASSESSEES APPEAL IN IT(TP)A.406/BANG/2015 IS ALLOW ED FOR STATISTICAL PURPOSE. REVENUES APPEAL IN IT(TP)A.497/BANG/2015 IS PARTLY ALLOWED. CROSS OBJECTION NO.124/BANG/2016 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH DAY OF APRIL, 2019. SD/- SD/- (A. K. GARODIA) (L ALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 25.04.2019 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE