Bax Global India (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 4757/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65966 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 19-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PEYUSH JAIN
• Assessee Lawyers: J S KOCHAR; UDAIBIR K OCHAR
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; Question of law; Validity of assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : I : NEW DELHI SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 4757/DEL/2010 ASSESSMENT YEAR: 2006- 2007 BAX GLOBAL INDIA (P) LTD. VS. ADDL. COMMI SSIONER OF INCOME TAX (NOW KNOWN AS SCHENKER INDIA(P) LTD. RANGE-2, I.P . ESTATE, NEW DELHI. 93-94, KAPASHERA NEW DELHI 110037 PAN AAACCB0697B (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI J.S. KOCHAR & UDAIBIR K OCHAR, ADVOCATE RESPONDENT BY : SHRI PEYUSH JAIN, CIT DR ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPEL LATE ORDER ON THE FOLLOWING GROUNDS :- 1. THAT THE LEARNED DRP ERRED IN LAW AND ON FACTS IN NOT INTERFERING WITH THE DRAFT ASSESSMENT ORDER PROPOSE D BY THE AO WHEREBY HE SOUGHT TO MAKE AN ADDITION OF RS. 1,04,39,000/- AS CEASED LIABILITIES U/S 41(1) OF TH E I.T. ACT WHEN (I) NO CESSATION HAD TAKEN PLACE DURING THE YEAR , (II) IT IS THE CONSISTENT POLICY OF THE ASSESSEE CO MPANY TO WRITE BACK AS INCOME ON ITS OWN, THE LIABILITIES WH ICH ARE NOT CLAIMED OR SETTLED WITHIN A PERIOD OF SIX MONTHS, (III) WHEN SIMILAR ADDITIONS MADE BY THE AO IN A.Y. 2004-05 AND 2005-06 WERE DELETED BY THE CIT (APPELAS) ITA NO. 4757/DEL/2010 2 2. THAT THE LEARNED DRP ERRED IN LAW AND ON FACTS IN NOT INTERFERING WITH THE DRAFT ASSESSMENT ORDER PROPOSE D BY THE AO, WHEREBY HE SOUGHT TO MAKE A DISALLOWANCE OF RS. 93,768 TOWARDS DEPRECIATION ON LEASED ASSETS WHEN O N SIMILAR FACTS, THE CIT (APPEALS) HAS DELETED THE DI SALLOWANCE FOR A.Y. 2005-06 3. THAT THE LEARNED DRP ERRED IN LAW AND ON FAC TS IN NOT INTERFERING WITH THE DETERMINATION OF THE ARMS LENG TH MARGIN BY THE TPO AT RS. 14,25,37,131 AS AGAINST RS. 3,62, 09,029 TAKEN BY THE ASSESSEE BY REJECTING THE CUP METHOD ADOPTED BY THE ASSESSEE AND ADOPTING TNMM METHOD AS : (I) CUP METHOD WAS ADOPTED CONSISTENTLY BY THE ASSESSEE AND APPROVED BY VARIOUS TPOS SINCE DAY ONE AND EVEN IN THE SUBSEQUENT YEAR I.E. (A.Y. 2007-08) , IT WAS APPROVED BY THE SAME TPO. THERE WAS NO CHANGE I N THE FACT SITUATION OR LAW DURING ALL THESE YEARS. (II) TNMM METHOD WAS NOT THE MOST APPROPRIATE METHOD FOR BENCHMARKING THE INTERNATIONAL TRANSACTI ONS IN THE CASE OF THE ASSESSEE. 4. THAT, AT ANY RATE, THE LEARNED DRP ERRED IN LAW AND ON FACTS IN NOT INTERFERING WITH THE ACTION OF THE TPO WHEREBY HE SELECTED BLUE DART EXPRESS LTD., GATI LTD . AND ALLCARGO GLOBAL LOGISTICS LTD. FOR TAKING THE AVERA GE ARMS LENGTH MARGIN (OP/OC RATIO) WHEN THE OPERATIONS OF THESE COMPANIES WERE MATERIALLY DIFFERENT FROM THE OPERAT IONS OF THE ASSESSEE AND THE FUNCTIONS, ASSETS AND RISK ANA LYSIS COULD NOT BE CARRIED OUT IN RESPECT OF THE INCOMPAR ABLES. 5. THAT, AT ANY RATE, WHILE WORKING OUT THE AVERAG E ARMS LENGTH MARGIN (OP / OC RATIO), THE FIGURE OF BLUE D ART EXPRESS LTD. SHOULD HAVE BEEN EXCLUDED AS ITS OP /OC RATIO WAS ABNORMALLY HIGHER THAN THE OTHER TWO COMPANIES AND STATISTICALLY, IT IS IMPERMISSIBLE TO TAKE AVERAGE OF FIGURES HAVING WILD FLUCTUATION AS IT WOULD CREATE AN UPWAR D BIAS. 2. THE ASSESSEE HAS ALSO MOVED APPLICATION UNDER RULE 11 OF THE ITA RULES 1963 FOR RAISING FOLLOWING ADDITIONAL GROUNDS : ITA NO. 4757/DEL/2010 3 GROUND NO. 2A AS ALTERNATIVE TO GROUND NO. 2 THAT THE LEARNED DRP ERRED IN LAW AND ON FACTS IN NOT DIRECTING THE AO TO COMPUTE THE TOTAL INCOME BY EXCLUDING THE GROSS LEASE RENT FROM THE TOTAL INCOME OF THE ASSESSEE AND INCLUDING ONLY THE FINANCE CHARGES (INTEREST) ON FINANCE LEASE, AS A SEQUITOR TO DISAL LOWANCE OF DEPRECIATION ON FINANCE LEASED ASSETS. GROUND NO. 6 THAT THE LEARNED AO ERRED IN ALLOWING DEPRECIATIO N ON UPS (UNINTERRUPTED POWER SUPPLY) @ 15% ONLY INSTEAD OF 60% CLAIMED BY THE ASSESSEE AND WHICH THE ASSESSEE WAS ENTITLED TO UNDER THE LAW, IN TERMS OF THE DECISION OF THE HONBLE DELHI HIGH COU RT IN ITA NO. 1694/2010. 3. THE LD. AR SUBMITTED THAT BOTH THE ABOVE GROUNDS ARE PURELY LEGAL IN NATURE AND DO NOT REQUIRE ANY FACTUAL INVESTIGAT ION AND ARE BORNE OUT FROM THE RECORDS OF THE AUTHORITIES BELOW. THE LD. DR OPPOSED THE SAME. 4. CONSIDERING THE ABOVE SUBMISSIONS WE FIN D THAT THE ISSUES RAISED IN THE ABOVE ADDITIONAL GROUNDS ARE LEGAL IN NATURE AN D ADJUDICATION OF THE SAME DOES NOT REQUIRE CONSIDERATION OF FRESH MATERI AL OUTSIDE THE RECORD. WE THUS ALLOW THESE ADDITIONAL GROUNDS FOR THE ADJU DICATION OF THE BENCH. 5. IN SUPPORT OF GROUND NO. 2A, LD. AR SUB MITTED THAT IT IS ALTERNATIVE TO THE GROUND NO. 2 RAISED IN THE MEMORANDUM OF APP EAL AND IS FULLY COVERED BY THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2005-06 VID E ITS ORDER DATED 16.3.2012 IN ITA NO. 439/D/2010., A COPY THEREOF HA S BEEN MADE AVAILABLE AT PAGE NOS. 1 TO 6 OF THE PAPER BOOK FILED ON 19.1 1.2012. HE REFERRED CONTENTS OF PARA NOS. 10 & 11 OF THE SAID ORDER WHE REIN THE ISSUES RAISED ITA NO. 4757/DEL/2010 4 HAS BEEN ADJUDICATED UPON IN FAVOUR OF THE ASSESSEE . HE SUBMITTED THAT FACTS OF THIS YEAR ARE SIMILAR TO THE FACTS ON THE ISSUE IN THE ASSESSMENT YEAR 2005-06. IN THIS REGARD HE REFERRED PAGE NO. 8 TO 1 0 OF THE PAPER BOOK PART A. THESE ARE THE STATEMENT OF TAXABLE INCOME AND TA X LIABILITY THEREON AS WELL AS COMPUTATION OF INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND INCOME FROM OTHER SOURCES. 6. LD. AR DID NOT PRESS GROUND NO. 2. 7. LD. DR DID NOT DISPUTE THE ABOVE SUBMISS ION REGARDING ISSUE RAISED IN ADDITIONAL GROUND NO. 2A. HE FURTHER PLACED RELI ANCE ON THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD. 8. CONSIDERING ABOVE SUBMISSIONS WE FIND TH AT AN IDENTICAL ISSUE WAS RAISED BEFORE THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2005-06 IN ITA NO. 439/D/2010 WHICH HAS BEEN D ECIDED IN FAVOUR OF THE ASSESSEE. IN THAT YEAR THE ASSESSEE COMPANY HAD LEASED OUT CERTAIN ASSETS ON FINANCIAL LEASE BASIS. THE ASSESSEE HAD A LSO CLAIMED DEPRECIATION ON THOSE ASSETS. THE AO DISALLOWED THE CLAIMED DEPR ECIATION ON THE ASSETS WHICH WERE GIVEN ON THE BASIS OF FINANCIAL LEASE. LD. CIT(A) DELETED THE SAME. IN APPEAL BEFORE THE TRIBUNAL IT WAS SUBMITTE D BY THE ASSESSEE THAT ASSESSEE HAD ACCOUNTED FOR THE TRANSACTION ON THE B ASIS OF FINANCIAL LEASE AND THEREFORE NO DEPRECIATION WAS CLAIMED IN THE B OOKS OF ACCOUNTS AND THE LEASE RENT OF RS. 36.14 LACS WAS CREDITED TO TH E PROFIT AND LOSS ACCOUNT WHICH WAS THE FINANCIAL CHARGES IF INTEREST WAS ACC RUED TO THE ASSESSEE ITA NO. 4757/DEL/2010 5 FROM SUCH FINANCIAL LEASE. HOWEVER IN THE COMPUTATI ON OF INCOME , THE ASSESSEE HAD OFFERED THE INCOME OF LEASE RENT AND A LSO CLAIMED THE DEPRECIATION. THUS IT WAS ARGUED THAT IN THE COMPU TATION OF INCOME THE ASSESSEE HAD DISCLOSED THE INCOME AS IT WAS AN OPER ATIVE LEASE. IT WAS SUBMITTED THAT THE INCOME DISCLOSED BY THE ASSESSEE IN COMPUTATION OF INCOME WAS MORE THAN THE INCOME CHARGEABLE TO FINA NCIAL LEASE. IT WAS ARGUED THAT IF THE AO TREATED THE TRANSACTION AS FI NANCIAL LEASE. HE SHOULD HAVE CONSIDERED THE LEASE RENT ALSO ON THE BASIS OF FINANCIAL LEASE AND NOT THE GROSS LEASE RENT WHICH INCLUDED THE PART OF THE SALE CONSIDERATION OF THE ASSET ALSO. ACCORDINGLY IT WAS PRAYED THAT THE AO M AY BE DIRECTED TO REWORK OUT THE ASSESSEE S INCOME TREATING THE LEASE AS FI NANCE LEASE. AFTER DISCUSSING THE CASES OF THE PARTIES THE TRIBUNAL HA S GIVEN THE FOLLOWING FINDING IN PARA NO. 5 OF ITS ORDER DATED 16.3.2012 :- 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. IN THE B OOKS OF ACCOUNT, THE ASSESSEE HAS ACCOUNTED FOR THE INCOME AS IF THE TRANSACTION WAS IN THE NATURE OF FINANCIAL LEASE. HOWEVER, IN THE C OMPUTATION OF INCOME, HE OFFERED THE INCOME AND CLAIMED THE DEPRE CIATION AS IF THE TRANSACTION WAS OPERATING LEASE. THE ASSESSING OFFI CER HAS NOT EXAMINED THE LEASE AGREEMENT AND HAS NOT ARRIVED AT A CONCLUSIVE FINDING WITH REGARD TO THE NATURE OF THE LEASE BUT TREATED THE LEASE TO BE FINANCE LEASE AND , ACCORDINGLY, DISALLOWED THE DEPRECIATION. IT WAS CONTENDED BY THE LEARNED COUNSEL THAT IF THE AS SESSING OFFICER TREATED THE LEASE TO BE FINANCE LEASE, THEN, HE SHO ULD HAVE TAKEN THE LEASE RENT ALSO AS PER FINANCE LEASE. THE ASSESSING OFFICER CANNOT ADOPT DOUBLE YARDSTICK, ONE FOR ALLOWING THE DEPREC IATION AND, SECOND FOR TAXING THE LEASE RENT. HE ALSO REFERRED TO ACCO UNTING STANDARD-19 PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANT S OF INDIA IN WHICH THE INSTITUTE HAS PROVIDED HOW TO ACCOUNT FOR THE L EASE RENT IN THE CASE OF FINANCIAL LEASE AS WELL AS OPERATING LEASE. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES AND THE FACTS OF TH E CASE, WE ARE OF ITA NO. 4757/DEL/2010 6 THE OPINION THAT THE MATTER NEEDS RE-EXAMINATION AT THE END OF THE ASSESSING OFFICER. WE AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL THE FIRSTLY THE ASSESSING OFFICER HAS TO DE TERMINE THE NATURE OF THE LEASE, WHETHER IT IS A FINANCIAL LEASE OR AN OPERATING LEASE AND THEREAFTER, HE HAS TO DETERMINE THE INCOME WHICH IN CLUDES THE TAXABILITY OF LEASE RENT AS WELL AS ALLOWABILITY OF DEPRECIATION BOTH. THE ASSESSING OFFICER CANNOT ADOPT A DIFFERENT YARD STICK FOR TAXING THE LEASE RENT AND DIFFERENT YARDSTICK FOR ALLOWABILITY OF DEPRECIATION. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS OF AUTHO RITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER . WE DIRECT HIM TO READJUDICATE THIS ISSUE IN ACCORDANCE WITH LAW AFTER ALLOWING ADEQUATE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 9. SIMILAR ARE THE FACTS ON THE ISSUE DURING THE YEAR. WE THUS RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL ON THE ISSUE IN THE ASSESSMENT YEAR 2005-06 WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD AND RESTORE THE MATTER TO THE FILE O F THE AO TO READJUDICATE THE ISSUE IN ACCORDANCE WITH THE LAW AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS DIRECTED BY THE TRIBUNAL I N THE ASSESSMENT YEAR 2005-06 10. THE ADDITIONAL GROUND NO. 2A IS THUS ALLOW ED FOR STATISTICAL PURPOSES AND GROUND NO. 2 IS REJECTED. ADDITIONAL GROUND NO. 6 :- 11. LD. AR POINTED OUT THAT IN THIS GROUND THE ASSESSEE HAS TRIED TO JUSTIFY THE CLAIMED DEPRECIATION ON UPS (UNINTERRU PTED POWER SUPPLY) @ 60% WHICH HAS BEEN WRONGLY INTERRUPTED BY THE AO BY ALLOWING THE SAME @ 15% ONLY. HE POINTED OUT THAT THE ISSUE IS NOW CO VERED BY THE DECISION OF HONBLE JURISIDICTIONAL HIGH COURT OF DELHI IN T HE CASE OF CIT VS. NET INDIA LTD. ITA NO. 1694/2010 JUDGMENT DATED 8.11.2010, A COPY THEREOF HAS ITA NO. 4757/DEL/2010 7 BEEN MADE AVAILABLE AT PAGE NO. 46 OF THE PAPER BOO K FILED ON 19.11.2012. LD. DR DID NOT DISPUTE THIS FACT. HE HOWEVER PLACED RELIANCE ON TEH ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD. 12. HAVING GONE THROUGH THE DECISION OF H ONBLE JURISIDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS. NET INDIA LTD . (SUPRA) WE FIND THAT IN THAT CASE ALSO THE ASSESSEE HAD CLAIMED DEPRECIATIO N ON THE UPS @ 60% WHEREAS AO WAS OF THE VIEW THAT DEPRECIATION SHOULD BE ALLOWED @ 15%. THE HONBLE HIGH COURT WAS PLEASED TO HOLD THAT ON UPS THE DEPRECIATION IS ADMISSIBLE @ 60% WHICH ASPECT AGAINST HAS BEEN DECI DED BY THE HIGH COURT IN THE CASE OF CIT VS. BSES YAMUNA POWER LTD., ITA 1267/2010 DECIDED ON 31.10.2010. THE HONBLE HIGH COURT ACCOR DINGLY DID NOT FIND THAT ANY QUESTION OF LAW WAS ARISEN FOR ITS CONSIDERATIO N. THE APPEAL PREFERRED BY THE REVENUE WAS THUS DISMISSED. RESPECTFULLY FOL LOWING THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF NET 4 INDIA (SUPRA) WE DIRECT THE AO TO ALLOW THE CLAIMED DEPRECIATION ON UPS @60 %. GROUND NO. 6 IS ACCORDINGLY ALLOWED. GROUND NO. 1 13. AT THE OUTSET OF HEARING LD. AR POINTED OUT THAT THE ISSUE RAISED IN GROUND NO. 1 IS SQUARELY COVERED BY THE ORDER OF TH E TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. A CO PY THEREOF HAS BEEN MADE AVAILABLE AT PAGE NO. 1 O 6 OF THE PAPER BOOK OF CASE LAWS FILED ON 19.11.2012. LD. DR DID NOT REBUT IT BUT PLACED RELI ANCE ON THE ORDERS OF THE ITA NO. 4757/DEL/2010 8 AUTHORITIES BELOW. HE SUBMITTED FURTHER THAT THE LD . DR HAS NOT PASSED A COMPREHENSIVE AND SPEAKING ORDER ON THE ISSUES RAIS ED BEFORE IT. HENCE THE MATTER SHOULD BE REMANDED BACK FOR ITS FRESH CONSID ERATION. 14. HAVING GONE THROUGH THE ORDER DATED 16.3 .2012 OF THE TRIBUNAL IN ITA NO. 439/D/2010 IN THE CASE OF ASSESSEE FOR THE ASSTT. YEAR 2005-06 ON THE ISSUE WE FIND THAT DURING THAT YEAR ALSO AN IDE NTICAL ISSUE WAS RAISED ABOUT THE VALIDITY OF ASSESSMENT ORDER IN MAKING AD DITION OF RS. 62,96,000/- ON ACCOUNT OF UNCLAIMED LIABILITIES ON TREATING THE SAME AS INCOME BY THE AO. THE REVENUE HAD PREFERRED APPEAL BEFORE THE TRI BUNAL AGAINST THE FIRST APPELLATE ORDER WHEREBY THE LD. CIT(A) HAD DELETED THE ADDITION. IT WAS CONTENDED THAT THE LD. CIT(A) HAS IGNORED THAT THE COMMENTS REFLECTED IN FORM 3CB BY THE AUDITORS STATING THAT THE CLAIMS FR OM THE OVERSEAS COMPANIES WITH RESPECT TO THE CREDIT BALANCE WERE S TILL PENDING WITH THE DEPARTMENT FOR FILING RETURN AND IN THE ABSENCE OF CONFIRMATION FILED BY THOSE CREDITORS, AO WAS CORRECT IN WRITING BACK THE UNCLAIMED LIABILITIES TO THE TOTAL INCOME. THE LD. CIT(A) HAD RECORDED THE F INDING THAT ALL THE LIABILITIES WERE MAXIMUM FOUR MONTHS OLD. THE ASSES SEE HAD EXPLAINED THE PROCEEDING AS TO WHY THE UNCLAIMED LIABILITIES WERE DEALT WITH IN ITS BOOKS OF ACCOUNTS. LD. CIT(A) ACCORDINGLY HELD THAT SINCE ME RELY 95% OF THE UNCLAIMED BALANCE AROSE ONLY DURING THE LAST FOUR M ONTHS, THE AO WAS NOT JUSTIFIED IN WRITING IT BACK TO THE INCOME OF THE A SSESSEE FOR THE SAME ASSESSMENT YEAR. HE THEREFORE DELETED THE AMOUNT. T HE TRIBUNAL ITA NO. 4757/DEL/2010 9 CONSIDERING THE RIVAL CONTENTIONS AND MATERIAL PLAC ED BEFORE IT HELD THAT IT IS A SETTLED LAW THAT SECTION 41(1) OF THE IT ACT WOUL D BE APPLICABLE IN THE YEAR IN WHICH THERE IS REMISSION OR CESSATION OF THE TRA DING LIABILITY OF THE EARLIER YEARS. THE ONUS IS UPON THE REVENUE TO PROVE THAT T HERE IS REMISSION OR CESSION OF LIABILITY. SINCE THE REVENUE HAD NOT BRO UGHT ON RECORD AN IOTA OF EVIDENCE TO ESTABLISH THAT THERE WERE ANY REMISSION OR CESSATION OF THE TRADING LIABILITY, WHEREAS THE LD. CIT(A) HAD RECOR DED A FINDING THAT LIABILITY UNDER CONSIDERATION WAS MAXIMUM FOUR MONTHS OLD AND NO REASON WAS ASSIGNED BY THE REVENUE FOR PRESUMING THAT CESSATIO N OF THE LIABILITY WHICH WERE INCURRED JUST WITHIN FOUR MONTHS OF THE COMMEN TS OF THE RELEVANT PREVIOUS YEAR, THE TRIBUNAL UPHELD THE ACTION OF LD . CIT(A) IN DELETING THE ADDITION OF RS. 62,96,000/- MADE BY THE AO. SIMILAR ARE THE CONTENTIONS OF THE ASSESSEE DURING THE YEAR THAT LIABILITY UNDER C ONSIDERATION IS MAXIMUM FOUR MONTHS OLD AND THE REVENUE HAS NOT ASSIGNED AN Y REASON FOR PRESUMING THAT THERE WAS CESSATION OF THESE LIABILI TIES WHICH WERE INCURRED WITHIN FOUR MONTHS OF THE END OF THE RELEVANT PREVI OUS YEAR. THESE CONTENTIONS OF THE ASSESSEE NEED VERIFICATION. WE T HUS REMAND THE MATTER TO THE FILE OF THE LD. DRP TO DECIDE THE ISSUE AFRE SH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE PARTIES AND EXAMI NING THE RECORD AVAILABLE IN VIEW OF THE ORDER DATED 16.3.2012 OF T HE TRIBUNAL FOR THE ASSESSMENT YEAR 2005-06 (SUPRA). THE GROUND NO. 1 I S ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 4757/DEL/2010 10 GROUND 3 TO 5 15. IN SUPPORT OF THESE GROUNDS LD. AR SUBM ITTED THAT ALL THROUGH CUP METHOD FOLLOWED BY THE ASSESSEE HAS BEEN ACCEPTED B Y THE AO AS APPROPRIATE METHOD EXCEPT IN THE YEAR UNDER CONSIDE RATION THE AO HAS HELD THAT THE APPROPRIATE METHOD IS TNMM. HE POINTED OUT THAT THE SAME AO IN THE SUBSEQUENT ASSESSMENT YEAR 2007-08 HAS ACCEPTED THE APPLICATION OF CUP METHOD AS APPROPRIATE METHOD TO DETERMINE THE A RMS LENGTH PRICE IN THE CASE OF ASSESSEE. HE POINTED OUT FURTHER THAT I N THE EARLIER ASSESSMENT YEARS 2005-06 AND 2004-05 THE AO HAS ACCEPTED THE A PPLICATION OF CUP METHOD BY THE ASSESSEE. HE CONTENDED THAT FACTS OF ALL THESE ASSESSMENT YEARS ARE SAME HENCE THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN VIOLATING THE PRINCIPLE OF MAINTENANCE OF CONSISTENCY IN THE APPROACH OF THE REVENUE ON AN IDENTICAL ISSUE UNDER SIMILAR FACTS. THE LD. AR REFERRED PAGE NUMBERS 6 & 7, 16 & 17 AND 45 & 46 OF THE PAPER BOOK PART A WHERE COPIES OF THE ABOVE REFERRED ASSESSMENT ORDERS FOR THE ASSESSMENT YEARS 2007-08, 2005- 06 AND 2004-05 HAVE BEEN MADE AVAILABLE. THE LD. AR ALSO REFERRED THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CAS E OF AGILITY LOGISTICS (P) LTD. (2012) 23 TAXMAN.COM 5 (MUM) (TRIB) WHEREIN NO TING FACTS IN ISSUE FOR THE YEAR UNDER APPEAL AS IDENTICAL WITH THE FACTS O F ASSESSMENT YEARS 2004- 05 AND 2005-06 AS APPEALS OF THESE YEARS WERE ALLOW ED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL, THE TRIBUNAL ALLOWED THE APPEAL BY THE ASSESSEE AND ADDITION ON ACCOUNT OF ADJUSTMENT IN ALP WAS R EJECTED. ITA NO. 4757/DEL/2010 11 16. LD. DR ON THE OTHER HAND SUBMITTED THAT T HE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE IN THE MATTERS OF INCOME TAX ACT AND BESIDES THE FACTS IN THE ASSESSMENT YEARS UNDER CONSIDERATION O N THE ISSUE ARE NOT SAME AS OF THE ASSESSMENT YEARS 2004-05, 2005-06 AN D 2007-08. HENCE THE TPO HAS RIGHTLY HELD THAT TNMM IS THE APPROPRIA TE METHOD TO DETERMINE ARMS LENGTH PRICE DURING THE YEAR. THE LD. DR REFE RRED CONTENTS OF PAGE NO. 5 TO 11 OF THE ORDER OF THE TPO WHEREIN THE TPO HAS STATED AS TO HOW FACTS ON THE ISSUE ARE DIFFERENT DURING THE YEAR UN DER CONSIDERATION. HE POINTED OUT THAT THE TPO HAS NOTED THAT VARIOUS INT ERNATIONAL TRANSACTIONS RELATING TO FREIGHT HAD NOT BEEN BENCHMARKED, THERE WAS NO EXTERNAL COMPARABLE FOR THE RECEIPT OF BREAK BULK FEE. THUS INORDER TO BENCHMARK OF THE TRANSACTIONS THE TPO FOUND IT APPROPRIATE TO US E TNNM AS THE MOST APPROPRIATE METHOD WITH OP /OC AS THE PROFIT LEVEL INDICATOR. THE LD. DR POINTED OUT FURTHER THAT DURING THE YEAR THE ASSESS EE HAS SHOWN OP / OC AT 2.52% ONLY. 17. LD. AR REJOINED WITH THE SUBMISSION THAT THE TPO HAS NOWHERE EXPLAIN AS TO WHETHER THE FACTS OF THE PRESENT YEAR ON THE ISSUE IS DIFFERENT FROM THE ASSESSMENT YEARS 2004-05, 2005-06, 2007-08 TO JUSTIFY HIS ACTION FOR DEVIATING FROM THE ESTABLISHED PRINCIPLE OF MAI NTENANCE OF CONSISTENCY IN THE APPROACH OF THE REVENUE ON AN IDENTICAL ISSUE I N DIFFERENT ASSESSMENT YEARS. ITA NO. 4757/DEL/2010 12 18. CONSIDERING THE ABOVE SUBMISSIONS WE FIN D THAT THE LD. DRP HAS NOT DEALT WITH THE ISSUE BY PASSING A SPEAKING ORDE R IN THIS REGARD. LD. DRP HAS SIMPLY UPHELD THE ACTION OF THE TPO ON THE BASI S OF THE OBSERVATIONS OF THE TPO THAT THE DATA GATHERED FROM THE COMPANIES S ELECTED BY THE ASSESSEE AS IT IS COMPARABLE FOR THE PURPOSE OF BEN CHMARKING DOES NOT CARRY ANY SANCTITY SINCE THE SAME ARE NOT AVAILABLE IN PUBLIC DOMAIN. WE THUS TO MEET THE END OF JUSTICE REMAND THE MATTER T O THE FILE OF THE LD. DRP TO DECIDE THE ISSUE AFRESH AFTER AFFORDING OPPORTUN ITY OF BEING HEARD TO THE PARTIES BY PASSING A SPEAKING ORDER AS TO HOW THE F ACTS OF THE CASE OF THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERA TION ARE DIFFERENT FROM THE FACTS ON ISSUE FOR THE ASSESSMENT YEARS 2004-05 , 2005-06 AND 2007-08 TO JUSTIFY THE ACTION OF THE TPO IN NOT ACCEPTING T HE APPLICATION OF CUP METHOD BY THE ASSESSEE AS APPROPRIATE METHOD DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. GROUND NO. 3 TO 5 ARE THUS ALL OWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT APPEAL IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT O N 7.12.2012. SD/- SD/- (SHAMIM YAHYA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 7.12.2012 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT ITA NO. 4757/DEL/2010 13 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT