Bisazza India Pvt. Ltd., Kadi V. The Dy. CIT(OSD), Range-1, Ahmedabad

ITA 614/AHD/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8309 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Ahmedabad
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Transfer pricing; International transaction; Difference of opinion; Avoidance of tax; TDS
• Section: 143(3); 133(6); 201; 144C; 13; 2; 92

Judgement Text

BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 1 OF 15 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH D , AHMEDABAD [CORAM : JUSTICE P P BHATT, PRESIDENT , AND PRAMOD KUMAR , VICE PRESIDENT ] ITA NO S . 2 693/AHD/2011 ASSESSMENT YEAR 20 0 7 - 08 BISSAZA INDIA PVT LTD .....APPELLANT 372/2, NEAR PLOT NO. 17, KADI, MEHSANA 382715 [PAN: AAACB6284G] VS ASSISTANT COMMISSIONER OF INCOME TAX RANGE 1 , AHMEDABAD ..........RESPONDENT ITA NOS. 614/AHD/16 ASSESSMENT YEAR 2009 - 10 BISSAZA INDIA PVT LTD .....APPELLANT 372/2, NEAR PLOT NO. 17, KADI, MEHSANA 382715 [PAN: AAACB6284G] VS DEPUTY COMMISSIONER OF INCOME TAX OSD RANGE 1, AHMEDABAD ..........RESPONDENT ITA NO. 605/AHD/ 16 ASSESSMENT YEAR 2007 - 08 INCOME TAX OFFICER WARD 1(1)(3), AHMEDABAD APPELLANT VS BISSAZA INDIA PVT LTD ... .RESPONDENT 372/2, NEAR PLOT NO. 17, KADI, MEHSANA 382715 [PAN: AAACB6284G] APPEARANCES BY S N SOPARKAR AND PARIN SHAH FOR THE APPELLANT VINOD TANWANI FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 20, 201 9 DATE OF PRONOUNC EMENT : MARCH 12 TH , 2020 BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 2 OF 15 ORDE R PER BENCH : 1. THESE THREE APPEALS PERTAIN TO THE SAME ASSESSEE, INVOLVE SOME COMMON ISSUES AND WERE HEARD TOGETHER. AS A MATTER OF CONVENIENCE, THEREFORE, THESE THREE APPEALS ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. WE WILL FIRST TAKE UP THE ASSESSM ENT YEAR 2007 - 08, I.E. ITA NO. 2691/AHD/2011. 3. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 19 TH SEPTEMBER 2011, PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 200 7 - 08 . 4. IN GROUND NOS. 1 TO 3, WHICH WE WILL TAKE UP TOGETHER, IN SUBSTANCE, GRIEVANCE OF THE ASSESSEE IS THAT THE LEARNED CIT(A) ERRED IN CONFIRMING TPOS ACTION IN MAKING UPWARD ADJUSTMENT IN SALE, TO THE TUNE OF RS 7,85,90,044, BY ADOPTING TRANSACTIONAL NET MARGIN METHOD (TNMM) OVER COST PLUS METHOD (CPM) TO DETERMINE ARMS LENGTH PRICE WHEN COMPARISON MADE WAS THAT OF COST, WHEREAS UPWARD ADJUSTMENT WAS MADE IN SALE PRICES, AND ALSO ERRED IN IGNORING THAT DECOLIGHT CERAMICS LTD WAS NOT A COMPARABLE ENTERPRISE . 5. SO FAR AS THIS ISSUE IN APPEAL IS CONCERNED, LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSUE IS COVERED, IN PRINCIPLE IN FAVOUR OF THE ASSESSEE BUT WITH A DIRECTION FOR REMAND, BY A DECISION OF THE COORDINATE BENCH, IN THE CASE OF ASSE SSEES SISTER CONCERN PINO BISAZZA GLASS PVT LTD VS ACIT [ITA NO. 2857/AHD/2012; ORDER DATED 30 TH OCTOBER 2015] WHEREIN THE COORDINATE BENCH, SPEAKING THROUGH ONE OF US I.E. THE VICE PRESIDENT, HAS, INTER ALIA, OBSERVED AS FOLLOWS: 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEARNED REPRESENTATIVES SUBMITTED THAT WHATEVER WE DECIDE IN THE CASE OF GEMSTONE GLASS PVT LTD VS JCIT ( ITA NOS. 3223/AHD/11 AND 2858/AHD/12 ) WILL APPLY , MUTATIS MUTANDIS, IN THIS CASE AS WELL. VIDE OUR ORDER OF EVEN DATE, WE H AVE DECIDED THE SAID CASE AS FOLLOWS: 4. TO ADJUDICATE ON THESE APPEALS, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFORE US IS ENGAGED IN THE BUSINESS OF MANUFACTURING GLASS MOSAIC PRODUCTS AND SELLING THE SAME TO ITS AES. DURING T HE COURSE OF THE PROCEEDINGS BEFORE THE TPO FOR THE ASSESSMENT YEAR 2007 - 08, IT WAS NOTED THAT THE ASSESSEE HAS USED TRANSACTIONAL NET MARGIN METHOD TO DETERMINE THE ARMS LENGTH PRICE. IT WAS ALSO NOTED THAT THE COMPANIES SELECTED BY THE ASSESSEE AS COMPA RABLES, FOR THE PURPOSES OF TNMM, WERE MANUFACTURING GLASS BOTTLES, KITCHEN GLASS WARES, INSULATED GLASS, LAMINATED GLASS ETC BUT THEN THESE PRODUCTS ARE COMPLETELY DIFFERENT FROM THE GLASS MOSAIC PRODUCTS MANUFACTURED BY THE ASSESSEE. IT WAS ALSO NOTED TH AT GLASS MOSAIC IS A LUXURY PRODUCT HAVING TECHNICAL AND AESTHETIC CHARACTERISTICS MUCH DIFFERENT FROM A GLASS PRODUCT MANUFACTURED BY OTHER BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 3 OF 15 COMPANIES. IT WAS ALSO NOTED THAT THE MAIN RAW MATERIAL IN THE GLASS INDUSTRIES IS SILICA BUT IT CONSTITUTES LES S THAN 3% OF THE COST OF PRODUCTION. THE TPO, THEREFORE, PROCEED TO REJECT THE TNMM ON THE GROUND THAT COMPARABLE DATA IS NOT AVAILABLE. AN EFFORT WAS THEN MADE BY SEEKING DATA ON THE COST ANALYSIS OF THE PRODUCT SOLD TO AES AND NON - AES SO AS TO APPLY TH E INTERNAL COST PLUS METHOD BUT THIS EFFORT OF THE TPO HAD TO ABORTED FOR WANT OF RELEVANT DATA. IT WAS IN THIS BACKGROUND THAT THE TPO PROCEEDED TO ADOPT THE CUP METHOD. IT WAS NOTED THAT THE ASSESSEE HAS, IN THE RELEVANT PREVIOUS YEAR, SOLD THE SAME PRO DUCTS TO PALLADIO GLASS PVT LTD (RS 14,27,786) AND PINO BISAZZA GLASS PVT LTD (RS 2,15,13,437). BOTH OF THESE ENTITIES ARE ADMITTEDLY GROUP COMPANIES OF THE ASSESSEE INASMUCH AS ULTIMATE PARENT COMPANY OF THE ASSESSEE, I.E. TREND GROUP SPA, HOLDS 33% EQUIT Y IN PALLADIO GLASS PVT LTD, 67% EQUITY IN PINO BISAZZA GLASS PVT LTD AN 99% EQUITY IN GEMSTONE GLASS PVT LTD, I.E. THIS ASSESSEE. THE ASSESSEES CONTENTION THAT THE PRICES AT WHICH IT HAS SOLD GOODS TO THESE GROUP ENTITIES CANNOT BE TREATED AS VALID COM PARABLE FOR CUP METHOD INASMUCH SUCH PRICES MUST BE IN RESPECT OF THE TRANSACTIONS WITH UNRELATED PARTIES, WHEREAS THESE ENTITIES WERE ADMITTED RELATED PARTIES, WAS REJECTED ON THE GROUND THAT THE TRANSACTION OF THE ASSESSEE WAS WITH RESIDENT INDIAN COMPA NIES AND THERE IS NO MOTIVE FOR TAX AVOIDANCE . WHILE ADOPTING THE CUP METHOD, THE TPO REFERRED TO ASSESSEES STAND TO THE EFFECT THAT THERE ARE NO MAJOR PLAYERS IN SIMILAR DECORATIVE GLASS PRODUCTS IN INDIA .....(AND).. THERE ARE LIMITATIONS ON AVAILABILI TY OF DATA PERTAINING TO THE SIMILAR DECORATIVE PRODUCT INDUSTRY , AND JUSTIFIED ADOPTION OF CUP METHOD ON THE GROUND THAT TRANSACTIONAL NET MARGIN METHOD CANNOT BE APPLIED TO THE FACTS OF THIS CASE FOR WANT OF SUITABLE COMPARABLES. HE ALSO JUSTIFIED HI S ACTION ON THE GROUND THAT COST PLUS METHOD CANNOT BE APPLIED ON THE FACTS OF THIS CASE AS THE ASSESSEE DID NOT GIVE COSTING OF THE PRODUCTS SOLD TO THE AES AND THE NON AES. AS FOR THE ASSESSEES CONTENTION THAT PRICES AT WHICH PRODUCTS ARE SOLD IN INDIA COULD NOT BE COMPARED WITH THE PRICES AT WHICH THE SAME PRODUCTS ARE SOLD ABROAD, ON ACCOUNT OF GEOGRAPHICAL DIFFERENCES, THE TPO REJECTED THE SAME BY OBSERVING THAT IT IS SEEN THAT THE ASSESSEE COMPANY HAS SOLD ITS PRODUCTS AT LOWER RATE TO THE EUROPEAN MARKET BUT THE EUROPEAN MARKET (IN WHICH AES ARE BASED) IS A PREMIUM MARKET FOR LUXURIOUS GOOD LIKE THE DECORATIVE PRODUCTS MANUFACTURED BY THE ASSESSEE AND RATE OF THESE PRODUCTS SHOULD BE HIGHER THAN THE (RATES PREVAILING IN) INDIAN MARKET . ON THE BAS IS OF THIS REASONING AND ADOPTING THE PRICE AT WHICH THE SAME PRODUCTS ARE SOLD TO GROUP ENTITIES IN INDIA AS THE ARMS LENGTH PRICE, THE TPO RECOMMENDED A TRANSFER PRICING ADJUSTMENT OF RS 5,09,77,309. AGGRIEVED BY THE ARMS LENGTH PRICE ADJUSTMENT SO P ROPOSED, ASSESSEE APPROACHED THE DISPUTE RESOLUTION PANEL. THE DRP REJECTED THE GRIEVANCES OF THE ASSESSEE BY OBSERVING, INTER ALIA, THAT THE TP METHOD ADOPTED BY THE ASSESSEE WAS NOT MORE APPROPRIATE THAN ADOPTED BY THE TPO AND THAT BUT FOR THE ADJUSTM ENT FOR GEOGRAPHICAL DIFFERENCES, CUP IS MORE APPROPRIATE METHOD AND CANNOT BE FAULTED WITH . ACCORDINGLY, THE ALP ADJUSTMENT OF RS 5,09,77,309 WAS UPHELD. THE ASSESSEE IS AGGRIEVED AND IS IN FURTHER APPEAL BEFORE US. AS FOR THE ASSESSMENT YEAR 2008 - 09, THE TPO NOTED THE BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 4 OF 15 CONTENTION OF THE ASSESSEE THAT THE TNMM IS MOST APPROPRIATE METHOD FOR DETERMINING THE ALP. HE, HOWEVER, ALSO NOTED THAT IN THE TRANSFER PRICING REPORT FILED BY THE ASSESSEE IT HAS BEEN ACCEPTED THAT THE COST PLUS METHOD IS THE MOST AP PROPRIATE METHOD WHEN THE BUSINESS ACTIVITY IS IN THE NATURE OF CONTRACT MANUFACTURING . IT WAS ALSO NOTED THAT IN THE FAR (FUNCTION, ASSET AND RISK) ANALYSIS OF THE ASSESSEE HAS BEEN CHARACTERIZED AS CONTRACT MANUFACTURER. THE TRANSFER PRICING OFFICER FUR THER NOTED THAT THE ASSESSEE DID NOT CHOOSE THIS METHOD AS THE MOST APPROPRIATE METHOD SINCE THE DATA CORRESPONDING TO THE NORMAL GROSS MARK UPS, AS REQUIRED FOR THE APPLICATION OF COST PLUS METHOD, WAS NOT AVAILABLE IN THE PUBLIC DOMAIN . HE THEN ADDED T HAT IT MAY BE PERTINENT TO MENTION HERE THAT IN ITS REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE DID NOT RAISE ANY CONTENTIONS ABOUT INAPPROPRIATENESS OF CPM AS THE MOST APPROPRIATE METHOD . IT WAS IN THIS BACKDROP AND RELYING UPON THE PROVISIONS OF SECTI ON 92C(3) OF THE ACT AND THE JUDICIAL PRECEDENTS IN THE COCA COLA INC VS ACIT [(2009) 177 TAXMANN 103 (P&H)], SAP LABS INDIA PVT LTD VS ACIT [(2011) 44 SOT 156 (BANG)] AND SERDIA PHARMACEUTICALS INDIA PVT LTD VS ACIT [(2011) 44SOT 391(MUM)], THE TPO PROCE EDED TO REJECT THE TNMM AND ADOPT CPM FOR DETERMINING THE ARMS LENGTH PRICE. WHILE DOING SO AND ACCEPTING THE POSITION THAT THE REQUISITE DATA WAS NOT AVAILABLE AT THE POINT OF TIME WHEN THE TRANSFER PRICING DOCUMENTATION WAS PREPARED, THE TPO ALSO OBSERV ED THAT THE NON AVAILABILITY OF DATA AT THE TIME OF PREPARATION OF THE TRANSFER PRICING DOCUMENT NEED NOT FETTER THE APPLICATION OF CORRECT METHOD. IT WAS IN THIS BACKDROP AND AFTER OBTAINING THE REQUISITE INFORMATION UNDER SECTION 133(6) THAT THE TPO PR OCEEDED TO MAKE AN ALP ADJUSTMENT OF RS 2,14,46,604. ONCE AGAIN, AGGRIEVED, INTER ALIA, BY THIS CHANGE OF METHOD OF ASCERTAINING THE ARMS LENGTH PRICE, THE ASSESSEE CARRIED THE GRIEVANCES BEFORE THE DRP. ONCE AGAIN, DRP REJECTED THE GRIEVANCES OF THE AS SESSEE. WHILE DOING SO, THE DRP, INTER ALIA, OBSERVED THAT ..... WE MUST CONCEDE THAT PERFECT DATA FOR COMPARABILITY ANALYSIS IS RARELY AVAILABLE (IRRESPECTIVE OF) WHICHEVER METHOD IS SELECTED. IN SUCH CIRCUMSTANCES, THE ASSESSEES ARGUMENT THAT CPM SHOULD BE REJECTED BECAUSE PERFECT DATA IS NOT AVAILABLE DOES NOT HAVE MUCH FORCE . THE ASSESSEE IS NOT SATISFIED WITH THE STAND SO TAKEN BY THE DRP, AND IS IN APPEAL B EFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, CAREFULLY PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. WE HAVE NOTED THAT SO FAR AS ASSESSMENT YEAR 2007 - 08 IS CONCERNED, THE TPO H AS APPLIED INTERNAL CUP METHOD TO ASCERTAIN THE ARMS LENGTH PRICE. IT IS ONLY ELEMENTARY THAT COMPARABLE UNCONTROLLED PRICE AT WHICH THE ENTITY HAS SOLD THE SAME PRODUCT TO AN INDEPENDENT ENTERPRISES IS A SINE QUA NON FOR APPLICATION OF INTERNAL CUP. IT I S SO FOR THE REASON THAT RULE 10 B(1)(A) PROVIDES THAT UNDER COMPARABLE UNCONTROLLED PRICE METHOD, AS A FIRST STEP, THE PRICE CHARGED OR PAID FOR PROPERTY TRANSFERRED OR SERVICES PROVIDED IN A COMPARABLE UNCONTROLLED TRANSACTION, OR A NUMBER OF SUCH BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 5 OF 15 TRAN SACTIONS, IS IDENTIFIED. RULE 10A(A), ON THE OTHER HAND, DEFINES UNCONTROLLED TRANSACTION A TRANSACTION BETWEEN ENTERPRISES OTHER THAN ASSOCIATED ENTERPRISES, WHETHER RESIDENT OR NON - RESIDENT. THEREFORE, THE FIRST ESSENTIAL INPUT FOR APPLICATION OF CU P METHOD IS THE PRICE CHARGED OR PAID FOR SIMILAR PRODUCT IN A TRANSACTION BETWEEN TWO ENTERPRISES, WHETHER RESIDENT OR NON - RESIDENT, WHICH ARE NOT ASSOCIATED ENTERPRISES. IN THE PRESENT CASE, THE COMPARABLE PRICE ADOPTED FOR DETERMINING THE ARMS LENGTH PRICE IS THE PRICE AT WHICH THE ASSESSEE HAS SOLD THE SAME PRODUCT TO OTHER GROUP ENTITIES, WHICH ARE THUS ASSOCIATED ENTERPRISES, RESIDENTS IN INDIA. IT HAS BEEN DEFENDED BY THE DRP ON THE GROUND THAT THERE CANNOT BE ANY TAX AVOIDANCE MOTIVE IN SELLING THE PRODUCTS AT AN ARTIFICIAL PRICE. IN OUR CONSIDERED VIEW, HOWEVER, THIS ASPECT OF THE MATTER IS IRRELEVANT INASMUCH AS THE VERY DEFINITION OF UNCONTROLLED TRANSACTION UNDER RULE 10A EXCLUDES THE TRANSACTIONS WITH ASSOCIATED ENTERPRISES WHETHER RESI DENT OR NON - RESIDENT. ONCE IT IS NOT IN DISPUTE THAT UNCONTROLLED TRANSACTION IS A STATUTORILY DEFINED TERM, THERE IS NO ROOM FOR DISCARDING OR QUESTIONING THIS DEFINITION ON THE BASIS OF SUPERIOR LOGIC IN AN ALTERNATIVE DEFINITION. SUCH HEROICS ARE NOT CALLED FOR IN THE PROCESS OF JUDICIAL INTERPRETATION. LEARNED DRP OUGHT TO HAVE FOLLOWED THE LAW AS IT EXISTS RATHER THAN PONDERING OVER WHAT THE LAW OUGHT TO BE, AS IS INHERENT IN THEIR JUSTIFICATION FOR INCLUSION OF UNCONTROLLED TRANSACTIONS WITH ASSOCI ATED ENTERPRISES RESIDENT IN INDIA. WE DISAPPROVE THE LINE OF REASONING ADOPTED BY THE AUTHORITIES BELOW. IN OUR CONSIDERED VIEW, WHETHER THE TRANSACTIONS ARE WITH ASSOCIATED ENTERPRISES RESIDENT IN INDIA OR WITH ASSOCIATED ENTERPRISES RESIDENT OUTSIDE INDIA, THE PRICES AT WHICH SUCH TRANSACTIONS ARE ENTERED INTO WITH SUCH ENTERPRISES CANNOT BE TAKEN AS COMPARABLE UNCONTROLLED PRICE FOR THE PURPOSE OF DETERMINING THE ARMS LENGTH PRICE. 7. AS FOR THE QUESTION AS TO WHETHER THE TRANSACTIONS WITH ASSOCI ATED ENTERPRISES CAN, IN ANY SITUATIONS, BE CONSIDERED AS A VALID INPUT FOR ASCERTAINMENT OF ARMS LENGTH PRICE UNDER THE CUP METHOD, WE FIND THE ISSUE IS COVERED, IN FAVOUR OF THE ASSESSEE, BY DECISION OF A COORDINATE BENCH IN THE CASE OF SABIC INNOVATIVE PLASTIC INDIA PVT LTD VS DCIT [(2013) 59 SOT 138 (AHD)]. IN THIS CASE, IT WAS INTER ALIA OBSERVED THAT: 7. AS FOR THE CONNOTATIONS OF THE EXPRESSIONS INTERNAL CUP' AND EXTERNAL CUP', WHILE THE FORMER DEALS WITH A SITUATION IN WHICH PRICES AT WHICH SIMIL AR TRANSACTION IS ENTERED INTO WITH AN INDEPENDENT ENTERPRISES, LATTER REFERS TO THE SITUATION IN WHICH TWO UNCONNECTED INDEPENDENT ENTERPRISE DEAL WITH EACH OTHER. IN OTHER WORDS, EVEN IN THE CASE OF INTERNAL CUP', THE ARM'S LENGTH PRICE TO BE ADOPTED IS THE PRICE, SUBJECT TO ADMISSIBLE ADJUSTMENTS, AT WHICH THE SIMILAR TRANSACTIONS ARE CARRIED OUT BETWEEN THE ASSESSEE AND AN INDEPENDENT ENTERPRISE. INTERNAL CUP HAS NOTHING TO DO WITH THE MARGINS EARNED BY THE SAME ENTERPRISES FROM OTHER TRANSACTIONS, AS IS THE CASE BEFORE US. LEARNED CIT(A)'S RELIANCE ON THE DECISION OF A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF BAYER MATERIAL SCIENCE PVT LTD VS ADDITIONAL COMMISSIONER OF INCOME TAX (134 ITD 582), IS ALSO OF NO LONGER SUSTAINABLE IN LAW. THE AUTH ORITIES BELOW HAVE PROCEEDED ON THE BASIS THAT IN THE CASE OF GEII'S PLASTIC DIVISION THERE WERE SUBSTANTIAL INTRA AE TRANSACTIONS AS EVIDENT FROM LEARNED CIT(A)'S OBSERVATIONS TO THE EFFECT THAT, BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 6 OF 15 THE APPELLANT HAS ALSO STATED THAT FOR THE PURPOSES OF INT ERNAL CUP ALSO, THE UNCONTROLLED TRANSACTIONS CAN ONLY BE CONSIDERED. SINCE, THE TRANSACTIONS OF THE PREDECESSOR COMPANY I.E. GE INDIA PVT. LTD. WERE NOT UNCONTROLLED TRANSACTIONS, BUT WERE TRANSACTIONS MADE WITH ASSOCIATED ENTERPRISES UNDER CONTROLLED CON DITIONS '. YET THESE CONTROLLED TRANSACTIONS WERE TREATED AS GOOD COMPARABLES. BAYER MATERIAL SCIENCE WAS ALSO A CASE IN WHICH TRANSACTIONS BETWEEN ASSOCIATED ENTERPRISES WERE USED AS COMPARABLES FOR BENCHMARKING, AND THIS ACTION WAS UPHELD BY THE TRIBUNAL. IT WAS IN THIS PROCESS THAT IN THE CASE OF BAYER MATERIAL SCIENCE (SUPRA ), A COORD INATE BENCH OF THIS TRIBUNAL HAD INTER ALIA OBSERVED AS FOLLOWS: 19. IT IS POSSIBLE THAT THE NATURE OF INTERNATIONAL TRANSACTION BETWEEN TWO ASSOCIATED ENTERPRISES MAY BE SUCH WHICH, IN NORMAL COURSE, IS UNUSUAL BETWEEN INDEPENDENT ENTERPRISES. IN SUCH A C ASE THERE WILL BE HARDLY ANY COMPARABLE UNCONTROLLED CASE FOR THE PURPOSES OF BENCHMARKING OF SUCH TRANSACTION. THE QUESTION WILL ARISE AS TO WHETHER IN SUCH A SITUATION, THE TRANSFER PRICING PROVISIONS WILL FAIL AND CEASE TO BE APPLICABLE AND AS SUCH THE TPO WILL BE COMPELLED TO ACCEPT THE MANOEUVRED PRICE DECLARED BY THE ASSESSEE. THE FURTHER QUESTION WILL BE AS TO WHETHER ANY COGNIZANCE CAN BE TAKEN OF SUCH CONTROLLED TRANSACTIONS FOR BENCHMARKING. WE HAVE OBSERVED ABOVE THAT A MAJORITY OF ASSESSES DO NO T INTEND TO PLAY FOUL WITH THE REVENUE BY UNNECESSARILY ATTEMPTING TO REDUCE THE TAX LIABILITY. IN SUCH CIRCUMSTANCES THE DECLARED INCOME FROM SUCH INTERNATIONAL TRANSACTIONS WILL ITSELF REPRESENT THE ARM'S LENGTH PRICE. THUS, WHERE IT IS AN ADMITTED POSIT ION BETWEEN THE TAX PAYER AND THE TAX COLLECTOR THAT THERE IS NO COMPARABLE UNCONTROLLED TRANSACTION DUE TO THE NATURE OF TRANSACTION BEING SUCH THAT IT IS ORDINARILY BETWEEN ASSOCIATED ENTERPRISES, IN SUCH A CASE, A TRANSACTION BETWEEN TWO ASSOCIATED ENTE RPRISES AT ARM'S LENGTH PRICE, THOUGH TECHNICALLY CALLED 'CONTROLLED TRANSACTION', WOULD PARTAKE OF THE CHARACTER OF 'UNCONTROLLED TRANSACTION' FOR THE PURPOSES OF DETERMINING THE ALP IN A LATER INTERNATIONAL TRANSACTION BETWEEN TWO AES. IN SUCH A SITUATIO N, NO FETTERS CAN BE PLACED ON THE POWERS OF THE TPO TO CONSIDER SUCH COMPARABLE CONTROLLED TRANSACTION - HAVING ADORNED THE GARB OF UNCONTROLLED TRANSACTION - FOR THE PURPOSES OF BENCHMARKING. IF THE CONTENTION OF THE LD. A.R. IS ACCEPTED THAT CONTROLLED T RANSACTION SHOULD BE ALTOGETHER SHUNTED OUT FOR THE PURPOSE OF TRANSFER PRICING PROVISION, EVEN IN RARE CIRCUMSTANCES AS ARE PRESENTLY PREVAILING, THEN THE VERY RATIONALE AND PURPOSE OF SECTIONS 92 TO 92F, BEING THE DETERMINATION OF ALP, WHICH IS OTHERWISE ACHIEVED FROM THE CONTROLLED TRANSACTION, WILL BE DEFEATED . IT IS IN SUCH EXCEPTIONAL CIRCUMSTANCES THAT THE PRINCIPLE OF PURPOSIVE INTERPRETATION WILL COME INTO PLAY TO SET FREE THE HANDS OF THE TPO TIED WITH DETERMINING ALP ONLY ON THE BASIS OF UNCONTRO LLED TRANSACTIONS. 20. WE HAVE NOTICED ABOVE THAT THE PURPOSE BEHIND THESE PROVISIONS IS TO PREVENT THE AVOIDANCE OF TAX IN THE INTERNATIONAL TRANSACTIONS BY ASCERTAINING THE ARM'S LENGTH PRICE. THESE PROVISIONS ARE BASICALLY FOR THE ASSISTANCE OF THE REVE NUE AS IS EVIDENT FROM SEC. 92(3) WHICH MANDATES THAT THE PROVISIONS OFTHIS SECTION SHALL NOT APPLY IN A CASE WHERE THE COMPUTATION OF INCOME UNDER SUBSECTION (1) OR THE DETERMINATION OF ALLOWANCE FOR ANY EXPENSE OR INTEREST UNDER THAT SUB - SECTION OR DETER MINATION OF ANY COST OR EXPENSE ALLOCATED OR APPORTIONED HAS THE EFFECT OF REDUCING THE INCOME CHARGEABLE TO TAX COMPUTED ON THE BASIS OF ENTRIES MADE IN THE BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 7 OF 15 BOOKS OF ACCOUNT IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE INTERNATIONAL TRANSACTION WAS ENTERE D INTO. THE EFFECT OF SECTION 92(3) IS THAT IF THE DETERMINATION OF INCOME FROM INTERNATIONAL TRANSACTION AT ARM'S LENGTH PRICE RESULTS INTO A LOWER INCOME THAN WHAT HAS BEEN DECLARED BY THE ASSESSEE AS PER THE ENTRIES IN THE BOOKS OF ACCOUNT, THEN NO COGN IZANCE SHOULD BE TAKEN OF SUCH DETERMINATION OF ALP, WHICH SHALL BE IGNORED AND THE INCOME SHALL BE COMPUTED ON THE BASIS OF ENTRIES MADE. ON THE OTHER HAND, IF THE INCOME DETERMINED AT ARM'S LENGTH PRICE IS HIGHER THAN THAT EMANATING FROM ENTRIES IN THE B OOKS OF ACCOUNT, THEN SUCH INCOME AT ARM'S LENGTH PRICE, BEING HIGHER THAN THAT FROM THE ENTRIES IN THE BOOKS OF ACCOUNT, SHALL BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. IT IS, THEREFORE, MANIFEST THAT THE HIGHER OF INCOME DETERMINED AT ARM'S LENGTH PRICE OR AS EMERGING FROM THE ENTRIES MADE IN THE BOOKS OF ACCOUNT, IS TAKEN INTO CONSIDERATION FOR COMPUTING THE TOTAL INCOME OF AN ASSESSEE. THIS SUB - SECTION (3) OF SECTION 92 WHEN SEEN IN JUXTAPOSITION TO THE CHAPTER X IN WHICH THE RELEVANT SECTIONS HA VE BEEN RESIDED TITLED AS 'PROVISIONS RELATING TO AVOIDANCE OF TAX', MAKES IT APPARENT THAT THE PURPOSE BEHIND SUCH PROVISIONS IS TO UNCOVER THE ARRANGEMENT MADE BY THE ASSOCIATED ENTERPRISES IN NOT REFLECTING THE TRUE PROFIT FROM THE INTERNATIONAL TRANSAC TIONS. IF WE ACCEPT THE CONTENTION RAISED BY THE LD. A.R. THAT THE CONTROLLED TRANSACTIONS SHOULD BE COMPLETELY IGNORED IN SUCH A SITUATION WHEN THERE ARE NO UNCONTROLLED TRANSACTIONS AT ALL, IT WOULD AMOUNT TO DEFEATING THE OBJECT OF THESE PROVISIONS. WHE N THE VERY PURPOSE OF THESE PROVISIONS IS TO DETERMINE ARM'S LENGTH PRICE AND THERE IS ADMITTEDLY NO RECORD OF ANY UNCONTROLLED TRANSACTION, IN OUR CONSIDERED OPINION, IT IS PERFECTLY IN ORDER TO CONSIDER A CONTROLLED TRANSACTION GENUINELY ENTERED IN AN UN CONTROLLED MANNER BETWEEN SOME OTHER ASSOCIATED ENTERPRISES, FOR THE PURPOSES OF BENCHMARKING OF SUCH A TRANSACTION. 8. HOWEVER, THE SAME LEARNED MEMBER, AS A THIRD MEMBER IN THE CASE OF TECHNIMONT ICB PVT LTD VS ADDITIONAL COMMISSIONER OF INCOME TAX (138 ITD 23 TM), AND AGREEING WITH ONE OF US (I.E. THE ACCOUNTANT MEMBER) IN A SITUATION OF DIVERGENCE OF OPINION BETWEEN THE MEMBERS CONSTITUTING THE DIVISION BENCH, DISCARDED THE ABOVE SCHOOL OF THOUGHT. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, URGES US TO FOLLOW THE VIEW TAKEN BY THE BAYER MATERIAL SCIENCE (SUPRA) AND IGNORE THE THIRD MEMBER DECISION IN THE CASE OF TE CHNIMONT ICB (SUPRA). IN A WRITTEN NOTE FILED BEFORE US, IT IS SUBMITTED THAT 'IN THIS REGARD, IT IS IMPORTANT TO NOTE THAT IN THE THIRD MEMBER DECISION IN TECHNIMONT ICB INDIA (P) LTD. CASE, CURIOUSLY NO DISCUSSION IS MADE ON THE EARLIER JUDGMENTS DELIVERE D IN THE CASES OF NGC NETWORK AND BAYER MATERIAL SCIENCE. THIS ASSUMES SIGNIFICANCE IN THIS CASE BECAUSE THE HON'BLE MEMBER WHO WROTE THE THIRD MEMBER JUDGMENT IN TECHNIMONT CASE HAD EARLIER WRITTEN THE JUDGMENT IN THE CASE OF BAYER MATERIAL SCIENCES ALSO. THE HON'BLE MEMBER CATEGORICALLY WROTE THAT NO COGNIZANCE OF THE JUDGMENTS CITED BY THE REPRESENTATIVES (INCLUDING BAYER MATERIAL SCIENCES AND NGC) ARE BEING MADE BY HIM IN THE CASE (TECHNIMONT), WHICH IS AN INHERENT CONTRADICTION IN THE STANDS TAKEN BY T HE HON'BLE MEMBER IN THESE CASES. IN SUCH A SCENARIO, THE CASE SHOULD HAVE BEEN REFERRED TO THE SPECIAL BENCH INSTEAD OF DECIDING THE SAME ISSUE IN TWO DIFFERENT WAYS THAT TOO WITHOUT DISTINGUISHING THE EARLIER JUDGMENT . CONSEQUENTLY, THE EXTREME VIEW TAK EN IN THE TECHNIMONT JUDGMENT IS INCORRECT, IMPRACTICAL AND AGAINST THE SPIRIT OF SEVERAL JUDGMENTS DELIVERED BY DIFFERENT BENCHES OF TRIBUNALS ON THIS ISSUE'. W E ARE NOT SWAYED BY THESE SUBMISSIONS, AND SEE NO LEGALLY SUSTAINABLE MERITS IN BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 8 OF 15 THE SAME. AS FA R AS THE QUESTION OF BINDING NATURE OF THESE JUDGMENTS IS CONCERNED, THERE DOES NOT SEEM TO BE MUCH DISPUTE ON THE PROPOSITION THAT A THIRD MEMBER DECISION OVERRIDES THE DECISION OF A DIVISION BENCH AND HAS A GREATER BINDING FORCE. IT HAS THE SAME PRECEDEN CE VALUE AS THAT OF A SPECIAL BENCH. ELABORATING THIS PRINCIPLE, A SPECIAL BENCH OF THIS TRIBUNAL, IN THE CASE OF DCIT VS OMAN INTERNATIONAL BANK SAOG (100 ITD SB 285), THAT A THIRD MEMBER DECISION IS DEFACTO A DECISION OF LARGER BENCH, AND , IN COMING TO THIS CONCLUSION, THE SPECIAL BENCH WAS GUIDED BY HON'BLE DELHI HIGH COURT'S JUDGMENT IN THE CASE OF P C PURIVS CIT (584) WHEREIN THEIR LORDSHIPS OBSERVED THAT 'THERE IS NO DIFFERENCE, REALLY SPEAKING, BETWEEN A FULL BENCH OF THREE JUDGES SITTING TOGETHER A ND THIS METHOD OF REFERRING TO THE THIRD JUDGE IN THE CASE OF A DIFFERENCE OF OPINION BETWEEN THE TWO JUDGES. WHETHER THE FIRST METHOD IS ADOPTED OR THE SECOND, 'OPINION OF THE MAJORITY' WILL BE DECISIVE. IN THIS CASE, THERE IS A FORMAL REFERENCE TO A THIR D JUDGE TO ASCERTAIN HIS OPINION. HE IS THE DECIDING VOICE. HE TURNS THE SCALES. THE THIRD JUDGE IS THE FULL BENCH. NOT ALONE. BUT ALONG WITH THE TWO OTHERS, WHO FIRST HEARD THE CASE. WHETHER THE THREE JUDGES SIT AT THE SAME TIME OR AT DIFFERENT TIMES - TW O AT ONE TIME AND THE THIRD HEARING THE MATTER LATER ON A DIFFERENCE OF OPINION - DOES NOT MAKE MUCH DIFFERENCE.'. VIEWED THUS, A THIRD MEMBER MAY NOT REALLY BE BOUND BY THE DECISIONS OF DIVISION BENCHES AND THE THIRD MEMBER DECISION MAY BE SEEN AS OVERRUL ING NOT ONLY THE DISSENTING VIEWS BUT ALSO UNANIMOUS DECISIONS OF THE DIVISION BENCHES. LEARNED THIRD MEMBER, IN HIS MAJORITY VIEW IN THE CASE OF TECHNIMONT (SUPRA), HAD STATED AS FOLLOWS: 14. .................. THERE IS NO STATUTORY SANCTION FOR ROPING IN A COMPARABLE CONTROLLED TRANSACTION FOR THE PURPOSES OF BENCHMARKING . WHEN IT HAS BEEN CLEARLY MANDATED IN ALL THE RELEVANT METHODS FOR DETERMINING ALP THAT THE COMPARISON HAS TO BE MADE BY THE ENTERPRISE'S INTERNATIONAL TRANSACTION WITH COMPARABLE UNCONTR OLLED TRANSACTION, BY NO SHEER LOGIC A COMPARABLE CONTROLLED TRANSACTION CAN BE EMPLOYED FOR THE PURPOSES OF MAKING COMPARISON. THERE IS NO WARRANT FOR DILUTING THE PRESCRIPTION GIVEN BY THE STATUTE OR RULES WHEN SUCH PRESCRIPTION ITSELF SERVES THE ENDS OF JUSTICE PROPERLY AND IS INFALLIBLE. IF THE VIEW OF THE REVENUE THAT A CONTROLLED TRANSACTION SHOULD NOT BE SHUNTED OUT FOR THE PURPOSES OF BENCHMARKING, IS ACCEPTED, THEN ALL THE RELEVANT PROVISIONS CONTAINED IN CHAPTER X IN THIS REGARD, WILL BECOME OTIOS E. IF SUCH A CONTENTION OF MAKING COMPARISON WITH A COMPARABLE CONTROLLED TRANSACTION IS TAKEN TO ITS LOGICAL CONCLUSION, THEN THERE WILL NEVER ARISE ANY NEED TO TAKE UP ANY CASE FOR TRANSFER PRICING SCRUTINY. THE REASON IS OBVIOUS. ALP IS DETERMINED FOR A PPLICATION IN RESPECT OF TRANSACTIONS BETWEEN TWO AES SO THAT THE PROFIT LIKELY TO ARISE FROM SUCH TRANSACTIONS IS NOT UNDER - REPORTED VIS - A - VIS FROM SIMILAR TRANSACTIONS WITH THIRD PARTIES. IF THE COMPARISON IS MADE AGAIN WITH NET PROFIT MARGIN REALIZED FR OM TRANSACTIONS BETWEEN TWO AES, INSTEAD OF THIRD PARTIES, IT MAY DEMONSTRATE THE SAME COOKED RESULTS IN BOTH THE SITUATIONS, THEREBY LEAVING NO SCOPE FOR ANY ADJUSTMENT. IN THIS EVENTUALITY, THE VERY OBJECT OF SUCH PROVISIONS WILL BE FRUSTRATED. THUS IT F OLLOWS THAT THE ALP CAN BE DETERMINED ONLY BY MAKING COMPARISON WITH A COMPARABLE UNCONTROLLED TRANSACTION AND NOT A COMPARABLE CONTROLLED TRANSACTION. 9. LEARNED THIRD MEMBER THUS VIRTUALLY OVERRULED HIS OWN VIEW IN A DIVISION BENCH. AS HE DID SO, HE WAS NOT OBLIVIOUS OF THE DIVISION BENCH ORDER THAT HE WAS DEPARTING FROM, AS EVIDENT FROM HIS FOLLOWING CLOSING REMARKS: BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 9 OF 15 18. BEFORE PARTING WITH THIS MATTER, I CONSIDER IT MY DUTY TO RECORD THAT THE LD. AR RELIED ON CERTAIN DECISIONS INCLUDING UCB INDIA (P.) L TD. V..ASSTT. CIT [2009] 121 ITD 131 , BAYER MATERIAL SCIENCE (P.) LTD. V. ADDL. CIT [2012] 134 ITD 582 AND DY. CIT V. BP INDIA SERVICES (P.) LTD. [2011] 133 ITD 255 (MUM) IN WHICH IT HAS BEEN HELD THAT CONTROLLED TRANSACTIONS CANNOT BE CONSIDERED FOR DETERMINING ALP IN OTHER TRANSACTIONS. PER CONTR A , THE LD. DR HAS RELIED ON A SOLITARY DECISION RENDERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN NGC NETWORK (INDIA) (P.) LTD. (SUPRA) TO BUTTRESS HIS CONTENTION THAT A CONTROLLED TRANSACTION CAN ALSO BE CONSIDERED FOR BENCHMARKING. I DO NOT PROPOSE TO EMB ARK UPON THESE CASES SEPARATELY FOR DISCUSSION, I CLARIFY THAT MY DECISION IN THE FOREGOING PARAS IS FOUNDED ON THE INTERPRETATION OF THE RELEVANT BARE PROVISIONS OF THE ACT AND RULES, WITHOUT TAKING ANY ASSISTANCE FROM DECISIONS CITED BY THE RIVAL PARTIES ON THE POINT, WHICH DIFFER IN THEIR CONCLUSION AS STATED BY THE LD. REPRESENTATIVES BEFORE ME. 10. LEARNED DEPARTMENTAL REPRESENTATIVE'S SUBMISSION THAT A JUDICIAL OFFICER CANNOT DEVIATE FROM HIS OWN STAND DOES NOT SEEM TO BE CORRECT. WHAT MAY BE MATERIAL IS THE HIERARCHICAL POSITION OF THE FORUM AT WHICH THE JUDICIAL OFFICER IS PLACED AND NOT THE JUDICIAL OFFICER HIMSELF. A THIRD MEMBER DECISION, AS WE HAVE NOTED ABOVE IN THE LIGHT OF HON'BLE DELHI HIGH COURT'S JUDGMENT IN THE CASE OF P C PURI (SUPRA ), IS A DE FACTO FULL BENCH DECISION AND A VIEW DOES SEEM POSSIBLE THAT IT IS NOT, THEREFORE, BOUND BY DIVISION BENCH DECISIONS - INCLUDING, OF COURSE, THE ORDERS THE THIRD MEMBER HIMSELF MAY HAVE AUTHORED ON BEHALF OF THE DIVISION BENCHES. IN ANY CASE, NO ONE IS INFALLIBLE AND THERE CANNOT BE ANY HEROISM IN PERPETUATING AN ERROR EITHER. BANJAMIN N CARDOZO, ONE OF THE MOST DISTINGUISHED US CHIEF JUSTICES, IN HIS CLASSIC BOOK THE NATURE OF JUDICIAL PROCESS' (YALE UNIVERSITY PRESS; FIRST PUBLISHED IN DEC 1921; ONLI NE VERSION AT HTTP://WWW.CONSTITUTION.ORG/CMT/CARDOZO/JUD PROC.HTM) BEAUTIFULLY PUTS IT AS I OWN THAT IT IS A GOOD DEAL OF A MYSTERY TO ME HOW JUDGES, OF ALL PERSONS IN THE WORLD, SHOULD PUT THEIR FAITH IN DICTA. A BRIEF EXPERIENCE ON THE BENCH WAS ENOUG H TO REVEAL TO ME ALL SORTS OF CRACKS AND CREVICES AND LOOPHOLES IN MY OWN OPINIONS WHEN PICKED UP A FEW MONTHS AFTER DELIVERY, AND REREAD WITH DUE CONTRITION. THE PER - SUASION THAT ONE'S OWN INFALLIBILITY IS A MYTH LEADS BY EASY STAGES AND WITH SOMEWHAT GR EATER SATISFACTION TO A REFUSAL TO ASCRIBE INFALLIBILITY TO OTHERS.' THE HYPER TECHNICAL ISSUES RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ARE THUS DEVOID OF ANY LEGALLY SUSTAINABLE MERITS. THE ISSUE STANDS COVERED AGAINST THE REVENUE BY A THIRD MEM BER DECISION WHICH PREVAILS OVER A DIVISION BENCH DECISION. LEARNED COUNSEL SUBMITS THAT EVEN IF BAYER DECISION (SUPRA) IS TO BE IMPLEMENTED ON MERITS, THE ASSESSEE'S CASE WILL NOT BE COVERED. THAT ASPECT OF THE MATTER IS, HOWEVER, ACADEMIC NOW. THE COURSE OF ACTION ADOPTED BY THE AUTHORITIES BELOW, IN ADOPTING THE NET MARGIN @ 8.95%, ON THE BASIS OF RESULTS SHOWN BY THE GEII'S PLASTIC DIVISION, IS UNSUSTAINABLE IN LAW, AND WE VACATE THE SAME. HOWEVER, WE HAVE NOTED THAT THE LEARNED CIT(A) HAS DECLINED TO D EAL WITH ALL OTHER ISSUES ON THE SHORT GROUND THAT THE DECISION TO APPLY, WHAT HE ERRONEOUSLY TERMS AS, INTERNAL CUP' METHOD FOR ASCERTAINING ARM'S LENGTH PRICE IS CORRECT AND DOES NOT CALL FOR ANY INTERFERENCE. THIS STAND, IN THE LIGHT OF THE DISCUSSIONS ABOVE, IS CLEARLY INCORRECT AND UNSUSTAINABLE IN LAW. IN THIS VIEW OF THE MATTER, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION ON MERITS IN THE LIGHT OF ABOVE OBSERVATIONS, IN ACCORDANCE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. THERE CANNOT BE ANY GOOD REASONS FOR US TO DEAL WITH ALL OTHER ISSUES ON MERITS WHEN LEARNED CIT(A) DID NOT HAVE AN OCCASION TO DEAL WITH THE SAME AT ALL. LEARNED CIT(A) HAS DECIDED BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 10 OF 15 T HE MATTER ON THE SHORT LEGAL GROUND, WHICH WE FIND TO BE UNSUSTAINABLE IN LAW, AND, THEREFORE, WE SEND THE MATTER BACK TO THE CIT(A) FOR PROPER ADJUDICATION. WITH THESE OBSERVATIONS, MATTER STANDS RESTORED TO THE FILE OF THE CIT(A) AND ALL OTHER GROUNDS OF APPEAL STAND DISMISSED AS INFRUCTUOUS. 8. IT IS, THEREFORE, CLEAR THAT THE PRICES ON WHICH THE ASSESSEE HAS SOLD THE SAME PRODUCTS TO RESIDENT ASSOCIATED ENTERPRISES CANNOT BE TAKEN AS BENCHMARK FOR ASCERTAINING THE ARMS LENGTH PRICE OF ITS SIMILAR SALE TRANSACTION WITH THE NON - RESIDENT ENTERPRISES. ONCE WE COME TO THE CONCLUSION THAT NECESSARY INPUTS FOR ASCERTAINING THE ALP UNDER CUP ARE NOT AVAILABLE, THERE CANNOT BE ANY OCCASION TO APPLY THE SAME. IN THE ASSESSMENT YEAR 2008 - 09, THE TPO HIMSELF ABAND ONED THE CUP METHOD AND RESORTED TO COST PLUS METHOD. 9. AS FOR THE COST PLUS METHOD BEING APPLIED TO THE FACTS OF THIS CASE, WE HAVE NOTED THAT THE DRP HAS CONCEDED THAT APPROPRIATE DATA FOR THE APPLICATION OF COST PLUS METHOD IS NOT AVAILABLE AND YET THE Y HAVE APPROVED ADOPTED OF THE CPM BECAUSE, ACCORDING TO THE DRP, APPROPRIATE DATA IS NOT AVAILABLE FOR THE TNMM EITHER. IT IS DIFFICULT TO UNDERSTAND THE LOGIC OF THIS APPROACH. CPM IS NOT A RESIDUARY METHOD IN THE SENSE THAT IF EVERY OTHER METHOD OF ASCE RTAINING THE ARMS LENGTH PRICE FAILS, CPM CAN BE APPLIED ON THE BASIS OF IMPERFECT DATA. IF AT ALL THERE IS A RESIDUARY METHOD, OR WHAT IS TERMED AS THE METHOD OF LAST RESORT, IT IS TRANSACTIONAL NET MARGIN METHOD. TNMM HAS ALMOST BECOME THE DEFAULT MET HOD FOR TAXPAYERS IN RECENT YEARS.THE KEY ADVANTAGE OF THE TNMM IS THAT THERE IS OFTEN AVAILABLE DATA IN THE PUBLIC DOMAIN ABOUT THE NET PROFITS THAT COMPARABLE INDEPENDENT BUSINESSES EARN FROM THEIR TRADING ACTIVITIES IN COMPARABLE MARKETS WITH OTHER THIR D PARTIES. AS SUCH, THE TNMM OFTEN PROVES EASIER TO APPLY THAN, SAY, THE COST PLUS OR RPM METHODS, AND TNMM IS LESS SENSITIVE TO MINOR DIFFERENCES IN THE PRODUCTS BEING SOLD. IT IS ALSO IMPORTANT THAT THE DATA FOR APPLICATION OF CPM, AS COLLECTED BY THE TP O, WAS NOT IN PUBLIC DOMAIN AND THIS HAS BEEN DONE BY COLLECTING INFORMATION UNDER SECTION 133(6). SUCH A DATA COULD NOT HAVE BEEN AVAILABLE TO THE ASSESSEE. ALL SHORTCOMINGS BEING EQUAL IN THE APPLICATION OF THE METHODS OF DETERMINING THE ALP, AS AT BEST IS THE CASE OF THE AUTHORITIES BELOW, THE METHOD TO BE PREFERRED IS THE METHOD FOR WHICH NECESSARY INPUTS ARE AVAILABLE IN THE PUBLIC DOMAIN. AS FOR THE TNMM DATA NOT BEING AVAILABLE, AS THERE IS DIFFERENCE BETWEEN THE PRODUCT THAT THE ASSESSEE IS MANUFAC TURING VIS - - VIS THE PRODUCTS BEING MANUFACTURED BY THE COMPARABLES ADOPTED, IT IS ONLY BROAD SIMILARITY IN THE PRODUCT AND ECONOMIC SIMILARITY IN THE CONDITIONS WHICH IS NEED. WHILE ON THIS ISSUE, IT MAY BE RELEVANT TO REFER TO FOLLOWING OBSERVATIONS IN T HE UNS TRANSFER PRICING MANUAL: TNMM IS USUALLY APPLIED WITH RESPECT TO BROAD COMPARABLE FUNCTIONS RATHER THAN PARTICULAR CONTROLLED TRANSACTIONS. RETURNS TO THESE FUNCTIONS ARE TYPICALLY MEASURED BY A PLI IN THE FORM OF A NET MARGIN THAT ARGUABLY WILL BE AFFECTED BY FACTORS UNRELATED TO ARMS LENGTH PRICING. CONSEQUENTLY, ONE MIGHT EXPECT THE TNMM TO BE A RELATIVELY DISFAVOURED METHOD. NEVERTHELESS TNMM IS TYPICALLY APPLIED WHEN BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 11 OF 15 TWO RELATED PARTIES ENGAGE IN A CONTINUING SERIES OF TRANSACTIONS AND ONE OF THE PARTIES CONTROLS INTANGIBLE ASSETS FOR WHICH AN ARMS LENGTH RETURN IS NOT EASILY DETERMINED. SINCE TNMM IS APPLIED TO THE PARTY PERFORMING ROUTINE MANUFACTURING, DISTRIBUTION OR OTHER FUNCTIONS THAT DO NOT INVOLVE CONTROL OVER SUCH INTANGIBLE ASSETS, IT ALLOWS THE APPROPRIATE RETURN TO THE PARTY CONTROLLING UNIQUE OR DIFFICULTTO VALUE INTANGIBLE ASSETS TO BE DETERMINED INDIRECTLY. TNMM MAY ALSO BE APPROPRIATE FOR USE IN CERTAIN SITUATIONS IN WHICH DATA LIMITATIONS ON UNCONTROLLED TRANSACTIONS MAKE IT MORE RELIABLE THAN TRADITIONAL METHODS. TNMM MAY BE MORE ATTRACTIVE IF THE DATA ON GROSS MARGINS ARE LESS RELIABLE DUE TO ACCOUNTING DIFFERENCES (I.E. DIFFERENCES IN THE TREATMENT OF CERTAIN COSTS AS COST OF GOODS SOLD OR OPERATING EXPENSES) BETWEEN THE T ESTED PARTY AND THE COMPARABLE COMPANIES FOR WHICH NO ADJUSTMENTS CAN BE MADE AS IT IS IMPOSSIBLE TO IDENTIFY THE SPECIFIC COSTS FOR WHICH ADJUSTMENTS ARE NEEDED. IN SUCH A CASE, IT MAY BE MORE APPROPRIATE TO USE TNMM TO ANALYSE NET MARGINS, A MORE CONSIST ENT MEASURED PROFIT LEVEL INDICATOR THAN GROSS MARGINS IN CASE OF ACCOUNTING DIFFERENCES. 10. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW INDEED ERRED IN NOT APPLY ING THE TNMM FOR ASCERTAINING THE ARMS LENGTH PRICE OF ASSESSEES TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES. WE DIRECT THE AO/TPO TO COMPUTE THE ALP ON THE BASIS OF THE TRANSACTIONAL NET MARGIN METHOD. WITH THESE DIRECTIONS, WE REMIT THE MATTER TO THE FILE TO THE ASSESSMENT STAGE FOR FRESH DETERMINATION OF ARMS LENGTH PRICE. AS THE MATTER IS BEING REMITTED TO THE ASSESSMENT STAGE, IT WILL BE OPEN TO THE ASSESSEE TO TAKE SUCH OTHER PLEA, ON MERITS, ON ASCERTAINMENT OF ALP UNDER THE TNMM AS THE ASSESSEE MAY DEEM FIT AND THE SAME WILL HAVE TO BE DISPOSED OF BY WAY OF A SPEAKING ORDER, IN ACCORDANCE WITH THE LAW AND AFTER GIVING A FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ALL THOSE ISSUES REGARDING APPLICATION OF TNMM METHOD, AS ON NOW, A RE ACADEMIC AND WHOLLY HYPOTHETICAL. WITH THESE DIRECTIONS, THE MATTER IS REMITTED TO THE FILE OF THE ASSESSING OFFICER. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US IN THE CASE OF GEMSTONE (SUPRA). RESPECTFULLY F OLLOWING THIS DECISION, WE HOLD THAT THE AUTHORITIES BELOW INDEED ERRED IN NOT APPLYING THE TNMM FOR ASCERTAINING THE ARMS LENGTH PRICE OF ASSESSEES TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES. WE DIRECT THE AO/TPO TO COMPUTE THE ALP ON THE BASIS OF THE TRANSACTIONAL NET MARGIN METHOD. WITH THESE DIRECTIONS, WE REMIT THE MATTER TO THE FILE TO THE ASSESSMENT STAGE FOR FRESH DETERMINATION OF ARMS LENGTH PRICE. AS THE MATTER IS BEING REMITTED TO THE ASSESSMENT STAGE, IT WILL BE OPEN TO THE ASSESSEE TO TAKE SUCH OTHER PLEA, ON MERITS, ON ASCERTAINMENT OF ALP UNDER THE TNMM AS THE ASSESSEE MAY DEEM FIT AND THE SAME WILL HAVE TO BE DISPOSED OF BY WAY OF A SPEAKING ORDER, IN ACCORDANCE WITH THE LAW AND AFTER GIVING A FAIR AND REASONABLE OPPORTUNITY OF HEARING T O THE ASSESSEE. ALL THOSE ISSUES REGARDING COMPUTATION BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 12 OF 15 PART, AS ON NOW, ARE QUITE ACADEMIC AND WHOLLY HYPOTHETICAL. WITH THESE DIRECTIONS, THE MATTER IS REMITTED TO THE FILE OF THE ASSESSING OFFICER. 5. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MA TTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH IN THE GROUP CASE. RESPECTFULLY FOLLOWING THIS DECISION, WE HOLD THAT THE AUTHORITIES BELOW INDEED ERRED IN NOT APPLYING THE TNMM FOR ASCERTAINING THE ARMS LENGTH PRICE OF ASSESSEES TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES. WE DIRECT THE AO/TPO TO COMPUTE THE ALP ON THE BASIS OF THE TRANSACTIONAL NET MARGIN METHOD. WITH THESE DIRECTIONS, WE REMIT THE MATTER TO THE FILE TO THE ASSESSMENT STAGE FOR FRESH DETERMINATION OF ARMS LENGTH PRICE. AS THE MA TTER IS BEING REMITTED TO THE ASSESSMENT STAGE, IT WILL BE OPEN TO THE ASSESSEE TO TAKE SUCH OTHER PLEA, ON MERITS, ON ASCERTAINMENT OF ALP UNDER THE TNMM AS THE ASSESSEE MAY DEEM FIT AND THE SAME WILL HAVE TO BE DISPOSED OF BY WAY OF A SPEAKING ORDER, IN ACCORDANCE WITH THE LAW AND AFTER GIVING A FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WITH THESE DIRECTIONS, THE MATTER IS REMITTED TO THE FILE OF THE ASSESSING OFFICER. 6. GROUND NOS. 1 TO 3 ARE THUS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. 7. GROUND NO. 4 WAS NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE. ACCORDINGLY, GROUND NO. 4 IS DISMISSED AS NOT PRESSED. 8. IN GROUND NO. 5, THE ASSESSEE HAS RAISED GRIEVANCE AGAINST INTEREST ADDITION OF RS 27,703, BRING INTEREST EARNED ON DEPOSIT WITH THE ELECTRICITY COMPANY LESS ELECTRICITY EXPENSES. 9. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTICED THAT THERE IS A DIFFERENCE OF RS 27,703 BETWEEN THE INTEREST INCOME AS SHOWN BY THE ASSESSEE AND THE INTEREST INCOME AS PER TDS CERTIFICATES ISSUED BY UTTAR GUJARAT VIJ CO LTD. THIS AMOUNT WAS, ACCORDINGLY, ADDED TO THE INCOME RETURNED BY THE ASSESSEE. IN APPEAL BEFORE THE CITI(A), HOWEVER, IT WAS POINTED OUT BY THE ASSESSEE THAT INTEREST WAS NOT SEPARATELY PAID BY UTTAR GUJARAT VIJ CO LTD, THE ELECTRICITY SUPPLY COMPANY, BUT REDUCED FROM THE ELECTRICITY CHARGES BILLED. IT WAS THUS CONTENDED T HAT NOT DISCLOSING THE INTEREST INCOME DID NOT MAKE A DIFFERENCE TO THE ULTIMATE INCOME OF ACCOUNTS, ADJUSTMENT OF INTEREST INCOME AGAINST ELECTRICITY EXPENSES IS NOT POSSIBLE. THE ASSESSEE IS AGGRIEVED AND IS IN FURTHER APPEAL BEFORE US. 10. HAVING HEAR D THE RIVAL CONTENTIONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE FIND THAT THE PLEA OF THE ASSESSEE IS INDEED CORRECT INASMUCH AS WHETHER THE INTEREST INCOME IS SHOWN SEPARATELY AND GROSS AMOUNT OF ELECTRICITY EXPENSES IS CLAIMED AS DEDUCTION, OR WHET HER ONLY NET AMOUNT OF ELECTRICITY EXPENSES OUTGO IS SHOWN, THIS CHOICE OF ACCOUNTING IS ENTIRELY TAX NEUTRAL. ONCE IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS, RATHER THAN CLAIMING GROSS AMOUNT OF ELECTRICITY BILLING AS EXPENSES AND SHOWING THE INTEREST AD JUSTMENT AS INCOME, SHOWN ONLY NET AMOUNT OF ELECTRICITY EXPENSES, AS IN THIS CASE, NO ADDITION CAN BE MADE FOR THE INTEREST AMOUNT. THE BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 13 OF 15 ACCOUNTING TREATMENT IS TAX NEUTRAL. WE, THEREFORE, UPHOLD THE PLEA OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION OF RS 27,703. 11. GROUND NO. 5 IS THUS ALLOWED. 12. GROUND NO. 6 WAS NOT PRESSED, IN THE LIGHT OF NOW SETTLED LEGAL POSITION BEING AGAINST THE ASSESSEE, AND IS DISMISSED AS SUCH. 13. GROUND NO. 6 IS DISMISSED. 14. IN GROUN D NO. 7, THE ASSESSEE IS AGGRIEVED OF LEARNED CIT(A) SUSTAINING THE ADDITION OF RS 19,00,793 TO THE CLOSING STOCK, AND, IN DOING SO, HE IS SAID TO HAVE FAILED TO APPRECIATE THAT DAMAGED STOCK WAS TAKEN AT NIL VALUE IN AUDITED ACCOUNTS AND 3 CD REPORTS. 14 . SO FAR AS THIS GRIEVANCE OF THE ASSESSEE AS CONCERNED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED WHILE CLOSING STOCK OF OPUS ROMANO WAS SHOWN AT ZERO VALUE, THE QUANTI TATIVE RECORDS SHOWED THAT THERE WAS OPENING STOCK OF 1,097.76 SQ MTR, PURCHASE OF 117.25 SQ. MTR., SALE OF 202.09 SQUARE METERS AND CAPTIVE CONSUMPTION OF 50.33 SQ. MTR. THE NET QUANTITY AVAILABLE WAS THUS 962.59 SQUARE METERS BUT THE VALUE WAS SHOWN AT N IL NEVERTHELESS. WHEN ASSESSING OFFICER PROBED THE MATTER, IT WAS EXPLAINED BY THE ASSESSEE THAT OPUS ROMANO IS A PRODUCT WHICH IS A MIX OF VARIOUS COLOURS, THAT THERE ARE STANDARD AS ALSO CUSTOMIZED MIXES FOR OPUS ROMANO, AND THAT THE STOCK WHICH IS WRITT EN OFF REPRESENTS STANDARD MIXES WHICH WERE IMPORTED IN THE FORM OF PAPERED SHEETS IN EARLIER YEARS WITH A VIEW TO SELL THE SAME IN THE DOMESTIC MARKET WHICH COULD NOT BE SOLD AND ARE OF NO REALIZABLE VALUE. WHAT WAS IMPORTED IN THE PRESENT YEAR WAS ONLY AGAINST CONFIRM ORDERS, AND WHAT HAS BEEN WRITTEN OFF IS THE PURCHASES OF EARLIER YEARS WHICH IS UNSELLABLE. THIS PLEA WAS REJECTED ON THE GROUND THAT NO EVIDENCE HAS BEEN PRODUCED TO SUBSTANTIATE ITS CLAIM THAT THE GOODS ARE NON - MARKETABLE AS CLAIMED, AND ADDITION OF RS 19,00,793 WAS, ACCORDINGLY, MADE IN THE HANDS OF THE ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 15. WE HAVE HEARD THE RIVAL CONTE NTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 16. WE FIND IT IS ONLY ELEMENTARY THAT, IN TERMS OF THE WELL ESTABLISHED FUNDAMENTALS OF THE ACCOUNTING, A LOSS IS BOOKED AT THE P OINT OF TIME WHEN IT CAN BE REASONABLY FORESEEN, AND, AS SUCH, BOOKING THE LOSS IS NOT REQUIRED TO BE DEFERRED TILL THE LOSS ACTUALLY MATERIALIZES, AND THAT IS THE REASON THAT CLOSING STOCK IS VALUED AT THE LEAST OF COST PRICE OR MARKET PRICE. AS HELD BY H ONBLE SUPREME COURT, IN THE LANDMARK CASE OF CHAINRUP SAMPATRAM VS CIT[(1953) 24 ITR 481 (SC)] , WHILE ANTICIPATED LOSS IS THUS TAKEN INTO ACCOUNT, ANTICIPATED PROFIT IN THE SHAPE OF APPRECIATED VALUE OF THE CLOSING STOCK IS NOT BROUGHT INTO THE ACCOUNT, AS NO PRUDENT TRADER WOULD CARE TO SHOW INCREASED PROFIT BEFORE ITS ACTUAL REALISATION. THIS IS THE THEORY UNDERLYING THE RULE THAT THE CLOSING STOCK IS TO BE VALUED AT COST OR MARKET PRICE WHICHEVER IS THE LOWER, AND IT IS NOW GENERALLY ACCEPTED AS BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 14 OF 15 AN EST ABLISHED RULE OF COMMERCIAL PRACTICE AND ACCOUNTANCY . VIEWED THUS, AS LONG AS, IN THE BONAFIDE UNDERSTANDING OF THE ASSESSEE, AN ITEM REFLECTED IN THE CLOSING STOCK IS SHOWN AS OF NO REALIZABLE VALUE, ITS PURCHASE PRICE CANNOT BE INCLUDED IN THE VALUE OF CLOSING STOCK. THE ASSESSEE HAS GIVEN A REASONABLE EXPLANATION OF NIL VALUATION, AS THE FRESH IMPORT OF SIMILAR PRODUCT WAS ONLY ON A BACK TO BACK CONFIRMED ORDER AND THE STOCK OF PRODUCT, TRANSFERRED TO SCRAPYARD, WAS WHOLLY UNSELLABLE. THE ASSESSING OFFI CER HAS REQUISITIONED EVIDENCE OF THE FACT THAT THIS ITEM CANNOT BE SOLD, BUT THEN, IN DOING SO, HE HAS IGNORED THE FACT THAT NOBODY CAN BE ASKED TO PROVE A NEGATIVE. THE APPROACH OF THE ASSESSING OFFICER WAS THUS WHOLLY VITIATED ON FACTS AND IN LAW. WE HA VE ALSO NOTED THAT RS 7,99,233 REALIZED ON SALE OF ENTIRE SCRAP MATERIAL, INCLUDING THE MATERIAL SO CONSIGNED TO SCRAPYARD, HAS BEEN SHOWN IN THE INCOME IN THE FINANCIAL YEAR 2011 - 12. KEEPING ALL THESE FACTORS IN MIND, AS ALSO ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO DELETE THE IMPUGNED ADDITION OF RS 19,00,793. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 17. GROUND NO. 7 IS THUS ALLOWED. 18. GROUND NO 8 AND 9 BEING GENERAL IN NATURE DO NOT CALL FOR ANY ADJUDICATION. 19. THE ASSESSEE HAS THREE AD DITIONAL GROUNDS AND ALL THESE GROUNDS OF APPEAL PERTAIN TO ASCERTAINMENT OF ARMS LENGTH PRICE. HOWEVER, AS THIS ISSUE IS REMITTED TO THE ASSESSMENT STAGE WITH THE DIRECTIONS TO DECIDE EVERYTHING DE NOVO, WE SEE NO NEED TO DEAL WITH THESE GROUNDS OF APPEA L. SUFFICE TO SAY THAT THE ASSESSEE WILL HAVE THE LIBERTY TO RAISE THESE ISSUES IN THE REMANDED PROCEEDINGS. 20. THE ADDITIONAL GROUNDS OF APPEAL ARE THUS, IN EFFECT, ALLOWED FOR STATISTICAL PURPOSES. 21. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 22. WE NOW TAKE UP THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2009 - 10 I.E. ITA NOS. 605 AND 614/AHD/16. 23. THESE CROSS APPEAL ARE DIRECTED AGAINST THE ORDER DATED 3 RD DECEMBER 2015 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSME NT UNDER SECTION 143(3) R.W.S. 144 C OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009 - 10. 24. GRIEVANCE OF THE ASSESSEE, IN SUBSTANCE, IS THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS 1,75,79,917 ON ACCOUNT OF ARMS LENGTH PRICE ADJUSTMENT OF RS 4,16,71,708 MADE IN THE IMPUGNED ASSESSMENT ORDER. GRIEVANCE OF THE ASSESSING OFFICER, ON THE OTHER HAND, IS ON ACCOUNT OF RELIEF GRANTED BY THE CIT(A) IN SUCH PARTIAL DELETION OF THE ALP ADJUSTMENT. 25. ONE OF THE CORE ISSUES RAISED BY THE ASSESSEE IS THAT THE CIT(A) ERRED IN HOLDING THAT TRANSACTIONAL NET MARGIN METHOD (TNMM) ADOPTED BY THE ASSESSEE WAS RIGHTLY REJECTED AT THE ASSESSMENT STAGE, AS AGAINST COMPARABLE UNCONTROLLED PRICE (CUP) METHOD IMPOSED UPON THE ASSESSEE BY THE TPO/ AO. BISSAZA INDIA PVT LTD (3 APPEALS) ASSE SSMENT YEARS 2007 - 08 AND 2009 - 10 PAGE 15 OF 15 26. SO FAR AS THIS ISSUE IS CONCERNED, LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSUE IS A COVERED ISSUE, BY A DECISION OF THE COORDINATE BENCH IN THE CASE OF A GROUP ENTITY I.E. PINO BISAZZA GLASS PVT LTD VS ACIT [ITA NO. 2857/AHD/2012; ORDER DATED 30TH OCTOBER 2015] , AND, IN ANY CASE, WHATEVER WE DECIDE ON ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2007 - 08, WHICH WAS HEARD ALONGWITH THESE APPEALS, WILL FOLLOW HERE AS WELL. 27. VIDE OUR ORDER FOR THE ASSESSMENT YEAR 2007 - 08, AND IN TERMS OF OUR DISCUSSIONS EARLIER IN THIS VERY CONSOLIDATED ORDER, WE HAVE UPHELD THE PLEA OF THE ASSESSEE THAT THE ARMS LENGTH PRICE IN THIS CASE CAN INDEED BE DETERMINED ON THE BASIS OF TRANSACTIONAL NET MARGIN METHOD (TNMM), AND REMITTED THE MATTER TO THE FILE AT THE ASSESSMENT STAGE FOR FRESH ADJUDICATION. 28. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTE R THAN THE VIEW SO TAKEN FOR THE ASSESSMENT YEAR 2007 - 08. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE PLEA OF THE ASSESSEE AND REMIT THE MATTER FOR ADJUDICATION DE NOVO IN THE ABOVE LIGHT. ORDERED ACCORDINGLY. 29. THE GRIEVANCE RAISED BY THE ASSESSEE IS THUS UPHELD IN PRINCIPLE, AND THE GRIEVANCE RAISED BY THE ASSESSING OFFICER IS DISMISSED AS INFRUCTUOUS. 30. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE, AND THE APPEAL OF THE ASSESSING OF FICER IS DISMISSED AS INFRUCTUOUS. 31. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED IN THE TERMS INDICATED ABOVE, AND THE APPEAL OF THE ASSESSING OFFICER IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (A PPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE LIST OF PRONOUNCEMENTS BEING PLACED ON THE NOTICE BOARD. SD/ - SD/ - JUSTICE P P B HATT PRAMOD KUMAR ( PRESIDENT) ` ( VICE - PRESIDENT) D ATED THE 12 TH DAY OF MARCH , 20 20 COPIES TO : (1) THE APPELLANT (2) THE RESPONDEN T (3) CIT (4) CIT(A) ( 5 ) DR (6) GUARD FILE BY ORDER ASSISTANT/DEPUTY REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD