M/s Greaves Travel India Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 6703/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2854 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 30-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Rule of consistency
• Section: 143(3); 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I-1 NEW DELHI BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.6703/DEL/2016 ASSESSMENT YEAR: 2012-13 GREAVES TRAVEL INDIA PVT. LTD., 4-B, JANGPUR-B, MATHURA ROAD NEW DELHI 110014 AABCG9481H VS A CIT, CIRCLE - 10 ( 2 ), NEW DELHI APPLICANT RESPONDENT ASSESSEE BY MR. SATYAJEET GOEL, CA REVENUE BY MR. SANDEEP KUMAR MISHRA , SR. DR ORDER PER NARASIMHA K. CHARY, JM AGGRIEVED BY THE ORDER DATED 24/11/2016 PASSED UNDER SECTION 143(3) READ WITH SECTION 144C (13) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), PURSUANT TO THE DIRECTIONS DATED 30/9/2016 ISSUED BY THE LD. DISPUTE RESOLUTION PANEL (DRP)-I, NEW DELHI (LD. DRP), M/S GREAVES TRAVEL INDIA PRIVATE LIMITED (THE ASSESSEE) FILED THIS APPEAL MAINLY CONTESTING THE REJECTION OF THE COST PLUS METHOD (CPM) ADOPTED BY THE ASSESSEE AS THE MOST APPROPRIATE METHOD FOR DETERMINATION OF THE ARMS LENGTH PRICE DATE OF HEARING 01.08 .2019 DATE OF PRONOUNCEMENT 02 .09.2019 2 (ALP) AND APPLYING TNMM AS THE MOST APPROPRIATE METHOD WITH OP/TC AS PLI. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROVIDING FOR OPERATOR AND TRAVEL AGENTS SERVICES AND IT PROVIDES COMPREHENSIVE TRAVEL AND TOURISM SOLUTIONS FOR INDIVIDUALS AND GROUP LEISURE TRAVELS. THE CORE BUSINESS OF THE ASSESSEE HAS BEEN THE SALE OF PACKAGES FOR LASER TRAVEL WHERE TWO OR MORE COMPONENTS OF TRAVEL, SUCH AS FLIGHTS, HOTELS, TRANSPORTATIONS, TRANSFER AND GROUND HANDLING SERVICES ARE BUNDLED TOGETHER AND/OR SOLD INDIVIDUALLY TO CUSTOMERS, AND THEREFORE, IN ORDER TO SUPPORT ITS MAIN BUSINESS, THE ASSESSEE ALSO PROVIDES A CHARTER SERVICES AT SPECIFIED REQUESTS OF ITS CUSTOMERS. IN ORDER TO SUPPORT ITS STORE OPERATIONS, THE ASSESSEE BOUGHT A SMALL AIRCRAFT.BUT DUE TO REGULATORY REQUIREMENTS BY CIVIL AVIATION AUTHORITY AND IN THE ABSENCE OF THE NON-SCHEDULED OPERATORS PERMIT LICENCE (NSOP) THE ASSESSEE WAS UNABLE TO OPERATE THE AIRCRAFT AND THEREFORE, THE ASSESSEE HAD INDUCTED THE AIRCRAFT UNDER THE NSOP LICENSE OF AIR WORKS ENGINEERING SERVICE PRIVATE LIMITED WHO HAVE BEEN USING THE AIRCRAFT PRIMARILY FOR PLYING LOCAL NON-AES PASSENGERS. THE ASSESSEE, HOWEVER, ON SOME OCCASIONS USING IT FOR FLYING PASSENGERS. 3. FOR THE ASSESSMENT YEAR 2012-13, ASSESSEE FILED ITS RETURN OF INCOME ON 18/9/2012 DECLARING A LOSS OF RS. 1,39,08,023/-AND IN VIEW OF THE INTERNATIONAL TRANSACTION WORTH MORE THAN 15 CRORES, AND BY THE ASSESSEE WITH ITS AE, DETERMINATION OF ARMS-LENGTH PRICE WAS REFERRED TO THE LD TRANSFER PRICING OFFICER (TPO). ASSESSEE HAD DESEGREGATED APPROPRIATELY ALL FLYING BETWEEN AE AND NON-AE PASSENGERS. LD. TPO BY ORDER DATED 29/1/2016 HELD THAT THE TNMM IS THE MOST APPROPRIATE METHOD RATHER 3 THAN THE CPM, SINCE TNMM WILL BE A METHOD THAT WILL TAKE INTO ACCOUNT ALL THE COSTS RELEVANT TO THE SERVICES THAT ARE PROVIDED BY THE ASSESSEE TO THE AE, AND SUGGESTED AN UPWARD ADJUSTMENT TO THE TUNE OF RS. 3,01,99,649/-. 4. ASSESSEE FILED OBJECTIONS BEFORE THE LD. DRP CHALLENGING THE ACTION TAKEN BY THE LD. TPO. LD. DRP BY WAY OF IMPUGNED ORDER CONSIDERED THE SUITABILITY OF ONEKERALA TRAVEL INTERSERVE LTD TO BE INCLUDED IN THE FINAL LIST OF COMPARABLES AND DIRECTED THE LD. TPO TO PROVIDE NECESSARY MATERIAL IN RESPECT OF THAT ENTITY TO THE ASSESSEE AND TO RECOMPUTE THE ARMS LENGTH PRICE (ALP). 5. AGGRIEVED BY THE SAME, ASSESSEE FILED THIS APPEAL MAINLY CONTESTING THE ADOPTION OF TNMM AS THE MOST APPROPRIATE METHOD INSTEAD OF CPM ADOPTED BY THE ASSESSEE, AND IN THE ALTERNATIVE TO CONSIDER THEIR CONTENTION THAT KERALA TRAVEL INTERSERVE LTD IS NOT AT ALL COMPARABLE ENTITY WITH THE ASSESSEE FOR SEVERAL REASONS CANVASSED BY THEM. 6. AT THE OUTSET, IT IS THE SUBMISSION OF THE LD. AR THAT IN RESPECT OF THE EARLIER ASSESSMENT YEAR 2010-11 AS WELL AS THE SUBSEQUENT ASSESSMENT YEAR 2013-14, THE AUTHORITIES BELOW HAD ACCEPTED THE CPM AS THE MOST APPROPRIATE METHOD AND WHEN THE BUSINESS MODEL OF THE ASSESSEE IS THE SAME ALL THROUGH THESE YEARS, STRANGELY THE AUTHORITIES ADOPTED TNMM AS THE MOST APPROPRIATE METHOD IN RESPECT OF THE ASSESSMENT YEARS 2011-12 AND 2012-13. HE ALSO SUBMITTED THAT WHEN THE MATTER FOR THE ASSESSMENT YEAR 2011-12 TRAVELLED TO THE TRIBUNAL, A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 6722/DEL/2015 BY ORDER DATED 24/10/2018 FOLLOWED THE RULE OF CONSISTENCY AND ACCEPTED THE CPM AS THE MOST APPROPRIATE METHOD. HE PRAYED THAT SINCE THE BUSINESS MODEL OF THE ASSESSEE REMAINED THE SAME 4 FOR THIS YEAR ALSO, A SIMILAR VIEW MAY BE TAKEN FOR THIS YEAR ALSO.THE SUBMISSIONS OF THE LD. AR COULD NOT BE CONTROVERTED BY THE REVENUE. 7. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IT IS NOT THE CASE OF THE REVENUE THAT ANY CHANGE IN THE BUSINESS MODEL OF THE ASSESSEE HAD TAKEN PLACE BETWEEN THE ASSESSMENT YEARS 2010-11 AND 2013-14. FOR ASSESSMENT YEARS 2010-11 AND 2013-14 THE REVENUE ACCEPTED THE CPM AS THE MOST APPROPRIATE METHOD, WHEREAS FOR THE ASSESSMENT YEAR 2011-12 A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 6722/DEL/2015, BY ORDER DATED 24/10/2018, ACCEPTED THE CPM AS THE MOST APPROPRIATE METHOD. IN THE ABSENCE OF ANY CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE RULE OF CONSISTENCY DEMANDS THAT THE CONSISTENT VIEW HAS TO BE TAKEN. WE, THEREFORE, WHILE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT (1992)192 ITR 321 ACCEPT THE CONSISTENT VIEW TAKEN IN ASSESSEES OWN CASE FOR THE EARLIER AS WELL AS THE SUBSEQUENT YEAR AND HOLD THAT CPM IS THE MOST APPROPRIATE METHOD FOR THE DETERMINATION OF ALP IN THIS CASE. IN VIEW OF THIS CONCLUSION REACHED BY US, IT IS NOT NECESSARY TO CONSIDER THE SUITABILITY OF M/S KERALA TRAVELS INTERSERVE LTD. GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED ACCORDINGLY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND SEPTEMBER, 2019. SD/- SD/- (PRAMOD KUMAR) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER 5 DATED: SEPTEMBER, 2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON DRAFT PLACED BEFORE AUTHOR DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON DATE OF UPLOADING ORDER ON THE WEBSITE FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.