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ITA 722/DEL/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77706 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 24-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Related party transaction; Transfer pricing; Opportunity of being heard; International transaction; Rule of consistency; Wholly owned subsidiary; Avoidance of tax
• Section: 92C; 143(3); 147; 92

Judgement Text

FIT FOR PUBLICATION SD/- SD/- (JM) (AM) IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I, NEW DELHI BEFORE SH. R. S. SYAL, AM AND SH. RAJPAL YADAV, JM ITA NO. 722/DEL/2014 : ASST T. YEAR : 2009-10 TECHBOOKS INTERNATIONAL PVT. LTD., O-100, 1 ST FLOOR, SECTOR-12, NOIDA (UP) VS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, NOIDA (APPELLANT) (RESPONDENT) PAN NO. AABCT3774A ASSESSEE BY : S/ SHRI C. S. AGGARWAL & RAVI PRATAP MALL REVENUE BY : S/SHRI PEEYUSH JAIN & YOGES H KUMAR VERMA DATE OF HEARING : 24.4.2014 DATE OF PRONOUNCEMENT : 28.4.2014 ORDER PER R. S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED `THE A CT) ON 20.1.2014 IN RELATION TO THE ASSESSMENT YEAR 2009-10. I. LACK OF JURISDICTION 2.1. THE FIRST ISSUE ESPOUSED UP BY THE LD. AR RA ISED THROUGH GROUND NO. 3 IS AGAINST THE NON-DISCHARGING OF THE S TATUTORY ONUS CAST UPON THE ASSESSING OFFICER IN TERMS OF CLAUSES (A) T O (D) OF SEC. 92C(3) ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 2 OF THE ACT. THE LD. SENIOR COUNSEL FOR THE ASSESSEE S UBMITTED THAT A SPECIFIC OBJECTION IN THIS REGARD WAS TAKEN BEFORE TH E DISPUTE RESOLUTION PANEL (DRP) WHICH HAS BEEN SUMMARILY DISMIS SED WITHOUT GIVING ANY CONVINCING REASON. ON THE MERITS OF THE GRO UND, IT WAS PUT FORTH THAT THE ASSESSING OFFICER (AO) FAILED TO DISC HARGE THE ONUS TO ESTABLISH THAT THE ASSESSEES CASE WAS COVERED UNDER ANY OF THE CLAUSES (A) TO (D) OF SEC. 92C(3) WHICH IS A PRE-CO NDITION FOR ASSUMING JURISDICTION TO PROCEED WITH THE DETERMINATION OF ARM S LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTIONS. IN SUPPORT OF THIS CONTENTION, THE LD. AR RELIED ON CERTAIN LINES FROM THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SONY INDIA (P) LTD. VS CBDT AND ANR. (2007) 288 ITR 52 (DELHI). HE STATED THAT IT WAS OBLIGATORY ON THE PART OF THE A.O TO FORM AN OPINION AS REGARDS FULFILLMEN T OF EITHER OR ALL OF REQUIREMENTS STIPULATED IN THE CLAUSES (A) TO (D) OF SEC. 92C(3). HAVING NOT DONE SO, THE LD. AR URGED THAT THE FOLLOWI NG ENTIRE EXERCISE OF DETERMINING THE ALP AND THE RESULTANT TRANSFER PRICING ADDITION GOT VITIATED. THE LD. DR OPPOSED THIS ARGUMENT BUT STATI NG THAT NO SUCH REQUIREMENT IS ENSHRINED IN THE PROVISION. HE ALSO RELIE D ON THE JUDGMENT IN THE CASE OF SONY INDIA (SUPRA) . 2.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. THE THRUST OF THE LD. AR I S ON SUB-SEC. (3) OF SEC. 92C WHICH, IN TURN, PROVIDES THAT WHERE DURING THE COURSE OF ANY PROCEEDING FOR THE ASSESSMENT OF INCOME, THE ASSE SSING OFFICER, ON THE BASIS OF MATERIAL OR INFORMATION OR DOCUMENT IN HIS POSSESSION, IS OF THE OPINION THAT (A) THE PRICE CHARGED OR PAID IN AN INTERNATIONAL TRANSACTION HAS NOT BEEN DETERMINED IN ACCORDANCE WI TH SUB-SECTIONS (1) AND (2); OR (B) ANY INFORMATION AND DOCUMENTS RE LATING TO AN ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 3 INTERNATIONAL TRANSACTION HAVE NOT BEEN KEPT AND MAIN TAINED BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SUB-SECTION (1) OF SEC. 92D; OR (C) THE INFORMATION OR DATA USED IN COMPUTATION OF THE ARM'S LENGTH PRICE IS NOT RELIABLE OR CORRECT; OR (D ) THE ASSESSEE HAS FAILED TO FURNISH, WITHIN THE SPECIFIED TIME, AN Y INFORMATION OR DOCUMENT WHICH HE WAS REQUIRED TO FURNISH BY A NOTICE ISSUED UNDER SUB-SECTION (3) OF SEC. 92D, THEN HE MAY PROCEED T O DETERMINE THE ALP IN RELATION TO THE SAID INTERNATIONAL TRANSACTION. SEC. 92CA, WHICH IS QUITE RELEVANT FOR OUR PURPOSE DEALS WITH MAKING A REFERENCE TO THE TRANSFER PRICING OFFICER (TPO). SUB-SEC. (1) OF SEC. 92 CA OF THE ACT MANDATES THAT WHERE AN ASSESSEE HAS ENTERED INTO AN INTERNATIONAL TRANSACTION IN ANY PREVIOUS YEAR, AND THE AO CONSIDER S IT NECESSARY OR EXPEDIENT SO TO DO, HE MAY, WITH THE PREVIOUS APPROV AL OF THE COMMISSIONER, REFER THE COMPUTATION OF THE ARM'S LENGT H PRICE IN RELATION TO THE SAID INTERNATIONAL TRANSACTION UNDER S EC. 92C TO THE TPO. HERE IT IS RELEVANT TO TAKE NOTE OF INSTRUCTION N O. 3 OF 2003 DATED 28.5.2003 ISSUED IN THE CONTEXT OF SECTION 92CA, W HICH PROVIDES THAT WHEREVER THE AGGREGATE VALUE OF INTERNATIONAL TRANSAC TIONS OF AN ASSESSEE IN A YEAR EXCEEDS RS. 5 CRORE, THE CASE SHOU LD BE PICKED UP FOR SCRUTINY AND REFERENCE U/S 92CA BE MADE TO THE TPO . THE ASSESSEE IN SONY INDIA (SUPRA) CHALLENGED THE VIRES OF THE INSTRUCTION NO. 3 OF 2003 BY CLAIMING THAT THE WORDS NECESSARY AN D EXPEDIENT IN SECTION 92CA(1) REQUIRE FORMATION OF OPINION BY THE A .O BEFORE MAKING A REFERENCE TO THE TPO. REJECTING THIS CONTENTION, T HE HONBLE HIGH COURT HELD THAT : ` THERE IS NOTHING IN S. 92CA ITSELF THAT REQUIRES THE AO TO FIRST FORM A CONSIDERED OPINION IN THE MANNER IN DICATED IN S. 92C(3) BEFORE HE CAN MAKE A REFERENCE TO THE TPO. IN OUR VIEW, IT IS ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 4 NOT POSSIBLE TO READ SUCH A REQUIREMENT INTO S. 92CA( 1). HOWEVER, IT WILL SUFFICE IF THE AO FORMS A PRIMA FACIE OPINION TH AT IT IS NECESSARY AND EXPEDIENT TO MAKE SUCH A REFERENCE. . IT WAS FURTHER NOTICED BY THEIR LORDSHIPS THAT THE TRANSACTIONS OF HIGH VALUE REQU IRE A CAREFUL EXAMINATION TO DETERMINE IF THE DECLARED PRICE IS IN F ACT ACCEPTABLE AS AT ALP. IT MAY NOT BE EXPEDIENT FOR THE AO TO EFFICIE NTLY DEAL WITH THE ASSESSMENT INVOLVING SUCH AN EXERCISE. IN THAT SENS E IT ACHIEVES THE EXPEDIENT DISPOSAL OF THE ASSESSMENT BY THE AO IF T HE EXERCISE IS REFERRED FOR A SPECIALISED DETERMINATION BY THE TPO. TH AT IS HOW THE INSTRUCTION NO. 3 DT. 20TH MAY, 2003 ISSUED BY THE C BDT WAS HELD TO BE CONSISTENT WITH THE STATUTORY OBJECTIVE UNDERLYING S. 92CA(1) AND ACTING AS A GUIDANCE TO THE AO IN THE EXERCISE OF DI SCRETION IN REFERRING AN INTERNATIONAL TRANSACTION TO THE TPO FOR DETERMINAT ION OF ITS ALP. EVENTUALLY, IT WAS HELD BY THEIR LORDSHIPS THAT SUCH INSTRUCTION IS NEITHER ARBITRARY NOR UNREASONABLE, AND IS NOT ULTRA VIRES THE ACT. . IT IS PALPABLE FROM THE ABOVE JUDGMENT THAT THE AO IS RE QUIRED TO FORM ONLY A PRIMA FACIE VIEW AT THE STAGE OF MAKING REFERENCE TO THE TPO. THE EFFECT OF HOLDING SUCH INSTRUCTION AS INTRA VIRES IS THAT ALL OF ITS CONTENTS ARE LEGALLY SUSTAINABLE. SIMILAR VIEW HAS B EEN REITERATED BY THE HONBLE DELHI HIGH COURT IN RANBAXY LABORATORIES LTD. VS. CIT (2013) 245 ITR 193 (DEL). IT IS FURTHER RELEVANT TO NOTE THAT THE HONBLE PUNJAB & HARYANA HIGH COURT WAS CALLED UPON TO A NSWER INTER ALIA QUESTION : (IV) WHETHER OPPORTUNITY OF BEING HEARD IS REQUIRED BEFORE REFERRING THE MATTER OF DETERMINATION OF ALP TO TPO ?' IN COCA COLA INC. VS. ASSTT. CIT (2009) 309 ITR 194 (P&H) . ANSWERING THIS QUESTION IN NEGATIVE, THE HONBLE HIGH COURT OBSERVED THAT : `THE DECISION IS TO BE TAKEN BY THE AO HAVING REGARD TO THE QUESTION ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 5 WHETHER IT WILL BE PROPER FOR THE AO HIMSELF TO DETERMI NE THE ALP OR IT WILL BE EXPEDIENT TO HAVE IT DETERMINED FROM THE TPO. THERE IS SAFEGUARD OF SEEKING PRIOR APPROVAL OF THE CIT. WHETHER COMPUTATION OF ALP IS MADE BY ONE OFFICER OR BY THE OTHER, DOES NOT IN ANY MANNER AFFECT THE ASSESSEE.. THESE JUDGMENTS MAKE IT CLE AR THAT THERE IS NO SUCH REQUIREMENT IN THE LANGUAGE OF THE STATUTE AS I S SOUGHT TO BE READ BY THE LD. AR. 2.3. WE FIND THAT THE LEGISLATURE HAS PROVIDED SUFFICIENT SAFEGUARDS TO PROTECT THE INTEREST OF THE ASSESSEE IN THIS REGARD. FIRSTLY, THE REFERENCE BY THE A.O TO THE TPO U/S 92CA(1) CAN BE MAD E ONLY WITH THE PREVIOUS APPROVAL OF COMMISSIONER. SECONDLY, THE TPO GIVES SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO SHOW CAUSE AS TO HOW ITS INTERNATIONAL TRANSACTIONS ARE AT ALP. THIRDLY, THE ASSE SSEE IS FREE TO CHALLENGE THE DRAFT ORDER PASSED BY THE A.O, GIVING EF FECT TO THE TPOS FINDING, BEFORE THE DISPUTE RESOLUTION PANEL. THE D RP IS REQUIRED TO GIVE DUE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFOR E GIVING DECISION ON THE OBJECTIONS RAISED AGAINST THE DRAFT ORDER INCLUD ING THE TRANSFER PRICING ADJUSTMENT. IT IS ONLY THEREAFTER THAT THE FI NAL ASSESSMENT ORDER IS PASSED. THUS, IT IS EVIDENT THAT ASSESSEE GE TS TWO OPPORTUNITIES TO PUT FORTH ITS POINT OF VIEW BEFORE T HE FINALIZATION OF THE ASSESSMENT ORDER, VIZ., FIRSTLY BEFORE THE TPO AND THEN THE DRP. THE RESULTANT ASSESSMENT ORDER PASSED AFTER THESE TWIN OPPO RTUNITIES IS AGAIN SUBJECT TO APPEAL BEFORE THE TRIBUNAL. IN VIEW OF THE AFORENOTED SAFEGUARDS PROVIDED BY THE LEGISLATURE SHIELDING THE I NTEREST OF THE ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THE RE IS NO NEED TO DEVICE AND INTRODUCE ONE MORE PROTECTION IN TERMS OF T HE RECORDING OF DETAILED SATISFACTION BY THE A.O BEFORE MAKING REFER ENCE TO THE TPO ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 6 THAT THE PRICE CHARGED/PAID IN AN INTERNATIONAL TRANSACT ION IS NOT AT ALP. 2.4. THE LD. AR HARPED ON ONE-TWO LINES FROM THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SONY INDIA (SUPRA) TO UNSUCCESSFULLY BOLSTER HIS POINT OF VIEW ABOUT THE N ECESSITY OF FORMATION OF A CONSIDERED VIEW (ANALOGOUS TO THAT U/S 147 BEFORE ISSUING NOTICE U/S 148) BY THE AO BEFORE MAKING A REFE RENCE IN TERMS OF CLAUSES (A) TO (D) OF SECTION 92C(3). THERE IS HARDLY ANY DOUBT THAT THE REQUIREMENTS OF SECTION 147 ARE QUITE DISTINCT FROM THAT OF SECTION 92. EVEN OTHERWISE, IT IS TRITE THAT REQUIREMENTS OF ONE SECTION CANNOT BE BODILY LIFTED AND READ INTO ANOTHER UNLESS THE ST ATUTE SO MANDATES. ADMITTEDLY THE VALUE OF THE ASSESSEES INTERNATIONAL TRANSACTIONS STANDING AT RS.116 CRORE IS FAR IN EXCESS OF THE THRES HOLD LIMIT OF RS.5 CRORE GIVEN IN THE INSTRUCTION, WHICH, IN TURN, HAS BE EN ISSUED IN THE CONTEXT OF SECTION 92CA. IT IS SIGNIFICANT TO NOTE THAT THE CASE OF THE ASSESSEE IS COVERED UNDER SECTION 92CA AND NOT SECTI ON 92C AS HAS BEEN ARGUED WHICH IS ALSO EVIDENT FROM A READING OF G ROUND NO.3. ARGUMENTS HAVE BEEN ADVANCED BY TAKING RECOURSE TO C LAUSES (A) TO (D) THAT ARE PART OF SECTION 92C(3) AND NOT SECTION 9 2CA, WHICH IS REALLY APPLICABLE TO THE ASSESSEE. WHEN THE HONBLE D ELHI HIGH COURT IN SONY INDIA (SUPRA) HAS CONSIDERED AND DECIDED THE QUESTION OF VALIDITY OF THE INSTRUCTION ISSUED IN THE CONTEXT OF SECTION 92CA AGAINST THE ASSESSEE, WHICH IS FULLY AND DIRECTLY APPLICABLE IN THE INSTANT CASE, WE FAIL TO APPRECIATE AS TO HOW THE RATIO DECIDENDI OF THE JUDGMENT CAN BE KEPT AT BAY AND A DIFFERENT CONCLUSION ARRIVED AT. EV ERYONE, BE THE CONTESTING PARTIES OR THE AUTHORITIES, ACTING UNDER THE JURISDICTION OF THE HONBLE HIGH COURT ARE BOUND BY ITS JUDGMENT. IT IS NEITHER ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 7 PERMISSIBLE TO THE APPEARING PARTIES TO SEEK TO CANVA SS A CONTRARY VIEW NOR THE AUTHORITIES TO BE SWAYED BY SUCH ARGUMENT S AND RENDER A DIVERGENT VIEW. AS THE CASE OF THE ASSESSEE IS GOV ERNED BY THE INSTRUCTION ISSUED IN THE CONTEXT OF SECTION 92CA AN D THERE ARE DIRECT JUDGMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT AGAI NST THE ASSESSEE ON THIS ISSUE, WE JETTISON THIS CONTENTION RAISED ON BEHALF OF THE ASSESSEE. 2.5. THE LD. AR ALSO SUBMITTED DURING THE COURSE OF ARGUMENTS THAT HIS OBJECTION WOULD BE TAKEN CARE IF SOMETHING IS BRO UGHT ON RECORD TO DEMONSTRATE THAT THE AO DID FORM AN OPINION AS TO TH E FULFILLMENT OF THE CONDITIONS AS STIPULATED IN SECTIONS 92C/92CA. W E ARE UNABLE TO COUNTENANCE THIS CONTENTION FOR THE OBVIOUS REASON TH AT WHEN THERE IS A PROCEDURE PRESCRIBED FOR DOING A PARTICULAR THING AND T HAT THING IS DONE BY THE CONCERNED AUTHORITY, THEN THE PRESUMPTION IS THAT THE REQUISITE PRESCRIBED PROCEDURE WAS PROPERLY FOLLOWED. THI S PRESUMPTION WOULD FAIL IF THE ASSESSEE BRINGS ON RECORD SOME COGENT MATERIAL TO INDICATE THAT THE AUTHORITY FAILED TO FOL LOW THE PRESCRIBED PROCEDURE. A BALD STATEMENT ABOUT NOT FULFILLING THE REQUISITE FORMALITIES BY THE CONCERNED AUTHORITY, UNBACKED BY AN Y EVIDENCE, CANNOT BE ACCEPTED. IF SUCH A CONTENTION IS ACCEPTE D, THEN IT WOULD OPEN FLOODGATES OF DISPUTES THEREBY CAUSING UNNECES SARY DELAY IN THE DISPOSAL OF APPEALS INASMUCH AS THE ASSESSEE WOULD BE CHALLENGING EACH AND EVERY STEP TAKEN BY THE AO DEMANDING PROOF O F HAVING COMPLIED WITH THE REQUISITE REQUIREMENTS. OBVIOUSLY, SUCH A POSITION CANNOT BE ACCEPTED. THE NUTSHELL IS THAT THE PRESCRIB ED PROCEDURE IS TO BE PRESUMED AS HAVING BEEN RIGHTLY COMPLIED WITH BY THE CONCERNED AUTHORITY UNLESS IT IS SPECIFICALLY AND EXPLICITLY S HOWN OTHERWISE. ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 8 SCRUTINY IN THIS REGARD CAN BE UNDERTAKEN BY THE APPELL ATE AUTHORITIES ONLY WHEN THE ASSESSEE ADDUCES SOME EVIDENCE TO IND ICATE THAT THERE WAS A FAILURE ON THE PART OF THE AUTHORITY TO ADHERE T O THE PRESCRIBED PROCEDURE. NO MATERIAL WORTH THE NAME HAS BEEN BROUGHT O N RECORD BY THE ASSESSEE TO DEMONSTRATE THAT THE AO FAILED TO FO RM A PRIMA FACIE VIEW AT THE TIME OF MAKING A REFERENCE TO THE TPO. F INDING NO MERIT IN THIS LEGAL GROUND, WE DISMISS THE SAME. II. RULE OF CONSISTENCY 3.1. NEXT ARGUMENT TAKEN BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT NO TP ADJUSTMENT WAS CALLED FOR IN THE EXTANT YE AR INASMUCH AS THE ASSESSEES WORKING OF ALP FOR THE PRECEDING YEAR WA S ACCEPTED BY THE AUTHORITIES. HE RELIED ON THE JUDGMENTS OF THE HO NBLE SUPREME COURT IN RADHASOAMI SATSANG VS CIT (1992) 193 ITR 321 (SC) AND CIT VS EXCEL INDUSTRIES LTD. 2013 358 ITR 259 (SC) TO ACCENTUATE ON THE RULE OF CONSISTENCY. 3.2. IN PRINCIPLE, WE APPRECIATE THE RULE OF CONSIST ENCY. IT GOES WITHOUT SAYING THAT IF A PARTICULAR ISSUE HAS BEEN DE CIDED IN A PARTICULAR MANNER IN A PRECEDING YEAR, SIMILAR VIEW SHOU LD BE TAKEN ON SUCH ISSUE IN THE SUBSEQUENT YEAR. BUT IT IS PERTINE NT TO NOTE THAT THE RULE OF CONSISTENCY IS NOT WITHOUT EXCEPTION. IT CO MES WITH A RIDER THAT THERE SHOULD BE NO CHANGE IN THE FACTUAL OR LEGAL PO SITION GOVERNING THAT ISSUE IN THE PRECEDING YEAR VIS--VIS THE SUCCEEDING YEAR. IF THE FACTS AND CIRCUMSTANCES AND THE LEGAL POSITION OBTA INING IN THE PRECEDING YEAR IS SIMILAR TO THAT IN THE LATER YEAR, TH EN THE VIEW TAKEN IN THE PRECEDING YEAR SHOULD ORDINARILY BE FOLLOWED. HOWEVER, WE FIND ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 9 THAT THE INSTANT CASE FALLS IN THE EXCEPTION TO THE RULE OF CONSISTENCY. IT IS RELEVANT TO HIGHLIGHT THAT PRESENTLY WE ARE DEAL ING WITH THE APPLICABILITY OF CHAPTER-X, BEING SPECIAL PROVISIO N RELATING TO AVOIDANCE OF TAX. THE CORE OF THIS CHAPTER IS THAT AN Y INCOME ARISING FROM AN INTERNATIONAL TRANSACTION SHOULD BE COMPUTED HAVING REGARD TO THE ARMS LENGTH PRICE. CERTAIN METHODS HAVE BEEN PRESCRIB ED FOR THE DETERMINATION OF ALP. UNDER THE TRANSACTIONAL NET MARGIN METHOD (TNMM), WHICH HAS BEEN APPLIED IN THE PRESENT CASE, THE RATIO OF NET OPERATING PROFIT MARGIN TO ONE OF THE BASES ADOPTED BY THE ASSESSEE IS COMPARED WITH SIMILAR BASE OF THE COMPARABLES FOR ASCE RTAINING WHETHER THE ASSESSEES INTERNATIONAL TRANSACTIONS ARE AT ALP. CERTAIN FILTERS ARE APPLIED FOR CHOOSING COMPARABLES, WHICH FORM THE BEDROCK FOR THE SETTING OF THE BENCHMARK. THE PROFIT MARGIN OR E VEN THE COMPARABLES SOMETIMES UNDERGO CHANGE FROM ONE YEAR TO ANOTHER. SIMPLY BECAUSE THE ARMS LENGTH PRICE DECLARED BY THE A SSESSEE WAS ACCEPTED IN A PRECEDING YEAR DOES NOT PUT AN EMBARGO ON THE POWERS OF THE AUTHORITY TO DETERMINE THE ALP OF THE INTERNATI ONAL TRANSACTIONS FOR THE SUBSEQUENT YEAR. THERE ARE SEVERAL FACTORS WHICH ARE TAKEN INTO CONSIDERATION FOR DETERMINING THE ALP OF AN INTERNATION AL TRANSACTION. IT IS ALSO QUITE POSSIBLE THAT A PARTICULAR CASE INCO MPARABLE IN ONE YEAR MAY BECOME COMPARABLE IN THE SUBSEQUENT YEAR AND VICE VERSA . THE LD. DR SUBMITTED THAT SOME OF THE ASSESSEES OWN CH OSEN COMPARABLES FOR THE PRECEDING YEAR ARE NOT THERE IN THE LIST OF COM PARABLES FOR THE INSTANT YEAR. THIS CONTENTION HAS NOT BEEN CONTROVE RTED ON BEHALF OF THE ASSESSEE. FURTHER A CASE THOUGH FUNCTIONALLY COMP ARABLE MAY FIND EXCLUSION FROM THE LIST OF COMPARABLES FOR A YEAR BECAU SE OF CERTAIN SPECIFIC FILTER IN ONE YEAR, SUCH AS THE `RELATED PA RTY TRANSACTIONS ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 10 BREACHING THE REASONABLE PERCENTAGE, BUT IT MAY AGAIN FIND ITS PLACE IN THE LIST OF COMPARABLES FOR THE SUBSEQUENT YEAR. TH E MERE FACT THAT NO TRANSFER PRICING ADJUSTMENT WAS MADE IN THE PRECEDING YEAR WOULD SIMPLY MEAN THAT THE PROFIT SHOWN BY THE ASSESSEE FRO M ITS INTERNATIONAL TRANSACTIONS IS EQUAL TO OR MORE THAN THE BENCHMARKED PROFIT. IF THE ASSESSEE HAS SHOWN PROFIT AT ARMS LENGT H PRICE IN ONE YEAR, WHICH HAS BEEN ACCEPTED AS SUCH, IT DOES NOT N ECESSARILY MEAN THAT THE ASSESSEES PROFIT FROM INTERNATIONAL TRANSACTI ON IN THE SUCCEEDING YEAR IS ALSO BETTER THAN THAT OF THE COMPA RABLES. IT IS AXIOMATIC THAT IF PROFIT FROM THE ASSESSEES INTERNAT IONAL TRANSACTIONS IN SUCCEEDING YEAR IS EQUAL TO OR BETTER THAN THAT OF COM PARABLES AFTER CONSIDERING THE CUSHION AVAILABLE, THEN THERE CAN BE NO QUESTION OF MAKING ANY TRANSFER PRICING ADJUSTMENT NOTWITHSTANDING THE FACT THAT THE INTERNATIONAL TRANSACTIONS WERE SCRUTINIZED IN TER MS OF SECTION 92. THE CRUX OF THE MATTER IS THAT THERE ARE SEVERAL FACTORS WHICH AFFECT THE DETERMINATION OF THE ALP, WHICH MAY BE PRESENT IN ONE YEAR BUT ABSENT IN THE OTHER YEAR. IT IS TOO FAR TO CLAIM THAT THE ACCEPTANCE OF INTERNATIONAL TRANSACTION AT ALP IN ONE YEAR SHOULD PRECL UDE THE AUTHORITIES FROM THE DETERMINATION OF ALP IN A SUBSEQUE NT YEAR. WE, THEREFORE, REJECT THIS CONTENTION. III. FOREIGN EXCHANGE FLUCTUATION GAIN/LOSS 4.1. THE NEXT ISSUE TAKEN UP BY THE LD. AR IS A GAINST THE EXCLUSION OF FOREIGN EXCHANGE FLUCTUATION GAIN/LOSS FROM THE OPE RATING REVENUE/COST OF THE ASSESSEE AS WELL AS THE COMPARABL ES. ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 11 4.2. BRIEFLY STATED THE FACTS OF THIS ISSUE ARE TH AT THE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF APTARA. IT OFFERS A COMBIN ED PRINT AND ELECTRONIC DELIVERY SOLUTIONS BASED ON XML TO PUBLISH ERS. IT IS ENGAGED IN DEVELOPMENT OF CUSTOMIZED ELECTRONIC DATA. IT CON VERTS DATA FROM HARD COPY OR FILES INTO XML/SGML/HTML, CREATING ELECTRON IC STYLE FILE. THE ASSESSEE EARNED REVENUE OF RS. 113.76 CRORES FROM ITS ASSOCIATED ENTERPRISES (AES) TOWARDS PROVISION OF I.T ENABLED DATA CONVERSION SERVICES. THE ASSESSEE CHOSE TNMM AS THE MOST APPROPRI ATE METHOD AND PROFIT LEVEL INDICATOR (PLI) OF OPERATING PROFIT TO T OTAL COST. THE ASSESSEE DECLARED ITS OP/OC RATIO AT 15.64%. FIVE COMPA RABLE CASES WERE CHOSEN, WHOSE AVERAGE PLI, ON THE BASIS OF WEIGHT ED AVERAGE FOR THE CURRENT YEAR AND IMMEDIATELY PRECEDING TWO YEARS, W AS SHOWN AT 12.81%. ON THE BASIS OF SUCH CALCULATIONS, IT WAS CL AIMED THAT ITS INTERNATIONAL TRANSACTIONS WERE AT ALP. THE TPO ACCEPTED THE APPLICATION OF TNMM AS THE MOST APPROPRIATE METHOD WI THOUT DISTURBING THE PLI OF OP/OC. HOWEVER, THE USE OF MULTIPL E YEARS DATA WAS RESTRICTED TO ONLY THE CURRENT YEARS DATA. ALL TH E FIVE COMPARABLES REPORTED BY THE ASSESSEE IN ITS TP STUDY WERE HELD TO B E INCOMPARABLE. THE TPO CONDUCTED HIS OWN SEARCH AND CAME UP WITH CERT AIN NEW COMPARABLES AS TABULATED ON PAGE 14 OF HIS ORDER. THE ASSESSEE ALSO SELECTED CERTAIN NEW COMPARABLE CASES AND OFFERED TO T HE TPO FOR CONSIDERATION. AFTER CONSIDERING THE ENTIRE MATERIAL, TH E TPO SHORTLISTED FIVE COMPARABLE CASES WITH THEIR OP/TC AS U NDER: ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 12 SL. NO. NAME OF THE COMPANY OP/TC(%) 1. ADITYA BIRLA MINACS WORLDWIDE LTD. 13.91% 2. CROSSDOMAIN 25.63% 3. COSMIC GLOBAL 48.12% 4. CEPHA IMAGING 20.08% 5. CORAL HUB 36.93% AVERAGE 28.93% 4.3. THEREAFTER, HE PROCEEDED TO COMPUTE THE ALP AN D PROPOSED TRANSFER PRICING ADJUSTMENT OF RS. 14,33,87,402/-. PURS UANT TO THE DIRECTION GIVEN BY THE DRP, THE A.O PASSED THE FINAL ORDER MAKING ADDITION ON ACCOUNT OF TP ADJUSTMENT AT RS. 18,29,51 ,057/-. THE ASSESSEE IS AGGRIEVED AGAINST THIS ADDITION. 4.4. THE FIRST ISSUE AGITATED BEFORE US IS AGAINS T TREATING THE FOREIGN EXCHANGE FLUCTUATION AS AN ITEM OF NON-OPERATING NAT URE WHICH WAS EXCLUDED BY THE TPO FOR THE PURPOSES OF COMPUTING THE MARGIN OF THE ASSESSEE AS WELL AS OF THE COMPARABLES. THE LD. AR C ONTENDED THAT THE ASSESSEE EARNED FOREIGN EXCHANGE GAIN AMOUNTING TO RS . 1,17,78,842/- WHICH WAS DECLARED AS PART OF THE OPERA TING PROFIT BY REDUCING IT FROM THE OPERATING EXPENSES INCURRED BY THE ASSESSEE, BUT THE TPO REDUCED SUCH AMOUNT OF FOREIGN EXCHANGE FLUCTU ATION GAIN FROM THE ASSESSEES PROFIT AND ALSO EMBARKED UPON THE SAME EXERCISE FOR EXCLUDING THE EFFECT OF SIMILAR FOREIGN EXCHANGE GAIN/LOSS FROM THE FINANCIAL RESULTS OF THE FIVE COMPARABLES CASES FIN ALLY CHOSEN BY HIM. IT WAS URGED THAT THE FOREX GAIN/LOSS IS REQUIRED TO BE CONSIDERED AS A PART OF THE OPERATING REVENUE/COST. ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 13 4.5. WE OBSERVE THAT THE ASSESSEE RAISED OBJECTION AT SERIAL NO. 11 BEFORE THE DRP CONTENDING FOR THE INCLUSION OF FO REIGN EXCHANGE GAIN/LOSS AS PART OF THE OPERATING COST/REVENUE. THE DR P VIDE PAGE 9 OF ITS ORDER DIRECTED THE TPO: TO RECTIFY THE ARITHMETIC AL ERRORS IN THE COMPUTATION OF MARGINS OF THE COMPARABLES IN ACCORDANC E WITH THE PROVISION OF THE ACT. THERE IS NO DECISION ON THE AS SESSEES OBJECTION AGAINST NOT INCLUDING FOREIGN EXCHANGE GAIN/LOSS AS THE OPERATING REVENUE/COST. ON A SPECIFIC QUERY, IT WAS POINTED O UT BY THE LD. AR THAT THE ASSESSEES FOREIGN EXCHANGE GAIN RESULTED FRO M THE INTERNATIONAL TRANSACTIONS IN QUESTION WHICH ARE OF TH E REVENUE CHARACTER. 4.6. WE FIND MERIT IN THE CONTENTION RAISED ON BEH ALF OF THE ASSESSEE ABOUT THE INCLUSION OF FOREIGN EXCHANGE GAIN/LOSS IN THE OPERATING REVENUE/COSTS OF THE ASSESSEE AS WELL AS THAT OF THE COMPARABLES. WHEN WE ADVERT TO THE NATURE OF SUCH FOREIGN EXCHANG E GAIN EARNED BY THE ASSESSEE, IT COMES OUT THAT THE SAME IS IN RE LATION TO THE REVENUE EARNED BY THE ASSESSEE FROM ITS A.ES IN CONN ECTION WITH THE PROVISION OF I.T ENABLED DATA CONVERSION SERVICES, WHI CH HAS BEEN REPORTED AS INTERNATIONAL TRANSACTION TO THE TUNE OF RS . 113.76 CRORES. WHEN THE FOREIGN EXCHANGE GAIN DIRECTLY EMANATES FROM THE CONSIDERATION RECEIVED FOR RENDERING OF SERVICES TO ITS A.E, WE FAIL TO APPRECIATE AS TO HOW SUCH FOREIGN EXCHANGE GAIN FLUC TUATION CAN BE CONSIDERED AS AN ITEM OF NON-OPERATING REVENUE. WHAT IS TRUE FOR FOREIGN EXCHANGE GAIN FROM THE TRANSACTIONS OF THE REV ENUE NATURE BEING CONSIDERED AS PART OF OPERATING REVENUE IS EQUAL LY TRUE FOR THE ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 14 FOREIGN EXCHANGE LOSS BEING CONSIDERED AS PART OF OPE RATING COSTS FROM THE TRANSACTIONS OF THE REVENUE NATURE. 4.7. THE SPECIAL BENCH OF THE TRIBUNAL IN ACIT VS PRAKASH I. SHAH (2008) 115 ITD 167 (BOM)(SB) HAS HELD THAT THE GAIN DUE TO FLUCTUATION IN THE FOREIGN EXCHANGE RATE EMANATING FR OM EXPORT IS ITS INTEGRAL PART AND CANNOT BE DIFFERENTIATED FROM THE EX PORT PROCEEDS SIMPLY ON THE GROUND THAT THE FOREIGN CURRENCY RATE H AS INCREASED SUBSEQUENT TO SALE BUT PRIOR TO REALIZATION. IT WENT ON TO ADD THAT WHEN GOODS ARE EXPORTED AND THE INVOICE IS RAISED IN THE C URRENCY OF THE COUNTRY FROM WHERE THE GOODS ARE SOLD AND SUBSEQUENTLY WHEN THE AMOUNT IS REALIZED IN THAT FOREIGN CURRENCY AND THEN C ONVERTED INTO INDIAN RUPEES, THE ENTIRE AMOUNT IS RELATABLE TO THE EXPORTS MADE. IN FACT IT IS ONLY THE TRANSLATION OF INVOICE VALUE FROM THE FOREIGN CURRENCY TO THE INDIAN RUPEES. IT HELD THAT THE EXCHANGE RATE GAIN OR LOSS CANNOT HAVE A DIFFERENT CHARACTER THAN THE TRANSACTIO N TO WHICH IT RELATES. THE BENCH FURTHER FOUND FALLACY IN THE SUBMIS SION MADE ON BEHALF OF THE REVENUE THAT THE EXCHANGE RATE DIFFEREN CE SHOULD BE DETACHED FROM THE EXPORTS AND BE CONSIDERED AS AN IND EPENDENT TRANSACTION. EVENTUALLY, THE SPECIAL BENCH HELD THAT SUCH EXCHANGE RATE GAIN ARISING FROM EXPORT CANNOT BE VIEWED IN A DI FFERENT SHADE. 4.8. IN THE CONTEXT OF TRANSFER PRICING, THE BANGA LORE BENCH OF THE TRIBUNAL IN SAP LABS INDIA PVT. LTD. VS ACIT (2011) 44 SOT 156 (BANGALORE) HAS HELD THAT FOREIGN EXCHANGE FLUCTUATION GAIN IS P ART OF OPERATING PROFIT OF THE COMPANY AND SHOULD BE INCLUDE D IN THE OPERATING REVENUE. SIMILAR VIEW HAS BEEN TAKEN IN TRILOGY E BUSINESS ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 15 SOFTWARE INDIA (P) LTD. VS DCIT (2011) 47 SOT 45 (URO) (BANGALORE) . THE MUMBAI BENCH OF THE TRIBUNAL IN S. NARENDRA VS ADDTL. CIT (2013) 32 TAXMAN.COM 196 HAS ALSO LAID DOWN TO THIS EXTENT. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED OPINI ON THAT THE AMOUNT OF FOREIGN EXCHANGE GAIN/LOSS ARISING OUT OF REVENUE TRA NSACTIONS IS REQUIRED TO BE CONSIDERED AS AN ITEM OF OPERATING REVEN UE/COST. 4.9. SINCE, THE TPO HAS COMPUTED PLI OF THE ASSESS EE AS WELL AS COMPARABLES BY IGNORING THE AMOUNT OF FOREX GAIN/LOSS, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE O F AO/TPO TO RECOMPUTE THE ASSESSEES MARGIN AS WELL AS THAT OF TH E COMPARABLES BY CONSIDERING FOREIGN EXCHANGE GAIN/LOSS AS AN ITEM O F OPERATING REVENUE/COST. WE WANT TO MAKE IT CLEAR THAT OUR FINDI NG IN THIS REGARD IS RESTRICTED TO CONSIDERING FOREX GAIN/LOSS FROM THE TRA NSACTIONS OF THE REVENUE NATURE AS PART OF OPERATING REVENUE/COST. IF T HE FOREX GAIN/LOSS IS RELATABLE TO CAPITAL ACCOUNT, THEN THAT CANNOT BE CONSIDERED AS PART OF OPERATING REVENUE/COST. IN THE FRESH EXERCISE TO BE UNDERTAKEN BY THE TPO/AO, IT IS DIRECTED TO EXAMINE THE NATURE OF FOREX GAIN/LOSS IN THE LIGHT OF OUR ABOVE OBSERVATIONS NOT ONLY IN THE CASE OF THE ASSESSEE BUT ALSO THE COMPARABLES FOR DEC IDING AS TO WHETHER SUCH FOREX GAIN/LOSS SHOULD CONSTITUTE PART OF OPERATING REVENUE/COSTS. IV. CORAL HUB LTD. 5.1. THE NEXT OBJECTION OF THE LD. AR IS AGAINST THE INCLUSION OF THE CASE OF CORAL HUB LTD. (EARLIER KNOWN AS VISHAL INFORMATI ON ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 16 TECHNOLOGIES LTD.[VITL]) IN THE LIST OF COMPARABLES. T HE LD. AR ARGUED THAT THE TPO ERRED IN INCLUDING THIS CASE IN THE LIS T OF COMPARABLES, WHICH IS QUITE DIFFERENT FROM THAT OF THE ASSESSEE. I T WAS SUBMITTED THAT THIS COMPANY WAS INVOLVED IN AN ALTOGETHER DIFF ERENT BUSINESS MODEL OF OUTSOURCING ACTIVITIES; OWNING SIGNIFICANT INTANGIBLES WITH MINIMUM EMPLOYEES COST RATIO AS COMPARED TO THAT OF THE ASSESSEE. HE STATED THAT THIS CASE HAS BEEN HELD BY THE REVENUE AUTHORITIES THEMSELVES TO BE INCOMPARABLE FOR THE IMMEDIATELY PRE CEDING YEAR, THAT IS, A.Y. 2008-09. IT WAS POINTED OUT THAT THI S CASE WAS INCLUDED BY THE TPO IN THE LIST OF COMPARABLES WHILE DETERMINI NG THE ALP FOR THE ASSESSMENT YEAR 2007-08. INVITING OUR ATTENTION TOWARD S THE ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08, THE LD. AR CONTENDED THAT THIS CASE HAS BE EN HELD TO BE INCOMPARABLE. IT WAS, THEREFORE, PRAYED THAT THIS CAS E BE EXCLUDED FROM THE LIST OF COMPARABLES FOR THE INSTANT YEAR. PER CONTRA, THE LD. DR RELIED ON THE IMPUGNED ORDER ON THIS ISSUE. 5.2. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PE RUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE CONTENTI ON OF THE LD. AR THAT THE CASE OF VITL BE EXCLUDED BECAUSE IT WAS DON E FOR THE A.Y. 2008-09, IS NOT TENABLE. IT IS RELEVANT TO NOTE THA T THIS CASE WAS HELD TO BE NOT COMPARABLE ON THE BASIS OF FILTER OF `RELAT ED PARTY TRANSACTIONS AT MORE THAN 25% , THEREBY TAKING IT OUT OF THE PURVIEW OF UNCONTROLLED TRANSACTION. NOTHING HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE THAT THE RELATED PARTY TRANSACTIONS OF VIT L FOR THE CURRENT YEAR EXCEED THE THRESHOLD LIMIT OF 25%. WHILE DEALING WITH THE RULE OF CONSISTENCY SUPRA , WE HAVE OBSERVED THAT SIMPLY BECAUSE A CASE HAS ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 17 BEEN HELD TO BE INCOMPARABLE FOR ONE YEAR CANNOT PER SE BE CONSIDERED AS INCOMPARABLE FOR THE SUCCEEDING YEAR. IT IS ESSENTI AL TO CONSIDER THE BASIS ON WHICH SUCH CASE WAS HELD TO BE NOT COMPARAB LE. IF THE SAME BASIS CONTINUES IN THE SUCCEEDING YEAR, THEN, OF CO URSE, SUCH CASE MERITS EXCLUSION. AS THE BASE FOR LEAVING OUT THE C ASE OF VITL FROM COMPARABLES FOR THE IMMEDIATELY PRECEDING YEAR HAS N OT BEEN PROVED FOR THE INSTANT YEAR, WE CANNOT APPROVE THIS CONTEN TION OF THE LD. AR. 5.3. HOWEVER, WE FIND FROM THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 2007-08 THAT THE CASE OF VISHAL INFORMATION TECH NOLOGIES LTD. (NOW CALLED AS CORAL HUB LTD.) HAS BEEN HELD TO BE NOT COMPARABLE BECAUSE OF DIFFERENT BUSINESS MODEL AS IT WAS OUTSOU RCING EXECUTION OF CONTRACT FROM EXTERNAL VENDORS. THE TRIBUNAL HAS NOTED IN PARA 13 OF ITS ORDER, A COPY OF WHICH IS AVAILABLE ON RECORD, T HAT THE EMPLOYEE COST IN THE CASE OF VITL WAS A MERE 3% OF THE TOTAL COST, WHEREAS IN THE CASE OF THE ASSESSEE IT STOOD AT 60% . THE POSITION FOR THE CURRENT YEAR IS ALSO MORE OR LESS SIMILAR. THE EMPLOYEES COST OF VITL FOR THE INSTANT YEAR IS AT 2.71% OF THE TOTAL COST AS AGAINS T A LITTLE MORE THAN 60% OF THE ASSESSEE. 5.4. AT THIS JUNCTURE, IT IS PARAMOUNT TO REC ORD THE CONTENTION OF THE LD. DR THAT THE FILTER OF EMPLOYEES COST TO TOTA L COST IS NOT RELEVANT AS IT DOES NOT ULTIMATELY IMPACT THE OVERALL PROFITAB ILITY. HE FORTIFIED THIS CONTENTION ON THE STRENGTH OF THE ORDER PASSED B Y THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS DEOLITE CONSULTING INDIA PVT. LTD. (A COPY OF ORDER PLACED ON RECORD) IN WHICH IT HAS BEE N HELD ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 18 THAT SUCH A FILTER DOES NOT IMPACT THE OVERALL PROFIT ABILITY AND THE SPECIFIC CASE OF VITL HAS BEEN HELD TO BE COMPARABLE . 5.5. CONFRONTED WITH TWO ORDERS PASSED BY THE TRIBU NAL TAKING DIAGONALLY OPPOSITE VIEWS ON THIS FILTER, WE FIND THAT ONE OF SUCH ORDERS HAS BEEN PASSED IN THE CASE OF THIS VERY ASSES SEE FOR THE PRECEDING YEAR DIRECTING THE EXCLUSION OF VITL FROM THE LIST OF COMPARABLES ON THE BASIS OF THE FILTER OF EMPLOYEES C OST TO TOTAL COST. ONE OPTION IN SUCH CIRCUMSTANCES IS TO REFER THE MATTE R FOR THE CONSTITUTION OF SPECIAL BENCH ON THIS ISSUE AND THE SECOND IS TO FOLLOW THE VIEW TAKEN IN ASSESSEES OWN CASE. WITHOUT MAKI NG AN INDEPTH ANALYSIS, PRIMA FACIE WE FEEL THAT THE VIEW TAKEN BY THE TRIBUNAL IN ASSESSEES OWN CASE IS EQUALLY CONVINCING VIS--VIS THE CONTRARY VIEW TAKEN BY THE HYDERABAD BENCH. SINCE THE RULE OF CONSI STENCY ENJOINS TO FOLLOW THE VIEW TAKEN IN THE PRECEDING YEAR WHEN T HERE IS NO CHANGE IN FACTS OR LAW, WE ARE PERSUADED TO FOLLOW THE VIEW CANVASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE, MORE SO, WHEN THE LD . DR FAILED TO SHOW THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT YEAR ARE NOT SIMILAR TO THOSE OF THE A.Y. 2007-08. HOWEVER, WE WA NT TO MAKE IT CLEAR THAT OUR DECISION TO FOLLOW THE VIEW TAKEN BY T HE TRIBUNAL IN ASSESSEES OWN CASE IS FOUNDED ON THE PRINCIPLE OF STARE DECISIS WITHOUT INDEPENDENT EVALUATION OF THE RIVAL VIEWS. THE ISSUE , AS TO WHICH OF THE TWO VIEWS IS MORE CONVINCING DE HORS ANY SPECIFIC BACKGROUND AS IS THERE BEFORE US IN WHICH THE TRIBUNAL HAS TAKEN ONE V IEW IN ASSESSEES OWN CASE, CAN BE INDEPENDENTLY EXAMINED AT SOME OTH ER APPROPRIATE TIME IN A SUITABLE CASE. SINCE THE TRIBUNAL IN A PR ECEDING YEAR HAS HELD THIS CASE TO BE NOT COMPARABLE ON THE STRENGTH O F FILTER OF ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 19 PERCENTAGE OF EMPLOYEES COST TO TOTAL COST AND THE ASSESSEE PASSES THE TEST OF THIS FILTER FOR THE INSTANT YEAR AS WELL, WE DIRECT THE EXCLUSION OF THIS CASE FROM THE LIST OF COMPARABLES. 6. INITIALLY, THE LD. AR MADE CERTAIN SUBMISSIONS AG AINST THE EXCLUSION OF SOME COMPARABLES CASES CHOSEN BY THE AS SESSEE AND INCLUSION OF SOME FRESH CASES BY THE TPO. HOWEVER, IT WAS LATER ON SUBMITTED DURING THE COURSE OF HEARING THAT IF THE BEN CH AGREES WITH THE ASSESSEES CONTENTION ON THE INCLUSION OF FOREIG N EXCHANGE FLUCTUATION GAIN/LOSS IN THE OPERATING REVENUE/COST IN ASSESSEES CASE AS WELL AS THE COMPARABLES AND THE EXCLUSION OF THE CASE OF CORAL HUB LTD., HE WILL NOT PRESS FOR ADJUDICATION ON OTHER ISS UES. AS WE HAVE DECIDED THESE TWO ISSUES IN ASSESSEES FAVOUR, THERE IS NO NEED TO DEAL WITH THE OTHER GROUNDS INTER ALIA CHALLENGING THE INCLUSION OR EXCLUSION OF OTHER CASES IN THE FINAL LIST OF COMPARABLES. WE C ONSIDER IT OUR DUTY TO RECORD THAT ON SUCH SUBMISSION ADVANCED BY THE LD . AR, WE DID NOT PERMIT THE LD. DR TO ARGUE IN SUPPORT OF THE ORDERS PA SSED BY THE AUTHORITIES BELOW ON SUCH OTHER ISSUES. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. SD/- SD/- (RAJPAL YADAV) (R. S . SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 28/4/2014 *SUBODH* ITA NO. 722/DEL/2014 TECHBOOKS INTERNATIONAL PVT. LTD. 20 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 24.4.2014 PS 2. DRAFT PLACED BEFORE AUTHOR 28.4.2014 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *