Ikea Services India P.Ltd, Haryana V. ACIT Circle-12(2), New Delhi

ITA 907/DEL/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4497 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Assessment Year: 2016-2017
• Appeal Filed On: 27-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary; Set aside
• Section: 143(3); 13

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI I-1 B ENCH, NEW DELHI (THROUGH VIDEO CONFERENCING] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 907/DEL/2021 [A.Y 2016-17] IKEA SERVICES INDIA PVT. LTD. VS. THE A.C.I.T. UNIT NO. 421, DLF TOWER -A, CIRCLE - 12 (2) JASOLA DISTRICT CENTRE NEW DELHI SOUTH DELHI, NEW DELHI PAN : AACCI 8376 C [APPELLANT] [RESPONDENT] DATE OF HEARING : 28.09.2021 DATE OF PRONOUNCEMENT : 01.10.2021 ASSESSEE BY : SHRI KANCHAN KAUSHAL , ADV. SHRI RAVI SHARMA, ADV REVENUE BY : SHRI SURENDERPAL, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST OR DER DATED 29.06.2021 FRAMED U/S 143(3) R.W.S 144C(13) R.W.S 1 44B OF THE INCOME- TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' ] PERTAINING TO A.Y. 2016-17. 2 2. THE GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE ORDER PASSED BY THE NATIONAL E- ASSESSMENT CENTRE, DELHI (LD. AO) IS BAD IN LAW AND VOID AB-INITIO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE DEPUTY COMMISSIONER OF INCOME TAX - INCOME TAX & TR ANSFER PRICING DELHI 2(1)(2) (THE LD. TPO) (FOLLOWING TH E DIRECTIONS OF THE LD. DRP), ERRED IN ENHANCING THE INCOME OF THE APPE LLANT BY INR 43,01,97,828 HOLDING THAT THE APPELLANTS INTERNATI ONAL TRANSACTION PERTAINING TO PROVISION OF SOURCING SUPPORT SERVICE S TO ITS ASSOCIATED ENTERPRISES (AES) DOES NOT SATISFY THE ARMS LENGTH PRINCIPLE ENVISAGED UNDER THE ACT AND IN DOING SO, THE LD. TPO/ THE LD. DRP HAVE GROSSLY ERRED IN: 2.1 CONCLUDING THE INCORRECT FUNCTIONAL PROFIL E OF THE APPELLANT, THEREBY WRONGLY CHARACTERIZING IT AS A TRADER AND N OT AS A SERVICE PROVIDER; 2.2 CONCLUDING THAT THE APPELLANT HAS DEVELOPED HUMAN RESOURCE AND SUPPLY CHAIN INTANGIBLE FOR ITS AES; 2.3 CONCLUDING THAT THE APPELLANT IS ENGAGED IN MAXIMIZING LOCATION SAVINGS FOR ITS AES. 3 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO/ LD DRP HAVE ERRED IN DISREGARDING THE BENCHMARKING APPROACH ADOPTED BY THE APPELLANT IN ITS TP DOCUMENTATION AN D INCLUDING THE FREE ON BOARD (FOB) COST OF THE GOODS SOURCED DIR ECTLY BY THE AES FROM THE THIRD PARTY VENDORS IN THE COST BASE O F THE APPELLANT, FOR THE PURPOSE OF COMPUTING THE ARM'S L ENGTH PROFIT MARGIN OF THE APPELLANT. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO/LD.DRP HAVE ERRED IN CONSIDERING THE COST INCUR RED BY UNRELATED ENTERPRISE TO COMPUTE NET PROFIT MARGIN O F THE APPELLANT WHILE APPLYING TRANSACTION NET MARGIN METHOD (TNMM ). 5. WITHOUT PREJUDICE TO OTHER GROUNDS RAISED B Y THE APPELLANT, ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. TPO/ LD. DRP HAVE ERRED IN SELECTING COMPANIES CARRYING OUT TRADING ACTIVITIES AS COMPARABLE TO THE APPELLANTS BUSINES S OF PROVISION OF SOURCING SUPPORT SERVICES FOR COMPUTATION OF ALLEGE D ARMS LENGTH PRICE AND IN DOING SO HAVE GROSSLY ERRED IN SELECTI ON OF: 5.1 SHOPPERS STOP LIMITED; 5.2 ISHA NATURAL BEAUTY PRODUCTS& WELLNESS PRIVAT E LIMITED; 5.3 LIFESTYLE INTERNATIONAL PRIVATE LIMITED; 5.4 FUTURE ENTERPRISES LIMITED; 5.5 BIOWORLD MERCHANDISING (INDIA) PRIVATE LIMITE D; 5.6 AVENUE SUPERMARTS LIMITED; 5.7 V2 RETAIL LIMITED; 5.8 PARIN FURNITURE LIMITED 4 ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFO RE OR AT THJE TIME OF HEARING OF THE APPEAL. THE APPELLANT PRAYS THAT APPROPRIATE RELIEF BE GRAN TED BASED ON THE SAID GROUNDS OR 0| -, FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED. JUDICIAL DECISIONS BROUGHT TO OUR NOTICE DULY CONSIDERED. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE APPELLANT COMPANY IS A 100% SUBSIDIARY OF INGKA PRO HOLDING B V NETHERLANDS AND IS PRIMARILY ENGAGED IN THE PROVISION OF SOURCING S UPPORT SERVICES TO ITS ASSOCIATED ENTERPRISES [AES]. THE APPELLANT OPERAT ES ON AN ASSURED RETURN REVENUE MODEL UNDERTAKING MINIMAL/LIMITED RI SK, MAKING THE SERVICES OF THE APPELLANT HAVING LEAST COMPLEX OPER ATIONS AND BEARS LESSER SHARE OF RISKS. 5 5. THE FACTS ON RECORD FURTHER SHOW THAT THE APPELL ANT, IN THE COURSE OF PROVISION OF SOURCING SUPPORT, IS NOT INVOLVED IN MAKING ANY STRATEGIC SOURCING DECISIONS. IT IS PRIMARILY INVOL VED IN IDENTIFICATION AND SEARCH OF SUPPLIERS, OBTAINING OFFERS AND QUOTA TIONS, MANAGING LOGISTICS AND QUALITY CONTROL CHECK IN PERFORMING I TS DAY-TO-DAY FUNCTIONS. WE FIND THAT THE AE(S) UNDERTAKE FUNCTIO NS LIKE STRATEGY FORMULATION FOR ITS SOURCING BUSINESS, SELECTING AN D APPROVING NEW SUPPLIERS, NEGOTIATIONS WITH SUPPLIERS, CLAIM MANAG EMENT ETC. 6. DURING THE YEAR UNDER CONSIDERATION, THE APPELLA NT HAS ENTERED INTO THE FOLLOWING INTERNATIONAL TRANSACTIONS: S. NO. NATURE OF TRANSACTION METHOD VALUE OF TRANSACTION (IN RS.) 1. PROVISION OF SOURCING SUPPORT SERVICES TNMM 919225248 2. RECEIPT OF SHARED ACCOUNTING SERVICES 601559 3. SERVICES PROVIDED TO IKEA FOUNDATION IN RELATION TO COORDINATION ACTIVITIES TNMM 34194382 4. REIMBURSEMENT OF EXPENSES RECEIVED/ RECEIVABLE 5004999 5. REIMBURSEMENT OF EXPENSES PAID /PAYABLE TNMM 6809652 6 7. WE HAVE CAREFULLY PERUSED THE ORDER OF THE TPO. WE FIND THAT THE TPO HAS PROCEEDED ON THE PREMISE THAT THE BUSIN ESS MODEL OF THE APPELLANT IS AKIN TO THAT OF A TRADER AND ON THIS P REMISE, THE TPO FORMED A BELIEF THAT THE ASSESSEES COMPENSATION MO DEL MUST INCLUDE FREE ON BOARD [FOB] VALUE OF GOODS SOURCED FROM IND IA AND FOLLOWING THE STRONG BELIEF, THE TPO SELECTED COMPARABLES IDE NTIFYING TRADERS AS COMPARABLES. THE SEARCH YIELDED THE FOLLOWING RESU LT: 1 SHOPPERS STOP LTD. 959.4 1052.2 1101.7 30262.8 33897 37864.6 3.05' 2 ISHA NATURAL BEAUTY PRODUCTS & WELLNESS PVT. LTD. 14.2 15 14.1 246.3 261.4 332.8 5.15' 3 LIFESTYLE INTERNATIONAL PVT. LTD. 1940 2470 2699.8 33500 41950 50740 5.63' 4 FUTURE ENTERPRISES LTD. 7245 6778.4 5083.6 123483.8 110474.7 88168.4 5.93' 5 BIOWORLD MERCHANDISING (INDIA) PVT. LTD. 22.8 45.3 36.8 440.8 598.6 707.7 6.00' 6 AVENUE SUPERMARTS LTD. 2801.2 3744.6 5616.8 45396.8 62430.1 89469.8 6.16' 7 V 2 RETAIL LTD. 54.9 281.4 270.5 2451.1 2911.1 3279.5 7.02' 8 PARIN FURNITURE LTD. 20.9 20.8 42.7 292 6 284.9 607 7.13' MEDIAN 5.97' 7 8. THE TPO NOTICED THAT THE FOB VALUE OF THE GOODS PROCURED THROUGH ASSESSEE FROM INDIA IS RS. 22,60,34,01,600 /-. THE TPO TOOK THIS FOB VALUE AS COST BASE TO CALCULATE THE REMUNE RATION OF THE ASSESSEE. APPLYING THE MEDIAN RATE OF 5.97% ON THE FOB VALUE OF 2260.34 CRORES, THE TPO COMPUTED THE REMUNERATION A T RS. 1,34,94,23,076/-. SINCE THE ASSESSEE HAS RECEIVED COMPENSATION OF RS. 91,92,25,248/- THE SAME WAS DEDUCTED AND THE BALANC E AMOUNT OF RS. 43,01,97,828/- WAS ADDED. 9. THE ASSESSEE RAISED OBJECTIONS BEFORE THE DRP BU T THE SAME WERE DISMISSED. 10. AS MENTIONED ELSEWHERE, THE ENTIRE TP APPROACH WAS ON THE PREMISE THAT THE SERVICES OF THE APPELLANT ARE AKIN TO THAT OF A TRADER AND THEREFORE, THE TPO HAS SELECTED THE COMPARABLES IDENTIFYING TRADERS AS COMPARABLES. WE ARE OF THE CONSIDERED V IEW THAT THE TPO HAS PROCEEDED ON AN ERRONEOUS PREMISE WHICH HAS RES ULTED INTO HIS TP ADJUSTMENT ERRONEOUSLY. 8 11. SERVICES PERFORMED BY THE ASSESSEE CAN BE SUMMA RIZED AS UNDER: SEARCHING OF SUPPLIERS IN THE EVENT THAT AN AE INTENDS TO SOURCE A NEW PRO DUCT FROM INDIA, IKEA SERVICES (ALONG WITH OTHER SOURCING SUPPORT EN TITIES IN RESPECTIVE COUNTRIES) IS INFORMED ON THE PRODUCT THAT NEEDS TO BE SOURCED AND, ON THE REQUIREMENTS, THAT THE PRODUCT WHICH SHOULD BE MET. SEARCH OF SUPPLIERS IS CARRIED OUT BASIS GUIDELINES AND PARAM ETERS PROVIDED BY AE I.E. THE IKEA WAY ON PURCHASING HOME FURNISHING PR ODUCTS (IWAY). IWAY HAS BEEN LAID DOWN BY THE AE, ADHERING TO WHIC H ALL ENTITIES WITHIN THE GROUP CONDUCT THEIR BUSINESS. AES HAVE A LSO LAID DOWN SPECIFIC GUIDELINES (WRITTEN DOCUMENT TERMED AS I-S TART) WHICH STIPULATES THE PROCEDURE WHICH IS REQUIRED TO BE FO LLOWED BY EVERY SOURCING ENTITY WITHIN THE GROUP FOR IDENTIFICATION , SELECTION AND STARTING UP OF SUPPLIERS. OBTAINING OFFERS IKEA SERVICES OBTAINS PRICE QUOTATIONS, DELIVERY AN D OTHER CONTRACTUAL TERMS FOR THE SUPPLIERS LOCATED IN INDIA. IKEA SERV ICES THEN SUBMITS THIS 9 INFORMATION TO THE RELEVANT PURCHASING COMPANY, WHO ALONE HAS THE AUTHORITY TO CONCLUDE PURCHASE AGREEMENTS WITH SUPP LIERS. IKEA SERVICES DOES NOT HAVE THE RIGHT TO NEGOTIATE WITH SUPPLIERS OR TO MAKE ANY DECISIONS IN REGARD TO PURCHASING THE GOOD S. PLACING OF ORDERS AND QUALITY CONTROL WHEN A PURCHASING CONTRACT HAS BEEN SUCCESSFULLY CO NCLUDED BETWEEN A PURCHASING COMPANY (AE) AND A SUPPLIER, ORDERS AR E GENERATED ELECTRONICALLY UP TO THE MAXIMUM AMOUNT OF PRODUCTS AS INCLUDED IN THE PURCHASING CONTRACT. PRIOR TO COMMENCEMENT OF FULL-FLEDGED PRODUCTION BY SUPPLIER, SOURCING ENTITY/ THE APPELLANT IS REQUIRED TO ENSUR E THAT THE SUPPLIER COMPLIES WITH A WORKING MANUAL, WHICH IS FORMULATED BY AE NAMELY, FIRST BATCH PRODUCTION. PURPOSE OF FIRST BATCH PR ODUCTION IS TO ENSURE AND VERIFY THAT SUPPLIER UNDERSTANDS THE IKEA REQUI REMENTS AND MAINTAINS APPROPRIATE PRODUCTION SET UP TO DELIVER THE RIGHT QUALITY FROM THE INCEPTION. 10 THE APPELLANT, ON DIRECTION AND WORKING MANUALS OF THE AE, INSPECTS THE ENTIRE MANUFACTURING PROCESS INCLUDING TRANSPOR TATION AND STORAGE TESTS. FURTHER, ANY COST INCURRED BY THE APPELLANT, DUE TO COMMERCIAL CONVENIENCE IS CONSIDERED AS PART OF TOTAL OPERATIN G COST OF THE PURPOSE OF COMPUTING THE MARGINS TO BE EARNED. TRANSPORT AND LOGISTICS THE APPELLANT SCOUTS FOR POTENTIAL TRANSPORT SERVIC E PROVIDERS IN INDIA AND OBTAINS PRICE QUOTATIONS, DELIVERY SCHEDULES AN D OTHER TERMS FROM THE CARRIERS. THE APPELLANT THEN SUBMITS THIS INFOR MATION TO THE RELEVANT PURCHASING COMPANY (AE), WHICH ALONE HAS T HE AUTHORITY TO ENTER INTO TRANSPORT AGREEMENTS WITH CARRIERS. AE D IRECTLY ENTERS INTO CONTRACTS WITH THE THIRD PARTY TRANSPORT SERVICE PR OVIDER AND ACCORDINGLY, ALL THE COST RELATED TO TRANSPORTATION AND LOGISTICS IS BORNE DIRECTLY BY AE. PAYMENT TO SUPPLIERS THE APPELLANT DOES NOT PERFORM ANY ROLE WITH RESPEC T TO PAYMENTS TO BE MADE BY AE FOR THE PURCHASES. INVOICES ARE DIREC TLY RAISED BY 11 SUPPLIERS ON THE AE. ACCORDINGLY, THE AE IS SOLELY RESPONSIBLE FOR DIRECTLY REMITTING PAYMENT TO THE SUPPLIERS. OTHERS THE PROCESS OF SETTLEMENT OF CLAIMS IS PERFORMED BY GLOBAL QUALITY SUPPORT CENTER (QSC) TEAM IN CHINA. THE APPELLANT MERELY COORDINATES ANY CLAIMS IN RELATION TO DEFECTIVE OR DAMAGED GOODS PRODUCED BY SUPPLIERS IN ITS REGION OR GOODS DAMAGE D DURING TRANSPORT BY THE TRANSPORT SERVICE PROVIDERS IN ITS REGION. H OWEVER, ANY LOSSES ARE NOT BORNE BY THE APPELLANT. 12. THE ASSESSEE DOES NOT HAVE ANY MARKET RISK, PRO DUCT LIABILITY RISK, SERVICE LIABILITY RISK, CREDIT RISK AND PRICE RISK. THE FACTS ON RECORD SHOW THAT THE ASSESSEE DOES NOT TAKE PART IN PURCHASE DECISIONS. IN FACT, THE ASSESSEE IS NOT ENGAGED AND DOES NOT HAVE ANY LEGAL RIGHT TO DO SO, IN THE ACTIVITY RELATING TO MAINTAINING ANY STOCK OF MERCHANDISE MANUFACTURED BY VENDORS AND/ OR RESELLING THE SAME TO GROUPS RETAIL ENTITIES ON ITS OWN ACCOUNT. IN OTHER WORDS, THE AS SESSEE DOES NOT BEAR ANY RISK ASSOCIATED WITH CARRYING/OWING/MAINTAINING STOCK OF INVENTORY. 12 13. IN OUR CONSIDERED VIEW, THE GLARING FALLACY IN THE APPROACH OF THE TPO LIES ON THE FACT THAT HE HAS ADOPTED FOB COST O F GOODS PROCURED FROM INDIA BY THE AES THROUGH THE ASSESSEE AS COST BASE. IN OUR CONSIDERED VIEW, THIS APPROACH OF THE TPO IS IN COM PLETE DISREGARD TO THE FUNCTIONAL PROFILE OF THE ASSESSEE. THE ASSESS EE OPERATES IN A LIMITED RISK ENVIRONMENT PROVIDING ROUTINE SUPPORT SERVICES TO GROUP ENTITIES AND ACCORDINGLY, ENTITLED TO BE REMUNERATE D BASED ON ASSURED RETURN. 14. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF LI AND FUNG INDIA LTD ITA NO. 306 OF 2012 HAS CONSIDERED A SIMILAR QU ARREL. THE MOST RELEVANT PART OF THE JUDGMENT IS EXTRACTED HEREINBE LOW: 39THIS COURT IS OF OPINION THAT TO APPLY THE TNMM , THE ASSESSEES NET PROFIT MARGIN REALIZED FROM INTERNAT IONAL TRANSACTIONS HAD TO BE CALCULATED ONLY WITH REFEREN CE TO COST INCURRED BY IT, AND NOT BY ANY OTHER ENTITY, EITHER THIRD PARTY VENDORS OR THE AE. TEXTUALLY, AND WITHIN THE BOUNDS OF THE TEXT MUST THE AO/TPO OPERATE, RULE 10B(1)(E) DOES NOT EN ABLE CONSIDERATION OR IMPUTATION OF COST INCURRED BY THI RD PARTIES OR UNRELATED ENTERPRISES TO COMPUTE THE ASSESSEES NET PROFIT MARGIN FOR APPLICATION OF THE TNMM. RULE 10B(1)(E) RECOGNI ZES THAT THE NET PROFIT MARGIN REALIZED BY THE ENTERPRISE FROM A N INTERNATIONAL TRANSACTION ENTERED INTO WITH AN ASSOCIATED ENTERPR ISE IS COMPUTED 13 IN RELATION TO COSTS INCURRED OR SALES EFFECTED OR ASSETS EMPLOYED OR TO BE EMPLOYED BY THE ENTERPRISE ... (EMPHASIS SUPPLIED). IT THUS CONTEMPLATES A DETERMINATION OF ALP WITH REFERENCE TO THE RELEVANT FACTORS (COST, ASSETS, SALES ETC.) OF THE ENTERPRISE IN QUESTION, I.E. THE ASSESSEE, AS OPPOSED TO THE AE O R ANY THIRD PARTY. THE TEXTUAL MANDATE, THUS, IS UNAMBIGUOUSLY CLEAR. 40. THE TPOS REASONING TO ENHANCE THE ASSESSEES C OST BASE BY CONSIDERING THE COST OF MANUFACTURE AND EXPORT OF F INISHED GOODS, I.E., READY-MADE GARMENTS BY THE THIRD PARTY VENDER S (WHICH COST IS CERTAINLY NOT THE COST INCURRED BY THE ASSESSEE), I S NOWHERE SUPPORTED BY THE TNMM UNDER RULE 10B(1)(E) OF THE R ULES. HAVING DETERMINED THAT (TNMM) TO BE THE MOST APPROPRIATE M ETHOD, THE ONLY RULES AND NORMS PRESCRIBED IN THAT REGARD COUL D HAVE BEEN APPLIED TO DETERMINE WHETHER THE EXERCISE INDICATED BY THE ASSESSEE YIELDED AN ALP. THE APPROACH OF THE TPO AN D THE TAX AUTHORITIES IN ESSENCE IMPUTES NOTIONAL ADJUSTMENT/ INCOME IN THE ASSESSEES HANDS ON THE BASIS OF A FIXED PERCENTAGE OF THE FREE ON BOARD VALUE OF EXPORT MADE BY UNRELATED PARTY VENDE RS. 41. LFILS COMPUTATION OF THE OPERATING PROFIT MARG IN (OP/TC PER CENT) BY ENHANCING THE COST BASE, I.E., BY INCREASI NG THE COST OF THE SALES FACILITATED BY LFIL LEADS TO AN ARBITRARY ADJ USTMENT OF ITS INCOME, AS SUCH AN ALTERATION RESIDES PLAINLY OUTSI DE THE RULES AND THE PROVISIONS OF THE ACT. 14 15. THIS JUDGMENT OF THE HON'BLE JURISDICTIONAL HIG H COURT WAS FOLLOWED BY THIS TRIBUNAL IN THE CASE OF MITSUBISHI CORPORATION INDIA PVT LTD VIDE ITA NO. 5042/DEL/2011. THE RELEVANT FINDI NGS OF THE COORDINATE BENCH READ AS UNDER: 81. CLEARLY, THEREFORE, IT IS IMPERMISSIBLE TO MA KE NOTIONAL ADDITIONS IN THE COST BASE AND THUS TAKE INTO ACCOU NT THE COSTS WHICH ARE NOT BORNE BY THE ASSESSEE. IT IS SO OPINE D BY HONBLE JURISDICTIONAL HIGH COURT ON A CAREFUL ANALYSIS OF RULE 10B(1)(E)(I). IT IS, THEREFORE, NO LONGER OPEN TO THE REVENUE AUT HORITIES TO RECONSTRUCT THE FINANCIAL STATEMENTS OF THE ASSESSE E BY INCLUDING THE COST OF PRODUCTS INCURRED BY THE AES, IN RESPEC T OF WHICH SERVICES ARE RENDERED, IN ITS RECONSTRUCTED FINANCI AL STATEMENTS, AND THEN PUTTING THE HYPOTHETICAL TRADING PROFITS, SO ARRIVED AT IN THESE RECONSTRUCTED FINANCIAL STATEMENTS, TO THE TE STS FOR DETERMINING ARMS LENGTH PRICE. RESPECTFULLY FOLLOW ING THE ESTEEMED VIEWS OF THEIR LORDSHIPS, WE HOLD THAT THE ADJUSTMENTS CARRIED OUT IN THE COST BASE OF ALP COMPUTATION, IN RESPECT OF SERVICE FEE/ COMMISSION SEGMENT, ARE INDEED DEVOID OF LEGALLY SUSTAINABLE MERITS. 16. THE TPO HAS NOT ACCEPTED THE DECISION OF THE HO N'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF L I & FUND [SUPRA] SOLELY ON THE GROUND THAT AN APPEAL HAS BEEN RECOMMENDED B EFORE THE HON'BLE APEX COURT. IN OUR CONSIDERED VIEW, WHEN T HE OPERATION OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT H AS NOT BEEN 15 SUSPENDED OR STAYED, IT WAS MANDATORY UPON THE TPO TO FOLLOW THE BINDING DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. 17. BE THAT AS IT MAY, CONSIDERING THE FACTS OF THE CASE IN TOTALITY, AS DISCUSSED HEREINABOVE, IN LIGHT OF THE DECISION OF THE HON'BLE HIGH COURT OF DELHI [SUPRA], WE SET ASIDE THE TP ADJUSTM ENT MADE BY THE ASSESSING OFFICER AND DIRECT HIM TO DELETE THE ADDI TION OF RS. 43,01,97,828/- 18 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO . 907/DEL/2021 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 01.10 .2021. SD/- SD/- [LALIET KUMAR] [N.K. BIL LAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: SEPTEMBER, 2021 VL/ 16 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER