TATA MOTORS EUROPEAN TECHNICAL CENTRE PLC, MUMBAI V. DCIT (IT) 4(1)(2), MUMBAI

ITA 907/MUM/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1945 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2010-2011
• Appeal Filed On: 09-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAN VORA NIKHIL TIWARI
• Assessee Lawyers: N K CHAND
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Permanent establishment; Wholly owned subsidiary
• Section: 92C; 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K, MUMBAI BEORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) TATA MOTORS EUROPEAN TECHNICAL CENTRE PLC., C/O. 3 RD FLOOR, NANAVATI MAHALAYA, 18 HOMI MODY STREET, HUTAMA CHOWK, MUMBAI 400 001 PAN:AACCT 7506K ... APPELLANT VS. DEPUTY COMMISSIONER OF INCOME-TAX (IT) 4(1)(2), ROOM NO.116, 1 ST FLOOR, SCINDIA HOUSE, N.M.ROAD, BALLARD ESTATE, MUMBAI 400038 .... RESPONDENT APPELLANT BY : S/SHRI R AJAN VORA/ NIKHIL TIWARI RESPONDENT BY : SHRI N.K.CHAND DATE OF HEARING : 10/12/2015 DATE OF PRONOUNCEMENT : 18/12/2015 ORDER PER JASON P. BOAZ, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2010-11 PASSED U/S.1 44C(13) R.W.S. 143(3) OF THE INCOME TAX ACT,1961 (IN SHORT THE AC T) VIDE ORDER DATED 30/12/2014 IN PURSUANCE OF THE DIRECTIONS ISSUED BY THE DISPUTE RESOLUTION PANEL (DRP) U/S.144(5) OF THE ACT VIDE ORDER DATED 14/11/2014. 2 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2.1 THE ASSESSEE IS A PERMANENT ESTABLISH (PE) OF TATA MOTORS EUROPEAN TECHNICAL CENTRE-UK (TMETC-UK) INCORPORA TED IN THE UK AND A WHOLLY OWNED SUBSIDIARY OF TATA MOTORS LTD., IND IA (TML). IN THE YEAR UNDER CONSIDERATION THE ASSESSING OFFICER (A O') MADE A REFERENCE U/S.92CA(1) OF THE ACT TO THE TRANSFER PRICING OFFI CER (TPO) FOR DETERMINATION OF ALL THE TRANSACTIONS REPORTED IN F ORM3CEB. THE ASSESSEE IS ENGAGED IN PROVIDING AUTOMOBILE DESIGN ENGINEERING SERVICES TO ITS SOLE CUSTOMER TATA MOTORS LTD. TML AND TMETC-UK HAD ENTERED INTO A DESIGN AND ENGINEERING SERVICE AGREE MENT, FOR RENDERING SERVICES ON A CONTINUOUS BASIS TO TATA MOTORS LTD. AND IN THIS REGARD SEVERAL EMPLOYEES OF TMETC ARE SENT TO INDIA. 2.2 IN ITS TP STUDY, THE ASSESSEE WORKED OUT ITS OP ERATING PROFIT (OP/TC%) AT 6.65%. THE ASSESSEE UNDERTOOK A SEARCH IN THE AMADEUS DATABASE IN THE EUROPEAN REGION TO IDENTIFY COMPA RABLE AND CHOSE 5 COMPARABLE COMPANIES IN THE EUROPEAN REGION ENGAGED IN THE RENDERING OF DESIGN AND ENGINEERING SERVICES TO THE AUTOMOBILE INDUSTRY. S.NO. NAME OF THE COMPANY AVERAGE 1. TRANSPORT RESEARCH FOUNDATION 3.35% 2. MIRA LIMITED 0.87% 3. DYTECNA LIMITED 5.42% 4. RAY MALLOCK LIMITED 4.21% 5. RICARDO PLC 8.77% ARITHMETIC MEAN 4.53% 3 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) WORKING OUT THE THREE YEARS WEIGHTED AVERAGE OF THE COMPARABLES AT 4.53%, THE ASSESSEE WAS OF THE VIEW THAT SINCE ITS MARGIN AT 6.5% WAS GREATER, ITS INTERNATIONAL TRANSACTIONS WERE AT ARM S LENGTH. 2.3 THE TPO REJECTED THE ASSESSEES TP STUDY AS HE WAS OF THE VIEW THAT SINCE THE PE IS AN INDIAN ESTABLISHMENT OF A F OREIGN COMPANY ONLY INDIAN COMPANIES ARE TO BE ADOPTED AS COMPARABLES. AFTER CARRYING OUT HIS OWN SEARCH AND CONSIDERING THE OBJECTIONS OF TH E ASSESSEE TO HIS PROPOSAL OF ADOPTING EIGHT INDIAN COMPANIES, THE TP O SELECTED THE FOLLOWING FOUR COMPANIES:- S.NO. NAME OF THE COMPANY AVERAGE(OP/TC) 1. BEST MULYANKAN CONSULTANTS LTD. 10.8% 2. ICRA ONLINE LTD. 12.50% 3. INDUS TECHNICAL & FINANCIAL CONSULTANTS LTD. 12.79% 4. MAHINDRA CONSULTING ENGINEERS LTD. 23.50% AVERAGE 14.72% SINCE THE AVERAGE PROFIT MARGIN OF THE COMPARABLE C OMPANIES WAS AT 14.72% VIS-A-VIS THE ASSESSEES MARGIN OF 6.65%, TH E TPO IN HIS ORDER U/S. 92CA(3) OF THE ACT DATED 3/1/2014 PROCEEDED T O WORK OUT THE TP ADJUSTMENT AT RS.2,89,12,090/- TO THE ARMS LENGTH O F THE ASSESSEES INTERNATIONAL TRANSACTIONS. THE ASSESSING OFFICER THEN COMPLETED THE DRAFT ORDE R OF ASSESSMENT UNDER SECTION 144C(1) R.W.S. 143(3) OF THE ACT VIDE ORDER DATED 24/2/2014, WHEREIN THE INCOME OF THE ASSESSEE WAS D ETERMINED AT RS.6,44,58,579/- AS AGAINST THE RETURNED INCOME OF RS.3,69,92,093/- DECLARED IN THE RETURN OF INCOME FILED FOR ASSESSME NT YEAR 2010-11 ON 4 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) 15/10/2010. THE ASSESSED INCOME, INTER-ALIA, INCL UDED THE T.P ADJUSTMENT OF RS.2,89,12,090/- PROPOSED BY THE TRAN SFER PRICING OFFICER. 2.4 AGGRIEVED BY THE DRAFT ORDER OF ASSESSMENT FOR THE ASSESSMENT YEAR 2010-11 DATED 24/02/2014, THE ASSESSEE FILED I TS OBJECTIONS THERETO BEFORE THE DRP. THE DRP ISSUED ITS DIRECTIO NS UNDER SECTION144C(5) OF THE ACT VIDE ORDER DATED 14/11/20 14. THE DRPS DIRECTIONS UPHELD THE ACTION OF THE TRANSFER PRICIN G OFFICER IN REJECTING FOREIGN COMPARABLES FOR BENCH MARKING ANALYSIS AND IN SELECTING INDIAN COMPANIES AS COMPARABLE. THE DRP REJECTED THE USE OF FOREIGN COMPARABLES FOLLOWING THE SIMILAR DECISIONS OF THE EARLIER DRPS FOR ASSESSMENT YEARS 2008-09 AND 2009-10; ON GROUNDS OF GEOGRAPHICAL DISPARITY; SINCE THE SAID FOREIGN COMPANIES WERE NO T HAVING TRANSACTIONS WITH INDIA; AND DIFFERENT FINANCIAL Y EARS OF THE FOREIGN COMPARABLE COMPANIES. THE DRP ACCEPTED THE ASSESSE ES ALTERNATE ARGUMENTS FOR DIRECTING THE TRANSFER PRICING OFFICE R TO VERIFY THE WORKING AND RE-COMPUTE THE OPERATING PROFIT MARGIN OF THE ASSESSEE TO ELIMINATE DOUBLE DISALLOWANCE ON ACCOUNT OF SUO-MOT O DISALLOWANCE OF HEAD OFFICE EXPENDITURE. 2.5 IN PURSUANCE OF THE DIRECTIONS OF THE DRP ISSUE D UNDER SECTION 144C(5) OF THE ACT DATED 14/11/2014, THE ASSESSING OFFICER PASSED THE FINAL ORDER OF ASSESSMENT UNDER SECTION 144C(13) R. W.S. 143(3) OF THE ACT VIDE ORDER DATED 30/12/2014 DETERMINING THE INC OME OF THE ASSESSEE AT RS.3,69,92,090/- UNDER NORMAL PROVISION S OF THE ACT. IN DOING SO, THE ASSESSING OFFICER/TRANSFER PRICING OF FICER VERIFIED AND THEN ACCEPTED THE WORKING OF THE OPERATING PROFIT MARGIN OF THE ASSESSEE AND 5 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) THEREBY NEITHER PROPOSED NOR MADE ANY ADJUSTMENT TO THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS OF T HE ASSESSEE, TREATING THE SAME TO BE AT ARMS LENGTH. 3.0 THE ASSESSEE, BEING AGGRIEVED WITH THE FINAL OR DER OF ASSESSMENT FOR ASSESSMENT YEAR 2010-11 DATED 30/12/2014 HAS PR EFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS:- 1.A) THE LEARNED ASSESSING OFFICER/TRANSFER PRICIN G OFFICER (HEREINAFTER REFERRED TO AS 'AO') HAS ERRED IN LAW AND ON FACTS IN SELECTING INDIAN COMPANIES AS COMPARABLE INSTEAD OF FOREIGN COMPANIES AS COMPARABLE FOR BENC HMARKING INTERNATIONAL TRANSACTIONS OF PROVISIONING OF SERVICES. B) THE LEARNED AO OUGHT TO HAVE ACCEPTED BENCHMARKI NG CARRIED OUT BY THE APPELLANT AND SELECTION OF UK COMPANIES AS COMPARAB LES FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS, CONSIDERING THE FACTS O F THE CASE OF THE APPELLANT. C) THE LEARNED AO HAS ERRED IN LAW AND ON FACTS IN DISREGARDING THAT IN AY 2007- 08, DEPARTMENT HAS ACCEPTED AND CONSIDERED UK COMPANIES AS COMPARABLES FOR THE PURPOSE OF BENCHMARKING OF INTERNATIONAL TRANSACTIO NS AND HENCE THE LEARNED ASSESSING OFFICER SHOULD HAVE FOLLOWED THE SAME AS THERE IS NO CHANGE IN THE FACTS OF THE CASE. 2. THE LEARNED AO HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT APPELLANT'S 'PERMANENT ESTABLISHMENT' ('PE') IS AN INDIAN ENTIT Y. 3. THE HON'BLE DISPUTE RESOLUTION PANEL ('DRP') HA S ERRED IN LAW AND ON FACTS IN REJECTING THE UK COMPANIES SELECTED BY THE APPELLAN T AS COMPARABLE DISREGARDING THE FACTS AND SUBMISSIONS THAT THESE ARE COMPARABLE COMPANIES. 4.WITHOUT PREJUDICE TO THE GROUND THAT INDIAN COMPA NIES CANNOT BE CONSIDERED FOR BENCHMARKING INTERNATIONAL TRANSACTIONS; A) THE LEARNED AO HAS ERRED IN LAW AND ON FACTS IN CHERRY PICKING 4 COMPANIES AS COMPARABLES WHICH ARE FUNCTIONALLY NON-COMPARABLE. B) THE LEARNED AO HAS ERRED IN LAW AND ON FACTS IN CHERRY PICKING COMPANIES WITH HIGH MARGIN INSTEAD OF FOLLOWING DETAILED, SYSTEMAT IC AND METHODICAL SEARCH PROCESS. 5. WITHOUT PREJUDICE TO THE GROUND THAT INDIAN COMP ANIES CANNOT BE CONSIDERED FOR BENCHMARKING INTERNATIONAL TRANSACTIONS, THE HON'BL E DRP SHOULD HAVE DIRECTED FRESH COMPARABILITY ANALYSIS TO SELECT INDIAN COMPA RABLES WHICH ARE FUNCTIONALLY COMPARABLE TO APPELLANT, AS COMPARABLES CHOSEN BY T HE LEARNED AO TO BENCHMARK THE TRANSACTION ARE FUNCTIONALLY DIFFERENT: 6. WITHOUT PREJUDICE TO OTHER GROUNDS, THE LEARNED AO HAS ERRED IN LAW AND ON FACTS IN NOT GRANTING BENEFIT OF PROVISO TO SECTION 92C W ITH RESPECT OF + /- 5% BENEFIT AS PER THE SAID SECTION. 6 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) 7. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND FACTS IN NOT GRANTING REFUND ALONGWITH INTEREST U/S.244A OF THE ACT DETERMINED A S PER ORDER UNDER SECTION 144C R.W.S. 143(3) OF THE ACT. 4. GROUND -1 A TO C USE OF FOREIGN COMPARABLES:- 4.1 IN THESE GROUNDS, THE ASSESSEE ASSAILS THE ORDE RS OF THE AUTHORITIES BELOW IN SELECTING INDIAN COMPANIES AS COMPARABLES INSTEAD OF FOREIGN COMPANIES AS COMPARABLES FOR BENCHMARKIN G INTERNATIONAL TRANSACTIONS FOR PROVISIONING OF SERVICES. IT IS C ONTENDED THAT THE AUTHORITIES BELOW OUGHT TO HAVE ACCEPTED THE SELEC TION OF FOREIGN COMPANIES AS COMPARABLES FOR BENCHMARKING OF INTERN ATIONAL TRANSACTIONS CONSIDERING THE FACTS OF THE CASE ON H AND. 4.2.1 THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBM ITTED THAT WHILE THE DRPS ORDER ON THE ASSESSEES ALTERNATE GROUND OF CORRECTION OF ITS OPERATING PROFIT MARGINS HAS RESULTED IN RELIEF TO THE ASSESSEE, HOWEVER ON THE ISSUE OF USE OF FOREIGN COMPARABLES FOR BENC HMARKING ITS INTERNATIONAL TRANSACTIONS, THE DRP HAS HELD AGAINS T THE ASSESSEE AND UPHELD THE ORDERS OF THE AUTHORITIES BELOW IN USING INDIAN COMPANIES FOR BENCHMARKING ITS INTERNATIONAL TRANSACTIONS. T HE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ISSUE OF THE US E OF FOREIGN COMPARABLES FOR BENCHMARKING ANALYSIS HAS BEEN DECI DED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008-0 9 AND 2009-10 IN ITA NO.7630/MUM/2012 AND 1698/MUM/2014 DATED 22/12/ 2014, WHEREIN THE BENCH HAS ACCEPTED THE CONTENTION OF T HE ASSESSEE THAT FOREIGN COMPARABLES CAN BE USED FOR BENCHMARKING AN ALYSIS. 7 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) 4.2.2 THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMI TS THAT WHILE THERE IS NO ADDITION(I.E. T.P ADJUSTMENT) MADE IN THE FIN AL ORDER OF ASSESSMENT, WHEREIN THE ASSESSING OFFICER/TRANSFER PRICING OFFICER HAS GRANTED RELIEF TO THE ASSESSEE BASED ON THE ALTERNA TE GROUND RAISED OF EXAMINATION AND RE-COMPUTATION OF THE ASSESSEES OP ERATING PROFIT MARGIN, THE SAME SHOULD NOT BE CONSTRUED AS ASSESSE ES ACCEPTANCE OF THE SAME AND MADE APPLICABLE FOR OTHER ASSESSMENT Y EARS ALSO. IN VIEW OF THE ABOVE, THE LD. REPRESENTATIVE FOR THE ASSESS EE PRAYS THAT THE ISSUE OF THE USE OF FOREIGN COMPARABLES FOR BENCHMA RKING ITS FOREIGN TRANSACTIONS OF PROVISIONING OF SERVICES IS TO BE H ELD IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008-09 AND 2009-10. 4.3 PER CONTRACT, THE LD. DEPARTMENTAL REPRESENTATI VE WAS HEARD AND HE EMPHATICALLY SUPPORTED THE ORDERS OF THE AUT HORITIES BELOW. 4.4.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE J UDICIAL PRECEDENT CITED. WE FIND THAT THE DECISION OF THE CO-ORDINAT E BENCH OF THIS TRIBUNAL IN ITA NO.7630/MUM/2012 AND 1698/MUM/2014 DATED 22/12/2014, OF WHICH ONE OF US IS THE AUTHOR, HAS A CCEPTED THE CONTENTIONS OF THE ASSESSEE THAT FOREIGN COMPARABLE S CAN BE USED TO BENCHMARK THE ASSESSEES INTERNATIONAL TRANSACTIONS IN THE PROVISIONING OF SERVICES, AND AT PARA-11, THEREOF HAS HELD AS U NDER:- 11. HERE IN THIS CASE, THERE CAN NO DISPUTE WITH REGARD TO THE FACT THAT THE TESTED PARTY IS TMETC, WHOSE OPERATING PROFIT IS TO BE BENCH MARKED BY CARRYING OUT FUNCTIONAL ANALYSIS OF ITS CONTROLLED TRANSACTIONS FOR WHICH 8 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) RELIABLE DATA FOR ITS COMPARABILITY IS AVAILABLE IN THE COUNTRY WHERE IT IS LOCATED, THEN SUCH COMPARABLES HAS TO BE TAKEN INTO ACCOUNT FOR CARRYING OUT THE COMPARABILITY ANALYSIS FOR THE PURPOSE OF TRANS FER PRICING AND BENCH MARKING THE ARM'S LENGTH PRICE. THE TMETC FOR THE P URPOSE OF RENDERING SERVICES IN INDIA IS INCURRING ALL ITS COST IN UK L IKE DIRECT COSTS, EMPLOYEE COSTS, LEGAL AND PROFESSIONAL FEES, RENT AND OTHER OPERATI NG EXPENSES, THEN FOR THE PURPOSE OF COMPUTATION OF PLI, THESE COSTS HAVE TO BE TAKEN INTO CONSIDERATION FOR DETERMINING THE PROFIT MARGIN. SI NCE ALL THE MAIN COSTS ATTRIBUTABLE TO THE PE ARE BASED ON COST INCURRED I N UK, THEN IT CAN BE VERY WELL SAID THAT PE IS INFLUENCED BY THE ECONOMIC AND FINANCIAL CONDITIONS OF UK, AS AGAINST THE INDIAN ECONOMIC FACTORS. THE IND IAN ECONOMIC FACTORS ARE NOT AT ALL INFLUENCING THE COST OR MARGIN OF THE AS SESSEE, HENCE IT CANNOT BE HELD THAT INDIAN COMPARABLES CAN BE USED TO BENCH M ARK THE TMETC TRANSACTION AND THE PRICE WITH TATA MOTORS. FOR THI S REASON, THE FINDING OF THE TPO AS WELL AS DRP THAT PE IS AN INDIAN ENTERPR ISE, WORKING IN INDIA AND THEREFORE, ITS MARGIN IS TO BE BENCH MARKED WITH IN DIAN COMPARABLES IS NOT ACCEPTED. THE PE IN INDIA IS A SERVICE PE, HAVING N O ESTABLISHMENT IN INDIA, NOR INCURRING ANY COSTS, DEPLOYED ANY ASSETS, THERE FORE, CANNOT BE HELD THAT IT IS AN INDEPENDENT INDIAN ENTERPRISE. NOTHING HAS BE EN BROUGHT ON RECORD THAT ASSESSEE'S PLI IS INFLUENCED BY THE ECONOMIC F ACTORS IN INDIA, VIZ, ATTRIBUTION OF COSTS, ASSETS OR OTHER FACTORS RELEV ANT FOR DETERMINATION OF PROFITS ARE BASED IN INDIA. THUS, IN OUR OPINION, T HE TRANSFER PRICING OFFICER AND DRP WERE NOT CORRECT IN HOLDING THAT UK COMPARA BLES CANNOT BE TAKEN INTO CONSIDERATION FOR THE PURPOSES OF COMPARATIVE ANALYSIS AND BENCH MARKING THE ASSESSEE'S MARGIN. ACCORDINGLY, WE HOLD THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FOREIGN COMPARAB LES I.E. UK COMPARABLES CAN BE TAKEN INTO ACCOUNT FOR CARRYING OUT FAR ANAL YSIS AND BENCH MARKING THE ARM'S LENGTH MARGIN OF THE ASSESSEE'S TRANSACTI ONS WITH ITS AE AND THE SELECTION OF THE INDIAN COMPARABLES BY THE TPO IS N OT ACCEPTED. SINCE THE TPO HAS NOT CARRIED OUT ANY COMPARABILITY ANALYSIS OR FAR ANALYSIS IN RESPECT OF UK COMPARABLES CHOSEN BY THE ASSESSEE, THEREFORE , HE IS DIRECTED TO CARRY OUT SUCH ANALYSIS AND BENCHMARK THE ASSESSEE' S MARGIN. IF SUCH COMPARABLES DO NOT STAND THE TEST OF COMPARABILITY THEN, TPO MAY SEARCH OTHER COMPARABLE AFTER CONFRONTING TO THE ASSESSEE. IN THAT CASE, FOR THE SEARCH OF COMPARABILITY ASSESSEE WILL PROVIDE NECE SSARY ASSISTANCE TO THE TPO. WITH THIS DIRECTION, THE MATTER OF TRANSFER PR ICING ADJUSTMENT IS RESTORED BACK TO THE FILE OF THE TPO/AO. THE GROUND NO.1 AS RAISED BY THE ASSESSEE IS THUS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURP OSES. 4.4.2 FOLLOWING THE AFORESAID DECISION OF THE CO-OR DINATE BENCH OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2008-09 AND 2009-10 (S UPRA), WE ALSO HOLD THAT THE FACTS AND CIRCUMSTANCES OF THE CASE IN TH E YEAR UNDER CONSIDERATION BEING SIMILAR TO THOSE OF THE EARLIER ASSESSMENT YEARS, 9 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) 2008-09 AND 2009-10, FOREIGN COMPARABLES (I.E. UK COMPARABLES) CAN BE TAKEN INTO ACCOUNT FOR CARRYING OUT FAR ANALYSI S AND BENCHMARKING OF THE ASSESSEES INTERNATIONAL TRANSACTIONS WITH I TS ASSOCIATED ENTERPRISES FOR DETERMINING THOSE ARM'S LENGTH PRI CE. IT IS ALSO ACCORDINGLY HELD THAT THE SELECTION OF INDIAN COMPA RABLES BY THE TRANSFER PRICING OFFICER IS NOT ACCEPTED. IN VIEW OF THE FACT THAT THE TRANSFER PRICING OFFICER HAS NOT EXAMINED THE COMPA RABILITY OF THE UK COMPARABLES CHOSEN BY THE ASSESSEE, HE IS DIRECTED TO DO SO AND IF THE ASSESSEES COMPARABLES DO NOT STAND THE TEST OF COM PARABILITY, THE TRANSFER PRICING OFFICER MAY CARRY OUT HIS OWN SEAR CH FOR FRESH COMPARABLES AND SELECT THE SAME, ONLY AFTER AFFORDI NG THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DET AILS/SUBMISSIONS IN THIS REGARD, WHICH SHALL BE DULY CONSIDERED BY THE TRANSFER PRICING OFFICER BEFORE TAKING A FINAL DECISION IN THE MATTE R. WITH THESE OBSERVATIONS, WE RESTORE THE MATTER OF THE TRANSFER PRICING ADJUSTMENT OF PROVISION OF SERVICES TO THE FILE OF THE ASSESSI NG OFFICER/TRANSFER PRICING OFFICER. IT IS ACCORDINGLY ORDERED. CONSE QUENTLY, GROUNDS 1, A) TO C) ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. GROUNDS AT S.NOS. 2 TO 7 : 5.1 IN VIEW OF OUR FINDING/DECISION IN RESPECT OF G ROUND NO.1, A) TO C) RAISED BY THE ASSESSEE IN THIS APPEAL, ACCEPTING I N PRINCIPLE THAT FOREIGN COMPARABLES ARE TO BE USED TO BENCHMARK ITS INTERN ATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES OF PROVISIONING OF SE RVICES FOR DETERMINATION OF ARM'S LENGTH PRICE THERETO, THESE GROUNDS RAISED BY THE ASSESSEE AT S.NOS. 2 TO 7 ARE ACADEMIC IN NATU RE AND, THEREFORE, NO ADJUDICATION IS CALLED FOR THEREON. 10 ITA NO. 907/MUM/2015 (ASSESSMENT YEAR : 2010-11) 6. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSM ENT YEAR 2010-11 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDIC ATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 18/ 12/2015 SD/- SD/- (AMIT SHUKLA) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED: 18/12/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS