Lee Hours Pomeroy Architects PC, Kolkata V. DCIT (IT) CIR-1(2), KOLKATA, Kolkata

MA 49/KOL/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 5447 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-04-2016
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Permanent establishment
• Section: 92C; 143(3); 10B

Judgement Text

1 MA NO. 49/KOL/2016 LEE HOURS POMEROY ARCHITECTS., AY 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGA NESH, AM] M.A. NO. 49/KOL/2016 I.T.A NO. 382/KOL/2015 ASSESSMENT YEAR: 2010-11 LEE HOURS POMEROY ARCHITECTS VS. DEPUTY COMMISSIO NER OF INCOME-TAX, (PAN: AABCL6082B) (IT), CIR-1(2), KOLKATA. ( APPLICANT ) ( RESPONDENT ) DATE OF HEARING: 22.07.2016 DATE OF PRONOUNCEMENT: 24.08.2016 FOR THE APPLICANT: MRS. RITUPARNA SINHA, AR FOR THE RESPONDENT: SHRI SALLONG YADEN, ADDL. CIT ORDER PER SHRI M. BALAGANESH, AM: THIS IS A MISCELLANEOUS APPLICATION FILED BY THE A SSESSEE U/S.254(2) OF THE INCOME TAX ACT, 1961 (ACT) PRAYING FOR RECTIFICATION OF CE RTAIN ERRORS APPARENT IN THE ORDER DATED 29.9.2015 PASSED BY THE TRIBUNAL IN THE AFORESAID A PPEAL OF THE ASSESSEE. 2. THE ISSUE THAT AROSE FOR CONSIDERATION IN THE AFORESAID APPEAL BY THE REVENUE WAS AS TO WHETHER THE AO WAS JUSTIFIED IN MAKING AN ADDITION OF RS.2,38,81,865 TO THE TOTAL INCOME OF THE ASSESSEE CONSEQUENT TO DETERMINATION OF ARMS L ENGTH PRICE(ALP) IN RESPECT OF AN INTERNATIONAL TRANSACTION ENTERED INTO BY THE ASSES SEE WITH ITS ASSOCIATED ENTERPRISE (AE). THE ADDITION TO THE TOTAL INCOME WAS MADE BY THE AO UNDER THE FOLLOWING FACTS AND CIRCUMSTANCES. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE (LEE HARRIS POMEROY ARCHITECTS P.C. LHPA IN SHORT) A COMPANY ESTABLISHED UNDER THE LAW S OF UNITED STATES OF AMERICA ( COMPANY ) ALONG WITH A CONSORTIUM OF MEMBERS CONS ISTING OF (I) M/S MAUNSELL CONSULTANTS ASIA LTD., A COMPANY INCORPORATED UNDER THE LAWS OF HONG KONG AND HAVING ITS REGISTERED OFFICE AT 8/F, GRAND CENTRAL PLAZA, TOWE R 2, 138, SHATIN RURAL COMMITTEE RD, SHATIN, NEW TERRITORIES, HONG KONG, (II) CONSULTING ENGINEERING SERVICES (INDIA) PRIVATE LIMITED, A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED 2 MA NO. 49/KOL/2016 LEE HOURS POMEROY ARCHITECTS., AY 2010-11 OFFICE AT 57, NEHRU PLACE, 5TH FLOOR, NEW DELHI 1 10019 , (III) YACHIYO ENGINEERING CO. LTD., A COMPANY INCORPORATED UNDER THE LAWS OF JAPA N HAVING ITS REGISTERED OFFICE AT 18-12, 2, NISHIOCHIAI, SHINJUKU-KU , TOKYO, JAPAN , (IV) E GIS RAIL S.A., A COMPANY INCORPORATED UNDER THE LAWS OF FRANCE AND HAVING ITS REGISTERED OFFICE AT 25, COURS EMILE ZOLA 69625, VILEURBANNE CEDEX, FRANCE (TOGETHER WITH THE COMPAN Y, THE CONSORTIUM ) WERE AWARDED A CONTRACT DATED 20.2.2009 BY KOLKATA METRO RAIL CORP ORATION LIMITED, A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, JOINTLY OWNED BY THE GOVERNMENT OF INDIA AND THE GOVERNMENT OF WEST BENGAL AND HAVING ITS RE GISTERED OFFICE AT HRBC BHAWAN 4 & 5TH FLOOR, MUNSHI PREM CHAND SARANI, KOLKATA 7000 21 ( KMRCL ) TO UNDERTAKE THE KOLKATA EAST WEST METRO RAIL PROJECT (PARTLY UNDERG ROUND AND PARTLY ELEVATED) EXTENDING FROM HOWRAH TO SALT LAKE SECTOR V, KOLKATA COVERING A TOTAL LENGTH OF 13.7 KILOMETRES , TO PROVIDE ADDITIONAL TRANSPORT INFRASTRUCTURE TO KOLK ATA. FOR THIS PURPOSE, LHPA USA HAD SET UP A PROJECT OFFICE IN KOLKATA DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO ASST YEAR 2010- 11, WHICH IS A PERMANENT ESTABLISHMENT IN INDIA FOR THE PURPOSE OF INDIAN INCOME TAX ACT, 1961 AND THE ASSESSEE IN USA IS AN ASSOCIATED ENTER PRISE (AE) OF THE INDIAN PROJECT OFFICE. 3.1. DURING THE FINANCIAL YEAR 2009-10, THE AE PRO VIDED SERVICES FOR METRO RAIL PROJECT ENTAILING LABOUR EXPENSES, OVERHEAD EXPENSES AND CO NSULTANCY CHARGES AND ALSO RECEIVED PAYMENTS FOR CONSULTANCY FEES FROM KMRCL. ACCORDING LY THE SAID TRANSACTIONS CONSTITUTED INTERNATIONAL TRANSACTIONS OF THE INDIAN PROJECT OF FICE WITH THE AE IN USA. THE INDIAN PROJECT OFFICE CONTEMPLATES TO PROVIDE THE FOLLOWIN G SERVICES TO ITS AE IN RELATION TO GENERAL CONSULTANCY FOR KOLKATA METRO RAIL PROJECTS: A) PROVISION OF KEY AND SUPPORT PERSONNEL B) LEAD TRANSPORTATION PLANNING C) LEAD SPATIAL PLANNING OF THE UNDERGROUND STATION S, ENTRANCES AND ASSOCIATED SURFACE WORKS D) PROVIDE INPUTS FOR CHIEF QUALITY SURVEYOR AND CO ST ESTIMATOR, CHIEF SAFETY ENGINEER AND TRANSPORT ORIENTED PROPERTY DEVELOPMEN T PLANNING . 3.2. THE FINANCIAL YEAR 2009-10 WAS THE FIRST YEAR OF OPERATION OF THE INDIAN PROJECT OFFICE. THE PROJECT OFFICE ADOPTED THE COMPLETED CO NTRACT METHOD FOR RECOGNIZING INCOME. THE NATURE OF WORK IN INDIA WAS SUCH THAT MAJOR POR TION OF THE EXPENSES WERE INCURRED IN THE FIRST YEAR OF OPERATION BUT REVENUE WAS TO ACCRUE S UBSEQUENTLY. DURING THE ASST YEAR 2010- 3 MA NO. 49/KOL/2016 LEE HOURS POMEROY ARCHITECTS., AY 2010-11 11, THE ASSESSEE UNDERTOOK THE FOLLOWING INTERNATIO NAL TRANSACTIONS WITH ITS AE, WHICH WERE DULY REPORTED IN FORM NO.3CEB FILED ALONG WITH THE ASSESSEES RETURN OF INCOME :- (A) LABOUR EXPENSES (B) OVERHEAD EXPENSES (C) SUSTAINABLE EMS (CONSULTANCY CHARGES PAID ON B EHALF OF LHPA INDIA) (D) KOLKATA METRO RAIL CORPORATION (CONSULTANCY IN COME RECEIVED ON BEHALF OF LHPA INDIA) LHPA PROVIDES BOTH ONSHORE AND OFFSHORE SERVICES UN DER THE GENERAL CONSULTANCY AGREEMENT. OFFSHORE SERVICES ARE THE MAIN SERVICES FOR WHICH LHPA WAS CONTRACTED FOR THE PROJECT. THESE INCLUDE PRIMARILY ARCHITECTURAL DESI GN, SAFETY PLANNING, SCHEDULING, COST ANALYSIS, TRANSPORTATION PLANNING AND SUSTAINABILIT Y AND PROPERTY DEVELOPMENT AND OUTLINE SPECIFICATION. THESE ARE UNDERTAKEN BY THE EMPLOYEE S OF LHPA IN USA. ONSHORE SERVICES MAINLY INCLUDE SUPERVISION OF EXEC UTION OF THE DESIGNS AND SPECIFICATIONS PROVIDED BY LHPA USA. THE ONSHORE SERVICES HAVE BEE N SUBCONTRACTED TO SUPERIOR GLOBAL INFRASTRUCTURE INDIA PRIVATE LIMITED (SGI) A THIRD PARTY VENDOR, WHO UNDERTAKES THE WORK ON BEHALF OF LHPA USA. LHPA HAS ALSO DEPUTED FEW OF IT S EMPLOYEES TO SUPERVISE THE SAME. 3.3. FOR THE PURPOSE OF COMPUTING THE ARMS LENGTH PRICE (ALP) OF THE ABOVE MENTIONED INTERNATIONAL TRANSACTIONS, THE ASSESSEE HAD ADOPTE D CUP METHOD IN ITS FORM 3CEB FILED ALONG WITH THE RETURN OF INCOME. THE ASSESSEE HAD S TATED IN NOTES TO FORM 3CEB IN POINT NO. 6 AS BELOW:- THE COMPANY HAS DETERMINED COMPARABLE UNCONTROLLE D PRICE METHOD (CUP) AS THE MOST APPROPRIATE METHOD U/S 92C OF THE ACT. THE CUP METHOD EVALUATES THE PRICE CHARGED IN A CONTROLLED TRANSACTION TO TH E PRICE CHARGED IN A COMPARABLE UNCONTROLLED TRANSACTION, WHICH COULD BE IDENTIFIED EITHER THROUGH INTERNAL OR EXTERNAL COMPARABLES. THE NET PROFIT PE RCENTAGE OF INTERNATIONAL TRANSACTION WITH ASSOCIATE ENTERPRISE WAS COMPARED BY THE SIMILAR TRANSACTIONS OF INDIA CLIENTS FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2010, WHICH WAS FOUND BY THE COMPANY TO BE AT ARMS LENGTH AS PROVIDED U/ S 92C OF THE ACT. BASED ON SUCH COMPARISONS, THE AMOUNT RECEIVED / RECEIVABLE AS COMPUTED BY THE COMPANY HAVING REGARD TO THE ALP IS THE AMOUNT RECEIVED / R ECEIVABLE AS PER ITS BOOKS OF ACCOUNT. FOR REIMBURSEMENT OF EXPENSES, IN CONSIDERATION OF THE OECD GUIDELINES, NO MARK UP IS REQUIRED TO BE CHARGED FOR THE EXPENSES INCURRED BY LEE HARRIS 4 MA NO. 49/KOL/2016 LEE HOURS POMEROY ARCHITECTS., AY 2010-11 POMEROY ARCHITECTS P.C. ON BEHALF OF ITS ASSOCIATED ENTERPRISES. THE TRANSACTIONS ARE THEREFORE IN COMPLIANCE WITH THE ARMS LENGTH P RINCIPLE. 3.4. THE ASSESSEE ADOPTED CUP METHOD IN FORM 3CEB FILED ALONG WITH THE RETURN OF INCOME IN RESPECT OF THE FOLLOWING:- LABOUR EXPENSES - RS. 9,84,14,467 OVERHEAD EXPENSES - RS. 1,08,35,031 SUSTAINABLE EMS INVOICES (USD) - RS. 1,54,94,256 KOLKATA METRO RAIL CORPORATION INVOICES - RS. 11,9 3,43,920 BUT BEFORE THE TRANSFER PRICING OFFICER (TPO), THE ASSESSEE DID EXTENSIVE TRANSFER PRICING (TP) STUDY AND SHIFTED FROM CUP METHOD TO TRANSACTI ONAL NET MARGIN METHOD (TNMM) FOR DETERMINATION OF ITS ALP. UNDER TNMM, THE PROFIT LE VEL INDICATOR (PLI) OF THE TESTED PARTY (I.E THE ASSESSEE HEREIN) WAS -3.03% AND WHEREAS TH E PLI OF COMPARABLES CHOSEN BY THE ASSESSEE BASED ON MULTIPLE YEAR DATA WAS 2.95%. WHE N ASSESSEE WAS ASKED TO SUBMIT THE COMPARATIVE ANALYSIS BASED ON SINGLE YEAR DATA INST EAD OF MULTIPLE YEAR DATA, THE ASSESSEE VIDE SUBMISSION DATED 9.7.2013 STATED BEFORE THE TP O THAT ARITHMETIC MEAN OF THE MARGIN OF THE COMPARABLE COMPANIES USING DATA FOR SINGLE YEAR (I.E FOR FY 2009-10) IS 2.51% ON OPERATING COST. 3.5. THE TPO DETERMINED THE ALP USING TNMM BY REJE CTING THE TWO COMPARABLES AS AGAINST 11 COMPARABLES OF THE ASSESSEE AND SUBSTITU TED TWO COMPARABLES BASED ON HIS RESEARCH AND APPLIED THE ARITHMETIC MEAN OF THE 11 COMPARABLES ARRIVED AT 13.18% ON THE TOTAL COST INCURRED BY THE ASSESSEE AT RS. 14,79,29 ,609/- AND DETERMINED THE ALP AT RS. 1,94,97,122/- AS AGAINST THE RETURNED LOSS OF RS. 4 3,84,742/- THEREBY MAKING AN UPWARD ADJUSTMENT OF RS. 2,38,81,864/-. THE LEARNED AO PAS SED A DRAFT ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 144C(1) OF THE ACT IN FEB 2014 . AGAINST THIS DRAFT ASSESSMENT ORDER, THE ASSESSEE FILED OBJECTIONS BEFORE THE DISPUTE RESOLU TION PANEL (DRP) WHO UPHELD THE ORDER OF THE LEARNED TPO & DRAFT ORDER OF THE LEARNED AO VIDE PROCEEDINGS DATED 29.12.2014. LATER THE LEARNED AO PASSED THE FINAL ASSESSMENT OR DER U/S 143(3) READ WITH SECTION 144C(13) OF THE ACT ON 10.2.2015 PURSUANT TO THE DI RECTIONS OF THE DRP. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON VARIOUS GROUNDS. THE ASSESSEE ALSO FILED ADDITIONAL GROUNDS OF APPEAL BEFORE US. BUT THE CENTRAL GROUND REVOLVES AROUND THE MOST APPROPRIATE 5 MA NO. 49/KOL/2016 LEE HOURS POMEROY ARCHITECTS., AY 2010-11 METHOD TO BE ADOPTED BY THE ASSESSEE IN THE FACTS A ND CIRCUMSTANCES OF THE CASE AND CONSEQUENTIAL DETERMINATION OF ALP. 4. ONE OF THE CONTENTION OF THE ASSESSEE BEFORE T HE TRIBUNAL WAS THAT CUP WAS THE MOST APPROPRIATE METHOD (MAM) FOR DETERMINATION OF ALP IN THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE AND THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN ADOPTING TRANSACTION NET MARGIN METHOD (TNMM) AS THE MAM. THIS WAS ACCE PTED BY THE TRIBUNAL IN PARA 7.7 OF ITS ORDER WHICH READS THUS: 7.7. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTA NCES AND THE VARIOUS JUDICIAL PRECEDENTS RELIED UPON, WE FIND THAT IN THE INTERES T OF JUSTICE AND FAIR PLAY, WE DEEM IT FIT AND APPROPRIATE TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED TPO / AO WITH A DIRECTION TO ADOPT CUP METHOD AS THE MOST APPROPRIATE METHOD FOR DETERMINATION OF ALP FOR INTERNATIONAL TRANSACTIONS . THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE COMPARABLES BASED ON INDEPE NDENT TP STUDY FOR ADOPTION OF CUP METHOD AND PRODUCE SUCH OTHER EVIDENCES AND DOCUMENTS BEFORE THE LEARNED TPO / AO TO ENSURE QUICK DISPOSAL OF THIS S ET ASIDE PROCEEDINGS. WE ALSO DIRECT THE LEARNED TPO / AO TO PERMIT THE ASSE SSEE TO USE MULTIPLE YEAR DATA AND ADOPT THE WEIGHTED AVERAGE DATA OF THE FIN ANCIAL INFORMATION OF THE COMPARABLES AND USE THE SAME FOR DETERMINATION OF A LP OF THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE. 5. IN THIS MISCELLANEOUS APPLICATION THE ASSESSEE HAS POINTED OUT THAT THE CONSULTANCY INCOME OF RS.119,343,920/- RECORDED IN FORM 3CEB OF THE PERMANENT ESTABLISHMENT OF LEE HARRIS POMEROY ARCHITECTS P.C IN INDIA (I.E. THE AP PELLANT) REPRESENTS INCOME RECEIVED BY THE HEAD OFFICE ('HO') IN THE USA FROM INDEPENDENT CUSTOMER NAMED KMRCL FOR THE PROVISION OF OFFSHORE SERVICES BY THE FORMER TO THE LATTER IN RELATION TO EXECUTION OF KOLKATA EAST WEST METRO RAIL PROJECT. THE AFORESAID INCOME WAS CREDITED ON ACTUAL BASIS TO THE PROFIT & LOSS ACCOUNT OF THE AFORESAID PERMANENT ES TABLISHMENT FOR THE FINANCIAL YEAR ENDED 31S1 MARCH, 2010. AS THE AFORESAID CREDIT DOES NOT STAND FOR ANY SEPARATE TRANSACTION ENTERED INTO BY THE PERMANENT ESTABLISHMENT WITH TH E HO, THE SUM RECEIVED BY THE HO FROM KMRCL UNDER NORMAL OPEN MARKET COMMERCIAL TERMS ITS ELF STANDS AS A COMPARABLE UNCONTROLLED TRANSACTION IN RELATION TO THE AFORESA ID CONTROLLED TRANSACTION RECORDED IN FORM 3CEB. HENCE, IT MAY PLEASE BE APPRECIATED THAT THER E IS NO NEED FOR THE ASSESSEE TO PRODUCE FURTHER COMPARABLE FOR DETERMINING THE ARM'S LENGTH NATURE OF THE AFORESAID INTERNATIONAL TRANSACTIONS UNDER REVIEW. 6 MA NO. 49/KOL/2016 LEE HOURS POMEROY ARCHITECTS., AY 2010-11 HE ALSO POINTED OUT THAT THE LABOUR EXPENSES (INR 9 8,414, 467/-) RECORDED IN FORM 3CEB OF THE PERMANENT ESTABLISHMENT REPRESENT EXPEN SES INCURRED BY THE HO IN THE USA TO MAKE PAYMENTS TO ITS EMPLOYEES FOR THE PROVISION OF OFFSHORE SERVICES TO KMRCL IN RELATION TO EXECUTION OF KOLKATA EAST WEST METRO RA IL PROJECT. FURTHER, THE OVERHEAD EXPENSES (INR 10,835,031/-) AND CONSULTANCY CHARGES (INR 15,494,256) RECORDED IN FORM 3CEB REPRESENT EXPENSES INCURRED BY THE HO TO MAKE PAYMENTS TO INDEPENDENT PARTIES FOR THE PROVISION OF OFFSHORE SERVICES TO KMRCL IN RELA TION TO EXECUTION OF THE AFORESAID PROJECT. THE AFORESAID EXPENSES WERE DEBITED ON ACT UAL BASIS (I.E. WITHOUT ANY PROFIT ELEMENT ADDED TO THE ACTUAL COST INCURRED) TO THE PROFIT & LOSS ACCOUNT OF THE AFORESAID PERMANENT ESTABLISHMENT FOR THE FINANCIAL YEAR ENDED 31ST MAR CH, 2010. AS THE AFORESAID DEBITS DO NOT STAND FOR ANY SEPARATE TRANSACTION ENTERED INTO BY THE PERMANENT ESTABLISHMENT WITH THE HO, THE SUMS PAID BY HO TO ITS EMPLOYEES AND THIRD PART IES UNDER NORMAL OPEN MARKET COMMERCIAL TERMS THEMSELVES STAND AS COMPARABLE UNC ONTROLLED TRANSACTIONS IN RELATION TO THE AFORESAID CONTROLLED TRANSACTIONS RECORDED IN F ORM 3CEB. HENCE, IT MAY PLEASE BE APPRECIATED THAT THERE IS NO NEED FOR THE ASSESSEE TO PRODUCE FURTHER COMPARABLES IN RELATION TO DETERMINE THE ARM'S LENGTH NATURE OF THE INTERNA TIONAL TRANSACTIONS UNDER REVIEW. THE PROVISO TO RULE 10B(4) OF THE INCOME TAX RULES, 1962, CLEARLY PROVIDES THAT MULTIPLE YEAR DATA, THAT IS, THE DATA RELATING TO A PERIOD NOT BEING MORE THAN TWO YEARS PRIOR TO THE RELEVANT FINANCIAL YEAR IS TO BE CONSIDERED IF SUCH DATA REVEALS FACTS WHICH COULD HAVE AN INFLUENCE ON THE DETERMINATION OF TRANSFER PRICE S IN RELATION TO THE TRANSACTIONS BEING COMPARED. SINCE THE ASSESSEE HAD CURRENT YEAR DATA IN SUPPORT OF THE APPLICATION OF THE CUP METHOD, IT MAY PLEASE BE APPRECIATED THAT IN THE IN STANT CASE THERE IS NO NEED TO USE MULTIPLE YEAR DATA FOR DETERMINING THE ARM'S LENGTH NATURE O F THE INTERNATIONAL TRANSACTIONS UNDER REVIEW. 6. THE ASSESSEE HAS THEREFORE MADE THE FOLLOWING PRAYER IN THE M.A. 3.5. IN VIEW OF OUR ABOVE SUBMISSIONS, WE HUMBLY PRAY TO THE HON'BLE MEMBERS TO RECTIFY THE APPARENT MISTAKE THAT CROPPE D UP WHILE RENDERING THE DECISION VIDE ORDER DATED 29 TH SEPTEMBER, 2015, BY DELETING THE BELOW MENTIONED SENTENCES IN PARAGRAPH NO. 7.7 OF PAGE NO . 14. 'THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE COMPA RABLES BASED ON INDEPENDENT TP STUDY FOR ADOPTION OF CUP METHOD AND PRODUCE SUCH 7 MA NO. 49/KOL/2016 LEE HOURS POMEROY ARCHITECTS., AY 2010-11 OTHER EVIDENCES AND DOCUMENTS BEFORE THE LEARNED TP O / AO TO ENSURE QUICK DISPOSAL OF THIS SET ASIDE PROCEEDINGS. WE AL SO DIRECT THE LEARNED TPO / AO TO PERMIT THE ASSESSEE TO USE MULTIPLE YEA R DATA AND ADOPT THE WEIGHTED AVERAGE DATA OF THE FINANCIAL INFORMATION OF THE COMPARABLES AND USE THE SAME FOR DETERMINATION OF ALP OF THE IN TERNATIONAL TRANSACTIONS OF THE ASSESSEE.' THE APPELLANT WOULD BE GRATEFUL TO HAVE THE OPPORTU NITY OF A PERSONAL HEARING BEFORE THE PRESENT APPLICATION IS DISPOSED OF. 7. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATE D THE STAND OF THE ASSESSEE AS STATED IN THE M.A. THE LEARNED DR SUBMITTED THAT THE MISTAKE POINTED OUT BY THE ASSESSEE IN THE M.A. CANNOT BE SAID TO BE MISTAKE APPARENT ON THE F ACE OF THE RECORD WITHIN THE MEANING OF SEC.254(2) OF THE ACT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE SELECTION OF THE MOST APPROPRIATE TRANSFER PRICING METHOD FOR A PARTICULAR CASE WILL DEPEND ON THE AVAILABILITY OF RELIABLE INFORMATION TO APPLY IT, AND IN PARTICULAR, ON THE AVAILABILITY OF RELIABLE COMPARABLE DATA. WHERE IT IS POSSIBLE TO LOCATE COMPARABLE UNCONTROL LED TRANSACTIONS THE CUP METHOD IS THE MOST DIRECT AND RELIABLE WAY TO APPLY THE ARM'S LEN GTH PRINCIPLE. THE COMPARABLE UNCONTROLLED PRICE METHOD CAN BE APPLIED ON THE BAS IS OF THE TAXPAYERS TRANSACTIONS WITH INDEPENDENT ENTERPRISES (INTERNAL COMPARABLES), O R ON THE BASIS OF TRANSACTIONS BETWEEN OTHER INDEPENDENT ENTERPRISES (EXTERNAL COMPARABLE S). AMONG THE TWO, INTERNAL COMPARABLE IS PREFERABLE TO EXTERNAL COMPARABLE. I N PARAGRAPH 7.7 OF THE ORDER OF THE TRIBUNAL, IT HAS ONLY BEEN OBSERVED AS FOLLOWS: THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE COMPA RABLES BASED ON INDEPENDENT TP STUDY FOR ADOPTION OF CUP METHOD AND PRODUCE SUC H OTHER EVIDENCES AND DOCUMENTS BEFORE LEARNED TPO/AO TO ENSURE QUICK DIS POSAL OF THIS SET ASIDE PROCEEDINGS. THE ABOVE OBSERVATIONS DO NOT IN ANY WAY STAND IN T HE WAY OF THE ASSESSEE MAKING A CLAIM BEFORE THE AO THAT ONE INTERNAL COMPARABLE WOULD BE SUFFICIENT TO DETERMINE THE ALP OF THE INTERNATIONAL TRANSACTION. THE ABOVE OBSERVATIONS SHOULD BE CONSTRUED AS A DIRECTION THAT CUP METHOD AS MAM AND LIBERTY IS GIVEN TO THE ASSES SEE TO FILE TP STUDY ADOPTING CUP AS THE MAM. THESE OBSERVATIONS, IN OUR VIEW, WOULD BE SUFFICIENT SAFEGUARD AND THERE IS NO NEED TO DELETE THE SAME. AS FAR AS THE DIRECTION WI TH REGARD TO USE OF MULTIPLE YEAR DATA AND 8 MA NO. 49/KOL/2016 LEE HOURS POMEROY ARCHITECTS., AY 2010-11 ADOPTING WEIGHTED AVERAGE DATA OF FINANCIAL INFORMA TION OF THE COMPARABLES IS CONCERNED, IT HAS BEEN POINTED OUT BEFORE US THAT USE OF MULTIPLE YEAR DATA AND ADOPTING WEIGHTED AVERAGE DATA IS PERMISSIBLE ONLY IN RESPECT OF INTERNATIONA L TRANSACTIONS ENTERED INTO ON OR AFTER THE 1 ST APRIL, 2014 AS PER THE AMENDMENT TO RULE 10B AND RU LE 10CA OF THE INCOME TAX RULES, 1962 BY THE INCOME-TAX (16 TH AMENDMENT) RULES, 1962. THESE AMENDMENTS BROUGHT T O OUR NOTICE SHOWS THAT THE SAME DO NOT APPLY TO THE DETE RMINATION OF ALP OF THE INTERNATIONAL TRANSACTION IN THE PRESENT CASE. THE DIRECTION GIV EN BY THE TRIBUNAL IN PARAGRAPH-7.7 OF THE ORDER OF THE TRIBUNAL REGARDING USE OF MULTIPLE YEA R DATA AND ADOPTING WEIGHTED AVERAGE DATA OF FINANCIAL INFORMATION OF THE COMPARABLES, B EING CONTRARY TO THE STATUTORY PROVISIONS, IS A MISTAKE APPARENT ON THE FACE OF THE RECORD AND THE SAME IS HEREBY DIRECTED TO BE DELETED. 9. IN THE RESULT, THE M.A. IS PARTLY ALLOWED AS IND ICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 24.08.2016 SD/- SD/- (N. V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 24TH AUGUST, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPLICANT LEE HOURS POMEROY ARCHITECTS, C/O S. K. BAJORIA & ASSOCIATES, 6, OLD POST OFFICE STREET, GROUND FLOOR , KOLKATA-700 001. 2 RESPONDENT DCIT(IT), CIRCLE-1(2), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .