Geodis Overseas Pvt. Ltd., Gurgaon v. ACIT, New Delhi

ITA 5825/DEL/2011 | 2007-2008
Pronouncement Date: 18-11-2014 | Result: Allowed

Appeal Details

RSA Number 582520114 RSA 2011
Assessee PAN AAACC8168L
Bench Delhi
Appeal Number ITA 5825/DEL/2011
Duration Of Justice 2 year(s) 10 month(s) 21 day(s)
Appellant Geodis Overseas Pvt. Ltd., Gurgaon
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 18-11-2014
Date Of Final Hearing 02-09-2014
Next Hearing Date 02-09-2014
Assessment Year 2007-2008
Appeal Filed On 28-12-2011
Judgment Text
I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 1 OF 21 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI I BENCH NEW DELHI [CORAM: PRAMOD KUMAR AM AND C . M . GARG JM ] I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 GEODIS OVERSEAS PVT LTD .APPELLANT DLF BUILDING NO. 5 TOWER B 10 TH FLOOR DLF CYBER CITY PHASE III GURGAON 122 002 PAN : AAACC8168L VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12(1 ) NEW DELHI . RESPONDENT APPEARANCES BY: MUKESH BUTANI VISHAL KALRA AND VRINDA TU LSHAN FOR THE APPELLANT PEEYUSH JAIN AND Y K VERMA FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. THESE THREE PERTAIN TO THE ASSESSEE INVOLVE A COMMON ISSUE AND ARISE OUT OF THE SAME SET OF FACTS. AS A MATTER OF CONVENIENCE THEREFORE ALL THE THR EE APPEALS ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. THESE THREE APPEALS CALL INTO QUESTION CORRECTNESS OF THE ORDER DATED 29 TH DECEMBER 2011 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2006 - 07 ORDER DATED 28 TH OCTOBER 2011 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 144C FOR THE ASSESSMENT YEAR 2007 - 08 AND ORDER DATED 18 TH OCTOBER 2012 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 144 C FOR THE AS SESSMENT YEAR 2008 - 09. I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 2 OF 21 2. WHEN THESE APPEALS WERE CALLED OUT FOR HEARING OUR ATTENTION WAS INVITED TO SIMILARLY WORDED THREE PETITION DATED 12 TH DECEMBER 2013 SEEKING ADMISSION OF THE FOLLOW ING ADDITIONAL GROUND OF APPEAL IN EACH OF THESE APPEALS: THA T ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE AO/TPO/DRP ERRED IN NOT APPRECIATING THE 50:50 REVENUE SPLIT BUSINESS MODEL BETWEEN THE APPELLANT AND ITS ASSOCIATED ENTERPRISES IN RELATION TO INTERNATIONAL TRANSACTIONS I.E. PROVISION AND RECE IPT OF FREIGHT FORWARDING SERVICES AND FURTHER ERRED IN MAKING AN UPWARD ADJUSTMENT ALLEGING THAT SUCH TRANSACTIONS WERE NOT AT ARMS LENGTH. 3. THESE PETITIONS POINT OUT THAT THE APPELLANT LIAISES WITH ITS ASSOCIATED ENTERPRISES (AES) TO TRANSPORT TIME SENSITIVE PACKAGES FROM ORIGINATION POR TO THE DESTINATION PORT WHETHER INBOUND OR OUTBOUND AND FURTHER DELIVER THE SAME TO THE THIRD PARTY CUSTOMERS. IN OTHER WORDS THE ASSESSEE UNDERTAKES INTERNATIONAL TRANSACTIONS PERTAINING TO PAYMENTS TO AND RECE IPT FROM THE AES IN RESPECT OF THIS CARGO HANDLING AND FREIGHT FORWARDING. IN ORDER TO UNDERTAKE THESE TRANSACTIONS THE ASSESSEE ENTERS INTO A REVENUE SPLIT AGREEMENT WITH THE AES. THE WAY THIS MODEL WORKS IS SAID TO BE LIKE THIS. ALL THE EXPENSES IN TRA NSPORTATION OF PACKAGES FROM ORIGINATION POINT TO DESTINATION POINT ARE REDUCED FROM THE REVENUES GENERATED BY THE SERVICE RENDERED TO THE END CUSTOMER AND THE BALANCE AMOUNT IS SPLIT BETWEEN THE ASSESSEE AND THE AES ON A 50:50 BASIS. ON THIS FACTUAL BACKD ROP SET OUT IN THE PETITION OUR ATTENTION IS INVITED TO RATHER RECENT DECISIONS OF THE TRIBUNAL IN THE CASES OF ACIT VS AGILITY LOGISTICS PVT LTD (136 ITD 46) AND ACIT VS DANZAS LEMUIR PVT LTD (TS - 752 - ITAT - MUM (2012) TP] WHEREIN IT IS HELD THAT IN THE LO GISTICS INDUSTRY INTERNATIONAL TRANSACTIONS BENCHMARKED ON THE BASIS OF 50:50 REVENUE SHARING MODEL COMPLIES WITH THE ARMS LENGTH PRINCIPLE. IT IS SUBMITTED THAT THE ADDITIONAL GROUND IS BEING RAISED PURSUANT TO THE APPELLANT BEING RECENTLY INFORMED OF THE CORRECT POSITION OF LAW AND THAT THE OMISSION TO DO SO EARLIER WAS NEITHER WILFUL NOR DELIBERATE. RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 3 OF 21 SUPREME COURT IN THE CASE OF THE CASES NATIONAL THERMAL POWER CO LTD VS CIT (229 ITR 383) AND JUTE CORPORATI ON OF INDIA LTD VS CIT (187 ITR 688 ) AND WE ARE URGED TO EXERCISE OUR DISCRETION OF ADMITTING THIS ADDITIONAL GROUND OF APPEAL. 4. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSES THE ADMISSION OF THIS GROUND OF APPEAL EVEN AS HE DOES NOT DISPUTE T HE FACTS ABOUT JUDICIAL PRECEDENTS AS CITED IN THE PETITIONS SEEKING ADMISSION OF ADDITIONAL GROUND AND THE RATIO OF THESE JUDICIAL PRECEDENTS. HE SUBMITS THAT THIS ISSUE CAN NOT BE RAISED AT THIS STAGE. OUR ATTENTION IS ALSO INVITED TO THE FACT THAT SO FAR AS THE ASSESSMENT YEAR 2006 - 07 IS CONCERNED THE ASSESSEE IS IN SECOND ROUND OF PROCEEDINGS AND IT CANNOT BE OPEN TO THE ASSESSEE TO RAISE THESE FACTUAL ISSUES AT THIS STAGE. WE ARE URGED TO REJECT THE PETITIONS AND TO CONFINE OUR CONSIDERATION TO THE GROUNDS OF APPEAL AS SET OUT IN THE MEMORANDUMS OF APPEALS. 5. THERE IS NO DISPUTE ABOUT THE FACT THAT TWO RECENT JUDICIAL PRECEDENTS RECOGNIZE THAT 50:50 MODEL OF REVENUE SPLIT AFTER DEDUCTING TRANSPORTATION COSTS IS AN INDUSTRY NORM SO FAR AS THE LOGI STICS AND FREIGHT FORWARDING INDUSTRY DEALING WITH TRANSPORTATION OF TIME SENSITIVE CONSIGNMENTS FROM DESTINATION IN ONE COUNTRY TO ANOTHER COUNTRY ARE CONCERNED. WHILE DEALING WITH ONE SUCH CASE THIS VERY BENCH OF THE TRIBUNAL VIDE ORDER OF EVEN DATE IN THE CASE OF TOLL GLOBAL FORWARDING INDIA PVT LTD VS DCIT (ITA NO. 5025/DEL/10; ASSESSMENT YEAR 2006 - 07) HAS SUMMED UP THE POSITION AS FOLLOWS: 3. TO ADJUDICATE ON THIS ISSUE ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE COMPANY IS A JOINT VENTURE BALTRANS INTERNATIONAL (BVI) LIMITED - A COMPANY LISTED IN HONGKONG STOCK EXCHANGE HOLDING 74% EQUITY AND KAPIL DEV DUTTA HOLDING BALANCE 26% EQUITY. AS STATED IN THE TRANSFER PRICING STUDY REPORT IT IS ENGAGED IN THE BUSINESS OF FREIGH T TRANSPORTATION TIME DEFINED AIR AND OCEAN TRANSPORT AND FREIGHT FORWARDING. THE ASSESSEE IS PRIMARILY ENGAGED IN THE BUSINESS OF FREIGHT FORWARDING THROUGH AIR AND OCEAN TRANSPORTATION BUT UNLIKE A BUSINESS I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 4 OF 21 MODEL IN WHICH THE ASSESSEE OWNS OR MANAGES SUCH MEANS OF TRANSPORTATION ON HIS OWN AND WHICH INCLUDES RENDITION OF RELATED SERVICES OUTSIDE INDIA AS WELL THE ASSESSEE IS USING SERVICES OF OTHER ENTERPRISES FOR THESE PURPOSES. IN THE COURSE OF CONDUCTING THIS BUSINESS THE ASSESSEE PICKS UP OR REC EIVES FREIGHT SHIPMENTS FROM ITS CUSTOMERS CONSOLIDATES THESE SHIPMENTS OF VARIOUS CUSTOMERS FOR COMMON DESTINATIONS ARRANGES FOR TRANSPORTATION OF THE CONSOLIDATED FREIGHT TO THESE DESTINATIONS AND AT DESTINATION DISTRIBUTES THE SHIPMENTS AND EFFECTS DELIVERY TO THE CONSIGNEES. THE ASSESSEE ALSO FACILITATES THE CUSTOM CLEARANCES AT THE INTERNATIONAL POINTS OF ENTRY. THESE SERVICES ARE OFFERED EITHER DIRECTLY BY THE APPELLANT TO ITS CUSTOMERS OR AS A PART OF DELIVERABLES SOLD TO OVERSEAS CUSTOMERS BY THE ASSESSEES AES AS ALSO UNRELATED THIRD PARTY AGENTS ABROAD. IN RESPECT OF THE CASES IN WHICH SERVICES ARE RENDERED TO THE OVERSEAS CUSTOMERS THE ASSESSEE RECEIVES THESE SHIPMENTS FROM SUCH AES OR INDEPENDENT THIRD PARTY ASSOCIATES OBTAINS CUSTOMS CL EARANCE AT THE PORT OF ENTRY AND ORGANIZES DELIVERY OF THESE CONSIGNMENTS TO THE CONSIGNEES IN INDIA. IN ESSENCE THUS THE ASSESSEE ALONG WITH ITS ASSOCIATED ENTERPRISE OFFERS MULTI MODAL TRANSPORTATION SERVICES TO BUSINESS TO BUSINESS SHIPPERS THROUGH GLOBAL FREIGHT FORWARDING SERVICES. THE COMPANY IS HAVING TWO TYPES OF INTERNATIONAL TRANSACTIONS (A) ARRANGING IMPORT OF CARGO FROM OTHER COUNTRIES TO INDIA BY AIR AND SEA TRANSPORTATION AND DELIVERING THE SAME TO CONSIGNEES IN INDIA; (B) ARRANGING EX PORT OF CARGO FROM INDIA TO OTHER COUNTRIES BY AIR AND SEA TRANSPORTATION WHEREIN CONSIGNMENTS ARE PICKED UP IN INDIA BY ASSESSEE AND ARE SENT TO DESTINATION AS PER INSTRUCTION OF SHIPPERS/CONSIGNERS FOR THE PURPOSE OF DELIVERING TO CONSIGNEES THROUGH ITS ASSOCIATED ENTERPRISES ABROAD. WHILE THE ASSESSEE CONTROLS PRICING TO THE END CUSTOMERS IN DOMESTIC MARKET PRICING FOR END CUSTOMERS IN CONNECTION WITH CONSIGNMENT PICKED UP ABROAD IS ESSENTIALLY DETERMINED BY THE ASSOCIATE ABROAD. HOWEVER IN LINE WITH WHAT ARE STATED TO BE THE GLOBAL PRACTICES FOLLOWED BY THE SIMILAR COMPANIES IN FREIGHT FORWARDING INDUSTRY THE PROFITS EARNED AFTER DEDUCTING TRANSPORTATION COSTS BY THE ASSESSEE AND ITS AES OR INDEPENDENT THIRD PARTY BUSINESS ASSOCIATES IN RESPECT OF IMPORT AND EXPORT OF CARGO ARE SHARED IN A 50:50 RATIO. IN THE TRANSFER PRICING REPORT SUBMITTED BY THE ASSESSEE THE ASSESSEE HAS ADOPTED THE COMPARABLE UNCONTROLLED PRICE (CUP) METHOD FOR DETERMINING THE ARMS LENGTH PRICE. HOWEVER THE A.O. REJECTE D THE SAID METHOD AND PROCEEDED TO ADOPT TRANSACTIONAL NET MARGIN (TNMM) METHOD. THE STAND OF THE TPO WAS THAT THE CUP METHOD CHOSEN IN THE TRANSFER PRICING REPORT FOR BOTH IMPORTS AND EXPORTS HAS NOT BEEN DEMONSTRATED. IT WAS ALSO STATED THAT EVEN IN THE I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 5 OF 21 INTERNATIONAL TRANSACTIONS OUGHT TO BE ANALYSED ON CUP METHOD THE ASSESSEE IS REQUIRED TO FURNISH THE DOCUMENTS/VOUCHERS RELATED TO THIRD PARTY FOR EXPORT AND IMPORT TRANSACTIONS RELATED TO CONTROLLED AND UNCONTROLLED TRANSACTIONS. IT WAS ALSO NOTE D THAT WHILE THE TRANSFER PRICING STUDY REPORT MENTIONS CUP AS MOST APPROPRIATE METHOD THE RELATED COLUMN IN THE FORM 3CEB STATES THAT TNMM (TRANSACTION NET MARGIN METHOD) IS MOST APPROPRIATE METHOD EVEN AS THE ASSESSEE SUBSEQUENTLY CLARIFIES THAT IT WAS AN INADVERTENT ERROR TO HAVE TYPED IN THE TNMM IN THE PLACE OF CUP. IT WAS EXPLAINED BY THE ASSESSEE THAT AS PER THE BUSINESS MODEL ADOPTED INDUSTRY - WISE IN RESPECT OF THIS TYPE OF TRANSACTION RESIDUAL PROFIT AFTER DEDUCTING OF RELATED TRANSPORTATION CO ST IS SHARED EQUALLY BETWEEN THE ASSOCIATED PARTIES AND ARRANGEMENT IS AS MUCH IN WITH THE ASSOCIATED ENTERPRISES AS MUCH IT IS WITH THE UNRELATED ENTERPRISES. WHILE THE TPO WAS FAIR ENOUGH TO PLACE ON RECORD THE FACT THAT THOUGH IT IS NOT DENIED THAT I N MOST COMPANIES ENGAGED IN SIMILAR BUSINESS OF LOGISTICS AND FREIGHT FORWARDING ADOPT THIS REVENUE MODEL BUT SUCH AN ARRANGEMENT SHOULD HAVE BEEN DEMONSTRATED BY THE ASSESSEE IN BLACK AND WHITE ALONG WITH SUPPORTING DOCUMENTS HE DID REJECT THIS BUSINESS MODEL AS AN ACCEPTABLE EVIDENCE OF ARMS LENGTH PRICING AND PROCEEDED TO ADOPT THE TRANSACTIONAL NET MARGIN METHOD (TNMM) FOR DETERMINING THE ARMS LENGTH PRICE. IN THE COMPUTATION OF ARMS LENGTH PRICE IN ACCORDANCE WITH TNMM AN ARMS LENGTH PRICE ADJUS TMENT OF RS 2 09 00 179 BUT FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE IT IS NOT REALLY NECESSARY TO GO INTO FINE POINTS ABOUT ADJUSTMENTS UNDER TNMM IN THIS CASE. SUFFICE TO NOTE THAT CUP WAS REJECTED AT THE ASSESSMENT STAGE. BASED ON THE ARMS LENGTH ADJUSTMENT SO RECOMMENDED BY THE TPO THE ASSESSING OFFICER PROPOSED TO FRAME THE ASSESSMENT. THE ASSESSEE WAS NOT SATISFIED WITH THE ASSESSMENT SO PROPOSED BY THE ASSESSING OFFICER AND DID RAISE THE GRIEVANCES BEFORE THE DISPUTE RESOLUTION PANEL BU T WITHOUT ANY SUCCESS. IT WAS IN THIS BACKDROP THAT AN ARMS LENGTH PRICE ADJUSTMENT OF RS 2 09 00 179 WAS MADE IN THE ASSESSMENT ORDER. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTION PERUSED THE MATERIAL AVA ILABLE ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. WE FIND THAT IN THE PRESENT CASE IT IS NOT REALLY EVEN IN DISPUTE THAT IN THIS FIELD OF BUSINESS ACTIVITY THE 50:50 BUSINESS MODEL (I.E. T HE BUSINESS MODEL OF SHARING RESIDUAL PROFITS IN EQUAL RATIO WITH THE SERVICE PROVIDER AT I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 6 OF 21 THE OTHER END OF THE TRANSACTION I.E. AT THE CONSIGNEES END IN THE CASE OF EXPORT TRANSACTION AND AT CONSIGNERS END IN THE CASE OF IMPORT TRANSACTION) IS A STANDAR D PRACTICE. IN OTHER WORDS EVEN WITH RESPECT TO THE TRANSACTION WITH UNRELATED PARTIES IN THIS LINE OF ACTIVITY IT IS ADMITTED PRACTICE TO SHARE THE RESIDUAL PROFIT IN EQUAL RATIO AND THAT IS PRECISELY THE ASSESSEE CLAIMED TO HAVE BEEN ADOPTED WITH THE ASSOCIATED ENTERPRISE AS WELL. THE TROUBLE HOWEVER IS THAT WHILE THERE IS A STANDARD FORMULAE FOR COMPUTING THE CONSIDERATION THE DATA REGARDING PRECISE AMOUNT CHARGED OR RECEIVED FOR PRECISELY THE SAME SERVICES MAY NOT BE AVAILABLE FOR COMPARISON. WHILE THE ASSESSEE IS PLEADING FOR ACCEPTANCE OF FORMER AS A VALID COMPARABLE UNDER THE CUP THE AUTHORITIES BELOW ARE OF THE CONSIDERED VIEW THAT AVAILABILITY OF PRECISE AMOUNT HAVING BEEN CHARGED FOR PRECISELY THE SAME SERVICE IS A SINE QUA NON FOR APPLICATIO N OF CUP METHOD. AS THIS DATA ABOUT EXACTLY THE SAME AMOUNT HAVING BEEN CHARGED FOR EXACTLY THE SAME SERVICE IN THE UNCONTROLLED TRANSACTIONS HAS NOT BEEN FURNISHED BY THE ASSESSEE THE TPO HAS HELD THAT IT IS NOT A FIT CASE FOR APPLICATION OF CUP AND A CCORDINGLY THE TNMM WHICH IS USUALLY REFERRED TO AS METHOD OF LAST RESORT FOR COMPUTATION OF ARMS LENGTH PRICE HAS BEEN PUT IN SERVICE RESULTING IN IMPUGNED ALP ADJUSTMENT OF RS 2 09 00 179. 6. UNDOUBTEDLY CUP METHOD IS THE MOST DIRECT METHOD UNAFF ECTED BY ALL EXTRANEOUS FACTORS OF ASCERTAINING ARMS LENGTH PRICE OF A TRANSACTION AND IT FINDS MENTION IN THE TRANSFER PRICING LITERATURE AS SUCH. THATS THE REASON WHEREVER IT IS PRACTICAL TO ASCERTAIN ARMS LENGTH PRICE UNDER THIS METHOD ALL OTHER M ETHODS OF ASCERTAINING ARMS LENGTH PRICE RELEGATE INTO IRRELEVANCE. THERE CANNOT BE AND THERE IS NO DISPUTE ON THIS PROPOSITION IN PRINCIPLE. THE CONTROVERSY HOWEVER SOMETIMES ARISES WITH RESPECT TO THE FUNCTIONAL ASPECTS OF CUP METHOD AND THE CASE B EFORE US INDICATES ONE SUCH DIMENSION. 7. UNDER RULE 10 B (1)(A) THE MECHANISM OF DETERMINING ARMS LENGTH PRICE AS PER THE COMPARABLE UNCONTROLLED PRICE METHOD IS SET OUT AS FOLLOWS: (I) THE PRICE CHARGED OR PAID FOR PROPERTY TRANSFERRED OR SERVICE S PROVIDED IN A COMPARABLE UNCONTROLLED TRANSACTION OR A NUMBER OF SUCH TRANSACTIONS IS IDENTIFIED; I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 7 OF 21 (II) SUCH PRICE IS ADJUSTED TO ACCOUNT FOR DIFFERENCES IF ANY BETWEEN THE INTERNATIONAL TRANSACTION AND THE COMPARABLE UNCONTROLLED TRANSACTIONS OR BE TWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS WHICH COULD MATERIALLY AFFECT THE PRICE IN THE OPEN MARKET; AND (III) THE ADJUSTED PRICE ARRIVED AT UNDER SUB - CLAUSE (II) IS TAKEN TO BE AN ARMS LENGTH PRICE IN RESPECT OF THE PROPERTY TRANSFERRED OR SERVICES PROVIDED IN THE INTERNATIONAL TRANSACTION. 8. A QUICK LOOK AT THE ABOVE DEFINITION OF ARMS LENGTH PRICE DETERMINATION DOES INDEED GIVE AN IMPRESSION THAT UNLESS THE AMOUNT CHARGED FOR SIMILAR UNCONTROLLED TRANSACTION IS THE SAME AS INTERNATIONA L TRANSACTION BETWEEN THE AES THE CUP METHOD CANNOT COME INTO PLAY. IN OTHER WORDS IN A CASE IN WHICH THE DATA IS NOT AVAILABLE FOR PRICE FOR THE SAME PRODUCT OR SERVICE IN AN UNCONTROLLED SITUATION THE CUP METHOD CANNOT BE APPLIED. 9. IN THE PRESENT CASE HOWEVER ADMITTEDLY THE ASSESSEE HAS NOT EVEN MADE ANY EFFORTS TO DEMONSTRATE NOR CLAIMED THAT ACTUAL AMOUNT CHARGED FOR COMPARABLE SERVICES RENDERED TO OR RECEIVED FROM ASSOCIATED ENTERPRISE IS THE SAME AS IN THE CASE OF THE INDEPENDENT ENTERPRIS E BUT THE ASSESSEES CASE IS THAT THE AMOUNT CHARGED FOR COMPARABLE SERVICES RENDERED TO OR RECEIVED FROM ASSOCIATED ENTERPRISE IS COMPUTED ON THE BASIS OF THE SAME RESIDUAL PROFIT SHARING FORMULAE AS IN THE CASE OF THE INDEPENDENT ENTERPRISE. THE CON NOTATIONS OF PRICE AS SET OUT IN RULE 10 B(1)(A) ARE THUS REQUIRED TO BE TAKEN TO BE SOMETHING MUCH BROADER THAN THE EXPRESSION AMOUNT INASMUCH AS IT IS REQUIRED TO COVER NOT ONLY QUANTIFICATION OF PRICE IN TERMS OF AN AMOUNT BUT ALSO IN TERMS OF A F ORMULAE ACCORDING TO WHICH THE PRICE IS QUANTIFIED. THE QUESTION THAT WE REALLY NEED TO ADJUDICATE UPON IS WHETHER THE MECHANISM FOR COMPUTING THE AMOUNT OF PROFIT SO AGREED UPON BETWEEN THE PARTIES CAN INDEED BE TAKEN AS A COMPARABLE FOR THE PURPOSES O F CUP ANALYSIS IN TRANSFER PRICING. 10. THIS ISSUE IS NO LONGER RES INTEGRA. THERE ARE AT LEAST TWO REPORTED DECISIONS BY VERY DISTINGUISHED COORDINATE BENCHES OF THIS TRIBUNAL DEALING WITH ALBEIT SOMEWHAT INDIRECTLY WITH THIS PROPOSITION AND BOTH OF T HESE BENCHES HAVE UPHELD APPLICATION OF CUP METHOD IN SUCH A SITUATION. I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 8 OF 21 11. IN THE CASE OF ACIT VS AGILITY LOGISTICS PVT LTD (136 ITD 46) WHICH WAS QUITE A PATH BREAKING DECISION IN ITS IMPACT PERHAPS THIS ISSUE CAME UP FOR THE FIRST TIME BEFORE THE TRI BUNAL. THAT WAS A CASE IN WHICH THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF INTERNATIONAL FREIGHT FORWARDING BY AIR AND SEA LOGISTIC ACTIVITIES AND CUSTOMS CLEARANCE AND IT WAS A CORPORATE POLICY OF THE AES ALL OVER THE WORLD THAT AFTER PAYMENTS OF THE COSTS THE PROFITS WERE SHARED BETWEEN THE AES THAT HAVE PARTICIPATED IN THE TRANSACTION. IN BRIEF THE CASE OF THE ASSESSEE WAS THAT IN THIS PECULIAR LINE OF BUSINESS ACTIVITY IT WAS A COMMON PRACTICE WITH ASSOCIATED ENTERPRISES AS ALSO INDEPENDENT EN TERPRISES THAT THE PROFITS FROM A TRANSACTION AFTER MEETING THE DIRECT COSTS WERE SHARED EQUALLY BETWEEN THE PARTIES INVOLVED IN A TRANSACTION. IT WAS THUS CONTENDED THAT THE ARRANGEMENTS WITH INDEPENDENT ENTERPRISES ENTERED INTO BY THE ASSESSEE CONST ITUTE INSTANCES OF COMPARABLE UNCONTROLLED TRANSACTION AND SINCE THESE TRANSACTIONS WERE ON THE SAME TERMS AS WITH THE ASSOCIATED ENTERPRISES THE TRANSACTIONS ENTERED INTO WITH THE AES SHOULD BE HELD TO BE ARMS LENGTH TRANSACTIONS. THIS PLEA WAS REJECTED AT THE ASSESSMENT STAGE FOR A VARIETY OF REASONS INCLUDING THE REASON THAT THE AGREEMENTS ARE ENTERED INTO ON A PROFIT SPLIT BASIS AND JOT ON THE BASIS OF RATE AND AS SUCH THERE IS IN FACT NO INTERNAL CUP. THE TPO APPLIED THE TNMM METHOD AND REJE CTED ASSESSEES RELIANCE ON CUP METHOD. WHEN THE MATTER TRAVELLED IN APPEAL BEFORE THE CIT(A) IT WAS INTER ALIA CONTENDED THAT CUP METHOD IS MOST DIRECT AND RELIABLE WAY TO APPLY THE ARMS LENGTH PRICE AND IS PREFERABLE OVER ALL OTHER METHODS AND THA T SINCE CUP IS THE MOST DIRECT METHOD IT SHOULD BE USED TO TEST THE ARMS LENGTH NATURE OF TRANSACTIONS OF THE ASSESSEE. LEARNED CIT(A) NOTED THAT THE ASSESSEE HAD PRODUCED AGENCY AGREEMENTS BETWEEN THE GEOLOGISTIC GROUP AND UNRELATED PARTIES WHICH ARE SUBSTANTIALLY THE SAME AND THAT THE PROFIT SPLIT INFORMATION CONTAINED IN ALL THE AGREEMENTS (50:50) IS TYPICAL OF THE INDUSTRY I.E. STANDARD FORMULAE FOR LOGISTICS AND FREIGHT FORWARDING SERVICE PROVIDERS. LEARNED CIT(A) WAS OF THE VIEW THAT THE TPO HAD IGNORED THIS CRUCIAL ASPECT OF THE BUSINESS AS WELL AS ORDERS OF HIS PREDECESSORS AND HENCE ARRIVED AT AN ERRONEOUS FINDING. LEARNED CIT(A) ALSO REFERRED TO AND RELIED UPON DECISION OF THE TRIBUNAL IN THE CASE OF ACIT VS MSS INDIA PVT LTD (25 DTR 1 19) IN SUPPORT OF THE PROPOSITION THAT TNMM SHOULD BE APPLIED ONLY WHEN STANDARD METHODS SUCH AS CUP FAIL. HE THUS CONCLUDED THAT A VALID CUP EXIST FOR BENCHMARKING THE INTERNATIONAL TRANSACTION IN THIS CASE AS CONDITIONS ARE IDENTICAL AND THAT TO S UM UP THE APPELLANTS CONTENTION ON CUP METHOD SUPPORTED WITH THIRD I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 9 OF 21 PARTY AGREEMENTS AND THE UNDERSTANDING OF THE COMPARABLE LEVEL OF FUNCTIONS PERFORMED ASSET USED AND RISK BORNE BY THE ORIGINAL COMPANY AND THE DESTINATION COMPANY HAS MERIT. AS SUCH I A M IN AGREEMENT THAT THE RISK AND REWARDS OF THE BUSINESS IS TO BE SHARED IN 50:50 RATIO. THE MATTER TRAVELLED IN FURTHER APPEAL THIS TIME AT THE INSTANCE OF THE ASSESSING OFFICER BEFORE A COORDINATE BENCH OF THIS TRIBUNAL. THE COORDINATE BENCH UPHELD TH E STAND OF THE CIT(A) BY CONCLUDING THAT WE DO NOT FIND ANY INFIRMITY IN THE CUP METHOD (50:50 MODULE) ADOPTED BY THE ASSESSEE. BY IMPLICATION THUS THE COORDINATE BENCH UPHELD THE APPLICATION OF CUP METHOD BY A COMPARING A PRICING FORMULAE RATHER THA N THE PRICING QUANTIFICATION IN AMOUNT - AS WAS CONSIDERED SINE QUA NON BY THE TPO. 12. IN THE CASE OF ACIT VS DHL DANZAS LEMUIR PVT LTD [TS - 752 - ITAT - MUM (2012) TP] ONCE AGAIN A SIMILAR ISSUE CAME UP BEFORE ANOTHER COORDINATE BENCH. IN THIS CASE ALSO TH E ASSESSEE WAS ENGAGED IN THE BUSINESS AS A LOGISTIC SERVICE PROVIDER OFFERING INTER ALIA A COMPREHENSIVE PORTFOLIO OF INTERNATIONAL FREIGHT HANDLING SERVICES. THE MODUS OPERENDI ADOPTED BY THE ASSESSEE WAS TO ENTER INTO CONTRACT WITH THIRD PARTIES FOR LIFTING THEIR CARGO FROM SOURCE TO DESTINATION ABROAD AND THE EXECUTION OF THIS JOB INVOLVED LIFTING OF CARGO FROM THE PLACE OF CUSTOMERS IN INDIA SENDING IT TO THE INDIAN PORT/AIRPORT SHIPPING OR AIRLIFTING AS THE CASE MAY BE TO THE COUNTRY OF ITS DES TINATION COLLECTING IT FROM SUCH PORT/AIRPORT OF THE OTHER COUNTRY AND THEN SUPPLYING IT TO THE DESTINATION ENTITY ULTIMATE BUYER. IN SO FAR AS THE ACTIVITIES IN INDIA ARE CONCERNED THESE ARE DONE BY THE ASSESSEE AND THE ACTIVITIES ABROAD ARE EXECUTED B Y CERTAIN FOREIGN ENTITIES WITH WHOM THE ASSESSEE HAS ENTERED INTO CONTRACTS FOR THIS PURPOSE. IN THE LIKE MANNER SUCH FOREIGN ENTITIES ALSO UNDERTAKE SHIPPING/AIRLIFTING OF CARGO FROM THEIR RESPECTIVE COUNTRIES. THE ACTIVITIES IN INDIA SIMILAR TO WHICH ARE PERFORMED BY SUCH FOREIGN ENTITIES IN THEIR COUNTRIES FOR THE BOOKINGS MADE BY THE ASSESSEE IN INDIA ARE DONE BY THE ASSESSEE FOR THE BOOKINGS MADE BY SUCH FOREIGN ENTITIES ABROAD. THE TOTAL DIRECT EXPENSES INCURRED IN INDIA BY THE ASSESSEE AND ABROA D BY THE FOREIGN ENTITIES WERE AGGREGATED AND THEN REDUCED FROM THE GROSS RECEIPTS. THE RESIDUAL WAS SHARED IN THE RATIO OF 50:50 BETWEEN THE ENTITY OF ORIGIN COUNTRY AND THE ENTITY OF DESTINATION COUNTRY. INITIALLY THE ASSESSEE HAD ADOPTED THE TNMM BUT S UBSEQUENTLY VIDE LETTER DATED 3RD OCTOBER 2006 THE ASSESSEE PLEADED FOR ADOPTION OF CUP METHOD STATING THAT THE TERMS AND CONDITIONS APPLICABLE TO THE COMPANIES WERE THE SAME FOR AGENTS AND THIRD PARTIES AFFILIATES. HOWEVER TPO DID NOT ACCEPT THIS PLE A. IN APPEAL LEARNED CIT (A) I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 10 OF 21 UPHELD THE STAND OF THE ASSESSEE. WHEN ASSESSING OFFICER CARRIED THE MATTER IN FURTHER APPEAL A COORDINATE BENCH ADJUDICATING UPON THE GRIEVANCES SO RAISED BY THE ASSESSING OFFICER HELD AS FOLLOWS: 6. THE SHORT CONTROVERSY BEFORE US IS TO DETERMINE THE ALP IN RESPECT OF TRANSACTIONS BETWEEN THE ASSESSEE AND ITS AES TOWARDS RECEIPT/PAYMENT OF FREIGHT. THE ASSESSEE SHARED PROFIT IN THE RATIO OF 50:50 BOTH ON THE PAYMENTS MADE BY IT AND THE RECEIPTS OF FREIGHT FROM ITS AES. WE HAVE PERUSED THE SUBMISSIONS AND THE FINDING OF THE LEARNED CIT (A) ON THE FUNCTIONS PERFORMED ASSETS EMPLOYED AND RISK UNDERTAKEN BY BOTH THE AES IN SUCH TRANSACTIONS. THE LEARNED DR COULD NOT CONTROVERT SUCH FINDING THAT THE FUNCTIONS PERFORMED ASSETS EMPLOYED AND RISK UNDERTAKEN IN BOTH THE AES IS SAME. THE ASSESSEE PAID CERTAIN SUM TO ITS AES ABROAD FOR DOING THE WORK SIMILAR TO WHICH IT DID FOR WHICH IT RECEIVED FREIGHT REVENUE FROM ITS AES. THE CRUX OF THE MATTER IS THAT IN BOTH THE SITUATIONS THE TOTAL RECEIPTS ARE TAKEN ON ONE HAND FROM WHICH ALL THE EXPENSES INCURRED IN CONNECTION WITH THE TRANSPORTATION OF CARGO IN BOTH THE COUNTRIES ARE EXCLUDED. THE REMAINING AMOUNT IS DISTRIBUTED BETWEEN THE ENTITY OF ORIGIN COUNTRY AND THE ENTITY OF DESTIN ATION COUNTRY IN EQUAL SHARE. AS THE ASSESSEE HAS EARNED/PAID REVENUE FROM/TO ITS AES IN THE SAME PROPORTION IN OUR CONSIDERED OPINION THE TRANSACTIONS HAVE BEEN RECORDED AT ARMS LENGTH PRICE AND THERE WAS NO JUSTIFICATION FOR MAKING SUCH ADDITION. WE D O NOT SEE ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD COPIES OF THE ORDERS PASSED BY THE TRIBUNAL IN THE CASE OF ACIT VS. M/S AGILITY LOGISTICS PVT. LTD. FOR ASSESSMENT YEARS 2004 - 05 TO 200 6 - 07. IN THESE TWO SEPARATE ORDERS THE FACTS ARE ALMOST SIMILAR WHEREBY VARIOUS AGENCY AGREEMENTS WERE ENTERED INTO BETWEEN THE COMPANY OF ORIGIN COUNTRY AND THE COMPANY OF DESTINATION COUNTRY IN THE BUSINESS OF LOGISTICS SERVICE PROVIDER. THE REVENUES WE RE SHARED BETWEEN THE TWO IN THE RATIO OF 50:50. THE TRIBUNAL HAS ACCEPTED THE SHARING OF PROFIT IN THE EQUAL PROPORTION AT ARMS LENGTH PRICE. THE LD. DR COULD NOT DISTINGUISH THE FACTS OF THAT CASE VIS - A - VIS THE CASE IN HAND. I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 11 OF 21 RESPECTFULLY FOLLOWING THE P RECEDENT WE UPHOLD THE ORDER PASSED BY THE LEARNED CIT (A). 13. IN BOTH OF THESE CASES THUS IT WAS CONCLUDED THAT EVEN IN A SITUATION IN WHICH THE COMPARABLES WERE THE FORMULAS ON THE BASIS OF WHICH EXACT QUANTIFICATION FOR PRICE OF SERVICES WAS DONE THE SAME COULD BE ACCEPTED AS A PRICE FOR THE PURPOSES OF APPLICATION OF CUP METHOD OF ASCERTAINING ARMS LENGTH PRICE. THE APPROACH SO ADOPTED EVEN IF SOMEWHAT SERENDIPTUOUS WAS QUITE REMARKABLE PRAGMATIC AND IN DUE DEFERENCE TO THE REALITIES OF BUSINE SSES. IN THE PECULIAR CIRCUMSTANCES OF THIS CASE WHEN CONNOTATIONS OF PRICE UNDER RULE 10B(1)(A) ARE TREATED TO INCLUDE NOT ONLY AN AMOUNT STATED IN MONETARY TERMS BUT ALSO A MECHANISM IN TERMS OF A FORMULAE TO ARRIVE AT CONSIDERATION SUCH AN INTERPRET ATION IS CERTAINLY A VERY PURPOSIVE AND REALISTIC INTERPRETATION. 14. THE CONCLUSION SO ARRIVED EVEN WITHOUT THE BENEFIT OF TOO ELABORATE A DISCUSSIONS ON THE LEGAL FRAMEWORK ENABLING SUCH WHAT MAY SEEM AT THE FIRST SIGHT EXTENDED MEANING TO THE EXPRE SSION PRICE MEET OUR CONSIDERED CONCURRENCE. IN COMING TO THIS CONCLUSION WE MAY HAVE DIFFERENT OR MANY DIFFERENT SETS OF SPECIFIC REASONS AS ANALYSED ELSEWHERE IN THIS ORDER BUT THAT DOES NOT DILUTE OUR HIGHEST RESPECT FOR THESE JUDICIAL PRECEDEN TS FROM THE COORDINATE BENCHES. 15. IT IS USEFUL TO BEAR IN MIND THE FACT THAT AS AGAINST THE USE OF EXPRESSION AMOUNT IN THE US TRANSFER PRICING REGULATIONS 1 DEALING WITH CUP ANALYSIS WHICH HAVE PIONEERED TRANSFER PRICING LEGISLATION WORLDWIDE OUR D OMESTIC TRANSFER PRICING REGULATION AS AGAINST THE OECD TRANSFER PRICING GUIDELINES 2 AND AS AGAINST UN PRACTICAL MANUAL ON TRANSFER PRICING FOR DEVELOPING COUNTRIES 3 USE THE EXPRESSION PRICE IN THE COMPARABILITY 1 INTERESTINGLY UNLIKE THE REFERENCE TO PRICE AS A COMPARATOR IN THE INDIAN TP REGULATIO NS OECD TRANSFER PRICING GUIDELINES AND UN TRANSFER PRICING MANUAL US TRANSFER PRICING REGULATION 1.482 - 3(B) REFERS TO AMOUNT AS A COMPARATOR AS IT STATES THAT (T)HE COMPARABLE UNCONTROLLED PRICE METHOD EVALUATES WHETHER THE AMOUNT CHARGED IN A CONTR OLLED TRANSACTION IS ARM'S LENGTH BY REFERENCE TO THE AMOUNT CHARGED IN A COMPARABLE UNCONTROLLED TRANSACTION . 2 OECD TRANSFER PRICING GUIDELINES 2010 RECOGNIZES MECHANISM OF CUP METHOD IN PARAGRAPH 2.13 AS (T)HE CUP METHOD COMPARES THE PRICE CHARGE D FOR PROPERTY OR SERVICES TRANSFERRED IN A CONTROLLED TRANSACTION TO THE PRICE CHARGED FOR PROPERTY OR SERVICES IN A COMPARABLE UNCONTROLLED TRANSACTION IN COMPARABLE CIRCUMSTANCES 3 UN PRACTICAL MANUAL ON TRANSFER PRICING FOR DEVELOPING COUNTRIES IN P ARAGRAPH 6.2.1.1 RECOGNIZES THE WORKING MECHANISM OF CUP METHOD BY STATING THAT (T)HE COMPARABLE I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 12 OF 21 ELEMENT. WHILE NORMALLY THE EXPRESSION PRICE AND AMOUNT AS COMPARABILITY ELEMENT DO NOT LEAD TO DIFFERENT CONNOTATIONS SINCE PRICE IS EXPRESSED IN TERMS OF AN AMOUNT AND THEREFORE WHETHER THE COMPARABILITY ELEMENT IS TAKEN AS PRICE OR AS AMOUNT IT MEANS THE SAME THING. IN OTHER WORD S CONNOTATIONS OF EXPRESSION PRICE AND AMOUNT AS A COMPARATOR ARE MATERIALLY THE SAME AS LONG AS PRICE IS STATED IN TERMS OF AN AMOUNT AND THAT IS THE STANDARD PRACTICE ALMOST WELL ALMOST UNIVERSALLY. 16. THERE ARE HOWEVER OCCASIONS AS IN THE CASE BEFORE US WHEN AGREED PRICE OF A SERVICE RENDERED TO OR RECEIVED FROM AN ASSOCIATED ENTERPRISE IS NOT STATED IN TERMS OF AN AMOUNT BUT IN TERMS OF A FORMULAE WHICH LEADS TO QUANTIFICATION IN AMOUNT. 17. ON A CONCEPTUAL NOTE IT IS NOT REALLY ESS ENTIAL THAT PRICE OF A COMMODITY OR SERVICE MUST ALWAYS BE QUOTED IN TERMS OF AN AMOUNT. PRICE IN ECONOMIC AND BUSINESS TERMS COULD BE INTERPRETED AS REWARD FOR FUNCTIONS PERFORMED ASSETS EMPLOYED AND RISKS ASSUMED WHILE AMOUNT IN ECONOMIC AND BUS INESS TERMS IS A RELATIVELY MUNDANE QUANTIFICATION IN TERMS OF A CURRENCY. AS ECONOMIC PRINCIPLES RECOGNIZE PRICE CAN EVEN BE IN TERMS OF A FORMULAE TO ARRIVE AT THE AMOUNT WHICH IS PAID OR RECEIVED AS A CONSIDERATION FOR THE COMMODITY OR SERVICE IN QUE STION AND THERE CANNOT BE A BETTER EXAMPLE OF THIS PHENOMENON THAN INTEREST RATE WHICH ARE FREQUENTLY USED IN CUP ANALYSIS AS A MEASURE OF COMPUTING THE AMOUNT RATHER THAN THE AMOUNT ITSELF. OTHER EXAMPLES CAN BE FOUND IN PRICING FINANCIAL DERIVATIVES A ND OTHER FINANCIAL ASSETS. FOR INSTANCE THE PRICE OF INFLATION - LINKED GOVERNMENT SECURITIES IN SEVERAL COUNTRIES IS QUOTED AS THE ACTUAL PRICE DIVIDED BY A FACTOR REPRESENTING INFLATION SINCE THE SECURITY WAS ISSUED. THE EXAMPLES CAN BE ENDLESS BUT THE COM MON THREAD IN ALL THESE EXAMPLES COULD BE THE REALITY THAT THE EXPRESSION PRICE IN CERTAIN SITUATIONS EXTENDS WELL BEYOND THE SPECIFIC AMOUNTS. IN CERTAIN BUSINESS MODELS A BUSINESS ASSOCIATE PERFORMS THE SERVICES IN CONSIDERATION OF SHARING RESIDUAL PROFITS IN A CERTAIN MANNER AND AS SUCH THE PRICE FOR THOSE SERVICES WOULD BE THIS SHARE IN THE RESIDUAL PROFIT. 18. VIEWED THUS THE STAND TAKEN BY THE AUTHORITIES THAT CUP CANNOT BE APPLIED IN SUCH CASES BECAUSE OF NON AVAILABILITY OF DATA IN TERMS OF UNCONTROLLED PRICE (CUP) METHOD COMPARES THE PRICE CHARGED FOR PROPERTY OR SERVICES TRANSFERRED IN A CONTROLLED TRANSACTION TO THE PRICE CHARGED FOR PROPERTY OR SERVICES TRANSFERRED IN A COMPARABLE UNCONTROLLED TRANSACTION IN COMPARABLE CIRCUMSTANCES . I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 13 OF 21 COMPARABLE AMOUNT HAVING BEEN CHARGED FOR THE SAME SERVICE LOSES ITS RELEVANCE. BE THAT AS IT MAY FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE EVEN THIS ASPECT OF THE MATTER MAY BE SOMEWHAT ACADEMIC AT THIS STAGE. 19. IT IS ALSO IMPORTANT TO B EAR IN MIND THE FACT THAT WHAT WE ARE DEALING WITH AT PRESENT IS A CLASSIC CASE IN WHICH WHILE THERE IS NO AND THERE CANNOT BE ANY DISPUTE EVEN AT THE ASSESSMENT STAGE THAT THE TERMS AT WHICH THE ASSESSEE HAS ENTERED INTO THE ARRANGEMENTS WITH THE AES ARE THE SAME AS THE TERMS AT WHICH THE ASSESSEE HAS ENTERED INTO ARRANGEMENTS WITH THE INDEPENDENT ENTERPRISE THERE ARE STILL SOME PROCEDURAL ISSUES WITH REGARD TO APPLICATION OF METHODS OF DETERMINING ARMS LENGTH PRICE AS SET OUT IN RULE 10B. HERE IS A CASE IN WHICH THERE IS NO DISPUTE THAT THE PRICE DETERMINATION FOR ALL BUSINESS ASSOCIATES WHETHER ASSOCIATED ENTERPRISES OR INDEPENDENT ENTERPRISES IS ON THE SAME TERMS AND AS PER THE SAME BUSINESS MODEL WHICH IS ADMITTEDLY UNIQUE TO THAT LINE OF BUSI NESS BUT OWING TO THE LIMITATIONS OF THE METHODS PRESCRIBED UNDER RULE 10B(1)(A) TO (E) AS THE PRESCRIBED METHODS OF DETERMINING THE ARMS LENGTH PRICE EXISTED AT THE RELEVANT POINT OF TIME THERE ARE CERTAIN WHAT CAN AT BEST BE DESCRIBED AS UNRESOLVE D PROCEDURAL ISSUES. 20. LET US NOT FORGET THE FUNDAMENTAL FACT THAT TRANSFER PRICING BY ITSELF IS NOT AND SHOULD NOT BE VIEWED AS A SOURCE OF REVENUE; IT IS AN ANTI - ABUSE MEASURE IN CHARACTER AND ALL IT DOES IS TO ENSURE THAT THE TRANSACTIONS ARE NO T SO ARTIFICIALLY PRICED WITH THE BENEFIT OF INTER SE RELATIONSHIP BETWEEN ASSOCIATED ENTERPRISES SO AS TO DEPRIVE A TAX JURISDICTION OF ITS DUE SHARE OF TAXES. OUR TRANSFER PRICING LEGISLATION AS ALSO TRANSFER PRICING JURISPRUDENCE DULY RECOGNIZE THIS F UNDAMENTAL FACT AND ENSURE THAT SUCH PEDANTIC AND UNRESOLVED PROCEDURAL ISSUES AS HAVE ARISEN IN THIS CASE DUE TO LIMITATIONS OF THE PRESCRIBED METHODS OF ASCERTAINING ARMS LENGTH PRICE ARE NOT ALLOWED TO COME IN THE WAY OF SUBSTANTIVE JUSTICE PARTICUL ARLY WHEN IT IS BEYOND REASONABLE DOUBT THAT THERE IS NO INFLUENCE OF INTRA AE RELATIONSHIP ON THE DETERMINATION OF PRICES IN RESPECT OF INTRA AE TRANSACTIONS. 21. WHILE ON THIS SUBJECT IT WILL BE APPROPRIATE TO TAKE NOTE OF SOME VERY THOUGHTFUL AND VER Y WELL ARTICULATED OBSERVATIONS MADE BY A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ASCENDAS INDIA PVT LTD VS DCIT (143 ITD 208) . THESE OBSERVATIONS ARE REPRODUCED BELOW: I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 14 OF 21 THE PURPOSE OF ENACTMENT OF CHAPTER X IS TO BENCHMARK AN INTERNATIONAL TRANSACTION WITH THE FAIR MARKET VALUE OF SUCH TRANSACTION SO AS TO ENSURE THAT THERE ARE NO PROFIT TRANSFERS BETWEEN PARTIES IN DIFFERENT JURISDICTIONS EFFECTUALLY CIRCUMVENTING TAXES. THUS PURPOSE OF TRANSFER PRICING RULES IS TO VERIFY WHETHER THE PR ICES AT WHICH AN INTERNATIONAL TRANSACTION HAS BEEN CARRIED OUT IS COMPARABLE WITH THE MARKET VALUE OF THE UNDERLYING ASSET OR COMMODITY OR SERVICE. IT MAY BE TRUE THAT DIFFICULTIES MIGHT ARISE IN ASCERTAINING THE FAIR MARKET VALUE BUT SUCH DIFFICULTIES S HOULD NOT BE A REASON FOR NOT ADAPTING THE RULES AND METHODS PRESCRIBED IN THIS REGARD. THIS MIGHT REQUIRE SOME SUBTLE ADJUSTMENTS IN THE METHODOLOGY PRESCRIBED FOR EVALUATION OF AN INTERNATIONAL TRANSACTION. A WATER - TIGHT ATTITUDE OF INTERPRETATION OF THE PRESCRIBED METHODS WILL DEFEAT THE VERY PURPOSE OF ENACTMENT OF TRANSFER PRICING RULES AND REGULATIONS AND ALSO DETRIMENTALLY AFFECT THE EFFECTIVE AND FAIR ADMINISTRATION OF AN INTERNATIONAL TAX REGIME [EMPHASIS BY UNDERLINING SUPPLIED BY US] 22. VIEWED THUS ADOPTING A PEDANTIC APPROACH IN DETERMINATION OF ARMS LENGTH PRICE WHICH SERVES LETTER OF THE LAW BUT LEADS TO THE CONCLUSION DIAMETRICALLY OPPOSED TO THE SPIRIT OF THE LAW HAS TO BE DEPRECATED. WE ARE IN CONSIDERED AGREEMENT WITH THIS SCHOOL OF THOUGHT. TO THAT EXTENT THE METHODS OF DETERMINATION OF ARMS LENGTH PRICES HAVE TO BE ESSENTIALLY IMPLEMENTED IN A REASONABLE AND PRAGMATIC MANNER SO AS TO ACHIEVE ITS LAUDABLE OBJECTIVES WITHOUT ANY COLLATERAL DAMAGE. 23. THE LAWMAKERS HAVE ALSO NOT BEEN OBLIVIOUS OF THIS COMPELLING NEED OF A CERTAIN DEGREE OF FLEXIBILITY IN THE METHODS OF DETERMINING ARMS LENGTH PRICE. CENTRAL BOARD OF DIRECT TAXES VIDE NOTIFICATION DATED 23 RD MAY 2012 HAS INTRODUCED IN ADDITION TO COMPARABLE UNCONTROLLED PRIC E (CUP) METHOD RESALE PRICE METHOD (RPM) COST PLUS METHOD (CPM) PROFIT SPLIT METHOD (PSM) AND TRANSACTIONAL NET MARGIN METHOD (TNMM) THE FOLLOWING ADDITIONAL METHOD: ANY METHOD WHICH TAKES INTO ACCOUNT THE PRICE WHICH HAS BEEN CHARGED OR PAID OR WOULD HAVE BEEN CHARGED OR PAID FOR THE SAME OR SIMILAR UNCONTROLLED TRANSACTION WITH OR BETWEEN NON - I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 15 OF 21 ASSOCIATED (I.E. INDEPENDENT) ENTERPRISES UNDER SIMILAR CIRCUMSTANCES CONSIDERING ALL THE RELEVANT FACTS. 24. VERY SIGNIFICANTLY THE ABOVE METH OD WHICH IS ONLY METHOD PRESCRIBED UNDER ANY OTHER METHOD UNDER SECTION 92C(1)(F) READ WITH RULE 10B(1)(F) IS NOT A RESIDUAL METHOD IN THE SENSE THAT IT IS NOT A CONDITION PRECEDENT FOR THE APPLICATION OF THIS METHOD THAT ALL OTHER METHODS I.E. METHO DS SET OUT IN SECTION 92C (1)(A)TO 92C(1)(E) AND AS ELABORATED UNDER RULE 10B(1)(A) TO (E) MUST FAIL AND ONLY THEN THIS METHOD CAN BE APPLIED. THIS METHOD IS AT PAR WITH ALL OTHER METHODS OF DETERMINING THE ARMS LENGTH PRICE AS SET OUT IN SECTIONS 92C(1 )(A) TO (F) AND IN TERMS OF SECTION 92C(2) THE MOST APPROPRIATE METHOD REFERRED TO IN SECTION 92C(1) SHALL BE APPLIED FOR DETERMINATION OF ARMS LENGTH PRICE IN THE MANNER PRESCRIBED. THEREFORE AS LONG AS THE METHOD COVERED BY RULE 10AB WHICH I S DULY COVERED BY SECTION 92C(1) SATISFIES THE TEST OF BEING THE MOST APPROPRIATE METHOD IT CAN BE APPLIED TO A FACT SITUATION. THERE IS CLEARLY NO BAR ON ITS APPLICABILITY JUST BECAUSE A METHOD SPECIFIED IN RULE 10B EVEN IF INDIRECT METHOD LIKE TNMM CAN ALSO BE APPLIED TO THE SAME. QUITE TO THE CONTRARY AS NOTED BY THE COORDINATE BENCHES IN THE CASES OF ACIT VS. MSS INDIA PVT LTD (SUPRA) DIRECT METHODS SUCH AS CUP AND THE OTHER METHOD UNDER RULE 10B WHICH AS WE WILL SEE IN A SHORT WHILE IS ONLY A VARIANT OF THE CUP METHOD HAVE AN INHERENT EDGE OVER INDIRECT METHODS SUCH AS TNMM AND THEREFORE AS LONG AS IT IS POSSIBLE TO DO SO A DIRECT METHOD OF ASCERTAINING THE ARMS LENGTH METHOD SHOULD BE APPLIED. IN THE CASE OF SERDIA PHARMACEUTICALS PV T LTD VS ACIT (44 SOT 391) A COORDINATE BENCH OF THE TRIBUNAL HAS OBSERVED THAT . EVEN AS THE TRANSFER PRICING LEGISLATION DOES NOT PROVIDE FOR AN ORDER OF PREFERENCE OF METHODS OF DETERMINING ALP SUCH AN ORDER OF PREFERENCE BEING DRAWN UP IS AN INTEGR AL THOUGH SOMEWHAT SUBLIMINAL PART OF THE PROCESS OF DETERMINING THE ALP AND THAT WHENEVER A DIRECT METHOD OF ASCERTAINING ARMS LENGTH PRICE CAN BE USED IT SHOULD BE PREFERRED OVER AN INDIRECT METHOD. IN VIEW OF THESE DISCUSSIONS METHOD UNDER RULE 10 BA WHICH IS A DIRECT METHOD OF ASCERTAINING ARMS LENGTH PRICE - AS IS THE CASE WITH COMPARABLE UNCONTROLLED PRICE (CUP) METHOD RESALE PRICE METHOD (RPM) AND COST PLUS METHOD (CPM) HAS AN INHERENT EDGE OVER INDIRECT METHODS SUCH AS TRANSACTIONAL NET MARG IN METHOD (TNMM) AND PROFIT SPLIT METHOD (PSM). I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 16 OF 21 25. IN EFFECT THUS IT WOULD APPEAR THAT AS LONG AS ONE CAN COME TO THE CONCLUSION UNDER ANY METHOD OF DETERMINING THE ARMS LENGTH PRICE THAT PRICE PAID FOR THE CONTROLLED TRANSACTIONS IS THE SAME AS IT WOULD HAVE BEEN UNDER SIMILAR CIRCUMSTANCES AND CONSIDERING ALL THE RELEVANT FACTORS FOR AN UNCONTROLLED TRANSACTION THE PRICE SO PAID CAN BE SAID TO BE ARMS LENGTH PRICE. AS WE HAVE NOTED EARLIER IN THIS ORDER THE PRICE NEED NOT BE IN TERMS OF AN AM OUNT BUT CAN ALSO BE IN TERMS OF A FORMULAE INCLUDING INTEREST RATE FOR COMPUTING THE AMOUNT. IN ANY CASE WHEN THE EXPRESSION PRICE WHICH.WOULD HAVE BEEN CHARGED ON PAID IS USED IN RULE 10BA DEALING WITH THIS METHOD IN THIS METHOD THE PLACE OF PR ICE CHARGED OR PAID AS IS USED IN RULE 10B(1)(A) DEALING WITH CUP METHOD SUCH AN EXPRESSION NOT ONLY COVERS THE ACTUAL PRICE BUT ALSO THE PRICE AS WOULD HAVE BEEN HYPOTHETICALLY SPEAKING PAID IF THE SAME TRANSACTION WAS ENTERED INTO WITH AN INDEPENDE NT ENTERPRISE. THIS HYPOTHETICAL PRICE MAY NOT ONLY COVER BONAFIDE QUOTATIONS BUT IT ALSO TAKES IT BEYOND ANY DOUBT OR CONTROVERSY THAT WHERE PRICING MECHANISM FOR ASSOCIATED ENTERPRISE AND INDEPENDENT ENTERPRISE IS THE SAME THE PRICE CHARGED TO THE ASSO CIATED ENTERPRISES WILL BE TREATED AS AN ARMS LENGTH PRICE. IN THIS VIEW OF THE MATTER THE BUSINESS MODEL SAID TO HAVE BEEN ADOPTED BY THE ASSESSEE IN PRINCIPLE MEETS THE TEST OF ARMS LENGTH PRICE DETERMINATION UNDER RULE 10BA AS WELL. 26. NO DOUBT RULE 10BA AS ALSO THE CORRESPONDING ENABLING RULE 10B(1)(F) ARE INSERTED BY THE INCOME TAX (SIXTH AMENDMENT) RULES 2012 AND ARE SPECIFICALLY STATED TO BE EFFECTIVE FROM 1 ST APRIL 2012 I.E. ASSESSMENT YEAR 2012 - 13 ONWARDS. HOWEVER IN HONBLE SUPREME COUR TS FIVE JUDGE CONSTITUTIONAL BENCHS LANDMARK JUDGMENT IN THE CASE OF CIT VS VATIKA TOWNSHIPS PVT LTD (2014 TIOL 78 SC) THE LEGAL POSITION IN THIS REGARD HAS BEEN VERY SUCCINCTLY SUMMED UP BY OBSERVING THAT (I)F A LEGISLATION CONFERS A BENEFIT ON SOME PERSONS BUT WITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOME OTHER PERSON OR ON THE PUBLIC GENERALLY AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISLATORS OBJECT THEN THE PRESUMPTION WOULD BE THAT SUCH A LEGISLATION GIVING IT A PURPO SIVE CONSTRUCTION WOULD WARRANT IT TO BE GIVEN A RETROSPECTIVE EFFECT HONBLE SUPREME COURT HAS OBSERVED THAT THIS (THE FOREGOING ANALYSIS) EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PROVISIONS AS RETROSPECTIVE. THEIR LORDSHIPS THEN FURTHER OB SERVED THAT IN GOVERNMENT OF INDIA & ORS. V. INDIAN TOBACCO ASSOCIATION (2005) 7 SCC 396 THE DOCTRINE OF FAIRNESS WAS HELD TO BE RELEVANT FACTOR TO CONSTRUE A STATUTE CONFERRING A BENEFIT IN THE I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 17 OF 21 CONTEXT OF IT TO BE GIVEN A RETROSPECTIVE OPERATION AND T HAT THE SAME DOCTRINE OF FAIRNESS TO HOLD THAT A STATUTE WAS RETROSPECTIVE IN NATURE WAS APPLIED IN THE CASE OF VIJAY V. STATE OF MAHARASHTRA & ORS. (2006) 6 SCC 286. IT WAS HELD THAT WHERE A LAW IS ENACTED FOR THE BENEFIT OF COMMUNITY AS A WHOLE EVEN IN THE ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO BE RETROSPECTIVE IN NATURE. THEIR LORDSHIPS ALSO NOTED THAT THIS RETROSPECTIVELY BEING ATTACHED TO BENEFIT THE PERSONS IS SHARP CONTRAST WITH THE PROVISION IMPOSING SOME BURDEN OR LIABILITY WHER E THE PRESUMPTION ATTACHES TOWARDS PROSPECTIVITY. 27. IT MAY APPEAR TO BE SOME KIND OF A DICHOTOMY IN THE TAX LEGISLATION BUT THE WELL SETTLED LEGAL POSITION IS THAT WHEN A LEGISLATION CONFERS A BENEFIT ON THE TAXPAYER BY RELAXING THE RIGOUR OF PRE - AMEND MENT LAW AND WHEN SUCH A BENEFIT APPEARS TO HAVE BEEN THE OBJECTIVE PURSUED BY THE LEGISLATURE IT WOULD A PURPOSIVE INTERPRETATION GIVING IT A RETROSPECTIVE EFFECT BUT WHEN A TAX LEGISLATION IMPOSES A LIABILITY OR A BURDEN THE EFFECT OF SUCH A LEGISLATI VE PROVISION CAN ONLY BE PROSPECTIVE. WHAT LOGICALLY FOLLOWS FROM THE LAW SO SETTLED BY A CONSTITUTIONAL BENCH OF HONBLE SUPREME COURT IS THAT THE OPERATION OF RULE 10BA WHICH CONFERS THE BENEFIT OF AN ADDITIONAL METHOD OF ASCERTAINING ARMS LENGTH PRI CE AND INTER ALIA RELAXES THE RIGOUR OF CUP METHOD CAN ONLY BE RETROSPECTIVE IN EFFECT. IN OUR CONSIDERED VIEW THEREFORE RULE 10BA IS TO BE HELD AS EFFECTIVE FROM 1 ST APRIL 2002 I.E. THE TIME WHEN TRANSFER PRICING PROVISIONS WERE INTRODUCED IN INDIA. 28. IN VIEW OF THE ABOVE DISCUSSIONS THE CONCLUSION ARRIVED AT BY THE COORDINATE BENCHES MEETS OUR CONSIDERED APPROVAL NOT ONLY BECAUSE OF OUR RESPECT FOR THE PIONEERING WORK DONE BY THE COORDINATE BENCHES BUT ALSO BECAUSE OF OUR ANALYSIS ELSEWHERE IN T HE ORDER AND THE SUBSEQUENT DEVELOPMENTS IN JURISPRUDENCE AS ALSO IN LEGISLATIVE FIELD SUPPORTING THE CONCLUSIONS ARRIVED AT BY THE COORDINATE BENCHES. THE BUSINESS MODEL OF 50:50 AS WAS ADMITTEDLY PREVALENT IN THE LINE OF BUSINESS ACTIVITY OF THE ASSE SSEE AND AS IS FOLLOWED BY THE ASSESSEE THUS INDEED SATISFIES THE TEST FOR DETERMINATION OF ARMS LENGTH PRICE. 29. FOR THE REASONS SET OUT ABOVE AS ALSO RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF THE COORDINATE BENCHES WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. WE HOLD THAT THE ASSESSEES CONTENTION TO THE EFFECT THAT THE ARMS LENGTH PRICE OF SERVICES RENDERED TO OR RECEIVED FROM THE ASSOCIATED I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 18 OF 21 ENTERPRISES WHICH WAS COMPUTED ON THE BASIS OF THE SAME 50:50 MODEL AS IS THE INDUSTRY NORM AND AS HAS BE EN EMPLOYED BY THE ASSESSEE FOR COMPUTING SIMILAR SERVICES TO THE INDEPENDENT ENTERPRISES WAS AT ARMS LENGTH. ACCORDINGLY THE IMPUGNED ARMS LENGTH PRICE ADJUSTMENT OF RS 2 09 00 179 STANDS DELETED. 6. WE ARE ALSO ALIVE TO THE FACT THAT THE INSERTION OF RULE 10 BA PARTICULARLY IN VIEW OF RECENT HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF CIT VS VATIKA TOWNSHIPS PVT LTD (2014 TIOL 78 SC) IS REQUIRED TO BE HELD AS RETROSPECTIVE IN EFFECT. GOING BY THIS RULE AS WE NOTED IN THE CASE OF TOLL GLOBAL F ORWARDING (SUPRA) THE 50:50 BUSINESS MODEL AS IS SAID TO HAVE BEEN ADOPTED BY THE ASSESSEE WOULD MEET ARMS LENGTH TEST. IT THUS APPEARS TO BE FREE FROM DOUBT THAT 50:50 BUSINESS MODEL AS HAS BEEN ADOPTED BY MANY ASSESSEES IN LOGISTICS AND FREIGHT FORW ARDING INDUSTRY IS AS PER THE RECENT DEVELOPMENTS IN THE LEGISLATION AND JURISPRUDENCE IN THE TRANSFER PRICING A VITAL FACTOR IN DETERMINING THE ARMS LENGTH PRICING OF ASSESSEES INTERNATIONAL TRANSACTIONS. WE HAVE ALSO NOTED THAT THE ASSESSEE HAD SPEC IFICALLY TAKEN UP THE ISSUE OF APPRECIATION OF THIS UNIQUE 50:50 BUSINESS MODEL BEFORE THE DRP IN THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09. AS REGARDS THE ASSESSMENT YEAR 2006 - 07 IT HAS BEEN NOTED THAT THE ASSESSEES CLAIM IS THAT THE ASSESSEE HAD PLEADED FOR APPRECIATION OF THIS 50:50 BUSINESS MODEL WHICH IS UNIQUE TO THE ASSESSEES LINE OF BUSINESS ACTIVITY AND WHEN THE TRIBUNAL DID NOT DO SO THE ASSESSEE EVEN MOVED A MISCELLANEOUS PETITION UNDER SECTION 254(2) WHATEVER BE THE INHERENT LIMITATIONS O F THIS PROVISION ON THAT POINT. THAT ASPECT OF THE MATTER IS HOWEVER ACADEMIC BECAUSE WHETHER OR NOT SUCH A MISCELLANEOUS PETITION IS ACCEPTED OR WHETHER OR NOT EVEN SUCH A POINT WAS SPECIFICALLY TAKEN UP IN THE FIRST ROUND OF PROCEEDINGS THE ASSESSEE DOES INDEED IN OUR CONSIDERED VIEW HAVE A RIGHT TO RAISE THAT ASPECT OF THE MATTER IN THE SECOND ROUND OF PROCEEDINGS BEFORE THE TRIBUNAL. IN HOLDING THIS VIEW WE FIND SUPPORT FROM A LANDMARK DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF INVENTO RS IND USTRIAL CORPORATION LTD V CIT ( 194 ITR 548) WHEREIN SPEAKING THROUGH I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 19 OF 21 HONBLE J USTICE T D SUGLA WHO HAD ALSO ADORNED THE OFFICE OF THE PRESIDENT OF THIS TRIBUNAL FOR LONG YEARS NOTED THAT THE CALCUTTA HIGH COURT HAS TAKEN A VIEW IN THE CASE OF CI T VS SHREE GANESH JUTE MILLS LTD (109 ITR 562) THAT ANY NEW GROUND NOT NECESSARILY A GROUND PERTAINING TO JURISDICTIONAL ASPECT COULD BE TAKEN UP FOR THE FIRST TIME BEFORE THE APPELLATE ASSISTANT COMMISSIONER IN THE SECOND ROUND OF PROCEEDINGS AND THA T IN THE CASE OF G M CONTRACTOR VS GUJARAT ELECTRICITY BOARD AIR 1972 SC 792 AT P 793 THE SUPREME COURT HAS HELD AS UNDER: IT IS STATED THAT THIS GROUND GOES TO THE VERY ROOT OF THE MATTER BUT IT WAS NOT RAISED BEFORE THE HIGH COURT. THE APPELLANT S OBJECTED TO THIS GROUND BEING ALLOWED TO BE TAKEN UP BUT WE CONSIDER THAT AS THIS GROUND OF GOES TO THE VERY ROOT OF THE MATTER IT SHOULD BE ALLOWED. SO FAR AS THIS PARTICULAR CASE BEFORE HONBLE BOMBAY HIGH COURT WAS CONCERNED IT DEALT WITH A JU RISDICTIONAL ISSUE BEING TAKEN UP IN T HE SECOND ROUND OF PROCEEDINGS BUT IN THE EXTENDED DISCUSSIONS CONTAINED IN THIS ERUDITE JUDGMENT HONBLE COURT DID SPECIFICALLY DEAL WITH NON - JURISDICTIONAL ISSUES AS WELL AND RECOGNIZED THAT EVEN THOSE ASPECTS NEW GROUNDS COULD PROBABLY BE TAKEN UP IN THE SECOND ROUND OF PROCEEDINGS. WHEN SUCH ARE THE VIEWS OF HONBLE COURTS ABOVE IT WOULD INDEED BE APPROPRIATE FOR US TO BE SWAYED BY THE PEDANTIC ISSUES BEING RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE - PART ICULAR LY IN A SITUATION IN WHICH WE ARE DEALING WITH AN EMERGING AREA OF TAX LAWS WHERE JURISPRUDENCE IS STILL IN EARLY STAGES OF DEVELOPMENT AND IN A SITUATION IN WHICH THE PLEA HAS BEEN RAISED DUE TO SUBSEQUENT DEVELOPMENTS IN LEGISLATION AND JURISPRUDE NCE. 7. IN VIEW OF THE ABOVE DISCUSSIONS AS ALSO BEARING IN MIND ENTIRETY OF THE CASE WE DEEM IT FIT AND PROPER TO ADMIT THE ADDITIONAL GROUND OF APPEA L IN ALL THESE THREE APPEALS. 8. EVEN AS WE ADMIT THE ADDITIONAL GROUNDS OF APPEAL WE ARE ALIVE TO THE FACT THAT ALL THE RELATED ASPECTS OF THE MATTER HAVE BEEN EXAMINED AT THE I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 20 OF 21 ASSESSMENT STAGE. WE THEREFORE CONSIDER IT APPROPRIATE TO REMIT THE MATTER TO THE ASSESSMENT STAGE FOR EXAMINATION OF THE PLEA RAISED BY WAY OF THE ADDITIONAL GROUND OF APP EAL AS SET OUR EARLIER IN THIS ORDER AND FOR EXAMINATION OF ALL THE RELATED FACTS AS MAY BE NECESSARY RELATIN G TO THE SAID GROUND OF APPEAL. 9. WITH A VIEW TO ENSURE THAT THE ASSESSEE DOES NOT RESORT TO ANY DELAYING TACTICS IN THE REMAND ED PROCEEDINGS WE DIRECT THE ASSESSEE TO APPROACH THE ASSESSING OFFICER AND THE TRANSFER PRICING OFFICER WITHIN FOUR WEEKS OF RECEIVING THIS ORDER SO AS TO ENSURE THE DATE OF HEARING FOR THE REMANDED PROC EEDINGS AND TO FULLY COOPERATE IN EXPEDITIOUS DISPOSAL OF THE R EMANDED PROCEEDINGS. IN CASE THE ASSESSEE DOES NOT COOPERATE IN TIMELY COMPLETION OF THE REMANDED PROCEEDINGS OR RESORTS TO ANY DILATORY TACTICS THE ASSESSING OFFICER AND THE TRANSFER PRICING OFFICER SHALL BE AT LIBERTY TO DECIDE THE MATTER BASED ON MATER IAL ON RECORD. 10. WITH THESE DIRECTIONS THE MATTER STANDS REMITTED TO THE ASSESSMENT STAGE. AS THE MATTER HAS BEEN REMITTED TO THE ASSESSMENT STAGE FOR THE SHORT REASONS SET OUT ABOVE WE SEE NO NEED TO DEAL WITH OTHER GROUNDS OF APPEAL WHICH ARE GIVEN THIS CONCLUSION RENDERED ACADEMIC AND INFRUCTUOUS. 11. IN THE RESULT ALL THE THREE APPEALS ARE ALLOWED FOR STATI STICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 18 TH DAY OF NOVEMBER 2014. SD/XX SD/XX C M GARG PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NEW DELHI 18 TH DAY OF NOVEMBER 2014 I.T.A. NO .: 916/DEL/12 5825/DEL/11 AND 6289/DEL/12 ASSESSMENT YEAR: 2006 - 07 2007 - 08 AND 2008 - 09 PAGE 21 OF 21 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) DRP (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES NEW DELHI