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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य, राजे�� सद�य राजे�� राजे�� केकेकेके अनुसा राजे�� अनुसा अनुसार /PER RAJENDRA, AM- अनुसा Challenging the orders,dated 30/10/2014 and 09/06/2015,of the Dispute Resolution Panel-II Mumbai the Assessee has filed the appeals for the above mentioned two assessment years (A.Y.s).Assessee,an Indian company was incorporated on 10/07/2001. It is a subsidiary of Safilo International B.V. ('Safilo B.V.') which holds 88.50% of the shares of Safilo India and the remaining 11.50% of the shares are held by Lion Holdings Ltd., Malta.It is a part of the Safilo Group with Safilo S.p.A,Italy.The parent company is engaged in manufacture, marketing and distribution of spectacle frames, sunglasses,etc.under its own brand name and is also licensed to sell spectacles, frames, sunglasses, etc. of other reputed brand names.The assessee is engaged in the distribution of Safilo products (spectacles, sunglasses, etc.) in India as per the distribution agreement(DA)with Safilo S.p.A.Details of filing of returns of income returned incomes, assessed incomes, etc, can be summmarised as under :-
A.Y. ROI filed on Returned Income Asstt. dt. Assessed Income 2010-11 01/10/2010 Rs.5,33,47,107/- 24/12/2014 Rs.11,89,12,550/- 2011-12 30/11/2011 Rs.1,78,82,059/- 09/06/2015 Rs.1,99,02,330/- ITA/588/Mum/2015,AY.2010-11: 2.During the assessment proceedings,the AO found that the assessee had entered in to international transactions (IT.s)with its Associate Enterprise(AE).To determine the arm’s 588/M/15 & 4940/M/15- Safilo India Private Limited length(ALP)of the transactions,he made a reference to the Transfer Pricing Officer(TPO). Vide his order,dt.1/2/122013,the TPO proposed total adjustment of 7.18 crores. Accordingly, the AO issued a draft assessment order to the assessee who challenged it before the DRP. The DRP issued directions on 30/10/2014,giving part relief to the assessee.The AO passed the final order after receiving the directions of the DRP. 3.First effective ground of appeal is about TP adjustment of Rs.6.48 crores.During the Transfer pricing(TP)proceedings,the TPO found that the assessee had reported two IT.s namely purchase of optical frames and sunglasses(Rs.13.53 crores)and Purchase of promo - tional materials (Rs.47,80,515/-),that it had adopted the RPM and CUP method respectively as the most appropriate method to determine the ALP for its IT.s.He observed that it had not reported the following IT.s: SN. Nature of International transaction Value in (Rs.) i. Advertising spend in terms of Art. 6.4 Rs.2,07,82,059/-debited in P&L as ‘ Advertis - of ‘Distribution Agreement’(04.10. 01) ing & sales promotion’. ii. Market information report in terms of Not quantified Art 11 of the above agreement iii. Claim of damaged goods Claimed in Profit & Loss account Rs.6,48, 60, 993/- as amount of Write down on carrying value of traded goods. During the TP proceedings,he observed that the assessee had claimed Rs.6.48 crores under the head write down of traded goods. He required the assessee to file explanation in that regard.It was stated that,during the year,stock of Rs.6,48,60,993/-declared as unfit for sale and was destroyed.The TPO directed the assessee to explain as to whether the agency agreement entered with the AE required it to destroy the branded products. After going through the Distribution Agreement(DA).dtd. 16/7/2001,the TPO held that it was the responsibility the assessee to notify defects in the products to the AE,that the defective products were to be kept for inspection of AE for two years, that it had not got anything on record to prove that the defective products were reported to the AE, that the stock statement of the assessee did not prove that destroyed products were more than two years old, that the AE was duty bound to replace the goods or to repair the goods,that it had not claimed the replacement/repairs as stipulated in the terms of the agreement,that expenditure of Rs.6.48 crores was the expenditure of the AE and that same was incurred by assessee on behalf of the AE. He observed that it was an IT,that the assessee had not reported the transaction, that it was required to claim damages from AE as per the agreement, that the cost of goods purchased had to be reimbursed to the assessee, that under the comparable uncontrolled situation the amount of cost of goods written off had to be reimbursed to the assessee,that the 588/M/15 & 4940/M/15- Safilo India Private Limited written down value of carrying cost of goods had to be basis for application of CUP method. Finally,he determined the ALP of the transaction at Rs.6.48 crores. 3.1.Before the DRP,the assessee filed objections and made detailed submissions. After considering available material,it held that the TPO had rightly treated the impugned sum of write off in the carrying cost of the traded goods as an IT, that the value of closing stock was reduced by the assessee on account of certain unsaleable goods,that it had a direct impact on the profit and loss of the assessee as well as the assets of the company, that the DA provided for compensation in respect of same from the AE ,that the evidence produced by it in the form of certificates of value and aging schedules of the goods merely indicated that the goods had in fact become unsaleable,that it did not establish the fact that the defect was caused due to default of assessee or that there were no defect at the time of import, that it could not be held that writing-down in respect of traded goods was not recoverable from the AE,that similar writing down had been undertaken in the preceding year,that such writing down clearly proved that purchase price of imported goods were overstated. Finally it held that TPO had rightly treated the write-down in the value of traded goods as an IT,that ALP of an IT had to be necessarily determined. It further observed that the contention of the assessee that the write-down of the trading goods was an extra ordinary event, was totally devoid of merit, that write-down could not be ignored for calculating Gross Profit margin that there was no separate debit note.With regard to the assessee's alternative argument that write-down should be considered to reduce the profit margin of the earlier years right from FY.2004 up to FY.2009,the DRP held that the argument was totally without any merit,that the events happened in the previous year had to be considered,that accounts could not be re-casted according to convenience of the AO/assessee, that the assessee, in its audited balance sheet, had written down the carrying cost of traded goods during the year under appeal,that there was no basis to notionally apportion the same to various years in the past and then contend that even after write-off the profits were at arm's length in all those earlier years,that no such contention had ever been raised by the assessee in those earlier years, that the same was an afterthought. 3.2.The DRP also considered the other alternate claim made by the assessee.It was argued that if at all any adjustment was to be made, it should be restricted to the sum of Rs.3.01 crores by adjusting the value of imported goods by taking the correct value of cost of goods sold in computing the gross profit margin.The DRP held that as per the agreement the assessee was entitled to recover the costs of damaged goods from AE,that the cost of those 588/M/15 & 4940/M/15- Safilo India Private Limited items written off was necessarily the ALP,that there was no reason why the adjustment was to be restricted in any manner,that it would be only when it was considered that the write off was not recoverable from AE,that as per DA the assessee was entitled to recover the value of write off,that there was no justification in restricting the adjustment. 3.3.Before us,the Authorised Representative(AR)argued that the departmental authorities erred in alleging that there existed an arrangement between the assessee and the AE,that they erred in contending that Safilo Italy was required to replace the goods or repair the goods,that they failed to appreciate that the event of "write down on carrying value of traded goods" was an extra-ordinary event,that none of the comparables had such an extra ordinary event,that write down of traded goods should not be considered for calculating PLI,that in the case of the assessee the goods were lying in the stock for several years,that same were not in a saleable condition,that gross margin earned by the assessee was at arm’s length after allocation of stock write down to respective AY.s.,that the TPO and the assessee had accepted GP/Sales ratio as the PLI for determining ALP in respect of imported goods,that even after considering the revised sales/GP ratio of the petitioner for the year under appeal after allocating stock write down to respective years the margin was as arm’s length vis a vis the average gross profit to sales ratio of the comparables,that the TPO had not adopted any of the methods,as envisaged by Rule 10B of the Rules,for making adjustment,that once property was destroyed CUP could not be appelied.(Pg.27 & 29 paras 64,67-68 of ITA 7349 of M 2012).He relied upon the cases of M/s. Johnson & Johnson (IT Appeal No.1291 of 2014, AY. 2006-07,dtd.03.04.2017 of Hon’ble Bombay HC),Federal Mogul Automative Products (India)Pvt. Ltd.(ITA/848 of 2015,AY.2003-04 dtd.06.11.2015 of Hon’ble Delhi HC),M/s. Tuppeware India Pvt.Ltd. (ITA/2140/Del/2011& other appeals,AY.2003-04 dtd.29.08.2014), Transwitch India Pvt. Ltd.(ITA/6083/Del/2010,AY.2006-07,dtd. 30.03.2012) and Accounting Standard (AS)-5. The Departmental Representative (DR) argued that transaction in question was an IT,that no details of damaged stock was provided,that it was not an extraordinary item which had to be excluded,that the TPO had rightly applied RPM for determining the ALP of the transaction, that provisons of section 92(2)(b) were applicable.He relied upon the case of Thomas Cook (India)Ltd.(70 taxmann.com 322) 4.We find that the assessee had written off goods worth Rs.6.28 crores during the year under appeal,that it had not shown the transaction as an IT,that the TPO and the DRP were of the view that stock written off was an IT and that ALP of the transaction had to be 4 588/M/15 & 4940/M/15- Safilo India Private Limited determined,that they referred to the clause 25 of the DA entered in to by the AE with the assessee,that the assessee on the basis of same agreement contended that same proved the stand taken by it.In our opinion, it would be useful to go through the relevant portion of the agreement i.e.Clause 25.2 of the agreement.As per the said clause the assessee had to notify the any claim regarding quantity,defects in quality,lack of compliance upon arrival of the products,that the guarantee would be limited to defects of products arising from defects in planning,materials or manufacturing attributable to the AE,which in turn would render the product unsaleable by the assessee.It was also provided in the sub clause that guarantee would not be valid in absence of assessee’s proof of ‘proper use,maintenance and storage’.The defect was to be lodged with the AE with in a period of 30 days.The AE had provided guarantee of the goods for a period of two years from the date of delivery. A bare reading of the above terms and conditions it is clear that the assessee could return the goods,if there was any manufacturing defect.There was no contractual obligation to replace goods when the same had been damaged or destroyed after the title of goods was transferred to the assessee.Generally all manufacturers replace the goods supplied by them to the agents/wholesalers or semi wholesaler if it is found that same are suffering from manufacturing defects.Besides,some time period is also fixed for returning back the defective products to the supplier.Clause 25 of the agreement,as referred to above,falls in the category of general-replacement-guarantee given by the manufacturers.We are not inclined to confirm the views of the DRP that the agreement was also for replacement of the goods that were not defective i.e. were not salable because of reasons other than manufacturing defect.In other words,it is not an omnibus agreement covering all the eventualities in its broader umbrella.So,we hold that the DRP should not have held that it was an IT.The AE was not involved in any manner in writing off of the obsolete stock.The goods were sold by the AE in the earlier years and in the year under appeal and same were found to be sold at arm’s length.For the purchases from the AE no adjustment was made by the TPO in any of the years.So called guarantee period was also over for the goods that were received,by the assessee,before two years.Thus,there was no relation between the writing off of obsolete stock and the purchases made by the assessee during the year under appeal.The Indian entity had taken a decision considering the local ground realities and none of the ingredients,that make a transaction an IT.,was existing in the writing off carried out by the assessee.Each and every business transaction cannot be held an IT. 4.1.Obsolence of items like sunglasses or readymade garments or footwares or for that 588/M/15 & 4940/M/15- Safilo India Private Limited matter any product related to fashion is a well known fact of commercial and business world. Shelf-life of such items is not very long and with the passage of time they become ‘out of fashion’ items.It is also a known fact in the business of sunglasses the salesmen use eyewares for demonstration purpose and that such an item would also become unsalable.To clear such inventories businessmen have to find some way.We find that in the case under consideration,the assessee decided to write off and destroy the obsolete stock-in-trade.In its meeting the Board of Directors of the assessee-company passed a resolution regarding writing off of goods.Age-wise inventory of the obsolete stock was prepared before writing off the stock that remained unsold.It had furnished the evidence of destroying the goods before the departmental authorities.Here,we would like to refer to the judgment of the Hon’ble Delhi High Court in the case of Federal Mogul Automative Products (India)Pvt. Ltd.(supra) and it reads as under: “1. This appeal by the Revenue is directed against an order dated 25th March. 2015 passed by the Income Tax Appellate Tribunal ('TTAT') in for the Assessment Year ('AY1) 2003-04. The question urged by the Revenue is whether the Commissioner of Income Tax (Appeal) [CIT(A)] erred in accepting the plea of the Assessee that the provision for stock obsolescence/inventory for a sum of Rs.2,53,06,608/- should be excluded from the net operating expenditure of the Assessee for determining the net operating margin since it was an abnormal and extraordinary expenditure? 2. A perusal of the order of the CIT (A) in this case reveals that the Assessee applied the Transactional Net Margin Method to the import of raw material from its associated enterprise. The Assessee undertook a transfer pricing study of eight comparables with the profit level indicator being operating margin on operating income. Since on such analysis, the operating margin on operating income of the Assessee (10.94%) was higher than the arithmetic mean of the weighted average margins earned by the comparables (8.04%), the Assessee contended that the international transactions between it and its AEs were at arm's length.
The Transfer Pricing Officer (TPO) re-computed the net operating margin and included the provision for obsolescence in the sum of Rs. 2,53,06,608 as part of the operating expenditure of the Assessee. As a result, the difference of Rs.1,81,79,699 in the net operating margin was attributed to the import of raw materials and accordingly, the TPO made a downward adjustment to the value of import of raw materials by the Assessee from its AE.
4. The CIT (A) after analysing the stock obsolescence to sales ratio for the comparables found that none of the comparable companies, except Kirloskar Oil Engines Ltd. (KOEL) had made any provision for stock obsolescence/non-moving inventory. In the case of KOEL, the provision for stock obsolescence was only 1.03% of its sales whereas it was 8.98% as far as the Assessee was concerned. The CIT (A) also noted that the mean of the revised margin of the comparable companies after considering the provision for non-moving inventory as non-operating expenses was 8.17% as compared to 10.85% in the case of the Assessee. The CIT(A) accepted the plea of the Assessee that since the provision for stock obsolescence was 'abnormal' and extraordinary in nature, it was required to be excluded for the cost of the Assessee in computing its operating margin. Since the said item occurred only in KOEL. the CIT (A) was of the opinion that its margin needed to be re-worked. The rationale for this was that the same treatment had to be accorded to the tested party i.e. the Assessee and its comparables. Since the Assessee's ALP was above the margin of the comparables, the proviso to Section 92 C (2) of the Act was held not to apply. 5 Having heard the learned counsel for the Revenue, the Court is unable to discern any legal infirmity in the approach of the CIT (A) which was upheld by the ITAT in the impugned order. It is sought to be suggested that the Assessee makes a provision for stock obsolescence year after year and,therefore, this could not be treated as 'extraordinary' or 'non-recurring'. However, when one peruses the order of the CIT (A), it is seen that the question was not whether the Assessee was claiming it only as a one-time measure but whether it was gaining any undue advantage in using this device as a measure for avoiding tax. Ultimately, the entire exercise of determining ALP for international transactions is to ensure that there is no avoidance of tax by an Assessee by resorting to an accounting device. The Court 6 588/M/15 & 4940/M/15- Safilo India Private Limited is unable to hold that the provision made for stock obsolesce the Assessee resulted in any undue advantage to it. The comparability analysis undertaken by the CIT (A) which has been affirmed by the ITAT does not suffer from any legal infirmity. 6. No substantial question of law arises. The appeal is dismissed.”
4.2.We find that the year under appeal is not the first occasion when the assessee had written off out-of-fashion,old and obsolete stock.In the earlier years also,it had carried out same exercise and the TPO had not made adjustment towards such writing off of stock.In the AY.s.2004-05 to 2006-07,it had written off stock and no TP adjustment was made.It is true that the principles of res judicata do not apply to income tax proceedings. But, consistency demands that TPO/AO should record the reasons if they want to make some addition in a particular year-especially if assessee’s similar claim is accepted in scrutiny assessment in the earlier years.Basic principles of taxation jurisprudence stipulate that without assigning some plausible reason stand taken in earlier AY.s. should not be disturbed in later years.In the matters of Dalmia Promoters and Developers (P.)Ltd.(281 ITR346) and Excel Industries (358ITR295)have upheld the above principle.In the case of Dalmia Promoters and Developers (P.)Ltd.(supra),the Hon’ble Court has held as follow: “For rejecting the view taken for the earlier assessment years, there must be a material change in the fact situation. There was no gainsaying that the previous view would have no application even in cases where the law itself had undergone a change but before an earlier view could be upset or digressed from, one of two things must be demonstrated, namely, a change in the fact situation or a material change in law whether enacted or declared by the Supreme Court. In the absence of a change in the facts or any additional input there was no compelling reason for taking a different view.” We do not find any reason,in the order of the AO/TPO,for not allowing write off of obsolete stock for this year.In other words,they have made addition without mentioning the new facts that had come to their notice while completing the assessment of the year under appeal and which were different form earlier AY.s. 4.3.Indian Parliament had introduced the TP provisions in the statute to curb the malpractices of those assessees who would shift profit outside India and would pay no or less taxes in India by showing lesser market value of goods sold/purchased or services offered/availed to/from their AE.s.The basic intention behind the provisions of Chapter X is to ensure that assessees should purchase or sell their goods/services at the rates they would pay or charge from the independent third parties.Fair market value should prevail in the transactions that are entered in to by the AE.s.Income tax Rules, 1962 (Rules) stipulate the methodology for computation of TP adjustments.As per the existing Rules for determining the APL of a transaction,the TPO.s should use any of the six methods provided therein.He applied CUP as the most appropriate method for making adjustment to 588/M/15 & 4940/M/15- Safilo India Private Limited the income of the assessee.But in our opinion CUP was not the method to determine the ALP of the disputed transaction.Lastly,we hold that destroying the obsolete stock after writing it off was an extra ordinary event. Considering the above,we are of the opinion that the DRP was not justified in confirming the order of the TPO who had made upward adjustment under the head writing off of obsolete stock.GOA-2 is decided in favour of the assessee. 5.TP adjustment (Rs.17.50 lakhs)in relation to provision of market information services(MIS) provided to the AE is the subject matter of the third ground of appeal
.During the TP proceed -ings,the TPO noted that the assessee had not reported its provision of service in providing Market Information report to its AE as an IT,that the AE had not compensated the assessee for the services.He determined the adjustment at 2% of the turnover of the assessee at Rs 70,03,313/- 5.1.After considering the objections,filed before it,the DRP held that the assessee was required to provide local market information to its AE as per DA,that agreement benefitted both,that the argument of the assessee that it was the assessee's prerogative to conduct its business in any manner was not acceptable,that the TP provisions were distinct from section 37 which dealt with expenses incurred for business,that under the TP provisions the assessee had to demonstrate that under uncontrolled conditions,that no compensation was to be received from another entity to which market information was provided,that the assesseee failed to do so,that it did not even report the transaction as an IT.Referring to the provisions of Rule
10. B,the DRP held that the assessee could adopt any other method,that in the preceding years,on the same issue,the DRP had accepted 0.5% of turnover to be reasonable. Finally,it restricted the adjustment to 0.5% of the turnover of the assessee i.e.to Rs.17.05 lakhs. 5.2.Before us,the AR contented that the assessee did not provide any service to Saffilo Italy, that no market information report or any other material was collated by it for the purpose of providing it to its AE,that the TPO/DRP had determined the ALP on an ad hoc basis i.e. without following one of the prescribed method, that applying rate of half a percent of the turnover of the assessee was not in accordance with the provisions of law.He referred to the cases of Kodak India Pvt.Ltd.(ITA/7349/Mum/2012),Nimbus Communications (38SOT246); Ness Technologies (India) Pvt.Ltd.(ITA/696 and 1006/Mum/2016) and Kodak India Pvt. Ltd.(ITXA No.15 of 2014-Hon’ble Bombay High Court, dated 11.07.2016) and stated that it 588/M/15 & 4940/M/15- Safilo India Private Limited was mandatory for the TPO to compute ALP by applying one of the prescribed methods.The DR supported the order of the DRP and stated that the DRP had given a substantial relief to the assessee. 5.3.We have heard the rival submissions and perused the material before us.We find that the TPO had held that the assessee was providing information to its AE,that it was not being compensated for such services,that he referred to the clause 11 of the DA in his support to hold that it was duty bound to provide MIS on quarterly basis,that he estimated the ALP of the said activity at 2% of the total turnover of the assessee,that the DRP reduced it to 0.5%.In our opinion there is nothing in the DA that leads to the conclusion that the assessee was required to furnish MIS to its AE.Even if ,for the sake of argument it is accepted,then the AO/DRP had not followed the valid procedure for making the adjustment.As per the provisions of chapter X of the Act,the departmental authorities are required to follow one of the methods as envisaged by Rule 10 of the Rules.They cannot make ad-hoc disallowance. While making assessment under other sections of the Act ad hoc disallowance can be made e.g. rate of GP or expenses incurred for personal use of the partners etc.But,under section 92 it is not possible.It is a special section which prescribes strict rules for the assessee as well as the AO. Both of them are supposed to adhere to the rules.Here,we would like to refer to the case of M/s. KODAK India Pvt.Ltd.,decided by the Hon’ble Bombay High Court(supra)and it reads as under: “1.This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act) challenges the order dated 30th April, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal ). The impugned order is in respect of Assessment Year 2007-08. 2.Being aggrieved by the impugned order of the Tribunal, the Revenue has preferred the present appeal raising the following two questions for our consideration :- xxxxx (3) The respondent assessee is an Indian subsidiary of M/s. Eastman Kodak Co. USA (EKC). During the previous year relevant to the assessment year the respondent assessee sold its imaging business to one M/s. Carestream Health India Pvt. Ltd, The buyer company i.e. M/s. Carestream Health India Pvt. Ltd. was a Indian subsidiary of M/s. Carestream Inc. an USA company. The case of the respondent assessee was that the transaction of sale of imaging business by the respondent assessee to M/s. Carestream Health India Pvt. Ltd. was a transactions between the two domestic non Associated Enterprises. Hence 'the provision of Chapter X of the Act would have no application. Thus, not even declared this transaction in its 3 CEB report.
However the Transfer Pricing Officer (TPO) while examining another Transfer Pricing issue came across the impugned transaction. It held on the basis of Section/92B(2) of the Act that even if the transaction between Kodak\India Pvt. Ltd. ' and M/s. Carestream Health India Pvt. Ltd. was between two domestic non Associated Enterprises,yet it would still be considered to be an International Transaction and Chapter X of',the Act would be applicable.This on the basis that the Holding companies of both the respondent assessee as well as M/s. Carestream Health India Pvt. Ltd. had entered into a global agreement for sale 588/M/15 & 4940/M/15- Safilo India Private Limited of its business. This global agreement was prior in point of time to the sale of imaging business by the respondent assessee to M/s. Carestream Health India Pvt. Ltd. The Assessing Officer passed a draft Assessment Order under Section 144C of the Act on the basis of the order of the TPO.
Being aggrieved, the respondent assessee approached the Dispute Resolution Panel (DRP). However, the view of the TPO was upheld by the DRP.
On appeal, the Tribunal on interpretation of Section ;92B (2) of the Act, as in force during the subject assessment year concluded that the transaction would not be covered by the definition of International Transaction. This inter alia on the ground that the prior to amendment to Section 92B(2) of the Act w.e.f. 1st April, 2015 such a transaction was not deemed to be an International Transaction. Further, the impugned order also examined the issue on facts and and held that even if the Revenue's interpretation is accepted, no addition on account of Arms Length Price..(ALP) is warranted.Moreover, it also held that the ALP was sought to be determined by a method not prescribed under Section 92C of the Act and the prayer for restoration to the TPO to apply the prescribed method was rejected.(emphasis by us).
The grievance of the Revenue as evident from the question formulated is only in respect of interpretation of Section 92B of the Act. On the interpretation put on it by the Revenue, the impugned transaction would be covered by Chapter X of the Act.
The Revenue has not raised any grievance to the finding in the impugned order of the Tribunal, that even if one proceeds on the basis of theory of prior agreement, as provided in Sub-Section 2 of section 92B of the Act, yet the entire exercise of transfer of imaging business done by the Kodak India Pvt. Ltd. to M/s. Carestream Health India Pvt. Ltd. was independently done on its own terms and conditions. The global agreement arrived at between Its holding companies did not in any manner control the terms arrived at between the Kodak India Pvt. Ltd. and M/s. Carestrearn Health Pvt. Ltd. The aforesaid finding is not disputed by the Revenue before us.
Further,we find that the impugned order of the Tribunal rendered a finding of fact that the ALP for transfer of its imaging business ,as determined by the respondent assessee was reasonable is not disputed. The impugned order notes that average gross profit was Rs.4.49 crores and respondent assessee had worked out gross profit at Rs,5.98 crores to work out the consideration receivable. Thus, quite reasonable. This finding of fact has also not been challenged by the Revenue.
We must also record the fact that the ALP was arrived at by the Transfer Pricing Officer (TPO) by not adopting any of the methods prescribed under Section 92C of the Act. The method to determine the ALP adopted was not one of the prescribed methods for computing the ALP. It was not even any method prescribed by the Board. At the relevant time, i.e. for A.Y. 2008-09 Section 92C of the Act did not provide for other method as provided in Section 92C(1)(f) of the Act. The impugned order of the Tribunal holds that the method adopted by the Revenue to determine the ALP was alien to the methods prescribed under Section 92C of the Act. In the above circumstances, the Tribunal declined to restore the,issue to the Assessing Officer for re-determining the ALP by adopting one of the methods as listed out in Section 92C of the Act. This finding of the Tribunal has also not been challenged by the Revenue .
In view of the fact that the Revenue has accepted the order of the Tribunal on its finding on facts on the two issues as pointed out hereinabove as well as the refusal of the Tribunal to restore the issue of determination of ALP to the TPO by following one of the methods prescribed under Section 92C of the Act. Thus, the questions as formulated for our consideration even if answered in favour of the Revenue would become academic in the present facts. Thus, we see no reason to entertain this appeal. However, we make it clear that the issues of law which has been raised in the present appeal are left open for consideration in an appropriate case.”