TEEJAY INDIA PRIVATE LIMITED.,VISAKHAPATNAM vs. THE ACIT,, VISAKHAPATNAM

Per contra, the Ld. Departmental Representative submitted

that the Ld. AO has duly followed the directions of the Ld DRP as

evident from para 5 of the impugned assessment order.

available on record as well as the orders of the Ld. Revenue

Authorities. We find from the directions of the Ld. DRP wherein

the objections raised by the assessee with respect to providing

appropriate adjustment towards difference on account of working

capital, the Ld. DRP in para 2.1 of its order has directed the Ld.

AO to compute the mean of the working capital adjustment in

respect of the comparables retained. The Ld. AO in his order in

para 5 while considering the other directions of the Ld. DRP has

erred in not considering the directions of the Ld. DRP with regard

to working capital adjustment. We find that the Ld. AO has partly

carried out the directions and partly ignored the directions with

regard to working capital adjustment. We are therefore of the

considered view that it would be deemed fit to direct the Ld. AO/

Ld.TPO to consider all the directions of the Ld. DRP while

drafting the final assessment order. Accordingly, this legal

9 ground raised by the assessee is partly allowed for statistical

purposes.

Ld. AR submitted that it has requested for changing the method

from TNMM to CUP which was rejected by the Ld. DRP. The Ld.

AR submitted that for the AY 2011-12, this Bench of the Tribunal

has accepted the CUP method as Most Appropriate Method in the

assessee’s own case. The Ld. AR further submitted that as per

the OECD guidelines, the assessee is allowed to change the

Method if it is considered as an appropriate method. In this

connection, the Ld. AR relied on the decision of the Hon’ble Delhi

High Court in the case of Matrix Cellular International Services

Private Limited (ITA 484/2017). The Ld. AR further submitted

that the rate per unit of the fabric sold to AEs is Rs. 3.81 as

against the average rate per unit sold to Non-AEs stood at Rs.

3.56. The Ld. AR further submitted that the Revenue has not

appealed against the Tribunal order for the AY 2011-12 and

hence the issue is settled and therefore adopting the CUP Method

for the impugned assessment year is valid.

Per contra, the Ld. DR submitted that the assessee has

selected TNMM as Most Appropriate Method in its TP study

10 report. The Ld. DR also referred to the assessee’s own case in

ITA No. 154 & 155/Viz/2022 wherein under similar facts and

circumstances, the assessee has adopted TNMM as Most

Appropriate Method. Further, the Ld. DR also submitted that in

the case relied on by the Ld. AR, there was a secondary method

adopted by the assessee and therefore the Hon’ble High Court

directed to adopt the secondary method. The Ld. DR therefore

argued that in the instant case, there is no secondary method

prescribed in the TP report and hence the decision of the Hon’ble

Delhi High Court is distinguishable on facts. Countering the

arguments of the Ld. DR, the Ld. AR submitted that in the

assessee’s own case in ITA No. 154 & 155/Viz/2022 there were

multiple transactions and hence TNM method was used.

However, in the instant case, there is only one transaction i.e

sales and hence CUP method will be considered as Most

Appropriate Method.

available on record as well as the orders of the Ld. Revenue

Authorities. The case of the assessee is that in view of the facts

and circumstances of the instant case, CUP method will be Most

Appropriate Method to benchmark the international transaction

11 with its AEs. Even though, the assessee can resile from the Most

Appropriate Method as adopted in the TP Study Report provided

the new method confirms the requirement of Rule-10C(2) of the IT

Rules, 1962. The principle of Res Judicata is not applicable to

tax proceedings but at the same time, when there is no change in

the facts, then it is the requirement of law that consistency

should be maintained and the method will be adopted by the

assessee for benchmarking its international transaction should

not be disturbed. The assessee has adopted the TNMM during

the earlier and subsequent assessment years as Most Appropriate

Method. In the absence of any reasoning brought on record,

there is no merit in deviating or taking a stand contrary to the

accepted method in both the preceding and succeeding years. We

therefore find merit in the arguments of the Ld. DR and in the

present case, since there is no change in the facts and

circumstances which merits deviating from the TNMM to CUP

method to benchmark its international transactions. We are

therefore of the considered view that the change in method from

TNMM to CUP method cannot be entertained and thereby

dismissed the grounds raised by the assessee.

12 9. With regard to Grounds No. 3.1 to 3.7, the Ld. AR

submitted that the objections raised before the Ld. DRP were not

considered and rejected by the Ld. DRP. He therefore pleaded

that appropriate adjustment shall be made with respect these

grounds.

Per contra, the Ld. DR relied on the order of the Ld. DRP

and the Ld. Revenue Authorities.

available on record as well as the orders of the Ld. Revenue

Authorities. On perusal of the directions of the Ld. DRP dated

31/10/2016, we find that the Ld. DRP has observed and rejected

the objections raised by the assessee with respect to multiple /

prior year data and comparable companies while determining the

ALP in relation to the assessee that the assessee has failed to

establish that the use of data of earlier FYs could result in more

reliable results. Further, the Ld. DRP also relied on various

judicial pronouncements and Rule-10B(iv) of the IT Rules, 1962.

The assessee also failed to produce any data to establish its

objections raised before the Ld. DRP, even before us. Further, the

Ld. DRP also rejected the objections of the assessee with regard

to peculiar economic conditions faced by the assessee by

13 observing that any such differences are taken care of while

computing the mean margin. Further, with regard to abnormal

business loss and under-utilization of the capacity by the

assessee company, the assessee has failed to demonstrate such

factors which are unique to the assessee-company and does not

exist in the case of comparable companies. We find that the

assessee has also failed to produce or demonstrate such factors

even before us. With regard to non-operating and extraordinary

expenses, the Ld. DRP has observed that these cannot be

considered as operating expenses as it is only a provision made

in the books of account. We also find that the assessee has

failed to establish that the above expenses are extraordinary in

nature and these are not incurred by the comparable companies

which necessitate appropriate adjustment. We are therefore

inclined to uphold the directions of the Ld. DRP on the above

issues thereby rejecting the grounds raised by the assessee.

statistical purposes as indicated herein above.

14 Pronounced in the open Court on 13th February, 2024.

Sd/- Sd/- (दु�वू�आर.एलरे�डी) (एसबालाकृ�णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �या�यकसद�य/JUDICIAL MEMBER लेखासद�य/ACCOUNTANT MEMBER Dated :13.02.2024 OKK - SPS

आदेशक���त�ल�पअ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee–Teejay India Private Limited, Plot No. 15, 1. Brandix India Apparel City Private Limited SEZ, Pudimadaka Road, Atchutapuram, Visakhapatnam – 530 011. राज�व/The Revenue –Assistant Commissioner of Income Tax, Circle- 2. 5(1), 2nd Floor, Direct Taxes Building, MVP Double Road, Visakhapatnam, Andhra Pradesh. 3. The Principal Commissioner of Income Tax, आयकरआयु�त (अपील)/ The Commissioner of Income Tax 4. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, �वशाखापटणम/ DR,ITAT, 5. Visakhapatnam गाड�फ़ाईल / Guard file 6. आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam