PER N.K. BILLAIYA, ACCOUNTANT MEMBER, These two appeals by the Revenue are preferred against the common order of the CIT(A), Faridabad dated 06.02.2017 pertaining to assessment years 2011-12 and 2012-13. Since in both these appeals, the grounds are common, though the quantum may differ, both these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.

2. The common grievance of the Revenue reads as under: "On the facts and in circumstances of the case, the Ld. CIT(A) has erred on facts in law in deleting the addition of Rs.1,20,46,033/- [Rs. 4,58,23,613/- in Assessment Year 2012- 13] made by the Assessing Officer on account of difference in Arms Length Price of International Transactions disregarding the fact that the addition was made on the recommendation of the TPO which is an independent Authority to see the matter with regard to Arms Length Price.?

3. Briefly stated, the facts of the case are that the appellant- company is a wholly owned subsidiary of Knorr Bremse Far EaSt Limited and was engaged in the business of manufacturing of air brake sets of passenger cars and wagon coaches, shock absorbers for passenger cars and locomotives, distributor valves, computer control break system, tread bread unit and brake accessories. The manufacturing facility of the company is located as Faridabad, Haryana. The main customer of its products is Indian Railways.

4. For the sake of convenience, we are taking up the facts of Assessment Year 2011-12 and facts of Assessment Year 2012-13 are identical though quantum may differ.

5. During the F.Y. 2011-12 relevant to Assessment Year 2011-12, the international transactions undertaken by the assessee company are as under: S.no. International Transaction Value of Transaction (in INR) Most Appropriate Method selected by KB India

1 Purchase of raw materials & consumables 478,386,449 Transactional Net Margin Method

2 Sale of finished goods 93,223,599 ("TNMM")

3 Purchase of finished goods 215,230,184

4 Purchase of capital items 13,679,536

5 Provision of SAP Development Support Services 23,939,010 Provision of Designing Services 24,664,337

7 Provision of Order Procurement Services 592,565

8 Availing of Management Support Services 19,728,531

9 Availing of Professional Consultancy Services 20,229,296

10 Availing of Connectivity Services 3,099,363 Repair and Maintenance Support Services 10,639 Provision of Retro-fitment services 793,170

6. The TPO accepted the assessee companys selection of TNMM as the most appropriate method for determination of ALP for all the above international transactions except the following two items wherein he applied CUP as the most appropriate method:

i) Availing of professional consultancy services; and ii) Availing of management support services.

7. The TPO made adjustments on account of management support services of Rs. 1,97,28,531/- and on account of professional consultancy services of Rs. 2,02,29,296/- and added to the business income of the assessee.

13 Professional Charges for RS3 Project 31,311,174

14 Professional charges for CAF 4,387,300

15 Reimbursement of miscellaneous expense to AEs 2,857,636 No Benchmarking required

16 Reimbursement of miscellaneous 19,046,418 TOTAL TRANSACTIONS 951,179,207

8. The assessee carried the matter before the ld. CIT(A) and pointed out that the Tribunal in earlier years in assessees own case has deleted the adjustments and the order of the Tribunal has been upheld by the Hon'ble Punjab and Haryana High Court.

9. After perusing the order of the Tribunal and that of the Hon'ble Punjab and Haryana High Court, the ld. CIT(A) deleted the additions. The relevant findings read as under:

15. The facts of the present cases are similar to the facts of the case of the appellant for the Assessment year 2008-09. The TPO has advanced similar arguments and applied same method (CUP) to determine the ALP of similar transactions. In the years under appeal too, the TPO has failed to provide any comparables before applying the CUP method. Also one of the reasons for determining the ALP as NIL is that the appellant has failed to show any substantial benefit or Profit directly attributable to these transactions. Thus as is evident from the order reproduced above the Honble ITAT has already decided these issues in favour of the appellant and against the revenue in a previous assessment year. Moreover, the appellant has also produced before me the assessment order in the appellants own case for Asstt. Year 2013-14 passed by the AO (DCIT, Circle 1, Faridabad dated 25.1.2016) wherein on absolutely identical facts no addition has been made by the AO on this issue, and obviously none recommended by the TPO too. Thus to sum up, on identical facts, the appellant has got relief from the Honble ITAT for Asstt. Year 2008-09, and no adjustment has been made by the TPO and the AO on absolutely similar facts in Asstt. Year 2013-14.

16. Thus based on these facts and following the order of the Honble ITAT in the case of the appellant himself as reproduced above, I have no hesitation in deleting the addition and allowing Ground Nos. 2 to 11 of the appeal

10. Aggrieved by this, the Revenue is before us.

11. The ld. DR strongly supported the findings of the Assessing Officer/TPO.

12. Per contra, the ld. counsel for the assessee drew our attention to the decision of the Tribunal in assessees own case for Assessment Years 2007-08, 2008-09 and 2009-10 and also the decision of the Honble Punjab & Haryana High court for Assessment Years 2007-08 , AY 2009-10 & AY 2010-11.

13. The ld. counsel for the assessee drew our attention to the order of the TPO for Assessment Year 2013-14 i.e for subsequent Assessment Year and pointed out that the TPO has also accepted the order of the Tribunal and the Hon'ble High Court in the subsequent Assessment Year.

14. We have given thoughtful consideration to the orders of the authorities below and considered the decisions of the co-ordinate bench for earlier Assessment Years. We have also gone through the decisions of the Hon'ble Punjab and Haryana High Court for Assessment Years 2007-08, 2009-10 and 2010-11. All these decisions are placed in the paper book from pages 1 to 73. The relevant findings of the Hon'ble Punjab and Haryana High Court read as under:

6. The following questions of law have been raised in ITA No. 8535 of 2018:- 1.) Whether, on the facts and in circumstances of the case and in law, the Honble ITAT was right in law in deleting adjustment made by the TPO on account of Infra Group Services without appreciating that the TNMN is not most appropriate method in determining the ALP of Infra Group Services 2.) Whether on the facts and in circumstances of the case and in law, the Honble ITAT was right in holding that aggregation of the transaction of Infra Group Services was not correct and permissible? 3.) Whether on the facts and in circumstances of the case and in law, the Honble ITAT was right in 4 of 6

7. It is the contention of Mr. Tajender Joshi, Ld. Counsel for the Revenue that the Tribunal had fallen in error in rejecting the Cup Method employed by the TPO and accepting the TNMM used by the assessee in its transfer pricing analysis. It was also argued that the ITAT has not passed the order as per the directions/ observations given by this Court in the order dated 06-11-2015. He relied on the observations made by this Court in above said order and contended that this court did not held that the CUP method applied by the TPO was wrong and TNM method was required to be applied. The counsel for the revenue further contended that the ITAT had fallen in error in accepting TNMM as the most appropriate method for evaluation of international transactions including Intra Group Services.

8. The Tribunal while deciding the application of method for determining the Arms Length Price held as under:- In the present case, the TPO although applied the CUP method but nothing was brought on record to substantiate that the AE provided the similar services to an independent enterprise in comparable circumstances. He also did not bring on record any instance where comparable services were provided to an independent enterprise in the recipient market. Therefore, in our opinion, in the assessees case the CUP method was not the most appropriate method. On the contrary, the assessee rightly applied the TNMM method as most appropriate method because it was difficult to apply the CUP method or the cost plus method. Therefore, the TNMM was the most appropriate method in the absence of a CUP which is applicable where the nature of the activities involved, assets used, and risk assumed are comparable to those undertaken by an independent enterprise.

9. On a pointed query by the Bench whether in terms of Rule 10C read with Section 92C of the Income Tax Act and Rules, the Transfer Pricing Officer had referred to any comparables to apply the Cup Method in the facts and circumstances of the case, the counsel could not indicate any instance where an independent entity had availed of services and had not paid any remuneration for the same.

10. In light of the above, the conclusion of the ITAT could not be faulted as the same was inconsonance with the provisions of the Act and the Rules. The contention of the Counsel for the revenue cannot be accepted as the Tribunal while upholding the TNMM Method has observed that the other methods prescribed under the Act namely the CUP or Cost Plus Method being not applicable in the facts and circumstances of the case, the Respondent Assessee could only resort to TNMM as the most appropriate method to show that its profit margin from international transactions was at arms length.

11. Further, the Tribunal has concluded that the expenses paid to the employees of the A.E. were in the nature of reimbursement of their salaries without any mark up. Thus, the payment per se was to third party employees and not to any related party for services rendered. In light of the findings of the fact arrived at by the ITAT, the questions of law raised are answered against the revenue and in favour of the assessee.

12. Accordingly, all the three appeals stand dismissed.

15. As mentioned elsewhere, the facts of the years under consideration are identical to the facts considered by the co-ordinate bench and Hon'ble High Court in earlier A.Ys. Therefore, respectfully following the decision of the Hon'ble Punjab and Haryana High Court, we decline to interfere with the findings of the ld. CIT(A). Accordingly, the grounds raised by the Revenue in both the A.Ys stand dismissed.

16. In the result, the appeals of the Revenue in ITA Nos. 2277 and 2278/DEL/2017 are dismissed. The order is pronounced in the open court on 07.08.2020. Sd/- Sd/- [SUCHITRA KAMBLE] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07th August, 2020. Copy forwarded to:

1. Appellant

2. Respondent

3. CIT Asst. Registrar

4. CIT(A) ITAT, New Delhi

5. DR Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order