Income Tax Appellate Tribunal Delhi Bg Exploration & Production India Ltd., ... vs Dcit, International Taxation, ... on 17 July, 2018 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'I2' : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.6791/Del./2017 (ASSESSMENT YEAR : 201213) M/s. BG Exploration & Production vs. DCIT, India Limited, International Taxation, Lake Boulevard Road, Dehradun. Hiranandani Business Park, Powai, Mumbai 400 076. (PAN : AAACE4569K) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Ajay Vohra, Senior Advocate Shri Sahil Sharma, CA REVENUE BY : Shri H.K. Chaudhary, CIT DR Date of Hearing : 19.04.2018 Date of Order : 17.07.2018 ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. BG Exploration & Production India Pvt. Ltd. (for short 'the taxpayer'), by filing the present appeal sought to set aside the impugned order dated 30.10.2017, passed by the AO under section 144C read with section 143 (3) of the Incometax Act, 1961 (for short 'the Act') qua the assessment year 201213 in 2 ITA No.6791/Del./2017 consonance with the orders passed by the ld. DRP/TPO on the grounds inter alia that : "Ground No.1: Erroneous rejection of Transactional Net Margin Method ("TNMM") and selection of Comparable Uncontrolled Price ("CUP") Method 1.1 The learned AO I DRP I Transfer Pricing Officer ("TPO") have erred in law and on facts by disregarding the economic analysis conducted by the Appellant, for determination of the arm's length price ("ALP") by application of TNMM on an aggregated basis and further, erred in applying CUP method Ground No.2: Without prejudice that TNMM should be selected, learned AO / DRP / TPO applied CUP method in an erroneous manner 2.1 Without prejudice that TNMM should be selected as the most appropriate method for benchmarking the transactions pertaining to intragroup services, the learned AO / DRP / TPO have erroneously selected CUP method and have applied the same in an erroneous manner by considering the amount approved by the Joint Venture ("N") partner as CUP. Ground No.3: The learned DRP/AO/TPO erred in computing the TP adjustment of INR 2,619,486,354 for intragroup services even though the learned DRP had upheld the application of CUP method as per which the TP adjustment computed by the TPO was only INR 2,400,433,920. 3.1 Without prejudice to the assessee's contentions, the transfer pricing adjustment made by the Ld. AO/DRP/ TPO should be limited to the value of international transactions and cannot exceed INR 240 crores as per the ALP determined by the Ld. TPO under the CUP method which was upheld by Hon'ble DRP Ground No.4: Erroneously disregarded the directions of the Hon'ble DRP for AY 200910 and AY 201011 4.1 The learned AO I DRP I TPO erred in disregarding the directions issued by the Hon'ble DRP in the case of the 3 ITA No.6791/Del./2017 Appellant for the prior years i.e. AY 200910 and AY 2010 11 (which have also been affirmed by Hon'ble ITAT) even though the facts and circumstances of its case and the business model of the Appellant continued to remain the same. Ground No.5: Erroneously questioning of commercial expediency of the Appellant 5.1 The learned AO I DRP I TPO erred in law and on facts by questioning the commercial expediency of the Appellant in availing the intragroup services from its associated enterprise ("AE") and in changing from floating interest rate to fixed interest rate on the External Commercial Borrowing taken from its AE. Ground No.6: Erroneous application of CUP for determining arm's length interest rate 6.1 The learned AO I DRP I TPO erred in making an upward adjustment of INR 739,673,740 to the total income of the Appellant by erroneously applying CUP Method for determination of arm's length interest rate on the external commercial borrowing ("ECB") taken from its AE. 6.2 The learned DRP erred in upholding the erroneous approach of the Ld. AOI TPO to compute more than one arm's length price for the same international transaction by applying multiple approaches. Ground No.7: Double addition visavis alleged arm's length rate for interest. 7.1 Without prejudice to the fact that learned TPO / DRP erroneously applied the CUP method for determining the arm's length rate for interest payment, the learn