2020 (12) TMI 1363 - AT - Income Tax

Tribunal favors logistic service provider in appeal, overturns arm's length price adjustment. Decision supports appellant's position.

Agility Logistics Private Limited   Versus Dy. CIT-Range 9 (1) (1)

The Tribunal allowed the appeal, deleting the arm's length price adjustment in favor of the logistic service provider appellant. The decision, pronounced ... TP Adjustment - Upward adjustment in respect of international transaction of freight receipts and expenses - benchmarking under CUP - HELD THAT:- As decided in assessee own case [2012 (4) TMI 260 - ITAT MUMBAI] Tribunal has accepted the benchmarking done by the assessee under CUP method and has also held that the profit sharing ratio of 50:50 is prevalent both in respect of agreement entered into between group companies with unrelated parties as well as the assessee. Respectfully following the same, we uphold the plea of the assessee, and delete the impugned arm’s length price adjustment - The assessee gets the relief accordingly. Issues:Challenge to correctness of the order passed by the Assessing Officer under section 143(3) r.w.s. 144C(13) for the assessment year 2012-13 regarding upward adjustment of income in respect of international transaction of freight receipts and expenses.Analysis:The appellant, a logistic service provider, challenged the order confirming an upward adjustment of income in international transactions. The appellant, part of Agility Group, sought relief after unsuccessful appeals before the TPO/DRP. The Tribunal considered the issue covered by a previous decision in the appellant's case for other assessment years. The Tribunal analyzed the benchmarking methods applied by the appellant, including the Comparable Uncontrolled Price (CUP) method and the Transfer Pricing Officer's preference for the Transactional Net Margin Method (TNMM). The Tribunal noted the consistency in profit-sharing ratios and benchmarking decisions in the appellant's preceding assessment years.The Tribunal referenced previous decisions in the appellant's case for assessment years 2004-05 to 2009-10, where the CUP method was accepted, and profit-sharing ratios were upheld. The Tribunal emphasized the unchanged facts in the impugned assessment years and upheld the decision of the DRP in favor of the appellant. The Tribunal dismissed the grounds of dispute, maintaining consistency with previous rulings. Following the consistent view expressed in the appellant's preceding assessment years, the Tribunal upheld the appellant's plea and deleted the arm's length price adjustment, providing relief to the appellant.In conclusion, the Tribunal allowed the appeal for statistical purposes, upholding the appellant's position and deleting the impugned arm's length price adjustment. The decision was pronounced in favor of the appellant on 8th December 2020, based on the detailed analysis and consistency with previous rulings in the appellant's case.