Tribunal rejects appeal on Glazing Loss & EIA Monitoring fee, upholding Dispute Panel decisions.

The tribunal upheld the decisions of the Dispute Resolution Panel and Transfer Pricing Officer, rejecting the assessee's appeal on both issues. The claim for Glazing Loss in exported commodities was denied due to insufficient evidence and arbitrary adjustment claims. Additionally, the disallowance of the EIA Monitoring fee was upheld as Tax Deducted at Source (TDS) provisions applied. The tribunal found no merit in the assessee's arguments and dismissed the appeal in its entirety on July 5, 2018.

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Issues Involved:
1. Rejection of the claim for Glazing Loss in exported commodities.
2. Disallowance of EIA Monitoring fee paid to Export Inspection Agency for non-deduction of tax.

Detailed Analysis:

1. Rejection of the Claim for Glazing Loss in Exported Commodities:
The assessee's appeal challenged the rejection of their claim for Glazing Loss in exported commodities by the Dispute Resolution Panel (DRP), Bangalore. The assessee argued that their products, primarily seafood, had varying glaze percentages (up to 25%), which the Marine Products Export Development Authority (MPEDA) rates did not account for, as MPEDA rates were based on 10-20% glaze. The Transfer Pricing Officer (TPO) had used MPEDA data for benchmarking but rejected the assessee's claim for a 3% adjustment to account for higher glaze percentages, citing lack of evidence and arbitrary adjustment without scientific basis.

The DRP upheld the TPO's findings, noting that the assessee failed to provide evidence to support their claim that higher glaze percentages resulted in lower prices. The DRP also pointed out inconsistencies in the invoices and the lack of a clear basis for the 3% adjustment. Consequently, the DRP rejected the assessee's objections and confirmed the TPO's adjustments.

Upon appeal, the tribunal found no merit in the assessee's arguments, noting that the TPO had made suitable adjustments based on the MPEDA price list for 20% glaze. The assessee failed to demonstrate that their products with 25% glaze could not be compared with the MPEDA prices. Thus, the tribunal dismissed the assessee's grounds on this issue.

2. Disallowance of EIA Monitoring Fee Paid to Export Inspection Agency for Non-Deduction of Tax:
The second issue involved the disallowance of Rs. 18,02,939/- paid as EIA Monitoring fee to the Export Inspection Agency (EIA) due to non-deduction of tax at source. The assessee argued that EIA, being an autonomous body established by the Central Government, was not subject to TDS provisions under section 194J of the Income Tax Act, 1961. However, the Assessing Officer (AO) and the DRP disagreed, noting that no circular or certificate exempting EIA from income tax had been issued, and thus, TDS was applicable.

The DRP found that the assessee had not provided any documentation to support their claim that EIA was exempt from TDS. The tribunal upheld the DRP's decision, as the assessee failed to show that the payment to EIA was not liable for TDS. Consequently, the tribunal dismissed the assessee's appeal on this ground as well.

Conclusion:
The tribunal dismissed the assessee's appeal in its entirety, upholding the DRP's and TPO's decisions on both issues. The rejection of the claim for Glazing Loss was affirmed due to the lack of evidence and arbitrary adjustment claims, while the disallowance of the EIA Monitoring fee was confirmed due to the applicability of TDS provisions. The order was pronounced on July 5, 2018.

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