TaxTMI 
TaxTMI 
2012 (4) TMI 359
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....d in law in disallowing the provision for warranty of Rs. 4,57,992 claimed by the appellant by disregarding the directions issued by the Dispute Resolution Panel vide their order dated 27.08.2010 wherein the above claim of the appellant has been directed to be allowed. 3. That the Ld. AO has erred in making an adjustment of Rs. 1,76,56,164 to the arm's length price of the international transactions between the appellant and its associated enterprise without according sufficient opportunity of being heard to the appellant. 3.1 On the facts and circumstances of the case, the Ld. AO / TPO has erred in reject comparables submitted by the appellant alleging that the appellant had furnished comparable data in respect of only 36 CKDs out of 120 CKD's for T-163 trucks without appreciating that the appellant had furnished the comparable data in respect of all the purchases during the year under consideration. 3.2 That the AO/TPO erred on facts and in law in holding that the comparables submitted by the appellant were liable to be rejected since the same pertained to sales made by the AE to other countries having different geographical and market conditions. 3.3 That the ....
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....by the Dispute Resolution Panel (DRP) and an application dated 19.10.2010 was moved before the AO u/s. 154 of the Act which is still pending. He requested that a direction may be given to the AO to dispose of the application u/.s 154 of the Act pending before him expeditiously. 7. The ld. CIT(DR) did not object if a direction is given to the AO to dispose of the application of the assessee pending u/s. 154 of the Act expeditiously. 8. Considering the submissions of both the parties, we direct the AO to dispose of the application dated 19.10.2010 of the assessee moved u/s. 154 of the Act expeditiously after considering the directions/observations dated 27.8.2010 of the DRP, Bangalore. 9. Vide ground Nos. 3 to 3.4, the grievance of the assessee relates to the adjustment of Rs. 1,76,56,164 to the ALP of the international transactions between the assessee and its Associated Enterprises (AEs). The TPO passed an order u/s. 92CA of the Act on 28.10.2009 proposing adjustments of Rs. 2,29,86,949. The assessee raised various objections/ submissions before the DRP. In the course of reference proceedings, the DRP had directed the TPO to consider the assessee's submissions of being....
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....gth only, however, in the submissions dated 29.1.2009 TNMM has been adopted as the most appropriate method. It was further stated that the assessee submitted a new transfer pricing study before the DRP and contended that CUP method (internal CUP) was the most appropriate method by stating that the assessee was able to identify reliable internal CUP which previously was not considered for computing ALP. It was contended that the TPO in the remand report rejected the assessee's claim of CUP method which clearly shows that the assessee did not compute ALP in its TP study, in fact, the TPO computed the ALP by applying TNMM method, therefore no benefit of +/- 5% be given to the assessee, particularly when the proviso to section 92C(2) has been amended w.e.f. 1.10.2009. Reliance was placed on the decision of the ITAT Delhi Bench in the case of Marubeni India (P.) Ltd. v. Addl. CIT [IT Appeal No.935 (Delhi) of 2009]. Reliance was placed on the following case laws (but copies of unreported cases were not furnished):- (i) Dy. CTI v. Global Vantedge (P.) Ltd. [IT Appeal Nos. 2763 & 2764 (Delhi) of 2009, dated 17-12-2009] (ii) Dy. CIT v. BASF India Ltd. [2010] 41 SOT 10 (Mum.)(URO) ....
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....an by an amount not exceeding 5 per cent of such arithmetical mean. The first limb of the proviso has general application. There is no option with nor any sort of concession allowed to the assessee. The arm's length price so determined may be accepted or contested by the assessee or by any aggrieved person in accordance with the statutory provisions. It is a statutory levy without any option. The second limb of the proviso gives "an option" to the assessee to take the arm's length price which may vary from the arithmetic mean by an amount not exceeding 5 per cent of such arithmetic mean. The word "option" is synonymous with "choice" or "preference". Therefore, it is the choice of the assessee to take the arm's length price with a marginal benefit and not the arithmetical mean determined as the most appropriate method. There is nothing in the language to restrict the application of the provision only to marginal cases where the price disclosed by the assessee does not exceed 5 per cent of the arithmetic mean. The arm's length price determined on application of the most appropriate method is only an approximation and is not a scientific evaluation. Therefore, the Legi....
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....h date. Therefore, the benefit of +/- 5% intended by the erstwhile proviso to section 92C(2) of the Act was not available to the assessee. Accordingly the ld. CIT(DR) had strongly defended the assessment framed by the AO and his method of determining the ALP. 16. As regards to the applicability of the amended provisions in proviso to section 92C(2) of the Act which is applicable w.e.f. 1.10.2009 is concerned, it is noticed that this issue has been adjudicated by the ITAT Pune Bench "A", Pune in ITA No.1350/PN/2010 in the case of Starnet Networks (India) (P.) Ltd. (supra), wherein the relevant findings has been given in paras 20 to 23 of the order dated 03.10.2011 and read as under: "20. We have carefully considered the rival submissions. In this case, a pertinent issue which has been vehemently agitated by the appellant is with regard to its claim of seeking benefit of the option available under the erstwhile proviso to section 92C(2) of the Act. The erstwhile proviso which was inserted by Finance Act, 2002 with effect from 1.4.2002 read as under: "Provided that where more than one price is determined by the most appropriate method, the arm's length price shall be take....
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....ational transaction has actually been undertaken shall be deemed to be the arm's length price." The case set up by the Revenue is that the amended Proviso shall govern the determination of ALP in the present case, inasmuch as the amended provisions were on statute when the proceedings were carried on by the Transfer Pricing Officer (TPO). As per the Revenue, the amended Proviso would have a retrospective operation and in any case, would be applicable to the proceedings which are pending before the TPO on insertion of the amended Proviso, which has been inserted by the Finance (No. 2) Act, 2009 with effect from 1.10.2009 and, in this case, the TPO has passed his order on 30.10.2009. The learned Departmental Representative has also referred to the CBDT Circular No 5/2010 (supra) read with Corrigendum dated 30.9.2010 issued by the CBDT in this regard. Per contra, the stand of the assessee is that the amended Proviso would be applicable prospectively and would not apply in respect of the stated assessment year, which is prior to the insertion of the amended Proviso with effect from 1.10.2009. 22. We have carefully examined the rival stands on this aspect. The amended Proviso ....
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....therefore find no justification to deny the benefit of +/-5% to the assessee in terms of the erstwhile Proviso for the purposes of computing the ALP. 23. However, before parting we may also refer to a Corrigendum dated 30.9.2010 by the CBDT by way of which para 37.5 of the circular No 5/2010 (supra) has been sought to be modified. The Corrigendum reads as under: "CORRIGENDUM In partial modification of Circular No. 5/2010 dated 03.6.2010, (i) In para 37.5 of the said Circular, for the lines "the above amendment has been made applicable with effect from 1st April, 2009 and will accordingly apply in respect of assessment year 2009-10 and subsequent years." the following lines shall be read; "the above amendment has been made applicable with effect from 1st October, 2009 and shall accordingly apply in relation to all cases in which proceedings are pending before the Transfer Pricing Officer (TPO)on or after such date." (ii) In para 38.3, for the date "1st October, 2009, the following date shall be read: "1st April, 2009". In terms thereof, it is canvassed that the amended proviso has been made applicable with effect from 1.10.2009 and shall apply even to case....