TaxTMI 
TaxTMI 
2015 (12) TMI 357
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.... in the return of income at which the notice was addressed. On enquiry, the Department of Posts, Indraprastha Post Office, New Delhi, vide its letter dated 6.10.2007, confirmed that the notice was booked for delivery on 27.10.2006 by speed post and dispatched by them on 27.10.2006, but, the 'Dak' could not be delivered to the addressee and the same was returned to the Income-tax Officer on 1.11.2006. Again, another notice u/s 143(2) of the Act was issued on 7.2.2007 on the same address which also met with the same fate. The AO got inquiry conducted and traced out the new address of the assessee. It was on this new address that one more notice u/s 143(2) was issued on 10.7.2007 which was duly served and the proceedings were attended by the authorized representative. The assessee challenged the late service of notice before the ld. CIT(A), who held that no notice u/s 143(2) was validly served upon the assessee within the prescribed time limit and hence assessment was bad in law. The Revenue is aggrieved against this finding returned by the ld. CIT(A). 4. We have heard the rival submissions and perused the relevant material on record. The facts of the case lie in a narrow compass i....
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....on of addition on account of transfer pricing adjustment. Succinctly, the facts as recorded in the assessment order are that the assessee is a company incorporated in the Netherlands which had set up a liaison office in New Delhi in 1997. In 1999, the company converted its liaison office in India to a branch office. The Indian branch office is primarily engaged in the designing of engineering and construction projects in the power, oil and gas, fertilizer and petrochemical sectors. During the year under consideration, the assessee reported an international transaction of rendering `Services' to its AEs for a sum of Rs. 3,01,96,496/- and also earning of revenue from `Equipment supply' to the tune of Rs. 29,16,764/-, totaling receipts from its AEs at Rs. 3,31,13,260/-. The assessee also declared transactions with non-AEs to the tune of Rs. 8,08,550/-. The assessee used the Transactional net margin method (TNMM) as the most appropriate method to demonstrate that its international transactions were at arm's length price (ALP). The assessee computed its operating profit margin at 10.81% from the international transactions as against loss of 17.89% from unrelated transactions. That is ho....
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....rcumstances also being similar or capable of adjustment, usually CUP is the most preferable method. Application of the CUP as the most appropriate method becomes more imminent in a case where comparable uncontrolled transactions are internal. Adverting to the facts of the instant case, we find that the assessee itself admitted before the AO that the services provided to the AEs and non-AEs are similar. Since the internally uncontrolled comparable transactions of rendering similar services as provided to the AEs are available, we hold that the decision of the AO to apply CUP as the most appropriate method does not warrant any interference. We, therefore, approve the view taken by the AO in determining the ALP of the international transaction of `Service' revenue from its AE on the basis of CUP method as against TNMM applied by the assessee. Here, it is pertinent to mention that the AO has confined himself only to the determination of ALP in respect of `Service' revenue by impliedly accepting the international transaction of `Equipment supply' revenue at ALP. 7. Now, we espouse the determination of ALP of the international transaction of 'Service revenue' under the CUP method. It ....
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.... per sub-clause (i). This has been provided in no unambiguous terms in section 92C of the Act, which deals with the computation of the ALP. First proviso to section 92C(2) states : `that where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices'. Ergo, it is manifest that in case of availability of a number of comparable uncontrolled transactions, it is the arithmetic mean of the price charged in all such transactions, which is considered for determining the ALP of an international transaction. In such a case, neither the AO nor the AO/Transfer Pricing Officer can resort to cherrypicking. 9. Reverting to the facts of the extant case, we find that the assessee has entered into transactions with two parties, namely, India Glycols Ltd., and Petron Engineering Construction Ltd. Total revenue from rendering of service to these two parties is Rs. 8,08,550/-. In all, there are 8 invoices raised by the assessee, viz., seven on India Glycols Limited and one on Petron Engineering Construction Ltd., as under:- Date Invoice No. Name of the company Amount 21.04.2004 6-2302-3-L....