TaxTMI 
TaxTMI 
2015 (2) TMI 1321
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing for the assessee submitted that the tax demand has arisen mainly due to the Transfer Pricing adjustment made by the TPO. She submitted that the assessee has been providing business support services to its parent company in the form of assisting in booking of shipments, freight collection, transportation of containers etc. The Ld Counsel submitted that the assessee had adopted TNMM method as the most appropriate method for bench marking the international transactions entered with its AE. However, the TPO noticed that another AE had provided similar kind of services in the earlier years and accordingly adopted CUP method for bench marking the international transactions and accordingly proposed T.P adjustment of Rs. 22.36 crores. The AO, h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was considered by the Coordinate bench in AY 2008-09 in the order referred supra. For the sake of convenience, we extract below the operative portion of the order on the above said issue. "6. We have considered the rival submissions as well as relevant material on record. Upto 31/12/2006 GESA was providing the services for booking shipments to HLAG under agency agreement of 1993. GESA was charging a certain percentage on the freight turnover as commission apart from fixed charges @ US$ 10 per inland box. Other fee is as per RBI guidelines as well a fee for consignment delivery and bill of lading. 6.1 On the other hand the assessee was appointed as agent w.e.f. 01/01/2007 and is remunerated for the services rendered to AE ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r years but not more than two years prior to the current year, can be used, if, such data reveals facts which can have an influence on the determination of arms- length-price in relation to the international transaction. Therefore, the two years prior data can be used along with the current year data. The situation under which the older data can be used is illustrated under proviso to Rule 10D(4) as under :- " 10D(4) The information and documents specified under subrule (1) and (2), should, as far as possible, be contemporaneous and should exist latest by the specified date referred to in clause (iv) of section 92F: Provided that where an international transaction continue to have effect over more than one previous year, fresh docu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble Uncontrolled Price (CUP) Method compares the price charged for property or services transferred in a controlled transaction to the price charged for property or services transferred in a comparable uncontrolled transaction in comparable circumstances. The CUP method may also sometimes be used to determine the arm's length royalty for the use of an intangible asset. CUPs may be based on either "internal" comparable transactions or on "external" comparable transactions. Figure 6.1 below explains this distinction in the context of a particular case study. Figure 6.1 Comparable Uncontrolled Price Method 6.2.1 In the case of the assessee, GESA does not provide services to HLAG . Therefore, it cannot be considered as int....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Even if the CUP is adopted as most appropriate method ALP cannot be more than price received by GESA. Whereas the TPO has taken into consideration the price charged by the assessee with 10% mark-up. Hence, the computation of ALP is otherwise not based on correct uncontrolled price. 6.2.3 We may clarify that the international transaction in question should be considered as one and price received by the assessee in total has to be compared with the ALP. The assessee received the price for providing the service as per the agency agreement. Therefore, the service provided by the assessee to the AE are closely interlinked and price of one part is dependent on the price of the other part. Therefore, the entire services provided by the a....