AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 1535
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....in confirming the transfer pricing adjustment of INR 2,99,05,100 made by the Learned Transfer Pricing Officer ("TPO"). Addition on Account of Differences in SPCEN and SPCD Manufacturint Grades 2. The Learned CIT(A) and the TPO erred in law and on facts by determining the ALP using Comparable Uncontrolled Price ("CUP") method without applying the principles of application of CUP method as provided in Rule 10B(1)(a) and Rule 10B(2) of the Income Tax Rules, 1962 ('the Rules'). 3. The Learned CIT(A) and the TPO erred in law and on facts in failing to appreciate the material differences between the uncontrolled transactions and the international transactions. Specifically, the CIT(A) and the TPO grossly erred in disregarding the 5%volume discount granted by the Associated Enterprise for sale to a third party, and by/failing to make suitable adjustments to eliminate the material effect of such volume difference thereby disregarding Rule 10B(3) of the Rules. 4. The Learned CIT(A) and the TPO erred in law and on facts in failing to aggregate the same class of international transactions undertaken by the Appellant during the year for the purpose of determ....
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.... subsequent assessment years. 9. The Learned CIT(A) and the TPO erred in law in not granting the benefit of the 5 percent standard deduction as per proviso to Section 92C(2) of the Act to the Appellant. The Appellant craves leave to add, alter, amend and/or withdraw any of the above grounds of appeal and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appeal as per law. 3.0 Background of the Company Brief facts, International transaction and the method adopted by the assessee are extracted for the sake of convenience from the order of the TPO which reads asunder: M/s. POS-Hyundai is a Joint Venture Company Promoted by three Korean Multi Nationals Hyundai Corporation (HC), Pohang Iron & Steel Company (POSCO) and POSCO Steel Service sand Sales Company (POSTEEL) to manufacture Steel Sheets and components out of cold rolled steel Coils for supply predominantly to Hyundai Motor India Limited (HMIL)and other Automobile & White Goods Industries. POS-Hyundai was incorporated in 1997 with the main objects to carry on business of steel sheet fabrication and manufacture of steel components and....
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....c. for the above period. Step-2: Similarly the weighted average price of the unrelated imports is computed by taking the sum of total imports made during the current period from the same overseas supplier for a particular spec/grade and divided by the total import quantity of particulars pec for the above period. Step-3: On the above price of unrelated importer adjustment is made as appropriate towards volume discount. In the instant case, the import volume of particular grade of unrelated imported is 12 times more than our own imports for the same spec/grade. On are asonable basis, a 5% discount adjustment is considered in their average import price. Step-4: Adjusted import price of unrelated importer is arrived. Step-5: The import price determined above, using the uncontrolled transaction of unrelated importer is more than the actual import price from the same supplier/related Company the actual import price is the Arm's Length Price. The import price determined above, using the uncontrolled transaction of unrelated importer is less than the actual import price from the same supplier/related Company, the unrelated import price is the A....
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....rdingly sought for an adjustment of 5% volume discounts on the prices of Non AE. The assessee also furnished a letter from Hyundai Corporation Ltd., stating that volume discounts are allowed to Mahindra Inter trade Ltd during the period under consideration @5% on its sales. The TPO rejected adjustment sought by the assessee on the reasoning that the prices of the non-AE Company was less even after volume discount and no further adjustment is required to be made. The Ld. CIT(A) has dismissed the assessee's appeal for allowing the volume discount placing reliance on the Assessment Order. Hence the assessee is in appeal before us. 7.0 Appearing for the assessee, the Ld.AR argued that the AE has granted 5% volume discount for sale of third party sales which was not granted to the assessee. Therefore, the Ld.AR requested an adjustment of 5% volume discount on its purchases. The assessee has taken us to Paper Book Page No.241 wherein M/s. Hyundai Corporation has given a letter to the Ld. CIT(A) stating that 5% overseas volume discount is allowed on C&F price who purchases in excess of 10000 MT and accordingly, it was stated that M/s. Mahendra Inter trade Ltd., was allowed trade discou....
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....he country without payment of due taxes. The assessee company is a joint venture company of AE which expects more concessions than unrelated companies. In the instant case, the assessee has not demonstrated that it did not get volume discount with relevant bills of the comparable companies. The ALP is determined to arrive at the reasonable and fair price to the assessee from AE to plug diversion of profits. Since theassesse failed to prove that the Non AE company was allowed volume discount with relevant bill or account copy, we are unable to accept the adjustments sought by the assessee on account of volume discount andaccordingly dismissed the appeal of the assessee on this issue. 9.0 Ground No.5 is related to the addition on account of difference inSPCEN and SPCD Trading Grades. The assessee argued that both the SPCEN and SPCD Trading Gradesare different degrees in comparability, characteristics for applying the CUP method. However, no evidence is placed before us to establish the argument. The Ld.AR argued that this ground was raised before the CIT(A) but the Ld. CIT(A) has not adjudicated the ground and hence requested to remit the matter back to the file of CIT(A) for a....
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....he transactions by and between the third parties being external comparable. Above all, the data required for external comparables may be difficult to obtain and interpret or it may be incomplete. For the aforesaid reasons, the assessee has chose the internal comparables of comparable uncontrolled price method." In such a scenario, having taken a stand to adopt CUP method and now during the appellate proceedings, resorting to TNMM method by the assesee, is only an af rethought and cannot be accepted. Hence, in the presence of reliable internal comparable data, CUP method was adopted by the TPO and difference in prices calculated. In the TP analysis, only in the absence of internal comparables, the external comparable swill be taken for the comparability purpose using the TNMM method. But in assessees case, the internal comparable are very much available and also the various factors, that would be analysed in the CUP method, ware also satisfied. The items purchased between AE and3d party were also very well comparable in the assessee's case. Hence, CUP is the suitable method. While analysing the assessee's additional comparability analysis submitted during ....