2023 (7) TMI 511

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....international transactions and dismissed Revenue's appeal. 2. Respondent is engaged in the business of manufacture of Low Carbon Cold Rolled Electrical & Mild Steel. Return of income for the Assessment Year 2005-06 was filed on 28/10/2005 declaring total income at Rs. 43,68,70,518/-. AO completed the assessment under Section 143(3) of the Income Tax Act, 1961 ('the Act'). Assessment order dated 18/12/2008 was passed on total income of Rs. 49,96,88,040/- before set off of brought forward business loss and unabsorbed depreciation. In course of assessment, the AO referred the issue of international transactions entered into by respondent with its Associated Enterprises ('AE') to the TPO for determination of Arm's Length Price ('ALP'....

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.... to commission income. This resulted in adjustment of Rs. 1,80,97,017/- on account of ALP of the transaction relating to receipt of Sales Commission from the AE. The total adjustment suggested by the TPO is Rs. 4,37,30,383/- (Rs. 2,56,33,366/- plus Rs. 1,80,97,017/-). In the assessment order passed on 18.12.2008, the AO made addition of Rs. 4,37,30,383/- as adjustment on account of ALP of the international transactions as determined by the TPO. 3. Against the assessment order, respondent filed Appeal to the Commissioner of Income Tax (Appeals)-1, Nashik on 23.01.2009. Vide order dated 12.09.2014, the CIT(A)-I, Nashik has deleted the addition of Rs. 4,37,30,383/- made by the AO/TPO as adjustment on account of ALP of the international tran....

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....the CPM method had been accepted by the TPO for Assessment Years 2008-09 to 2010-11 and no adjustment has been made in the hands of respondent in those years. Therefore, ITAT found no merit in the order of TPO in applying the CUP method to benchmark the international transaction of export sales to AEs. In respect of the commission receipt from AE, the ITAT observed that respondent has also applied CUP method in the years 2006-07 to 2010-11. It is not the case of Revenue that respondent has received commission on different accounts in different years. In the succeeding years starting from Assessment Years 2006-07 to 2010-11, the TPO had applied CUP method. Therefore, the ITAT found no merit in the methodology adopted by the TPO in rejecting ....

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....om an affidavit of service filed by one Mr. Ganesh Ghorpade affirmed on 06/10/2017 for appellant. 7. With the assistance of Mr. Suresh Kumar, we have perused the impugned order. 8. The limited issue that arose before ITAT was to adjudicate on the methodology to be adopted while benchmarking the international transaction of respondent. Respondent had entered into two separate transactions with its AE; one was the export of manufactured steel items to AE and the second was receipt of commission from the AE. Respondent in the Transfer Pricing Study report while benchmarking transaction of export to AE had applied the CPM method for the year under consideration, i.e., Assessment Year 2005-06 and also for Assessment Years 2008-09 to 2010- ....