AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 324
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....Enterprises (AEs) do not satisfy the Arm's Length Principle (ALP) envisaged under the Income-tax Act, 1961 ('the Act'). 2. On the fact and circumstances of the case & in law, the Ld. TPO erred in rejecting the Comparable Uncontrolled Price ('CUP') analysis undertaken by the Appellant based on the rates available as per the industry reports and independent broker quotes as on the date of contract. 3. On the fact and circumstances of the case & in law, the Ld. TPO erred in comparing the prices of the international transactions of import and export of Agri-commoditius, with the data collected from the Custom Authorities without giving emphasis to economically relevant characteristics such as date of contract, incoterms, quality, etc.; 3. There is a delay in filing the present appeal and the assessee submitted vide written reply to the defect memo that, the appeal could not be filed due to Covid Situations and relied on the judgment of the Hon'ble Supreme Court dated 27th April 2021 in Miscellaneous Application No. 665/2021 in SMW (C) No. 3/2020. For the above reasons stated by the assessee, the delay in filing the appeal is condoned. 4. Brief facts of t....
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....ows:- S. No. Name of Commodities Difference in price import (in INR) 1 Oil Import 14,10,30,456/- 2 High Sea Oil Import 2,68,01,075 3 Grain Import 1,78,34,404 4 Cotton Import 12,166 Total amount of adjustment 18,56,78,191 Variation in Price of export: Name of Commodities No Difference in Price export (in INR) 1 Export of Cotton 2 Meal Export 3 Sugar Export Total amount of adjustment 40,619/- 5. The Assessing Officer shall revise the amount of adjustment from Rs. 19,40,52,522/- vide rectification order u/s 92CA(5) r.w.s. 154 of the Income Tax Act, 1961 to Rs. 18,57,18,810/- (Rs. 18,56,78,191 + Rs. 40, 619/-). 3. Therefore, the addition of Rs. 18,57,18,810/- is hereby made to the total income of the assessee on account of TP adjustment. Addition of Rs. 18,57,18,810/- Penalty proceedings u/s 271(l)(c) of the I.T. Act is separately initiated for furnishing inaccurate particulars of income. 4. In view of the above, the total income of the assessee is computed as follows: Return Income :  ....
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....iled in support of CUP for the very same transaction and the Ld. TPO after the remand by the Tribunal, accepted the data so filed and deleted the addition. Therefore, submitted that the appeal of the assessee deserves to be allowed. 9. On the other hand, the Ld. DR submitted that the case of the assessee for the year under consideration is entirely different than the Assessment Year 2008-09 and also the other years. Further submitted that the Ld. TPO and DRP have rightly taken into consideration of the data available with the custom authorities since the broker data used by the assessee are unreliable and unauthenticated which itself is against the findings/decisions of the Tribunal for Assessment Year 2008-09. The quotation provided by the third party brokers are not a real time transactions but only projection and the private third party report relied by the assessee provided an average price which cannot be used. Further submitted that, the Tribunal has time again held that the customs authorities are assigning the values to the import goods on the basis of scientifically formulated method and they are responsible for making a fair assessment value of the imported goods the val....
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....reed by the associated enterprises in the controlled transaction and the tax administration cannot otherwise determine a different pricing date under the guidance in Section D of Chapter I, tax administration may deem the pricing date for the commodity transaction on the basis of the evidence available to the tax administration; this may be the date of shipment as evidenced by the bill of lading or equivalent document depending on the means of transport. This would mean that the price for the commodities being transacted would be determined by reference to the average quoted price on the shipment date, subject to any appropriate comparability adjustments based on the information available to the tax administration." 15. It is also observed that the customs data at the port of shipment / delivery would better reflect the price of the commodity as it is inclusive of interest, insurance, freight costs, storage expenses, foreign currency terms, country of origin charges, transportation charges from place of origin to place of destination, port charges, customs clearance charges etc. Such data would be a more reliable indicator of the uncontrolled arm's length transaction value (inclus....
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....terprise in its MNE group, and at the same time sells 500 tons of the same product for $100 per ton to an independent enterprise. This case requires an evaluation of whether the different volumes should result in an adjustment of the transfer price. 17. It is the case of the assessee that for AY 2016-17, except for import of oil, no tariff values were notified by the Central Government for cotton, sugar, grains, and meals, as per information provided under the RTI Act, 2005 by CBIC as under- " In this regard, it is to inform that in terms of Section 14(2) of Customs Act, 1962, if the Central Board of Indirect Taxes and Customs (CBIC) is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. The Tariff Value is fixed and notified in case evidence indicate that there is volatility in the prices of a commodity. In order to remedy the same and to bring uniformity in the assessment of such goods at variou....
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....io of the Special Bench order, it is manifest that the ALP under the CUP method can be determined with the starting point of 'the price charged or paid' in a comparable uncontrolled transaction as per sub-clause (i). It is this price which is adjusted to account for differences under sub-clause (if. The nitty-gritty of sub-clause (i) is that there should firstly be available some 'price charged or paid' to start with the procedure as per this clause. When the statute read with rules specifically provides that the ALP under the CUP method should be determined by considering 'the price charged or paid ' in a comparable uncontrolled 'transaction', we fail to comprehend as to how any 'quotation' which has not fructified into a 'transaction' can be substituted with the actual price charged or paid in a transaction. As the law provides for considering the price charged or paid in a comparable uncontrolled transaction, there can be no scope for considering a quotation price in isolation which is not preceded with or succeeded by any actual transaction." (Emphasis added) 21. Further, the reliability of customs data being Govt, notified as CUP has been upheld by ITAT Che....