2024 (12) TMI 489

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.... the TPO. 2. Whether in the facts and circumstance of the case and in law the Ld. CIT(A) was right in deleting the adjustment made on account of Arm's Length Price of commission payment to the AE. 3. Whether in the facts and circumstances of the case in law the Ld. CIT(A) was right in not appreciating the fact that no documentary evidence was brought on record to support the claim that the AE, Taratec SA had performed any activity/ work for which it was entitled to payment of commission. 4. That the appellant craves to add, alter, amend or forego any ground(s) of the appeal raised above at the time of hearing. 5. That the grounds of appeal are without prejudice to each other. 2. Briefly stated facts are that the assessee namely "Ka....

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....profit to cost ratio of the comparable companies at 17.92% therefore the international transactions undertaken by the appellant were at arm's-length. 5.4 The AO accepted that the international transactions pertaining to sale of goods were at arm's-length. but determined the arm's length price of commission paid as Nil by applying the CUP method. 5.5 The appellant stated that it had entered into various marketing agreements with Taratec SA for receiving marketing related services and information in order to export goods in the European markets. As per the terms of revised agreement dated 27/03/2011, it was stated that the appellant had agreed to pay its associate enterprise (AE) a nominal commission at the rate of 4% of the F....

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....referred to him by the assessing officer. The price has to be determined by any one of the methods stipulated in subsection (A) of section 92C and by applying the most appropriate method stipulated in subsection (1) of section 92C and by applying the most appropriate method referred to in subsection (2) thereof. " The TPO has while holding the arm's-length price of international transaction of payment of export commission as Nil did not apply any of the 5 payment methods. The TPO cannot step in the shoes of a businessman and decide whether the appellant should engage an overseas export agent or not to promote its business. It is also noted that Taratec SA has earned-profit margin (OP/sales percent) of only 0.9% from the transaction en....

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....ere is no significant services rendered by its AE to get the commission ranging at the rate between 5 - 15% as per the Agreement entered into between the appellant and its AE. Ld AR main contention against finding of the TPO are that the appellant have no overseas branch to procure the export order, realise the export proceeds and function as a co-ordinator for issuing the goods from airports etc. Ld AR has further argued that the specifications of dial watch arms vary from manufacturer to manufacturer and design of watches. Therefore the continuous coordination is required with the manufacturer of the watches which the AE performs. The AE also takes care of rejection of Hems to the extent of 5% of invoice value. In view, of the above fac....