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TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 41
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.... of INR.45,60,29,850 as against the returned income of INR 2,96,48,671 declared by the Appellant, 2. erred in not providing reasonable opportunity of being heard to the Appellant to contest the erroneous assertions made by the Ld. AO/ Ld. TPO, thereby the order passed by the Ld. AO/ Ld. TPO lacks merit and is liable to be quashed, Transfer Pricing Adjustment Grounds against adjustment pertaining to transaction of import of vegetable oil 3. erred in not accepting the economic analysis of the Appellant, for determination of the arm's length price ('ALP') in connection with the impugned international transactions. 4. erred in considering that under the Comparable Uncontrolled Price ("CUP") method the Appellant cannot take average of prices of independent agencies namely the Solvent Extractors' Association ('SEA') of India, Sunvin Group and Murji Meghan Services Private Limited ('MMSPL') and hence considered only SEA prices under CUP method; 5. erred in rejecting quotations from Sunvin Group and MMSPL as CUP for benchmarking the international transaction of import of vegetable oil, 6. erred i....
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....Goods (Oil & Meal). The Assessee had determined the ALP of the aforesaid transaction at INR.1035,50,90,540/- following Comparable Uncontrolled Price Method(CUP). TPO passed Order under Section 92CA(3) on 18/09/2023 proposing a transfer pricing adjustment of INR.18,76,444/- in respect of on International Transaction of Import of Crude Palm Oil. In respect of all the other transactions of Import of Traded Goods (Oil & Meal) no transfer pricing adjustment was proposed by the TPO since the variation fell within the tolerance range of 1%. In the Draft Assessment Order, 18/09/2023, under Section 144C read with Section 144B of the Act the Assessing Officer incorporated the aforesaid transfer pricing addition. The Assessee filed objections before the DRP against the Draft Assessment Order. Before the DRP, the Assessee contended that the TPO had incorrectly rejected the quotations obtained from Sunvin Group and Murjhi Meghan Services Private Limited (MMSPL) and had determined ALP using CUP method only on the basis of quotations received from Solvent Extractors Associations of India (SEA). The Assessee also moved additional evidence to contend that the Assessee was entitled to benefit of tol....
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....r:- "(a) comparable uncontrolled price method, by which,- (i) the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction, or a number of such transactions, is identified; (ii) such price is adjusted to account for differences, if any, between the international transactions and the comparable uncontrolled transactions or between the enterprises entering into such transactions, which could materially affect the price in the open market; (iii) the adjusted price arrived at under sub-clause (ii) is taken to be an arm's length price in respect of the property transferred or services provided in the international transactions; 17. As per the TPO, in the CUP method "the price charged or paid" for an uncontrolled transaction is to be identified. The emphasis of the TPO is that a broker quote, though based on the prices prevailing in the market, is not a price charged or paid because it does not reflect an actual transaction. In this context, it would be appropriate to refer to Rule 10D of the Rules which enumerates the information and documents which have to be kept and maintained by an a....
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.... associated enterprises. One set of prices relied upon by the assessee was supplied by the Malaysian Palm Oil Board and the second set of prices was the quotations published by Oil World, an independent organization. The TPO took into account the rates mentioned by Malaysian Palm Oil Board and disregarded the rates published by Oil World. According to the TPO, the Malaysia Palm Oil Board was a statutory body of Malaysia whereas the quotations published by Oil World did not have any statutory authority. The aforesaid objection of the TPO was negated by the CIT(A) as well as the Tribunal, and such stand of the TPO also did not find favour with the Hon'ble High Court of Gujarat. Following discussion in the order of the Hon'ble High Court of Gujarat is relevant in this regard:- '7. In terms of clause (c) of sub-section (3) of Rule 10D of the Rules, these price publications as long as the same were authentic and reliable, would be relevant materials. In this background, mere base of the organisation would be of no consequence. Further, though the price quotations of the MPOB would be entitled to its due and full weightage and respect, would not necessarily mean that....
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.... 20. In so far as the price quotes of MMSPL are concerned, assessee pointed out before the lower authorities that it is a brokerage firm dealing primarily in edible vegetable oils. It was pointed out that MMSPL has a team of expert professional brokers with experience of more than 50 years in the oil industry and its clients include Fortune 500 companies, banks as well as local and internationally listed companies. It was also asserted that the prices provided by MMSPL are used as benchmark to determine commodity prices by major suppliers in the industry. One of the fundamental points raised by the assessee was that the price Notes issued by MMSPL were based on the prices prevalent in the commodity exchanges, including, Chicago Board of Trade (CBOT), which is an internationally recognized and accepted commodity exchange based in Chicago, USA. At the time of hearing, the learned representative for assessee had also referred to a confirmation letter issued by MMSPL, a copy of which is placed at 358 of the Paper Book. On the basis of this confirmation letter, which is stated to be on the records of the lower authorities, it is contended that MMSPL has confirmed that the prices qu....
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....ITAT in the impugned order, the ground on which the AO rejected the CUP method adopted by the Assessee was that "the price charged or paid" was on the basis of a broker quote, though based on the prices prevailing in the market, and was not a price charged or paid because it did not reflect the price of an actual transaction. 4. However, as noted by the ITAT, Rule 10D(3)(c) of the Income Tax Rules, 1962 envisages that the TPO should take into consideration price publications including stock exchange and commodity market quotations. Therefore, such published data available from stock or commodity exchanges could form the basis of the prices in both uncontrolled and controlled transactions. 5. Having heard learned counsel for the parties, the Court is not persuaded to hold that the above reasoning by the ITAT is perverse and suffers from any legal infirmity. No substantial question of law arises for determination. 6. The appeal is dismissed." 11. Following the above judgments, in the case of Assistant Commissioner of Income Tax Vs. Tvarur and Fats (P.) Ltd: 179 taxmann.com 614 (Delhi Trib.), the Delhi Bench of the Tribunal declined to interfere with the ....