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2014 (3) TMI 63 - AT - Income TaxArm’s length price adjustment u/s 92C of the Act – Method for determination of ALP - Whether the AO was justified in making an arm’s length price (ALP) adjustment u/s 92 C of the Act – Held that:- The inputs are not the independent ‘quotes’ , as referred to by the TPO, but only compilation of the data available in public domain - the Transfer Pricing Officer was clearly in error in rejecting these inputs on the ground that such information is not covered by Rule 10D (3) for the simple reason that Rule 10 D(3) is only illustrative in nature and it merely describes the information, required to be maintained by the assessee under section 92 D of the Act - The information furnished by the database used by the assessee is fairly comprehensive information, including description and prices as per invoices presented to customs – a fact noted by the TPO himself, which can be cross checked and verified, in case of doubts - As a quasi -judicial authority, and while pursing the goal of justice, one cannot remain at the mercy of the wisdom of representatives of the parties appearing before such an authority - it is bounden duty of every quasi -judicial authority to appreciate the scope of the legal provisions and apply them in letter and in spirit. The TPO himself has noted in his order, the assessee did not have any contractual arrangement and these were market driven prices on which the exports to AEs took place - It is also important to bear in mind the fact that the assessee has taken average of a quarter so as to ensure that day to day variations in prices do not distort the comparability - Neither there is any specific objection to this averaging, nor has the TPO suggested any better alternative to this approach – CUP method does provide for a reasonable, even if not perfect, solution to the distortion which may creep in case comparison of prices is done on day to day basis, and due to limited comparables being available for the same – Relying upon Serdia Pharmaceuticals Pvt Ltd Vs ACIT [2010 (12) TMI 60 - ITAT, Mumbai] - the ALP determination under CUP Method on the basis of ‘Daily Export Port Data – April 2007- March 2008’ , by adopting quarterly averages, was wrongly rejected by the TPO and the DRP - the application of CUP has been approved method in principle - Decided in favour of Assessee.
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