Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 685 - ITAT MUMBAIDetermination of ALP - International transaction of Freight receipts and expenses – Held that:- Following the decision in Agility Logistics (P.) Ltd. Versus Deputy Commissioner of Income-tax-8(1), Mumbai [2012 (8) TMI 191 - ITAT MUMBAI] - assessee was regularly adopting the CUP method on its international transactions relating to freight expenses and receipts which has been examined by the TPO - the TPO did not follow the earlier order of his predecessor and rejected the CUP method used by the assessee - for the impugned assessment year - the assessee company only co- ordinates with third party service providers and does not own any transportation assets such as trucks, ships, air crafts or any other transportation assets of similar nature and it owns only office premises and computers. Assessee rightly contended that both the origin company and the destination company assume comparable risks with the risk of bad debts being minimal and that there is no inventory risk since the assessee company enters into a contract with the shipping line/air line for booking space on a ship/air craft only upon receipt of confirmed orders from the customers - From the various agency agreements between Geo-logistics group and unrelated parties produced by the assessee, the terms and conditions are substantially same - The profit split information contained in all the agreements is typical to the industry - the four companies rejected by the TPO are functionally comparable to the assessee and therefore should have been retained in the comparable study. The geographical difference is not material so far as it applies to the logistics industry - From the various agreements it was found that there is splitting of gross profit equally at 50:50 even in Pakistan, Bangladesh and Sri Lanka which fall under the same geographical region – there was no infirmity in the CUP method adopted by the assessee – Decided in favour of assessee.
|