TMI Blog2014 (7) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions should be benchmarked on the basis of commission rate from non-AE transactions under the ‘Indenting business’ - the commission percentage on the basis of FOB value of goods from transactions with non-AEs be computed and taken as arm’s length rate of commission for the purposes of the transactions with AEs under the ‘Indenting business’ segment - the rates of commission are not emanating from the orders – thus, the matter is remitted back to the AO/TPO to find out the rate of commission income on FOB value of the transactions with non-AEs under the ‘Indenting business’ segment – Decided partly in favour of Assessee. - ITA No. 328/Del/2014 - - - Dated:- 14-7-2014 - Shri R. S. Syal, AM And Shri A. T. Varkey, JM,JJ. For the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions involve relatively low functional activity with minimal risk between suppliers and buyers. On the other hand, the assessee also enters into certain trading transactions on principal to principal basis, which obviously entails higher financial risks with the requirement of large capital. The assessee in its report in Form 3CEB declared the following seven international transactions :- S. No. Nature of Transaction Method Value of Transactions 1. Sale of Goods TNMM 464,454,166 2. Purchase of goods 581,727,448 3. Provision of services 469,298,294 4. Rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit margin from trading transactions with AEs and accepted the same at arm s length price (ALP). His only concern was with the international transactions under the Indenting business segment. Not accepting the assessee s manner of computing ALP under the Indenting segment, the TPO opined that the FOB value of the goods under the indenting business segment was required to be considered. He adopted such FOB value of goods at ₹ 2562.00 crore. By applying the margin of 5.28%, being the ratio of the assessee s gross profit margin to sales earned from non-AEs under the Trading segment , he proposed the TP adjustment of ₹ 88.40 crore. In drawing the above conclusions, he mainly relied on the view taken by him in assessee s own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting segment . The assessee s contention before the Tribunal that discount of 50% should be given from commission earned from non-AEs to make it comparable with the commission earned from AEs, was rejected. It was finally held that the commission percentage from AE transactions should be compared with the commission percentage from non-AE transactions. That is how, it was directed that such commission percentage at 2.26% from non-AE transactions should be taken as arm s length rate at which the assessee should have earned commission from AE transactions. Similar view was taken by the Tribunal in its order for the AY 2008-09 in which the commission percentage @ 2.23% from non-AE transactions was held to be arm s length rate of commission to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s TNMM was faulted with due to the reasons given in the order. We are not convinced with the contention of the ld. AR urging us to observe departure from earlier view taken by the tribunal for the obvious reason that when the Tribunal in identical facts has taken a particular view in assessee s own cases for the immediately two preceding assessment years, we cannot tinker with the same. We, therefore, hold that the commission percentage on the basis of FOB value of goods from transactions with non-AEs be computed and taken as arm s length rate of commission for the purposes of the transactions with AEs under the Indenting business segment. In this regard, the ld. AR submitted that the percentage of commission from AE transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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