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2009 (5) TMI 600 - AT - Income TaxArms length price - 100 per cent EOU - Transactions with associated enterprises (AEs) - CUP or TNMM method - assessee submitted that it is neither practical nor desirable for the assessee company to directly deal with third party suppliers in UK-particularly when the assessee has an AE, with several decades of experience in this line, in UK - With regard to import of raw material from AEs, the TPO noted assessee's stand that the Authorised Representative purchases raw material on behalf of the assessee and exports the same to the assessee company on bulk basis - although Chapter X has title 'Special provision relating to avoidance of tax' and aim of various sections under Chapter X is to check avoidance of taxes, diversion of income and funds by non-residents from India, it is not necessary that AO must demonstrate such avoidance and diversion of tax before invoking provisions of ss. 92C and 92CA. - the transfer pricing provisions could not have been invoked on the facts of this case, as the assessee did not have any tax avoidance motive, is hereby vacated. Regarding method of computation of ALP - It is an undisputed position that the imports of raw material, which mainly consist of copper and lead, are charged by the AE on the basis of rates prevailing at London Metal Exchange. and certain mark up thereon - once it is not in dispute that the billing by the AE for raw materials supplied to the assessee is done on the basis of the London Metal Exchange prices plus certain mark up, there is no further need of the internal comparables since London Metal Exchange, being an independent organization entering into transparent and arm's length transactions with a number of other organizations, provides the most reliable prices at which uncontrolled comparable transactions are entered into - assessee had offered the comparison of gross profit mark up margin of the assessee company on transactions with AEs with gross profit mark up margin of the assessee company on transactions with unrelated parties. which in our considered view. was a sufficient basis for determination of ALP under r. 10(1)(c) - Held that: TNMM was indeed not the appropriate method of determining ALP on the facts of this case, these comparables are no longer relevant. We decline to go into that aspect of the matter/issues as it is now purely academic aspect - Appeal is dismissed
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