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2013 (9) TMI 596 - AT - Income TaxTransfer pricing adjustments - ALP - Violation of Rule 10B(1)(a) - Determination of arm's length price - Internal Comparable Uncontrolled Price - CIT upheld adjustment made by TPO - Held that:- method upheld by the CIT(A), for the purposes of ascertaining ALP, is Internal CUP, but then the application of this method is clearly incorrect inasmuch as any application of any CUP (Comparable Uncontrolled Price) method involves dealing with prices of a product not the profit margin earned thereon - even in the case of 'internal CUP', the arm's length price to be adopted is the price, subject to admissible adjustments, at which the similar transactions are carried out between the assessee and an independent enterprise. Internal CUP has nothing to do with the margins earned by the same enterprises from other transactions - Following decision of Technimont ICB Pvt Ltd v Additional Commissioner of Income Tax [2013 (9) TMI 595 - ITAT MUMBAI] - Decided in favour of assessee. Binding nature of earlier ITAT decision - Division bench decision in Bayer Material Science Pvt Ltd v. Additional Commissioner of Income Tax (2011 (12) TMI 393 - ITAT MUMBAI) or Third member decision in Technimont ICB Pvt Ltd v Additional Commissioner of Income Tax (2013 (9) TMI 595 - ITAT MUMBAI) whereas the judicial member in the Bayer case is the third member in the ICB case - Held that:- As far as the question of binding nature of these judgments is concerned, there does not seem to be much dispute on the proposition that a Third Member decision overrides the decision of a division bench and has a greater binding force. It has the same precedence value as that of a special bench. Elaborating this principle, a special bench of this Tribunal, in the case of DCIT v Oman International Bank SAOG (2006 (5) TMI 117 - ITAT BOMBAY-H), that a Third Member decision is defacto a decision of larger bench, and , in coming to this conclusion, the Special Bench was guided by Hon'ble Delhi High Court's judgment in the case of PC Puri v. CIT (1984 (2) TMI 48 - DELHI High Court).
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