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2014 (11) TMI 644 - AT - Income TaxTransaction with AE towards receipt/payment of freight - Determination of ALP – Application of CUP method – Held that:- In ACIT Vs DHL Danzas Lemuir Pvt Ltd [2014 (2) TMI 991 - ITAT MUMBAI] it has been held that the assessee paid certain sum to its AEs abroad for doing the work similar to which it did for which it received freight revenue from its AEs - in both the situations, the total receipts are taken on one hand, from which all the expenses incurred in connection with the transportation of cargo in both the countries are excluded - even in a situation in which the comparables were the formulas on the basis of which exact quantification for price of services was done, the same could be accepted as a price for the purposes of application of CUP method of ascertaining arm’s length price - The approach so adopted, even if somewhat serendipitous, was quite remarkable, pragmatic and in due deference to the realities of businesses - under any method of determining the arm’s length price, that price paid for the controlled transactions is the same as it would have been, under similar circumstances and considering all the relevant factors, for an uncontrolled transaction, the price so paid can be said to be arm’s length price. Rule 10BA as also the corresponding enabling rule 10B(1)(f) are inserted by the Income Tax (Sixth Amendment) Rules 2012 and are specifically stated to be effective from 1st April 2012, i.e. assessment year 2012-13 onwards - when a legislation confers a benefit on the taxpayer by relaxing the rigour of pre-amendment law, and when such a benefit appears to have been the objective pursued by the legislature, it would a purposive interpretation giving it a retrospective effect but when a tax legislation imposes a liability or a burden, the effect of such a legislative provision can only be prospective - the operation of rule 10BA, which confers the benefit of an additional method of ascertaining arm’s length price and, inter alia, relaxes the rigour of CUP method, can only be retrospective in effect - Rule 10BA is to be held as effective from 1st April 2002, i.e. the time when transfer pricing provisions were introduced in India - the assessee’s contention to the effect that the arm’s length price of services rendered to, or received from, the associated enterprises, which was computed on the basis of the same 50:50 model as is the industry norm and as has been employed by the assessee for computing similar services to the independent enterprises, was at arm’s length – the order is set aside – Decided in favour of assessee.
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