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2014 (12) TMI 467 - AT - Income TaxTransfer pricing adjustment - Determination of ALP of international transactions - Sale of stitched bond fabric - Evaluation of a taxpayer’s separate and combined transactions – Held that:- Assessee rightly contended that under CUP approach, same period transactions ought to be compared so that correct benchmarking takes place - export sales rates in the month of March-2007 have increased drastically - for a correct benchmarking, transactions of March-2007 ought to have been ignored - sales to non-Associated Enterprises after 2-2-2007 should have been ignored - there are no. of instances wherein, the prices charged to the Associated Enterprises party are higher than prices charged to the non-Associate Enterprise party - Though yearly average is a good and reasonable indicator for benchmarking under the CUP approach, a transaction based benchmarking approach should not be rejected, and especially in such cases where, rejection of a transaction-based benchmarking may lead to some distortion - like has to be compared with like - In fact, natural process of benchmarking itself calls for ignoring that period when, supplies are not made either to Associated Enterprises party or non-Associated Enterprises party - Further, if March-07 supplies are removed from the yearly benchmarking average, even yearly average rates become comparable and within the permissible 5% variation scope as follows – thus, the additions made by the TPO is set aside – Decided in favour of assessee.
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