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2018 (1) TMI 1723 - AT - Income TaxTP Adjustment - comparable selection - assessee had adopted TNMM as the most appropriate method to determine the arm’s length nature of its IT's - DRP observed that Resale Price Method (RPM) would be appropriate to determine as to whether the AE transactions were at ALP, that the mean of GP realised in the non-AE transactions would be appropriate benchmark to examine arm’s length price of each of the AE transactions, that GP realised on non-AE exports would be an appropriate internal cup for the AE exports - HELD THAT:- The method adopted by the TPO was faulty from the very beginning. The TIPS data contained price of iron ore exported from Vishakhpatanm port for two categories- i. e. having iron content 62% and having iron content 62% or less. The assessee had exported iron ores to its AE's having FE contents of 63. 01%, 63. 38%, 60. 16% and 50. 60%. Export details clearly show that in three consignments FE content was less than 62% and only in on consignment FE was more than 62%. Even in three consignments having FE content less than 62% in one case iron ore content is 50. 60%. There is no need to quote any authority to hold that market value of the ore having 50. 60% FE would be less than the ore having 62% FE. Besides, price of iron ore, like any other exported commodity, is highly sensitive and has wide fluctuation depending upon demand and supply. Considering these peculiar facts, we are of the opinion that the DRP had rightly held that TIPS data was not a reliable tool to determine the ALP of the IT's of the assessee. TP provisions try to bring parity between the controlled and uncontrolled IT. s of similar nature. For that matter some methods have been incorporated in the IT Rules, 1962. The method is procedural part of the TP exercise, but the substantive law is Chapter X of the Act. What has to be seen in such proceedings that IT. s are valued in a reason ably fair manner. TP provisions are not based on some arithmetic or scientific formulas that would always give similar results in similar conditions. They find place in statute to take care of various and different situations and circumstance of dynamic business world. The method adopted by the DRP, in our opinion, was quite appropriate considering the peculiarities of the facts of the case. It did not result in deleting the entire adjustment proposed by the TPO/AO-it resulted in lower adjustment. AO had used the TIPS data but it had so many lacunas. The DRP, therefore, after obtaining details of all the seven AE and non-AE transactions, directed the AO to follow a particular method. Thus, there is no basic difference in the approach of the TPO and DRP. Certain modifacations, were made by it and we hold that same were required to decide the ALP. We would also like to mention that the cases relied upon by the DR are not relevant to decide the issue before us. Considering the above, we confirm the directions of the DRP and hold that same are not suffering from any legal or factual infirmity. Effective ground of appeal, filed by the AO, is decided against him.
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