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2021 (9) TMI 700 - AT - Income TaxTP adjustment in respect of a specified domestic transaction with the Associated Enterprise (AE) - benchmarking by the assessee under RPM - specified domestic transaction under dispute in the present appeal relates to purchase of castor meal from one of the AEs - selective approach for determining the ALP of the specified domestic transaction - HELD THAT:- When the assessee has established that the transaction with the AE is at arm’s length under RPM, there is no reason to discard assessee’s benchmarking without any genuine and valid reason. Thus, in our considered opinion, the departmental authorities have grossly erred in rejecting RPM followed by the assessee for benchmarking the specified domestic transaction with AE. More so, when the departmental authorities have not found any deficiency or error in the gross profit margin computed by the assessee in respect of both, AE and non AE transactions. Thus we hold that benchmarking by the assessee under RPM has to be accepted. What the TPO has done to reject the assessee’s claim is, he has ventured into date-wise comparison of purchase price of AE and non AE transactions. Even, while doing so, the TPO was very much conscious that except the month of April, the purchase price paid to the AE is less than the purchase price paid to non AEs. Therefore, he has conveniently restricted himself to the month of April where the purchase price paid to AE is slightly more than the purchase price paid to non AEs, while, ignoring the figures for the rest of the year as it would not have worked out to his liking. Thus, if the average purchase price of AE and non AE transactions are considered even under CUP, the transaction with AE would be at arm’s length. The per MT price of non AE transaction compared with date-wise AE transaction in reality is the average price of non AE transaction for the month of April. This fact is clearly discernible from the working note showing calculation of average purchase price and average sale price as placed at page 146 of the paper book. Thus, the aforesaid facts make it abundantly clear that the working of price difference made by the TPO is flawed, as he has compared date-wise price of AE transaction with average price of non AE transaction for the month of April 2012. Thus, it is very much clear that the TPO has adopted a purely selective approach for determining the ALP of the specified domestic transaction. Thus, in our considered opinion, even applying CUP method also assessee’s transaction with AE has to be considered to be at arm’s length. Accordingly, we delete the adjustment. This ground is allowed. TP adjustment in respect of specified domestic transaction relating to transfer of electricity to other units - what should be the price for transfer of electricity from the eligible unit to non eligible units of the assessee - HELD THAT:- In our view, the issue is no more res integra because of the decision of the Hon’ble jurisdictional High Court in case of Reliance Industries Ltd [2019 (2) TMI 178 - BOMBAY HIGH COURT] wherein as held that the rate at which the distribution company sells the electricity to the customer has to be adopted as the price at which the transaction between eligible and non eligible unit has taken place. TP adjustment made in respect of the specified domestic transaction relating to transfer of electricity is unsustainable. Accordingly, we delete the addition. These grounds are allowed
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