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TMI Blog2012 (9) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... sting an addition of Rs. 3,90,47,364/-. 4. The assessee has exported five varieties of minerals during the previous year relevant to the assessment year under appeal. Those varieties are : (i) Barite Powder (ii) Bentonite Lumps (iii) Bentonite Powder (iv) Potash Feldspar Lumps (v) Soda Feldspar Lumps 5. The assessee has followed TNMM method for the transfer pricing analysis in respect of Bentonite Lumps, Bentonite Powder and Potash Feldspar lumps. But the TPO substituted CUP method instead of TNMM method applied by the assessee. In the case of remaining two items, Barite Powder and Soda Feldspar Lumps, the assessee as well as the TPO adopted CUP method. In short, the Assessing Officer adopted CUP method for analyzing the price comparison of all transactions to arrive at the ALP. 6. On analysis of the details and particulars, the TPO arrived at the additional amounts to be added towards ALP adjustment, in the following manner : Rs. (i) Barite Powder 1,07,85,472.50 (ii) Bentonite Lumps 1,01,46,830.00 (iii) Bentonite Powder 57,71,100.00 (iv) Potash Feldspar Lumps 79,87,256.70 (v) Soda Feldspar Lumps 43,56,975. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered to AE at Dubai would be moderated by the volume of sales, whereas the sale of 324 MT made to non AE was only an occasional transaction, where no such moderation is given by the assessee. In addition to that, the learned counsel pointed out that the sales were made on FOB basis whereas the sales made to non AE were on CIF terms. If the factors of freight and insurance are deducted from the CIF rate, it is well comparable to the FOB rate quoted by the assessee to AE except for a nominal difference. The learned counsel further explained that while comparing the sale prices made to AE and non AE, the TPO has not at all considered the various qualities and quantities in different consignments of exports. It is evident from the invoices themselves that the sale price is depending upon the quality of the minerals. In support of which the assessee has filed chemical analysis report before the TPO to show that there are substantial differences in quality of different consignments and value is determined on the basis of quality. The learned counsel further pointed out that even a mistake occurred in the invoice was not considered by the TPO, where there is a significant cost differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions made on behalf of the assessee. The assessee has entered into international transactions with its AEs. In this connection, the facts recorded by the T.P.O. in the T.P.O's order are not disputed. What the assessee has disputed is the interpretation of such data and facts. The learned ARs has made arguments largely on the legal issues. The T.P. audit is basically a fact based exercise. The law on transfer pricing in India is not yet fully evolved and contentious issues are not yet settled. Therefore, the assessee's reliance placed on various court decisions in support of its contention that the T.P.O. has erred in recommending the adjustment has to be understood in this background. The contentious issues pertaining to the T.P. audit are not yet settled or resolved. We therefore uphold the action of the T.P.O. in making adjustment in respect of assessee's international transactions both its AEs. Consequently, the addition of Rs. 3,90,47,634/-proposed by the A.O. is confirmed and these grounds of dispute are rejected." 19. Therefore, we straightaway go to the order passed by the TPO to examine whether the addition is called for or not. 20. It is worthwhile to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no addition was made in the case of M/s. IBC Ltd. This is a sure case of double standard. The TPO has made a fundamental omission in not comparing the rate declared by M/s. IBC Ltd. while proposing the additions in the hands of the assessee company. 24. Then what is the method of comparison adopted by the TPO? This is apparent in the case of Bentonite Lumps. The TPO has adjusted the price reflected in the sale of 40 MT Bentonite Lumps made to non AE. The TPO summarily rejected the sale price reflected in the case of a sale of 23500 MT made to its AE. Is it fair to say that the export price of 23500 MT would be exactly that of a sale of 40 MT? In every trade, the volume of the consignment is a very important factor. It is to be seen that almost the entire sales of the assessee are made to AE at Dubai. Therefore, the price offered to its Dubai AE will be influenced by volume, frequency and other vital aspects of the trade. The sale of 40 MT made to non AE was an occasional sale, where the assessee was not constrained by such considerations as applicable in the case of its AE. Therefore, it is evident that the TPO has erred in comparing the mountain with a mole hill. 25. This is th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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