9911796707
TMI Blog2013 (12) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions at Rs.4,14,53,877 as against the declared value of Rs.1,58,12,470/-, thereby making addition by way of transfer pricing adjustment to the tune of Rs.2,87,72,311/-. 3. Briefly stated the facts of the case are that the assessee is a wholly owned subsidiary of Sinosteel Corporation, China. It is engaged in the business of providing support and assistance to its Associated Enterprises (AEs) with respect to procuring and supplying metallurgical materials and related activities. In lieu of such services rendered during the previous year relevant to the assessment year under consideration, the assessee received a sum of Rs.1,58,12,470/- as commission from its AEs. The assessee benchmarked such international transactions by using inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arable case. This led to the proposal for TP adjustment at Rs.2,87,72,311/-. The assessee remained unsuccessful before the Dispute Resolution Panel (DRP), which upheld the TP adjustment and resultantly the addition for such amount was made by the AO in the final order. The assessee filed certain additional evidence before the tribunal in the shape of a quotation given by Jyoti Enterprises, Orissa to the assessee's holding company which indicated reducing rate of commission with the increase in volume. The Tribunal remitted the matter to the DRP for consideration of additional evidence and consequently deciding the issue afresh. The DRP vide its order dated 25.11.2011 came to hold that the quotation of Jyoti Enterprises was of no consequence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as the Board may prescribe..'. In so far as the year under consideration is concerned, there have been enshrined five specific methods and the last being : `such other method as may be prescribed by the Board.' The mechanism for computation of ALP under these five specific methods is provided in rule 10B(1). The assessee admittedly claimed its international transactions at ALP on the basis of the CUP method, the working under which has been provided for in clause(a) of rule 10B(1), which reads as under :- "(a) comparable uncontrolled price met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to be followed for determining the ALP distinctly under the five methods. It is equally not permissible to invent a new procedure and try to fit such procedure within any of the existing procedures prescribed as per these methods. No one is authorized to add one or more new steps in the prescribed procedure or to substitute any other mechanism with the one prescribed under the rule. It is neither possible to invent a new method nor to substitute a new methodology in place of the one prescribed in the rule.' Elaborating further, it has been held in para 23.5 that : "One has to necessarily pass through these steps for determining ALP under the ....method. ....... When the rule prescribes a particular method to be followed and the steps so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olled transaction, there can be no scope for considering a quotation price in isolation which is not preceded with or succeeded by any actual transaction. 9. Adverting to the facts of the instant case, we find that there is only this quotation which has been pressed into service by the assessee so as to bring home the point that the international transaction was at ALP. On a pertinent query, the ld. AR candidly admitted that there was no evidence available with him to indicate the actual rate of commission charged by Jyoti Enterprises from similar uncontrolled transactions either with the assessee's holding company or any other third party. In fact, the matter ended with the quotation from this concern to the assessee's holding company. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gical conclusion by substantiating with the lower rate of commission charged in some uncontrolled transaction with higher volume. Unfortunately, there is no material on record to indicate that in some other comparable uncontrolled transaction, the rate of such commission suffered a dip with the increase in turnover. 11. This fact can not be lost sight of that we are dealing with the transfer pricing provisions, which fall under the Chapter X. The marginal note of this Chapter is : `Special provision relating to avoidance of tax'. The onus probandi under this Chapter to prove that the international transaction is at ALP is on the assessee. It is worthwhile to note that there is a departure under such provision from the normal provisions in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
