TMI Blog2015 (9) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to take a different view than the view taken by the DRP. We accordingly uphold the same. The grounds raised by the Revenue are accordingly dismissed. - Decided against revenue. - ITA No.523/PN/2014 - - - Dated:- 26-8-2015 - SHRI R.K. PANDA AND SHRI VIKAS AWASTHY, JJ. For The Appellant : Shri S.K. Rastogi, CIT For The Respondent : Shri Nikhil Pathak ORDER PER R.K. PANDA, AM : This appeal filed by the Revenue is directed against the order dated 18-12-2013 of the DRP, Pune relating to Assessment Year 2009-10. 2. Facts of the case, in brief, are that the assessee company is engaged in trading and sales and services of earth moving equipment, mining equipment, steel items, fuel energizers and also into agency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidiary of the Terex Corporation. The assessee is non exclusive distributor of the FHOL and the foreign company does not exercise any control over the assessee. 5. However, the TPO was not satisfied with the explanation given by the assessee and held that the foreign company exercises complete influence on the activities of the assessee company. The assessee is liable to get a commission of 5% of the net sales value for the orders which are directly executed by the foreign entity. The duties and obligations of the distributor, i.e. the assessee have also been clearly defined. The agreement is a 45 page long with various stipulations. This according to the TPO shows that the agreement provides for the control of the relationship betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company. Referring to Clause 16 of the distribution agreement, which states that no variation in the terms agreed as per the distribution agreement shall be effective unless such variation is agreed in writing by both the parties, it was stated that no party has right to influence or vary the agreed terms at own discretion because variation has to be agreed upon by both the parties. Further, right to termination is also provided to both the parties: Thus, if the entire agreement is considered, it is clear that Terex GB Limited has no right to influence conditions of the agreement and the assessee has every right to reject the proposal from Terex GB Limited. It was also argued that according to the Clause 13 of the agreement, both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y argued that the TP provisions are not applicable to the facts of the present case and therefore the TP adjustment made by the TPO at ₹ 4,04,08,285/- should be deleted. 11. Based on the arguments advanced by the assessee the DRP held that the TP provisions are not applicable to the assessee and accordingly deleted the adjustment of ₹ 4,04,08,285/- by observing as under Findings 2.2.8 We have considered the facts, arguments of the assessee and of the learned TPO and the legal position for deciding as to whether the assessee and Terex GB Limited ate AEs or not. For this purpose, it may be necessary to peruse the relevant provision of Section 92A, which is reproduced as under: (2) For the purposes of subsection (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee suggest that both are independent parties. According to us, it is one of the routine, nonexclusive manufacturerdistributor agreements. On the basis of such an agreement, if both the persons are treated as AE, then all manufacturers and their distributors will be considered as AEs. Such conclusion would be farfetched. 2.2.11 We hold that Terex GB Limited is not the assessee's AE. Accordingly, we hold that the adjustment of ₹ 4,04,08,285 is not in accordance with the provisions of law and hence is deleted. 2.2.12 We have decided that the transfer pricing provisions are not applicable to the assessee. Therefore, the other grounds of objections have become infructuous and we do not decide the same. 12. Aggrieved w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the same he submitted that although the first limb of that clause is fulfilled, however, the second limb of the clause, i.e. the prices and other conditions relating thereto are influenced by such other enterprises is not fulfilled. 15. The Ld. Counsel for the assessee drew the attention of the Bench to the Distributor agreement which is placed in paper book pages 1 to 45. Referring to page 25 of the agreement he drew the attention of the Bench to clause 16 according to which no variation to this agreement shall be effective unless in writing signed by a Director or other duly authorized officer of each of the parties hereto . Referring to clause 10 of the agreement which speaks of termination provisions (page 21 of the agreement) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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