TMI Blog2016 (1) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... -A) wherein it was held that the ALP should be determined on a transaction-by-transaction basis and not on an aggregate basis as argued by the assessee’s counsel. The same view was taken by the Tribunal in the case of ACIT v. UE Trade Corporation (India) (P.) Ltd.(2010 (12) TMI 224 - ITAT, NEWDELHI ) wherein it was held that the Assessing Officer was within his jurisdiction for the purpose of determining of ALP by examining each transaction separately. Further, in this case, price variation is more than 5%, Assessing Officer is justified in making adjustment of ALP determined by the tax payer and the proviso to sec.92C provides that where more than one price may be determined by the most appropriate method, the ALP shall be taken to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals). 4. The ld. AR, submitted before the CIT(Appeals) that on account of geographical difference between the various suppliers from different countries, some variation as pointed out by the assessee does arise, which has been properly explained. It was also submitted that if at all, any adjustments were required, the same should have been made in accordance with the provisions of sec.92C(2) of the Act, whereby the TPO has to adopt the arithmetical mean of the same product for determining the Arm s Length Price(ALP). According to the ld. AR, the TPO has not properly applied the arithmetic mean as given in the proviso to sec.92(C) of the Act. Further, the ld. AR submitted that it is an average of all the transactions with regard to im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which was adopted by the Assessing Officer in the assessment order. 4.2 The CIT(Appeals) observed that the TPO has not properly applied the arithmetical mean in respect of all the shipments. According to the CIT(Appeals), as per proviso to sec.92C(2) of the Act, where more than one price is determined by the most appropriate method, the ALP shall be taken to the arithmetical mean of such prices or at the option of the assessee, the price which may vary from the arithmetical mean by an amount not exceeding 5% of such arithmetical mean. He further observed that the dictionary meaning of arithmetical mean is the average of a set of quantities . According to him, from the above arithmetical means the sum total divided by the number of uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y linked transactions to facilitate determination of ALP envisaged a situation where it would be inappropriate to analysis the transactions individually. The proposition that a number of individual transactions can be aggregated and construed as a composite transaction in order to compute ALP also finds an echo in the OECD guidelines under Chapter III. Considering the legislative intent manifested by way of Rule 10A(d) r.w. Rule 10B of the Rules, it clearly emerges that in appropriate circumstances where closely linked transactions exist, the same should be treated as one composite transaction and a common transfer pricing analysis be performed for such transactions by adopting the most appropriate method. In other words, in a given case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT v. UE Trade Corporation (India) (P.) Ltd., 44 SOT 457 (Delhi), wherein it was held that the Assessing Officer was within his jurisdiction for the purpose of determining of ALP by examining each transaction separately. 7. Further, in this case, price variation is more than 5%, Assessing Officer is justified in making adjustment of ALP determined by the tax payer and the proviso to sec.92C provides that where more than one price may be determined by the most appropriate method, the ALP shall be taken to be the arithmetical mean of such prices. In the instant case only one price has been determined under most appropriate method, the question of application of the proviso does not arise. This view is supported by the decision relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
