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Cargill Foods India Pvt. Ltd. Versus Assistant Commissioner of Income Tax

2017 (11) TMI 585 - DELHI HIGH COURT

Application of Berry Ratio and Transactional Net Margin Method (TNMM) method - MAM - adjustment made in the present case unsupported by proper application of Rules 10B or 10C of the Income Tax Rules, 1962 - Held that:- The assessee has used Berry Ratio while applying TNMM to benchmark the international transactions. Once, CUP has been accepted as the most appropriate method there is no question of applying any other method to corroborate the analysis made under CUP. The assessee has to explain t .....

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the adjustments in the present case; the same would apply even in the case of discount for the sale transaction which was undertaken after six months. - ITA 938/2017, C.M. APPL.39852/2017 - Dated:- 6-11-2017 - MR. S. RAVINDRA BHAT & MR. SANJEEV SACHDEVA JJ. Appellant Through: Sh. Nageswar Rao, Sh. Sandeep. S. Karhail and Sh. Parth, Advocates. Respondent Through: Sh. Rahul Chaudhary, Sr. Standing Counsel. O R D E R The assessee in its appeal under Section 260A of the Income Tax Act, 1961 ques .....

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ntually became 100% subsidiary of M/s. Cargill Mauritius Limited. The commodities it manufactures and trades are edible oil and plastic films. For AY 2007-08, it declared net loss of ₹ 26,85,38,165/-; upon selection for scrutiny, the Assessing Officer (AO) found that the returns involved international transactions with its Associated Enterprise (AE); the matter was referred to the Transfer Pricing Officer (TPO), who largely accepted the Arm s Length Price (ALP) for various international tr .....

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E was a part of normal trade practice. This contention was rejected by the Tribunal. Sh. Nageswar Rao, learned counsel for the assessee made contentions in support of the grounds of appeal. He submits that the judgment in Sumitomo Corporation India Pvt. Ltd. v. CIT 387 ITR 611 has upheld the application of the Berry Ratio which was understood in the circumstances of the present case. It is submitted that the circumstance that the assessee obtained and kept advance consideration for 6 months cann .....

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CUP) but during the course of the proceedings, it was modified to TNMM. Its contention was firstly rejected by advertence to Rule 10 of the 1962 Rules which arms the AO/TPO with the discretion of applying the most appropriate method. Next dealing with the application of Berry Ratio, the Tribunal then proceeded to deal with the Berry Ratio and other arguments pertaining to cash discount on advance payments; it observed as follows: 9. The ld. AR has contended that Berry ratio is applied while benc .....

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CUP. The assessee has to explain the benchmarking of international transactions by applying the most appropriate method selected to benchmark the transaction. 10. In so far as allowing of cash discount is concerned there is no quarrel on the allowability of cash discounts. The Chennai Bench of the Tribunal in the case of M/s. Panasonic Sales & services (I) Company Limited Vs. Assistant Commissioner of Income Tax (supra) had accepted the allowability of cash discounts without reducing sellin .....

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