TMI Blog2015 (2) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... ough sub-agent and the remaining is performed by the assessee itself. It is like export of goods partly manufactured by the assessee and partly purchased from third party. However, purchase price of the goods exported cannot be applied as CUP for sale price charged to the AE. Accordingly considering the price received by GESA as CUP is contrary to the transfer pricing regulation. We do not rule out the CUP as most appropriate method for determination of ALP of international transaction in question. However, the comparable uncontrolled price must be a proper uncontrolled price in compliance of provisions of transfer pricing. There is one more fallacy in the TPO's order regarding bifurcating the international transactions into two segm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. - I.T.A. No. 1134/Mum/2015, STAY.APPLICATION No.59/Mum/2015 Arising out of I.T.A. No.1134/Mum/2015 - - - Dated:- 27-2-2015 - S/SHRI B.R. BASKARAN (AM) AND VIVEK VARMA, (JM) For the Appellant : S/Shri Ajay Jain, Ms.Radhika Thakur and Astha Bhatia For the Respondent : Shri Pavan Kumar Beerla ORDER Per B.R. BASKARAN, Accountant Member: The stay petition has been filed by the assessee seeking stay of collection of outstanding demand of 11.46 crores and it relates to the assessment year 2010-11. 2. The Ld Counsel appearing for the assessee submitted that the tax demand has arisen mainly due to the Transfer Pricing adjustment made by the TPO. She submitted that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the contrary, the Ld D.R submitted that the order passed by Ld DRP is still in force and accordingly objected to the prayer put forth by Ld A.R. 4. At this juncture, the bench proposed to take up the appeal for hearing, since the issue contested before us has since been adjudicated by the co-ordinate bench of Tribunal in the assessee s own case relating to AY 2008-09 and 2009-10 (referred supra). Both the parties agreed to the same and accordingly the appeal was taken up for hearing. 5. We heard the parties and perused the record. As submitted by Ld A.R, the issue relating to T.P adjustment was considered by the Coordinate bench in AY 2008-09 in the order referred supra. For the sake of convenience, we extract below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e charged for services by GESA to HLAG upto 31.12.2006 can be considered as internal CUP for the purpose of determination of ALP for the services provided by the assessee to AE during the FY 2007-08 onwards. The TPO supported his action by referring Rule 10B(4) and took the old price to compare with the current years price. It appears that the TPO misunderstood the proviso to Rule 10B(4) of the Income tax Rules. In ordinary situation only current year/contemporaneous data can be used for comparing uncontrolled price with the controlled price. Only in the case of exceptional circumstances, the data relating to earlier years but not more than two years prior to the current year, can be used, if, such data reveals facts which can have an influ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price of prior year cannot be considered for determination of ALP in relation to international transaction entered in current year. 6.2 The another aspect of considering the said price between GESA and assessee as internal CUP is that it does not satisfy the basic ingredient of a transaction between an unrelated party and associate enterprise of the assessee in the parity of the services provided by the assessee to the AE. United Nations Practical Manual on Transfer Pricing for Developing Countries has discussed the comparable uncontrolled price (CUP) in para-6.2.1.1 as under :- 6.2.1.1 The comparable Uncontrolled Price (CUP) Method compares the price charged for property or services transferred in a controlled transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be a proper uncontrolled price in compliance of provisions of transfer pricing. 6.2.2 There is one more fallacy in the TPO's order regarding bifurcating the international transactions into two segments for determining the ALP. The TPO accepted the price charged by the assessee in respect of services provided through sub- agency, but while computing the ALP it had ignored the CUP and took the price charged by the assessee as ALP. Further, the services provided by the assessee on its own were compared with CUP. Therefore, two separate ALP were determined by the TPO for the same service provided by the assessee to AE. Even if the CUP is adopted as most appropriate method ALP cannot be more than price received by GESA. Wherea ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
