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TMI Blog2018 (10) TMI 1793X X X X Extracts X X X X X X X X Extracts X X X X ..... g the disallowance of Rs. 2,00,000/- made by the A.O on a/c of Legal & Professional Charges? 4. The Order of the Ld.CIT (A) is erroneous both in law and on facts? 5. Any other ground that may be adduced at the time of hearing." C.O No. 90/BIL/2015 (A.Y 2010-11) "1. That under the facts and the law, the Ld.CIT(A) has rightly deleted the addition of Rs. 81,44,959/- made by the Ld. Assessing Officer on account of Transfer Pricing adjustment. 2. That the Ld.CIT(A) after considering the facts and law rightly deleted the disallowance of Rs. 2,00,000/- made out of travelling expenses and Rs. 2,00,000/- out of legal & professional expenses." 3. The assessee is a private limited company deriving income from the business of export of Iron Ore Fines, Rice Bran Oil, De-oiled Cake, Rice etc. The Assessing Officer, made an addition of Rs. 81,44,959/- on the basis of Order passed by DCIT (TPO-II), Ahemadabad u/s 92C(3) dated 28/01/2014. The Iron Ore Fines export is made in bulk / loose form from various Indian ports to various Chinese ports. The assessee has a wholly owned subsidiary at Singapore. It has filed Audit Report in Form 3CEB and Transfer Pricing Study (TP Study) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the assessee. The Assessing Officer also made disallowance of Rs. 2,00,000/- out of Legal & Professional Charges and Rs. 2,00,000/- out of Travelling Expenses. 5. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 6. The Ld. DR submitted that as regards Ground No.1, the CIT(A) erred in deleting the adjustment of Rs. 81,44,959/- pertaining to Arms Length Price as suggested by the TPO. The Ld. DR submitted that the TPO observed and gave finding that in 14 instances internal comparables were available in remaining 7 instances external comparables could have been used. The TPO further observed that in case of two vessels, namely " THEOSKEPASTI" and "GOA", the TPO found that there was only one comparable of Trade Steel Index. Therefore, the TPO rejected the claim of the assessee for allowing benefit of variation (+/-) 5% observing that benefit u/s 92C (2) Second proviso by relying various decisions and proposed upward adjustment of Rs. 81,44,959/-. As regards Ground No. 2, the Ld. DR submitted that the CIT(A) erred in deleting the disallowance of Rs. 2 lacs made by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) resale price method; (c) cost plus method; (d) profit split method; (e) transactional net margin method; (f such other method as may be prescribed by the Board. (2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of arm's length price, in the manner as may be prescribed: Provided that where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the Provided further that if the variation between the arm's length price so determined and price at which the international transaction has actually been undertaken does not exceed five per cent of the latter, the price at which the international transaction has actually been undertaken shall be deemed to be the arm's length price find that provisos to Sec. 92C(2) have been amended as below: First proviso was inserted by Finance Act, 2001, w.e.f. 1/04/2002 which reads as below:- "Provided that where more than one price may be determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices. " 2. However, the above proviso was substituted by Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly one price which is determined by the most appropriate method, then as per the main sub-section (2) without the aid of proviso, that price shall constitute the ALP. The second proviso comes into play to deem the actual transacted price asthe ALP. It provides that wherethe variation betw'een the ALP'so determined' does not exceedthe specified percentage, the price at which the international transaction has actually been undertaken 'shall be deemed to be the arm's length price'. The words 'so determined' as employed in the second proviso assume significance. As these have been used in the second proviso distinct from the subject matter of the first proviso, naturally these will apply to the ALP determined under sub-section (2) consisting of the main provision and also the first proviso. Resultantly, the option of 'deemed' ALP shall extend not only to a situation where more than one price is determined as ALP by the most appropriate method but also where only one price is determined as ALP. The net result is that the option to the assessee shall be available in both the situations, covered under main sub-section (2) and also the first proviso. " 12. The issue of prices quoted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the bottom of the page expressing that - "Platts acquired the Steel business briefing group. A leading information provider to the global steel market through its two core business, Steel Business Briefing (SBB) and These Steel Indexes (TSI) in July, 2011. The acquisition of the SBB group enables platts to provide customers and the market with the benefit of a target, highly experienced editorial team a grammatically extended brief prices assessments and far from expensive product and variance mix. " The TPO has accepted the TSI prices in TP Study for determining ALP. Therefore, the comment of the TPO in his report that Trade Steel Index is arithmetical mean has not been explained by the appellant cannot be accepted and appellant has sufficiently demonstrated above. The case laws referred by the TPO in the TP Order as well as in the comments filed by TPO pertain to earlier year i.e., prior to substitution of first proviso in Sec. 92C(2) by Finance Act, 2009. However, in case of UV Trade Corporation India - (2011) T-II04 ITAT - Del.-TP the Hon'ble Members have taken different view as taken in case of Development Bank of Singapore supra by the Hon'ble Members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of expenditure. The disallowance is, therefore, uncalled for and is deleted." Thus, the CIT(A) has taken the cognizance of the details filed by the assessee during the course of the Assessment Proceedings before the Assessing Officer as well as before him. The finding of the CIT(A) in our opinion is just and proper. Therefore, there is no need to interfere with the findings of the CIT(A). Ground No. 2 of the Revenue's appeal is dismissed. 10. As regards Ground No. 3, we find that the CIT(A) held as under:- "18. I have carefully gone through the assessment order and submissions of the appellant. The appellant incurred Rs. 65 lakhs & odd towards Legal and Professional Charges. Details with regard to above were filed before me, I have carefully gone through the same, the A.O has not brought on record any evidence to prove that the expenses were not incurred in relation to business nor any specific instance of unsubstantiated claim has been pointed out by the A.O. I do not find any reason to sustain the disallowance made by the AO on adhoc basis. Hence, the disallowance is deleted." The assessee incurred Rs. 65 lakhs approximately towards the legal and professional ..... X X X X Extracts X X X X X X X X Extracts X X X X
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