TMI Blog2021 (4) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... er Pricing Officer has not properly looked into assessee's claim of various adjustments on account of geographical location, volume and timing difference. The Transfer Pricing Officer has only allowed volume adjustment on purely ad-hoc basis, that too, only in respect of a single product while ignoring various other products wherein volume difference between AE and non-AE transaction is substantial.assessee's contention that the price of products insofar as sales made to the AE and non-AE would vary due to timing difference has not been properly considered. The various adjustments which are required to be made have been demonstrated before us by the learned counsel for the assessee by furnishing charts. In our view, all these factors have to be taken into consideration, even, while applying CUP method. One more submission of the assessee is that the DRP has allowed adjustment on account of marketing/allied cost. However, while computing such adjustment, the Assessing Officer has not taken note of marketing personnel cost. Since the facts before us are materially same, We are, therefore, respectfully following the decision of the co-ordinate bench of the Tribunal restore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arm's length price of the international transaction, using Comparable Uncontrolled Price ('CUP') as the most appropriate method: a) of ₹ 39,20,644 vis-a-vis the transaction of export of finished goods to AEs b) of ₹ 4,90,84,731 vis-a-vis the transaction of payment for marketing, administrative, logistics support and information technology services availed from AEs. I. EXPORT OF FINISHED GOODS TO ASSOCIATED ENTERPRISES ('AEs') Rejection of the economic analysis undertaken by the Appellant 3. erred in rejecting the economic analysis undertaken by the Appellant using the Transactional Net Margin Method (TNMIvT), in accordance with the provisions of the Act read with the Income-tax Rules, 1962 ('the Rules'), and instead using CUP as the most appropriate method for the determination of the arm's length price of the international transaction of export of finished goods, without providing any cogent reasons. 3. At the outset, the Ld. Counsel of the assessee submitted that ground No.1 is covered by the decision of the co-ordinate bench of the Tribunal in assessee s own case in ITA No.991/M/2016 A.Y.2011-12 vide order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trolled transaction is unavailable, CUP method cannot be applied. 16. It is further noticed, during the year under consideration assessee had sold 34 different products to both overseas AEs as well as domestic unrelated parties. Out of the 34 products sold, Transfer Pricing Officer has accepted the price of 16 products sold to AEs to be at arm's length, since, the price charged to AEs is more than the price charged to non-AEs. In case of 18 products only the Transfer Pricing Officer has made adjustment as the price charged to AEs is less than the price charged to non-AEs. Thus, it appears, the Transfer Pricing Officer has adopted a very selective approach while applying CUP. Even, while applying CUP, the Transfer Pricing Officer has not properly looked into assessee's claim of various adjustments on account of geographical location, volume and timing difference. The Transfer Pricing Officer has only allowed volume adjustment on purely ad-hoc basis, that too, only in respect of a single product while ignoring various other products wherein volume difference between AE and non-AE transaction is substantial. Similarly, assessee's contention that the price of products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the orders of authorities below. 10. We have heard the rival submissions of both the parties and perused the material on record. We find that the identical issue has been decided by the co-ordinate bench of the Tribunal in ITA No.991/M/2016 (supra) in assessee s own case in A.Y. 2011-12 vide para No.25, 26 27 which are reproduced as under: 25. We have considered rival submissions and perused the material on record. Undisputedly, the assessee has entered into two separate agreements with group entities for availing marketing, administrative and logistic services as well as information technology services. It is the contention of the assessee that the services were essentially required not only for carrying on the business activities but overall growth of the business, initially, in course of proceedings before the Transfer Pricing Officer, the assessee has claimed the payment made towards intragroups services to be at arm's length by benchmarking them on cost allocation basis to the three different segments i.e., manufacturing, engineering and trading. However, at the stage of DRP proceedings, the assessee has furnished segmental benchmarking under TNMM wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , hence, opposed to law. Though, both the Transfer Pricing Officer and learned DRP have alleged that the assessee has not substantiated the fact that the services were actually rendered and benefit accrued to the assessee, however, the very fact that the Transfer Pricing Officer has allowed a part of the payment made towards Intra group services, though on estimate basis, clearly indicates that even the Revenue accepts that services indeed were received by the assessee and the assessee also benefited from them. It is a fact on record that in course of proceedings before learned DRP, the assessee had furnished segmental benchmarking under TNMM which included allocation of cost towards intra-group services. Thus, it is a fact on record that the assessee has benchmarked the transaction by applying one of the approved methods. If the Transfer Pricing Officer was not satisfied with the benchmarking done by the assessee under TNMM, he should have independently benchmarked the transaction by applying one of the approved methods. However, that is not the case in the facts of the present case. The Transfer Pricing Officer has simply estimated the arm's length price of the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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