TMI Blog2023 (7) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... of respondent. The assessment orders for those assessment years are also on record. CIT(A) came to the conclusion, which was correctly upheld by the ITAT, that there was no merit in the order of TPO in applying the CUP method to benchmark the international transaction of export to AE in the hands of respondent. TP adjustment on receipt of commission from the AE - respondent in TP report had applied the CUP method for benchmarking the international transactions with its AE - Respondent had applied CUP method in all the years starting from 2006-07 to 2010-11. TPO for the assessment year under consideration, i.e., AY 2005-06 applied internal rate of return as the most appropriate method for benchmarking international transactions, but, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice ( ALP ). Respondent had made export sales of Cold Rolled Electrical Steel in coils amounting to Rs. 12,95,67,447/- to its AE, TKES EBG Italia S.r.L, Italy. Before the TPO it was submitted by respondent that the said transaction of export sales were benchmarked by applying Cost Plus Method ( CPM method ) as the same was considered to be the most appropriate method. However, for reasons discussed in detail in the order passed under Section 92CA(3) of the Act, the TPO held that Comparable Uncontrolled Price Method ( CUP method ) is the most appropriate method for determination of the ALP of the export sales to the AE. Applying the CUP method, the TPO calculated the adjustment at Rs. 2,56,33,366/- on account of the ALP of the export sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional transactions. In respect of export sales, the CIT(A) observed that the TPO has rejected the CPM method applied by respondent, without providing cogent reasons. The transactions considered as CUP by the TPO pertain to sale of small quantities of leftover stock and are in no way comparable to very large quantities sold to its AEs in foreign countries. The CIT(A) observed that the transactions considered in CUP by the TPO are not in line with the provisions of Rule 10B and 10C of Income Tax Rules. In respect of the Commission receipt, the CIT(A) accepted respondent s contention that the method applied by TPO is inapplicable and also observed that the ITAT, Pune, has held in the case of Hoganas India Pvt. Ltd. Vs. DCIT ITA NO. 1463 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e TPO in rejecting the method applied by respondent. Accordingly, the ITAT upheld the order of CIT(A) in deleting the adjustment of Rs. 4,37,30,383/- and dismissed Revenue's Appeal on this issue. 5. The following substantial questions of law have been proposed: A) Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal is justified in upholding the order of CIT(A) in deleting the additions/adjustments of Rs. 4,37,30,383/- made by TPO on account of Arms Length Price of International Transactions by way of Export Sales and Commission receipts? B) Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal is justified in upholding the CPM method adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2010- 11. The TPO was of the view that CUP method was most appropriate method to be applied. Since the transaction picked up for comparison by TPO was very negligible, on the basis of small sales made by respondent of similar components, the CIT(A) held that there is no merit in applying the CUP method. CIT(A) also observed that the methodology adopted by respondent in applying CPM method had been accepted from Assessment Years 2008-09 to 2010-11 by the TPO himself and no adjustment has been made in the hands of respondent. The assessment orders for those assessment years are also on record. Therefore CIT(A) came to the conclusion, which was correctly upheld by the ITAT, that there was no merit in the order of TPO in applying the CUP me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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