The Tax Publishers2020 TaxPub(DT) 4110 (Del-Trib)

INCOME TAX ACT, 1961

Section 92C

Merely because there were exports of same goods over a period to AE, they did not become inter-linked. There has to be a binding element behind all the transactions to make them one and connected. Such data was also not available before TPO, therefore, TPO was directed to compute ALP by considering transactions of export to associated enterprise on aggregate basis after assessee having established that all the export transactions were inter-linked.

Transfer pricing - Determination of ALP - Export of goods to AE - TPO disregarded comparison of average price and carried out detailed comparison on day-to-day basis--Assessee pleading export transactions to be inter-linked

Assessee benchmarked international transactions of export of goods of various grades of steel to its AE, by comparing average monthly prices of goods sold to associated enterprise with average monthly prices of goods sold to uncontrolled enterprises of same grades, applying CUP method. TPO disregarded comparison of average price of goods exported by assessee to its AEs and sought to carry out a detailed comparison on day-to-day basis considering date of acceptance of order as the basis for the purpose of benchmarking export of stainless steel products. Out of the total transactions of sale of goods, TPO picked up transactions, wherein price of goods sold to AE was found to be lower than price of goods sold to unrelated parties, on the basis of date of acceptance and accordingly, made ALP adjustment. Assessee's case was that transactions were inter-linked and ALP was to be considered of export of goods on aggregate basis. Held: Merely because there were exports of same goods over a period to AE, they did not become inter-linked. There has to be a binding element behind all the transactions to make them one and connected. Such data was also not available before TPO. Therefore, TPO was directed to compute ALP by considering transactions of export to associated enterprise on aggregate basis after assessee having established that all the export transactions were interlinked.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2007-08


INCOME TAX ACT, 1961

Section 199 Rule 37BA(3)

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