The Tax PublishersITA Nos. 3397, 3069/Ahd/2014, 2340, 2339, 2407/Ahd/2015, 1887, 2028/Ahd/2016, 1974, 2006/Ahd/2017
2020 TaxPub(DT) 5297 (Ahd-Trib)INCOME TAX ACT, 1961
Section 92B(2)
Section 92B(2) clearly specifies that there should be a prior agreement in relation to relevant transaction between other person and the AE. It is an undisputed fact that there was no agreement between the BGEH and Cairn group. The BGEH was negotiating on behalf of Indian companies. The agreement was entered between Indian entity of Cairn Group and assessee group company, which was incorporated in India. The contract or the agreement had subsequently been assigned to assessee. Therefore, provisions of section 92B(2) were not applicable.
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Transfer pricing - Applicability of section 92B(2) - Transaction of purchase of gas by assessee, whether international transaction -
Assessee company engaged in trading in natural gas, During the course of assessment, the AO noticed that assessee-company has entered into international transactions with its AE. The AE, B.G. Energy Holding Ltd., had negotiated the transaction with Cairn Energy Group for purhcase of natural gas from its Laxmi Gas field. The contract for purchase of gas was transferred by AE to Gujarat Gas Comppany Limited and subsequently, it was transferred to the assessee-company. Therefore, AO was of the view that transactions of purchase of gas by assessee from Cairn Energy Group were covered under definition of 'international transaction' as per provision of section 92B(2). Held: Section 92B(2) clearly specifies that there should be a prior agreement in relation to relevant transaction between such other person and the AE. It is an undisputed fact that there was no agreement between the BGEH and Cairn group. The BGEH was negotiating on behalf of Indian companies. The agreement was entered between Indian entity of Cairn Group and assessee group company, which was incorporated in India. The contract or the agreement had subsequently been assigned to assessee. Therefore, provisions of section 92B(2) were not applicable. AO was accordingly not justified to treat the transaction of purchase of gas from Cairn group as international transaction. It was also demonstrated from the copies of agreement that AE of assessee-company BGEH was not in agreement with Cairn for the purchase of gas from Laxmi Field and BGH has provided only negotiation services. Assessee has purchased the gas from Caim and from other operation from Laxmi Field, ONGC, World Tata Petrodyne Ltd. on the same price, therefore, it could not be said that assessee had not made transaction according to arm's length principles. Accordingly, no adjustment was called for.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11 to 2013-14
INCOME TAX ACT, 1961
Section 195
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