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| The Tax Publishers2020 TaxPub(DT) 3619 (Mum-Trib) INCOME TAX ACT, 1961
Section 92C
As decided in assessee's own case in assessment year 2004-05 [2012 TaxPub(DT) 2145 (Mum-Trib)] Tribunal had accepted the benchmarking done by assessee under CUP method and had also held that profit sharing ratio of 50:50 was prevalent both in respect of agreement entered into between group companies with unrelated parties as well as assessee, therefore, ground raised by assessee was dismissed.
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Transfer pricing - Computation of arm's length price - Comparable Uncontrolled Price (CUP) method as applied by the assessee to be the most appropriate method -
Assessee had entered into international transactions with its overseas AEs and in course of such transactions had paid freight expenses to AEs and has also received freight revenue from the AEs. Assessee had applied CUP as the most appropriate method. For comparability purpose, assessee had relied upon comparable agreements entered into by the group companies with third parties, wherein, the terms are similar to the terms of agreement between the assessee and the group companies. It was also emphasized that terms of contract between the group companies with the third parties as well as assessee remains the same as per which the residual gross profit was shared between the original company and the destination company at 50:50 ratio. Under TNMM, assessee selected seven comparables with mean OP/VAE of 30% as against the OP/VAE shown by the assessee at 22.76%. Thus, it was claimed that transactions with AEs were at arm's length. TPO, however, did not accept the submissions of the assessee and rejected CUP method applied by assessee. Held: On a perusal of material placed by assessee, while deciding identical issue in assessee's own case in assessment year 2004-05 [2012 TaxPub(DT) 2145 (Mum-Trib)] the Tribunal had accepted the benchmarking done by the assessee under CUP method and has also held that profit sharing ratio of 50:50 was prevalent both in respect of agreement entered into between group companies with unrelated parties as well as the assessee. Therefore, ground raised by assessee was dismissed.
Followed:Agility Logistics Pvt. Ltd. v. Asstt. CIT 2014 TaxPub(DT) 0116 (Mum-Trib) Agility Logistics (P.) Ltd. v. DCIT [IT Appeal No. 8648 (Mum.) of 2011, dt. 13-4-2012] ACIT v. Agility Logistics (P.) Ltd. 2012 TaxPub(DT) 2145 (Mum-Trib)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2010-11 & 2011-12
INCOME TAX ACT, 1961
Section 145
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