The Tax PublishersITA Nos. 57/H/2016 & 1656/H/2018
2021 TaxPub(DT) 1046 (Hyd-Trib)

INCOME TAX ACT, 1961

Section 92CA

Both the AO/TPO and the DRP should specify as to whether they had adopted cost/revenues of the international transactions in issue only or that of the entire activities involving the twin entities' gross transactions before taking a call on determining the actual ALP.

Transfer pricing - Determination of ALP - To be restricted to international transactions only -

The assessee is an agent of Maxicon Container Line Pte. Ltd. (AE) for all its operations in India. Profit of the AE for the year was Rs. 3.10 crores as per the Audited Accounts which was net of Rs. 7.72 Cr., being agency expenses paid to the assessee. In other words, the total profit generated was (Rs. 3.10 Cr. + Rs. 7.72 Cr.) = Rs. 10.82 Cr. AO passed order under section 143(3) read with section 144C(1) read with section 144C(5) in accordance with the direction of Dispute Resolute Panel (DRP) wherein DRP had deleted Arm's Length Price (ALP) adjustment, addition of Rs. 5.63 Crores on examination and interpretation of available records. Revenue has, vide the instant appeal, agitated against this deletion by the DRP. Held: The issue here concerns of aggregate figure to be adopted between the assessee and its overseas AE pertaining to the international transactions in the nature of container line income/container line expenses, reimbursement of expenses paid, liner agency services, slot hire income and slot expenses totaling to Rs. 19,60,49,865, as disclosed in Form 3-CEB report. It was noticed that neither the AO/TPO nor the DRP had specified as to whether they had adopted cost/revenues of the international transactions in issue only or that of the entire activities involving the twin entities' gross transactions. In view of this, it was decided to restore the instant issue with the direction to ascertain the correct ALP of the assessee's international transactions with its AE.

Followed :CIT Vs. Firestone International (P) Ltd. (2015) 378 ITR 558 (Bom.) : 2015 TaxPub(DT) 3467 (Bom-HC)

REFERRED :

FAVOUR : Partly in both revenue favour

A.Y. : 2011-12



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