2012 (6) TMI 841 - AT - Income Tax

Summary

Issues involved: Transfer pricing adjustment u/s 92CA of the Income-tax Act, 1961.

Transfer Pricing of Barite Lumps:
- The assessee exported minerals to its Associated Enterprise (AE) and third parties.
- The Transfer Pricing Officer (TPO) found discrepancies in the pricing of sales to AE and non-AEs.
- The Commissioner of Income-tax(Appeals) noted the differences in pricing but considered them justified due to the nature of transactions.
- The TPO's failure to consider the 5% tolerance limit and external price comparisons was highlighted.
- The Commissioner of Income-tax(Appeals) deleted the addition of Rs. 1,84,11,785 relating to Barite Lumps, emphasizing the justifiability of the pricing differences.

Transfer Pricing of Bentonite Powder:
- Discrepancies were found in the pricing of Bentonite Powder sales to a third party and the AE.
- The Commissioner of Income-tax(Appeals) noted the volume disparity and occasional nature of the third-party transaction, justifying the pricing differences.
- The addition of Rs. 20,73,411 was deleted by the Commissioner of Income-tax(Appeals) as the comparison between third-party and AE sales was deemed unjustified.

Judgment:
- The Revenue appealed the deletion of the transfer pricing adjustment for Barite Lumps.
- The Appellate Tribunal agreed with the Commissioner of Income-tax(Appeals) that the disputed addition was unwarranted.
- The Tribunal emphasized the need to consider all risk-taking functions of multinational enterprises, as highlighted by the Supreme Court.
- The appeal filed by the Revenue was dismissed, upholding the Commissioner of Income-tax(Appeals) decision.