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TMI Blog2013 (12) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be accepted as ALP. Assessee charged commission from SIMCO as well as some third party at $ 0.50 per DMT. Such rate, unless shown with the help of some other comparable case to be not applicable in respect of the other two international transactions because of different volume, cannot be ignored. - Decided against the assessee. - I.T.A .No.-175/Del/2012 - - - Dated:- 13-12-2013 - Shri R. S. Syal And Shri A. D. Jain,JJ. For the Petitioner : Shri Krishan Malhotra Sh. Ankur Goel, AR. For the Respondent : Sh. Peeyush Jain, CIT. DR ORDER Per R. S. Syal, AM. This appeal by the assessee arises out of the order dt. 13.12.2011 passed by the Assessing Officer u/s 143(3) r.w.s. 144C(5)/254 of the Income-tax Act, in relation to the assessment year 2006-07. 2. The only issue raised in this appeal through various grounds is against the determination of arm's length price (ALP) of certain international transactions at Rs.4,14,53,877 as against the declared value of Rs.1,58,12,470/-, thereby making addition by way of transfer pricing adjustment to the tune of Rs.2,87,72,311/-. 3. Briefly stated the facts of the case are that the assessee is a wholly owned subsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's holding company which indicated reducing rate of commission with the increase in volume. The Tribunal remitted the matter to the DRP for consideration of additional evidence and consequently deciding the issue afresh. The DRP vide its order dated 25.11.2011 came to hold that the quotation of Jyoti Enterprises was of no consequence and did not assist the case of the assessee. Resultantly the addition was sustained at the same level. The AO vide the impugned order upheld the addition of Rs.2.87 crore as originally made. The assessee is in appeal against the sustenance of such addition. 4. We have heard the rival submissions and perused the relevant material on record. The solitary contention of the ld. AR in support of the deletion of addition before us has been that the rate of commission charged by the assessee from its AEs in respect of two transactions was in accordance with the rate quoted by Jyoti Enterprises to Sinosteel International Holding Company Ltd. and hence the price so quoted should be considered as comparable uncontrolled price. There is no quarrel over the fact that the assessee adopted CUP method to demonstrate that its international transactions were at ALP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment to `such price' [that is `the price charged or paid' as per sub-clause(i)] on account of differences between the international transaction and the comparable uncontrolled transaction. Under step three, the adjusted price arrived at under sub-clause (ii) is taken to be an ALP in respect of the services provided in the international transaction. 7. The Special Bench of the Tribunal in the case of LG Electronics has held vide Para 22.11 that : ` Rule10B has specified a set procedure to be followed for determining the ALP distinctly under the five methods. It is equally not permissible to invent a new procedure and try to fit such procedure within any of the existing procedures prescribed as per these methods. No one is authorized to add one or more new steps in the prescribed procedure or to substitute any other mechanism with the one prescribed under the rule. It is neither possible to invent a new method nor to substitute a new methodology in place of the one prescribed in the rule.' Elaborating further, it has been held in para 23.5 that : "One has to necessarily pass through these steps for determining ALP under the ....method. ....... When the rule prescribes a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom such concern. As such, we are unable to accept the argument that the rate as per this quotation should be accepted as `the price charged or paid' under the CUP method. This contention, being bereft of any force deserves to be and is hereby given the fate of rejection. 10. Having held that the bare quotation price cannot be accepted under the CUP method for the purposes of benchmarking, we still need to find out if there is any further scope for allowing relief on the basis of some rationality for lower rate of commission on the increased volume, as argued by the ld. AR. We find some vigor in the submission of the ld. AR that there is a possibility of reduction in the rate of commission with the increase in volume. But this rule is not absolute. It may or may not turn out true. It can be seen from the facts of the extant case that the assessee received commission at the same rate of $.50 per DMT from its SIMCO with the volume of 1,64,357 DMT and from Top Resources Hong Kong Ltd with the volume of 40,418 DMT. There is no variation in the rate of commission despite the fact the volume is almost four times in transaction with its AE. However, as observed earlier, the possibility ..... X X X X Extracts X X X X X X X X Extracts X X X X
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