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TMI Blog2018 (7) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions of the appellant to the effect that with regard to 25% glaze products the water content will be more than 10-20% glaze products. So much so, the net yield would be less and considerable reduction in Selling Price. 4. The Dispute Resolution Panel, Bangalore did not also recognize the above aspect which has not been considered by the Transfer Pricing Officer, so much so the issue should have been send back to TPO for consideration. 5. The officers below were also not justified in disallowing EIA Monitoring fee paid to Export Inspection Agency, for non deduction of tax. Since EIA is an organization established by the Central government under the Export Quality Control and Inspection Act of 1963 and the provisions of TDS are not applicable. 6. For the above reasons and other reasons as may be adduced at the time of hearing the appellant prays that the above grounds may be considered for allowance. 3. The facts of the case with regard to Ground Nos. 2 to 4 are that the assessee in its Transfer Pricing study had concluded that CUP method was the most appropriate for benchmarking international transactions in the seafood industry. According to the TPO, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis being given. 'You have not submitted the quantification process adopted by you to arrive at the adjustments, claimed. The fact is that 3% adjustment was claimed on all transactions, without specifying the factors that affected the price as well as proper quantification of adjustment. In the above circumstances, it is proposed that the arbitrary adjustments claimed by you without supporting rationale and proof be rejected. Hence TPO proceeds to compare the sale price to AE with the MPEDA data for the. corresponding period and for the corresponding product and country, without granting any adjustment. Whenever the corresponding MPEDA rate is higher than the rate at which sale is made to Associated Enterprise, MPEDA rate will be taken as Arm's Length Price and based on the same, upward adjustments will be made to the income of the assesses. Objections, if any, may be furnished on or before 18.12.2015." 3.1 Before the TPO, the assessee vide letter dated 22.12.2015 explained the reason for adopting the 3 % weightage. The assessee submitted that certain grades U/ 1 and 1/2 of Cuttlefish is processed and packed with 25% glaze (glaze indicates the extent of water or ice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on any invoice is incorrect. The assessee did not controvert the entry wise adjustment details and only lump sum adjustment was sought by the assessee. In view of the above findings, the DRP upheld the order of the TPO and rejected the objections of the assessee. 5. Against this the assessee is in appeal before us. The Ld. AR submitted that having relied on CUP method as the most appropriate method for bench marking international transactions, they have relied on export rates published by MPEDA, which is a quasi govt. Body and the data released on a weekly basis gave input of the types of products and this was taken as benchmark for arriving at Arms Length Pricing. According to the Ld. AR, the main products exported by the assessee are cuttlefish, squids and Octopus of various sizes/grades with different glaze percentages. The Ld. AR submitted that Glaze represents the percentage of water content in the product. For instance 1kg of Cuttlefish grade U/1 with 25% glaze, will effectively have only 750 gms of cuttlefish and 250 gms of water. Similarly, it was submitted that one kg of squid U/5 with 15% glaze will have 850 gms of Squid and 150 gms of water. The glazes of different pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, the assessee has not brought on any evidence to show that the assessee's product is having 25% glazes so that it cannot be compared with the price list published by MPEDA. Being so, we do not find any merit in the argument of the Ld. AR and the same is rejected. Thus, Ground Nos. 2 to 4 of the assessee are dismissed. 8. The next ground, Ground No. 5 is with regard to disallowance of EIA Monitoring fee paid to Export Inspection Agency, for non deduction of tax. 9. The facts of the case are that the assessee had paid Rs. 18,02,939/- as EIA monitoring fee to Export Inspection Agency. The assessee had not deducted tax at source on this payment. Since the Export Inspection Agencies are autonomous bodies established by the Central Government under the (Export Quality Control &Inspection) Act, 1963 (22 of 1963), as the field organizations for implementing the policies of the Central Government with respect to Quality Control and/or shipment and inspection of Export Commodities from India as such TDS u/s 194] will be attracted in this case for the payment paid to autonomous bodies and non-deduction of tax will attract provisions of 40a(i)(a) of the Income Tax Act, 1961. Hence an am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take the appropriate action without any delay. This submission may not have priority with majority of the members but I still maintain that every member should pay serious attention to this issue as some of our members have been disallowed EIA fee as expenditure in their income tax assessment." 11. On appeal, the DRP found that from the para 1 of this e-mail also it was clear that even as late as 7.3.2016 no circular has been issued by the Govt. of India exempting EIC/ EIA from Income tax. Further, no other document was submitted by the assessee showing that the income of the assessee is exempt. Further, it was found that no certificate for non-deduction of TDS was produced before AO or even before the DRP. Therefore, the DRP upheld the action of the AO and the objection was rejected. 12. We have heard the rival submissions and perused the record. Before us also the Ld. AR was not able to show that the payment to Export Inspection Agency is not liable for deduction of TDS so as to attract the provisions of section 40(a)(ia) of the Act. In view of this, we do not find any merit in the argument of the Ld. AR and uphold the order of the lower authorities. Thus, this ground of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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