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TMI Blog2023 (8) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... quality, the customs data being Govt, notified would provide a reasonable basis for arriving at the uncontrolled transaction price. The Co-ordinate bench of the Tribunal in the case of M/s Sinosteel India Pvt. Ltd. Vs. DCIT (I.T.A No.-175/Del/2012), Hon ble ITAT, Delhi has held that bare quotation price cannot be accepted under the CUP method for the purposes of benchmarking under Rule lQBA(1)(a) of the IT Rules, 1962. Thus we are of the opinion that the objections of the assessee against the use of customs data under CUP had been rightly rejected by the Authorities. Further we do not find any error or infirmity in the direction given by the DRP. Decided against Assessee. - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER For the Appellant :Shri Ravi Sharma, Advocate; 8s Ms. Shruti Khimta, AR For the Respondent : Shri Rajesh Kumar, [CIT] - D. R. ORDER PER YOGESH KUMAR US, JM This appeal is filed by the assessee against the order of the Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income-tax Officer, National e-Assessment Centre, Delhi for assessment year 2016-17. 2. The assessee has raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 143(3A) 143(3B) of the Act by making TP adjustment of Rs. 18,57,18,810/- and assessing the income of the assessee at Rs. 45,60,62,921/- as against the returned loss of Rs. 64,17,81,731/- in following manner: - 2-Transfer Pricing Approach of the TPO:- In the TP study report assessee has used CUP as the most appropriate method. TPO rejected the TP study report submitted by assessee, However accepted CUP as MAM after making verification from the data collected from the Custom department and proposed or adjustment of Rs. 1,06,137,17,211/- on account of 'Import of Commodities and adjustment of Rs. 10,08,321/- was proposed on account of Export of commodities/ The adjustment proposed of Import of Commodities and Export of Commodities was subsequently revised to Rs, 19,40,52,522/- vide order passed u/s 154 of the IT Act dated 13.03.2020. 3. Aggrieved by the TPO order, assessee went before Ld. DRP on various issues. Ld. DRP vide its order Dt. 23.02.2021, upheld the TPG findings and directed In the light of the foregoing discussion, the objections of the assessee against the use of customs data under CUP are rejected. However, in regard to the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 64,17,81,731/- Add: TP Adjustment Rs. 18,57,18,810/ - Assessed Income Rs. 45,60,62,921/- 5. Assessment order passed u/s 143(3) r.w.s. 144C(13) of the I.T. Act. Issued demand notice and computation sheet as per Annexure attached. Penalty notice u/s 271(l)(c) issued separately. 6. Aggrieved by the assessment order dated 31/03/3021, the assessee has preferred the present appeal on the grounds mentioned above. 7. The Grounds of the Appeal of the assessee directed against the assessment order in enhancing the income of the assessee by Rs. 18,57,18,810/- by relying on the data collected from custom authorities by rejecting the comparable uncontrolled price (CUP) analysis undertaken by the assessee. 8. The Ld. Counsel for the assessee submitted that, to bench mark the transaction relating to import and export of agri-commoditie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CUP data has been accepted by the Department for the Assessment Year 2014-15 2015-16 there is not TP reference and for the Assessment Year 2017-18 the CUP data has been accepted by the Department. It is found that the Department was not having the benefit of the data of the custom authorities in the Assessment Year 2014-15 2015-16 and the Department was having the benefit of data provided by the Custom Department in the year under consideration and relying on the bench marking analysis conducted by the assessee it has been held to be not reliable or bonafide. 12. There is no dispute between the assessee and the Department regarding the applicability of the CUP method for benchmarking. Both the assessee and the TPO having taken CUP as the MAM in the assessment proceedings, no other method is considered in view of the same. The moot question in the present appeal that whether the prices published by industry associations and brokerages along with third party transactions constitutes a more reliable CUP compared to customs data for import / export transactions of such agri-commodities. 13. As per Customs Valuation Rules, the comparison has been made on the transaction v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a shared by the Customs Department does not specify the quality and price variations of the commodities in particular. On the other hand, the TPO had noted that the assessee had erroneously applied the CUP method by taking the average price of certain commodities and that the industry average in such data would also include other related party transactions which may influence the average prices. It is seen that, prices published by industry Associations or industry reports and third party transactional data may not reflect the accurate price for benchmarking. For example, the differences would exist with such quoted prices arising out of standard contracts between independent parties vis-a-vis the negotiated related party terms of contract between the assessee and its associated enterprise in terms of premium/discounts applied based on the quantity/ quality /volume, supply chain logistics of the group etc. Until and unless adjustments are made in respect of such material differences vis-a-vis the quoted price and/or the comparable uncontrolled transactions/the prices determined by using the quoted figures would not reflect the accurate arm s length price under CUP. The impact of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and indices: The average international prices of these commodities as published during the preceding 15 days is considered to arrive at the Tariff Value. The Tariff Value of such commodities therefore are reflective of the international prices and revised twice every month to incorporate any changes in such international prices, of the commodities. 18. Thus the assessee contended that as no import or export duty was payable on these commodities, the data provided by the Customs Department thereon pertains to the invoice values of the commodities as and when declared by various taxpayers vide Shipping Bill/ Bill of Entry. The Panel is of the view that the tariff value notified by customs prepared from data from international databases, journals and indices and based on a 15-day average with a bi-monthly revision of international prices constitutes a credible arm's length benchmark under CUP. 19. We do not agree with the above contention of the Ld. Counsel for the assessee, even where no tariff rate is notified as in the case of sugar, cotton, meals and grains, the transaction values of customs data can be relied upon as it is based on transaction of similar nature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s need not necessarily be realistic as that department is more interested in collecting import duties. We should state without fear of contradiction that the customs authorities are assigning values to the imported goods on the basis of scientifically formulated methods and they are responsible for making a fair assessment value of the imported goods. The valuation made by the customs authorities is not an arbitrary exercise. But on the other hand, it depends upon large volume of international data classified according to internationally accepted protocol. Therefore, it is not possible to say that the credibility of the price rate furnished by customs authorities needs to be discounted. 22. Similarly, in Rohm And Haas India (P) Ltd. vs. ACIT (ITA No.2199/Mum/2015), the ITAT, Mumbai Bench held as under- ...We find that assessee had also filed additional evidences before us by producing data from TIPS Data Base maintained by the Customs Department, for the purpose of comparability of the prices of import transactions carried out by the assessee vis-a-vis comparable prices on the relevant date or nearer to the date of transactions. This according to the Id. AR covers 94.69% o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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