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TMI Blog2024 (4) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... ase to find the sale price of rice. Without ascertaining or explaining in detail whether the rates were for products exported from India or from any other country or specifying whether the rates relate to controlled or uncontrolled transactions or whether it relates to retail or wholesale market, the TPO simply proceeded on the basis of Bloomberg database. In fact Assessee had even provided the rates accepted by the Indian Custom s Department for export of rice and requested that the same be considered for CUP analysis as the same would be more reliable. Assessee also submitted that it realized more price on exports than the rates quoted by the Custom Authorities. The TPO without explaining as to why he wanted CUP method to be followed and not the TNMM followed by us as Assessee and without clarifying whether the rates applied were for products exported from India or any other country or whether it related to controlled or uncontrolled transactions or retail or wholesale or as to why the Custom s rates are not acceptable, proceeded to fix the ALP purely relying on the Bloomberg database that was available with them. DRP also did not accept Assessee s objections in its entirety. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctively, were issued. 3. Assessee had adopted Resale Price Method ( RPM ) for import of coal and Transactional Net Margin Method ( TNMM ) for import of pulses from its Associate Enterprise ( AE ) for determining Arms Length Price ( ALP ). Assessee had also exported rice to its AE and followed TNMM to ascertain ALP. The Transfer Pricing Officer ( TPO ) collected the details of export prices of rice from Bloomberg database and compared the same with the price realized by Assessee in respect of each of exports. Wherever the difference was +/- 5%, the TPO considered the same as at ALP. Accordingly, the TPO proposed an addition of Rs. 7,25,11,410/- as TP adjustment to be made to international transaction. The Assessing Officer ( AO ) relying on the TPO order dated 29th January 2016 passed the draft assessment order dated 18th March 2016. Assessee had objected to the Dispute Resolution Panel ( DRP ). The DRP by its order dated 26th October 2016 issued directions under Section 144C(5) of the Act. The DRP accepted the contention of Assessee that there were mistakes in the computation made by the TPO. The DRP accepted that the rates prevailing on the date of entering into the agreement shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck up any method without demonstrating that it is a MAM. Whenever both methods, i.e., CUP as well as TNMM can be applied, the traditional transaction methods are to be preferred over traditional profit methods. He thereafter proceeded to apply the CUP method and conducted a search on the Bloomberg database to find the sale price of rice. Without ascertaining or explaining in detail whether the rates were for products exported from India or from any other country or specifying whether the rates relate to controlled or uncontrolled transactions or whether it relates to retail or wholesale market, the TPO simply proceeded on the basis of Bloomberg database. In fact Assessee had even provided the rates accepted by the Indian Custom s Department for export of rice and requested that the same be considered for CUP analysis as the same would be more reliable. Assessee also submitted that it realized more price on exports than the rates quoted by the Custom Authorities. The TPO without explaining as to why he wanted CUP method to be followed and not the TNMM followed by us as Assessee and without clarifying whether the rates applied were for products exported from India or any other countr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational transaction as determined by the TPO. Assessee objected to the same by filing a representation to the Dispute Resolution Panel ( DRP ). The DRP issued directions under Section 144C (5) of the Act on 26th December 2013. The DRP upheld the addition made by the AO on account of TP adjustment. The AO passed the assessment order dated 31st December 2013 and made addition to the international transaction as directed by the DRP. This was challenged by Assessee before the Income Tax Appellate Tribunal ( ITAT ). 3. The appeal was allowed by the ITAT. It is this order, which is impugned in this appeal and the following three substantial questions of law are proposed : 1. Whether on the facts and circumstances of the case and in law, the Hon ble ITAT was justified in stating that CUP is most appropriate method for bench-marking the transaction of import of minerals without appreciating that one quality of coal can t be compared with different quality of coal for the purpose of bench-marking? 2. Whether on the facts and circumstances of the case and in law, the Hon ble ITAT was justified in upholding that proportionate adjustment has been done in Kcal value of coal to apply CUP without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moisture content. We noticed that the Ld. AR referred to the report given by Central Electricity Regulation Commission ( CERC ) and submitted that the CERC has considered three indices for determining the price, viz., global COAL NEWC; South African Steam Coal and Richard s Bay API Index. He submitted that the global COAL NEWC prescribes rate for Spot FOB Newcastle for quality of 6700kcal/kg GAD. The South African Steam Coal Index considers coal quality of CV 6000kcal/kg NAR, ash 15% maximum and Sulphur 0.8% maximum. The Richards Bay API 4 Index prescribes the rate for 6000kcal/kg GAD. Thus we notice that even though the indices prescribe different rates, yet the basis for fixing rate is not clear and hence it cannot be said that these indices follow uniform criteria. In any case the Assessee has bench marked its import transactions with the indices published by the same country from which imports were made. 32. Another reason cited by the TPO is that the Assessee has made arbitrary adjustments to the prices quoted by the indices with the intention to bring the same to the tolerance level of +/- 5%. The Ld. AR submitted that the Assessee has made scientific calculation to arrive a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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