COMMISSIONER OF INCOME TAX DELHI-II vs. CARGILL FOOD INDIA LIMITED

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ITA/157/2016HC DelhiDLHC01021543201619 February 2016Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU3 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the CUP method, based on market prices from stock or commodity exchanges, was valid. The High Court found no perversity or legal infirmity in the Tribunal's reasoning.

What were the facts?

The Assessing Officer (AO) made an addition based on the Transfer Pricing Officer's (TPO) order regarding the arm's length price of imported edible oil. The AO rejected the Comparable Uncontrolled Price (CUP) method used by the assessee, stating it was based on broker quotes and not actual transactions.

What were the issues?

Whether market prices from broker quotes and commodity exchanges can be used as a basis for the Comparable Uncontrolled Price (CUP) method in transfer pricing.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

ITA 157/2016 Page 1 of 3

$~22 * IN THE HIGH COURT OF DELHI AT NEW DELHI

ITA 157/2016

COMMISSIONER OF INCOME TAXDELHI-II ..... Appellant Through: Mr. P. Roy Chaudhuri, Senior Standing counsel with Ms. Laxmi Gurung, Jr. Standing counsel.

versus

CARGILL FOOD INDIA LIMITED

..... Respondent

Through: Mr. Amit Shrivastava, Advocate.

CORAM: JUSTICE S.MURALIDHAR JUSTICE VIBHU BAKHRU

O R D E R %

19.02.2016

1.

This appeal under Section 260A of the Income Tax Act, 1961 (‘Act’) is directed against the impugned order dated 10th April 2015 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 1460/PN/2010for the Assessment Year (AY) 2006-07.

2.

The ground sought to be urged by the Revenue is whether the ITAT was justified in deleting the addition of Rs. 29,70.31,153 made by the Assessing Officer (‘AO’) in terms of the order of the Transfer Pricing Officer (‘TPO’)

ITA 157/2016 Page 2 of 3

in relation to the arm’s length price of its international transaction pertaining to the import of edible oil from the Assessee’s associated enterprise by using the Comparable Uncontrolled Price (‘CUP’) method.

3.

As noticed by the ITAT in the impugned order, the ground on which the AO rejected the CUP method adopted by the Assessee was that “the price charged or paid” was on the basis of a broker quote, though based on the prices prevailing in the market, and was not a price charged or paid because it did not reflect the price of an actual transaction.

4.

However, as noted by the ITAT, Rule 10 D (3) (c) of the Income Tax Rules, 1962 envisages that the TPO should take into consideration price publications including stock exchange and commodity market quotations. Therefore, such published data available from stock or commodity exchanges could form the basis of the prices in both uncontrolled and controlled transactions.

5.

Having heard learned counsel for the parties, the Court is not persuaded to hold that the above reasoning by the ITAT is perverse and suffers from any legal infirmity. No substantial question of law arises for determination.

ITA 157/2016 Page 3 of 3

6.

The appeal is dismissed.

S.MURALIDHAR, J

VIBHU BAKHRU, J FEBRUARY 19, 2016 Rk

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