M/S ECOM GILL COFFEE TRADING PVT. LTD.,,BANGALORE vs. DCIT, BANGALORE

In this appeal, the assessee is aggrieved by the order of the Assessing Officer (AO) dated 27/08/2012 which is passed in pursuance of the directions of the DRP u/s 143(3) r.w.s. 144C of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short].

IT(TP)A No.1228/Bang/2012 M/s.Ecom Gill Coffee Trading Pvt. Ltd. Page 2 of 5 2. Brief facts of the case are that the assessee-company which is engaged in the business of trading of Coffee, Cotton, Cocoa and other commodities, filed its return of income for the assessment year 2008-09 on 28/10/2007 declaring a loss of Rs.2,43,45,229/-. During the assessment proceedings u/s 143(3), the AO noticed that the assessee had international transaction with its Associated Enterprises (AE) exceeding Rs.15 crores. Therefore, reference was made to the Transfer Pricing Officer (TPO) u/s 92C of the Act for determination of the arms’ length price (ALP) of the international transaction. The assessee had adopted the CUP method as the most appropriate method for determining the ALP. The TPO determined the ALP u/s 92C(5) of the Act and held that the sale price of the assessee was found to be lower than the uncontrolled price and that the international transaction is not at arms’ length. He, therefore, determined the ALP adjustment at Rs.1,35,96,260/- for the financial year 2007-08 i.e. for the assessment year 2008-09. The assessee filed objections before the DRP stating that the TPO is not justified in adopting CUP method in determining the ALP and that TNMM should be adopted as it is the method adopted by the TPO as well as the DRP for the assessment year 2006-07. The DRP, however, rejected the assessee’s contention and confirmed the orders of the TPO and the AO accordingly passed the final order.

IT(TP)A No.1228/Bang/2012 M/s.Ecom Gill Coffee Trading Pvt. Ltd. Page 3 of 5 3. The assessee is in appeal before us against adoption of CUP method for determination of the ALP. At the time of hearing, the learned counsel for the assessee submitted that the assessee had adopted CUP as the most appropriate method during the assessment year 2006-07, but the TPO had rejected the same and had adopted TNMM and the issue in assessment year 2006-07 had travelled upto the Tribunal and the Tribunal by its order dated 26/04/2012 (to which one of us i.e. the Judicial Member is a signatory) had remanded the issue back to the file of the TPO to re-examine and determine the most appropriate method for determination of the ALP. He submitted that while giving effect to the orders of the Tribunal, for the assessment year 2006-07 and 2007-08, the TPO has adopted TNMM as the most appropriate method and has held that no adjustment is required u/s 92CA of the Act. Copies of the orders of the TPO dated 29/1/2014 for assessment year 2006-07 and 2007-08 are filed before us. He also filed copies of the orders of the TPO for the assessment years 2009-10 and 2010-11 i.e. subsequent to the assessment year under consideration wherein the TNMM method has been adopted for determining the ALP and no adjustment was made u/s 92CA of the Act. Thus, according to the learned counsel for the assessee, the revenue has been adopting TNMM as the most appropriate method from the assessment year 2006-07 to 2010-11 except for the assessment year 2008-09 i.e. assessment year before us and the revenue

IT(TP)A No.1228/Bang/2012 M/s.Ecom Gill Coffee Trading Pvt. Ltd. Page 4 of 5 should adopt a consistent and uniform stand for similar transactions. Therefore, he prayed that the TPO be directed to adopt TNMM as the most appropriate method.