The primary contention revolves around the Transfer Pricing Officer’s enhancement of the appellant’s income. This was based on the assertion that international transactions related to the import/export of Agri-commodities with Associated Enterprises did not satisfy the Arm’s Length Principle.

The Ld. Transfer Pricing Officer rejected the Comparable Uncontrolled Price (CUP) analysis undertaken by the appellant, which was based on industry reports and independent broker quotes. The Dispute Resolution Panel (DRP) upheld the Transfer Pricing Officer’s findings but directed certain adjustments based on the provisions of the Income-tax Act.

The final assessment order, made a Transfer Pricing (TP) adjustment, resulting in an income, compared to the returned loss. The appellant’s contention is that the rates published on commodities exchanges are actual prices, which vary daily and that the Transfer Pricing Officer had arbitrarily selected prices from the multiple prices of the commodity available on the same date of the Bill of Entry and that the data shared by the Customs Department does not specify the quality and price variations of the commodities in particular.

The Hon’ble Tribunal observed that the customs data at the port of shipment/delivery would better reflect the price of the commodity as it includes various costs as followed by the revenue. Further that the tariff value notified by customs, based on international prices, constituted a credible arm’s length benchmark under CUP. The Hon’ble Tribunal thus dismissed assessee’s objection against the use of customs data under CUP. (AY. 2016-17)