Cargill Foods India Ltd., Gurgaon V. DCIT Cir.-4, Pune

ITA 1460/PUN/2010

• Counselvise Citation: 146024514 RSA 2010
• Duration Of Justice: 4 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP GANG
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Rule of consistency; Wholly owned subsidiary; Difference of opinion; Unabsorbed depreciation
• Section: 92C; 143(3); 92B; 234B; 10B; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1460/PN/2010 (ASSESSMENT YEAR : 2006-07) CARGILL FOODS INDIA LIMITED (NOW MERGED IN AND KNOWN AS CARGILL INDIA PRIVATE LIMITED) 14 TH FLOOR, BUILDING 9-A, DLF CYBER CITY, PHASE III, GURGAON, HARYANA 122002 PAN: AABCP0312N . APPELLANT VS. THE DY. COMMISSIONER OF INCOME, CIRCLE 4, PUNE . RESPONDENT APPELLANT BY : SHRI M.P. LOHIA RESPONDENT BY : SHRI SANDEEP GANG, CIT DATE OF HEARING : 16-03-2015 DATE OF PRONOUNCEMENT : 10-04-2015 ORDER PER G. S. PANNU, AM: THE CAPTIONED APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 IS DIRECTED AGAINST AN ORDER OF THE DEPUTY COMMISSIONE R OF INCOME TAX, CIRCLE- 4, PUNE (IN SHORT THE AO), PASSED U/S 143 (3) R.W.S . 144C(13) OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT), DATED 28.10.2010, WHICH IS IN CONFORMITY WITH THE DIRECTIONS GIVEN BY THE DISPUTE RESOLUTION PANE L (IN SHORT DRP) DATED 13.09.2010. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP AND CONSEQUENTIALLY THE LEARNED AO HAVE: INTERNATIONAL TRANSACTION PERTAINING TO IMPORT OF E DIBLE OIL FROM THE AE 1. GENERAL GROUND CHALLENGING THE TRANSFER PRICING ADJUSTMENT OF RS 29,70,31,153 ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. ERRED IN MAKING TRANSFER PRICING ADJUSTMENT BY REJE CTING THE ANALYSIS UNDERTAKEN BY THE APPELLANT TO DETERMINE ARM'S LENG TH PRICE FOR ITS INTERNATIONAL TRANSACTION PERTAINING TO IMPORT OF E DIBLE OIL FROM THE AE. 2. REJECTION OF COMPARABLE UNCONTROLLED PRICE ('CUP ') AS THE MOST APPROPRIATE METHOD ERRED IN MAKING AN ADJUSTMENT TO THE INTERNATIONAL TRANSACTION OF THE APPELLANT, REJECTING CUP AS THE MOST APPROPRIATE ME THOD CONSIDERED BY THE APPELLANT TO DETERMINE THE ARM'S LENGTH PRICE. 3. NON CONSIDERATION OF ADDITIONAL EXTERNAL CUP, IN TERNAL CUP AND OTHER DATA ERRED BY NOT CONSIDERING THE ADDITIONAL EXTERNAL CU P, INTERNAL CUP DATA AND OTHER DATA SUPPORTING THAT THE APPELLANT'S INTERNATIONAL TRANSACTION WITH ITS AE IS AT ARM'S LENGTH. 4. INAPPROPRIATELY CONSIDERING TRANSACTIONAL NET MA RGIN METHOD ('TNMM') AS THE MOST APPROPRIATE METHOD WITHOUT PREJUDICE TO THE GROUNDS ABOVE, ERRED IN IN APPROPRIATELY CONSIDERING TNMM AS THE MOST APPROPRIATE METHOD IN SPITE OF SUBMITTING VARIOUS CUP DATA (BROKER NOTES, PRICE PU BLICATIONS ETC). 5. INAPPROPRIATE SEARCH PROCESS WHILE APPLYING OF T NMM AS THE MOST APPROPRIATE METHOD WITHOUT PREJUDICE TO THE GROUNDS ABOVE, ERRED IN CA RRYING OUT SEARCH PROCESS FOR IDENTIFYING COMPARABLE COMPANIES USING TNMM AS THE MOST APPROPRIATE METHOD, MAINLY WITH REGARDS TO THE FOLLOWING: 5.1 CONSIDERING ONLY 'PROWESS' DATABASE FOR SEARCH ANALYSIS THOUGH THERE IS ANOTHER WIDELY RECOGNIZED PUBLIC DATABASE I.E. 'CAPITALINE PLUS'; 5.2 NOT SHARING / PROVIDING OF THE DETAILED ACCEPT -REJECT ANALYSIS FOR THE PURPOSE OF ARRIVING AT THE COMPARABLE COMPANIES TO THE APPELLANT; 5.3 CONSIDERING NON CONTEMPORANEOUS DATA; 5.4 INAPPROPRIATE APPLICATION OF TURNOVER FILTER; AND 5.5 USE OF FINANCIAL DATA FOR AY 2006-07 ONLY. ERRED IN CONSIDERING THE OPERATING MARGINS EARNED B Y COMPARABLE COMPANIES BASED ON THE FINANCIAL DATA PERTAINING TO THE YEAR ENDED 31 MARCH 2006 ONLY AND REJECTING THE FINANCIAL DATA OF COMPARABLE COMPANIES FOR PRIOR TWO YEARS. 6. SELECTING INAPPROPRIATE COMPANIES AS COMPARABLE TO THE APPELLANT WITHOUT PREJUDICE TO THE GROUNDS ABOVE, ERRED ON FA CTS AND IN CIRCUMSTANCES OF THE CASE BY SELECTING INAPPROPRIAT E COMPANIES AS COMPARABLE TO THE APPELLANT. ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. 7. INAPPROPRIATE ADJUSTMENT USING TNMM ON THE TURNO VER OF ENTIRE OIL DIVISION OF THE APPELLANT WITHOUT PREJUDICE TO THE GROUNDS ABOVE, ERRED ON TH E FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW BY PROPOSING I NAPPROPRIATE ADJUSTMENT USING TNMM ON THE TURNOVER OF ENTIRE OIL DIVISION OF THE APPELLANT. 8. NOT CONSIDERED ADJUSTED MARGIN OF THE APPELLANT WITHOUT PREJUDICE TO THE GROUNDS ABOVE, ERRED ON TH E FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW BY REJECTING T HE APPELLANT'S PLEA TO CONSIDER THE ADJUSTED MARGIN OF THE APPELLA NT. 9. INAPPROPRIATE CALCULATION OF THE OPERATING MARGI NS OF COMPANIES SELECTED AS COMPARABLES BY THE LEARNED TP O WITHOUT PREJUDICE TO THE GROUNDS ABOVE, ERRED ON FA CTS AND IN CIRCUMSTANCES OF THE CASE IN INAPPROPRIATELY COMPUT ING THE OPERATING MARGINS OF COMPANIES SELECTED AS COMPARAB LES BY THE LEARNED TPO. 10. NOT CONSIDERED SET OFF OF BROUGHT FORWARD LOSSE S AND UNABSORBED DEPRECIATION FOR PREVIOUS YEARS WITHOUT PREJUDICE TO THE GROUNDS ABOVE, ERRED ON FA CTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW BY PASSING ORD ER UNDER SECTION 143(3) READ WITH SECTION 144C(13) OF THE ACT WITHOU T CONSIDERING BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION FOR PREVIOUS YEARS AMOUNTING TO RS.50,85,49,369, WHILE DETERMINI NG THE TOTAL INCOME OF THE APPELLANT FOR AY 2006-07 AT RS 20,00, 42,071. 11. APPLICABILITY OF +1-5% RANGE ERRED IN LAW IN NOT APPLYING THE PROVISO TO SECTION 92C OF THE ACT AND HAS FAILED TO ALLOW THE APPELLANT THE BENEFIT O F LOWER VARIATION OF 5 PERCENT IN DETERMINING THE ARM'S LENGTH PRICE. 12. ERRONEOUS LEVY OF PENALTY UNDER SECTION 271AA OF THE ACT ERRED ON THE FACTS AND IN LAW IN INITIATING THE PEN ALTY PROCEEDINGS UNDER SECTION 271AA OF THE ACT WITHOUT CONSIDERING THE FACT THAT THE APPELLANT HAS MAINTAINED AND FURNISHED ALL THE DOCU MENTATION THAT WERE REQUIRED FOR THE PURPOSE OF ASSESSING THE VALU E OF INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT AND THE A PPELLANT HAS COMPLIED WITH THE TRANSFER PRICING PROVISIONS. 13. ERRONEOUS LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WITHOUT PREJUDICE TO THE GROUNDS ABOVE, IF THE TRAN SFER PRICING ADJUSTMENT IS SUSTAINED THEN THE LEARNED AO HAS ERR ED IN PROPOSING TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT CONSIDERING THE FACT THAT ADJUSTMENT TO TRANSFER PR ICE IS JUST ON ACCOUNT OF DIFFERENCE OF OPINION AS TO APPLICATION OF MOST APPROPRIATE METHOD AS DETERMINED BY THE APPELLANT VIS-A-VIS AS DETERMINED BY ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. THE LEARNED TPO AND CONSEQUENTLY RESULTED IN AN ADJ USTMENT TO INCOME. 14. ERRONEOUS LEVY OF INTEREST UNDER SECTION 234B A ND 234C OF THE ACT WITHOUT PREJUDICE TO THE GROUNDS ABOVE, ERRED ON TH E FACTS AND IN LAW BY PROPOSING TO LEVY INTEREST UNDER SECTION 234 B AND SECTION 234C OF THE ACT, WITHOUT CONSIDERING THE FACT THAT THE INTEREST UNDER THESE SECTIONS OF THE ACT IS PROPOSED TO BE LEVIED TO THE EXTENT THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT IS MADE ON ACCOUNT OF DIFFERENCE OF OPINION REGARDING APPLICAT ION OF MOST APPROPRIATE METHOD, ETC AND BY NO MEANS THE APPELLA NT COULD HAVE ESTIMATED SUCH ADJUSTMENTS WHICH HAS BEEN PROPOSED AFTER THE TRANSFER PRICING COMPLIANCE DATES, AND CONSEQUENTIA L TAX ON SUCH ADJUSTMENT. 3. IN THIS APPEAL, ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT THE SOLITARY ISSUE IN DISPUTE IS ON ACCO UNT OF AN ADDITION OF RS.29,70,31,153/- MADE TO THE RETURNED INCOME ON AC COUNT OF DETERMINATION OF THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSAC TIONS ENTERED INTO BY THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISES. 4. IN BRIEF, THE RELEVANT BACKGROUND OF THE DISPUTE IS AS FOLLOWS. THE APPELLANT IS A COMPANY INCORPORATED UNDER THE PROVI SIONS OF THE COMPANIES ACT, 1956 AND IS INTER-ALIA, ENGAGED IN THE BUSINESS OF MANUFACTURE AND TRADING OF EDIBLE OIL AND PLASTIC FILMS. THE APPEL LANT IS A 100% SUBSIDIARY OF CARGILL MAURITIUS LIMITED FROM NOVEMBER, 2005 ONWAR DS. THE ASSESSEE PROCURES VARIOUS CATEGORIES OF OIL FOR MANUFACTURIN G PURPOSES FROM DOMESTIC AS WELL AS OVERSEAS MARKET AND SUCH PROCUREMENT IS FROM ASSOCIATED ENTERPRISES AS ALSO FROM THIRD PARTIES. THE OIL SO PROCURED BY IT IS FURTHER REFINED / PROCESSED FOR SALE TO ULTIMATE CUSTOMERS PREDOMINANTLY IN THE DOMESTIC MARKET TO THIRD PARTY CUSTOMERS IN BULK, T IN AND OTHER CONSUMER PACKAGINGS. FOR THE ASSESSMENT YEAR 2006-07, ASSES SEE FILED A RETURN OF INCOME DECLARING A TOTAL LOSS OF RS.(-)9,69,89,082/ - WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT. THE ASSESSING OFFICER NOTED T HAT THE ASSESSEE HAD ENTERED INTO CERTAIN INTERNATIONAL TRANSACTIONS WIT H ITS ASSOCIATED ENTERPRISES ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. ON ACCOUNT OF IMPORT OF OIL, AVAILING OF TREASURY S ERVICES, INCURRENCE OF DEMURRAGE EXPENSES AND CREDIT NOTE FOR PURCHASES MA DE IN THE EARLIER YEAR, ETC. ON ACCOUNT OF ASSESSEE HAVING ENTERED INTO CE RTAIN INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES, ASSES SING OFFICER MADE A REFERENCE TO THE TRANSFER PRICING OFFICER UNDER SEC TION 92CA(1) OF THE ACT IN ORDER TO DETERMINE THE ARM'S LENGTH PRICE OF SUCH I NTERNATIONAL TRANSACTIONS. NOTABLY, THE INCOME ARISING FROM THE INTERNATIONAL TRANSACTIONS WAS REQUIRED TO BE COMPUTED HAVING REGARD TO THEIR ARM'S LENGTH PRI CE IN VIEW OF SECTION 92(1) OF THE ACT. THE TRANSFER PRICING OFFICER, AFTER AL LOWING ASSESSEE AN OPPORTUNITY OF BEING HEARD, HAS PASSED AN ORDER UND ER SECTION 92CA(3) OF THE ACT DATED 28.10.2009 DETERMINING THE ARM'S LENGTH P RICE OF THE INTERNATIONAL TRANSACTIONS. AS PER THE TRANSFER PRICING OFFICER, AN ADJUSTMENT OF RS.29,70,31,153/- WAS REQUIRED TO BE MADE TO THE ST ATED VALUE OF THE INTERNATIONAL TRANSACTIONS RELATING TO IMPORT / PUR CHASE OF OIL FROM ASSOCIATED ENTERPRISES IN ORDER TO BRING IT TO THE LEVEL OF TH EIR ARM'S LENGTH PRICE. AT THIS POINT, IT IS TO BE NOTED THAT IN SO FAR AS THE OTHE R INTERNATIONAL TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES ARE CONCERNED, THE TPO H AS ACCEPTED THE ASSERTIONS OF ASSESSEE THAT THE SAME ARE AT AN ARM' S LENGTH PRICE. THE ONLY ISSUE ON WHICH THE TPO DIFFERED WITH THE ASSESSEE W AS WITH REGARD TO THE INTERNATIONAL TRANSACTIONS OF IMPORT / PURCHASE OF OIL FROM ITS ASSOCIATED ENTERPRISES, AND THIS IS THE SUBJECT MATTER OF DISP UTE BEFORE US. ON RECEIPT OF THE ORDER OF THE TPO DATED 28.10.2009, THE ASSESSIN G OFFICER PASSED A DRAFT ORDER UNDER SECTION 144C(1) OF THE ACT, DATED 24.12 .2009 PROPOSING AN ADDITION OF RS.29,70,30,153/- TO THE RETURNED INCOM E / LOSS ON ACCOUNT OF THE TRANSFER PRICING ADJUSTMENT TO THE STATED VALUE OF THE INTERNATIONAL TRANSACTIONS. THE ASSESSEE RAISED OBJECTIONS BEFORE THE DISPUTE R ESOLUTION PANEL (DRP), ASSAILING THE PROPOSED ADJUSTMENT AND SUCH OBJECTIO NS HAVE BEEN DISPOSED OF BY THE DRP VIDE ITS ORDER DATED 13.09.2010. IN TER MS OF THE DIRECTIONS OF THE ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. DRP DATED 13.09.2010, THE ASSESSING OFFICER HAS THE REAFTER, PASSED AN ORDER U/S 143 (3) R.W.S. 144C(13) OF THE ACT, DATED 28.10 .2010, WHEREIN THE TOTAL INCOME HAS BEEN DETERMINED AT RS.20,00,42,071/-, HA VING REGARD TO THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS AS D ETERMINED BY THE TPO IN HIS ORDER U/S 92CA(3) OF THE ACT. AS A CONSEQUENCE, TH E RETURNED LOSS OF RS.(-) 9,69,89,082/- HAS RESULTED IN AN ASSESSED INCOME OF RS.20,00,42,071/-. AGGRIEVED BY SUCH AN ADDITION, ASSESSEE IS IN APPEA L BEFORE US. 5. IN ORDER TO APPRECIATE THE MANNER IN WHICH THE T PO HAS DIFFERED WITH THE ASSESSEE ON THE ASPECT OF DETERMINING THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS, THE FOLLOWING DISCUSSIO N IS RELEVANT. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE IMPORTED SOYABEAN OIL AND SUN FLOWER OIL FROM ITS ASSOCIATED ENTERPRISES AMOUNTING TO RS.71,58,54 ,415/-. IN ITS TRANSFER PRICING STUDY, ASSESSEE ADOPTED THE COMPARABLE UNCO NTROLLED PRICE (CUP) METHOD AS THE MOST APPROPRIATE METHOD IN ORDER TO D ETERMINE THE ARM'S LENGTH PRICE IN RELATION TO THE INTERNATIONAL TRANSACTION OF IMPORT OF SOYABEAN AND SUNFLOWER OILS. THE AFORESAID APPROACH OF THE ASSE SSEE TO ADOPT THE CUP METHOD AS THE MOST APPROPRIATE METHOD WAS NOT ACCEP TED BY THE TPO WHO INSTEAD, ADOPTED THE TRANSACTIONAL NET MARGIN METHO D (TNMM) METHOD AND APPLIED IT AT THE ENTITY LEVEL SALES IN ORDER TO DE TERMINE THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS OF IMPORT OF SOYA BEAN AND SUNFLOWER OILS FROM THE ASSOCIATED ENTERPRISES. THIS ASPECT OF THE MAT TER IS THE GENESIS OF THE DISPUTE BETWEEN ASSESSEE AND THE REVENUE BEFORE US. 6. IT WAS EXPLAINED THAT SOYABEAN AND SUNFLOWER OIL S AMOUNTING TO RS.71,58,54,414/- WERE IMPORTED FROM ITS ASSOCIATED ENTERPRISES OUT OF THE TOTAL PURCHASES OF RS.787.50 CRORES I.E. ABOUT 9.09 % OF THE TOTAL PURCHASES. JUSTIFYING THE ADOPTION OF THE CUP METHOD AS THE MO ST APPROPRIATE METHOD, ASSESSEE POINTED OUT THAT EXTERNAL UNCONTROLLED COM PARABLE PRICES WERE ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. AVAILABLE IN ORDER TO BENCHMARK THE PRICE PAID BY T HE ASSESSEE FOR IMPORT OF SOYABEAN AND SUNFLOWER OILS FROM THE ASSOCIATED ENT ERPRISES. IN SUPPORT, ASSESSEE REFERRED TO THE BROKER PRICE NOTES ISSUED BY A REPUTED BROKER MURJI MEGHAN SERVICES PVT. LTD., (MMSPL) WHICH SHOWED THE PRICES PREVAILING IN THE MARKET ON THE RESPECTIVE DATES WHEN ASSESSEE TR ANSACTED THE IMPORT OF SOYABEAN AND SUNFLOWER OILS FROM ITS ASSOCIATED ENT ERPRISES. APART FROM THE AFORESAID, IN THE COURSE OF THE PROCEEDINGS BEFORE THE TPO, ASSESSEE ALSO OBTAINED SAMPLE QUOTES FROM SUNVIN GROUP, THE PRICE PUBLICATIONS OF OIL WORLD, AN INDEPENDENT PUBLICATION, AND JUSTIFIED BEFORE TH E TPO THAT THE PRICES SO PUBLISHED WERE APPROPRIATE TO BENCHMARK THE PRICE P AID BY THE ASSESSEE FOR THE TRANSACTION OF IMPORT OF OILS FROM THE ASSOCIAT ED ENTERPRISES. IT IS ALSO SEEN FROM THE ORDER OF TPO THAT THE ASSESSEE ALSO SUBMIT TED COMPARATIVE ANALYSIS OF INTERNAL UNCONTROLLED TRANSACTIONS WITH THE THIR D PARTIES VIS--VIS THE TRANSACTIONS OF IMPORT OF OIL FROM THE ASSOCIATED E NTERPRISES. 7. THE TPO, WHILE ANALYZING THE CUP METHOD ADOPTED BY THE ASSESSEE, CONCLUDED THAT WHAT HAS BEEN RELIED BY THE ASSESSEE WAS ONLY A BROKER PRICE NOTE AND THAT THE SAME COULD NOT TAKE THE CHARACTER AND CHARACTERISTICS OF A COMPARABLE UNCONTROLLED TRANSACTION. IN THIS CONTE XT, THE TPO REFERRED TO RULE 10B(1)(A)(I) OF THE INCOME TAX RULES, 1962 (IN SHOR T RULES) TO POINT OUT THAT IT IS THE PRICE CHARGED OR PAID FOR A COMPARABLE UNCONTROLLED TRANSACTION WHICH CAN BE ADOPTED AS A BENCHMARK WHILE APPLYING THE CU P METHOD. ACCORDING TO THE TPO, ANY PRICE QUOTE OR BROKER NOTE DOES NOT QUALIFY FOR CONSIDERATION IN TERMS OF RULE 10B(1)(A)(I) OF THE RULES. FURTHE RMORE, WITH REGARD TO THE SAMPLE QUOTES OBTAINED BY THE ASSESSEE FROM SUNVIN GROUP AND THE PRICE PUBLICATIONS OF OIL WORLD, THE TPO DID NOT CONSIDER SUCH EVIDENCES ALSO AS EXTERNAL COMPARABLE UNCONTROLLED TRANSACTIONS. AS PER THE TPO, THERE WERE DIFFERENCES BETWEEN THE TERMS AND CONDITIONS OF IMP ORT OF OIL TRANSACTED BY THE ASSESSEE FROM ITS ASSOCIATED ENTERPRISES AND THE DE TAILS OF IMPORTS AS ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. APPEARING IN THE BROKER QUOTES. THIRDLY, WITH REGA RD TO THE COMPARATIVE ANALYSIS OF INTERNAL UNCONTROLLED TRANSACTIONS WITH THIRD PARTIES, THE TPO REJECTED THE SAME BY POINTING OUT THAT THE NOMENCLA TURE OF THE OILS WAS NOT THE SAME AND THEREFORE, THE QUALITY AND SPECIFICATIONS OF THE OIL IMPORTED FROM ASSOCIATED ENTERPRISES WAS DIFFERENT THAN THE OIL P ROCURED FROM THIRD PARTIES. FOR ALL THE AFORESAID REASONS, THE TPO REJECTED THE CUP METHOD ADOPTED BY THE ASSESSEE IN ORDER TO BENCHMARK ASSESSEES INTER NATIONAL TRANSACTIONS OF IMPORT OF SOYABEAN AND SUNFLOWER OILS FROM ITS ASSO CIATED ENTERPRISES. 8. ON THIS ASPECT, THE LEARNED REPRESENTATIVE FOR A SSESSEE HAS VEHEMENTLY ARGUED THAT THE EXTERNAL UNCONTROLLED COMPARABLE PR ICES DATA UTILIZED BY THE ASSESSEE TO BENCHMARK ITS INTERNATIONAL TRANSACTION S OF IMPORT OF OIL FROM THE ASSOCIATED ENTERPRISES HAVE BEEN UNJUSTLY REJECTED BY THE TPO. ACCORDING TO THE LEARNED REPRESENTATIVE, CUP METHOD IS THE MOST DIRECT AND APPROPRIATE METHOD IN ORDER TO BENCHMARK THE PRICE PAID FOR TRA NSACTION OF IMPORT OF OILS FROM THE ASSOCIATED ENTERPRISES. EXPLAINING THE NA TURE OF THE BROKER NOTES, IT IS POINTED OUT THAT MMSPL IS A BROKERAGE FIRM WHICH IS DEALING IN EDIBLE OILS AND OTHER COMMODITIES. THE SAID CONCERN PROVIDES E SSENTIAL INFORMATION AND RECOMMENDATIONS TO ITS CUSTOMERS BY PROVIDING UPTO DATE INFORMATION ON MARKET MOVEMENTS, DAILY MARKET REPORTS AND TREND AN ALYSIS. IT IS ALSO POINTED OUT THAT THE PRICE QUOTES OF MMSPL ARE IN TURN, BAS ED ON THE PRICES PREVALENT IN THE COMMODITY EXCHANGES AND OTHER MARKETS INCLUD ING CHICAGO BOARD OF TRADE (CBOT). THEREFORE, IT IS SOUGHT TO BE POINTE D OUT THAT THE PRICE QUOTES OR THE BROKER NOTES ARE PREPARED ON THE BASIS OF TH E PREVAILING MARKET PRICES OF THE PRODUCTS AND THE ACTUAL TRANSACTIONS BEING U NDERTAKEN DURING THE RELEVANT PERIOD OF TIME. THEREFORE, IN THIS MANNER , IT IS SOUGHT TO BE POINTED OUT THAT THE TPO HAS ERRED IN REJECTING THE PRICE N OTES OF THE BROKER AS NOT BEING A GOOD EXTERNAL CUP DATA. FURTHERMORE, THE L EARNED REPRESENTATIVE ALSO REFERRED TO THE PRICE PUBLICATION OF OIL WORLD AND SAMPLE QUOTES FROM ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. SUNVIN GROUP, WHICH ARE INDEPENDENT PARTIES AND NOT RELATED TO MMSPL. THE LEARNED REPRESENTATIVE EXPLAINED THAT AFORESAID MAT ERIAL WAS OBTAINED BY THE ASSESSEE IN THE COURSE OF THE TRANSFER PRICING PROC EEDINGS AND SUCH DATA ALSO SUPPORTED ASSESSEES CLAIM THAT THE PRICE NOTES OF MMSPL WAS A VALID CUP DATA. SECONDLY, THE LEARNED REPRESENTATIVE POINTED OUT THAT TPO HAS ERRED IN OBSERVING THAT THERE WAS DIFFERENCE IN THE TERMS OF TRADE REFERRED IN THE BROKER NOTES ISSUED BY MMSPL AND THE TERMS OF TRADE AGREED BETWEEN THE ASSESSEE AND THE ASSOCIATED ENTERPRISES FOR IMPORT OF OIL. IN THIS CONTEXT, A REFERENCE WAS INVITED TO PAGE 330 OF THE PAPER BOOK WHICH CON TAINS THE TERMS OF TRADE BETWEEN THE ASSESSEE AND ASSOCIATED ENTERPRISES FOR IMPORT OF OIL AND ALSO TO PAGE 381 OF THE PAPER BOOK WHICH IS AN EXTRACT FROM THE WEBSITE FROM MMSPL SHOWING THE TERMS OF TRADE USED BY MMSPL. ON THIS BASIS, IT IS SOUGHT TO BE POINTED OUT THAT THE TERMS OF TRADE ARE SIMILAR. I N THIS CONTEXT, A REFERENCE HAS BEEN MADE TO THE FEDERATION OF OILS, SEEDS AND FATS ASSOCIATION (FOSFA) WHICH PROVIDES STANDARD FORM OF CONTRACTS COVERING VARIOUS PRODUCTS INCLUDING SOYABEAN AND SUNFLOWER OILS. BY REFERRING TO PAGE 423 OF PAPER BOOK WHICH CONTAINS THE FOSFAS STANDARD AGREEMENT, IT IS POIN TED OUT THAT FORM 54 DEPICTS THE CIF TERMS FOR VEGETABLE EDIBLE OIL AND THE SAME HAS BEEN REFERRED IN THE TERMS OF TRADE OF MMSPL AS ALSO ASSESSEES T ERMS OF TRADE WITH ITS ASSOCIATED ENTERPRISES FOR IMPORT OF OILS. THEREFO RE, THE STAND OF THE ASSESSEE IS THAT BOTH THE OBJECTIONS RAISED BY THE TPO IN OR DER TO REJECT THE EXTERNAL CUP DATA BASED ON THE PRICE QUOTES OF MMSPL IS NOT JUSTIFIED. 9. AT THE TIME OF HEARING, THE LEARNED REPRESENTATI VE ALSO JUSTIFIED THE COMPARATIVE ANALYSIS OF THE INTERNAL UNCONTROLLED T RANSACTION OF PURCHASE OF SOYABEAN AND SUNFLOWER OIL FROM THIRD PARTIES VIS- -VIS THE TRANSACTION OF IMPORT FROM ASSOCIATED ENTERPRISES. IT IS POINTED OUT THAT THE SAID COMPARATIVE ANALYSIS ALSO SHOWS THAT THE PRICE PAID BY THE ASSE SSEE FOR IMPORT OF OILS FROM THE ASSOCIATED ENTERPRISES WAS AT AN ARM'S LENGTH P RICE. IN THIS CONTEXT, OUR ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. REFERENCE HAS BEEN INVITED TO PAGE 395 OF THE PAPER BOOK WHEREIN, A COMPARATIVE CHART OF THE PURCHASE OF SOYABEAN AND S UNFLOWER OILS FROM ASSOCIATED ENTERPRISES AND FROM THIRD PARTIES HAS B EEN PLACED. AS PER THE SAID ANALYSIS, IT IS SOUGHT TO BE POINTED OUT THAT THE PER UNIT PRICE PAID FOR PURCHASE OF SOYABEAN AND SUNFLOWER OILS FROM THIRD PARTIES IS HIGHER THAN THE PER UNIT PRICE PAID FOR PURCHASE OF SOYABEAN AND SU NFLOWER OILS FROM ASSOCIATED ENTERPRISES. THEREFORE, IN CONCLUSION, THE LEARNED REPRESENTATIVE SUBMITTED THAT IN WHATEVER WAY THE CUP METHOD IS AP PLIED, THE PRICE PAID BY THE ASSESSEE FOR PURCHASE OF SOYABEAN AND SUNFLOWER OILS FROM ASSOCIATED ENTERPRISES IS AT AN ARM'S LENGTH PRICE. 10. ANOTHER PERTINENT POINT MADE BY THE LEARNED REP RESENTATIVE WAS THAT IN THE SUBSEQUENT ASSESSMENT YEAR OF 2007-08, THE TPO HAS ACCEPTED THAT ASSESSEES TRANSACTION OF IMPORT OF OILS FROM THE A SSOCIATED ENTERPRISES ARE AT AN ARM'S LENGTH PRICE, HAVING REGARD TO SIMILAR COM PARATIVE ANALYSIS OF INTERNAL CUP AS WELL AS EXTERNAL CUP DATA DONE IN THIS YEAR. THEREFORE, ON THE PRINCIPLE OF CONSISTENCY ALSO IT IS SOUGHT TO BE PO INTED OUT THAT THE ACTION OF THE TPO IN REJECTING THE CUP METHOD IN ORDER TO BENCHMA RK THE TRANSACTION OF IMPORT OF OILS FROM THE ASSOCIATED ENTERPRISES, IS NOT JUSTIFIED. 11. IN THE COURSE OF HEARING, THE LEARNED DEPARTMEN TAL REPRESENTATIVE APPEARING FOR THE REVENUE HAS PRIMARILY RELIED UPON THE STAND OF TPO, WHICH HAS BEEN NOTED BY US IN THE EARLIER PART OF THIS OR DER. PERTINENTLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE BROK ER QUOTES BEING RELIED UPON BY THE ASSESSEE CANNOT BE CONSIDERED AS A CUP DATA SO AS TO JUSTIFY APPLICATION OF CUP METHOD IN THE PRESENT CASE. ACC ORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE BENCHMARK ADOPTED BY THE ASSESSEE WAS ONLY A QUOTATION AND DOES NOT REPRESENT ANY ACTUAL TRANSACTION. FURTHERMORE, THE RELEVANT DETAILS SUCH AS, THE PRICE ON FOB BASI S, THE RELEVANT TERMS AND ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. CONDITIONS OF ASSESSEES CONTRACT FOR IMPORT OF OIL VIS--VIS BROKER NOTES ARE NOT VERIFIABLE, THEREFORE, THE BENCHMARKING SO DONE BY THE ASSESSEE FOLLOWING THE CUP METHOD, WAS NOT ACCEPTABLE. IT HAS ALSO BEEN S UBMITTED THAT THE BROKER NOTES ARE MEANT FOR PRIVATE CIRCULATION AND CANNOT BE SAID TO BE AN INFORMATION AVAILABLE IN PUBLIC DOMAIN WHICH CAN BE USED FOR TH E PURPOSE OF THE TRANSFER PRICING ASSESSMENT. ACCORDING TO THE LD.CIT-DR, IN THE CASE OF ACIT VS. MSS INDIA (P) LTD REPORTED IN 123 TTJ 657 (PUNE), T HE TRIBUNAL FOUND IT FIT TO CONSIDER THE PRICES QUOTED ON LONDON METAL EXCHANGE AS A VALID CUP DATA, WHICH IS AN INFORMATION IN PUBLIC DOMAIN BUT THE SA ME COULD NOT BE SAID OF PRICES QUOTED IN A BROKER NOTE. THE LD.CIT-DR ALSO SUBMITTED THAT THE COMPARATIVE ANALYSIS OF THE INTERNAL UNCONTROLLED T RANSACTION OF PURCHASE OF SOYABEAN AND SUNFLOWER OIL FROM THIRD PARTIES VIS- -VIS THE IMPORT FROM ASSOCIATED ENTERPRISES ASSERTED BY THE ASSESSEE IS ALSO NOT RELIABLE AS THE SIMILARITY IN THE PRODUCTS PROCURED IS NOT CLEAR. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 92(1) OF THE ACT PROVIDES THAT ANY INCOME ARISING FROM INTER NATIONAL TRANSACTIONS, AS DEFINED IN SECTION 92B OF THE ACT, SHALL BE COMPUTE D HAVING REGARD TO ITS ARM'S LENGTH PRICE. FURTHERMORE, SECTION 92C(1) OF THE A CT PROVIDES THAT ARM'S LENGTH PRICE IN RELATION TO INTERNATIONAL TRANSACTIONS SHA LL BE DETERMINED BY ANY OF THE METHODS PRESCRIBED THEREIN, BEING THE MOST APPROPRI ATE METHOD. IT IS FURTHER PRESCRIBED THAT THE MOST APPROPRIATE METHOD IS REQU IRED TO BE ESTABLISHED HAVING REGARD TO THE NATURE OF TRANSACTION OR CLASS OF TRANSACTION OR CLASS OF ASSOCIATED PERSONS OR FUNCTIONS PERFORMED BY SUCH P ERSONS OR SUCH OTHER RELEVANT FACTORS AS THE CBDT MAY PRESCRIBE. ONCE H AVING ADOPTED AND CHOSEN THE MOST APPROPRIATE METHOD REFERRED TO IN S UB-SECTION(1) OF SECTION 92C OF THE ACT, THEN, THE SAME IS TO BE APPLIED FOR DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS. TH E METHODS PRESCRIBED IN SUB- SECTION (1) OF SECTION 92C OF THE ACT, ARE:- ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. (A) COMPARABLE UNCONTROLLED PRICE METHOD (CUP); (B) RESALE PRICE METHOD (RPM); (C) COST PLUS METHOD (CPM); (D) PROFIT BUILDING METHOD (PBM); (E) TRANSACTIONAL NET MARGIN METHOD (TNMM); AND (F) SUCH OTHER METHOD AS MAY BE PRESCRIBED BY THE B OARD. 13. RULE 10B OF THE RULES ENUMERATES THE MECHANISM, IN TERMS OF WHICH THE ARM'S LENGTH PRICE IN RELATION TO INTERNATIONAL TRANSACTIONS IS TO BE DETERMINED BY APPLYING THE MOST APPROPRIATE METHOD OUT OF THE METHODS PRESCRIBED IN SECTION 92C(1) OF THE ACT. SUB-RULE (1) OF RULE 10B CONTAIN CLAUSES (A) TO (E) WHICH PROVIDES THE OPERATIONAL M ECHANICS OF THE VARIOUS METHODS ENUMERATED IN SUB-SECTION (1) OF SECTION 92 C OF THE ACT. SUB-RULE (2) OF RULE 10B PRESCRIBES THAT THE COMPARABILITY OF IN TERNATIONAL TRANSACTIONS WITH UNCONTROLLED TRANSACTIONS SHALL BE JUDGED WITH REFE RENCE TO THE FACTORS PRESCRIBED THEREIN. SIMILARLY, SUB-RULE (3) PRESCR IBES THAT UNCONTROLLED TRANSACTIONS SHALL BE COMPARABLE TO INTERNATIONAL T RANSACTIONS IF NONE OF THE DIFFERENCES IF ANY, BETWEEN THE TRANSACTION BEING C OMPARED OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS, ARE LI KELY TO MATERIALLY AFFECT THE PRICE OR THE COST CHARGED OR IF REASONABLY ACCURATE ADJUSTMENTS CAN BE MADE TO ELIMINATE THE MATERIAL EFFECT OF SUCH DIFFERENCE S. TO COMPLETE, WE MAY ALSO REFER TO SUB-RULE (4) OF RULE 10B WHICH SEEKS TO PR OVIDE THAT IN ANALYZING THE COMPARABILITY OF UNCONTROLLED TRANSACTIONS WITH INT ERNATIONAL TRANSACTIONS, THE DATA RELATING TO THE FINANCIAL YEAR IN WHICH THE IN TERNATIONAL TRANSACTION HAS BEEN ENTERED INTO, SHALL BE USED. RULE 10C OF THE RULES PRESCRIBES THAT THE MOST APPROPRIATE METHOD TO BE ADOPTED FOR THE PURPO SES OF DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION S SHALL BE THE METHOD WHICH IS BEST SUITED TO THE FACTS AND CIRCUMSTANCES OF EA CH PARTICULAR TRANSACTION AND WHICH PROVIDES THE MOST RELIABLE MEASURE OF AN ARM' S LENGTH PRICE IN RELATION TO ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. THE INTERNATIONAL TRANSACTIONS. SUB-RULE (2) OF RU LE 10C OF THE RULES LAYS DOWN CERTAIN FACTORS IN SELECTING THE MOST APPROPRIATE M ETHOD AS SPECIFIED IN SUB- RULE (1) THEREOF. 14. THE AFORESAID DISCUSSION SHOWS THAT THE ENTIRE OBJECTIVE OF CARRYING OUT COMPARABILITY ANALYSIS OF AN INTERNATIONAL TRANSACT ION WITH UNCONTROLLED TRANSACTIONS IS TO DETERMINE THE ARM'S LENGTH PRICE OF SUCH INTERNATIONAL TRANSACTION BECAUSE IN TERMS OF SECTION 92(1) OF TH E ACT, INCOME ARISING FROM INTERNATIONAL TRANSACTIONS IS TO BE COMPUTED HAVING REGARD TO THE ARM'S LENGTH PRICE. THE MOST APPROPRIATE METHOD TO BE ADOPTED F OR THE PURPOSE OF COMPARABILITY ANALYSIS IS THE ONE THAT IS BEST SUIT ED TO THE FACTS AND CIRCUMSTANCES OF EACH PARTICULAR TRANSACTION AND WH ICH PROVIDES THE MOST RELIABLE MEASURE OF THE ARM'S LENGTH PRICE IN RELAT ION TO THE TESTED INTERNATIONAL TRANSACTION. THOUGH SECTION 92C(1) OF THE ACT PRES CRIBES FIVE DIFFERENT METHODS, BUT THE SELECTED METHOD SHOULD PROVIDE THE MOST RELIABLE MEASURE OF AN ARM'S LENGTH PRICE IN RELATION TO THE INTERNATIO NAL TRANSACTIONS. 15. IN THE PRESENT CASE, THE INTERNATIONAL TRANSACT IONS IN QUESTION RELATE TO TRANSACTION OF IMPORT OF OILS BY THE ASSESSEE FROM ITS ASSOCIATED ENTERPRISES. NOTABLY, ASSESSEE PROCURES OIL FROM ASSOCIATED ENTE RPRISES AS WELL AS FROM THIRD PARTIES, WHICH IS FURTHER REFINED / PROCESSED TO MAKE IT READY FOR SALE TO ULTIMATE CUSTOMERS PREDOMINANTLY IN THE INDIAN MARK ET. THE RELATIVE USEFULNESS OF THE VARIOUS METHODS PRESCRIBED IN SEC TION 92C(1) OF THE ACT CAN BE A MATTER OF ELABORATE DISCUSSION. SO HOWEVER, F OR THE PRESENT, IT WOULD SUFFICE TO OBSERVE THAT IN A CASE WHERE A COMPARABL E UNCONTROLLED TRANSACTION IS POSSIBLE TO IDENTIFY AND LOCATE, IT WOULD BE THE MOST RELIABLE MEASURE OF AN ARM'S LENGTH PRICE IN RELATION TO THE TESTED INTERN ATIONAL TRANSACTION. CONSEQUENTLY, IN SUCH A SITUATION, THE CUP METHOD W OULD BE A PREFERABLE METHOD. WE ARE SAYING SO FOR THE REASON THAT IN TH E PRESENT CASE, PLEA OF THE ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. ASSESSEE HAS BEEN THAT THE TESTED TRANSACTION OF IM PORT OF OIL FROM ASSOCIATED ENTERPRISES HAS ALSO BEEN UNDERTAKEN WITH THIRD PAR TIES. IN OTHER WORDS, ASSESSEE HAS PURCHASED SOYABEAN AND SUNFLOWER OILS FROM ITS ASSOCIATED ENTERPRISES AS WELL AS FROM THIRD PARTIES. APART T HEREFROM, IT IS ALSO A PECULIAR FACT IN THE PRESENT CASE THAT THE PRODUCT BEING TRA NSACTED IS A COMMODITY WHICH IS RECOGNIZED FOR TRADING IN COMMODITIES EXCH ANGES. FOR INSTANCE, THE CHICAGO BOARD OF TRADE (CBOT), WHICH IS AN INTERNAT IONALLY RECOGNIZED AND ACCEPTED COMMODITY EXCHANGE BASED IN CHICAGO IN USA FACILITATES TRADING IN COMMODITIES, INTER-ALIA , VEGETABLE OILS ALSO. THEREFORE, THE QUOTATIONS APPEARING ON SUCH EXCHANGES WOULD REFLECT THE PRICE S AT WHICH THE COMMODITIES ARE BEING TRADED IN THE MARKET PLACE. THE PRICE PUBLICATION OF OIL WORLD, WHICH WAS ALSO PRESSED INTO SERVICE BY THE A SSESSEE, WOULD BE REFLECTIVE OF THE PRICES PREVAILING IN THE MARKET A T A PARTICULAR POINT OF TIME. UNDOUBTEDLY, THE RATE QUOTATIONS OF CBOT AND OIL WO RLD CAN BE SAID TO BE A DATA PUBLISHED BY INDEPENDENT ORGANIZATIONS, WHICH REFLECT THE PREVAILING MARKET RATES. THESE PRICES HAVE BEEN ADOPTED BY TH E ASSESSEE AS COMPARABLE UNCONTROLLED TRANSACTION PRICES AND THE TESTED TRANSACTIONS HAVE BEEN BENCHMARKED VIS--VIS SUCH PRICES. 16. THE STAND OF THE TPO IN REJECTING THE AFORESAID DATA AS BEING MERE QUOTATIONS AND NOT ACTUAL TRANSACTIONS, IN OUR VIEW , IS NOT JUSTIFIED. THE APPROACH OF THE TPO IN OUR VIEW, IS BASED ON A MYOP IC UNDERSTANDING OF THE PHRASEOLOGY OF RULE 10B(1)(A)(I) OF THE RULES, WHIC H READS AS UNDER:- (A) COMPARABLE UNCONTROLLED PRICE METHOD, BY WHICH ,- (I) THE PRICE CHARGED OR PAID FOR PROPERTY TRANSFER RED OR SERVICES PROVIDED IN A COMPARABLE UNCONTROLLED TRANSACTION, OR A NUMBER OF SUCH TRANSACTIONS, IS IDENTIFIED; (II) SUCH PRICE IS ADJUSTED TO ACCOUNT FOR DIFFEREN CES, IF ANY, BETWEEN THE INTERNATIONAL TRANSACTIONS AND THE COMPARABLE U NCONTROLLED TRANSACTIONS OR BETWEEN THE ENTERPRISES ENTERING IN TO SUCH ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. TRANSACTIONS, WHICH COULD MATERIALLY AFFECT THE PRI CE IN THE OPEN MARKET; (III) THE ADJUSTED PRICE ARRIVED AT UNDER SUB-CLAUS E (II) IS TAKEN TO BE AN ARM'S LENGTH PRICE IN RESPECT OF THE PROPERTY TR ANSFERRED OR SERVICES PROVIDED IN THE INTERNATIONAL TRANSACTIONS ; .. 17. AS PER THE TPO, IN THE CUP METHOD THE PRICE CHARGED OR PAID FOR AN UNCONTROLLED TRANSACTION IS TO BE IDENTIFIED. THE EMPHASIS OF THE TPO IS THAT A BROKER QUOTE, THOUGH BASED ON THE PRICES PREVAILING IN THE MARKET, IS NOT A PRICE CHARGED OR PAID BECAUSE IT DOES NOT REFLECT A N ACTUAL TRANSACTION. IN THIS CONTEXT, IT WOULD BE APPROPRIATE TO REFER TO RULE 1 0D OF THE RULES WHICH ENUMERATES THE INFORMATION AND DOCUMENTS WHICH HAVE TO BE KEPT AND MAINTAINED BY AN ASSESSEE ENTERING INTO AN INTERNAT IONAL TRANSACTION IN SUPPORT OF THE TRANSFER PRICING STUDY CARRIED OUT. IN PARTICULAR, WE MAY REFER TO SUB-RULE (3) OF RULE 10D OF THE RULES, THE RELEVANT PORTION OF WHICH READS AS UNDER:- (3) THE INFORMATION SPECIFIED IN SUB-RULE (1) SHAL L BE SUPPORTED BY AUTHENTIC DOCUMENTS, WHICH MAY INCLUDE THE FOLLOWIN G: (A) OFFICIAL PUBLICATIONS, REPORTS, STUDIES AND DAT A BASES FROM THE GOVERNMENT OF THE COUNTRY OF RESIDENCE OF THE ASSOC IATED ENTERPRISE, OR OF ANY OTHER COUNTRY; (B) REPORTS OF MARKET RESEARCH STUDIES CARRIED OUT AND TECHNICAL PUBLICATIONS BROUGHT OUT BY INSTITUTIONS OF NATIONA L OR INTERNATIONAL REPUTE; (C) PRICE PUBLICATIONS INCLUDING STOCK EXCHANGE AND COMMODITY MARKET QUOTATIONS; (D) PUBLISHED ACCOUNTS AND FINANCIAL STATEMENTS REL ATING TO THE BUSINESS AFFAIRS OF THE ASSOCIATED ENTERPRISES; (E) AGREEMENTS AND CONTRACTS ENTERED INTO WITH ASSO CIATED ENTERPRISES OR WITH UNRELATED ENTERPRISES IN RESPEC T OF TRANSACTIONS SIMILAR TO THE INTERNATIONAL TRANSACTI ONS; (F) LETTERS AND OTHER CORRESPONDENCE DOCUMENTING AN Y TERMS NEGOTIATED BETWEEN THE ASSESSEE AND THE ASSOCIATED ENTERPRISE; (G) DOCUMENTS NORMALLY ISSUED IN CONNECTION WITH VA RIOUS TRANSACTIONS UNDER THE ACCOUNTING PRACTICES FOLLOWE D. 18. OSTENSIBLY, THE RULES PERTAINING TO THE TRANSFE R PRICING ASSESSMENT REFER TO INFORMATION, BEING PRICE PUBLICATIONS INCLUDING STOCK EXCHANGE AND ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. COMMODITY MARKET QUOTATIONS. IT IS A COMMON KNOWLE DGE THAT FOR THE PRODUCTS WHICH ARE LISTED ON THE STOCK AND COMMODITY EXCHANG ES, THE TRANSACTIONS OF BUYING AND SELLING ARE CARRIED OUT BY PARTIES BASED ON THE PRICES PREVAILING/QUOTED ON THE RESPECTIVE STOCK OR COMMOD ITY EXCHANGES. THEREFORE, SUCH PUBLISHED DATA AVAILABLE FROM STOCK OR COMMODITY EXCHANGES IS AVAILABLE TO SET PRICES IN THE UNCONTROLLED AND CONTROLLED TRANSACTIONS BOTH. AT THIS STAGE, WE MAY ALSO REFER TO THE JUDGMENT OF HONBLE HIGH COURT OF GUJARAT IN TAX APPEAL NO.240 OF 2014 IN THE CASE OF CIT VS. ADANI WILMAR LIMITED, DATED 07.04.2014 WHICH WAS RELIED UPON BY THE ASSESSEE BEFORE US. IN THE CASE BEFORE THE HONBLE HIGH COURT OF GUJARA T, THE TPO ADOPTED CUP METHOD TO BENCHMARK AN INTERNATIONAL TRANSACTION. THE ASSESSEE PRESENTED TWO SETS OF PRICES CLAIMING THEM TO BE COMPARABLE T O HIS TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES. ONE SET OF PRICES RELIED U PON BY THE ASSESSEE WAS SUPPLIED BY THE MALAYSIAN PALM OIL BOARD AND THE SE COND SET OF PRICES WAS THE QUOTATIONS PUBLISHED BY OIL WORLD, AN INDEPENDE NT ORGANIZATION. THE TPO TOOK INTO ACCOUNT THE RATES MENTIONED BY MALAYSIAN PALM OIL BOARD AND DIS- REGARDED THE RATES PUBLISHED BY OIL WORLD. ACCORDI NG TO THE TPO, THE MALAYSIA PALM OIL BOARD WAS A STATUTORY BODY OF MAL AYSIA WHEREAS THE QUOTATIONS PUBLISHED BY OIL WORLD DID NOT HAVE ANY STATUTORY AUTHORITY. THE AFORESAID OBJECTION OF THE TPO WAS NEGATED BY THE C IT(A) AS WELL AS THE TRIBUNAL, AND SUCH STAND OF THE TPO ALSO DID NOT FI ND FAVOUR WITH THE HONBLE HIGH COURT OF GUJARAT. FOLLOWING DISCUSSION IN THE ORDER OF THE HONBLE HIGH COURT OF GUJARAT IS RELEVANT IN THIS REGARD:- 7. IN TERMS OF CLAUSE (C) OF SUB-SECTION (3) OF RU LE 10D OF THE RULES, THESE PRICE PUBLICATIONS AS LONG AS THE SAME WERE A UTHENTIC AND RELIABLE, WOULD BE RELEVANT MATERIALS. IN THIS BACK GROUND, MERE BASE OF THE ORGANISATION WOULD BE OF NO CONSEQUENCE. FURTHE R, THOUGH THE PRICE QUOTATIONS OF THE MPOB WOULD BE ENTITLED TO ITS DUE AND FULL WEIGHTAGE AND RESPECT, WOULD NOT NECESSARILY MEAN THAT THE OT HER QUOTATIONS WOULD LOSE THEIR SIGNIFICANCE, UNLESS, OF COURSE, I T IS POINTED OUT THAT SUCH QUOTATIONS LACK BASIS. IN THIS CONTEXT, WE MAY RECALL THAT THE ONLY OBJECTIONS WITH THE TPO TO TAKE INTO CONSIDERATION THE RATE QUOTATIONS OF THE OIL WORLD WERE, THAT WERE NOT BASED IN MALAYSIA AND THAT IT WAS AN ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. INDEPENDENT ORGANISATION, WHICH HAD NOTHING TO DO W ITH THE OLD PRICE PREVAILING IN MALAYSIA. WHEN THE CIT (APPEALS) AS W ELL AS THE TRIBUNAL HAVE ACCEPTED THE RELIABILITY AND AUTHENTICITY OF T HE ORGANISATION AND ITS PUBLICATION OF RATE-LIST, SUCH OBJECTION OF THE TPO MUST BE OVERRULED. LEARNED ADVOCATE MR.BHATT FOR THE REVENUE, HOWEVER, STRENUOUSLY ATTEMPTED TO PERSUADE US THAT THE OIL WORLD IS A FO RECASTING AGENCY AND FURTHER THAT SUCH RATES WERE NOT BASED ON ACTUAL TR ANSACTIONS. QUITE APART FROM THE OBSERVATIONS OF THE CIT (APPEALS) AN D TRIBUNAL BEING TO THE CONTRARY, THESE WERE NOT THE OBJECTIONS OF THE TPO. WE WOULD, THEREFORE, FOCUS ON THE GROUNDS ON WHICH THE TPO 'D ESIRED TO REJECT SUCH PRICE QUOTATIONS. 19. IT IS EVIDENT THAT THE HONBLE HIGH COURT OF GU JARAT HELD THAT THE PRICE PUBLICATIONS ARE ALSO RELEVANT MATERIAL FOR THE PUR POSES OF CARRYING OUT THE COMPARABILITY ANALYSIS IN THE COURSE OF APPLICATION OF CUP METHOD; SO HOWEVER, SUCH PRICE PUBLICATIONS OUGHT TO BE AUTHEN TIC AND RELIABLE. IT IS ALSO NOTEWORTHY THAT THE HONBLE HIGH COURT OF GUJARAT W AS CONSIDERING AN OBJECTION OF THE TRANSFER PRICING OFFICER, WHICH IS SIMILAR TO THAT BEING RAISED BEFORE US, WHICH IS TO THE EFFECT THAT THE PRICE PU BLICATION OF OIL WORLD ONLY REFLECT QUOTATIONS AND NOT ACTUAL TRANSACTIONS. TH E SAID ARGUMENT DID NOT FIND FAVOUR WITH THE HONBLE HIGH COURT OF GUJARAT AND I T NOTED THAT THE RELIABILITY AND AUTHENTICITY OF THE MATERIAL STOOD ESTABLISHED. INFACT, THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MSS INDIA (P) LTD. (SUPRA) RELIED UPON BY THE LD.CIT-DR DOES NOT HELP THE REVE NUE ON THIS ASPECT, AND IN ANY CASE THE SAID DECISION IS NOT AN AUTHORITY F OR THE PROPOSITION THAT PRICE CONTAINED IN THE BROKER NOTE, BASED ON A COMMODITY EXCHANGE, IS NOT A VALID CUP DATA. BASED ON THE AFORESAID JUDGMENT OF THE H ONBLE HIGH COURT OF GUJARAT, IN OUR VIEW, THE REJECTION BY THE TPO OF T HE PRICE PUBLICATION OF OIL WORLD AND THE PRICES QUOTED BY MMSPL, WHICH ARE BAS ED ON THE RATES QUOTED ON CBOT, CHICAGO, IS NOT JUSTIFIED. 20. IN SO FAR AS THE PRICE QUOTES OF MMSPL ARE CONC ERNED, ASSESSEE POINTED OUT BEFORE THE LOWER AUTHORITIES THAT IT IS A BROKERAGE FIRM DEALING PRIMARILY IN EDIBLE VEGETABLE OILS. IT WAS POINTED OUT THAT MMSPL HAS A TEAM ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. OF EXPERT PROFESSIONAL BROKERS WITH EXPERIENCE OF M ORE THAN 50 YEARS IN THE OIL INDUSTRY AND ITS CLIENTS INCLUDE FORTUNE 500 COMPAN IES, BANKS AS WELL AS LOCAL AND INTERNATIONALLY LISTED COMPANIES. IT WAS ALSO ASSERTED THAT THE PRICES PROVIDED BY MMSPL ARE USED AS BENCHMARK TO DETERMIN E COMMODITY PRICES BY MAJOR SUPPLIERS IN THE INDUSTRY. ONE OF THE FUN DAMENTAL POINTS RAISED BY THE ASSESSEE WAS THAT THE PRICE NOTES ISSUED BY MMS PL WERE BASED ON THE PRICES PREVALENT IN THE COMMODITY EXCHANGES, INCLUD ING, CHICAGO BOARD OF TRADE (CBOT), WHICH IS AN INTERNATIONALLY RECOGNIZE D AND ACCEPTED COMMODITY EXCHANGE BASED IN CHICAGO, USA. AT THE T IME OF HEARING, THE LEARNED REPRESENTATIVE FOR ASSESSEE HAD ALSO REFERR ED TO A CONFIRMATION LETTER ISSUED BY MMSPL, A COPY OF WHICH IS PLACED AT 358 O F THE PAPER BOOK. ON THE BASIS OF THIS CONFIRMATION LETTER, WHICH IS STA TED TO BE ON THE RECORDS OF THE LOWER AUTHORITIES, IT IS CONTENDED THAT MMSPL HAS C ONFIRMED THAT THE PRICES QUOTED WERE DERIVED / BASED ON CBOT AND BURSA MALAY SIA DERIVATIVE EXCHANGE (BMD). ALL THE AFORESAID ASSERTIONS OF TH E ASSESSEE HAVE NOT BEEN CONTROVERTED BY THE TPO OR THE DRP IN ANY MANNER. THEREFORE, THERE IS NO MATERIAL TO DOUBT THE AUTHENTICITY AND RELIABILITY OF THE DATA SOUGHT TO BE RELIED UPON BY THE ASSESSEE IN ORDER TO BENCHMARK ITS TRAN SACTION OF IMPORT OF OILS FROM ASSOCIATED ENTERPRISES. APART THEREFROM, IN T HE COURSE OF THE TRANSFER PRICING PROCEEDINGS, ASSESSEE, INTER-ALIA, REFERRED TO AND PRODUCED THE PRICE PUBLICATIONS OF OIL WORLD AND SAMPLE QUOTATIONS FRO M SUNVIN GROUP TO JUSTIFY ITS CLAIM THAT THE PRICES MENTIONED IN THE PRICE NOTES OF MMSPL ARE RELIABLE AND WAS A VALID CUP DATA. SUNVIN GROUP IS A COMMODITY BROKER AND ASSESSEE OBTAINED SAMPLE QUOTES FROM IT DURING THE COURSE OF PROCEEDINGS BEFORE THE TPO. ANOTHER SET OF EVIDENCE PRODUCED WAS THE PRIC E PUBLICATIONS FROM OIL WORLD, WHICH IS AN INDEPENDENT AGENCY PROVIDING REL IABLE INFORMATION ON MARKET PRICES. PERTINENTLY, THE SAME PUBLICATION W AS A SUBJECT MATTER OF CHALLENGE BEFORE THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF ADANI ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. WILMAR LIMITED (SUPRA). THE RELIABILITY AND AUTHEN TICITY OF THE PRICE PUBLICATION OF OIL WORLD WAS UPHELD AND FOUND TO BE A RELEVANT MATERIAL WHILE TESTING THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE IN THE C OURSE OF APPLICATION OF CUP METHOD. IN THE FACE OF THE AFORESAID, WE ARE UNABL E TO ACQUIESCE OURSELVES TO THE OBJECTIONS OF THE TPO IN REJECTING THE EXTERNAL CUP DATA SOUGHT TO BE USED BY THE ASSESSEE IN ORDER TO BENCHMARK ITS TRANSACTI ON OF IMPORT OF OILS FROM ITS ASSOCIATED ENTERPRISES. WE HOLD SO. 21. AT THIS POINT, WE MAY ALSO NOTICE ANOTHER UNCON TROVERTED ASPECT OF THE DISPUTE BEFORE US. THE LEARNED REPRESENTATIVE HAD ASSERTED THAT SIMILAR COMPARATIVE ANALYSIS OF EXTERNAL CUP AS WELL AS INT ERNAL CUP RELATING TO ASSESSEES TRANSACTION OF IMPORT OF OILS FROM ITS A SSOCIATED ENTERPRISES HAS BEEN ACCEPTED BY THE TPO IN THE NEXT ASSESSMENT YEA R I.E. 2007-08. THOUGH, WE ARE CONSCIOUS THAT THE PRINCIPLES OF RES JUDICATA ARE NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS SO HOWEVER, IF QUALITATIVELY SAME SITUATION PERMEATES THROUGH MORE THAN ONE ASSESSMENT YEAR, THEN THE RUL E OF CONSISTENCY CANNOT BE IGNORED. IN OTHER WORDS, UNIFORMITY IN TREATMEN T AND CONSISTENCY OVER A PERIOD OF TIME IS REQUIRED IF THE FACTS AND CIRCUMS TANCES ARE SIMILAR. ON THIS ASPECT ALSO, WE ARE UNABLE TO ACQUIESCE TO THE OBJE CTION RAISED BY THE TPO IN ORDER TO NEGATE THE ADOPTION OF CUP METHOD BY THE A SSESSEE TO BENCHMARK ITS INTERNATIONAL TRANSACTIONS OF IMPORT OF OILS FROM I TS ASSOCIATED ENTERPRISES. 22. BEFORE PARTING, WE MAY ALSO OBSERVE THAT THE CO MPARATIVE ANALYSIS CARRIED OUT BY THE ASSESSEE OF INTERNAL UNCONTROLLE D TRANSACTIONS WITH THIRD PARTIES VIS--VIS THE TRANSACTION OF IMPORT OF OIL FROM ASSOCIATED ENTERPRISES ALSO SHOWS THAT PER UNIT PRICE PAID FOR PURCHASE OF OIL FROM THIRD PARTIES IS HIGHER AS COMPARED TO THE PER UNIT PRICE PAID FOR P URCHASE OF OILS FROM ASSOCIATED ENTERPRISES. THIS ASPECT OF THE MATTER, IN OUR VIEW, IS UNCONTROVERTED AS IS CLEAR FROM THE DISCUSSION IN T HE ORDER OF THE TRANSFER ITA NO.1460/PN/2010 CARGILL FOODS INDIA LTD. PRICING OFFICER. THERE IS NO COGENT AND CREDIBLE M ATERIAL BROUGHT OUT BY THE REVENUE TO DIFFERENTIATE THE MATERIAL PROCURED FROM ASSOCIATED ENTERPRISES AND THE THIRD PARTIES. THEREFORE, ON THIS BASIS AL SO, WE FIND NO REASON FOR THE INCOME TAX AUTHORITIES TO HAVE REJECTED THE PLEA OF THE ASSESSEE THAT THE STATED VALUES OF THE PURCHASE OF SOYABEAN AND SUNFL OWER OILS FROM THE ASSOCIATED ENTERPRISES ARE AT THEIR ARM'S LENGTH PR ICE. THUS, WE HEREBY DIRECT THE ASSESSING OFFICER TO ACCEPT THE STATED VALUE OF THE INTERNATIONAL TRANSACTIONS OF IMPORT OF OILS FROM ASSOCIATED ENTE RPRISES TO BE AT AN ARM'S LENGTH PRICE. THUS, THE ADDITION OF RS.29,70,31,15 3/- IS DIRECTED TO BE DELETED. 23. ALTHOUGH, ASSESSEE HAS ALSO RAISED OTHER GROUND S, THE SAME ARE RENDERED ACADEMIC IN VIEW OF OUR AFORESAID DISCUSSI ON. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED, AS ABOVE. ORDER PRONOUNCED ON 10 TH APRIL, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 10 TH APRIL, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT/DIT (INTERNATIONAL TAXATION), PUNE 4) THE DR A BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE