The Dy. CIT, Circle-2(1)(1), , Ahmedabad V. M/s. Hazira LNG Private Limited, Ahmedabad

ITA 1491/AHD/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 2910 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: S N SOPARKAR; KARAN DHANUKA
• Keywords: Related party transaction; Business income; Transfer pricing; International transaction
• Section: 143(3); 92A; 92E; 133(6); 92

Judgement Text

ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 1 OF 17 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH D, AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT, AND PRAMOD KU MAR, VICE PRESIDENT] ITA NO. 1491/AHD/2016 ASSESSMENT YEAR: 2011-12 THE DY. COMMISSIONER OF INCOME-TAX ............ ..APPELLANT CIRCLE-2(1)(1), AHMEDABAD VS M/S. HAZIRA LNG PRIVATE LIMITED ............ .....RESPONDENT 101-103, ABHIJEET II, MITHAKALI CIRCLE, AHMEDABAD-380006 [PAN : AAACH 9143 C] APPEARANCES BY LALIT P. JAIN, FOR THE APPELLANT SN SOPARKAR & KARAN DHANUKA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 05.12.2018 DATE OF PRONOUNCEMENT : 04.03.2019 O R D E R PER PRAMOD KUMAR, VICE PRESIDENT: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 18 TH MARCH 2016 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE IN COME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUND :- THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE UPWARD ADJUSTMENT U/S 92CA AMOUNTING TO RS.3,72,62,891/- 2. BRIEFLY STATED, RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE US, I.E. HAZIRA LNG PVT LTD, IS A JOINT VENT URE BETWEEN SHELL GAS BV (74%) AND TOTAL GAZ ELECTRICITE HOLDINGS (26%). TH E ASSESSEE, WITH THE APPROVAL OF FOREIGN INVESTMENT PROMOTION BOARD (GOV ERNMENT OF INDIA) OWNS, OPERATES AND MAINTAINS TERMINAL FACILITIES FOR LIQU IFIED NATURAL GAS (LNG) AT HAZIRA TERMINAL. THE ASSESSEE PURCHASES LNG FROM I TS FOREIGN ASSOCIATED ENTERPRISES AND SELLS THE RE-GASIFIED LNG (R-LNG) T O ITS CUSTOMERS IN INDIA. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE PUR CHASED 14 SUCH CARGO ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 2 OF 17 FROM ITS AES ABROAD. THESE IMPORTS WERE ON CIF BAS IS, AND AS IS THE CONVENTION IN THIS LINE OF BUSINESS, THE PRICE FOR SUCH IMPORTS WAS DECIDED ON THE BASIS OF PER MILLION BRITISH THERMAL UNITS (MMB TU). IN ITS TRANSFER PRICING REPORT, THE ASSESSEE ADOPTED RETAIL PRICE METHOD (R PM) AS MOST APPROPRIATE METHOD FOR ASCERTAINING THE ARMS LENGTH PRICE OF I NTRA AE IMPORTS. FOR THE PURPOSE OF BENCHMARKING THESE TRANSACTIONS, THE ASS ESSEE ADOPTED PETRONET LNG LIMITED (PLL) AND GAIL INDIA LIMITED (GAIL). D URING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE EARNED GROSS PROFIT MAR GIN PER MMBTU AT 35.79 WHICH WAS GREATER THAN ARMS LENGTH MARGIN OF PLL A ND GAIL AT 30.23 PER MMBTU. IT WAS ON THIS BASIS THAT THE TRANSACTIONS WERE CLAIMED TO BE AT ARMS LENGTH. THE TRANSFER PRICING OFFICER, HOWEVE R, REJECTED THIS APPROACH. HE HELD THAT THE CUP METHOD IS THE MOST APPROPRIATE METHOD FOR ASCERTAINING ARMS LENGTH PRICE, AND IN ANY CASE, REJECTED THE P LL AND GAIL AS VALID COMPARABLES. ACCORDINGLY, BY ADOPTING CUP METHOD, THE TPO MADE AN ALP ADJUSTMENT OF RS.3,72,62,891/-. AGGRIEVED, ASSESSE E CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO, FOLLOWING THE VIEWS A DOPTED BY THE DISPUTE RESOLUTION PANEL IN THE ASSESSMENT YEAR 2009-10 AND 2010-11 AND FOLLOWING HIS PREDECESSORS ORDER FOR THE ASSESSMENT YEAR 200 8-09 IN ASSESSEES OWN CASES, REVERSED THE ACTION OF THE AUTHORITIES BELOW , DELETED THE SAID ALP ADJUSTMENT. THE ASSESSING OFFICER IS AGGRIEVED OF T HE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND CONSIDERED FACTS OF THE CASE IN THE LIGHT OF TH E APPLICABLE LEGAL POSITION. 4. WE FIND THAT THE ORDERS RELIED UPON BY THE CIT(A ) WERE CHALLENGED IN APPEAL BEFORE THIS TRIBUNAL, BUT THE CO-ORDINATE BE NCHES VIDE SEPARATE ORDERS DATED 27 TH DECEMBER 2016, CONFIRMED THE FINDINGS THEREIN AND DECLINED TO INTERFERE IN THE MATTER. IN THE LEAD ORDER, WHICH IS ALSO REPORTED AS DCIT VS. HAZIRA LNG PVT LTD (163 ITD 223), THE CO-ORDINATE B ENCH HAS, INTER ALIA, OBSERVED AS FOLLOWS:- 12. WE HAVE NOTED THAT THE LNG IS NOT AN ITEM WHICH IS SOLD AND PURCHASED IN AN OPEN COMMODITY MARKET SO THAT ITS P REVAILING PRICES CAN BE KNOWN TO ALL CONCERNED. A LOT OF EMPHASIS HAS BEEN PLACED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE FACT THAT THE PR ICES OF LNG AND THE CRUDE OIL HAVE MOVED IN THE SAME DIRECTION, AND, THUS EVE N THE INFORMATION IN PUBLIC DOMAIN COULD INDEED BE USED FOR ARRIVING AT THE VAL ID CUP INPUT. HOWEVER, APART FROM WHATEVER BE THE LACK OF MERITS OF THIS A RGUMENT, THIS ARGUMENT IS BEING TAKEN UP FOR THE FIRST TIME AT THIS STAGE. WH AT THE TPO HAS ACTUALLY DONE IN THIS CASE IS TO ADOPT THE PRICES AT WHICH PLL H AS IMPORTED LNG AS CUP INPUT, DESPITE THE VARIATION IN DATES AND VARIATION S IN THE ORIGIN OF THE LNG. THEREFORE, TAKING UP THE CRUDE OIL PRICES, AS BASE MATERIAL, OR REFERRING TO HENRY HUB PRICES AT THIS STAGE WILL BE GIVING A NEW TWIST TO THIS CASE AND ATTEMPTING TO THEREBY IMPROVE THE CASE OF THE REVEN UE- WHICH IS NOT PERMISSIBLE. LEARNED DEPARTMENTAL REPRESENTATIVE HA S LAID A LOT OF EMPHASIS ON THE OBSERVATION MADE IN THE TP REPORT TO THE EFF ECT THAT THE PRICE OF NATURAL GAS MIRRORED INTERNATIONAL CRUDE OIL PRICES IN TERMS OF VOLATILITY BUT ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 3 OF 17 THEN THEIR RATE OF VARIATION MAY NOT BE THE SAME EV EN AS IT MAY BE IN THE SAME DIRECTION. THAT IS CLEAR FROM THE GRAPH SHOWING MOV EMENT OF THESE PRICES, AS FILED BY THE ASSESSEE, CLEARLY SHOWS. IT IS NOT EVE N THE CASE OF THE DEPARTMENTAL REPRESENTATIVE THAT THERE IS A DIRECT FORMULA WITH THE HELP OF WHICH PRICES OF LNG CAN BE DERIVED NOR IS IT CLEA R TO US AS TO HOW CAN THE PRICES OF LNG BE DERIVED FROM THE PRICES OF CRUDE O IL, WHICH ARE IN PUBLIC DOMAIN. LEARNED DEPARTMENTAL REPRESENTATIVE HAS POI NTED OUT THAT THE JAPANESE LNG IMPORT IS BENCH MARKED ON THE BASIS OF JCC PRICES WHICH IS BASED ON JAPANS CUSTOMS CRUDE OIL CLEARANCE, AND T HAT IN THE NORTH AMERICA, THE PRICES OF LNG ARE DETERMINED BY HENRY HUB PRICES, AND CONTENTED THAT THERE ARE PRICES AVAILABLE FOR DIFF ERENT REGIONS IN THE WORLD CAN BE APPLIED WITH REASONABLE ADJUSTMENTS BUT THEN HE DOES NOT EXPLAIN THE MECHANISM OF THIS ADJUSTMENT PROCESS. IN ANY EVENT , WHAT APPLICATION OF CUP METHOD REQUIRES, AS A FIRST STEP, IS THAT THE PRIC E CHARGED OR PAID FOR PROPERTY TRANSFERRED OR SERVICES PROVIDED IN A COMPARABLE UN CONTROLLED TRANSACTION, OR A NUMBER OF SUCH TRANSACTIONS, IS IDENTIFIED BUT T HEN THE PRICE OF THE LNG PURCHASED BY THE ASSESSEE CANNOT BE IDENTIFIED BY R EFERRING TO THE PRICES OF CRUDE OIL OR NATURAL GAS. THE REFERENCE TO THESE PR ICES IS THUS OF NO RELEVANCE UNDER THE SCHEME OF THE TRANSFER PRICING LEGISLATIO N. IN ANY EVENT, HENRY HUB PRICES ARE RELEVANT TO THE US MARKET AND UNDOUBTEDL Y GEOGRAPHIC DIFFERENCES PLAY A VERY VITAL ROLE AS IS IMPLICIT IN THE STAND OF THE TPO HIMSELF. AS A MATTER OF FACT, IN THE IMMEDIATELY PRECEDING ASSESSMENT YE AR, WHEN THE LNG PRICES IN JAPANESE TRADES OF LNG WERE FURNISHED BY THE ASS ESSEE FOR COMPARISON, THE TPO HIMSELF REJECTED THE SAME BY OBSERVING THAT THE INFORMATION IS OF LITTLE RELEVANCE AS JAPANESE TRADE COMMANDS HIGHEST PRICES AND HENCE ARE NOT COMPARABLE JUST AS HENRY HUB PRICES LOWER THAN THAT OF INDIAN RATES AND HENCE NOT COMPARED ON SPOT BASIS AS FOR THE USE O F HENRY HUB PRICES IN THE FIRST YEAR OF OPERATIONS, THE ASSESSEES EXPLANATIO N FOR THE USE OF HENRY HUB PRICES IN THE FIRST YEAR IS AS FOLLOWS: (IN THIS YEAR).. LNG CARGOES WERE PRIMARILY PURCHA SED FOR COMMISSIONING OF HAZIRA TERMINAL AND NOT FOR TRADIN G. COMMISSIONING WAS AN ASCERTAINED ACTIVITY WITH DEFINED VOLUMES, T IME PERIOD ETC. HENCE, IT WAS POSSIBLE TO FIX FORWARD PURCHASES USI NG A FORMULA LINKED TO A COMMODITY INDEX. DUE TO UNAVAILABILITY OF ANY DOMESTIC UNCONTROLLED PRICE POINT AND ABSENCE OF ANY SUBSTAN TIAL (RE)SALE, HLPL HAD TO USE A PRICE DISCOVERY MECHANISM BASED ON AN INDEPENDENT EXCHANGE. HENRY HUB IS A NATURAL GAS TRADING HUB FO R SETTLEMENT OF GAS INFLOWS INTO THE US. IT IS NOT POSSIBLE TO BUY NATU RAL GAS AT HENRY HUB FOR IMPORTS TO INDIA. THEREFORE PRICE AT HENRY HUB EXCHANGE DOES NOT REFLECT THE SPOT LNG PRICES IN THE INTERNATIONAL MA RKET AND THE SAME CAN IN NO WAY BE TAKEN AS AN INDICATIVE PRICE FOR T HE PURPOSES OF BENCHMARKING THE SUBJECT INTERNATIONAL TRANSACTION 13. IN THE YEAR IN WHICH THE HENRY HUB PRICES WERE USED, PRIMARILY THE COMMISSIONING OF THE PROJECT WAS TO TAKE PLACE, AND , THEREFORE, THE OPERATIONS OF ASSESSEES BUSINESS WERE OF DIFFERENT NATURE. TH E FACT THAT THE ASSESSEE HAD USED HENRY HUB PRICES IN THE FIRST YEAR OF OPER ATIONS, THEREFORE, CANNOT BE ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 4 OF 17 USED AS ESTOPPEL AGAINST THE ASSESSEE. IN ANY CASE, THESE PRICES ARE OF A SIGNIFICANTLY DIFFERENT GEOGRAPHICAL MARKET AND A D IFFERENT PRODUCT INASMUCH NEITHER US, AS A MARKET, CAN BE COMPARED WITH INDIA N ENERGY MARKET, NOR LNG PRICES CIF HAZIRA CAN BE COMPARED WITH THE DOME STIC PRICES OF NATURAL GAS IN US. THIS IS, OF COURSE, BESIDES THE FACT TH AT THE TPO HAS NOT EVEN RELIED UPON HENRY HUB, OR, FOR THAT PURPOSE, ANY OT HER PRICES IN PUBLIC DOMAIN. 14. WHAT HAS BEEN DONE BY THE TPO IS TO ADOPT THE P RICES, AT WHICH PLL HAS IMPORTED LNG IN SPOT TRANSACTIONS, AS EXTERNAL COMPARABLES. THERE IS NO DISPUTE THAT THIS INFORMATION WAS NEVER IN PUBLIC D OMAIN, AND THAT IT WAS IN RESPONSE TO THE REQUISITION UNDER SECTION 133(6) OF THE ACT THAT THE PLL FURNISHED, VIDE LETTER DATED 1 ST FEBRUARY 2012, TO THE TRANSFER PRICING OFFICER. IN THIS LETTER, PLL HAS, INTER ALIA, STATED THAT EACH SPOT CARGO TRANSACTION IS DISTINCT AND ARE NOT COMPARABLE AND THAT PLL IS PRESENTLY OPERATING IN ONE SEGMENT I.E. R-LNG. THE INFORMATION SO FURNISHED B Y THE PLL IS AS FOLLOWS: SPOT CARGOES PURCHASED BY PETRONENT LNG LTD DURING FY 2008-09 LOADING PORT SUPPLIER SHIP UNLOADING DATE MMBTU PRICE USD/ MMBTU BOOKING DATE* LC REQUIR ED RAS LAFFAN, QATAR RASGAS AI THAKHIRA 11/5/2008 3,262,720.00 13,3000 2 4/4/2008 Y ARZEW, ALGERIA SONATRACH M DIDOUCHE 15/06/08 2,854, 894.10 13,9500 28/5/2008 Y IDKU PORT, EGYPT GAZ DE FRANCE GASLEYS 11/10/2008 3,286,422.00 18,5000 17/09/2008 Y ARZEW, ALGERIA SONATRACH GALEA 20/10/08 3,190,940,2 3 16,0000 4/10/2008 Y WITHNELL BAY, AUSTRALIA NORTH WEST SHELF, AUSTRALIS AI THAKHIRA 26/10/2008 3,362,960.00 17,5000 10/10/2 008 Y QALHAT, OMAN QALHAT IBARA LNG 7/11/2008 3,346,090.0 0 13,2500 4/11/2008 Y RAS LAFFAN, QATAR RASGAS MRL 22/11/08 3,092,090.00 12,3000 5/11/2008 Y POINT FORTIN T&T BG BLUE SKY 17/12/08 3,087,330.00 11,9000 25/11/200 8 Y BONNY, NIGERIA BG LNG AKWA IBOM 3/1/2009 2,724,260.00 11,9000 25/11/2008 Y BINTULU, MALAYSIA BP SERI ANGKASA 11/3/2009 3,274,231.00 6,2500 3/3 /2009 Y POINT FORTIN T&T BP BRIT INNOVATOR 29/03/09 2,779,225.03 5,8000 12 /3/2009 Y *DATE ON WHICH PURCHASE OF SPOT CARGO IS CONFIRMED. 15. THE ABOVE COMPARABLES HAVE BEEN USED TO EXAMINE THE FOLLOWING ACTUAL IMPORT TRANSACTIONS ENTERED INTO BY THE ASSE SSEE: ANNEXURE DETAILS OF PURCHASES MADE BY HLPL DURING FY 2008-09 S. NO NAME OF SHIP SOURCE DATE OF CONFIRMAT- ION NOTICE DATE OF ARRIVAL PRICE USD NET QTY. UNLOADED VALUE IN BOOKS (USD) VALUE IN BOOKS (INR) 1 AL THAKIRA QATAR 2-APR-08 11-APR-08 13.98 3,264,2 40 45,634,075 1,845,898,342 2 GALEA ALGERIA 14-APR-08 23-APR-08 13.98 3,138,060 43,870,079 1,774,544,687 3 EXCEL ABU DHABI, UAE 17-APR-08 24 MAY-08 13.42 3,221,030 43,226,223 1,750,662,015 ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 5 OF 17 4 ARCTIC LADY NIGERIA 21-APR-08 20-MAY-08 13.42 3,196,130 42,529, 725 1,722,453,846 5 LNG FINIMA NIGERIA 23-APR-08 1-MAY-08 13.35 2,829,290 37,771, 022 1,527,837,820 6 EXCEL ABU DHABI, UAE 28-APR-08 15-MAY-08 13.40 2,069,420 27,730,228 1,123,074,234 7 SIMAISMA QATAR 5-MAY-08 9-MAY-08 13.48 3,262,990 43,985,105 1,781,396,761 8 GRACILIS EQUATORIAL GUINEA 13-MAY-08 15-JUN-08 13.59 3,016,290 40,991,381 1,766,728,525 9 GALEA ALGERIA 22 MAY-08 30-MAY-08 13.59 3,150,350 42,813,257 1,733,936,888 10 MITHANE SHIRLEY ELISABETH IDKU, EGYPT 2-JULY-08 28-JUL-08 18.80 3,178,840 59,762,192 2,581,726,694 11 BERGE ARZEW ALGERIA 7-JULY-08 22-JUL-08 16.99 3,113,000 52,889, 870 2,284,842,384 12 MAESK METHANE GUINEA 15-JULY-08 18-SEP-08 20.45 3,422,600 69,992, 170 3,062,157,438 13 ARCTIC LADY NORWAY 21-JULY-08 13-AUG-08 19.55 3,272,270 63,972, 879 2,722,045,980 14 SERI ALAM GUINEA 23-JULY-08 24-SEP-08 19.55 3,05 8,230 59,788,397 2,615,742,347 15 SERI ALAM NIGERIA 28-JULY-08 8-AUG-08 18.70 3,16 6,660 59,216,542 2,519,663,862 16 BERGE ARZEW ALGERIA 13-AUG-08 22-AUG-08 20.37 3,118,180 63,517, 327 2,702,662,247 17 SERI BIJASKSAN A GUINEA 18-AUG-08 12-OCT-08 20.50 3,158,740 64,754,1 70 3,027,257,448 18 BORNO NIGERIA 26-AUG-08 30-AUG-08 20.50 3,265,07 0 66,933,935 2,848,038,934 19 SERI BEGAWAN BELGIUM 4-SEP-08 10-SEP-08 20.00 3,234,050 64,681,0 00 2,829,793,750 20 SALALAH LNG OMAN 21-SEP-08 2-OCT-08 19.95 3,397,770 67,785,512 2,965,616,128 21 GALLINA NIGERIA 20-OCT-08 29-OCT-08 17.20 2,781, 230 47,837,156 2,407,644,061 22 GRANOSA WESTERN AUSTRALIA 31-DEC-08 09-JAN-09 9.06 3,319,130 30,071,318 1,449,437,518 23 SOHAR LNG OMAN 26-FEB-09 3-MAR-09 7.15 3,162,030 22,608,515 1,137,208,279 24 BRITISH RUBY TRINIDAD, W.I. 6-MAR-09 31-MAR-09 5.65 3,153,020 17,814,563 869,07 2,519 25 AL MARROUNA QATAR 10-MAR-09 15-MAR-09 6.00 3,487,040 20,922,240 1,052,388,672 26 AL HAMLA QATAR 23-MAR-09 28-MAR-09 4.50 2,152,45 0 9,686,025 487,207,058 16. OUT OF 26 SPOT TRANSACTIONS THAT THE ASSESSEE H AD WITH ITS AE, ONLY ONE HAS BEEN FOUND TO BE NOT AT AN ARMS LENGTH. EVEN I N THIS CASE, THERE IS SIGNIFICANT VARIATIONS IN DATES OF TRANSACTION. THE ASSESSEE ENTERED INTO TRANSACTION ON 21 ST SEPTEMBER 2008, WHEREAS THE TRANSACTION USED AS EXTERNAL CUP INPUT WAS ENTERED INTO ON 17 TH SEPTEMBER 2008. IT IS BY NOW A SETTLED LEGAL POSITION THAT THE PRICES ENTERED INTO BY THE PARTIES ON THE DATE OF CONTRACT MUST BE COMPARED WITH THE PRICES OF SIMILA R TRANSACTIONS ON THAT DAY. IN THE CASE OF LIBERTY AGRI PRODUCTS PVT LTD VS ITO [(2012) 49 SOT 79 (CHENNAI)], A COORDINATE BENCH OF THIS TRIBUNAL HAS HELD THAT EVEN WHEN A COMPARISON WITH RESPECT TO CUSTOMS DATA IS TO BE MA DE, IT SHOULD BE FOR THE DATA IN RESPECT OF THE DAY ON WHICH CONTRACT WAS EN TERED INTO AND NOT A DIFFERENT DATE. THE DATA OBTAINED BY THE TPO FROM P LL WOULD ALSO SHOW THAT THERE ARE VARIATIONS IN THE PRICES OF LNG IMPORTED WITHIN A GAP OF EVEN 1 DAY. ON 4.11.2008, PLL ENTERED INTO SPOT DEAL @ US $ 13. 2500 PER MMBTU BUT ON ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 6 OF 17 THE VERY NEXT DAY, I.E. ON 5.11.2008, THE NEXT SPOT DEAL WAS @ US $ 12.3000 PER MMBTU. SIMILARLY, ON 4.10.2008, PLL ENTERED IN TO SPOT DEAL OF LNG IMPORTS @ US $ 16 PER MMBTU, BUT IN LESS THAN A WEE K, ON 10.10.2008, PLL ENTERED INTO ANOTHER SPOT DEAL OF LNG IMPORT @ USS $ 17.5 PER MMBTU. THE BUSINESS SITUATIONS CAN NEVER BE SO STATIC, PARTICU LARLY IN THE CASE OF A PRODUCT LIKE LNG SPOT DEALS WHICH ARE PURELY BASED ON ONE T O ONE NEGOTIATIONS, THAT THE MARKET PRICES ON A DAY OTHER THAN THE DAY ON WH ICH TRANSACTION HAS BEEN ENTERED INTO BY THE ASSESSEE CAN BE USED AS A VALID CUP INPUT, AND THAT IS PRECISELY WHAT THE COORDINATE BENCH HAS HELD AND TH E INFORMATION GIVEN BY THE TPO CLEARLY CORROBORATES. ON THE BASIS OF INFORMATI ON USED BY THE TPO HIMSELF, AND IN THE LIGHT OF THE LAW LAID DOWN BY T HE COORDINATE BENCH IN THE CASE OF LIBERTY AGRI PRODUCTS (SUPRA), EVEN IF CUP METHOD WAS TO BE ADOPTED IN THE MANNER IN WHICH IT HAS BEEN ADOPTED BY THE T PO, THE IMPUGNED ADDITION WAS TO BE DELETED ANYWAY. WE HAVE ALSO NOT ED THAT IN ALL THE ASSESSMENT YEARS IN WHICH SUCH ADJUSTMENTS ARE MADE , NOT ONLY THE DATA IS OF DATES, WHICH ARE DIFFERENT FROM THE DATE OF TRANSAC TIONS, AND IN MANY A CASES OF SUBSEQUENT DATES, AS WILL BE EVIDENT FROM THE CH ART GIVEN BELOW: AY HLPL PLL AY 2007-08 SOURCE BOOKING DATE PRICE (USD) SOURCE BOOKING DATE PRICE (USD) QATAR 12-09-06 9.95 EGYPT 04-09-06 8.60 EGYPT 15-09-06 9.37 EGYPT 04-09-06 8.60 MALAYSIA 03-01-07 9.30 QATAR 28-12-06 8.30 AY 2008-09 SOURCE BOOKING DATE PRICE (USD) SOURCE BOOKING DATE PRICE (USD) OMAN 18-01-08 16.75 QATAR 29-01-08 15 OMAN 31-01-08 16.45 QATAR 29-01-08 15 AY 2009-10 SOURCE BOOKING DATE PRICE (USD) SOURCE BOOKING DATE PRICE (USD) OMAN 21-09-08 19.95 EGYPT 17-09-08 18.50 AY 2010-11 SOURCE BOOKING DATE PRICE (USD) SOURCE BOOKING DATE PRICE (USD) RUSSIAN FEDERATION 06-04-09 5 EGYPT 13-04-09 4.8 WITHNELL BAY, WA 25-05-09 3.87 AUSTRALIA 22-05-09 3.50 RUSSIAN FEDERATION 02-06-09 3.87 AUSTRALIA 22-05-09 3.50 GUINEA 02-06-09 4.20 AUSTRALIA 22-05-09 3.50 RUSSIAN FEDERATION 25-08-09 5.15 QATAR 20-08-09 4.65 QATAR 03-09-09 5.15 QATAR 01-09-09 4.70 TRINIDAD, W.I 02-09-09 5.15 QATAR 01-09-09 4.70 ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 7 OF 17 17. IN ANY CASE, THE INFORMATION AVAILABLE FOR EXTE RNAL CUP INPUTS (I.E PLL DATA) IS CLEARLY INADEQUATE THAT IT IS ONLY IN RESP ECT OF SOME OF THE TRANSACTIONS ENTERED BY THE ASSESSEE THAT SUCH AN INFORMATION CA N BE USED. THERE ARE TRANSACTIONS ENTERED BY THE ASSESSEE IN RESPECT OF WHICH THERE ARE NO PLL TRANSACTIONS AVAILABLE IN THE SAME WEEK OR EVEN SAM E MONTH. WHEN VARIATIONS IN PRICES ARE EVIDENT ON DAY TO DAY BASI S, EVEN IN THE DATA USED BY THE TPO HIMSELF, IT IS ABSURD TO SUGGEST THAT DATA OF TRANSACTIONS A WEEK OR A MONTH AWAY FROM THE DATE OF EXTERNAL CUP INPUT CAN BE BENCHMARKED ON THAT BASIS. THESE TRANSACTIONS CANNOT, THEREFORE, BE BEN CHMARKED ANYWAY. CLEARLY, CUP CANNOT, FOR THIS SHORT REASON ALONE, C ANNOT BE THE MOST APPROPRIATE METHOD IN THIS CASE. AS WE HOLD SO, WE MAY ALSO REFER TO RULE 10C(2C) WHICH STATES THAT, IN SELECTING THE MOST AP PROPRIATE METHOD FOR ASCERTAINING THE ARMS LENGTH PRICE, THE AVAILABIL ITY, COVERAGE AND RELIABILITY OF DATA NECESSARY FOR APPLICATION OF THE METHOD IS ES SENTIALLY TO BE TAKEN INTO ACCOUNT. THE APPROPRIATENESS OF A METHOD OF ASCERT AINING THE ARMS LENGTH PRICE CANNOT BE DECIDED IN A VACUUM AND DE HORS THE AVAILABILITY OF RELEVANT DATA. NO MATTER HOW DESIRABLE IS THE USE OF CUP MET HOD IN A PARTICULAR TYPE OF TRANSACTION, OR IN EVERY PLAIN VANILLA COMMODITY PU RCHASE TRANSACTION- AS LEARNED DEPARTMENTAL REPRESENTATIVE PUTS IT, IT ESS ENTIALLY DEPENDS ON AVAILABILITY, COVERAGE AND RELIABILITY OF DATA NECE SSARY FOR APPLICATION OF SUCH A METHOD. LEARNED DEPARTMENTAL REPRESENTATIVES CASE FAILS ON THIS TEST AS WELL. 18. THERE IS, HOWEVER, AN EVEN MORE FUNDAMENTAL ISS UE THAT WE MUST BRIEFLY TOUCH UPON, AND THAT IS WHETHER ON THE BASI S OF SECRET COMPARABLES, I.E. WHICH ARE NOT IN PUBLIC DOMAIN AT ALL, THE CUP METH OD CAN BE THRUST UPON THE ASSESSEE. THE INFORMATION OBTAINED BY THE TPO UNDE R SECTION 133(6), ON THE BASIS OF WHICH THE USE OF CUP METHOD IS JUSTIFIED, WAS NOT IN THE PUBLIC DOMAIN, NOR DID THE ASSESSEE HAVE ANY INFORMATION A BOUT THE SAME UNLESS THE ASSESSEE WAS CONFRONTED WITH THE SAME BY THE TP O. TO SUGGEST THAT IN VIEW OF THE INFORMATION SO MADE AVAILABLE TO THE AS SESSEE NOW, THE ASSESSEE SHOULD HAVE USED CUP METHOD IS TO EXPECT AN IMPOSSI BILITY BEING PERFORMED BY THE ASSESSEE. WHAT IS IMPORTANT TO NOTE IN THE P RESENT CASE IS THAT THE METHOD OF ASCERTAINING THE ALP IS BEING SOUGHT TO B E CHANGED ON THE BASIS OF ALLEGED AVAILABILITY OF NECESSARY CUP DATA IN THE N ATURE OF SECRET COMPARABLES. THAT, IN OUR HUMBLE UNDERSTANDING, CAN NOT BE DONE. AS WE SAY SO WE ARE ALIVE TO THE FACT THAT IN CERTAIN DECISIO NS BY THE COORDINATE BENCHES, EVEN WHEN SECRET COMPARABLES ARE USED BY THE TPO, T HE SAME HAS BEEN BROADLY UPHELD WITH THE RIDER THAT THE ASSESSEE SHO ULD BE CONFRONTED WITH THE SECRET COMPARABLES USED BY THE TPO BUT THEN THE PRE SENT CASE IS MATERIALLY DIFFERENT. HERE IS A CASE IN WHICH SECRET COMPARABL ES, WHICH HAVE BEEN OBTAINED BY THE TPO UNDER SECTION 133(6), ARE NOT I N RESPECT OF THE TRANSACTIONS ON THE SAME DAY ON WHICH THE ASSESSEE ENTERED INTO SIMILAR TRANSACTIONS, IN SOME CASES- NOT EVEN THE SAME WEEK OR THE SAME MONTH, AND YET BASED ON THE AVAILABILITY OF THIS DATA, THE METHOD OF DETERMINING ALP ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 8 OF 17 IS BEING CHANGED. THE DRP WAS QUITE JUSTIFIED IN RE JECTING THE USE OF CUP METHOD ON THESE FACTS, AND WE APPROVE THE STAND OF THE DRP. 19. LEARNED DEPARTMENTAL REPRESENTATIVE HAS THEN CO NTENDED THAT RESALE PRICE METHOD IS NOT AN APPROPRIATE METHOD IN THIS C ASE AS THERE IS SUBSTANTIAL VALUE ADDITION BY WAY OF COMPLEX REGASIFICATION PRO CESS IN THE LNG TERMINAL OPERATED BY THE ASSESSEE, FOR WHICH THE ASSESSEE HA S NOT LEVIED ANY CHARGES, AND IT IS NOT A LIMITED RISK DISTRIBUTORS CASE FOR WHICH RPM IS ACTUALLY BEST SUITED. 20. LETS TAKE A PAUSE HERE, AND TRY TO UNDERSTAND AS TO HOW DOES THE LNG TERMINAL, WHICH IS WHAT THE ASSESSEE OWNS, OPERATES AND MAINTAINS, WORKS. LNG TERMINAL IS A RECEPTION FACILITY FOR UNLOADING OF CARGO FROM LNG TANKERS. SUCH A TERMINAL IS SPECIALLY USED FOR IMPORT OF LNG , AND IT CONTAINS A VARIETY OF FACILITIES FOR UNLOADING, REGASIFICATION, TANKIN G, METERING ETC. OF LNG. IT IS IMPORTANT TO BEAR IN MIND THE FACT THAT NATURAL GAS IS TRANSPORTED IN LIQUEFIED STATE, USING SPECIALIZED LNG GAS TANKERS, AND AT TH E LNG TERMINALS RECEIVING THIS LIQUEFIED GAS, THE LIQUEFIED NATURAL GAS IS TU RNED BACK INTO GASEOUS STATE (REGASIFIED) AFTER UNLOADING FROM SHIPS, AND THEN D ISTRIBUTED ACROSS THE NETWORK. WHILE ON THE SUBJECT, IT MAY BE USEFUL TO ALSO TAKE NOTE OF THE FACT THAT LIQUEFIED NATURAL GAS (LNG) WAS DEVELOPED IN 1 964 AS A SOLUTION TO THE PROBLEM OF TRANSPORTING THE GAS, WHICH WAS, UNTIL T HAT POINT OF TIME AND BECAUSE OF THE INHERENT LIMITATIONS OF TRANSPORTING THE GAS, SEEN AS A PRODUCT FOR DOMESTIC USE ONLY. WITH LNG, GAS IS LIQUEFIED AND TRANSPORTED INTERNATIONALLY VIA TANKERS AND THEN REGASIFIED INT O ITS ORIGINAL STATE FOR DISTRIBUTION AND SALE. ADDITIONALLY, THE HYDROCARBO N TAKES UP SIGNIFICANTLY LESS SPACE AS A LIQUID THAN A GAS; LNG IS APPROXIMATELY 1/600TH THE VOLUME OF THE SAME AMOUNT OF NATURAL GAS. LNG HAS TRANSFORMED TH E NATURAL GAS MARKET, MAKING PREVIOUSLY UNRECOVERABLE NATURAL GAS FINDS A N ECONOMIC REALITY. IN OTHER WORDS, STRANDED GAS RESERVOIRS, FOR WHICH PIP ELINES WERE TOO COSTLY TO CONSTRUCT, CAN NOW BE PRODUCED, TRANSFORMED INTO LN G AND TRANSPORTED VIA TANKER. NATURAL GAS IS LIQUEFIED BY LOWERING THE T EMPERATURE OF THE HYDROCARBON TO APPROXIMATELY -260 DEGREES FAHRENHEI T (-160 DEGREES CELSIUS). THIS TEMPERATURE DROP LIQUEFIES THE METHA NE PRESENT IN THE NATURAL GAS, MAKING TRANSPORTATION AT ATMOSPHERIC PRESSURE IN THE FORM OF LNG POSSIBLE LNG IS THEN INTRODUCED INTO SPECIALLY INS ULATED TANKERS AND TRANSPORTED AROUND THE WORLD. ONCE IT HAS REACHED I TS DESTINATION, THE LNG IS OFFLOADED FROM THE TANKER AND EITHER STORED OR REGA SIFIED. THE LNG IS DEHYDRATED INTO A GASEOUS STATE AGAIN THROUGH A PRO CESS THAT INVOLVES PASSING THE LNG THROUGH A SERIES OF VAPORIZERS THAT REHEAT THE FUEL ABOVE THE -260 DEGREE FAHRENHEIT (-160 DEGREES CELSIUS) TEMPE RATURE MARK. THE FUEL IS THEN SENT VIA ESTABLISHED TRANSPORTATION METHODS, S UCH AS PIPELINES, TO THE END USERS. THE WORK TYPICALLY DONE AT THE LNG TERMI NAL, BY WAY OF A DIAGRAM, CAN BE SHOWN AS FOLLOWS: ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 9 OF 17 (SOURCE: HTTP://WWW.MARINEINSIGHT.COM/WP-CONTENT/UP LOADS/2013/05/LNG- DIAGRAM.JPG) 21. WE HAVE NOTED THAT WHAT IS IMPORTED BY THE ASSE SSEE IS NATURAL GAS, WHICH IS LIQUEFIED BECAUSE IT CAN BE TRANSPORTED IN TERNATIONALLY ONLY AFTER BEING LIQUEFIED, AND WHAT IS SOLD IS ALSO NATURAL GAS. TH E PROCESS OF LIQUIFICATION AND REGASIFICATION IS THE COMPULSION OF INTERNATIONAL T RANSPORTATION AND AN INTEGRAL PART OF THIS BUSINESS MODEL. WHAT IS IMPORTED, HOWE VER, IS NATURAL GAS AND WHAT IS SOLD IS ALSO NATURAL GAS. AS WE DEAL WITH T HIS ASPECT OF THE MATTER, WE MAY REFER TO HONBLE SUPREME COURT IN THE CASE OF A SSOCIATION OF NATURAL GAS & ORS VS UNION OF INDIA & ORS [(2004) 4 SCC 489 (SC )] WHEREIN IT IS HELD THAT LIQUEFIED NATURAL GAS (LNG) IS ALSO A NATURAL GAS A ND BELONGS TO THE SAME CATEGORY. RECOGNIZING THE ROLE OF LIQUIFICATION OF NATURAL GAS FOR TRANSPORTATION PURPOSES, THEIR LORDSHIPS HAVE OBSERVED AS FOLLOWS: 24. TO OBTAIN A MARKETABLE PRODUCT, THE RAW NATUR AL GAS FLOWING FROM GAS OR OIL WELLS MUST BE PROCESSED TO REMOVE WATER VAPOR, INERT OR POISONOUS CONSTITUENTS, AND CONDENSABLE HYDROCARBON S. THE PROCESSED GAS IS PRINCIPALLY METHANE, WITH SMALL AM OUNTS OF ETHANE, PROPANE BUTANE, PENTANE, CARBON DIOXIDE AND NITROGE N. THIS GAS CAN EASILY BE TRANSPORTED FROM THE PRODUCING AREAS TO T HE MARKET IN UNDERGROUND PIPELINES UNDER PRESSURE OR LIQUEFIED A T LOW TEMPERATURES AND TRANSPORTED IN SPECIALLY DESIGNED OCEAN-GOING T ANKERS. . 28. THE TECHNOLOGICAL ADVANCEMENT IN THE USE OF LIQ UEFIED NATURAL GAS (LNG) PROVIDED, THE GAS INDUSTRY WITH NEW METHODS T O SOLVE THE PROBLEMS OF STORAGE AND TRANSPORTATION. NATURAL GAS CAN BE REDUCED TO ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 10 OF 17 1/600 OF THE VOLUME OCCUPIED IN THE GASEOUS STATE B Y CRYOGENIC PROCESSING, SAFELY STORED OR TRANSPORTED IN DOUBLE- WALLED INSULATED METAL CONTAINERS AT NEAR ATMOSPHERIC PRESSURE AND W HEN REQUIRED, CAN BE RE-GASIFIED. 22. IT CANNOT, THEREFORE, BE SAID THAT THE PRODUCT BEING IMPORTED AND THE PRODUCT BEING SOLD IN THE MARKET ARE DIFFERENT FROM EACH OTHER. ONCE HONBLE SUPREME COURT HOLDS SO, IT CANNOT BE OPEN TO US TO TAKE ANY OTHER VIEW OF THE MATTER. 23. AS FOR THE PROCESS INVOLVED IN REGASIFICATION, IT IS THE SAME PROCESS WHICH IS INVOLVED IN THE COMPARABLE PLL, AND THE SA ME IS THE POSITION WITH REGARD TO THE FOREIGN EXCHANGE RISK. THE PROCESS IN VOLVED MAKES IT ALL THE MORE COMPARABLE. AS WE HAVE NOTED EARLIER, IT IS T HE BUSINESS MODEL OF THE ASSESSEE TO IMPORT THE NATURAL GAS IN LIQUEFIED FOR M AND THEN CONVERT IT BACK INTO NATURAL GAS FORM AGAIN SO AS TO MAKE IT SALEAB LE, BUT THEN IT DOES NOT CHANGE THE CHARACTER OF THE TRANSACTION WHICH IS IN THE NATURE OF IMPORT OF A PRODUCT AND SELLING THE SAME. THE COSTS INCIDENTAL TO STORAGE AND TRANSPORTATION DO NOT ALTER THE CHARACTER OF TRANSA CTIONS CARRIED ON BY THE ASSESSEE. THE FAR ANALYSIS FOR THE ASSESSEE AND A T LEAST PLL ARE NOT ANY DIFFERENT. THERE IS A PROCESS OF CUSTOM CLEARANCE, UNLOADING, STORAGE, REGASIFICATION AND DELIVERY TO THE AGREED POINT INV OLVED IN THE WORK OF THE ASSESSEE AS ALSO THE PLL. 24. A LOT OF EMPHASIS IS THEN PLACED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE PROPOSITION THAT SINCE THERE IS SPECIAL PROCESS INVOLVED IN STORAGE AND SALE OF PRODUCT, THE RPM SHOULD NOT APPLY. HOWEVER, AS WILL BE EVIDENT FROM THE FOLLOWING GUIDANCE IN THE UN TRANS FER PRICING MANUAL AND THE OECD TRANSFER PRICING GUIDELINES, SUCH A FACT O NLY CALLS FOR, AT BEST, ECONOMIC ADJUSTMENTS, WHERE REQUIRED, AND THE HIGHE R MARGIN: 6.2.9.5. AS THE GROSS PROFIT MARGIN REMUNERATES A S ALES COMPANY FOR PERFORMING MARKETING AND SELLING FUNCTIONS, THE RES ALE PRICE METHOD ESPECIALLY DEPENDS ON COMPARABILITY REGARDING FUNCT IONS PERFORMED, RISKS ASSUMED AND ASSETS USED. THE RESALE PRICE MET HOD THUS FOCUSES ON FUNCTIONAL COMPARABILITY. A SIMILAR LEVE L OF COMPENSATION IS EXPECTED FOR PERFORMING SIMILAR FUNCTIONS ACROSS DI FFERENT ACTIVITIES. IF THERE ARE MATERIAL DIFFERENCES THAT AFFECT THE GROS S MARGINS EARNED IN THE CONTROLLED AND THE UNCONTROLLED TRANSACTIONS, A DJUSTMENTS SHOULD BE MADE TO ACCOUNT FOR SUCH DIFFERENCES. IN GENERAL CO MPARABILITY ADJUSTMENTS SHOULD BE PERFORMED ON THE GROSS PROFIT MARGINS OF THE UNCONTROLLED TRANSACTIONS. THE OPERATING EXPENSES I N CONNECTION WITH THE FUNCTIONS PERFORMED AND RISKS INCURRED SHOULD B E TAKEN INTO ACCOUNT IN THIS RESPECT, AS DIFFERENCES IN FUNCTION S PERFORMED ARE FRE- QUENTLY REFLECTED IN DIFFERENT OPERATING EXPENSES. [UN TRANSFER PRICING MANUAL] ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 11 OF 17 2.31 IT SHOULD BE EXPECTED THAT THE AMOUNT OF THE R ESALE PRICE MARGIN WILL BE INFLUENCED BY THE LEVEL OF ACTIVITIES PERFO RMED BY THE RESELLER. THIS LEVEL OF ACTIVITIES CAN RANGE WIDELY FROM THE CASE WHERE THE RESELLER PERFORMS ONLY MINIMAL SERVICES AS A FORWAR DING AGENT TO THE CASE WHERE THE RESELLER TAKES ON THE FULL RISK OF OWNERSHIP TOGETHER WITH THE FULL RESPONSIBILITY FOR AND THE RIS KS INVOLVED IN ADVERTISING, MARKETING, DISTRIBUTING AND GUARAN TEEING THE GOODS, FINANCING STOCKS, AND OTHER CONNECTED SERVICES. IF THE RESELLER IN THE CONTROLLED TRANSACTION DOES NOT CARRY ON A SUBSTANT IAL COMMERCIAL ACTIVITY BUT ONLY TRANSFERS THE GOODS TO A THIRD PA RTY, THE RESALE PRICE MARGIN COULD, IN LIGHT OF THE FUNCTIONS PERFORMED, BE A SMALL ONE. THE RESALE PRICE MARGIN COULD BE HIGHER WHERE IT CAN BE DEMONSTRATED THAT THE RESELLER HAS SOME SPECIAL EXPERTISE IN THE MARK ETING OF SUCH GOODS, IN EFFECT BEARS SPECIAL RISKS, OR CONTRIBUTES SUBST ANTIALLY TO THE CREATION OR MAINTENANCE OF INTANGIBLE PROPERTY ASSOCIATED WI TH THE PRODUCT. HOWEVER, THE LEVEL OF ACTIVITY PERFORMED BY THE RES ELLER, WHETHER MINIMAL OR SUBSTANTIAL, WOULD NEED TO BE WELL SUPPO RTED BY RELEVANT EVIDENCE. THIS WOULD INCLUDE JUSTIFICATION FOR MARK ETING EXPENDITURES THAT MIGHT BE CONSIDERED UNREASONABLY HIGH; FOR EXA MPLE, WHEN PART OR MOST OF THE PROMOTIONAL EXPENDITURE WAS CLEARLY INC URRED AS A SERVICE PERFORMED IN FAVOUR OF THE LEGAL OWNER OF THE TRADE MARK. IN SUCH A CASE THE COST PLUS METHOD MAY WELL SUPPLEMENT THE RESALE PRICE METHOD. [OECD TRANSFER PRICING GUIDELINES] 25. AS FOR THE POINT REGARDING THE ASSESSEE BEING A FULL RISK DISTRIBUTOR, AND FOR THAT REASON RPM SHOULD NOT APPLY, WE ARE UNABLE TO SEE MERITS IN THIS APPROACH EITHER. FIRSTLY, THE TPO HAS NOT ADOPTED A NY ALTERNATE APPROACH, WHICH IS SUSTAINABLE IN LAW AND WHICH IS MORE APPRO PRIATE THAN THE APPROACH OF THE ASSESSEE. SECONDLY, THE COMPARABLE, PARTICUL ARLY PLL, IS ASSUMING THE SAME RISKS. THIRDLY, AT BEST SOME ECONOMIC ADJUSTME NTS, AS MAY BE APPROPRIATE IN A CASE, MAY BE DONE IN SUCH A SITUAT ION BUT THEN NO SUCH ADJUSTMENTS ARE MADE BY THE TPO NOR EVEN SUGGESTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. FINALLY, IT IS FOR THE TAX ADMINISTRATION TO SHOW AS TO HOW ANOTHER APPROACH TO THE BENCHMARKING, IN A PARTICULAR FACT SITUATION, WILL BE MORE APPROPRIATE AND UNLESS THAT IS DONE, T HE ASSESSEES APPROACH TO BENCHMARKING THE TRANSACTIONS CANNOT BE DISCARDED. WHAT THE TPO HAD SUGGESTED WAS THE CUP METHOD, BUT, FOR THE DETAILED REASONS SET OUT EARLIER IN THIS ORDER, WE HAVE HELD THAT CUP METHOD CANNOT BE APPLIED TO THE FACTS OF THIS CASE. NO METHOD OF DETERMINING ALP IS PERFECT, BUT IT IS FROM THESE IMPERFECT METHODS THAT WE HAVE TO FIND OUT WHICH IS MORE APPROPRIATE A METHOD. THERE IS NOTHING ON RECORD OR IN THE ARGUME NTS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE WHICH CAN DEMONSTRATE T O US AS TO WHY THE RPM CAN BE DISCARDED AND A MORE APPROPRIATE METHOD OF DETERMINING ALP CAN BE ADOPTED. WE ARE, THEREFORE, NOT PERSUADED BY THIS PLEA EITHER. ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 12 OF 17 26. LET US NOW MOVE ON TO THE THIRD AND LAST LIMB O F REVENUES GRIEVANCE AND THAT IS AGAINST NON COMPARABILITY OF THE COMPAR ABLES, NAMELY PLL AND GAIL. 27. THE FIRST ISSUE AGAINST THE COMPARABILITY IS OF HIGH RELATED PARTY (I.E. INTRA AE) TRANSACTIONS. 28. SO FAR AS PLL IS COMPARED, AS POINTED OUT BY TH E LEARNED DEPARTMENTAL REPRESENTATIVE, TOTAL SALES OF THIS COMPARABLE IS 8 ,428.70 CRORES, OUT OF WHICH THE SALES TO THE RELATED PARTIES, NAMELY (1) INDI AN OIL CORP LTD, (2) BHARAT PETROLEUM LIMITED, (3) OIL AND NATURAL GAS CO LTD A ND (4) GAIL INDIA LTD, IS 8,372.95 CRORES. IT IS POINTED OUT THAT THE SALES WITH RELATED PARTIES BEING ALMOST 99%, THE COMPARABLE WITH SUCH HIGH RELATED PARTY TRANSACTIONS CANNOT BE TAKEN AS A VALID COMPARABLE. LEARNED DEPARTMENTA L REPRESENTATIVE RELIES UPON THE PROVISIONS OF SECTION 92A(2)(B) TO HOLD TH ESE COMPANIES AS ASSOCIATED COMPANIES AS MORE THAN 26% OF THE SHARES OF ASSESSEE ARE HELD, DIRECTLY OR INDIRECTLY, BY THE GOVERNMENT OF INDIA. 29. THE EQUITY CAPITAL OF PLL IS HELD BY INDIAN OIL , BHARAT PETROLEUM, ONG AND GAIL AT 12.5% EACH, AND, IN TURN, 74.14%, 78.92 %, 84.93% AND 57.36% RESPECTIVELY OF THE EQUITY CAPITAL OF THESE COMPANI ES IS HELD BY THE PRESIDENT OF INDIA. IN EFFECT, THUS, THE INDIRECT SHAREHOLDIN G OF THE PRESIDENT OF INDIA IN THESE COMPANIES CAN BE COMPUTED AS FOLLOWS: 30. THE QUESTION THAT WE ARE NOW CALLED UPON TO ADJ UDICATE IS WHETHER THESE FOUR COMPANIES CAN BE SAID TO BE ASSOCIATED E NTERPRISES OF THE ASSESSEE BEFORE US. 31. SECTION 92 A, AS RELEVANT TO THE ISSUE REQUIRIN G OUR ADJUDICATION, PROVIDES AS FOLLOWS: MEANING OF ASSOCIATED ENTERPRISE. 92A. (1) FOR THE PURPOSES OF THIS SECTION AND SECTI ONS 92, 92B, 92C, 92D, 92E AND 92F, ASSOCIATED ENTERPRISE, IN RELAT ION TO ANOTHER ENTERPRISE, MEANS AN ENTERPRISE SR. NO. % OF HOLDING OF GOVERNMENT OF INDIA % HOLDING IN PLL HOLDING 1 74.14 12.5% 9.2675 2 78.92 12.5% 9.865 3. 84.93 12.5% 10.61625 4. 57.36% 12.5% 7.17 TOTAL 36.91875 ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 13 OF 17 (A) WHICH PARTICIPATES, DIRECTLY OR INDIRECTLY, OR THROUGH ONE OR MORE INTERMEDIARIES, IN THE MANAGEMENT OR CONTROL O R CAPITAL OF THE OTHER ENTERPRISE; OR (B) IN RESPECT OF WHICH ONE OR MORE PERSONS WHO PAR TICIPATE, DIRECTLY OR INDIRECTLY, OR THROUGH ONE OR MORE INTE RMEDIARIES, IN ITS MANAGEMENT OR CONTROL OR CAPITAL, ARE THE SAME PERS ONS WHO PARTICIPATE, DIRECTLY OR INDIRECTLY, OR THROUGH ONE OR MORE INTERMEDIARIES, IN THE MANAGEMENT OR CONTROL OR CAP ITAL OF THE OTHER ENTERPRISE. (2) FOR THE PURPOSES OF SUB-SECTION (1), TWO ENTER PRISES SHALL BE DEEMED TO BE ASSOCIATED ENTERPRISES IF, AT ANY TIME DURING THE PREVIOUS YEAR, (B) ANY PERSON OR ENTERPRISE HOLDS, DIRECTLY OR IND IRECTLY, SHARES CARRYING NOT LESS THAN TWENTY-SIX PER CENT OF THE V OTING POWER IN EACH OF SUCH ENTERPRISES; OR . .... 32. IT IS THUS CLEAR THAT WHERE A PERSON OR AN ENTE RPRISE HOLDS, DIRECTLY OR INDIRECTLY, SHARES CARRYING NOT LESS THAN 26% OF VO TING POWERS IN EACH SUCH ENTERPRISES, THE REQUIREMENTS OF SECTION 92A(2)(B) WILL BE FULFILLED, AND THAT WHERE A PERSON, DIRECTLY OR INDIRECTLY, OR THROUGH ONE OR MORE INTERMEDIARIES, PARTICIPATES IN THE MANAGEMENT, CONTROL OR CAPITAL OF THESE COMPANIES, THE REQUIREMENTS OF SECTION 92A(1)(B) WILL BE FULFILLED . THE LAW IS ALSO SETTLED THAT CONDITIONS OF BOTH THE LIMBS OF SECTION 92A ARE TO BE FULFILLED, AND ONLY THEN THE ENTERPRISES CAN BE SAID TO BE ASSOCIATED ENTERP RISES. IT IS ONLY WHEN BOTH OF THESE CONDITIONS ARE FULFILLED THAT THESE FOUR C OMPANIES AND THE ASSESSEE CAN BE SAID TO BE ASSOCIATED ENTERPRISES. 33. THE EXPRESSION PERSON, UNDER SECTION 2(31), H AS BEEN DEFINED TO INCLUDE (I)AN INDIVIDUAL, (II) A HINDU UNDIVIDED FA MILY, (III) A COMPANY, (IV) A FIRM, (V) AN ASSOCIATION OF PERSONS OR A BODY OF IN DIVIDUALS, WHETHER INCORPORATED OR NOT, (VI) A LOCAL AUTHORITY, AND (V II) EVERY ARTIFICIAL JURIDICAL PERSON, NOT FALLING WITHIN ANY OF THE PRECEDING SUB -CLAUSES. HOWEVER, AS IT IS AN INCLUSIVE DEFINITION, AND IN ANY CASE VALID ONLY UNLESS THE CONTEXT OTHERWISE REQUIRES, A SCHOOL OF THOUGHT MAY INDEED EXIST TO J USTIFY INCLUSION OF THE PRESIDENT OF INDIA IN THIS DEFINITION OF PERSON A S WELL. HOWEVER, IT APPEARS TO US THAT SUCH AN APPROACH WOULD BE FALLACIOUS. THE PRESIDENT OF INDIA IS A CONSTITUTIONAL HEAD AND, UNDER THE CONSTITUTIONAL P ROVISIONS, THE UNION CARRIES ON BUSINESS IN HIS NAME. ARTICLE 53(1) OF THE CONST ITUTION OF INDIA STATES THAT THE EXECUTIVE POWER OF THE UNION SHALL BE VESTED I N THE PRESIDENT AND SHALL BE EXERCISED BY HIM EITHER DIRECTLY OR THROUGH OFFI CERS SUBORDINATE TO HIM IN ACCORDANCE WITH THIS CONSTITUTION. IT IS ALSO IMPO RTANT TO NOTE THAT THE VOTING RIGHTS ARE NOT EXERCISED OR CONTROLLED BY THE PRESI DENT OF INDIA, BUT BY THE UNION OF INDIA. ESSENTIALLY, THEREFORE, THE EQUITY SHAREHOLDING OF THE ASSEESSE, ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 14 OF 17 EVEN THOUGH IN THE NAME OF THE PRESIDENT OF INDIA, IS HELD BY THE UNION OF INDIA. THE SHARES ARE HELD BY THE UNION OF INDIA WH ICH IS A SOVEREIGN. AS FOR THE PRESIDENT OF INDIA BEING TREATED AS AN ARTIFICI AL JURIDICAL PERSON, AS IS CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIV E, WE ARE UNABLE TO SEE ANY MERITS IN THIS PLEA EITHER. AN ARTIFICIAL JURI DICAL PERSON IS A CREATURE OF LAW BUT THE PRESIDENT OF INDIA IS A CREATION OF THE CON STITUTION. IN THE CASE OF IC GOKAL NATH & ORS VS STATE OF PUNJAB & ANR (AIR 1967 SC 1643), AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, HONBL E SUPREME COURT HAS OBSERVED THAT, THE DISTINCTION BETWEEN THE CONSTIT UTION AND THE LAWS IS SO FUNDAMENTAL THAT THE CONSTITUTION IS NOT REGARDED A S A LAW OR A LEGISLATIVE ACT. CLEARLY, THEREFORE, PRESIDENT OF INDIA CANNOT BE TR EATED AS A CREATION OF LAW, WHICH, AS HAS BEEN NOTED ABOVE, QUALITATIVELY DIFFE RENT FROM CREATION OF THE CONSTITUTION. WHILE ON THIS ISSUE, IT IS ALSO USEF UL TO TAKE NOTE OF THE CIRCULAR NO.9/76 [13/127/6-CL-VI AND 1/1/76-CL-V] DATED 19.5 .1976 ISSUED UNDER THE COMPANIES LAW BY THE MINISTRY OF CORPORATE AFFAIRS FOR THE PURPOSE OF SECTION 370(1B)(3) OF THE ERSTWHILE COMPANIES ACT, 1956. IN THE SAID CIRCULAR THE ISSUE WAS WHETHER THE GOVERNMENT COMPANIES WILL BE DEEMED TO BE FALLING UNDER THE SAME MANAGEMENT FOR THE PURPOSES OF ABOVE STATED SECTION AS THE PRESIDENT OF INDIA OR THE GOVERNOR OF A STATE, AS T HE CASE MAY BE, HOLDS THE MAJOR SHARES AND EXERCISE AND CONTROL THE VOTING RI GHTS, AND IN THE MINISTRY OF CORPORATE AFFAIRS CLARIFIED THAT FOR THE PURPOSE OF SECTION 370, THE COMPANIES WILL NOT BE DEEMED TO BE UNDER THE SAME MANAGEMENT AS THE PRESIDENT OR THE GOVERNOR DOES NOT HOLD SHARES AND EXERCISES OR CONT ROLS VOTING RIGHTS AS AN INDIVIDUAL IN THE GOVERNMENT COMPANIES. OF COURSE, THE SCOPE OF SECTION 370 (1B), IN THE COMPANIES ACT IN FORCE AT THAT POI NT OF TIME, WAS WITH RESPECT TO THE EXPRESSION INDIVIDUAL AS AGAINST PERSON IN THE PRESENT CASE, BUT THEN THE SAME POSITION, FOR THE DETAILED REASONS SET OUT ABOVE, HOLDS GOOD IN THE PRESENT CONTEXT, I.E. IN THE CONTEXT OF PERSON, A S WELL. IF ALL THE PUBLIC SECTOR UNDERTAKINGS ARE TO BE TREATED AS ASSOCIATED ENTER PRISES, THE INTER SE TRANSACTIONS BETWEEN ALL THE PUBLIC SECTOR UNDERTAK INGS WILL BE SUBJECT TO ARMS LENGTH PRICE DETERMINATION- SOMETHING WHICH I S SEEMINGLY QUITE INCONGRUOUS AND CONTRARY TO THE SCHEME OF THE TRANS FER PRICING LEGISLATION. 34. IN VIEW OF THE ABOVE DISCUSSIONS, IN OUR CONSID ERED VIEW THE ASSESSEE AND INDIAN OIL, BHARAT PETROLEUM, ONGC AND GAIL, OR , FOR THAT PURPOSE, ANY OTHER PUBLIC SECTOR UNDERTAKING, CANNOT BE SAID TO BE ASSOCIATED ENTERPRISES. IN THE CASES OF PUBLIC SECTOR COMPANIES, EVEN AS AL L OR MAJORITY OF SHAREHOLDINGS MAY BE BY THE UNION OR STATE GOVERNME NTS, THESE COMPANIES, FOR THAT REASON ALONE, CANNOT BE SAID TO BE ASSOCIA TED ENTERPRISES FOR THE PURPOSES OF SECTION 92A. IN VIEW OF THIS FINDING, T HE ISSUE REGARDING RELATED PARTY TRANSACTIONS CEASES TO HOLD GOOD IN LAW. 35. THE NEXT POINT MADE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IS REGARDING THE NON SUITABILITY OF PLL AS A COMPARABL E FOR THE VARIATIONS IN FUNCTIONAL PARAMETERS. IT IS POINTED OUT THAT SEPAR ATE REGASIFICATION CHARGES ARE BEING LEVIED BY THE PLL WHEREAS THE ASSESSEE DO ES NOT LEVY ANY SUCH CHARGES. IT IS ALSO CONTENDED THAT ENTIRE COST OF PLL IS PASSED THROUGH INCLUDING FOREIGN EXCHANGE RISK WHICH MAKES ITS BUS INESS MODEL A LOW RISK BUSINESS MODEL NOT COMPARABLE WITH THE ASSESSEE. IT IS THEN POINTED OUT THAT ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 15 OF 17 PLL HAS ENTERED INTO CERTAIN LONG TERM CONTRACTS FO R PURCHASE OF LNG WHEREAS THE ASSESSEE HAS SOLELY PURCHASED LNG IN SP OT DEALS. 36. WE FIND NOTHING ON RECORD TO SUBSTANTIATE THE CLAIM OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE PLL WAS CHARGI NG SEPARATE FEES FOR REGASIFICATION. IN OUR CONSIDERED VIEW, REGASIFICAT ION IS AN INTEGRAL PART OF ASSESSEES TRADING ACTIVITY AS UNPACKING OF A CONSI GNMENT TO PUT THE SAME IN A SALEABLE STATE AND FIT FOR TRANSPORTATION BY THE AVAILABLE MODE. THE PROCESS OF REGASIFICATION CANNOT BE SEEN IN ISOLATION WITH THE MAIN ACTIVITY CARRIED ON BY THE ASSESSEE. WHAT HAS BEEN SOLD BY THE ASSESSEE IS REGASIFIED LNG (R- LNG) AS IS EVIDENT FROM THE FINANCIAL STATEMENTS OF THE ASSESSEE. THE BUSINESS MODELS OF HLPL AND PLL ARE SIMILAR IN THE SENSE THAT THE ENTIRE COST, WHETHER IT IS A LONG TERM OR A SHORT TERM CON TRACT, IS PASSED ON TO THE CUSTOMER IN INDIA AS NO TRADER WILL KEEP THE COST T O ITSELF INCLUDING THE FOREIGN EXCHANGE FLUCTUATION. TO THAT EXTENT, LEANED DEPART MENTAL REPRESENTATIVE INDEED SEEMS TO HAVE ERRED IN OBSERVING THAT IN THE CASE OF PLL, THE ENTIRE FUEL COST INCLUDING THE EXCHANGE RATE FLUCTUATION I S PASSED ON TO THE CUSTOMERS, WHEREAS THE SAME IS NOT THE CASE OF HLPL AS IT IS A FULL RISK DISTRIBUTOR. IN ANY CASE, AS A PLAIN LOOK AT THE F INANCIAL STATEMENTS OF PLL WOULD SHOW THE PLL HAS BOOKED, IN ITS PROFIT AND LO SS ACCOUNT, FOREIGN LOSS EXCHANGE LOSS SEPARATELY TO THE TUNE OF RS 33 CRORE S APPROXIMATELY, AND THUS IT CANNOT BE SAID THAT THE PLL HAD PASSED ON ENTIRE FOREIGN EXCHANGE FLUCTUATION RISK TO ITS CUSTOMERS. IT HAS ALSO BEEN NOTED THAT SALE TO CUSTOMERS IN INDIA BY BOTH PLL AS ALSO THE ASSESSE IS FOREIG N CURRENCY (USD) DENOMINATED AND, THEREFORE, THE FOREIGN CURRENCY RI SK IS A PASS THROUGH COSTS FOR BOTH HLPL AND PLL TO THAT EXTENT. WE HAVE ALSO NOTED, AS POINTED OUT BY THE LEARNED COUNSEL, THAT LNG PRICES ARE FLOATING I N LONG TERM TRADE AS WELL SINCE THEY ARE GENERALLY LINKED TO CERTAIN OIL EXCH ANGE PRICES. AS AN EXAMPLE, IT HAS BEEN NOTED THAT PLL SOURCED LNG FROM RASGAS, QATAR UNDER A 25 YEAR SPA FOR WHICH PRICES WERE LINKED TO JAPAN CUSTOM CL EARED (JCC) CRUDE OIL OF US$ 20/BBL IN THE PERIOD FROM APRIL 2004 TO DECE MBER 2008, AND IN THE PERIOD FROM JANUARY 2009 TO DECEMBER 2013, LNG PRIC ES WOULD GRADUALLY FLOAT IN LINE WITH THE SPECIFIED FORMULA, WITH PRIC ES FULLY INDEXED TO THE PREVIOUS 12 MONTH JCC FROM JAN 2014, SUBJECT TO CAP AND FLOO R PRICE. IT WOULD THUS FOLLOW THAT JUST BECAUSE PLL HAS ENTERED INTO LONG TERM CONTRACTS, IT DOES NOT ESSENTIALLY FOLLOW THAT THE PRICES WILL NOT BE SUBJ ECTED TO VARIATIONS. IN OTHER WORDS, EVEN UNDER LONG TERM CONTRACTS, THE PRICES O F THE LNG ARE NOT TO REMAIN STATIC, AS HAS BEEN ASSUMED BY THE LEARNED D EPARTMENTAL REPRESENTATIVE. THIS IS ALSO NOT IN DISPUTE THAT TH E PLL HAS PURCHASED THE LNG UNDER LONG TERM ARRANGEMENTS AS ALSO BY WAY OF THESE SPOT DEALS. IN ANY CASE, AS IS OPINED IN THE EXPERT OPINION FILED BY T HE ASSESSEE. IT IS, INFACT, A MISNOMER TO REFER TO THE SHORT-TERM LNG TRADE AS A SPOT MARKET, AND THERE IS NO SPOT MARKET BECAUSE NO ONE IS MAKING A MARKET , IN THE SENSE OF PROVIDING LIQUIDITY AND POSTING QUOTES IN EXCHANGE FOR A BUY-SELL SPREAD. AS A MATTER OF FACT, AS OPINED IN THE EXPERT REPORT, SH ORT-TERM TRADE IS A COLLECTION OF BILATERAL DEALS THAT MAY COVER A SINGLE CARGO TO MANY CARGOES, OVER PERIOD RANGING FROM A SINGLE MONTH TO OVER A YEAR. IN THI S VIEW OF THE MATTER, WE AGREE THAT THE MERE FACT THAT PLL ALSO HAS LONG TER M ARRANGEMENTS FOR ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 16 OF 17 PURCHASES OF LNG, IT DOES NOT CEASE TO BE A VALID C OMPARABLE FOR THIS REASON ALONE. 37. AS REGARDS GAIL AS A COMPARABLE, THE FIRST OBJE CTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS WITH RESPECT TO THE RELATED PARTY TRANSACTIONS BUT THEN, IN VIEW OF THE DISCUSSIONS EARLIER IN THI S ORDER, THE INTER SE TRANSACTIONS BETWEEN THE PUBLIC SECTOR UNDERTAKINGS CANNOT BE TREATED AS TRANSACTIONS BETWEEN THE ASSOCIATED ENTERPRISES, AN D, FOR THIS REASON ALONE, THIS OBJECTION IS TO BE DELETED. THE SECOND POINT I S REGARDING THE GAIL NOT OWNING ANY REGASIFICATION FACILITIES AND IT IS DEAL ING IN ONLY NATURAL GAS. THAT OBJECTION DOES NOT HOLD GOOD EITHER AS EVEN GAIL I S TRADING IN NATURAL GAS AND HAS MADE CONSIDERABLE INVESTMENTS IN ITS DISTRI BUTION NETWORK OF GAS PIPES. LEARNED DEPARTMENTAL REPRESENTATIVE DOES ACC EPT THAT GAIL IS ALSO INVOLVED IN TRADING IN NATURAL GAS THOUGH WITH A DI FFERENCE THAT IT DOES NOT HAVE ITS OWN TERMINAL AND REGASIFICATION FACILITIES BUT THEN HE HAS NOT POINTED AS TO WHAT COMPARABILITY ADJUSTMENT IS REQUIRED ON THAT A CCOUNT. AS FOR THE POINT THAT THE GAIL IS SELLING NATURAL GAS ON ADMINISTERE D PRICES, THIS OBJECTION IS FOUND TO BE INCORRECT INASMUCH ASIN RESPONSE TO THE RTI APPLICATION DATED JUNE 24, 2013, IT HAS BEEN CLARIFIED THAT GOVERNMEN T THAT IT DOES NOT REGULATE / FIX / CONTROL THE PRICES OF IMPORTED LNG. IN ANY EV ENT, EVEN IF GAIL IS TO BE EXCLUDED FROM COMPARABLES, IT DOES NOT MAKE ANY DIF FERENCE TO THE CONCLUSION THAT THE MARGIN EARNED BY THE ASSESSEE ARE WELL WIT HIN THE COMPARABLE MARGIN EARNED BY PLL. 38. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARI NG IN MIND ENTIRETY OF THE CASE, WE HOLD THAT THE COMPARABLES ADOPTED BY THE A SSESSEE ARE APPROPRIATE. HAVING SAID THAT, WE MAY ALSO POINT OUT IN THE GROU NDS OF APPEAL BEFORE US, THERE IS NO SPECIFIC GRIEVANCE AGAINST EXCLUSION OF ANY SPECIFIC COMPARABLE, AND THE GRIEVANCE IS CONFINED TO THE APPLICABILITY OF THE RPM AS CUP IS SAID TO BE MORE APPROPRIATE TO THE FACTS OF THIS CASE. THAT GRIEVANCE, FOR THE DETAILED REASONS SET OUT ABOVE, HAS ALREADY BEEN REJECTED BY US ON MERITS. 39. WE MAY ALSO ADD THAT THERE IS A SPECIFIC FINDIN G IN THE ORDER OF THE DISPUTE RESOLUTION PANEL THAT IN THE LIGHT OF THIS TRIBUNALS DECISION IN THE CASE OF LIBERTY AGRI PRODUCTS (SUPRA), EVEN FOR THE PURPOSES OF CUP, THE PRICES PREVAILING ON THE DAY OF TRANSACTION CAN ONL Y BE COMPARED WITH THE COMPARABLE UNCONTROLLED PRICES PREVAILING ON THAT D AY ONLY AND NOT ON SOME OTHER DATES, AND THAT IN NONE OF THE CASES THE TPO HAS USED THE PRICES PREVAILING ON THAT PARTICULAR DAY. THIS FINDING REM AINS UNCHALLENGED AND THIS PRINCIPLE HAS NOT BEEN CALLED INTO QUESTION BY THE APPELLANT. THEREFORE, EVEN IF CUP METHOD IS TO BE APPLIED, THE IMPUGNED ADJUSTMEN T WILL HAVE TO BE DELETED ANYWAY. VIEWED THUS, THE GRIEVANCES RAISED IN THIS APPEAL MAY BE VIEWED AS SOMEWHAT ACADEMIC AND OF NO PRACTICAL CON SEQUENCE. HOWEVER, WITHOUT ANY OFFENCE OR PREJUDICE TO THIS LINE OF RE ASONING, WE HAVE DEALT WITH THE ISSUE ON MERITS AND GIVEN OUR CATEGORICAL FINDI NGS ON THE SAME. 40. IN THE LIGHT OF THESE DISCUSSIONS ABOVE, AND FO R THE DETAILED REASONS SET OUT ABOVE, WE SEE NO MERITS IN THE GRIEVANCES RAISE D BEFORE US. ALL THE ITA NO. 1491/AHD/2016 DCIT VS. HAZIRA LNG PVT LTD ASSESSMENT YEAR: 2011-12 PAGE 17 OF 17 GROUNDS OF APPEAL, WHICH WE HAD TAKEN UP TOGETHER, ARE, THEREFORE, DISMISSED. 5. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE AB OVE DECISION WILL SQUARELY APPLY MUTATIS MUTANDIS FOR THIS YEAR AS WELL, EVEN THOUGH LEARNED DEPARTMENTAL REPRESENTATIVE NEVERTHELESS RELIED UPO N THE STAND AT THE ASSESSMENT STAGE AND JUSTIFIED THE SAME. 6. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCHES. RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AN D DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT TODAY ON THE 4 TH DAY OF MARCH, 2019. SD/- SD/- JUSTICE P P BHATT PRAMOD KU MAR (PRESIDENT) (VICE PRESIDENT) AHMEDABAD, DATED THE 4 TH DAY OF MARCH, 2019 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ETC TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ...ORDER PREPARED AS PER THE FIVE PAGES MANUSCRIPTS OF HONBLE VP WHICH ARE ATTACHED HEREWITH........04.03.2019.......... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .... 04.03.2019....... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 04.03.2019... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 04.03.2019 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : ...... 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......