HC of Gujarat upholds the use of price quotations for CUP if the quotations are reliable and authentic

Where in course of transfer pricing proceedings, TPO made addition to assessee’s ALP by rejecting comparable price list of an independent international organization submitted by assessee without assigning any reasons therefor, impugned addition made by him deserved to be deleted. HIGH COURT OF GUJARAT Commissioner of Income-tax – I v. Adani Wilmar Ltd (APRIL  7, 2014)

Section 92C of the Income-tax Act, 1961, read with rule 10B of the Income-Tax Rules, 1962 – Transfer pricing – Computation of arm’s length price (Comparables and adjustments) – In transfer pricing proceedings, assessee presented two sets of prices claiming them to be comparable – One set of transactions relied on by assessee was supplied by Malaysian Palm Oil Board ‘MPOB’ and other quotations by one Oil World, an organization based in Germany – Assessee adopted average of two sets of prices and claimed that price variance between assessee’s transaction and average of two sets of prices did not exceed 5 per cent and, therefore, no addition to arm’s length price was necessary – TPO having discarded rates quoted by German organization, made certain addition to assessee’s ALP – Commissioner (Appeals) as well as Tribunal taking a view that quotations of Oil World could not have been discarded, deleted addition made by TPO – Whether unless it was pointed out that questions of Oil World, Germany, lacked basis, those quotations would not lose their significance – Held, yes – Whether since Commissioner (Appeals) as well as Tribunal had accepted reliability and authenticity of Oil World organization and its publication of rate-list, impugned addition was rightly deleted – Held, yes  [In favour of assessee]


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