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31-10-2019, Louis Dreyfus Commodities, Section 234B, 234D, Tribunal Delhi

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1 week 4 days ago #11285 by amit
Section - 234B, 234D, 92CA(1)
Order Date - 31-10.2019
Favouring - Assessee
Court - Tribunal Delhi
Appellant - Louis Dreyfus Commodities India Pvt.Ltd.
Respondent - ACIT
Justice - SUSHMA CHOWLA JM & PRASHANT MAHARISHI AM
Citation - 1119Taxpundit26
Appeal No. - ITA No. 1863/Del/2016
Asstt. Year - 2005-06

Order

PER : SUSHMA CHOWLA, JM

The appeal filed by assessee is against order of Assessing Officer dated 22.12.2006 relating to assessment year 2005-06 passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).

2. The assessee has raised following grounds in this appeal:-

“That on the facts and circumstances of the case, and in law;

1. The Order passed by Ld. CIT(A) in pursuance of the appeal filed by the Appellant against the Assessment Order passed by the Ld. AO is a vitiated order as the Ld. CIT(A) erred both on facts and in law in confirming the addition made by the Ld. AO to the Appellant’s income in respect of washout charges by issuing an order without appreciation of facts and law/

2. The Ld. CIT(A) erred in confirming the addition of the income of the Appellant by Rs. 16,553,271 by holding that the international transaction of the Appellant pertaining to payment of washout charges does not satisfy the arm’s length principle envisaged under the Act.

2.1. In doing so, the Ld. CIT(A) has grossly erred in agreeing with the Ld. AO/Ld. Transfer Pricing Officer’s (‘Ld. TPO’s) action of drawing perverse interference regarding the arm's length behaviour between the parties notwithstanding supporting evidence placed on record;

2.2. The Ld. CIT(A) has erred in law and on facts by holding that there is no valid agreement at the time of washout of the contract for purchase of balance quantity of crude soyabean oil.

2.3. The Ld. CIT(A) has erred in law and on facts doubting the authenticity and genuineness of the evidences placed by the Appellant in support of the contention that the washout transaction was in respect of the valid unexpired contract;

2.4. The Ld. CIT(A) has erred in law and on facts by not giving cognizance to the fact that impugned transaction of payment of washout charges was independently examined and approved by the regulatory body, Reserve Bank of India (‘RBI’);

2.5. The Ld. CIT(A) has erred in law and on facts by holding that the evidence provided by the Appellant was not reliable and authentic.

3. The Ld. CIT(A) has grossly erred by proposing to direct Ld. AO to compute interest under section 234B and 234D of the Act. The above grounds are without prejudice to each other. The Appellant craves leave to alter, amend or withdraw all or any of the grounds herein or add any further grounds as may be considered necessary either before or during the hearing.”

3. Briefly in the facts of the case the assessee for the year under consideration had furnished the return of income declaring total income of Rs.2,35,06,990/-. The assessee was engaged in the business of agricultural commodity trading. The said commodity trading was done both in the domestic and international market. The main commodities which were traded were soyabean oil, sugar, wheat and rice. The Assessing Officer made reference u/s 92CA(1) of the Act to the Transfer Pricing Officer (in short “TPO”) to determine the Arms’ length Price (in short “ALP”) of the international transactions undertaken by the assessee. The TPO applied Comparable Uncontrolled Price method (“CUP” in short) and proposed an addition of Rs.9,32,747/- in the transaction of purchase of crude soyabean oil by the assessee from its AE. The said addition has been deleted and there is no issue raised with regard to the same before us.

4. Further, the TPO noted that the assessee had set up the operations in 1997 in Mumbai, which were re-located to New Delhi during the year 2000. The assessee was operating from various locations/ports in India. The TPO noted that the assessee was engaged in import and export of sugar, export of

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