Rallis India Ltd. Vs ACIT (ITAT Mumbai)
Transfer Price/ALP of goods sold through AE to third party was allowed to be determined basis ‘Other method’ instead of CUP used by TPO/AO
Recently the Mumbai ITAT in the case of Rallis India Ltd. v. ACIT Mumbai (ITAT Order dated 13-12-2024), granted big relief to the Tata Group entity, Rallis India Ltd. The tribunal dealt with the issues of Transfer Pricing (TP) adjustments, disallowance of expenses under Section 14A, denial of deductions under Section 35(2AB), MAT credit mismatch, and interest levies.
During the year, the assessee sold goods to its AE, Tata Chemicals International Pte Ltd. Singapore (TCIPL) on ‘Ship to- bill to’ basis, transfer price for which was justified, using ‘Other Method’. In the year under consideration, from April 2019 to 29th August, the assessee sold directly to Adama Agan Ltd. (AAL), but post 29th August 2019, the assessee sold goods through its AE i.e., When the assessee was selling goods directly to AAL, The credit period was between 150-180 days and the assessee was bearing the cost of bill discounting, credit risk arising from non-payment of dues by customers and also market risk where the prices keep on fluctuating in the international market. Post 29th August, when the assessee started selling its goods through its AE, TCIPL, the actual days of credit were between 5-21 days with no credit risk and no market risk as both have been shifted to the AE, TCIPL.
