ACIT Vs Tvarur & Fats Pvt. Ltd. (ITAT Delhi)
ITAT Delhi Upholds CUP Method for Palm Oil Imports – ₹2.18 Cr TP Adjustment Deleted in Tvarur Fats Case
Delhi Tribunal dismissed Revenue’s appeal & upheld the CIT(A)’s order deleting the ₹2.18 crore Transfer Pricing adjustment made on palm oil imports from AE, Inter-Continental Oils & Fats Pte. Ltd., Singapore.
Assessee, engaged in trading of palm oil, benchmarked its imports using the Comparable Uncontrolled Price (CUP) method, relying on Sunvin Oils’ price quotes derived from the Kuala Lumpur Commodity Exchange (KLCE), adjusted for freight & insurance. TPO rejected CUP, alleging that the Sunvin quotes were not actual transactions & instead applied TNMM, determining a 4.29% margin & proposing an addition of ₹2.18 crore, which AO adopted.
CIT(A) deleted the addition holding that broker quotes based on exchange-listed commodity prices are valid external CUP data u/r 10D(3)(c). He noted that TPO misapplied reasoning drawn from IT/ITeS industry comparability, unrelated to Assessee’s trading activity, & had failed to provide any valid reason for rejecting CUP. CIT(A) also relied on rulings in Cargill Foods India Ltd. (Delhi HC, 88 taxmann.com 470), Adani Wilmar Ltd. (Guj HC, 45 taxmann.com 365), & DCIT vs Noble Resources & Trading India (70 taxmann.com 300)—all affirming that exchange-based broker quotes are acceptable CUP benchmarks.
