Court :Mumbai Bench of the Income-tax Appellate Tribunal
Citation :Cheminova India Ltd Vs ACIT, Mumbai (ITA No. 4865/Mum/05) [13 ITAT INDIA 240 (Mum)]
Brief : Recently, the Mumbai Bench of the Income-tax Appellate Tribunal (‘the Tribunal’) in the case of Cheminova India Ltd Vs ACIT, Mumbai (ITA No. 4865/Mum/05) [13 ITAT INDIA 240 (Mum)]., accepted higher price paid to its Associated Enterprises (‘AEs’) (as compared to unrelated parties) under Comparable Uncontrolled Price (‘CUP’) Method to be the arm’s length price (‘ALP’) based on the economic and commercial justification.
Facts of the case
1. The taxpayer is an Indian company engaged in manufacturing of agrochemicals, pesticides, weedicides and plant growth stimulators. The taxpayer filed its return of income for assessment year (‘AY’) AY 2002-03 declaring a total income of Rs.8.52 crores.
2. During AY 2002-03, the taxpayer entered into various international transactions with its AE. The taxpayer purchased a raw material called Di Ethylthiophosphrol Chloride (‘DETPCL’) from its AE and Non-AEs.
3. The taxpayer benchmarked the import of DETPCL from its AE selecting the CUP method as the most appropriate method to justify its ALP on the basis of the following:
– Import price paid to other with Non-AEs for DETPCL;
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