The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that International transactions should be benchmarked using Custom Valuation Data.
The assessee, GP Global Energy Pvt. Ltd. is a power trading company. The Company offers power trading, generation, renewable project, energy management, storage, and power advisory service. GP Global Energy serves clients worldwide.
The CIT (A) on appeal directed the AO/TPO to benchmark the international transaction of the assessee by using customs data, ignoring the widely accepted principle that the customs valuation cannot be indiscriminately used for the purpose of determining the Arm’s Length Price under the Income Tax Act as the purpose and criteria governing the customs valuation are different and, therefore, it does not relieve the taxpayer’s burden of establishing that the price is at Arm’s Length for the purpose of Transfer Pricing requirements under the Income Tax Act. Against which revenue preferred appeal before ITAT.
Mr. Mrinal Kumar Das, counsel for the revenue submitted that the customs rates are minimum presumptive rates prescribed for a class of goods to check evasion of duty, without going into the exact specifications of a particular input, within that class of goods.
The Tribunal observed that the Revenue challenged the order of the CIT (A) in directing the AO/TPO to benchmark the international transaction of the assessee by using customs data
The Coram of G.S. Pannu, Hon’ble President, and Mr. Challa Nagendra Prasad, Judicial Member by relying on the decision of Chennai Bench of
the Tribunal in the case of Coastal Energy Pvt. Ltd. Vs. ACIThas held that “the valuation was made by custom authorities by assigning values to import goods on the basis of scientifically formulated methods as they were responsible for making fair assessment value of the imported goods according to internationally accepted protocols. Therefore, we see no infirmity in the order of the Ld. CIT(A) on this issue”.
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