Volume Discount & Geography Adjustments Shall Be Considered While Determining TP Adjustment: Ahmedabad ITAT
Pankaj Bajpai
3 May 2024 3:00 AM GMT
The Ahmedabad ITAT remitted the issue of granting business volume discount adjustment and geographical difference adjustment for determination of ALP in case of company engaged in the business of manufacturing chemicals like dyes, agro chemicals, bulk drugs, commodity chemicals and intermediates. While referring to the Coordinate bench ruling in assessee's own case for AY 2006-07,...
The Ahmedabad ITAT remitted the issue of granting business volume discount adjustment and geographical difference adjustment for determination of ALP in case of company engaged in the business of manufacturing chemicals like dyes, agro chemicals, bulk drugs, commodity chemicals and intermediates.
While referring to the Coordinate bench ruling in assessee's own case for AY 2006-07, the Bench comprising Annapurna Gupta (Accountant Member) and T.R. Senthil (Judicial Member) reiterated that the assessee company shall be allowed adjustment to the sale price to its AEs on account of volume discount and geography of sale.
The Bench noted that the TPO rejected assessee's TNMM and applied CUP wherever details were available and for the remaining transactions, applied TNMM.
The Bench also noted assessee's contention that while determining the ALP, adjustment be made on account of
(i) volume discount given to the AE, considering huge volume of turnover with the AEs as compared to the small volume of turnover with different non-AEs; and
(ii) sales made in different geographical areas fetching different prices on account of various factors determining the price in different geographies.
Hence, the ITAT remitted the issue of determination of ALP to the TPO for re-adjudication afresh.
Counsel for Tax Payer: S.N. Soparkar and Parin Shah
Counsel for Department: Darsi Suman Ratnam
Case Title: Atul Limited verses DCIT
Case Number: IT(TP)A No.446/Ahd/2015
