The Delhi High Court remitted matter to the Commissioner of Income Tax to determine the most appropriate method for determining the arm length price (ALP).
The counsel for the appellant raised the following issues for consideration:
First, which would be the Most Appropriate Method (MAM) for determining the Arm’s Length Price (ALP). It is the appellant’s/assessee’s contention that given the facts and circumstances obtaining in the Assessment Year (AY) in issue, i.e., AY 2011-12, Comparable Uncontrolled Price (CUP) Method should be applied, while the respondent/revenue contends that this aspect has already attained finality, in view of the order passed by this court in ITA No.223/2018 concerning AY 2010-11.
Second, which, in fact, concerns the following aspect i.e., whether the appellant/assessee had recovered a price from its Associate Enterprise (AE), against supply of bogies/wagons, which was higher than that which the AE had received from the third party, i.e., Delhi Metro Rail Corporation (DMRC).
The senior standing counsel, who appeared on behalf of the respondent/revenue, says that since this very issue is pending before the Commissioner of Income Tax (Appeals) [“CIT(A)”] visa-vis AY 2010-11 and has been remitted by the impugned order as well to the said authority, he cannot have any objection to the said direction continuing to operate.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “Having heard the counsel for the parties, according to us, this appeal can be disposed of with the consent of learned counsel for the parties, with the following directions. The matter is remitted to the CIT(A) for examination of the issues set forth hereafter: (i) Whether or not the appellant/assessee recovered from its AE a price higher than that which the AE received from DMRC against the supply of bogies/wagons. (ii) The comparables against which ALP should be benchmarked. (iii) Whether, in the facts and circumstances obtaining in the AY in issue, i.e., AY 2011-12, requires the usage of CUP Method for determining ALP as against TNM Method, as held by this court in its order dated 09.04.2018 passed in ITA No.223/2018.”
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