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PER R.S. SYAL, VP:

This appeal filed by the Revenue arises out of the order passed by the CIT(A) on 12.09.2014 in relation to the assessment year 2008-09.

2. The first ground is against allowing relief of Rs.83,79,551/- in respect of addition on account of transfer pricing adjustment.

3. Briefly stated, the facts of this ground are that the assessee company is engaged in the business of manufacturing of sheet metal components and weld assemblies, metal fasteners, aluminum foundry, forging and tool room. International transactions of Purchase of capital goods, Sale of finished goods, Commission on sales and Reimbursement of expenses, all totaling, Rs.5.26 crore, were declared in Form No.3CEB. The Assessing Officer (A.O.) made reference to the Transfer Pricing Officer (TPO) for determining the arm's length price (ALP) of the international transactions. The TPO did not dispute the ALP of any transaction except Commission payment of Rs.1,11,72,735/-. In support of payment of commission to M/s Bull Moose Tube, its associated enterprise (AE), at the ALP, the assessee stated that it entered into an agreement for availing expert services of its AE and commission was paid as per the terms of the Agreement. In order to demonstrate that this international transaction was at ALP, the assessee applied Profit Split Method (PSM) as the most appropriate method. In the absence of any substantiation of the ALP of the international transaction of payment of commission under this method, the TPO observed that no sales were made through the AE for which the alleged commission was paid. The assessee was found to have made fixed payment of US $ 31,500 per month in performance of its Agreement. The TPO opined that no tangible and concrete benefit was reaped by the assessee. In his opinion, no independent party would get into such an agreement where it would incur cost on provision of no services. He, therefore, held that the assessee made payment of Rs.1.11 crore for no intra-group services. The ALP of this international transaction was taken at Nil on application of Comparable Uncontrolled Price (CUP) Method. That is how, the transfer pricing adjustment of Rs.1.11 crore was proposed. The Assessing Officer made this addition.