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CUP method couldn’tbe applied if AE & an non-AEs were situated at different geographical locations

June 14, 2019[2019] 106 166 (Mumbai - Trib.)

Transfer pricing : While considering issue of comparability with an uncontrolled transaction, condition prevailing in market for which respective parties to transaction operate, including geographical location along with other factor is relevant to decide which method is suitable for benchmarking transaction

• Where assessee-company, engaged in business of manufacturing and marketing of natural flavours, fragrances etc., exported its products to AEs to as well as Non-AEs, and benchmarked said transaction by applying TNMM, but TPO had applied CUP on common finished goods exported to AEs (foreign parties) and non AEs (located in India), AEs and non-AEs being situated in different geographical locations, there may be various factors/reasons which could have influenced price charged by assessee to AEs and non-AEs, and, thus, price charged to non-AEs cannot be considered to be a CUP to determine arm's length price of price charged for sale of finished products to AEs and as a consequence, CUP cannot be applied as MAM

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