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2012 (6) TMI 138 - ITAT CHENNAITransfer Pricing - ALP - rejection of addition of three new comparable by the assessee before the DRP - Held that:- This was rightly rejected by the DRP. Assessee itself had selected two comparable companies originally and such a selection was done based on a detailed analysis. In this situation, assessee cannot be allowed to bring in a new set of comparable, for if allowed, it will result in an unending exercise since endeavor of all assessee would be to bring the ALP within comparable range - Decided against the assessee. Correctness of method adopted by AO - Held that:- AO divided the total operating cost between material cost relatable to AEs and cost relatable to non-AEs, which included both material cost as well as other costs. Thus the ALP cost arrived at by TPO was not logical. He deducted from the operating cost, only the material cost relatable to purchases from AEs and not the operating cost attributable to such material cost. The resultant figure will not give ALP of the purchases made from AEs. Matter requires a re-visit by the AO insofar as it relates to determination of ALP of the purchases made from AEs - matter remanded back On contention of assessee that adjustment ought have been allowed on the margins with reference to M/s Halonix Ltd., for a reason that it had different functionality it is held that ALP analysis is made under TNM method. TNM method is generally preferred where functions are not strictly comparable, but when the tested and comparables were in the same lines of business.
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