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2014 (2) TMI 891 - AT - Income TaxTransfer Pricing Adjustment - Determination of ALP - Method for benchmarking the transaction for payment of management cost contributions – Held that:- The record shows that the issue before the TPO and the DRP as far as the assessee is concerned has been contested in the light of the stand taken that TNMM was the most appropriate method - assailing the TPO's stand before the DRP that CUP is the most appropriate method the assessee did lead evidence and arguments and documentation in order to justify that no adjustment was required to be done even if CUP is taken as the most appropriate method - the relevant documentation Agreements etc. for deciding the issue have not been considered either by the TPO or by the DRP as the focus of the department's attention necessarily has remained assailing the assessee's stand that TNMM is the most appropriate method - The department justifying its stand and assailing the stand of the assessee has accordingly remained focused on the position that CUP is the most appropriate method. The decision in CIT Versus EKL APPLIANCES LTD [2012 (4) TMI 346 - DELHI HIGH COURT] followed - The departmental stand cannot be approved when the issue is considered from the aspect of appropriateness of the expendituring - the need and necessity for the assessee to incur the expendituring also cannot be held to be an acceptable criteria - Nor can the necessity of the expenditure from the benefit accrued to the assessee point of view has been approved as a relevant criteria - the finding given by the Co-ordinate Bench, is based on a peculiar set of facts namely that the assessee in the facts of that case consistently failed to provide a cost allocation key not only before the TPO/DRP but even before the Tribunal - the issue pertained to direct expenses which admittedly are easier to demonstrate and verify - the expenses are not direct expenses however the order of the Co-ordinate Bench in Dresser Rand's has considered indirect expenses which position apparently has not been upset by any Higher Forum - in the absence of any serious discussion on facts specifically addressing the detailed documentation placed on record by the assessee, it would be appropriate to restore the issue back to the TPO – Thus, the matter remitted back to the TPO for fresh adjudication – Decided in favour of Assessee.
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