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2015 (10) TMI 2793 - ITAT AHMEDABADTP Adjustment - Selection of MAM - TNMM OR Cost Plus Method (CPM) - what is the most appropriate method, on the facts of this case, for determining the arm’s length price of the exports made by the assessee to its associated enterprises (AEs) abroad - HELD THAT:- Whether the transactions are with associated enterprises resident in India or with associated enterprises resident outside India, the prices at which such transactions are entered into with such enterprises cannot be taken as “comparable uncontrolled price” for the purpose of determining the arm’s length price. As for the question as to whether the transactions with associated enterprises can, in any situations, be considered as a valid input for ascertainment of arm’s length price under the CUP method, we find the issue is covered, in favour of the assessee, by decision of a coordinate bench in the case of Sabic Innovative Plastic India Pvt Ltd Vs DCIT [2013 (9) TMI 596 - ITAT AHMEDABAD]. No reasons to take any other view of the matter than the view so taken by us in the case of Gemstone [2015 (11) TMI 185 - ITAT AHMEDABAD]. Respectfully following this decision, we hold that the authorities below indeed erred in not applying the TNMM for ascertaining the arm’s length price of assessee’s transactions with the associated enterprises. We direct the AO/TPO to compute the ALP on the basis of the transactional net margin method. With these directions, we remit the matter to the file to the assessment stage for fresh determination of arm’s length price. As the matter is being remitted to the assessment stage, it will be open to the assessee to take such other plea, on merits, on ascertainment of ALP under the TNMM as the assessee may deem fit and the same will have to be disposed of by way of a speaking order, in accordance with the law and after giving a fair and reasonable opportunity of hearing to the assessee. All those issues regarding computation part, as on now, are quite academic and wholly hypothetical.
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