Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (1) TMI 128 - AT - Income TaxTP Adjustment - MAM selection - RPM OR TNMM - HELD THAT:- From the TP analysis made by the taxpayer, we are of the considered view that it is proved on file that the taxpayer is a pure distributor/ trader which resale the goods after purchasing from its AE without any value addition. Reasons for rejection of RPM applied by the taxpayer given by the ld. TPO are generic in nature. When apparently there is no value addition to the goods purchased and resold by the taxpayer, RPM is the MAM. Not an iota of evidence is there on the file if the taxpayer has made any value addition to the goods purchased from the AE before the reselling the same to the third party or has created any intangible in favour of AE. TPO/DRP/AO have erred in applying the TNMM as the MAM in case of taxpayer who is a pure distributor of goods purchased from its AE and resell the same to third party without any value addition. So, TPO/AO are directed to apply the TNMM as the MAM to benchmark the international transactions undertaken by the taxpayer qua its trading segment by providing an opportunity of being heard to the taxpayer. So, Ground No.3.2 is determined in favour of the taxpayer. Adjustment to the entire income of the taxpayer and not confined to the addition of the international transactions as mandated by law - HELD THAT:- In view of the settled principle of law that transfer pricing adjustment is required to be restricted to the amount of international transactions only and not to the entire income of the taxpayer, the TPO is directed to make the adjustment accordingly. - Decided in favour of assessee
|