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2023 (7) TMI 1076 - AT - Income TaxTPA - selection of MAM - rejection of RPM as MAM and application of TNMM as MAM - International Transaction of purchase of formulations - HELD THAT:- TPO mainly relied on the fact that the comparables have incurred lesser cost of AMP expenses, which again, in our view is not correct reason for rejecting RPM. The comparison here is at a gross margin level and the TPO has not given any adverse finding with regard to the gross margin ratio of the asessee. Thus we hold that RPM is the most appropriate method in assessee’s case. However with regard to the trading segment, there is a need for deciding the benchmarking analysis of the transactions as has been done by the assessee in its transfer pricing study. TPO has proceeded on the basis that TNMM is the most appropriate method and in the process, has not decided the comparability analysis done by the assessee under RPM method. We, therefore, deem it fit to restore the issue of benchmarking analysis under RPM to the file of the TPO with a direction to re-determine the ALP of international transactions of the assessee after accepting RPM as the most appropriate method. The assessee shall, in the course of the remand proceedings, file with the TPO, the relevant details with regard to the functionality, assets employed and the risks (FAR) of the comparables, to be considered by the TPO for benchmarking the ALP of the international transactions, as per RPM.
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