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2013 (3) TMI 658 - AT - Income TaxMethod of computing ALP and selection of comparables - Held that:- TNMM was determined as the most appropriate method to determine the ALP by assessee - Rejected by TPO - TPO adopted Resale Price Method as the appropriate method - The assessee is engaged in product replacement service transaction - he has no right to fix the resale price or to choose the customer to whom the products are to be sold - thus assessee cannot he held to be a trader or distributor of the goods - TNMM is to be regarded as the most appropriate method as per Hon'ble Tribunal the decision in the appellant's own [ITA No.1410(Bang)/2010] Held that:- Assessee is performing the function of storing the spare parts imported and supply - The comparables adopted by the assessee are also performing similar functions - As per TPO the assets employed and the risk undertaken by these companies are also higher than the assessee hence rejected - This issue ids remitted bck to TPO with a direction to recompute the ALP by adopting the proper comparables - Matter remanded back The assessee co. is involved in undertaking of the required coding of the programs and it is also responsible for physical testing of the products such as integration testing, software testing, system testing, performance and regression testing etc - The size of the comparable is an important factor in comparability process - Tata Elxsi and Flextronics are functionally different from that of the assessee and hence they deserve to be deleted from the list of six comparables and hence there remains only four companies as comparables Held that:- Assessee incurred net foreign exchange loss incurred in the normal course of carrying on the business operations as 'operating' in nature and thus included as part of 'total operating costs' - profit/loss on foreign exchange fluctuation is treated as part of operating cost - Decided in favor of revenue
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