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2014 (4) TMI 200 - AT - Income TaxAddition on account of transfer pricing adjustment by A.O. – Most appropriate method which has to be adopted for determining ALP - Held that:- Assessee is only a job worker or a contract manufacturer who is entitled for making charges based on its cost incurred and not based on value of material supplied by its AE - Comparables chosen by TPO, who are full fledged independent manufacturers cannot be prima facie considered for purpose of comparability analysis, as in all cases of comparables there is a value addition and a mark up on cost at time of sale - If any of direct methods like CUP, RPM or CPM can be adopted for bench marking transactions, then they should be given preference - Once these traditional methods are rendered inapplicable then only TNMM should be resorted to as a last measure - Entire matter is remanded back to file of the AO/TPO to examine whether CUP can be considered as the most appropriate method or not - Entire assessment is set aside for fresh adjudication in the light of observation made in this order – Decided in favour of assessee.
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