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2015 (2) TMI 202 - AT - Income TaxTransfer pricing adjustment - selection of comparable - CIT(A) upheld the rate per man hour of USD 18 adopted by TPO to be appropriate, however, he held that further adjustment of 5% is to be allowed on account of material differences between assessee and Wipro - Held that:- On the earlier occasion while disposing off the appeals of assessee as well as the department, the Tribunal has given a clear direction to TPO to determine the ALP under the CUP method by bringing comparable cases on record. Of course it directed the TPO, as a second option, to adopt the rate charged by assessee in the subsequent FY in case no comparable case is available under the CUP. However, the Tribunal while considering the Miscellaneous Application of assessee [2015 (2) TMI 242 - ITAT HYDERABAD] modified the appeal order by deleting direction given to TPO to consider the rate adopted by assessee in the immediate next year. Thus, after the order dated 09/01/2015 passed in M.A., the only option left to AO/TPO for determining ALP is by applying CUP method. As ALP determined by TPO and confirmed by DRP is not under CUP method, the same is invalid. Rule 10B(1)(a) of IT Rules prescribes the method for determination of ALP under CUP. As per the said provision, TPO at first has to find out the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction or a number of such transactions and thereafter making necessary adjustments of such price on account of differences between the international transactions and comparable uncontrolled transactions or between the enterprises entering into such transactions which could materially affect the price in the open market, TPO will have to determine ALP. Therefore, unless, comparables are brought on to benchmark the price charged by a particular assessee, it cannot be said that the price charged by assessee is not within the arm’s length. However, on a perusal of the order dated 23/05/2013 of the TPO passed in pursuance to the direction of the Tribunal, it is very much clear, TPO has expressed his inability in finding a comparable under CUP method. In these circumstances, there was no other choice left to TPO but to accept the price charged by assessee as ALP. Thus we hold that adjustment made to ALP is not justified. Accordingly, we delete the addition made on that account. - Decided in favour of assessee.
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