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2018 (10) TMI 1886 - AT - Income TaxTP Adjustment - Assessee has assailed the action of authorities below in rejecting CUP/internal Transactional Net Margin Method (TNMM) as the most appropriate method for determining arm’s length price of the international transactions - grant of proportionate adjustment at entity level - HELD THAT:- A perusal of the orders of authorities below show that the assessee had asked for adjustment only on the AE sales as disclosed in segmental accounts. The assessee in the immediately preceding assessment year 2010-11 had computed adjustment on same lines. DRP accepted the same. In the assessment year under appeal the adjustment is sought at entity level and there has been no change in the facts. DRP directed the TPO to make adjustment only on AE sales as was made in the preceding assessment year. The assessee in order to fortify his submissions with respect to allowability of adjustment at entity level has placed reliance on the decision of Co-ordinate Bench of the Tribunal in the case of WIKA Instruments India Pvt. Ltd. [2018 (4) TMI 1637 - ITAT PUNE] - Appeal of Revenue is dismissed being devoid of any merit. Most appropriate method to be applied for determining Arm’s Length Price (ALP) of international transactions in respect of provision for engineering design and services - HELD THAT:- From the order of the Tribunal for assessment year 2009-10 we find merit in the plea of assessee that hourly rates charged by it in providing specialized services to its associated enterprises can be the basis for verifying its stand as to whether the services provided by the assessee to its associated enterprises were at arm's length. However, the stand of Assessing Officer / TPO in rejecting the said plea of assessee was the tainted transactions vis-à-vis costs incurred by the assessee both for associated enterprises and non-associated enterprises. In the totality of the above said facts and circumstances, where the stand of assessee has not been looked into by the TPO and has been brushed aside, we in the interest of justice, direct the Assessing Officer / TPO to determine arm's length price of international transactions undertaken by the assessee by applying most appropriate method i.e. internal TNMM method of man hourly rates. The assessee has also asked for various other adjustments for carving out differences which may also be looked into by the TPO, who shall decide the issue after affording reasonable opportunity of hearing to the assessee and determine arm's length price of international transactions.
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