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2020 (6) TMI 817 - AT - Income TaxTP Adjustment - applicability of principle laid down in the Advance Pricing Agreement[APA] for benchmarking the international transactions - HELD THAT:- As when undisputedly there is no change in the FAR of the taxpayer in the year under assessment vis-à-vis years covered under APA and consolidated margin (OP/OC) computed as per APA at 19.26% is much more than the consolidated margin agreed upon between the taxpayer and the CBDT for the years covered under APA at 16.60% for both the segments, APA though not specifically applicable to the year under assessment, is having persuasive value to the dispute between the parties for other years. Hon’ble Delhi High Court in the case of PCIT vs. Ameriprise India Pvt. Ltd [2016 (3) TMI 1272 - DELHI HIGH COURT] held that when under the APA entered into between the taxpayer and the CBDT under section 92CC aforementioned cost plus pricing methodology has been implicitly accepted, the APA has persuasive value to the dispute in question for other years. We are of the considered view that when in the APA entered into between the taxpayer and the CBDT though for the roll back years and subsequent years, application of most appropriate transfer pricing method and arm’s length price of these transactions have already been agreed upon between the taxpayer and CBDT and there is no change in the FAR and nature of international transactions entered into during the year under consideration vis-à-vis earlier years and subsequent years, principle laid down in the APA for benchmarking the international transactions in question shall have a guidance value. Moreso these days, it is endevour of the Union of India to stop avoidable litigations and this case falls in the category of cases where litigation can be minimized. As brought on record by the taxpayer the consolidated margin (OP/OC) for the year under assessment as 19.26% as against ALP agreed upon between the parties to the appeal under APA at 16.60%. So, we are of the considered view that transfer pricing adjustment made by the AO/TPO/CIT(A) by applying Transfer Pricing principles is not sustainable, hence ordered to be deleted subject to the verification of computation of margin made by the taxpayer as per APA referred. - Decided against revenue.
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