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2020 (11) TMI 1102 - AT - Income TaxTP Adjustment - allocation of expenses - assessee submitted he had determined the percentage of profit by allocating expenses incurred on the basis of gross margin earned by AEs other than Sumitomo Corporation Japan, and by non-AEs whereas the TPO had allocated after assuming 26% of the gross profit earned by non-AEs and, thereafter had allocated expenses in proportion of gross profit - TPO, in the instant case proposed an adjustment on protective basis in respect of indent segment of AEs other than Sumitomo Corporation, Japan by considering 5% as the arm’s length commission rate for commission received - DRP while holding that no protective adjustment is required and the addition has to be made on substantive basis, directed the TPO to apply 3.03% as CUP for adjustment. HELD THAT:- Respectfully following the consistent decision of the Tribunal in assessee’s own case for AYs 2007-08-2011-12 [2018 (10) TMI 1785 - ITAT DELHI] for AYs 2013-14 [2019 (5) TMI 1440 - ITAT DELHI] we restore the issue to the file of the AO/TPO with a direction to examine and benchmark the international transaction by adopting TNMM as the most appropriate method by taking ‘berry ratio’ as PLI. The assessee has to substantiate its margin by bringing comparable uncontrolled transactions to demonstrate that its commission earned in this segment is at arm’s length. Needless to say, the AO/TPO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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