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2016 (12) TMI 942 - AT - Income TaxTPA - whether the Comparable Uncontrolled Price (CUP) method is the most appropriate method as compared to Transactional Net Margin Method (TNMM) - Held that:- The assessee bears lesser business risk than independent comparable enterprises due to the nature of its revenue model. It is beyond any doubt that the project receipts are from KMRCL which is a Government body and hence the margins earned by the assessee is bound to be comparatively lower to reflect the lower level of business risk involved. Moreover, the comparables selected for the analysis also include companies that performs additional functions while being engaged in providing comparable services. Further the risk profiles of independent companies differ from that of assessee. The impact of these functional and risk differences definitely require to be factored while determining the ALP. We find that in the interest of justice and fair play, we deem it fit and appropriate to set aside this issue to the file of the Learned TPO / AO with a direction to adopt CUP method as the Most Appropriate Method for determination of ALP for international transactions. The assessee is also directed to furnish the comparables based on independent TP study for adoption of CUP method and produce such other evidences and documents before the Learned TPO / AO to ensure quick disposal of this set aside proceedings. We also direct the Learned TPO / AO to permit the assessee to use multiple year data and adopt the weighted average data of the financial information of the comparables and use the same for determination of ALP of the international transactions of the assessee.
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