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2017 (8) TMI 1251 - AT - Income TaxTransfer pricing adjustment - determining the ALP of the international transaction - TNMM method or RPM method - taking operating income into consideration - adjustment made with reference to the Comparables available of non-AE transactions change from one method to another method - Held that:- the assessee is engaged in purchasing and reselling the same goods without any value addition, and as such, the RPM is the most appropriate method in such circumstances. Secondly, the Tribunal in earlier years has upheld the RPM as the most appropriate method. In the absence of any change in the facts and circumstances of the instant year vis-ŕ-vis the earlier years, we cannot order the switch over from the RPM to the TNMM. On going through the Annual accounts of the assessee-company, it is lucid that the transfer pricing adjustment has been made with reference to the figures which also include non-AE transactions. Also legally transfer pricing adjustment should be limited to the international transactions only. The Hon'ble Delhi High Court in CIT vs. Keihin Panalfa Ltd. (2016 (5) TMI 203 - DELHI HIGH COURT), has held that the transfer pricing adjustment can be made only with reference to the international transactions and not the transactions with the non-associated enterprises. Similar view has been espoused by the Hon'ble Bombay High Court in CIT vs. Thyssen Krupp Industries India Private Ltd. (2015 (12) TMI 1076 - BOMBAY HIGH COURT). Thus, it is clear that the transfer pricing adjustment cannot be made with reference to the non-AE transactions, but, the same has to be confined only to the international transactions. Since the TPO/AO has made the addition on the basis of transactions even with non-AEs, we direct to restrict the addition only qua the international transactions. Thus we set aside the impugned order and remit the matter to the file of the Assessing Officer/TPO for accordingly redetermining the ALP of the international transaction afresh after allowing a reasonable opportunity of being heard to the assessee. Appeal is partly allowed for statistical purposes. The appeal is partly allowed for statistical purposes.
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