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2017 (12) TMI 180 - AT - Income TaxTPO - inclusion of Cybermate Infoteck Ltd. as comparable - Held that:- Unlike Resale Price Method (RPM) and Comparable Uncontrolled Price (CUP), TNMM involves comparison of margins at net profit level, not at gross profit level. TNMM is a transactional profit method; not a traditional transactional method like CUP or RPM . In general, closely comparable products/services are required if CUP method is used to determine ALP. And RPM and CPM (Cost Plus Method) generally require a lesser degree of products or services comparability and may be appropriate if functional comparables are available. The TNMM, however, requires only broad functional and product/services comparability. Thus TNMM is less dependent on product comparability and on functional comparability than the traditional transaction methods. As mentioned hereinbefore the services/products and functions rendered by the assessee and CIL fall broadly in similar domain. The assessee has adopted TNMM which has been followed by the TPO/AO. The initial inclusion of CIL as a comparable by the assessee proved to be a valid comparable later on by the TPO/AO as TNMM requires only broad functional and product/services comparability. That is the raison detre of TNMM. That being the case we uphold the order of the AO in including CIL as a comparable.
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