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2018 (3) TMI 536 - HC - Income TaxDetermine the ALP of the export sales to AEs - considering TNMM and MAM - manufacturing of electric connectors, accessories, cable assemblies and system integration - Held that:- We find that the TPO has while stating that FAR analysis has to be carried out, does not indicate that it was carried out. Tribunal in the impugned order has done the necessary FAR analysis. As compared the risk and functional differences involved in finished goods being sold to AEs as against those sold to third parties as we have enumerated above to come to the conclusion that the prices at which the finished goods sold to the third parties are not comparables to the prices at which the goods sold to the AEs on the FAR analysis. Finished goods are customized goods and the geographical differences, volume differences, timing differences, risk differences and functional differences, came to a conclusion that the CUP method would not be the MAM to determine the ALP. It upheld the stand of the respondent assessee that TNM method is the MAM to arrive at ALP. Thus, the view taken by the Tribunal on the facts before it, is a possible view on the application of appropriate tests. Revenue has not shown that the selection of TNM method as the MAM to determine the AL of export to AEs is perverse. Differentiating CUP analysis on the basis of geographic difference and volume difference in respect of sale commission - Held that:- We note that the impugned order of the Tribunal has analyzed the differences between sales commission paid to its AEs for clients identified by them and the sales commission paid to third party agents in respect of sales goods in India. On account of the differences in respect of function and geography between the AEs transaction and third party transaction, the CUP method is not the MAM method. Therefore, held that TNM method is the most appropriate. View of the Tribunal that the TNM method is the most appropriate method is a reasonable and possible view on application of appropriate test in the present facts.
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