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2018 (8) TMI 712 - AT - Income TaxTransfer pricing - selection of comparable - determination of arm’s length price - The AO referred the matter to the Transfer Pricing Officer (TPO) to determine the arm’s length price of the international transactions u/s 92CA(3) of the Act. - The TPO also noticed that the arm’s length price of the international transactions representing IT enabled services provided to the AEs was determined by the assessee by applying transactional net margin method (TNMM) and the operating profit to total cost ratio (OP/OC) was taken as the profit level indicator (PLI) in the TNMM analysis. He also noticed that the PLI of the company was arrived at 17.36% on cost whereas the average PLI of the comparables was arrived at 14.13% as per the analysis in the TP documents and that the PLI of the comparable companies had been worked out by adopting weighted averages for the current year and the immediately preceding periods. Held that:- Since, the facts in assessee’s case are similar to the facts involved in the case of [2016 (9) TMI 1392 - ITAT DELHI]. So, respectfully following the said order, we direct the AO to exclude the aforesaid comparable while working out the arm’s length price. Regarding exclusion of certain comparable, decision of DRP sustained. - Decided in favor of assessee and revenue partly.
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