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2019 (5) TMI 1065 - HC - Income TaxTPA - determination of ALP of the international transactions - additional 5% mark-up on the free on board value of exports to third parties - assessee is in business of rendering support services in relation to facilitation and market support to its AEs in order to facilitate sourcing transactions of its AEs with prospective sellers - application of TNMM - HELD THAT:- As in Li & Fung India Pvt. Ltd. [2014 (1) TMI 501 - DELHI HIGH COURT] this Court set aside the approach of the TPO for proposing an additional 5% mark-up on the free on board value of exports to third parties as the same would tantamount to application of TNMM in an erroneous manner. This Court has already held that including the FOB value of the AE’s contract in the operating cost in order to determine its margin not to be sustainable in law. The ITAT has rightly held that the TPO has “artificially enhanced the cost base of the taxpayer and proposed a mark up of the FOB value of goods sourced by AEs and as such this approach is not available in TNMM under Rule 10 B(1) (e).” Further, the observation of the ITAT that the TPO “has wrongly recharacterized the business function of the taxpayer from a business support service provider to a trader” also suffers from no legal infirmity. - No substantial question of law arises
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