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2020 (12) TMI 49 - ITAT VISAKHAPATNAMTP Adjustment - TPO rejected the CUP as MAM and conducted the independent economic study and separate analysis has been made and held that TNMM is most appropriate method for both purchase and sale transactions - HELD THAT:- The assessee had purchased the raw material from its AE and the AE has supplied the raw material to the tax payer on back to back basis without marking up for any costs or expenses or profit. AE has made purchases from third party vendor which is uncontrolled transaction and the supplies made by the AE to the taxpayer are controlled transaction. The price charged by the AE to the taxpayer is less or equal to the uncontrolled transaction. This fact was also demonstrated by the assessee in respect of purchases made from Saravana Spinning Mills by the assessee through the AE. AO has not demonstrated that the price charged in controlled transaction is more than the uncontrolled transaction with any proof or evidence. TPO also did not bring any material to show that the internal CUP is not acceptable or any restrictions are placed by the Income Tax Act to consider internal CUP as comparable. It is also undisputed fact that supplier of the material is not related party of the AE. No reason to reject the transfer pricing study of the assessee and to accept CUP as most appropriate method in respect of purchases. Accordingly, we set aside the orders of the lower authorities and direct the AO to adopt CUP as most appropriate method for purchases. Sale price charged by the assessee to its AE - In the instant case, sufficient data and information is available to show that the sale price charged by the assessee to its AE is comparable and internal comparables are available which were placed by the assessee before the TPO as well as the DRP. No valid reason was assigned for rejecting the method adopted by the assessee. The AO simply brushed aside the internal report with regard to sale price, without bringing any evidence to show that the sale price charged to the AE is incorrect. When the assessee has given complete documentation to the TPO / DRP, the burden shifts on AO/TPO to establish that the method adopted by the assessee is faulty. We observe that the sale price charged to AE is more or equal to Non AEs and the assessee has furnished the complete information before the AO/TPO. The Department has not brought on record to controvert the submission of the assessee to establish that the assessee has charged the less price than third party buyers. The assessee has relied on various decisions cited supra to support their contention with regard to CUP as MAM in respect of sales. Therefore, we, hold that CUP is most appropriate method for sales as well as purchases. We therefore, direct the AO to adopt CUP as most appropriate method and delete the additions made by the AO/TPO. The appeal of the assessee is allowed.
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