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2022 (8) TMI 802 - AT - Income TaxTP Adjustment - MAM - Assessee benchmarked using cost plus method (CPM) - rejecting the method TPO applied Transactional Net Margin Method (TNMM) to benchmark these transactions - HELD THAT:- Assessee is 100% EOU and its profits are exempt. The entire products are sold to joint venture entities outside. In such a case, there would be no incentive for the assessee to shift its profits outside India. Further, the assessee is a contract manufacturer and do not carry out marketing functions. The entire risk is borne by the Associated Entities. The sale transactions have been benchmarked using cost plus method (CPM) which would be Most Appropriate Method considering the functions of the assessee. It is also undisputed fact that similar methodology as adopted by the assessee in other years has been accepted by Ld. TPO. Therefore, TNMM method could not be applied to the case of the assessee. The issue has rightly been adjudicated by Ld. CIT(A) in the impugned order. Adjustment made for import of raw material - as alleged that the price paid by the assessee was higher than the cost from original supplier. Therefore, Resale Price Method (RPM) as adopted by the assessee was rejected and Comparable Uncontrolled Price (CUP) method was adopted to arrive at this adjustment. However, it could be seen that the assessee did not resell the components thus purchased to any third parties and the components were utilized for manufacturing of goods exclusively for sale as finished goods to Associated Enterprises (AE) by adding its own margin. In such a case, RPM method was to be accepted and comparison of price of raw material sold by the AE to other parties could not be the basis of adjustment. On this score also, no infirmity could be found in the impugned order. - Decided against revenue.
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