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2023 (10) TMI 212 - DELHI HIGH COURTTP Adjustment - MAM selection - ITAT justification in holding internal TNMM as the most appropriate method even when the transfer pricing documentation using internal TNMM were not filed before the AO - HELD THAT:- As on behalf of the appellant/revenue it was not demonstrated as to how change in MAM would produce better or more appropriate arms length price in the facts of the present case. Tribunal gave detailed reasons for arriving at a conclusion that internal TNMM and not CUP method would be the most appropriate method. Tribunal observed that the assessee had demonstrated the kind of services rendered by it to its AEs as well as non-AEs by placing reliance on agreements and it was argued before the Tribunal that the assessee deals with AEs as well as independent parties being network partners in all regions of the world wherever there were no affiliates of the parent company of the assessee; that agreements of the respondent/assessee with its AEs and non-AEs were in equal ratio; that the DRP had rejected internal TNMM because the respondent/assessee had not carried out an internal FAR and proper identification of revenue and costs vis-à-vis the audited accounts. With these observations, Tribunal set aside the order passed by the TPO and Assessing Officer and directed assessee to carry out internal FAR and identify proper revenue and costs vis-à-vis the audited accounts to establish internal comparability under TNMM as MAM - Tribunal proceeded further and held that if the respondent/assessee failed to demonstrate the internal FAR and identification of proper revenue and costs vis-à-vis the audited accounts, it would file details in respect of external comparables under TNMM as MAM and the TPO would decide the issue as per law. As mentioned above, during the pendency of this appeal, the TPO held that it is the external TNMM which should be applied as the MAM. Reasoning of Tribunal in the impugned order robust and without any flaw. For, the ultimate aim of the transfer pricing exercise is to determine an accurate value of the arms length price for the purpose of taxation and as laid down in the above cited judicial precedents, the appellate authorities are not precluded from adopting a method different from that adopted by the assessee in transfer pricing report. No substantial question of law.
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