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2015 (10) TMI 1747 - ITAT PUNETransfer pricing adjustment - rejecting the methodology followed by the assessee for benchmarking of international transactions - TNMM v/s CUP method - Held that:- The associate enterprises’ segment also includes controlled transactions, wherein material imported had been used for manufacturing geysers / water heaters, which in turn, were sold both to associate enterprises and non-associate enterprises. All these above said explanations have been rejected by the TPO/DRP without any basis, wherein similar explanation has been accepted by the TPO itself in all the other years. The conduct of the business and the products manufactured are identical in the year under consideration, when compared to the other years i.e. assessment year 2005-06, 2007-08, 2008-09 and 2010-11. In the entirety of the above said facts and circumstances, we are of the view that the adoption of TNMM method was the most appropriate method for benchmarking international transactions with its associate enterprises and we find no merit in the order of Assessing Officer in adopting CUP method to benchmark the international transactions with its associate enterprises. We hold that the TNMM method should be applied on aggregate basis for benchmarking international transactions of the assessee. Benchmarking international transactions with its associate enterprises on aggregate basis, TNMM method should be applied and since the margins declared by the assessee are higher than the margins declared by the comparables picked up by the assessee in its TP study report and consequently, the international transactions entered into by the assessee with its associate enterprises being at arm's length price, no addition is warranted in the hands of the assessee. Accordingly, we delete the addition. - Decided in favour of assessee.
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