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2020 (9) TMI 325 - AT - Income TaxTP Adjustment - determination of the ALP of the international transactions - computation of mark up - Re-characterizing the Distribution activities of Appellant to a Service Provider - HELD THAT:- As decided in own case [2018 (4) TMI 636 - ITAT HYDERABAD] since the assessee had no revenue left after reducing the operating cost/expenses, the AE was not paid any percentage. The revenue generated by selling the goods is retained by the assessee. The TPO has instead computed the mark up on the operating cost of the assessee to determine the ALP and brought the notional income to tax which is not justified. Therefore, the additional grounds of appeal are allowed. As regards the applicability of the provisions of section 92(3) AO/TPO is directed to conduct fresh TP analysis by treating the assessee’s transaction as a distribution agreement and by determining the most appropriate method afresh and after allowing the necessary adjustments. If the loss declared by the assessee is increased by such TP study, then no TP adjustment can be made as provided in section 92(3) of the Act. - Decided partly in favour of assessee for statistical purposes.
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