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2020 (10) TMI 240 - AT - Income TaxTP Adjustment - comparable selection - AO applying internal RPM (based on sale price quoted for goods in the tender documents) for benchmarking the payments made - comparability of PAE Ltd. - HELD THAT:- There is no similarity in the products between the appellant and PAE Ltd as gleaned from the activities delineated. Because of lack of similarity, it has impact on functions performed and on gross margins earned. In the instant case, the product differences between the appellant and PAE Ltd. are not at all acceptable in applying the RPM. In RPM, the compensation for a distribution company should be the same. The similar level of compensation is expected for performing similar functions across different activities. In the instant case similar level of compensation is not expected for performing similar functions across different activities. In view of the above factual scenario and principles governing RPM, the AO has rightly excluded PAE Ltd in the final set of comparables. To hold otherwise would be to exalt artifice above reality and to deprive the settled principles in question of all relevant purpose.
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