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2021 (1) TMI 682 - AT - Income TaxTP Adjustment - Selection of MAM - Resale Price Method Vs. Transactional Net Margin Method - TPO held that TNMM should be the most appropriate method AND selected 4 comparables whose margin was 4.70 % computed the margin of the assessee (-) 26.76% and proposed an adjustment u/section 92CA(3) - HELD THAT:- Admittedly in this case the assessee itself has adopted the transactional net margin method as the most appropriate method for benchmarking itself for international transaction by import of finished goods. As during the course of hearing before the ld TPO assessee submitted that RPM should be taken as the most appropriate method. In its TP Study report assessee itself submitted that assesses lacks information about the other companies, so that comparables are not available in public domain, so Resale Price method cannot be the most appropriate method. Owing to this limitation, the RPM was rejected. In case of resale price method only the gross profit margin is required to be computed whereas in the case of the assessee, it has incurred salaries and the employees benefit expenses of ₹ 1.49 crores and has incurred operating and other expenses of ₹ 1.93 crores out of total revenue of ₹ 7.92 crores - Assessee has incurred employee benefit and other expenses of approximately ₹ 3.5 Crores on a revenue of ₹ 7.92 Crores. In view of this, we did not find any infirmity in the order of the lower authorities in adopting TNMM as the most appropriate method. In view of this ground Nos. 1 and 2 of the appeal of the assessee are dismissed. We set aside the whole issue back to the file of the ld TPO with a direction to consider the fresh search of the comparables by the assessee. The assessee is directed to submit the complete search along with accept/ reject matrix and the computation of the margin of TNMM method before the ld TPO and the ld TPO may verify it and after giving proper opportunity of hearing to the assessee may compute the correct margin and consequent adjutsment. Accordingly ground No. 3 and 4 of the appeal is allowed with above direction
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