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2023 (10) TMI 697 - ITAT MUMBAITP Adjustment - MAM - most appropriate method selection - RPM or Other method - DRP upheld the most appropriate method as the resale price method - assessee has raised new plea of adopting ‘other method’ as the most appropriate method - HELD THAT:- Assessee is a limited risk distributor. Based on this FAR, assessee in its transfer pricing study report placed at page number 35 of the report stated that out of the 52,215 companies [ capitaline] the only company which could be considered a similar to the assessee was Brahmos aerospace private limited which was also rejected for non-availability of the latest available data in public domain. One more reason was given that company owned significant intangible and technology of developing missiles. Also stated to be a full-fledged manufacturer. In the end it was stated that the gross profit margin of the assessee at 7.84% is stated to be at arm’s-length for the reason that the contract is in essence between two governments therefore it was held to be reasonable to conclude that the international transactions entered into by the associated enterprise with its associated enterprise is at arm’s-length. We find that even if the resale price method is adopted, in absence of comparable, the comparability analysis fails. Thus there is no use of adoption of most appropriate method as resale price method. Assessee has also stated that in such cases the ‘other method’ is the most suitable method for benchmarking the international transaction by considering the last purchase price of the similar items which are negotiated between the two governments. Considering the facts and circumstances of the case, we set-aside the whole issue back to the file of the learned TPO/assessing officer to benchmark above international transaction by adopting either resale price method , if adequate comparability data is available, or ‘other method’ as the most appropriate method. Also duty of the assessee to substantiate before the AO/TPO to show that the international transaction entered into with its associated enterprise are at arm’s-length based on certain credible information.
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