TMI Blog2015 (12) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... s at arm’s length. Accordingly, the impugned arm’s length price adjustment stands deleted. The legal principles governing the determination of ALP in a TP adjustment exercise have been expounded lucidly by the ITAT in the impugned orders. - Decided against revenue - ITA 374/2015, ITA 396/2015 - - - Dated:- 10-12-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Ms Suruchi Aggarwal, Senior Standing Counsel with Ms Vibhooti Malhotra, Junior Standing Counsel and Ms Radhika Gupta, Advocates For the Respondent : Dr. Rakesh Gupta, Ms. Poonam Ahuja Mr. Rohit Kumar Gupta, Advocates ORDER 1. These are two appeals by the Revenue under Section 260A of the Income Tax Act 1961. 2. ITA No. 374/2015 is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents/vouchers related to third party for export and import transactions related to controlled and uncontrolled transactions. The TPO, therefore, proceeded to adopt the Transactional Net Margin Method ( TNMM ) and benchmarked the profitability of the Assessee with comparable companies engaged in a similar business by application of the TNMM at the entity level by using operating margin as the profit level indicator. On this methodology, the TPO determined that there was a difference of ₹ 20,900,179/- between the booked value and the ALP and since the same was more than 5%, the said difference was added back to the income of the Assessee. 5. On the basis of the above order of the TPO for AY 2006-07 the AO passed a draft assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and instead adopted the TNMM, which is normally deployed as a method of last resort for computation of ALP. 8. The ITAT then proceeded to examine, in light of Rule 10B(1)(a), the appropriateness of adopting the CUP Method in the present case notwithstanding that the Assessee has not even made any efforts to demonstrate nor claimed that actual amount charged for comparable services rendered to, or received from, associated enterprise is the same as in the case of the independent enterprise. What the Assessee fell back on, and was accepted by the ITAT as sufficient for arriving at the conclusion that the price charged was at arm s length, was the fact that the profit sharing ratio of the transaction between the Assessee and the AEs was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustry norm and as has been employed by the assessee for computing similar services to the independent enterprises, was at arm s length. Accordingly, the impugned arm s length price adjustment of ₹ 2,09,00179/- stands deleted. 10. Accordingly, the ALP adjustment for the AY 2006-07 was deleted. The same result followed in the Assessee's appeal AY 2007-08. 11. It was urged by Ms Suruchi Aggarwal, learned Senior Standing Counsel for the Revenue, that even if it is accepted that CUP is the most appropriate method to be adopted as per the prevailing industry norm, the matter should nevertheless be sent back to the TPO for the Assessee to furnish the relevant details which would help the TPO determine whether the price charged ..... X X X X Extracts X X X X X X X X Extracts X X X X
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