TMI Blog2016 (10) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... methodology adopted in their domestic jurisdiction will differ”. The TNMM method depends on accurate data with respect to all the three elements – wherever they apply. In the Comparable Uncontrolled Price (CUP) method - which is premised upon the elements in Rule 10B(1)(a), the methodology adopted is the price charged or paid for property transfer or services provided in the Comparable Uncontrolled transaction. Therefore, the nature of the transaction and the appropriate filter determines the elements that are to be considered in TNMM. Therefore, the costs, sales and assets employed wherever relevant are to be applied. From this perspective, the revenue’s contention that segmental data was available, cannot be accepted. The mere availabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying out the ALP determination. The assessee s profit margin from this transaction was shown as 22.63% as against the mean margin of five comparables at 17.91%. The TPO observed that the overall Profit Level Indicator (PLI), upon application of the Operating Profit to Operating Cost (OP/OC) on the assessee s Profit and Loss account was (-)15.34% whereas it has shown profit margin on international transactions at 22.63%. After considering the record, the TPO decided to add 20 comparables and according to its determination, an adjustment of ₹ 8,23,72,723/- had to be made to the income. Aggrieved, the assessee approached the Dispute Resolution Panel (DRP). This body, after considering the submissions of the assessee held that of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnology services. In these circumstances, the argument about lack of segmental data could not have been a broad brush reasoning by the ITAT to reject the comparables which otherwise indicated high profit margins. It was also contended that apart from this, there is no reason worthwhile for the exclusion of Wipro Technology Services Limited on the list of comparables. 6. Learned counsel for the assessee appearing on advance notice contends that the transfer pricing exercise in the Profit Loss filter to be adopted invariably is premised upon accurate as opposed to approximation, with respect to Operating Cost and Operating Profits. The comparison which the assessee or the entity is subjected to is with respect to its transaction with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y any of the following methods, being the most appropriate method, in the following manner, namely :- XXXX XXXX XXXX e) transactional net margin method, by which,- (i) the net profit margin realised by the enterprise from an international transaction [or a specified domestic transaction] entered into with an associated enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base; (iii) the net profit margin referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pare with other income assessments where the methodology adopted in their domestic jurisdiction will differ . The TNMM method depends on accurate data with respect to all the three elements wherever they apply. In the Comparable Uncontrolled Price (CUP) method - which is premised upon the elements in Rule 10B(1)(a), the methodology adopted is the price charged or paid for property transfer or services provided in the Comparable Uncontrolled transaction. Therefore, the nature of the transaction and the appropriate filter determines the elements that are to be considered in TNMM. Therefore, the costs, sales and assets employed wherever relevant are to be applied. From this perspective, the revenue s contention that segmental data was availa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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