TMI Blog2013 (8) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case. 2. The Learned AO/TPO is not justified in law in rejecting the M.ost Appropriate Method (MAM) adopted by the assessee company as Cost Plus Method (CPM) for determining the Arm's Length Price in respect of international transactions of export sales of ₹ 76, 39,85,723/-. 3. Alternatively appellant adopted internal Transaction Net Margin Method (TNMM) which was also rejected. The Learned AO is not justified in adopting external TNMM for computing Arm's Length Price in respect of export sales, ignoring appropriate methods. 4. The Learned AO is not justified in law in considering inappropriate comparables without performing functions, assets and risks analysis (FAR analysis) and consequently arriving at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited is a company registered under the Indian Companies Act, 1956. The assessee is engaged in the business of manufacture of aluminium products. For the assessment year under dispute, the assessee filed its return of income declaring the total income at Nil . During the assessment year under dispute, the assessee had entered into international transaction with its Associated Enterprise (AE) M/s. O S Metal Import GMBH, Germany by purchasing aluminium billets, ingots and scrap worth ₹ 79,59,40,882 and sale of aluminium extruded products to its AE for a sale value of ₹ 76,39,85,723/-. The assessee bench marked its international transactions by adopting CPM for determining the ALP. In course of scrutiny assessment proceedings, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder which was challenged by the assessee before the DRP. The DRP having confirmed the draft assessment order, the assessee has preferred the present appeal before us against the final assessment order passed by the Assessing Officer. 6. At the very outset, the learned authorised representative for the assessee submitted before us that the issue is squarely covered by the decision of the co-ordinate bench in assessee s own case relating to earlier assessment years in ITA Nos. 613 and 614/Hyd/2009, 845/Hyd/2011, 941/Hyd/2011, 1475/Hyd/2010 and ITA No.2070/Hyd/2011 dated 31-5-2013. 7. The learned Departmental Representative also agreed t the fact that the issue is covered by the earlier decision of the Tribunal in assessee s own case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... needs to be the Most Appropriate Method (MAM). In the instant case however we do not find any substance in any of the TPO s multiple arguments for rejection of assessee s internal CPM and adoption of external TNMM. 55. We further point out that in the ruling of the Supreme Court in DIT (Intl. Taxation) vs. Morgan Stanley (292 ITR 416) it was held that the most appropriate method has to be applied for computation of the arm slength price. It will depend on facts and circumstances of each particular international transaction . .Applying this ratio, considering the facts and circumstances in the instant case, internal CPM seems to be the Most Appropriate Method (MAM) rather than external TNMM. The assessee has relied on the decision of ACI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year also in accordance with direction of the co-ordinate bench as contained in para-56 of the order extracted hereinabove. In aforesaid view of the matter, the grounds raised by the assessee are allowed for statistical purposes. 10. In ground No.6, the assessee has assailed the application of PLI on the total operating cost instead of applying the profit level indicator (PLI) on the cost relating to international transaction entered into with the AE. While advancing his argument on this issue, the learned authorised representative for the assessee submitted that the PLI should be applied on the international transaction entered into with the AE as against applying PLI on total operating cost. In this context, the learned authorised rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational transactions with the AEs and not non-AEs. Special provisions relating to the computation of income from international transactions were introduced through sections 92 to 92F by the Finance Act, 2001 with a view to provide a statutory frame work which can lead to the computation of reasonable profits and taxes in India in case of international transactions between enterprises of a multinational group. The object of these provisions is to ensure that the transactions between two AEs are not arranged in such a manner so as to reduce the incidence of tax due in India. Such object is achieved by determining ALP as per the relevant provisions of the Act, which is then compared with the price at which international transactions are actu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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