TMI Blog2016 (11) TMI 1628X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of the CIT (A) to examine the most appropriate method for determination of the ALP particularly when the assessee itself is challenging the method adopted by it in its TP study. In view of the same, we are satisfied that the TNMM is the most appropriate method and therefore, we deem it fit and proper to set aside the orders of the authorities below and remand the issue of determination of the ALP to the file of the AO by adopting the TNMM as the most appropriate method - ITA No.980/Hyd/2016 And ITA No. 931/Hyd/2016 - - - Dated:- 30-11-2016 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For The Assessee : Mr. Raghunathan S For The Revenue : Smt. U. Mini Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment also, the assessee has stated that the royalty was paid at 4% on export sale and 2.5% on domestic sale to M/s. Euroflex International (UK). According to the assessee, the royalty payments are genuine and are also sanctioned by the Ministry of Commerce and the RBI. The AO, however, observed that the TP study of the assessee is not reliable. He therefore, conducted his own TP study. 3. The TPO arrived at a list of 18 companies as final comparables and computed the Arm s Length Price adjustment accordingly. Aggrieved, the assessee preferred an appeal before the CIT (A) stating that the TP study conducted by the assessee itself is not correct and the most appropriate method ought to have been TNMM. The assessee has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and as brought out by the learned Counsel for the assessee, there are varying conditions between the assessee and the comparables both in the products manufactured by them and also the market conditions. Therefore, we agree with the findings of the CIT (A) that the CUP is not the most appropriate method. However, we do not agree with the conclusion of the CIT (A) that since the assessee has adopted the CUP method in its TP study, the same has to be followed. The requirement of law is that the most appropriate method suitable for determining the ALP is to be adopted. Merely because the assessee has adopted the CUP method, it will not become the most appropriate method. The AO, after conducting the FAR analysis has to determine the most ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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