TMI Blog2022 (12) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... cherry picking few transactions out of a lot of transactions undertaken by the assessee with its AEs and this principle is supported by the decision of ITAT Pune Bench in the case of Amphenol Interconnect India Pvt. Ltd. [ 2014 (5) TMI 1066 - ITAT PUNE] where an identical issue has been decided by the Tribunal and after considering relevant facts held that when the TPO has accepted 90% of export to the AEs are at ALP, there is no reason to apply CUP method for remaining part of the exports. Also held that when the TPO has accepted TNMM as most appropriate method for an overwhelming majority of exports to AEs, then there is no reason why for the balance of exports of goods, TNMM method should be not be applied. In this case, the TPO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solitary issue that needs to be decided from the grounds of appeal filed by the assessee is transfer pricing adjustment made towards international transactions of the assessee with its associated enterprises (in short AEs ). Therefore, we deem it not appropriate to reproduce various grounds raised by the assessee for the sake of brevity. 3. The brief facts of the case are that M/s.Madura Coats Pvt. Ltd., is engaged in the business of manufacture and sale of threads and accessories. M/s.Madura Coats Pvt. Ltd., has three divisions. The Coats India Division of M/s.Madura Coats Pvt. Ltd., is the marketer of the sewing thread. The Division named Madhura Industrial Textiles, manufactures range of textiles. The third division, Global Thread Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and has substituted CUP method and worked out an upward adjustment of Rs.50,35,211/- only in respect of export of threads to AEs. 4. In pursuant to directions of the TPO, the AO has passed draft assessment order u/s.143(3) r.w.s.144C of the Act, and made upward adjustment of Rs.50,35,211 to total income. The assessee has filed objection before the DRP-2, Bangalore, and challenged upward adjustment suggested by the TPO on various grounds including rejection of TNMM method and adoption of CUP method as most appropriate method. The sum and substance of arguments of the assessee before the DRP was that when the TPO has accepted 99.95% of the transaction pertaining to export of threads, erred in applying CUP method for 0.05% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Madras High Court. 6. The Ld.AR for the assessee submitted that the DRPis erred in applying CUP method as the most appropriate method to determine 0.05% of international transactions pertain to export of threads to AEs without appreciating the fact that the TPO has accepted 99.95% transaction with AEs under TNMM method. The Ld.AR for the assessee further referring to the decision of ITAT Pune Bench, in the case of Amphenol Interconnect India Pvt. Ltd. v. DCIT in ITA No.1486/PN/2019 argued that the Tribunal held that when the TPO has accepted 90% of transactions under TNMM method is erred in applying CUP method for remaining 10% transactions by cherry picking few transactions out of total transactions of the assessee with its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties, perused the materials available on record and gone through orders of the authorities below. The assessee entered into various international transactions with its AEs right from import of raw materials, export of finished goods, payment of royalty payment of management service fee and import of machinery etc. The assessee has aggregated all transactions and applied TNMM as most appropriate method and considered to be a tested party. The TPO has accepted TNMM as most appropriate method in respect of all transactions including export of threads to AEs to the extent of 99.95% transactions ofexport of threads. However, in respect of 0.05% of transactions pertains to export of threads, he has applied CUP method by cherry picking few tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Es are at ALP, there is no reason to apply CUP method for remaining part of the exports. The Hon ble Bombay High Court in the case of Amphenol Interconnect India (P.) Ltd., has held that when the TPO has accepted TNMM as most appropriate method for an overwhelming majority of exports to AEs, then there is no reason why for the balance of exports of goods, TNMM method should be not be applied. In this case, the TPO has accepted 99.95% of export of threads to AEs under TNMM method, but he had cherry picked 0.05% of transactions and applied CUP method without there being any valid reason. Therefore, we are of the considered view that the TPO is erred in adopting CUP method for few transactions when he has accepted overwhelming majority of tran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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