Computation of gross profit margin should be based on audited accounts and should not be a notional figure.

Executive Summary- The Mumbai bench of the Income Tax Appellate Tribunal (Tribunal) recently pronounced its ruling in the case of Monsanto Holdings Private Limited Vs. Dy. Commissioner of Income Tax Range – 8(2) (Mumbai Bench), ITA No: 9130/Ml/2010 , on transfer pricing issues arising from international transactions entered by the Taxpayer with its Associated enterprises (AEs). The Tribunal ruled in favor of the Revenue stating that Resale Price Method (RPM) cannot be applied based on expected gross margin. Application of RPM is required to be based on examination of audited accounts and...