Case Law Details
Wieland Metals India Private Ltd. Vs ITO (ITAT bangalore)
Issue before us is with regard to TP adjustment by applying TNMM by the TPO instead of CUP method adopted by the assessee as most appropriate method in respect of determining of ALP of manufacturing segment. As seen from the details of international transactions, the assessee is importing raw material from its AE and also making exports of products to the customers in accordance with the Purchase Order which is carried out by Wieland group. Thus, import as well as export transactions are interlinked and closely linked. The price of export is not free from the impact of the import price. Therefore, the international transactions in respect of import of raw material has direct bearing on export of goods. The TPO has applied TNMM by taking entire turnover of the assessee and then proposed an adjustment being the difference between the net margin of assessee as well as comparable price. Since these international transactions are closely linked and rather inter-dependent having a bearing on each other, therefore, for the purpose of determining the ALP it is appropriate to take composite transaction and apply TNMM as the most appropriate method. CUP is no doubt a preferable method of determining ALP as it leaves no scope of any possible variations in the process of computing ALP. However, when transactions are relatable and interrelated, then if a particular transaction out of the composite transactions cannot be tested under CUP method, then it is not proper to apply separate methods for determining the ALP for each of the transaction, particularly when international transactions are closely linked and inter-depending having direct bearing on the price of each other. Therefore, we are of the considered opinion that in the given facts and circumstances of the case, the TNMM would be the most appropriate method for determining the ALP of international transactions entered into by the assessee with AE. We do not find any infirmity in the order of the DRP on this issue and the same is confirmed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by the assessee is directed against the order of the Assessing Officer passed u/s. 143(3) r.w.s. 144C(13) r.w.s. 92CA of the Income-tax Act, 1961 [the Act] dated 30.9.2016 for the assessment year 2015-16.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
