Case Law Details
ACIT Vs e4e Business Solutions India Pvt. Ltd. (ITAT Bangalore)
TPO should choose the internal comparable in controlled transaction as against an external comparable
The underlying object behind computing ALP of an international transaction is to find out the profits which such enterprise would have earned if the transaction had been with some third party instead of related party. When the data is available showing profit margin of that enterprise itself from a third party, it is always safe and advisable to have recourse to such internal comparable case. The reason is patent that the various factors having bearing on the quality of output. assets employed, input cost etc. continue to remain by and large same in case of an internal comparable. The effect of difference due to such inherent factors on comparison made with the third parties, gets neutralized when comparison is made with internal comparable. Ex consequenti, it follows that an internal comparable uncontrolled transaction is more noteworthy vis-â-vis its counterpart i.e. external comparable.
ITAT uphold the orders of the CIT(Appeals) applying internal TNMM method for determination of the ALP.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
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