Case Law Details
Lenovo (India) Pvt Ltd Vs ITO (ITAT Bangalore)
ITAT Bangalore held that Comparable Uncontrolled Price (CUP) is the most appropriate method for determining the Arm’s Length Price of the assessee for the importing of goods for manufacturing segment.
Facts- The assessee company is engaged in the business of trading, manufacture and sale of desktops, lap tops, servers and smart phones.
The case was selected for scrutiny through CASS for complete scrutiny. Accordingly, statutory notices were issued to the assessee and various details were called for. In response to notice issued, the assessee company submitted details from time to time which were examined from documents submitted. It was noted that the company had international transactions exceeding Rs.10 crores, therefore, the case was referred to the TPO u/s 92CA of the Act for determination of arms length price after obtaining prior approval from the competent authority. The ld. TPO after receipt of reference, called the documents maintained u/s 92D(3) of the Act.
The ld.TPO from tax payers study report noticed that the assessee had adopted CUP method as the most appropriate method for import of parts of manufacture of personal computers for determination of PLI. The ld.TPO after considering the written submissions, computed the adjustment of ALP after applying TNMM as the most appropriate method and determined the adjustment for Manufacturing segment. The DRP also accepted the reasons given by the TPO for applying the TNMM as most appropriate method for computation of Arms Length Price.
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