PCIT Vs Burberry India Pvt. Ltd. (Delhi High Court)
Delhi High Court held that Resale Price Method (RPM) is the most appropriate method when reseller imports goods from its Associated Enterprise (AE) and the goods are sold in the same condition without any value addition.
Facts- The present appeal has been preferred by the revenue. The controversy involved in the present appeal relates to the most appropriate method required to be used for benchmarking the international transaction entered by the assessee for determining the Arms Length Price (ALP). Tribunal held that the Resale Price Method (RPM) would be the most appropriate method and had accordingly, directed the Transfer Pricing Officer (TPO) to adopt the same for benchmarking the international transaction – import of the finished goods for a declared value of ₹28,88,97,371/-.
Conclusion- Mumbai ITAT in Mattel Toys India (P.) Ltd. v. Dy. CIT had held that the RPM is mostly applied in a situation in which the reseller purchases tangible property or obtain services from an A.E. and reseller does not physically alter the tangible goods and services or use any intangible assets to add substantial value to the property or services i.e., resale is made without any value addition having been made.
