Case Law Details
CIT Vs Sumitomo Corporation India Pvt Ltd (Delhi High Court)
In the case of CIT vs. Sumitomo Corporation India Pvt Ltd, the Delhi High Court examined the suitable method for determining the Arm’s Length Price (ALP) for international transactions concerning indenting-transactions. The court dismissed the appeal for Assessment Years 2012-13 and 2013-14 and upheld the Transaction Net Margin Method (TNMM) as appropriate for the case.
The appeal revolved around the commission earned by Sumitomo Corporation India Pvt Ltd in indenting transactions with its Associated Enterprises (AEs). The court had previously remanded the issue to the Tribunal, which concluded that TNMM would be the most suitable method for determining the ALP, with the Berry ratio as PLI.
The court analyzed the similarities and differences between controlled and uncontrolled transactions, considering factors like volume, value, market, and geographical location. It found TNMM more appropriate than CUP method due to significant variations in these factors.
The Delhi High Court’s judgment reaffirms TNMM as the suitable method for determining ALP in cases involving indenting-transactions. The decision emphasizes the importance of considering transaction specifics and establishes the Berry ratio as a relevant PLI for such transactions. The dismissal of the appeal indicates the Court’s agreement with the Tribunal’s findings and upholds the application of TNMM for Sumitomo Corporation India Pvt Ltd’s case.
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