Transfer Pricing – TPO should provide reasons for rejecting the Most Appropriate Method [MAM] used by the assessee before adopting a different MAM

Indian Additives Limited Vs The ACIT (ITAT Chennai)- Fact that a particular MAM used by the taxpayer cannot be rejected without providing any cogent reasons. Further, the Tribunal has mentioned that if there exist significant amount of purchases from Associates enterprises , the same cannot be included while computing the gross margins under the Resale Price Method [RPM]. The Tribunal have also re-emphasised the importance of comparing the FAR analysis of the tested party and that of the comparable companies while applying the TNM method.<

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