9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (4) TMI 578 - HC - Income TaxTP Adjustment - MAM - Tribunal had remanded the matter to the TPO as to whether the other method would be the most appropriate method, as was contended by the respondent/assessee? - For several years assessee had been using TNMM for benchmarking its transactions - Out of the eighteen (18) transactions, was agreed that sixteen (16) transactions will be benchmarked by using the other method while the remaining two (2) transactions will be benchmarked by using Transaction Net Margin Method (TNMM) and Resale Price Method - HELD THAT - According to us, the approach adopted by the Tribunal is wholesome. A perusal of the impugned order shows that the Tribunal was conscious of the fact that the assessee could enter into the APA with CBDT only from AY 2013-14. Thus, having regard to this limiting factor and given the complexity of the transaction which the respondent/assessee is involved in, the Tribunal thought it fit that the APA could be used to benchmark the transactions even for the AY in issue. As correctly pointed out by Respondent this direction is ring-fenced with the caveat that the TPO will have to determine as to whether the FAR in the given AY is the same as those which are covered in the APA.We may also note that the Tribunal has cited several judgments of various Benches of the Tribunal in adopting this approach - we are of the view that no error has been committed by the Tribunal concerning either in the application of law or on facts.
Issues Involved:
The judgment involves the interpretation of the applicability of Advance Pricing Agreement (APA) for benchmarking transactions in Assessment Year (AY) 2012-13. Interpretation of Applicability of APA: The Tribunal's order was challenged based on the contention that APA should not form the basis for benchmarking as it was introduced in the statute only from AY 2013-14, not for the AY in question. The appellant argued that the Tribunal erred in law by considering APA for benchmarking. On the other hand, the respondent argued that before APA was introduced, the assessee had already been using the other method for benchmarking transactions for several years. The respondent clarified that the Tribunal only directed to apply the principles of the agreement executed between the assessee and the CBDT. The respondent's counsel highlighted that the assessee functions as a data base for entities worldwide, justifying the benchmarking based on APA principles with the condition that the Transfer Pricing Officer (TPO) verifies the Functions, Assets, and Risks (FAR) alignment. Court's Decision and Analysis: The Court found the Tribunal's approach appropriate, considering the complexity of the transactions involved and the limiting factor that the APA was applicable from AY 2013-14. The Tribunal's decision to use APA for benchmarking transactions in the AY in question was upheld. The Court emphasized that the TPO must ensure alignment of FAR with the APA for accurate benchmarking. The Tribunal's reliance on previous judgments supporting the adoption of APA even for years not covered by it was considered valid. The specific directions issued by the Tribunal were cited, emphasizing the importance of aligning FAR with the APA for international transactions. The Court concluded that no error was committed by the Tribunal in applying the law or assessing the facts, and no substantial question of law arose for consideration. The appeal was closed, and parties were directed to act based on the digitally signed copy of the order.
|
