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TMI Blog2018 (4) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below. Accordingly, the orders of all the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall refer the matter once again to Transfer Pricing Officer. - Decided in favour of assessee for statistical purposes. - ITA No. 2745/Chny/2017 - - - Dated:- 6-4-2018 - Shri N. R. S. Ganesan, Judicial Member And Shri Abraham P. George, Accountant Member Appellant by : Sh. B. Ramakrishnan, CA Respondent by : Sh. Vijay Kumar Punna, Standing Counsel ORDER Per N. R. S. Ganesan, Judicial Member This appeal of the assessee is directed against the order of the Assessing Officer dated 28.09.2017, consequent to the direction of Dispute Resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Comparable Uncontrolled Price method as most appropriate method. According to the Ld. representative, the services rendered by Associated Enterprise are in the nature of sourcing, procurement, quality control, identification of new market, etc. The Associated Enterprise provided services to other entities as well. According to the Ld. representative, the Transfer Pricing Officer rejected the entity level approach adopted by the assessee under Transaction Net Margin Method and considered Comparable Uncontrolled Price method as most appropriate method for determination of arm's length price for management services rendered by the Associated Enterprise. While selecting Comparable Uncontrolled Price as most appropriate method, the TPO as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e additional ground raised by the assessee. 7. We have considered the rival submissions on either side and perused the relevant material available on record. The assessee adopted Transaction Net Margin Method as most appropriate method. However, the Transfer Pricing Officer adopted CUP method as most appropriate method. While adopting CUP method as most appropriate method, the TPO as well as DRP have not taken any comparable companies for determination of arm's length price. Rule 10B(1) of Income-tax Rules, 1962 says that the method should be selected in a following manner. For the purpose of convenience, we are reproducing Rule 10B(1):- 10B. (1) For the purposes of sub-section (2) of section 92C, the arm's length price in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction, or a number of such transactions ; (iii) the price so arrived at is further reduced by the expenses incurred by the enterprise in connection with the purchase of property or obtaining of services ; (iv) the price so arrived at is adjusted to take into account the functional and other differences, including differences in accounting practices, if any, between the international transaction or the specified domestic transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of gross profit margin in the open market ; (v) the adjusted price arrived at under sub-clause (iv) is taken to be an arm's length price in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nique intangibles or in multiple international transactions which are so inter-related that they cannot be evaluated separately for the purpose of determining the arm's length price of any one transaction, by which- (i) the combined net profit of the associated enterprises arising from the international transaction in which they are engaged, is determined ; (ii) the relative contribution made by each of the associated enterprises to the earning of such combined net profit, is then evaluated on the basis of the functions performed, assets employed or to be employ-ed and risks assumed by each enterprise and on the basis of reliable external market data which indicates how such contribution would be evaluated by unrelated enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base ; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base ; (iii) the net profit margin referred to in sub-clause (ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of net profit margin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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