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TMI Blog2024 (5) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided as per the Income Tax Statute. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. Ground no.1 is partly allowed for statistical purpose. TP Adjustment - Selection of MAM - CIT(A) affirming TPO s action of rejecting most appropriate method (MAM) adopted by the assessee - AR submitted that the rejection of CUP method for benchmarking purchase transaction was not justified on the part of the TPO as the TPO himself has accepted CUP as most appropriate method for the same set of transactions carried with the Associated Enterprise (AE) in preceding years - HELD THAT:- CIT(A) has totally failed to take into account profit margins as well as how the comparables which were selected by the TPO are not as per the filters given by the TPO himself. The product is manufactured by the assessee as per the specification and quality needed by the AE for which necessary technical assistance for setting up, commissioning and running of plants and training of the Indian Technicians was provided by the AE. All the functions of manufacturing are performed by the assessee according to the needs of the AE and in case the AE is unable to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 4. Ld. CIT (A) erred in holding that TPO has rightly rejected CUP method for benchmarking purchase transaction by considering it as incorrect method ignoring fact that TPO himself has accepted CUP as MAM for same set of transaction carried with AE in preceding years. 5. Ld. CIT (A) erred in law in holding that TPO has rightly rejected the CPM (Cost Plus Method) for benchmarking sale transaction by considering it as incorrect method ignoring fact that appellant being manufacturer has entered into specific long-term selling contracts with AE and by following CPM a higher profit margin earned by the appellant as compared to most appropriate comparable companies. 6. Ld. CIT (A) ought to have considered the fact that TPO himself has accepted CPM as MAM for same set of transaction carried out with AE in preceding year as well as subsequent year and accordingly ought to have accepted CPM on principle of consistency. 7. Ld. CIT (A) erred in law and on facts in confirming action of TPO in adopting TNMM as MAM for purchase and sale both transaction carried with AB. 8. Ld. CIT(A) ought to have appreciated submission of appellant that if TNMM is accepted then OP/OC - Profit margin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. As regards to ground no.2, the Ld. AR submitted that in the light of decision of Hon'ble Apex Court in the case of Checkmate Services (P.) Ltd. vs. CIT-1 (2022) 448 ITR 518, the said ground is against the assessee. Hence, ground no.2 is dismissed. 6. As regards to ground no.1 related to total expenses of Rs. 2,96,92,435/- out of which Rs. 16,55,644/- (1/5th of Rs. 82,78,218/-) which is eligible under Section 35D(2) of Act should have been allowed as capitalisation for balance of Rs. 2,14,14,000/-, the Ld. AR submitted that the CIT(A) has not at all considered the alternative plea of the assessee while deciding the issue/ground and in fact has given his dismissal for which the Ld. AR requested that the matter may be remanded back to the file of the CIT(A) for proper adjudication of the issues. 7. The Ld. DR submitted that the CIT(A) has concurred the view of the Transfer Pricing Officer/Assessing Officer and, therefore, there is no need to give separate finding to that extent. 8. We have heard both the parties and perused all the relevant material available on record. It is pertinent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has rightly held that the cost-plus method is sensitive to differences in accounting practices and, therefore, any difference in accounting practice such as treatment of commission and discounts as reduction in sale price or a separate head of expenditure would affect the calculation of gross profit margins. Therefore, the gross profit margins for the comparables are not readily available and also could not be readily worked out. Therefore, the Ld. DR submitted that the TPO has rightly rejected the cost-plus method. The Ld. DR further submitted that regarding incorrect computation by taking into account gross profit margin is 20% in the show cause notice and the same was rightly discussed and decided by the TPO. The Ld. DR further submitted that the CIT(A) has in fact given categorical finding that the method adopted by the TPO was just and proper as the assessee though claimed has not carried out any adjustments on account of bulk quantity discount and customs duties, the purchase price paid to AE was still lower as that paid to unrelated party. Since the factors of comparability that are required to be examined for determining a comparable uncontrolled transaction are sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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