This case pertains to a transfer pricing (TP) adjustment dispute ...

Company's TP method selection upheld; Revenue failed to justify change from previous year.

Case Laws     Income Tax

October 22, 2024

This case pertains to a transfer pricing (TP) adjustment dispute involving the selection of the most appropriate method - Resale Price Method (RPM) or Transactional Net Margin Method (TNMM). The assessee selected RPM with gross profit to sales as the profit level indicator (PLI) for certain transactions, and TNMM for others. The Tax Officer rejected RPM and applied TNMM, which was upheld by the CIT(A). The key points are: The Revenue's appeal challenging the CIT(A)'s order deleting the TP adjustment was rejected, as the facts were similar to the previous year's case where the HC had ruled in the assessee's favor. The ITAT noted the Revenue failed to highlight material differences in facts between the two years that would impact the TP adjustment. The assessee's choice of method (RPM/TNMM) and tested party (foreign AE) varied between the years, but the Tax Officer applied TNMM in both years, rejecting the assessee's approach. No contentions were raised regarding the comparables. Hence, the ITAT upheld the CIT(A)'s order deleting the TP adjustment.

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