“most appropriate method”

Transfer PricingSection 92CSection 92C1,345 judgments

The decision most relied on for most appropriate method is CIT v. Cushman & Wakefield (India) (P.) Ltd. (367 ITR 730), cited in 120 judgments on BharatTax.

Leading authorities on most appropriate method

CIT v. Cushman & Wakefield (India) (P.) Ltd.

367 ITR 730 · 2014 · High Court

120

citing judgments

This case determines the Arm's Length Price (ALP) for intra-group services and reimbursements, clarifying when charges constitute services warranting a mark-up versus mere pass-through costs. It provides guidance on the circumstances under which an ALP adjustment, including an ALP of 'nil', is appropriate for such transactions.

Dresser-Rand India (P.) Ltd. v. Addl. CIT

13 Taxmann.com 82 · 2011 · High Court

citing judgments

An Assessing Officer cannot disregard an assessee's decision to avail services from associated enterprises, even if the assessee has internal expertise, as the determination of necessity is the assessee's prerogative. The Transfer Pricing Officer's role is to determine the arm's length price, not the need for the service itself.

CIT v. EHPT India P Ltd.

350 ITR 41 · 2013 · High Court

citing judgments

The headcount method is an appropriate allocation key for indirect expenses between eligible and non-eligible units when it has been consistently accepted by revenue authorities and there is no just cause for abandoning it. Deviation from a consistently followed and accepted method can disturb or distort profits.

Mobis India Ltd. v. Dy. CIT

38 Taxmann.com 231 · 2013 · ITAT

citing judgments

A working capital adjustment is unreliable if it is based on broad approximations, estimations, and assumptions, and the assessee fails to demonstrate how the adjustment was arrived at.

LG Electronics India Pvt. Ltd. v. ACIT

29 Taxmann.com 300 · 2013 · High Court

citing judgments

The 'bright line test' is not an appropriate method for determining the existence of an international transaction for calculating arm's length price. This ruling overrules prior special bench decisions on AMP expenses.

Magneti Marelli Powertrain India Pvt. Ltd. v. DCIT

389 ITR 469 · 2016 · High Court

citing judgments

The Assessing Officer (AO) or Transfer Pricing Officer (TPO) cannot dispute the application of the TNMM method if they have already accepted it as the most appropriate method for certain international transactions, especially when other transactions are intrinsically linked.

Skoda Auto India (P) Ltd. v. ACIT, Aurangabad

30 SOT 319 · 2009 · ITAT

citing judgments

The Tribunal may allow adjustments for differences between the tested party and comparable companies to eliminate material differences, provided accurate and credible evidence is furnished.

Principal Commissioner of Income-tax-6 v. Matrix Cellular International Services (P.) Ltd.

90 Taxmann.com 54 · 2018 · High Court

citing judgments

The Resale Price Method (RPM) is the most appropriate method for determining the arm's length price of a distributor who does not add significant value to the goods purchased.

Judgments citing most appropriate method

Jungheinrich Lift Truck India Private Limited, Mumbai vs. ACIT-Circle 15(1)(2), Mumbai

In the result appeal of the assessee is allowed for statistical purposes

ITA 2531/MUM/2022[2018-19]Status: DisposedITAT Mumbai12 Jun 2023AY 2018-19

Bench: Shri Prashant Maharishi, Am & Shri Kuldip Singh, Jm Jungheinrich Lift Truck India Asst. Commissioner Of Income Private Limited 203 204, 2 N D Floor Tax Vs. Delphi A Wing, Central Avenue, Circle 15(2)(2) Hiranandani Business Park, Powai, Mumbai Mumbai-400 076 (Appellant) (Respondent) Pan No. Aaccj7808G

For Appellant: Shri Ketan Ved &For Respondent: Shri Mehul Jain, Sr. AR

Section 143(3)Section 144C(13)Section 43A

were considered by the assessee company to be in compliance with the arm's-length principle on application of other method as the most appropriate method. 06. The learned transfer pricing officer disputed the above transaction asking the assessee to furnish back to back invoices of the expenses incurred

Oxford University Press, Mumbai vs. DCIT, International Taxation, Circle-3(2)(2), Mumbai

In the result, appeal of the assessee is allowed for statistical purpose

ITA 2327/MUM/2022[2018-19]Status: DisposedITAT Mumbai12 Jun 2023AY 2018-19

Bench: Shri Vikas Awasthy & Shri Gagan Goyalआअसं.2327/मुं/ 2022 ("न.व.2018-19) Oxford University Press, 22 Workspace, 2Nd Floor, 1/22 Ansari Road, New Delhi, Delhi – 110 002 Pan: Aaaco-3278-K ...... अपीलाथ" /Appellant बनाम Vs. Dcit, International Taxation, Circle -3(2)(2) 16Th Floor, Air India Building, Nariman Point,Mumbai 400 007. ..... ""तवाद"/Respondent अपीलाथ" "वारा/ Appellant By : Shri Rishabh Malhotra ""तवाद" "वारा/Respondent By : Shri Soumendu Kumar Dash सुनवाई क" "त"थ/ Date Of Hearing : 31/05/2023 घोषणा क" "त"थ/ Date Of Pronouncement : 12/06/2023

For Appellant: Shri Rishabh MalhotraFor Respondent: Shri Soumendu Kumar Dash

Section 143(3)Section 40

assessment year under appeal. To benchmark the transactions with its Associated Enterprises(AE), the assessee adopted Transactional Net Margin Method (TNMM) as the most appropriate method. The Transfer Pricing Officer (TPO) did not accept the comparables selected by the assessee to benchmark the transactions. The TPO 3 selected fresh

Sona Blw Precision Forgings Ltd., Gurgaon vs. Assesing Officer, National E-Assessment Centre, New Delhi

In the result, this appeal filed by the assessee is partly allowed as

ITA 524/DEL/2021[2016-17]Status: DisposedITAT Delhi09 Jun 2023AY 2016-17

For Appellant: Ms. Aditi Gupta, AdvocateFor Respondent: Shri Jitender Kumar, CIT DR

Section 133(6)Section 40

loans availed. However, we are of the opinion that, the transaction has to be benchmarked applying most appropriate method as per the provisions of the Act. The adjustment made by the Assessing Officer taking average rate of guarantee commission by the banks cannot be held as a comparable uncontrolled price

DCIT, CC-2, Jaipur vs. Shri Nath Corporation, Jaipur

In the result, appeal of the assessee and that of the revenue stands

ITA 182/JPR/2020[2017-18]Status: DisposedITAT Jaipur07 Jun 2023AY 2017-18

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. Manish Agarwal (CA)For Respondent: Sh. Sanjay Dhariwal (CIT) &

Section 132Section 143Section 145(3)

assessee which is the best guide to estimate the GP and various courts including Rajasthan High Court held the same as most appropriate method." 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not upholding the invocation of provisions

M/S. Shri Nath Corporation, Jaipur vs. DCIT, C.C.-2, Jaipur

In the result, appeal of the assessee and that of the revenue stands

ITA 117/JPR/2020[2017-18]Status: DisposedITAT Jaipur07 Jun 2023AY 2017-18

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. Manish Agarwal (CA)For Respondent: Sh. Sanjay Dhariwal (CIT) &

Section 132Section 143Section 145(3)

Tpg Growth II Makets Pte Ltd., Mumbai vs. DCIT 4(1)(2), Mumbai

Accordingly, Ground No. 4 raised by the Appellant is partly allowed

ITA 1387/MUM/2022[2017-18]Status: DisposedITAT Mumbai06 Jun 2023AY 2017-18

For Appellant: Shri Dinesh BafnaFor Respondent: Dr. Samuel Pitta

Section 143(3)Section 144C(13)Section 144C(5)Section 5Section 9Section 92C(3)

provides for computation of arm’s length 14 price or ALP. It provides that the ALP shall be determined by applying the Most Appropriate Method out of the following six methods: (a) Comparable Uncontrolled Price Method (For short ‘CUP Method’) (b) Resale Price Method (RPM) (c) Cost Plus Method ... third-parties. 19 As regards CUP Method, Rule 10B(1)(a) provides that ALP shall be determined by using CUP Method, being the most appropriate method, and the same shall require: 15 (i) Identification of the price charged/paid for property transferred or services provided in a comparable uncontrolled transaction

Jiostar India Private Limited, Mumbai vs. Asst CIT 16 (1), Mumbai

ITA 7872/MUM/2019[2015-16]Status: FixedITAT Mumbai05 Jun 2023AY 2015-16

Bench: Shri R.S. Syal (V.P.), Shri Aby T. Varkey (J.M.) & Shri Prashant Maharishi (A.M.) आयकर अपील सं. / Ita. No.7872/Mum/2019 "नधा"रण वष" / Assessment Year : 2015-16

Section 255(3)

this juncture, it is pertinent to note that as against the Comparable Uncontrolled Price (CUP) method applied as the most appropriate method for benchmarking this transaction in the immediately preceding year, the assessee invoked the `Other method’ in its Transfer pricing study report (T.P.S.R.) as the most appropriate ... year under consideration. Further, the assessee argued for adoption of the CUP as the most appropriate method for this year before the authorities below as well as the Tribunal to justify that the transaction of payment of 90.5% of the amount which would have been paid by ESS to third

Lintas India Pvt. Ltd., Mumbai vs. ACIT, Circle- 16(1), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 2018/MUM/2022[2018-19]Status: DisposedITAT Mumbai01 Jun 2023AY 2018-19

Section 143(3)Section 144C(13)Section 14ASection 92CSection 92C(1)

have erred in rejecting the benchmarking analysis undertaken by the Appellant using Transactional Net Margin Method (TNMM), as the most appropriate method and computing the transfer pricing addition without undertaking any comparable analysis and applying Other Method (Need Evidence Benefit Test method) which is not a prescribed methods as provided ... under the directions of the Hon'ble DRP have erred in rejecting the Transaction Net Margin Method (TNMM') method, as the most appropriate method for benchmarking this transaction and computing the transfer pricing addition without undertaking any comparable analysis and applying Other Method (Need Evidence Benefit Test method) which

DCIT -5(2) (1), Mumbai vs. Kec International Ltd, Mumbai

Accordingly, Ground No. 3.1 & 3.2 raised by the Assessee are dismissed

ITA 33/MUM/2022[2013-14]Status: DisposedITAT Mumbai31 May 2023AY 2013-14

For Appellant: Shri Vijay MehtaFor Respondent: Shri Pravin Shekhar

Section 143(3)Section 144C(3)

determined by the Tribunal. The TPO finally concluded that Comparable Uncontrolled Price (CUP) Method with adjustments could be adopted as the Most Appropriate Method for benchmarking the transaction of giving guarantee as the same offers least complicated approach with maximum available data. On the basis of the aforesaid ... concluded that Comparable Uncontrolled Price (CUP) Method with adjustments could be adopted as the Most 29 ITA No. 2453/Mum/2021 (AY 2013-14) Appropriate Method for benchmarking the transaction of giving corporate guarantee as the same offers least complicated approach with maximum available data and . On the basis of the aforesaid

Firefly Market Research India P. Ltd., Mumbai vs. Addl/Jt/Dy/CIT/Asstt/ITO, Nationa E-Assessment Centre, Delhi

ITA 934/MUM/2021[2016-17]Status: DisposedITAT Mumbai31 May 2023AY 2016-17

Bench: Shri Kuldip Singhassessment Year: 2016-17

For Appellant: Shri Ajit Kumar Jain, A.RFor Respondent: Shri Anoop Hiwase, D.R

Section 153(4)Section 92CSection 92C(1)

learned TPO, the AO and the Hon'ble DRP have erred in rejecting the Transactional Net Margin Method (TNMM)/Other Method, as the most appropriate method for benchmarking this transaction and computing the transfer pricing addition without applying any of the prescribed methods as provided under section

Transporter Industry Internatinal Gmbh, Mumbai vs. Dy CIT International Taxation, Circle-4(1)(2), Mumbai

In the result, the appeal of the assessee is partly allowed for statistical purposes

ITA 1240/MUM/2021[2016-17]Status: DisposedITAT Mumbai31 May 2023AY 2016-17

Bench: Shri Aby T. Varkey, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.1240/Mum/2021 (निर्धारण वर्ा / Assessment Years: 2016-17) Transporter Industry बिधम/ Dcit, Int Tax Circle- International Gmbh. 4(1)(2) Vs. Kalisrabe 57, 74076 Air India Building, Heilbronn, Germany, Pin- Nariman Point, Mumbai- 999999. 400021. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aafct0013Q (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Nikil Tiwari Revenue By: Shri Soumedu Kumar Dash (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 30/03/2023 घोषणा की तारीख /Date Of Pronouncement: 31/05/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Company Against The Order Of The Ao/Dcit, Circle-4(1)(2), Mumbai R.W.S 144C(13) Of The Income Tax Act, 1961 (Hereinafter “The Act”) Dated 25.04.2021 Pursuant To The Direction Of The Ld. Dispute Resolution Panel (Drp) Dated 18.03.2021. 2. Ground No. 1 Is General In Nature, So Dismissed. 3. Ground No. 3 Is A Legal Issue Which Has Been Raised By The Assessee Challenging The Action Of The Transfer Pricing Officer (Tpo) To Have Passed The Transfer Pricing (Tp) Order, After The Due Date Prescribed In Section 92(3A) R.W.S 153 Of The Act. Therefore, The Assessee Is Challenging The Action Of The Tpo In Passing Transfer Pricing Order After Limitation Period By Citing The Decision Of The Hon’Ble Madras High Court (Db) In The Case Of M/S. Saint Gobain

For Appellant: Shri Nikil TiwariFor Respondent: Shri Soumedu Kumar Dash (Sr. AR)

Section 153Section 3Section 92Section 92C

that case, the Hon’ble High Court held that since the TPO has not fixed the mark up of the International transaction by adopting appropriate method prescribed by any Act/Rules, the Adhoc determination of the ALP was bad in law and held as under: - “7. We note that the Tribunal ... relevant Rules. In fact, as found both by the CIT (A) as well as the Tribunal that neither the method selected as the most appropriate method to determine the ALP is challenged nor the comparables taken by the respondent assessee is challenged by the TPO. Therefore, the ad-hoc determination

Larsen & Toubro Infotech Ltd, Mumbai vs. Addl CIT RG 2(2), Mumbai

ITA 1924/MUM/2014[2009-10]Status: DisposedITAT Mumbai31 May 2023AY 2009-10

For Appellant: Shri Percy J PardiwallaFor Respondent: Dr. Yogesh Kamat, CIT DR

Section 10ASection 143(2)Section 143(3)Section 144C(13)Section 144C(5)Section 92C

subsidiary. Reliance was also placed on behalf of the Appellant on judicial precedents where the transfer pricing officer had accepted CUP as the most appropriate method and applied PLR for determining the arm‟s length rate of interest, and the Tribunal had rejected the aforesaid approach of the TPO. However ... find that the facts are different to the extent that (a) the TPO has rejected internal CUP adopted by the Appellant as most appropriate method and (a) TPO has adopted Cost Plus Method, and for determining arm‟s length interest rate in respect of outbound loan given by the Appellant

Deputy Commissioner of Income Tax 14(2)(1), Mumbai vs. India Debt Management Private Limited, Mumbai

ITA 5532/MUM/2017[2012-13]Status: DisposedITAT Mumbai30 May 2023AY 2012-13

For Appellant: Shri Vijay MehtaFor Respondent: Shri Purnesh Gururani

Section 143(3)Section 144C(3)

average rate of interest at the rate of 11 for determining the arm's length price of rate of interest using CUP as most appropriate method even when interest rate paid by the assessee to its Associated Enterprises (AEs) was 7% on fully. convertible debentures issued ... using data for FY 2011-12 to corroborate the appropriateness of the average interest rate on FCDs payable on all issuances. 4.5.1 The Most Appropriate Method xx xx 9 4.5.2. Selection of Most Appropriate Method 4.5.2.1.Comparable Uncontrolled Price Method In order to determine the arm's length nature