“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

Essar Investments Ltd, Mumbai vs. DCIT 5(1), Mumbai

In the result, the present appeal is partly allowed

ITA 2195/MUM/2014[2009-10]Status: DisposedITAT Mumbai28 Dec 2022AY 2009-10

For Appellant: Shri Vijay MehtaFor Respondent: Ms. Samruddhi D Hande

Section 143(3)Section 144CSection 144C(5)

Sons (96 ITR 390) and in the case of Sainik Motors v. State of Rajasthan (AIR 1961 SC 1480). Hence, while finding the most appropriate method it is not that modern valuation methods fitting the type of underlying service or commodities have to be ignored. Fixing enterprise value based

Asst CIT 9(2)(1), Mumbai vs. Canvasm Technologies Ltd, Mumbai

In the result, the appeal filed by the revenue is treated as allowed for statistical purposes

ITA 3980/MUM/2015[2009-10]Status: DisposedITAT Mumbai27 Dec 2022AY 2009-10

Bench: Shri B.R. Basakaran & Shri Rahul Chaudharydy. Commissioner Of Vs. M/S. Tech Mahindra Income Tax 2(3)(1), Limited, R.No.552, Aayakar Bhavan, (Successor In Interest To M.K. Road, M/S. Canvasm Mumbai – 400 020 Technologies Ltd.), Gateway Building, Apollo Bunder, Mumbai-400 001 Pan Aaccc8665N (Appellant) (Respondent) Assessee By : Mr. Viral Shah. Revenue By : Mr. Samruddhi Dhyananjay Hande, Dr Date Of Hearing : 16.11.2022 Date Of Pronouncement : 27.12.2022

For Appellant: Mr. Viral ShahFor Respondent: Mr. Samruddhi Dhyananjay

circumstances of the case, the Ld. CIT-(A) erred in not discussing merits of the application of external TNMM, adopted as the most appropriate method by the TPO". iv) "Whether on the facts and in the circumstances of the case, the Ld. C/T-(A) erred in fact ... prepare fresh TP study taking itself as tested party. In the revised TP Study, the assessee adopted Transaction Net Margin Method (TNMM) as Most Appropriate Method (MAM) and Operating Margin to Operating Revenue (OM/OR) as “Profit level indicator” (PLI). The assessee selected nine comparable companies whose average margin of operating

Xchanging Solutions Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Circle-7(1)(1), Bangalore

In the result, the appeal is partly allowed

ITA 292/BANG/2022[2017-18]Status: DisposedITAT Bangalore21 Dec 2022AY 2017-18

Bench: Shri N.V. Vasudevan & Ms. Padmavathy S

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri K. Sankar Ganesh, Jt.CIT(DR)(ITAT), Bengaluru

Section 143(2)Section 143(3)

Trade payables Other Method Reimbursement related 7,924,397 Other Method receivables 5. The assessee applied TNM method as the most appropriate method for computing the ALP. Operating Profit/Operating Cost is considered as Profit Level Indicator. The margins computed as per the TP study of the assessee is given below

Alcon Laboratories (India) Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-1(1)(1), Bangalore

In the result, the appeal by the assessee is partly allowed

ITA 224/BANG/2021[2016-17]Status: DisposedITAT Bangalore19 Dec 2022AY 2016-17

Bench: Shri N.V. Vasudevan & Ms. Padmavathy S

For Appellant: Shri Percy Pardiwala, Sr. CounselFor Respondent: Shri K. Sankar Ganesh, Jt.CIT(DR)(ITAT), Bengaluru

Section 143(2)Section 143(3)Section 92C

revenue made adverse observation that assessee incurred excessive sales and distribution expenses and compared to the comparable companies by using CUP as the most appropriate method. He submitted that the revenue has attributed excessive sales and distribution expenditure to the additional function of promoting and developing the marketing intangibles ... Direct expenses 2,26,86,669 Operating Profit 13.04% Operating margin 10. The assessee is applying Transactional Net Margin Method (TNMM) as the most appropriate method for the purpose of computing the arm’s length margin. Operating profit/Operating Cost ratio has been taken as the Profit Level Indicator

Microsemi India Private Limited (Now Merged With Microchip Technology (India) Private Limited), Hyderabad vs. Deputy Commissioner of Income Tax, Circle-5(1)(1), Hyderabad

In the result, the appeal is partly allowed

ITA 211/BANG/2021[2016-17]Status: DisposedITAT Bangalore19 Dec 2022AY 2016-17

Bench: Shri N.V. Vasudevan & Ms. Padmavathy S

For Appellant: Smt. Tanmayee Rajkumar, AdvocateFor Respondent: Shri K. Sankar Ganesh, Jt.CIT(DR)(ITAT), Bengaluru

Section 143(2)Section 143(3)Section 92C

Assessee has preferred the present appeal before this Hon’ble Tribunal. 3. The assessee has chosen Transaction Net Margin Method (TNMM) as the most appropriate method for determining the ALP. Operating Profit by Operating cost (OP/OC) is the Profit Level Indicator (PLI). The PLI of the assessee

Asst CIT Cir 4(3)(2), Mumbai vs. Morgan Stanley India Co.P.Ltd, Mumbai

ITA 1794/MUM/2016[2011-12]Status: DisposedITAT Mumbai15 Dec 2022AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm Co No. 145/Mum/2016 (Arising In Ita No. 1794/Mum/2016 For A.Y. 11-12)

For Appellant: Shri Sunil M. Lala, ARFor Respondent: Shri Samuel Pitta, DR

Section 143(3)Section 144CSection 14ASection 253Section 80G

compared to the independent clients 1.2. In not accepting the Respondent's contention that the Transactional Net Margin Method is the most appropriate method for determining the ALP for the brokerage received from trades executed for the AES.1.3. In not determining the ALP of the aforesaid transaction in accordance with ... provision of broking and derivatives income and support services were benchmarked using Transactional Net Margin Method as the most appropriate method and investment banking services was benchmarked using profit split method and also Transactional Net Margin Method. The learned Transfer Pricing Officer noted that there is an adjustment history

Morgan Stanley India Company P. Ltd, Mumbai vs. Asst CIT RG 4(3)(2), Mumbai

ITA 1715/MUM/2016[2011-12]Status: DisposedITAT Mumbai15 Dec 2022AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm Co No. 145/Mum/2016 (Arising In Ita No. 1794/Mum/2016 For A.Y. 11-12)

For Appellant: Shri Sunil M. Lala, ARFor Respondent: Shri Samuel Pitta, DR

Section 143(3)Section 144CSection 14ASection 253Section 80G

M/S Astrazeneca Pharma India Limited, Bangalore vs. The Deputy Commissioner of Income Tax Large Tax Payers Unit (Ltu) Circle-1, Bangalore

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

ITA 3250/BANG/2018[2014-15]Status: DisposedITAT Bangalore15 Dec 2022AY 2014-15

Bench: Shri N.V. Vasudevan & Shri Chandra Poojariit(Tp)A No.3250/Bang/2018 Assessment Year: 2014-15

For Appellant: Shri Nageswar Rao, A.RFor Respondent: Smt. Susan D. George, D.R

Section 143(3)Section 154Section 80G

erred in approving the same. 7.6 Ld. AO/TPO/DRP have erred in benchmarking subvention receipt using Comparable. Uncontrolled Price ("CUP") as the most appropriate method and further erred in arbitrarily determining arm's length price ("ALP") as INR 86,24,00.000 on the pretext of applying such most appropriate method, contrary ... erred in approving the same. 7.6 Ld. AO/TPO/DRP have erred in benchmarking subvention receipt using Comparable. Uncontrolled Price ("CUP") as the most appropriate method and further erred in arbitrarily determining arm's length price ("ALP") as INR 86,24,00.000 on the pretext of applying such most appropriate method, contrary

Hannover Millano Fairs Inida P.Ltd, Mumbai vs. Asst CIT Cir 10(1)(1), Mumbai

In the result, the present appeal is partly allowed

ITA 2065/MUM/2017[2012-13]Status: DisposedITAT Mumbai12 Dec 2022AY 2012-13

For Appellant: Shri Manuj SabharwalFor Respondent: Ms. Samruddhi Dhananjay Hande

Section 143(3)Section 144C(1)Section 144C(13)Section 144C(5)Section 92C

rejecting the Comparable Uncontrolled Price (CUP) method adopted by the Appellant and adopting Transactional Net Margin Method (TNMM) as the most appropriate method in determination of ALP. 1.2 Without prejudice to 1.1 above, in determination of ALP under TNMM, the Hon'ble DRP erred in confirming the action ... adjudication of the issue raised in the present appeal are that Appellant had adopted Comparable Uncontrolled Price (CUP) Method as the most appropriate method for benchmarking the international transactions with its AEs. During the assessment proceedings, the Appellant was asked by the TPO to substantiate its benchmarking analysis in respect

Tessitura Monti India P.Ltd, Mumbai vs. Asst CIT (OSD) 8(3), Mumbai

In the result, the appeal by the assessee is allowed for statistical purposes

ITA 799/MUM/2015[2010-11]Status: DisposedITAT Mumbai12 Dec 2022AY 2010-11

Bench: Shri M. Balaganesh & Shri Sandeep Singh Karhail

For Appellant: Shri Nitesh JoshiFor Respondent: Shri Samuel Pitta

Section 143(3)Section 144C(5)

that the international transaction of purchase of capital goods is at arm’s length by adopting Comparable Uncontrolled Price (‘CUP’) method as the most appropriate method. Tessitura Monti India Pvt. Ltd. IT(TP)A no799/Mum./2015 5. The AO made reference to the Transfer Pricing Officer (‘TPO’) for the determination ... length price. Accordingly, the TPO accepting Tessitura Monti India Pvt. Ltd. IT(TP)A no799/Mum./2015 CUP as the most appropriate method, proposed a total adjustment of Rs. 6,36,91,154=81 in respect of international transaction pertaining to the purchase of capital goods. The remaining international transactions were

Lintas India Private Limited, Mumbai vs. NFAC, Delhi

The appeal is allowed with the same directions

ITA 595/MUM/2022[2017-18]Status: DisposedITAT Mumbai09 Dec 2022AY 2017-18

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm Acit Cir 3(2)(1) Lintas India Private Limited It Office, R.No. 608, 6 Th 15Th Floor, Express Towers, Floor, Aayakar Bhavan, Nariman Point, Vs. M.K. Road, Mumbai-400021 Mumbai-400020 (Appellant) (Respondent) Pan No. Aaacl0124F Lintas India Private Addl/Joint/Deputy/Acit/Income- Limited 15Th Floor, Express Tax Officer, National Faceless Vs. Towers, Nariman Point, Appeal Centre, Delhi Mumbai-400 021 (Appellant) (Respondent) Pan No. Aaacl0124F Assessee By : Shri Ajit Jain & Siddhesh Chaugule Revenue By : Dr. Yogesh Kamat, Cit Dr Date Of Hearing: 13.09.2022 Date Of Pronouncement: 09/12/2022

For Appellant: Shri Ajit Jain and SiddheshFor Respondent: Dr. Yogesh Kamat, CIT DR

Section 143(3)Section 144CSection 144C(10)Section 144C(5)Section 92C

learned TPO, and AO and the Hon‟ble DRP have erred in rejecting the Comparable Uncontrolled Price(„CUP‟) 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 ... Assessing Officer, under the directions of the Hon'ble DRP have erred in rejecting the Transaction Net Margin Method (TNMM) med, as the most appropriate method for benchmarking these transactions and computing the transfer pricing addition without applying any of the prescribed methods as provided under section

Wns Global Services P. Ltd., Mumbai vs. Addl/Jt/Dy/Asstt/CIT/ITO, Nationa Faceless Assessment Centre, Dilhi

In the result, appeal filed by the assessee is allowed

ITA 1259/MUM/2021[2016-17]Status: DisposedITAT Mumbai09 Dec 2022AY 2016-17

Bench: Shri Vikas Awasthy & Shri Gagan Goyalwns Global Services Pvt. Ltd., Pl 10, Gate No.4, Godrej & Boyce Complex, Pirojshanagar, Lbs Marg, Vikhroli (West), Mumbai-400079. Pan: Aaacw2598L ...... Appellant Vs.. Addl./Jt/Dy./Acit/Ito/Nfac, Room No. 455, Circle-14(3)(1), Mumbai. ..... Respondent Appellant/Assessee By : Sh. Porus Kaka, Sr. Adv. & Sh. Manish Kant Respondent/Revenue By : Sh. Jasdeep Singh, Cit-Dr

For Appellant: Sh. Porus Kaka, Sr. Adv. &For Respondent: Sh. Jasdeep Singh, CIT-DR

Section 143(3)Section 144C(13)Section 92B

determining the value of the shares of AE. The Assessee in its Transfer Pricing Study followed Comparable Uncontrolled Price (CUP) as the most appropriate method. The value determined under the valuation report given by an independent valuer was considered as CUP. Tecumseh Products India (P) Ltd. v. ACIT

Lintas India P.Ltd, Mumbai vs. Asst CIT Cir 3(2)(1), Mumbai

The appeal is allowed with the same directions

ITA 398/MUM/2019[2014-15]Status: DisposedITAT Mumbai09 Dec 2022AY 2014-15

For Appellant: Shri Ajit Jain and SiddheshFor Respondent: Dr. Yogesh Kamat, CIT DR

Section 143(3)Section 144CSection 144C(10)Section 144C(5)Section 92C

Hp India Sales Private Limited, Bangalore vs. Assistant Commissioner of Income Tax, Circle-3(1)(1), Bangalore

In the result, ground 14 is allowed for statistical purposes

ITA 283/BANG/2022[2017-18]Status: DisposedITAT Bangalore07 Dec 2022AY 2017-18

Bench: Shri George George K, Jm & Shri Laxmi Prasad Sahu, Am It(Tp)A No.283/Bang/2022 : Asst.Year 2017-2018 M/S.Hp India Sales Private Ltd. The Assistant Commissioner No.24, Salarpuria Arena Of Income-Tax, Circle 3(1)(1) V. Bangalore. Hosur Main Road Adugodi Bengaluru – 560 030. Pan : Aaacc9862F. (Appellant) (Respondent) Appellant By : Sri.Ajay Vohra, Advocate Respondent By : Sri.Arun Kumar, Cit(Tp)-2-Dr Date Of Pronouncement : 07.12.2022 Date Of Hearing : 06.12.2022 O R D E R Per George George K, Jm : This Appeal At The Instance Of The Assessee Is Directed Against Final Assessment Order Dated 28.02.2022 Passed U/S 143(3) R.W.S. 144C(13) Of The I.T.Act. The Relevant Assessment Year Is 2017-2018. 2. The Assessee Has Raised 13 Grounds In Its Memorandum Of Appeal Dated 22.06.2022. The Learned Ar During The Course Of Hearing, Did Not Raise Any Specific Plea With Regard To Grounds 1 To 5, 10, 12 & 13 (Also Sub-Grounds), Hence, The Same Are Dismissed. The Surviving Grounds, Namely, Grounds 6 To 9, 11 & Its Sub-Grounds, Read As Follows:-

For Appellant: Sri.Ajay Vohra, AdvocateFor Respondent: Sri.Arun Kumar, CIT(TP)-2-DR

Section 143(3)Section 37Section 92B

Communications India (P.) Ltd. v. CIT [2015] 374 ITR 118 held that once the revenue accepts the entity level margins as per the most appropriate method, it 11 IT(TP)A No.283/Bang/2022. M/s.HP India Sales Private Limited would be inappropriate to treat a particular expenditure as a separate international transaction

Lanxess India P.Ltd, Thane vs. DCIT Cir 1, Thane

In the result, the present appeal is partly allowed

ITA 971/MUM/2015[2010-11]Status: DisposedITAT Mumbai06 Dec 2022AY 2010-11

For Appellant: Shri Dhanesh Bafna, Ms. ChandniFor Respondent: Ms. Samruddhi Dhananjay Hande

Section 143(3)Section 144C(13)Section 144C(5)Section 69CSection 92C

transactions pertaining to manufacturing segment. 4. The Appellant had benchmarked the said segment by selecting External Transactional Net Margin Method (TNMM') as the most appropriate method (MAM). However, TPO rejected the same. The TPO called for plant-wise segmental information for export of goods ... applied internal TNMM as the most appropriate method for benchmarking the international transaction for export of goods from Thane Plant. Whereas, the TPO applied the CUP method for benchmarking international transaction of export of goods from Nagda Plant. Thus, the TPO vide order dated 20.01.2014 passed under Section 92CA

Rothschild (India) P. Ltd, Mumbai vs. DCIT Cir 3(2), Mumbai

In the result, the appeal of the assessee is allowed

ITA 1557/MUM/2014[2009-10]Status: DisposedITAT Mumbai06 Dec 2022AY 2009-10

matter of determination of arms’ length price (ALP) of international transaction to the Transfer Pricing Officer (TPO). The assessee adopted TNM method as most appropriate method and “Operating profit by Operating revenue” as Profit level indicator (PLI). The assessee has declared PLI at 17.07%. The assessee selected five comparable companies

ACIT Cir 7(2)(1), Mumbai vs. Merck Ltd, Mumbai

In the result, appeal of the assessee is partly allowed

ITA 1798/MUM/2016[2011-12]Status: DisposedITAT Mumbai05 Dec 2022AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm M/S. Merk Limited Godrej One, 8Th Floor, Dcit 7(2)(1) Pirojshanagar , Range 7(2)(1) Eastern Express Highway Vs. Mumbai Vikhroli(E) Mumbai-400 079 (Appellant) (Respondent) M/S. Merk Limited Acit Cir 7(2)(1) R.No. 573, 5Th Floor, Aayakar Shivsagar Estate A Dr. Bhavan, M.K. Road, A.B. Road, Worli, Vs. Mumbai-400 020 Mumbai-400 018 (Appellant) (Respondent) Pan No. Aaace2616F Assessee By : Ms. Arativissanji, Ms. Astha Shah Revenue By : Shri. Samuel Pitta Date Of Hearing: 07.09.2022 Date Of Pronouncement : 05.12.2022

For Respondent: Shri. Samuel Pitta

Section 143(3)Section 144C(5)Section 4Section 5Section 92CSection 92C(1)Section 92C(2)

respect of international transaction of purchase of raw materials from associated enterprise(„AE‟). (a) Rejection of Appellant’s Most Appropriate Method The learned TPO erred in proposing and the Hon‟ble DRP further erred in confirming the rejection of Transactional Net Margin Method (“TNMM”) considered as the most appropriate method ... proposing and the Hon‟ble DRP further erred in considering the TPO‟s action of selection of Comparable Uncontrolled Price („CUP‟) method as most appropriate method for determining the arm‟s length price of the international transaction ,without appreciating that the purported use of CUP data was not appropriate

Merck Ltd, Mumbai vs. ACIT 7(2)(1), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 1525/MUM/2016[2011-12]Status: DisposedITAT Mumbai05 Dec 2022AY 2011-12

For Respondent: Shri. Samuel Pitta

Section 143(3)Section 144C(5)Section 4Section 5Section 92CSection 92C(1)Section 92C(2)

M/S Toyota Kirloskar Motors (P) Ltd, Bangalore vs. The Assistant Commissioner of Income Tax Ltu Circle-1, Bangalore

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

ITA 150/BANG/2017[2012-13]Status: DisposedITAT Bangalore02 Dec 2022AY 2012-13

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahu

For Appellant: Sri Padam Chand Khincha, A.RFor Respondent: Sri Sunil Kumar Singh, D.R

Section 40A(2)

touchstone of arm's length principle, the lower authorities have erred in adopting the CUP without justifying how the same` is the most appropriate method in the case of the Appellant. 11. The lower authorities have erred in: a. Concluding that the Appellant has not received any economic benefit from ... documentation the segmental results were not given and combined segmental results were calculated by the assessee by adopting the TNMM method as most appropriate method. The TPO considered the segmental financial analysis from the audited financial statements. The TPO after discussing the Rule 10B(2) of the Income Tax Rules

Beetle Ventures Pvt. Ltd, Mumbai vs. ACIT 16(2), Mumbai

In the result, appeal filed by the assessee is allowed

ITA 836/MUM/2022[2015-16]Status: DisposedITAT Mumbai01 Dec 2022AY 2015-16

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Beetle Ventures Private Limited V. Acit – 16(2) Unit No. 155 Room No. 440, 4Th Floor Shah & Nahar Industrial Estate Aayakar Bhavan, M.K. Road S.J. Marg, Lower Parel (W) Mumbai - 400020 Mumbai - 400013 Pan: Aafcb9355H (Appellant) (Respondent) Assessee Represented By : Shri Jayesh Dadiya Department Represented By : Shri Chetan M. Kacha

Section 142(1)Section 143(1)Section 143(2)

appellant was not tax abuse but genuine business transaction. (v). Rule 11UA(2) of the I.T. Rules gives an option to choose the most appropriate method for determination of Fair Market Value. Accordingly, the appellant has chosen the Discounted Free Cash Flow method. As per the technical guidance