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“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
43
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
41
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
38
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
37
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
35
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
26
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
25
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

M/S. Dell International Services India Private Limited ( Formerly Known As Dell Computer India Private Limited), Bangalore vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore

In the result, appeal of the assessee is partly allowed

ITA 392/BANG/2021[2004-05]Status: DisposedITAT Bangalore28 Sept 2022AY 2004-05

Bench: Shri N. V. Vasudevan & Shri Chandra Poojariit(Tp)A No.392/Bang/2021 Assessment Year : 2004-05 M/S. Dell International Services The Deputy Commissioner Vs. India Pvt. Ltd., Of Income Tax, (Formerly Known As Dell Circle – 2(1)(1), Computer India Pvt. Ltd.,) Bengaluru. 12/1A, 12/2A, 13/1A, Diyashree Greens, Challaghatta Village, Varthur Hobli, Bengaluru-560 071. Pan : Aaach 1925 Q Appellant Respondent Assessee By : Smt. Tanmayee Rajkumar, Advocate Revenue By : Shri. Sumer Singh Meena, Cit(Dr)(Itat), Bangalore Date Of Hearing : 26.09.2022 Date Of Pronouncement : 28.09.2022 O R D E R Per N. V. Vasudevan: This Is An Appeal By The Assessee Against The Final Order Of Assessment Dated 26.04.2021, Passed By The Dcit, Circle – 2(1)(1), Bengaluru, Under Section 143(3) R.W.S. 144C R.W.S. 254 Of The Income Tax Act, 1961 (Hereinafter Called The ‘Act’) In Relation To Assessment Year 2004-05. 2. The Assessee Is The Subsidiary Of Dell International Usa & Is Engaged In The Provision Of Call Centre Support Services, Back-Office Support Services & Offshore Development Support Services [Software Development (“Swd”)] To Its Associated Enterprises (“Aes”). The Assessee Provided The Aforesaid Services To It(Tp)A No.392/Bang/2021 Page 2 Of 12

For Appellant: Smt. Tanmayee Rajkumar, AdvocateFor Respondent: Shri. Sumer Singh Meena, CIT(DR)(ITAT), Bangalore
Section 143(3)Section 92Section 92C

rendering back-office support services is concerned, the assessee as well as the TPO chose Transaction Net Margin Method (TNMM) as the most appropriate method for determining the ALP. The Profit Level Indicator (PLI) chosen for the purpose of comparison of the assessee’s margin with that of the comparable

Continuserve Softech India Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore

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

ITA 242/BANG/2021[2016-17]Status: DisposedITAT Bangalore23 Sept 2022AY 2016-17

Bench: Shri N. V. Vasudevan & Shri Chandra Poojariit(Tp)A No.242/Bang/2021 Assessment Year : 2016-17 Vs. Dcit, M/S. Continuserve Softech India Pvt. Ltd., Circle – 2(1)(1), Prathik Tech Park, 2Nd & 3Rd Floor, Bengaluru. Sy. No.93/1, Veerasandra Village, Attibele Hobli, Hosur Road, Electronic City Phase 1, Bengaluru – 560 100. Pan : Aaacc 8342 A Assessee Respondent Assessee By : Shri. Darpan Kirpalani, Advocate Revenue By : Shri. Sumer Singh Meena, Cit(Dr)(Itat), Bengaluru Date Of Hearing : 22.09.2022 Date Of Pronouncement : 23.09.2022 O R D E R Per N V Vasudevan

For Appellant: Shri. Darpan Kirpalani, AdvocateFor Respondent: Shri. Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 143(3)Section 144C(13)Section 92Section 92(1)Section 92B(1)

Study) to justify the price paid in the international Transaction as at ALP by adopting the Transaction Net Margin Method (TNMM) as the Most Appropriate Method (MAM) of determining ALP. The Assessee selected Operating Profit/Operating Cost (OP/OC) as the Profit Level Indicator (PLI) for the purpose of comparison ... price in relation to an international transaction [or a specified domestic transaction] shall be determined by any of the following methods, being the most appropriate method, in the following manner, namely :— (a) to (d).... (e)transactional net margin method, by which,— (i) the net profit margin realised by the enterprise

M/S. Te Connectivity India Private Limited, Bangalore vs. Assistant Commissioner of Income Tax, Circle- 2, Ltu, Bangalore

In the result, all these appeals are partly allowed

ITA 2593/BANG/2019[2015-16]Status: DisposedITAT Bangalore23 Sept 2022AY 2015-16

Bench: Shri N. V. Vasudevan & Shri.Chandra Poojariit(Tp)A Nos. & Appellant Respondent Assessment Year 2593/Bang/2019 M/S. Te Connectivity India Private Limited, Acit, 2015-16 Te Park, 22B, Doddenakundi Corporation, Circle – 2, 2Nd Phase, Industrial Area, Large Taxpayer Unit, Whitefield Road, Bengaluru Bengaluru – 560 048. Pan: Aabct 7374 C 372/Bang/2021 -Do- -Do- 2016-17 200/Bang/2022 -Do- Dcit, Ltu, 2017-18 Circle – 2, Bengaluru. 716/Bang/2022 -Do- Acit, 2018-19 Circle – 7(1)(1), Bengaluru. Assessee By : Shri Sriram Seshadri, Advocate Revenue By : Shri Sumer Singh Meena, Cit(Dr)(Itat), Bengaluru. Date Of Hearing : 21.09.2022 Date Of Pronouncement : 23.09.2022 O R D E R Per N. V. Vasudevan:

For Appellant: Shri Sriram Seshadri, AdvocateFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 143(3)Section 144BSection 92Section 92ASection 92F

Study was in the following manner: Manufacturing Segment: • The assessee had undertaken an analysis adopting the Transactional Net Margin Method ("TNMM") as the most appropriate method with operating profit margin i.e., Operating Profit/Sales being the Profit Level Indicator ("PLI") for the Licensed Manufacturing segment and mark-up on total cost ... length in accordance with the Indian transfer pricing regulations. EDS Segment in AY 2016-17: • TNMM was adopted as most appropriate method. PLI chosen for comparison was OP/sales. 28 companies were identified as comparables for Assessment Year 2016-17 the services segment [EDS segment], weighted average of operating profit earned

Mega Soft Limited, Chennai vs. DCIT, Chennai

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

ITA 733/CHNY/2017[2012-13]Status: DisposedITAT Chennai21 Sept 2022AY 2012-13

Bench: Shri V. Durga Rao, Hon’Ble & Shri G. Manjunatha, Hon’Bleआयकर अपील सं./Ita No.733/Chny/2017 िनधा"रण वष" /Assessment Year: 2012-13 M/S.Mega Soft Ltd., V. The Dy. Commissioner – No.85, Kutchery Road, Of Income Tax, Mylapore, Chennai-600 004. Corporate Circle-4(1), Chennai. [Pan: Aabcm 8933 A] (अपीलाथ"/Appellant) (""यथ"/Respondent) : अपीलाथ" क" ओर से/ Appellant By Mr.M.Muraleedhara Reddy,Ca & Mr.Nagaprasad, Ca ""यथ" क" ओर से /Respondent By : Dr.S.Palani Kumar, Cit सुनवाई क" तारीख/Date Of Hearing : 28.07.2022 घोषणा क" तारीख /Date Of Pronouncement : 21.09.2022

For Respondent: Dr.S.Palani Kumar, CIT
Section 144(5)Section 144C(13)Section 92B

applicability to facts of the Appellant's case? 4. The AO/DRP erred in choosing Transaction Net Margin Method (TNMM) as the most appropriate method without any reasoned order and choosing the same by default on rejection of CUP method? 5. The DRP erred in substituting TNMM over CUP method ... most appropriate method? 6. The DRP/AO failed to see that they cannot take different stand on same set of facts on the applicability of quantum of services provided, quality and nature of services provided, geographical location of the customers, credit, market risk when applying CUP method and when applying TNMM

Iron Mountain Services Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Circle-3(1)(1), Bangalore

ITA 307/BANG/2022[2017-18]Status: DisposedITAT Bangalore20 Sept 2022AY 2017-18

Bench: Shri N.V. Vasudevan & Shri Chandra Poojariit(Tp)A No.307/Bang/2022 Assessment Year : 2017-18 M/S. Iron Mountain Services Private Limited, Vs. The Deputy Commissioner Of Income Tax, Level 10, Citrine Building Bagmane World Circle – 3(1)(1), Technology Centre, 4, Outer Ring Road, Bengaluru. Mahadevpura, Bengaluru – 560 048. Pan : Aahcm 2578 F Appellant Respondent Appellant By : Shri. Chavali Narayanan, Ca Respondent By : Shri. Sumer Singh Meena, Cit(Dr)(Itat), Bengaluru Date Of Hearing : 20.09.2022 Date Of Pronouncement : 20.09.2022 O R D E R Per N. V. Vasudevan: This Appeal By The Assessee Is Directed Against The Order Dated 27.02.2022 Of National Faceless Assessment Centre (Nfac), Delhi, (Hereinafter Referred To As The Assessing Officer, “Ao” In Short) Passed U/S.143(3) Read With Section 144C(13) Of The Income Tax Act, 1961 (Act) In Relation To Assessment Year 2017-18. 2. The Assessee In Engaged In The Business Of Provision Of Information Technology Enabled Services (Ites), To Its Wholly Owned Holding Company. In Terms Of The Provisions Of Sec.92-A Of The Act, The Assessee & Its Wholly

For Appellant: Shri. Chavali Narayanan, CAFor Respondent: Shri. Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 143(3)Section 144C(13)Section 92Section 92(1)Section 92B(1)Section 92C

Study) to justify the price paid in the international Transaction as at ALP by adopting the Transaction Net Margin Method (TNMM) as the Most Appropriate Method (MAM) of determining ALP. The assessee selected Operating Profit/Operating Cost (OP/OC) as the Profit Level Indicator (PLI) for the purpose of comparison. The OP/OC

Watanmal (India) Pvt Ltd, Chennai vs. DCIT, Corporate Circle-3(2), Chennai

In the result, both the appeals filed by the assessee are allowed

ITA 2407/CHNY/2017[2008-09]Status: DisposedITAT Chennai16 Sept 2022AY 2008-09

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./I.T(Tp).A. No. 4/Chny/2018 & I.T.A. No. 2407/Chny/2017 िनधा"रण वष"/Assessment Years:2006-07 & 2008-09 Vs. The Deputy Commissioner Of Watanmal (India) Pvt. Ltd., Old No. 12, New No. 14, Ground Floor, Income Tax, Sripuram Second Street, Royapettah, Corporate Circle 3(2), Chennai 600 014. Chennai. [Pan:Aaacw6624B] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri T. Banusekar, C.A. ""थ" की ओर से/Respondent By : Dr. S. Palanikumar, Cit सुनवाई की तारीख/ Date Of Hearing : 05.09.2022 घोषणा की तारीख /Date Of Pronouncement : 16.09.2022 आदेश /O R D E R Per V. Durga Rao,: The Appeal Filed By The Assessee For The Assessment Year 2006- 07 Is Directed Against The Order Passed By The Ld. Dispute Resolution Panel -2, Bengaluru Under Section 143(3) R.W.S. 147 R.W.S. 92Ca(3) R.W.S. 144C(5) R.W.S. 254 R.W.S. 144C(5) Of The Income Tax Act, 1961 [“Act” In Short] Dated 27.12.2017. The Appeal Filed By The Assessee For The Assessment Year 2008-09 Is Directed Against The Order Of The Assessing Officer Under Section 143(3) R.W.S. 147 R.W.S. 92Ca(3) R.W.S.

For Appellant: Shri T. Banusekar, C.AFor Respondent: Dr. S. Palanikumar, CIT
Section 133ASection 143(1)Section 143(3)Section 147Section 148Section 92C

thereby, the total income of the assessee has been assessed at ₹.47,53,988/-. 3. The assessee has chosen TNMM as the Most Appropriate Method for determining the Arm’s Length Price of the international transactions. Operating Margin upon Operating Cost has been chosen as the PLI. The assessee conducted ... determining the Arm's Length Price. 1.1 It was submitted that the Assessing Officer accepted TNMM adopted by the applicant as the Most Appropriate Method and Operating Margin upon Operating Cost as the PLI. While the Assessing Officer accepted the search criteria applied by the applicant and the resultant three

Walvoil Fluid Power India Private Limited, Bengaluru vs. Joint Commissioner of Income Tax, Circle-7(1)(1), Bengaluru

In the result, the appeal by the assessee is allowed

ITA 339/BANG/2022[2011-12]Status: DisposedITAT Bangalore14 Sept 2022AY 2011-12

Bench: Shri N.V. Vasudevan & Ms. Padmavathy Sit(Tp)A No.339/Bang/2022 Assessment Year : 2011-12 Walvoil Fluid Power India Pvt. Ltd., Vs. The Deputy Commissioner No.19, 2Nd Cross, 2Nd Main, Of Income Tax, Kiadb Attibele Industrial Area, Circle 7(1)(2), Attibele, Anekal Taluk, Bengaluru. Bengaluru – 562 107. Pan: Aaacw 5954E Appellant Respondent Appellant By : Shri R.E. Balasubramaniyan, Ca Respondent By : Dr. Shankar Prasad, K., Addl. Cit-Dr Date Of Hearing : 07.09.2022 Date Of Pronouncement : 14.09.2022 O R D E R Per Padmavathy S.This Appeal Is Against The Final Order Of The Ao Passed U/S. 143(3) R.W.S. 144C(13) Of The Income-Tax Act, 1961 [The Act] Dated 28.01.2022 For The Assessment Year 2011-12 On The Following Grounds:- “1. That The Order Of The Ld. Ao Insofar As It Is Prejudicial To The Interests Of The Appellant Is Opposed To Law & Facts Of The Case. 2. That In The Calculation Of Alp The Ld. Ao Erred In Including Entities Such As M/S Dhp India Ltd & The Sundram Bleistahl

For Appellant: Shri R.E. Balasubramaniyan, CAFor Respondent: Dr. Shankar Prasad, K., Addl. CIT-DR
Section 143(2)Section 143(3)Section 37(1)

purchases from AE constituted 42% and sales to AE was 9%. The assessee has chosen Transaction Net Margin Method (TNMM) as the most appropriate method for computation of ALP. Operating Profit / Operating Cost is the Profit Level Indicator. The assessee chose 4 comparables whose average margin ... list of com parables. 7. We have considered the rival submissions and perused the material on record. The assessee followed TNMM as the Most Appropriate Method [MAM] for the determination of ALP. Before going into the merits of this case, we will first look into the legal position with regard

Hsbc Professional Services (I) P. Ltd, Mumbai vs. DCIT RG 8(2), Mumbai

ITA 8823/MUM/2011[2006-07]Status: DisposedITAT Mumbai13 Sept 2022AY 2006-07

Bench: Shri Aby T Varkey () & Shri Om Prakash Kant () Assessment Year: 2006-07 Jcit-8(2), (Osd), M/S Hsbc Professional Services Room No. 216-A, Aayakar (India) Pvt. Ltd., Bhavan, M.K. Road, Vs. Kamla Bhavan, Swami Nityanand Mumbai-400020. Marg, Andheri (East), Mumbai-400069. Pan No. Aabch 0705 R Appellant Respondent Assessment Year: 2006-07 Hsbc Professional Services The Deputy Commissioner Of (India) Private Limited, Income-Tax Range 8(2), 6Th Floor, Shiv Building, Cts Vs. Mumbai. No. 139 & 140B, Sahar Road, Vile Parle (East), Mumbai-400057. Pan No. Aabch 0705 R Appellant Respondent Assessee By : Mr. Niraj Sheth, Ar Revenue By : Mr. V.K. Agarwal, Dr Date Of Hearing : 01/07/2022 Date Of Pronouncement : 13/09/2022

For Appellant: Mr. Niraj Sheth, ARFor Respondent: Mr. V.K. Agarwal, DR
Section 92CSection 92C(2)Section 92D

Transactional Net M/s HSBC Professional Services Pvt. Ltd. Professional Services Pvt. Ltd. ITA Nos. 8753 & 8823/M/2011 Margin Method (TNMM) a (TNMM) as the most appropriate method s the most appropriate method for benchmarking international transactions. The benchmarking international transactions. The Ld. TPO has noted the TPO has noted the admission ... length price of the international transa length price of the international transactions. As far as selection of ctions. As far as selection of most appropriate method as Transactional Net Margin Method most appropriate method as Transactional Net Margin Method most appropriate method as Transactional Net Margin Method (TNMM), there