“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

M/S Glenmark Pharmaceuticals Ltd, Mumbai vs. DCIT (Ltu)-1, Mumbai

Appeals are disposed off

ITA 7933/MUM/2019[2010-11]Status: DisposedITAT Mumbai18 Jul 2022AY 2010-11

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Vijay Mehta, ARFor Respondent: Shri O P Sharma, DR

Section 07Section 115Section 115JSection 143Section 147Section 30tSection 35

amounting to Rs. 52,31,89,111/- as an international transaction which has been benchmarked adopting Transitional Net Margin Method as the most appropriate method. In the computation of total income, the assessee has given a breakup of claiming of weighted deduction under Section 35(2AB) of the Act. With

ACIT (Ltu-1), Mumbai vs. Glenmark Pharmaceuticals Ltd, Mumbai

Appeals are disposed off

ITA 7742/MUM/2019[2009-10]Status: DisposedITAT Mumbai18 Jul 2022AY 2009-10

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Vijay Mehta, ARFor Respondent: Shri O P Sharma, DR

Section 07Section 115Section 115JSection 143Section 147Section 30tSection 35

ACIT (Ltu-1), Mumbai vs. Glenmark Pharmaceuticals Ltd, Mumbai

Appeals are disposed off

ITA 7582/MUM/2019[2010-11]Status: DisposedITAT Mumbai18 Jul 2022AY 2010-11

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Vijay Mehta, ARFor Respondent: Shri O P Sharma, DR

Section 07Section 115Section 115JSection 143Section 147Section 30tSection 35

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

ITA 2788/MUM/2014[2009-10]Status: DisposedITAT Mumbai18 Jul 2022AY 2009-10

Bench: Shri Aby T Varkey () & Shri Om Prakash Kant () Assessment Year: 2009-10 Lanxess India Private Limited, Asst. Commissioner Of Income-Tax, Lanxess House, Plot No. 162-164, Circle 1, Road No. 27, Wagle Estate, Opp. Iti Vs. 6Th Floor, Asher It Park, Road No. College, Midc, 16-Z, Wagle Industrial Estate, Thane-(West)-400604. Thane. Pan No. Aaccb 3880 A Appellant Respondent Assessment Year: 2009-10 Asst. Commissioner Of Income-Tax, Lanxess India Private Limited, Circle 1, Lanxess House, Plot No. 162-164, 6Th Floor, Asher It Park, Road No. 16- Vs. Road No. 27, Wagle Estate, Opp. Iti Z, Wagle Industrial Estate, College, Midc, Thane. Thane-(West)-400604 Pan No. Aaccb 3880 A Appellant Respondent

For Appellant: Mr. Pratik Shah/For Respondent: Mr. V.K. Agarwal, CIT-DR

Section 143(3)Section 144C(13)

higher of two methods followed whereas the law specifically methods followed whereas the law specifically requires selection of requires selection of Most Appropriate Method. Most Appropriate Method. The Appellant prays that the afo The Appellant prays that the aforesaid additions be deleted. resaid additions be deleted. 4. Without prejudice

Lanxess India P.Ltd, Thane vs. Asst CIT Cir 1, Thane

ITA 2628/MUM/2014[2009-10]Status: DisposedITAT Mumbai18 Jul 2022AY 2009-10

For Appellant: Mr. Pratik Shah/For Respondent: Mr. V.K. Agarwal, CIT-DR

Section 143(3)Section 144C(13)

Toyota Boshoku Automotive India Private Limited, Ramanagaram vs. The Assistant Commissioner of Income Tax, Ltu, Circle-2, Bangalore

In the result, the appeal of the assessee is allowed

ITA 362/BANG/2021[2016-17]Status: DisposedITAT Bangalore18 Jul 2022AY 2016-17

Bench: Shri N.V Vasudevan, Hon’Ble & Shri Laxmi Prasad Sahu

For Appellant: Ms. Hirali Desai, ARFor Respondent: Shri Pradeep Kumar, CIT (DR)

Section 92D

Method ('TNMM') used by the Appellant and IT(TP)A No.362/Bang/2021 Page 3 of 40 applying the Profit Split method ('PSM') as the most appropriate method ('MAM') to benchmark the international transaction of payment of royalty. Without prejudice, while applying PSM, the Learned TPO / Hon'ble DRP erred ... manufacture of automotive components, peculiar to automobile industry. The assessee before us aggregated all the international transaction by using TNNM as the most appropriate method to benchmark IT(TP)A No.362/Bang/2021 Page 18 of 40 the international transactions. The Ld.TPO segregated management fees and royalty payment, which constituted major part

M/S Te Connectivity India Pvt Ltd, Bengaluru vs. Deputy Commissioner of Income Tax, Ltu, Circle-1, Bengaluru

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

ITA 2680/BANG/2017[2013-14]Status: DisposedITAT Bangalore18 Jul 2022AY 2013-14

Bench: Shri N.V. Vasudevan, Vice Preseident & Shri Padmavathy S

For Appellant: Shri Sumeet Khurana, CAFor Respondent: Shri V.S. Chakrapani, CIT(DR)(ITAT), Bengaluru

Section 143(2)Section 143(3)Section 40Section 92

No.2680/Bang/2017 Page 3 of 50 at arm’s length, the assessee filed a TP study adopting Transactional Net Margin Method [TNMM] as the most appropriate method for determination of the Arm’s Length Price (ALP). The Profit Level Indicator (PLI) chosen for the purpose of comparison of the assessee ... 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 :— ****** (e) transactional net margin method, by which,— IT(TP)A No.2680/Bang/2017 Page 15 of 50 (i) the net profit

Van Oord Dredging and Marine Contractors Bv, Mumbai vs. DCIT (It) 4(3)(1), Mumbai

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

ITA 1382/MUM/2017[2012-13]Status: DisposedITAT Mumbai15 Jul 2022AY 2012-13

Bench: Shri Amit Shukla & Shri Amarjit Singhvan Oord Dredging & Vs. Deputy Commissioner Of Marine Contractors Bv Income-Tax (International 201, 2Nd Floor, Central Taxation)-4(3)(1) Plaza, 166 Cst Road, 16Th Floor, Air India Kalina, Building, Nariman Point, Mumbai - 400098 Mumbai - 400020 स्थायी लेखा सं./जीआइआर सं./ Pan/Gir No: Aaach3500M Appellant .. Respondent

For Appellant: Nishant Thakkar &For Respondent: K.C. Kanojiya

Section 144C(13)Section 92CSection 92C(3)

circumstances of the case and in law, the learned TPO / DRP: 4. erred in rejecting 'other method which has been considered as the most appropriate method in VODMC's transfer pricing study report and selecting transactional net margin method without providing cogent reasons for the same and simply relying ... rejected the independent valuer certificate used by the assessee for benchmarking the transaction of charter hire of dredgers using cup as most appropriate method and proceeded to benchmark charter hire dredgers and payment to associate enterprises for sub-contract of specified dredging activities using TNMM and aggregating these transaction

The Boston Consulting Group (India) P. Ltd, Mumbai vs. DCIT 3(1), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 1870/MUM/2014[2009-10]Status: DisposedITAT Mumbai15 Jul 2022AY 2009-10

Bench: Shri M. Balaganesh () & Smt. Kavitha Rajagopal ()

Section 143(3)Section 144(3)Section 234DSection 274

transfer pricing study report, where all the international transactions of the assessee have been aggregated and have been benchmarked applying CUP as the most appropriate method. The AO / TPO has rejected the benchmarking made by the assessee in the transfer pricing study report for the reason that the assessee

Sitel India Ltd, Mumbai vs. DCIT RG 8(3), Mumbai

In the result, appeal by the Revenue is partly allowed

ITA 1777/MUM/2012[2007-08]Status: DisposedITAT Mumbai15 Jul 2022AY 2007-08

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Ajit Jain a/wFor Respondent: Shri Tejinder Pal Singh

Section 10ASection 250

capable of directly marketing its services. For benchmarking this transaction, the assessee adopted the Transactional Net Margin Method (‘TNMM’) as the most appropriate method with Profit Level Indicator (‘PLI’) of operating profit on cost. The assessee adopted certain adjustment for unutilised capacity and on such adjustments it has submitted that

Dy.CIT-8(3), Mumbai vs. Sitel India Ltd., Mumbai

In the result, appeal by the Revenue is partly allowed

ITA 1426/MUM/2012[2007-08]Status: DisposedITAT Mumbai15 Jul 2022AY 2007-08

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Ajit Jain a/wFor Respondent: Shri Tejinder Pal Singh

Section 10ASection 250

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

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

ITA 206/BANG/2021[2016-17]Status: DisposedITAT Bangalore14 Jul 2022AY 2016-17

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(Tp)A No. 206/Bang/2021 Assessment Year : 2016-17 M/S. Epson India Pvt. Ltd., The Deputy 12Th Floor, The Milenia, Commissioner Of Tower A, Income Tax, No. 1,Murphy Road, Circle 2 (1)(1), Ulsoor, Vs. Bangalore. Bangalore – 560 008. Pan: Aaace7858F Appellant Respondent : Shri Padamchand Khincha, Assessee By Ca : Dr. Manjunath Karkihalli, Revenue By Cit Dr Date Of Hearing : 15-06-2022 Date Of Pronouncement : 14-07-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against The Final Assessment Order Dated 25/03/2021 Passed By National E-Assessment Centre, Delhi For A.Y. 2016-17 On Following Grounds Of Appeal: “General Ground 1. The Orders Passed By Learned Additional / Joint / Deputy / Assistant Commissioner Of Income Tax / Income- Tax Officer, National E-Assessment Centre (Hereinafter Referred As "Ao" For Brevity), Learned Deputy Commissioner Of Income Tax (Tp) — 1(2)(1), Bangalore (Hereinafter Referred As "Tpo" For Brevity) & The Honourable Drp-1

For Respondent: Shri Padamchand Khincha

part of AMP expenses, thereby resulting in adopting incorrect base for computing AMP; (iii) Adopting other method prescribed under Rule 10AB as the most appropriate method; (iv) Adopting incorrect AMP ratio of the Comparables; (v) Selecting the following companies as comparables to compute mark-up, which are not appropriate comparables ... Range OP/OR (%) per multiple year rule 35th Percentile 4 7.44% 5 8.69% Median 65th Percentile 6 8.77% The assessee used TNMM as the most appropriate method to determine the arms length price and as the margin was within the permissible limit, the transaction was held to be at arms length

M/S Subex Limited, Bangalore vs. Income Tax Officer Ward-6(1)(4), Bangalore

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

ITA 107/BANG/2019[2014-15]Status: DisposedITAT Bangalore14 Jul 2022AY 2014-15

Bench: Smt. Beena Pillai & Shri. Laxmi Prasad Sahuit(Tp)A No. 107/Bang/2019 Assessment Year : 2014-15 M/S. Subex Ltd., Rmz Ecoworld, The Income Tax Outer Ring Road, Officer, Devarabisanahalli, Ward – 6 (1)(4), Bangalore – 560 103. Bangalore. Vs. Pan: Aabcs9255R Appellant Respondent Assessee By : Shri Ajay Rotti, Ca : Shri Sunil Kumar Singh, Cit- Revenue By Dr Date Of Hearing : 07-06-2022 Date Of Pronouncement : 14-07-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against Order Dated 26/10/2018 Passed By Ld.Ito, Ward – 6(1)(4), Bangalore For A.Y. 2014-15 On Following Grounds Of Appeal: “The Grounds Stated Hereunder Are Independent Of & Without Prejudice To One Another. The Appellant Submits As Under: 1. Assessment & Reference To Learned Transfer Pricing Officer Are Bad In Law 1.1. The Income Tax Officer. Ward — 6(1)(4), Bangalore (Learned Assessing Officer Or 'Ld. Ao') Erred In Making A Reference To The Deputy Commissioner Of Income-Tax, Transfer Pricing —Range 2(2)(1) (Learned Transfer Pricing Officer' Or 'Ld. Tpo'), Inter Alia, Since He Has Not Recorded

For Appellant: Shri Ajay Rotti, CA

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

computing the PLI of tested party of the comparables. The assessee used 4 comparables for SWD service segment. Applying TNMM as the most appropriate method, computed the arms length margin. The PLI in the hands of the comparable was determined by considering weighted average method for the preceding 3 years

J.P. Morgan India P.Ltd, Mumbai vs. Asst CIT RG 4(3), Mumbai

In the result, appeal filed by the assessee is treated as allowed

ITA 1502/MUM/2014[2009-10]Status: DisposedITAT Mumbai13 Jul 2022AY 2009-10

Section 143(3)Section 14A

marketing support services in respect of investment banking mandates executed by the AEs of the assessee. The assessee adopted TNM method as most appropriate method and Operating Profit/Operating cost (OP/OC) as the profit level indicator. The assessee’s margin was 19.13%. The Ld A.R submitted that the assessee had selected

M/S. Yahoo Software Development India Private Limited, Bengaluru vs. The Joint Commissioner of Income Tax, Special Range- 7, Bangalore

In the result, the appeal filed by the assessee stands allowed as indicated hereinabove

ITA 178/BANG/2022[2017-18]Status: DisposedITAT Bangalore11 Jul 2022AY 2017-18

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(Tp)A No. 178/Bang/2022 Assessment Year : 2017-18 M/S. Yahoo Software Development India Pvt. Ltd., Torrey Pines, The Joint Embassy Golf Links Commissioner Of Business Park, Income-Tax, Off Indira Nagar – Special Range – 7, Koramangala Vs. Bengaluru. Intermediate Ring Road, Bengaluru – 560 071. Pan: Aaacy1876D Appellant Respondent Assessee By : Ms. Amulaya, Advocate : Shri Sumer Singh Meena, Cit Revenue By Dr Date Of Hearing : 11-07-2022 Date Of Pronouncement : 11-07-2022 Order Per Beena Pillaipresent Appeal Is Filed By The Assessee Against The Order Dated 25/01/2022 Passed By National Faceless Assessment Centre, Delhi For A.Y. 2017-18 On Following Grounds Of Appeal:

For Appellant: Ms. Amulaya, Advocate

Section 92A(2)(a)

dated 23.11.2012 wherein this Tribunal took the following view:- "64. The next objection of the Assessee is that when the most appropriate method selected for determining ALP is the TNMM there is no reason as to why one should look at price difference in offshore software development and onsite software

Accenture Solutions Pvt Ltd. (Asol) As A Successor to Accenture Serivces Pvt Ltd (Aspl), Mumbai vs. Dy CIT Circle- 14 (1)(1), Mumbai

ITA 8008/MUM/2019[2015-16]Status: DisposedITAT Mumbai07 Jul 2022AY 2015-16

Bench: Shri Baskaran Br & Shri Kuldip Singhassessment Year: 2015-16 M/S. Accenture Solutions The Dy. Commissioner O Pvt. Ltd. (‘Asol’), Income Tax, (As A Successor To Circle 14(1)(1), Accenture Services Pvt. 475, Aayakar Bhavan, Ltd. (‘Aspl’) Which Has M.K. Road, Merged Into Asol With An Mumbai - 400020 Effective Date Of 1 Vs. December 2016) Plant 3, Godrej & Boyce Complex, Phirojshah Nagar, Vikhroli West, Off L.B.S Marg, Mumbai – 400 079 Pan: Aacca8997K (Appellant) (Respondent)

For Appellant: Shri Percy J. Pardiwalla, A.RFor Respondent: Dr. Yogesh Kamat, D.R

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

Licensing of trademark and brand' with an average royalty rate of 3.3%. 19. Without prejudice to the contention that CUP method is the most appropriate method for benchmarking the royalty transaction, erred in rejecting the alternate analysis using TNMM that was submitted by the Appellant for benchmarking the royalty transaction

Vena Energy Patan Power Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Central Circle- 2(2), Bangalore

In the result, the appeal is allowed in favour of the assessee

ITA 198/BANG/2021[2016-17]Status: DisposedITAT Bangalore07 Jul 2022AY 2016-17

Bench: Shri George George K. & Ms. Padmavathy S

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Smt. Susan Dolores George, CIT(OSD)(DR)

Section 115JSection 143(3)Section 40

study, the assessee has IT(TP)A Nos.195 to 198/Bang/2021 Page 4 of 26 chosen Comparable Uncontrollable Price [CUP] method as the most appropriate method (MAM) for determination of the arm’s length price [ALP]. Accordingly, the assessee applied certain filters to arrive at the comparable companies. The assessee selected