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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

Nomura Services India P. Ltd, Mumbai vs. DCIT 10(3), Mumbai

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

ITA 2303/MUM/2013[2008-09]Status: DisposedITAT Mumbai06 Jan 2022AY 2008-09

Bench: Shri Pramod Kumar & Shri Pavan Kumar Gadalenomura Services India Vs. Dcit – Circle 10(3) Pvt Ltd., Aayakar Bhavan, 10Th Floor, Nomura, Mk Road, Off High Street, Mumbai – 400020. Hiranandani Business Park, Powai, Mumbai – 400076. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabcl0053C Appellant .. Respondent Appellant By : Mr.Faruk Irani & Mr Sumin Mehta.Ar Respondent By : Mrs.Vatsala Jha. Dr Date Of Hearing 23.11.2021 Date Of Pronouncement 10.01.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Assessee Has Filed The Appeal Against The Order Passed U/S 143(3) R.W.S 144C(13) Of The Act In Pursuance To Directions Of The Dispute Resolution Panel (Drp) U/Sec144C(5) Of The Act Dated 07.09.2012. Nomura Services India P Ltd., Mumbai. 2. The Assessee Has Filed The Fallowing Grounds Of Appeal As Under:

For Appellant: Mr.Faruk Irani &For Respondent: Mrs.Vatsala Jha. DR
Section 143(3)

TataElxsi 18.97 Arithmetic Mean 17.33 Nomura Services India P Ltd., Mumbai. 5. The TPO find that the assessee has applied TNMM as Most Appropriate Method (MAM) and the operating margin/Profit Level Indicator (PLI) i.e operating profit to operating cost (OP/OC) @ 20%. The TPO has issued notice U/sec 92CA ... income processing, reconciliations, MIS reporting, finance and accounting support, credit risk report generation, journal validation, posting of entries.The assessee has applied TNMM as Most Appropriate Method (MAM) and the operating margin/Profit Level Indicator (PLI) i.e. operating profit to operating cost (OP/OC) @ 18%. The assessee has identified 16 companies as comparables

M/S Software Paradigms Infotech Private Limited, Mysore vs. Assistant Commissioner of Income Tax Circle-1(1), Mysore

ITA 2828/BANG/2017[2013-14]Status: DisposedITAT Bangalore27 Dec 2021AY 2013-14

Bench: Shri. B.R. Baskaran & Smt. Beena Pillaiit(Tp)A No. 2828/Bang/2017 Assessment Year : 2013-14 M/S. Software Paradigms The Assistant Infotech Pvt. Ltd., Commissioner Of No. 316-318, Spi City, Income Tax, Hebbal Industrial Area, Circle – 1 (1), Mysuru – 570016. Mysuru. Vs. Pan: Aalcs7583C Appellant Respondent Assessee By : Shri G.S. Prashanth, Ca Revenue By : Shri Pradeep Kumar, Cit (Dr) Date Of Hearing : 29-11-2021 Date Of Pronouncement : 27-12-2021 Order Per Beena Pillaipresent Appeal By The Assessee Has Been Filed By Assessee Against The Assessment Order Dated 24.10.2017 Passed By The Acit, Circle – 1 (1), Mysuru U/S. 143(3) R.W. 92Ca R.W. 144C(5) Of The Act For Assessment Year 2013-14 On Following Grounds Of Appeal. 1. The Orders Of The Tpo / Drp / Assessing Officer In So Far As They Are Against The Appellant, Are Opposed To Law, Weight Of Evidence, Natural Justice, Probabilities, Facts & Circumstances Of The Appellant'S Case. 2. The Appellant Denies Itself To Be Assessed On A Total Income Of Rs. 10,50,75,429/- As Against Income Of Rs. 6,77,58,220/- As Declared By The Appellant.

For Appellant: Shri G.S. Prashanth, CAFor Respondent: Shri Pradeep Kumar, CIT (DR)
Section 143(3)Section 92C

Software Development 64,54,53,564 Services IT Enabled Services 1,82,24,266 5. The Ld.TPO observed that assessee used TNMM as most appropriate method with OP/TC as PLI. It computed its margin at 13.90% under SWD segment and 13.1% for ITeS services. Assessee used following 9 comparables with