Appellate Tribunal reverses CIT(A) decisions on transfer pricing and loose tools, emphasizing method adherence and consistency.

The Appellate Tribunal set aside the Ld CIT(A)'s orders, directing a reexamination of the transfer pricing adjustment for management services and the deletion of the disallowance of writing off loose tools. The Tribunal emphasized adherence to prescribed methods in determining ALP and consistency in decision-making based on past cases. The Tribunal found the TPO's determination of ALP as NIL for management services not in accordance with the law and upheld the assessee's valuation method for loose tools, leading to the allowance of all appeals by the assessee.

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Issues:
- Challenge to transfer pricing adjustment for management services
- Challenge to disallowance of writing off loose tools

Transfer Pricing Adjustment for Management Services:
The assessee challenged the decision of Ld CIT(A) confirming the transfer pricing adjustment for fee paid for management services, with the TPO determining the ALP as NIL. The TPO questioned the necessity of the services received from the AE, lack of evidence of services rendered, absence of cost-benefit analysis, and lack of quantification of services at arm's length. The Ld CIT(A) accepted Arm's Length Price for some items but upheld the adjustment for others. The Appellate Tribunal noted that the TPO applied the benefit test and determined the ALP as NIL, which was not in accordance with the prescribed methods under the law. The Tribunal also considered the necessity of segregating the transaction and the AAR's decision in a previous case. The Tribunal directed the tax authorities to reexamine the issue based on the assessee's contentions and previous rulings.

Disallowance of Writing off Loose Tools:
In AY 2012-13 and 2013-14, the assessee contested the disallowance of writing off loose tools. The Tribunal referred to a previous ruling in AY 2008-09 where a similar disallowance was deleted. The Tribunal agreed with the method adopted by the assessee in valuing loose tools as inventories awaiting use in the production process. Following the previous decision, the Tribunal directed the AO to delete the disallowance for these years. Consequently, all appeals of the assessee were treated as allowed.

In conclusion, the Appellate Tribunal set aside the Ld CIT(A)'s orders on both issues, directing a reexamination of the transfer pricing adjustment for management services and the deletion of the disallowance of writing off loose tools based on previous rulings. The Tribunal emphasized the need for adherence to prescribed methods in determining ALP and consistency in decision-making based on past cases.

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