Tribunal backs assessee on transfer pricing method & profit additions, rejects Revenue's arguments.

The Tribunal upheld the assessee's use of the Comparable Uncontrolled Price (CUP) method for benchmarking international transactions, rejecting the Revenue's proposed adjustments under the Transactional Net Margin Method (TNMM). Additionally, the Tribunal supported the deletion of gross profit additions related to a search and seizure operation, finding no evidence of wrongdoing by the assessee. The Tribunal dismissed the Revenue's appeals and the assessee's cross objections, emphasizing the lack of supporting evidence for the Revenue's contentions and pronouncing the order on September 3, 2020.

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Issues involved:
1. Assailing the decision of accepting the Comparable Uncontrolled Price (CUP) method.
2. Deletion of addition made on account of transfer pricing adjustment.
3. Deletion of addition made to the gross profit.

Issue 1: Assailing the decision of accepting the Comparable Uncontrolled Price (CUP) method:
The appeals by the Revenue and cross objections by the assessee arose from orders of the Dispute Resolution Panel concerning assessment years 2010-11 and 2011-12. The primary issue was the acceptance of the CUP method by the assessee for benchmarking international transactions with overseas Associated Enterprises. The assessee argued that profits were shared equally between AEs participating in transactions, supported by evidence. The Transfer Pricing Officer rejected the CUP method, proposing adjustments based on the Transactional Net Margin Method (TNMM). However, the Tribunal, considering past decisions, upheld the DRP's decision in favor of the assessee, citing consistent views in previous assessment years.

Issue 2: Deletion of addition made on account of transfer pricing adjustment:
The second common issue pertained to the deletion of additions made to the gross profit following a search and seizure operation related to the Commonwealth Games. The Assessing Officer proposed additions based on decreased gross profit, suspecting adjustments due to transactions related to the games. However, the DRP, after examining the evidence, found no wrongdoing by the assessee and deleted the additions. The Tribunal upheld the DRP's decision, noting the lack of adverse findings on the assessee's books of account and the absence of evidence supporting the Assessing Officer's suspicions.

Conclusion:
The Tribunal dismissed the Revenue's appeals and the assessee's cross objections, upholding the decisions of the DRP in both issues. The Tribunal found no reason to interfere with the DRP's decisions, emphasizing the lack of evidence supporting the Revenue's contentions. The cross objections were deemed infructuous in light of the dismissal of the Revenue's appeals. The Tribunal pronounced the order on September 3, 2020, in accordance with the applicable rules.

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