Transfer pricing adjustment deleted after acceptance of internal TNMM and segmental results in the assessee's own case.

Transfer pricing adjustment was deleted where the Tribunal accepted the assessee's internal TNMM based on segmental AE and non-AE results, and held that it could not be rejected merely because the segmental accounts were unaudited or because the TPO preferred a different cost-allocation method. The Tribunal also declined to sustain the external TNMM benchmarking and idle-capacity related adjustment, noting that the issue was already covered by the jurisdictional High Court in the assessee's own case. On the facts, the arm's length price adjustment was found unwarranted and the assessee succeeded on this issue.

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Issues: Whether the transfer pricing adjustment made by rejecting internal TNMM, disallowing the segmental allocation and idle capacity claim, and applying external TNMM to benchmark the assessee's international transactions was justified.

Analysis: The Tribunal found that the issue was covered by the decision of the jurisdictional High Court in the assessee's own case. It accepted that the assessee's internal TNMM, based on segmental results of AE and non-AE transactions, could not be rejected merely because the segmental accounts were not audited or because the TPO preferred a different view of cost allocation. The Tribunal also held that the impugned adjustment on account of arm's length price was not warranted on the facts and followed the earlier binding decision on the same dispute.

Conclusion: The transfer pricing adjustment was deleted and the assessee succeeded on this issue.

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