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ITAT allowed the assessee's appeal on transfer pricing, holding that for the international transaction of import of finished goods from its AE, the assessee functions as a routine distributor with no value addition, assuming limited risks, while the AE is the principal undertaking manufacturing, HQ and marketing functions and major risks. Accordingly, the assessee was rightly treated as the tested party and Resale Price Method (RPM), with PLI of gross profit to sales, was held to be the Most Appropriate Method instead of TNMM. The TP adjustment made by the TPO/AO was thereby held unsustainable.
ITAT allowed the assessee's appeal on transfer pricing, holding that for the international transaction of import of finished goods from its AE, the assessee functions as a routine distributor with no value addition, assuming limited risks, while the AE is the principal undertaking manufacturing, HQ and marketing functions and major risks. Accordingly, the assessee was rightly treated as the tested party and Resale Price Method (RPM), with PLI of gross profit to sales, was held to be the Most Appropriate Method instead of TNMM. The TP adjustment made by the TPO/AO was thereby held unsustainable.
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