2014 (6) TMI 697

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....- "1. The assessment order passed by the learned Assessing Officer u/s 143(3) r.w.s. 144C(13) pursuant to the directions of learned DRP is bad in law and against the principles of natural justice. The directions issued by the learned DRP are in violation of the principles of natural justice. 2. The learned DRP erred in not holding that, under the facts and circumstances of the case, comparable uncontrolled price method (CUP) is the most appropriate method (MAM) in determining the arm's length price of the assessee. The learned DRP ought to have appreciated the fact that there is an internal CUP available for the year under consideration hence, CUP is the MAM to determine the arm's length price of the assessee. 3. The learned DRP erred in....

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....assessee's case has been that it is only doing a job work for the AE and, as per the arrangement, it is recovering the labour charges from them. The purchase/import of the raw material from the AE is without any mark up and the export prices are fixed after adding up labour charges. The business model of the assessee is entirely different which has no comparables for benchmarking and therefore the assessee's margin on account of labour charges should be treated as at arm's length. The Assessing Officer held that the assessee has not submitted transfer pricing study report for benchmarking its international transaction and therefore TNMM should be applied as the most appropriated method, after taking OP/OC as PLI. Thereafter the TPO searched....

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...., the comparables chosen by the TPO, who are full fledged independent manufacturers cannot be prima facie considered for the purpose of comparability analysis, as in all the cases of comparables there is a value addition and a mark up on cost at the time of sale. However the assessee has also not given any external comparables who are carrying out similar kind of job work for unrelated parties. Before us, the learned counsel Sri Vijay Mehta had submitted that there are internal CUP available with the similar transaction carried out by the third parties on similar negotiated price, which is evident from the invoices raised by them (which has also been placed in the paperbook before us) and once there is a direct method of CUP available, then....