2019 (2) TMI 1449

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.... law for our consideration: "Whether on the facts and in the circumstances of the case and in law, was the Tribunal right in directing Transfer Pricing Officer (TPO) to use Transactional Net Margin Method (TNM Method) to determine the Arms Length Price (ALP) of the respondent's International Transactions on the ground that it is the most appropriate method as it is consistently accepted/adopted by the Revenue?" 3. The respondent is engaged in the manufacturing of resistors and capacitors. The manufacturing facility of the respondent is divided into a Domestic Tariff Area Units (DTA unit) and Export Oriented Units (EOU). In its EOU the respondent manufactured certain high end resistors which were exported to its Associated Enterpri....

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....urther appeal to the Tribunal. In appeal the Tribunal in the impugned order observed the fact that the TNM method on the aggregated international transaction has been consistently applied by the Revenue in determining the ALP of the respondent's International Transactions with its AE's. It noted that the assessment year 2006-07 to assessment year 2008-09 the TPO had adopted the TNM Method on the aggregated International Transaction as the most appropriate method for benchmarking the respondent-assessee's international transactions. In fact in paragraph No.18 the impugned order, the Tribunal observed as under: "18. The case of the assessee before us is that in view of the above said facts and circumstances, there was no merit ....

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....unctional risks which are different for both the segments and consequently, no comparison could be made on the gross profit level, as adopted by the TPO for benchmarking international transactions of the assessee with its associated enterprises. The explanations of the assessee have been rejected by the TPO/CIT(A) without any basis, wherein similar explanation has been accepted by the TPO itself in all the other years. The conduct of the business and the products manufactured are identical in the year under consideration, when compared to the other years i.e. assessment years 2006-07, 2007-08 and 2008-09. In the entirety of the above said facts and circumstances, we are of the view that the adoption of TNMM method was the most appropriat....

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....015 and the same has been admitted on 1st August, 2018. Therefore, this appeal also requires admission. 7. Mr.Joshi, learned counsel opposing the appeal supports the impugned order and submits that no interference is warranted. It is further pointed out that TPO has accepted the TNM method the most appropriate method in determining ALP of the respondent's transaction with its AE's till the assessment year 2015-16. Further, the objection before the revenue has been dealt with by the Tribunal and on examination of the record it has been found that no material difference has been shown for the assessment years 2006-07 and 2008-09 to that existing in the subject assessment year. 8. We have considered rival submissions. We note ....