2023 (4) TMI 1233

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....r.w.s. 144C(1) of the Income Tax Act, 1961 (for short "the Act") assessee filed this appeal. 2. Brief facts of the case are that the assessee is engaged in the business of software development services and unified data storage solutions. They have filed their return of income for the assessment year 2011-12 on 29/11/2011 declaring a loss of Rs. 1,26,86,720/- under normal provisions of the Income Tax Act, 1961 (for short "the Act") and Rs. 2,11,50,476/- under the provisions of section 115 JB of the Act. According to form PCB, the assessee had international transactions with its associated Enterprises during the year and therefore a reference was made to the Transfer Pricing Officer (Ld. TPO). Learned TPO by order dated 27/01/2015 suggested ....

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....Rs. 1,51,01,866/-. 5. Hence the assessee is before us in this appeal, contending that when once the ITAT concluded in the first round of litigation that the business of the assessee is merely that of a pure distributor, then it is, but natural to conclude that the Resale Price Method (RPM) is the most appropriate method but the authorities below failed to appreciate the fact that the assessee got the goods it sold in the Indian market were provided to the assessee by the parent company at free of cost and the assessee was earning the maximum gross margin after incurring certain expenditure. Assessee further contended that in such situation, TNMM cannot be the most appropriate method. 6. Per contra, it is the contention of the learned DR t....

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....ion and determine the ALP thereof. He submitted that if the view taken by a coordinate Bench of this Tribunal in assessee's own case for the assessment year 2013-14 is followed, the matter needs to be restored to the file of the learned Assessing Officer/learned TPO to adopt the RPM as MAM and to look at the facts from that angle. 8. Learned DR, however, read out the relevant observation of the Co-ordinate Bench of this Tribunal and submitted that the Co-ordinate Bench of this Tribunal observed that as per 10B(1)(b) of the Act, RPM could be applied where the property or service purchased from AE are resold to an unrelated enterprise. He, therefore, submits that the Co-ordinate Bench of this Tribunal recorded its findings on the premise tha....

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....t from its AE and had sold it to unrelated parties in India. Hence, we hold re-sale price method should be the most appropriate method in the instant case. Moreover, the re-sale price method is traditional transaction method which would always be preferable to transactional profit method like profit split method and TNMM. 6.6. Yet another excruciating fact which is relevant to be addressed in the instant case is that the arm's length price adjustment should be restricted only to the value of international transaction. Admittedly, the international transaction involved in the distribution segment is purchase of software by the assessee from the AE. Since the assessee is not making any payment to its AE for the software supplied to it, the ....