2023 (11) TMI 289

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....19]. 2. We have heard arguments in the above-captioned appeals. 2.1 The following substantial question of law is framed for consideration: (i) Whether the Tribunal misdirected itself on facts and in law in rejecting the Transactional Net Margin Method (TNMM) which was used by the Transfer Pricing Officer (TPO) in ascertaining the Arm's Length Price (ALP)? 3. With the consent of counsel for the parties, the appeals are taken up for hearing and final disposal at this stage itself. 4. The record shows that the Assessing Officer (AO) passed orders dated 30.01.2016, 30.01.2017 and 30.10.2017 under Section 144C read with Section 143(3) of the Income Tax Act, 1961 [in short, "Act"] vis-à-vis the aforementioned AYs i.e.,....

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....g these two aspects in mind, the Tribunal concluded that RPM was the MAM available to benchmark the concerned international transactions. 13. We may note that this view has found resonance in the judgment of a coordinate bench of this court rendered in Principal Commissioner of Income-tax-6 v. Matrix Cellular International Services (P.) Ltd., [2018] 90 taxmann.com 54 (Delhi). 14. The following observations made in the said judgment will be apposite and are extracted hereafter: "7. The dispute before the Court is whether the ITAT erred in adopting the RPM in order to determine the arms' length price in relation to the assessee's business. In the relevant assessment year, the assessee had four AEs. Three of them were wholly own....

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....the remaining sub-clauses of r. 10B(1)(b) makes it clear beyond doubt that RPM is best suited for determining ALP of an international transaction in the nature of purchase of goods from an AE which are resold as such to unrelated parties. Ordinarily, this method presupposes no or insignificant value addition to the goods purchased from foreign AE. In a case the goods so purchased are used either as raw material for manufacturing finished products or are further subjected to processing before resale, then RPM cannot be characterized as a proper method for benchmarking the international transaction of purchase of goods by the Indian enterprise from the foreign AE." 9. Similarly, in Swarovski India Pvt. Ltd. v. ACIT, ITA No. 5621/Del/....