TaxTMI 
TaxTMI 
2026 (9) TMI 1469
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.... the present appeal under Section 260A of the Income Tax Act, 1961 [Act] impugning an order dated 31.12.2025 [impugned order] passed by the learned Income Tax Appellate Tribunal [ITAT] in IT(TP) A Nos. 638 & 639/Bang/2025 in respect of Assessment Years [AY]: 2013-14 and 2014-15. The present appeal arises from the impugned order in so far as it relates to IT(TP) A No. 639/Bang/2025 for AY 2014-2015. 3. The revenue has projected the following question of law for consideration of this Court : "Whether on the facts and circumstances of the case & in law, the Tribunal is correct in directing to accept internal TNMM and delete the transfer pricing adjustment which is in violation of section 92 to 92C of Income Tax Act, 1961 and rule 1....
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....hat the Transactional Net Margin Method [TNMM] is the most appropriate method for determining the ALP. 7. The transfer pricing adjustments as directed by the learned TPO were upheld by the learned DRP, and this led the Assessee to file an appeal before the ITAT. The said appeal, IT(TP)A No. 3353/Bang/2018, was considered along with IT(TP)A No.2746/Bang/2017 in respect of the AY 2014-15. The learned ITAT disposed of the said appeals by an order dated 18.02.2022, whereby the matter was remanded to the learned AO/TPO to carry out the analysis in accordance with its directions. 8. The Assessee had also assailed the decision of the learned TPO to use TNMM as the most appropriate method. However, the Assessee gave up that ground before the ....
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....racy and not the segmental data. The relevant extract of the certificate as set out by the learned TPO in the order dated 29.01.2024 is reproduced below : "We, V.R. Sabnis & Associates, Chartered Accountants have gone through the financial segmental prepared by the management of Sami Labs Limited for AY 2014-15 and certify the correctness of figures and further certify that the key to allocation of expenditure and income are as per the generally accepted rational basis of allocation used in the industry. This certificate is being issued to verify the accuracy and completeness of the financial segment for AY 2014-15 relevant to FY 2013-14, and the aforesaid facts that have been mentioned in the same." 11. The learned TPO....
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....arned TPO concluded that the Assessee had not provided sufficient data on internal comparables, and accordingly rejected the transfer pricing studies furnished by the Assessee. 14. On appeal before the learned ITAT in the second round, the ITAT faulted the TPO for rejecting the certificate. The learned ITAT had examined the said facts and concluded that the Assessee had maintained segmental financials for AE and non-AE transactions which were placed before the learned TPO. The segmental details were derived from the audited books of account, and a chartered accountant certified them, confirming their mathematical accuracy and that the allocation followed generally accepted principles. 15. The learned ITAT found that income and sales h....
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....ifies mathematical accuracy. In addition, it also certifies that the allocation is in accordance with "generally accepted rational basis of allocation used in the industry". The learned TPO's finding that only arithmetical accuracy had been verified and the segmental data had not been maintained is clearly erroneous. It is not disputed that the segmental finances certified by the chartered accountant were extracted from the audited accounts, as found by the learned ITAT. 17. The segment financials indicated that the margin from the international transactions was significantly higher (at 11.32%) than the margins of non-AE transactions, which were reported as 2.42%. This clearly reflected that there was no scope for upward transfer pri....