| COURT: | ITAT Mumbai |
| CORAM: | R. C. Sharma (AM), Ram Lal Negi (JM) |
| SECTION(S): | 92C |
| GENRE: | Transfer Pricing |
| CATCH WORDS: | ALP, Transfer Pricing |
| COUNSEL: | Harsh Shah, Karishma Phatarphekar, Mukesh Butani, Shreyash Shah |
| DATE: | January 16, 2019 (Date of pronouncement) |
| DATE: | March 15, 2019 (Date of publication) |
| AY: | 2012-13 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 92C Transfer Pricing: It is mandatory for the AO to determine the arm's length price (ALP) of the international transactions by following one of the prescribed methods. He is not entitled to follow any other method or to resort to estimation. The failure to follow one of the prescribed methods makes the entire transfer pricing adjustment unsustainable in law. The legal infirmity cannot be cured by restoring the issue to the TPO. The TPO cannot be allowed another innings to rectify the mistake | |
Section 92C(1) of the Act, contemplates that the arms length price in relation to an international transaction shall be determined by comparable uncontrolled price method; resale price method; cost plus method; profit split method; transactional net margin method or such other method as may be prescribed by the Board. Hence, the TPO is bound to determine the ALP by following one of the prescribed methods, however, we notice that in the present case the Ld. TPO has not followed any prescribed methods and made the transfer pricing adjustment by estimating the man hours and the cost of service per hour. We therefore, find merit in the contention of the Ld. counsel that any ad-hoc determination of arms length price by the Ld TPO u/s section 92 de-hors section 92C(1) of the Act cannot be sustained
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