Held that\u00a0 Held that if the working capital adjusted margin of the assessee corresponding to the international transaction, which are related to such transaction is better than that of the comparables, in which case no separate adjustment would be warranted. Held that it is evident from the TPO\u2019s valuation that the TPO had cherry picked the numbers (without explaining the basis) and figures from different methods of valuation in both the valuation reports in the manner beneficial to the Revenue. The TPO\u2019s valuation is also not as per the prescribed methods of determining the arm’s length price. Findings of the DRP are upheld, which deleted the transfer pricing addition on buy back of shares. Consequently, deletion of the secondary transfer pricing adjustment is also confirmed. Held that in the absence of a comparable uncontrolled price, arm’s length price cannot be determined at Nil using the same comparable uncontrolled price method. Further placing reliance on the judgement in Sony Ericsson Mobile Communications India Ltd. the Hon\u2019ble Tribunal held that-if an Indian entity has satisfied the transactional net marginal method i.e., the operating margins of the Indian enterprise are much higher than the operating margins of the comparable companies, no further separate adjustment for Royalty expenditure was warranted.\u00a0\u00a0 As regards the adjustment towards royalty payment by the assessee, the DRP upheld the order of the AO\/TPO. Upon appeal before the Hon\u2019ble Tribunal, held that-Neither the TPO nor the DRP has brought on record any comparable uncontrolled price for the royalty payment. (AY. 2009-10)\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 92C : Transfer pricing-Arm\u2019s length price-Comparable-Since working capital adjusted margin of assessee had already been factored in delay in receivables, and further assessee was not charging interest on overdue debts from third parties, and was also not paying any interest to creditors, no adjustment was further warranted-When the TPO could not controvert the independent reports of valuation furnished by the Assessee and followed no prescribed method of determining ALP, yet made additions, the same was termed untenable-With primary adjustment being rejected, consequent secondary adjustment fails too-If an Indian entity has satisfied the TNMM i.e., the operating margins of the Indian enterprise are much higher than the operating margins of the comparable companies, no further separate adjustment for Royalty expenditure is warranted.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-29652","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-7Ig","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/29652","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=29652"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/29652\/revisions"}],"predecessor-version":[{"id":29653,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/29652\/revisions\/29653"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=29652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=29652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=29652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}