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Tax Publishers
Additions to TP based on CUP ignoring geographical
variations - not questioning assessee's application of Resale price method
Facts:
Assessee
imported 8k Sim cards from its AE in USA and in Hong Kong and was reselling the
same. They adopted resale price method (RPM) as the right benchmarking method
for TP purposes. TPO did not concur with the RPM benchmarking and made
additions to income. On appeal the CIT(A) dropped part of the TP additions
alleging that Comparable Uncontrollable Price (CUP) method was the right method
to be adopted besides giving reasoning for dropping the additions and
benchmarking by referring to technical aspects, product/technology obsolescence
and also holding that geographically the pricing cannot be different. Aggrieved
by this revenue went in appeal -
Held
in favour of the revenue that the TP additions that were dropped by the CIT(A)
were done incorrectly and they were reinstated.
Ed. Note:
The decision is a classic example depicting the saturated maturity of Indian TP
authorities. The SC has recently held in SAP labs case that the issues of ALP
computation may be questions of law if the procedure as per law is not
adequately followed or are found perverse. It is not known whether this
decision is one such fit case for appeal to high court on fact of law and not
on facts of finding.
Case: Asstt. CIT v. Thales DIS India (P) Ltd. 2023 TaxPub(DT) 2560
(Del-Trib)
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