INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - MAM - CUP or TNMM --- import of parts and components from AE

As regards the issue of MAM in case of assessee in the transaction of import of parts and components for manufacture of PCs was concerned, TPO rejected CUP as MAM on the ground that for applying CUP method, reliable data is required for comparing controlled transaction with an uncontrolled transaction and such reliable data was not available. Also, assessee used weighted average of price of components/parts imported throughout the year and ,therefore, it could not be said that method adopted by the Assessee was CUP as weighted average price was not the actual price in controlled and uncontrolled transaction. Further, there was no publicly available information on prices charged in independent transactions of similar or identical nature, so external CUP could not be applied. Held: Each of the component/part was identified with a unique identification number and the details were captured in TP Analysis. The components/parts were imported throughout the year and were large in number. It was practically impossible to compare each and every import transaction. Also, price would depend on quantity imported and used in the manufacture of computers and hence weighted average would be the most appropriate price that should be chosen for comparison and since internal CUP was used, there was no need to look at publicly available information as doing so would be against the basic feature of CUP method of determination of ALP. Accordingly, CUP was the MAM especially when adoption of CUP as MAM stood accepted in earlier year.

REFERRED :

FAVOUR : in assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 115JB

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