TNMM is Suitable Method for Determining ALP for International Transactions Concerning Indenting-Transactions: Delhi HC dismisses Appeal [Read Order]

The Delhi High Court dismissed appeal and observed that Transaction Net Margin Method (TNMM) is suitable method for determining Arm’s Length Price (ALP) for international transactions concerning indenting-transactions.

As would be evident, the Delhi High Court, while dealing with the appeals concerning AYs 2007-2008 to 2010-11 had, via order dated 22.07.2016, remitted the appeals to the Tribunal. The appeals in which the orders were passed were ITA Nos.381/2013, 738/2015, 382/2013 & 702/2014.

What has compounded the problems for the appellant/revenue is that, pursuant to the order impugned in the instant appeal dated 21.05.2019 passed by the Tribunal, the Assessing Officer has given effect to the same.

Pursuant to the said judgment of the coordinate bench of the Delhi High Court, the Tribunal passed an order on 22.10.2018, whereby it concluded that the Transaction Net Margin Method (TNMM) was the most suitable method for determining the Arm’s Length Price (ALP) for international transactions concerning indenting-transactions concerning the respondent/assessee and its AEs.”

The Tribunal also concluded that the Berry ratio method for calculating Profit Level Indicator (PLI) was the most appropriate method, insofar as the respondent/assessee is concerned.

A Division Bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “For the present, it is not necessary to dwell on whether it is a delay in filing or re-filing, having regard to the facts noted above. We are closing the instant appeals in view of the fact that the appellant/revenue chose not prefer an appeal against the order dated 22.10.2018 passed by the Tribunal in the AYs referred to hereinabove. According to us, the issues in the above-captioned appeals are pari materia with those that arose in AY 2007-08 to AY 2010-11.”

The Bench concluded by noting that the above-captioned appeals are, accordingly, closed as no substantial question arises for our consideration.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates