The Delhi Bench of the Income-tax Appellate Tribunal upheld the decision in the case of: Liugong India Private Ltd. v. ACIT (ITA No. 1482/Del/2015) and decided that when comparable are available, the CUP method is the best method to use in computing the arm’s length price.
It is also held that merely for the reason that Transactional Net Margin Method (TNMM) has been used in the Transfer Pricing (TP) report cannot refrain the taxpayer from using CUP during the proceedings if reasonable data is available for comparability purposes. The Tribunal furthermore emphasized on the need for making accurate adjustments to eliminate material factors (including geographical differences) affecting price which may include adjustment of freight and other relevant expenses to arrive at the Free on Board (FOB) value from Cost, Insurance and Freight (CIF) values, cost or the profit arising from such transaction.
