Transfer Pricing

Arm’s Length Principle — TNMM is the most appropriate method of determining ALP when the services rendered by the assessee falls under the category of installation services, warranty services and after sales services, as held by MumTrib in ACIT v Schlafhorst Marketing Co Ltd — In favour of: The assessee.

The basis of selection of comparables depends upon the quantum of adjustment that it would permit rather than other factors.

Internal comparables with third party transactions should be preferred wherever possible to external comparables.

Decided on: 12 August 2011.