ALP recomputed by TPO is Invalid as Assesee Followed Prescribed method (TNMM) u/s 92C of Income Tax Act : ITAT allows appeal of Schaeffler India Ltd

The Income Tax Appellate Tribunal (ITAT) has ruled that the Arm's Length Price (ALP) recomputed by the Transfer Pricing Officer (TPO) is invalid because the assessee, Schaeffler India Ltd., had correctly followed the prescribed method (TNMM) under Section 92C of the Income Tax Act. The ITAT allowed the company's appeal, emphasizing that once an assessee adopts a legally recognized and appropriate method for determining ALP, and provides adequate justification, the TPO cannot arbitrarily recompute it. This decision reinforces the importance of adhering to the specified transfer pricing methods and provides clarity on the limitations of the TPO's power when the assessee demonstrates compliance with the regulations, offering significant relief to Schaeffler India Ltd.