CBDT backtracking on Development Centre Circulars - Reason to cheer?

On June 29, CBDT issued a press release to withdraw Circular No. 2/2013 and amend and reissue Circular No.3 dated March 26, 2013. CBDT has clarified that Circular No. 2 was rescinded as it appeared to give an impression that Profit Split method (PSM) was the preferred method in cases involving unique intangibles. CBDT press release also states that requirement of cumulatively satisfying all the conditions specified in old Circular, for classification as "contract R&D service provider with insignificant risk ", was perhaps too restrictive. It has also clarified the meaning of phrases like 'economically significant functions' and 'low or no tax jurisdiction'.


Does the CBDT move of rescinding Circular No. 2 and amending Circular No. 3 indicate a business friendly approach? Will it bring absolute clarity on TP issues related to R&D centres as claimed by CBDT and result in resolution of disputes? What could be the impact of CBDT's dictum that TPO should be guided by the conduct of parties and not merely by terms of contract?