INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Computation of arm's length price - ALP determination at entity level -

Assessee filed this appeal contending that DRP erred in upholding writ petition confirming the action of TPO in rejecting the transfer pricing analysis/study prepared by assessee, without appreciating that none of the conditions mentioned in clauses (a) to (d) of section 92C(3) were satisfied. Further, it was contended that DRP further erred in upholding/ confirming the action of TPO in rejecting certain appropriate filters adopted by assessee in its transfer pricing study and in applying certain inappropriate filters to select new comparable companies. Held: Instant issue of Chapter X computation to be restricted to assessee's international transactions only is no more res integra in light of decision in CIT v. Firestone International (P) Ltd. [(2015) 378 ITR 558 (Bom) : 2015 TaxPub(DT) 3467 (Bom-HC)]. Thus, Revenue's supporting the lower authorities' action, in computing the assessee's impugned ALP at entity level margin only pertaining to its international transactions with the AEs, was declined. Accordingly, there was merit in the assessee's case, hence the issue was restored back to TPO for his fresh adjudication as per law.

Followed:University of Delhi v. UOI & Ors. [Civil Appeal No. 9488 & 9489/2019, dated 17-12-2019] : 2020 TaxPub(DT) 446 (SC), Collector, Land Acquisition v. Mst. Katiji & Ors. 1987 AIR 1353 (SC) : 1987 TaxPub(DT) 1279 (SC) and CIT v. Firestone International (P) Ltd. (2015) 378 ITR 558 (Bom-HC) : 2015 TaxPub(DT) 3467 (Bom-HC).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2016-17

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