INCOME TAX ACT, 1961

Section 92C

Transfer Pricing - Computation of ALP - Selection of MAM -

Assessee-company filed an appeal before High Court. It was submitted on behalf of the assessee that Tribunal was not justified in holding that Berry Ratio was the MAM for computation of ALP, when the assessee as a trader of UPS systems and accessories was selling the same without any value addition. It was further submitted that the Tribunal had not decided all the grounds raised before it by the assessee and without deciding all the grounds of appeal, rather passed a cryptic order. Held: While dealing with the complex issue of TP adjustment and the method to be adopted in the ALP, firstly the final fact finding body is expected to give its own reasons for the method to be adopted for ALP and if the TP given by the assessee is not acceptable to the revenue authorities, cogent reasons have to be clearly spelt in the order. Secondly, if the Tribunal directs the revenue authorities for adopting any one of the methods for determining ALP, the reasons, therefore, have to be clearly spelt by the Tribunal in its order. In instant case, on perusal of the order of the Tribunal, it was found that the alleged reasons given by the Tribunal left more confusion than clarity. Further, the Tribunal had not dealt with all the grounds of appeal raised by the assessee in a proper perspective and after detailed discussion cogent findings had not been returned by the Tribunal, insofar as the method of determining the ALP was concerned. Therefore, the matter was remanded to the Tribunal for deciding the same afresh and the Tribunal was directed to deal with all the grounds raised before it in an appropriate manner and give its reasons for rejecting the CUP method adopted by the assessee or for adopting any other method for determining the ALP.

REFERRED :

FAVOUR : Matter remanded.

A.Y. :

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