The Tax Publishers2021 TaxPub(DT) 0090 (Del-Trib)

INCOME TAX ACT, 1961

Section 92C

TPO had not pointed out any deficiency in either the functional analysis undertaken by assessee for the purpose of selection of tested party or in the reliability of data furnished by assessee for undertaking benchmarking analysis taken the AE as tested party. Accordingly, no cogent reason had been provided by TPO for rejection of AE as the tested party. Accordingly, issue was restored to TPO for fresh analysis and verification after duly considering the detailed workings, arguments and evidences filed earlier by assessee in this regard.

Transfer pricing - Determination of ALP - Selection of comparables - No proper analysis done by TPO

Assessee had entered into international transactions with AE in terms of section 92CA(1) and considered foreign AE as the tested party. Although assessee had selected the foreign Associated Enterprise (AE) as the tested party, TPO selected assessee as the tested party and selected 99 companies as comparable and made TP adjustment. Main reason for rejecting foreign AE as the tested party was stated to be the absence of relatable data of foreign company. Held: TPO had not pointed out any deficiency in either the functional analysis undertaken by assessee for the purpose of selection of tested party or in the reliability of data furnished by assessee for undertaking benchmarking analysis taken the AE as tested party. Accordingly, no cogent reason had been provided by TPO for rejection of AE as the tested party. Further, TPO had selected 99 comparables without actually conducting FAR analysis in respect of each comparable and had undertaken exercise of selection without applying any quantitative and qualitative filters. Accordingly, issue was restored to TPO for fresh analysis and verification after duly considering the detailed workings, arguments and evidences filed earlier by assessee in this regard.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2010-11



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