The Tax Publishers2021 TaxPub(DT) 0801 (Jp-Trib)


Section 92C


Transfer pricing - Determination of ALP - Remuneration paid to related parties -

Assessee paid salary/remuneration to certain related parties (wives of directors of assessee-company. In order to determine ALP, show cause notice was issued by TPO to assessee to furnish comparable cases to benchmark salary paid by assessee to above related parties. It was submitted that assessee had applied Comparable Uncontrolled Price (CUP) method for benchmarking Salary paid to these related parties. However, TPO brushed aside submission made by assessee and re computed ALP on the basis of salaries of other employees working in the organization. Held: Both the related persons as well as comparable cases selected by TPO were holding non-teaching faculty role, and were holding and discharging administrative functions in terms of supervising and managerial role in their respective administrative fields. Therefore, besides requisite educational qualification which each of them possessesed what was more relevant was the experience and period of service of such personnel discharging their respective functions which would provide a better and rationale basis for benchmarking analysis. Each of the related persons had rendered services of three years as on 1-4-2014 and thus carried the desired experience and skill set developed over such period of three years with the assessee company of supervising and managerial activities in their respective administrative fields whereas in cases of comparable cases selected by TPO the employees had rendered service ranging from seven months to five years which provided a wide variance and thus, for comparability purposes, it would be appropriate to consider comparable cases who had rendered services for minimum three years and exclude other cases who have rendered services for a lesser period. Therefore, case of Prashant Varma who has rendered service of 4 years and that of Yashwant Sharma who had rendered service of 5 years would be taken as comparable cases and rest all cases were to be excluded for the purposes of comparability analysis.


FAVOUR : Partly in assessee's favour.

A.Y. :



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