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2011 (7) TMI 576 - AT - Income TaxInternational transaction - Reference to TPO - Arms length price - recourse to external comparables v/s internal comparables - assessee is carrying on the business of providing services for in-bound, out-bound and local travels - Held that:- As in Birlasoft (India) Ltd. Versus Dy. CIT (2011 (1) TMI 406 - ITAT, DELHI) it has been clearly held that the assessee was justified in undertaking internal comparison on standalone basis by placing on record working of operative profit margin from international transactions with AEs and transactions with uncontrolled parties undertaken in similar functional and economic scenario. Such internal comparison is valid in all the methods. Therefore, an the first instance, the attempt should be made to determine arm's length price of controlled transactions by comparing the same with internal uncontrolled transactions undertaken in same or similar economic scenario. No argument has been made by the DR that economic scenarios of controlled and uncontrolled transactions were different. Therefore, it is held that the transfer pricing analysis should have been done by taking recourse to internal uncontrolled transactions. Whether the method employed by the assessee should have been accepted by AO - Held that: The assessee has not been able to show, on the basis of FAR analysis, that there are material difference in in-bound and out-bound services. However, the profitability in the two segments may be different due to geographical area of the service. Therefore, it will be more appropriate on the facts of this case to compute arm's length price in respect of two segments separately on TNMM - the matter is restored to the file of the Assessing Officer to examine the figures supplied by the assessee and thereafter arrive at the arm's length price after hearing the assessee - in favour of assessee for statistical purposes.
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