2015 (12) TMI 1076 - BOMBAY HIGH COURT

Transfer pricing adjustment - Tribunal restricting the Transfer Pricing (TP) adjustment only to the transaction between the Associated Enterprises (AEs.) - Held that:- in terms of Chapter X of the Act, redetermination of the consideration is to be done only with regard to income arising from International Transactions on determination of ALP. The adjustment which is mandated is only in respect of International Transaction and not transactions entered into by assessee with independent unrelated third parties. This is particularly so as there is no issue of avoidance of tax requiring adjustment in the valuation in respect of transactions entered into with independent third parties. The adjustment as proposed by the Revenue if allowed would result in increasing the profit in respect of transactions entered into with nonAE. This adjustment is beyond the scope and ambit of Chapter X of the Act. - Decided in favour of assesee

Appeal admitted on Question Nos.(b)Disallowance of payment of royalty, project engineering and manufacturing drawing fees - ITAT allowed the claim

and (c)Disallowance of payment of liquidated damages - ITAT allowed the claim