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2013 (11) TMI 925 - AT - Income TaxTransfer pricing adjustment - Determination of arm's length price - Violation of principle of natural justice - Held that:- show cause notices were issued to the assessee by the TPO at least on two occasions; viz., on 20.4.2009 and 20.7.2009 in the course of T.P. Audit. As far as issue of notice to the assessee before passing of the final order by the Assessing Officer under section 143(3) r.w.s. 144(13) of the Act. Section 144C(13) mandates that upon receipt of the DRP's directions under section 144C(5) of the Act, the Assessing Officer's mandate is to complete the assessment in conformity with the directions of the DRP without providing any further opportunity of being heard to the assessee - Decided against assessee. Reference to TPO - Held that:- it is mandatory for the Assessing Officer to refer all the cases whenever the aggregate value of international transactions is more than ₹ 5 Crores. These instructions are binding on all Assessing Officers. In these cases, there is no need for the Assessing Officer to make a prima facie opinion, except that he/she needs to examine the 3CEB Report to see the aggregate value of international transactions. In the instant case, as the aggregate value of international transactions based on 3CEB Report filed by the taxpayer before the Assessing Officer, exceeded ₹ 5 Crores, he referred the case to the TPO. Therefore, we see no infirmity in referring the matter to the TPO without forming "a considered opinion". In the light of the above reasoning, the first legal point raised by the assessee, namely, the reference to the TPO by the Assessing Officer without forming "a considered opinion" does not stand the test of law and cannot be sustained, therefore this plea of the assessee is rejected - Following decision of Tally solutions Pvt Ltd. v. DCIT [2011 (9) TMI 196 - ITAT BANGALORE] - Decided against assessee. Selection of comparables TPO conducted fresh search for comparables - Held that:- The income arising from international transactions is to be computed having regard to arm's length price as per the guidelines laid down in section 92C of the Act by adopting one of the laid down methods, at the discretion of the competent authority - No ambiguity or absurd consequence of application of Chapter X to persons who are subject to the jurisdiction of taxing authorities in India nor do we find any statutory requirement of establishing that there is a transfer of profits outside India or that there is evasion of tax. Only condition precedent for invoking provisions of Chapter X is that there should be income arising from international transaction and such income has to be computed having regard to arm's length price - Chapter X cannot be made applicable to parties which are subject to the jurisdiction of the tax authorities in India, without there being any material to show transfer of profits outside India or evasion of tax between the two parties - Following decision of Coca Cola India Inc v. ACIT [2008 (12) TMI 67 - PUNJAB AND HARYANA HIGH COURT] - Decided against assessee. From the assessee's T.P. Study and the MSA, it is clear that the assessee group deals with both product development and professional services and the assessee renders services to both the divisions, including product development. The MSA between Yodlee, USA and the assessee envisages product development by the assessee and this aspect does not appear to have been examined by the TPO. Adjustments under Rule 10B - Held that:- Inspite this the TPO has given a detailed disposition on each of the risk involved in the risk profile and his detailed reasons as to why no adjustment is tenable in the case of the assessee - No evidence has been brought on record by the assessee before us, to controvert or to demonstrate that the findings of the TPO were incorrect and that the assessee had a case either for risk adjustment, or for that matter for adjustments for accounting practices, research and development expenditure or marketing expenditure. No case has been made out by the assessee by virtue raising this ground that any of the adjustments sought for are warranted. It cannot be anybody's case that an adjustment has to be necessarily granted whenever or wherever there is difference between the tested party and the comparables. An adjustment for risks etc is a valid principle for comparability, but whether this case entails such an adjustment would depend on the facts of the case. However, in the instant case mere claim for adjustments for risks, research and development expenditure, market expenditure etc serves no purpose as it is not backed by any cogent or clinching evidence. The onus is on the assessee to establish the need for adjustments on specific issues and how these issues affect comparability. In the instant case, the assessee has not discharged the onus and we are, therefore, constrained to dismiss this ground raised by the assessee - Decided against assessee.
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