Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (1) TMI 466 - AT - Income TaxBenchmarking approach adopted / contemporaneous documentation rejected - transfer pricing adjustment - international transaction, pertaining to provision of software services ('IT services') and customer support back office services ("ITES Services') to the associated enterprise ('AE'), are not at arm's length under the Income-tax Act, 1961 - Held that:- We have upheld the plea of the assessee for IT service vis-à-vis exclusion of KALS Information System Ltd. and Bodhtree Consulting Ltd. from the final set of comparables. We accordingly, direct the Assessing Officer to re-compute the arm’s length price of the transactions of assessee company with its AEs applying the average profit margin of remaining comparables and if the difference between the arm’s price length so recomputed and the price actually charged is within the limit of +/- 5%, then no Transfer Pricing adjustment is to be made. The grounds of appeal raised by assessee are thus, allowed for statistical purposes. TPO wrongly added and rejected some comparables without even examining as to whether they are functionally comparable or not. If at all the TPO was to reject the same, it was imperative for him to examine all the comparables in the light of the FAR analysis and only thereafter reject the same after passing a speaking order. In the absence of such an approach by the TPO, in our view, the comparability analysis carried out by him is vitiated. In the entirety of the facts and circumstances, we deem it fit to restore this aspect of the issue back to the file of the AO / TPO, who shall consider the aforesaid companies picked up by way of fresh search carried out in ITES segments. Reasonable opportunity of being heard to the assessee should be given in this regard. The said issue with respect to determination of arm’s length price in ITES segment is thus, set aside to the file of AO / TPO and the ground of appeal raised by the assessee in this regard is thus, allowed for statistical purposes.
|