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2021 (3) TMI 1262 - AT - Income TaxTP Adjustment - International transactions of the assessee with its associated enterprises - assessee has restricted his arguments in respect of entity level adjustments made by the Ld. TPO - HELD THAT:- Admittedly, it is a well settled principle of law by the decision of Hon'ble Supreme Court in the case of CIT vs. M/s. Firestone International Pvt. Ltd. [2016 (1) TMI 1408 - SC ORDER] affirmed to the findings of Hon'ble Bombay High Court, where the Hon'ble High Court held that TP adjustments cannot be made beyond the transactions of the assessee with its associated enterprises. ITAT, Chennai in the case of Prodapt Solutions Pvt. Ltd. [2019 (3) TMI 1919 - ITAT CHENNAI] has considered an identical issue and held that transfer pricing adjustment has to be made only in respect of transactions of the assessee being a tested party, with associated enterprises after comparing the transactions made by similarly placed company in uncontrolled transactions with non associated enterprises. Thus adjustment can be made only in respect of transactions of the assessee with its associated enterprises, but not to a third party transactions at entity level - TPO as well as DRP has erred in making TP adjustment at entity level - we direct the Ld. TPO to restrict TP adjustment in respect of international transactions of the assessee with its associated enterprises. Working capital adjustment - HELD THAT:- TPO needs to compute working capital adjustment having regard to the margins of the comparables after considering the working capital levels. But, fact remains that the details with regard to working capital adjustment of comparables is not placed before us. Therefore, we are of the considered view that the matter needs to go back to the file of Ld. TPO to re-consider the working capital adjustment in light of the findings of the Tribunal in assessee’s own case for AY 2011-12 [2021 (3) TMI 585 - ITAT CHENNAI].
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