2022 (5) TMI 1521 - AT - Income Tax

TP Adjustment - CIT(A) allowing the customs duty adjustments to the margin of the respondent-assessee company - in whose hands such adjustments should be made? - HELD THAT:- The Co-ordinate Bench of this Tribunal in the case of ACIT vs. Nord Drive Systems Pvt. Ltd. [2019 (12) TMI 32 - ITAT PUNE] held that the adjustments is required to be made only in the profit margin of the comparables.

This decision is being the latest decision on the issue, we do not prefer other decisions referred by the ld. AR. Accordingly, we direct the Assessing Officer/TPO to make adjustments to the margins earned by comparables instead of the margins of the respondent-assessee company. To this extent, the order of the ld. CIT(A) is reversed, hence, ground of appeal no.1 and 2 stands partly allowed.

TP adjustments on account of technical services fees by stating that no additional evidence was filed by the respondent-assessee - as contended that there is no necessity of technical services fees as the respondent-assessee had not started manufacturing activities - CIT-A concluded that the respondent-assessee had availed the technical services from its AEs - HELD THAT:- As on the question of necessity of technical services, it is settled position that the Assessing Officer cannot question the necessity of incurring of the expenditure on technical services, as it is within the exclusive domain of the respondent-assessee. Further, in the case of CIT vs. M/s. Merck Ltd. [2016 (8) TMI 561 - BOMBAY HIGH COURT] held that not adopting one of the mandatorily prescribed methods to determine the ALP in respect of fees of technical services, makes the entire Transfer Pricing Study is unsustainable in law. Thus no illegality in the order of the ld. CIT(A).

Appeal filed by the Revenue stands partly allowed.