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2022 (3) TMI 1533 - AT - Income TaxTP Adjustment - Computation of Arm's Length Price - comparable selection - Tribunal directed to be excluded Infosys BPO Ltd., Eclerx Services Ltd., and Crossdomain Solutions Pvt. Ltd., as comparable companies - HELD THAT:- As comparing the functional profile of the companies with that of assessee we direct exclusion of the aforesaid 3 companies from the list of comparable companies. TPO while determining the ALP has considered the entire turnover of the assessee and made an adjustment under section 92 of the Act whereas in law, an adjustment should be restricted only to the transactions with AE - The law is well settled that the addition on account of determination of ALP should be restricted only to the transactions with AE and it cannot be made in respect of transactions with non-AE. The Hon'ble Mumbai Tribunal in the case of Thyssen Krupp Industries India Pvt. Ltd.[2012 (12) TMI 71 - ITAT MUMBAI]held that the ALP can only be determined on the value of international transaction alone and not on the entire turnover of the assessee at entity level. Also confirmed by HC [2015 (12) TMI 1076 - BOMBAY HIGH COURT] Thus section 92 of the Act can be applied only in respect of international transactions i.e., transactions with AE and the transfer pricing adjustment should be restricted only to the AE related transactions of the assessee. TPO/AO is directed to compute the ALP in the light of the directions as given above, after affording assessee opportunity of being heard.
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