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2018 (4) TMI 1957 - AT - Income TaxTP Adjustment - ALP determination - AO accepted the consideration received by FIPL from the assessee as appropriate and did not make any adjustment on account of ALP - whether the fact that income declared by FHPL and FIPL has been accepted as at Arm’s Length, means that the corresponding payment by the Assessee to FHPL and FIPL should also be regarded as at Arm’s Length? - HELD THAT:- ALP has to determined in the hands of the Assessee irrespective of the acceptance of ALP in the hands of FHPL and FIPL. The question as to whether the payment for such services are at Arm’s Length or commensurate with the benefit received by the Assessee are all matters which needs examination by the TPO. No such exercise has been carried out by the TPO. But that does not mean that the ALP has been established by the Assessee. It would be just and proper to set aside the order of the Assessing Officer on this issue and remand the question of determination of ALP to the TPO for fresh consideration. It is made clear that the TPO shall not dispute that services were rendered by the AE. If the approach of the Assessee in adopting TNMM at entity level is disputed by the TPO, the Assessee should be permitted to file TP study for each of the international transaction separately. Assessee is also directed to file the TP study, if not already filed which is in accordance with the provisions of the Act and substantiate that the price paid by it to its AE is at arm's length within the methods laid down in the Act and the judicial decisions rendered on this issue. TPO will consider the same in accordance with the law, after affording an opportunity of being heard. Validity of the order of assessment making addition on account of adjustment in ALP suggested by TPO on the ground that TPO did not confront to the Assessee information received from IRA, Singapore - As as already held, the TPO misdirected himself by not examining these evidence on the premise that the payment to the AE’s was only with a view to reduce tax liability in India and to shift profits earned in India out of India. The tests laid down in the judicial decision referred to in the earlier part of this order have to be applied to the evidence filed by the Assessee. Since this exercise has not been carried out, we have remanded the issue to the TPO for fresh consideration. Assessee vehemently argued that the revenue should not be given a second innings. We are of the view that there cannot be any estoppels in cases involving Transfer Pricing. These are new provisions and are evolving. The ITAT special bench in the case of Quark Systems Pvt.Ltd. [2009 (10) TMI 591 - ITAT, CHANDIGARH] has held that there cannot be estoppel in Transfer Pricing issues and the law on the subject was evolving and it would not be unfair to hold that an Assessee can take a stand that a company chosen by it as comparable is in fact not comparable. Keeping in mind the decision of the Special Bench referred to above, we are of the view that the determination of ALP is an exercise which has to be carried out by the TPO in accordance with the provisions of the Act. Appeal by the Assessee is treated as allowed for statistical purpose.
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