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2018 (4) TMI 383 - AT - Income TaxAddition on account of transfer pricing adjustment - transactions with the non-AEs - Provision of software development services - Held that:- As the entire exercise under Chapter-X of the Act is confined to computing total income of the assessee from international transactions having regard to the arm’s length price, there is no scope for computing income from non-international transactions also having regard to the ALP. Since the TPO has computed the transfer pricing adjustment qua all the transactions carried out by the assessee with reference to the base of ‘Total costs’, also inclusive of costs relevant for transactions with non-AEs, we cannot countenance such a point of view. Hon’ble Delhi High Court in CIT VS. Keihin Panalfa Ltd. (2016 (5) TMI 203 - DELHI HIGH COURT), in which it has been held that the transfer pricing adjustment can be made only with reference to the international transactions and not the transactions with the non-associated enterprises. Transfer pricing adjustment cannot be made with reference to the non-AE transactions, but, the same has to be confined only to the international transactions. Since the TPO/AO has proposed/made the addition on the basis of transactions even with non- AEs, we set aside the impugned order and send the matter back to the file of the AO/TPO for deciding the issue afresh as per law after allowing a reasonable opportunity of hearing to the assessee. In deciding the issue afresh, it will be open to the TPO/assessee to depart from the earlier stand and take into consideration later developments in law having bearing on the issue, wherever applicable
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