Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (12) TMI 406 - AT - Income TaxTP Adjustment - comparable selection - Application for admission of additional evidences - assessee submitted that in the present AY, being first year, the assessee had erroneously considered the comparable companies engaged in ‘financial and leasing services’ (hire purchase and leasing services, investment services, other financial services, other consultancy services) to benchmark the subject international transaction instead of considering comparable companies engaged in providing ‘business support services’. HELD THAT:- Section 92CA(3) rests obligation on TPO to determine the arm’s length price in relation to the international transaction in accordance with sub-section (3) of section 92C. This exercise at one end is to accept or discredit the TPSR of the assessee on the other hand obliges the TPO to make an independent enquiry of his own on the question of determination of ALP. The point is that in present AY the TPO accepted the comparables of segment taken by assessee without questioning if the assessee was right in taking up comparable of segment financial services/ selling of financial products however in same set and scope of business activity and model when accepted in AY 2008-09 onwards the assessee’s changed stand with comparables of different segment of ‘business support services’. Thus the comparables of segment AY 2008-09 onwards are binding on the TPO and if those are accepted the whole TPSR becomes defective and that causes prejudice to both the parties. In any case, if additional evidence of fresh TPSR on new set of comparables is allowed, the TPO will still have a right to not consider the same and allege that in present AY the comparables of right segment were taken. Admissibility of additional evidence we are of the considered view that Rule 29, bars the right of parties to the appeal to produce additional evidence either oral or documentary. However, if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders, the additional evidence can be called for. Further the Rule 29 provides that for ‘any other substantial cause’ also the Tribunal can allow the additional evidences. in the case in hand the facts and circumstances establish that either both TPO and the assessee or the TPO only hand failed to take comparables of correct segment. Thus, there is force in the contention of assessee that both the assessee and TPO were mistaken on facts of the functional profile of the assessee to consider comparables engaged in ‘financial and leasing services’ instead of ‘business support services’. Hence at the end, before us, neither the assessee nor the Revenue can completely justify the comparables accepted by them. Assessee has sought indulgence of the Bench to allow the additional evidences of new set of comparables, but, the same require verification as the whole exercise has to be done again by the TPO who has right to rebut the same. Thus, the question of admissibility of these evidences as to the assessee had opportunity to lead this evidence at the first instance or that the assessee has created this evidence subsequently is not of much consequences. The evidence is from the contemporary data of relevant AY only so there is no question of assessee taking advantage of subsequent facts or something created by assessee ex post facto. The nature of fresh set of comparables require a fresh look into all the issues, substantially and incidentally involved due to erroneously taking comparables of wrong segment by both the assessee and the TPO. Thus, we are inclined to allow the application of the assessee. Impugned final assessment order is set aside and the TPO is directed to accept the fresh evidence and report of the assessee for the purpose of Section 92C of the Act r.w. Rule 10B of the Income-tax Rules, 1962 and, after giving further opportunity of hearing to the assessee pass a fresh order. The assessee will be at liberty to raise further incidental issues afresh before the TPO/AO. In the result, the appeal of the assessee be considered allowed for statistical purposes.
|