2009 (10) TMI 591 - AT - Income Tax

Arm Length Price - Referred to Transfer pricing officer - No speaking order - It is variation between the arm's length price so determined and price at which the international transaction has actually been undertaken does not exceed 5% of the latter, the price at which international transaction has actually been undertaken shall be deemed to be arm's length price - Decided in the favour of the assessee by way of remand

Whether or not the CIT (A) was justified in excluding Immercus - The risk analysis to the two organizations i e the assessee and the Imercius clearly show that these two entities are not on even ground - merely because a comparable is making loss, it cannot be excluded from the list of comparables for the purposes of computation of arms length price - mercius is a case in which not only functional area is different, Imercius has a negative net worth but also because turnover of the Imercius has no comparison with the assessee companies - Decided against the assessee

When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred - transfer pricing was in the initial stages in this year and we are inclined to take a rather liberal approach by giving assessee an opportunity to make out its case properly and place all the relevant facts before the tax authorities so that proper arms length price can be determined in accordance with the law the proceedings before the tax authorities are not adversarial proceedings and the assessee should not therefore be placed at under advantage because of his inadvertent and bonafide mistakes - The matter stands restored to the file of the Assessing Officer as such - the appeals are allowed for statistical purposes