Transfer Pricing Appeal Succeeds: Internal Comparables Validated, Tax Adjustment of INR 30.2M Overturned Based on Profitability Analysis

ITAT allowed taxpayer's appeal, rejecting transfer pricing adjustment of INR 30,264,835. The tribunal found merit in the argument that internal comparables should not be dismissed solely based on transaction volume. Referencing a prior Delhi HC decision, the tribunal held that comparable entities cannot be automatically rejected due to size disparity. The lower authorities erred in disqualifying the assessee's internal non-arm's length transaction profitability comparison. Consequently, the arm's length price (ALP) adjustment was deleted, affirming the taxpayer's transfer pricing methodology as justified. .....

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