Benchmarking Analysis during International Transaction

This Income Tax Appellate Tribunal case involved a transfer pricing analysis for the 2014-15 assessment year. The assessee had initially included ITW India Limited as a comparable company in its report but later sought its exclusion. The Tribunal ruled that just as a Tax Officer can remove an inappropriate comparable, an assessee can also claim the exclusion of a company wrongly included. Consequently, the appeal was allowed for statistical purposes.

IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH, „C‟ PUNE – VIRTUAL COURT
BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND
SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER

ITA No.29/PUN/2019

Assessment Year : 2014-15

A Raymond Fasteners India Pvt. Ltd.,
G.No.259, 276/8B,
Nighoje, Taluka Khed,
Pune 410 501
PAN : AAGCA7184G

vs

DCIT, Circle-8,
Pune

Assessee by
Shri M.P. Lohia
Revenue by
Ms. Divya Bajpai
Date of hearing 29-10-2021
Date of pronouncement 01-11-2021

ORDER

This appeal by the assessee emanates from the final assessment order dated 24-10-2018 passed by the Assessing Officer (AO) u/s.143(3) r.w.s.144C(13) of the Income-tax Act, 1961 (hereinafter also called „the Act‟) in relation to the assessment year 2014-15.

2. A bird‟s eye view of the above transfer pricing guidelines clearly transpires that a tested party is normally the one which is least complex or performs simpler functions and assumes minimum risks without owning any valuable intangibles or unique assets; and for which reliable and verifiable information of self and comparables is available for perusal and analysis by the Revenue authorities. The idea is that the relevant information about tested party - be it the assessee itself or the foreign/AE – should be available and the same should be made available to the Department for making the transfer pricing assessment. The thrust is on the relative easiness of the computation of the ALP, which pre-supposes its accuracy. If accuracy itself is compromised in the process, then easiness of the computation is of no avail.

3. Having heard the rival submissions and gone through the relevant material on record, it is seen that the assessee suo motu selected ITW India Limited as a comparable in its transfer pricing study report and now it is seeking its exclusion. The same way in which TPO is entitled to abort a company taken by the assessee as comparable, if it is really not so, there is no impediment in an assessee claiming exclusion of a company wrongly inducted by it in the list of comparables.

4. In the result, the appeal is allowed for statistical purposes. Order pronounced in the Open Court on 1st November, 2021.

Please find attached the enclosed file for the full judgement