2016 (8) TMI 1274 - HC - Income Tax

Appropriateness and correctness of treating the Foreign/Associated Enterprises (AEs) as a tested party - transfer pricing analysis and determination of ALP - ITAT remitted the matter for consideration of the most appropriate method as well as question of the appropriate comparables applicable - assessee approached this court against the observations and findings of the ITAT to the effect that the Foreign AE cannot be considered as a tested party as per sec 92B Held that - This court notices that for re-consideration and determination of the appropriate method as well as appropriate comparables and the tested party it would be convenient and appropriate for the TPO to consider the question which the assessee urges in the present case. The TPO is therefore directed to overlook and not feel bound by the observations of the tribunal and render findings on the merit of the issue No question of law arises

Summary

Issues:
1. Appropriateness and correctness of treating Foreign/Associated Enterprises (AEs) as a tested party for transfer pricing analysis for AY-2009-2010.

Analysis:
The appellant in this case raised a question of law concerning the treatment of Foreign/Associated Enterprises (AEs) as a tested party for transfer pricing analysis for the assessment year 2009-2010. The appellant challenged the findings of the ITAT, which had remitted the matter for consideration of the most appropriate method and appropriate comparables. The appellant contended that the Foreign AE should be considered as a tested party, citing Section 92B and arguing that there is no prohibition in the provision against such consideration.

The High Court acknowledged the need for reconsideration and determination of the appropriate method, comparables, and the tested party in this case. The Court directed the Transfer Pricing Officer (TPO) to disregard the observations of the tribunal and make independent findings on the merit of the issue. The Court emphasized that the TPO should carefully consider the question raised by the appellant regarding the treatment of the Foreign AE as a tested party.

Ultimately, the High Court concluded that since the matter had been remitted to the TPO for further consideration, there was no question of law that required adjudication by the Court. The Court partially allowed the appeal, directing the TPO to reevaluate the issues raised by the appellant regarding the treatment of Foreign/Associated Enterprises as a tested party for transfer pricing analysis.