2016 (11) TMI 1510 - HC - Income Tax

Transfer pricing adjustment u/s 92CA - international transactions relating to receipts in respect of investment advisory services - selection of comparables - Held that - This issue raised stands concluded against Revenue and in favour of the Assessee by the decision of this Court in CIT v/s. Carlyle India Advisors (P) Ltd. 2013 (4) TMI 486 - BOMBAY HIGH COURT and CIT v/s. General Atlantic (P) Ltd. 2016 (3) TMI 736 - BOMBAY HIGH COURT Appeal admitted on substantial question at (a) - Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in law in deleting the disallowance of expenditure of ₹ 10,41,90,731/u/ s. 40(a) (ia) of the Act ?

Summary

Issues:
1. Disallowance of expenditure under section 40(a)(ia) of the Income Tax Act, 1961.
2. Deletion of adjustment made on account of transfer pricing under section 92CA.

Analysis:
1. The High Court considered the challenge to the order passed by the Income Tax Appellate Tribunal regarding the disallowance of expenditure of ?10,41,90,731 under section 40(a)(ia) of the Act for the Assessment Year 2008-09. The Revenue raised the question of whether the Tribunal was justified in deleting this disallowance. The court noted that the issue had been settled in favor of the RespondentAssessee in previous decisions of the Court. The Counsel for the Revenue acknowledged this and stated that the issue stands concluded against the Revenue. Therefore, the court held that the question did not give rise to any substantial question of law and thus was not entertained.

2. Regarding the second issue of the adjustment made on account of transfer pricing under section 92CA, the court examined whether the Tribunal was justified in deleting the adjustment of ?8,02,32,972 related to international transactions for investment advisory services. The Revenue questioned the selection of comparables under the IT Act. However, the court referred to previous decisions in similar cases and found that the issue had been settled in favor of the RespondentAssessee. The court noted that the question as framed did not raise any substantial question of law and therefore was not entertained. The appeal was admitted on a substantial question at (a), and the Registry was directed to communicate the order to the Tribunal for further proceedings.

In conclusion, the High Court upheld the decisions of the Tribunal in both issues, citing previous judgments that favored the RespondentAssessee. The court found that the questions raised did not give rise to substantial questions of law and therefore were not entertained, leading to the dismissal of the appeal on those grounds.