2019 (5) TMI 1793 - HC - Income Tax

Transfer pricing adjustment - selecting comparable - HELD THAT - This Court is of the considered view that the issue of selection of the comparables for the process of the adjustment consequent upon the transfer pricing exercise does not give rise to any substantial question of law unless the entire exercise is shown to be so perverse as to require re-determination. The Court is not satisfied that in either of the appeals any case has been made out that meets this threshold. Consequently this Court is not satisfied that the impugned order of the ITAT gives rise to any substantial question of law.

Summary

Issues:
1. Condoning delay in re-filing the appeals.
2. Appeals by Revenue and Assessee against the same impugned order.
3. Concern over the correctness of transfer pricing adjustment by the TPO.
4. Whether the selection of comparables for transfer pricing adjustment raises a substantial question of law.

Analysis:

1. The judgment begins by addressing the issue of condoning the delay in re-filing the appeals. The court, after considering the reasons provided in the applications, decides to condone the delay and allows the applications related to CM 13029/2019 and CM 28248/2018 in ITA 252/2019 and ITA 753/2018, respectively.

2. Moving on to the next issue, the judgment highlights that there are two appeals, one by the Revenue and the other by the Assessee, against the same impugned order dated 13th November, 2017, passed by the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2011-12.

3. The central issue raised by both the Revenue and the Assessee pertains to the correctness of the transfer pricing adjustment made by the Transfer Pricing Officer (TPO) through the selection of comparables. This issue revolves around the transfer pricing exercise and the methodology used in selecting comparables for adjustment.

4. The court then delves into the analysis of whether the selection of comparables for the transfer pricing adjustment gives rise to a substantial question of law. It emphasizes that the exercise does not warrant a re-determination unless it is shown to be so perverse as to necessitate such action. The judgment concludes that neither of the appeals has presented a case meeting this threshold, indicating that the impugned order of the ITAT does not raise any substantial question of law.

5. Consequently, the court dismisses both appeals, stating that no substantial question of law has been established in the selection of comparables for the transfer pricing adjustment. The judgment concludes by mentioning that no costs are awarded in this matter, bringing closure to the legal proceedings surrounding the transfer pricing dispute.