2016 (11) TMI 1732 - AT - Income Tax

TP Adjustment - filters adopted by the TPO - HELD THAT - From the above finding of the DRP, it is very clear that the order of the DRP is very cryptic and without any reasoning and therefore, we find force in the submissions of the assessee that the entire issue should be restored back to the file of the AO/TPO/DRP for fresh decision. Hence, we set aside the order of the AO and restore the matter back to his file for a fresh decision after allowing adequate opportunity of being heard to the assessee. No adjudication is called for on merit of any of the issues involved in this appeal. Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues:
Transfer Pricing Related
1. Adjustment to transfer price
2. Selection of comparable companies
3. Application of filters for comparable companies
4. Inclusion of third-party sales in transfer pricing analysis
5. Applicability of amended proviso to sec.92C(2)
Other than Transfer pricing related
6. Treatment of software expenses
7. Disallowance of software expenditure
8. Deduction claimed under Chapter VIA
9. Computation of interest under section 234B
10. Adjustment of interest due under section 234C
11. Extension in due date for payment of advance tax

Transfer Pricing Related:
The appellant filed an appeal against the assessment order for A.Y. 2006-07 concerning transfer pricing issues. The grounds raised by the assessee included challenges to the adjustment made to the transfer price, selection of comparable companies, application of filters for comparability analysis, inclusion of third-party sales in transfer pricing analysis, and the applicability of the amended proviso to sec.92C(2). The DRP's order was found to lack reasoning, leading to the decision to set aside the AO's order and restore the matter for a fresh decision after providing the assessee with an opportunity to be heard. No adjudication on the merits of the issues was made, and the appeal was partly allowed for statistical purposes.

Other than Transfer pricing related:
Regarding issues not related to transfer pricing, challenges were raised concerning the treatment of software expenses, disallowance of software expenditure, deduction claimed under Chapter VIA, computation of interest under section 234B, adjustment of interest due under section 234C, and extension in the due date for payment of advance tax. However, due to the decision to set aside the AO's order for transfer pricing issues, no adjudication on the merits of these issues was made. The appeal was partly allowed for statistical purposes.