2022 (12) TMI 156 - AT - Income Tax

Transfer Pricing adjustment. - international transaction of the assessee-company with its AEs representing the sale of resins - HELD THAT - Restriction of Transfer Pricing adjustment only in respect of the relevant international transaction of the assessee-company with its AEs representing sale of resins is squarely covered by various judicial pronouncements including the decision of Delhi Bench of this Tribunal in the case of Aithent Technologies (P.) Ltd. 2015 (2) TMI 535 - ITAT DELHI relied upon by the Ld.CIT(A) in his impugned order. DR has also not been able to dispute this position. He has also not cited any case-law which is in favour of Revenue on this issue. We, therefore, respectfully follow the decision of Coordinate Bench of this Tribunal in the case of Aithent Technologies (P.) Ltd. (supra) and uphold the impugned order of the Ld.CIT(A) directing the Assessing Officer to restrict the Transfer Pricing adjustment only in respect of international transaction of the assessee-company with its AEs representing the sale of resins. Appeal of the Revenue is dismissed.

Summary

Issues Involved:
Transfer Pricing adjustment

Detailed Analysis:
The case involved an appeal by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals) regarding a Transfer Pricing adjustment. The assessee, a company engaged in manufacturing, had entered into International Transactions with Associated Enterprises (AEs) exceeding Rs.5 crores. The Transfer Pricing Officer (TPO) revised the turnover filter and selected comparables, leading to a Transfer Pricing adjustment of Rs.5,48,31,917. The Assessing Officer made an addition to the total income based on this adjustment.

The assessee challenged the addition before the Ld.CIT(A), raising objections to the TPO's methodology. The Ld.CIT(A) upheld the TPO's turnover filter, acceptance of entities from Foreign and Co-operative Sectors as comparables, and search process. The Ld.CIT(A) also noted that working capital adjustment was already allowed. However, the Ld.CIT(A) restricted the Transfer Pricing adjustment only to the turnover relating to the sale of resins to AEs, citing a Delhi Tribunal decision. The Revenue appealed this restriction.

During the Tribunal hearing, no one appeared for the assessee, leading to an ex-parte disposal. The Tribunal observed that the issue of restricting the Transfer Pricing adjustment was covered by judicial precedents, including the Delhi Tribunal decision cited by the Ld.CIT(A). The Revenue failed to dispute this position or provide favorable case-law. Consequently, the Tribunal upheld the Ld.CIT(A)'s order to restrict the adjustment to the relevant international transaction of the sale of resins to AEs.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the Ld.CIT(A)'s direction to limit the Transfer Pricing adjustment to the specific international transaction involving the sale of resins to AEs. The decision was based on established judicial precedents and lack of contrary arguments or case-law presented by the Revenue.

The judgment was pronounced in the Court on 15th June, 2022, at Ahmedabad.