2024 (9) TMI 1703 - HC - Income Tax

TP Adjustment - Admit the appeal on substantial questions of law. (1) Whether on the facts and in the circumstances of the case and in law the Hon ble Tribunal was justified in holding that Working Capital adjustment can be made to the arms length operating margin of the comparables under Rule 10B (1)(e)(iii) of the Income Tax Rules 1962? (2) Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in holding that adjustment on account of higher import cost to the arms length operating margin of the comparables can be made under Rule 10B(1)(e)(iii) of the Income Tax Rules 1962? (3) Whether on the facts and in the circumstances of the case and in law the Hon ble Tribunal was justified in granting deduction of 5% when multiple prices in establishing the arithmetic mean were involved even though the same is contrary to the proviso to Section 92C(2) as amended with effect from 1.10.2009? (4) Whether on the facts and in the circumstances of the case and in law the Hon ble Tribunal was justified in holding that Transfer Pricing adjustment is to be made only with reference to sales related to the import of components and spares procured from Associated Enterprises and not to the entire sales of the manufacturing segment of the Assessee? The respondent waives service.

Summary

The Bombay High Court admitted the appeal based on substantial questions of law regarding transfer pricing adjustments under the Income Tax Rules. The reframed questions of law focus on issues such as working capital adjustment, import cost adjustment, deduction for multiple prices, and the scope of transfer pricing adjustments. The respondent waived service, and the court directed the Registrar to summon the original record for inspection. The Registry was instructed to prepare a complete paper book in accordance with the rules.