2024 (12) TMI 645 - HC - Income Tax

TP Adjustment - Tribunal proceeded to recompute the net profit margin earned from unrelated transaction in non-AE segment - By the time the appeal came to be taken up by the Tribunal, it represented the second round of litigation since in the first round of proceedings before it, the appeal was disposed of and the matter remanded back to the TPO - HELD THAT - Tribunal has taken into consideration the undisputed fact that by the time this appeal came to be taken up for consideration, the Department had taken a consistent view in AY 2007-08 to 2011- 12 insofar as comparables and controlled transactions were concerned. Tribunal noted that the TPO had proceeded far beyond the directions of remit which had been framed and undertaken an exercise to recompute the net profit margin. This becomes evident from a reading of paragraph 13, which is reproduced hereinbelow 13. It has been observed that Ld. AO, instead of restricting himself to the directions of this Tribunal proceeded to recompute the net profit margin earned from unrelated transaction in non-AE segment, by substituting the actual cost of employee expense and cost of outsourced work in the unrelated party segments at the same level as that in the related party segment. No ground to entertain this appeal. No substantial question of law arises. The appeal, consequently, stands dismissed.

Summary

The High Court dismissed the appeal by the Principal Commissioner against the order of the Income Tax Appellate Tribunal for Assessment Year 2006-07. The Tribunal had directed a fresh adjudication by the Assessing Officer/Transfer Pricing Officer to determine the arm's length price in international transactions. The Tribunal found that the TPO had exceeded the directions of remit by recomputing the net profit margin. No substantial question of law arose, leading to the dismissal of the appeal.