2020 (1) TMI 1145 - HC - Income Tax

TP Adjustment - ITAT remanded the matter back to the file of the Assessing Officer to decide the issue afresh by considering the decisions relied upon by the Tribunal for allocation of non-syndication fee between the assessee and associated enterprise after giving opportunity of being heard to the assessee - HELD THAT - In the facts and circumstances of the case, we do not find any error or infirmity in the view taken by the Tribunal in remanding the matter back to the file of the Assessing Officer for a fresh decision in accordance with law. On thorough consideration, we are of the opinion that the proposed questions of law does not arise out of the impugned order of the Tribunal.

Summary

Issues:
Appeal under Section 260A of the Income Tax Act, 1961 regarding the arms length price determination of syndication fee for the assessment year 2007-08.

Detailed Analysis:
1. The appeal challenges the order passed by the Income Tax Appellate Tribunal (ITAT) regarding the arms length price determination of a syndication fee. The Transfer Pricing Officer determined the arms length price at 100% of the fee received by the assessee.

2. The Commissioner of Income Tax (Appeals) upheld the Transfer Pricing Officer's findings, resulting in an addition to the assessee's income. The Tribunal remanded the matter back to the Assessing Officer for a fresh decision based on certain decisions referenced in the order.

3. The Tribunal relied on previous decisions involving M/s Credit Lyonnais and Calyon Bank, directing the Assessing Officer to consider only the fee and charges received by foreign branches for making adjustments under transfer pricing provisions. The Tribunal emphasized that interest income should not be considered for attribution of service charges/fees.

4. The Tribunal's decision was based on the principle that the arms length price should be determined by considering comparable uncontrolled transactions. Since no suitable comparables were provided, the Tribunal found the CIT(A)'s estimation at a rate of 20% to be appropriate for fee and charges other than interest.

5. The High Court found no error or infirmity in the Tribunal's decision to remand the matter back to the Assessing Officer for a fresh decision in accordance with the law. The proposed questions of law were deemed not to arise from the impugned order of the Tribunal.

6. Consequently, the High Court dismissed the appeal without any order as to costs, upholding the Tribunal's decision to remand the matter for a fresh determination of the arms length price of the syndication fee in accordance with the transfer pricing regulations and relevant legal provisions.