2022 (2) TMI 810 - AT - Income Tax

TP Adjustment - including the comparables i.e. M/s. Jain Granites Projects India Ltd. and M/s. Somany Ceramics Ltd. for determining the adjustments made of Arm's Length Price under Section 92CA - HELD THAT - We find that, by including the above two comparables raised in the grounds of Appeal, the Arm Length Price charges would change to 37.5% to 41%, which is still within the tolerance margin of 5% of the TP guidelines. We, by taking note of the concerns expressed by the ld. CIT, DR and make it clear that as a result of the dismissal of the Revenue's appeal on the ground of low tax effect, the said order would not act as a precedent where there is a tax effect in any subsequent or prior year where the Revenue would want to agitate the issues on similar grounds before the ITAT on merit. Accordingly, in the light of the submissions of the ld. AR and the DR, the appeal of the Revenue is dismissed.

Summary

Issues:
1. Appeal by Revenue against CIT(A) order for AY 2008-09.
2. Exclusion of comparables M/s. Jain Granites & Project India Ltd. and M/s. Somany Ceramics Ltd.
3. Arm's Length Price adjustments within tolerance margin.
4. Precedent setting on tax effect for future cases.
5. Dismissal of Cross Objection by assessee.

Analysis:
1. The appeal was filed by the Revenue and Cross Objection by the assessee against the CIT(A) order for Assessment Year 2008-09.
2. The Revenue raised concerns over the exclusion of comparables, M/s. Jain Granites & Project India Ltd. and M/s. Somany Ceramics Ltd., by the Assessing Officer.
3. The representative of the Assessee argued that even if the comparables were included, the adjustments made for Arm's Length Price would still be within the tolerance margin of the Transfer Pricing guidelines.
4. The Tribunal noted that including the two comparables would result in Arm's Length Price changes within the tolerance margin of ±5% of the Transfer Pricing guidelines.
5. The Tribunal clarified that the order's dismissal of the Revenue's appeal due to low tax effect would not set a precedent for future cases where similar issues are raised by the Revenue.
6. Consequently, the appeal of the Revenue was dismissed based on the submissions and concerns raised by both parties.
7. The Cross Objection filed by the assessee was deemed in-fructuous following the dismissal of the Revenue's appeal.
8. As a result, the Cross Objection filed by the assessee was also dismissed by the Tribunal.
9. Ultimately, both the appeal filed by the Revenue and the Cross Objection filed by the assessee were dismissed by the Tribunal.