2023 (5) TMI 486 - SCH - Income Tax

TP Adjustment - comparable selection - ITAT excluding M/s Eclerx Services Pvt. Ltd, TCS E-Serve Ltd, BNR Udyog Ltd. and Excel Infoways Ltd as comparables for determining arm s length price - High Court has observed that perusal of the impugned order reveals that the ITAT has given cogent reasons for excluding the aforesaid four companies as comparables. HELD THAT - In view of the matter and in the peculiar facts and circumstances of the case, we see no reason to interfere with the impugned judgment and order passed by the High Court. The Special Leave Petition stands dismissed. However, the question of law on the powers of the High Court to consider the findings recorded by the Transfer Pricing Officer and/or the ITAT are kept open. The present Special Leave Petition is considered on the peculiar facts of the case and the question of law on the aforesaid is kept open.

Summary

Issues:
1. Delay condonation.
2. Validity of excluding companies as comparables.
3. Powers of the High Court to consider findings of Transfer Pricing Officer and ITAT.

Delay Condonation:
The Supreme Court, comprising Hon'ble Mr. Justice M.R. Shah and Hon'ble Mr. Justice C.T. Ravikumar, condoned the delay in the case. After hearing both parties' counsel, the Court noted the High Court's observation in para 4, where it found that the ITAT had provided valid reasons for excluding four companies as comparables. Consequently, the Court decided not to interfere with the High Court's judgment, ultimately dismissing the Special Leave Petition. The Court also disposed of any pending applications.

Validity of Excluding Companies as Comparables:
The High Court's decision to exclude the four companies as comparables was upheld by the Supreme Court. The Court found that the ITAT had provided cogent reasons for this exclusion, leading to the affirmation of the High Court's judgment. The Court emphasized that based on the specific circumstances of the case, there was no justification for intervening in the High Court's decision. Therefore, the Special Leave Petition was dismissed, maintaining the exclusion of the companies as comparables.

Powers of the High Court to Consider Findings of Transfer Pricing Officer and ITAT:
While dismissing the Special Leave Petition, the Supreme Court kept open the question of law concerning the High Court's authority to review the findings of the Transfer Pricing Officer and the ITAT. The Court clarified that the current decision was based on the unique circumstances of the case, and the issue regarding the High Court's powers in this regard was left unresolved for future consideration. The Court specifically mentioned that the Special Leave Petition was dismissed in light of the case's peculiar facts, indicating that the broader legal question remained open for future interpretation.