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2023 (8) TMI 449 - AT - Income TaxTP Adjustment - comparable selection - TPO justification taking export filter of 50% and thereby including only one comparable i.e. GTN India to determine the Arm s Length Price of the assessee and holding that in the instant facts, only the GTN represents the industry standards - HELD THAT - As we observe that proper comparability analysis has not been done by the Ld. TPO taking into consideration the directions of ITAT in the aforesaid order. We observe that the ITAT has specifically observed that the TPO has sought to compare the valves which is a consumer product with the industrial product of the tested party, which would not give a true picture of the profit. Despite the aforesaid directions of ITAT in 2015 (7) TMI 448 - ITAT AHMEDABAD the directions of ITAT ostensibly have not been followed and the same comparable was again used for conducting the comparability analysis, which was directed to be excluded. Matter is being again restored to the file of the Ld. TPO for carrying out a fresh benchmarking analysis in light of the observations made by Hon ble ITAT supra . In the result, the matter is being restored to the file of Ld. TPO with the above directions.
Issues Involved:
1. Adjustment related to international transaction of sale of goods to Associated Enterprises (AEs). 2. Non-allowance of benefit of +/- 5% range as per Section 92C(2) of the Income-tax Act, 1961. 3. Charging of interest under section 220(2) of the Income-tax Act. Summary: Issue 1: Adjustment related to international transaction of sale of goods to AEs The assessee contested the adjustment of Rs. 4,17,26,088/- made by the Learned Assistant Commissioner of Income-tax under the directions of the Honourable Dispute Resolution Panel (DRP) for Assessment Year (A.Y.) 2009-10. The Transfer Pricing Officer (TPO) had initially proposed an adjustment of Rs. 3,02,66,356/-, which was later enhanced by the DRP. The ITAT had previously directed the TPO to conduct a fresh benchmarking exercise. However, the TPO repeated the same exercise, including only one comparable entity, GTN Ltd., which the ITAT had directed to exclude. The Tribunal observed that the directions of the ITAT were not followed, and hence, the matter was restored to the file of the TPO for a fresh benchmarking analysis, excluding GTN Ltd. For A.Y. 2010-11, a similar adjustment of INR 6,64,11,722/- was contested. The Tribunal restored the matter to the TPO for fresh benchmarking analysis, consistent with the directions given for A.Y. 2009-10. Issue 2: Non-allowance of benefit of +/- 5% range The assessee argued that the Ld. AO, under the directions of the Hon'ble DRP, erred in not allowing the benefit of +/- 5% range as per Section 92C(2) of the Income-tax Act in relation to the international transaction of sale of goods to AEs. The Tribunal did not provide a separate ruling on this issue but implied that it should be reconsidered in the fresh benchmarking analysis directed for both assessment years. Issue 3: Charging of interest under section 220(2) For A.Y. 2010-11, the assessee contested the charging of interest under section 220(2) of the Act on the demand raised pursuant to the original assessment order, which was set aside for fresh adjudication by the Tribunal. The Tribunal did not specifically address this issue in the summary provided but implied that it should be reconsidered in light of the fresh benchmarking analysis. Conclusion: The appeals for both Assessment Years 2009-10 and 2010-11 were allowed for statistical purposes, and the matters were restored to the file of the TPO for carrying out fresh benchmarking analyses in light of the ITAT's directions.
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