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2023 (12) TMI 1029 - AT - Income TaxTP Adjustment - US Transactions non US Transactions - scope of MAP agreement - associated enterprise of the assessee in the USA filed an application under mutual agreement procedure (MAP) with the competent authority of the US under article 27 of the India USDTAA and the settlement has been arrived at between the competent authority of India with respect to the adjustment on account of Transfer Pricing issues relating to the US transactions - DR vehemently stated that the same treatment should be given to the non US transactions as there is no difference in FAR of US transactions and non US transactions. HELD THAT - It is true that this is an appeal by the assessee but it is equally true that the other party i.e. the revenue can raise issue under rule 27 orally as settled in the case of Sanjay Sahney 2020 (5) TMI 441 - DELHI HIGH COURT and respectfully following the same the oral request of the DR is accepted. It would be better to refer to the settlement arrived between the competent authority of India and the competent authority of USA to resolve the cases relating to Hewitt India for A.Y. 2006-07 to 2010-11 by adopting the values relating to US related international transaction - No hesitation to direct the AO / TPO to adopt the same approach for the non US transactions as adopted in the MAP for US transactions and determine the TP adjustment, if any, after affording a reasonable and sufficient opportunity of being heard to the assessee. See J.P. Morgan Services India Private Limited 2019 (4) TMI 219 - BOMBAY HIGH COURT Appeal of the assessee is allowed for statistical purpose.
Issues involved:
The appeal against the order framed under section 143 (3) r.w.s. 144 C (13) of the Income Tax Act, 1961 regarding Transfer Pricing Adjustment. Transfer Pricing Adjustment - INR 22,648,798: The Dispute Resolution Panel (DRP) erred in summarily rejecting the Appellant's objections without due consideration of facts and merits. The Transfer Pricing Officer (TPO) erred in rejecting the comparability analysis without providing a cogent basis and by substituting it with his own analysis. The TPO also erred in disregarding the legal status of an overseas branch, using unavailable data, not providing complete information, and selecting dissimilar comparables. Moreover, the TPO applied arbitrary filters and failed to allow risk adjustments, leading to an unjustified approach in the assessment. Facts of the Case: The assessee company is involved in BPO, Technology Development Services, Human Resource Consultancy, and Human Resources Outsourcing Service. The AO noticed international transactions exceeding Rs. 5 crores, leading to a proposed addition by the TPO. Objections raised before the DRP were dismissed, resulting in a final assessment order with the addition against which the assessee appealed. US and Non-US Transactions Adjustment: The associated enterprise in the USA settled Transfer Pricing issues under mutual agreement procedure (MAP). The DR argued for similar treatment for non-US transactions, raising the issue under rule 27 of the ITAT rules. The Tribunal allowed the revenue to raise additional issues under rule 27, following the precedent set by the High Court, directing the AO/TPO to adopt the approach taken for US transactions in MAP for non-US transactions. Judicial Precedent and Decision: Referring to the settlement between competent authorities for US transactions, the Tribunal directed the AO/TPO to adopt the same approach for non-US transactions, citing the decision in the J.P. Morgan Services India Private Limited case. The issues were restored for fresh determination, and the appeal of the assessee was allowed for statistical purposes. Conclusion: The Tribunal allowed the appeal for statistical purposes, directing a fresh determination of Transfer Pricing Adjustment for non-US transactions following the approach taken for US transactions in the MAP settlement.
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