NI Systems (India) Pvt. Ltd. Vs DCIT (ITAT Bangalore)
Income Tax Appellate Tribunal (ITAT) Bangalore has remanded the case of NI Systems (India) Pvt. Ltd. for a fresh transfer pricing (TP) study. The dispute arose over the applica-bility of the arm’s length price (ALP) determined in Mutual Agreement Procedure (MAP) proceedings for US-based Associated Enterprises (AEs) to the company’s non-US AEs. The assessee, a subsidiary of a US-based entity engaged in software and hardware development, had challenged the selection of com-parables for benchmarking its international transactions. While the MAP resolution settled the dispute for US-based AEs, the assessee sought to extend the same ALP to transactions with its non-US AEs, which constituted 64% of its total international dealings.
The ITAT noted that since the MAP had resolved the dispute for US-based AEs, it would be appropriate for the Transfer Pricing Officer (TPO) to conduct a fresh TP study to determine whether the same ALP could apply to non-US AEs. The tribunal, therefore, set aside the earlier order and directed the TPO to re-evaluate the matter in light of the MAP resolution. This decision ensures a comprehensive review of transfer pricing adjustments, aligning the treatment of transactions across different jurisdictions.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
