Case Law Details
Tokai Rika Minda India Private Limited Vs DCIT (ITAT Bangalore)
On the issue of Transfer Pricing (TP) adjustment to be restricted to AE transactions, we find that the Assessee has rightly contended that section 92 of the Act can be applied only in respect of international transactions i.e., transactions with AE. The ITAT in the case of Continental Automotive Components India Private Limited IT(TP)A No713/Bang/2017 has held as follows:
“53. We have considered the rival submissions. This issue was considered by the Hon’ble Supreme Court in the case of CITv. Hindustan Unilever Ltd., 99 taxman.com 134 (SC) wherein it was held that while determining the ALP of international transactions, benchmarking has to be done only on Associated Enterprises transactions and not for the entire turnover. In view of this, we-find force in the argument of the ld. AR that the TP adjustment should be restricted only to international transactions pertaining to purchase of raw materials from AEs and other related transactions only. With these observations, we allow this ground of the assessee.”
In view of the transfer pricing provisions and various judicial precedents, we hold that the transfer pricing adjustment should be restricted only to the AE related transactions of the assessee.
FULL TEXT OF THE ORDER OF ITAT BANGALORE Please become a Premium member. If you are already a Premium member, login here to access the full content.
