Assesee is MN Dastur and Company Pvt. Ltd.
The assessee is engaged in providing consulting and software engineering services to both domestic and international clients.
The case involves inappropriate transfer pricing adjustments applied at the overall entity level, rather than being limited to specific international transactions.
Assessee’s Contentions | Revenue’s Contentions | Judgement |
|---|---|---|
The assessee contended that the TPO erroneously applied adjustments on the entire turnover of INR 5.99 crore instead of limiting the adjustments strictly to transactions with the AEs, which amounted to only INR 4.80 crore. | The Revenue supported the TPO and DRP’s approach, maintaining that the transfer pricing adjustments made were appropriate and justified under the facts and circumstances of the case. | The ITAT held that transfer pricing adjustments must be restricted solely to international transactions with AEs and should not be applied at the entity-wide turnover level. |
The assessee also pointed out procedural unfairness, stating that it was not provided with an opportunity to reconcile or verify the figures used by the TPO, which led to an inflated adjustment. | However, the Revenue did not oppose the remand of the matter, indicating a willingness for fresh verification to address any discrepancies related to AE transaction values. | The Tribunal cited the Supreme Court ruling in Hindustan Unilever Ltd. and the ITAT decision in Tokai Rika Minda India Pvt. Ltd., directing the TPO to re-examine and verify the correct value of AE transactions and recompute adjustments accordingly. |
The ITAT Bangalore ruled that TP adjustments must be limited to AE transactions and remanded the matter for fresh verification and fair assessment.
