TPG GROWTH II MAKETS PTE LTD.,MUMBAI vs. DCIT 4(1)(2), MUMBAI

ITA 1387/MUM/2022Status: DisposedITAT Mumbai06 June 2023AY 2017-1837 pages
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What did the Tribunal hold?

The tribunal held that the TPO's method of substituting actual financial results for projected ones in the Discounted Cash Flow (DCF) valuation was incorrect. For the sale of shares of QNPL, the tribunal directed the AO/TPO to re-compute the ALP based on the DCF valuation report after verification, allowing Ground No. 2 partly. For the purchase of SIPL shares, the tribunal held that no adjustment could be made to the cost of purchase, allowing Ground No. 4 partly.

What were the facts?

The appellant, a foreign company, engaged in international transactions involving the purchase and sale of shares with associated enterprises. The Transfer Pricing Officer (TPO) proposed significant adjustments to the arm's length price (ALP) for these transactions. The Dispute Resolution Panel (DRP) upheld some of the TPO's actions, leading to the present appeal.

What were the issues?

The key issues revolve around the determination of the arm's length price (ALP) for international transactions involving share purchases and sales, specifically concerning the TPO's methodology in valuation and the applicability of transfer pricing provisions.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(5),Section 92CA(1),Section 92C(3),Section 5,Section 9,Section 56(2)(viia),Section 270A

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Income Tax Appellate Tribunal, J BENCH, MUMBAI

Per Rahul Chaudhary, Judicial Member:

The present appeal is directed against Assessment Order dated, 1. 28/04/2022, passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2017-18, as per directions issued by CIT (Dispute Resolution Panel-2), Mumbai-3 [hereinafter referred to as ‘the DRP’] under Section 144C(5) of the Act.

The Appellant has raised following grounds of appeal:

2.1.

Ground No. 1: Transfer pricing (TP") adjustment in respect of purchase of equity shares of Sutures India Private Limited (SIPL) and Quality Needle

The order continues below.

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