RALPH LAUREN SOURCING INDIA LLP,BANGALORE vs. DCIT, CIRCLE, BANGALORE

ITTPA 852/BANG/2026Status: DisposedITAT Bangalore21 September 2026AY 2022-2313 pages
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What did the Tribunal hold?

The Tribunal held that the Transfer Pricing Officer (TPO) incorrectly rejected the assessee's transfer pricing study report. The TPO did not verify the assessee's report to find it unreliable or incorrect, nor did he provide reasons for rejecting the databases, filters, or methodology used by the assessee. Instead, the TPO conducted a fresh search on a different database (Prowess) without establishing why the assessee's chosen databases (Capitaline Neo and Ace TP) were incorrect or unreliable. The Tribunal found the TPO's approach to be flawed, particularly in rejecting the assessee's analysis without proper grounds. Consequently, the Tribunal directed the assessee to incorporate all filters added by the TPO into its comparability analysis and submit the revised list of comparables. The TPO was then instructed to examine the removals made by the assessee based on functions, assets, and risks, and then determine the arm's length price. The issue was restored to the AO for redetermination based on these directions. Grounds 2 and 3 were allowed for statistical purposes, and other grounds were not adjudicated as they were not pressed or were rendered moot by the decision on other grounds.

What were the facts?

The assessee, Ralph Lauren Sourcing India LLP, filed an appeal for Assessment Year 2022-23 against an assessment order passed by the Income Tax Department Assessment Unit. The order determined the assessee's total income at ₹76,945,064, an increase from the returned income of ₹37,423,030. This increase was due to a transfer-pricing adjustment of ₹39,522,034 made by the Transfer Pricing Officer (TPO) under section 92CA(3). The assessee had made objections to the Dispute Resolution Panel (DRP). The international transactions in dispute involved the provision of sourcing support services and IT/ITeS services to associated enterprises. The assessee had reported margins of 14.39% for sourcing support services and 15.23% for IT/ITeS services, contending they were at arm's length.

What were the issues?

The Tribunal had to decide the following questions: 1. Whether the Assessing Officer (AO)/TPO and DRP erred in making total additions of INR 3,95,22,034 to the returned income in respect of international transactions for sourcing support services and IT/ITeS services (Section 92C, 92CA). 2. Whether the AO/TPO erred in rejecting the economic analysis carried out by the assessee without providing reasons and by adopting different filters and comparable companies (Section 92C, 92CA). 3. Whether the AO/TPO erred in using data not available in the public domain and not provided to the assessee for adjusting international transactions (Section 92C, 92CA). 4. Whether the AO/TPO erred in rejecting specific companies identified by the assessee as comparables for sourcing support services (Section 92C, 92CA). 5. Whether the AO/TPO erred in rejecting specific companies identified by the assessee as comparables for IT/ITeS services (Section 92C, 92CA). 6. Whether the AO/TPO erred in considering functionally dissimilar companies as comparable for sourcing support services (Section 92C, 92CA). 7. Whether the AO/TPO erred in considering functionally dissimilar companies as comparable for IT/ITeS services (Section 92C, 92CA). 8. Whether the AO/TPO erred in not undertaking working capital adjustment for the impugned transactions (Section 92C, 92CA). 9. Whether the AO/TPO erred in ignoring that the assessee, as a captive service provider, is entitled to suitable adjustments, including risk adjustment (Section 92C, 92CA). 10. Whether the AO erred in proposing penalty proceedings under section 274 read with section 270A. Assessee's Contentions: The assessee argued that the TPO rejected its economic analysis without reasons, used data not in the public domain, and wrongly rejected its proposed comparables while including dissimilar ones. The assessee also contended for working capital and risk adjustments. The revenue's contentions were not explicitly recorded in the provided text, beyond the fact that the TPO made adjustments.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 92CA(3),Section 92C(3)(c),Section 92CA,Section 274,Section 270A,Section 143(2),Section 92C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDARARAJAN K.

PER SHRI PRASHANT MAHARISHI, VICE PRESIDENT

ITTPA 852/BANG/2026

01.

This appeal is filed by Ralph Lauren Sourcing India LLP for assessment year 2022–23 against the assessment order passed by the Income Tax Department Assessment Unit under section 143(3) read with sections 144C (13) and 144B of th

The order continues below.

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