“tested party”

Transfer PricingSection 92CSection 92C615 judgments

The decision most relied on for tested party is ITO v. E Value Serve.com (75 Taxmann.com 195), cited in 60 judgments on BharatTax.

Leading authorities on tested party

ITO v. E Value Serve.com

75 Taxmann.com 195 · 2016 · Reported

citing judgments

In transfer pricing analysis, demanding daily balances for working capital adjustments is impractical and improper; adjustments should be based on opening and closing working capital. Transfer pricing inherently involves estimation to ensure comparability.

Ranbaxy Laboratories Ltd. v. ACIT

68 Taxmann.com 322 · 2016 · High Court

citing judgments

When benchmarking export transactions, the Associated Enterprise (AE) can be considered the tested party if it possesses the least complex functional analysis. The Assessing Officer's acceptance of a methodology in prior years can also support its use.

Capital IQ Information Systems India Pvt. Ltd. v. DCIT

32 Taxmann.com 21 · 2013 · ITAT

citing judgments

A change in depreciation policy impacts an entity's profitability, which is a key factor in assessing its suitability as a comparable company for transfer pricing analysis.

Skoda Auto India (P) Ltd. v. ACIT, Aurangabad

30 SOT 319 · 2009 · ITAT

citing judgments

The Tribunal may allow adjustments for differences between the tested party and comparable companies to eliminate material differences, provided accurate and credible evidence is furnished.

Development Consultants Pvt. Ltd. v. DCIT

115 TTJ 577 · 2008 · ITAT

citing judgments

The Arm's Length Price (ALP) must be determined on a transaction-by-transaction basis, and transactions should only be evaluated together if they are so closely linked or continuous that they cannot be adequately assessed separately. The 'tested party' for determining ALP should be the least complex entity.

Pr. CIT v. Aptara Technology (P.) Ltd.

92 Taxmann.com 240 · 2018 · High Court

citing judgments

A comparable company is not suitable if it has a significantly different business model, such as substantially higher outsourcing expenses as a percentage of operating costs, indicating a deviation from the tested party's operations.

Ranbaxy Laboratories Ltd. v. Additional Commissioner of Income-tax

110 ITD 428 · 2008 · ITAT

citing judgments

The tested party in a transfer pricing analysis should be the entity for which reliable comparable data is readily available and requires the fewest adjustments. This generally means selecting the party with the less complex functional analysis.

Smt. Raj Rani Devi Ramna v. CIT

201 ITR 1032 · 1993 · High Court

citing judgments

The transfer of property does not necessarily occur upon registration; the true test is the intention of the parties and whether there are any conditions precedent like payment of consideration or delivery of the deed.

Judgments citing tested party

Biocon Biologics Limited, Bangalore vs. The Assistant Commissioner of Income Tax, Circle 2(1)(1), Bangalore

ITA 1590/BANG/2024[2020-21]Status: DisposedITAT Bangalore23 Dec 2024AY 2020-21

Bench: Shri Prashant Maharishi & Shri Prakash Chand Yadavit(Tp)A No.1590/Bang/2024

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri D.K. Mishra, CIT(DR)(ITAT), Bengaluru

Section 115JSection 143(3)Section 92Section 92C

study report is placed and drawn our attention to para 5.4.2 stating that since there are significant differences in working capital between the tested party (assessee) and the comparable companies, appropriate adjustment may be required so that closely linked international transactions are properly determined. He submits that there

Ims Health Analytics Services Private Limited, Bangalore vs. Income Tax Officer, Ward-3(1)(1), Bangalore

ITA 300/BANG/2022[2017-18]Status: DisposedITAT Bangalore18 Dec 2024AY 2017-18

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyit(Tp)A No.300/Bang/2022

For Appellant: Shri Ajit Tolani & Sri Darpan Kriplani, CAFor Respondent: Shri A Sreenivasa Rao, CIT (DR)

observed that the purpose of attaining a relatively equal degree of comparability can be achieved by taking into consideration the functional profile of the tested party and comparing the same with the entities selected as potential comparables on broad functional analysis taken at ITeS level. The principal functions performed ... tested party should be identified and the same can be compared with the principal functions performed by the entities already selected to find out the relatively equal degree of comparability, and that if it is possible by this exercise to determine that some uncontrolled transactions have a lesser degree

Humboldt Wedag India Pvt. Ltd, New Delhi vs. Additional/Joint/ Deputy/ACIT, Circle-10(1), Delhi

The appeal of the assessee is allowed

ITA 3074/DEL/2024[2020-21]Status: DisposedITAT Delhi10 Dec 2024AY 2020-21

Bench: Shri Pradip Kumar Kedia & Shri Anubhav Sharmaassessment Year: 2020-21 Humboldt Wedag India Pvt. Ltd., Vs Addl. Cit, A-36, Mehtab House, Circle-10(1), Mohan Co-Op. Estate, Delhi. Mathura Road, Delhi – 110 044. Pan: Aaach7474G (Appellant) (Respondent) Assessee By : Shri Siddhesh Chaugule, Ca & Ms Hemlata Sharma, Ca Revenue By : Shri Dharm Veer Singh, Cit-Dr Date Of Hearing : 20.11.2024 Date Of Pronouncement : .12.2024 Order Per Anubhav Sharma, Jm:

For Appellant: Shri Siddhesh Chaugule, CA &For Respondent: Shri Dharm Veer Singh, CIT-DR

Section 143(3)

cost basis. The transaction value was Rs 155,728,455/-. Analysis carried out in the TP documentation was Method: Cost Plus Method (‘CPM’)Tested Party NCPM:5%; Arm’s length NCPM: 3.47% - 6.56% 3 (median: 4.64%). Service fee to the extent of cost is allowed by the TPO/AO however

Otis Elevator Company (India) Limited, Mumbai vs. DCIT, 13(1)(2), Mumbai

ITA 3337/MUM/2024[2020-21]Status: DisposedITAT Mumbai29 Nov 2024AY 2020-21

Bench: Shri Narendra Kumar Billaiya, Hon'Ble & Shri Sunil Kumar Singh, Hon'Bleι.Τ.Α. No. 3337/Mum/2024

For Appellant: Shri Rajan Vora & Nikhil Tiwari, A/RsFor Respondent: Shri Asif Karmali, Sr. D/R

Section 143(3)Section 144C(13)Section 234ASection 234CSection 234FSection 270A(1)Section 37(1)Section 92CSection 92C(3)

TNMM method applied by Assessee: 8. erred in not accepting Transactional Net Margin Method ('TNMM') adopted by the Appellant with its AE as the tested party as the most appropriate method for the purpose of benchmarking the international transaction of payment of management fee; Disregarding the commercial nature of transaction ... length nature of the mark-up on the costs for intra-group services (IGS). The AEs (Foreign parties) were considered as tested parties for primary analysis to demonstrate that the margins earned by them compared as to independent companies were comparable to conclude whether the assessee was better

3F Industries Limited, Tadepalligudem vs. Assistant Commissioner of Income Tax, Circle-1, Rajahmundry

In the result, appeal of the assessee is partly allowed for statistical purposes

ITA 434/VIZ/2024[2021-22]Status: DisposedITAT Visakhapatnam25 Nov 2024AY 2021-22

Bench: Shri K. Narasimha Chary, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अपीलसं./I.T.A.No.434/Viz/2024 (निर्धारण वर्ा/ Assessment Year: 2021-22) 3F Industries Limited V. Asst. Cit – Circle – 1 Aayakar Bhavan Pb No. 15, Tanuku Road Veerabhadrapuram Tadepalligudem, West Godavari Rajahmundry – 533105 Andhra Pradesh - 534102 Andhra Pradesh [Pan: Aaacf2643K] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)

Section 143(1)(a)Section 143(2)Section 143(3)Section 92B(1)Section 92CSection 92E

rate of fees charged by State Bank of India on the issuance of financial guarantees given for the computation of ALP and the tested party with respect to the guarantees given to the AEs. The Ld. TPO has thus concluded that the median of the ALP works

Axalta Coating Systems India Private Limted, Gurgaon vs. DCIT, Circle-3(2), New Delhi

In the result the grounds of appeal of the assessee in ITA

ITA 9344/DEL/2019[2015-16]Status: DisposedITAT Delhi14 Nov 2024AY 2015-16

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Shri Ajit Jain, ARFor Respondent: Shri Rajesh Kumar, CIT-DR

during the hearing dated 22 April 2019, requested both TPO and the assessee to undertake fresh benchmarking taking assessee as the tested party. The submission was duly filed by the assessee videsubmission dated 10 May 2019 before the Ld. DRP. The assessee was thus under the bonafide belief that ... considering the assessee as the tested party and therefore the taxpayer did not submit any additional evidence before the DRP. Finally, the Ld. AR submitted that therefore, the assessee wants to furnish certain additional evidence before the Hon'ble Tribunal in support of the rendition of services and prayed that

Imsofer Manufacturing India Pvt. Ltd., Pune vs. ACIT, Circle-12(1), New Delhi

In the result, the appeal of the assessee in ITA No

ITA 7923/DEL/2019[2012-13]Status: DisposedITAT Delhi14 Nov 2024AY 2012-13

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Shri Ajit Jain, ARFor Respondent: Shri Reuben Mathew Jacob, Sr. DR

Section 92C(2)Section 92D

providing any valid reason to reject the alternative benchmarking carried out by the Appellant wherein the Associated Enterprise CAE') is considered as tested party for arm's length price. 3.5 holding that the Appellant failed to justify the mark-up of 5% on cost with respect to the services which

3F Industries Limited, Tadepalligudem vs. Assistant Commisssioner of Income Tax, Circle-1, Rajahmundry

In the result, appeal filed by the assessee is allowed

ITA 275/VIZ/2024[2020-21]Status: DisposedITAT Visakhapatnam30 Oct 2024AY 2020-21

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकरअपीलसं./ I.T.A. No.275/Viz/2024 (िनधा"रणवष"/ Assessment Year :2020-21) 3F Industries Limited, Vs. Assistant Commissioner Of P.B. No. 15, Tanuku Road, Income Tax, Tadepalligudem, West Godavari Circle-1, District, Andhra Pradesh-534101. Rajahmundry. Pan: Aaacf2643K (अपीलाथ"/ Appellant) (""यथ"/ Respondent) अपीलाथ"क"ओरसे/ Appellant By : Ms. Suvibha Nolkha, Ar ""याथ"क"ओरसे/ Respondent By : Dr. Satyasai Rath, Cit-Dr सुनवाईक"तारीख/ Date Of Hearing : 07/10/2024 घोषणाक"तारीख/Date Of : 30/10/2024 Pronouncement O R D E R

For Appellant: Ms. Suvibha Nolkha, ARFor Respondent: Dr. Satyasai Rath, CIT-DR

Section 133(6)Section 143(1)Section 143(2)Section 143(3)Section 92B(1)Section 92CSection 92E

rate of fees 9 charged by State Bank of India on the issuance of financial guarantees given for the computation of ALP and the tested party with respect to the guarantees given to the AEs. The Ld. TPO has thus concluded that the median of the ALP works

ACIT, Circle- 27(2), New Delhi vs. Yutaka Autoparts India Pvt. Ltd., Delhi

In the result appeal of the Revenue in ITA No

ITA 2795/DEL/2018[2012-13]Status: DisposedITAT Delhi16 Oct 2024AY 2012-13

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

Section 143(3)Section 92C(2)

account of higher depreciation. Ld TPO has considered the contention and was of the view that adjustments is not possible in the computation of tested parties and relied on the decision of Hon'ble ITAT in the case of Hawarth India Pvt. Ltd. vs. DCIT (2011) Taxmann.com 76 DelhiLd ... sought adjustment on account of depreciation. The TPO has not allowed the adjustment in PLI of the Assessee on the ground that for the tested party, no adjustment should be allowed in the net profit by relying on the order of the Tribunal in the case of Hind Composites India

Yutaka Autoparts India Pvt. Ltd., Delhi vs. DCIT, Circle- 27(1), New Delhi

In the result appeal of the Revenue in ITA No

ITA 2742/DEL/2018[2012-13]Status: DisposedITAT Delhi16 Oct 2024AY 2012-13

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

Section 143(3)Section 92C(2)

Yutaka Autoparts India Pvt. Ltd., Delhi vs. ITO, New Delhi

In the result appeal of the Revenue in ITA No

ITA 1607/DEL/2017[2011-12]Status: DisposedITAT Delhi16 Oct 2024AY 2011-12

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

Section 143(3)Section 92C(2)

Philips Foods India Private Limited, Tuticorin vs. PCIT-1, Madurai

ITA 640/CHNY/2023[2016-17]Status: DisposedITAT Chennai30 Sept 2024AY 2016-17

Bench: Shri Mahavir Singh & Shri Amitabh Shuklaआयकर अपील सं./Ita No. 640/Chny/2023 निर्धारण वर्ष /Assessment Year: 2016-17 Philips Foods India Private Limited, The Principal Commissioner Of Vs. C-75 / 76, Sipcot Industrial Complex, Madathoor, Tuticorin - 628008 [Pan: Aabcp7916Q] Madurai-1 (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee By : Shri Ashik Sha, Ca, Mr.Vinay Jain Ca, Shri Nilay Baran Som, Cit प्रत्यर्थी की ओर से /Revenue By : सुनवाई की तारीख/Date Of Hearing : 05.09.2024 घोषणा की तारीख / Date Of Pronouncement : 30.09.2024 आदेश / Order Per Amitabh Shukla, A.M : This Appeal Is Filed Against The Order Bearing Din & Order No.Itba/Rev/F/Rev5/2022-23/1051684572(1) Dated 30.03.2023 Of The Learned Principal Commissioner Of Income Tax [Herein After “Pcit" For The

For Appellant: Shri Ashik Sha, CA

Section 143(3)Section 263Section 92C

Kong) Limited (PFHK)) was much higher when compared to the functions performed by PFHK and accordingly concluded that PFHK must be considered as the tested party and accordingly an adjustment must be made to PFIN's total income with reference to the 'excess margin retained' by PFHK. During the course ... PFUS) and you. But in, the TP documentation provided, it was claimed that you were the least complex entity and therefore chosen as the tested party while determining the ALP of the international transaction. It was also claimed that PFHK performed the functions of manufacturing, marketing and distribution and borne

M/S Emerson Automation Solutions Intelligent Platforms Pvt. Ltd, Bangalore vs. DCIT, C-3(1)(2), Bangalore

In the result, the Ground Nos

ITA 9/BANG/2019[2014-15]Status: DisposedITAT Bangalore30 Aug 2024AY 2014-15

Bench: Shri Prakash Chand Yadav & Shri Waseem Ahmedm/S Emersion Automation Solutios The Deputy Commissioner Intelligent Platforms Private Limited Of Income Tax, Circle- (Formerly M/S Ge Intelligent 3(1)(2), Bmtc Building, Platforms Private Limited), Velankani Vs. Koramangala, Bangalore Tech Park, Building 9, First Floor, 43 Hosur Road, Bangalore-560100 Pan – Aaacg7573K (Appellant) (Respondent) Assessee By: Sri. Sachit Jolly & Sri. Rishabh Malhotra, Advocates Revenue By: Sri. Subramanian. S, Jcit Date Of Hearing: 13.08.2024 Date Of Pronouncement: 30.08.2024 O R D E R Per: Prakash Chand Yadav,J.M. Present Appeal Of The Assessee Is Arising From The Order Of Ld. Ao / Drp Dated 30Th October, 2018. The Assessee Has Raised 19 Grounds Of Appeal Out Of Which Ground Nos. 1 To 5 Are General In Nature & Hence Not Required Specific Adjudication. Ground No. 6 Related To The Grievance Of The Assessee With Respect To The Adjustment Of Custom Duty, Base Cost, Working Capital Not Granted By The Ao While Completing The Assessment. Ground No. 7 Is With Respect To The Applicability Of Tnmm Method Instead Of Rpm Method Applied By The Assessee For Its Trading Segment Transactions. Ground Nos. 8, 9 & 10 Are Related To The Rejection Of Comparability Analysis Conducted By The Tpo As Affirmed By The Drp & Followed By Ao. Ground No. 11 Is With Respect To The Adjustment Of Working Capital Denied By Tpo Affirmed By Drp & Followed By Ao. Ground No. 12 Is With Respect To The Disallowance Of Foreign Exchange Fluctuation & Ground Nos. 13 & 14 Is With Respect To The Payments Made To Headquarters In Lieu Of Services Obtained By Applying

For Appellant: Sri. Sachit Jolly & Sri. RishabhFor Respondent: Sri. Subramanian. S, JCIT

Section 115JSection 142(1)Section 143Section 143(1)Section 143(2)Section 143(3)Section 144Section 144CSection 271(1)(b)Section 5

with respect to the adjustment of custom duty are as under:- “7.11.6 Customs Duty Adjustment: In the assessee's case, operating cost of the tested party has been adjusted instead of that of comparable companies. This is in contradiction of the fundamental principles of making any adjustment under the transfer ... trading segment. Ld. counsel for the assessee has argued that it is settled position of law that difference between the working capital of the tested party and of the comparables should be given credence while calculating Arm’s Length Price (ALP). 25. The ld. DR relied upon the orders

Nokia India Pvt. Ltd., Gurgaon vs. JCIT, Special Range-6, New Delhi

In the result, the appeal filed by the assessee is partly allowed as indicated above

ITA 7745/DEL/2018[2014-15]Status: DisposedITAT Delhi30 Aug 2024AY 2014-15

Bench: disregarding the ALP determined by the Appellant and proceeded to determine the ALP himself.

Section 143(3)Section 144CSection 92CSection 92C(3)Section 92D

compared with the Appellant being a captive service provider. The difference being that in the case relied upon by the Revenue Department, the tested parties were engaged in provision of software development services on behalf of its foreign AE's for customers of the foreign AEs, while the Appellant herein ... Therefore, we do not find any infirmity in the directions given by the DRP to exclude both foreign exchange loss or gain of the tested party as well as comparables from the operating income. This ground of Revenue is dismissed. 3) Proseed India Ltd. v/s ACIT, ITAT Hyderabad Bench

DCIT, New Delhi vs. M/S. Sony India Pvt. Ltd., New Delhi

In the result, appeal filed by the assessee is partly allowed as indicated above and appeal filed by the revenue is dismissed

ITA 1166/DEL/2015[2010-11]Status: DisposedITAT Delhi30 Aug 2024AY 2010-11

Bench: SHRI S.RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

For Appellant: Shri Nageshwar Rao, AdvocateFor Respondent: Shri Rajesh Kumar, CIT DR

Section 143Section 143(2)Section 143(3)Section 92C

detailed from page 64 of paper book - attention is invited to conclusion on page 75. At page 264 of paper book 2A tested party margin working can be seen, it is important to note that entire Advertisement, Marketing and promotion expenditure including discounts etc., (of Around 370 crores approx ... again is unlawful and unjustified. As far as benchmarking of software development services is concerned the approach adopted by Ld. TPO by working out tested party margin at 18.07 % and discussion relating benchmarking all related activities as one segment, observations in the context of comparable companies etc., to reach final

Sony India Private Limited, New Delhi vs. Deputy Commissioner of Income-Tax, New Delhi

In the result, appeal filed by the assessee is partly allowed as indicated above and appeal filed by the revenue is dismissed

ITA 1026/DEL/2015[2010-11]Status: DisposedITAT Delhi30 Aug 2024AY 2010-11

Bench: SHRI S.RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

For Appellant: Shri Nageshwar Rao, AdvocateFor Respondent: Shri Rajesh Kumar, CIT DR

Section 143Section 143(2)Section 143(3)Section 92C

S& P Capital (India) Private Limited, Hyderabad vs. Dy. Commissioner of Income Tax, Circle-3(1), Hyderabad

In the result, appeal of the assessee is partly allowed

ITA 2215/HYD/2018[2014-15]Status: DisposedITAT Hyderabad07 Aug 2024AY 2014-15

Bench: Shri K. Narasimha Chary & Shri Madhusudan Sawdia

For Appellant: Shri K.C.Devdas,Mrudulata and Shri Kranthi, C.AsFor Respondent: : Shri Kumar Pranav, CIT-DR

Section 143(3)

applied by the Ld. TPO. Considering their submissions, we are of the considered opinion that, if the comparable is functionally same as that of tested party then same cannot be rejected. Hence we direct the Ld. AO to verify the RPT from the available data and to permit the assessee

ADIT, Cirlce- 1(1), International Taxation, New Delhi vs. American Express Banking Corp. (India Branch), New Delhi

In the result, the Appeal filed by the Assessee in ITA No

ITA 6455/DEL/2017[2009-10]Status: DisposedITAT Delhi07 Aug 2024AY 2009-10

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

Section 92C(3)Section 92F

list of comparables selected for benchmarking the international transaction. Therefore, the ITAT has held that if the comparable is functionally same as that of tested party then same cannot be rejected merely on the ground that data for entire financial year is not available. If from the available data

American Express Banking Corp. (India Branch), New Delhi vs. ADIT, Cirlce- 1(1), International Taxation, New Delhi

In the result, the Appeal filed by the Assessee in ITA No

ITA 6253/DEL/2017[2009-10]Status: DisposedITAT Delhi07 Aug 2024AY 2009-10

Bench: SHRI S. RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Judicial Member)

Section 92C(3)Section 92F

Toyota Tsusho India Private Limited, Bangaore vs. The Assistant Commissioner of Income Tax, Circle-3(1)(1), Bangalore

In the result, the appeal filed by the assessee is hereby partly allowed for statistical purposes

ITA 241/BANG/2021[2016-17]Status: DisposedITAT Bangalore05 Aug 2024AY 2016-17

Bench: Shri George George K & Shri Waseem Ahmed

For Appellant: Shri Darpan Kriplani, CAFor Respondent: Ms. Neera Malhotra, CIT (DR)

Section 72

financial statement of the company available on record. Under transfer pricing study, the comparable companies are selected which are sufficiently comparable with the tested party. In the present case, the company, namely M/s Growtech Limited, is engaged in the manufacturing activity which cannot be compared with the trading activity