“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

The Assistant Commissioner of Income Tax, Jalandhar vs. M/S Broadways Overseas Ltd, Jalandhar

ITA 477/ASR/2015[2008-09]Status: DisposedITAT Amritsar30 May 2023AY 2008-09

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 10BSection 14A

loan advanced by Assessee Company in foreign currency viz. US $ to its AE (100% owned subsidiary company) in USA by observing that since the tested party is tax payer, prevalent interest that could have been earned by the taxpayer by advancing a loan to unrelated party in India

Cnh Industrial (India) Private Limited, Mumbai vs. The Assistant Commissioner of Income Tax, Centre Circle 6(3), Mumbai

In the result appeal of the assessee is partly allowed

ITA 1890/MUM/2022[2018-19]Status: DisposedITAT Mumbai15 May 2023AY 2018-19

Bench: Shri Prashant Maharishi, Am & Ms. Kavitha Rajagopal, Jm Cnh Industrial (Ind) Pvt. Ltd Level04, Rectangle-1, D4 Acit, Central Circle 6(3) District Center, Commercial Mumbai Vs. Complex Saket, South Delhi, Delhi 110017 (Appellant) (Respondent) Pan No. Aaci3922Q

For Appellant: Shri. Ajit Jain, ARFor Respondent: Ms. Samruddhi Hande, DR

Section 234BSection 92C

Assessee benchmarked this international transaction by adopting Transactional Net margin method [ TNMM], adopting profit level indicator of operating profit/operating cost, taking assessee itself as tested party, selecting 8 comparable companies whose weighted average margin for 3 years was computed in the range of 3.63% – 14.51%. Margin of assessee is computed

ACIT, New Delhi vs. M/S. Schlumberger Measurement & Systems India Ltd., New Delhi

In the result, the order of the Ld

ITA 5225/DEL/2011[2002-03]Status: DisposedITAT Delhi11 May 2023AY 2002-03

Section 92C

Borrowings Rs.756.48 CUP b) Import of finished goods Rs. 5617.99 RPM c) Purchase of fixed assets Rs. 35.25 CUP Import of finished goods i) Tested party : Assessee ii) MAM :RPMN(Single segment excepting 8K cards) iii) PLI :Gross margin to sales. iv) Basis for search of comparables :Keywords “economic activity

ACIT Cir 2(3)(1), Mumbai vs. Canvas M Technologies Ltd, Mumbai

ITA 7163/MUM/2016[2011-12]Status: DisposedITAT Mumbai10 May 2023AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm Canvas M Technologies Ltd. Acit Cir 2(3)(1) (Now Known As M/S. Tech Room No. 552, 5Th Floor, Aayakar Mahindra Ltd.) Bhavan, M.K. Road, Vs. Gateway Building, Apollo Mumbai-400 020 Bunder, Mumbai – 400 001 (Appellant) (Respondent) Pan No. Aaccc8665N Assessee By : Mr. Viral Shah, Ar Revenue By : Ms. Samruddhi Hande, Dr Date Of Hearing: 15.02.2023 Date Of Pronouncement : 10.05.2023

For Appellant: Mr. Viral Shah, ARFor Respondent: Ms. Samruddhi Hande, DR

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

development services, it aggregated them for its transfer pricing study under Rule 10D of the Income Tax Rules, 1962, assessee selected itself as the tested party, most appropriate method of Transactional Net Margin Method [ TNMM] adopting the Profit Level Indicator (PLI) of net cost plus markup. The margin

Dy Commissioner of Income Tax -6(1)(2), Mumbai-400020 vs. M/S. Bristol Myers Squibb India P Ltd., Mumbai-400018

In the result, appeal of the Revenue is partly allowed and the assessee’s cross objections are dismissed

ITA 1175/MUM/2022[2013-14]Status: DisposedITAT Mumbai08 May 2023AY 2013-14

Bench: Amit Shukla () & Ms. Padmavathy S. ()

TNMM, the ALP is determined by comparing the operating profit related to an appropriate base i.e. cost or sale or assets of the "tested party" with the operating profit of an uncontrolled party engaged in comparable transactions. As such, ur/der the TNMM, the net margin or operating profit achieved ... TNMM the major thrust is to derive the operating profit at the transactional level and to identify the operating expenses of both the tested party as well as the independent parties, which, thus, requires a lot of adjustments to arrive at the actual operating profit. Thus

Godawari Power and Ispat Ltd., Raipur vs. Deputy Commissioner of Income Tax, National Informatics Center, Delhi

In the result, appeal of the assessee is allowed

ITA 42/RPR/2022[2017-18]Status: DisposedITAT Raipur24 Apr 2023AY 2017-18

Bench: SHRI RAVISH SOOD (Judicial Member), SHRI ARUN KHODPIA (Accountant Member)

For Respondent: Smt. Ila M. Parmar, CIT-DR

Section 142(1)Section 143(2)Section 270ASection 80Section 80ISection 92BSection 92C

manufacturing unit to SEB was held to represent internal comparable arm's length rate - whether, on facts, assessee had correctly identified manufacturing unit as tested party and applied CUP as MAM and purchase price of electricity in open market from SEB to manufacturing units in uncontrolled conditions was ALP - Held

Technimont Spa India Project Office, Mumbai vs. DCIT (It) 4(1)(2), Mumbai

In the result, the appeal of the assessee is partly allowed

ITA 2152/MUM/2017[2012-13]Status: DisposedITAT Mumbai21 Apr 2023AY 2012-13

Bench: Shri Aby T. Varkey, Jm & Shri S Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.2152/Mum/2017 (निर्धारण वर्ा / Assessment Years: 2012-13) M/S. Tecnimont Spa India बिधम/ Deputy Commissioner Of Office Income Tax- 4(1)(2) Vs. Tecnimont Icb House, Room No. 1712 17Th Chincholi Bunder, 504 Link Floor, Air India Building Road, Malad (W), Mumbai- Nariman Point, Mumbai- 400064. 400021 स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaact8224A (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri. M.P. Lohia A/W Pranay Gandhi Revenue By: Shri Manoj Kumar Cit Dr सुनवाई की तारीख / Date Of Hearing: 15/02/2023 घोषणा की तारीख /Date Of Pronouncement: 21/04/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ao Dated Nil Passed U/S 143(3) Read With Section 144C(1) Of The Income Tax Act, 1961 (Hereinafter “The Act”). 2. At The Outset, The Ld. Ar Of The Assessee Brought To Our Notice That The Only Issue Is Regarding The Transfer Pricing Adjustment Made By The Ao Pursuant To The Dispute Resolution Panel (Drp) Direction Dated 23.12.2016. According To The Ld. Ar, The Assessee/Tipo Is A Project Office/Pe Of M/S. Tecnimont Spa (Tcm), A Foreign Company Incorporated At Milan, Italy Which Is Engaged In Engineering & Construction World-Wide In Section Of Chemical, Petro-Chemical Oil & Gas, Energy Etc; According To The Ld. Ar, The Assessee/Tipo Has Been Awarded Inter-Alia Turnkey Project By M/S. Indian Oil Corporation (Hereinafter “M/S. Iocl”) At Panipat Project. & The Assessee/Tipo

For Appellant: Shri. M.P. Lohia a/w PranayFor Respondent: Shri Manoj Kumar CIT DR

Section 143(3)Section 144C(1)

this case operating profit, selected (OP/OC) to find out the ALP of the payments made and the assessee itself was selected as the tested party for the purpose of his TP analysis. Thus, it was observed by TPO as under: - 7.4 However the most important fact that needs consideration

Clsa India P. Ltd, Mumbai vs. DCIT RG 4(1), Mumbai

In the result, appeal of the assessee is allowed

ITA 6263/MUM/2014[2004-05]Status: DisposedITAT Mumbai21 Apr 2023AY 2004-05

Section 143(3)

indirect overhead expenses reimbursement is closely inter linked to the assessee’s business and therefore, was benchmarked using TNMM by considering assessee as a tested party. 8. However, the ld. TPO has determined the ALP of this transaction at Nil and entire payment of referral fees and indirect overhead reimbursement

DCIT, New Delhi vs. M/S Rampgreen Solutions Pvt. Ltd., (Erstwhile Vcostomer Services India Pvt. Ltd), New Delhi

In the result, the appeal of the assessee is partly allowed and the appeal of the Revenue is dismissed

ITA 1618/DEL/2016[2011-12]Status: DisposedITAT Delhi24 Mar 2023AY 2011-12

Bench: Shri G. S. Pannua N D Shri Challa Nagendra Prasad

Section 143(3)Section 144C(5)Section 14ASection 234ASection 271(1)(c)Section 92C

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 ... capital adjustment as under: "a) Compute the average of opening and closing balance of inventories, trade debtors/ receivables, trade creditors/ payable of both the tested party and the comparables on revenue account. b) Work out the net working capital ratio (in pecentage) after dividing the net working capital by operating

M/S. Rampgreen Solutions Pvt. Ltd., Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is partly allowed and the appeal of the Revenue is dismissed

ITA 1404/DEL/2016[2011-12]Status: DisposedITAT Delhi24 Mar 2023AY 2011-12

Bench: Shri G. S. Pannua N D Shri Challa Nagendra Prasad

Section 143(3)Section 144C(5)Section 14ASection 234ASection 271(1)(c)Section 92C

3F Industries Limited, Tadepalligudem vs. Deputy Commissioner of Income Tax, Circle-1, Rajamahendravaram

In the result, appeal of the assessee is partly allowed

ITA 225/VIZ/2022[2016-17]Status: DisposedITAT Visakhapatnam06 Mar 2023AY 2016-17

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Ble

For Appellant: Smt. Suvibha Nolkha, CAFor Respondent: Sri ON Hari Prasada Rao, Sr

Section 143(1)Section 143(2)Section 143(3)Section 92(1)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

Uop India Pvt. Ltd., New Delhi vs. DCIT, Circle- 18(1), New Delhi

In the result, the appeal of the assessee and revenue are partly allowed

ITA 5421/DEL/2017[2009-10]Status: DisposedITAT Delhi03 Mar 2023AY 2009-10

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Us

For Appellant: Sh. Ajit, Saksham Jain &For Respondent: Sh. Rajesh Kumar, CIT (DR)

Section 234BSection 271Section 92C(2)

report) is for Indiacom Ltd. and functionally include it in the final list of same as Accented in AY comparables. that of 2008-09 tested party The Company has then same (Refer page 42 of paper been accepted by cannot be book for relevant extract of the Ld. TPO rejected

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

In the result, appeal of the assessee is partly allowed

ITA 473/VIZ/2018[2014-15]Status: DisposedITAT Visakhapatnam16 Feb 2023AY 2014-15

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Ble

For Appellant: Smt. SuvibhaNolkha, CAFor Respondent: Sri MN Murthy Naik, CIT-DR

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

Bmw India Financial Services P.Ltd, Gurugram vs. DCIT, Circle-1(1), New Delhi

In the result, the appeals of the assessee are allowed

ITA 562/DEL/2022[2018-19]Status: DisposedITAT Delhi03 Feb 2023AY 2018-19

Bench: Sh. C. N. Prasaddr. B. R. R. Kumarita No. 478/Del/2022 : Asstt. Year : 2017-18 Ita No. 562/Del/2022 : Asstt. Year : 2018-19 Bmw India Financial Services Pvt. Ltd., Vs Dcit, 1St Floor, Building No. 11, The Oberoi Circle-10(1), Corporate Tower, Dlf Cyber City, Delhi Phase-2, Gurgaon, Haryana-122002 (Appellant) (Respondent) Pan No. Aadcb8986G Assessee By : Sh. Ajit Jain, Ca Revenue By : Sh. Rajesh Kumar, Cit Dr Date Of Hearing: 01.02.2023 Date Of Pronouncement: 03.02.2023

For Appellant: Sh. Ajit Jain, CAFor Respondent: Sh. Rajesh Kumar, CIT DR

Section 143(1)(a)Section 143(3)Section 40aSection 43Section 92C

inclusive of markup, allocated by the assessee. The TPO accordingly selected 'other method' as MAM instead of TNMM and used service provider as tested party. It was submitted before the ld. DRP that the TPO has already accepted ITA Nos. 478 & 562/Del/2022 7 BMW India Financial Services Pvt. Ltd. need

Bmw India Financial Services Private Limited, Gurgaon vs. DCIT, Circle-10(1), Delhi

In the result, the appeals of the assessee are allowed

ITA 478/DEL/2022[2017-18]Status: DisposedITAT Delhi03 Feb 2023AY 2017-18

For Appellant: Sh. Ajit Jain, CAFor Respondent: Sh. Rajesh Kumar, CIT DR

Section 143(1)(a)Section 143(3)Section 40aSection 43Section 92C

Belden India Private Limited, Gurgaon vs. DCIT, Circle 1(1), Gurgaon

In the result, the appeal of the assessee is allowed

ITA 424/DEL/2022[2017-18]Status: DisposedITAT Delhi03 Feb 2023AY 2017-18

Bench: Sh. C. N. Prasaddr. B. R. R. Kumarita No. 424/Del/2022 : Asstt. Year : 2017-18 Belden India Pvt. Ltd., Vs Dcit, Unit No. 233-236, 2Nd Floor, Spaze Circle-1(1), Edge, Tower-B, Sohna Road, Sector- Gurgaon 47, Gurgaon, Haryana-122002 (Appellant) (Respondent) Pan No. Aaccb9624Q Assessee By : Sh. Vishal Kalra, Adv. Revenue By : Sh. Rajesh Kumar, Cit Dr Date Of Hearing: 30.01.2023 Date Of Pronouncement: 03.02.2023

For Appellant: Sh. Vishal Kalra, AdvFor Respondent: Sh. Rajesh Kumar, CIT DR

Section 143(1)Section 143(3)Section 92CSection 92C(3)

under rule 10B(2) of the Income Tax Rules, 1962. Comparability analysis by TNMM method may be less sensitive to certain dissimilarities between the tested party and the comparables. However, that cannot be the consideration for diluting the standards of selecting comparable transactions/entities. A higher product and functional similarity would ... offering services/products which are not entirely similar to the controlled transaction/entity. However, this can be done only if (a) the functions performed by the tested party and the selected comparable entity are similar including the assets used and the risks assumed; and (b) the difference in services/products offered

Karl Storz Endoscopy India Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is partly allowed and that of the revenue is dismissed

ITA 2281/DEL/2017[2011-12]Status: DisposedITAT Delhi24 Jan 2023AY 2011-12

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Usita No. 1967/Del/2017: Asstt. Year: 2011-12 Acit, Vs Karl Storz Endoscopy India Pvt. Ltd., Circle-41(1), D-181, Okhla Industries Area, Phase-1, New Delhi New Delhi-110020 (Appellant) (Respondent) Pan No. Aaack4816D

For Appellant: Sh. V. K. Sabharwal, AdvFor Respondent: Sh. Bhagwati Charan, Sr. DR

Section 143(3)

Germany pays a commission to Karl Storz India on sales made by its distributors in India. 10. The assessee has selected itself as the tested party and TNMM has been used as MAM and PLI is OP/OC. The assessee has selected 13 companies as comparable on the basis

ACIT, New Delhi vs. M/S. Karl Storz Endoscopy India Pvt. Ltd., Delhi

In the result, the appeal of the assessee is partly allowed and that of the revenue is dismissed

ITA 1967/DEL/2017[2011-12]Status: DisposedITAT Delhi24 Jan 2023AY 2011-12

For Appellant: Sh. V. K. Sabharwal, AdvFor Respondent: Sh. Bhagwati Charan, Sr. DR

Section 143(3)

De Diamond Electric India Pvt. Ltd., Rewari vs. DCIT, New Delhi

In the result, the appeal is partly allowed

ITA 1109/DEL/2017[2010-11]Status: DisposedITAT Delhi19 Jan 2023AY 2010-11

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2010-11

traded goods, the assessee benchmarked it for transfer pricing analysis applying Cost Plus Method (CPM) by treating the overseas Associated Enterprise (AE) as the tested party and the price paid to the AE was claimed to be at arm’s length. However, after verifying the TP study report ... Transfer Pricing Officer (TPO) was not convinced. Therefore, he insisted upon the assessee to carry out a fresh benchmarking by considering itself as the tested party and applying Transactional Net Margin Method (TNMM). In compliance to the direction of TPO, the assessee carried out a fresh benchmark under TNMM showing

Xerox India Ltd., Gurgaon vs. DCIT, New Delhi

In the result, Ground No. 3 of the assessee is allowed for statistical purpose

ITA 2014/DEL/2017[2012-13]Status: DisposedITAT Delhi04 Jan 2023AY 2012-13

Bench: Dr. B. R. R. Kumar & Sh. Yogesh Kumar U.S.

Section 143(3)Section 144CSection 92BSection 92F

India Ltd., ND 2.4. making erroneous computations for the Other expenses/ Sales and profit margins of the selected comparable companies as well as the tested party; 2.5. levying the mark-up on account of remuneration for alleged brand building activities and furthermore, calculating the same on entire increased cost base ... considering the correct segmental accounts as furnished by the assessee for calculating the Profit Level Indicator ("PLI") of distribution segment in case of the tested party thereby not allowing the economic adjustments of certain non-operation implicit expenses and other scientifically carried allocations; 5. That on facts