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“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
60
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
55
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
44
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
26
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
24
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
23
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
22
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
21
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

DCIT, Circle-25(1), New Delhi vs. Wrigley India P.Ltd, New Delhi

ITA 1295/DEL/2022[2016-17]Status: DisposedITAT Delhi29 May 2025AY 2016-17

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

associated enterprise ('AE') and disregarding the benchmarking methodology of the Appellant by drawing an erroneous conclusion that the Appellant should be chosen as the tested party for benchmarking the said international transaction; 2. 2. disregarding the fact that when the transaction of sale of finished goods by the Appellant ... overseas AEs (in its capacity as routine manufacturers only for the raw materials) were the least complex entity and were chosen as the tested party for the transaction pertaining to purchase of goods and TNMM was used as the most appropriate method with OP/TC as the relevant

DCIT, Circle- 25(1), New Delhi vs. Wrigley India Pvt. Ltd., New Delhi

ITA 1294/DEL/2022[2015-16]Status: DisposedITAT Delhi29 May 2025AY 2015-16

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

associated enterprise ('AE') and disregarding the benchmarking methodology of the Appellant by drawing an erroneous conclusion that the Appellant should be chosen as the tested party for benchmarking the said international transaction; 2. 2. disregarding the fact that when the transaction of sale of finished goods by the Appellant ... overseas AEs (in its capacity as routine manufacturers only for the raw materials) were the least complex entity and were chosen as the tested party for the transaction 24 ITA Nos.667 & 702, 952 & 953/Del/2022 ITA No. 1293 to 1295/Del/2022 pertaining to purchase of goods and TNMM was used

DCIT, Circle-25(1), New Delhi vs. Wrigley India P.Ltd, New Delhi

ITA 1293/DEL/2022[2014-15]Status: DisposedITAT Delhi29 May 2025AY 2014-15

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I': NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI MANISH

JCIT, Circle-27(2), New Delhi vs. Wrigley India Pvt. Ltd., New Delhi

ITA 702/DEL/2019[2013-14]Status: DisposedITAT Delhi29 May 2025AY 2013-14

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

associated enterprise ('AE') and disregarding the benchmarking methodology of the Appellant by drawing an erroneous conclusion that the Appellant should be chosen as the tested party for benchmarking the said international transaction; 2. 2. disregarding the fact that when the transaction of sale of finished goods by the Appellant ... overseas AEs (in its capacity as routine manufacturers only for the raw materials) were the least complex entity and were chosen as the tested party for the transaction pertaining to purchase of goods and TNMM was used as the most appropriate method with OP/TC as the relevant

Wrigley India Pvt. Ltd., 206, Okhla Industrial Estate, Phase-3, New Delhi-110020 vs. DCIT, Circle 27(2), New Delhi

ITA 667/DEL/2019[2013-14]Status: DisposedITAT Delhi29 May 2025AY 2013-14

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I': NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI MANISH

Fidelity Information Services India Private Limited, Punjab vs. Deputy Commissioner of Income Tax, Chandigarh

In the result, the appeal of the Revenue is dismissed

ITA 998/CHANDI/2024[2020-21]Status: DisposedITAT Chandigarh28 May 2025AY 2020-21

Bench: Shri Rajpal Yadav & Shri Krinwant Sahayआयकर अपील सं./ Ita No. 998/Chd/2024 निर्धारण वर्ष / Assessment Year: 2020-21 Fidelity Information Services Vs The Dcit, Chandigarh, India Private Ltd., 2Nd A-45, Industrial Area, Sector 74, Phase 8B, Sas Nagar. स्थायी लेखा सं./Pan No: Aagcs0395D अपीलार्थी/Appellant प्रत्यर्थी/Respondent Assessee By: Shri Vishal Kalra, Advocate & Ms. Sumisha, Ca Revenue By : Shri Manav Bansal, Cit Dr Date Of Hearing : 06.05.2025 Date Of Pronouncement : 28.05.2025 Hybrid Hearing Order Per Raj Pal Yadav, Vp The Assessee Is In Appeal Before The Tribunal Against The Assessment Order Dated 31.07.2024 Passed U/S 143(3) Read With Section 144C(13)/144B Of The Income Tax Act In

For Appellant: Shri Vishal Kalra, Advocate & Ms. Sumisha, CAFor Respondent: Shri Manav Bansal, CIT DR
Section 139(1)Section 143(2)Section 143(3)Section 144C(13)Section 234ASection 270A

reimbursement of expenses as so described therein and TNMM has been determined as per the most appropriate method with the assessee being the tested party and operating profit margin being the PLI and it has been provided that the reimbursement of expenses shall be benchmarked along with the main transaction

Australia and New Zealand Banking Group Limited, Mumbai vs. DCIT (International Tax) 1(1)(2), Mumbai

In the result, appeal by the assessee is allowed

ITA 4778/MUM/2024[2020-21]Status: DisposedITAT Mumbai28 May 2025AY 2020-21

Bench: Shri Pawan Singh & Shri Girish Agrawalassessment Year: 2020-21

For Appellant: Shri. Madhur Agrawal, AdvocateFor Respondent: Shri. Kiran Unavekar, Sr. DR
Section 133(6)Section 143(3)Section 144C(3)Section 144C(5)Section 153

very very negligible due to reduced time span involved therein. Given these undisputed facts, it would be appropriate to consider assessee as the tested party as it would be the least complex entity and its profitability could be reliably ascertained. Admittedly, the transaction which requires to be benchmarked

Emerson Electric Company (India)Pvt. Ltd, Mumbai vs. DCIT 1(2) (1) Jurisdictional Assessing Officer, Mumbai

In the result, this ground of appeal is allowed

ITA 2323/MUM/2022[2018-19]Status: DisposedITAT Mumbai28 May 2025AY 2018-19

Bench: Shri Pawan Singh&Girish Agrawal(Physical Hearing) Emerson Electric Company (India) Dcit, Range-1(2)(1), Mumbai Private Limited, Delphi ‘B’ Wing, Vs Aayakar Bhawan, 601-603, Orchard Avenue, Mumbai Hiranandani Business Park, Powai, Mumbai-400076. [Pan No. Aaace1260B] Appellant / Assessee Respondent / Revenue

Section 143(3)Section 144BSection 144C(13)Section 254(1)

Thermo India Ltd. Vs DCIT (supra) also held that in term of sub-clause(i) of Rule 10B(1)(e), net profit margin of tested party (assessee) drawn from its financial accounts can be suitably adjusted to facilitate its comparison with the uncontrolled entities/ transactions. Thus, we accept the submissions

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

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

ITA 7924/DEL/2019[2013-14]Status: DisposedITAT Delhi28 May 2025AY 2013-14

Bench: SHRI S.RIFAUR RAHMAN (Accountant Member), SHRI ANUBHAV SHARMA (Judicial Member)

For Appellant: Shri Ajit Jain, ARFor Respondent: Shri Abhishek Deval, Sr. DR
Section 115JSection 271(1)(c)Section 92C(2)

providing any valid reason to reject the alternative benchmarking carried out by the Appellant wherein the Associated Enterprise ('AE') is considered as tested party for arm's length price. 1.5 holding that the Appellant failed to justify the mark-up of 5% on cost with respect to the services which

Milacron India Private Limited, Ahmedabad vs. The Dy. CIT, Circle-2(1)(1), Ahmedabad

The appeal of the assessee is allowed

ITA 2201/AHD/2024[2021-22]Status: DisposedITAT Ahmedabad21 May 2025AY 2021-22

Bench: S/Shri T.R. Senthil Kumar & Makarand V.Mahadeokarasstt.Year : 2021-22 Milacron India Pvt.Ltd. The Dcit, Cir.2(1)(1) Plot No.93/2 & 91/4 Vs Ahmedabad. Phase-1,Gidc Vatva, Ahmedabad. Pan : Aabcc 0881 D

For Appellant: Shri Prathvi Raj Meena, CIT-DR
Section 143(3)Section 144C(1)Section 144C(5)Section 270ASection 92BSection 92C

international transaction, the appropriate method of evaluating the arm’s length nature is through a holistic adjustment that reflects the commercial substance of the tested party’s operating cycle, which the assessee has already undertaken. The AR further submitted that the benchmarking of international transactions undertaken by the assessee ... categorically observed, and the DR reiterated, that the working capital adjustment undertaken by the assessee was based on the financial data of the tested party for FY 2020–21, whereas adjustments were being made to the comparables for FYs 2018–19 and 2019–20. According to the DR, this violated

Aquity Solutions India Private Limited, Mumbai vs. Deputy Commissioner of Income Tax, Circle 15(1)(1), Mumbai

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

ITA 4817/MUM/2024[2020-21]Status: DisposedITAT Mumbai20 May 2025AY 2020-21

Bench: Shri Sandeep Singh Karhailshri Girish Agrawal

For Appellant: Shri Harsh ShahFor Respondent: Shri Ajay Ojha, Sr.DR
Section 143(3)Section 144C(13)Section 144C(5)Section 234ASection 234B

benchmarking this transaction, the assessee adopted Comparable Uncontrolled Price (“CUP") method as the most appropriate method by considering itself as the tested party. For the determination of arm's length price (“ALP”), the assessee analysed the service level agreement of AE with the assessee and AE with Indian third-party ... TNMM”) as the most appropriate method with the Profit Level Indicator (“PLI") of Operating Profit to Total Operating Expenses. By considering itself as the tested party, the assessee identified 11 comparable companies with an arithmetic mean of weighted adjusted net cost plus markup of 22.60%, with 35th and 65th percentile

Deputy Commissioner of Income Tax, Circle-5(1), Kolkata vs. Dhunseri Ventures Limited, Kolkata

In the result, the appeal filed by the revenue is dismissed

ITA 968/KOL/2024[2016-17]Status: DisposedITAT Kolkata15 May 2025AY 2016-17

Bench: Shri Pradip Kumar Choubey&Shri Sanjay Awasthi]

Section 115JSection 80ISection 92C

eligible unit at average landed cost at which the non eligible units procured electricity from the SEB by taking non eligible units as the tested party in the TP Study Report and accordingly ALP of the power captively consumed has been benchmarked at ALC of power purchased by the tested ... price at which the property ,goods or service has been acquired under similar market conditions. It is also settled that choice of tested party is of lesser significance for the purpose of application of CUP method but instead key factor in application of CUP is product comparability and similar market

Bock Compressors India Private, Bengaluru vs. The Dy. CIT, Circle - 1(1)(1), Vadodara

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

ITA 1484/AHD/2024[2020-21]Status: DisposedITAT Ahmedabad09 May 2025AY 2020-21

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokarassessment Year 2020-21

For Appellant: Shri Ketan Ves, A.R. &For Respondent: Shri Uday Kakne, Sr. D.R
Section 143(3)Section 144(5)Section 144CSection 234BSection 253Section 270ASection 920Section 92ASection 92C

erred in law and on facts in computing the amount of adjustment by incorrectly computing the operating margin of the tested party. 8. The Ld. AO erred in levying interest under section 234B and 234D of the Act which is consequential to the grounds of appeal in above paras

DCIT, New Delhi vs. M/S. Fis Global Business Solutions India Pvt. Ltd., New Delhi

In the result, both appeals of the revenue stand dismissed and both Cos are allowed as above

ITA 2387/DEL/2014[2008-09]Status: DisposedITAT Delhi09 May 2025AY 2008-09

Bench: SHRI AVDHESH KUMAR MISHRA (Accountant Member)

ITeS which takes within its fold various types of services CO No.02/Del/2015 CO No.03/Del/2013 with completely different content and value. Thus, where the tested party is not BPO service provider, an entity rendering KPO services cannot be considered as a comparable for the purposes of Transfer Pricing analysis. The perception

DCIT, New Delhi vs. Fis Global Business Solution India (P) Ltd., New Delhi

In the result, both appeals of the revenue stand dismissed and both Cos are allowed as above

ITA 5939/DEL/2012[2007-08]Status: DisposedITAT Delhi09 May 2025AY 2007-08

Bench: SHRISUDHIR KUMAR (Judicial Member), SHRI AVDHESH KUMAR MISHRA (Accountant Member)

ITeS which takes within its fold various types of services CO No.02/Del/2015 CO No.03/Del/2013 with completely different content and value. Thus, where the tested party is not BPO service provider, an entity rendering KPO services cannot be considered as a comparable for the purposes of Transfer Pricing analysis. The perception

Biogenex Life Sciences Private Limited, Hyderabad vs. DCIT, Circle 1(1), Hyderabad

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

ITA 68/HYD/2022[2017-18]Status: DisposedITAT Hyderabad07 May 2025AY 2017-18

Bench: Shri Ravish Sood & Shri Madhusudan Sawdia

For Appellant: Shri P. Murali Mohan Rao, C.AFor Respondent: : Smt. M. Narmada, CIT-DR
Section 143(3)Section 92C

submit the information. 5.7 ought to have considered the segmental information which provides more reliability on comparability factors with relevant operations of the tested party. 5.8 ought to have adjusted the operating margin of the assessee by considering the differences between the international transactions undertaken with AE and comparable uncontrolled

Dsm Shared Services India Private Limited, Hyderabad vs. ACIT, Circle-8(1), Hyderabad

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

ITA 501/HYD/2022[2018-19]Status: DisposedITAT Hyderabad05 May 2025AY 2018-19

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdia

For Appellant: Shri Aliasgar Rampurawala, C.AFor Respondent: Shri B. Bala Krishna, CIT-DR
Section 143(3)Section 43B

also submitted that WCA is a legitimate adjustment intended to neutralize the impact of difference levels of working capital between the tested party and the comparables, which affects the margins and profitability. It was also submitted that the WCA may be computed on the basis of average of opening ... comparable uncontrolled transactions which could materially affect the amount of net profit margin. In our view, difference in levels of working capital between the tested party and the comparables have an affects on the margins and profitability. Therefore, the Ld. TPO’s approach in insisting upon daily/monthly working capital cycle

Gainsight Software Private Limited, Hyderabad vs. Deputy Commissioner of Income Tax, Circle 2(1), Hyderabad

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

ITA 200/HYD/2021[2016-17]Status: DisposedITAT Hyderabad05 May 2025AY 2016-17

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdia

For Appellant: Shri Aliasgar Rampurawala, C.AFor Respondent: Shri B. Bala Krishna, CIT-DR
Section 143(3)Section 271ASection 37(1)Section 438

also submitted that WCA is a legitimate adjustment intended to neutralize the impact of difference levels of working capital between the tested party and the comparables, which affects the margins and profitability. It was also submitted that the WCA may be computed on the basis of average of opening ... comparable uncontrolled transactions which could materially affect the amount of net profit margin. In our view, difference in levels of working capital between the tested party and the comparables have an affects on the margins and profitability. Therefore, the Ld. TPO’s approach in insisting upon daily/monthly working capital cycle

Open Text Technologies India Private Limited, Hyderabad vs. Dy. Commissioner of Income Tax, Circle-16(2), Hyderabad

ITA 2387/HYD/2018[2014-15]Status: DisposedITAT Hyderabad05 May 2025AY 2014-15

Bench: Shri Vijay Pal Rao, Hon’Ble & Shri Madhusudan Sawdia, Hon'Ble

For Appellant: Revenue byFor Respondent: Date of hearing
Section 143(3)Section 92B

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”, HYDERABAD BEFORE SHRI VIJAY PAL

Royal Canin India Private Limited, Mumbai vs. Assistant Commissioner of Income-Tax, Mumbai

Appeal is hereby dismissed

ITA 6816/MUM/2024[2021-22]Status: DisposedITAT Mumbai28 Apr 2025AY 2021-22

Bench: Shrivikram Singh Yadav & Shri Anikesh Banerjeeroyal Canin India Pvt Ltd Vs Assistant Commissioner Of Income- 1401 & 1402, F Wing, 14Th Tax, Circle 3(1)(1), Floor, Lotus Corporate Park, Aayakar Bhavan, M.K. Road, Cts No.185/A, Graham Firth Mumbai-400 020 Compound, Western Express Highway, Goregaon (East), Mumbai-400 063 Pan: Aadcr4417J Appellant Respondent

For Appellant: ShriK.M. Gupta a/w Shri AnmolFor Respondent: Shri Pankaj Kumar (CIT DR)
Section 143(3)Section 144BSection 144CSection 144C(13)

products worldwide. During the relevant assessment year the assessee undertook the following international transactions with its Associated Enterprise (AEs):- Particulars Most Appropriate Value of Tested party Arm’s length Method (‘MAM’) international margin range transaction (INR) Payment of franchisee fees Comparable 288,806,121/- 9% 8% to 10% uncontrolled price