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of <h1>Tribunal overturns assessment order on transfer pricing, emphasizes need for proper consideration of relevant factors.</h1> <h3>Adobe Software India Private Ltd. (Now merged with Adobe Systems India Private Ltd.) Versus Additional Commissioner of Income-tax, Noida Range, Noida (U. P).</h3> The Tribunal allowed the appeal, setting aside the assessment order and directing a reconsideration by the Dispute Resolution Panel regarding transfer ... - Issues involved: The judgment involves issues related to transfer pricing adjustments made by the Assessing Officer under section 143(3) read with section 144C of the Income-tax Act, 1961 for assessment year 2006-07.Grounds raised by the assessee:1. The Assessing Officer (AO) erred in confirming the adjustment made to the total income of the appellant on account of adjustment in the arm's length price of international transactions.2. The Dispute Resolution Panel (DRP) erred in disregarding the economic analysis undertaken by the appellant for establishing the arm's length price of international transactions related to software development.3. The Transfer Pricing Officer (TPO) and AO erred by not accepting the economic analysis undertaken by the assessee and conducting a fresh economic analysis for determining the arm's length price.4. The TPO/AO erred in determining the arm's length margin/price using only financial year 2005-06 data.5. The TPO/AO erred in rejecting certain comparable companies identified by the assessee where consolidated results had been used for analysis.6. The TPO/AO erred in rejecting certain comparable companies identified by the assessee using turnover < Rs. 1 crore as a comparability criterion.7. The TPO/AO erred in rejecting certain comparable companies identified by the assessee as having economic performance contrary to industry behavior.8. The TPO/AO erred in rejecting certain comparable companies identified by the assessee as having different accounting year.9. The TPO/AO erred in rejecting certain comparable companies identified by the assessee using employee cost greater than 25 percent of total revenues.10. The TPO/AO erred in rejecting certain comparable companies identified by the assessee using onsite revenues greater than 75 percent of total revenues.11. The TPO/AO erred in obtaining information not available in public domain for comparability purposes.12. The TPO/AO erred by not providing the assessee an opportunity of being heard in certain cases.13. The TPO/AO erred by not considering foreign exchange fluctuation gain/loss and provisions written back in computing operating margins of comparable companies.14. The TPO/AO erred by not making suitable adjustments for differences in the risk profile of the assessee vis-Ã -vis comparables.15. The TPO/AO erred in not providing the benefit of the arm's length range for computing the arm's length price.16. The AO erred in not allowing set-off of unabsorbed depreciation for the assessment year 2006-07.Additional grounds raised:1. The assessment order passed u/s 143(3) read with section 144C is illegal and without jurisdiction.2. The assessment was completed on a non-existing entity, and not on the amalgamating/successor company.Key Decision:The Tribunal allowed the appeal for statistical purposes and restored the matter to the DRP for further consideration and decision in accordance with the law.
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