Tribunal partially allows appeal, remands issues for reconsideration. Upholds CIT(A)'s decisions.

The Tribunal partly allowed the appeal for statistical purposes, remanding certain issues to the AO/TPO for reconsideration and re-computation. The Tribunal upheld the CIT(A)'s decisions on various grounds, citing relevant judicial precedents and legal provisions.

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Issues Involved:
1. Legality of the order of the Assessing Officer (AO) and Transfer Pricing Officer (TPO).
2. Justification for AO making a reference to the TPO.
3. Reliance on the TPO's order by the AO.
4. Determination of the appellant's international transaction at arm's length.
5. Rejection of data used by the appellant in determining the arm's length price (ALP).
6. Non-use of multiple-year data as prescribed by Rule 10B(4) of the Income Tax Rules, 1962.
7. Use of financial year 2001-02 data for comparable companies.
8. Inclusion of a new company as comparable without providing an opportunity to the appellant.
9. Inclusion of non-operating income and expenses in comparing profits.
10. Nature of payment to associated enterprises as cost reimbursements.
11. Application of the proviso to section 92C(2) of the Act.
12. Determination of the arm's length price.
13. Computation of total income chargeable to tax.

Issue-wise Detailed Analysis:

1. Legality of the order of the AO and TPO:
The appellant contended that the order of the AO/TPO was arbitrary and contrary to law. The Tribunal found no reason to interfere with the CIT(A)'s decision, which upheld the AO's reference to the TPO and the adoption of the TPO's computation of ALP.

2. Justification for AO making a reference to the TPO:
The appellant argued that the AO erred by making a reference to the TPO without meeting the preconditions under section 92CA of the Act. The Tribunal, relying on the Special Bench decision in the case of M/s Aztec Software & Technology Ltd., held that the AO is not required to demonstrate the existence of circumstances set out in clauses (a) to (d) of section 92C(3) before referring the case to the TPO.

3. Reliance on the TPO's order by the AO:
The appellant claimed that the AO violated principles of natural justice by not independently applying his judgment to the TPO's order. The Tribunal upheld the CIT(A)'s decision, which found no illegality or arbitrariness in the AO adopting the TPO's computation of ALP.

4. Determination of the appellant's international transaction at arm's length:
The appellant argued that the CIT(A) erred in confirming the TPO/AO's approach in determining that the international transaction was not at arm's length. The Tribunal upheld the CIT(A)'s decision, which relied on the Special Bench decision in the case of M/s Aztec Software & Technology Ltd.

5. Rejection of data used by the appellant in determining the ALP:
The appellant contended that the TPO/AO erred in rejecting the data used by the appellant. The Tribunal upheld the CIT(A)'s decision, which found that the data used by the appellant was not contemporaneous and that the TPO was within his powers to use fresh available data.

6. Non-use of multiple-year data:
The appellant argued that the TPO/AO erred in not using multiple-year data as prescribed by Rule 10B(4). The Tribunal upheld the CIT(A)'s decision, which found that the use of contemporaneous data was appropriate and that the appellant failed to justify the use of multiple-year data.

7. Use of financial year 2001-02 data for comparable companies:
The appellant claimed that the TPO/AO erred in using financial year 2001-02 data, which was not available to the appellant at the time of complying with transfer pricing documentation requirements. The Tribunal upheld the CIT(A)'s decision, which found that the appellant should have adopted the data available at the time of filing the income-tax returns.

8. Inclusion of a new company as comparable:
The appellant argued that the CIT(A) erred by including a new company as comparable without providing an opportunity to the appellant. The Tribunal found this argument unacceptable, as the CIT(A) had included a company that was comparable in subsequent years and the appellant had not objected to its inclusion then.

9. Inclusion of non-operating income and expenses:
The appellant contended that the TPO/CIT(A) erred in not excluding certain non-operating income and expenses in computing profits. The Tribunal remanded the matter to the AO/TPO for re-working the operating margins of the comparables and making the necessary adjustments.

10. Nature of payment to associated enterprises:
The appellant argued that the payment to its associated enterprises was in the nature of cost reimbursements and should not be marked up. The Tribunal remanded this issue to the AO/TPO for reconsideration.

11. Application of the proviso to section 92C(2):
The appellant claimed that the TPO/CIT(A) should have given a standard deduction of 5% as provided under the proviso to section 92C(2). The Tribunal directed the AO to adopt the arm's length price after giving the standard deduction of 5%.

12. Determination of the arm's length price:
The appellant argued against the arm's length price determined by the TPO/CIT(A). The Tribunal, in view of its findings on other grounds, did not find it necessary to specifically adjudicate this issue.

13. Computation of total income chargeable to tax:
The appellant raised a ground regarding the computation of total income chargeable to tax. The Tribunal, in view of its findings on other grounds, did not find it necessary to specifically adjudicate this issue.

Conclusion:
The appeal filed by the appellant was partly allowed for statistical purposes, with certain issues remanded to the AO/TPO for reconsideration and re-computation. The Tribunal upheld the CIT(A)'s decisions on several grounds, relying on relevant judicial precedents and legal provisions.

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