Tribunal allows appeal on transfer pricing, directs AO to reevaluate under APA provisions. Appellant granted opportunity.

The Tribunal allowed the appeal on transfer pricing adjustment grounds, directing the AO to reevaluate the issue in line with the APA provisions. The appellant was granted an opportunity to present their case, and the order was pronounced in their favor on August 12, 2016. Other additions to the total income were not disturbed as specific grounds were not raised.

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Issues:
Transfer pricing adjustment based on international transactions.

Analysis:
The appeal was against the order of the DCIT relating to the assessment year 2009-10 under the Income Tax Act. The appellant raised several grounds of appeal, including errors in proposed additions to the total income, rejection of external CPM and TNMM analysis, and improper application of internal CUP and CPM methods. The appellant argued that the DRP, AO, and TPO erred in comparing domestic and export prices without considering various differences. The appellant also contested the rejection of comparable companies and the failure to allow adjustments for comparability.

The appellant further challenged the rejection of the external TNMM adopted in the previous assessment year and the initiation of penalty proceedings. The appellant requested the deletion of the addition made by the AO and TPO. The appellant highlighted the existence of an Advance Pricing Agreement (APA) with the CBDT covering multiple years and argued for consistent treatment based on the APA provisions. The TPO proposed adjustments due to alleged non-arm's length transactions, resulting in additions to the appellant's income. The AO upheld these adjustments, which were then confirmed by the DRP.

Upon review, the Tribunal found that the international transactions in the year under consideration were similar to those covered in the APA. Considering this, the Tribunal directed the AO to reevaluate the transfer pricing issue in line with the APA provisions and report from the TPO. The Tribunal allowed the appeal on transfer pricing adjustment grounds, granting the appellant a reasonable opportunity to present their case. Other additions were not disturbed as specific grounds were not raised. Consequently, the appeal was allowed, and the order was pronounced in favor of the appellant on August 12, 2016.

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