ITAT Allows Appeal on Transfer Pricing Adjustments for Marketing Support Services

The ITAT allowed the assessee's appeal concerning Transfer Pricing adjustments for Marketing Support Services. The Tribunal recalled the order to address the specific issue after the assessee filed a Miscellaneous Application. The DRP directed the exclusion of certain comparables, and the ITAT analyzed each disputed comparable, ultimately allowing the appeal based on exclusions of specific comparables for Marketing Support Services.

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Issues:
Transfer Pricing adjustment relating to international transaction of provision of Marketing Support Services.

Analysis:
The appeal was initially disposed of by the Tribunal, but the assessee filed a Miscellaneous Application (M.A.) stating that the contentions on the issue of Transfer Pricing adjustment for Marketing Support Services were not addressed. The M.A. was allowed, and the Tribunal recalled the order for adjudication on this specific issue.

The assessee, a subsidiary, provided IT services and Marketing Support Services to its parent company during the relevant Assessment Year. The Transfer Pricing (TP) documentation used TNMM as the Most Appropriate Method, with OP/TC as the PLI. The TPO made adjustments to the international transactions of IT services and Marketing Support Services, but accepted the arm's length nature of other transactions.

The DRP directed the TPO to exclude certain comparables for Marketing Support Services. After adjustments, the final comparable set was determined. The assessee sought exclusion of three more comparables, arguing functional dissimilarity based on activities. The Departmental Representative contended that even the accepted comparables were not strictly providing Marketing Support Services.

The ITAT analyzed each disputed comparable. Choksi Laboratories Ltd. was found comparable due to its services. Indus Technical & Financial Consultants Ltd. was excluded for being a manufacturing company. WAPCOS Limited (Segmental) was also excluded for providing different services. The appeal of the assessee was allowed based on these observations.

In conclusion, the ITAT directed the exclusion of specific comparables for Marketing Support Services, leading to the allowance of the assessee's appeal.

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