2020 (1) TMI 1171 - AT - Income Tax

ITAT Mumbai: Appeal allowed for transfer pricing adjustments, re-verification of comparables ordered. TDS recovery issue remanded.

Altico Capital India Private Limited, (Formerly Clearwater Capital Partners India Private Limited,) Versus Dy. Commissioner of Income Tax, Circle 3 (1), Mumbai

Altico Capital India Private Limited, (Formerly Clearwater Capital Partners India Private Limited,) Versus Dy. Commissioner of Income Tax, Circle 3 (1), ... Issues:1. Transfer Pricing Adjustment - Selection of Comparables2. Addition on Account of Mismatch in Form 26AS3. Recovery of TDS Amount Deducted but Not DepositedTransfer Pricing Adjustment - Selection of Comparables:The appellant, providing Investment Advisory Services, applied the Transactional Net Margin Method (TNMM) for benchmarking international transactions. The TPO accepted TNMM but excluded some comparables selected by the appellant, making an upward adjustment. The CIT(A) granted partial relief, deleting some comparables but erred in accepting Goldman Sachs and AGM India Advisors Pvt. Ltd. as comparables. The appellant contended that these companies fail the Related Party Transaction (RPT) filter. The Tribunal agreed, directing the issue back to verify RPT qualification. The appeal was allowed for statistical purposes.Addition on Account of Mismatch in Form 26AS:Apart from transfer pricing adjustment, the Assessing Officer made an additional amount due to a mismatch in Form 26AS. The appellant received interest income with TDS deduction, but the deductor failed to deposit the TDS amount, leading to the mismatch. Citing legal precedents and a CBDT Office Memorandum, the appellant argued against the addition. The Tribunal referred to a judgment of the Hon'ble Bombay High Court and the CBDT Memo, concluding that if TDS was deducted, it cannot be recovered again. The issue was remanded to verify TDS deduction, and the appeal was allowed for statistical purposes.Recovery of TDS Amount Deducted but Not Deposited:Regarding the recovery of TDS amount not deposited by the deductor, the Tribunal upheld the appellant's contention based on legal provisions and the CBDT Memo. Following the judgment of the Hon'ble Bombay High Court, the Tribunal directed the Assessing Officer to verify TDS deduction on interest payments. If TDS was deducted, the addition should be deleted. The appeal was allowed for statistical purposes.This comprehensive analysis covers the key issues addressed in the legal judgment by the Appellate Tribunal ITAT MUMBAI, providing a detailed understanding of the transfer pricing adjustment, mismatch in Form 26AS, and the recovery of TDS amount deducted but not deposited.