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of <h1>Court Upholds Tribunal's Transfer Pricing Decision; No Substantial Legal Question Found in Revenue's Appeal.</h1> The HC dismissed the Revenue's appeal against the Income Tax Appellate Tribunal's decision on the determination of Arms Length Price and transfer pricing ... Maintainability of appeal in HC u/s 260A - determination of Arms Length Price - substantial quantum of international trade and transactions - payment in respect of management fees and global sale and marketing activity fees - substantial question of law or not? - Tribunal setting aside the determination of Arms Length Price done by assessing authority and has directed the assessing authority to the file of the TPO/AO by considering the payment in respect of management fees and global sale and marketing activity fees as part of the operating cost and allocating the same in the ration of the turnover of the other international transactions when each transaction is different and should be analyzed separately and without appreciating that duplication of services and benefit analysis is very important to bench mark the transaction in transfer pricing - HELD THAT:- As decided by tribunal payment in respect of management fees as well as Global Sale and Marketing Activity Fees shall be considered as operating cost and has to allocated in the ratio of turnover of the other international transactions and then the ALP of the other international transactions has to be determined under TNMM analysis. Hence we set aside the entire issue of determination of ALP and TP Adjustment to the record of the TPO/A.O. for carrying out fresh exercise of determination of ALP in respect of international transactions by considering the payment in respect of management fees and Global Sale and Marketing Activity Fees as part of the operating cost and allocating the same in the ratio of the turnover of the other international transactions. However, this Court in a recent judgment in M/s Softbrands India Pvt. Ltd. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT] has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable. Issues:Appeal by Revenue challenging Order of Income Tax Appellate Tribunal regarding determination of Arms Length Price and transfer pricing analysis for Assessment Year 2010-11.Analysis:The Revenue raised substantial questions of law regarding the determination of Arms Length Price by the assessing authority and the direction to file the case back to the TPO/AO for considering management fees and global sale and marketing activity fees as part of operating cost. The Tribunal found that the assessee had multiple international transactions involving various charges and payments to associated enterprises. It concluded that all international transactions with revenue receipt from and payment to associated enterprises should be clubbed together for analysis under TNMM. The Tribunal directed the TPO to determine the ALP of global sale and marketing activity fees instead of considering it NIL. The Court referred to a recent judgment stating that unless there is an evident error in the Tribunal's findings, appeals under Section 260-A of the Act are not maintainable.The Court emphasized that substantial questions of law should involve interpretations of DTAA provisions, Income Tax Act, or significant tax issues like BEPS or treaty shopping, not mere comparability or filter application disputes. It clarified that dissatisfaction with Tribunal findings is insufficient to invoke Section 260-A. The Court dismissed the Revenue's appeal, stating no substantial question of law arose in the case. The judgment highlighted the importance of quick resolution in international trade cases and reiterated the standards for raising substantial questions of law in appeals.Therefore, the Court dismissed the Revenue's appeal, finding no grounds for invoking Section 260-A and emphasizing the need for substantial legal issues in such appeals. The judgment underlined the significance of proper comparability analysis in transfer pricing cases and the limited scope for challenging Tribunal findings without clear legal questions involved.
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