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of <h1>Tribunal Orders Reexamination of Transfer Pricing Issues with 15% RPT Filter</h1> <h3>The Deputy Commissioner Income Tax, Circle-7 (1) (2), Bangalore Versus M/s Yodlee Infotech Pvt. Ltd. Bangalore</h3> The tribunal allowed cross appeals by the assessee and the revenue against the assessment order, directing a reexamination of transfer pricing issues with ... Transfer pricing adjustment - RPT filter application - Held that:- Where the DRP has applied 0% RPT filter and as per the settled position of law by now, the RPT filter should be applied at the rate of 15%, we set aside the order of the AO/TPO and restore back the matter to the file of the AO/TPO for a fresh decision by applying RPT filter of 15%. We also hold that since the matter is going back to the file of the AO/TPO and much development has taken place in the legal position on the TP issue, now the entire matter should be reexamined and decided afresh by the AO/TPO as per the present legal position, which may result into fresh consideration of those comparables which were rejected earlier for some reasons. Issues:Cross appeals filed by the assessee and the revenue against the assessment order passed by the AO u/s 143 (3) r.w.s.144C of the IT Act, 1961 dated 30-01-2015, as per the directions of the DRP.Analysis:1. Revenue's Grounds:- The revenue raised several grounds opposing the DRP's order, including errors in considering company size and turnover for comparability, exclusion of certain comparables based on turnover, granting risk adjustment based on a previous decision, and directions regarding communication and travel expenses.- The revenue also challenged the application of 0% RPT by the DRP, highlighting contradictions in the decision and the need for a reevaluation based on a 15% RPT filter.2. Assessee's Grounds:- The assessee contested the AO's assessment based on the DRP's directions, specifically regarding the total income assessment and transfer pricing adjustments.- Issues raised included errors in accepting economic analysis, determining arm's length price using limited data, and rejecting comparables based on accounting year, export earnings, and employee costs.- The DRP's modification of the RPT filter was also challenged, along with specific rejections of comparable companies and the imposition of penalties and interest by the AO and DRP.3. Judgment:- Both sides agreed on the need to apply a 15% RPT filter instead of the 0% filter applied by the DRP, leading to a decision to restore the matter to the AO/TPO for a fresh decision.- The tribunal set aside the previous order and directed a reexamination of the entire transfer pricing issue, emphasizing the evolving legal position and the reconsideration of previously rejected comparables.- Ultimately, both appeals of the assessee and the revenue were allowed for statistical purposes, indicating a procedural victory without altering the substantive tax implications.In conclusion, the judgment focused on procedural errors in the transfer pricing assessment, particularly regarding the application of the RPT filter, leading to a decision to remand the matter for a fresh determination in line with the current legal standards.
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