Dismissal of Appeal on International Transactions with Associate Enterprise, Section 92C(2)

The appeal challenging concurrent findings of the Commissioner of Income Tax (Appeals) and the Tribunal regarding international transactions with an associate enterprise was dismissed. The appellant's arguments on arm's length pricing, applicability of Section 92C(2), and the comparison of companies were not accepted. The Tribunal's evaluation of the appellant's operating margin within the arm's length range led to the dismissal of the appeal due to the absence of substantial questions of law. The appeal was dismissed without costs, emphasizing that new grounds not raised before lower authorities cannot be introduced in the appeal.

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Issues:
Concurrent findings of the Commissioner of Income Tax (Appeals) and the Tribunal challenged in the present appeal regarding international transactions with an associate enterprise, applicability of Section 92C(2) of the Income Tax Act, consideration of comparable companies for benchmarking, permissible arm's length pricing, and the admissibility of new grounds in the appeal.

Analysis:
The appellant challenges the Commissioner of Income Tax (Appeals) and the Tribunal's findings on international transactions with an associate enterprise. The substantial questions of law raised include the correctness of the price charged in international transactions falling within the permissible range, the application of the arm's length purchase price, the benefit of +/5% to the assessee, and the justification of the ITAT's findings without addressing the department's specific grounds of appeal. The appellant argues that Section 92C(2) was not properly considered, and the comparison of two companies by the TPO was wrongly discarded without reasons. The appellant contends that the transaction is beyond the arm's length and seeks to set aside the order.

The respondent, engaged in the business of weighing equipments, conducted international transactions with its associate enterprises. The respondent selected a comparable company for benchmarking using the TNMM method. The Assessing Officer made additions to the purchase made by the assessee based on operating margins. The appellant's operating margin was calculated at 6.18%, which falls within the arm's length even if the TPO's calculated margin of 9.60% is considered. The Commissioner of Income Tax (Appeals) and the Tribunal evaluated this aspect reasonably, leading to the dismissal of the appeal due to the absence of substantial questions of law that were not raised before the lower authorities.

The judgment emphasizes that grounds not previously raised before the Commissioner of Income Tax (Appeals) and the Tribunal, especially those based on facts, cannot be raised in the present appeal. The decision to dismiss the appeal is based on the lack of substantial questions of law. The judgment concludes by dismissing the appeal without costs.

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