Appeal partly allowed using MAP resolution for TP adjustment in ITeS

The Tribunal partly allowed the appeal, applying MAP resolution to non-US AE transactions for a TP adjustment in providing ITeS. The resolution, initially covering 94% of the adjustment with the US AE, was extended to non-US AEs based on established legal principles and the absence of distinctions in accounts or TP analysis. The Tribunal found merit in the assessee's claim, citing precedent and holding that margins accepted in MAP proceedings with the US AE could guide the ALP for non-US AE transactions. Consequently, the appeal was partly allowed, and further consideration of raised grounds was deemed unnecessary.

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Issues:
Appeal against CIT(A) order on TP adjustment for international transaction of ITeS. Admission of additional ground for applying MAP resolution to TP adjustment. Application of MAP resolution to non-US AE transactions. Comparison of decisions by ITAT Bengaluru Bench.

Analysis:
The appeal pertains to a TP adjustment made by the TPO on the ALP determination for an international transaction of providing ITeS to an AE. The CIT(A) partly allowed the appeal, leading to the assessee challenging the order. An additional ground was filed seeking application of the MAP resolution to the TP adjustment, specifically for transactions with non-US AEs. The MAP request was resolved for transactions with the US AE, covering 94% of the TP adjustment. The assessee requested to extend this resolution to transactions with non-US AEs, constituting 6% of the adjustment. The Tribunal admitted the additional ground for adjudication based on established legal principles.

The assessee's argument was supported by the factual background where 94% of ITeS revenue was from the US AE, resolved under MAP. The remaining 6% revenue was from AEs in the UK and domestic parties. The assessee sought to apply the ALP rates accepted in the MAP proceedings for US AE transactions to non-US AE transactions. Citing precedent in Amazon Development Centre India Pvt. Ltd. case, the Tribunal found merit in the assessee's claim due to the absence of distinctions in accounts or TP analysis.

The ITAT considered the decisions in various cases cited by the parties. While the DR relied on remanded cases for fresh consideration, the Tribunal differentiated the present case due to the lack of distinction between US and non-US transactions. It was held that margins accepted in MAP proceedings with the US AE could guide the ALP for non-US AE transactions as well. Consequently, the appeal was partly allowed based on the application of MAP resolution to non-US AE transactions. The Tribunal concluded that the grounds raised by the assessee may not require further consideration in light of this decision.

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