Transfer pricing adjustment to be recomputed on MAP basis for non-US transactions, with fresh hearing directed

Transfer pricing adjustment for non-US international transactions was directed to be reconsidered on the same Mutual Agreement Procedure basis already accepted for the US transactions, as no material functional or risk distinction was shown. The Tribunal held that the MAP treatment could be followed for the non-US transactions as well and restored the matter to the Assessing Officer and Transfer Pricing Officer for fresh determination after giving the assessee a reasonable and sufficient opportunity of being heard.

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Issues: Whether the transfer pricing adjustment for the non-US international transactions should be recomputed by adopting the approach accepted in the Mutual Agreement Procedure for the US transactions and whether the matter should be restored to the Assessing Officer and Transfer Pricing Officer for fresh determination.

Analysis: The adjustment relating to US transactions had already been settled under the Mutual Agreement Procedure between the competent authorities of India and the USA. The parties were heard on whether the same treatment should be extended to the non-US transactions. The Tribunal accepted the Revenue's oral request under Rule 27 and held that, in the absence of a material distinction in the functional and risk profile, the approach adopted in the MAP for the US transactions could be followed for the non-US transactions as well. The Tribunal also directed that the fresh exercise be undertaken after granting the assessee a reasonable and sufficient opportunity of being heard.

Conclusion: The issue was decided in favour of the assessee to the extent that the matter was restored for fresh consideration on the same MAP-based approach.

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