Transfer pricing adjustments on head office charges fail where documentary evidence supports services and no prescribed benchmarking method is applied.

Transfer pricing adjustments for Global Head Office and Regional Head Office charges were deleted because the assessee had produced documentary evidence, including emails, agreements and invoices, showing receipt of India-specific services. The Transfer Pricing Officer could not lawfully benchmark the transactions at nil without applying a prescribed method or making any comparable search. Rule 10AB of the Income-tax Rules requires the other method to be based on the price of a same or similar uncontrolled transaction, and that exercise was not undertaken. The Court also held that disputes on comparables and fact-based transfer pricing findings do not, by themselves, give rise to a substantial question of law under section 260A.

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Issues: Whether the Tribunal was justified in deleting the transfer pricing adjustments made on account of Global Head Office and Regional Head Office charges by holding that the assessee had shown receipt of India-specific services and that the Transfer Pricing Officer could not determine arm's length price at nil without applying a prescribed method, and whether the Revenue's appeals under section 260A of the Income-tax Act, 1961 disclosed any substantial question of law.

Analysis: The Tribunal recorded factual findings that the assessee had produced substantial documentary material, including emails, agreements and invoices, showing receipt of services from the overseas offices. It also held that the Transfer Pricing Officer had adopted a restrictive approach by treating the transactions as nil without conducting any comparable search or determining arm's length price under a prescribed method. The Court found no perversity in those findings and held that Rule 10AB of the Income-tax Rules, 1962 requires the other method to be based on the price of a same or similar uncontrolled transaction, which was not attempted here. The Court further held that disputes on selection of comparables and transfer pricing adjustments based on appreciation of facts do not, by themselves, raise a substantial question of law under section 260A.

Conclusion: The Tribunal's deletion of the transfer pricing adjustments was upheld and the Revenue's appeals were dismissed.

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