Tribunal Allows Appeal, Condoning Delay Due to Pandemic; Emphasizes Turnover for Comparability in Transfer Pricing.

The Tribunal condoned a 129-day delay in filing the appeal due to the pandemic, aligning with the SC's extension guidelines. It upheld the TPO's ALP determination at Rs. 3,84,41,049 and emphasized turnover as a relevant criterion for comparability in Transfer Pricing cases. The Tribunal directed the AO to apply a turnover filter of ten times on both sides of the assessee's turnover for a fresh search, overturning lower authorities' findings and allowing the appeal for statistical purposes.

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Issues:
Delay in filing appeal due to pandemic, Arm's Length Price (ALP) determination, Turnover filter in ALP, Relevant criteria for choosing comparables, Appropriate turnover filter.

Delay in filing appeal due to pandemic:
The appeal was delayed by 129 days, attributed to the pandemic. The Supreme Court's decision allowed a 90-day extension for cases where the limitation would have expired between a specific period. As the limitation period for this appeal fell within this extension, the delay was condoned. The Tribunal proceeded to hear the appeal on its merits.

Arm's Length Price (ALP) determination:
The Transfer Pricing Officer determined the ALP at Rs. 3,84,41,049 using TNMM method, while the assessee argued for a lower ALP of 9.75% based on OP/OC as PLI. The Dispute Resolution Panel confirmed the TPO's adjustment, leading to the final assessment order.

Turnover filter in ALP:
The assessee contended that the turnover of comparables significantly differed from the assessee's turnover, affecting comparability. The AR argued that turnover is a relevant factor for comparability, citing various judicial precedents supporting this view.

Relevant criteria for choosing comparables:
The Tribunal considered conflicting decisions regarding the relevance of turnover in choosing comparables. While one view emphasized that huge profit or turnover does not automatically exclude comparability, another view highlighted turnover as a crucial criterion for selecting comparables in Transfer Pricing cases. Following the Karnataka High Court's stance, turnover was deemed a relevant criterion for choosing comparables in ALP determination.

Appropriate turnover filter:
The Tribunal directed the Assessing Officer to apply a tolerance range of turnover ten times on both sides of the assessee's turnover for a fresh search. This decision overturned the findings of the lower authorities and allowed the appeal for statistical purposes.

In conclusion, the Tribunal addressed the delay in filing the appeal, discussed the ALP determination methodology, emphasized the relevance of turnover in choosing comparables, and specified the appropriate turnover filter to be applied. The decision provided clarity on these crucial aspects of the case, ultimately allowing the appeal for statistical purposes.

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