ITAT remands transfer pricing adjustment to TPO for fresh consideration with additional evidence on arm's length pricing

ITAT Chennai remanded transfer pricing adjustment matter to TPO for fresh consideration after admitting additional evidence including dealer price determinations and letters of intent. The tribunal directed TPO to reconsider most appropriate method selection for arm's length price determination, allowing assessee's grounds for statistical purposes. Separately, business promotion expenditure disallowance was also remanded to AO for fresh adjudication after assessee undertook to file supporting evidence.

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Issues:
1. Rejection of Resale Price Method and adoption of Berry Ratio as the Most Appropriate Method.
2. Admissibility of additional evidences for fresh consideration.
3. Disallowance of business promotion expenditure.

Analysis:

Issue 1: Rejection of Resale Price Method and adoption of Berry Ratio
The appeals were directed against final assessment orders passed under the Income Tax Act for the assessment years 2014-15 and 2013-14. The Appellate Tribunal decided to hear both appeals together due to similar issues. The assessee challenged the rejection of Resale Price Method (RPM) and the adoption of Berry Ratio as the Most Appropriate Method (MAM) by the Assessing Officer (AO)/DRP/TPO. The Tribunal considered the additional evidences filed by the assessee, which were not presented before the TPO/DRP. Referring to a previous order in the assessee's own case, the Tribunal remanded the matter back to the TPO for fresh consideration based on the additional evidences provided. Consequently, ground Nos. 3 & 4 raised by the assessee were allowed for statistical purposes.

Issue 2: Admissibility of additional evidences for fresh consideration
The Tribunal examined the additional evidences submitted by the assessee, including determination of dealer prices and letters of intent. The Tribunal, after considering the submissions of both parties, decided to remand the matter back to the Assessing Officer/Transfer Pricing Officer for fresh adjudication based on the additional evidences provided by the assessee. Ground Nos. 5 to 9 were considered infructuous in light of the decision on ground Nos. 3 & 4.

Issue 3: Disallowance of business promotion expenditure
The assessee debited a significant amount under "other expenses" for business promotion expenses. The Assessing Officer disallowed a portion of this expenditure due to lack of details provided by the assessee. The Tribunal noted that the DRP had deleted the addition made in the assessment year 2014-15 after considering additional evidence furnished by the assessee. In the interest of justice, the Tribunal remanded the matter back to the Assessing Officer for fresh adjudication, allowing ground No. 9 raised by the assessee for statistical purposes.

In conclusion, both appeals of the assessee were partly allowed for statistical purposes, and the matter was remanded back to the respective authorities for fresh consideration based on additional evidences and lack of details provided.

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