Transfer pricing benchmarking limited to associated enterprise transactions; no substantial question of law survived for admission.

Transfer pricing benchmarking was held to be confined to associated enterprise or related party transactions, not the entire turnover. The Bombay HC noted that prior coordinate bench decisions had already settled this position against the Revenue, so the proposed substantial question of law did not survive for admission. On that basis, the proposed question was answered in favour of the assessee, and the appeal was not admitted and stood dismissed.

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Issues: Whether the proposed substantial question of law arose for admission in respect of transfer pricing adjustment and whether benchmarking of the adjustment could be confined to associated enterprise transactions rather than the entire turnover.

Analysis: The appeal concerned assessment year 2009-10. The Court noted that earlier coordinate bench decisions had already held that benchmarking for transfer pricing purposes is to be carried out only with reference to associated enterprise or related party transactions and not on the basis of the entire turnover. It further noted that the issue had already been treated as concluded against the Revenue in prior decisions, and that the proposed question therefore did not survive as a substantial question of law.

Conclusion: The proposed question was answered against the Revenue and in favour of the assessee; the appeal was not admitted and stood dismissed.

Ratio Decidendi: Transfer pricing adjustment must be confined to associated enterprise transactions, and once the issue is settled by binding coordinate bench precedent, no substantial question of law arises for admission.

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