2017 (12) TMI 855

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....assessee, submitted that the Dispute Resolution Panel has violated the principles of natural justice and made downward adjustment by taking the entire transaction at entity level instead of Associated Enterprise transaction. According to the Ld. counsel, under the scheme of Income-tax Act, the transaction of the assessee being tested party with Associated Enterprise outside the country has to be compared with transaction of the similarly placed company in uncontrolled transaction. In the case before us, according to the Ld. counsel, the Assessing Officer has taken the entire transaction of the assessee, including the domestic transaction, for the purpose of transfer pricing adjustment. 3. Referring to the judgment of Bombay High Court in....

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..... counsel, the DRP is not justified in giving direction to the Assessing Officer for adjustment. 5. We have heard Smt. Ruby George, the Ld. Departmental Representative, also. According to the Ld. D.R., the entire transaction of the assessee, including domestic transaction, has to be taken into consideration for the purpose of transfer pricing adjustment. Moreover, the royalty reversal needs to be removed from operating income for the purpose of transfer pricing adjustment. Therefore, according to the Ld. D.R., there is no reason to interfere with the direction of the Dispute Resolution Panel. 6. We have considered the rival submissions on either side and perused the relevant material available on record. The first issue arises for con....

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....t. Therefore, the order of this Tribunal in Caterpillar India Pvt. Ltd. (supra) may not be applicable to the facts of the case. 7. This Tribunal is of the considered opinion that under the scheme of the Income-tax Act, the transfer pricing adjustment has to be made only in respect of the transaction of the assessee being a tested party, with Associated Enterprise outside the country after comparing the transaction made by similarly placed company in uncontrolled transaction with non-Associated Enterprise. Therefore, we are unable to uphold the order of the Dispute Resolution Panel Accordingly the order of the DRP is set aside and the entire issue is remitted back to the file of the Assessing Officer. 8. Since the main issue is remitte....