2022 (9) TMI 887

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....usiness of direct selling of consumer products through multi-level marketing. The assessee filed its return for AY 2013-14 declaring an income of Rs.3,04,03,40,790/-. Since, the assessee admittedly had international transaction with its Associated Enterprises ('AEs'), the case was referred to the Transfer Pricing Officer ('TPO') for determination of Arm's Length Price ('ALP'). The TPO vide order dated 31.10.2016, recommended an adjustment of Rs.15,66,27,250/- on account of ALP determined for royalty payment and Rs.7,54,77,412/- on account of managerial remuneration to the director. The Assessing Officer ('AO') vide order dated 31.01.2017 confirmed the addition made by the TPO and assessed the income of the assessee to the tune of Rs.3,27,24....

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....judgment of this Court in Chrys Capital Investment Advisors (India) Pvt. Ltd. v. Deputy Commissioner of Income Tax, ITA No. 417/2014, passed on 27.04.2015. 6. He further states that the ITAT erred in confirming the order of CIT(A) whereby it was held that the rejection of two comparables, namely, Columbia Laboratories Inc. and Premier Consumer Products Inc., by the TPO while retaining the balance four comparables was based on a summary fashion and that no cogent reason was provided for arriving at this opinion. 7. In this regard, the CIT(A) held as follows, "7.9. The contention of the TPO is not backed by any cogent reason but is based on conjectures and surmises which will not stand the test of judicial scrutiny. A comparabl....

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.... indicate that the high rates in respect of determination of ALP of royalty is one of the criteria of the rejection while confronting the assessee. The ratio laid down by the Hon'ble High Court in the case of Chrys Capital Investment (supra) is applicable in the present case. Hence there is no need to interfere with the findings of the CIT(A). The appeal of the Revenue is dismissed." 9. A perusal of the above order reveals that the ITAT and CIT (A), both fact finding authorities have concurrently held that the rejection of the two comparables by the TPO is based on conjectures and surmises and thus, deleted the addition made on account of transfer pricing adjustment for transaction related to royalty. Learned Counsel for the appellant co....