TaxTMI 
TaxTMI 
2026 (9) TMI 1465
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.... 30.08.2011 passed by the Income Tax Appellate Tribunal, Bengaluru [the Tribunal] in ITA No.1410/BANG/2010 for the Assessment Year [AY] 2006-07. The respondent [Assessee] had preferred the appeal before the Tribunal, impugning the order dated 24.01.2009 passed by the Assessing Officer [AO]. The Assessment Order dated 25.10.2010 was passed under Section 143(3) of the Act. The Assessee had disclosed certain transactions with its Associated Enterprise [AE]. Accordingly, the AO referred the matter to the Transfer Pricing Officer [TPO] under Section 92CA of the Act. The learned TPO had passed the order dated 30.10.2009 making a transfer pricing adjustment in the sum of Rs.26,86,57,520/- in respect of Arm's Length Price [ALP] for spare replac....
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.... by purchasing products from its AE and reselling them to the AE's customers in India. The learned TPO held that given the FAR [Functions, Assets and Risks] analysis, the Resale Price Method [RPM] is the most appropriate method. 7. The Assessee disputed that its functional profile was that of a trader. It claimed that it provided product replacement services and, therefore, the international transactions should be benchmarked with other service providers, not with an entity engaged in trading activities. 8. The FAR analysis furnished by the Assessee set out that it is a captive service provider for its AE and assumes no risks. It explained that the AE had supplied equipment to the customers in India and AE undertakes the services of p....
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....eeded on the basis that the Assessee purchases goods, holds inventory, and sells them to customers. 12. The learned TPO rejected TNMM as the most appropriate method and used RPM instead. 13. The learned Tribunal examined the Assessee's functional profile and did not concur with the TPO's finding. The Tribunal accepted that the functions of the Assessee were not akin to those of a trader. The Tribunal noted that a trader purchases goods by transfer of ownership and is free to fix the resale price and choose the customers to whom the goods are sold. The Tribunal found that the Assessee has no right to fix the resale price or to select its customers to whom the products are sold. The Assessee procures the spare parts to be supplied a....
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....is not applicable in the case of the assessee on the ground that the purchase and transactions are with the same associated enterprise and that TNMM is the right method to be adopted? 3. Whether the Tribunal was correct in holding that the tax payer is not a trader merely because it has no right to fix the resale price and that the assessee is performing functions akin to those of C & F agents? 4. Whether the Tribunal was correct in holding that the comparables adopted by the TPO are to be rejected while upholding one of the comparables of the TPO whereas there is no significant difference between the other 3 comparables of the TPO and this company in terms of functions performed assets owned and risk undertaken? ....
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....considered as a substantial question of law. The Supreme Court remanded the batch of matters to the Court to examine whether the guidelines laid down under the Act and Rules would be followed while determining the ALP. 22. The learned counsel appearing for the Department fairly stated that question No.1 is not required to be considered as the directions issued by the Supreme Court in Sap Labs India Pvt. Ltd. v. The Income Tax Officer and other connected matters : ITA No.10/2011 were to examine whether the guidelines laid down in the Act and the Rules have been followed for determining the ALP. He also submitted that in addition to the questions of law as projected in the appeal, the following question of law may also be considered: ....