ITAT directs AO to Exclude Cox & Kings from the list of comparables while Determining the ALP for International Transactions [Read Order]

The Income Tax Appellate Tribunal (ITAT) Bangalore, has held that Cox & Kings cannot be held to be a good comparable for determination of the Arm’s Length Price (ALP) for international transactions.

The Appellant, M/s Enchanting Travels Pvt. Ltd. is engaged in providing tourism services to customers of Enchanting India, their Associate Enterprise (AE) as well as to independent customers in the Indian region. A reference was made to the Transfer pricing officer (TPO) for evaluation of the transfer pricing transactions entered into by the appellant with its AE to see whether they are at arm’s length. In transfer pricing study, assessee has submitted a transfer pricing study report before the TPO and has taken 7 comparables to include base for the report. The report was returned by the TPO including an addition of 3 more comparables, including Cox & Kings. Aggrieved, the assessee filed an objection before the Dispute Resolution Panel but was unfortunately rejected by them resulting in this appeal before the ITAT.

Accountant Member Inturi Rama Rao and Judicial Member Sunil Kumar Yadav while allowing the appeal held, “we find that Cox & Kings is involved in different activities besides tour operation and has its own brand value. Therefore, it cannot be held to be a good comparable for determination of the ALP for the international transactions. We accordingly direct the AO/TPO to exclude this company from the list of comparables while determining the ALP for international transactions.”