ITAT directs to Recompute ALP by including the Excluded Comparable Chosen for Transfer Pricing [Read Order]

The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) comprising Amit Shukla ( Judicial Member ) and Padmavathy S. ( Accountant Member ) directed to recompute the Arm Length Price ( ALP ) by including excluded comparable chosen for transfer pricing .

In this case the Assessee Star Television Entertainment Ltd  is a non resident company and is a tax resident of Hong Kong belonging to the Star Television group of companies. After revising the assessee's income the case was selected for scrutinizing.

Accordingly A reference was made to the Transfer Pricing Officer ( TPO ) in order to determine the arm’s length price of the transactions the assessee has entered into with its Associated Enterprises ( AEs ).During the proceeding the Assessing Officer has excluded the 3 comparables for the reasons that those companies are loss making and the profit margin is low.

Aggrieved, the assessee filed an appeal before the two member bench of  tribunal.

Assesee representative, Porus Kaka before the bench argued that in  the assessment year 2009-2010 the co-ordinate bench in group companies case has considered the issue of exclusion of these comparables where it held that these three comparables are to be included.

The Department representative, Himanshu Sharma supported the decision of lower authorities .

After observing the submissions of both parties the tribunal determined that “the Assessing Officer has excluded the above 3 comparables for the same reasons that those companies are loss making and the profit margin is low. Therefore, the ratio laid down by the co-ordinate bench in the above case is applicable to assessee also.”

Therefore the ITAT bench directed the TPO to include these comparables and re-compute the ALP accordingly. Thus the ground raised by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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