Facts of the Case

  • The Revenue filed appeals against two orders of the Income Tax Appellate Tribunal (ITAT).
  • The ITAT had:
    • Included and excluded certain comparables
    • Remanded some comparables to the Transfer Pricing Officer (TPO)
  • The dispute related to determination of Arm’s Length Price (ALP) in international transactions of the assessee company.

Issues Involved

  1. Whether the ITAT was justified in including/excluding certain comparables for ALP determination.
  2. Whether remanding comparables to the TPO was legally valid.
  3. Whether such issues give rise to a substantial question of law under Section 260A.

Petitioner’s Arguments (Revenue)

  • The ITAT erred in:
    • Selection and rejection of comparables
    • Remanding issues back to the TPO
  • The Revenue contended that these actions affected proper determination of ALP and required High Court intervention.

Respondent’s Arguments (Assessee)

  • The ITAT had:
    • Exercised proper judicial discretion
    • Followed settled principles in transfer pricing
  • The issues raised were factual in nature and did not constitute substantial questions of law.

Court’s Findings / Order

  • The Delhi High Court held:
    • The issues raised pertain to selection of comparables and ALP determination, which are purely factual matters.
    • No substantial question of law arises from the ITAT’s order.

Important Clarification

  • The High Court reaffirmed that:
    • Transfer pricing disputes involving comparables selection are generally questions of fact.
    • Such matters do not qualify for interference under Section 260A unless a clear legal issue is demonstrated.

Sections Involved

  • Section 260A of the Income Tax Act, 1961 (Appeal to High Court)
  • Transfer Pricing Provisions (Arm’s Length Price – Sections 92C, 92CA)

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2019:DHC:7404-DB/SMD20052019ITA14132018_161439.pdf

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