Broadcom Communication Technologies Pvt Ltd vs Dy. CIT
The Assessee is engaged in the business of provision of Software Development Services to its wholly owned holding company. The Assessee and its wholly owned holding company were Associated Enterprises and were engaged in “international transaction”. The Transfer Pricing Officer to whom the determination of ALP was referred to by the AO, accepted Transaction Net Margin Method as the Most Appropriate Method and also used the same Profit Level Indicator for comparison. The TPO accepted 3 companies chosen by the Assessee as comparable companies. The DRP excluded 10 out of 13 comparable companies chosen by the TPO. Three companies remain as comparable companies after the directions of the DRP. Based on the directions of the DRP, the AO passed the final order of assessment. The Assessee has preferred appeal before the Tribunal over the decision of the DRP.
Bangalore ITAT is of the view that when the TPO and assessee agree on certain comparables, it is not open to the DRP to suo motu exclude comparable companies. However, the Assessee did not dispute the comparability of one of the companies before the TPO and the DRP but seeks to now raise an issue regarding comparability of this company. Since the issue has been raised by the Assessee for the first time before ITAT, we deem it fit and proper to remand the question of comparability of this company to the AO/TPO afresh.