IN HIGH COURT OF DELHI AT NEW DELHI ITA 250/2017 PR. COMMISSIONER OF INCOME TAX-4 ..... Appellant Through: Mr.Ruchir Bhatia, Sr. Standing Counsel. Versus INTERRA INFOTECH ( INDIA) PVT. LTD. ..... Respondent Through: Mr.Ajay Vohra, Sr.Advocate with Mr.Neeraj Jain, Advocate. CORAM: JUSTICE S.MURALIDHAR JUSTICE PRATHIBA M. SINGH ORDER % 25.08.2017 1. This is appeal by Revenue against order dated 23 rd August, 2016 passed by Income Tax Appellate Tribunal ( ITAT ) in ITA No.1632/Del/2013 for Assessment Year ( AY ) 2009-10. question urged before Court by Revenue is whether ITAT was justified in rejecting Arm s Length Price ( ALP ) as determined by Assessing Officer ( AO ) on basis of comparables adopted by Transfer Pricing Officer ( TPO ) for AY 2008-09, particularly, since there was no change in circumstances from AY 2008-09. 2. facts in brief are that Assessee is engaged in business of development of computer software. return filed by Assessee for ITA 250/2017 Page 1 of 4 AY in question was picked up for scrutiny. AO noticed that Assessee had entered into international transactions with M/s Interra Information Technologies Inc., USA for sum of Rs.11,34,95,073/-. 3. AO rejected Transfer Pricing ( TP ) study of Assessee and observed that there were no abnormal changes in facts and circumstances of case for AY 2009-10. AO adopted same comparables that had been adopted by TPO for AY 2008-09. In other words, AO, without making any reference to TPO straightaway proceeded to apply those very comparables and reworked ALP under Section 92CA(1) of Act. AO proceeded to make addition of Rs.4,17,59,187/-. 4. In appeal filed by Assessee, Commissioner of Income Tax (Appeals) [ CIT(A) ] noticed that profit level indicator ( PLI ) earned by Assessee from transaction with uncontrolled entities was within 5% range of operating margins of 8.03% earned from transaction with AEs. On comparison of internal as well as external comparables, CIT (A) found that PLI was within margin and did not warrant any TP adjustment. In any event, as regards external comparables, CIT (A) found that PLI of Assessee by applying TNMM was 5.40% against average PLI of -1.07%. 5. Revenue then went in appeal before ITAT which concurred with CIT (A) and held that AO was not justified in adopting comparables selected from AY 2008-09 without undertaking proper analysis. ITAT found that CIT (A) had, in fact, elaborately considered both internal as well as external benchmarking analysis ITA 250/2017 Page 2 of 4 and come to definitive conclusions regarding there being no occasion to make any TP adjustment. 6. Mr. Ruchir Bhatia, learned Senior Standing Counsel for Revenue has urged that since ITAT had itself remanded to TPO issue concerning TP adjustment for AY 2008-09, it ought to have passed similar order for present AY as well. According to him, in present AY, AO ought to have made reference to TPO and there was no occasion for CIT (A), in exercise of its appellate jurisdiction, to undertake TP analysis. 7. Court is unable to agree with above submission. Court has perused ground of appeal urged by Revenue before ITAT. While there is general ground about CIT (A) having been in error in deleting TP adjustment made by AO, no specific ground was urged that CIT (A) ought not to have itself undertaken TP analysis and that it was mandatory requirement in law for AO to have made reference to TPO for AY in question. Consequently, Court is not persuaded to permit Revenue to raise such ground at this stage. 8. Court finds that CIT (A) has given cogent reasons for not accepting approach of AO in simply following TPO s order for earlier AY 2008-09 without undertaking detailed analysis where Assessee was able to show that facts and circumstances of case in AY in question were different from earlier AY. Court is unable to be persuaded that concurrent orders of CIT (A) and ITAT suffer from any legal infirmity or perversity warranting framing of any substantial ITA 250/2017 Page 3 of 4 question of law. 9. appeal is accordingly dismissed but in circumstances without any order as to costs. S. MURALIDHAR, J. PRATHIBA M. SINGH, J. AUGUST 25, 2017 anb ITA 250/2017 Page 4 of 4 Pr. Commissioner of Income-tax-4 v. Interra Infotech (India) Pvt. Ltd