Transfer Pricing

Arm’s Length Price — If Associate Enterprises is rendering two distinct services and mark-up is received for one and not for the other, the aggregate position cannot be considered for determining ALP — as held by MumTrib in Exxon Mobil Company India P Ltd v Dy CIT — In favour of: The Assessee (Partly) ; ITA No. 8311/Mum/2010 : Assessment Year: 2006–2007

Decided on: 10 June 2011

Multi-year data can be considered for determining the ALP but the burden is on the assessee to demonstrate that the previous year’s data contained certain facts which would influence the determination of transfer pricing, in the absence of that, there is no scope for considering data other than that of the current year.

Neither loss making units nor high profit making units can be eliminated from the comparables unless there are specific reasons for eliminating the same which is other than the general reason that a comparable has incurred loss or has made abnormal profits.