Whether determining ALP based on working prepared by assessee is final for AO ?

CIT vs. Tata Power Solar Systems Ltd (Bombay High Court) - "9 Aug 2017"

Question of law decided in the judgement " Whether on the facts and in the circumstance of the case and   in   law,   the   Tribunal   was   justified   in   excluding   two comparables viz. Indowind Energy Ltd. and B. F. Utilities Ltd. for determination of Arm's Length Price (ALP) of international transaction   with   AEs,   when   these two comparables   were originally   included   by   the   assessee   company   among   the comparables?"

Some major takeaways notes/ concluding remarks (summarized)-

1- The assessee worked out on ALP transactions in which he had taken some of the comparable companies data in order to substantiate ALP transaction and submitted a study report to AO

2- Later on, before the TPO, the assessee sought to withdraw some of the companies used as comparable in TP study submitted to TPO as the assessee noted that these companies were having some different verticals,

3- However TPO refused to allow withdrawal of such comparable and used these companies and prepared an assessment order,

4- Learned High Court held that just because it was included by the assessee and now once he finds these irrelevant then TPO can not stop this action,

5- Learned court also mentioned "The Transfer Pricing   Mechanism   requires   comparability   analysis   to   be   done between   like   companies   and   controlled   and   un­   controlled

transactions.   This   comparison   has   to   be     done   between   like companies and requires carrying out of FAR analysis to find the same. Moreover, the Assessee's submission in arriving at the ALP is  not final"

6- It was hence deliberated by the court that it is TPO to examine and find out comparable and to substantiate if the comparable were actually correct or not,

Hence court dismissed the appeal as there is nothing substantial question of law in this case.

for full text of judgement please refer - http://itatonline.org/archives/cit-vs-tata-power-solar-systems-ltd-bombay-high-court-transfer-pricing-a-party-is-not-barred-in-law-from-withdrawing-from-its-list-of-comparables-a-company-found-to-have-been-included-on-account-of-m/tata-power-transfer-pricing/

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