TP Adjustment deleted for own Entity

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that transfer pricing adjustments cannot be sustained in respect of transactions between an Indian company and its wholly owned US LLC where the LLC is merely a pass-through entity and its profits are ultimately taxed in the hands of the Indian company. 

The Tribunal observed that no person can trade with itself or earn profits from itself, and where the entire income of the foreign entity is already offered to tax in India, there is neither profit shifting nor erosion of the Indian tax base. 

Consequently, the Tribunal deleted the transfer pricing adjustment of ₹2.84 crore, the associated adjustment relating to overdue receivables, and the consequential reduction in deduction claimed under Section 80-IC.