Bangalore ITAT Remands Andante Foods LLP Transfer Pricing Case for Fresh Review
Tribunal orders reassessment of international transactions and interest on delayed receivables amid insufficient evidence from the appellant
In a recent decision, the Income Tax Appellate Tribunal (ITAT) Bangalore Bench "C" has remanded a case involving Andante Foods LLP and the Deputy Commissioner of Income Tax for a fresh examination. The case, tagged as ITA No.1723/Bang of 2024, was presided over by Shri Prashant Maharishi, Vice President, and Shri Keshav Dubey, Judicial Member, with a decision date of September 15, 2025.
The legal dispute centers around the selection of the tested party in the context of transfer pricing concerning international transactions executed by Andante Foods LLP with its associated enterprise (AE) in Belgium. The assessee firm, engaged in the processing and trading of fruits, vegetables, and nutraceuticals, designated its foreign AE as the tested party, arguing that it bore lower entrepreneurial risks compared to the Indian entity. However, this selection was rejected by the Transfer Pricing Officer (TPO) due to the lack of sufficient documentary evidence supporting the claim.
The ITAT's ruling highlighted that the matter required further examination by the TPO. The Tribunal directed the assessee to provide the audited financial statements and the Functional, Asset, and Risk (FAR) profile of both the Indian entity and its foreign AE. This information is crucial for conducting a fresh benchmarking analysis to determine the appropriate Arm's Length Price (ALP) for the international transactions, which in this case involve the sale of processed foods and related transactions between Andante Foods LLP and its Belgium subsidiary. The case has been remanded to the TPO for further consideration.
Another key issue addressed in the judgment was the interest on delayed receivables, which the TPO had treated as a separate international transaction. The Tribunal held that this issue is contingent on the determination of the tested party and has therefore remanded it back to the TPO for re-examination in conjunction with the primary issue.
The ITAT's decision underscores the importance of providing comprehensive documentation, especially when foreign AEs are selected as tested parties in transfer pricing cases. The tribunal observed that Andante Foods LLP failed to substantiate its claim that the foreign AE was the least complex entity, as no audited accounts or sufficient data for a comparability analysis were provided.
This ruling will likely have broader implications for multinational enterprises engaged in international transactions, emphasizing the need for rigorous documentation and justification when selecting a foreign AE as a tested party in transfer pricing studies. The case highlights the ITAT's insistence on robust evidence to support claims of reduced complexity and entrepreneurial risk associated with foreign AEs.
The appeal by Andante Foods LLP was ultimately allowed for statistical purposes, providing the company another opportunity to present adequate evidence to the TPO. This judgment serves as a cautionary tale for businesses involved in international transactions, emphasizing the critical need for well-documented and substantiated transfer pricing study reports.
