TaxTMI 
TaxTMI 
2023 (4) TMI 557
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....itio. 2. Re: Proposed adjustment of INR 10,85,05,9431- on account of excess interest paid on Non-Convertible Debentures as per TPO: 2.1. On the facts and in the circumstances of the case and in law, the TPO/AO erred in making the transfer pricing adjustment on account of alleged excess interest paid by the Assessee on non-convertible debentures to the tune of INF 10,85,05,943/-. 2.2. That the DRP/TPO erred in law in making an adjustment on account of excess interest on debentures in complete ignorance of the decisions of the DRP rendered in the Assessee's own case for A Y 2015-16, where under the said issue was decided in favour of the Assessee. 2.3. That the DRP/TPO erred in not appreciating that in the absence of change in facts from AY 2015-16, there could be no occasion to make the impugned adjustment in view of the settled principle of consistency. 2.4. That the DRP/TPO grossly failed to appreciate that during the original/pre-Section 153C proceedings, the erstwhile TPO had himself accepted the benchmarking analysis of the Assessee and had not drawn any adverse inference on the said transactions. 2.5. That the DRP/TPO g....
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....5% subject to a maximum of 15%. Consequent to a search in the business premises of the holding company of the assessee, the assessment of the assessee for assessment year 2017-2018 and 2018-2019 were centralized and selected for scrutiny. During the course of scrutiny assessment, the matter was referred to the Transfer Pricing Officer (TPO) to determine the Arm's Length Price (ALP) of the interest payment made by the assessee to its AE. In the transfer pricing study of the assessee for the assessment year 2017- 2018, the assessee chose two comparables, which had issued NCDs during the same period of the assessee and since the debentures issued by the comparables were at the rate of 15% as opposed to 14.27% charged by the assessee, the transaction was sought to be at arm's length. Similarly, for assessment year 2018-2019, the assessee chose two different companies, which again issued NCDs during the same period of the assessee and since the debentures issued by the comparable were at the rate of 15% as opposed to 13.93% charged by the assessee, the interest payment to the AE on these NCDs has sought to be at arm's length. Further, the assessee had also benchmarked the transaction us....
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....r both the assessment years, the comparable list etc. The learned AR reiterated the submissions that internal CUP is to be preferred to the external CUP. In this context, the learned AR relied on the following judicial pronouncements:- (i) Aditya Birla Minacs Worldwide Ltd. ITA No.7033/Mum/2022 (order dated 16.03.2016) (ii) Uttam Bharat Electricals Pvt. Ltd. v. DCIT (2019) 112 taxmann.com 305 (Jaipur-Trib.) (iii) Hughes Systique India Pvt. Ltd.v. ACIT (2013) 36 taxmann.com 41 (Delhi-Trib.) (iv) Wipro Ltd. v. ACIT (2020) 122 taxmann.com 268 (Bangalore-Trib.) (v) AT & S India Pvt. Ltd. v. DCIT ITA No.179/Kol/2016 (order dated 03.08.2016) (vi) DCIT v. Kesoram Industries Ltd. ITA No.1777/Kol/ 2019 & Ors. (order dated 28.10.2021) 8. Further, the learned AR also relied on the DRP's directions for the assessment year 2015-2016, which observed that once an internal CUP was available, the same can be applied for benchmarking the interest payment post giving appropriate adjustments. As regards some of the comparables selected by the TPO for assessment years 2017- 2018 and 2018-2019, it was contended by the learned AR that Government co....
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.... from a comparable uncontrolled transaction' and the other part talks of 'the net profit margin realised .... by an uncontrolled enterprise from a comparable uncontrolled transaction'. It transpires that whereas the first part refers to the profit margin from internal comparable uncontrolled transactions, the second part refers to profit margin from an external comparable uncontrolled transaction. Thus it is discernible that what is to be compared under this method is profit from a comparable uncontrolled transaction. The word 'comparable' may encompass internal comparable or external comparable. There is cue in the rule itself as to preference to be given to internal comparable uncontrolled transactions visa- vis externally comparable uncontrolled transactions. It is because the delegated Legislature has firstly referred to the net profit margin realized by the enterprise (internal) from a comparable uncontrolled transaction and, thereafter, it points towards net profit margin realized by an unrelated enterprise (external) from a comparable uncontrolled transaction. Thus where potential comparable is available in the shape of an uncontrolled transaction of the ....