TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 214
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.....37,44,93,220/-. Thereafter, the assessee filed revised return declaring the same income as was declared originally. Thereafter, the case of the assessee was selected for scrutiny. As the instant case was having international transactions with its AE. The Assessing Officer made a reference to the TPO in accordance with TP provisions. Thereafter, the Ld. TPO computed the Arm's Length Price (ALP) o the international transactions entered into by the assessee. After the receipt of TPO order, the Ld. Assessing Officer framed the draft assessment order against which the assessee filed objections before the DRP and the Ld. DRP vide its order dated 25th June 2024 restored the issue of computation of ALP to the file of TPO with certain directions. Thereafter, the Ld. TPO while giving effect to the directions of Ld. DRP passed a fresh TP order on 28th July, 2024. However, the Ld. TPO has reiterated the same order, thereafter, the Assessing Officer framed the final assessment order, which is impugned before us. 3. The assessee has raised the following grounds of appeal: "1. On the facts and circumstances of the case and in law, the impugned final assessment order dated July 30, 2024 framed....
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....proposing an adjustment to the transfer price of the Appellant in respect of the payment of Technical Assistance fee of INR 26,18,009 to AE, holding that by holding that it does not satisfy the arm's length price ('ALP') envisaged under the Act and in doing so have grossly erred in: 3.1. Rejecting of the Transfer pricing study and comparability analysis maintained by the Appellant without providing any cogent reason to disregard the Appellant's approach; 3.2. Inappropriately questioning the commercial wisdom of the Appellant for payment towards availing these services, thereby ignoring the principal that it is not the domain of learned TPO to question the rendition of service and benefit arising therefrom; 3.3. Not appreciating the evidence placed on record and concluding that the evidence does not demonstrate the rendition of service and benefit derived; 3.4. Determining arm's length price of international transaction of payment for technical assistance fee as 'NIL' by applying Other Method, even though the Ld. AO/TPO/DRP considered the value of the aforesaid transaction while making adjustment to the value of international transactions for benc....
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....previous or subsequent years. For the sake of convenience, we would like to reproduce the chart given by the assessee hereunder. Sr. No. Company Name Appellant's Contentions 1. Gajjar Compressors Private Limited Refer DRP Directions Page No.48 of the Appeal Set) (refer DRP submission Page No. 89 to 93 of the Appeal Set) (refer TP order Page No. 190 of the Appeal Set) (Refer page No. 223-226 of the Paper book) Functionally comparable- GajjarComressors Private Limited is engaged in manufacturing and supply of high-performance Air Compressor, Screw Air Compressor, Oil Free Dental Compressor, Single and Two Stage Dry Vacuum Pump, Air Dryer and Air Receiver Tank (non-core auto parts) on par with global standards under the brand name, Air marshal. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 2 of ARC) 2. Passes all other relevant filter applied by the Ld. TPO. 3. Accepted as a comparable by Ld. TPO for AY 2018-19. Swan Pneumatics Pvt. Ltd. (refer DRP Direction....
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....e No. 11 of ARC) 2. Passes all other relevant filter applied by the Ld. TΡΟ. 3. Accepted as a comparable by Ld. TPO for AY 2018-19 5 Frick India Limited ("Frick India") (refer DRP Directions Page No.49 of the Appeal set) 1. Functionally comparable: Frick India Limited is engaged in manufacturing of compressors, condensers, heat exchange and pressure vessels, packaged chillers etc. which are non-core auto products while the Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 16-17 of ARC) 2. Accepted by Ld. TPO in Appellant's own case of AY 2021-22. 3. Passes all other relevant filter applied by the Ld.TPO. 6 NHK Spring India Ltd. ("NHK Spring) NHK Spring India Ltd ("NHK Spring") (refer remand report at Page No. 407 paperbook) 408 of the (refer additional grounds-filed before Ld. DRP at Page 3 No. 349 351 of the Paperbook) 1. Functionally comparable: NHK Spring is engaged in the manufacturing of coil spring, leaf spring, stabilizer bar and seats for motor vehicle....
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....tors. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 34 of ARC) 2. Accepted by Ld. TPO in Appellant's own case of AY 2021-22. 3. Passes all other relevant filter applied by the Ld. TPO. 10. Mahabal Auto Ancillaries Pvt. Ltd. ("Mahabal Auto") (refer remand report at Page No.409-410 of the paperbook. (refer additional grounds fled before Ld. DRP at Page No.358-361 of the Paperbook) 1. Functionally comparable: Mahabal Auto is engaged in manufacturing of balancer shaft, differential spider, shifter finger, stub axle-LH, front axle assembly with brake, etc. for automobiles and sleeve, traction clutch, piston, brake (S-axle) piston, suffix-coupling, splined coupling, shaft, PTO-connecting, etc. for tractors. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 34 of ARC) 2. Accep....
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....HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 43-48 of ARC) 2. Accepted by Ld. TPO in Appellant's own case of AY 2021-22 3. Passes all other relevant filter applied by the Ld. TPO B. Application of TNMM does not require product comparability 7.1 From perusal of the above chart it would be seen that comparable Gajjar Compressors Private Limited is functionally similar to that of the assessee and the same has been accepted by the TPO in Assessment Year 2018-19. Therefore, we direct the TPO to include this comparable in the list of final set off comparables. 8. Similarly, Swan Pneumatics Pvt. Ltd. is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2018-19, therefore, we direct the TPO to include this comparable in the final set off comparables. 9. Similarly, Emerson Climate Technologies (India) ("Emersion Climate") is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2018-19, therefore, we direct the TPO to include this comparable in the final set off....
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....omparable, we observe that this comparable company is receiving Government grants and the assessee before us is not receiving any Government grant, therefore cannot be treated as similar to the assessee. Hence, we direct the TPO to exclude this comparables also from the list of final set off comparables. 17. So far as AdvikHI-Tech Private Ltd., we do not find any force in the argument of the assessee for exclusion of this comparable from the list of final set off comparables, therefore, the action of the TPO is justifiable. 18. In view of the above observations, we direct the TPO to determine the arm's length price of the impugned international transactions after taking into consideration the above set off comparables and then conduct the TP study in accordance with law. 19. In ground No.2.7, the assessee has challenged the action of TPO vis-à-vis exclusion of "other income". From the ambit of operative revenue, counsel for the assessee contended that the TPO has excluded three items from the ambit of "other income" namely: (i) Foreign exchange difference to the tune of Rs.72.25,417/- (ii) Duty drawback Rs.45.17.852/- (iii) Compensation obsolete items Rs.3,44,48,765....