AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 837
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....ated 27/9/2024 in the draft assessment order passed on 26/12/2023 wherein the order under section 92CA(3) was passed by the learned TPO proposing the adjustment. 2. Assessee is aggrieved with it and has preferred following grounds of appeal: - i. That the learned assessment unit, income tax department (AO) has erred both in law and on facts in determining total income of the appellant company at Rs. 50,021,422/- as against declared loss of Rs. 72,545,473/- in an order of assessment dated 27/10/2024 under section 143(3)/144C(13) read with section 144B of the act. ii. That the learned AO/TPO/DRP has erred both in law and on facts in making an adjustment of Rs. 48,174,000/- to the sale and purchase of a ticket segment of the appellant in an order dated 27/10/2024 under section 143(3)/144C(13)/144B of the act read with the order dated 27/10/2021 & 18/10/2024 under section 92CA (3) of the act and order dated 27/9/2024 under section 144C(5) of the act. The learned AO/TPO/DRP have also erred both in law and on facts by adopting transactional net margin method as the most appropriate method for determination of the arm's-length price of the impugned transa....
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....f the appellant company. 3. At the time of hearing, the learned authorized representative submitted that ground number 1 is general in nature, ground number 6 is not pressed, and ground number 7 is consequential in nature and therefore these grounds are dismissed. 4. The learned authorized representative submitted that only 2 issues are involved in this appeal wherein as per ground number 2 - 4 the assessee is challenging the transfer pricing adjustment of Rs. 48,174,000/- and as per ground number 5, assessee is challenging the disallowance of the claim of depreciation of Rs. 1,845,615/-. 5. The brief facts of the case show that the assessee is a private limited company. The business relevant to the subject matter of appeal involves the online sale of airline, railway, and bus tickets, as well as tour packages and hotel room bookings. These operations are carried out under both B2B and B2C models. The B2B (business-to-business) model refers to transactions with other businesses, while the B2C (business- to-consumer) model involves direct sales to individual customers. 6. The assessee filed their return of income on 4 March 2022, declaring a total loss of Rs. 72,545,473.....
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....ices with its related and unrelated parties to demonstrate the above facts. However, the learned transfer pricing officer was of the view that the taxpayer has failed to submit relevant agreements in support of its claim. In absence of agreement, it is difficult for the TPO to determine the authenticity of these invoices. It was further held that the taxpayer could have selectively provided only those invoices on which it is relying that same charges to its associated enterprises and non- associated enterprises. The learned TPO was further provided with a board resolution for collection of booking surcharge and tickets. According to the TPO only mentions that the booking charge of Rs. 10 per ticket per passenger is to be collected by the company. Same does not have any mention regarding associated enterprises and non-associated enterprises transactions. Therefore, due to lack of any agreement establishing the above mentioned facts, the contention of the taxpayer was rejected by the TPO. Thus, the learned TPO held that "other method" is not the Most appropriate method for determination of the arm's-length price, and he adopted the Transactional Net Margin Method [ TNMM] as the m....
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....arlier years as well as the current year, the action of the AO was upheld. iii. Accordingly in the order giving effect to order passed by the learned TPO the adjustment with respect to sale and purchase of a ticket of Rs. 4,81,74,000/- was made. 15. Consequently, the assessment order was passed determining total income of the assessee at Rs. 50,021,421 wherein the amount to adjustment/addition/disallowance of Rs. 4,81,75,807 on account of determination of the arm's-length price and disallowance of Depreciation of Rs. 1,845,615/- was retained. The assessee is in appeal before us. 16. The ld. AR submitted that: - i. With respect to the transfer pricing adjustment the learned authorized representative stated that the international transaction of assessee with its AE is of only on Rs. 15,313,905/- and the adjustment made is of Rs. 48,174,000/-. If the adjustment is made with respect to the international transactions with the associated enterprises but it has been made by the learned TPO on whole of the transaction, the addition would be less than 50,000/-. ii. He submits that there are several judicial precedents which say that the adjustment is req....
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....epreciation is claimed only on the opening balances carried forward from last year's depreciation chart. 17. The learned CIT DR vehemently supported the order of the learned that AO/TPO and the direction of the learned dispute resolution panel. It was stated that the most appropriate method selected by the assessee as other method is based on only invoices and there is no agreement. In absence of agreement, it was not possible to verify the contention of the assessee. On the issue of the depreciation, it was submitted that the matter may be restored back to the file of the learned assessing officer for verification. 18. We have carefully considered the rival contention and perused the orders of the learned lower authorities along with the written note made by assessee. The only issue with respect to the transfer pricing adjustment is that assessee has entered international transaction with its associated enterprise of sale of air tickets amounting to Rs. 1,50,13,905. To benchmark this transaction, the assessee adopted the other method as the most appropriate method. The cost of a ticket is a third-party cost which does not have any impact on sale of tickets to related party o....
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.... pricing officer does not accept the above methodology. The reason given by the TPO is that the taxpayer has failed to give the relevant agreements in support of its claim therefore it is difficult for the learned TPO to determine the authenticity of these invoices. His allegation is that the taxpayer would have selectively produced only those invoices in which it is charging same charges to its AE and non-AE parties. Thus, absence of agreement and allegation that assessee would have selectively produced the invoices made him reject the TPSR of the assessee. 22. According to us the invoices produced by the assessee are also a form of agreement where a particular transaction is documented. Further the learned TPO was of the view that assessee could have selectively produced only those invoices which have the same pricing irrespective of the buyer of the Air tickets, if that be so, he is empowered by the act to carry out necessary enquiries. In absence of any necessary enquiry, finding the learned TPO of selectively producing the invoices is merely an allegation. Even if we presume for a second that if there is no agreement and that assessee might have produced evidence in the for....