AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1159
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....be deleted pursuant to DRP directions while computing income tax demand of INR1,42,56,69,665. 3. Impugned order is bad in law as it seeks to make multiple transfer pricing adjustments by subjecting the same business and resultant profits to multiple tests under different methods and PLIs, on pretext of different international transactions. Transfer Pricing adjustment in respect of transaction of payment of royalty: 4. Impugned order erred in law and in facts in considering arm's length price of international transaction of payment of royalty as NIL: 4.1 Ld. DRP has erred in upholding the adjustment by relying on its directions for AY 2015-16 despite being intimated that the matter has been decided in favour of the Appellant by the Tribunal for AY 2016-17. 4.2 Impugned order exceeds its jurisdiction firstly in questioning and then disregarding commercial expediency for royalty payment including the cost benefit analysis and the Appellant's business model of receiving assured arm's length margins on revenue. 4.3 Impugned order errs in rejecting combined transaction approach & TNMM adopted by Appellant for benchmarking ....
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....djustment is deleted by Hon'ble Tribunal]: In law and facts of present case: 13, Impugned order errs in considering "service income and "miscellaneous income as non-operating in nature while computing Appellant's net margin under TNMM. 14. Impugned order errs in selecting inappropriate comparable companies for benchmarking the transaction of import of finished goods. Protective Transfer Pricing Adjustment in respect of international transaction for Marketing and Market Development functions ("MMDF") based on Bright Line Test ("BLT") approach In law and facts of present case: 15. Impugned order errs in retaining protective assessment based on BLT Contrary to Hon'ble jurisdiction High Court decision. Further such adjustment is based on incorrect presumptions and ignores relevant factors laid down by Hon'ble Court. 16. Impugned order errs in holding that MMDF expenditure incurred by the Appellant, is an 'international transaction'. 17. Without prejudice to other grounds, impugned order errs to determine the excessive/non-routine MMDF expenses 17.1 by considering the expenses like r....
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....een settled that the manner in which commercial decisions are undertaken by the taxpayer, cannot be dictated by an income tax authority. 24. That the Ld. DRP has grossly erred in facts and law, by relying on its directions for AY 2015-16 and in not following the decisions of Hon'ble Income Tax Appellate Tribunal, Delhi ' Bench in Appellant's own case for the AY 2016-17 (having ITA No.493/DEL/2021), wherein the subject issue was decided in favour of the Appellant despite the same being intimated to DRP, Penalty proceeding initiated u/s 270A r.w.s 155(18) of the Act on the Education Cesssuo-moto offered by the Appellant 25. That on the facts and circumstances of the case and in law, Ld. AO has erred in proposing to initiate the penalty proceeding in accordance with the provisions of Section 155(18) r.w.s. 270A of the Act even though the section 155(18) of the Act is not applicable on the Appellant as the cumulative requirement of section 155(18) of the Act, i.e. claimed and allowed, is not fulfilled. 26. That the Ld. AO has grossly erred in initiating the penalty proceeding u/s 270A of the Act by ignoring that prior to the amendment made in....
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....s challenging findings of Ld. TPO and Ld. DRP relating to comparability analysis and classification of income, which are entirely factual matters. 2. Assessee-Appellant submits that the above contention of the Ld. TPO is incorrect, on account of the following: a. It may be noted that Ld. TPO has contended that additional ground cannot be entertained if it involves investigation into new facts. However, Ld. TPO has not elaborated or established on how Assessee's challenge to Ld. DRP's findings on selection of Sonal Infosoft, Annaie Information Pvt. Ltd. and Saitech Instruments Pvt. Ltd.; and treatment of service income as non- operating in nature, as being 'nonspeaking' amounts to investigation into new facts. All submissions of the Assessee in relation to these above two issues are already on record, as would be evident from: i. For inclusion of Sonal Infosoft India - Pg. 212 of Appeal set and Pg. 1175-1177 of Paperbook 2 ii. For exclusion of Annaie Information Pvt. Ltd. - Pg. 217 of Appeal set and Pg. 1186-1188 of Paperbook iii. For exclusion of Saitech Instruments Pvt. Ltd. - Pg. 217 of Appeal set and Pg. 1188-1189 of P....
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....t this issue is covered in assessee's own case by the decision of coordinate Bench in AYs 2015-16, 2017-18 & 2018-19 order dated 08.08.2025 and AY 2016-17 order dated 17.10.2022 and submitted that Hon'ble High Court vide order dated 30.09.2024 passed in ITA 551/2023 in AY 2016-17 upholding the order of the Tribunal dated 17.10.2022 in ITA No.493/Del/2021 for AY 2016-17 and accordingly, prayed to allow this ground. 9. On the other hand, ld. DR of the Revenue could not controvert the aforesaid proposition made by the ld. AR. 10. Considered the rival submissions and material placed on record. We observe that this issue is covered by the decisions of the coordinate Benches. Further we observe that Hon'ble High Court vide order dated 30.09.2024 for AY 2016-17 (supra) has upheld the decision of the coordinate Bench by observing as under :- "12. The assessee had entered into different types of international transactions with AEs. The same also included payment of royalty of a total value of Rs.14,69,89,634/-. The said payment was subject to examination by the learned TPO for determining whether the same was on arm's length basis. The assessee had explained that there were c....
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....f license, under the said agreement, as noted by the Tribunal is reproduced below: (1) SONY hereby grants to SID a non-exclusive, indivisible, non-assignable and non-transferable and non-sublicensable license under the LICENSED PATENTS and/or the LICENSED KNOW-HOW (i) to manufacture or have the SUBCONTRACTOR manufacture the LICENSED PRODUCTS in the TERRITORY by using the COMPONENTS, and (ii) to sell, use lease or otherwise dispose of such LICENSED PRODUCTS in the TERRH ORY. (2) SONY hereby grants to SID, a non-exclusive, indivisible, non-assignable, non-transferable and non-sub liceasable license to use the LICENSED TRADEMARKS in the TERRITORY (i) to manufacture or have the SUBCONTRACTOR manufacture the LICENSED PRODUCT'S which shall meet the quality requirements to which reference is made in Paragraph (1) of ARTICLE V of this Agreement, and (ii) to sell, use, lease, otherwise dispose of the" 16. In terms of the said agreement referred to by the Tribunal, the assessee had agreed to pay the royalty equal 2% on the net sales (as determined in terms of the agreement) as license fee. 17. On the basis of the material on record, the Tribunal concluded ....
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....use of appropriate method for benchmarking AMP transactions while finding BLT to not be a method recognized under the Act and Rules. Hon'ble Delhi High Court in Casio India Company Private Limited vs. DCIT in ITA 814/2017, order dated 10th February, 2025, has considered the decision of in Maruti Suzuki (2015) 381 ITR 117 (Delhi), and relevant para of Maruti Suzuki decision (supra) are reproduced below : "70. What is clear is that it is the 'price' of an international transaction which is required to be adjusted. The very existence of an international transaction cannot be presumed by assigning some price to it and then deducing that since it is not an ALP, an 'adjustment' has to be made. The burden is on the Revenue to first show the existence of an international transaction. Next, to ascertain the disclosed 'price' of such transaction and thereafter ask whether it is an ALP. If the answer to that is in the negative the TP adjustment should follow. The objective of Chapter X is to make adjustments to the price of an international transaction which the AEs involved may seek to shift from one jurisdiction to another. An 'assumed price cannot form ....
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....) 108 taxmann.com 125 (Chandigarh) to approve that what applies to BLT also applies to 'intensity approach' as a method for making ALP adjustment. 9. On the basis of aforesaid discussion we have no hesitation to uphold the contention of ld. Counsel that either applying BLT or by way of intensity approach alone the adjustments to AMP were not in accordance with law. Thus this issue and corresponding grounds are decided in favour of the assessee. Both substantive and protective adjustments to AMP shall stand deleted." 15. In view of the above and respectfully following the aforesaid order, we allow ground nos.5 to 12 raised by the assessee. 16. With regard to ground nos.13 & 14 regarding transfer pricing adjustment in respect of transaction of import of finished goods on protective basis, a time of hearing it is brought to our notice that Ld DRP has not passed any speaking order, hence, it was submitted that this ground may be remitted back to the file of DRP to verify the claim of the assessee and pass the relevant findings for the objections raised before them. For the same of justice, we are inclined to remit this issue back to the file of Ld DRP to verify the submi....
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....ed 30.09.2024 (supra). For the sake of brevity, relevant paras of Hon'ble Delhi High Court's order are extracted below :- "19. The assessee had valued its opening stock and closing stock on the basis of cost or net realisable value, whichever is low. The AO had faulted the assessee from valuing the stock at a value lower than the cost. There is no dispute that the assessee had been consistently valuing its stock - both opening stock and closing stock - on the basis of cost or realisable value, whichever is lower. The aforesaid basis is well accepted for valuation of stock. The said basis was also noted by the Supreme Court in CIT v. Woodword Governor India (P.) Ltd.: (2009) 312 ITR 254. The learned counsel for the Revenue also does not dispute that if the aforesaid basis is followed consistently, the assessee's income for the year would be fully captured as the element of profit would also not be included in the opening stock. 20. The finding of the Tribunal cannot be faulted. Clearly, no substantial question of law arises from the decision of the Tribunal to delete the addition made on account of the valuation of closing stock." 23. Respectfully following the afores....