TaxTMI 
TaxTMI 
2026 (6) TMI 1440
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....ase, the Ld.CIT(A) is correct is deleting the adjustment proposed on the basis of the APA entered into in the subsequent years for a non-APA year ignoring the standard procedure and guidelines followed while entering into the Advance Pricing Agreement when the option of rollback provision is available to the appellant as per section 92CC(9A) of the Income Tax Act, 1961. iii. Whether on the facts and circumstances of the case, the Ld. CIT(A) is correct in deleting the adjustment ignoring the benchmarking done by the TPO during the original TP Audit proceedings. iv. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer restored." ITA No. 279/Chny/2025: "i. The order of the learned CIT(A) is contrary to the facts and circumstances of the case. ii. Whether on the facts and circumstances of the case, the Ld. CIT(A) was correct in directing to exclude the company, M/s. Acropetal Technologies Ltd by considering the SEBI report which actually dealt with fraud in dividend which was nothing to do with the profit margins? iii. Wheth....
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....ent are within Arm's length. The TPO during the proceedings did not allow the working capital and risk adjustment made by the assessee and initiated fresh search for comparables. The TPO selected the following comparables to arrive at a margin of 27.90%: Comparable OP/OC Acropetal Technologies Ltd. 57.66 Tata Elxsi Ltd. 10.53 Cades Digitech Ltd. 5.37 Vama Industries 38.05 Average 27.90 4. Accordingly, the TPO arrived at the adjustment as per below computation: 8. ALP calculation : Value of International Transaction = Rs. 24,51,97,125 Margin of the Assessee = 14% Margin of comparables = 27.90% Cost Profit Sale 100 14 114 100 27.9 127.9 ALP of International Transaction = Rs. 24,51,97,125*127.9/114 = Rs. 27,50,93,967 Adjustment to be made = Rs. 2,98,96,842/- 5. Before the CIT(A), the assessee contended inclusion of the comparable M/s. Acropetal Technologies Ltd (Acropetal). The CIT(A) directed the TPO to exclude the above comparable by holding that: "5.3.1 One of the grounds relate to the selection of Mis Acropetal Technologies Ltd a....
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....is allowed and ground No. 2.6 is not adjudicated as it has become infructuous." 6. The Ld. Departmental Representative (DR) submitted that the only ground for exclusion of Acropetal is that the comparable is found to be engaged in fraudulent transactions. The Ld. DR further submitted that the alleged fraudulent transactions pertain to the misuse of funds raised through IPO which has got no impact on the margins of the company. Accordingly, the Ld. DR argued that exclusion of the company on the said ground is not acceptable. 7. The Ld. Authorized Representative (AR) of the assessee, on the other hand, submitted that the exclusion of Acropatel has been consistently held in favour of the assessee by the Coordinate Benches and that when irregularity is found in the financials the margins as declared by the assessee is unreliable. Accordingly, the Ld. AR supported the order of the CIT(A). 8. We have heard the parties, and perused the material available on record. From the above findings of the CIT(A), we notice that the financial results of Acropatel has been showing high fluctuation from FY 2010-11 to 2014-15 and SEBI has adjudicated that there are irregularities committed in ....
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....rned Remarks Manufacturing of KP/FD products NCP of 9,5% 14.36% The margin earned is in line with the APA Distribution segment NRM of 3:5% plus 2.6% on Direct sales -5.74% The margin earned is in line with the APA Engineering Design Segment NCP of 15.50% 14.00% The margin earned falls within the (+/-) 3 percent range of the arm's length margin as per the APA 3.7 In its support, the Appellant relied on the ruling of the jurisdictional Tribunal In the case of M/s Lotus Footwear Enterprises Ltd (India Branch) (ITA No. 779/Mds/2014, 801/Mds/2015 & 810/Mds/2016) which held that the APA has a considerable bearing on the previous years. The Appellant also relied on the ruling of the Delhi Tribunal in the case of M/s Ranbaxy Laboratories Limited (ITA NO. 196/Del/2013), which held as below: Para 28. "The agreement entered into by CBDT with the assessee, which has considered all the aspects of the manner of determination of ALP which are also similar for the this year, should be given highest sanctity and therefore mechanism suggest in that agreement should be necessarily followed in determining ALP of the transactions for....