TaxTMI 
TaxTMI 
2026 (7) TMI 495
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....Officer ('TPO') and Assessing Officer ('AO') are without jurisdiction, bad in law and ought to be cancelled as the reference to TPO and downward adjustment to sales and consequential disallowance of deduction under section 10AA of the Act are without complying with the applicable law and guidelines. 2. The learned DRP, TPO and AO erred in making addition to the total income on the basis of downward adjustment to Arm's Length Price of sales made by the Appellant. It is submitted that the provisions of Chapter X of the Act are not applicable as the Appellant has neither entered into any transaction with its Associated Enterprise as defined under section 92A of the Act nor entered into any transaction falling withi....
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....ibunal in the aforesaid assessment year. Therefore, respectfully following the decision of the Tribunal in the assessee's own case for A.Y. 2021-22, and considering that the facts and circumstances involved in the present appeal are identical, we proceed to adjudicate the issues raised herein in the light of the findings and conclusions recorded in the said order. 3. Grounds Nos. 1 and 2 challenge the jurisdiction of the reference made to the TPO and the consequent transfer pricing adjustment made to the sales of the assessee, resulting in disallowance of deduction under section 10AA of the Act. 3.1. The Ld.AR submitted that the issues raised in these grounds are squarely covered in favour of the assessee by paragraph 6 of the Tri....
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....propriate circumstance." Accordingly, Grounds Nos. 1 and 2 are disposed of in terms of the aforesaid decision. 4. Grounds Nos. 3 and 4 relate to the addition made by the Ld.AO on account of transfer pricing adjustment. At the outset, it was submitted that these grounds are squarely covered by paragraphs 10 to 10.7 of the Tribunal's order dated 08/05/2026 in the assessee's own case for A.Y. 2021-22. The Ld. DR fairly conceded that the facts and issues involved in the year under consideration are identical. 4.1. We have considered the rival submissions and perused the material available on record. Since the issue arising in the present appeal is identical to that adjudicated by the Coordinate Bench in the assessee's own c....
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....can be applied only where it is demonstrated that, owing to a close connection between the assessee carrying on the eligible business and any other person, or for any other reason, the course of business between them is so arranged that the business transacted produces to the assessee more than the ordinary profits which might ordinarily arise in such eligible business. In the present case, the adjustment has been proposed in respect of the transactions entered into by the assessee with H.K. Design Inc. and Pure Brilliance LLC, USA. 10.2. Thus, following essential conditions are required to be cumulatively established before any adjustment can be proposed under Section 80-IA(10) is that; (i) there must exist a close connec....
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....ther note that the Ld. TPO has not brought on record any reliable benchmarking analysis or comparable industry material to demonstrate as to what, in the facts of the present case and in relation to the transactions with H.K. Design Inc. and Pure Brilliance LLC, constituted the "ordinary profits" of such business. In the absence of such foundational exercise, the adjustment proposed under Section 80- IA(10) remains unsupported by the statutory requirements of the provision. Efficiency in operations, commercial prudence, economies of scale, market conditions, or business expertise may legitimately result in higher profit margins and, by themselves, do not justify an adverse inference under Section 80-IA(10). 10.5. We have also consi....