TaxTMI 
TaxTMI 
2026 (7) TMI 1967
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....ection 92CA of the Act are not in accordance with the law, made in violation of the principles of equity and natural justice and are contrary to the facts and circumstances of the present case. 2 The learned AO, the DRP and the TPO has erred, in law and on facts, in holding that the international transactions undertaken by the Appellant with its associated enterprise ("AE") were not at Arm's Length Price ("ALP") as defined under section 92F(ii) of the Act and thereby making adjustment amounting to INR 10,22,12,375. 3 The learned AO and the DRP has erred, in law and on facts, in holding that the amount paid towards purchase of software to Saipem SPA, Italy ("Saipem Italy"), being the parent company, is royalty as per the Act and the treaty, consequently making a disallowance of INR 15,00,72,242 under section 40(a)(i) of the Act to the total income of the appellant. Grounds on Transfer Pricing 4 The learned AO, the DRP and the TPO have erred undertaking a fresh search of comparable companies for benchmarking the international transaction of the Appellant without cogent reasons. The learned AO, the DRP, and the learned TPO did not consider that ....
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....nd the TPO have erred, in law and on facts, in not accepting the international transactions at arm's length under the Internal Transactional Net Margin Method ("TNMM") (supported by audited segment financial information), considering that the Appellant has also rendered engineering services to third parties and based on the audited segmental information, the margin earned by the Appellant from its Associated enterprises is comparable to the margin earned by the Appellant from third parties. Other grounds relating to Transfer Pricing 11 The learned AO, the DRP and the TPO have erred, in law, by making adjustments in respect of the entire revenue of the Appellant and not restricting the transfer pricing adjustments to the value of the international transactions. 12 The Appellant prays that the benefit of variance of 3 percent from the value of the international transaction as per proviso to Section 92C(2) of the Act be provided on granting relief under any of the above mentioned grounds of appeal Grounds on Disallowance under section 40(a)(i) of the Act 13. The learned AO and the DRP have erred in law and on facts in disallowing the pa....
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.... 28.11.2023 declaring loss of Rs. 6,82,37,705/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. Since the assessee had international transactions, the A.O made a reference to the Transfer Pricing Officer (TPO) to compute the Arm's Length Price (ALP) of the international transactions. The TPO proposed a TP adjustment of Rs. 15,05,37,031/- . The A.O passed the draft assessment order incorporating the TP adjustment. The A.O also made a disallowance u/s. 40(a)(i) towards payments made to its AE on which the assessee has not deducted tax at source. Aggrieved, the assessee filed its further objections before Disputes Resolution Panel (DRP). The DRP gave partial relief to the assessee towards TP Adjustment but sustained the entire disallowance made u/s. 40(a)(i) of the Act. The assessee is in appeal before the Tribunal against the final order of assessment passed by the A.O pursuant to the directions of the DRP. Transfer Pricing adjustment: 3. The assessee in the transfer pricing report has adopted Transaction Net Margin Method (TNMM) as the most appropriate method (MAM) for the purpose of determining the Arm's Length Price (AL....
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....ansaction works out 35.94%. Accordingly, the Ld. AR argued that the comparables fails the RPT filter test. Without prejudice the Ld. AR submitted that the comparables is functionally different and also fails the turnover filter of 1/10th. 8. We have heard the parties, and perused the material available on record. We notice from the financial statements of the comparables, the income from services is at Rs. 7,69,63,463/- and that the services income from related party is at Rs. 2,76,59,973/-. Accordingly, the claim that the percentage of RPT income of the comparables is at 35.94% has merits. We further notice that the TPO himself has applied the RPT filter of < 25% (page 5 of TPO order) while doing the fresh search comparables. In view of this discussion, we are convinced of the fact that the comparable fails the RPT filter and therefore cannot be part of the final list of comparables. Tata Consulting Engineering Ltd.: 9. We have heard the parties, and perused the material available on record. The primary argument of the Ld. AR with regard to the exclusion of the comparables is that the company is engaged in diversified activities beyond engineering services and therefore c....