TaxTMI 
TaxTMI 
2025 (4) TMI 1849
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....red in making transfer pricing adjustment and assessing, the Income of the Appellant at INR 2,37,76,15,886 as against the total income as per return of income filed for AY 2020-21 (on 31 March 2021) declaring income of INR 2,18,37,92,336. Transfer Pricing ('TP') issues 2. The Ld AO/TPO erred in proposing and the Hon'ble DRP further erred in upholding an adjustment of INR 19,38,23,546/- in respect of the international transactions pertaining to export of chemical additives, alleging that the same to be not at arm's length in terms of the provisions of Sections 92C(1) and 92C(2) of the Act read with Rule 100 of the Income-tax Rules, 1962 ("Rules"). 3. Erred in rejecting the application of Transactional Net Margin Method ("TNMM") as the Most Appropriate Method ("MAM") used by the Appellant for benchmarking the international transaction in respect of its exports of chemical additives to its associated enterprise ("AES"). 4. Erred in not appreciating the operating margin ("OM") earned by the Appellant of 16.15% at entity level is higher than the updated weighted average arm's length range i.e. 5.35% to 6.40% with median of 5.88%. ....
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....ing TNMM as the MAM for benchmarking the export of chemical additives transaction of the Appellant as there are no change in facts or circumstances of the Appellant. 12. Erred in rejecting the whole entity approach adopted by the Appellant for benchmarking the exports of chemical additives which the Revenue Authorities had accepted in the previous assessments for AY 2002-03, AY 2003-04, AY 2004-05, AY 2005-06, AY 2008-09 and AY 2011-12, AY 2014-15, AY 2016-17 and AY 2019-20 and thereby violating principle of consistency. 13. Erred in considering only judicial precedents which were in favour of the Revenue and failed to distinguish the judicial precedents placed on record by the Appellant which were in favour of the Appellant Direct Tax issues 14. The Ld AO erred in law in levy of interest under Section 234A of the Act of INR 5,72,468. Further the LD AD erred in calculating total amount of total interest and fee payable of INR 7,11,865. 15. The Ld AO erred in raising a demand of INR 10,84,33,287 on account of Dividend Distribution Tax (DDT) payable. The Ld. AO erred in not granting of credit of INR 6,90,65,788 which is already paid by the....
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....mical additives to its foreign AEs. The assessee adopted Transaction Net Margin Method (TNMM) as the most appropriate method. The TPO entered into reference and rejected the most appropriate method adopted by assessee. The TPO applied Comparable Uncontrolled Price (CUP) method. The TPO on the basis of his methodology referred in paragraph - 9 of his order, suggested upward adjustment of Rs.19.38 crores on account of export of chemical additives to its AE. On receipt of report of TPO, the Assessing Officer included the adjustment in draft assessment order. On service of draft assessment order, the assessee exercised its option for filing objection before Dispute Resolution Panel (DRP)-1, Mumbai. The DRP confirmed the order of TPO in its direction dated 05.06.2024. On receipt of direction of DRP, the Assessing Officer ultimately passed the final assessment order which is impugned before this Tribunal. The ld. AR of the assessee submitted that in fact the grounds of appeal raised by assessee is covered in favour of assessee by a series of decisions in assessee's own case in Assessment Year 2005-06 to 2010-11 and again in Assessment Year 2012-13 to 2018-19. Copies of all such decisions....
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....ate method. The assessee is consistently following TNMM method for similar transaction in earlier years wherein the most appropriate method adopted by assessee has been accepted/approved in favour of assessee by Tribunal, in Assessment Year 2005-05 to 2010-11 in ITA Nos.1821/Mum/2011, 8148/Mum/2010, 2305/Mum/2012, 882/Mum/2014 and 396/Mum/2015 respectively. And again in Assessment Year 2012-13 to 2018-10 in ITA Nos.6667/Mum/2016, 6393/Mum/2019, 1464/Mum2021, 586/Mum/2022 and 1576/Mum/2022, copies of all such decisions are placed on record. Thus, based on the decisions of earlier orders, the grounds of appeal raised by assessee are in fact covered in favour of assessee. The ld. AR also made other alternative submission. 4. Ground No. 14 relates to the wrong working / calculation of interest levied under section 234A. The ld AR of the assessee submits subsequent to filing of this appeal, the error committed by Assessing Officer has been rectified on filing application by assessee vide his order dated 09.12.2024, copy of which is filed on record, hence this ground of appeal has become infructuous and does not require any adjudication. Ground No.15 and 16 relates to raising a demand....
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....pute before this Tribunal for AYs 2005-06 to 2007-08, ITA Nos. 8148/Mum/2010, 2305/Mum/2012 & 1821/Mum/2011, common order dated 20/11/2019 wherein the matter was concluded by the co-ordinate bench in assessee's favor in the following manner: - 20. In our considered opinion the aforesaid reasoning fully applies to the facts of the present case. Without any change in facts and law the Transfer Pricing officer has changed the consistently applied TNMM method to the cup method. While doing so he has blandly held that TNMM method is not full proof. Furthermore, the assessee's objection that the comparison of other transactions have to be considered by adjustment of various factors is also not fully dislodged. 21. In the background of the aforesaid discussion and precedent we hold that the change in method from TNMM to CUP method is not justified. Hence, we set aside the order of the Assessing Officer. Accordingly, the order of learned CIT(A) for A.Y. 2005-06 is upheld and the order of Assessing Officer pursuant to DRP direction for A.Y. 2006-07 and 2007-08 is set aside. As it could be observed that coordinate bench held that consistently applied TNMM metho....
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....sessment Year 2012 13 was followed in subsequent year, though which has been ultimately held in favour of assessee by Tribunal and that Department has filed an appeal before the Hon'ble High Court. We find that orders of all earlier years have been reversed by Coordinate Bench of this Tribunal while following the order in Assessment Year 2012-13 in ITA No.6667/Mum/2016 as quoted above. Thus, respectfully following the decision of Coordinate Bench of Tribunal, we find that the grounds of appeal raised by the assessee are in fact covered in favour of the assessee and against the revenue. No contrary facts or law is brought to our notice to take other view, thus the ground no.2 to 13 of the appeal are allowed. 8. Ground no.14 relates to the wrong working / calculation of interest levied under section 234A. We find that subsequent to filing of this appeal, the Assessing Officer has already rectified his order under section 154 vide his order dated 09.12.2024, and allowed relief to the assessee, hence this ground of appeal has become infructuous and does not require any adjudication. Ground No.15 and 16 relates to raising a demand of Rs. 10.484 Crores on account of Dividend Distr....
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....had performed a scientific analysis for selection of the MAM having regard to the provisions of the rule 10B of the Rules. Further, the TPO in its order has not provided any cogent and detailed reasons in rejecting TNMM as the MAM. 6. Erred in disregarding the aggregation approach adopted by Appellant for benchmarking its international transactions (including transaction of export of chemical additives). 7. Erred in rejecting TNMM as the MAM for benchmarking the transaction of export of chemical additives on the grounds that the said transaction should be benchmarked separately and thereby contradicting themselves, since no such separate benchmarking was conducted by the Ld TPO while benchmarking the balance international transaction pertaining to export of chemical additives for which TNMM was accepted. 8. Erred in selecting Comparable Uncontrolled Price ("CUP") Method as the MAM for benchmarking the said international transaction merely on the basis that the details pertaining to similar transactions with third parties were available. 9. Erred in applying CUP method by comparing sales made to unrelated parties with that of export sales made to ....
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....of the relevant assessment year. Particulars Date of Order Captioned AY 2021-22 End of AY 31 March, 2022 Due date for completion of assessment under section 153 where reference is made under section 92CA of the Act i.e. 21 months from end of assessment year 31 December, 2023 Final Assessment Order passed in Appellant's case 26 September, 2024 In this regard, the Appellant would like to place reliance on the decisions of Madras High Court in case of CIT v. Roca Bathroom Products Private Limited [2022] 140 taxmann.com 304 (Madras) wherein it was held that the Section 153 and Section 144C are not mutually exclusive as both contain provisions relating to Section 92CA and are independent and overlapping and hence limitation period as laid down by Section 153 is applicable. It further held that outer time limit of 33 months in case of reference to TPO under Section 153, would not refer to draft order, but only to final order and hence, the entire proceedings would have to be concluded within the time limits prescribed under Section 153 of the Act. The Hon'ble HC also held that non-obstante clause in Section 144C would not exclude the operation o....