TaxTMI 
TaxTMI 
2026 (8) TMI 266
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.... and circumstances of the case. 2. The AO has erred in computing the total income at INR 27,33,37,824/- in the final assessment order, as against the correct figure of INR 18,41,66,042/-. The said determination is the result of a clear arithmetical/typographical error, which has led to an incorrect computation of assessed income and consequential demand. Transfer Pricing Grounds 3. Upward transfer pricing adjustment to the International Transactions undertaken by the appellant with its Associated Enterprises ('AE') General 3.1. The AO/DRP erred in law and facts in confirming the action of the TPO in determining an upward adjustment to the value of international transactions undertaken by the Appellant. 3.2. The AO/ DRP erred in law and facts in confirming the action of the TPO, in rejecting the assessee's TP documentation and performing a fresh search resulting in the addition of new comparable companies. 3.3. The AO/DRP erred in law and facts in confirming the action of the TPO of invoking the provisions of section 92C(3) of the Income Tax Act, 1961. comparable 3.4. The TPO erred in not providing t....
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....ted Enterprise (AE) segment, whereas the comparable companies are entrepreneurial entities that inherently bear significantly higher risks. 3.17. Without prejudice, the DRP/TPO ought to have provided necessary risk adjustment to give effect to any differences in the comparability between the assessee and the entrepreneurial comparable companies. Incorrect inclusion of comparable companies 3.18. Without prejudice to any of the objections, the TPO has failed to appreciate/ consider the rebuttals made by the assessee against the comparable companies selected by the TPO and erred in retaining such companies which are functionally not comparable to that of the assessee. 3.19. The TPO/DRP erred in retaining companies which are functionally dissimilar/ earning abnormal margins/ undertaking diversified functions as compared to that of the Appellant. The list of comparable companies are as below: • Systango Technologies Ltd. • Sasken Technologies Ltd. • CG-VAK Software & Exports Ltd • IDS Infotech Ltd. • Ksolves India Limited 4. Upward adjustment towards interest on outstanding rece....
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.... hoc rate of LIBOR plus 450 BPS without giving proper basis for the same. 4.10. The DRP/AO/TPO erred in computation of notional interest on outstanding receivables by adopting credit period of 30 days without giving proper basis for the same. 4.11. Without prejudice to the above, the interest attributed is high and arbitrary." 2. The assessee is a private limited company engaged in route market solutions to various principles in the consumer packaged goods/FMCG Industry and also a cloud based enterprise solution provider. The assessee filed a return of income for AY 2022-23 on 10.11.2022 declaring total income of Rs. 7,95,92,730/-. 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 upward TP adjustment towards AE sales amounting to Rs. 8,61,41,751/- and upward adjustment towards outstanding receivables amounting to Rs. 20,57,070/-. The A.O passed the draft assessment order incorporating the TP adjustments agains....
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....rrespondence evidencing marking efforts and other relevant records substantiating the segmental allocation. 5. The Ld. AR submitted that the assessee for the year under consideration has followed the same methodology for the segmental details for AE and non-AE related transactions as applied in the subsequent AYs. The Ld. AR further submitted that the segmentation has been rejected for the year under consideration only on the ground that the same has not audited. The Ld. AR also submitted that the assessee during the course of hearing submitted the segmentation as followed as per safe harbour rules in subsequent years but the same is rejected for the reason that it is not filed along with the return of income. The Ld. AR prayed that the additional evidences now submitted would substantiate the segmentation and is audited by independent Chartered Accountant. Accordingly the ld AR prayed for admission of the additional evidence and one more opportunity be given before the lower authorities. 6. The Ld. Departmental Representative (DR), on the other hand, relied on the orders of the lower authorities. 7. We have heard the parties, and perused the material available on record. ....
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.... on outstanding receivables @ LIBOUR + 350 basis points. The TPO while doing so has allowed 30 days credit period. The DRP enhanced the adjustment by directing the TPO to attribute interest rate @ LIBOUR + 450 basis points. 9. The Ld. AR submitted that the assessee has not charged any interest from its non AE customers even where the receivables have exceeded the credit period of 30 days and therefore no interest is chargeable. The Ld. AR in this regard relied on the decision of the Coordinate Bench in the case of M/s. Gimpex Pvt. Ltd. vs. ACIT [IT(TP)A No. 57/Chny/2018 dated 05.04.2019] where it is held that: "23. Now we take up the dispute regarding the Arms Length Price adjustment imputing interest on overdue receivables. It is not disputed by the Revenue that assessee had not charged interest either from its Associated Enterprise or from Non Associated Enterprises, for delay in collection of receivables. It is also not disputed that out of the total transactions of the assessee almost 57% were with its Non Associated Enterprises. Once there is complete uniformity followed by assessee in not charging any interest from any party, whether Associated Enterprise or Non A....
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....-10-2021 2,96,77,403 25 74,19,35,075 2021-22 01-10-2021 JE020147 01-11-2021 1,65,23,167 31 51,22,18,177 2021-22 01-11-2021 JE020631 01-11-2021 1,30,74,243 0 - 2021-22 01-11-2021 JE020631 01-11-2021 4,43,96,448 0 - 2021-22 01-11-2021 JE020631 02-11-2021 73,96,670 1 73,96,670 2021-22 01-11-2021 JE020631 01-12-2021 1,00,18,139 30 30,05,44,170 2021-22 01-12-2021 JE021286 01-12-2021 5,68,03,297 0 - 2021-22 01-12-2021 JE021286 01-12-2021 74,22,401 0 - 2021-22 01-12-2021 JE021286 29-12-2021 1,07.04,802 28 29,97,34,456 2021-22 03-12-2021 JE021506 29-12-2021 8,55,56,644 26 2,22,44,72,744 2021-22 03-12-2021 JE021506 29-01-2022 45.73,556 57 26,06,92,692 2021-22 27-01-2022 JE022609 29-01-2022 3,24,72,887 2 6,49,45,774 2021-22 27-01-2022 JE022609 14-02-2022 51.02,613 18 9,18,47,034 2021-22 01-02-2022 JE023143 14-02-2022 98,94,387 13 12,86,27,031 2021-22 01-02-2022 JE023143 01-03-2022 50,74,513 28 ....