TaxTMI 
TaxTMI 
2026 (9) TMI 761
X X X X Extracts X X X X
X X X X Extracts X X X X
....d and applicable law and has been completed without adequate inquiries, therefore is liable to be quashed. 2. Jurisdictional grounds 2.1. The impugned final assessment order dated January 21, 2026 passed under section 143(3) read with section 144C(13) read with section 144B of the Act, having been passed beyond the limitation provided in section 153(1) read with section 153(4) of the Act is barred by limitation and therefore is void ab initio, bad in law thereby liable to be quashed. 2.2. The notice issued by the Ld. AO, under Section 143(2) of the Act, dated June 02, 2023, is contrary to the provisions of the Act and the binding circulars issued by the Central Board of Direct Taxes ('CBDT) and accordingly the consequential final assessment order passed by the Ld. AO under Section 143(3) read with Section 144C(13) read with Section 144B of the Act, dated January 21, 2026, is void-ab-initio and is accordingly liable to be quashed. 3. Transfer Pricing ("TP") adjustment towards payment for IT support services 3.1. The lower authorities erred in rejecting the Transfer Pricing ("TP") documentation maintained by the Appellant, in good fait....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... incurred capital expenditure on scientific research related to the business carried on by the Appellant. 5.2. The lower authorities erred in violating the principles of judicial discipline by disregarding the Hon'ble Jurisdictional Tribunal's ruling in Appellant's own case for AY 20-21 and 21-22, wherein the deduction under Section 35(1)(iv) was allowed by this Hon'ble Tribunal after considering the facts of the Appellant's case. 5.3. The lower authorities erred in not allowing the claim of deduction under section 35(1)(iv) of the Act for non-submission of Form 3CM without appreciating the fact that furnishing of Form 3CM is not a requirement under the Act for claim of deduction under section 35(1)(iv) of the Act. 5.4. The lower authorities erred in disallowing the deduction claimed under section 35(1)(iv) of the Act without appreciating that the deduction 35(2AB) of the Act could not have been claimed by the Appellant for the subject year since beneficial tax regime under section 115BAA of the Act was opted by the Appellant. 6. Miscellaneous Grounds 6.1. The Ld. AO has, in the facts and circumstances of the case and....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... AR submitted that the TPO has accepted the overall margin earned by the assessee from manufacture segment which included the cost of impugned IT support services and held that the same has with arm's length. The Ld. AR further submitted that the TPO after having accepted the overall margin cannot carve out one element separately to benchmark and determine the ALP at Nil. The Ld. AR in this regard relied on the decision of the Hon'ble Delhi High Court in the case of Magneti Marelli Powertrain India Pvt. Ltd. vs. DCIT [2016] 75 taxmann.com 212 (Delhi). The Ld. AR further submitted that the Hon'ble Supreme Court has dismissed the SLP filed against the above decision of the Hon'ble Delhi High Court and therefore, the impugned issue has reached finality. 6. The Ld. DR on the other hand vehemently argued that the cost paid by the assessee is akin to reimbursement of expenses incurred by the AE and the AE has not rendered any services in this regard to warrant any markup. 7. We have heard the parties and perused the material available on record. The primary argument of the assessee regarding the adjustment made by the AO towards margin is that the TPO has accepted the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....respect of the technical fee payment too." 9. In the present case as already stated the TPO has accepted the overall margin as within arm's length under TNMM whereas he has carved out one of the elements i.e. impugned expenses to compute the ALP as Nil using other method. Further, the TPO has not justified the reason for benchmarking the impugned cost separately given the submission that the impugned services are inextricably linked to the core business of the assessee. We in this regard notice that an identical issue has been considered by the coordinate bench of the Tribunal in the case of Haworth India (P.) Ltd v. Dy. CIT [2025] 179 taxmann.com 220 (Chennai - Trib.) where it is held that - "We have noted the facts of the present case are akin to those available in judicial precedence discussed herein above. Thus, as the Assessee's core business activity and sale is inextricably linked/dependent on the Global Account Management service from its AEs, the payment of these charges cannot be segregated and benchmarked separately. The judicial precedence discussed hereinabove also support this line of thinking. Accordingly, in respectful compliance to the same, we hold....
X X X X Extracts X X X X
X X X X Extracts X X X X
....we are of the considered view that the transfer pricing adjustment on account of notional interest pertaining to overdue receivables is unwarranted. Accordingly, we direct the Transfer Pricing Officer (TPO) to delete the said adjustment and to recompute the Arm's Length Price (ALP) in accordance with the above observations. In view thereof, the grounds of appeal raised by the assessee are allowed. 12. For the year under consideration, we notice from the financials that the assessee is a debt free company for the year ended 31.03.2022 also and therefore, in our considered view the ratio laid down in the above case is applicable for the year under consideration also. The revenue, for the year under consideration, did not bring any new material on record for us to take a different view. Therefore, respectfully following the above decision, we direct the AO/TPO to delete the adjustment made towards interest on receivables. Disallowance u/s. 35(1)(iv) of the Act - Ground No.5: 13. The assessee has a R&D facility at Ambattur, Chennai and during the year under consideration the assessee claimed 100% of deduction u/s. 35(1)(iv) of the Act. The AO disallowed the deduction on the gr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....edly stating that there is lack of evidence to support the claim of the assessee, rejected the deduction claimed u/s. 35(1)(iv) of the Act. 152. We also note that the AO during the assessment proceedings for AY 2021-22, rejected the claim of the assessee stating that Form 3CM submitted by the assessee is valid till 31.03.2020 only and allegedly denied the claim u/s. 35(1)(iv) of the Act in the absence of Form 3CM. The contention of lower authorities to deny the claim u/s. 35(1)(iv) of the Act on the basis of failure to obtain Form 3CM or failure to quantify the expenses in Form 3CM is not tenable since it is not a mandate prescribed under the provisions of the Act for the claim of deduction u/s. 35(1)(iv) of the Act and the same is only a requirement for the purpose of claiming deduction u/s. 35(2AB) of the Act. This proposition is upheld in the following decision, wherein it has been held that capital expenditure incurred towards scientific research is allowable u/s. 35(1)(iv) of the Act. - Apex Laboratories (P.) Ltd - 80 taxmann.com 236 - MAHLE Behr India (P.) Ltd - 130 taxmann.com 7 153. In light of the foregoing facts and discussion, and resp....