PCIT Vs Nivea India Pvt Ltd. (Bombay High Court)
The Bombay High Court dismissed the Revenue’s appeal and upheld the order of the Income Tax Appellate Tribunal (ITAT) admitting an additional transfer pricing (TP) ground raised by the assessee for the first time at the appellate stage. The dispute arose after the ITAT allowed the assessee to raise an additional ground contending that its Associated Enterprises (AEs), being the least complex entities, should be treated as the tested party for benchmarking international transactions. The Revenue challenged this, arguing that the ground was purely factual, had not been raised before lower authorities, contradicted the assessee’s own TP study and Form 3CEB, and lacked justification for late introduction.
The High Court noted that the ITAT was fully conscious that the ground had not been raised earlier and nevertheless admitted it after examining the record. The Tribunal found that relevant facts regarding the AEs—their identity, relationship, nature of business, and international transactions—were already available in the TP documentation and Form 3CEB. Relying on settled principles, including Supreme Court decisions permitting additional grounds where necessary to determine correct tax liability, the ITAT reasoned that it is the final fact-finding authority and should adopt a pragmatic approach, particularly where tax liability is sought to be fastened.
