LANXESS India Pvt. Ltd. Vs ACIT (ITAT Mumbai)
ITAT Removes TP Addition Because Revenue Failed to Show Distinguishing Facts; ITAT Deletes ALP Adjustment Because Services Were Already Accepted in Earlier Year; Transfer Pricing Addition Set Aside Because Prior ITAT Decision Remained Binding; ITAT Deletes ₹61.22 Crore TP Adjustment Because Facts Were Materially Identical.
The appeal before the ITAT Mumbai concerned the assessment order passed for Assessment Year 2022-23 under sections 143(3) read with sections 144C(13) and 144B of the Income-tax Act, 1961. The assessee challenged several aspects of the assessment, including the transfer pricing reference, limitation, and the transfer pricing adjustment. However, during the hearing, the principal dispute on merits related to the transfer pricing adjustment of ₹61.22 crore arising from payments made to associated enterprises (AEs) for Production Technology, Safety and Environment (PTSE) services, Information Technology (IT) support services, and centralized support services.
The assessee had declared total income of ₹245.69 crore. During scrutiny, the Transfer Pricing Officer (TPO) determined the arm’s length price (ALP) of the intra-group services at Nil and proposed an adjustment of ₹61.22 crore. The adjustment comprised ₹7.22 crore towards PTSE services, ₹41.47 crore towards IT support services, and ₹12.54 crore towards centralized support services. The Dispute Resolution Panel (DRP) upheld the TPO’s findings, and the Assessing Officer incorporated the adjustment in the final assessment order.
