ACIT Vs Alfa Laval India Pvt. Ltd. (ITAT Pune)
When Facts & Consistency Matter: Tribunal Slams TP Adjustment, ICDS Addition & Provision Taxation- No Double Tax, No Arbitrary Additions; Benchmarking Battle Ends: Consistent Method, Consistent Relief:
Assessee, a leading manufacturer & trader of heat transfer, separation & fluid handling equipment, filed its return of income declaring ₹246.57 crores. The case was selected for scrutiny on various issues including international transactions. AO referred the matter to TPO, who rejected the TNMM applied by Assessee for benchmarking export of traded spares to AEs & adopted Cost Plus Method (CPM) based on internal comparables. He computed a TP adjustment of ₹1.78 crores. AO also made further additions towards disallowance u/s 40(a)(ia), ICDS adjustments, liquidated damages written back, reversal of project cost provisions & reversal of doubtful debts. The total income was assessed at ₹271.18 crores.
In appeal, the CIT(A) deleted all the additions. Aggrieved, the Revenue approached the Tribunal.
On the transfer pricing issue, it was submitted that from AY 2009-10 onwards, the Tribunal in assessee’s own case has consistently held that TNMM is the most appropriate method for benchmarking export of traded spares to AEs & that internal comparison with domestic segment is not proper. The CIT(A), following his predecessors’ orders for AYs 2014-15 to 2016-17 & Tribunal’s orders for AYs 2009-10 to 2011-12, held that TNMM should be retained. Tribunal noted that in AY 2017-18 also identical grounds of Revenue were dismissed & there being no distinguishing feature in the present year, upheld the deletion of TP adjustment of ₹1.78 crores. Thus, CPM adopted by the TPO was rejected & TNMM was confirmed as the MAM.
