MRF Limited Vs DCIT (ITAT Chennai)
The Chennai ITAT partly allowed MRF Limited’s appeal for Assessment Year 2014-15 against the final assessment order dated 09.10.2018 passed under Sections 143(3)/144C(13) pursuant to DRP directions dated 27.09.2018. MRF, engaged in manufacturing and selling automobile tyres, tubes, flaps and other rubber products, had returned total income of Rs.1054,17,99,530/- and book profit under Section 115JB of Rs.770,49,49,961/-. The assessment involved, among other matters, a transfer-pricing adjustment of Rs.66,94,650/-, depreciation on retention money of Rs.87,57,934/-, Section 80JJAA deduction of Rs.3,15,55,429/-, forward-cover premium charges of Rs.52,32,74,580/-, Section 14A disallowance of Rs.31,10,129/-, Cricket Pace Foundation expenditure of Rs.3,89,00,000/-, Section 35(2AB) weighted deduction of Rs.95,500/- and warranty provision of Rs.20,54,23,000/-.
On transfer pricing, MRF’s eligible wind-energy division transferred electricity to its manufacturing units at Rs.5.50 per unit, benchmarked under the CUP method with the rate charged by TNEB/TANGEDCO to industrial consumers. The TPO reduced the transfer value by wheeling charges borne by the consuming unit. The Tribunal held that the consuming unit paid Rs.5.50 per unit to TNEB plus wheeling charges and, therefore, when wheeling charges were not included in the comparable TNEB tariff, they could not be deducted from the captive power transfer price. The Rs.66,94,650/- transfer-pricing adjustment was consequently deleted.
