Shree Ulka LLP Vs ACIT (ITAT Mumbai)
Fresh Factory or Old Business Repackaged? ITAT Reopens Section 10AA Deduction & ₹19.19 Crore TP Adjustments
Summary: In Shree Ulka LLP v. ACIT, ITA Nos. 9233 & 9234/Mum/2025, decided on 27 August 2026, the Mumbai Bench of the Income Tax Appellate Tribunal examined whether the assessee’s undertaking in Mangalore Special Economic Zone was a genuinely new unit eligible for deduction u/s 10AA or had been formed by splitting up or reconstructing the existing business of its associated enterprise. Since crucial licences, agreements, machinery bills & statutory approvals had not been examined earlier, the Tribunal admitted additional evidence & restored both the section 10AA claim & connected transfer-pricing adjustments to the AO.
Relevant Facts
The assessee was an LLP engaged in production, processing & preservation of fish & fish products from its unit situated in Mangalore SEZ. AY 2020-21 was the first year in which deduction u/s 10AA was claimed.
For AY 2021-22, the assessee filed its return declaring nil income after claiming deduction of ₹4,46,69,638 u/s 10AA. It entered into specified domestic transactions with its associated enterprise, Ulka Sea Foods Pvt. Ltd., including purchases aggregating to ₹115,17,16,462.
The assessee benchmarked these transactions by adopting the “other method” under Rule 10AB as the most appropriate method. It also conducted a corroborative analysis using the transactional net margin method.
