KBS Creations Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that that existence of arrangement between the deduction seeking unit and other AE is a pre-condition for invoking rigor of section 80IA(10) of the Income Tax Act. Since pre-condition of existence of an arrangement is not fulfilled, section 80IA(10) is not applicable. Accordingly, appeal of assessee allowed.
Facts- The assessee is a firm, engaged in business of Gems and Jewellery, primarily manufacturing and export of diamond studded Jewellery. The case of the assessee was selected for scrutiny. Since, the assessee reported certain Specified Domestic Transaction (SDT) with its related party/associated enterprises, therefore, the assessing officer (AO) made reference u/s. 92CA (1) was made to Transfer Pricing Officer (TPO) for computation of Arm Length Price. The TPO passed his order u/s. 92CA(3) dated 21/10/2023 suggested addition/made downward adjustment of Rs.11.62 crore on account transaction of sale of jewelry.
On receipt of order of TPO, the AO made addition /adjustment of Rs.11.62 crores in draft assessment order. The copy draft assessment order dated 12.12.2023, passed under section 144C(1) was served on the assessee. The assessee exercised its option for filling objection before Dispute Resolution Panel (DRP). On receipt of direction of DRP, AO passed final assessment order u/s. 143(3) r.w.s 144C (13) r.w.s. 144B on 25.02.2024. AO by referring the final set of six comparables computed the final adjustment on account of sale transaction to its AE at Rs. 10.98 crore and straightway added the same to the income of assessee. Being aggrieved, the present appeal is filed.
