UIL ELECTRONICS INDIA PRIVATE LIMITED,GAUTAM BUDH NAGAR vs. ACIT, DCIT, NFAC, DRP, CIVIC CENTER, NEW DELHI

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ITA 3712/DEL/2024Status: DisposedITAT Delhi30 July 2025AY 2020-21Bench: SHRI PRAKASH CHAND YADAV (Judicial Member), SHRI MANISH AGARWAL (Accountant Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the lower authorities failed to properly appreciate the assessee's contentions regarding the selection of comparables with R&D expenses and the provision of working capital adjustment. The matter was remitted to the TPO for fresh consideration.

What were the facts?

The assessee, engaged in manufacturing mobile accessories and exporting to its Associated Enterprises (AEs), is a 100% captive unit. The TPO made an upward adjustment of Rs. 8,46,27,297/- on international transactions, which was affirmed by the DRP and the AO.

What were the issues?

Whether the TPO correctly selected comparable companies and provided for working capital adjustment in determining the arm's length price for international transactions.

Which sections of the Income-tax Act were involved?

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘H’: NEW DELHI

For Appellant: Shri Rajesh Dua, CA
For Respondent: Shri S. K. Jadhav, CIT-DR
Hearing: 24/07/2025Pronounced: 30/07/2025

(ASSESSMENT YEAR 2020-21) UIL Electronics India Private ACIT, DCIT, NFAC, Limited, DRP, Civic Centre, Plot No.114-116, 123-126B, Vs. New Delhi. Ecotech-1 Extension, Greater Noida- 201308. Uttar Pradesh PAN-AAACO0160A (Appellant) (Respondent) Assessee by Shri Rajesh Dua, CA Department by Shri S. K. Jadhav, CIT-DR Date of Hearing 24/07/2025 Date of Pronouncement 30/07/2025 O R D E R

PER PRAKASH CHAND YADAV, JM:

1.

The present appeal of the assessee is arising out from the order of Ld. Assessing Officer dated 19th July, 2024 and relates to Asst. Year 2020-21.

2.

Brief facts of the case as coming out from the orders of authorities below are that the assessee is a company and engaged in the manufacturing of mobile accessories. The assessee is exporting the manufacturing products to its Associated Enterprises (AE) only. The assessee is 100% captive unit, which means the assessee does not have any transactions with non-associated enterprises for the year under consideration. The assessee has entered into international transaction with AEs; accordingly, a reference was made to the TPO, who after analyzing the TP study report of the assessee made an upward adjustment Rs. 8,46,27,297/- and, thereafter, restore the matter to file of the AO. The Assessing Officer thereafter, passed draft assessment order, against UIL Electronics India Pvt. Ltd. vs. ACIT, DCIT, NFAC, DRP which the assessee filed its objection before the DRP, Ld. DRP affirmed the order of TPO. Thereafter, final assessment order, which is impugned before us, has been passed by the AO. Assessee has raised so many grounds of appeal, however the controversy involved in this appeal is narrow down to following issues: (a) non-selection of the comparable who are having expenses in the field of R&D equivalent to 2% of the net sell. (b) non-providing of working capital adjustment to the assessee by the TPO.

3. Ld. Counsel for the assessee appearing on behalf of the assessee. Vehemently argued that the TPO has not taken the such comparables which are having R&D expenses to the tune of 2% of total sales and, hence, the approach of the TPO is not correct in the bench marking the international transaction. In simple word, it is the contention of the assessee is that R&D filter may kindly be provided. Similarly, the Counsel for assesse vehemently argued that both the authorities have failed to appreciate that if the working capital adjustment filter would be given to the assessee then no further adjustment is called for in this case.

4.

Ld. DR relied upon the orders of the authorities below. However, concurred with the suggestion of the bench that matter requires fresh consideration at the end of TPO.

5.

After considering the rival submissions, we observed that facts and figure with respect to the contention made by the assessee before us are not properly appreciated by the lower authorities. For example, the lower authorities have failed to make any comment with respect to the working capital adjustment as computed and submitted by the assessee before them. Therefore, the interest of justice, we remit this matter to the file of TPO for the examine afresh after giving UIL Electronics India Pvt. Ltd. vs. ACIT, DCIT, NFAC, DRP due consideration to the submissions of the assessee with respect to the filters to be applied for selecting appropriate comparables.

6.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 30/07/2025.

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