PRIMETEK PENS PRIVATE LIMITED (FORMELY KNOWN AS BIC CELLO INDIA) PVT LTD,DAMAN vs. CENTRAL CIRCLE 5(2), MUMBAI

Ground Nos. 1 and 2 challenge the transfer-pricing adjustment of Rs.26,81,32,346/- in respect of management support services and the non-adjudication of the Assessee’s specific objection that the same amount was subsequently written back and offered to tax in A.Y. 2023–24. Ground No. 3 is general.

Brief facts relevant for adjudication of the instant appeal are that the Assessee, formerly known as BIC Cello (India) Private Limited, is engaged in the manufacture and sale of pens, refills and allied products. During the relevant year, it availed management support services from its associated enterprise, Societe BIC, France, and recorded expenditure of Rs.26,81,32,346/-.

The TPO, vide order dated 27.01.2025 passed u/s 92CA(3) of the Act, determined the arm’s length price of the said services at Nil, principally on the ground that the Assessee failed to establish actual rendition and receipt of services, costs incurred by the associated enterprise and corresponding benefit. Accordingly, an adjustment of Rs.26,81,32,346/- was proposed. The TPO also noticed the Assessee’s plea that the liability was subsequently written back and offered to tax in A.Y. 2023–24, but left that issue for examination by the AO.

The AO incorporated the adjustment in the draft assessment order dated 13.03.2025. The Assessee raised specific objections before the DRP, contending that the same amount had been reversed and offered to tax in A.Y. 2023–24 and, therefore, its disallowance in A.Y. 2022–23 would result in taxation of the same amount twice. The DRP, while upholding the determination of Nil arm’s length price, did not adjudicate this specific objection. The AO thereafter retained the adjustment in the final assessment order.

Before us, the Ld. Counsel submitted that the associated enterprise waived the outstanding charges due to the continued losses of the Assessee and, consequently, the liability was written back and offered to tax in A.Y. 2023–24. Reference was made to the relevant financial statements, computation of income, Form No. 3CEB, waiver letter and the assessment record for that year. It was further submitted that the transaction was examined in A.Y. 2023–24 and no corresponding transfer-pricing adjustment was made.

On the contrary, the Ld. DR supported the impugned order and, alternatively, sought restoration of the issue to the TPO.

We have heard the parties and perused the material available on record. The limited question is whether the adjustment can survive in A.Y. 2022–23 when the identical liability is stated to have been written back and offered to tax in A.Y. 2023–24.

Admittedly, the TPO for the year under consideration had already determined the arm’s length price of the management support services at Nil and had specifically left the consequence of the subsequent write-back for examination by the AO. The Assessee also raised this issue before the DRP. However, neither the DRP nor the AO returned any finding on the specific plea that the same amount stood offered to tax in the subsequent year.

In these circumstances, the Revenue’s alternative plea for restoring the matter to the TPO cannot be accepted. No fresh determination of the arm’s length price is required for deciding the limited question of duplication of taxation. The issue now survives only to verify whether the identical amount has actually been offered to and retained in taxation in A.Y. 2023–24. Accordingly, the Revenue’s alternative prayer for restoration of the issue to the TPO is rejected.

If the identical amount of Rs.26,81,32,346/- has already been written back, offered to tax and retained in the assessed income for A.Y. 2023–24, sustaining the same adjustment in the year under consideration would result in taxation of the same amount twice, which cannot be sustained.

Consequently, we direct the AO to delete the transfer-pricing adjustment of Rs.26,81,32,346/-, subject only to verification that: