M/S TDK INDIA PRIVATE LIMITED,KOLKATA vs. D.C.I.T., CIRCLE-11(1), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA‘C’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. No.1998/KOL/2024 Assessment Year:(2020-21) M/s TDK India Private Limited, DCIT, WBIDC Growth Centre, Kulia Vs. Circle – 11(1), Kanchrapara Road, PO – NS Kolkata Saatorium, Kalyani, Nadia, Kolkata – 741251, West Bengal [PAN:AAACI6950Q] (Appellant) .. (Respondent) Appellant by : Shri Arijit Chakrborty, AR Respondent by: Md. Gayasuddin Ansari, CIT-DR Date of Hearing 15.07.2026 Date of Pronouncement 22.07.2026 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: This appeal is preferred by the assessee against the order of the learned DC/ACIT/TP-2, Kolkata (hereinafter referred to as the “ld. ACIT”], dated 26.09.2023 for the Assessment Year (AY) 2020-21.

ITA No.1998/Kol/2024/AY 2020-21 M/s TDK India Pvt. Ltd. vs. DCIT 22, dated 05.12.2025, wherein the Co-ordinate Bench has decided the issue in favour of the assessee by following the decision in A.Y. 2016-17 and 2017-18 in assessee’s own case. The operative part of the order is extracted below:

“2.5 After hearing the rival contentions and perusing the materials on records, we find that the issue is settled in favour of the assessee by the then decision of the coordinate bench in A.Y. in AY 2016-17 & 2017-18 . The operative part of the decision in the said assessment years is as under:- 7.1 Therefore, respectfully following the above decision of Co- ordinate Bench in assessee own case (supra), we direct the AO/TPO to delete the addition and accept the charges paid by the assessee to AE for IGS are held to be at arm's length. Our direction is inconsonance with the decision of the Hon'ble Apex Court in the case of Radhasoami Satsang vs. CIT [1992] 193 ITR 321 (SC) wherein the Hon'ble Apex Court held that even though the principle of res-judicata does not apply to income tax proceedings, but where fundamental aspect permeating through the different assessment years has been found as the fact one way or the other and the parties have allowed the position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in subsequent year. Similar view has been laid down by the Hon'ble Calcutta High Court in the case of CIT vs. Britannia Industries Ltd. [2003] 257 ITR 225 (Cal), decision of Hon'ble Apex Court in the case of CIT vs. Excel Industries Ltd. in Civil Appeal Nos. 5195 of 2011 and 125,9100 & 9101 of 2013. Accordingly, ground no. 6 to 11 are allowed." Similarly, for AY 2014-15 & 2015-16 (consolidated order), the Hon'ble ITAT held as follows: "26. In view of our conclusion that the Ld. TPO and Hon'ble DRP were in error in holding that the nature of services rendered by AE were in the nature of stewardship activity or shareholder activity, we hold that the TPO's conclusion that no charges ought to have been paid by the Assessee is without any basis. After considering all the evidences submitted by the Assessee and various judicial precedents relied on the Ld. Counsel, we conclude that the charges paid by the Assessee to AE are held to be at Arm's Length. Consequently, the addition made by the revenue authorities in this regard are directed to be deleted and relevant grounds raised on this issue are allowed." (Emphasis supplied) 2

ITA No.1998/Kol/2024/AY 2020-21 M/s TDK India Pvt. Ltd. vs. DCIT 2.6 Even on the rule of consistency the ground raised by the assessee needs to be allowed as the deptt has accepted the position and not preferred any appeal before the Hon'ble Calcutta High Court till date in the earlier assessment years. 2.7 Considering these facts and the decisions of the coordinate bench in earlier assessment years we set aside the order of DRP and direct the AO/TPO to delete the addition. The ground no. 3 to 16 are allowed.” 4. Considering the facts and circumstances of the instant appeal and the decision of the Co-ordinate Bench as discussed above direct the AO/TPO to delete the addition. Accordingly, first issue raised by the assessee in respect of ITSS including mark-up charged by the AE on third-party costs is allowed.

ITA No.1998/Kol/2024/AY 2020-21 M/s TDK India Pvt. Ltd. vs. DCIT years. For ready reference, the operative part of the decision in A.Y. 2021-22, which is extracted below:

“3.1 The facts relating the issue are that during the year under consideration, TDK India provided marketing support services to its AEs for sell of TDK Group products in India. The business is conducted as a direct business, i.e. customers import directly from AEs. TDK India does not enter into any contract or negotiate the prices on behalf of its AEs. TDK India is remunerated for its marketing efforts on cost plus basis. The Appellant has applied the Transactional Net Margin Method ('TNMM') as the most appropriate method to benchmark the international transaction in provision of marketing support services, selecting TDK India as the tested party and using the Net Cost Plus as the Profit Level Indicator. The TPO rejected the TNMM applied by the appellant simply on the ground that it is an indirect method without finding any flaw in the same. Furthermore, although he stated that data for application of CUP was available, he took only one non-comparable agreement for his benchmarking analysis. Before the Hon'ble DRP, it was submitted that the Department has consistently accepted the TNMM applied by the appellant for benchmarking of marketing support services, which is as under: - Sr. Assessment Status Method accepted by No. year ld. Transfer Pricing Officer/ Hon'ble DRP 1. 2011-12 Approach accepted by TPO - No TNMM adjustment done 2. 2012-13 Approach accepted by TPO - No TNMM adjustment done 3. 2013-14 Approach accepted by TPO - No TNMM adjustment done 4. 2014-15 Approach accepted by TPO - No TNMM adjustment done 5. 2015-16 Adjustment deleted by TPO post TNMM DRP Direction 6. 2016-17 Approach accepted by TPO - No TNMM adjustment done 7. 2017-18 Adjustment deleted by TPO post TNMM DRP Direction 8. 2018-19 Adjustment deleted by TPO post TNMM DRP Direction 3.2 The Ld. DRP dismissed the appellant's plea of following the rule of consistency as the facts were similar, by stating that rule of consistency is applicable only in respect of "accounting principles." However, they directed the TPO to broaden his search to more comparables agreements. In accordance with the direction of Hon'ble DRP, the Ld. TPO added one more

ITA No.1998/Kol/2024/AY 2020-21 M/s TDK India Pvt. Ltd. vs. DCIT non-comparable agreement and determined the arm's length price of the international transaction under consideration. 3.3 The ld AR submitted that Rule of Consistency should be followed where the DRP/ TPO have accepted the Appellant's approach of benchmarking using TNMM as a most appropriate method in previous assessment years. Further, the Hon'ble DRP/Ld.TPO has erred in selecting CUP as a most appropriate method for determining the arm's length price for the transactions under consideration, which required stringent product, market, function comparability, which is not met in the instant case for the following reasons i) availability of Agreement: A copy of agreement of Polybrite International Inc is available. However, there is no copy of agreement is available for Gorilla Brand LLC, which was selected by the TPO after the DRP hearing making comparability impossible. Ii) Functionality is different: The Appellant renders marketing support services of non-exclusive right to solicit & mediate sales of contractual products. The one agreement selected does referral of clients, introduction of strategic partners, sales, identifying other business opportunities, sale under brand name. Another agreement pertains to a franchise license, granting rights to use thetrademarks, trade names, copyrights, proprietary know-how, software, trade secrets, and operational systems for running a retail business. Geographical Location is also different. The Appellant works for India, Nepal, Sri Lanka, Bhutan and Bangladesh. The geographical region of operation of one of the agreements is American region and for the other agreement, there is no information. Products are different: The Appellant deals in capacitors and ferrites. One of TPO's agreement deals in LED Lighting Solutions/Technologies. The other agreement deals with use of trade name, trade mark etc. and not for marketing of products. Remuneration model is different: The appellant has a cost-plus model, whereas the agreement selected by the Ld. TPO have a percentage of sales model of remuneration. 3.4 The DR could not controvert the above differences but relied on the order of the DRP. Without prejudice to the above on merit, it was submitted that TNMM has been consistently accepted as the method for benchmarking marketing support services, the same should be followed, especially since the TPO/DRP have not given any cogent reason to (1) reject TNMM for benchmarking & (2) not following the rule of consistency to be applied on identical facts.The Appellant places the reliance on the following judicial precedents wherein similar view has been upheld: “A.Principal Commissioner of Income-tax-4, Pune v. Vishay Components India (P.) Ltd. (Bombay High Court) - IT APPEAL NO. 1643 OF 2016 B.Omni Active Health Technologies Ltd. v. Addl./Joint/Dy/Asstt. Commissioner of Income-tax, National E-Assessment Centre (ITAT Mumbai) - IT APPEAL NO. 1224 (MUM.) OF 2021-ITAT Mumbai.” 5

ITA No.1998/Kol/2024/AY 2020-21 M/s TDK India Pvt. Ltd. vs. DCIT 3.5 Based on the above, the Appellant humbly submitted that Hon'ble DRP/Ld. TPO erred in characterizing transaction under consideration and not following the earlier years order where facts of the case is identical. Accordingly, the Appellant submits that the adjustment with respect to the provision of marketing support services of INR 6,98,32,146 for AY 2021-22 may kindly be deleted. 3.6 We have heard the rival contentions and perused the materials on records. We observe that the DRP/ TPO have accepted the Appellant's approach of benchmarking using TNMM as a most appropriate method in previous assessment years and therefore Rule of Consistency should be followed. Further, the Hon'ble DRP/Ld.TPO has erred in selecting CUP as a most appropriate method for determining the arm's length price for the transactions under consideration, which required stringent product, market, function comparability, which is not met in the instant case for the reasons cited by the learned AR before us. The case of the assessee is squarely covered by the decisions as cited above by the learned AR. Consequently, we set aside the order of DRP and direct the AO /TPO to delete the addition. The grounds no. 17 to 23 are allowed.” 7. Considering the facts and circumstances of the instant appeal and the decision of the Co-ordinate Bench as discussed above direct the AO/TPO to delete the addition. Accordingly, second issue raised by the assessee in respect of marketing support services is allowed.

ITA No.1998/Kol/2024/AY 2020-21 M/s TDK India Pvt. Ltd. vs. DCIT The 4th issue is in respect of non-granting of set-off of brought forward 9. losses against the assessed income computed.

The order is pronounced in the open Court on 22/07/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUTANT MEMBER Kolkata, Dated: 22/07/2026 SAMANTA आदेश �ȧ ĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to: \ �Ȣ�ȡ�ȸ/ The Appellant 1. 2. Ĥ×��ȸ/ The Respondent. 3. Ȳ�Ȳͬ��आयकर] �ǕÈ�/ Concerned CIT आयकर] �ǕÈ�(अपील) / The CIT(A)- 4. 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, आयकर\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata 6. �ȡ�[ फाईल/ Guard file.

BY ORDER, // TRUE COPY // Asstt.Registrar, ITAT, Kolkata