A.HARTRODT INDIA PRIVATE LIMITED, GURUGRAM,GURUGRAM, HARYANA vs. ASSESSMENT UNIT, INCOME TAX DEPARTMENT, ASSESSMENT UNIT, INCOME TAX DEPARTMENT

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: I: NEW DELHI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA No.5823/Del/2024 Assessment Year: 2021-22 A.HARTRODT India Private v. DCIT, Limited Circle-1(1), Gurgaon First Floor, Plot No. 2 Haryana. Industrial Area , Sector-33, Gurugram -122001, Haryana

PAN: AAFCA6346A (Appellant) (Respondent)

Assessee by : Shri Ankit Arora , CA & Ms. Vandana Gupta, CA Revenue by : Shri Dharam Veer Singh, CIT, DR Date of Hearing : 06.04.2026 Date of Pronouncement : 03.07.2026

ORDER PER RAMIT KOCHAR, AM: The appeal in ITA No.5823/Del/2024 for assessment year: 2021-22 has been filed by the assessee against the assessment order dated 24.10.2024 passed by the learned Assessing Officer, Assessment Unit, Income Tax Department u/s 143(3) r.w.s. 144C(13) read with Section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) , wherein addition of Rs.1,31,28,013/- on

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account of ALP adjustment u/s 92C were made in the hands of the assessee, which assessment order has been passed by the AO in pursuance of the directions given by the Ld. DRP-1. New Delhi, dated 20.09.2024 u/s 144C(5) of the Act(DIN : ITBA/DRP/M/144C(5)/2024-25/1068911749(1)) . The AO had earlier issued draft assessment order dated 21.12.2023 u/s. 144C(1) of the Act wherein the AO proposed an addition of Rs.1,40,41,885/- on account of ALP adjustment u/s 92C as proposed by ld. TPO in its Transfer pricing order dated 28.10.2023 passed u/s 92CA(3), which were subjected to challenge by the assessee by filing objection before the ld. DRP which culminated into an order passed by ld. DRP dated 20.09.2024 u/s 144C(5) of the Act. TPO passed order giving effect to the directions of ld. DRP. 2. The brief facts of the case are that the assessee is engaged in the business of international freight forwarding business and provides full fledge logistics service through air and sea mode of transportation and also providing custom clearance and clearing agent services to its client on contractual basis. The assessee also provides consultancy on the above mentioned services to its clients. The reference was made by the National Faceless E-Assessment Centre to the TPO for determining the arms length price u/s 92CA(3) in respect of ‘international transactions’ entered into by the assessee during the impugned assessment year.

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2.2The assessee has entered into following international transactions as per Form No. 3CEB: S.No. Nature of International Transaction Amount(INR) 1. Provision of Freight and Forwarding services 19,75,30,242 2. Payment of Group Affiliation Fees 77,04,023 3. Availing Freight & Forwarding Services 15,55,33,451 4. Availing IT Support Services 69,92,547 5. Interest Earned 1,46,554 6. Interest Cost 1,573 7. Reimbursement of Expenses 9,37,96,151

2.3 The assessee submitted its TPSR detailing its benchmarking for the above international transactions. The dispute has arisen between rival parties wrt to determination of ALP wrt item at S. No. 1 and 3 above, i.e. wrt Provision of Freight and Forwarding Services to the tune of Rs. 19,75,30,542/- and availing of Freight and Forwarding Services to the tune of Rs. 15,55,33,451/- . The assessee adopted TNMM method using PLI of OP/OC. The 4 comparables selected by the assessee has an arithmetic mean of 3.13% , based on which it was proposed by the assessee that no adjustment to ALP is warranted as it is within the range of +/-3%. The TPO modified the filters adopted by the assessee, as the assessee had not used appropriate filters to select the comparables, which is

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recorded at page 3-4 of the TPO’s order. The TPO accepted all the four comparables adopted by the assessee, and included other comparables as were found comparable based on FAR analysis, thus, leading to selection of 23 comparables, with following margins: 35th percentile margin of 2.89% 65th percentile margin of 4.00% And Median Margin of 3.83%. 2.4 The TPO computed assessee’s PLI after exclusion of ‘other income’ of Rs. 8,33,667/- at 1.71% which was outside the 35th -65th percentile range of comparables, and proposed adjustment to ALP to the tune of Rs. 1,40,41,885/-. 2.5 The AO passed draft assessment order, proposing aforesaid adjustment to ALP. The assessee filed objections before ld. DRP, who was pleased to dispose of objections of the assessee vide orders dated 20.09.2024. The assessee raised challenge to inclusion of 8 comparables by ld. TPO, and ld. DRP accepted the contentions of the assessee wrt 6 comparables which were order to be excluded by ld. DRP. The dispute remains wrt to two comparables which were included by ld. TPO as well by ld. DRP, which is presently challenged by the assessee before us. The ld TPO passed order giving effect, revising adjustment to ALP to the tune of Rs. 1,31,28,013/- . The AO passed final assessment order , and finally addition of Rs.1,31,28,013/- was sustained by the AO by way of adjustment to ALP.

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2.6 The assessee being aggrieved filed appeal with the Tribunal. The ld. Counsel for the assessee has restricted its arguments against inclusion of two comparables by TPO which inclusion was later upheld by ld. DRP viz. Cargo Service Center India Private Limited and Unique Speditorer Private Limited as well as against non-grant of working capital adjustment. Infact, there was challenge by assessee before ld. DRP wrt inclusion of 8 comparables by ld. TPO, out of which ld. DRP gave relief to the assessee by ordering exclusion of 6 comparables. Remaining two as detailed above are in challenge by the assessee before the Tribunal. Both the parties advanced their arguments.Written submissions are filed by both the parties. The assessee has also filed paper book. Copy of written submissions as well Paper Book are also given by the assessee to ld. CIT-DR. 2.7 Heard both the parties and perused the material on record. The facts in brief are narrated above and not repeated. The assessee is objecting to the inclusion by TPO of following two comparables , vide Ground No. 5: 2.7.1 Cargo Service Center India Private Limited (In Short “CSC”) We have gone through the orders of ld. TPO, and it is observed that ld. TPO has directed this company to be included as comparable by holding as under at para 6.1 of ld. TPO order: S.No. Name of the Assessee’s remarks Comments of the Company TPO 1. Cargo Service Functionally not comparable Cargo Service Center Center India India Private Limited is

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Private Limited acceptable as comparable owing to the following reasons:  Passes all the filters applied by the undersigned.  Functionally comparable to the assessee company as it is in the logistic sector without much investment in fixed assets  In view of the discussion above, the company is a suitable comparable

2.7.1.1 We have gone through the orders of the ld. DRP , and it is observed that ld. DRP has directed this company to be included as comparable by holding as under at para 7.1 of ld. DRP order: S.No. Comparable Assessee’s Contention DRPs Finding and Direction 1. Cargo Service The company was also building a The entity acts as an Center India Greenfiled air cargo terminal at Delhi authorized Private Limited airport. Spread over 70000 sq. mt. with representative to an investment of USD100 million , the several airlines in facility will have capacity to handle handling general and close to 1 million MT of cargo. The perishable cargo, services provided by the company hazardous goods, includes:- pharmaceuticals Packhouse management and operations products , livestock including Fruit ripening facility- and other cargo at Cleaning, sorting, grading and storage quite a few Indian of fruits and vegetables- Cold Storage Airports . In services –Other related services – comparison, assessee 6

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Bonded Warehousing for Exim cargo. is engaged in international freight forwarding business and provided as full fledged logistics services through air and sea mode of transportation . The bench-marking is being done under TNMM as the MaM which is able to weed out major internal differences between tested party and comparable. Hence, to be included on grounds of broad functional similarity.

2.7.1.2The main bone of contention of the assessee before the Tribunal is that this company is not functionally comparable. It is engaged in Air Cargo handling operations at Indian airports, while the assessee is simple freight forwarder. It is submitted by ld. Counsel for the assesssee that CSC is engaged in design , building and operating international cargo terminal at various airports through concession agreements viz. Delhi Airport, Mangaluru , Ahmedabad, Aurangabad, Mumbai , Kannur and Cochin Airport. The assessee has relied upon the website of this company to substantiate its contentions. It has also filed screen shot of Annual Report for the financial year 2023-24 and 2024-25, in the documents filed with the ITAT. Thus, it is claimed that CSC is functionally dissimilar and hence need to be excluded. The. Ld. CIT-DR objected to the data downloaded from the website to contend that it is not contemporaneous as it is

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the current data and we are concerned with assessment year 2021-22 , as well it is contended by ld. CIT DR that these are additional evidences for which no application for admission of additional evidences is filed by the assessee before the ITAT. The ld. CIT-DR filed extract of annual report of Cargo Service Center India Private Limited for financial year ended 31st March 2021, and it is was contended that in the annual report/audited accounts, it is clearly mentioned that this company is in the business of cargo handling activities. Thus, it was prayed by ld. CIT-DR that this company need to be included as comparable.After carefully going through the contentions of both the parties and perusing the material on record, we are of the considered view that inclusion of comparable is to be based on FAR analysis which will include analyzing functions, assets deployed and risks assumed. The assessee has filed additional evidences before ITAT for the first time seeking exclusion of aforesaid comparable. These additional evidences require verification and enquiry. Thus, we are of the considered view that the matter need to be restored to ld. DRP to give detailed finding on FAR analysis of this comparable vis-à-vis the assessee , for the contemporaneous period. Merely saying that the comparable is functionally comparable is not sufficient but FAR analysis is required to be done. It is true that in TNMM method, exact FAR may not be achievable and minor variations are acceptable , and ld. CIT-DR rightly relied on the Tribunal order in Copal Research India Private Limited v. DCIT (2016) 73 taxmann.com 157(Del) with

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respect thereto. Thus, we are restoring the matter back to the file of ld. DRP for fresh adjudication on merits in accordance with law. Proper opportunity of being heard to be provided. We order accordingly. 2.7.2 Unique Speditore Private Limited(In Short ‘USPL’) We have gone through the orders of ld. TPO, and it is observed that ld. TPO has directed this company to be included as comparable by holding as under at para 6.1 of ld. TPO order: S.No. Name of the Assessee’s remarks Comments of the Company TPO 1. Unique Functionally not comparable Unique Speditorer Speditorer Private Limited is Private Limited acceptable as comparable owing to the following reasons:  Passes all the filters applied by the undersigned.  Functionally comparable to the assessee company being n the logistic sector  In view of the discussion above, the company is a suitable comparable

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2.7.2.1We have gone through the orders of the ld. DRP , and it is observed that ld. DRP has directed this company to be included as comparable by holding as under at para 7.1 of ld. DRP order: S.No. Comparable Assessee’s Contention DRPs Finding and Direction 1. Unique Speditorer .Functionally not comparable Along The entity is engaged Private Limited with, rendering of freight forwarding in business of custom services, it also provides various value broker, forwarding , added services to its customers . These shipping agent , services include Turnkey project stevedoring Handling : USPL provides end to end consolidator and logistics support service, specializing in warehousing agent. offering an extensive range of In comparison , equipment and vehicles on lease hire.. assessee is engaged Besides this, it also offers Port in international Handling , CFS & ICD Handling, freight forwarding Domestic Cargo, Project Cargo and business and provides Base Management Material Handling full-fledged logistics Operations. The company arranges services through air material handling operations . The and sea mode of company arranges material handling transportation. The operations including equipment for bench-marking is bulk, precious or other special cargoes. being done under TNMM as the MaM which is able to weed out minor internal differences between the tested party and comparable. Hence, to be included on ground of broad functional similarity.

2.7.2.2 The main bone of contention of the assessee before the Tribunal is that this company is not functionally comparable. It is submitted that apart from rendering freight forwarding services , it also provides various value added services to its customers. These services include Turnkey project Handling : 10

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USPL provides end to end logistics support service, specializing in offering an extensive range of equipment and vehicles on lease hire.. Besides this, it also offers Port Handling , CFS & ICD Handling, Domestic Cargo, Project Cargo and Base Management Material Handling Operations. This company USPL has handled many turnkey projects of various size and weights and have the experience and expertise for handling such projects. The company arranges material handling operations . The company arranges material handling operations including equipment for bulk, precious or other special cargoes. It was submitted that this comparable provides services which are akin to consultancy services such as handling of schemes such as EPCG, SHIS, DBk, VKGUY, Advance authorization license , EOU , legal assistance in matters pertaining to EXIM Policy , notifications , value, classification and daily updates, liasoning with Ministries , clearances under EPCG, MEIS, DBK and other services etc. The assessee has relied upon the website of this company to substantiate its contentions. Thus, it is claimed that USPL is functionally dissimilar and hence need to be excluded. The. Ld. CIT-DR objected to the data downloaded from the website to contend that it is not contemporaneous as it is the current data and we are concerned with assessment year 2021-22 as well it is contended that these are additional evidences for which no application for admission of additional evidences is filed by the assessee before the ITAT.It was also submitted by ld. CIT-DR that the assessee is also providing services

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including legal services as is done by this comparable. The ld. CIT-DR has filed extract of annual report of USPL for financial year 2020-21 and submitted that the main income of USPL is from clearing and forwarding business. Thus, it was prayed by ld. CIT-DR that this company need to be included as comparable. After carefully going through the contentions of both the parties and persuing the material on record, we are of the considered view that inclusion of comparable is to be based on FAR analysis which will include analyzing functions, assets deployed and risks assumed. The assessee has filed additional evidences before ITAT for the first time seeking exclusion of aforesaid comparable. These additional evidences require verification and enquiry. Thus, we are of the considered view that the matter need to be restored to ld. DRP to give detailed finding on FAR analysis of this comparable vis-à-vis the assessee , for the contemporaneous period. It is true that in TNMM method, exact FAR may not be achievable and minor variations are acceptable, and ld. CIT-DR rightly relied on the Tribunal order in Copal Research India Private Limited(supra) with respect thereto. But, however, merely saying that the comparable is functionally comparable is not sufficient. Thus, we are restoring the matter back to the file of ld. DRP for fresh adjudication on merits in accordance with law. Proper opportunity of being heard to be provided. We order accordingly. 2.8 The assessee is also objecting to non-grant of working capital adjustment., vide Ground No. 6 raised before the Tribunal. The assessee has relied upon

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several judgments of ITAT. The assessee has submitted that working capital adjustment will increase comparability between assessee and comparables. The assessee has relied upon Rule 10B(3) of the Income-tax Rules, 1962. The assessee raised this issue before ld. TPO , wherein ld. TPO rejected the contentions of the assessee as the assessee fails to demonstrate that the difference in the working capital deployed is the reason for difference in the margins earned by the assessee and the comparables. As per TPO that all the companies are efficient profit maximizers , but poor management may be a simple reality. Thus as per TPO, the assessee is not able to demonstrate why there are material deviation in the working capital source or level, and hence the contentions of the assessee was rejected. The assessee did not raise this issue before ld. DRP in the objections filed with ld. DRP. Now , before the Tribunal, the assessee has raised this ground No. 6 requesting grant of working capital adjustment. The ld.CIT DR objected to raising of this ground before the Tribunal, as the same was never raised before ld. DRP. The ld. CIT-DR also relied upon Rule 10B(1)(e)(iii) . After hearing both the parties, we admit this ground of appeal and restore the same before ld. DRP for passing directions on merits in accordance with law. Proper opportunity of being heard to be provided. Thus, Ground no. 5 and 6 are allowed for statistical purposes in the manner as indicated above. We order accordingly.

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2.9- Ground No. 1,2,3,4 , 7 and 8 are dismissed as not been pressed by the assessee. 3. In the result, the appeal of the assessee in ITA No. 5823/Del/2024 for assessment year 2021-22 is partly allowed for statistical purposes in the manner as indicated above. Order pronounced in the open court on 03.07.2026.

Sd/- Sd/- (RAJ KUMAR CHAUHAN) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 3rd July , 2026. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DRP 5. DR Asstt. Registrar, ITAT, New Delhi