ADVANCE METERING TECHNOLOGY LIMITED,DELHI vs. DCIT TP 1(1)(1), DELHI

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ITA 3524/DEL/2024Status: DisposedITAT Delhi04 June 2026AY 2020-216 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted the additional evidence submitted by the assessee, citing the reasonable cause of COVID-19 for not filing them earlier. The issue of transfer pricing adjustment for legal and professional services was set aside to the TPO for fresh consideration.

What were the facts?

The assessee, engaged in manufacturing energy meters and power generation, filed a return of Nil income. The Transfer Pricing Officer (TPO) made an adjustment of Rs. 64,89,000/- on account of legal and professional expenses (Intra Group Services). The assessee was unable to furnish certain documents due to COVID-19 restrictions.

What were the issues?

Whether the transfer pricing adjustment on legal and professional expenses was justified, and if additional evidence should be admitted due to circumstances beyond the assessee's control.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 143(3),Section 144C,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘I’, NEW DELHI

For Appellant: Shri Pancham Sethi, FCA and Shri Saurabh Gupta, FCA
For Respondent: Shri Dharm Veer Singh, CIT(DR)
Hearing: 18.03.2026Pronounced: 04.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I’, NEW DELHI BEFORE SH. ANUBHAV SHARMA, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 3524/Del/2024 (Assessment Year : 2020-21) Advance Metering Vs. Assessment Unit Technology Ltd. Income Tax Department E-8/1, Malviya Nagar, Delhi Near Geeta Bhawan Mandir Delhi – 110 017 PAN No. AAJCA 5564 H (APPELLANT) (RESPONDENT) Assessee by Shri Pancham Sethi, FCA and Shri Saurabh Gupta, FCA Revenue by Shri Dharm Veer Singh, CIT(DR) Date of hearing: 18.03.2026 Date of Pronouncement: 04.06.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :

The above captioned appeal is preferred by the assessee against the assessment order dated 03.07.2024, passed by Assessment Unit, Income Tax Department, New Delhi, (hereinafter referred to as ‘ld. AO), passed u/s 143(3) r.w.s. 144C(13) r.w.s 144B of the Income Tax Act, 1961 (hereinafter ‘the Act’) in pursuance of directions of the ld.

ITA No. 3524/DEL/2024 [A.Y 2020-21] Advance Metering Technology Ltd. vs DCIT TP Dispute Resolution Panel-1, New Delhi (in short ‘ld. DRP') dated 08.06.2024 pertaining to Assessment Year 2020-21.

2.

Brief facts of the case are that the assessee is a BSE listed company and engaged in the business of manufacturing wide range of Energy Meters including Energy Meters for Smart Grid and tailor made metering solutions for the Indian and global markets. The company is also engaged in the business of generating power by using technologies in the domain of Wind, Bio-fuels and Solar Energy.

3.

The return of income for A.Y. 2020-21 was electronically filed on 12.02.2021 declaring income of Rs. Nil/-. After that, the return was processed under section 143(1)(a) of the Act on 20.09.2021 as income of Rs. Nil. Thereafter, case was selected for complete scrutiny under CASS. Notice under section 143(1) of the Act was issued on 29.06.2021 and duly served upon the assessee. In response to these notices, reply was received with some issues. After considering the issues and reply of the assessee’s claim about loses from business at Rs.10,91,55,191/- during the year after setting off income from other heads, draft assessment order was passed on 27.09.2023 assessing the income at (-) loss Rs.8,72,42,609/- under section 143(3) r.w.s 144C of the Act. In response to draft order, assessee replied on 26.10.2026. Thereafter,

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ITA No. 3524/DEL/2024 [A.Y 2020-21] Advance Metering Technology Ltd. vs DCIT TP TPO observed that it is the appeal under section 92CA(3) of the Act to Dispute Resolution Panel (DRP) of income tax with regard to the variations. Further, the DRP has passed the order dated 08.06.2024 and rejected objections raised by the assessee. Therefore, the total income of the assessee remains the same as per draft order. After the DRP order passed, the Assessing Officer assessed Rs. (-) loss Rs.8,72,42,609/- under section 143(3) r.w.s 144C(13) of the Act and penalty proceedings under section 270A have been initiated through notice issued separately for under reporting of income. 4. Aggrieved, assessee now in appeal before us with the following grounds: “1. That the Assessment Unit, Income Tax Department has erred in law and on facts by passing the Final Assessment Order u/s 143(3) r.w.s 144C(13) r.w.s. 144B in pursuance to directions of the Ld. DRP u/s 144C(5) confirming the TP Adjustment of Rs. 64,89,000/- u/s 92CA(3). 2. That the Ld. DRP/ Ld. TPO has erred in law and on facts by questioning the business expediency of Legal and Professional expenses (Intra Group Services, IGS) and determining their Arm's length Price at "NIL", without appreciating that these expenses were legitimate and incurred for business purposes only. 3. That the Ld. DRP has erred in law and on facts by confirming Ld. TPO's approach to reject "Other Method" applied by the appellant and benchmarking Legal and Professional expenses (IGS) under CUP Method: 3.1. without following the methodology prescribed by Rule 10B(1)(a) for determining the Arm's Length Price under the CUP method.

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ITA No. 3524/DEL/2024 [A.Y 2020-21] Advance Metering Technology Ltd. vs DCIT TP 3.2. without appreciating that there were no sufficiently comparable uncontrolled transactions available for applicability of the CUP Method. 4. The Ld. AO erred by initiating the penalty proceedings u/s 274 read with section 270A of the Income-tax Act, 1961. 5. The appellant craves the right to add, amend, alter or vary the above ground of appeal at or before the time of hearing.”

5.

At the outset, learned Counsel for the assessee submitted that TP adjustment on account of legal and professional services amounting to Rs.64,89,000/- was made by the TPO. It is submitted that the assessee was prevented from furnishing additional evidences which are being filed before us. It is submitted that aforementioned documents placed at serial nos. 9 & 10 of pages 119 to 216 of the paper book being in relation to expense incurred by the associate enterprises while rendering legal and professional services to the assessee. These documents could not be placed before the AO/TPO as the associate enterprises which is based in Canada was not operating due to Covid-19 at the time when the transfer pricing proceedings u/s 92CA(3) were going on. In view of the same, learned Counsel of the assessee prayed to admit these documents as additional evidences in view of the legal and professional services under Rule 29-31 of the Income-tax Appellate Tribunal Rules.

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ITA No. 3524/DEL/2024 [A.Y 2020-21] Advance Metering Technology Ltd. vs DCIT TP 6. Per contra, learned DR objected to filing the additional evidences now. He however did not raise any serious objection to the statement of the AR to remand the matter to the file of the TPO.

7.

We have heard the rival submissions and perused the material available on record. We find that the documents in relation to expenses incurred by associate enterprises in respect of legal and professional services provided to the assessee, could not be placed before the TPO during the TP proceedings on account of Covid-19. We find the explanation as reasonable and sufficient cause for not filing the additional documents/evidences with the lower authority during the relevant proceedings. We, therefore, admit these documents as additional evidence and set aside the issue of TP adjustment on account of legal and professional services to the file of the TPO for consideration and adjudication afresh. The TPO is directed to accord reasonable opportunities to the assessee to represent its case and the assessee is also directed to avail the opportunities and furnished documents/evidences as required by the TPO. The ground of appeal is allowed for statistical purposes. 8. In the result, appeal filed by the assessee in ITA No. 3524/DEL/2024 is allowed for statistical purposes.

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ITA No. 3524/DEL/2024 [A.Y 2020-21] Advance Metering Technology Ltd. vs DCIT TP Order pronounced in the open court on 04.06.2026

Sd/- Sd/- (ANUBHAV SHARMA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 04.06.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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