INDO NISSIN FOODS PRIVATE LIMITED,BENGALURU vs. ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE-3(1)(1), BENGALURU

ITTPA 1806/BANG/2024Status: DisposedITAT Bangalore31 August 202622 pages
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What did the Tribunal hold?

The Tribunal addressed the issues as follows: Regarding the validity of the assessment order and DRP directions, the judgment does not explicitly record findings on the grounds related to limitation or the invalidity of DRP directions due to manual DIN quoting. However, the appeal is partly allowed, implying these grounds might not have been the sole basis for the decision. Concerning the transfer pricing adjustment for manufacturing activity, the Tribunal directed the exclusion of specific comparables (Amway India Enterprise Private Ltd., Avenue Food Plaza Private Limited, Euro India Fresh Foods Ltd, Haldiram Bhujiwala Ltd., and MTR Foods Private Ltd.) while upholding the inclusion of GITS Foods Products Private Ltd. This resulted in the grounds related to manufacturing activity being partly allowed. For the AMP expenses, the Tribunal held that the Bright Line Test, adopted by the TPO, lacks statutory mandate as per the Delhi High Court ruling in Sony Ericson Mobile Communications (India) Pvt. Ltd. vs. CIT. Furthermore, the Tribunal found no material on record to prove any arrangement between the assessee and its associated enterprises for incurring AMP expenses on their behalf. Consequently, the transfer pricing adjustment on account of AMP expenses was deleted, and the grounds related to this issue were allowed. Grounds pertaining to the initiation of penalty proceedings were dismissed as premature.

What were the facts?

The assessee, M/s. Indo Nissin Foods Private Limited, engaged in manufacturing and selling instant noodles, filed its return of income for Assessment Year 2020-21 declaring Nil income. The return was selected for scrutiny. Due to large international transactions with associated enterprises, a reference was made to the Transfer Pricing Officer (TPO). The TPO made a total transfer pricing adjustment of Rs. 53,34,92,074, comprising Rs. 11,52,47,234 for manufacturing and trading, and Rs. 41,82,44,840 for AMP expenditure. The Assessing Officer (AO) passed a draft assessment order incorporating these adjustments. The Dispute Resolution Panel (DRP) rejected the assessee's objections. Consequently, the AO passed the final assessment order dated 26.07.2024 under section 143(3) r.w.s 144C(13) r.w.s. 144B of the Income-tax Act, 1961. The assessee appealed this order.

What were the issues?

1. Whether the final assessment order dated 26.07.2024 is bad in law and liable to be quashed, considering it was passed beyond the limitation period prescribed under section 153 of the Act, and whether the DRP directions dated 24.06.2024 were invalid due to manual quoting of the Document Identification Number, rendering the final assessment order illegal. - Assessee's contention: The final assessment order is barred by limitation and the DRP directions are invalid due to non-compliance with CBDT Circular No. 19 of 2019, making the assessment order void-ab-initio. - Revenue's contention: Not recorded. 2. Whether the transfer pricing adjustment of Rs. 11,52,47,234 made to the arm's length price (ALP) of the assessee's international transaction pertaining to its manufacturing activity is erroneous. - Assessee's contention: The TPO/DRP erred in invoking section 92C(3), disregarding the assessee's TP study, conducting a fresh economic analysis, characterizing the assessee as a licensed manufacturer, rejecting the transaction-by-transaction approach in favour of entity-level TNMM, including/excluding comparables incorrectly, computing OPM incorrectly, not restricting the adjustment to the transaction value, and not granting economic adjustments. - Revenue's contention: Not recorded. 3. Whether the transfer pricing adjustment of Rs. 41,82,44,840 made to the ALP of the assessee's alleged AMP expenses is erroneous. - Assessee's contention: The TPO/DRP erred in treating AMP expenses as an international transaction, applying the Bright Line Test, and making the adjustment without sufficient evidence of an arrangement with associated enterprises. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 92CA(1),Section 92CA(3),Section 144C(1),Section 144C(5),Section 153,Section 92C(3),Section 92B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL

For Respondent: Smt. Divya K.J, CIT-DR

PER SANDEEP SINGH KARHAIL, JUDICIAL MEMBER:

The assessee has filed the present appeal against the impugned final assessment order dated 26.07.2024, passed under section 143(3) r.w.s 144C(13) r.w.s. 144B of the Income-tax Act, 1961 (“the Act”), pursuant to the directions dated 24.06.2024 issued b

The order continues below.

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