INVITROGEN BIOSERVICES INDIA PRIVATE LIMITED,BENGALURU vs. THE DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX - CIRCLE 3(1)(1), BANGALORE

ITTPA 723/BANG/2026Status: DisposedITAT Bangalore31 August 2026AY 2022-2342 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal addressed several grounds. Regarding the inclusion of Microland Limited as a comparable for IT-enabled Services (ITeS), the Tribunal found that Microland has a separate reportable segment for IT-enabled Services, distinct from its infrastructure management services. Therefore, it directed the AO/TPO to consider the IT-enabled Services segment of Microland Limited for benchmarking the international transaction of 'Provision of ITeS'. This led to Grounds No. 14-20 being partly allowed. For the Distribution Segment, the Tribunal found that the eligibility for the 3% tolerance band required factual verification. It restored this issue to the AO/TPO to examine the assessee's eligibility based on the proviso to section 92C and the Notification dated 28.06.2022. If the variation is within 3%, the adjustment should be deleted. Accordingly, Grounds No. 21-23 were allowed for statistical purposes. Grounds pertaining to outstanding trade receivables (No. 24-29) were not pressed by the assessee and were dismissed. The ground regarding penalty proceedings (No. 30) was dismissed as premature. The judgment does not explicitly address grounds related to limitation, the AO failing to give effect to DRP directions, or the overall quantum of adjustment for IT services and ITeS beyond the specific issue of Microland, nor does it detail the reasoning for the other grounds.

What were the facts?

The assessee, Invitrogen BioServices India Private Limited, filed its return of income for Assessment Year 2022-23 declaring Rs. 185,30,89,510/-. The case was selected for scrutiny. Due to large international transactions with associated enterprises, a reference was made to the Transfer Pricing Officer (TPO). The TPO proposed a total transfer pricing adjustment of Rs. 84,42,00,456/-. 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 on 24.12.2025 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 was barred by limitation under section 153 of the Act? 2. Whether the final assessment order was bad in law for failing to give effect to the DRP's directions as per section 144C(10) of the Act? 3. Whether the transfer pricing adjustment of INR 40,97,64,229/- made under section 92CA(3) for IT Services, ITeS, Distribution Segment, and Interest on delayed receivables was erroneous? 4. Whether the AO erred in disregarding the assessee's margins and re-computing them by treating certain expenses as non-operating? 5. Whether the AO erred in rejecting the assessee's economic analysis and undertaking a fresh benchmarking analysis? 6. Whether the AO erred in introducing or modifying filters to reject comparable companies? 7. Whether the AO erred in applying an inappropriate turnover filter for selecting comparable companies? 8. Whether the transfer pricing adjustment in the IT services segment amounting to Rs. 14,55,31,897/- was erroneous? 9. Whether the AO erred in rejecting specific comparable companies for IT services and considering non-comparable companies? 10. Whether the AO erred in considering incorrect margins of certain comparables for determining the arm's length price of the IT services transaction? 11. Whether the assessee was entitled to the benefit of working capital adjustment? 12. Whether the transfer pricing adjustment in the Distribution Segment was erroneous, considering the tolerance band of 3%? 13. Whether the transfer pricing adjustment on account of outstanding trade receivables was erroneous? 14. Whether the initiation of penalty proceedings under section 270A was premature? Assessee's Contentions: The assessee argued that the final assessment order was barred by limitation and bad in law. It contended that the transfer pricing adjustments were erroneous, including the rejection of its economic analysis and comparable companies, and the incorrect computation of margins. The assessee also argued for the inclusion of Microland Limited as a comparable for ITeS. For the Distribution Segment, it argued for the application of a 3% tolerance band as per a notification. The assessee also sought rectification of adjustments related to receivables and argued that penalty proceedings were premature. Revenue's Contentions: The revenue, through the TPO and DRP, made the transfer pricing adjustments and upheld the AO's assessment. Specific arguments for the revenue are not detailed in the provided text, but their position was to defend the assessment order.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 142(1),Section 92CA(1),Section 92CA(3),Section 144C(1),Section 144C(5),Section 153,Section 144C(10),Section 92C,Section 10B,Section 270A

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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 24.12.2025, passed under section 14

The order continues below.

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