LAMA RICE PRIVATE LIMITED ,DELHI vs. DCIT CIRCLE 13 (1) , DELHI

ITTPA 66/DEL/2026Status: DisposedITAT Delhi19 August 2026AY 2022-2331 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that grounds 1 to 3 were general and not pressed, hence not adjudicated. Regarding the inclusion of 'Export Incentive' and 'Cash discount' as operating revenue (Issue 5), the Tribunal observed that the assessee declared cash discount and sale of license as part of operating margin. The TPO rejected this and recomputed the profit margin. The Tribunal held that cash discount is part of the purchase cost and should be treated as part of operating income. For sale of license, which is an incentive from export activities, the Tribunal referred to Section 28(iia) and Rule 10TA of the Act. It relied on the Hon'ble Bombay High Court's decision in Welspun Zucchi Textiles Ltd., which held that export incentives like DEPB form part of operating revenue and must be included in computing operating profit for TNMM, as exclusion distorts a like-to-like comparison. Similar views were held by various ITAT benches. Therefore, the Tribunal directed the AO/TPO to include export incentive and cash discount as operating income. Grounds 4 and 11 were general and not adjudicated. The appeal was allowed.

What were the facts?

The assessee, Lama Rice Private Limited, filed an appeal against the assessment order dated 08.01.2026 passed by the DCIT, Circle 13(1), Delhi, for Assessment Year 2022-23. The order was passed under section 143(3) read with section 144C(13)/144B of the Income-tax Act, 1961, pursuant to directions from the Dispute Resolution Panel. The assessee is a private limited company and a subsidiary of Lama Holdings Limited, engaged in the export of Basmati rice. It entered into international transactions with its Associated Enterprise (AE), Saleh Abdulaziz Babaker Sons & Co. The assessee's returned income was Rs. 8,68,44,307/-, while the assessment order determined the income at Rs. 19,09,20,975/-. The primary dispute revolves around a Transfer Pricing adjustment of Rs. 10,40,76,668/- made by the TPO.

What were the issues?

1. Whether the final assessment order passed by the learned AO under section 143(3) r.w.s 144C(13) of the Act is illegal and liable to be quashed as it was passed beyond the statutory time limit prescribed under section 153 of the Act, thus barred by limitation. The assessee argued that the assessment order was passed beyond the statutory time limit. The revenue's contention is not recorded. 2. Whether the reference to the Transfer Pricing Officer (TPO) was made without complying with CBDT Instruction No. 3/2016 and section 92CA(1) of the Act. The assessee contended that the reference was made without proper compliance. The revenue's contention is not recorded. 3. Whether the learned AO/TPO erred in making an addition of Rs. 10,40,76,668/- on account of adjustment proposed by the TPO in respect of the international transaction relating to 'Sale of Rice' made to the AE, rejecting the assessee's submissions that the transactions were benchmarked at Arm's length. The assessee argued that the transactions were at arm's length. The revenue's contention is not recorded. 4. Whether the learned AO/TPO erred in rejecting the assessee's contention that companies lacking segmental information should not be considered as comparables. The assessee argued for exclusion of companies lacking segmental information. The revenue's contention is not recorded. 5. Whether the learned AO/TPO erred in not considering the 'Export Incentive' and 'Cash discount' in the calculation of the Operating Profit, despite them being in the nature of Operating Revenue. The assessee contended that export incentives and cash discounts are operating revenues. The revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 153,Section 92CA(1),Section 92A,Section 28(iia),Section 10TA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘H’: NEW DELHI

Before: SHRI S.RIFAUR RAHMAN & SHRI VIMAL KUMAR

For Appellant: Shri Ved Jain, Advocate, Ms. Uma Upadhyay, CA
For Respondent: Shri Bhopal Singh, CIT DR
Hearing: 04.06.2026Pronounced: 19.08.2026

PER S.RIFAURRAHMAN,AM:

1.

This appeal filed by the assessee is directed against the assessment order dated 08.01.2026 passed by the Income Tax Department/DCIT, Circle 13 (1), Delhi under section 143(3) read with section 144C (13)/144Bof the Income-tax Act, 1961 (for short ‘the Act”) for Assessment Year 2022-23 pursuant to the directions of the Dispute Resolution Panel u/s 144C (5) of the Act raising the following grounds of appeal :-

2 “1. On the facts and circumstances of the case, the final assessment order passed by the learned AO under section 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 ("the Act")

The order continues below.

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