ZF WIND POWER COIMBATORE PRIVATE LIMITED,CHENNAI vs. JCIT (OSD) CORPORATE CIRCLE 1, COIMABTORE

PDF · subscribers
ITTPA 20/CHNY/2026Status: DisposedITAT Chennai12 August 2026AY 2020-217 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Ld. CIT(A) erred in disposing of the appeal without considering the assessee's specific request to keep the proceedings in abeyance due to pending Mutual Agreement Procedure (MAP) proceedings. The Tribunal noted that no reasons were recorded for not accepting this request, which directly impacted the appellate proceedings. This failure to consider the plea resulted in a denial of an effective opportunity to the assessee. The Tribunal also acknowledged that substantive grounds on transfer pricing, Section 43B disallowance, and computational issues were raised. Consequently, the Tribunal set aside the impugned order of the Ld. CIT(A) and restored the appeal to the file of the jurisdictional CIT(A) for de novo adjudication. The jurisdictional CIT(A) is directed to consider the plea regarding pending MAP proceedings and the request for abeyance, and then adjudicate the grounds of appeal after affording a reasonable opportunity of being heard. The Tribunal explicitly stated that it was not expressing any opinion on the merits of the additions/adjustments, leaving all grounds raised by the assessee on merits open for fresh consideration. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, ZF Wind Power Coimbatore Private Ltd, is a domestic company manufacturing gearboxes for wind turbine generators, operating from a Special Economic Zone. For Assessment Year 2020-21, its return was processed under Section 143(1), with an adjustment under Section 43B. The case was selected for scrutiny, and due to international transactions with associated enterprises, it was referred to the Transfer Pricing Officer (TPO). The TPO proposed adjustments for group/divisional charges and interest on overdue receivables. The Assessing Officer (AO) passed a draft assessment order, and subsequently, a final assessment order under Section 143(3) read with Section 144C(3) and 144B, incorporating these adjustments. The assessee appealed to the CIT(A), who passed an order dated 27.11.2025. The assessee's appeal to the ITAT challenges this order.

What were the issues?

1. Whether the Ld. CIT(A) erred in issuing the impugned order without jurisdiction and in violation of CBDT Notification No. 113/2022 dated 13 October 2022, rendering the order liable to be quashed (Question of law, relating to jurisdiction and procedural compliance). 2. Whether the lower authorities erred in rejecting the Transfer Pricing (TP) documentation under Section 92D read with Rule 10D without satisfying the conditions in Section 92C(3) (Question of mixed law and fact, relating to TP documentation and statutory conditions). 3. Whether the lower authorities erred in determining the arm's length price (ALP) of management services as NII and proposing a downward TP adjustment of INR 81 Crores (Question of mixed law and fact, relating to TP adjustment for services). 4. Whether the lower authorities erred in making an adjustment of INR 0.82 crores towards notional interest on overdue receivables by treating it as a separate international transaction under Chapter X of the Act (Question of mixed law and fact, relating to TP adjustment for interest on receivables). Assessee's contentions: The Ld. CIT(A) passed the order without jurisdiction and in violation of Notification No. 113/2022. The TP documentation was rejected without satisfying Section 92C(3). The downward TP adjustment for management services was erroneous, as the services were linked to the business and the aggregation approach was ignored. The 'NIL' value for services was arbitrary. The lower authorities disregarded evidence of services received and commercial expediency. The adjustment for interest on overdue receivables was unwarranted as Chapter X was extraneous, and the entity-level benchmarking was ignored. Contractual terms were substituted without basis. The interest computation was arbitrary. The Ld. CIT(A) also erred in disposing of the appeal without considering the request to keep proceedings in abeyance due to pending MAP proceedings and without granting an effective opportunity to present submissions. The assessment order suffered from legal defects and was barred by limitation. The Ld. AO erred in not considering MAT credit. Revenue's contentions: The Ld. Departmental Representative relied on the impugned order passed by the Ld. CIT(A).

Which sections of the Income-tax Act were involved?

Section 92D,Section 92C(3),Section 143(1),Section 43B,Section 92CA(3),Section 144C(1),Section 143(3),Section 144C(3),Section 144B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: HONOURABLE SHRI GAGAN GOYAL & SHRI MANU KUMAR GIRI

Hearing: 30.07.2026Pronounced: 11.08.2026

आयकर अपीलीय अधिकरण ’डी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI माननीय श्री गगन गोयल लेखा सदस्य के समक्ष एवं श्री मनु कुमार धगरर, न्याययक सदस्य BEFORE HONOURABLE SHRI GAGAN GOYAL, ACCOUNTANT MEMBER AND SHRI MANU KUMAR GIRI, JUDICIAL MEMBER आयकर अपील सं./IT(TP)A No. 20/Chny/2026 यनिाारण वर्ा /Assessment Years: 2020-21 ZF Wind Power Coimbatore Private Ltd, v. The Joint Commissioner of Plot No.3, Aspenpark Infra SEZ, Income Tax, (OSD), Annur Road, Kittampalayam and Corporate Circle-1, Karumathampatty Village, Coimbatore. Coimbatore, Tamil Nadu-641 659. [PAN: AABCH8089G] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. Ashik Shah, C.A & Ms. Soundariya, C.A. Ld. ARs प्रत्यर्थी की ओर से /Revenue by : Mr. K. Jayaganesh, CIT Ld. DR सुनवाईकीतारीख/Date of Hearing : 30.07.2026 घोषणाकीतारीख /Date of Pronouncement : 11.08.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This appeal filed by the assessee is directed against the order dated 27.11.2025 passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, under section 250 of the Income-tax Act, 1961, for assessment year 2020-21.

GROUDS OF APPEAL General Ground 1. The Ld. CIT (A) erred in issuing the impugned order without jurisdiction and in gross violation of Notification No. 113/2022 dated 13 October 2022 [No. 113/2022/F.No.279/Misc./66/2014- ITJ (PL)/SO 4873(E)] issued by the Central Board of Direct Taxes, and binding on the lower authorities, and hence, the impugned order is liable to be quashed.

IT (TP) A 20/Chny/2026 (2020-21) ZF Wind Power Coimbatore Private Ltd 2 The lower authorities' erred in finalizing an order of assessment which suffers from legal defects such as being passed in violation of principles of natural justice, contrary to the provisions of the Income Tax Act, 1961 ("the Act"), barred by limitation, is devoid of merits, contrary to facts on record and applicable law and has been completed without adequate inquiries, therefore is liable to be quashed. 3 The lower authorities erred in rejecting the Transfer Pricing ("TP") documentation maintained by the Appellant, in good faith, as required under Section 92D of the Act read with Rule 10D of the Rules, without demonstrating the satisfaction of the conditions stipulated in section 92C(3) of the Act Downward TP adjustment in relation to the availing of management services 4 The lower authorities erred in determining the arm's length price ("ALP") of the payment made towards intra group services to be NII and thereby erred in proposing a downward transfer pricing adjustment of INR 81 Crores. 5 The lower authorities erred in not appreciating that the intra group services availed by the Appellant are closely linked to the Appellant's business and inherent to the centralization of functions that normally occurs within Multinational Groups and have erred in not considering the aggregation approach adopted by the Appellant in its transfer pricing documentation. 6. The lower authorities have, in the facts and circumstances of the case and in law, erred in considering the value of intra group services availed as 'NIL' purportedly under the Other method, without bringing on record any benchmarking exercise and undertaking any objective search process to identify comparable companies and has as such exceeded their jurisdiction. 7 The lower authorities have, in the facts and circumstances of the case and in law, erred in disregarding the evidence provided by the Appellant for availing the intra group services and has erred in concluding that no tangible/direct benefits accrued to the Appellant from such services, without appreciating the fact that commercial expediency of transaction cannot be questioned by the lower authorities. 8 The lower authorities erred in not considering the voluminous evidence and supporting documentation and explanation provided by the Appellant during the course of proceedings to substantiate the rationale for paying the group divisional charges. 9. The lower authorities erred in disregarding the email correspondences and various other documentary evidences submitted by the Appellant to substantiate that the Appellant is in receipt of the impugned intra group services. 10. The lower authorities erred in facts and in circumstances of the case and in law in concluding that the services received are in the nature of shareholder services. TP adjustment towards notional interest on overdue receivables 11. The lower authorities erred in making an adjustment of INR 0.82 crores towards notional interest on the Appellant's overdue receivables from its associated enterprises ('AEs'), by treating the same a separate international transaction.

Page 2 of 7

IT (TP) A 20/Chny/2026 (2020-21) ZF Wind Power Coimbatore Private Ltd 12. The lower authorities erred in proposing a transfer pricing adjustment towards interest on overdue trade receivables without appreciating that the provisions of Chapter X of the Act are extraneous to the facts of the present case and further erred in treating the same as an unsecured interest-free loan granted to the AEs. 13. Without prejudice, the lower authorities failed to appreciate that a separate adjustment is unwarranted as the Appellant has carried out an entity level benchmarking using the Transactional Net Margin Method as the most appropriate method. 14. The lower authorities erred in not appreciating the fact that the Appellant has not charged any interest in relation to the overdue receivables, outstanding beyond the agreed credit period, from third party customers. 15. The lower authorities have erred in ignoring the contractual terms agreed between the Appellant and the AEs and instead, substituted the same with a credit period of 30 days without any basis. 16 The lower authorities erred in making the said addition without undertaking a benchmarking analysis based on similar uncontrolled transactions and without adopting any of the prescribed methods under the Act and the related rules. 17. The lower authorities erred in computing interest on delayed receivables without adjusting (netting-off) the inter-company payables. 18 Without prejudice, the lower authorities erred in arbitrarily adopting 6-month LIBOR 350 bps to benchmark the interest on overdue receivables, without appreciating that the same is without any proper basis. Disallowance under Section 43B of the Act 19. The lower authorities, in the facts and circumstances of the case and in law, erred in not considering the Appellant's submissions against the adjustments made by CPC and arbitrarily upholding the same without appreciating that the intimation issued under section 143(1) would get merged into the order of assessment and debatable issues cannot be subject to prima facie adjustments under section 143(1) as upheld by Bombay High Court in the case of Halliburton Technology India Private Limited. 20. The CPC, in the facts and circumstances of the case, erred in making a disallowance under section 43B of the Act without appreciating the facts of the case and also without providing an opportunity of being heard. Miscellaneous grounds 21. The Appellant is unable to verify any computational aspects in relation to the demand raised as per the notice of demand under section 156 of the Act in the absence of the Computation sheet which is generally annexed with the Final Assessment Order along with the demand notice and craves leave to add grounds on computational aspects. 22. The Ld. AO erred in arriving at the tax payable without consideration of the MAT credit of INR 59.31 Crores, available to the Appellant after the adjustment of INR 16.67 Crores by the Appellant in the return of income.

Page 3 of 7

IT (TP) A 20/Chny/2026 (2020-21) ZF Wind Power Coimbatore Private Ltd The Appellant prays that directions be given to grant all such relief arising from the grounds of appeal mentioned supra and all consequential relief thereto. The Appellant craves leave to add to and/or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal.

2.

The brief facts of the case are that the assessee, ZF Wind Power Coimbatore Private Limited, formerly known as Hansen Drives Limited, is a domestic company primarily engaged in manufacturing and assembly of gearboxes for wind turbine generators. The assessee operates from a Special Economic Zone situated at Coimbatore.

3.

The assessee filed its return of income for the assessment year under consideration. The return was processed under section 143(1) of the Act by the Central Processing Centre vide intimation dated 30.12.2021, wherein an adjustment/disallowance under section 43B of the Act was made. Thereafter, the case was selected for scrutiny and, since the assessee had entered into international transactions with its associated enterprises, the matter was referred to the Transfer Pricing Officer for determination of the arm's length price.

4.

The Transfer Pricing Officer passed an order dated 14.07.2023 under section 92CA(3) of the Act proposing transfer pricing adjustments, including adjustment in relation to group/divisional charges and interest on overdue receivables. Consequent thereto, the Assessing Officer passed draft assessment order dated 29.08.2023 under section 144C (1) of the Act. The final assessment order was passed on 21.09.2023 under section 143(3) read with section 144C (3) and section 144B of the Act, after incorporating the transfer pricing adjustments and the adjustment proposed under section 143(1) of the Act.

5.

Aggrieved by the final assessment order, the assessee preferred appeal before the Ld. CIT (A). Before us, the Ld. Authorised Representative submitted that the Ld. CIT (A) erred in disposing of the appeal without considering the assessee's specific request for keeping the proceedings in abeyance in view of pending MAP proceedings. It was submitted that the MAP applications were filed in respect of the very same transfer pricing issues which were subject matter of appeal before the Ld. CIT (A). The Ld. Authorised Representative further submitted that the impugned Page 4 of 7

IT (TP) A 20/Chny/2026 (2020-21) ZF Wind Power Coimbatore Private Ltd order has been passed without granting effective opportunity to the assessee to place complete submissions on merits and without adjudicating the preliminary plea raised by the assessee.

6.

Further, the Authorised Representative also relied upon the Notification dated October 13, 2022, and submitted that jurisdiction to adjudicate appeals in cases pertaining to transfer pricing issues was vested with the Commissioner of Income Tax (Appeals)-16 and considering that the order of the CIT(A) National Faceless Appeal Centre was passed without providing an opportunity to the assessee, it was prayed that the impugned order be set aside and the matter be restored to the file of the jurisdictional Ld. CIT(A) for fresh adjudication in accordance with law.

7.

The Ld. Departmental Representative, on the other hand, relied on the impugned order passed by the Ld. CIT (A).

8.

We have heard the rival submissions and perused the material available on record. We find that the impugned order of the Ld. CIT (A) does not deal with the assessee's request for keeping the appeal in abeyance on account of pending MAP proceedings. No reasons have been recorded as to why such request was not acceptable. Once a specific plea having a direct bearing on the conduct of the appellate proceedings was raised before the first appellate authority, i.e. the Ld. CIT (A) was required to consider the same and pass a reasoned order thereon. Disposal of the appeal without dealing with such plea, in our considered view, has resulted in denial of effective opportunity to the assessee.

9.

We also note that the assessee has raised substantive grounds on transfer pricing adjustments as well as grounds relating to disallowance under section 43B of the Act and computational issues, including MAT credit. Since the appeal has been disposed of without proper consideration of the assessee's request and without effective adjudication after granting adequate opportunity, we are of the view that the matter requires fresh consideration by the first appellate authority.

10.

In the facts and circumstances of the case, and following the principle that where an appellate order is found to have been passed without considering, a

Page 5 of 7

IT (TP) A 20/Chny/2026 (2020-21) ZF Wind Power Coimbatore Private Ltd material plea of the assessee the matter is to be restored to the competent appellate authority, we set aside the impugned order dated 27.11.2025 passed by the Ld. CIT(A). The appeal is restored to the file of the jurisdictional CIT(A) for de novo adjudication in accordance with law in the light of the Notification dated October 13, 2022 and the decision of this Hon'ble Jurisdictional Bench in the case of KR Jagannathan (WTA No. 5 and 6/CHNY/2025 and MA No. 179 and 180/CHNY/2025) 11. The jurisdictional Ld. CIT (A) shall consider the assessee's plea regarding pendency of MAP proceedings and request for keeping the appeal in abeyance and thereafter adjudicate the grounds of appeal raised by the assessee after affording reasonable opportunity of being heard. 12. Since we have restored the matter to the file of the jurisdictional Ld. CIT (A) for fresh adjudication, we do not express any opinion on the merits of the additions/adjustments. All grounds raised by the assessee on merits are left open. 13. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 11th day of August, 2026, in Chennai.

Sd/- Sd/- (मनु कुमार गिरर) (गगन गोयल) (MANU KUMAR GIRI) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 11th August, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem K Digitally signed 4. पवभागीय प्रयतयनधि/DR by K BABU Date: BABU 5. गार्ड फाईल/GF 2026.08.13 13:05:43 +05'30' Page 6 of 7

IT (TP) A 20/Chny/2026 (2020-21) ZF Wind Power Coimbatore Private Ltd

Page 7 of 7

More judgments on Section 92D

All 485 judgments and leading authorities on Section 92D →

Recent GST High Court judgments

Search GST case law →