HENKEL ANAND INDIA PRIVATE LIMITED,HARYANA vs. DEPUTY COMMISSIONER OF INCOME-TAX, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, I: NEW DELHI BEFORE Ms. KAVITHA RAJAGOPAL, JUDICIAL MEMBER AND SMT. RENU JAUHRI, ACCOUNTANT MEMBER IT(TP)A No.- 108/Del/2026 [Assessment Year: 2022-23] Henkel Anand India Pvt. Ltd., Deputy Commissioner of Income - B-660, HQ-27, The Headquarters, tax, Galleria DLF-IV, S.O., Gurugram, Vs Room No. 389A, CR Building, I.P. Haryana-122009. Estate, New Delhi-110002. PAN- AAACH5216Q Assessee Revenue Assessee by Shri Pranay Gandhi, CA (Virtual) Revenue by Shri Mahesh Kumar, CIT(DR) Date of Hearing 23.06.2026 Date of Pronouncement 30.06.2026 ORDER Per Renu Jauhri, Accountant Member:

This appeal by the assessee is against the final assessment order dated 19.12.2025 passed by the Assessment Unit, Income Tax Department, New Delhi, (hereinafter referred to as the ‘ld. AO’) under Section 143(3) r.w.s. 144C(13) read with Section 144B of the Income-tax Act, 1961 (“the Act”), pursuant to the directions of the Hon'ble Dispute Resolution Panel-1, New Delhi (DRP) order dated 28.10.2025 for the Assessment Year 2022-23.

IT(TP)A- 108/Del/2026 Henkel Anand India Pvt. Ltd. 2. Grounds of appeal filed by the assessee are reproduced as under: “1. General ground: erred in assessing the total loss at Rs. 24,81,21,902 as against the loss of Rs. 28,23,36,579 disclosed in the return of income filed by the Appellant; Final assessment order is bad in law and liable to be quashed 2 Erred in passing final assessment order dated 19 December 2025 which is beyond the time limit of one month from end of the month in which the DRP directions are received, as prescribed under Section 144C(13) of the Act, and hence, the final assessment order is time barred and liable to be quashed: 3 Erred in not passing the final assessment order within the time limit prescribed under Section 153 of the Act which is the outer time limit for passing the final order and hence, the assessment proceedings are barred by limitation and liable to be quashed; Transfer Pricing ('TP') grounds - Adjustment of Rs. 3.42,14,677 towards purchase of raw materials and sale of finished goods ('impugned transactions') 4 Erred in making an upward adjustment of Rs. 1,99,37,820 by re-determining the arm's length price of purchase of raw materials / intermediate chemicals, interalia, rejecting the benchmarking analysis undertaken by the Appellant, 5. Erred in making an upward adjustment of Rs. 1,42,76,857 by re-determining the arm's length price of sale of finished goods, interalia, rejecting the benchmarking analysis undertaken by the Appellant; Rejection of TP documentation maintained by Appellant with respect to purchase of goods 6. Erred in not accepting the economic analysis conducted by the Appellant in accordance with the provisions of the Act read with the Rules and modifying the economic analysis for the determination of the ALP in connection with impugned transactions undertaken and holding that the impugned transactions are not at arm's length; Transactions at arm's length considering Appellant's joint venture profile 7. Erred in not appreciating the Appellant's submission that the impugned transactions undertaken by the Appellant would inherently be consistent with the arm's length standard, on account of the fact that the Appellant is a joint venture entity between two Independent groups; Search process undertaken by the learned TPO

IT(TP)A- 108/Del/2026 Henkel Anand India Pvt. Ltd. 8. Erred in failing to provide details of the systematic search process undertaken, including the quantitative filters applied, the accept/reject matrix, qualitative functional analysis of the comparables rejected, and the detailed computation of margins of the comparable companies selected in the Transfer Pricing order; Application of fresh filters 9. Erred in upholding learned TPO's action of applying inappropriate filters for eliminating companies with different financial year end; 10. Erred in upholding learned TPO's action of applying inappropriate filters for eliminating companies with persistent operating losses in 2 out of 3 years; 11. Erred in upholding learned TPO's action of applying inappropriate filters for eliminating failing turnover criteria of INR 1 crore; Recomputation of PLI 12. Erred in recomputing Appellant's profit level indicator viz. ratio of operating profit to operating revenue at -3.13% instead of 5.64% and operating profit to operating cost ('OP/OC') at -3.04% instead of 5.97%, by incorrectly treating exceptional expenses qua restructuring cost, Kurkumbh transition cost, premium freight cost and Net RM price increase as "non-operating" in nature, without appreciating the documentary evidences and details placed on the records; Exclusion of learned TPO's comparables 13. Erred in inappropriately selecting below companies in the final set of comparables without appreciating the fact that the said companies were functionally dissimilar to Appellant, without providing cogent reasons to substantiate the same:

1) Arvee Laboratories (India) Ltd 2)Prasol Chemicals Ltd 3)Highgrade Industries India Pvt Ltd 4)ARCL Organics Ltd 5)Saraf Chemicals Pvt Ltd 6)Hercules Pigments Pvt Ltd 7) Amarita Packaging Pvt Ltd

IT(TP)A- 108/Del/2026 Henkel Anand India Pvt. Ltd. 8) Fosroc Chemicals (India) Pvt Ltd 9) Aromatics India Pvt Ltd 10) Black Rose Industries Ltd 11) Oriental Aromatics Ltd 12) Chemspec Chemicals Ltd Not giving effect to Hon'ble Panel's directions qua sale of finished goods 14. Without prejudice to Appellant's contention that no TP adjustment is warranted qua sale of finished goods, erred in not giving effect to Hon'ble Panel's directions for excluding Goyal Engineering Polymers Pvt Ltd and Sunita Commercials Pvt Ltd from the comparable set while computing the margin for sale of finished goods and retaining an OP/OC ratio of 11.12% instead of 11.05% and disregarding Appellant's rectification application dated 20 November 2025 against learned TPO's order dated 11 November 2025 while giving effect to Hon'ble Panel's directions; Initiation of penalty proceedings under Section 270A of the Act 15. Erred in initiating penalty proceedings under section 270A of the Act. The Appellant craves leave to add, alter, omit or substitute any or all of the above grounds of appeal at any time before or during the course of hearing before the Hon'ble Income Tax Appellate Tribunal, so as to enable the Hon'ble Income Tax Appellate Tribunal to decide the appeal according to the law and facts.”

IT(TP)A- 108/Del/2026 Henkel Anand India Pvt. Ltd. 28,23,36,579/-. The case was selected for scrutiny and a reference u/s 92CA (1) was made to the Transfer Pricing Officer (TPO) for determination of Arm’s length Price (ALP) for the international transactions reported in Form 3CEB. An upward adjustment of Rs. 3,41,56,010/- was proposed by the TPO. Against the draft assessment order, the assessee filed objection before the Dispute Resolution Panel (DRP). Vide directions issued by the DRP u/s 144C(5), the assessee’s objections were discussed and directions were given to the TPO vide order dated 28.10.2025 to made upward adjustment of Rs. 3,42,14,677/- to the income. Thereafter, assessment order u/s 143(3) r.w.s. 144C(13) r.w.s. 144B of the Act was passed on 19.12.2025 at assessed loss of Rs. 24,81,21,902/-. 3.2 Aggrieved, the assessee has preferred an appeal before the Tribunal. 4. Before us, Ld. AR has submitted a copy of the intimation letter dated 28.10.2025 of the CIT(DRP)-1, Delhi informing the assessee regarding passing order u/s 144C(5). It is contended that pursuant to these directions of the DRP, the final assessment order had to be passed on or before 30.11.2025. However, the same has evidently been passed on 19.12.2025. As a result, the order is barred by limitation and is liable to be quashed. 4.1 Ld. DR, on the other hand, has relied the orders of the lower authorities but could not controvert the sequence of dates pointed out by the Ld. AR.

IT(TP)A- 108/Del/2026 Henkel Anand India Pvt. Ltd. 5. We have heard the rival submissions and perused the material available on record. Admittedly, the order u/s 143(3) r.w.s. 144C(13) r.w.s. 144B has been passed on 19.12.2025 whereas the directions of the DRP were issued on 28.10.2025 as per intimation letter placed on record. Thus, the assessment order was issued beyond the limitation date (i.e. 30.11.2025) and is invalid. Accordingly, the same is hereby quashed. 6. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 30.06.2026.

SD/- SD/- [KAVITHA RAJAGOPAL] [RENU JAUHRI] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated- 30.06.2026. Pooja. Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR

Asst. Registrar, ITAT, New Delhi,