M/S. PLINTRON MOBILITY SOLUTIONS PVT. LTD.,KANCHIPURAM vs. DCIT, COPORATE CIRCLE-1, LTU RANGE-801,, CHENNAI

आयकर अपील�य अ�धकरण, ‘डी’ �यायपीठ, चे�नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI �ी जॉज� जॉज� के, उपा�य� एवं �ी एस.आर.रघुनाथा, लेखा सद�य के सम� BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./IT(TP)A No.: 32/CHNY/2026 �नधा�रण वष�/Assessment Year: 2022-23 Plintron Mobility Solutions The Deputy Commissioner Pvt Ltd., Vs. of Income Tax, 3rd Floor, GLS Tech Park, Corporate Circle – 1 (LTU), 1/24, Shivaji Garden, Range 801, DLF IT SEZ, Chennai Nandambakkam Kudiyiruppu S.O., Nandambakkam, Kanchipuram – 600 089. PAN: AAFCP 6213L (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri S. P. Chidambaram, Advocate (Through Virtual Mode) ��यथ� क� ओर से/Respondent by : Shri K. Jayaganesh, CIT सुनवाई क� तार�ख/Date of Hearing : 18.06.2026 घोषणा क� तार�ख/Date of Pronouncement : 29.06.2026 आदेश/ O R D E R PER GEORGE GEORGE, VICE PRESIDENT: This appeal filed by the assessee is directed against the final assessment order dated 23.12.2025 passed u/s.143(3)

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r.w.s.144C(13) of the Income Tax Act, 1961 (hereinafter the ‘Act’). The relevant assessment year is 2022-23.

A Downward adjustment towards Payment of Business and Management consultancy fee

2.1 The directions of the Dispute Resolution Panel (DRP)-2, and the consequential final assessment order is erroneous in so far as determining and quantifying the downward adjustment to the value of international transaction relating to "Payment towards Business and Management consultancy fees"

2.2 The AO/TPO/DRP, though having accepted that the services have been rendered by the AE and benefits were received, erred in wrongly concluding that the services were in the nature of stewardship/shareholder services.

2.3 The AO/TPO/DRP erred in concluding that the Business and Management consultancy services received from the AE are in the nature of shareholder activities without taking cognizance of the fact that AE does not own any shareholding in Appellant company and the services provided by the AE are exclusively for the Appellant, as such, cannot be construed to be in the nature of shareholder activities,

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2.4 The AO/TPO/DRP erred in holding that the arm's length price is required to be determined on a transaction-to-transaction basis, without appreciating the fact that the payment of Business and Management consultancy fee is inextricably linked to the main business of the Appellant.

2.5 The AO/TPO/DRP ought to have appreciated that services received from AE were connected with the operational business activity of the Appellant and hence the same had to be aggregated with all other international transactions for the purpose of benchmarking

2.6 The AO/TPO/DRP erred in rejecting Transactional Net Margin Method ("TNMM") adopted by the Appellant as the most appropriate method in benchmarking the payment made for Business and Management consultancy services.

2.7 The AO/DRP grossly erred in confirming the action of TPO in concluding Other Method as the most appropriate method without appreciating that TNMM is the most appropriate Method.

2.8 Without prejudice to the above, Other Method has been incorrectly applied by the AO/TPO/DRP without identifying any comparable companies.

2.9 The AO/DRP/TPO erred in concluding that the AE has not rendered services without appreciating the evidences produced by the Appellant to substantiate that the Business and Management consultancy services were received, and the Appellant has actually benefitted from the same.

2.10 The AO/DRP/TPO failed to appreciate the facts and submissions presented during the course of assessment proceedings and brushed aside the evidences by stating that the services were in the nature of shareholder activities.

2.11 The AO/TPO/DRP failed to appreciate the business need of the Appellant in availing the Business and Management consultancy services from its AEs to perform the operational functions more effectively.

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2.12 The AO/DRP/TPO ought to have appreciated the benefits accrued to the appellant in relation to services provided by the AEs during the subject year.

2.13 The AO/TPO/DRP erred in concluding that the e-mails correspondences and reports cannot be treated as evidence for receipt of service.

2.14 The AO/TPO/DRP ought to have appreciated that the amount paid by the Appellant to its AE towards the receipt of Business and Management consultancy services is commensurate with the various services provided by latter.

2.15 Without prejudice to the above, The AO/TPO/DRP having accepted the margins to be at arm's length under TNMM ought not to have separately benchmarked payment of Business and Management consultancy fees.

2.16 The AO/TPO/DRP erred in questioning the commercial expediency of the Appellant with respect to the nature of services to be availed from the AEs, which is beyond the jurisdiction of the TPO.

B. Upward adjustment towards Interest income from outstanding receivables

2.17 The directions of the Dispute Resolution Panel (DRP)-2, and the consequential final assessment order is erroneous in so far as determining and quantifying an upward adjustment to the value of international transaction relating to interest on outstanding receivables.

2.18 The AO/TPO/DRP erred in facts and in law by holding the delay in realization of receivables from AEs as an international transaction ignoring the fact that the same is not explicitly recognized as an international transaction in terms of section 928 of the Act.

2.19 The AO/DRP failed to take cognizance of the guidance note issued by The Institute of Chartered Accountants of India (ICAI) on Report under Section 92E of the Income-tax Act, 1961 (Transfer Pricing) in respect of the disclosure of the international transactions in the

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Accountant's Report in Form No. 3CEB, wherein it specifically emphasizes to avoid duplication by reporting advances and debts of any principal transaction.

2.20 The AO / TPO / DRP erred in equating the outstanding receivables on account of business operations as financing/ funding without appreciating that the Explanation inserted by Finance Act 2012 refers to direct loans or advances given for capital financing

2.21 The AO/TPO/DRP failed to take cognizance of the General Instructions for preparation of

Balance Sheet under Schedule III to the companies Act, 2013, which clearly distinguishes the

definition of "Trade Receivables" and "loans and advances" and as such both the transactions. cannot be treated equally.

2.22 The AO/ TPO/ DRP arbitrarily restructured legitimate business transaction of the Appellant thereby disregarding the principle laid down by OECD guidelines which states that tax administrations should not disregard the actual transactions or substitute other transactions.

2.23 The AO/TPO/DRP erred in facts and circumstances of the case and in law by re-characterizing the transaction of outstanding receivables as loans advanced to the AEs and charging notional interest on the same.

2.24 The AO/ΤΡΟ/DRP ought to have appreciated that the Appellant has not charged any interest on outstanding receivables from third parties (i.e., non-AE's) which itself serves as a benchmark and the transaction is at arm's length.

2.25 The AO/TPO/DRP failed to appreciate that the AE has not charged interest on belated trade payables to the Appellant and as such charging interest on trade receivables from AE is unwarranted and unsustainable.

2.26 The AO/TPO/DRP erred in holding average credit period of 30 days as industry average without any basis.

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2.27 The AO/TPO/DRP erred in not providing any cogent reasons for adopting LIBOR plus 350 BPS for computing notional interest on outstanding receivables.

2.28 Without prejudice to the above, the AO/TPO/DRP erred in law and on the facts in adding a spread of 350 BPS on the LIBOR rates as against using the average LIBOR rates itself for computing notional interest on outstanding receivables.

2.29 The AO/ DRP erred in in law and on facts in enhancing the TP adjustment in relation to outstanding receivables by adding a spread of 100 basis points over and above the LIBOR plus 350 basis points which was adopted by the TPO.

2.30 The AO/ TPO/DRP failed to take cognizance of the specific relief provided by Reserve Bank of India in relation to timelines within which the export proceeds ought to be repatriated.

Corporate Tax Grounds: 3.

A. Addition under section 69 of the Act as unexplained assets

3.1 The AO/DRP erred in concluding the difference of INR 1,06,098 relating to additions to the block of assets, as disclosed in the financial statements and the tax audit report, as unexplained investment under section 69 of the Act, without duly considering the supporting invoices and explanations furnished in proper light.

3.2 The AO/DRP has failed to consider that the impugned software decapitalization of INR 1,06,098 was disclosed as net additions in financials and deletions in the tax audit report, and that there is no difference in the 40% plant and machinery block considered while computing the depreciation under section 32 of the Act. The Assessee wishes to submit that all the above grounds are without prejudice to each other.

The appellant craves to add, alter, amend, substitute, rescind, modify and/or withdraw in any manner whatsoever all or any of the foregoing grounds at or before the hearing of appeal.”

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appropriate methods and determined the arm’s length value as ‘nil’ stating that services received are stewardship in nature. The TPO also held that e-mail correspondence cannot be treated as evidence for receipt of services and assessee has failed to provide substantial evidence for receipt of such services. Apart from the above TP adjustment proposed, the TPO also considered outstanding receivables as international transaction and benchmarked the same by adopting LIBOR + 350 BPS after giving credit period of 30 days and attributed interest on the same. The assessee in its TP study had not considered the outstanding receivables as separate international transaction.

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upheld the action of the TPO in treating the business and management consultancy services received by the assessee as stewardship activities and undertaking separate benchmarking of the transaction under the Other method. Further, the DRP enhanced the benchmark rate for interest on outstanding receivables from LIBOR + 350 BPS to LIBOR + 450 BPS. The DRP also confirmed the addition made u/s.69 of the Act for Rs.1,06,098/-. Consequently, the objections raised by the assessee were rejected and the adjustments proposed by the AO in the Draft Assessment Order were sustained. Pursuant to the directions issued by the DRP u/s.144C(5) of the Act, the AO passed the impugned Final Assessment Order u/s. 143(3) r.w.s.144C(13) of the Act.

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Business and Management Consultancy Fee (Ground Nos.2.1 to 2.16) 7. The Ld. AR submitted that the assessee had availed business and management consultancy services from its AE amounting to ₹26.45 crores during the year. These services comprised International Business Development, Global Marketing, Global Legal and Compliance, and Technology-related Strategic Services, which were closely linked to the assessee’s business operations and contributed to its revenue growth and profitability. The Ld. AR contended that the impugned services were integrated with the assessee’s overall business activities and therefore ought to be aggregated with other international transactions and benchmarked under TNMM. It was submitted that the TPO/DRP had rejected the aggregation approach without assigning any cogent reasons. The assessee had also furnished documentary evidence, including e-mail correspondences and supporting records, to establish the need for, receipt of, and benefit derived from the services.

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Coordinate Bench of the Tribunal in favour of the assessee by directing aggregation of the management consultancy services under TNMM. Pursuant thereto, the TPO, while giving effect to the Tribunal’s order, deleted the entire adjustment. Reliance was also placed on the decisions of the Chennai Bench of the Tribunal in Doowon Automotive Systems India Private Limited in IT(TP)A No.88/CHNY/2024 and Siemens Gamesa Renewable Power Private Limited vs. DCIT in ITA No.1420 & 376/Mds/2017 wherein it was held that once the transactions are benchmarked under TNMM and the margins are at arm’s length, no separate adjustment for individual service payments is warranted. Accordingly, the Ld. AR prayed that the payment towards business and management consultancy services be aggregated and benchmarked under TNMM and the transfer pricing adjustment made by the TPO be deleted.

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Chennai Bench of the Tribunal in the assessee’s own case for Assessment Year 2021-22 in IT(TP)A No.120/Chny/2024 vide order dated 31.12.2025. The Coordinate Bench, after examining the nature of management consultancy services, the benchmarking adopted by the assessee under TNMM, and the judicial precedents on the subject, held that the payment towards business and management consultancy services, being closely linked with the assessee’s business operations, ought to be aggregated with other international transactions and benchmarked under TNMM. The Tribunal further held that if the assessee’s margin is found to be at arm’s length under TNMM, no separate transfer pricing adjustment in respect of such services would be warranted. The relevant findings of the Tribunal are reproduced hereunder: “6. We have considered the rival submissions in light of the materials on record. It is noted that the Assessee is fully dependent on its Associated Enterprise (AE) for business management and consultancy services, for which a fee is payable. Neither the Learned TPO nor the Learned DRP has questioned the Assessee’s reliance on its AE for international business development, marketing, legal, and technology- related services. Additionally, the Assessee has submitted substantial additional evidence before us to further substantiate the receipt of management services. In the interest of justice and fairness, we remit this issue to the file of the TPO to examine the additional evidence, seek further details if necessary, and benchmark the transaction based on the methodology outlined by us below. The TPO shall provide the

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Assessee with adequate opportunity to submit the required details or documents.

6.4 Regarding the methodology for benchmarking the management charges, it is noted that the Assessee has aggregated this transaction and benchmarked it under TNMM. The Ld. AR strongly contended that payments for business and management consultancy services are closely linked to the Assessee’s business operations and therefore cannot be segregated and benchmarked independently. To support this view, the Ld.AR relied on the jurisdictional decision in M/s. Doowon Automotive Systems India Private Limited vs DCIT [IT(TP)A No. 88/Chny/2024], which held as follows: “24.0 We have noted that the facts of the present case are akin to those available in judicial precedence discussed herein above and no distinguishment of facts was pointed out by the Revenue. Accordingly, in respectful compliance to the same, we direct the Assessing Officer to aggregate technical fee payments and benchmark the same under Transactional Net Margin Method (TNMM) after allowing customs duty adjustment, working capital adjustment and treating miscellaneous expenses as operating in nature for the assessee and the comparable companies. In case the assessee’s margin is at arm’s length then there would be no requirement to make separate adjustment for technical fee payments. With these specific directions we remit this issue to the Ld.TPO to redetermine the arm’s length price as per our observations herein above. Accordingly, all the grounds of appeal nos.2.32 to 2.39 are allowed for statistical purposes.”

6.5 We also note the jurisdictional decision relied upon by the Ld. AR in M/s. Siemens Gamesa Renewable Power Private Limited vs DCIT [ITA No. 1420 & 376/Mds/2017], where a co-ordinate bench has held as follows: “20.5. We have heard both the parties and perused the material on record. In our considered opinion, transaction to transaction approach is not required if the PLI of the Assessee at entity segment level is at arm’s length where the Assessee company has adopted TNMM for the purpose of benchmarking. Its adoption of CUP solely for the purpose of evaluating technical assistance fee would lead to chaos and be detrimental to the interests of both

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revenue and the Assessee. In other words, once the arm’s length criterion is tested at entity level, the learned TPO has no jurisdiction to examine the need, benefit etc. in relation to each transaction”

6.6 We note that the facts of the present case are similar to those considered in the judicial precedents discussed above, and the Revenue has not pointed out any distinguishing facts. In accordance with these precedents, we direct the TPO to aggregate the payments for business and management consultancy services and benchmark them under the Transactional Net Margin Method (TNMM). If the Assessee’s margin is found to be at arm’s length, no separate adjustment for payments towards business and management consultancy services will be necessary. In view of these directions, we remit this issue to the Learned TPO to redetermine the arm’s length price in line with our observations. Consequently, all grounds of appeal Nos. 2.1 to 2.6 are allowed for statistical purposes.”

Interest on outstanding receivables (Ground Nos.2.17 to 2.30) 12. The Ld. AR submitted that the adjustment made towards interest on outstanding receivables is unsustainable in law. It was

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contended that outstanding receivables cannot be treated as a separate international transaction independent of the principal transaction of rendering services. Once the primary international transaction has been benchmarked and accepted to be at arm's length under TNMM, the receivables arising therefrom get subsumed within such transaction and no separate benchmarking is warranted. The Ld. AR further submitted that the TPO erred in adopting LIBOR plus 450 basis points on an adhoc basis for computing notional interest without assigning any valid rationale or basis for such adoption. The Ld. AR pointed out that an identical issue had arisen in the assessee's own case for Assessment Year 2021-22, wherein the Hon'ble Tribunal directed the AO to compute interest on outstanding receivables from AEs by adopting the average LIBOR as the basis for imputation of interest. Accordingly, relying on the decision of the Coordinate Bench in the assessee's own case, the Ld. AR prayed that the adjustment be deleted or, alternatively, the matter be restored to the Assessing Officer/TPO with a direction to recompute the interest, if any, by adopting average LIBOR in accordance with the Tribunal's directions.

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7.1 The Ld. AR for the Assessee submitted that this issue covered by various decisions of ITAT Chennai benches wherein it has been held that outstanding receivables is an international transaction, however when it comes to benchmarking, this Tribunal has held that Average LIBOR was to be adopted as the appropriate rate for benchmarking the delayed

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receivables. Relying upon the same, the Ld. AR pleaded that Average LIBOR may be adopted for imputing interest.

7.2 Per contra, the Ld. DR strongly supported the orders and directions of the lower authorities.

7.3 We have heard the rival contentions, perused the material available on record, gone through the orders of lower authorities and case laws relied upon. We find that an identical issue has already been adjudicated by the co-ordinate bench in the case of M/s. Acqueon Technologies Pvt Ltd vs DCIT, [IT(TP)A Nos: 34 & 115/Chny/2024] wherein this Tribunal has directed the AO to recompute interest by adopting Average LIBOR as the basis. The relevant findings of the Tribunal are reproduced below:

“26. The first issue that came up for our consideration from ground no. 2 to 11 of this appeal is recharacterization of outstanding trade receivables as separate international transactions. Since this issue has already been adjudicated in ITA No.34/CHY/2024(supra) for AY 2020-21, by following the same, we direct the Assessing officer to recompute interest by adopting Average LIBOR as the basis for imputing interest on outstanding Trade Receivables.”

7.4 In view of the above and following the decisions of co-ordinate benches of this Tribunal, we direct the Assessing Officer to compute interest on outstanding receivables from the Associated Enterprises (AEs) by using the average LIBOR as the basis for imputation. Consequently, the grounds of appeal Nos.3.1 to 3.2 raised by the Assessee are allowed.”

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from AEs by adopting the average LIBOR as the basis for determining the arm's length rate of interest. Accordingly, the grounds raised by the assessee on this issue are allowed for statistical purposes.

Corporate Tax (Ground Nos.3.1 & 3.2) 16. The Ld. AR submitted that the assessee had made additions to the Plant and Machinery – 40% block (computers and software) aggregating to Rs.1,43,78,873 during FY 2021-22, which were duly disclosed in the Tax Audit Report and supported by invoices and documentary evidence furnished before the AO. It was explained that the alleged difference of Rs.1,06,098 pertained to software expenditure that was subsequently decapitalized during the year. The amount was disclosed as a deletion in the Tax Audit Report and accordingly reduced from the software additions reflected in the financial statements. Thus, the difference arose only on account of reconciliation of figures and did not represent any unexplained investment. The Ld. AR, therefore submitted that there was no discrepancy between the Tax Audit Report and the financial statements and that the addition of Rs.1,06,098 made u/s. 69 of the Act was factually incorrect and liable to be deleted.

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= Disclosed as 'net additions' under software in the financial statements (INR 1,33,92,465-INR 1,06,098).

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the reconciliation furnished by the assessee has not been examined either by the AO or by the DRP. Therefore, in the interest of justice, we deem it appropriate to restore this issue to the file of the AO for fresh examination of the reconciliation and supporting evidences furnished by the assessee and to decide the issue in accordance with law after providing adequate opportunity of being heard to the assessee. Accordingly, this ground is allowed for statistical purposes.

Order pronounced in the open court on 29th June, 2026 at Chennai.

Sd/- Sd/- (एस.आर. रघुनाथा) (जॉज� जॉज� के) (S.R. RAGHUNATHA) (GEORGE GEORGE K) उपा�य� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai, �दनांक/Dated, the 29th June, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Chennai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.07.02 09:49:00 +05'30'