HEIDELBERG INDIA PRIVATE LIMITED,KANCHIPURAM vs. THE ASSESSING OFFICER CORPORATE CIRCLE 1(1), CHENAI

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ITTPA 130/CHNY/2024Status: DisposedITAT Chennai04 June 2026AY 2021-2228 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the Assessee's single-year margin of -1.63% for AY 2021-22, when compared to the comparable companies' single-year average margin of -23.9%, meets the ALP, considering the impact of COVID-19 and relying on the decision in Brakes India Pvt. Ltd. v. DCIT. Regarding management charges, the Tribunal held that the TPO was incorrect in determining ALP at Nil without independent benchmarking and that these charges, being intrinsically linked to the Assessee's core business, cannot be segregated for independent benchmarking. Following precedents like Magneti Marelli Powertrain India Pvt. Ltd. v. DCIT and Haworth India Pvt Ltd v. DCIT, the Tribunal directed the deletion of the addition made in respect of management charges. The appeal was partly allowed for statistical purposes.

What were the facts?

Heidelberg India Pvt. Ltd. (the Assessee) is engaged in marketing and distribution of graphic arts machinery and provides after-sales services. For Assessment Year 2021-22, the Assessee declared a total income of Rs. 2,96,37,789/-. The case was selected for scrutiny, and due to international transactions with Associate Enterprises (AEs), the Assessing Officer (AO) referred the matter to the Transfer Pricing Officer (TPO). The TPO proposed a TP adjustment of Rs. 4,05,32,639/- towards management charges and a downward adjustment of Rs. 1,20,22,317/- on a protective basis for margins. The Assessee filed objections before the Dispute Resolution Panel (DRP), which upheld the TPO's order. The AO passed a final assessment order incorporating these adjustments, leading to the present appeal before the ITAT.

What were the issues?

1. Whether the Tribunal had to decide if the Assessee's single-year margin of -1.63% for AY 2021-22, impacted by COVID-19, meets the Arm's Length Price (ALP) when compared to the comparable companies' single-year average margin of -23.9%, as argued by the Assessee, relying on Brakes India Pvt. Ltd. v. DCIT. The Revenue did not record specific arguments on this issue. 2. Whether the Tribunal had to decide if the TPO was correct in disallowing management charges by determining ALP at Nil without independent benchmarking, as argued by the Assessee, relying on AMEC Foster Wheeler India (P.) Ltd. v. DCIT and other precedents. The Revenue did not record specific arguments on this issue. 3. Whether the Tribunal had to decide if management charges, being inextricably linked to the Assessee's core business, could be segregated for independent benchmarking, as argued by the Assessee, relying on Magneti Marelli Powertrain India Pvt. Ltd. v. DCIT and Haworth India Pvt Ltd v. DCIT. The Revenue did not record specific arguments on this issue.

Which sections of the Income-tax Act were involved?

Section 144C(13),Section 144B,Section 143(1),Section 10B(2),Section 10B(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI MANU KUMAR GIRI & SHRI S. R. RAGHUNATHA

Hearing: 30.03.2026Pronounced: 04.06.2026

आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीय प्रनतननधि/DR 5. गाडा फाईल/GF

DEVADAS Digitally signed by DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.06.08 16:19:28 +05'30'

:-28-: IT(TP)A No:130/Chny/2024.

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