EXPEDITORS INTERNATIONAL (INDIA) PRIVATE LIMITED,NEW DELHI vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1), CR BUILDING, IP ESTATE, NEW DELHI, 110002, INDIA, NEW DELHI

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IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H”, NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER IT (TP)A No. 77/Del/2026, Assessment Year: 2022-23 Expeditors International Vs. Deputy Commissioner of (India) Private Limited Income-tax, Room No. 7B, First Floor Circle 7(1), Import Building No. 3, C.R.Building, International Cargo IP Estate, Terminal, IGI Airport, New Delhi 110002, New Delhi, 110037, India India, New Delhi �थायीलेखासं./जीआइआरसं./PAN/GIR No: AAACE1795K Appellant .. Respondent

Appellant by : Sh. Deepak Chopra, Advocate Sh. Rohan Khare, Advocate Sh. Priyam Bhatnagar, Advocate Respondent by : Shri S.K.Jadhav, CIT(DR)

Date of Hearing 25.05.2026 Date of Pronouncement 29.05.2026 O R D E R PER VIMAL KUMAR, JM: The appeal filed by the assessee is against final assessment order dated 20.01.2026 of the ld. Assessing Officer/Assessment Unit under section

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143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment year (‘AY’) 2022- 23. 2. Brief facts of the case are that the assessee company is engaged in business of provision of global freight forwarding & logistics services, the assessee operates in three segments i.e., airfreight, ocean freight and ocean services, and customs brokerage and import services. The logistics services provided range from packing, loading/unloading, trucking, containerization, customs clearance, and other cargo handling activities besides moving the goods via air/sea. The assessee is engaged in the provision of logistics services in the Indian region. The assessee’s functions comprise the Indian leg of a logistics contract involving the transportation of consignments from the consignee (or Indian port/airport) to the Indian Port (or consignee), while another Expeditors Group member or third-party agent typically handles the other end of the consignment in their respective region.

2.1 The assessee filed Return of Income on 29.11.2022 declaring total income of Rs. 3,38,03,31,950/-. The return was revised by the assessee on

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30.11.2022 declaring total income of Rs. 3,21,77,97,930/-. The revised return was processed by the CPC on 16.03.2023 u/s 143(1)(a) of the Act at an income of Rs. 3,21,77,97,930/- at the returned income. The revised return filed by the assessee was selected for complete scrutiny under CASS. Notice u/s 143(2) of the Act dated 01.06.2023 along with a letter on the same date intimating scrutiny assessment proceedings was issued. Notices u/s 142(1) of the Act dated 27.10.2023, 08.01.2024, 09.02.2024, 06.11.2024, 06.01.2025 and 03.03.2025 were issued. Show cause notice dated 06.03.2025 was issued after that assessee submitted partial details. Ld. AO referred the case to Transfer Pricing Officer who passed order dated 29.01.2025 with TP adjustments u/s 92CA(3) of the Act regarding the International Transaction which reads as under:

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2.2 In view of the order of TPO dated 29.01.2025, the Draft Assessment Order dated 18.03.2025 u/s 144C(1) r.w.s. 143(3) r.w.s. 144B of the Act was issued. The assessee filed objections before Ld. DRP against the draft assessment order. Hon’ble DRP vide order dated 30.12.2025 disposed of the objections of the assessee and issued directions to the TPO vide order dated 16.01.2026 revising TP adjustments. The relevant portion of the TPO order passed after giving effect to the DRP directions in the case is summarized as below:

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2.3 On completion of proceedings, Ld. AO vide order dated 20.01.2026 made

TP adjustment of Rs. 76,86,45,649/-.

grounds:

“1. That on the facts and circumstances of the case and in law, the Ld. AO has erred in assessing the total income of the Appellant at INR 3,98,64,43,579 in pursuance to the directions issued by the DRP, as against the returned income of INR 3,21,77,97,930/-. Transfer Pricing adjustment amounting to INR 67,31,66,177 in respect of the international transactions pertaining to payment of royalty: 2. That on the facts and circumstances of the case and in law, the TPO has erred in making and the AO/DRP have erred in upholding the transfer pricing adjustment of INR 67,31,66,177 in respect of the international transaction pertaining to payment of royalty. 3. That on the facts and circumstances of the case and in law, the AO / DRP/ TPO have erred in disregarding the ALP as determined by the Appellant in the transfer pricing documentation maintained by it in terms of section 92D of the Act and Rule 100 of the Rules on an arbitrary basis without providing any cogent reasoning and have further erred in benchmarking the international transaction of payment of royalty with royalty agreements which are functionally different/ incomparable. 4. That on the facts and circumstances of the case and in law, the AO/TPO/DRP have erred in rejecting the benchmarking analysis and methodology adopted by the Appellant, wherein the aggregated Transactional Net Margin Method ("TNMM") was adopted by the Appellant for benchmarking the international transaction of payment of Royalty and further erred in adopting the Comparable Uncontrolled Price ("CUP") method for benchmarking the transaction. 5. That the TPO/DRP erred in not appreciating that the Payment of Royalty was subsumed in the cost base for the purposes of benchmarking the Logistics

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segment and once the said segment was found at arm's length, a separate adjustment on such account was unwarranted. 6. Without prejudice to the above, the TPO/DRP erred in not appreciating that once TNMM was accepted as the most appropriate method for benchmarking the logistic segment, then, analyzing individual elements of cost i.e. royalty expense was inconsistent with the fundamental tenets of application of the TNMM. 7. That the TPO erred in benchmarking the Royalty payment without appreciating that the said Royalty was paid for various services provided by the AE and it was not appropriate to benchmark such payments against licenses relating to intellectual properties. 8. That the TPO grossly erred in not appreciating that for the purposes of benchmarking "royalty payments" what is of seminal importance is the nature of the right which is transferred. 9. That the TPO grossly erred in not appreciating that the "payment of royalty" was for a bouquet of support services such as sales and marketing, operations support, claims processing and other services availed from its AE and not towards grant of any IPR's or similar rights. 10. That on the facts and circumstances of the case and in law, the AO/TPO/DRP have erred in arbitrarily selecting functionally incomparable companies and not considering functionally comparable companies for the purpose of benchmarking the international transaction pertaining to royalty, without appreciating the functional, asset and risk ("FAR") profile of the Appellant and the submissions furnished during the course of proceedings. 11. That on the facts and circumstances of the case and in law, the AO/TPO/DRP have erred in arbitrarily selecting functionally incomparable companies, namely Goin' Postal Franchise Corp; MW Equity, Inc. d/b/a My Way Mobile Storage; Local Motion International, LLC and Craters & Freighters Franchise Co for the purpose of benchmarking the international transaction pertaining to royalty. 12. That on the facts and circumstances of the case and in law, the AO/TPO/DRP have erred in not following the principle of consistency by ignoring the fact that similar the international transactions pertaining to royalty have been undertaken by the Appellant in earlier years and was

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accepted to be at arm's length with the application of TNMM by this Hon'ble Tribunal. Transfer Pricing adjustment amounting to INR 9,54,79,472 in respect of the international transactions pertaining to Global Accounts Manager ("GAM") expenses. 13. That on the facts and circumstances of the case and in law, the AO/TPO / DRP have erred in making an upward TP adjustment of INR 9,54,79,472 in respect of payment of GAM charges, alleging that the same were not at arm's length and determining the ALP as 'Nil'. 14. That the TPO completely erred in not appreciating that the services provided in respect of the Global Account were on a reciprocal basis and based on actual costs incurred, without there being any mark-up 15. That on the facts and circumstances of the case and in law, the AO/TPO/DRP have erred in not appreciating that the Hon'ble Tribunal, in previous years, had upheld that the subject transaction is in the nature of pure re-imbursements, not liable for any deduction of taxes. 16. That the TPO/DRP erred in not appreciating that the payment of GAM charges was subsumed in the cost base for the purposes of benchmarking the logistics segment and once the said segment was found at arm's length, a separate adjustment on such account was unwarranted. 17. Without prejudice to the above, the TPO/DRP erred in not appreciating that once TNMM was accepted as the most appropriate method for benchmarking the logistic segment, then, analyzing individual elements of cost i.e. GAM charges were inconsistent with the fundamental tenets of application of the TNMM. 18. That the TPO erred in not appreciating that the payment of GAM charges already formed part of the cost-base relating to the Logistic Segment, which had been benchmarked under TNMM and accepted at ALP and hence, a separate adjustment on account of GAM was not warranted. 19 That on the facts and circumstances of the case and in law, the AO/ TPO / DRP have erred in erroneously determining the ALP of the international transaction pertaining to payment of GAM charges as 'Nil' by applying "Other Method", which is not in accordance with the provisions of the Act read with the Rules.

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Grounds of Appeal No. 1 is general in nature, Ground of Appeal

Nos. 2 to 12 are regarding Transfer Pricing Adjustment on account of

payment of royalty and Ground of Appeal Nos. 13 to 23 are

regarding Transfer Pricing Adjustment on account of Global

Accounts Manager (GAM expenses).

“This issue is no longer res-integra and has been decided in favour of the Appellant in its own case for A.Y. 2020-21 (ITA No. 4392/Del/2024) and 2021-22 (ITA No. 5501/Del/2024), wherein, it has been held that once the combined transaction approach had been accepted and cost relating to royalty and GAM, were duly taken into account for the purposes of benchmarking, the TPO’s approach in proceedings to benchmark these transactions separately was unwarranted and no adjustment on this account could be upheld. The findigns of the hon’ble Tribunal would apply mutatis mutandis to the present case in the absence of any change in facts and circumstances in the subject AY (Kindly refer page no. 1755-1773 of the paper book – Vol. IV)  Reliance in this regard is also placed on Hi-Lex India Pvt. Ltd. v. AU, ITD Gurgaon, [Order dated 28.11.2025 in ITA No. 4288/Del/2024] (Delhi Tribunal); Samsung India Electronics (P.) Ltd. v. DCIT, [2025] 127 ITR (T) 543 (Delhi Tribunal) and Magneti Marelli Powertrain India (P) Ltd. vs. DCIT, [2016] 389 ITR 469 (Delhi HC).  Lastly, it would also be relevant to highlight that vide order dated 16.01.2026, the TPO whilst giving effect to the directions of the DRP, has held the logistics services segment of the Appellant to be at arm’s length and deleted the adjustment As initially proposed by the TPO [Please refer page no. 23 of the order dated 16.01.2026 passed by the TPO whilst giving effect to the DRP Directions (Kindly refer page no. 51 of the Appeal Set).]

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combined transaction approach under the Transactional Net Margin Method (“TNMM”). The cost base i.e., the operating cost for benchmarking the logistic segment included costs incurred towards payment of royalty as well as net GAM charges paid by the assessee (page no. 101 Volume 1 of paper book).

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assessee. [refer page no. 92-93 of the TPO order (page no. 288-289 of the Appeal Set)]. Further, the TPO held that no third party would pay anything without services being rendered by the other pary and hence, the ALP of such services was determined at NIL. [refer page no. 92 and 93 of the TPO order (page no. 288-289 of the Appeal Set)].

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[refer page no. 40 of the DRP Directions (page no. 173 of the Appeal

Set)].

and 5501/Del/2024 titled as Expeditors International (India) Private Limited vs. DCIT for Assessment Year 2020-21 and

2021-22 vide order dated 06.03.2026 in Para No. 13 to 17 held as

under:

“13. Ground of appeal Nos.7 to 22 raised by the assessee are with respect to transfer pricing adjustment towards sale of logistic service of INR 58,57,09,000/-, on account of Royalty paid of INR 17,64,25,299/- and towards Global Accounts Manager (“GAM”) expenses of INR 5,80,64,686/-. Before us, Ld.AR for the assessee submits that the assessee has benchmarked its logistics segment by adopting by combined approach under TNMM where the total operating cost includes the expenses incurred towards payment of Royalty as well as GAM charges paid. Ld.AR submits that TPO while determining the ALP of logistics services, had taken the combined approach and not allowed working capital adjustments and further included four new comparables and excluded three comparable selected by the assessee for benchmarking the transactions. Ld.AR submits that besides this, AO/TPO has separately worked out the transfer pricing adjustment on account of Royalty as well as GAM charged paid by using CUP method for Royalty and other method for GAM. Ld.AR submits that DRP though allowed the working capital adjustments however, confirmed the segregation of Royalty payment and GAM charges paid and separate benching for determination for their ALP, however, at the same time has accepted the combined approach taken by the assessee to determine the ALP of logistic services. Ld.AR submits that in the order giving effect, AO/TPO has not given the working capital adjustment and further separately benchmarked worked out the transfer pricing adjustment for Royalty as well as for GAM charges paid. Ld. AR submits that under identical circumstances in the case of Hi-Lex India Pvt.Ltd. vs Assessment Unit vide order dated 28.11.2025 in ITA No.4288/Del/2024 [Assessment Year

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2020-21], the Co-ordinate Bench has held that once the combined approach has been accepted, no further adjustment could be made separately for Royalty paid. He prayed accordingly. 14. On the other hand, ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that Royalty is a separate transaction and therefore should be benchmarked separately. Likewise GAM expenses is also a separate transaction therefore, AO has rightly made segregation of the same and he requested for the confirmation of the approach adopted by AO/TPO. Ld. CIT DR for the Revenue further placed reliance on para 11.5 of the order of ld. DRP wherein ld. DRP has held that Royalty transactions need to be separately benchmarked and further uphold CUP method as against TNMM method applied by the assessee. Therefore, Ld. CIT DR requested for the confirmation of the action of AO/TPO in this regard. 15. Heard the contentions of both the parties at length and perused the material available on record. For the determination of ALP of sale of logistic service, the TPO has accepted the filters applied by the assessee and also the method applied as TNMM as per which OP/OC was computed at 5.93%. The TPO further include three new filters and out of Eleven comparables selected by assessee, accepted total Seven comparables and rejected remaining Four comparables. Besides this, TPO has also included three new comparables and accordingly, final set of Ten comparables was considered and computed the mean margin at 10.75% and proposed the adjustment of INR 8496.927 Lakhs. Thereafter, assessee’s objections were considered by the TPO and finally after including Five more comparables and excluding One comparable, total Fourteen comparables were taken as final set of comparables and worked out OP/OC at 13.96% which has resulted into the adjustment of INR 1,46,37,41,000/-. The said adjustment was rectified by the AO at INR 78,08,28,000/- and after the order of DRP, it is reduced to INR 58,57,09,000/-. It is relevant to state herein that operating cost taken is inclusive of Royalty charges and GAM expenses paid by the assessee. Besides this, the AO/TPO has separately computed the ALP for Royality payment where, as against Royalty paid @ 5% by assessee, the TPO has worked out the ALP @ 3% based on CUP method and adjustment of INR 17,64,25,299/- was made which was confirmed by ld. DRP. Besides this, adjustment with respect to GAM expenses paid was also separately benchmarked and adjustment was made at INR 5,80,64,686/- which was also confirmed by ld. DRP. 16. As observed above, TPO has accepted the combined approach adopted by the assessee for working the ALP of sale of logistics services and further determined the ALP separately for Royalty payment as well as for GAM expenses paid. Once the expenses on account of Royalty & GAM expenses have been included in the total operating cost for working out ALP towards sale of logistics services,

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separate determination of ALP for the cost on account of Royalty and GAM expenses is not permissible. The Co-ordinate Bench of ITAT Delhi in the case of Hi-Lex India P. Ltd. (supra) under identical circumstances by following various judgements of Hon’ble jurisdictional High Court and Co-ordinate Benches of Tribunal has held that such action is not permissible. The relevant observations of Co-ordinate Bench are reproduced as under:- 12. In our considered opinion, once the combined bench marking approach, whose PLI includes payment of royalty is accepted by the TPO to Arm’s Length, a separate adjustment pertaining to the concerned international transaction ought not to be made to income of the Assessee. 13. The Jurisdictional High Court in the case of Magneti Marelli Powertrain India Private Ltd. Vs. DCIT (2016) 75 taxmann.com 213(Delhi) held as under:- “17. As far as the second question is concerned, the TPO accepted TNMM applied by the assessee, as the most appropriate method in respect of all the international transactions including payment of royalty. The TPO. however, disputed application of TNMM as the most appropriate method for the payment of technical assistance fee of Rs. 38,58,80,000 only for which Comparable Uncontrolled Price ("CUP") method was sought to be applied. Here, this court concurs with the assessee that having accepted the TNMM as the most appropriate, it was not open to the TPO to subject only one element, ie payment of technical assistance fee, to an entirely different (CUP) method. The adoption of a method as the most appropriate one assures the applicability of one standard or criteria to judge an international transaction by. Each method is a package in itself, as it were, containing the necessary elements that are to be used as filters to judge the soundness of the international transaction in an ALP fixing exercise. If this were to be disturbed, the end result would be distorted and within one ALP determination for a year, two or even five methods can be adopted. This would spell chaos and be detrimental to the interests of both the assessee and the revenue. The second question is, therefore, answered in favour of the assessee; the TNMM had to be applied by the TPO/AO in respect of the technical fee payment too." 14. The identical ratio has been laid down in plethora of cases relied by the Assessee mentioned as mentioned in previous Para No. 8 of the order. 15. Considering the above facts and circumstances and following the ratio laid down by the Hon'ble High Court of Delhi in the case of Magneti Marelli Power train India Private Limited (supra) and other judicial precedents, we find merit in the Ground No. 1 of the Assessee and accordingly we delete the addition made by the A.O.”

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a fresh decision in accordance with law after affording fair opportunity of hearing to the assessee.

Order pronounced in the open court on 29.05.2026

Sd/- Sd/- (S. RIFAUR RAHMAN) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29.05.2026 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI