AGFA HEALTHCARE INDIA PRIVATE LIMITED ,THANE, INDIA vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, THANE, THANE

ITA 3938/MUM/2024Status: DisposedITAT Mumbai25 September 2026AY 2020-2111 pages
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What were the facts?

The assessee, Agfa Healthcare India Private Limited, is appealing against an order passed by the Assessing Officer (AO) under section 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961, for Assessment Year 2020-21. The dispute centers around a transfer pricing adjustment of INR 2,13,98,282/- made by the Transfer Pricing Officer (TPO) on international transactions with associated enterprises. The assessee used TNMM as the Most Appropriate Method (MAM) and calculated its net profit margin at 4.11%. The TPO, however, identified comparable companies with a margin range of 4.19% to 5.85% (median 4.67%), deeming the assessee's margin to be lower. The assessee's objections to the TPO's comparable selection and margin computation were rejected by the TPO and subsequently by the Dispute Resolution Panel (DRP). The AO sustained the adjustment, leading to the present appeal.

What did the Tribunal hold?

The Tribunal allowed Ground No. 9 and 10, finding that the assessee's margin of 4.11% falls within the range of working capital adjusted margins (3.08% to 5.81%) of the comparable companies, with a median of 4.55%, after the TPO confirmed the assessee's computation of weighted average margins from annual reports and verified the working capital adjusted margins. Consequently, no transfer pricing adjustment is called for. Grounds 3-8 were rendered academic and dismissed. Regarding the disallowance of INR 11,51,940/- under Section 37(1), the matter was remitted to the AO to verify the assessee's claim of double disallowance of interest on income-tax. If found to be a suo-moto disallowance made by the assessee, the further disallowance is to be deleted. This ground was allowed for statistical purposes. For the addition of INR 3,64,042/- under Section 36(1)(va), the matter was remitted to the AO for examination in light of the Supreme Court decision in Checkmate Services (P) Ltd., concerning the due date of deposit under PF statute versus the due date for filing the return. This ground was also allowed for statistical purposes. Ground No. 14 was infructuous as credit was allowed. Ground No. 1 was dismissed as academic. Grounds 15-17 were not adjudicated as they related to consequential interest and penalty. The appeal was partly allowed for statistical purposes.

What were the issues?

1. Whether the TPO ought to have computed the three-year weighted average margin of the comparables selected by the TPO from their respective annual reports, as per Section 92C and Rule 10B of the Income Tax Act, 1961. The assessee argued that its margin of 4.11% falls within the arm's length range when computed using the three-year weighted average from annual reports (3.88% to 5.86%, median 5.16%). The assessee contended that the TPO failed to provide workings for its margin computation and rejected the assessee's comparable companies. The revenue did not record any specific arguments on this issue, but the TPO's initial position was that the assessee's margin was below the arm's length range. 2. Whether the assessee is entitled to a working capital adjustment to account for differences between the assessee and comparable companies, as per Rule 10B(1)(e)(iii) r/w Section 92CA. The assessee argued for this adjustment, which was rejected by the DRP. The revenue did not record any specific arguments on this issue. 3. Whether a disallowance of INR 11,51,940/- under Section 37(1) of the Act, representing interest on income-tax, is sustainable when it was already disallowed under Section 40(a)(ii) and incorporated in the intimation under Section 143(1). The assessee contended this amounts to double disallowance. The revenue did not record any specific arguments. 4. Whether an addition of INR 3,64,042/- under Section 36(1)(va) for delayed deposit of employees' contribution to provident fund is sustainable when the deposit was made before the due date for filing the return of income. The assessee relied on the Supreme Court decision in Checkmate Services (P) Ltd. The revenue did not record any specific arguments.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 92C,Section 92CA,Section 37(1),Section 40(a)(ii),Section 143(1),Section 36(1)(va),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “K” BENCH; MUMBAI

Before: SHRI VIKRAM SINGH YADAV & SHRI SIDDHARTHA NAUTIYAL

Hearing: 30.07.2026Pronounced: 25.09.2026

PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the Assessee against the order of the Assessing Officer passed u/s. 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 [‘the Act’], vide order dated 10.06.2024, pertaining to Assessment Year (AY) 2020-21. 2. Briefly, the facts of the case are that the assessee is a company engaged in the business of trading of healthcare and imaging products.

During the year under consideration, the Assessee purchased healthcare imaging equipment and related consumables (inc

The order continues below.

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