AZURE POWER MARS PRIVATE LIMITED,HARYANA vs. DEL-C, CIRCLE 1(1), INCOME TAX OFFICER, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’: NEW DELHI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER IT(TP)A No.19/Del/2025 (ASSESSMENT YEAR: 2021-22) Azure Power Mars Private Income-tax Officer, Limited, DEL-C, Circle-1(1), D-II, 5th Floor Southern Park, v. C R Building Saket Place, New Delhi-110017. New Delhi-110002. PAN-AANCA1425H (Appellant) (Respondent) Assessee by Shri Ravi Sharma, Adv. and Ms. Supriya Mehta, CA Department by Shri S.K. Jadhav, CIT-DR Date of Hearing 28.04.2026 Date of Pronouncement 04.05.2026 ORDER PER RAMIT KOCHAR, AM: This appeal in IT(TP)A 19/Del/2025 for Assessment Year: 2021-22 has arisen from the learned CIT(A)’s appellate order dated 17.09.2025 passed u/s 250 of the Income-tax Act, 1961 (hereinafter called “the Act”) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1080810137(1), which in turn has arisen from the assessment order dated 15.12.2023 passed by the learned Assessing Officer, Assessment Unit, Income Tax Department u/s 143(3) r.w.s 144C(3) r.w.s.144B of the 1961 Act in DIN: ITBA/AST/S/143(3)/2023-24/1058810504(1). Brief facts of the case are that the assessee filed return of income on 25th February, 2. 2022, showing total income at Rs.1,16,69,960/-. The assessee’s case was selected by Revenue for framing scrutiny assessment under CASS. During the course of assessment proceedings, statutory notices were issued by the AO to the assessee from time to time

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u/s 143(2) and 142(1) of the Act, as are recorded in the assessment order. The assessee company is a Private Limited Company domiciled in India and is a part of Azure Power Group. The company’s primary business includes generation of solar energy for its solar power project , and it has set up power plants which it continues to own, operate and manage. The AO made reference u/s 92CA(1) to TPO for computing ALP of the international transactions entered into by the assessee. The TPO passed an order dated 06.10.2023 u/s 92CA(3) making downward adjustment to ALP to the tune of Rs. 45,02,177/- towards excess interest paid by the assessee to its AE. The AO passed draft assessment order dated 26.10.2023 u/s 144C(1) r.w.s. 143(3) r.w.s. 144B of the 1961 Act, wherein aforesaid TP additions by way of downward adjustment to ALP of international transactions entered into by the assessee with its AE to the tune of Rs. 45,02,177 towards excess interest paid by the assessee to its AE, was proposed by the AO . The assessee did not intimated AO about its decision to file objections with ld. DRP within the statutory time limit of 30 days of the receipt of the draft order, as is required by Section 144C(2) of the 1961 Act. The AO passed assessment order dated 15.12.2023 u/s 143(3) r.w.s 144C(3) r.w.s 144B of the 1961 Act , where in total income of the assessee was computed at Rs.1,61,72,138/- as against the returned income of Rs.1,16,69,960/- filed by the assessee, wherein addition was made by the AO by way of downward adjustment to ALP to the tune of Rs.45,02,177/- towards excess interest paid by the assessee to its AE , as was proposed by ld. TPO and in the draft assessment order. The assessee instead chose to file first appeal with ld. CIT(A).

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Further, external CUP using PLR + 300 bps is less preferable to the internal CUP using the own AE's interest rate. Further, in this case, since the USD loan is being transferred as INR loan. PLR cannot be a standard for benchmarking. Any benchmarking should be in reference to the currency of the original loan, which is USD. Therefore, PLR, which is for loans in INR, cannot be used as a benchmarking standard in this case Calculation of Adjustment: Interest on NCDs Amount of Facility (Rs) 23,60,00,000 ALP interest Rate 8.23% ALP interest (Rs) 1,94,22,800 Interest paid (Rs) 2,39,24,977 Excess interest paid (Rs) 45,02,177 Therefore, a total adjustment of Rs.45,02,177/- was proposed u/s 92CA(3) of the Income Tax Act. The transfer pricing adjustment of Rs.45,02,177/- is confirmed. The appeal filed by the assessee is dismissed.”

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reproduced hereunder. The copy of said notification is filed by the assessee and is placed on record in file.

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It was prayed by ld. Counsel for the assessee that the appellate order dated 17th September, 2025 passed by ld. CIT(A) be set aside, and matter can be restored back to the file of ld. CIT(A) for denovo adjudication of the appeal of the assessee. It was also submitted by ld. Counsel for the assessee that the Tribunal in ITA No.4802 & 4814/Del/2024 for Assessment Year 2017-18 and 2018-19 in the case of Panasonic Life Solutions India Private Limited v. DCIT under similar circumstances has restored the matter back to the file of the Ld. CIT(A) for fresh decision in accordance with law. Thus, it was prayed that the matter can be restored back to the file of the Ld. CIT(A) for denovo adjudication of the appeal of the assessee in accordance with notification dated 13.10.2022 issued by CBDT. 4.2. Ld. CIT-DR relied upon orders of the authorities below , but also fairly concurred that the matter can be restored back to the file of Ld. CIT(A) for denovo adjudication of the appeal of the assessee 5. We have considered rival submissions and perused the materials available on record. Facts in brief and contentions of both the rival parties are enumerated by us in the preceding para’s of this order , and are not repeated. We have observed that the ld. CIT(A) passed an ex-parte appellate order .As it appears from the contentions and records, the replies filed by the assessee were not considered by the ld. CIT(A) while passing ex-parte order. It is a cryptic order passed by ld. CIT(A). It is observed that the ld. CIT(A) issued only one notice on 13.08.2025 , and appellate order was passed on 17th September, 2025. There is clearly breach of principles of natural justice. Further as per notification issued by CBDT, the ld. CIT(A) , Delhi-44 was duly authorized to take up and adjudicate appeals arising from Transfer Pricing Order passed by TPO-1, Delhi, but in the instant case , the ld. CIT(A) , NFAC, Delhi passed the order, which is not in accordance with the notification dated 13th October, 2022 issued by CBDT. Further, both the parties are ad-idem that the matter can be restored back to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law , in accordance with the instructions/notification issued by CBDT. Thus, Considering the facts and circumstances

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of the case , materials placed on record, keeping in view the decision of the ITAT in the case of Panasonic Life Solutions India Private Limited (supra) and in the interest of justice, we are setting aside the appellate order dated 17th September, 2025 passed by ld. CIT(A) and restore the matter back to the file of ld. CIT(A) for fresh adjudication on merits in accordance with law , after giving proper opportunity of being heard in accordance with principles of natural justice. The appeal of the assessee is allowed for statistical purposes. We order accordingly.

Order is pronounced in the Open Court on 04 .05. 2026.

Sd/- Sd/- -/- (ANUBHAV SHARMA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANTMEMBER Dated: 04.05.2026 *PK, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELH