MOLVIZADAH SONS INDIA PRIVATE LIMITED,NEW DELHI vs. DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME-TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE

PER ANUBHAV SHARMA, JM:

This appeal and stay application is preferred by the assessee against the

order of the Ld. Assessing Officer dated 17.12.2025 (hereinafter referred to

as the Ld. AO, for short) u/s 143(3) r.w.s144C(13) read with section 144B of

the Income Tax Act, 1961 with the direction of Dispute Resolution Panel-1

dated 26.11.2025 u/s 144C(5) of the Income Tax Act, 1961 for AY: 2022-23.

Private Limited ( in short 'MZS India' or "Appellant') was incorporated in

India on September 13, 2017, as a wholly owned subsidiary of Molvizadah

Sons Pte. Ltd. ('MZS Pte.?'). The Appellant is engaged in trading of Spices,

Oil Seeds, Seeds, Dry Fruits and Confectionery ingredients to its AEs and

third-party customers.

3.1 During the period under consideration, the Appellant sold spices and

dry fruits to its Associated Enterprises (AEs') namely Molvizadah Sons

General Trading LLC ('MZS LL') amounting to INR 1,225,699,926.

P a g e | 3 ITA No.2/Del/2026 & SA No. 7/del/2026 Molvizadah Sons India Pvt. ltd. (AY: 2022-23) 3.2 The Appellant has also exported similar goods to its third-party

customers. As per the case of assessee, under the said business transactions

with both AE and non-AE, the Appellant performs the similar business

functions. Accordingly, a direct comparison had been drawn by comparing

the net cost plus mark-up ('NCPM') earned by it from its AEs transactions

versus transactions with third party customers and it was concluded that the

Appellant's international transactions with its AEs with segment margin of

.38% is consistent with the arm's length standard from an Indian TP

perspective, as margin of non-AE is .38%.

3.3 The Ld. TPO disregarded the segmental approach and applied external

TNMM. Resultantly, a transfer pricing adjustment of INR 35,505,900 was

made in the order u/s 92CA(3) of the Act.Aggrieved with the proposed

adjustment, the Appellant filed its objections before Ld. DRP. While the Ld.

DRP principally upheld the Ld. AO / Ld. TPO's application of external

TNMM, the following two reliefs were allowed in favour of the Appellant by

the DRP:

P a g e | 4 ITA No.2/Del/2026 & SA No. 7/del/2026 Molvizadah Sons India Pvt. ltd. (AY: 2022-23) a) Working capital adjustment on account of difference in the working

capital position between the Appellant and the external Comparable

used, and

b) Inclusion of two external comparable selected by the Appellant

namely (i)DL Tanumal Private Limited and (ii)Premier Pulses Limited.

3.4 Pursuant to the directions of DRP, the Ld. TPO passed an order giving

effect dated 8 December 2025 wherein the proposed adjustment was reduced

to IN 28,588,330. While passing this effect order, Ld. TPO, allowed the

working capital adjustment as directed by the DRP. However, as regards the

2nd relief, Ld. TO summarily rejected the inclusion of the two selected

comparables stating that "no reliable and complete financial data of DL

Tanumal Pvt. Ltd. and Premier Pulses Ltd. is available in the public domain

to enable application of the prescribed filters or to determine their functional

comparability as mandated under Rule 10B. In absence of availability of

financials and requisite segmental information, these companies fail the

basic test of data availability and therefore cannot be included in the final

comparable set."

P a g e | 5 ITA No.2/Del/2026 & SA No. 7/del/2026 Molvizadah Sons India Pvt. ltd. (AY: 2022-23) 4. Aggrieved by the above order, the Appellant is now in appeal and ld.

Counsel has drawn our attention to Ground 5.1 to 5.3 and Ground No. 6, by

which assessee alleges incorrect rejection of Internal TNMM analysis and

resorting to external TNMM and at the outset, the Appellant’s Counsel

submits that it has undertaken similar transactions with AE and Non-AE

wherein the FAR profile is comparable. Thus, the Appellant applied internal

TNMM to justify the arm's length nature of its international related party

transactions in accordance with Rule 10B and Rule 10C of the Income Tax

Rules and our attention was drawn to the fact that in immediately preceding

assessment year (i.e., AY 2021-22), a co-ordinate bench in the case of the

Appellant vide ITA No. 5297/Del/2024, on similar facts and circumstances,

has held that the action of Ld. TO with respect to reject the segment results is

not correct. The relevant extracts of the order of is reproduced as under:

"Further, the assessee has rightly relied upon the order of the Coordinate Bench of the Madras Tribunal in the case of Honeywell Electrical Devices & Systems India Ltd., wherein, it has been held that filing of audited segments is not necessary, if the accounts are audited and the figures mentioned therein are not disturbed by the TPO. Respectfully, following the decision of the Co-ordinate Bench, we are

P a g e | 6 ITA No.2/Del/2026 & SA No. 7/del/2026 Molvizadah Sons India Pvt. ltd. (AY: 2022-23)

of the view that opinion of PO with respect to filing of audited segments results is not correct."

made by ld. TPO is calculating segmental margins as Ld. TPO has

inadvertently considered the sum of non-operating expenses attributable to

the Non-AE export segment as INR 2,354,415 instead of INR 134,068 and

thus submitted that even where the revised segment level profitability as

computed by Ld. TPO is considered, after rectification of mistakes apparent

from record, it shall support the Appellant's argument that it has earned better

margins from its AE segment when compared with its Non-AE

segment.Details of the revised segment level profitability (as computed by

Ld. TPO), the mistakes apparent from record in such computation and the

corrected profitability is summarized as under:

Particulars As per the TP order (refer page no. 121 at pages Corrected Remarks 119 to 138 of the Appeal memo) position as per the Appellant Export AE Export Non-AE Entity Level Export Non- Segment Segment AE Segment (Corrected) (I) (II) (III) (IV) Operating Income (A) 1,225,699,926 269,235,260 1,550,476,004 269,235,260 Total Expenses (B) 1,244,911,519 274,267,902 1,580,540,345 Less: Finance Cost (C) 597,947 131,344 756,386 131,344 Less: Provision for MEIS (D) 1,610,000 - 1,610,000 - Less: Interest on TDS (E) 12,000 2,724 15,686 2,724 Non-operating expenses 2,220,347 2,354,415 2,382,072 134,068 Ld. TPO has (F=C+D+E) inadvertently considered the sum of non- operating

P a g e | 7 ITA No.2/Del/2026 & SA No. 7/del/2026 Molvizadah Sons India Pvt. ltd. (AY: 2022-23)

expenses attributable to the Non-AE export segment as INR 2,354,415 instead of INR 134,068 Operating Expenses (G=B-F) 1,242,691,172 271,913,487 1,578,158,272 274,133,834 Consequential changes due to change in tehamoutn of Non-operating expenses. Operating profit (H= A-G) (16,991,245) (2,678,227) (27,682,268) (4,898,575) NCPM (%) -1.37% -0.98% -1.79% (I+H/G)

(Refer page no. 208 and 209 of the Appeal Memo)

the same that the revised segment level profitability, as computed by

Ld.TPO, after rectification of mistakes apparent from record, supports the

argument that the margins earned by the Appellant from its AE segment i.e.,

(1.37)% is in excess of the margins earned by the Appellant from Non-AE

segments i.e.., (1.79)%.

the subject transaction still meets the arm's length principle as per section

92C of the Act in light of the {+/- 1%} tolerance limit. We find thatthis

contention has been affirmed by the co-ordinate bench in the case of the

Appellant in the immediately preceding assessment year i.e., AY 2021-22,

(supra) and the relevant extracts of the order is produced as under:

P a g e | 8 ITA No.2/Del/2026 & SA No. 7/del/2026 Molvizadah Sons India Pvt. ltd. (AY: 2022-23) "9.......We observe that in this case, the solitary ground on the basis of

which the TPO has discarded the TP study of the assessee is that the

segments filed by the assessee were not audited. The Ld. TPO has

discarded the certificate of the auditor in a summary manner. Further,

we observe that even if, we go by the conclusion of the TPO in arriving

the PLI, then also the same is within the t-1% tolerance limit.

Therefore, we are of the view that no adjustment is called for in this

case and the adjustments made by the TPO are hereby deleted."

Ground No. 6, and allow the appeal of assessee. The adjustments made by ld.

Tax authorities below stands deleted. The stay application accordingly

becomes infructuous and dismissed.

Order pronounced in the open court on 29.04.2026

Sd/- Sd/- (M Balaganesh) (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 29.04.2026 Rohit, Sr. PS

P a g e | 9 ITA No.2/Del/2026 & SA No. 7/del/2026 Molvizadah Sons India Pvt. ltd. (AY: 2022-23) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI