CLARITRICS INDIA PRIVATE LIMITED,CHENNAI vs. DCIT CORPORATE CIRCLE 1(1), CHENNAI

ITTPA 84/CHNY/2024Status: DisposedITAT Chennai04 August 2025AY 2021-225 pages
AI SummaryRemanded

What were the facts?

The assessee, M/s. Claritrics India Private Limited, filed its return of income for Assessment Year 2021-22 declaring a total income of ₹.1,78,580/-. The case was selected for scrutiny due to large international transactions. A reference was made to the Transfer Pricing Officer (TPO) to determine the arm's length price (ALP) of international transactions. The TPO issued a notice under section 92D(3) for TP study report, to which the assessee responded on 03.09.2023. The assessee adopted the 'other method' as the Most Appropriate Method (MAM) and considered its AE, ClariTrics Inc., as the tested party. The TPO rejected the assessee's TP study due to non-availability of financials of the tested party and comparables in the public domain. The TPO conducted an independent search using the Transactional Net Margin Method (TNMM) and determined the ALP, proposing an upward adjustment of ₹.2,00,48,645/-. The assessee challenged the TPO's rejection of its study and the subsequent order, citing violation of principles of natural justice.

What did the Tribunal hold?

The Tribunal noted that the assessee had uploaded its response to the notice dated 06.10.2023 on 13.10.2023. However, the TPO concluded its order under section 92CA(3) on 13.10.2023 itself. Consequently, the TPO did not have an opportunity to consider the assessee's submissions in response to the notice dated 06.10.2023. Therefore, the Tribunal held that the matter should be remanded to the file of the TPO. The TPO is directed to rework the Arm's Length Price (ALP) of the international transactions after considering the submissions made by the assessee vide its response dated 13.10.2023. The appeal was allowed for statistical purposes.

What were the issues?

1. Whether the Transfer Pricing Officer (TPO) erred in rejecting the assessee's Transfer Pricing Study (TPS) report on the ground of non-availability of financial statements of the tested party and comparable companies in the public domain, thereby violating the principles of natural justice? (Question of law and fact, concerning Section 92CA of the Income Tax Act, 1961). Assessee's contentions: The assessee argued that the TPO rejected its TPS without sound reasoning and failed to consider its objections on the selection of fresh comparables. The assessee contended that the TPO passed the order without referring to its response filed on 13.10.2023, which constituted a defiance of the principles of natural justice. The assessee sought a remand of the matter to the TPO for a reasonable opportunity to present its case. Revenue's contentions: The Revenue, through the learned Departmental Representative (DR), fairly conceded that the matter may be remanded to the TPO to consider the company details regarding their operations as submitted on 13.10.2023.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 92B(2),Section 92CA(1),Section 92D(3),Section 271G,Section 92CA(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI MANU KUMAR GIRI

Per Manu Kumar Giri, JM: This appeal by the Assessee is arising out of the order of the Deputy Commissioner of Income Tax, Corporate Circle (1), Chennai passed u/s.143(3) r.w.s. 144C(13) r.w.s 144B of the Income Tax Act, 1961 (in short ‘’the Act’) vide order dated 13.09.2024 for assessment year 2021-2022. 2. Facts of the case are that the Assessee filed its ret

The order continues below.

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