ILJIN AUTOMOTIVE PRIVATE LIMITED,KANCHEEPURAM vs. DCIT CORPORATE CIRCLE 2(2), CHENNAI

आयकर अपीलीय अिधकरण “डी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, CHENNAI माननीय �ी मनोज कुमार अ�वाल ,लेखा सद# एवं माननीय �ी मनु कुमार िग'र, �ाियक सद# के सम(। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI MANU KUMAR GIRI, JM आयकरअपील सं./ IT(TP)A No.53/Chny/2019 (िनधा)रणवष) / Assessment Year: 2015-16) M/s. Iljin Automotive Private Limited DCIT बनाम/ Plot No.B1 & B2, SIPCOT Industrial Park Corporate Circle-2(2), Irungattukottai, Sriperumbudur Chennai. Vs. Kanchipuram-602 105. �थायीलेखासं./जीआइआरसं./PAN/GIR No.AAACI-2641-E (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Sandeep Bagmar (Advocate) - Ld. AR � थ�कीओरसे/Respondent by : Shri A. Sasikumar (CIT) - Ld. DR सुनवाईकीतारीख/Date of Hearing : 19-11-2024 घोषणाकीतारीख /Date of Pronouncement : 03-12-2024 आदेश / O R D E R

Manoj Kumar Aggarwal (Accountant Member)

1.1 Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 is a recalled matter since the appeal was disposed-off by Tribunal vide common order dated 03-08-2022. However, the order has subsequently been recalled in MA Nos.8/Chny/2023 & ors. order dated 03-11-2023. Accordingly, the appeal has come up for fresh hearing before the bench. This appeal arises out of final assessment order dated 13-05-2019 passed by Ld. Assessing Officer (AO) u/s 143(3) r.w.s.144C(13) of the Act pursuant to the directions of Ld. Dispute Resolution Panel-2,

Bengaluru (DRP) u/s 144C(5) dated 29-03-2019. Since the assessee carried out certain international transactions with its Associated Enterprises (AE), the same were referred to Ld. DCIT (TPO)-2(2), Chennai (TPO) for determination of Arm’s Length Price (ALP). The Ld. TPO passed an order u/s 92CA (3) on 26-10-2018 proposing certain Transfer Pricing (TP) adjustment. Incorporating the same, a draft assessment order was passed on 22-11-2018 which was subjected to assessee’s objections before Ld. DRP. Pursuant to the directions of Ld. DR, Ld.AO passed final assessment order dated 13-05-2019 which is in further appeal before us. 1.2 The grounds raised by the assessee read as under:- 1. General On the facts and the circumstances of the case, the impugned order passed by the learned Joint Commissioner of Income Tax / Assessing Officer ('AO') is erroneous and contrary to the principles of natural justice and bad in law. 2. Grounds in relation to transfer pricing adjustment The learned Transfer Pricing Officer ('TPO") and the learned AO, under the directions issued by the Hon'ble Dispute Resolution Panel (DRP"): 2.1 Erred in law and on facts in rejecting the Transfer Pricing (TP") Study maintained by the Appellant and undertaking fresh benchmarking search, thereby violating Section 92C(3) of the Income-tax Act, 1961 ('the Act'). 2.2 Erred in law and on facts in arriving at a fresh set of comparable companies, without establishing any cogent reason or basis for selecting the same. Erred in law by selecting the following companies which are functionally not comparable to that of the Appellant - ATS Elgi Ltd. - JBM Auto Systems Pvt.Ltd - Badve Engineering Ltd. - NRB Bearings Ltd. & - Talbros Engineering 2.3 Erred in law and on facts by rejecting the following comparable companies selected by the Appellant in the transfer pricing documentation. - Automotive Stampings and Assemblies Ltd. and - Jamna Auto Industries Ltd. 2.4 Erred in law and on facts in not allowing appropriate economic adjustment in the nature of working capital adjustment to account for functional differences between the Appellant and the comparable companies.

As is evident, the sole issue that fall for our consideration is Transfer Pricing (TP) Adjustment as made by lower authorities while determining the income of the assessee. 1.3 The Ld. AR placed on record ground-wise chart and advanced arguments by referring to the findings of lower authorities. Our attention has been drawn to various documents as placed in concise paper book as filed on 19-11-2024. Reference has also been made to the decision of Tribunal in assessee’s own case in earlier years. The Ld. CIT-DR also advanced arguments and supported the findings of Ld. DRP. Having heard rival submission and upon perusal of case records, our adjudication would be as under. The assessee being resident corporate assessee is stated to be operating assembling plant in Chennai and is a leading assembler of wheel bearings. The assessee is subsidiary of Iljin, Korea. This appeal was heard along with assessee’s similar appeal for AYs 2013-14 & 2014-15 which has separately been disposed-off. 2. Transfer Pricing Adjustment 2.1 The assessee carried out various international transactions with its AEs which include import of raw material, tools, stores and Machineries etc. The assessee was characterized as routine assembler exposed to less than normal risk associated with carrying out such business. The assessee compared its margins with weighted average of comparable companies. The assessee’s PLI (OP/OI) was computed as 3.93%. The Ld. TPO rejected the weighted approach and in independent search from prowess database, identified 9 entities having mean margin of 5.41%. The assessee assailed comparability matrix and also sought various economic adjustments. However, Ld. TPO rejected all the arguments and proposed entity level adjustment of Rs.252.88 Lacs.

2.2 Before Ld. DRP, the assessee, inter-alia, assailed inclusion of 5 entities which was rejected by Ld. DRP primarily on functional similarity. The assessee sought inclusion of M/s Automotive Stamping and Assemblies Ltd. and M/s Jamna Auto Industries which was also rejected. The assessee sought working capital adjustment which was also rejected since the assessee could not substantiate the same. Aggrieved, the assessee is in further appeal before us. 2.3 We have gone through the ground-wise chart as placed by Ld. AR on record. The Ld. AR seeks inclusion of M/s Automotive Stamping Assemblies Ltd. and M/s Jamna Auto Industries Ltd. However, M/s Automotive Stamping Assemblies Ltd. has incurred loss in three consecutive years and therefore, this entity has rightly been rejected. The issue of selection of M/s Jamna Auto Industries Ltd., in AY 2014-15, has been restored back by us to the file of Ld. AO / Ld. TPO with a direction to the assessee to substantiate the inclusion of this entity. Similar directions are issued for this year. 2.4 The Ld. AR seeks exclusion of M/s ATS Elgi Ltd. & M/s JBM Auto Systems Pvt. Ltd. However, in AY 2014-15, we have accepted both the entities. Taking the same view, we upheld the selection of both these entities. The assessee seeks exclusion of M/s Badve Engineering Ltd. However, no plausible facts could be brought on record to justify exclusion of this entity. Therefore, this entity has rightly been accepted. The assessee seeks exclusion of M/s NRB Bearing Ltd. on the ground that this entity offers a high-precision solution for all mobility applications. Further, this entity is into significant R&D and owns intangibles. However, Ld. DRP has held that the expenditure on R&D is merely 1.02% of the turnover. Nothing could be shown that this entity was into

different product line. Considering the same, we uphold the selection of this entity. No functional dissimilarity has been shown in comparable entity M/s Talbros Engineering. No other ground has been urged in the appeal. All the corresponding grounds stands disposed-off accordingly, 3. The appeal stand partly allowed in terms of our above order. Order pronounced on 3rd December, 2024

Sd/- Sd/- (MANU KUMAR GIRI) (MANOJ KUMAR AGGARWAL) �ाियक सद# / JUDICIAL MEMBER लेखा सद# / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated :03-12-2024 DS आदेशकीIितिलिपअ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयु=/CIT, Chennai. 4. िवभागीय�ितिनिध/DR 5. गाडBफाईल/GF