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Facts
The assessee filed an appeal against the assessment order. The assessee later opted to settle the dispute under the Direct Tax Vivad Se Vishwas Scheme, 2024 and sought to withdraw the appeal.
Held
The Tribunal noted that the assessee had opted for the Direct Tax Vivad Se Vishwas Scheme and consequently sought to withdraw the appeal. Therefore, the appeal was dismissed as withdrawn.
Key Issues
Whether the appeal should be dismissed as withdrawn due to the assessee opting for the Vivad Se Vishwas Scheme.
Sections Cited
143(3), 144C(13), 143(3A), 143(3B), 92CA(3), 92CA(3A), 153, 92C, 37(1), 115-O, 271(1)(c), 115P
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Before: SHRI ANIKESH BANERJEE & SMT. RENU JAUHRI, ACCOU
आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the DCIT, Mumbai National e-Assessment Centre, Delhi passed u/s. 143(3) r.w.s. 144C(13) r.w.s. 143(3A) & 143(3B) of the Income Tax Act, [hereinafter referred to as “Act”] on 26.03.2021 for Assessment Year 2016-17.
The assessee has raised the following grounds in these appeals.
“Based on the facts and circumstances of the case, Dow Chemical International Private Limited (as successor of Dow Corning India Private Limited) (hereinafter referred to as 'the Appellant' or 'DCIPL') respectfully craves to prefer an appeal against the assessment order issued by the National e-Assessment Centre, Delhi (hereinafter referred to as the 'AO") under section 143(3) read with section 144C(13) in pursuance of directions of the Dispute Resolution Panel-1 (hereinafter referred to as the 'Hon'ble DRP') and order of Assistant Commissioner of Income-tax, Transfer Pricing-1(2) (2), Mumbai (hereinafter referred to as the "learned TPO') on the following grounds , each of which are without prejudice to one another: On the facts and in the circumstances of the case and in law, the learned AO/ learned TPO/the Hon'ble DRP have: GENERAL
1. Erred in determining the Appellant's total income at Rs. 29,67,65,620/- as against the income of Rs. 25,39,34,970/- disclosed in the return filed.
2. Erred in passing the transfer pricing assessment order under section 92CA(3) of the Act on 1 November 2019, which was barred by limitation, thereby rendering the transfer pricing order as null and void as per the provisions of section 92CA(3A) read with section 153 of the Act.
3. Erred in continuing assessment proceedings and passing the final assessment order in the name of a non-existent/ amalgamating entity i.e. Dow Corning India Private Limited instead of Dow Chemical International Private Limited (as successor of Dow Corning India Private Limited), thus rendering the entire proceedings null and void, liable to be quashed. TRANSFER PRICING GROUNDS International Transaction - Export of finished goods to associated enterprises ('AEs') General
4. Erred in making an adjustment of INR 1,01,60,644 to the total income of the Appellant under section 92CA(3) of the Act on account of adjustment in the arm's length price of the international transaction of export of finished goods to AEs. Rejection of the economic analysis undertaken by the Appellant
5. Erred in rejecting the economic analysis undertaken by the Appellant using Transactional Net Margin Method (TNMM), which was in accordance with the provisions of the Act read with the Indian Income-tax Rules, 1962 (the Rules'), for the determination of arm's length price of the international transaction of export of finished goods, without providing any cogent reasons for the same. Inappropriate application of Comparable Uncontrolled Price ('CUP") method to benchmark the international transaction
6. Erred in considering CUP method as the most appropriate method for determination of arm's length price without appreciating that there are differences that exist on account of function, assets and risk ('FAR') between finished products sold to AEs vis-à-vis finished products sold locally to third parties.
7 Erred in not appreciating the fact that the price at which finished goods were sold to AEs are affected by various factors such as market conditions, functions performed, risks assumed, geographical considerations, business reasons for sale of products etc. which in the present case cannot be reasonably quantified and hence CUP method cannot be applied.
Erred in not considering 15% volume discount for computation of adjustment, though the same was granted by the Ld. TPO in the TPO Order. International Transaction: Availing of information technology services from AEs General 9. Erred in making an adjustment of INR 3,26,70,003 to the total income of the Appellant under Section 92CA(3) of the Act on account of adjustment in the arm's length price of the international transaction of payment for information technology services to AE Rejection of economic analysis undertaken by the Appellant 10. Erred in not accepting the economic analysis undertaken by the Appellant including the analysis using cost allocation methodology, which was in accordance with the provisions of the Act read with the Rules, for determination of arm's length price.
Erred in not appreciating the fact that since the operating margin earned by the assessee from its business operations is at arm's length (based on net level margin analysis using TNMM) payment made for availing of IT services utilized in respect of business activities also meets the arm's length test. Inappropriate application of CUP method to benchmark international transaction 12. Erred in not using any of the six methods prescribed under section 92C to benchmark the international transaction of payment for availing of services.
Erred in first stating that cost of goods/services in the hands of the seller / service provider cannot be the basis for determining the arm's length price and thereafter himself computing a hypothetical man hour rate based on the estimated salary of the employee rendering the services for computation of arm's length price.
Without prejudice to the above, erred in computing the arm's length price by applying some ad-hoc man hour rate to some ad-hoc number of man hours (so called CUP) which is not in accordance with the transfer pricing regulations prescribed in India.
Erred in not appreciating that one of the basic conditions for applying CUP is availability of the price of the same service in uncontrolled condition and it cannot be hypothetical or imaginary value but real value on which similar transactions have taken place. Benefit test/ commercial expediency for availing services 16 Failed to appreciate the business model and business realities of the Appellant and the role of its AE and concluding that very little services have been received or no benefits have been availed by the Appellant.
Erred in not appreciating the evidences submitted to substantiate services received benefits derived/ basis of allocation of costs and disregarded the same without giving any cogent reasons. Ignored evidences submitted for service availed and benefits derived 18. Erred in not considering the external accountant certificate alongwith detailed cost allocation sheet submitted by the Appellant which demonstrates that cost has been allocated using appropriate allocation keys and that the transaction is at arm's length. CORPORATE TAX GROUNDS Credit for Dividend Distribution Tax (DDT) 19. erred in not granting credit for DDT of Rs 7,10,84,832 paid by the assessee. Interest under section 115P 20. erred in charging interest of Rs 3,76,74,961 under section 115P of the Act. Claim for Education cess 21. The assessee prays that the Assessing Officer be directed to allow deduction under section 37(1) of the Act in respect of education cess paid during the year on income- tax and DDT Taxation of DDT 22. erred in not appreciating that dividend paid/ distributed to non-resident shareholder namely Dow Corning Enterprise LLC (a tax resident of USA), is liable to be taxed under Article 10 of India - USA DTAA (i.e. at the rate of 15%) and not as per section 115-0 of the Act at 20.56%. LEVY OF PENALTY 23. Erred in initiating penalty proceedings under section 271(1)(c) of the Act. The above grounds of appeal
are independent and without prejudice to each other. The Appellant craves leave to add, alter, vary, omit, substitute of amend the above grounds of appeal, at any time before or at the time of hearing of the appeal, so as to enable the Honorable Members to decide this appeal according to law.”
3. The assessee has subsequently taken the following additional ground: “Each of the grounds given below are independent and without prejudice to the other grounds of appeal preferred by the Appellant.
24. Without prejudice to the Appellant's grounds of appeal
, the assessment order dated
25. March 2021 is time-barred as assessment order under section 143(3) of the Act was required to be passed by 31. December 2019. The Appellant craves for leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.”
At the outset, Ld. AR submitted that the assessee has opted to settle the dispute under the Direct Tax Vivad Se Vishwas Scheme, 2024 (DTVSVS). Vide letter dated 19.03.2025, the assessee has placed on record, a copy of the Form 2 dated 07.03.2025 received from the Designated Authority determining the tax liability. The assessee, therefore, seeks to withdraw the present appeal.
In view of the above facts, the appeal is dismissed as withdrawn.