SEMPERTRANS INDIA PRIVATE LIMITED,ROHA vs. INCOME-TAX OFFICER, PANVEL

ITA 1778/PUN/2024Status: DisposedITAT Pune14 November 202548 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the intra-group services availed by the assessee did not fall into the category of shareholder/stewardship activities, duplicate services, or incidental benefits. The Tribunal found that the services were essential for the assessee's day-to-day business operations, adopting international standards and meeting export requirements. The Tribunal noted that if the assessee had not received these services from its AE, it would have incurred costs by engaging a third party. Consequently, the Tribunal held that the expenditure was incurred towards intra-group services. However, since the TPO had not examined the ALP adopted by the assessee (based on the TNM method) in light of the prescribed methods, the issue of determining the ALP was restored to the file of the TPO for necessary examination. Grounds of appeal No. 6 to 15 were allowed for statistical purposes. Regarding Ground No. 5, the Tribunal distinguished the case of CLSA India (P) Ltd. vs. DCIT, noting that in the present case, the TPO had not made any calculation of ALP but had observed that no services were received. The Tribunal found no merit in Ground No. 5 and dismissed it. Grounds No. 1, 2, and 3 were not pressed and were dismissed. Grounds No. 18, 19, and 20 concerning set-off of brought forward losses and unabsorbed depreciation were allowed and restored to the AO. Remaining grounds were considered consequential or general and did not require adjudication. The appeal was partly allowed.

What were the facts?

The assessee, Sempertrans India Private Limited, is in appeal against an order dated 27.06.2024 passed by the Assessing Officer (AO) under section 144 r.w.s. 260 r.w.s. 144B of the Income Tax Act, 1961, for Assessment Year 2020-21. The dispute primarily concerns an addition of INR 5,66,05,177 made to the assessee's income concerning payments to its Associated Enterprises (AEs) for intra-group services. The AO, following directions from the Dispute Resolution Panel (DRP), determined the Arm's Length Price (ALP) of these services as 'NIL'. The assessee had claimed these expenses as legitimate business expenditures. Procedurally, certain grounds were not pressed, and others related to set-off of brought forward losses and unabsorbed depreciation were restored to the AO.

What were the issues?

1. Whether the DRP erred in issuing directions in violation of section 144C(8) by directing the AO to make an additional disallowance under section 37(1), rendering the final assessment order bad in law? The assessee argued that the DRP's directions were contrary to the law and should be quashed. The revenue did not present arguments on this specific point as recorded in the judgment. 2. Whether the AO erred in not passing the final assessment order as per the DRP's directions under section 144C(13), making the assessment order void? The assessee contended that the AO's failure to adhere to the DRP's mandate rendered the assessment invalid. The revenue did not present arguments on this specific point as recorded in the judgment. 3. Whether the final assessment order was issued beyond the time limit prescribed under section 153, making it time-barred? The assessee argued that the assessment order was time-barred. The revenue did not present arguments on this specific point as recorded in the judgment. 4. Whether the DRP erred in confirming the AO/TPO's action, ignoring that there was no intention by the assessee to shift profits outside India? The assessee argued that there was no profit shifting intent. The revenue did not present arguments on this specific point as recorded in the judgment. 5. Whether the DRP erred in upholding the TPO's action of inappropriately applying the 'Other Method' and failing to bring on record comparable data as mandated by section 92C read with Rules 10B and 10C? The assessee contended that the TPO's method was inappropriate and lacked comparable data. The revenue did not present arguments on this specific point as recorded in the judgment. 6. Whether the addition of INR 5,66,05,177 for intra-group services was justified, and whether the TPO/AO erred in determining the ALP of these services as 'NIL' by disregarding the assessee's benchmarking approach under section 92D read with Rule 10D? The assessee argued that the services were legitimate business expenses, the ALP determination was flawed, and the need-benefit-evidence test was met. The revenue did not present arguments on this specific point as recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 144,Section 260,Section 144B,Section 144C(8),Section 37(1),Section 144C(13),Section 153,Section 92C,Section 10B,Section 10C,Section 92D,Section 10D,Section 92CA,Section 274,Section 270A,Section 143(3),Section 234A,Section 234B,Section 234C

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Income Tax Appellate Tribunal, PUNE BENCHES “C”, PUNE

Before: DR.MANISH BORAD & MS. ASTHA CHANDRA

For Appellant: Shri Ajit Jain, Shri Siddhesh Chaugule
For Respondent: Shri Prakash L. Pathade
Hearing: 08.09.2025Pronounced: 14.11.2025

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeal at the instance of assessee pertaining to Assessment Year 2020-21 is directed against the order dated 27.06.2024 passed by Ld. Assessing Officer u/s.144 r.w.s.260 r.w.s.144B of the Income Tax Act, 1961. 2. Assessee has raised following legal as well as Factual grounds of appeal : “Legal Grounds:

1.

On the facts and circumstances of the case and in law, the Hon'ble DRP has erred in issuing directions in violation to provisions of section 144C(8), read with the explanation thereto, by directing the AO to make additional disallowance under section 37(1). Accordingly, the directions of the H

The order continues below.

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