SRF LIMITED,DELHI vs. ASSISTANT / DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 10(1), NEW DELHI, DELHI

Date of Hearing : 15.10.2025 Date of Order : 12.12.2025 O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :

(AY : 2017-18) 1. This appeal is filed by the assessee against the assessment order dated 29.04.2022, passed by the ACIT, Circle 10 (1), Delhi under section 143(3) r.w.s. 260 of the Income-tax Act, 1961 (for short ‘the Act”) for Assessment Years 2017-18 pursuant to the directions of the Dispute Resolution Panel u/s 144C(5) of the Act.

2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. “General Grounds: 1.0 That the Learned Assessing Officer (‘Ld. AO’) has erred in law and on the facts & circumstances of the assessee’s case by passing the final assessment order u/s 143(3) r.w.s. 260 of the Act dated 29th April, 2022 pursuant to the directions of the Learned Dispute Resolution Panel (‘Ld. DRP’) dated 09th February, 2022 making transfer pricing adjustments / additions of Rs. 56,31,05,314/- arising out of the order of the Ld. Transfer Pricing Officer (‘TPO’) u/s 92CA(3) of the Act and additions / disallowances of Rs. 2,20,99,54,363/- on account of various non-transfer pricing issues. 2.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not entertaining or granting the additional claim / allowance amounting to Rs. 54,15,119/- made by the assessee during the course of assessment proceedings and again before the Ld. DRP, on account of gratuity actually paid during the year inadvertently left to be claimed by the assessee while filing / revising its return of income. 3.0 That the Ld. DRP and consequently the Ld. AO have erred in completely ignoring the claim for enhanced deduction u/s 80-IA of the Act raised by the assessee by re-determining the arm’s length price of steam transferred by CPP unit at Bhiwadi, Rajasthan to Rs. 82,19,37,824/- [instead of Rs. 25,71,07,345/-] and at Dahej, Gujarat to Rs. 1,42,57,52,588/- [instead of Rs. 55,15,74,973/-] based on the certificates of the Chartered Engineer in accordance with the directions of the Hon’ble DRP in the assessee’s own case for the A.Y. 2016-17. 4.0 That the final assessment order passed u/s 143(3) r.w.s. 260 of the Act dated 29th April, 2022 is bad in law.

Common Grounds of Appeal in respect of the final assessment Order passed by the Ld. AO u/s 143(3) r.w.s. 260 of the Act dated 29th April, 2022 Final Assessment Order passed by the Ld. AO is Null & Void 5.0 That the final assessment order passed by the Ld. AO u/s 143(3) r.w.s. 260 of the Act dated 29th April, 2022 pursuant to the directions given by the Ld. DRP dated 9th February, 2022 is null & void and is liable to be quashed being passed in gross violation to the statutory provisions of the Act on the following accounts: that the final assessment order of the Ld. AO dated 29th April, 2022 is i. passed beyond the statutory time limit as specified u/s 144C(13) of the Act (viz. 30 days from the end of the month in which directions of the Ld. DRP is received by the Ld. AO) and therefore, the final assessment order passed by the Ld. AO is time barred and therefore liable to be quashed. ii. that the final assessment order of the Ld. AO is passed u/s 143(3) r.w.s 260 of the Act instead of the correct provisions viz. 143(3) r.w.s. 144C(13)/92CA(3) of the Act. Therefore, there is a non-curable defect in the final assessment order passed by the Ld. AO and hence, the same is liable to be quashed. 6.0 The Hon’ble ITAT may be pleased to quash the final assessment order passed by the Ld. AO u/s 143(3) r.w.s. 260 of the Act dated 29th April, 2022 as the same is passed by violating the statutory provisions of the Act. Grounds of Appeal in respect of incorrect computation of total income and consequently the incorrect demand of tax and interest thereon [Mistake apparent from records] 7.0 Without prejudice to the grounds challenging the adjustments / additions / disallowances made by the Ld. TPO / Ld. AO as upheld by the Ld. DRP, the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in computing the incorrect assessed total income and again in wrongly computing the demand of Rs. 1,19,57,051/- u/s 156 of the Act which is laced with the following mistakes apparent from records and which are on wholly unjust, illegal, erroneous and untenable grounds: that the Ld. AO has erred in disallowing the entire amount of deduction amounting to Rs.54,91,48,703/- [Rs. 17,29,14,326/- in respect of its CPP Unit at Bhiwadi & Rs.37,62,34,377/-in respect of CPP at Dahej] claimed by the assessee u/s 80-IA of the Act, ignoring that an amount of Rs. 42,40,28,739/- has already been added through transfer pricing adjustment in accordance with the directions of the Ld. DRP in respect of same units [as contested by assessee vide ground no. 36 to 41] and thus inadvertently making excess/double disallowance to the extent of Rs. 54,91,48,703/-; i. that of the remaining deduction under Chapter-VIA available to the assessee, the ld. AO has erred in granting the deduction to the Rs. 25,02,27,500/- only instead of the correct remaining deduction amounting to Rs. 28,81,77,500/-; ii. that the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in not granting or allowing the benefit of the MAT Credit available to the assessee to extent of Rs. 1,87,77,71,841/- (as per return of income of A.Y 2017-18) u/s 115AA of the Act; iii. that the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case by considering the total income as per intimation u/s 143(1) of the Act amounting to Rs. 72,57,95,230/- instead of considering the correct total income as per the revised income tax return dated 29th March, 2019 filed by the assessee amounting to Rs. 72,55,90,860/-. 8.0 It is prayed before the Hon’ble Tribunal to direct the Ld. AO to compute the correct total income after rectifying the aforesaid mistakes apparent from records and consequently to delete the demand inadvertently raised u/s 156 of the Act amounting to Rs. 1,19,57,051/- and grant the refund along with the interest.

GROUNDS OF APPEAL - TRANSFER PRICING ADJUSTMENTS INTERNATIONAL TRANSACTIONS – ADJUSTMENTS OF RS.2,50,60,929/- I. Provision of Management Support Services (MSS) – Adjustment of Rs. 34,41,669/- 9.0 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an adjustment of Rs. 34,41,669/- in respect of international transaction of provision of management support services amounting to Rs. 3,90,89,223/-. 10.0 That the Ld. TPO/Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not providing any cogent reason for rejection of assessee’s search process, which is bad in law. 11.0 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on the facts & circumstance of the assessee’s case in arbitrarily rejecting some of assessee’s comparables without providing any cogent reason. 12.0 That the Ld. TPO and consequently the Ld. AO have erred in law and on the facts & circumstance of the assessee’s case in not appreciating Ld. DRP in assessee’s case for the AY 2016-17, no adjustment is warranted on the aforesaid transaction as the assessee’s PLI of the MSS segment @ 15.28% is higher than the comparable’s PLI (Keystone) @ 5.74%. 13.0 Without prejudice, that the Ld. DRP has erred in law and facts and circumstances of the case by simply directing the ld. TPO/AO to follow its directions on selection / rejection of comparables in assessee’s case for AY 2016-17 without appreciating that this year involves 3 new companies which have not been examined by the ld. DRP in earlier year. 14.0 That the Ld. TPO/ Ld. AO have further erred in blindly accepting the abovementioned three companies as comparables, ignoring the assessee’s submissions that said three companies are completely different from the assessee’s profile both in the terms of nature of activities and the functions performed and such action is against the tenet of comparability under Rule 10B(2) of the Rules. 15.0 That the Ld. DRP and consequently Ld. TPO/ Ld. AO have erred in law and on the facts & circumstance of the assessee’s case in arriving at arm’s length mark-up @ 25.43% against assessee’s mark-up @ 15.28% on cost and thus making the adjustment for the difference. 16.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete such adjustment of Rs. 34,41,669/- in respect of international transaction of provision of management support services. II. Allocation of Software Cost to AE’s – Adjustment of Rs. 12,20,172/- 17.0 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an adjustment of Rs. 12,20,172/- in respect of international transaction of allocation of software cost amounting to Rs. 1,31,76,800/- to AE’s by imputing a mark-up @ 9.26% over and above the pure software cost allocation. 18.0 Without prejudice, the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in applying the search process / comparables and their PLI’s solely based on directions given by the Ld. DRP in the assessee’s case for the A.Y. 2016-17 which in turn are based on the ld. DRP directions of A.Y. 2014-15, and thus completely ignoring that such comparables are manufacturing companies and applying their margins for benchmarking the transaction of pure cost allocation is highly unjustified.

19.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not appreciating and completely ignoring that assessee has recovered the software allocation cost along with finance charges @ 8.99% which should have been accepted as ALP mark-up having regard to the nature of transaction. 20.0 That the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in holding that not charging of mark-up is not reflective of arm’s length behavior of the transaction and thus failing to appreciate that the assessee while performing its role of a parent company of the group incurs various costs for and behalf of its group entities/AE’s at group HO level (which are charged to group entities without any mark-up), as incurring such cost (such as software implementation, license etc.) at individual entity level may not be commercially and economically feasible. 21.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete aforesaid adjustment of Rs. 12,20,172/- in respect of allocation of software cost to AE’s. III. Reimbursement / recovery of expenses from AE’s - Adjustment of Rs. NIL/- 22.0 Without prejudice to the fact that no adjustment has been made to the transaction of reimbursement/recovery of expenses, the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law treating the abovementioned transaction as intra-group services and applying mark-up @ 9.26% based on the search process. 23.0 That without prejudice, the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in not appreciating that said transactions are pure reimbursement of business expenditure such as travelling, boarding, lodging, conveyance, IT expenses etc. undertaken by both the assessee and the AEs under reciprocal arrangements on cost-to-cost basis. 24.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the case by not following the binding precedent of the Hon’ble ITAT, Delhi on the identical issue in assessee’s own case for the AY 2014-15 (ITA No. 6220/Del/2018), wherein the Hon’ble Tribunal has accepted the assessee’s methodology / benchmarking the same transaction on cost-to-cost basis. 25.0 The Hon’ble ITAT may be pleased to treat the above transactions in the nature of pure reimbursement and not in the nature of intra-group services and thus warranting no mark-up over and above cost.

IV. Corporate Guarantee Fee from AE’s - Adjustment of Rs. 2,03,99,088/- 26.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an upward adjustment of Rs. 2,03,99,088/- by imputing the arm’s length corporate guarantee fee rate @ 0.50% instead of @ 0.25% charged by assessee from its AEs [wholly owned subsidiaries] based on the specific quotations obtained from HDFC Bank and Yes Bank, which constituted the valid comparable data in assessee's specific case under the ‘Other Method’. 27.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have exceeded their jurisdiction in making a transfer pricing adjustment for the extension of corporate guarantees which do not involve incurring any cost and therefore, are out of the ambit of international transactions u/s 92B of the Act and therefore, not subject to re-determination under Chapter-X of the Act. 28.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not considering that the AE’s have furnished back-to-back counter guarantees of equivalent amounts on similar terms to the assessee and therefore assessee is completely indemnified against any risk of default on the part of its AE’s. 29.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not appreciating the fact that corporate guarantees have been extended by the assessee, being the parent company on behalf of its wholly owned subsidiaries, as a matter of business prudence and to protect its own commercial interest. The assessee does not incur any cost by extending such corporate guarantee to its AEs nor assumes any risk as entire capital / assets of its AEs are held directly or indirectly by the assessee. 30.0 That the Ld. DRP / Ld. TPO / Ld. AO have erred not following the binding judicial precedents rendered on the issue including the favourable orders of Hon’ble Jurisdictional ITAT in assessee’s own case for A.Y. 2010-11, A.Y. 2012-13 and A.Y. 2014-15. 31.0 The Hon’ble ITAT may be pleased to hold that: - i. the act of giving corporate guarantee by the assessee on behalf of the AE’s is not an international transaction and, therefore, not amenable to any adjustment under Chapter X of the Act; ii. no adjustment is required as AE has provided back-to-back counter guarantees of equal amounts on similar terms and hence no adjustment / addition is required; iii. no adjustment is required as @ 0.25% charged by the assessee as corporate guarantee fee from its AE’s [wholly owned subsidiaries] is at arm’s length and thus upward adjustment of Rs. 2,03,99,088/- be directed to be deleted; iv. the transactions of corporate guarantee fee, benchmarked by the assessee using ‘Other Method’ as most appropriate method based on specific quotations obtained from HDFC Bank and Yes Bank are at arm’s length; v. no adjustment is required as corporate guarantee fee charged by the assessee @ 0.25% has also been accepted at arm’s length by Hon’ble Jurisdictional ITAT in assessee’s own case for A.Y. 2010- 11, A.Y. 2012-13 and A.Y. 2014-15. GROUNDS OF APPEAL - TRANSFER PRICING ADJUSTMENTS SPECIFIED DOMESTIC TRANSACTIONS – ADJUSTMENTS OF Rs.53,80,44,385/- V. Inter-unit Transfer - Technical Textile Business, Kashipur (TTBK) Division – Adjustment of Rs. 8,095/- 32.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making transfer pricing adjustment of Rs. 8,095/- in respect of inter-unit transactions amounting to Rs. 3,14,970/- pertaining to ‘Technical Textile Business’ (TTB) Segment of the assessee. 33.0 That the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in law and on facts and circumstances of the case, in rejecting, without any cogent reason, the assessee’s most appropriate method being ‘CUP Method’ which is a direct price based method and instead applying the ‘TNMM’ in an arbitrary manner, not providing FAR analysis and search process to assessee and resultantly taking companies which are product wise and functionally incomparable to the assessee’s TTBK unit. 34.0 Without prejudice to the above, the Ld. TPO and consequently the Ld. AO have erred in making the adjustment, as the PLI of assessee’s TTBK unit (eligible unit)as computed by the Ld. TPO himself @ 8.97% is still lower than the assessee’s TTB Segmental Margin of @ 14% and thus warranting no adjustment even under TNMM made by the Ld. TPO.

35.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete such adjustment of Rs. 8,095/- in respect of inter-unit transactions pertaining to TTB Segment. VI. Transfer of Electricity by Captive Power Plant (CPP) unit at Bhiwadi, Rajasthan and at Dahej, Gujarat – Adjustment of Rs. 15,57,92,582/- in Bhiwadi Plant and Rs. 26,82,36,157/- in Dahej Plant - Total Adjustment of Rs. 42,40,28,739/- 36.0 That the Ld. TPO and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the transfer pricing adjustment of Rs. 15,57,92,582/-& Rs. 26,82,36,157/- in respect of transaction of transfer of electricity by the CPP units at Bhiwadi & Dahej respectively by using an external price data in form of Indian Energy Exchange (IEX) rates [@ Rs. 2.58 per unit for Bhiwadi and @ Rs. 2.29 per unit for Dahej] for the purpose of benchmarking in addition to the assessee’s comparable uncontrolled price data [@ Rs. 10.39 per unit for Bhiwadi and @ Rs. 7.50 per unit for Dahej] (in form of actual purchase of electricity from respective state electricity boards (SEB)). 37.0 That the Ld. TPO and consequently the Ld. AO have erred in law and on facts and circumstances of the case in averaging the data of two different systems viz. assessee’s comparable data and IEX spot rates and erroneously treating such average rate as ALP for the purpose of making the aforesaid adjustment in respect of transfer of electricity by CPPs. 38.0 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on facts and in circumstances of the assessee’s case in treating the rates of power traded on IEX u/s 133(6) of the Act, as comparable uncontrolled rates/prices. IEX Transactions are not at all comparable with the assessee’s transactions of power on account of following factors: - i. the modus operandi and business model of IEX which is a spot energy exchange is not comparable to the assessee’s case. ii. the rates obtained from IEX u/s 133(6) do not qualify as an appropriate comparable data for the application of CUP method. iii. there are material differences between the terms and conditions of transaction entered into by the assessee and those taken from IEX. 39.0 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on the facts & circumstances of the assessee’s case rejecting the assessee’s reliable internal CUP data in form of actual transactions of purchase of electricity from the SEBs and instead applying the CUP method by taking the average rates of average price being traded at IEX & rate at which power was purchased from respective state electricity boards. 40.0 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in using the IEX rates as obtained u/s 133(6) of the Act without appreciating that such IEX rates are only basic rates and various other charges viz. fixed charges, POC charges, RPO Charges, distribution charges, NDLC Charges, load charges, electricity duty, cesses etc. have not been factored in while benchmarking the transactions. 41.0 The Hon’ble ITAT may be please to delete the transfer pricing adjustment of Rs. 15,57,92,582/- & Rs.26,82,36,157/- in respect of transaction of transfer of electricity by the CPP units at Bhiwadi & Dahej respectively. VII. Sale of Electricity by Wind Power Mill (WPP) unit at Tamil Nadu – Adjustment of Rs. 11,40,07,551/- 42.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the transfer pricing adjustment of Rs. 11,40,07,551/- in respect of specified domestic transaction of transfer or sale of electricity @ 6.35 per unit by the assessee’s WPP unit at Tamil Nadu on wholly unjust, illegal, erroneous, superficial, frivolous, arbitrary and untenable grounds and is prayed to be deleted before your honour. 43.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in rejecting the assessee’s reliable internal CUP data in form of actual purchase of electricity and instead taking the general tariff rates @ 2.5192 per unit obtained by ld. TPO u/s 133(6) of the Act from TNERC1 while benchmarking the transaction of sale of electricity by WPP unit of the assessee. 44.0 Without prejudice, that the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in taking the tariff rates obtained from TNERC without appreciating that such tariff rates may at most be the basic rate and various other charges viz. fixed charges, electricity duty, cesses etc. have not been factored in while considering such rate for benchmarking purposes. 45.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO/ Ld. TPO to delete the above adjustment of Rs. 11,40,07,551/- in respect of WPP unit of the assessee. VIII. Enhanced claims of deduction made during the course of proceedings before the Ld. DRP Claim w.r.t Captive Power Plant (“CPP”) Unit at Bhiwadi, Rajasthan 46.0 That the Ld. DRP and consequently the Ld. AO have erred in not entertaining the claim of enhanced deduction u/s 80-IA of the Act raised by the assessee by re-determining the arm’s length price of steam transferred by CPP unit at Bhiwadi, Rajasthan to Rs.82,19,37,824/- [instead of Rs. 25,71,07,345/-] which is computed by multiplying the equivalent quantity of such steam in terms of unit of electricity (KwH) as certified by the Chartered Engineer with the ALP rate of electricity in accordance with the directions of the Hon’ble DRP in the assessee’s own case for the A.Y. 2016-17. 47.0 That the Hon’ble ITAT may be pleased to direct the Ld. TPO/ Ld. AO to re-determine the profitability of CPP unit at Bhiwadi, Rajasthan giving the consequential effect of above ground and therefore allow the enhanced deduction u/s 80-IA of the Act by Rs. 56,48,30,479/- in respect to said unit. Claim w.r.t. Captive Power Plant (“CPP”) Unit at Dahej, Gujarat 48.0 That the Ld. DRP and consequently the Ld. AO have erred in not entertaining the claim of enhanced deduction u/s 80-IA of the Act raised by the assessee by re-determining the arm’s length price of steam transferred by CPP unit at Dahej, Gujarat to Rs. 1,42,57,52,588/- [instead of Rs. 55,15,74,973/-] which is computed by multiplying the equivalent quantity of such steam in terms of unit of electricity (KwH) as certified by the Chartered Engineer with the ALP rate of electricity in accordance with the directions of the Hon’ble DRP in the assessee’s own case for the A.Y. 2016-17. 49.0 That the Hon’ble ITAT may be pleased to direct the Ld. TPO/ Ld. AO to re-determine the profitability of CPP unit at Dahej, Gujarat giving the consequential effect of above ground and therefore allow the enhanced deduction u/s 80-IA of the Act by Rs. 87,41,77,615/- in respect to said unit. GROUNDS OF APPEAL - CORPORATE TAX ISSUES – DISALLOWANCE OF Rs. 2,20,99,54,363/- IX. Disallowance of Weighted Deduction u/s 35(2AB) of the Act amounting to Rs. 1,64,72,14,000/- in respect of In-House Research and Development Units 50.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case by disallowing the entire claim of weighted deduction u/s 35(2AB) of the Act in respect of in-house scientific research facility to the extent of Rs.1,64,72,14,000/- solely on account of not receipt of approval of allowable revenue & capital expenditure in Form No. 3CL viz. report to be submitted by the prescribed authority i.e. DSIR to the Director General (Income-tax Exemptions). 51.0 That the Ld. DRP and consequently the Ld. AO has erred in law in making the aforesaid disallowance by ignoring that assessee has duly complied with all applicable provisions of section 35(2AB) r.w.r. 6(7A) as attributable to the assessee i.e. Recognition/renewal of all R&D units from DSIR, from filing of Form No. 3CK before DSIR [on 12.07.2016 along with all necessary details], obtaining the reports from Statutory auditors in Form No. 3CLA and getting the same uploaded on IT Portal, Audits of accounts of R&D units, and further following up with DSIR for getting the Form no. 3CL filed with IT authorities. 52.0 That the Ld. DRP and consequently the Ld. AO have erred in making the aforementioned disallowance as non-receipt of approval in Form No. 3CL is not a mistake/obligation/delay attributable to the assessee, though the assessee made several reminders to the DSIR for that matter, and even the provisions of section 35(2AB) nowhere requires that receipt of Form No. 3CL is pre-condition for claiming deduction under said section by the assessee. 53.0 The ld. AO has erred in making the disallowance of bonafide claim of the assessee without appreciating that deduction allowed by the substantive provisions of the Act cannot be controlled by the procedural lapses specified in subordinate legislation and that too on part of some other agency and which is beyond the control of assessee. 54.0 Without prejudice, the Ld. AO/Ld. DRP have erred in not granting the deduction of depreciation, additional depreciation and investment allowance u/s 32(1), 32(1)(iia) and 32AC of the Act respectively in respect of Capital expenditure of which weighted deduction u/s 35(2AB) of the Act was disallowed. 55.0 The Hon’ble ITAT may be pleased to grant the weighted deduction amounting to Rs. 1,64,72,14,000/- u/s 35(2AB) of the Act. X. Disallowance of Deduction u/s 80-IA of the Act amounting to Rs. 54,91,48,703/- 56.0 That the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case by disallowing the entire amount of deduction claimed by the assessee u/s 80-IA of the Act amounting to Rs. 54,91,48,703/- [Rs. 17,29,14,326/- in respect of its CPP Unit at Bhiwadi & Rs.37,62,34,377/- in respect of CPP at Dahej] on the following grounds which are purely based on conjectures, surmises and non-application of mind: a) that assessee did not furnish any justification along with documentary evidences w.r.t. to the deduction claimed u/s 80-IA of the Act; b) that the tax auditor of the assessee did not approve / certify the eligibility of the above unit in the tax audit report which is factually incorrect as the tax auditor has duly certified the above amount of deduction u/s 80-IA of the Act in its tax audit report and also necessary certificates in Form no.10CCBs were duly filed by the assessee. c) that the Ld. DRP had upheld the similar disallowance in AY 2016- 17, however, the Ld. AO has failed to correctly appreciate the Ld. DRP directions on this issue; 57.0 that as per the details submitted by the assessee in respect of cost incurred in each plant, the assessee is not eligible for claim of deduction u/s 80-IA of the Act in respect of both the units which is without any reason, evidence or justification on part of ld. AO. That without prejudice, the Ld. AO has erred in law and on the facts &circumstances of the assessee’s case by disallowing the entire amount of deduction ignoring that an amount of Rs. 42,40,28,739/- has already been added through transfer pricing adjustment in accordance with the directions of the Ld. DRP in respect of same units [as contested by assessee vide ground no. 36 to 41 above] and thus inadvertently making excess/double disallowance to the extent of Rs. 54,19,48,703/-. 58.0 The Hon’ble ITAT may be pleased to direct the Ld. AO to delete the disallowance of deduction u/s 80-IA of the Act amounting to Rs.54,91,48,703/-. XI. Disallowance of Depreciation of Goodwill amounting to Rs. 10,77,290/- 59.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of depreciation of Rs. 10,77,290/- on goodwill arising on acquisition of three business units from SRF Polymers.

60.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of depreciation of Rs. 10,77,290/- on goodwill: - i. by taking a view that the amount of goodwill as arise on acquisition of three businesses is a balancing figure and not the goodwill which the assessee paid in excess of its valuation; ii. by drawing an incorrect interpretation after perusal of agreement for transfer of business dated 01.01.2009 that in the given schedule of assets & liabilities, goodwill is not mentioned implying thereby that there was neither any valuation of goodwill nor there was any sale of goodwill; iii. by treating the same merely as book entry in the books of accounts of the assessee. 61.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the identical issue has been decided in the favour of the assessee by the Hon’ble Delhi ITAT in the A. Y. 2014-15 and A.Y. 2012-13 in the assessee’s own case. 62.0 The Hon’ble ITAT may be pleased to grant the allowance of depreciation on Goodwill of Rs. 10,77,290/-. XII. Disallowance u/s 14A of the Act amounting to Rs. 1,25,14,370/- 63.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of Rs. 1,25,14,370/- u/s 14A of the Act read with rule (‘r.w.r.’) 8D(2)(iii) of the Income Tax Rules, 1962 (‘the Rules’) inspite of assessee having no exempt income during the year under consideration. The said disallowance is on wholly unjust, illegal, erroneous and untenable grounds on the facts & circumstances of the assessee’s case & based on conjectures and surmises and is prayed to be deleted before your honour. 64.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in computing the disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) of the Rules by solely relying on the clarification inserted to section 14A in the Act via Finance Act, 2022 and by following the CBDT Circular No. 05/2014 (F. No. 225/182/2013-ITA.II) dated 11.02.2014. 65.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the above disallowance by failing to appreciate that the assessee had made investment out of its own reserves and surplus funds as the amount of average investments related to tax free income is only Rs.6.52 Crores and the total amount of reserves & surplus as on 31.03.2017 is Rs. 3,086.41 Crores which is 473.38 times of the value of average tax free investments, thus warranting no disallowance under section 14A of the Act. 66.0 Without prejudice to above grounds, the Ld. DRP and consequently the Ld. AO while making the disallowance u/s 14A of the Act, have erred in taking entire value of investments instead of investments related to tax-free income and thus not following the judgments of the various courts including jurisdictional Delhi High Court in the case of ACB India Ltd. vs. ACIT (2015) 374 ITR 108 (Delhi) and others. The ld. AO erred in taking the following incorrect opening & closing balances of value of viz. a) Rs. 245.50 Crores instead of correct amount of Rs. 8.91 Crores w.r.t. opening balance of investments; b) Rs. 255.07 Crores instead of correct amount of Rs. 4.12 Crores w.r.t. closing balance of investments. 67.0 Without prejudice to above, the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the similar issue has been decided in the favour of the assessee in the assessee’s own case in different years before the various appellate forums viz. Ld. CIT(A) in the AY 2015- 16, Hon’ble DRP in the AY 2014-15 and Hon’ble Delhi ITAT in the AY 2012-13, AY 2010-11, AY 2008-09, AY 2007-08 & AY 2006-07. 68.0 The Hon’ble ITAT may be pleased to delete the disallowance u/s 14A of the Act amounting to Rs. 1,25,14,370/-. XIII. Incorrect computation book profits u/s 115JB of the Act by the Ld. AO. 69.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the addition of Rs. 1,25,14,370/- on account of disallowance u/s 14A of the Act while computing the book profits u/s 115JB of the Act, even when provisions of section 115JB do not provide for such disallowance. 70.0 That the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the similar issue has been decided in the favour of the assessee in the assessee’s own case in different year before the various appellate forums viz. Hon’ble Delhi ITAT in the AY 2010-11 and Ld. CIT(A) in the AY 2015-16. 71.0 The Hon’ble ITAT may be pleased to direct the Ld. AO to delete the above addition while computing the book profits u/s 115JB of the Act. XIV. OTHER CORPORATE TAX ISSUES - Claims made during the assessment proceedings before the Ld. AO 72.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not entertaining the claim made by the assessee during the course of assessment and then again before the ld. DRP amounting to Rs. 54,15,119/- on account of amount of gratuity actually paid by the assessee but routed through other comprehensive income and which was inadvertently left to be claimed while filing /revising its return of income. 73.0 That on the facts & circumstances of the assessee’s case, the Ld. DRP and consequently the Ld. AO have erred in law in not entertaining and adjudicating the above ground by relying the judgment of Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs CIT [284 ITR 323] and without prejudice, the claim is being made before the Hon’ble ITAT as an adjudicating authority following precedent in NTPC Ltd. [229 ITR 383 (1998)]. 74.0 The Hon’ble ITAT may be pleased to grant the claim of Gratuity amounting to Rs.54,15,119/- on account of actually paid by the assessee under normal provision of the Act. XV. Other Grounds of Appeal

75.0 The Ld. AO has erred in law and on the facts & circumstances of the assessee’s case by initiation of penalty proceedings u/s 270A read with section 274 of the Act for under reporting of income which is in consequence of misreporting thereof since there was no under reporting /misreporting of any income, nor any default according to law by the assessee. 76.0 That the assessee craves leave to amend, alter, change vary or substitute any of the aforesaid grounds of appeal or add & raise an additional ground of appeal if it becomes necessary to do so in the interest of justice. 77.0 That each ground of appeal is independent of and without prejudice to the other grounds of appeals raised herein.”

3. Apropos Ground Nos. 1 to 4 are general in nature, hence, not adjudicated and dismissed as such.

4. Apropos Ground Nos. 5 to 6 are common grounds of appeal

, although not specifically argued by the ld. AR. In view of not pressing these common grounds and ld. AR took up the other grounds on merits of the case, these grounds are not adjudicated and dismissed as such.

5. Apropos ground Nos.7 to 8 are in relation to incorrect computation of total income and consequently the incorrect demand of tax and interest thereon.

6. We have considered the submissions of the assessee and perused the material on record. The assessee has pointed out that while giving effect to the DRP’s directions, the AO has committed apparent mistakes in computing the assessed income and consequential demand of Rs.1,19,57,051/-. It is noted that the AO disallowed the entire deduction u/s 80-IA amounting to Rs.54,91,48,703/-, even though Rs.42,40,28,739/- relating to the same units had already been added through TP adjustment, thereby resulting in double disallowance. Further, the deduction under Chapter VI-A has been restricted to Rs.25,02,27,500/- instead of the correct Rs.28,81,77,500/-, MAT credit of Rs.1,87,77,71,841/- has not been granted, and the total income has been taken from the intimation u/s 143(1) rather than the revised return filed on 29.03.2019.

7. All these are apparent computational errors verifiable from the record. Accordingly, we direct the AO to rectify the mistakes by eliminating the double disallowance under section 80-IA, granting the correct Chapter VI-A deduction and MAT credit, and adopting the income as per the revised return. The consequential demand u/s 156 shall be recomputed, and due refund, if any, shall be granted in accordance with law. These grounds are allowed for statistical purposes.

8. Apropos grounds nos.9 to 16 relating to adjustment in respect of international transaction in the nature of provision of Management Support Services (MSS)of Rs. 34,41,669/-. Briefly stated, the assessee had provided Management Support Services to its various Associate Enterprises (AE) amounting to Rs. 3,90,89,223/- during the year under consideration, details of which are as below: S. No. Name of the AE’s Amount (in Rs.)

1. SRF Flexipack (South Africa) (Pty) Ltd. 80,57,914/-

2. SRF Industries (Thailand) Ltd. 2,72,90,241/-

3. SRF Industex Belting (Pty) Ltd. 37,41,068/- Total 3,90,89,223/- 9. The assessee applied the Transactional Net Margin Method (TNMM) u/s 92C(1)(e) read with Rule 10B(1)(e) as the Most Appropriate Method, using Operating Profit/Operating Cost (OP/OC) as the Profit Level Indicator (PLI). The outcome of Assessee’s search had resulted in 8 comparables with the arm’s length range of Operating Profits 5.32% (35th percentile) to 15.75%(65th percentile) while assessee' s profit level indicator (PLI) (OP/OC) was computed at 10% to 15% which has been concluded by assessee as within the arm’s length range of PLI of the comparable, the extract of the assessee’s benchmarking analysis is as under: Average operating S.No. Name of The Company profits on value added cost (%) 1 Adhaan Solutions Pvt Ltd 1.05% 2 MCI Management (India) Limited 4.13% 3 I C R A Management Consulting Services Ltd. 5.32% India Tourism Development Corporation Ltd 4 11.38% (Segmental) 5 Concept Public Relations India Ltd. 13.79% Kestone Integrated Marketing Services Private Limited 6 15.75% (Segmental) 7 Majestic Research Limited 29.64% 8 Overseas Manpower Corporation Ltd. 41.38% Arithmetic mean 11.58% 35th Percentile 5.32% Median 12.59% 65th Percentile 15.75%

10. The TPO in the proceedings u/s 92CA, rejected 4 out of the 8 comparables adopted by the assessee and conducted a fresh search introducing 6 new comparables. Based on this new set of 10 comparables (including 4 comparables of the assessee)the TPO determined the median margin at 22.20% that is shown in below table:

S.No. Name of The Company OP/OC (%) Kestone Integrated Marketing Services Private Limited 1 5.74% (Segmental) 2 I C R A Management Consulting Services Ltd. 13.31% 3 Pressman Advertising consulting services Ltd. 15.61% 4 Concept Publisc relations India Ltd. 16.53% 5 Praendex Management Resources Pvt. Ltd. 18.49% 6 EDCIL India Ltd. 25.91% 7 Info Edge India Ltd. 28.98% 8 KitKo Ltd. 29.79% 9 Majestic Resarch Ltd. 39.33% 10 ICRA Ltd. 66.56% 35th Percentile 16.53% Median 22.20% 65th Percentile 28.98%

OP/OC S.No. Name of The Company (%) Kestone Integrated Marketing Services Pvt. Ltd. 1 5.74% (segmental) 2 I C R A Management Consulting Services Ltd. 13.31% 3 Pressman Advertising Ltd. 15.61% 4 EDCIL (India) Ltd. 25.91% 5 ICRA Ltd. 66.56% Average 25.43%

S. Company TPO’s Assessee’s DRP directions no. remarks remarks 1 MCI The There is no The Panel is unable to Management company such PBT ascertain the nature of the (India) Ltd fails the filter. filter referred to by the (Assessee) PBT filter TPO. The assessee’s observations are correct in this regard. However, it is seen from public domain information that it is an event management company earning revenue from conference and exhibitions. It is functionally different. It has also been held to be an invalid comparable by DRP in other cases in relation to MSS. Rightly excluded by the TPO. 2 India Tourism The For the As held by DRP in other Development company purpose of cases, ITDC Ltd. being a Corporation Ltd. fails the benchmarking, Govt. undertaking cannot (Segmental) FAR filter only one be taken as comparable. as the segment viz. To remain excluded. company is marketing engaged in segment & the tourism misc. industry. operations has been considered. The TPO’s approach is wrong in considering the entity level FAR.

3 Concept Public The The company From the website of the Relations India company is engaged in company, it is seen that the Ltd. fails the providing company is engaged in FAR filter services public relations as the relating to management. Functionally company is organising dissimilar. Rightly into PR conferences, excluded by the TPO. business tours, demonstration of products, seminars, publicity campaign through various media channels, demonstrations of client products. Hotels bookings, conference literature etc 4 Kestone The For the DRP has held in other Integrated company purpose of cases that this company has Marketing fails the benchmarking, a manpower services and Services Private FAR filter only one sales management service Ltd. (Segmental) as the segment viz. segment which is included company is Event in marketing support into Management segment. The segment is Marketing Services has functionally similar, hence Services, been should be retained, if considered. available from the accounts Thus TPO’s in this AY. approach is wrong in considering the entity level FAR. 5 Majestic The The company As held by DRP in other Research company is also engaged cases, the company is Services and fails the in market engaged in data analytics Solutions Ltd. FAR filter research and and market research for (Assessee) as the hence can be various industrial sectors. company is taken as Functionally dissimilar engaged in comparable. under MSS segment. research Rightly excluded by the services TPO.

S. Name of the Margins as Assessee's Margins TPO’s No. Company per Ld. TPO's reason for as margins Order Giving rejection of computed for Effect to the by the comparabl Hon’ble comparable Assessee e selected DRP's by assessee Direction (P. no. 86 of Appeal Set)

1. Kestone Integrated 5.74% Not Applicable 5.74% 5.74% Marketing Services Pvt. Ltd.

16. The Ld. AR of the assessee has submitted the snapshot of the website of the EDCIL (India) Ltd.& ICRA Ltd to establish the function and business dissimilarity, at page 50 to 51A of Written Submission. The same is reproduced below:

22. Accordingly, the Transfer Pricing adjustment of Rs.34,41,669/- is deleted, and the grounds of appeal

Nos.17 to 21 are allowed.

23. Apropos grounds no.17 to 21 relating to adjustment of Rs.12,20,172/-u/s92CA(3) of the Act on account of allocation of software cost received from its Associated Enterprises are concerned, ld. Counsel for the assessee submitted that this issue is fully covered by the order of the Jurisdictional ITAT in the assessee's own case for A.Y. 2014-15 and recently passed in the A.Y. 2016-17 wherein the coordinate Bench upheld that the reimbursement received at cost does not require any mark-up.

24. It was further submitted that the Transactions entered into with the AEs are purely reimbursement received of software allocations on cost to cost basis from the AEs. Hence, no mark-up is chargeable on the cost of reimbursement received from AEs. It was the further contention that not considering the fact that the assessee is a holding company of the group and incurs cost, which is recovered from the AEs and also, not appreciating that the assessee has recovered the software allocation costs along with finance charges @ 8.99% for delayed payment. It was also submitted that the relied upon OECD guidelines, no mark-up is warranted on reimbursements. It was further submitted that the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT [TS-106-SC-2021] had also upheld the reference to OECD guidelines being persuasive in nature. The Ld. AR also submitted that various judicial precedents on the same issue have upheld the cost to cost nature of reimbursement as ALP. In view of above, he requested to direct the TPO to delete such adjustment in respect of reimbursement received.

25. Ld. DR of the Revenue relied upon the orders of the authorities below, but he did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment year 2014-15& 2016-17 and neither produced any contrary decision.

26. Considered the rival submissions and material placed on record. We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for A.Y. 2014- 15& 2016-17, wherein the coordinate Bench upheld that the reimbursement received at cost does not require any mark-up. The relevant findings of the coordinate bench in assessee’s own case for AY 2016-17 are reproduced below: “5. Considered the rival submissions and material placed on record. We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for A.Y. 2014-15, wherein the coordinate Bench upheld that the reimbursement received at cost does not require any mark-up. The relevant findings of the coordinate bench are reproduced below: “23. Ground No.12 to 15 are with respect to adjustment on account of reimbursement received by the assessee from its AEs amounting to Rs.45,39,571/-.

24. TPO on perusing the TP documentation noticed that assessee had incurred certain expenses which were in the nature of travelling lodging and boarding charges, courier etc. Assessee was asked to show-cause as to why reimbursement of the expenses not be treated as expenses and why a markup should be charged to which assessee interalia submitted that the reimbursement should not be treated as intra group services as these were third party costs which were reimbursed by AEs on a cost to cost basis. The submission of the assessee was not found acceptable to TPO. TPO noted that assessee had incurred expenses and also employed manpower, assets and had rendered travel related services to its AEs. He was of the view that had these resources been utilized by the assessee for its own business activities, the assessee would have benefitted and by utilizing those resources for benefit of its AEs, the assessee is losing out on benefits. He therefore held that assessee should have earned a markup on such expenses. The TPO thereafter by considering the comparables, as listed at Page 40 & 41 of his order, proposed an adjustment of Rs.58,13,774/- 25. Aggrieved by the proposed adjustment, assessee carried the matter before the DRP. DRP upheld the action of adjustment proposed by the TPO but however directed to compute the adjustment by taking the nine comparables as listed on Page 11 of its directions. Consequent to the direction of DRP, AO made final upward adjustment of Rs.45,39,571/-. Aggrieved by the order of AO, assessee is now before us.

26. Before us, Learned AR reiterated the submissions made before the lower authorities and further submitted that on identical facts, no adjustment on account of reimbursement of expenses was made in earlier years. He further submitted that transactions entered into with the AEs are of the pure reimbursement received from the AEs which are in the nature of expenses incurred for travelling, lodging, boarding, courier etc. of employees of the AEs which are charged on cost to cost basis. It was further submitted that similar reimbursement are made by the assessee to its AEs also at cost to cost basis. It was further submitted that assessee had entered various business transactions with its AEs which are in the nature of export of goods, import of goods, corporate guarantee fee, interest on loan, management support services etc. the volume of which is Rs.126.93 crore as against which the nature of reimbursement received and paid from and to the AEs are Rs.3.86 crore which is normal considering the volume of business transactions entered into with the AEs. He further submitted that no adjustment is required when it is reimbursement of expenses. He further submitted that transactions were undertaken from commercial expediency point of view and were not intended for the exploitation of return. He thereafter submitted that Co-ordinate Bench of Tribunal in the case of Vedanta Ltd. vs. ACIT in order dated 21.09.2020 for A.Y. 2014-15 has held that no mark up was warranted on the reimbursement of primary third party expenses for which no value addition was done by the assessee and which are subsequently reimbursed by the AEs on cost to cost basis. He pointed to the relevant findings of the Tribunal order placed at Page 236 of the paper book. He therefore submitted no addition is called for.

27. Learned DR on the other hand pointed to the observations made by DRP. She also placed reliance on the decision rendered by Hon’ble Delhi High Court in case of CIT vs. Cushman And Wakefield (India) Pvt. Ltd. reported in 367 ITR 730 and decision rendered by Hon’ble Delhi High Court in the case of Centrica India Offshore Pvt. Ltd.(WP-6807 of 2012 order dated 25.04.2014).

28. Learned AR in the rejoinder submitted that the expenses were in the nature of reimbursement and there is no whisper in the order of TPO of the assessee having rendered any services and that assessee collects the expenses incurred on behalf of AEs from the AEs and passes it on to the third parties. He further submitted that it is not an international transactions as per Clause 92D(1) of the Act.

27. Respectfully following the above decisions and further it is noted that Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT (supra) had also upheld the reference to OECD guidelines being persuasive in nature. In view of the aforesaid discussions and respectfully the aforesaid precedents, we deem it fit and proper to direct the AO/TPO to delete adjustments of Rs.12,20,172/-in respect of allocation of software cost from its AEs received. Accordingly, Ground Nos.17 to 21 are allowed.

28. Apropos grounds no. 22 to 25 relating to adjustment of Rs.NIL/- u/s.92CA(3) of the Act on account of allocation of reimbursement received from its Associated Enterprises are concerned, ld. AR submitted that this issue is fully covered by the order of the ITAT in the assessee's own case for A.Y. 2014-15 and recent order passed for the AY 2016-17 wherein the coordinate bench upheld that the reimbursement received at cost does not require any mark-up. Reimbursement received from AEs in the nature of expenses incurred for travelling, lodging, boarding, courier etc. of employees of AEs which are charged on cost-to-cost basis.

29. Ld. DR of the Revenue relied upon the orders of the authorities below, but he did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment year 2014-15& 2016-17 and neither produced any contrary decision.

“7. Apropos grounds no. 12 to 15 relating to adjustment of Rs.22,20,109/- u/s. 92CA(3) of the Act on account of allocation of reimbursement received from its Associated Enterprises are concerned, ld. Counsel for the assessee submitted that this issue is fully covered by the order of the ITAT in the assessee's own case for A.Y. 2014-15, wherein the coordinate bench upheld that the reimbursement received at cost does not require any mark-up. Reimbursement received from AEs in the nature of expenses incurred for travelling, lodging, boarding, courier etc. of employees of AEs which are charged on cost-to-cost basis. Similarly, the reimbursement expenditure paid by the assessee to its AE is also on a cost basis only. Further, it was submitted that the mark up of 13.18% which has been worked out through a search process, wherein selected companies are into the manufacturing of textiles, yarn etc. This average margin is applied on reimbursement transactions, which is grossly erroneous. Further the assessee has entered into various business transactions with its AEs in the nature of export of goods, import of goods, corporate guarantee fee, interest on loan, management support services etc. the volume of which is around Rs.33.17 crores. It was also submitted that the assessee has also entered into the ancillary transactions in the nature of reimbursement received and paid from/to AEs for Rs.1.68crores, which is nominal and normal considering the volume of business transactions entered into with the AEs. It was also submitted that the assessee also relies on OECD guidelines in this regard which advocate that no mark-up is chargeable in reimbursements. It was further submitted that Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. vs. CIT (supra) had also upheld the reference to OECD guidelines being persuasive in nature. The Ld. AR also submitted that various judicial precedents on the issue have upheld the cost to cost nature of reimbursement as ALP. In view of above, he requested to direct the TPO to delete such adjustment of Rs.22,20,109/- in respect of reimbursement received.

8. Ld. DR of the Revenue relied upon the orders of the authorities below, but she did not controvert the contention of the ld. AR for the assessee that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case in the assessment year 2014-15 and neither produced any contrary decision.

by the assessee are only technical grounds raising the challenge to action of TPO and DRP in determination of mark-up on cost of reimbursement. Therefore, although we agree that no mark-up is warranted on the reimbursement received by the assessee, however in absence of any adjustment, the technical grounds No. 22 to 25 being technical in nature are dismissed with above observations.

32. Apropos grounds no. 26 to 31 relating to adjustment of Rs 2,03,99,088/- u/s. 92CA(3) of the Act on account of Corporate Guarantee Fee from AE.

33. The assessee, being the parent company, had provided corporate guarantees on behalf of its wholly owned Associated Enterprises (AEs) and charged a corporate guarantee fee at the rate of 0.25%, resulting in total receipts of Rs. 2,15,17,579. For benchmarking this transaction, the assessee adopted the ‘Other Method’ as the Most Appropriate Method and relied upon specific quotations obtained from HDFC Bank and Yes Bank, which indicated that a corporate guarantee commission of 0.25% would be commercially acceptable. The assessee therefore claimed that the rate charged to its AEs was at arm’s length, particularly since the AEs had also furnished back-to-back counter guarantees.

34. The TPO, however, rejected the assessee’s benchmarking and instead applied the CUP Method. Relying on the State Bank of India’s quotation for bank guarantees, the TPO determined the arm’s length rate at 1.30% and proposed an upward adjustment by applying the differential of 1.05% (1.30% minus 0.25%). Upon objections filed before the DRP, the DRP partly accepted the assessee’s contentions and, following its earlier directions in the assessee’s own case for A.Y. 2016-17, determined the appropriate corporate guarantee rate at 0.50% instead of 1.30%. Consequently, the DRP sustained a partial adjustment by applying a difference of 0.25% (0.50% minus 0.25%), leading to an upward adjustment of Rs. 2,03,99,088 as incorporated in the TPO/AO’s order.

Nos. 26 to 31are allowed.

36. Concerning grounds no. 32 to 35 relates to adjustment of Rs.8,095/- on account of Inter unit Transfer – Technical Textile Business, Kashipur Division. For benchmarking such inter-unit transactions, the assessee adopted the Internal CUP Method as the Most Appropriate Method (MAM), contending that similar products or services were sold to third parties by the eligible unit at same price.

37. The TPO, however, rejected the CUP Method without assigning specific and applied TNMM at the segmental level. The TPO determined the PLI for eligible unit 8.97% while the PLI of Technical Textile Business (TTB) segment was determined at 6.40%. In view of TPO since the eligible unit’s margin was higher, the TPO alleged overstatement of profits and proposed an adjustment of Rs. 3,97,00,000/- on the entire segment, ignoring the actual value of controlled transactions. On objections raised before the DRP, it directed to restrict the adjustment to the value of controlled transactions, leading to a final adjustment of Rs. 8,095/-.

38. The Ld. AR submitted that the issue is squarely covered by the decisions of the TAT in the assessee’s own cases for A.Ys. 2016-17, the Coordinate Bench has held that CUP is to be preferred over TNMM, and deleted the corresponding adjustment. The facts for the current year are identical, and therefore, consistency demands that the same view be followed.

39. In addition, the ld. AR submitted that assessee’s methodology was rejected without providing any reason. It was further submitted that on the anvil of the various judicial precedents, CUP method to be preferred over TNMM. It was further submitted that segmental margin of TTB segment computed by TPO @6.40% is incorrect as the segmental margin from the segmental results of assessee is 14% and hence no adjustment is warranted in any case. Hence, he requested that the adjustment of Rs. 8,095/- need to be deleted.

15. Ld. DR of the Revenue relied upon the orders of the authorities below on this issue.

47. The TPO rejected this approach and instead determined the ALP by averaging the assessee's actual rate in form of actual purchase of electricity from respective state electricity boards (SEB's) rate and the Indian Energy Exchange (IEX) rate, resulting in an average rate of per unit that is as below:. Proposed rates - CPP Bhiwadi at Rajasthan: Rs. 2.58 p.u. as IEX & assessee’s comparable uncontrolled price data @ Rs. 10.39 p.u. as actual purchase of electricity from SEB, resulted in proposed rate @ 6.48 p.u. Proposed rates - CPP Dahej at Gujarat: Rs. 2.29 p.u. as IEX & assessee’s comparable uncontrolled price data @ Rs. 7.50 p.u. as actual purchase of electricity from SEB, resulted in proposed rate @ 4.89 p.u.

50. The judicial precedents by the coordinate Bench in assessee’s own case for the A.Y. 2016-17 is reproduced below: “21. Apropos Ground no. 30 to 34 relating to transfer of power by Captive Power Plant (CPP) at Bhiwadi Adjustment of Rs.18,72,72,104/- are concerned, ld. Counsel for the assessee submitted that no reason provided by TPO for rejection of assessee's MAM. He also placed reliance of the Hon’ble Supreme Court decision in case of M/s Jindal Steel and Others [TS-731-SC- 2023] wherein, it has been settled that in order to benchmark the transfer of electricity by captive power plants, the rate at which state electricity board sells electricity to Industrial consumer in the market should be adopted as the open market value u/s 80-IA(8). It was further submitted that issues of transfer of electricity being benchmarked w.r.t. SEB rates has been favourably adjudicated by ITAT in the case of DCM Shriram Limited by order dated 21.10.2021. He further submitted that on the anvil of various judicial pronouncements advocating the adoption of SEB rates for benchmarking the electricity transfer, Rule of Consistency has also been filed before Ld. DRP. It was further submitted that data of various discom rates obtained u/s 133(6) were not available in public domain, hence cannot be used and no opportunity to examine and rebut the data. It was submitted that assessee's internal CUP to be preferred over an external CUP, by placing reliance on the case of Technimont ICB P Ltd. (TS-557-ITAT-2012 (Mum). In view of the above, he requested that adjustment of Rs.18,72,72,104/- needs to be deleted.

24. It is brought to our notice that in AY 2014-15 and AY 2015-16, similar bench marking was carried by the assessee adopting the CUP method based on SEB rates, which was accepted by the AO in AY 2014-15 and on the basis of CBDT instruction no 3/2016 in AY 2015-16. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking based on the decision of Hon’ble Supreme Court in the case of Jindal Steels and others (supra) and as per law. Accordingly, Ground Nos. 30 to 34 are allowed as indicated above”.

“57. We also consider it apposite to refer to the recent decision of the Supreme Court in Commissioner of Income Tax v. Jindal Steel and Power Limited⁷. The principal issue involved in the said decision was the determination of market value of goods and services. In terms of Clause (i) of Explanation to Sub-section (8) of Section 80IA of the Act, the market value in relation to goods and services would mean the price that such goods or services would ordinarily fetch in the open market. In the aforesaid context, the Supreme Court had considered the question of what would constitute an open market in the context of determining the market value of electricity supplied by captive power units of the assessee in that case. In that case, the assessee had entered into an agreement with the SEB of State of Madhya Pradesh to supply surplus electricity at the rate of Rs.2.32 per unit. However, the Assessee had computed the revenue from supply of electricity to its own unit at the rate of Rs.3.72 per unit. It was the Assessee’s case that the market value of the electricity was Rs.3.72 per unit as that was the rate charged by the SEB for supply of electricity to industrial consumers including the Assessee. The learned ITAT had accepted the assessee’s stand and had set aside the order passed by the CIT(A) rejecting the assessee’s appeal in that regard. The High Court had also rejected the Revenue’s appeal by referring to its earlier decision where the question of law had been answered against the Revenue and in favour of the Assessee.

58. The Revenue had approached the Supreme Court assailing the orders passed by the learned ITAT and the High Court. In the aforesaid context, the Supreme Court had held as under: “23. This brings to the fore as to what do we mean by the expression “open market” which is not a defined expression.

Such a price cannot be said to be the price which is determined in the normal course of trade and competition.

60. In view of the above, the questions of law are answered in favour of the Assessee and against the Revenue”.

53. The relevant Extract of the judicial precedents of the coordinate Bench, Delhi, in consolidated order dated 30.06.2025 is reproduced below for AY 2015-16 {ITA No.927/Del/2022: “16. Thus, by respectfully following the judgement of Hon’ble High Court and Co-ordinate Bench of the Tribunal in the case of assessee itself and also by respectfully following the judgement of Hon’ble Supreme court in the case of Jindal Steel & Power ltd. (supra), we find no infirmity in the order of the Ld. CIT(A) in deleting the adjustment made on account of transfer of power from eligible units to non-eligible units and accordingly, the adjustment of INR7,96,94,566/- has rightly been deleted by ld. CIT(A) which order is hereby upheld. Ground No.1 raised by the Revenue is thus, dismissed.”

- Gujarat Alkalies & Chemicals Ltd. [[2017] 88 taxmann.com 722 (Gujarat)] - Sial SBEC Bioenergy Ltd. {[2004] 4 SOT 730 (DELHI)} - Godavari Power & Ispat [2014] 42 taxmann.com 551 (Chhattisgarh) - Reliance Industries Ltd. [2019] 102 taxmann.com 372 (Bombay) DCIT vs. M/s. Balarampur Chini Mills Ltd. (ITA No. 1672/Kol/2019) CIT vs. Kanoria Chemicals & Industries Ltd. [2013] 35 taxmann.com 566 (Calcutta) - Graphite India Ltd. [ITA Nos.304-305/Kol/2008] Gujarat Fluor Chemicals Ltd. [[2018] 97 taxmann.com 10 (Ahmd.-Trib.)] - Hero MotoCorp Ltd. [TS-844-ITAT-2012(Mum)] Birla Corporation Ltd. [ ITAT /46/2025 ( Calcutta High Court)] [10-06-2025]. - Star Paper Mills Ltd. [2025] 172 taxmann.com 391 (Calcutta) [05-02-2025]. - Prabhu Spining Mills Private Limited [ITA No. 433 & 435/ Chny/2025] [13-08- 2025] .

M/S DHUNSERI VENTURES LTD. Vs. PCIT 2, [ITA/25/2024(Calcutta High Court)] [20-08-2025].

67. The TPO rejected this approach and instead determined the ALP by taking the general tariff rates @ 2.5192 per unit obtained u/s 133(6) of the Act from TNERC2 while benchmarking the transaction of sale of electricity by WPP unit of the assessee. Based on the above proposed rate, the TPO proposed an adjustment of Rs. 3.8371 p.u. (6.35 - 2.5129) amounting to Rs. 11,40,07,551/-., which was upheld by the DRP relying upon its own directions for A.Y. 2016-17.

Nos. 42 to 45 are allowed.

70. Apropos grounds no. 46 to 49 relating to enhanced claims of deduction u/s 80-IA of the Act to the tune of Rs. 56,48,30,479/- & 87,41,77,615/-, it has been stated that such enhanced claims of deduction were made by the assessee during the course of proceedings before the DRP w.r.t Captive Power Plant (“CPP”) Unit at Bhiwadi, Rajasthan and Dahej, Gujarat respectively.

71. The assessee during the course of proceedings before the DRP had raised enhanced claims seeking re-determination of the arm’s length price (ALP) of transfer of steam from the eligible units to non-eligible units. The assessee has claimed that it is based on the order of DRP-II, New Delhi dated 26.03.2021 in assessee’s own case for the A.Y. 2016-17. The assessee’s claim is that the DRP while allowing the claim of the assessee’s in its own case for A.Y.2016-17 placed reliance on the certificate issued by Chartered Engineer and held that ALP of the steam should be determined by converting the same into electricity units (KWH) as certified by a Chartered Engineer and then multiplying it with rate of electricity applicable to industrial consumers. The 2Tamil Nadu Electricity Regulatory Commission 15/02/2022 before the DRP.

72. In terms of the computation furnished, the assessee re-determined the ALP of transfer of steam at Rs. 82,19,37,824/- for the Bhiwadi CPP as against Rs. 25,71,07,345/- originally considered, resulting in an enhanced deduction claim of Rs. 56,48,30,479/- and further at Rs. 142,57,52,588/- for the Dahej CPP as against Rs. 55,15,74,973/- originally considered, resulting in an enhanced deduction claim of deduction u/s 80- IA of the Act to the tune of Rs. 56,48,30,479/- & Rs.87,41,77,615/ respectively-. The DRP and subsequently AO, however, declined to admit this enhanced claim on the ground that it was made during the course of proceedings and not through a revised return.

, the assessee has made revised / additional claim of INR 2,99,49,20,010/- of deduction u/s 80 IA towards transfer of steam from eligible units to non-eligible units. The assessee has claimed that it is based on the order of Hon’ble DRP-II, New Delhi dated 26.03.2021 in case of group concerns M/s. SRF Ltd. for AY 2016- 17 where the additional claim was considered and allowed by the Hon’ble DRP. The assessee’s claim is that the Hon’ble DRP while allowing the additional claim in the case of group concern M/s. SRF Ltd. placed reliance on the certificate issued by Chartered Engineer. As the Ld.DRP had issued directions only on 26.03.2021, it was not possible for the assessee to make such additional claim before the AO who has already passed the final assessment order after the directions of Ld. DRP on 28.12.2019. Thus under these circumstances, this additional claim is made for the first time before the Tribunal by filing additional grounds of appeal and further by filing additional evidences. With regard to the admission of additional grounds of appeal, we find that the additional ground taken are legal in nature where the assessee has claimed the revised / additional deduction u/s 80. IA of the Act. The Hon’ble Supreme Court in the case of NTPC vs CIT 229 ITR 383 has held that any legal claim could be made at any stage of the proceedings. It is further seen that the Revenue has challenged the admission of additional grounds for the reason that it is a fresh claim made by the assessee. Since it is not made through the income tax return filed u/s 139(1) of the Act, such claim could not be admitted. For this reliance was placed in the case of PCIT vs Wipro Ltd.(supra) wherein the Hon’ble Supreme Court has held that, one of the mandatory conditions is that for claiming the benefit u/s 10B(8) of the Act, the twin conditions of furnishing the declaration to the AO in writing and the same must be furnished before the due date of filing of return of income u/s139(1) of the Act are required to be fulfilled and are satisfied which conditions are mandatory. It cannot be said that one of the conditions would be mandatory and other is directory. However, in the instant case, it is seen that the assessee has not made a fresh claim of deduction u/s 80IA of the Act before us, but the claim of the deduction u/s 80IA of the Act was made in the return of income which was revised to an upward figure and for which the additional claim is lodged before the Tribunal for the first time. Therefore, the judgement of Hon’ble Supreme Court in the case of Wipro Ltd.(supra) is not applicable to the facts of the present case. The Hon’ble Delhi High Court in the case of PCIT vs Oracle (OFSS) BPO Services Ltd. (2019) 102 taxmann.com 396 (Del.) has held that “the Act does not debar the assessee to correct or modify the deduction once claimed under particular section.” The AO indeed can examine the claim of deduction and can make additions/disallowances.

48. In view of the overall discussion, we admit the additional grounds of appeal taken by the assessee with respect to the additional / revised claim of deduction u/s 80IA of the Act.

49. With respect to the admission of additional evidences, we find that these evidences are crucial to decide the quantum of deduction of additional / revised claim of deduction u/s 80IA made by the assessee in the additional grounds of appeal

taken before us. The assessee while filing the additional grounds of appeal in categorical terms has admitted that the said claim is made only after the directions given by Hon’ble DRP in the case of group concern M/s.SRF Ltd in terms of order passed on 26.03.2021 and prior to that making, such claim is not possible. The additional evidences also contained the Chartered Engineer certification with regard to the working of enhanced claim and supported by the revised certificate in this regard.

50. In the instant case, since the draft assessment order, the direction by the Hon’ble DRP and the final assessment order was passed prior to the direction given by ld.DRP in the case of M/s.SRF Ltd., therefore, these evidences could not be filed before the lower authorities. This is a reasonable cause for admission of the additional evidences at this stage.

51. In view of these facts and by respectfully following the judgments as relied upon by the assessee in particular, the judgement of Hon’ble Jurisdictional Delhi High Court in the case of Text Hundred India Pvt. Ltd. [TS-13-HC-2011 (Del.)], we find that the assessee has shown sufficient cause for non-filing of these evidences before the lower authorities and therefore, the same are hereby admitted for adjudication.

52. Now coming to the merits of the issue taken in the additional grounds of appeal

, Ld.AR for the assessee contended that identical issue has been decided by the Co-ordinate Bench of the Tribunal in assessee’s group company namely DCM Shri Ram in ITANo.1000/Del/2002 for AY 2017-18 and in for AY 2016-17. In the said case, the Co- ordinate Bench has remitted back all the issues of additional claim of deduction u/s 80IA of the Act on transfer of steam to the file of AO for fresh consideration on the basis of additional evidences and direct to decide the issue as per law. The relevant observations made by the CO-ordinate Bench are as under:-

8. The next issue is with reference to re-determination of ALP of steam transferred from eligible unit to non-eligible units and consequent enhancement of deduction under section 801A of the Act. This issue arises in assessment years 2016-17 and 2017-18.

9. We have considered rival submissions and perused the materials on record. As could be seen from the materials placed before us, this issue was raised for the first time by the assessee before the Tribunal through additional grounds in assessment year 2016-17. In assessment year2017-18, as well, the assessee did not raise the issue in course of assessment proceedings. Even, before learned DRP no specific objection was raised in this regard. It is the say of the assessee, DRP, the assessee has raised the issue of enhanced claim of deduction under section 801A of the Act through submissions. However, learned DRP has completely ignored the issue while issuing the directions.

76. Respectfully following the above judicial precedents and the coordinate bench decisions, we hold that the assessee’s enhanced claim under section 80-IA merits examination on facts and should not have been rejected merely on procedural grounds. The Hon’ble Supreme Court in Goetze (India) Ltd. v. CIT (284 ITR 323) has held that while the Assessing Officer cannot entertain a new claim without a revised return, appellate authorities are empowered to direct its consideration if it is otherwise admissible in law. Accordingly, the issue is restored to the file of the Assessing Officer to verify the assessee’s computation of the arm’s length value of steam transferred by the CPP units at Bhiwadi and Dahej, based on the Chartered Engineer’s certificate and applicable electricity rates, and thereafter re-determine the profits of the eligible units and allow enhanced deduction under section 80-IA as per law after affording due opportunity of being heard to the assessee.

77. In conclusion, the grounds raised by the assessee in Ground Nos. 46 to 49 are allowed for statistical purposes, with the direction that the Assessing Officer shall verify the enhanced claim and decide the matter afresh in accordance with law.

78. The Apropos ground no. 50 to 55 relates with the Disallowance of Weighted Deduction u/s 35(2AB) of the Act amounting to Rs. 1,64,72,14,000/- in respect of In- House Research and Development Units.

79. The assessee claimed a weighted deduction of Rs. 1,64,72,14,000/- under section 35(2AB) in respect of expenditure incurred on its approved in-house R&D facilities. The claim was supported by statutory auditors’ reports and certification in Form No. 3CLA submitted to the Department of Scientific and Industrial Research (DSIR) within time.

87. Apropos ground no. 56 to 58 relates Disallowance of Deduction u/s 80-IA of the Act amounting to Rs. 54,91,48,703/-.

Nos. 59 to 62 are allowed.

98. Apropos Grounds no. 63 to 68 and Ground No.69-71 are interconnected therefore considered together. These are related to the disallowance u/s 14A under the Normal Provisions of the Act and under section 115JB (MAT) provision of the Act.

99. Ground Nos. 63 to 68 are in relation to disallowance of Rs. 1,25,14,370/- made by the AO by invoking the provision of rule 8D(2)of the Rules. Briefly stated, the assessee had not earned any exempt income during the relevant assessment year and accordingly made no suo-moto disallowance under section 14A of the Act. The Ld. AR submitted that assessee had made investment out of its own reserves and surplus funds as the amount of average investments related to tax free income is only Rs. 6.52 crores, whereas its own reserves and surplus stood at Rs. 3,086.41 crores as on 31.03.2017 which is 473.38 times of the value of average tax free investments, thus warranting no disallowance under section 14A of the Act, establishing that all investments were made out of abundant interest-free funds. Detailed submissions and supporting documents were filed before the AO demonstrating that only investments capable of earning exempt income should be considered for Rule 8D computation.

102. Heard both the parties and perused the material available on record. This issue has already been decided by us in favour of assessee in assessee’s appeal for AY 2011-12 in ITA No.80/Del/2016.

106. Ground No. 69-71 raised by the assessee is in relation to the disallowance u/s 14A to the book profits computed u/s 115JB of the Act. This issue again has already been decided by us in favour of assessee in assessee’s appeal for AY 2011-12 in ITA No. 80/Del/2016.

107. Thus, by following the observations made therein, we hold that no addition could be made in the book profits on account of disallowance made u/s 14A of the Act. Ground No.69-71 of the assessee is accordingly, allowed.

108. Ground Nos. 72 to 74 are in relation to claims made during the assessment proceedings before the AO Payment of Gratuity of Rs. 54,15,119/-.

(AY 2018-19) 119. This appeal is filed by the assessee against the assessment order dated 29.04.2022 passed by the ACIT, Circle 10 (1), Delhi passed under section 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 (for short ‘the Act”) for Assessment Year 2018-19 pursuant to the directions of the Dispute Resolution Panel u/s 144C(5) of the Act raising following grounds of appeal :- “General Grounds: 1.0 That the Learned Assessing Officer (‘Ld. AO’) has erred in law and on the facts & circumstances of the assessee’s case by passing the final assessment order u/s 143(3) r.w.s. 144C(13) of the Act dated 29th April, 2022 pursuant to the directions of the Learned Dispute Resolution Panel (‘Ld. DRP’) dated 07th March, 2022 [read with rectification order u/s 154/143(3) dated 07th June, 2022] making transfer pricing adjustments / additions of Rs. 1,05,76,05,068/- arising out of the order of the Ld. Transfer Pricing Officer (‘TPO’) u/s 92CA(3) of the Act and additions / disallowances of Rs. 61,66,48,448/- on account of various non-transfer pricing issues. 2.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not entertaining or granting the additional claim / allowance made by the assessee during the course of proceedings before the Ld. DRP amounting to Rs. 85,12,327/- on account of gratuity actually paid during the year but routed through other comprehensive income and Rs. 25,79,06,280/- (being 25% of original cost of lease hold land amounting to Rs.1,03,16,25,119/-) on account of amount of depreciation on lease hold land, both inadvertently left to be claimed by the assessee while filing/ revising its return of income. 3.0 That the Ld. DRP and consequently the Ld. AO have erred in not granting the claim for enhanced deduction u/s 80-IA of the Act raised by the assessee by re-determining the arm’s length price of steam transferred by CPP unit at Bhiwadi, Rajasthan to Rs. 88,39,61,354/- [instead of Rs. 26,14,87,986/-]and at Dahej, Gujarat to Rs. 2,34,19,87,791/- [instead of Rs. 79,09,57,273/-] based on the certificates of the Chartered Engineer in accordance with the directions of the Hon’ble DRP in the assessee’s own case for the A.Y. 2016-17. 4.0 That the final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act dated 29th April, 2022 [read with rectification order u/s 154/143(3) dated 07th June, 2022] is bad in law. Grounds of Appeal in respect of incorrect computation of total income and consequently the incorrect demand of tax and interest thereon [Mistake apparent from records] 5.0 Without prejudice to the grounds challenging the adjustments / additions / disallowances made by the Ld. TPO / Ld. AO as upheld by the Ld. DRP, the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in computing the incorrect assessed total income and again in wrongly computing a demand of Rs. 11,03,24,869/- u/s 156 of the Act [post rectification order passed u/s 154 r.w.s. 143(3) of the Act dated 07th June, 2022] which is laced with the following mistakes apparent from records and which are on wholly unjust, illegal, erroneous and untenable grounds: i. that the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case by taking the incorrect returned total income at Rs. 2,06,05,38,216/-(which is actually the returned gross total income)

Rs. 83,60,40,320/-, inspite of directions of Ld. DRP to verify the claim of the assessee. ii. that of the remaining deduction under Chapter-VIA available to the assessee, the ld. AO has erred in granting the deduction to the extent of Rs. 75,72,97,759/- only instead of the correct deduction amounting to Rs. 1,22,44,97,900/-; iii. the Ld. DRP/TPO and consequently the Ld. AO have erred in making the transfer pricing adjustment amounting to Rs. 22,62,18,062/- with respect to the transfer of electricity by CPP Unit at Bhiwadi and thus completely ignoring the fact that amount of deduction u/s 80-IA of the Act actually claimed w.r.t. the said unit in its return of income is only Rs. 18,95,46,684/-. The Ld. TPO/AO completely lost sight while making the aforesaid addition which is even higher than the amount of deduction u/s 80-IA actually claimed by the assessee. iv. that the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in not granting or allowing the benefit of the MAT Credit available to the assessee to extent of Rs. 2,79,22,85,765/- (as per return of income of A.Y 2018-19) available to the assessee u/s 115AA of the Act; 6.0 It is prayed before the Hon’ble Tribunal to direct the Ld. AO to compute the correct total income after rectifying the aforesaid mistakes apparent from records and consequently to delete the demand inadvertently raised u/s 156 of the Act as per the rectification order passed u/s 154 r.w.s. 143(3) of the Act dated 07th June, 2022 amounting to Rs. 11,03,24,869/-and grant the refund along with the interest. GROUNDS OF APPEAL - TRANSFER PRICING ADJUSTMENTS INTERNATIONAL TRANSACTIONS – ADJUSTMENTS OF RS.1,88,67,884/- XVI. Allocation of Software Cost to AE’s – Adjustment of Rs. 13,35,090/- 7.0 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an adjustment of Rs. 13,35,090/- in respect of international transaction of allocation of software cost amounting to Rs. 1,50,34,805/- to AE’s by imputing a mark-up @ 8.88% over and above the pure software cost allocation. Adjustment made without any show-cause notice and hence null and void 8.0 That the Ld. TPO has erred in proposing and ld. DRP erred in upholding the aforesaid adjustment which is made without issuing any show cause notice and thus the said adjustment is in contradiction to the principle of natural justice which is liable to be deleted.

Without prejudice to above and on merits of the case 9.0 Without prejudice, the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in applying the search process / comparables and their PLI’s solely based on directions given by the Ld. DRP in the assessee’s case for the A.Y. 2016-17 which in turn are based on the ld. DRP directions of A.Y. 2014-15, and thus completely ignoring that such comparables are manufacturing companies and applying their margins for benchmarking the transaction of pure cost allocation is highly unjustified. 10.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not appreciating and completely ignoring that assessee has recovered the software allocation cost along with finance charges @ 10% which should have been accepted as ALP mark-up having regard to the nature of transaction. 11.0 That the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in holding that not charging of mark-up is not reflective of arm’s length behavior of the transaction and thus failing to appreciate that the assessee while performing its role of a parent company of the group incurs various costs for and behalf of its group entities/AE’s at group HO level (which are charged to group entities without any mark-up), as incurring such cost (such as software implementation, license etc.) at individual entity level may not be commercially and economically feasible. 12.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete aforesaid adjustment of Rs. 13,35,090/- in respect of allocation of software cost to AE’s. XVII. Reimbursement / recovery of expenses from AE’s - Adjustment of Rs. NIL/- 13.0 Without prejudice to the fact that no adjustment has been made to the transaction of reimbursement/recovery of expenses, the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law treating the abovementioned transaction as intra-group services and applying mark-up @ 8.88% based on the search process. 14.0 That without prejudice, the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in not appreciating that said transactions are pure reimbursement of business expenditure such as travelling, boarding, lodging, conveyance, IT expenses etc. undertaken by both the assessee and the AEs under reciprocal arrangements on cost-to-cost basis. 15.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the case by not following the binding precedent of the Hon’ble ITAT, Delhi on the identical issue in AY 2014-15 (ITA No. 6220/Del/2018), wherein the Hon’ble Tribunal has accepted the assessee’s methodology / benchmarking the same transaction on cost-to-cost basis. 16.0 The Hon’ble ITAT may be pleased to treat the above transactions in the nature of pure reimbursement and not in the nature of intra-group services and thus warranting no mark-up over and above their cost. XVIII. Corporate Guarantee Fee from AE’s - Adjustment of Rs. 1,75,32,794/- 17.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an upward adjustment of Rs. 1,75,32,794/- by imputing the arm’s length corporate guarantee fee rate @ 0.50% instead of @ 0.25% charged by assessee from its AEs [wholly owned subsidiaries] based on the specific quotations obtained from HDFC Bank and ICICI Bank, which constituted the valid comparable data in assessee's specific case under the ‘Other Method’. Adjustment made without any show-cause notice and hence null and void 18.0 That the Ld. TPO has erred in proposing and ld. DRP erred in upholding the aforesaid adjustment which is made without issuing any show cause notice and thus the said adjustment is in contradiction to the principle of natural justice which is liable to be deleted. Without prejudice to above and on merits of the case 19.0 Without prejudice, that the Ld. DRP and consequently Ld. TPO / Ld. AO have exceeded their jurisdiction in making a transfer pricing adjustment for the extension of corporate guarantees which do not involve incurring any cost and therefore, are out of the ambit of international transactions u/s 92B of the Act and therefore, not subject to re-determination under Chapter-X of the Act. 20.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not considering that the AE’s have furnished back-to-back counter guarantees of equivalent amounts on similar terms to the assessee and therefore assessee is completely indemnified against any risk of default on the part of its AE’s. 21.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not appreciating the fact that corporate guarantees have been extended by the assessee, being the parent company on behalf of its wholly owned subsidiaries, as a matter of business prudence and to protect its own commercial interest. The assessee does not incur any cost by extending such corporate guarantee to its AEs nor assumes any risk as entire capital / assets of its AEs are held directly or indirectly by the assessee.

22.0 That the Ld. DRP / Ld. TPO / Ld. AO have erred not following the binding judicial precedents rendered on the issue including the favourable orders of Hon’ble Jurisdictional ITAT in assessee’s own case for A.Y. 2010-11, A.Y. 2012-13 and A.Y. 2014-15. 23.0 The Hon’ble ITAT may be pleased to hold that: - i. the act of giving corporate guarantee by the assessee on behalf of the AE’s is not an international transaction and, therefore, not amenable to any adjustment under Chapter X of the Act; ii. no adjustment is required as AE has provided back-to-back counter guarantees of equal amounts on similar terms and hence no adjustment / addition is required; iii. no adjustment is required as @ 0.25% charged by the assessee as corporate guarantee fee from its AE’s [wholly owned subsidiaries] is at arm’s length and thus upward adjustment of Rs. 1,75,32,794/- be directed to be deleted; iv. the transactions of corporate guarantee fee, benchmarked by the assessee using ‘Other Method’ as most appropriate method based on specific quotations obtained from HDFC Bank and ICICI Bank are at arm’s length; v. no adjustment is required as corporate guarantee fee charged by the assessee @ 0.25% has also been accepted at arm’s length by Hon’ble Jurisdictional ITAT in assessee’s own case for A.Y. 2010- 11, A.Y. 2012-13 and A.Y. 2014-15. GROUNDS OF APPEAL - TRANSFER PRICING ADJUSTMENTS SPECIFIED DOMESTIC TRANSACTIONS – ADJUSTMENTS OF Rs.1,03,87,37,184/- XIX. Inter-unit Transfer - Technical Textile Business, Kashipur (TTBK) Division – Adjustment of Rs. 49,765/- 24.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making transfer pricing adjustment of Rs. 49,765/- in respect of inter-unit transactions amounting to Rs. 18,63,873/- pertaining to ‘Technical Textile Business’ (TTB) Segment of the assessee. 25.0 That the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in law and on facts and circumstances of the case, in rejecting, without any cogent reason, the assessee’s most appropriate method being ‘CUP Method’ which is a direct price based method and instead applying the ‘TNMM’ in an arbitrary manner, not providing FAR analysis and search process to assessee and resultantly taking companies which are product wise and functionally incomparable to the assessee’s TTBK unit.

26.0 Without prejudice to the above, the Ld. TPO and consequently the Ld. AO have erred in making the adjustment, as the PLI of assessee’s TTBK unit (eligible unit) as computed by the Ld. TPO himself @ 4.56% is still lower than the assessee’s TTB Segmental Margin of @ 17.61% and thus warranting no adjustment even under TNMM made by the Ld. TPO. 27.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete such adjustment of Rs. 49,765/- in respect of inter-unit transactions pertaining to TTB Segment. XX. Transfer of Electricity by Captive Power Plant (CPP) unit at Bhiwadi, Rajasthan and at Dahej, Gujarat – Adjustment of Rs. 22,62,18,062/- in Bhiwadi Plant and Rs. 69,83,85,215/- in Dahej Plant - Total Adjustment of Rs. 92,46,03,277/- 28.0 That the Ld. TPO and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the transfer pricing adjustment of Rs. 22,62,18,062/-&Rs. 69,83,85,215/- in respect of transaction of transfer of electricity by the CPP units at Bhiwadi&Dahej respectively by using an external price data being the average of Indian Energy Exchange (IEX) rates [@ Rs. 3.25 per unit for Bhiwadi and @ Rs. 3.23 per unit for Dahej] and notified tariff rate of respective state electricity board(s) [@ Rs. 7.15 per unit for Bhiwadi and @ Rs. 5.32 per unit for Dahej] for the purpose of benchmarking the stated transaction and by rejecting the assessee’s comparable uncontrolled price data (in form of actual purchase of electricity from respective state electricity boards (SEB)). 29.0 That the Ld. TPO and consequently the Ld. AO have erred in law and on facts and circumstances of the case in averaging the data of two different systems viz. IEX spot rates and notified tariff rate of respective state electricity board(s) and erroneously treating such average rate as ALP for the purpose of making the aforesaid adjustment in respect of transfer of electricity by CPPs. 30.0 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on facts and in circumstances of the assessee’s case in treating the rates of power traded on IEX u/s 133(6) of the Act, as comparable uncontrolled rates/prices. IEX Transactions are not at all comparable with the assessee’s transactions of power on account of following factors: - i. the modus operandi and business model of IEX which is a spot energy exchange is not comparable to the assessee’s case. ii. the rates obtained from IEX u/s 133(6) do not qualify as an appropriate comparable data for the application of CUP method. iii. there are material differences between the terms and conditions of transaction entered into by the assessee and those taken from IEX. 31.0 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on the facts & circumstances of the assessee’s case rejecting the assessee’s reliable internal CUP data in form of actual transactions of purchase of electricity from the SEBs and instead applying the external CUP method by taking the average rates of average price being traded at IEX & rate at which power was purchased from respective state electricity boards. 32.0 That the Ld. DRP and consequently the Ld. TPO/ Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in taking the IEX rates and notified tariff rates of SEB as obtained from public domain without appreciating that such tariff rates are only basic rates and various other charges viz. fixed charges, POC charges, RPO Charges, distribution charges, NDLC Charges, load charges, electricity duty, cesses etc. have not been factored in while benchmarking the transactions. 33.0 Without prejudice, that the Ld. TPO and consequently the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in not considering the landed / total cost of IEX which is Rs. 8.19/- unit for Bhiwadi and Rs. 7.14/- unit for Dahej after considering the various other fixed, variable charges and cesses. Further, the Ld. TPO erred in not considering the landed / total tariff rates as notified by the SEB which after including the various other fixed, variable charges and cesses are same as that of assessee’s rates. Adjustment made is higher than the deduction claimed u/s 80-IA of the Act 34.0 Without prejudice to the above, the Ld. DRP/TPO and consequently the Ld. AO have erred in making the transfer pricing adjustment amounting to Rs. 22,62,18,062/- with respect to the transfer of electricity by CPP Unit at Bhiwadi and thus completely ignoring the fact that amount of deduction u/s 80-IA of the Act actually claimed w.r.t. the said unit in its return of income is only Rs. 18,95,46,684/-. The Ld. TPO/AO completely lost sight while making the aforesaid addition which is even higher than the amount of deduction u/s 80-IA actually claimed by the assessee. 35.0 The Ld. DRP/TPO and consequently the Ld. AO erred in making the aforesaid addition without appreciating the intent and objectives of provisions of section 80-IA(8) of the Act, which clearly provides that determination of ALP of inter-unit transactions is only for the purpose of computing of deduction u/s 80-IA of the Act. Thus, the Ld. AO has erred in law in making the addition of entire transfer pricing adjustment without having regard to the deduction actually availed by/allowed to the assessee. 36.0 The Hon’ble ITAT may be pleased to delete the transfer pricing adjustment of Rs. 22,62,18,062/-&Rs. 69,83,85,215/- in respect of transaction of transfer of electricity by the CPP units at Bhiwadi & Dahej respectively. XXI. Sale of Electricity by Wind Power Mill (WPP) unit at Tamil Nadu – Adjustment of Rs. 11,40,84,142/- 37.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the transfer pricing adjustment of Rs. 11,40,84,142/- in respect of specified domestic transaction of transfer or sale of electricity @ 6.35 per unit by the assessee’s WPP unit at Tamil Nadu on wholly unjust, illegal, erroneous, superficial, frivolous, arbitrary and untenable grounds and is prayed to be deleted before your honour. 38.0 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in rejecting the assessee’s reliable internal CUP data in form of actual purchase of electricity and instead taking the general tariff rates @ 2.86 per unit obtained by ld. TPO u/s 133(6) of the Act from TNERC3 while benchmarking the transaction of sale of electricity by WPP unit of the assessee. 39.0 Without prejudice, that the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in using the tariff rates obtained from TNERC without appreciating that such rates may at most be the basic rate and various other charges viz. fixed charges, electricity duty, cesses etc. have not been factored in while considering such rate for benchmarking purposes. 40.0 The Hon’ble ITAT may be pleased to direct the Ld. TPO/ Ld. TPO to delete the above adjustment of Rs. 11,40,84,142/- in respect of specified domestic transaction of transfer of electricity by WPP unit of the assessee. XXII. Enhanced claims of deductions made during the course of proceedings before the Ld. DRP Claim w.r.t Captive Power Plant (“CPP”) Unit at Bhiwadi, Rajasthan 41.0 That the Ld. DRP and consequently the Ld. AO have erred in not granting the claim of enhanced deduction u/s 80-IA of the Act raised by the assessee by re-determining the arm’s length price of steam 3Tamil Nadu Electricity Regulatory Commission CPP unit at Bhiwadi, Rajasthan to Rs. 88,39,61,354/- [instead of Rs. 26,14,87,986/-] which is computed by multiplying the equivalent quantity of such steam in terms of unit of electricity (KwH) as certified by the Chartered Engineer with the ALP rate of electricity in accordance with the directions of the Hon’ble DRP in the assessee’s own case for the A.Y. 2016-17. 42.0 That the Hon’ble ITAT may be pleased to direct the Ld. TPO/ Ld. AO to re-determine the profitability of CPP unit at Bhiwadi, Rajasthan giving the consequential effect of above ground and therefore allow the enhanced deduction u/s 80-IA of the Act by Rs. 62,24,73,368/- in respect to said unit. Claim w.r.t. Captive Power Plant (“CPP”) Unit at Dahej, Gujarat 43.0 That the Ld. DRP and consequently the Ld. AO have erred in not granting the claim of enhanced deduction u/s 80-IA of the Act raised by the assessee by re-determining the arm’s length price of steam transferred by CPP unit at Dahej, Gujarat to Rs. 2,34,19,87,791/- [instead of Rs. 79,09,57,273/-] which is computed by multiplying the equivalent quantity of such steam in terms of unit of electricity (KwH) as certified by the Chartered Engineer with the ALP rate of electricity in accordance with the directions of the Hon’ble DRP in the assessee’s own case for the A.Y. 2016-17. 44.0 That the Hon’ble ITAT may be pleased to direct the Ld. TPO/ Ld. AO to re-determine the profitability of CPP unit at Dahej, Gujarat giving the consequential effect of above ground and therefore allow the enhanced deduction u/s 80-IA of the Act by Rs. 1,55,10,30,518/- in respect to said unit. GROUNDS OF APPEAL - CORPORATE TAX ISSUES – DISALLOWANCE OF RS. 61,66,48,448/- XXIII. Disallowance of Weighted Deduction u/s 35(2AB) of the Act amounting to Rs. 52,78,00,000/- in respect of In-House Research and Development Units 45.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case by disallowing the entire claim of weighted deduction u/s 35(2AB) of the Act in respect of in-house scientific research facility to the extent of Rs. 52,78,00,000/- solely on account of not receipt of approval of allowable revenue & capital expenditure in Form No. 3CL viz. report to be submitted by the prescribed authority i.e. DSIR to the Director General (Income-tax Exemptions). 46.0 That the Ld. DRP and consequently the Ld. AO has erred in law in making the aforesaid disallowance by ignoring that assessee has duly 35(2AB) r.w.r. 6(7A) as attributable to the assessee i.e. Recognition/renewal of all R&D units from DSIR, from filing of Form No. 3CK before DSIR [on 19.02.2018 along with all necessary details], obtaining the reports from Statutory auditors in Form No. 3CLA and getting the same uploaded on IT Portal, Audits of accounts of R&D units, and further following up with DSIR for getting the Form no. 3CL filed with IT authorities. 47.0 That the Ld. DRP and consequently the Ld. AO have erred in making the aforementioned disallowance as non-receipt of approval in Form No. 3CL is not a mistake/obligation/delay attributable to the assessee, though the assessee made several reminders to the DSIR for that matter, and even the provisions of section 35(2AB) nowhere requires that receipt of Form No. 3CL is pre-condition for claiming deduction under said section by the assessee. 48.0 The ld. AO has erred in making the disallowance of bonafide claim of the assessee without appreciating that deduction allowed by the substantive provisions of the Act cannot be controlled by the procedural lapses specified in subordinate legislation and that too on part of some other agency and which is beyond the control of assessee. 49.0 Without prejudice, the Ld. AO/Ld. DRP has erred in not granting the deduction of depreciation, additional depreciation and investment allowance u/s 32(1), 32(1)(iia) and 32AC of the Act respectively in respect of Capital expenditure of which weighted deduction u/s 35(2AB) of the Act was disallowed. 50.0 The Hon’ble ITAT may be pleased to grant the weighted deduction amounting to Rs. 52,78,00,000/- u/s 35(2AB) of the Act. XXIV. Disallowance of Deduction u/s 80-IA of the Act amounting to Rs. 7,09,74,669/- 51.0 That the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case by disallowing the amount of deduction claimed by the assessee u/s 80-IA of the Act amounting to Rs. 7,09,74,669/- [out of deduction claimed by the assessee u/s 80-IA of the Act amounting to Rs. 18,95,46,684/- in respect of its CPP Unit at Bhiwadi&Rs. 80,60,31,262/-in respect of CPP at Dahej] on the following grounds which are purely based on conjectures, surmises and non-application of mind: d) that assessee did not furnish any justification along with documentary evidences w.r.t. to the deduction claimed u/s 80-IA of the Act; e) that the tax auditor of the assessee did not approve / certify the eligibility of the above unit in the tax audit report which is factually incorrect as the tax auditor has duly certified the above amount of 80-IA of the Act in its tax audit report and also necessary certificates in Form no.10CCBs were duly filed by the assessee. f) that the Ld. DRP had upheld the similar disallowance in AY 2016-17, however, the Ld. AO has failed to correctly appreciate the Ld. DRP directions on this issue; g) that as per the details submitted by the assessee in respect of cost incurred in each plant, the assessee is not eligible for claim of deduction u/s 80-IA of the Act in respect of both the units which is without any reason, evidence or justification on part of ld. AO. h) that the disallowance has been proposed solely on the basis of disallowance made by the predecessor Ld. AO and the precedent followed in AY 2017-18. 52.0 The Hon’ble ITAT may be pleased to direct the Ld. AO to delete the disallowance of deduction u/s 80-IA of the Act amounting to Rs.7,09,74,669/-. XXV. Disallowance of Depreciation of Goodwill amounting to Rs.8,07,967/- 53.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of depreciation of Rs. 8,07,967/- on goodwill arising on acquisition of three business units from SRF Polymers. 54.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of depreciation of Rs. 8,07,967/- on goodwill: - i. by taking a view that the amount of goodwill as arise on acquisition of three businesses is a balancing figure and not the goodwill which the assessee paid in excess of its valuation; ii. by drawing an incorrect interpretation after perusal of agreement for transfer of business dated 01.01.2009 that in the given schedule of assets & liabilities, goodwill is not mentioned implying thereby that there was neither any valuation of goodwill nor there was any sale of goodwill; iii. by treating the same merely as book entry in the books of accounts of the assessee. 55.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the identical issue has been decided in the favour of the assessee by the Hon’ble Delhi ITAT in the A.Y. 2014-15 and A.Y. 2012-13 in the assessee’s own case.

56.0 The Hon’ble ITAT may be pleased to grant the allowance of depreciation on Goodwill of Rs. 8,07,967/-. XXVI. Disallowance u/s 14A of the Act amounting to Rs. 1,70,65,812/- 57.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the disallowance of Rs. 1,70,65,812/- u/s 14A of the Act read with rule (‘r.w.r.’) 8D(2)(iii) of the Income Tax Rules, 1962 (‘the Rules’) inspite of assessee having no exempt income during the year under consideration. The said disallowance is on wholly unjust, illegal, erroneous and untenable grounds on the facts & circumstances of the assessee’s case & based on conjectures and surmises and is prayed to be deleted before your honour. 58.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in computing the disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) of the Rules by solely relying on the clarification inserted to section 14A in the Act via Finance Act, 2022 and by following the CBDT Circular No. 05/2014 (F. No. 225/182/2013-ITA.II) dated 11.02.2014. 59.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the above disallowance by failing to appreciate that the assessee had made investment out of its own reserves and surplus funds as the amount of average investments related to tax free income is only Rs. 4.12 Crores and the total amount of reserves & surplus as on 31.03.2018 is Rs. 3,391.23 Crores which is 823.11 times of the value of average tax free investments, thus warranting no disallowance under section 14A of the Act. 60.0 Without prejudice to above grounds, the Ld. DRP and consequently the Ld. AO while making the disallowance u/s 14A of the Act, have erred in taking entire value of investments instead of investments related to tax-free income and thus not following the judgments of the various courts including jurisdictional Delhi High Court in the case of ACB India Ltd. vs. ACIT (2015) 374 ITR 108 (Delhi) and others. The ld. AO erred in taking the following incorrect opening & closing balances of value of viz. c) Rs. 279.48 Crores instead of correct amount of Rs. 4.12 Crores w.r.t. opening balance of investments; d) Rs. 205.42 Crores instead of correct amount of Rs. 4.12 Crores w.r.t. closing balance of investments. 61.0 Without prejudice to above, the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the similar issue has been decided in the favour of the assessee in the assessee’s own case in different years before the various appellate forums viz. Ld. CIT(A) in the AY 2015- 16, Hon’ble DRP in the AY 2014-15 and Hon’ble Delhi ITAT in the AY 2012-13, AY 2010-11, AY 2008-09, AY 2007-08 & AY 2006-07. 62.0 The Hon’ble ITAT may be pleased to delete the disallowance u/s 14A of the Act amounting to Rs. 1,70,65,812/-. XXVII. Incorrect computation book profits u/s 115JB of the Act by the Ld. AO. 63.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the addition of Rs. 1,70,65,812/- on account of disallowance u/s 14A of the Act while computing the book profits u/s 115JB of the Act, even when provisions of section 115JB do not provide for such disallowance. 64.0 That the Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the similar issue has been decided in the favour of the assessee in the assessee’s own case in different year before the various appellate forums viz. Hon’ble Delhi ITAT in the AY 2010-11 and Ld. CIT(A) in the AY 2015-16. 65.0 The Hon’ble ITAT may be pleased to direct the Ld. AO to delete the above addition while computing the book profits u/s 115JB of the Act. XXVIII. OTHER CORPORATE TAX ISSUES - Claims made during the proceedings before the Ld. DRP 66.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not entertaining the claim made by the assessee during the course of proceedings before the ld. DRP amounting to Rs. 85,12,327/- on account of amount of gratuity actually paid by the assessee but routed through other comprehensive income and which was inadvertently left to be claimed while filing/ revising its return of income. 67.0 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in not entertaining the claim made by the assessee during the course of proceedings before the ld. DRP amounting to Rs. 25,79,06,280/-(being 25% of original cost of lease hold land amounting to Rs. 1,03,16,25,119/-) on account of amount of depreciation on lease hold land, which was inadvertently left to be claimed by the assessee while filing/ revising its return of income. 68.0 That on the facts & circumstances of the assessee’s case, the Ld. DRP and consequently the Ld. AO have erred in law in not entertaining and Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs CIT [284 ITR 323] and without prejudice, the claim is being made before the Hon’ble ITAT as an adjudicating authority following precedent in NTPC Ltd. [229 ITR 383 (1998)]. 69.0 The Hon’ble ITAT may be pleased to grant the claim of Gratuity amounting to Rs. 54,15,119/- on account of actually paid by the assessee and claim of depreciation on lease hold land amounting to Rs. 25,79,06,280/-, under normal provisions of the Act. XXIX. Other Grounds of Appeal 70.0 The Ld. AO has erred in law and on the facts & circumstances of the assessee’s case by initiation of penalty proceedings u/s 270A read with section 274 of the Act for under reporting of income which is in consequence of misreporting thereof since there was no under reporting /misreporting of any income, nor any default according to law by the assessee. 71.0 That the assessee craves leave to amend, alter, change vary or substitute any of the aforesaid grounds of appeal or add & raise an additional ground of appeal if it becomes necessary to do so in the interest of justice. 72.0 That each ground of appeal is independent of and without prejudice to the other grounds of appeals raised herein.

120. Apropos Ground Nos. 1 to 4 are general in nature, hence, not adjudicated and dismissed as such.

121. Apropos Ground Nos. 5.0 to 6.0, these relate to the incorrect computation of total income and, consequently, the erroneous demand of tax and interest amounting to Rs. 11,03,24,869/– raised under section 156 of the Act pursuant to the rectification order passed under section 154 read with section 143(3) dated 07.06.2022. These grounds are covered by our above decision vide para 7 in and accordingly respectfully following the same, these grounds are allowed for statistical purposes as indicated above.

123. Apropos grounds no.13 to 16 relating to adjustment w.r.t Reimbursement / recovery of expenses from AE’s of Rs. NIL/-. These grounds are covered by our above decision vide paras 30 & 31 in and accordingly respectfully following the same, these grounds are dismissed as indicated above.

135. The assessee raised an additional claim before the DRP. The DRP, however, refused to entertain the same solely relying on the judgment of the Hon’ble Supreme Court in Goetze (India) Ltd. v. CIT (284 ITR 323) and held that since the claim was not made in the original or revised return, it could not be admitted at that stage. Thus, no adjudication on the merits of the claim was carried out.

- expenditure on leased assets eligible for depreciation under Explanation 1 to Section 32.  MSA Motors (ITAT Hyderabad) [ITA No. 794/Hyd/2016] - capital expenditure incurred on leased premises is eligible for depreciation.  Cotecna Inspection SA (Delhi High Court, TS-1132-HC-2021) - intangible commercial rights eligible for depreciation. 138. Ld. DR of the Revenue relied upon the orders of the authorities below, but he did not controvert the contention of the ld. AR for the assessee.

ITA NO.5618/Del/2014 (AY 2021-22)

This appeal is filed by the assessee against the assessment order dated 24.10.2024 143. passed by the ACIT, Circle 10 (1), Delhi passed under section 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 (for short ‘the Act”) for Assessment Year 2021-22 pursuant to the directions of the Dispute Resolution Panel u/s 144C(5) of the Act raising following grounds of appeal :-

“General Grounds: 1.0 That the Learned Assessing Officer (‘Ld. AO’) has erred in law and on the facts & circumstances of the assessee’s case in making transfer pricing adjustments / additions of Rs.8,47,48,351/- arising out of the order of the Ld. Transfer Pricing Officer (‘TPO’) u/s 92CA(3) of the Act and additions / disallowances of Rs.12,24,63,445/- on account of various non-transfer pricing issues under normal provisions of the Act and not rectifying the mistakes crept in intimation u/s 143(1) of the Act amounting to Rs.3,07,03,85,274/- and included in the final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act dated 24th October, 2024 pursuant to the directions of the Learned Dispute Resolution Panel (‘Ld. DRP’) dated 30th September, 2024. 2.0 That the final assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act dated 24th October, 2024 is bad in law. 3.0 Mistakes apparent from records committed in intimation u/s 143(1) of the Act aggregating to Rs.3,07,03,85,274/-. 3.1 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts and circumstances of the assessee’s case in not rectifying the following mistakes apparent from records aggregating to Rs.3,07,03,85,274/- committed by the Centralized Processing Center (‘CPC’) in the intimation dated 22.09.2022 issued u/s 143(1) of the Act included in the final assessment order by opining that adjustments 143(1) by the CPC does not lie within the scope of the variation proposed in the draft assessment order passed u/s 144C(1) of the Act: a) incorrectly disallowing an amount of bad debts of Rs.10,12,54,712/- under the normal provisions of the Act; b) deeming an income of Rs.57,13,58,000/- as other income not included in profit & loss account without any basis; c) not granting the allowance of bonus of Rs.2,09,63,318/- u/s 43B of the Act under the normal provisions of the Act; d) not granting the allowance of leave encashment of Rs.2,18,75,224/- u/s 43B of the Act under the normal provisions of the Act on wholly; e) not allowing the deduction of Rs.2,35,49,34,020/- u/s 80-IA of the Act under the normal provisions of the Act without providing any reason or showing any inconsistency. 4.0 Income computed as per computation sheet forming part of final order u/s 143(3)/144C(13) of the Act is inaccurate and erroneous 4.1 That the Learned Assessing Officer (‘Ld. AO’) has erred in law and on the facts & circumstances of the assessee’s case in making an ad-hoc addition (non-speaking addition) of Rs.6,03,04,307/- in the computation sheet [in the item under Profit and Gain from Business and Profession (PGBP)] forming part of the assessment order over and above the same income [i.e. PGBP] considered in the computation of assessed income in the assessment order, which is wholly illegal, erroneous, vague, unreasoned and bad in law, thus prayed to be deleted. 5.0 Corporate Guarantee Fee from AE’s - Adjustment of Rs.3,61,35,181/- 5.1 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts and circumstances of the assessee’s case in making an upward adjustment of Rs.3,61,35,181/- by imputing the arm’s length corporate guarantee fee rate @ 0.50% instead of @ 0.25% charged by assessee from its AEs [wholly owned subsidiaries] based on the specific quotations obtained from HDFC Bank and Yes Bank, which constituted the valid comparable data under the ‘Other Method’ in assessee's specific case. 5.2 Without prejudice, the Ld. DRP and consequently Ld. TPO / Ld. AO have exceeded their jurisdiction in making a transfer pricing adjustment w.r.t.4 extension of corporate guarantees which do not 4w.r.t. : With respect to 92B of the Act and therefore, not subject to re-determination under Chapter-X of the Act. 5.3 The Hon’ble ITAT may be pleased to hold that: - i. the act of giving corporate guarantee by the assessee on behalf of the AE’s is not an international transaction and, therefore, not amenable to any adjustment under Chapter X of the Act; ii. no adjustment is required as AE has provided back-to-back counter guarantees of equal amounts on similar terms and hence no adjustment / addition is required; iii. no adjustment is required as @ 0.25% charged by the assessee as corporate guarantee fee from its AE’s [wholly owned subsidiaries] is at arm’s length and thus upward adjustment of Rs.3,61,35,181/- be directed to be deleted; iv. no adjustment is required as corporate guarantee fee charged by the assessee @ 0.25% has also been accepted at arm’s length by Hon’ble Jurisdictional ITAT in assessee’s own case for A.Y. 2010-11, A.Y. 2012-13 and A.Y. 2014-15. 6.0 Allocation of Software Cost to AE’s – Adjustment of Rs.11,65,743/- 6.1 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an adjustment of Rs.11,65,743/- in respect of international transaction of allocation of software cost amounting to Rs.98,54,126/- to AE’s by imputing a mark-up @ 11.83% over and above the pure software cost allocation. 6.2 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in proposing a mark-up @11.83% on software cost based on the average margins of some companies engaged in manufacturing of polyfilms, fibres, yarns etc. which is highly unjustified & untenable under law while benchmarking the transaction of software cost allocation which is in the nature of pure cost reimbursement. 6.3 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have erred in law in not following the order of the Hon’ble ITAT in the assessee's own case for the AY 2014-15 in which the Hon’ble ITAT has accepted the aforementioned transaction of software allocations on cost to cost basis at ALP. 6.4 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. AO to delete aforesaid adjustment of Rs.11,65,743/- in respect of allocation of software cost to AE’s.

7.0 Interest on Foreign Currency Loan – Adjustment of Rs.69,31,832/- 7.1 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an upward adjustment of Rs.69,31,832/- on the ground that interest charged by the assessee @ 6month LIBOR + 115/125 BPS [effectively @1.40% ~ 1.50%] in the case of USD loans and 6 month Euribor + 110 BPS (1.10%) in the case of Euro loans from its AE, does not meet the arm's length principle. 7.2 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in making the above adjustment of Rs.69,31,832/- by inadvertently taking the benchmark interest rate @ 3.84% for USD loans and 3.51% for EURO loans extracted from a private database ‘Bloomberg database’ on an arbitrary basis. 7.3 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in disregarding the benchmarking analysis carried out by the assessee in its TP study without affording any cogent reason which correctly determined the benchmark rate of interest on similar loans from third parties (i.e. from Banks) at @0.71% / 0.81% for USD loans and @0.50% / 0.75% for Euro denominated loan. 8.0 Interest on Trade Receivable – Adjustment of ` 24,95,150/- 8.1 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making an upward adjustment of Rs.24,95,150/- by recharacterizing the trade receivable as deemed loan and thereby incorrectly imputing the interest rate @ 6 month LIBOR + 425 BPS (effectively 4.621%) on such outstanding trade receivable from its AEs 8.2 That the Ld. DRP and consequently Ld. TPO / the Ld. AO have grossly erred in law and on the facts & circumstances of the assessee’s case in rejecting the assessee’s consistent approach of allowing the similar credit period of duration of 60 days to 360 days to both AEs and non-AEs, which is in fact a normal credit period range in the industry in which the assessee operates. They further erred in not considering the fact that it is the assessee’s uniform practice of not charging the interest on overdue trade receivables whether pertaining to AEs or non-AEs. 9.0 Transaction of inter-unit transfer of Power (Heating and Cooling) by Captive Power Plant (CPP) Unit at Bagdoon, Madhya Pradesh - Adjustment of Rs.1,31,04,579/- 9.1 That the Ld. TPO and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the Rs.1,31,04,579/- in respect of transaction of transfer of power (heating and cooling) @ ` 4.41 per unit by the CPP unit at Bagdoon, Madhya Pradesh on wholly unjust, illegal, erroneous, superficial, frivolous, arbitrary and untenable grounds and the same is therefore prayed to be deleted. 9.2 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in rejecting the assessee’s reliable CUP data in form of actual purchase of electricity from Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd. @ average rate of Rs.5.52 per unit and instead taking the average of power sale price of power generating company namely Madhya Pradesh Power Generating Co. Ltd. [Thermal +Hydel] @ Rs.4.11 per unit as obtained by the Ld. TPO u/s 133(6) of the Act. 9.3 That the Ld. DRP / Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s in acting contrary to the judgments of various courts including the judgment of Hon’ble Supreme Court in case of Jindal Steel & Power Ltd. (CA.13771/2015 & Others) wherein the rate at which SEB transfers the electricity to its consumers was held as an appropriate market rate for benchmarking the similar transaction of transfer of power. 9.4 The Hon’ble ITAT may be pleased to delete the transfer pricing adjustment of Rs.1,31,04,579/- in respect of transaction of transfer of electricity by the CPP unit at Bagdoon, Madhya Pradesh. 10.0 Transaction of inter-unit transfer of Power (Electricity) by Wind Power Mill (WPP) Unitat Tamil Nadu–Adjustment of Rs.2,49,15,866/- 10.1 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the transfer pricing adjustment of Rs.2,49,15,866/- in respect of specified domestic transaction of transfer of electricity @ ` 6.35 per unit by the assessee’s WPP unit at Tamil Nadu on wholly unjust, illegal, erroneous, superficial, frivolous, arbitrary and untenable grounds and is prayed to be deleted. 10.2 That the Ld. DRP and consequently Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in rejecting the assessee’s reliable CUP data in form of actual purchase of electricity from Tamil Nadu State Electricity Board (‘TNSEB’) / Tamil Nadu State Electricity Corporation (‘TNSEC’) and instead taking the average of power sale price of various power generating companies in the state of Tamil Nadu @ Rs.4.61 per unit as obtained by the Ld. TPO u/s 133(6) of the Act.

10.3 That the Ld. DRP and consequently the Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in failing to appreciate that the average sale price of various power generating companies in the state of Tamil Nadu does not qualify as an appropriate comparable data under CUP method instead it is the actual price charged by the State Electricity Board (which actually sells electricity to consumers) which can be used as appropriate comparable in the application of CUP method. 10.4 That the Ld. DRP / Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s in acting contrary to the judgments of various courts including the judgment of Hon’ble Supreme Court in case of Jindal Steel & Power Ltd. (CA.13771/2015 & Others) wherein the rate at which SEB transfers the electricity to consumer was held as an appropriate market rate for benchmarking the similar transaction of transfer of electricity. 10.5 Without prejudice, the ld. DRP and consequently the Ld. TPO / Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in applying the average price of various power generating companies, without appreciating that assessee’s transfer price falls within the range of such prices [obtained by ld. TPO u/s 133(6) of the Act] and hence no adjustment is warranted. 10.6 The Hon’ble ITAT may be pleased to direct the Ld. TPO / Ld. TPO to delete the above adjustment of Rs.2,49,15,866/- in respect of specified domestic transaction of transfer of electricity by WPP unit of the assessee.

11. Disallowance of weighted deduction u/s 35(2AB) of the Act amounting to Rs.8,44,43,000/- 11.1 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in disallowing the claim of weighted deduction u/s 35(2AB) of the Act in respect of in- house scientific research facility to the extent of Rs.8,44,43,000/- solely on account of not receipt of approval of allowable expenditure in Form No. 3CL viz. report to be submitted by the prescribed authority i.e. DSIR to the Director General (Income-tax Exemptions). 11.2 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making above disallowance by completely ignoring that assessee has duly complied with all applicable provisions of section 35(2AB) r.w.r. 6(7A) as attributable to the assessee i.e. Recognition/renewal of all R&D units from DSIR dated 28.10.2021 and obtaining the reports from statutory auditors in Form No. 3CLA and getting the same uploaded on IT Portal, Audits of accounts of R&D units, and further following up with DSIR for getting the Form No. 3CL filed with IT authorities and non- Form No. 3CL is not a mistake/obligation/delay attributable to the assessee, though the assessee did follow up and made several reminders to the DSIR even for that. 11.3 The Hon’ble ITAT may be pleased to direct the Ld. AO to delete the disallowance of weighted deduction u/s 35(2AB) of the Act amounting to Rs.8,44,43,000/-.

12. Disallowance of Deduction u/s 80-IA of the Act amounting to Rs.3,80,20,445/- 12.1 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in disallowing the amount of deduction claimed by the assessee u/s 80-IA of the Act to the extent of Rs.3,80,20,445/- in respect of its CPP Unit at Bagdoon and WPP unit at Manali equal to the amount of TP adjustment made by the Ld. TPO, purely based on conjectures, surmises and non- application of mind. 12.2 That the Ld. DRP and consequently the Ld. AO have erred in law and on the facts & circumstances of the assessee’s case in making the double addition / disallowance of` Rs.3,80,20,445/-, first on account of transfer pricing adjustment 92CA(3) of the Act and again disallowing the deduction u/s 80-IA of the Act by the same amount in respect of the above mention power units. 12.3 The Hon’ble ITAT may be pleased to direct the Ld. AO to delete the disallowance of deduction u/s 80-IA of the Act amounting to Rs.3,80,20,445/-.

13. Incorrect demand of Rs.54,19,33,350/- u/s 156 of the Act. 13.1 The Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in raising a demand of Rs.54,19,33,350/- u/s 156 of the Act which has arisen inter-alia due to various mistakes crept in the intimation u/s 143(1) of the Act which were not rectified by the ld. AO / ld. DRP and further due to not granting the MAT credit u/s 115JAA of the Act [available to the extent of Rs.5,81,07,42,703/-]. 13.2 That without prejudice the ld. AO has erred in not giving the credit of amount actually collected by way of adjustment of refunds pertaining to AY 2006-07, AY 2014-15 and AY 2016-17 amounting to Rs.52,32,23,860/-, Rs.42,21,428/- and Rs.4,59,35,738/- respectively, against the inadvertent demand of Rs.54,19,33,350/- raised u/s 156 of the Act for the year under consideration. 13.3 the adjusting the above demand of Rs.54,19,33,350/- u/s 156 of the Act along with interest with the refunds pertaining to the AY 2006-07, AY 2014-15 and AY 2016-17.

14.0 Charging of alleged Interest u/s 234A, 234B & 234C of the Act. 14.1 The Ld. AO has erred in law and on the facts & circumstances of the assessee’s case in charging the alleged interest u/s 234A, 234B and 234C of the Act on wholly unjust, illegal, erroneous and untenable grounds. 15.0 Initiation of penalty u/s 270A of the Act 15.1 The Ld. AO has erred in law and on the facts & circumstances of the assessee’s case by initiation of penalty proceedings u/s 270A read with section 274 of the Act as there is no under reporting / misreporting of any income, nor any default according to law by the assessee. 16.0 Other Grounds of Appeal 16.1 That the assessee craves leave to amend, alter, change vary or substitute any of the aforesaid grounds of appeal or add & raise an additional ground of appeal if it becomes necessary to do so in the interest of justice. 16.2 That each ground of appeal is independent of and without prejudice to the other grounds of appeals raised herein.”

144. Apropos Ground Nos. 1 to 2 are general in nature, hence, not adjudicated and dismissed as such.

145. Apropos Ground No. 3 is in relation to the Mistakes apparent from records committed in intimation u/s 143(1) of the Act aggregating to Rs. 3,07,03,85,274/-.

146. Brief Fact The Centralized Processing Centre (“CPC”) while issuing intimation u/s 143(1) made certain prima facie adjustments aggregating to Rs.3,07,03,85,274/-, including: a) Disallowance of bad debts of Rs.10,12,54,712/-; b) Addition of deemed income of Rs.57,13,58,000/- without basis; c) Non-allowance of bonus u/s 43B amounting to Rs.2,09,63,318/-; d) Non-allowance of leave encashment u/s 43B amounting to Rs.2,18,75,224/-; e) Non-granting of deduction u/s 80-IA amounting to Rs.2,35,49,34,020/-.

147. The assessee raised these issues before the DRP contending that all such adjustments were mistakes apparent from record. However, the DRP declined to adjudicate the same on the ground that adjustments made by CPC u/s 143(1) do not fall within the scope of variations proposed in the draft assessment order u/s 144C(1).

148. At the time of hearing, the ld. AR submitted that all the above issues have already been adjudicated in favour of the assessee by the Commissioner of Income Tax (Appeals) in proceedings u/s 250 of the Act vide order dated 11/07/2025, wherein the CIT(A) has deleted the impugned additions/disallowances.

156. Apropos grounds no.6.1 to 6.4 relating to adjustment w.r.t Allocation of Software Cost to AE’s of Rs. 11,65,743/-. These grounds are covered by our above decision in for AY 2017-18 vide paras 26 & 27 and respectfully following the same, these grounds are allowed.

157. Apropos grounds no. 7.1 to 7.3 relating to Interest on Foreign Currency Loan - Adjustment of Rs. 69,31,832/- 158. The assessee advanced foreign currency loans to its Associated Enterprises (AEs) in the ordinary course of business. The loans were denominated in USD and EURO, and 6-month LIBOR + 115/125 bps (1.40%–1.50%) for USD loans and 6-month EURIBOR + 110 bps (1.10%) for EURO loans. The assessee supported these rates by benchmarking them against comparable third-party loans from banks, which ranged between 0.71% to 0.81% for USD loans and 0.50% to 0.75% for EURO loans, demonstrating that its interest rates were at arm’s length.

159. The TPO rejected the assessee’s LIBOR/EURIBOR-based interest rates of 1.40%– 1.50% for USD loans and 1.10% for Euro loans advanced to AEs, and instead adopted much higher benchmark rates of 3.84% (USD) and 3.51% (Euro) taken from the Bloomberg database, treating the assessee’s loans as being below arm’s length. Based on these rates, the TPO computed an upward adjustment of Rs.69,31,832/-, which the AO accepted in the draft assessment. The DRP further endorsed the TPO’s approach without offering cogent reasoning and disregarded the assessee’s TP analysis showing that comparable third-party bank loans carried significantly lower interest rates, thereby confirming the entire adjustment.

163. Apropos grounds no. 8.1 to 8.3 relating to Interest on Trade Receivable – Adjustment of Rs. 24,95,150/-.

Uniform business practice of not charging interest to both AEs and non-AEs negates any allegation of differential treatment. e) Reliance was placed on decisions including:  AT&T Communication Services India Pvt. Ltd[ITA 915/2019] [HC(del)] [16.12.2024].,  Global Logic India Pvt. Ltd.,  Kusum Healthcare Pvt. Ltd. (Del HC)[ITA 765/2016] [dated 25.04.2017],  Barco Electronic Systems (P) Ltd[ITA No.6123/Del/2018].

181. The assessee submitted that it had continuously followed up with the DSIR for issuance of Form 3CL, but despite numerous reminders, the DSIR had not issued Form 3CL quantifying the eligible R&D expenditure. The assessee contended that non-issuance of Form 3CL was not attributable to any deficiency on its part.

204. Apropos grounds no. 14.1is related to the Interest Charged u/s 234A of the Act of Rs. 1,31,40,992/-.

210. Apropos Grounds no. 14 to 15 relating to Charging interest u/s 234B & 234C and initiation of penalty u/s 270 of the Act. These are the consequential in nature and hence do not require any adjudication.