K.G. DENIM LIMITED,COIMBATORE vs. DCIT, TP-2(1), CHENNAI

ITA 1718/CHNY/2024Status: DisposedITAT Chennai05 December 2024AY 2020-21Bench: SHRI MAHAVIR SINGH, HON’BLE (Vice President), SHRI S. R. RAGHUNATHA, HON’BLE (Accountant Member)19 pages
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What did the Tribunal hold?

The Tribunal held that the CIT erred in invoking Section 263 jurisdiction. The TPO's acceptance of the assessee's ALP, supported by judicial precedents and the jurisdictional High Court's view on divergent opinions, was not erroneous or prejudicial to revenue.

What were the facts?

The assessee, K G Denim Limited, engaged in denim production, had a thermal power unit that supplied electricity to a related party. The Transfer Pricing Officer (TPO) initially accepted the assessee's ALP for the transaction. However, the CIT (Transfer Pricing) invoked revisionary powers under Section 263, deeming the TPO's order erroneous and prejudicial to revenue.

What were the issues?

Whether the CIT correctly invoked Section 263 powers to revise the TPO's order accepting the assessee's ALP for electricity transfer to a related party, considering established judicial precedents.

Which sections of the Income-tax Act were involved?

Section 263,Section 92CA,Section 80IA,Section 69B

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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI S. R. RAGHUNATHA, HON’BLE

Hearing: 11.09.2024Pronounced: 05.12.2024

PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Transfer Pricing), Chennai, dated 26.04.2024 and pertains to assessment year 2020-21. 2. The assessee has raised the following grounds of appeal:

“1. The revisional order of the CIT,(Transfer Pricing), Chennai dated 26.04.2024 vide DIN & Order No. ITBA/COM/F/17/2024-

:-2-: ITA. No: 1718/Chny/2024

The order continues below.

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