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Judgment
PER VIMAL KUMAR, JM:
This appeal is filed by the assessee against the final assessment order dated 23.02.2022 passed u/s 143(3) r.w.s 144C (13) of the Income Tax Act, 1961 (hereinafter called ‘the Act’) subsequent to the directions of the Ld. Dispute Resolution Panel (DRP)/TPO vide order dated 15.12.2021 for Assessment Year 2017-18.
The assessee has taken the following concise grounds of appeal.
1- That the DRP-1/Assessing Officer/National e-Assessment Center ["NeAC"] erred on fact and in law in determining the income of the appellant at Rs.3,46,49,803/- as against the NIL income returned by the appellant pursuant to the order of the Dispute Resolution Panel-1. New Delhi.
2- The TPO/DRP-1/National e-Assessment Center erred on fact and in law in not considering the additional evidence filed by the appellant during the proceeding before DRP vide letter dated 16/08/2021.
3- The TPO/DRP-1/National e-Assessment Center erred on fact and in law in making transfer pricing adjustment amounting to Rs. 22,54,738/- on account of international transaction for reimbursement of expenditure being remuneration of the consultant holding that the appellant has not received any services from the AE without considering the additional evidences filed by the appellant vide its letter dated 16/08/2021.
4- The TPO/DRP-1/National e-Assessment Center erred on fact and in law in making transfer pricing adjustment amounting to Rs. 86,32,222/-on account of international transaction for business support services received by appellant from the AE holding that the appellant has not received any services from the AE on account of international transaction for business support services without considering the additional evidences filed by the appellant vide its letter dated 16/08/2021.
5- TPO/DRP-1/National e-Assessment Center erred on fact and in law in making transfer pricing adjustment amounting to Rs.2,37,62,843 on account of international transaction of Sale of books to AE, Royalty expenditure on Books to AE, Commission income on services rendered to AE and Purchases of books from AE.
6- That the TPO/DRP-1/National e-Assessment Center erred on facts and in law in applying the TNMM as MOM on the entity level by holding that the segmental accounts prepared by the appellant provide a distorted view of the profitability of the various segments ignoring the fact that under transfer pricing regulations, the adjustment can only be made on the value of International Transaction with the Associated Enterprise. 7- That the TPO/DRP-1/National e-Assessment Center erred on facts and in law in disregarding the benchmarking analysis undertaken by the appellant by rejecting the comparable companies selected by the appellant on the ground of persistence losses.
8- That the TPO/National e-Assessment Center erred on fact and in law in in selecting the comparables which are functionally different to the business of the Appellant and DRP-1 sustaining the benchmarking analysis undertaken by the TPO which contains the selection of comparables that are not functionally most comparable with the business operations of the appellant.
9- The DRP/National e-Assessment Center New Delhi erred in charging of interest under the provision of section 2348, 234C & 234D of the Income Tax Act in their order.
10- The appellant craves leave to urge, add or alter other ground or grounds at the time of hearing.
Through application dated 17.05.2025 request for admitting following additional ground was made:-
1- TPO/DRP-1/National e-Assessment Center erred on fact and in law in not considering the request of the appellant that an internal cup existed for international transaction of Sale of books to AE where the appellant has been provided greater discounts compared to the third parties.
An application under rule 29 of the income tax appellate tribunal rules, 1962 (rules) in connection with ground no. 4 of main grounds of appeal relating to the calculation of the arm's length price of the transaction of purchase of books from Macmillan Distributors Ltd ["MDL" or "Deemed AE"]. Submission of segment wise profitability calculation of the appellant company was preferred.
Paper book of consisting of 20 pages for filing as under:
| Sr. No. | Content | Page No. | Submitted before lower authorities |
| 1 | Copy of Show cause Notice [SCN] dated 01.12.2020 | 1-12 | Not Applicable |
| 2 | Copy of Transfer Pricing Order under section 92CA(3) For the A.Y 2021-22, dated 30.10.2023 | 13-15 | Not Applicable |
| 3 | E-Mail on discount on print price. | 16-18 | No |
| 4 | Segmental Accounts of Bloomsbury Publishing India Private Limited for A.Y 2021-22 | 19 | Not Applicable |
| 5 | Segmental Accounts of Bloomsbury Publishing India Private Limited for A.Y 2018-19 | 20 | Not Applicable |
4 Ld. Authorized Representative for the appellant/assessee submitted that certain evidence filed before DRP which were not filed before ld. AO were not considered by DRP. Segmental account of publishing loss and trading profits are to be filed. The similar segmental account for A.Y 2020-21 were accepted the Hon’ble ITAT in ITA No. 812/DEL/2021 for A.Y 2016-17 vide order dated 22.01.2025 had sent the matter to ld. AO for afresh decision. 5 Ld. Departmental Representative submitted that, the assessment was completed on the basis information provided by the assessee. He had no objection to the additional evidence considering the nature of business and functions are exactly similar and he prayed that the issue may remitted back to AO/TPO for proper verification.
6 From examination of record, in light of aforesaid contentions, it is crystal clear that ground of appeal no. 1 and 10 are general in nature.
7 Regarding grounds of appeal no. 2 to 8 of transfer pricing, ld. authorized representative for the appellant assessee claimed that transactions and FAR of the assessee are similar to A.Y 2021-22 and there is no change in the activities carried out by the assessee in the current assessment year and subsequent assessment years. It is brought to our notice that the assessee has filed the segmental report at the time of TP study, however the data was incomplete. Therefore, the TPO rejected the TP study submitted by the assessee. Now based on the detailed findings in the AY 2021-22, the assessee has prepared the segmental report by following the similar allocation of expenses relating to the segment. Since, it is claimed that the books of account maintained by the assessee are exactly similar, it is only a re-appreciation of facts and allocation of expenses following allocation key of respective sales. In our considered view, the above additional evidences are relevant and accepted. For the sake of complete justice, we are inclined to remit this issue to the file of AO/TPO to verify the allocation of expenses and the segmental report prepared by the assessee based on the accepted method of allocation in AY 2021-22 and also the details of discount offered by its AE and may be compared with the discount offered by the AE in the uncontrolled transactions and directed to compare the internal CUP available in this case to benchmark the transactions of purchase of books from its AE. Therefore, we direct the AO/TPO to benchmark the international transactions based on the additional evidences brought on record by the assessee as per law after giving proper opportunity of being heard to the assessee. Accordingly, ground no. 2 to 8 raised by the assessee are allowed for statistical purposes.
8 In the result, the appeal of assessee is allowed for statistical purposes.