I) [1]Commissioner Of Income Tax v. Alstom Projects India Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 414 OF 2018 The Pr. Commissioner of Income Tax, Pune 5Vs.Spicer India Ltd. ….. Appellant ….. Respondent Mr. Suresh Kumar, for Appellant.Mr. Sanjiv M. Shah, for Respondent. CORAM:K.R.SHRIRAM, J &FIRDOSH P. POONIWALLA, J.DATED :JUNE 28, 2023 P.C. 1.The following two questions of law have been proposed: (a)Whether the ITAT was correct in holding thatthe TP adjustment should be proportionately to thevalue of international transaction same is contraryto the prescription of Rule 10B(1)(c). Further, theIndian Transfer Pricing Regulations does not allowit as it presupposes that if the net margins of AE &non-AE are not same, then ITTPL does not permitfurther adjustment to the adjustment. Because thepresumption underlying arm’s length principle isthat uncontrolled transactions are at arm’s length,and therefore, if the overall margins are less thanarm’s length margins, the shortfall must be onaccount of AE transactions only and not on proratebasis? (b) Whether the ITAT was correct in allowing theproportionate adjustment claim even though theSLP on the similar filed by the Revenue has beenadmitted by the Hon’ble Supreme Court in the caseof Fire Stone International Pvt. Ltd. Vide its orderdated 16/08/2016? 2.The actual question, however, is whether benchmarking should bedone only on the associated enterprises transactions or for the entireturnover ? 3.Mr. Shah has placed on record 7 judgments of this Court and 1judgment of the Supreme Court which are as under : i) [1]Commissioner of Income Tax Vs. Alstom Projects India Ltd. ii) [2]Commissioner of Income Tax Vs. Tara Jewels Exports P. Ltd. iii) [3]Commissioner of Income Tax Vs. Thyssen Krupp Industries IndiaP. Ltd. iv)[4]Commissioner of Income Tax Vs. Hindustan Unilever Ltd. v) [5]Commissioner of Income Tax Vs. Phoenix Mecano (India) Pvt.Ltd. vi) [6]Commissioner of Income Tax Vs. Firestone International P. Ltd. vii) [7]The Pr. Commissioner of Income Tax Vs. M/s. Bunge India Pvt.Ltd. viii) [8]Commissioner of Income Tax Vs. Essar Teleholdings Ltd. 4.In all these matters, the Courts have held that the benchmarkingshould be done only on the associated enterprises transactions and not for the entire turnover. 1(2017) 394 ITR 141 (BOM)2(2016) 381 ITR 404 (BOM)2(2016) 381 ITR 404 (BOM) 3(2016) 381 ITR 413 (BOM) 4(2017) 394 ITR 73 (BOM) 5(2019) 414 ITR 704 (BOM) 6(2015) 378 ITR 558 (BOM) 7Order passed by Bombay High Court dated 03/06/2019 in Income Tax Appeal No. 445 of 20178(2018) 401 ITR 445 (SC)8(2018) 401 ITR 445 (SC) 5.Therefore, the ITAT was correct in holding that the TP adjustmentshould be proportionate to the value of international transaction. 6.As regards the proposed question of law no. 2, appeal in case of Firestone International P. Ltd (supra) was part of the appeals that wasconsidered by the Apex Court in Essar Teleholdings Ltd. (supra) but whatwe find from the judgment of the Apex Court Essar Teleholdings Ltd.(supra) is that Revenue in its appeal in Firestone International P. Ltd(supra) has only raised the issue of disallowance under Section 14A andnot regarding TP adjustment. 7.Therefore, the 2[nd] issue also cannot be considered as a substantialquestion of law. 8.Appeal dismissed. 9.Mr. Shah states that against the judgment of the Bombay High Courtin Hindustan Unilever Ltd. (supra), Revenue had preferred SLP whichcame to be dismissed by order dated 29/10/2018 in [9]Commissioner ofIncome Tax Vs. Hindustan Unilever Ltd. (FIRDOSH P. POONIWALLA, J) (K.R.SHRIRAM, J) 9(2018) 99 taxmann.com 135(SC)