BUNDY INDIA LIMITED,VADODARA V. THE DY. CIT., CIRCLE-1(1), BARODA

ITA 1403/AHD/2016

AI Insights

Bundy India Ltd. appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the TPO's adjustments to the value of international transactions amounting to Rs. 1,77,85,368 for the Assessment Year 2009-10. The adjustments were primarily related to the ITES segment, disallowance of management charges, and the manufacturing segment. The ITAT found merit in the assessee's arguments regarding the need for a detailed FAR analysis and the application of the MAP resolution, leading to the restoration of these issues to the TPO for re-evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785773 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 25-05-2016
• Other Referred Cases: Dresser-Rand India Pvt. Ltd. vs. CIT, CIT vs. Vishakhapatnam Port Trust, J.P. Morgan Services India (Pvt.) Ltd. vs. DCIT, Dell International Services India (Pvt.) Ltd. vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: VEERBADRAM VISLAVATH
• Assessee Lawyers: S.N. SOPARKAR
• Keywords: Set aside; Opportunity of being heard; Transfer pricing; International transaction; Commercial expediency; Principle of natural justice; Double taxation relief; Related party transaction
• Section: 143(3); 90; 133(6); 10B

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “D“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD ] ] BEFORE ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER आयकर अपील सं /ITA No.1403/Ahd/2016 िनधा \u000fरण वष\u000f /Assessment Year : 2009-10 Bundy India Limited Plot No.2, GIDC Industrial Estate, Makarpura Vadodaria - 390 010 बनाम/ v/s. The Dy.CIT Circle-1(1) Baroda \u0013थायी लेखा सं./PAN: AAACB 3039 M (अपीलाथ\u0017/ Appellant) (\u0018\u0019 यथ\u0017/ Respondent) Assessee by : Shri S.N. Soparkar, Sr. Advocate Revenue by : Shree Veerbadram Vislavath, Sr.DR सुनवाई की तारीख/Date of Hearing : 31/07/2025 घोषणा की तारीख /Date of Pronouncement: 30/10/2025 आदेश/O R D E R PER SIDDHARTHA NAUTIYAL, JM: This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], dated 24/02/2016, passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2009-2010. 2. The assessee has raised the following grounds of appeal: “Your appellant, being dissatisfied with the order passed by the Dy. Commissioner of Income Tax, Circle-1(1), Baroda (\"AO\"), prefers this appeal against the same on the following amongst other grounds, which are without prejudice to each other. Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 2 1. The order passed by the learned Assessing Officer ('AO') is erroneous and contrary to the provisions of law, facts and circumstances of the case and therefore requires to be modified. 2. The AO erred in law and on facts in making and Commissioner of Income-tax (Appeals) ('CIT(A)') in upholding upward adjustment to the value of international transactions of Rs. 1,77,85,368 u/s 92CA(3) of the Income-tax Act, 1961 ('the Act'). 3. The Id. AO erred in law and on facts in making the adjustment to the international transactions of the appellant without establishing that the pre- conditions specified in section 92C(3) read with section 92CA(3) of the Act were satisfied. 4. ITES segment (Adjustment of Rs. 4,447,175) 4.1. The Id. AO/CIT(A) erred in law and on facts, in holding that the international transaction of providing back-office support services by the appellant to its associated enterprises is not at arm's length and making an adjustment of Rs. 4,447,175, 4.2. The Id. AO/CIT(A) erred in facts by not appreciating the fact of the case and in classifying the services as high-end services. 4.3. The id. AO/CIT(A) erred in law and on facts in rejecting use of multiple years data by the appellant as prescribed under Rule 10B (4) of Income tax Rules, 1962. 4.4. The Id. AO/CIT(A) erred in law and on facts in disregarding methodical search process undertaken by the appellant and rejecting 6 (six) out of 8 (eight) comparable companies selected by the Appellant, without taking cognizance of Rule 10B(2) of the Income Tax Rules, 1962 ('the Rules'). 4.5. The Id. AO/CIT(A) erred in law and on facts in rejecting various filters applied by the appellant while selecting comparable companies. 4.6. The Id. AO/CIT(A) erred in selecting additional alleged 7 (seven) comparable companies. 4.7. The Id. AO/CIT(A) violated the principle of natural justice by not providing/sharing complete details of the benchmarking analysis carried out by him and adopting arbitrary approach in selection of additional 7 (seven) alleged comparables. 4.8. The Id. AO/CTT(A) erred in law and on facts in selecting additional 7 (seven) alleged comparable companies without taking cognizance of Rule 108(2), (3) and (4) of the Rules. Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 3 4.9. The Id. AO/CIT(A) erred in using data obtained under section 133(6) of the Act which is not available in public domain and thus it is unfair and unjust to the interests of the appellant. 5. Disallowance of management charges (Adjustment of Rs. 13,482,591) 5.1. The Id. AQ/CIT(A) erred in law and on facts, in holding that the international transaction of payment of management fees by the appellant to its associated enterprises is not at arm's length and considering arm's length price of management charges as Nil. 5.2. The Id. AO/CIT(A) erred in law and on facts, in disregarding aggregation of management fees with the manufacturing segment as adopted by the appellant for benchmarking the international transactions. 5.3. The Id. AO/CIT(A) erred in law and on facts in applying comparable uncontrolled price (CUP) method as most appropriate method under Rule10B(1)(a) of Income Tax Rules, 1962 r.w.s. Section 92C(1) of the Income Tax Act, 1961. 5.4. The Id. AO/CIT(A) erred in law and on facts in applying CUP method as most appropriate method without providing any comparable instances. 5.5. The Id. AO/CIT(A) erred in law and on facts, in holding that benefit received by the appellant on paying management fees is not commensurate with the volumes and quality of services received by the appellant. 5.6. The Id. AO/CIT(A) erred in law and on facts in conveniently neglecting the detailed management recharge analysis and various evidences submitted by the appellant to support its contentions. 5.7. The Id. AO/CIT(A) erred in law and on facts, in not providing any observation/findings on various documentary evidences submitted by the appellant to demonstrate benefits received by the appellant. 5.8. The id. AO/CIT(A) erred in law and on facts, in arbitrarily holding that the basis of allocation of management charges adopted by the appellant is not supported by documentary evidences and is in ad-hoc basis. 5.9 Without prejudice to the contentions of the appellant that no adjustment is warranted in case of the appellant, it is submitted that as the amount of cost recharge incurred by the associated enterprise, directly or indirectly, related to the appellant and be allowed as reimbursement of expenses by the appellant to the associated enterprise. Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 4 6. Manufacturing segment 6.1. Without prejudice, the appellant submits that amount of management charges has been disallowed and the same has been deducted from operating cost base of manufacturing segment while computing arm's length margin of the transaction. The resultant operating margin was within the alleged arm's length margin, the adjustment was not made to the manufacturing segment. 6.2 The Id. AO/CIT(A) erred in law and on facts in disregarding methodical search process undertaken by the appellant and rejecting comparable companies selected by the Appellant, without taking cognizance of Rule 10B(2) of the Income Tax Rules, 1962 (\"the Rules'). 6.3. The Id. AO/CIT(A) violated the principle of natural justice by not providing/sharing complete details of the benchmarking analysis carried out by him and adopting arbitrary approach in selection of 2 (two) alleged comparables. 6.4. The Id. AO/CIT(A) erred in law and on facts in selecting 2 (two) alleged comparable companies without taking cognizance of Rule 10B(2), (3) and (4) of the Rules. 7. The Id. CIT(A) has erred on facts in disregarding directions given by Dispute Resolution Panel (DRP) in appellant's own case of AY 2010-11 with respect to allowance of management fees in full as well as removal of export earnings while calculating operating margin of comparable companies. 8. The Appellant submits that each grounds of appeal is without prejudice to one another. The Appellant craves leave to add to and/or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this appeal.” 3. The brief facts of the case are that the assessee, M/s Bundy India Ltd., filed its return of income for the assessment year 2009–10 on 30.09.2009 declaring a total loss of Rs. 2,99,62,218/-. The case was selected for scrutiny and assessment was completed under section 143(3) read with section 144C(4) determining the total income at Rs. 8,57,52,857/-. In the assessment order, the Assessing Officer made various additions Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 5 including transfer pricing adjustments amounting to Rs. 1,77,85,368/- made by the TPO in three main segments—(i) the ITES segment, (ii) disallowance of management charges, and (iii) the manufacturing segment. The assessee preferred an appeal before the CIT(A) against these additions. 4. In respect of the ITES Segment Adjustment, the Assessing Officer and the TPO held that the international transaction of providing back-office support services by the assessee to its associated enterprises was not at arm’s length, resulting in an upward adjustment of Rs. 44,47,175/-. The TPO classified the services rendered by the assessee as high-end knowledge process outsourcing (KPO) services rather than low-end routine IT-enabled services. The assessee’s use of multiple-year data was rejected by invoking Rule 10B(4) of the Income-tax Rules, 1962, on the ground that the assessee failed to demonstrate how prior-year data influenced the determination of the arm’s length price (ALP) for the current year. The TPO also rejected six out of eight comparables proposed by the assessee on various grounds such as failure of turnover and export filters, differing accounting years, and extraordinary events. The Assessing Officer in turn, selected seven new comparables, including Accentia Technologies Ltd., Acropetal Technologies Ltd. (Seg.), Coral Hubs Ltd., Crossdomain Solutions Pvt. Ltd., Eclerx Services Ltd., and Genesys International Corporation Ltd. These companies were held to be functionally similar, according to the TPO, and their margins were used to compute the mean profit level indicator. The TPO further upheld the use of data obtained under section 133(6) of the Act, which was not available in the public domain, stating that the information had been provided to the assessee for rebuttal. The assessee objected to this approach on the ground that that the TPO erred in re-characterizing its services as high- end KPO, rejecting the comparables selected by it, and relying on non-public Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 6 data. However, the CIT(A) upheld the TPO’s order in its entirety. The CIT(A) observed that the filters applied by the TPO—such as turnover limits, related party transaction (RPT) filter, exclusion of companies with extraordinary events, and exclusion of companies whose data was unavailable—were judicially approved and applied correctly. The Ld. CIT(A) further noted that the companies selected by the TPO were functionally comparable, and objections regarding extraordinary events or supernormal profits were not substantiated. The CIT(A) therefore held that the ITES segment adjustment made by the TPO was justified and dismissed the assessee’s grounds on this issue. 5. On the issue of Disallowance of Management Charges, the TPO determined the arm’s length price (ALP) of such payments at nil. The assessee had paid a sum of Rs. 1,34,82,591/- to its associated enterprise, TI Group Automotive Systems Ltd., UK, for management and technical support services under a global cost-sharing arrangement. The TPO noted that the assessee failed to furnish a proper benchmarking analysis or demonstrate actual, specific, and measurable benefits received from these services. It was observed that the assessee merely furnished allocation details based on group turnover and headcount but did not provide documentary evidence such as supporting documentation, service reports, or proof of benefits. The TPO therefore held that the payment was not substantiated and determined the ALP at nil. In appellate proceedings before CIT(Appeals), the assessee argued that the payments were made as per a cost-sharing agreement consistent with OECD Transfer Pricing Guidelines and that similar services had been accepted as genuine in subsequent years. The assessee submitted that the services were integral to its global operations, involving managerial, administrative, financial, and technical support provided by the parent Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 7 company to all group entities. The assessee relied on judicial precedents such as Dresser-Rand India Pvt. Ltd. (ITAT Mumbai) and CIT v. Vishakhapatnam Port Trust (144 ITR 146), on the ground that the commercial expediency of such expenditure could not be questioned by the tax authorities. However, the CIT(A) upheld the TPO’s findings, observing that a similar issue had arisen in the assessee’s own case for AY 2007–08, where the ALP was also held to be nil. The CIT(A) held that the assessee failed to demonstrate the actual receipt of services or produce any evidence to justify the payment. The allocation of expenses on an equal-share basis among 83 group companies, without establishing a link between the costs and the benefits received, was held to be arbitrary. The CIT(A) further noted that the assessee’s allocation method was inconsistent with the cost-sharing mechanism outlined in the inter-company agreement, and that no documentation substantiating the time spent or the quantum of services rendered was furnished. Therefore, following the reasoning adopted in AY 2007–08, the CIT(A) confirmed the adjustment and sustained the ALP of nil for management charges. 6. As regards the Manufacturing Segment, the TPO made an upward adjustment by rejecting several comparables proposed by the assessee and introducing new comparables of his own. The assessee, engaged in the manufacture of brake and fuel line assemblies, had selected comparables engaged in similar manufacturing activities. The TPO rejected entities such as IAI Industries Ltd., JNS Instruments Ltd., NHK Spring India Ltd., Victor Gaskets Ltd., and Venus Industrial Corporation Ltd. on the grounds of persistent losses, lack of functional similarity, and unavailability of segmental financial data. He also noted that certain companies derived the majority of their revenue from functionally different products, such as instrument clusters and gaskets, which could not be considered comparable to the Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 8 assessee’s fuel and brake line assemblies. The assessee challenged the inclusion and exclusion of comparables, alleging violation of the principles of natural justice and arbitrariness in selection. However, the CIT(A) observed that the Dispute Resolution Panel (DRP) in the assessee’s own case for AY 2010–11 had already upheld similar rejections and inclusions of comparables. Following the DRP’s reasoning, the CIT(A) held that the rejection of comparables due to persistent losses and lack of segmental data was justified, as was the inclusion of two new comparables selected by the TPO. The CIT(A) thus confirmed the transfer pricing adjustment in the manufacturing segment, holding that the TPO’s analysis was consistent with Rule 10B(2) and supported by functional comparability criteria. Accordingly, the CIT(A) upheld the Transfer Pricing adjustments made by the TPO in respect of the ITES segment, disallowance of management charges, and the manufacturing segment, while confirming that the approach adopted by the TPO was in accordance with the provisions of the Income-tax Act and the Rules. The CIT(A) held that the assessee failed to discharge its onus to establish that the transactions were at arm’s length, and consequently, the appeal was dismissed, confirming the additions made in the assessment order. 7. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the ld. counsel for the assessee submitted that that the orders passed by the Assessing Officer, the Transfer Pricing Officer (TPO), and the Commissioner of Income Tax (Appeals) were contrary to law and facts on record and therefore required to be set aside or suitably modified. It was submitted at the outset that the transfer pricing adjustments sustained by the lower authorities aggregating to Rs. 1,77,85,368/- were unwarranted since the preconditions Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 9 for invoking section 92C(3) read with section 92CA(3) of the Act were not satisfied, and the authorities below erred in law in making the adjustments without properly establishing that the assessee’s international transactions were not at arm’s length. With regard to the ITES segment adjustment, the learned counsel drew the Bench’s attention to the findings of the lower authorities and submitted that the adjustment of Rs. 43,02,777/- made to the international transaction of providing back-office support services to its associated enterprises was unjustified. He submitted that the assessee was engaged in routine, low-end IT-enabled back-office services and not in high- end KPO operations, as incorrectly characterized by the TPO. The assessee’s benchmarking analysis was prepared using the Transactional Net Margin Method (TNMM) as the most appropriate method and identified eight comparables with an average margin of 17.73%. However, the TPO rejected six of these comparables and introduced seven new ones, including entities such as Accentia Technologies Ltd., Acropetal Technologies Ltd., and Eclerx Services Ltd., which were functionally distinct and engaged in high-end services or had extraordinary events affecting their profits. The learned counsel argued that the TPO’s approach of rejecting multiple-year data, as adopted by the assessee under Rule 10B(4), and relying solely on single-year data, was contrary to the settled legal position. The ld. counsel for the assessee further submitted that that the use of non-public information gathered under section 133(6) of the Act was contrary to the principles of natural justice as the assessee was not afforded a proper opportunity to verify or cross-examine such data. The TPO’s recharacterization of the assessee’s services as high-end KPO and inclusion of supernormal profit-making companies led to a distorted computation of the arm’s length price. The learned counsel submitted that the TPO and CIT(A) erred in ignoring the MAP (Mutual Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 10 Agreement Procedure) resolution reached between India and the UK competent authorities on 18 August 2016, where the margin agreed upon for ITES services was 18% on cost, as against the 32.21% margin determined by the TPO/CIT(A). The counsel for the assessee referred to Para 5.3 of the Paper Book (Vol. 1, Page 30) and the MAP resolution (Page 339, Vol. 2), and submitted that in view of the MAP settlement, the margin of 18% should be applied even for the transactions with non-UK entities. The Counsel for the assessee pointed out that a similar issue had arisen in the assessee’s own case for AY 2007-08, and as recorded in Para 9.5 of the ITAT’s order for that year (Page 330, Vol. 2), the matter had been remanded for fresh analysis. Therefore, applying the same principle, the counsel contended that the ALP should be determined at 18% in parity with the MAP resolution. 8. Regarding the disallowance of management charges, the learned counsel submitted that this issue stood entirely resolved under the India– UK MAP dated 18 August 2016, wherein 70% of the management fees were accepted as allowable by the Competent Authorities. Hence, the issue pertaining to the disallowance of Rs. 1,34,82,591/- did not survive, and the corresponding grounds were withdrawn to that extent. The counsel for the assessee referred to Para 6.2.1 of the order (Page 44 of Paper Book Vol. 1) and to the MAP resolution (Page 164 of Vol. 1 and Page 339 of Vol. 2) in support of this submission. 9. For the manufacturing segment, the learned counsel submitted that the authorities erred in disregarding the detailed and methodical search process undertaken by the assessee and in arbitrarily rejecting the comparables selected by it. It was submitted that the amount of management charges disallowed by the TPO/CIT(A) had already been deducted from the Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 11 operating cost base while computing the operating margins of the manufacturing segment, and after such adjustment, the resultant operating margin of the assessee was within the arm’s length range. Hence, no further transfer pricing adjustment was warranted for this segment. The learned counsel contended that the TPO and CIT(A) failed to appreciate the functional comparability of the companies identified by the assessee. It was argued that companies like IAI Industries Ltd. and Victor Gaskets India Ltd., which were engaged in manufacturing auto components such as hydraulic systems and gaskets—similar to the products manufactured by the assessee—ought to have been accepted as valid comparables. The ld. counsel for the assessee referred to Page 95 of the Paper Book (Vol. 1) and Para 5.1 of the written rebuttals, where the product comparability had been clearly demonstrated. Similarly, the assessee contended that Rambal Ltd. and STI Sanoh India Ltd. were wrongly excluded, though they were engaged in functionally comparable businesses. It was explained that Rambal Ltd., which had a high export ratio, should not have been excluded solely on that basis since export orientation impacts pricing, not functional comparability. The learned counsel further clarified that STI Sanoh India Ltd., engaged in manufacturing single-walled copper-coated tubes, was comparable to the assessee’s double-walled copper-coated tubes, and its related party transactions were within acceptable limits (1.45% of income and expenses). It was submitted that both the TPO and CIT(A) erred in not providing the complete benchmarking analysis or the reasoning for the inclusion or exclusion of comparables, which was a violation of the principles of natural justice. The learned counsel pointed out that in the assessee’s own case for AY 2010-11, the Dispute Resolution Panel (DRP) had directed the TPO to allow full management fees and to exclude export incentives while Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 12 computing operating margins of comparables. The CIT(A), however, disregarded these binding directions without justification. Reliance was placed on Para 5.3 of the DRP’s directions (Page 285 of Paper Book Vol. 2) and Pages 264–270 of the same volume, which record that the ITAT in AY 2010–11 had accepted similar contentions raised by the assessee. 10. In response, Ld. DR placed reliance on the observations made by CIT(Appeals) in the appellate order. 11. We have heard the rival contentions and perused the material on record. 12. Ground Nos. 1 to 3 of the assessee’s appeal are general in nature and do not require any specific adjudication. Grounds Number 4: ITES Adjustment (Rs. 44,47,175/-) 13. With regards to TP adjustment for ITES segment, we observe that ITAT in the assessee’s own case for AY 2007-08 in ITA number 1764/Ahd/2013 had adjudicated on this issue and has made the made the following observations: “ 9.1 This ground pertains to. TP adjustment of Rs.44,47,175/- in ITES Segment. The assessee company was providing back office support service to its AEs. The ALP of the service was determined by the TPO and an adjustment of Rs.44,47,175/- was made. The assessee had contested this adjustment before the Ld. CIT(A) in respect of rejection of seven out of twelve comparable companies selected by it. Further the assessee had also objected to the six new comparable selected by the TPO. The operating profit (OP) margin earned by the assesse from its manufacturing activity was 10.36% which was compared with OP margin of 26.7% of the comparables selected by the TPO and accordingly an adjustment of Rs.44,47,175/- was made to ITES segment. The Ld. CIT(A) rejected the objection of the assesse in respect of comparable used by the TPO and upheld the TP adjustment in this segment. Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 13 9.2 The Ld. A.R. submitted that the assessee company had opted for Mutual Agreement Procedure (MAP) in respect of TP adjustment pertaining to transactions with United Kingdom (UK) AE. The assessee had accepted the terms mutually agreed under MAP resolution in respect of transactions made with UK Tax Residents AEs and a copy of the relief under MAP with UK companies has been brought on record. As a result of the MAP resolution, the assessee company has filed revised Ground of Appeal withdrawing the grounds challenging the TP adjustment in respect of its transactions with AE of UK. The Ld. A.R. explained that the margin as per assessee's TP study was 10.36% whereas ALP as determined by TPO and upheld by Ld. CIT(A) was 26.7%. On the other hand the margin as agreed upon under MAP resolution was 18% only. The Ld. A.R. requested that the margin of 18% determined under MAP may be applied to adjustment in respect of transactions with AEs of other than UK Countries in respect of ITES service. In this regard, he placed reliance on the decision in the case of J.P. Morgan Services India (Pvt.) Ltd. Vs. DCIT (Mum-Trib.) reported in 70 taxmann.com 228. He pointed out that the appeal filed by the Department against this decision was dismissed by the Hon'bleBombay High Court and the SLP was also dismissed by the Hon'ble Supreme Court. 9.3 The Ld. D.R. on the other hand relied upon the order of the Ld. CIT(A). 9.4 We have heard the rival submissions and gone through the material placed before us. A copy of Letter F. No.480/01/2014-APA dated 18.09.2016 of the CBDT has been brought on record in which relief under MAP with UK in the case of BundiyIndia Pvt. Ltd. for the Assessment Years 2007-08 to 2009-10 has been specified. It is found that the ALP of ITES transactions of the assesse with UK entities was settled at 118% of Operating Cost (OC) for all the three years. It is further found that for the Asst. Year 2007-08, the cost pertaining to UK entity in ITES Segment was Rs.112,02,382/- which was 41.16% only of total Operating Cost in ITES segment. The contention of the assessee is that the margin of 18% as determined under MAP resolution for 41.16% of the transactions with UK entities should be applied in respect of remaining 58.48% of ITES transactions with non-UK entities. 9.5 We have given a careful thought to the request of the assessee and also considered the decision in the case of J.P. Morgan Service India Pvt. Ltd. (supra) as relied upon. It is found that in the case of J.P. Morgan Services India Pvt. Ltd., MAP resolution was in respect of US related transactions with whom the company had 96% of the transactions. Considering this fact, the Ld. ITAT had held that the margin as adopted for US entities should also apply to remaining 4% transactions with non-US entities. In the present case, however, the transactions covered under MAP resolution is only the 41.16%. Thus, the facts of the two cases are found to be distinctly different as the transaction not covered under MAP in that case was a miniscule 4% whereas such transactions in this case is substantial 58.48%. Further, this issue can be decided after undertaking FAR analysis of non-UK transactions in order to find out whether there is any distinction in the factors influencing the price Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 14 between UK and non-UK transactions. The assessee has not brought on record any similarities of factors that influenced the price between UK and non-UK transactions. Therefore, we are of the considered opinion that the matter may be restored to the file of the TPO/AO for analysis of factors influencing the price between UK and non-UK AE transactions for ITES segment. If it is found that the factors influencing the price are similar between UK and non-UK transactions, the price adopted for UK transactions may also be adopted for non-UK transactions. In this regard we are guided by decision of the Ld. ITAT, Bangalore in the case of Dell International Services India (Pvt.) Ltd. Vs. DCIT (73 taxmann.com 24), wherein it was held that if after taking a FAR analysis of non-US transactions, it is found that factors influencing the price were similar between US and non-US AE transactions, same price fixed under MAP can be adopted for all the transactions. The ground is allowed for statistical purpose.” 14. We observe that the Co-ordinate Bench of this Tribunal in the assessee’s own case for Assessment Year 2007–08 in ITA No. 1764/Ahd/2013, the Tribunal, after detailed consideration of the facts and the assessee’s submissions, held that since a part of the ITES transactions of the assessee with its UK Associated Enterprises had been resolved through the Mutual Agreement Procedure (MAP) under Article 27 of the India–UK Double Taxation Avoidance Agreement, and the Competent Authorities of both countries had agreed upon a margin of 18% on operating cost, the same benchmark could, in principle, be extended to non-UK transactions, provided that the functional, asset, and risk (FAR) profiles were found to be similar. The Tribunal, relying upon the decision of the Hon’ble ITAT, Mumbai Bench in J.P. Morgan Services India (P.) Ltd. v. DCIT [2016] 70 taxmann.com 228 (Mumbai - Trib.), which was affirmed by the Hon’ble Bombay High Court and the Hon’ble Supreme Court, and the decision of the Hon’ble ITAT, Bangalore Bench in Dell International Services India (P.) Ltd. v. DCIT [2016] 73 taxmann.com 24 (Bangalore - Trib.), directed the TPO to undertake a FAR analysis to determine whether the factors influencing the price for UK and non-UK AE transactions were similar, and if so, to adopt the same MAP-determined margin for non-UK transactions as well. Following Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 15 the above decision of the Co-ordinate Bench in the assessee’s own case and respectfully applying the judicial principles laid down therein, we hold that the issue relating to the transfer pricing adjustment in the ITES segment requires fresh examination by the TPO/AO. The TPO shall undertake a detailed FAR analysis of the ITES transactions entered into by the assessee with non-UK Associated Enterprises for the relevant year and determine whether the functional and economic characteristics of such transactions are comparable with those of the UK transactions already covered under the MAP resolution dated 18 August 2016. If, upon such examination, it is found that the factors influencing the price are similar, the same margin of 18% on operating cost, as agreed under the MAP resolution between the Indian and UK Competent Authorities, shall be applied for determining the arm’s length price of the ITES segment for non-UK transactions as well. We, therefore, set aside the findings of the lower authorities on this issue and restore the matter to the file of the Assessing Officer/TPO for a fresh determination of the arm’s length price of the ITES segment in accordance with law and in the light of the directions contained herein. The assessee shall be afforded reasonable opportunity of being heard and to furnish necessary documentation in support of its contentions. 15. In the result, the ground of appeal relating to the ITES segment adjustment is allowed for statistical purposes, in line with the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for AY 2007–08 in ITA No. 1764/Ahd/2013. Ground 5: Disallowance of Management Charges (Rs.1,34, 82, 591/-) Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 16 16. We have carefully considered the rival submissions, perused the orders of the lower authorities, and examined the material placed on record. The issue for adjudication before us pertains to the transfer pricing adjustment made by the Assessing Officer/TPO in respect of the international transaction involving payment of management charges amounting to Rs. 1,34,82,591/- to the Associated Enterprise (AE), TI Group Automotive Systems Ltd., UK. The TPO determined the arm’s length price (ALP) of this transaction at nil on the reasoning that the assessee failed to establish the actual receipt of services and the benefits derived therefrom, and that the allocation of management charges among group entities was arbitrary. The CIT(A) upheld this adjustment by relying upon the appellate order in the assessee’s own case for AY 2007–08. 17. Before us, the learned counsel for the assessee submitted that the issue stands covered by the Mutual Agreement Procedure (MAP) resolution dated 18 August 2016, entered into between the Competent Authorities of India and the United Kingdom under Article 27 of the India–UK Double Taxation Avoidance Agreement. As per the said MAP resolution, 70% of the management fees paid to the UK AE were accepted to be at arm’s length, and corresponding relief was granted by the Competent Authorities for the relevant assessment years, including AY 2009–10. It was, therefore, submitted that in view of the binding MAP settlement, the disallowance of management charges to that extent cannot survive. 18. We observe that identical issue regarding management fees arose in the assessee’s own case for earlier years, and the Co-ordinate Bench of this Tribunal, in M/s. Bundy India Ltd. v. DCIT in ITA No. 1764/Ahd/2013 for AY 2007–08, had considered this issue in the context of the same group cost- Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 17 sharing arrangement. The Tribunal made the following observations in the aforesaid order which are reproduced for ready reference: “10. Ground No. 6: TP adjustment in management charge 10.1 This grounds pertains to TP adjustment of Rs.145,54,002/- in respect of management charges. The assessee has filed a letter dated 28.02.2019 informing that MAP was initiated under Article 27 of Double Tax Avoidance Agreement (DTAA) between India and the United Kingdom (UK) in respect of management fee adjustment of Rs.145,54,002/-pertaining to tranactions with AE in the UK. The Ld. AR informed that after examination of the facts of the case and the issue involved a resolution was arrived in terms of section 90 of the Act read with Article 27 of the India UK DTAA and Rule 44H of I.T. Rules. As per MAP order dated 18.08.2016, 70% of the management fee adjustment was allowed and, therefore, the assessee has requested for withdrawal of the ground in respect of disallowance of management charges. 10.2 We have considered the request of the assessee. It is found from the letter dated 18.08.2016 of the CBDT that payment of management charges by the assessee to TI Group Automatic System Ltd., UK was settled at 30% of TP adjustment of Rs.145,54,002/-. As this ground has been withdrawn by the assessee, the same is dismissed as withdrawn.” 19. Accordingly, we hold that relief may be accorded to the assessee in light of the observations made by ITAT in the assessee’s own case for AY 2007-08 and the submissions of the ld. counsel for the assessee in which reliance has been placed on the aforesaid decision, Ground Number 5 of the assessee’s appeal is dismissed as withdrawn, in view of MAP settlement. Ground Number 6: Manufacturing Segment: 20. We have carefully considered the rival contentions of both sides, perused the orders of the lower authorities, and examined the material placed on record. The issue for adjudication before us relates to the transfer pricing adjustment made by the Assessing Officer/TPO in respect of the manufacturing segment of the assessee, M/s Bundy India Ltd., for the Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 18 assessment year 2009–10. The TPO made an upward adjustment to the international transactions entered into by the assessee with its Associated Enterprises, primarily by rejecting several comparables selected by the assessee and including new ones, which according to him, were functionally comparable. The CIT(A) upheld the TPO’s findings by relying upon the reasoning adopted in the assessee’s own case for the subsequent assessment year 2010–11. 21. The learned counsel for the assessee submitted that the TPO had erred in disregarding the detailed, methodical, and scientific search process undertaken by the assessee for selecting functionally comparable companies in its transfer pricing study. It was contended that the TPO and CIT(A) had arbitrarily rejected functionally comparable companies such as IAI Industries Ltd., Victor Gaskets India Ltd., Rambal Ltd., and STI Sanoh India Ltd., which were engaged in the manufacture of automotive components similar to those of the assessee, and instead included certain companies which were not functionally comparable and had abnormal profit margins or significant related party transactions. It was further submitted that in the assessee’s own case for AY 2009-08, the Hon’ble ITAT, Ahmedabad Bench, in Bundy India Ltd. v. DCIT [(2024) 164 taxmann.com 117 (Ahmedabad - Trib.) / (2024) 113 ITR(T) 505 (Ahmedabad - Trib.)] dated 10 June 2024, had adjudicated the identical issue and restored the matter to the file of the TPO for fresh benchmarking after detailed consideration of product similarity, functional comparability, import/export filters, and related party transactions. Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 19 22. We find from the record that the assessee is engaged in the manufacture of brake and fuel line assemblies and other tubular products used in the automotive industry. The principal raw material used by the assessee is copper-coated steel strips and sheets, of which nearly 50% is imported from its Associated Enterprises. The products manufactured by the assessee are integral parts of the hydraulic and fuel systems of automobiles and fall within the category of automotive ancillary components. We observe that in the assessee’s own case for AY 2007-08 (supra), the Co-ordinate Bench of this Tribunal had considered in detail the functional comparability of each of the companies included and excluded by the TPO/CIT(A). The Tribunal observed that the comparables such as Coventry Coil-O-Matic (Haryana) Ltd., Frontier Springs Ltd., Gabriel India Ltd., and Jamna Auto Industries Ltd. were functionally dissimilar, as they were engaged in manufacturing coil springs, shock absorbers, or suspension components, and utilized different raw materials, mainly spring steel, whereas the assessee’s manufacturing operations were based on copper-coated materials. The Tribunal, therefore, upheld the rejection of such comparables by the TPO. On the other hand, the Tribunal held that FCC Rico Ltd. was liable to be excluded due to high related party transactions exceeding 25%, and directed the exclusion of that company from the final set of comparables. Further, the Tribunal observed that Setco Automotive Ltd., engaged in the manufacture of clutch drive plates and clutch cover assemblies, was functionally comparable to the assessee, since both products—clutch plates and brake/fuel line assemblies— formed part of the same automotive hydraulic and mechanical system. The Tribunal, however, clarified that the mere presence of intangibles in Setco Automotive Ltd. did not render it incomparable, as there was no evidence that such intangibles materially impacted the margins. The Tribunal Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 20 therefore, remitted the matter to the TPO for examining the functional and economic impact of such export orientation on comparability. 23. In light of these findings and directions of the Co-ordinate Bench in the assessee’s own case for AY 2007–08 (supra), we are of the considered view that the issue relating to the transfer pricing adjustment in the manufacturing segment for the present assessment year also requires a fresh determination by the TPO/AO. The TPO shall undertake a detailed analysis of functional, asset, and risk (FAR) parameters and verify whether the comparables adopted by the assessee or those included by the TPO are functionally and economically comparable, keeping in mind the product profile and raw material usage of the assessee. The TPO shall specifically apply appropriate related party transaction filters, import/export filters, and turnover filters in accordance with Rule 10B(2) and Rule 10B(3) of the Income-tax Rules, 1962. 24. Accordingly, the issue relating to the transfer pricing adjustment in the manufacturing segment is restored to the file of the Assessing Officer/TPO for fresh determination of the arm’s length price of international transactions in accordance with the principles laid down above and the directions contained in the decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case for AY 2007–08 (supra). The assessee shall be afforded due opportunity of being heard and to furnish necessary documentation in support of its claim. Printed from counselvise.com ITA No.1403/Ahd/2016 Bundy India Ltd. vs. DCIT Asst. Year : 2009-10 21 25. In the result, Ground Number 6 of the assessee’s appeal is allowed for statistical purposes. 26. In the combined result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the Open Court on 30 /10/2025 at Ahmedabad. Sd/- Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 30/10/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की \"ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. \"%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT 4. आयकर आयु& ) अपील ( / The CIT(A)-1, Vadodara 5. िवभागीय \"ितिनिध , अिधकरण अपीलीय आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स%ािपत \"ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by H-JM in his computer) : 31.10.2025 2. Date on which the typed draft is placed before the Dictating Member. : 31.10.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 30/10/25 7. Date on which the file goes to the Bench Clerk. : 30/10/25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : Printed from counselvise.com "