CALSONIC KANSEI MOTHERSON AUTO PRODUCTS PRIVATE LIMITED,NEW DELHI V. ASSISTANT/DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI

ITA 4500/DEL/2024

AI Insights

The case involves Calsonic Kansei Motherson Auto Products Pvt. Ltd., which appealed against the final assessment order by the Assistant/Deputy Commissioner of Income Tax, New Delhi, concerning the assessment year 2020-21. The primary issues revolved around the Transfer Pricing Officer's (TPO) determination of the Arm's Length Price (ALP) for international transactions and the inclusion/exclusion of certain comparables in the benchmarking analysis. The Tribunal found that the TPO had not adequately justified the exclusion of some comparables and the inclusion of others, leading to a reassessment of the ALP. Additionally, the Tribunal directed the TPO to consider certain items as part of operating revenue, which were previously excluded.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712541 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2020-2021
• Other Referred Cases: PCIT vs. B.C. Management Services (P.) Ltd. [IT Appeal No.1064 & 1083 of 2017], CIT vs. EKL Appliances Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return; Transfer pricing; International transaction

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’: NEW DELHI BEFORE SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4500/Del/2024 (ASSESSMENT YEAR: 2020-21) Calsonic KanseiMotherson Auto Products Private Limited, F-7, Block B-1, 2nd Floor, Mohan Cooperative Industrial Estate, Mathura Road, New Delhi-110044, India. PAN-AADCC1932F Vs. Assistant/Deputy Commissioner of Income Tax, New Delhi. (Appellant) (Respondent) Assessee by Shri K.M. Gupta, Adv. & Ms. Shruti Khimta, AR& Ms. Kashish Gupta, CA Department by Shri S. K. Jadhav, CIT-DR Date of Hearing 22/07/2025 Date of Pronouncement 31/07/2025 ORDER PER PRAKASH CHAND YADAV, JM: The present appeal of the assessee is arising out from the order of Ld. Assessing Officer date13th July, 2024 having DIN No. ITBA/AST/S/143(3)/2024-25/1067139099(1) and relates to Assessment Year 2020-21. 2. Brief facts of the case as coming out form the orders of authorities below are that assessee is a company and engaged in the manufacturing of compressor and HVAC requirements of customers in India with technological back up from CKC Japan. The company is manufacturing a wide range of modules such as HAVC Systems for controlling and regulating temperature for the impugned assessment year. It has filed its return of income on 21st January, 2021 declaring total income of Rs.37,44,93,220/-. Thereafter, the Printed from counselvise.com 2 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT assessee filed revised return declaring the same income as was declared originally. Thereafter, the case of the assessee was selected for scrutiny. As the instant case was having international transactions with its AE. The Assessing Officer made a reference to the TPO in accordance with TP provisions. Thereafter, the Ld. TPO computed the Arm’s Length Price (ALP) o the international transactions entered into by the assessee. After the receipt of TPO order, the Ld. Assessing Officer framed the draft assessment order against which the assessee filed objections before the DRP and the Ld. DRP vide its order dated 25th June 2024 restored the issue of computation of ALP to the file of TPO with certain directions. Thereafter, the Ld. TPO while giving effect to the directions of Ld. DRP passed a fresh TP order on 28th July, 2024. However, the Ld. TPO has reiterated the same order, thereafter, the Assessing Officer framed the final assessment order, which is impugned before us. 3. The assessee has raised the following grounds of appeal: “1. On the facts and circumstances of the case and in law, the impugned final assessment order dated July 30, 2024 framed by the Ld. AO is bad in law and barred by limitation. Transfer Pricing Grounds Manufacturing and related services 2. On the facts and circumstances of the case and in law, the Ld. AO grossly erred in confirming the Transfer Pricing addition of INR 2,68,44.735 to the income of the Appellant proposed by the Ld. TPO, pertaining to manufacturing and related services rendered to its Associated Enterprises (AES), does not satisfy the arm's length principle under the Income Tax Act, 1961 ('the Act'). In doing so, the Hon'ble DRP/Ld. AO grossly erred in upholding the Id. TPO's action of: 2.1. not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income Tax Rules, 1962 (\"the Rules\") and modified the economic analysis undertaken by the Appellant for the determination of the ALP of impugned transaction and holding that they are not at arm's length; 2.2. applying additional filters in order to determine the companies comparable to the Appellant in spite of the fact that such additional filters are inappropriate and should not be applied for selecting the comparable companies; 2.3. rejecting the comparables identified by the Appellant in its TP documentation for benchmarking its international transactions, without providing any cogent Printed from counselvise.com 3 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT reasons for the same which are comparable to the Appellant in terms of functions performed, assets employed, and risks assumed; 2.4. including companies in the final set that are not comparable to the Appellant in terms of functions performed, assets employed, and risks assumed; 2.5. not providing the search strategy of the fresh benchmarking as conducted by the Ld. TPO and cherry-picking high profit making comparables; 2.6. rejecting the Appellant's claim for adjustment on account of difference in working capital employed by the Assessee vis-a-vis the comparable companies; 2.7. arbitrarily excluding \"Other income in operating revenue for the purpose of making TP adjustment of Rs. 4,66,30,609; 2.8. Computing the value of international transactions with AEs at INR 31,01,23,499 as against INR 30,79,57,418 while making a TP adjustment to manufacturing and related services provided by the Appellant to its AES, Intra-group services 3. On the facts and in the circumstances of the case and in law, the Ld. AO/TPO/DRP erred in proposing an adjustment to the transfer price of the Appellant in respect of the payment of Technical Assistance fee of INR 26,18,009 to AE, holding that by holding that it does not satisfy the arm's length price ('ALP') envisaged under the Act and in doing so have grossly erred in: 3.1. Rejecting of the Transfer pricing study and comparability analysis maintained by the Appellant without providing any cogent reason to disregard the Appellant's approach; 3.2. Inappropriately questioning the commercial wisdom of the Appellant for payment towards availing these services, thereby ignoring the principal that it is not the domain of learned TPO to question the rendition of service and benefit arising therefrom; 3.3. Not appreciating the evidence placed on record and concluding that the evidence does not demonstrate the rendition of service and benefit derived; 3.4. Determining arm's length price of international transaction of payment for technical assistance fee as 'NIL' by applying Other Method, even though the Ld. AO/TPO/DRP considered the value of the aforesaid transaction while making adjustment to the value of international transactions for benchmarking the management and related services fee. This results in double disallowance of the same transaction. Interest on outstanding receivables 4. On the facts and circumstances of the case and in law, the Ld. AO/TPO/DRP erred in making a TP adjustment amounting to INR 27,40,528 on account of outstanding receivables by: 4.1. treating outstanding receivables from AEs as a separate international transaction and re-characterizing outstanding receivables from AEs as a loan advanced to AEs; Printed from counselvise.com 4 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT 4.2. Applying ad-hoc credit period of 60 days for computing interest on outstanding receivables without taking into consideration the actual payment terms of the invoices/purchase orders; 4.3. without prejudice to the above, disregarding that outstanding payables to AEs should be taken into consideration while computing the interest income of receivables. 5. On the facts and circumstances of the case & in law, the Ld. A.O./DRP grossly erred in initiating penalty proceedings under section 270A of the Act. The Appellant craves leave to add, alter, amend, modify, or withdraw all or any of the aforesaid grounds of appeal as may be considered necessary at any time before or at the time of hearing of the appeal. The above grounds are without prejudice to each another.” 4. With respect to ground No.2 to 2.6, Counsel for the assessee contended that the Ld. TPO has chosen certain comparables which are not similar to the profile of the assessee company. Counsel for the assessee in nutshell argued that the TPO has failed to apply FAR test, while selecting the comparables for determining the ALP of the international transaction. Drawing attention of the Bench towards the set off final comparables, Ld. Counsel for the assessee pointed out that the assessee wish to include certain comparables and as exclude certain comparables from the final list of the comparables. 5. The Ld. DR appearing on behalf of the Revenue relied upon the orders of authorities below. :-Finding of the Bench :- 6. We have heard the rival submissions and perused the materials available on record. We hereby observe that the assessee has duly submitted the FAR test analysis before the Ld. TPO. However, Ld. TPO discarded the analysis without any cogent reason. 7. In our view the following comparables given by the assessee are functionally similar to the assessee and has been accepted by the TPO in previous or subsequent years. For the sake of convenience, we would like to reproduce the chart given by the assessee hereunder. Printed from counselvise.com 5 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT Sr. No. Company Name Appellant’s Contentions 1. Gajjar Compressors Private Limited Refer DRP Directions Page No.48 of the Appeal Set) (refer DRP submission Page No. 89 to 93 of the Appeal Set) (refer TP order Page No. 190 of the Appeal Set) (Refer page No. 223-226 of the Paper book) Functionally comparable- GajjarComressors Private Limited is engaged in manufacturing and supply of high-performance Air Compressor, Screw Air Compressor, Oil Free Dental Compressor, Single and Two Stage Dry Vacuum Pump, Air Dryer and Air Receiver Tank (non-core auto parts) on par with global standards under the brand name, Air marshal. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 2 of ARC) 2. Passes all other relevant filter applied by the Ld. TPO. 3. Accepted as a comparable by Ld. TPO for AY 2018-19. Swan Pneumatics Pvt. Ltd. (refer DRP Directions Page No. 48 of the Appeal Set) (refer DRP submission Page No. 93 to 96 of the Appeal Set) (refer TP order Page No. 190-191 of the Appeal Set) (refer Page No. 226-229 of the Paperbook) 1. Functionally comparable -Swam Pneumatics is engaged in manufacturing and sale of air compressors, centrifugal fans & blowers, mechanical vacuum boosters, dry screw vacuum pumps, liquid ring vacuum pumps, vacuum system and packages and condenser exhausters which are non-core auto products. The Appellant is also involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 5 of ARC) 2. Passes all other relevant filter applied by the Id. TPO 3. Accepted as a comparable by Li. TPO for AY 2018-19 3. Advance Cooling Systems Private Limited (\"Advance Cooling) (refer DRP Directions Page 1. Functionally comparable: Advance Cooling Systems Private Limited is engaged in manufacturing of panel air conditioner, compressed air dryer, chilllers, air to air heat exchanger etc. Printed from counselvise.com 6 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT No. 48-49 of the Appeal Set) (refer DRP submission Page No. 96 to 100 of the Appeal Set) (refer TP order Page No. 191 of the Appeal Set) (refer Page No. 229-231 of the Paperbook. and the Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 8 of ARC) 2. Passes all other relevant filter applied by the Ld. TPO. 4 Emerson Climate Technologies (India) Limited Emerson Climate\") (refer DRP Directions Page No. 49 of the Appeal Set) (refer DRP submission Page No. 100 to 103 of the Appeal Set) (refer TP order Page No.191 of the Appeal Set) (refer Page No.232-234 of the Paperbook) 1. Functionally comparable: Emerson Climate Technologies (India) Limited is engaged in manufacturing and trading of hermetically sealed compressor which are used in HVAC systems, refrigeration units, and heat pumps while the Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 11 of ARC) 2. Passes all other relevant filter applied by the Ld. TΡΟ. 3. Accepted as a comparable by Ld. TPO for AY 2018-19 5 Frick India Limited (“Frick India”) (refer DRP Directions Page No.49 of the Appeal set) 1. Functionally comparable: Frick India Limited is engaged in manufacturing of compressors, condensers, heat exchange and pressure vessels, packaged chillers etc .which are non-core auto products while the Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 16-17 of ARC) 2. Accepted by Ld. TPO in Appellant’s own case of AY 2021-22. 3. Passes all other relevant filter Printed from counselvise.com 7 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT applied by the Ld.TPO. 6 NHK Spring India Ltd. (“NHK Spring) NHK Spring India Ltd (\"NHK Spring\") (refer remand report at Page No. 407 paperbook) 408 of the (refer additional grounds- filed before Ld. DRP at Page 3 No. 349 351 of the Paperbook) 1. Functionally comparable: NHK Spring is engaged in the manufacturing of coil spring, leaf spring, stabilizer bar and seats for motor vehicles. (refer Page No. 20-21 of ARC). 2. Accepted by Ld. TPO in Appellant’s own case of AY 2021-22. 3. Passes all other relevant filter applied by the Ld. TPO 7. Action Springs (India) Private Ltd. (“Action Springs”) (refer remand report at Page No.408-409 of the paper book) (refer additional grounds filed before Ld. DRP at Page No.351-353 of the Paperbook) 1. Functionally comparable: Action Springs is engaged in in the business of manufacturers, assemblers and distributors of laminated leaf springs, U- bolts, pins, shackles, automobile parts & cast-iron products, steel products, electrical equipment and other articles used in the manufacture, assembling, maintenance and working of the automobile vehicles which are non-core auto products. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 24 of ARC) 2. Accepted by Ld. TPO in Appellant’s own case of AY 2021-22. 3. Passes all other relevant filter applied by the Ld. TPO 8. Ankit Air Systems Private Limited (refer remand report at Page No.410 of the paperbook) (refer additional grounds field before Ld. DRP at Page No.353-355 of the Paperbook) 1. Functionally comparable: Auto Pins India is engaged in the manufacturing loose leaf springs-iron and steel used in automobiles which are non-core auto parts. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 31 of ARC) Printed from counselvise.com 8 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT 2. Accepted by Id. TPO in Appellant's own case of AY 2021-22 3. Passes all other relevant filter applied by the Ld. ΤΡΟ 9. Auto Pins India Ltd. (“Auto Pins India”) (refer remand report at Page No.409-410 of the Paperbook) (refer additional grounds filed before Ld. DRP at Page No.358-361 of the Paperbook) 1. Functionally comparable: Mahabal Auto is engaged in manufacturing of balancer shaft, differential spider, shifter finger, stub axle-LH, front axle assembly with brake, etc. for automobiles and sleeve, traction clutch, piston, brake (S- axle) piston, suffix-coupling, splined coupling, shaft, PTO-connecting, etc. for tractors. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 34 of ARC) 2. Accepted by Ld. TPO in Appellant’s own case of AY 2021-22. 3. Passes all other relevant filter applied by the Ld. TPO. 10. Mahabal Auto Ancillaries Pvt. Ltd. (“Mahabal Auto”) (refer remand report at Page No.409-410 of the paperbook. (refer additional grounds fled before Ld. DRP at Page No.358-361 of the Paperbook) 1. Functionally comparable: Mahabal Auto is engaged in manufacturing of balancer shaft, differential spider, shifter finger, stub axle-LH, front axle assembly with brake, etc. for automobiles and sleeve, traction clutch, piston, brake (S- axle) piston, suffix-coupling, splined coupling, shaft, PTO-connecting, etc. for tractors. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 34 of ARC) 2. Accepted by Ld. TPO in Appellant's own case of AY 2021-22 3. Passes all other relevant filter applied by the Ld. TPΟ. Printed from counselvise.com 9 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT 11. Musashi Auto Parts India Private Limited (refer remand report at Page No.409 of the paperbook) (refer additional grounds filed before Ld. DRP at Page No.361-363 of the Paperbook. 1. Functionally comparable: The Company is involved in the manufacture of automotive components like transmission gears, shafts, etc. for two wheelers and four-wheeler vehicles. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 38 of ARC) 2. Accepted by Ld. TPO in Appellant's own case of AY 2021-22 3. Passes all other relevant filter applied by the Ld. TPO 12. Dynamic Transmission Limited (“Dynamic Transmission”) (refer remand report at Page No.408 of the paperbook) (refer additional grounds filed before Ld. DRP at Page No.363-365 of the Paperbook. 1. Functionally comparable: Dynamic Transmission is engaged in the business of manufacturing of high-quality automobile parts like Transmission components, steering components, engine & drive components, suspension components, aluminium PDC, hot & cold forging, oil pump assemblies and precision turned components. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 40-42 of ARC) 2. Accepted by Ld. TPO in Appellant's own case of AY 2021-22 3. Passes all other relevant filter applied by the Ld. TPΟ 13. Kalyani Forge Limited (“Kalyani Forge”) (refer remand report at Page No.410 of the paperbook) (refer additional grounds filed before Ld. DRP at Page No.365-367 of the Paperbook. 1. Functionally comparable: Forge is engaged in the manufacturing of engine parts, chassis system parts, turbo charger parts, transmission parts, front and rear axle parts and steering & suspension parts etc. The company is also engaged in manufacturing additional products such as clutch parts, connecting rods and suspension parts. The Appellant is involved in the manufacturing of non-core auto parts such as HVAC Systems for controlling Printed from counselvise.com 10 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT and regulating temperature, Engine Cooling Module, Exhaust System. Hence, the company is functionally comparable to the Appellant. (refer Page No. 43-48 of ARC) 2. Accepted by Ld. TPO in Appellant's own case of AY 2021-22 3. Passes all other relevant filter applied by the Ld. TPO B. Application of TNMM does not require product comparability 7.1 From perusal of the above chart it would be seen that comparable Gajjar Compressors Private Limited is functionally similar to that of the assessee and the same has been accepted by the TPO in Assessment Year 2018-19. Therefore, we direct the TPO to include this comparable in the list of final set off comparables. 8. Similarly, Swan Pneumatics Pvt. Ltd. is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2018-19, therefore, we direct the TPO to include this comparable in the final set off comparables. 9. Similarly, Emerson Climate Technologies (India) (“Emersion Climate”) is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2018-19, therefore, we direct the TPO to include this comparable in the final set off comparabels. 10. Similarly, Frick India Limited (“Frick India) is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2018- 19, therefore we direct the TPO to include this comparables in the final set off comparables. 11. NHK Spring India Ltd. is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2021-22. This comparable Printed from counselvise.com 11 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT has been put-forth before the DRP for the first time by the assessee and DRP has also sought remand report from the AO. 12. Ankit Air Systems Private Limited is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2021-22. This comparables has been put-forth before the DRP for the first time by the assessee and DRP has also sought remand report from the AO. 13. Mahabal Auto Ancillaries is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2021-22. This comparables has been put-forth before the DRP for the first time by the assessee and DRP has also sought remand report from the AO. 14. Dynamic Transmission Limited (“Dynamic Transmission”) is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2021-22. This comparables has been put-forth before the DRP for the first time by the assessee and DRP has also sought remand report from the AO. 15. Kalyani Forge Limited (“Kalyani Forge”) is also functionally similar to that of assessee and has been accepted by the TPO in Assessment Year 2021-22. This comparables has been put-forth before the DRP for the first time by the assessee and DRP has also sought remand report from the AO. 16. Similarly, we observe that so far as exclusion of certain comparables from the list of final set off of comparable is concern, the following comparables are not to be included in the final list of comparables: (a) Banco Products (India) Ltd. Segmental information with respect to the products is not sought for Financial Year 2019-20. (b) PPAP Automotive Ltd. (“PPAP”), it is observed that huge intangible are there with this company and the segmental activity of the company is R&D, therefore, it is not at all comparable with the assessee. We Printed from counselvise.com 12 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT accordingly direct the TPO to exclude from the list of final set off comparables. (c) Samsera Engineering Ltd. (“Sansera”) with respect to this comparable, we observe that this comparable company is receiving Government grants and the assessee before us is not receiving any Government grant, therefore cannot be treated as similar to the assessee. Hence, we direct the TPO to exclude this comparables also from the list of final set off comparables. 17. So far as AdvikHI-Tech Private Ltd., we do not find any force in the argument of the assessee for exclusion of this comparable from the list of final set off comparables, therefore, the action of the TPO is justifiable. 18. In view of the above observations, we direct the TPO to determine the arm’s length price of the impugned international transactions after taking into consideration the above set off comparables and then conduct the TP study in accordance with law. 19. In ground No.2.7, the assessee has challenged the action of TPO vis-à-vis exclusion of “other income”. From the ambit of operative revenue, counsel for the assessee contended that the TPO has excluded three items from the ambit of “other income” namely: (i) Foreign exchange difference to the tune of Rs.72.25,417/- (ii) Duty drawback Rs.45.17.852/- (iii) Compensation obsolete items Rs.3,44,48,765/- 20. Counsel for the assessee contended that so far as foreign exchange gain is concern the same has been arisen on account of revenue receivables from the foreign parties and hence, it forms part of the revenue receipts. Counsel for the assessee placed reliance on the judgments of the Hon’ble Delhi High Court in the case of PCIT vs. B.C. Management Services (P.) Ltd. [IT Appeal No.1064 & 1083 of 2017] held that foreign exchange gain/loss cannot be termed as Non-operating items. Similarly, for Duty Drawback of compensation of obsolete Printed from counselvise.com 13 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT items, Counsel of the assessee reiterated the arguments made before the lower authorities. 21. Ld. DRP relied upon the orders of DRP and TPO. 22. After considering the rival submissions, we observe that issue of inclusion of foreign exchange gain in operating margin is no more res-intigra, it has now been settled by the Hon’ble Delhi High Court in the case of PCIT vs. B.C. Management Services (P.) Ltd. [IT Appeal No.1064 & 1083 of 2017]. Respectfully following the same, we direct the TPO to consider this gain as part of operative Revenue. Similarly, we direct the TPO to examine the inclusion of Duty Draw back and compensation from obsolete items to be part of operating revenue and then examine the issue in accordance with provisions of Rule 10TA (k) (vii). 23. In ground No.2.8, the assessee has contended that the TPO has wrongly taken figure of international transaction as at Rs.31,01,23,499/-. In place of the correct figure of Rs.30,79,57,418/-. We direct the TPO to consider the figure of Rs.30,79,57,418/- as the figure of international transaction of the assessee with its AE. 24. In ground No.3, assessee has challenged the addition of Rs.26,18,009/- facts related to this issue are that the assessee has made certain payments on account of technical assistance received from the AE. It is the contention of the assessee that total turnover of the assessee is around 4.77 Cr. and the amount of technical fees paid within Infra Group is Rs.26.18 lac only, which is very meniscal when compared with the turnover of the assessee company. 25. Ld. DR relied upon the orders of authorities below. 26. We have heard the rival submissions and perused the materials available on record. We observed that voluminous evidences filed by the assessee, in order to prove the rendition of services by the AE. We also appreciate the fact that when payment of technical fee is compared with the turnover of the assessee then these payments are justifiable as made by the assessee. Printed from counselvise.com 14 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT Considering the facts and circumstances of the case, we allow this ground of the assessee. 27. Before parting, we would like to observe that now there is no need to demonstrate the need/ benefitsripen from any services. In simple word, it is not necessary that by incurring any expenditure, assessee must receive a benefit as held by Delhi High Court in CIT vs. EKL Appliances Ltd. 28. In ground No.4, the assessee has challenged the addition of Rs.27,40,528/- made by the AO on account of interest on delayed receivable. With respect to this ground, the Counsel for the assessee at the outset prayed that LIBOR + 200 basis point as applicable rate with a credit period of 60 days may kindly be applied. Counsel for the assessee also prayed that set off adjustment of receivables cleared by the AEs before 60 days may also be examined and the net result would have to be taken into consideration for the purposes of levying interest rate of LIBOR +200 basis point. 29. Ld. DR relied upon the orders of authorities below. 30. We have heard the rival submissions and perused the materials available on record. We direct the TPO to apply the LIBOR +200 basis point with a credit period of 60 days to the assessee. The TPO will also provide benefit of those sums which the assessee has received from its AE before the expiry of 60 days. With these directions, this issue is restored to the file of AO. 31. In the result, the appeal of the assessee is allowed as indicated above. Order pronounced in the open court on 31/07/2025. vvSd/- Sd/- (MANISH AGARWAL) (PRAKASH CHAND YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31/07/2025 PK/Sr. Ps Printed from counselvise.com 15 ITA No.4500 /Del/2024 Calsonic Kensei Motherson Auto Products Pvt. Ltd. vs. DCIT Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "