DEPUTY COMMISSIONER OF INCOME TAX- 3(1)(1), MUMBAI V. DSV SOLUTIONS PVT. LTD. (FORMERLY UT WORLDWIDE (INDIA) PVT. LTD.) , MUMBAI

ITA 533/MUM/2025

AI Insights

The case involves DSV Solutions Pvt. Ltd. (formerly UT Worldwide (India) Pvt. Ltd.), which is part of the U.T. Worldwide Group U.K., engaged in logistics related to freight forwarding. The dispute centered on the adjustments made by the TPO concerning the arm's length price of certain transactions between the assessee and its associated enterprises (AEs), specifically related to reimbursements of expenses. The TPO had determined the arm's length price of these transactions as nil, leading to adjustments. The CIT(A) had deleted these additions, which the revenue appealed against. The Tribunal, referencing its previous decisions in similar cases involving the same parties and facts, upheld the CIT(A)'s decision and dismissed the revenue's appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713060 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2013-2014
• Other Referred Cases: UT Worldwide India (P.) Ltd. vs. DCIT Range-8(3)
• Laws Referred To: Income Tax Act, 1961, Rule 10D(1)(d) of IT Rules 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIKHIL TIWARI
• Assessee Lawyers: BHAGIRATH RAMAWAT
• Keywords: Transfer pricing; International transaction; Commercial expediency
• Section: 37

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI (JUDICIAL MEMBER) AND SHRI OMKARESHWAR CHIDARA (ACCOUNTANT MEMBER) I.T.A. No. 532/Mum/2025 Assessment Year: 2012-13 & I.T.A. No. 533/Mum/2025 Assessment Year: 2013-14 & I.T.A. No. 534/Mum/2025 Assessment Year: 2014-15 Deputy Commissioner of Income Tax-3(1)(1), Mumbai Room No.607, AayakarBhawan, M.K. Road, Mumbai-400020 Vs. DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) A-203, The Qube, C.T.S. No.1489, M.V. Road, Marol, Andheri East Mumbai-400059 PAN:AAACA3826B (Appellant) (Respondent) CO No. 60/Mum/2025 Assessment Year: 2012-13 & CO No. 61/Mum/2025 Assessment Year: 2013-14 & CO No. 62/Mum/2025 Assessment Year: 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Vs. Deputy Commissioner of Income Tax-3(1)(1), Printed from counselvise.com 2 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) A-203, The Qube, C.T.S. No.1489, M.V. Road, Marol, Andheri East Mumbai-400059 PAN:AAACU5306L Mumbai Room No.607, AayakarBhawan, M.K. Road, Mumbai-400020 (Appellant) (Respondent) Appellant by Shri Nikhil Tiwari Respondent by Shri BhagirathRamawat, SR. D.R. Date of Hearing 09.06.2025 Date of Pronouncement 30.07.2025 ORDER Per Bench: The present appeals filed by the revenue arises out of separate final assessment orders passed for assessment years under consideration, the details of which are as under: S.No. Assessment Year Passed by Date of Impugned order 1. 2012-13 CIT(A) 58, Mumbai 18/11/2024 2. 2013-14 CIT(A) 58, Mumbai 18/11/2024 3. 2014-15 CIT(A) 58, Mumbai 18/11/2024 2. Both sides admit that the facts and circumstances for all the years under consideration are identical. Therefore, all appeals are being disposed off by way of a common order. For sake of convenience, we are considering the facts for assessment year 2012-13 as under. Printed from counselvise.com 3 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Grounds raised by the revenue for assessment year 2012-13 is reproduced as under: “Grounds of appeal 1 \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deleting the ALP adjustment made by TPO on account of Reimbursement of expenses to A.E. relating to intra-group services pertaining to APAC regional cost, freight liability & insurance expenses, RSU Cost, Verizon communication charges and Stock Compensation cost said to have been incurred by the AE and allocated to assessee amounting to Rs.22,43,23,212/-?\" 2. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in treating the only document of service agreement between Assessed and its AE provided by the assessee as sufficient documentation and holding the fixed cast being contractual obligation as per such agreement was at Arm's Length, ignoring the provisions of Rule 10D(1)(d) of IT Rules 1962 by virtue of which the assessee was under mandatory obligation of maintaining complete details of services provided and the quantum and value of each such transaction?\" 3. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the facts that the assessee has not provided adequate and cogent proof of rendition of services by the AE to the assessee to the extent that an independent 3rd party would pay similar sums for, in uncontrolled circumstances?\" 4 \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in ignoring the basic tenet of transfer pricing as enshrined in Section 92F(ii), as no unrelated party in uncontrolled circumstances would have incurred such expenses without commensurate benefit and that the assessee failed to prove any third party justification for such huge expenses?\" 5. \"Whether on the facts and circumstances on the case and in law, the Ld. CIT(A) is correct in ruling that, the TPO has adjudicated the issue and subjected the reimbursed expenditure to the test of Section 37 of the Income Tax Act, 1961 and genuineness of the expenditure, where as in fact the TPO has determined the ALP of Printed from counselvise.com 4 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) the transaction to be Nil in a third party scenario based on TP provisions and not based on tests of Section 37 of the Act and genuineness of the expenditure?\"” Brief facts of the case are as under: 3. The assessee, an Indian company, and is a part of U.T. Worldwide Group U.K. It is submitted that the assessee belongs to a group that is world leader in international flight forwarding business. The assessee is engaged in the business of logistics relating to freight forwarding by air and ocean, custom clearance and contract logistics, etc. The assessee entered into an agreement with U.T.T. Networks Inc., U.K. for forwarding by air or sea of general commodities. 3.1. The Ld.AO noted that the assessee had international transactions with its Associated Enterprises (AE’s) beyond the threshold limit.Thusa reference was made to the Transfer Pricing Officer (Ld.TPO). The Ld.TPO called for economic details of the transaction with AE in Form 3CEB.The Ld.TPO found that the assessee benchmarked the payment made and received towards freight forwarding concerning the AE’s in various countries, applying the internalComparable Uncontrolled Price(CUP)method. The assessee compared the profit share percentage given to AE’s with profit share percentage given to unrelated entities for both export and import business, respectively. 3.2. The Ld.TPO objected to the ALP determination by the assessee in respect of the following transactions with the AE’s. S.No. Transaction Amount 1. Fright Forwarding Received 142,94,89,965 Printed from counselvise.com 5 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) 2. Fright Forwarding Paid 156,72,42,368 3. Reimbursement of expenses (paid) 24,36,24,000 3.3. The Ld.TPO observed that the assessee had not benchmarked the payment made and received towards freight forwarding and reimbursement of expenses applying CUP method. The assessee was thus called upon to justify as to how the above transactions can be treated to be at arms length. In response, the assessee submitted that the UT group incurred certain expenses for the benefit of the assessee which was later reimbursed on actual basis. Thus, it was submitted by the assessee that reimbursement of expenses by the assessee to other group companies is at arm's length based on application of CUP. 3.4. After considering the submissions of the assessee and the details furnished, the Transfer Pricing Officer observed that the assessee was unable to establish that it has received any benefit due to the cost incurred by the AEs. Accordingly, he concluded that since the assessee has failed to establish the benefit derived relating to the cost incurred by the AEs on various account, the arm's length price of such transaction has to be determined as nil. Thus, he proposed an adjustment of 22,43,75,628/-. 3.5 On receipt of the order passed under section 92CA(3), the Ld.AO passed the draft assessment order on 23/03/2016, proposing to make addition as per the order under section 92CA(3) of the Act. Printed from counselvise.com 6 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) 3.6 On receipt of the draft assessment order, the assessee intimated the Ld.AO regarding filing appeal before the Ld.CIT(A). Accordingly, the Ld.AO passed the assessment order on 28/04/2016. Aggrieved by the order of the Ld.AO, the assesse preferred appeal before the Ld.CIT(A). 4. After considering the submissions of the assessee in the context of facts and material on record, Ld.CIT(A)relied on the observation of DRP for assessment year 2009-10 and 2010-11 and deleted the addition. Aggrieved by the orders passed by the Ld.CIT(A),the revenue preferred appeal before this Tribunal. 5. The Ld.AR submitted, the Ld.TPO determined ALP of the international transaction by adopting one of the prescribed methods under the statute. It is submitted, that the Ld.TPO was not justified in determining the ALP at ‘nil’, by applying commercial expediency and benefit test without following any one of the prescribed methods. It was submitted that, while considering identical issue in assessee’s own case for the assessment year 2009–10 & 2011-12, this Tribunal deleted the adjustment made in respect of reimbursement of expenses by adopting similar approach. The Ld.AR submitted, the issue is covered by the decisions of coordinate bench of this Tribunalin assessee’s own case in UT Worldwide India (P.) Ltd. vs. DCIT Range-8(3), reported in (2019) 103 taxmann.com 422 & (2020) 114 taxmann.com 689 for assessment year 2009-10 and 2011-12 respectively. Printed from counselvise.com 7 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) 5.1. On the contrary, the Ld.DR relied on the orders passed by the DRP/TPO and submitted that the assessee and the group entities are sharing revenue on fixed ratio basis, then there is no justification for further reimbursement of cost incurred towards administrative expenses, management fee, etc. He submitted following submissions in support of his contentions: Printed from counselvise.com 8 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 9 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 10 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 11 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 12 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 13 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 14 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 15 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 16 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 17 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 18 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 19 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 20 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 21 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 22 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 23 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 24 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 25 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 26 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 27 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 28 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 29 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Printed from counselvise.com 30 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Be that as it may, the Ld.DR informed that the department has preferred appeal before Hon’ble Bombay High Court against the orders passed by this Tribunal for assessment years 2009-10 & 2011-12. We have perused the submissions advanced by both sides in light of records placed before us. 6. It is noted that this is a recurring issue and has already been decided by coordinate bench of this Tribunal in the preceding assessment years. Admittedly, there are no factual changes in the preceding years and the years under consideration. 6.1. We reproduce the observation of this Tribunal for assessment year 2011-12 in assessee’s own case(supra) as under: 9. We have considered rival submissions and perused the material on record. It is seen from the factual matrix that the assessee has entered into various agreements with the group entities for provision of certain service. By virtue of such agreements, the assessee has the benefit of using the overall UT Network outside India. Similarly, the group companies are also bound to use assessee’s services for their operations in India. As per the terms of Printed from counselvise.com 31 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) the agreement, if some freight was required to be transported by the customer from overseas to India then such transaction was to be referred to as an import transaction and if it was to be transported by a customer from India to overseas, then the same was to be referred to as an export transaction. Fee earned from a customer is reduced by cost of transportation and the balance amount is shared by exporting and importing entities in the following manner. OriginatingPlace U.T.India U.T.I.Group Entity India 67% 33% Oversees 33% 67% 1. The aforesaid business and revenue sharing model has been followed by the assessee and group entities from the past years. It is observed, similar reimbursement of expenses was made to the group entities in the past years under similar revenue sharing model of 67:33.Therefore,the contention of the learned Departmental Representative that the facts involved in this year is different from assessment year 2009–10 due to 67:33 revenue sharing model, in our view, is without basis and not borne out from the record. Rather, the facts on record very clearly indicate that the revenue sharing model of 67:33 and vice versa has been followed by the assessee as well as group entities from past years including assessment year 2009–10. On a perusal of the order passed in assessee’s own case in assessment year 2009–10 as referred to above, it is observed that the Tribunal while deciding the issue relating to identical adjustment made by determining the arm's length price of reimbursement of expenditure at nil has reversed the decision of the Revenue authorities and held that the determination of arm's length price of the transaction at nil cannot be supported. Further, the Tribunal also did not accept the reasoning of the Departmental Authorities that the assessee had failed to satisfy the benefit test. On the contrary, the Tribunal has observed that whether the assessee benefited by availing the services of the AEs is not an issue to be examined by the Transfer Pricing Officer. Accordingly, the Tribunal deleted the adjustment. It is also relevant to observe, while doing so, the Tribunal also took note of the fact that in assessment year 2010–11, the Transfer Pricing Officer himself has accepted there imbursement of the administrative expenses /management fee paid to the AEs to be at arm's length. Thus, considering the pas event and the revenue sharing model consistently followed by theassessee as well as the decision of the Tribunal in assessee’s own case for the assessment year 2009–10, as referred to above, we are of the considered opinion that the adjustment of ` 37,77,552, deserves to be deleted. Accordingly, we do so. Printed from counselvise.com 32 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) 6.2. Respectfully following the aboveview, we direct the adjustment to be deleted for all the years under consideration. Accordingly, the grounds raised by the assessee for assessment year 2012-13 stand allowed. 7. As the facts and circumstances of the addition are identical for assessment years 2013-14 & 2014-15, the above view applied for assessment year 2012-13 is to be applied mutatis mutandis. Accordingly, the grounds raised by the assessee for assessment year 2013-14 & 2014-15 stand allowed. 8. The assesse has also filed cross objection alleging legal issue challenging the validity of the assessment orders passed being beyond the time limit prescribed under section 153 of the Act. The Ld.AR submitted that the assesse do not wish to contest this issue at this juncture and the same may be kept open. Considering the fact that the issue on merits have been adjudicated herein above, we deem it appropriate to hold the legal issue to be academic at this stage. However, liberty is granted to the assesse to contest the issue in case the situation so warrant. Accordingly, the cross objectionfiled by the assesse stands dismissed as infructuous. In the result, the appeals filed by the revenueand cross objections filed by the assesse for 2012-13, 2013-14 & 2014- 15 under consideration stand dismissed. Printed from counselvise.com 33 ITA No.532, 533, 534/Mum/2025; CO no.60, 61, 62,/Mum/2025 A.Y. 2012-13 to 2014-15 DSV Solutions Pvt. Ltd. (Formerly UT Worldwide (India) Pvt. Ltd.) Order pronounced in the open court on 30/07/2025 Sd/- Sd/- (OMKARESHWAR CHIDARA) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 30/07/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt.Registrar) ITAT, Mumbai Printed from counselvise.com "