GIESECKE AND DEVRIENT INDIA PVT LTD.,GURGAON V. ACIT (OSD), NEW DELHI

SA 166/DEL/2022

AI Insights

The case involves Giesecke & Devrient (India) Pvt. Ltd., the appellant, contesting an assessment order passed by the Assistant Commissioner of Income Tax (ACIT), which was based on directions from the Dispute Resolution Panel (DRP). The primary contention was the legality of the assessment order due to procedural lapses, including the absence of a valid Document Identification Number (DIN) and the failure to adhere to the statutory time limits for passing the assessment order as stipulated under Section 144C(13) of the Income Tax Act. The Tribunal examined these procedural issues alongside substantive transfer pricing disputes concerning various segments of international transactions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826478 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 21 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 07-01-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2018-2019
• Appeal Filed On: 17-06-2022
• Other Referred Cases: National Thermal Power Corporation v. PCIT, Jute Corporation of India, Louis Dreyfus Company India (P) Ltd vs DCIT, Shell India Markets (P.) Ltd. v. Addt. CIT, Vodafone Idea Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Transfer pricing; International transaction; Commercial expediency; Period of limitation; Application of stay
• Section: 143(3); 234B; 92

Judgement Text

"1 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H”: NEW DELHI BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER AND SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 1428/DEL/2022 Assessment Year: 2018-19 ALONGWITH S.A. N0. 1428/Del/2022 ( In ITA No. 1428/Del/2022) M/s Giesecke & Devrient (India) Pvt. Ltd., Plot No. 2, EHTP, Sector-34, Gurugram-122001. PAN: AABCG 4223 D Vs ACIT (OSD), New Delhi. APPELLANT RESPONDENT Assessee represented by Shri Harpreet Singh Ajmani, Adv. & Ms. Ashmita Sharma, Adv. Department represented by Shri S.K. Jadhav, CIT(DR) Date of hearing 17.12.2025 Date of pronouncement 07.01.2026 O R D E R PER Ms. MADHUMITA ROY, JM: The instant appeal, filed by the assessee, is directed against the Assessment Order dated 30.05.2022 (DIN & Order No. ITBA/AST/S/143(3)/2022-23/1043248599(1) passed by the Assistant Commissioner of Income Tax, ACIT(OSD), Delhi, under Section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as “the Printed from counselvise.com 2 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 Act”), pursuant to the directions of the Dispute Resolution Panel (“DRP”) under Section 144C(5) of the Act for the Assessment Year 2018-19. 2. Grounds of appeal raised by the assessee are as under: “General Grounds 1. On facts and in law, the Ld. AO erred in framing assessment at total income of INR 42,04,06,690/- as against the returned income of INR 27,56,51,270/- declared by the Appellant and consequently, raising tax demand of INR 7,51,76,830/- 2. That on the facts and in the circumstances of the case and in law, the order passed by the AO/DRP is bad in law. JURISDICTIONAL GROUNDS 3. That the directions dated 17.03.2022 issued by the DRP are patently illegal on account of mismatch between the \"date of signature\" by the collegium of commissioner/s and \"date of directions\". 4. That directions dated 17.03.2022 passed by the DRP are void ab initio and non- est, the same having been issued without a valid Document Identification Number. 5. That on the facts and in law the intimation letter dated 30.03.2022 issued by the CIT(DRP-1), Delhi-2 is also invalid as they do not meet the pre-requisites as envisaged under Circular No. 19/2019 dated 14.08.2019 issued by the Central Board of Direct Taxes directing generation / allotment/ quoting of Document Identification Number on all communication/correspondence/order by the Income Tax Department. 6. That the DRP/AO erred in not appreciating that Circular / Notification issued by the CBDT in exercise of the powers conferred under section 119 of the Act are binding on all income-tax authorities and ought to be complied in letter and spirit. 7. That the impugned Final Assessment Order dated 30.05.2022 passed by the Assessing Officer is bad in law and non-ext being passed in violation to the mandate of section 144C(13) of the Act, which prescribes to complete assessment in \"conformity with the directions\" of the DRP. 8. That the impugned Final Assessment order dated 30.05.2022 is non-est, having being passed by the ACIT(OSD) as opposed to the National Faceless Assessment Centre (\"NFAC\") which had validly assumed jurisdiction over the Assessee. Printed from counselvise.com 3 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 9. That on the facts of the case and in law, once the NFAC assumed jurisdiction over the Assessee by issuing the requisite notices, it was only the NFAC which was competent to pass the impugned order/s failing which, the entire assessment is liable to be quashed. 10. That on the facts and in law, in terms of section 144B of the Act read with S.O. No. 1434(E) dated 31.03.2021 issued by the Central Board of Direct Taxes (\"CBDT\"), the assessment order could only be passed by the relevant income-tax authority designated as an \"Assessing Officer\" under the NFAC scheme, failing which the assessment framed would be non-est and void. 11. That, without prejudice, on the facts and in law the ACIT(OSD) erred in assuming jurisdiction and passing the final assessment order, without appreciating that once the jurisdiction was transferred to the NFAC, the jurisdictional AO became fiunctus officio and could not suo-moto re-assume jurisdiction over the matter in the absence of a valid approval as envisaged under Section 144B(8) of the Act.. TRANSFER PRICING GROUNDS A. Software Development and Design Support Services Segment [INR 2,00,97,763/-] 12. On the facts and in law, the TPO/AO grossly erred in determining and DRP erred in confirming the addition to the tune of INR 2,00,97,763/- to the total income of the Appellant on account of the difference in the arm's length price of international transactions pertaining to the Software Development and Design Support Services Segment. 13. On the facts and in law, the TPO/AO/DRP have erred in rejecting the economic analysis undertaken by the Appellant without proper justification and conducting a fresh search using arbitrary filters for identifying companies comparable to the Appellant. 14. On the facts and in law, the TPO/AO/ DRP grossly erred in not accepting the comparable companies proposed by the Appellant, as the said comparable companies met the FAR (functions performed, assets employed and risk assumed) test as envisaged under Rule 10B(2) of the Income Tax Rules, 1962 (\"the Rules\"). 15. On facts and in law, the AO/ TPO erred in violating the provisions of Rule 10B(2) of the Rules by introducing new comparables without considering the differences in the functions performed, assets employed and risks assumed by such companies vis-à-vis the Appellant, thereby resorting to cherry picking of comparables. Printed from counselvise.com 4 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 16. On facts and in law, the TPO/AO/DRP erred in not allowing working capital/ risk adjustment to the Appellant, thereby contravening the provisions of Rule 10B(1)(e)(iii) read with Rule 10B(3) of the Rules. 17. That the TPO/DRP erred in not appreciating that risk and working capital adjustment had consistently been granted to the Appellant in the preceding years and in the absence of any change in facts, ought to have been allowed to the Appellant during the relevant year as well. 18. That the TPO erred on facts and in law in incorrectly computing the unadjusted margins of the comparable/s which have been finally selected for determining the arm's length price of the international transaction pertaining to provision of software development support services, despite specific directions in Para 3.2.2 at Page 8 of the DRP Directions and in complete ignorance of the data available as per audited financials of the comparables. 19. On facts and in law, the DRP erred in not adjudicating upon certain objections raised by the Appellant and the TPO further erred in not giving effect to the directions of the DRP which if followed, the entire adjustment ought to be deleted. B. ITeS Support Services Segment [INR 65,48,110/-] 20. On the facts and in law, the TPO/AO grossly erred in determining and Ld. DRP erred in confirming the addition of INR 65,48,110/- to the total income of the Appellant on account of the difference in the arm's length price of international transactions pertaining to the ITeS Support Services. 21. On the facts and in law, the TPO/AO/DRP have erred in rejecting the economic analysis undertaken by the Appellant without proper justification and conducting a fresh search using arbitrary filters for identifying companies comparable to the Appellant. 22. On the facts and in law, the TPO/AO/DRP grossly erred in not accepting the comparable companies proposed by the Appellant, as the said comparable companies met the FAR (functions performed, assets employed and risk assumed) test as envisaged under Rule 10B(2) of the Rules. 23. On facts and in law, the AO/TPO erred in violating the provisions of Rule 10B(2) of the Rules by introducing new comparables without considering the differences in the functions performed, assets employed and risks assumed by such companies vis-à-vis the Appellant, thereby resorting to cherry picking of comparables only on the basis of quantitative filters. 24. On facts and in law, the TPO/AO/DRP erred in not allowing working capital risk adjustment to the Appellant, thereby contravening the provisions of Rule 10B(1)(e)(iii) read with Rule 10B(3) of the Rules. Printed from counselvise.com 5 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 25. That the TPO erred on facts and in law in incorrectly computing the unadjusted margins of the comparable/s which have been finally selected for determining the arm's length price of the international transaction pertaining to provision of ITeS segment and in complete ignorance of the data available as per audited financials of the comparables. C Intra-Group Services [INR 11,80,91,036/- 26. That the Ld. TPO/AO/ DRP grossly erred in facts and in law in rejecting the economic analysis of the Appellant and determining of the arm's length price ('ALP') of the international transaction at NIL. 27. That the TPO/DRP erred in not taking cognizance of the evidence adduced in respect to the payment of service charges and also erred in disregarding the favorable decision of Commissioner of Income Tax (Appeals) confirmed by this Hon'ble Tribunal in the case of Appellant for earlier Assessment Years in similar set of facts. 28. That the DRP/TPO erred in summarily rejecting the approach adopted by the Appellant wherein it has benchmarked this international transaction using Transactional Net Margin Method (\"TNMM\") as the most appropriate method. 29. That the TPO/DRP erred in making/upholding the adjustments while applying the principles of \"commercial expediency\", which approach had been rejected judicially and is not mandated under the provisions of section 92CA of the Act. 30. That the TPO/DRP grossly erred in applying the \"Benefit Test\" whilst determining the ALP of the transaction at Nil which in itself is in gross violation of the law settled by various co-ordinate benches of the Tribunal as well as the jurisdictional High Court. 31. The TPO/DRP erred in rejecting the cost plus mark up approach adopted by the Appellant as per the Agreement and failed to appreciate that the service charges were incidental to all business segments of the Appellant and on receipt of the services a mark up of 3 percent on the cost has been paid. 32. That the DRP/TPO erred on facts and in law in concluding that no documentation was furnished to substantiate the cost base, allocation key and mark-up by the Appellant in complete disregard of the fact that all these details form part of the inter-company agreement and economic analysis submitted by the Appellant. 33. That the DRP erred on facts and in law in concluding that: a. there is no evidence that the services have been actually provided; Printed from counselvise.com 6 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 b. there is no basis for revenue claimed to have been generated from the alleged services: c. cost allocation for the intra group services has no basis nor has any such basis been given for each intra-group services received; d. CUP has been correctly applied by the TPO; e. The Appellant has failed to establish that any direct nexus which would establish the benefit received by the appellant on account of receipt of such services; and f. No independent party would be willing to pay for services which are a part of its routine business performed by it and would not engage to receive such incidental services for a payment, even at cost. D. Interest on Receivables [18,506/-] 34. The TPO/DRP erred in making an adjustment of INR 18,506 to the income of the Appellant on account of alleged difference in the arm's length price of the alleged international transaction of interest on outstanding receivables 35. That the TPO/AO/DRP erred on facts and in law by considering the continuing debit balance of receivables of the Appellant as a separate \"international transaction'. 36. That the TPO/AO/DRP erred on facts and in law in ignoring that no adjustment was warranted on account of receivables since the Appellant did not charge interest on delayed payment of receivables from third parties. 37. That the DRP/TPO ought to have considered that as a commercial decision the Appellant is neither levying nor charging interest on outstanding receivable from AE's as well as the third parties. 38. The TPO/AO erred in applying 'substance over form' principle to re- characterizing the transaction as an interest free loan' the coming to the conclusion that 6 months LIBOR rate is to applied in calculating the interest on receivables. 39. That without prejudice, the TPO/AO erred not appreciating that once the working capital adjustment was taken into account, as had been allowed to the Appellant in there preceding years, no separate adjustment on account of receivables was warranted in terms of the dictum of the jurisdictional High Court. 40. Without prejudice, the TPO erred in computing the amount of interest on outstanding receivables. In doing so, the TPO erred in not appreciating that Appellant has significantly higher outstanding payables towards AEs which Printed from counselvise.com 7 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 should also be considered while calculating the overall credit period and resultant interest payable/chargeable to the AE. Consequential Grounds 41. That the AO has erred in initiating penalty proceedings under Section 270 r.w.s. 274 of the Act. 42. That the AO has erred in levying interest under section 234B of the Act on the Assessee. 2.1 The assessee vide application dated 26.08.2025 has also raised following additional jurisdictional ground: “11.1 That the order dated 25.07.2021 passed by the Transfer Pricing Officer ['TPO\"| under section 92CA(3) of the Act without a valid Document Identification Number (\"DIN\") is in contravention to Circular No. 19/20219 dated 14.08.2019 issued by the Central Board of Direct Taxes (\"CBDT\") is non-est and void. 11.2 That the TPO erred in not appreciating that in terms of section 119 of the Act, all Circular/Order / Instruction / Directions issued by the CDBT for the proper administration of the Act are binding on subordinate income-tax authorities and other persons employed in the execution of the Act. 11.3 That the Assessing Officer ought to have appreciated that if, the order dated 25.07.2021 passed by the TPO is non-est and void, then the Appellant is no longer an 'eligible assessee in terms of section 144C(15)(b) of the Act, thus assessment could not be framed in terms of section 144C of the Act. 11.4 That the Assessing Officer ought to have appreciated that if, the order dated 25.07.2021 passed by the TPO is non-est and void then the Final assessment order dated 30.05.2022 passed under section 143(3) r.w.s 144C(13) of the Act would consequentially be barred by limitation, non-est and void.” 2.2 As the jurisdictional ground has been raised by the assessee which goes to the root of the matter, having regard to the ratio of decisions of the Hon’ble Apex Court in National Thermal Power Corporation v. PCIT reported in 229 ITR 833 and Jute Corporation of India the additional ground raised by the assessee is admitted and is taken by us at the very threshold for adjudication. Printed from counselvise.com 8 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 3. Admittedly, in the instant case as per “Intimation Letter for Order under Section 144C(5)”, dated 30.03.2022 [DIN & Document No.: ITBA/DRP/S/91/2021- 22/1042080183(1)], appearing at page 26 of the appeal set filed before us, the DRP order dated 17.03.2022 under Section 144C(5) of the Act was uploaded on the ITBA portal on 30.03.2022. The final assessment order under Section 143(3) r.w.s. 144C(13) was passed by the Assessing Officer on 30.05.2022. The Learned Counsel appearing for the assessee joins issue here to this effect that once the final order is passed beyond the prescribed time limit in terms of Section 144C(13) of the Act which ought to have been passed within one month from the end of the month in which DRP direction is issued i.e. 30.03.2022 in the instant case when the order was uploaded on the ITBA portal, the same is not sustainable in the eyes of law and is liable to be quashed. On this ground the Learned Counsel relied upon very many judgments including the judgment passed by the Hon’ble Jurisdictional High Court of Delhi in the case of Louis Dreyfus Company India (P) Ltd vs DCIT: [2024] 464 ITR 595 (Del). 4. On the other hand, the Learned DR submitted a report obtained from the Assessing Officer stating that the DRP order dated 17.03.2022 was provided to the NFAC on 11.04.2022. The same was further received by the TPO on 7.4.2022 and on 29.4.2022 by the office of the ACIT(OSD), Range-X, New Delhi, who in turn passed the final assessment order under Section 143(3) r.w.s. 144C(13) of the Act on 30.05.2022. In that view of the matter, since the DRP order was received by the Assessing Officer on Printed from counselvise.com 9 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 29.04.2022, the impugned assessment order dated 30.05.2022 is very much sustainable in the eyes of law as the same has been passed within the statutory time limit. 5. Having heard the rival submissions made by the parties and considering the present facts of the matter and particularly taking into consideration the settled provision of law for passing final assessment order in terms of Section 144C(13) of the Act, we have perused the observation made by the Hon’ble Jurisdictional Delhi High Court in the case of Louis Dreyfus Company India (P) Ltd (supra), the relevant observation of which is as under: “17. As is manifest from a reading of sub-section (13) of Section 144C of the Act, the AO is not accorded any discretion in the framing of an order of assessment once directions have come to be framed by the DRP. In fact, the provision requires the AO to frame an order of assessment in conformity with those directions and without providing any further opportunity of hearing to the assessee. This principle of law has been affirmed by the Bombay High Court in the aforenoted paragraphs of Vodafone Idea and in Shell India Markets (P.) Ltd. v. Addt. CIT. National Faceless Assessment Centre [2022] 139 taxmann.com 335/443 ITR 366 (Bom)/Judgment dated 14 February 2022 in WP No. 3298/2021. The relevant paragraph of the decision in Shell India are extracted hereinbelow: \"10. Sub-section (13) of Section 144C, therefore, is very clear inasmuch as the Assessing Officer shall, upon receipt of the directions issued under sub- section (5), in conformity with the directions, complete the assessment within one month from the end of the month in which such direction is received. Sub-section (13) also provides that the Assessing Officer can complete the assessment without providing any further opportunity of being heard to the assessee. This means that the moment the Assessing Officer receives the directions under sub-section (5), he has to straightaway complete the assessment and he does not even have to hear the assessee. The Assessing Officer shall simply comply with the directions received from the DRP within one month from the end of the month in which such direction is received.\" 18. In this backdrop, we note that both the judgments of the Bombay High Court in Shell India Markets (P) Ltd's case (supra) and Vodafone Idea Lid's case (supra) Printed from counselvise.com 10 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 construe the time lines as provided in Section 1440 to be mandatory in character. In our considered opinion, this interpretation is in accord with the intent behind insertion of that provision and the bare text and spirit of that section. Thus, we accord our approval to the interpretation as set out in the aforenoted decisions of the Bombay High Court 19. Further, the procedure of assessment as provided under section 144C does not envisage or contemplate the interdiction or involvement of the TPO once a directive has been framed by the DRP. The role of the TPO comes to an end once an order as contemplated under section 92 CA(4) of the Act has come to be framed and remitted to the AO. There was thus no occasion for the TPO having resumed proceedings post the passing of the direction by the DRP on 20 June 2022. “20. Undisputedly, the directive of the DRP came to be uploaded on the ITBA portal on 24 June 2022. It is additionally stated to have been dispatched through Speed Post to the third respondent (TPO) and the fourth respondent (Additional/Joint/Deputy/Assistant Commissioner of Income Tax, National Faceless Assessment Centre, New Delhi) on 27 June 2022. It is thereafter that the TPO appears to have passed the order dated 25 July 2022 21. We, however note that paragraph 4(2) of the E-as, 2019 makes the following salient provisions:- \"4(2). All communication among the assessment unit, review unit, verification unit or technical unit or with the assesse or any other person with respect to the information or documents or evidence or any other details, as may be necessary for the purposes of making an assessment under this Scheme shall be through the National e-assessment Centre.\" 22. It is thus manifest that as per the provisions of E-as, 2019, all orders, notices and decisions have to be necessarily uploaded on the ITBA portal and as part of the larger faceless assessment regime which now holds the field. The uploading of the directive of the DRP on the ITBA portal would thus constitute valid and sufficient service and the period of limitation as prescribed in Section 144C(13) of the Act would be liable to be computed bearing that crucial date in mind. Once the aforesaid position becomes clear, it is evident that the -order of assessment, if at all could have been framed lastly by 31 July 2022. There has thus been an abject failure on the part of the first respondent to comply with the mandatory timelines as incorporated in the gforenoted provisions. Accordingly, the writ petition is liable to be allowed and the impugned order of assessmem and the consequential penalty proceedings are thus liable to be set aside on this short score alone. 23. The writ petition is allowed. The order of assessment dated 24 August 2022 as well as the penalty show cause notice dated 24 August 2022 are quashed and set Printed from counselvise.com 11 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 aside. For reasons afore noted and consequent to a failure on the part of the respondents to implement the directives of the DRP, the return as submitted by the petitioner would be deemed to have been accepted and the tax liability worked accordingly”. 5.1 Admittedly, in the instant case the final assessment order in terms of Section 144C(13) impugned before us has been passed on 30.05.2022 wherein the DRP order dated 17.03.2022 vide intimation letter dated 30.03.2022 was uploaded on ITBA portal on 30.03.2022. The final assessment order passed by the Learned Assessing Officer on 30.05.2022 is found to be beyond the prescribed time limit of thirty days from the end of the month of the DRP order dated 17.03.2022, uploaded on the ITBA portal on 30.03.2022 (DIN was generated subsequently), whereas as in view of the judgment passed by the Hon’ble Jurisdictional High Court in Louis Dreyfus Company India (P) Ltd (supra), the last date of passing the order by the Learned Assessing Officer ought to have been 30.04.2022 as the order of the Learned DRP was uploaded in the ITBA portal on 30.3.2022, keeping in view the observation made by the Hon’ble Apex Court in the matter of Louis Dreyfus Company India (P) Ltd. (supra) in paragraph 22 therein, the impugned final assessment order under Section 143(3) r.w.s. 144C(13) is found to be barred by limitation in terms of Section 144C(13) of the Act and is thus, quashed, as void ab initio. 5.2 The ‘DIN’ is not pressed by the Ld. AR in the open court which is recorded here. 5.3 Since the instant appeal on legal jurisdictional issue is being disposed of, the other grounds raised have become of academic interest only and consequently are not adjudicated upon. Printed from counselvise.com 12 ITA No. 1428/Del/2022 & SA No. 166/Del/2022 6. In view of the appeal itself having been disposed of by us, the stay application filed by the assessee has become infructuous and is disposed of accordingly. 7. In the result, assessee’s appeal in ITA No. 1428/Del/2022 is allowed in above terms. The stay application SA No. 166/Del/2022 is dismissed as infructuous. Order pronounced in open court on 07.01.2026. Sd/- Sd/- (SMT. RENU JAUHRI) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 07.01.2026. *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "