THE DCITBHARUCH RANGE, BHARUCH V. HEUBACH COLOUR PVT.LTD., ANKLESHWAR

ITA 547/AHD/2012

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax, Bharuch Circle against Heubach Colour Pvt. Ltd. concerning the valuation of intangible assets acquired by Heubach from its associated enterprise, Colour Ltd. The TPO initially valued these intangibles using the CUP method based on a 2002 transaction, which was significantly lower than the valuation by Heubach using the Royalty Savings Method. The CIT(A) found the CUP method inappropriate due to substantial differences between the 2002 and 2007 transactions and accepted the Royalty Savings Method with adjusted royalty rates and valuation periods. The Tribunal upheld the CIT(A)'s decision, dismissing the Department's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 125999 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIN PATHAN
• Assessee Lawyers: DA RSI SUMAN RATNAM
• Keywords: Transfer pricing; International transaction; Depreciation; Valuation report
• Section: 32; 92D

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.547/Ahd/2012 (Assessment Year: 2007-08) Deputy Commissioner of Income Tax, Bharuch Circle, Bharuch Vs. Heubach Colour Pvt. Ltd., 9003-9010, Phase-VI, GIDC Estate, Ankleshwar- 393002 [PAN No.AAACH2578P] (Appellant) .. (Respondent) Appellant by : Ms. Amrin Pathan, A.R. Respondent by: Dr. Darsi Suman Ratnam, CIT-DR Date of Hearing 22.01.2025 Date of Pronouncement 21.04.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Department against the order passed by the Ld. Commissioner of Income Tax (Appeals)-I, (in short “Ld. CIT(A)”), Baroda vide order dated 27.12.2011 passed for A.Y. 2007-08. 2. The Department has taken the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law (i) the Ld.CIT(A) erred in law and on facts of the case, by determining Arm's Length Price, ALP at Rs.17,88,08,043/- instead of ALP at Rs. 6,94,39,913/- determined by the Transfer Pricing Officer, holding that ALP of the intangible assets purchased by the Assessee should be calculated using the \"Net Present Value\", NPV/ Royalty Savings Method under Income Approach\" as against more appropriate Comparable Uncontrolled Price (CUP) method used by the Transfer Pricing Officer with comparable transaction of Colour Ltd, the Associated Enterprise of the assessee with Avecia Ltd. (ii) the Ld.CIT(A) erred in law and on facts of the case, by holding that the downward adjustment of Rs.54,03,30,087/- being the difference of the ALP determined by the Assessee at Rs.6,94,39,913/- and Rs.60,67,70,000/- by the Transfer Pricing ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 2– Officer should not be added to the total income of the assessee contrary to the stand taken by the Transfer Pricing Officer and the Assessing Officer. (iii) the Ld.CIT(A) erred in law and facts of the case, in scaling down the upward adjustment of Rs.32,83,64,753/- made by the Transfer Pricing Officer to Rs.17,88,08,043/- on sale of finished goods at Rs.66,36,17.861/- by holding that only ALP of the Avecia Products should be modified while that of non-Avecia should not be done, ignoring the fact the assessee is earning huge * margins in the sale of non-avecia products also. 2. The appellant craves to add to, amend or alter the above grounds as may be deemed necessary.” Ground Number 1: Ld. CIT(Appeals) erred in facts and in law in determining ALP at Rs. 17,88,08,043/- instead of Rs. 6,94,39,913/- 3. The brief facts relating to this Ground of Appeal are that the Assessee had acquired the business of Avecia from its associated enterprise (AE), Colour Ltd (CL), for a total consideration of Rs. 60.97 crore (approximately US $14.05 million). This acquisition included the purchase of valuable intangible assets such as a trademark, technical know-how, and goodwill. To determine the fair value of these intangibles, the Assessee relied on a valuation report prepared by an independent firm of Chartered Accountants, M/s. Dalal & Shah, Mumbai. This report used a method that assessed the future benefits the Assessee would earn from the business. However, the Transfer Pricing Officer (TPO) disagreed with the valuation method used by the Assessee and instead proposed using the Comparable Uncontrolled Price (CUP) method for valuing the intangibles. The TPO was of the view that the price paid by CL to Avecia Ltd. in 2002 for similar intangibles should serve as the arm's length price (ALP) for the Assessee's transaction as well. The TPO referred to the purchase price paid by CL in 2002, which was Rs. 6.94 crore (approximately US $1.60 million), and considered this as the appropriate benchmark. Consequently, the TPO suggested an adjustment of Rs. 54.03 crore to the valuation of the intangibles acquired by the Assessee. ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 3– The Assessee had capitalized these intangibles on its books, but since the acquisition was made on March 31, 2007, no depreciation was claimed on these assets. During the course of proceedings before TPO, the Assessee submitted that the Reserve Bank of India (RBI) had approved the acquisition of these intangibles, including goodwill and technical know-how, for the amounts involved, which were also remitted in compliance with RBI regulations. The assessee submitted that it had conducted a thorough valuation based on the future benefits expected from the business, which was a standard approach in line with OECD guidelines. The Assessee argued that since no other comparable transactions were available, it was appropriate to use this method. It was submitted that according to the OECD guidelines, the pricing for intangibles should take into account the potential benefits for both the transferor and the transferee. The transferee (in this case, the Assessee) was expected to pay for the intangibles based on their usefulness and the expected benefits they would bring to the business. Upon acquiring these intangibles, the Assessee significantly upgraded its manufacturing capabilities, shifting from a custom manufacturer to a full-fledged manufacturer. This change brought considerable risks, including technological, capacity, and market risks. As a result of these upgrades, the Assessee was able to directly manage the distribution of the products from April 1, 2007, which allowed them to capture a larger share of the margin on sales. This resulted in a substantial increase in the prices realized for the products, which exceeded the estimated benefits from the valuation report. Over the next few years (2007-2010), the price per kilogram of the Avecia products increased significantly, surpassing the projected estimates. In support of these claims, the Assessee submitted sales data and audited financial statements showing the actual price realizations from 2006 to 2010. The Assessee submitted that in just three years, it had already realized more than US ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 4– $15.5 million, compared to the initial payment of US $14.05 million for the intangibles, which was a conservative estimate. The actual additional pre-tax benefits from these sales were much higher than anticipated, further strengthening the Assessee's position. The TPO, however, was of the view that the CUP method based on the 2002 transaction should be applied 4. In appeal before Ld. CIT(Appeals), the Assessee pointed out that the CUP method is only valid if the transactions being compared are sufficiently similar, and this was not the case here. The Assessee submitted that Rule 10B(4) of the Income Tax Rules prohibits using data from transactions that occurred more than two years before the relevant financial year. Further, the assessee submitted that the 2002 transaction between CL and Avecia was different from the 2007 transaction between CL and the Assessee. The 2002 deal involved additional contractual obligations, such as a call option and a manufacturing agreement, which did not apply in the Assessee’s case. The Assessee also submitted that the economic conditions in 2000, 2002, and 2007 were significantly different, making the 2002 transaction an inappropriate basis for determining the price of the intangibles in 2007. The Assessee also pointed out that the business acquired in 2007 was significantly different from the one acquired in 2002, as the sale of a high-value product, Special Alpha Blue (PB 60), had grown substantially in the years leading up to 2007. This product’s contribution to the business had increased over 16 times during this period, which had a major impact on the business’s value. Therefore, the 2002 valuation failed to account for the changes in the business during the five-year period. The Assessee submitted before Ld. CIT(Appeals) that the CUP method proposed by the TPO was not applicable due to the significant differences between the 2002 and 2007 transactions. In light of the above, the Assessee requested that the TPO’s adjustment be deleted, as the ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 5– valuation of the intangibles was done in accordance with the proper methodology and in compliance with the applicable laws. Order by Ld. CIT(Appeals) 5. Ld. CIT(Appeals) examined the assessee's arguments and the Transfer Pricing Officer's (TPO) findings. Ld. CIT(Appeals) noted that the assessee had relied on a valuation report by M/s. Dalal & Shah, Chartered Accountants, to determine the Arm’s Length Price (ALP) of intangibles, arguing the absence of comparable transactions. However, the TPO found significant issues with the valuation, notably the report's reliance on unaudited financial data provided by the management of Colour Ltd. without independent verification or audits. The TPO highlighted that the valuation's royalty rates for technical know-how (10%) and trademarks (5%) lacked any benchmarked comparables and were solely based on Colour Ltd.'s management’s perception, which the TPO found unreliable. Consequently, the TPO rejected the valuation report. Ld. CIT(Appeals) noted that the TPO had applied the CUP method, on the basis of a 2002 business transaction between Colour Ltd. and Avecia Ltd. to estimate the ALP. The assessee objected to this CUP, submitting that the 2002 transaction was significantly different from the 2007 acquisition of intangibles by the assessee, due to differences in contractual obligations, including a prior option agreement and manufacturing agreement. The assessee submitted that adjusting the CUP for margins earned during the option period would lead to a more accurate comparison, but this was contested by the TPO due to the difficulty in isolating relevant margins and the lack of verifiable financial data. The Commissioner (Appeals) agreed with the assessee that the two transactions (2002 and 2007) could not be directly compared without accounting for the differences. The time gap between the transactions and differing contractual ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 6– obligations further complicated the CUP application, and it was deemed improper to rely on CUP as the most appropriate method for determining the ALP of intangibles. Moreover, the assessee's use of hindsight in justifying the ALP based on later developments was also rejected. Considering the difficulties with the CUP method, the Commissioner (Appeals) looked to the possibility of using an alternative method. The OECD Transfer Pricing Guidelines suggested that the Net Present Value (NPV) calculation could be an acceptable approach when no comparable transactions exist. The assessee’s valuer had used the Royalty Savings Method under the Income Approach, which was deemed an acceptable methodology despite the flaws in the specific valuation conducted by the valuer. The method involved projecting the annual after-tax cash flows the intangibles were expected to generate over their useful life and discounting them to their present value. The Commissioner (Appeals) agreed that this methodology could be used, subject to applying appropriate royalty rates and expected benefit periods. 6. For the royalty rate of technical know-how, the Commissioner (Appeals) held that the TPO's suggested rate of 3.5% was more appropriate than the 10% proposed by the valuer, considering the unregistered nature of the know-how and the potential lack of confidentiality. Similarly, for trademarks, the Commissioner found a 3% royalty rate more suitable than the 5% proposed by the assessee's valuer, based on industry standards. In addition, the period for computing expected benefits from the know-how was set at 10 years instead of the 5 years suggested by the valuer, due to the unique nature of the trade secret. 7. Ld. CIT(Appeals) also assessed the valuation of goodwill, which had been computed by the valuer as the difference between the business’s capitalized ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 7– value and the value of the intangibles. However, the lack of comprehensive audited financial statements for Colour Ltd. and the unexplained fall in profits from 2006 to 2008 led the Commissioner to reject this method for goodwill valuation. Instead, the Commissioner upheld the TPO’s assessment of the goodwill at US$1, based on the terms of the Goodwill Purchase Agreement, which defined goodwill as including factors such as market positioning and customer information. The Commissioner (Appeals) determined the final Arm’s Length Price of the intangibles as follows:  Know-how: US$ 1.54 million (₹6,68,36,000)  Trademarks: US$ 2.58 million (₹11,19,72,000)  Goodwill: US$ 1 (₹43.4) 8. The total value for the intangibles was determined by Ld. CIT(Appeals) to be ₹17,88,08,043/-. Ld. CIT(Appeals) also held that depreciation on technical know-how and trademarks should be allowed in future years based on these adjusted values, in accordance with the provisions of Section 32 of the Income Tax Act, while goodwill depreciation was not applicable, as the assessee had not claimed depreciation on goodwill. 9. On going through the orders passed by the Assessing Officer and Ld. CIT(Appeals) and taking into consideration arguments of both the parties, we are of the considered view that there is no infirmity in the order of Ld. CIT(Appeals) so as to call for any interference. In our view, Ld. CIT(Appeals) correctly noted that the assessee, citing the non-availability of other comparables, determined the arm's length price of intangibles based on the valuation report by M/s. Dalal & Shah, Chartered Accountants (CAs). However, the Transfer Pricing Officer found this report unreliable for several reasons and ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 8– rejected the valuation report relied upon by the assessee. Before Ld. CIT(Appeals), the assessee submitted that the use of this CUP on the grounds that the transaction in 2002 differed significantly from the subject transaction and that there were partially performed contracts and obligations in the 2002 agreement, which were not present in the 2007 acquisition of intangibles by the assessee. The assessee also pointed out that the CUP identified by the TPO did not account for the margins earned by Avecia Ltd. during the option period. In our view, considering the facts of the assessee’s case, Ld. CIT(Appeals) has correctly observed that the CUP method adopted by TPO cannot be used without eliminating the differences between the transactions. The TPO’s CUP of US $ 15,99,998, which did not factor in margins earned during the option period, was correctly, not found to be reliable by Ld. CIT(Appeals). Further, Ld. CIT(Appeals) correctly held that the 2002 prices cannot be applied to the transactions related to the impugned year under consideration. Accordingly, in our view, Ld. CIT(Appeals) correctly held that expected benefits from intangible property through Net Present Value calculation was an acceptable option to determine SLP of intangibles. In the absence of a comparable, Ld. CIT(Appeals) has correctly applied the Royalty Savings Method, used by the valuer under the income approach, as an acceptable methodology for determining the ALP of intangibles. Further, Ld. CIT(Appeals) held that the royalty rates adopted by the valuer (10% for technical know-how and 5% for trademarks) were not justified. Based on the OECD Transfer Pricing Guidelines, Ld. CIT(Appeals) considered it more appropriate to apply a royalty rate of 3.5% for technical know-how and 3% for trademarks. Looking into the assessee’s set of facts, we are of the view that Ld. CIT(Appeals) has adopted a well-reasoned approach, while passing the order, and we find no infirmity in the order of Ld. CIT(Appeals) so as to call for any interference. ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 9– 10. In the result, in light of the above observations, Ground Number 1 of Department’s appeal is hereby dismissed. Ground Number 2: Ld. CIT(Appeals) erred in holding that the downward adjustment of Rs. 54,03,30,087/- being the difference of the ALP determined by the assessee at Rs. 6,94,39,913/- and Rs. 60,67,70,000/- by the TPO should not be added to the total income of the assessee 11. The brief facts relating to this ground are that the assessee filed appeal against the addition of Rs. 54,03,30,087/- made by the AO which was based on the difference between the Arm's Length Price (ALP) determined by the assessee and the ALP determined by the TPO. The TPO held that the assessee had transferred a cash asset of Rs. 54,03,30,087/- to its associated enterprise (AE) without consideration and that the net present value (NPV) of this asset was Rs. 54,04,40,087/-. As a result, the TPO recommended that this amount should be added to the assessee's income as an upward adjustment for the international transaction. 12. The assessee filed appeal before Ld. CIT(Appeals), and objected to the addition on the ground that it represented a duplicate addition for the same adjustment. The assessee pointed out that the TPO had already instructed the AO to reduce the value of intangibles by Rs. 54,03,30,087/-, and to allow depreciation only on the reduced value. However, in another part of the TPO's order, the TPO proposed making an upward adjustment of Rs. 54,03,30,087/- based on the assumption that the assessee had transferred cash assets to the AE, which would result in a double addition for the same transaction. The assessee submitted before Ld. CIT(Appeals) that according to the law, there cannot be double additions for the same transaction, and that if ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 10– there was an adjustment to the transaction, it should either reduce the value of the acquisition (with corresponding depreciation) or add the amount as income for the current year, but not both. 13. Ld. CIT(Appeals) noted that the TPO had made a downward adjustment of Rs. 54,03,30,087/- to the ALP of intangibles but had not explained how this amount could also be considered as the assessee’s income. The AO and TPO did not refer to any provisions of the Income Tax Act that would support the addition of this amount as taxable income. Furthermore, even if the assessee had transferred a cash asset of Rs. 54,03,30,087/- to its associated enterprise, the addition of this amount to the assessee's income was not justified. Therefore, the Commissioner (Appeals) held that the addition of Rs. 54,03,30,087/- to the assessee's income was incorrect and deleted the same on the ground that double addition was not allowed under the Income Tax Act. 14. On going through the facts of the assessee’s case, we find no infirmity in the order of Ld. CIT(Appeals) and accordingly Ground Number 2 of Department’s appeal is dismissed. Ground Number 3: Ld. CIT(Appeals) erred in scaling down the upward adjustment of Rs. 32,83,64,753/- made by the TPO to Rs. 17,88,08,043/- on sale of finished goods at Rs. 66,36,17,861/- by holding that only ALP of Avecia products should be modified while that of non- Avecia should not be done 15. The brief facts relating to this ground are that the assessee filed appeal against order passed by the AO and the TPO concerning the transfer pricing adjustments made to its transactions with its Associated Enterprise, M/s. Colour ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 11– Ltd. based in Bermuda. The assessee had sold 1,825.723 tonnes of pigments/pigment dispersions to Colour Ltd. for Rs. 66,36,17,861/-. In its Transfer Pricing Documentation maintained under Section 92D of the Act, the assessee treated itself as the tested party and applied the Transactional Net Margin Method (TNMM), using operating margin of cost as the Profit Level Indicator (PLI) to benchmark its transaction. The assessee selected eight comparable companies for its analysis, considering companies from the chemical industry (paints and dyes sub-industry) with a sales turnover greater than Rs. 1 crore and a manufacturing-to-sales ratio greater than 80%. The average operating margin of these comparables was 4.88%, while the assessee’s operating margin from the AE exports was 15.89%. The TPO, however, raised several concerns. Firstly, the TPO noted that the assessee had failed to submit financial statements of its AE, Colour Ltd., despite repeated requests. As a result, the TPO was unable to verify the functions, assets, and risks (FAR) of Colour Ltd., and hence, the FAR analysis presented by the assessee was not acceptable. The TPO pointed out that Colour Ltd. acted primarily as a routing entity without bearing marketing risks, distribution costs, or any significant business functions, except providing technical know-how for Avecia products. Therefore, the TPO held that the assessee was the more complex entity, responsible for manufacturing, R&D, procurement, and other business functions, which justified its classification as the full-fledged manufacturing entrepreneur. Accordingly, the TPO rejected TNMM as the most appropriate method, suggesting that the Profit Split Method (PSM) would have been a more correct approach due to the shared intangibles between the assessee and Colour Ltd. However, since the assessee failed to submit the necessary financial information regarding Colour Ltd., the TPO could not apply PSM as well. Consequently, the TPO decided to apply a royalty mark-up on sales to the AE, since Colour Ltd. ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 12– owned the intangibles related to Avecia products. The TPO then calculated an upward adjustment of Rs. 32,83,64,753/- based on a 15% royalty mark-up on the sales made to Colour Ltd. In response, the assessee contended that TNMM was the most appropriate method and that it should be considered the tested party, given its limited risk as a custom manufacturer. The assessee submitted that the FAR analysis, supported by contracts and documents, was sufficient to demonstrate that Colour Ltd. was responsible for marketing and distribution, and not for any substantial manufacturing functions. Furthermore, the assessee pointed out that applying the royalty mark-up to both Avecia and non-Avecia product sales was inappropriate, as the mark-up for non-Avecia products was not justified. The assessee also provided a breakdown of the sales for Avecia and non-Avecia products and submitted that the TPO's calculation of the upward adjustment was based on incorrect assumptions. The assessee submitted that any upward adjustment should be limited to the sales of Avecia products, given that the mark-up rate of 75.86% applied by Colour Ltd. was only applicable to these products. The assessee thus revised the figures and thereafter proposed a reduced upward adjustment of Rs. 13,64,68,598/- for the Avecia products. 16. In appeal, Ld. CIT(Appeals) agreed with the TPO's rejection of the TNMM method due to the lack of a proper FAR analysis, especially the failure to submit the financial statements of Colour Ltd. Ld. CIT(Appeals) also concurred with the TPO's finding that Colour Ltd. acted primarily as a routing entity and did not assume significant risks or perform substantial functions beyond providing technical know-how. However, Ld. CIT(Appeals) found that the TPO’s upward adjustment of Rs.32,83,64,753/- was excessive and should be restricted to Rs.17,76,95,458/-, based on a more appropriate royalty rate of 6.5% for the Avecia products. Accordingly, Ld. ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 13– CIT(Appeals) upheld the upward adjustment to the assessee's income but reduced the amount from the TPO's proposed figure of Rs. 32,83,64,753/- to Rs. 17,76,95,458/- appeal of the assessee was partly allowed. 17. The Department is in appeal before us against the order passed by Ld. CIT(Appeals). In our view, while passing the order, Ld. CIT(Appeals) has taken a well-reasoned approach and there is no reason to interfere with the same. The Commissioner (Appeals) upheld the Transfer Pricing Officer's findings that the assessee’s submission of contracts alone could not substantiate the functions performed, risks assumed, and assets deployed by the associated enterprises (AEs), especially without the financial statements of Colour Ltd. The financial statements were crucial for verifying whether Colour Ltd. had actually performed the functions it claimed. The TPO also highlighted that Colour Ltd. did not provide technical know-how for non-Avecia products, and that it did not assume any marketing or inventory risks, which the assessee did not dispute. The Commissioner agreed with the TPO that the FAR (Function, Asset, Risk) analysis provided by the assessee was insufficient and could not be accepted at face value. Regarding the choice of the most appropriate transfer pricing method, Ld. CIT(Appeals) concurred with the TPO that TNMM could not be considered appropriate due to the faulty FAR analysis. The assessee’s reliance on OECD guidelines, which suggest that financial information may not be necessary if TNMM is the selected method, was also found to be misplaced by Ld. CIT(Appeals). As the FAR analysis was deemed unreliable, the method chosen by the assessee was held not to be appropriate. On the issue of the tested party, the TPO’s rejection of the assessee as the tested party was also upheld by Ld. CIT(Appeals), as both the assessee and Colour Ltd. owned valuable intangibles, and the assessee failed to rebut the TPO's findings regarding their respective functions. The assessee's attempt to justify the use of the CUP ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 14– (Comparable Uncontrolled Price) method was rejected by Ld. CIT(A), as the Transfer Pricing Report had already rejected CUP due to differences in product specifications, risks, functions, and other factors. Ld. CIT(Appeals) agreed with the TPO’s approach to determining the ALP of sales to AE, which involved reducing a royalty markup from sales by Colour Ltd., as this was based on a functional/FAR analysis. However, Ld. CIT(Appeals) accepted the assessee's contention that the upward adjustment should apply only to the sales of Avecia products, given that the 75.86% markup was on sales of these products. The assessee's arguments regarding the non-Avecia products were also considered, but Ld. CIT(Appeals) ruled that the TPO's method was appropriate in this context. The final upward adjustment was determined to be Rs. 17,76,95,458/-, instead of the Rs. 32,83,64,753/- initially proposed by the TPO. The addition to the assessee's income was confirmed to the extent of Rs. 17,76,95,458/-, providing some relief to the assessee. In our view, looking into the facts of the assessee’s case and findings made by Ld. CIT(Appeals), we find no infirmity in the order of Ld. CIT(Appeals) so at to call for any interference. 18. In the result, Ground Number 3 of the Department’s appeal is dismissed. 19. In the combined result, the Department’s appeal is dismissed. This Order is pronounced in the Open Court on 21/04/2025 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 21/04/2025 TANMAY, Sr. PS TRUE COPY ITA No.547/Ahd/2012 DCIT vs. Heubach Colour Pvt. Ltd. Asst.Year –2007-08 - 15– आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 24.03.2025(Dictated by Hon’ble Member on his dragon software) 2. Date on which the typed draft is placed before the Dictating Member 24.03.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 24.03.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement .03.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 22.04.2025 7. Date on which the file goes to the Bench Clerk 22.04.2025 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 Dispatch of the Order…………………………………… "