This case delves into the final tribunal order issued for ITA No. 478/DEL/2021 where Alcatel Lucent India Ltd., based in New Delhi, contested several additions and adjustments made by the Assessing Officer under the Income Tax Act, 1961. The core issues centered around transfer pricing adjustments related to capital goods purchases from associated enterprises (AEs) and the proper application of corporate tax laws.
The dispute arises from the order dated 31.03.2021 in which the Assessing Officer increased the taxable income of Alcatel Lucent significantly over the returned income. The company challenged this on various grounds including improper transfer pricing adjustments and erroneous corporate tax additions.
The primary contention in the appeal was the adjustment made to the cost of capital goods purchased from AEs. Alcatel Lucent argued that the markup applied by the AEs and the consequent adjustments were not properly benchmarked, which led to significant financial discrepancies in the assessed income.
The Tribunal examined the arguments regarding the lack of proper benchmarking of transactions involving capital goods and the inappropriateness of the methods used by the Transfer Pricing Officer (TPO). The case highlighted issues of natural justice and the need for proper methodological application in determining arm’s length pricing.
The tribunal remanded several issues back to the lower authorities for reassessment, emphasizing the need for a comprehensive and fair review. This case underscores the complexities of transfer pricing within international transactions and the necessity for clear documentation and appropriate methodological applications in tax assessments.
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