ITAT Pune Deletes Rs. 99 Cr TP Adjustments in Bosch Case, Upholds TNMM

The Income Tax Appellate Tribunal (ITAT), Pune Bench by deleting substantial transfer pricing (TP) adjustments and upholding the Transactional Net Margin Method (TNMM) as the most appropriate method for benchmarking international transactions. The bench Astha Chandra (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) found that the assessee had furnished sufficient documentary evidence including agreements, invoices, and communications demonstrating receipt of services and business benefits. It held that the TPO’s determination of ALP at NIL was arbitrary and contrary to law, particularly since no comparable uncontrolled transactions were brought on record. The adoption of the “Other Method” without satisfying the requirements of Rule 10AB was held invalid, leading to deletion of the entire adjustment on this issue. The assessee, a wholly owned subsidiary of the Bosch Group engaged in manufacturing braking systems and automotive safety components, had reported total income of over ₹207 crore. During the assessment proceedings, the Transfer Pricing Officer (TPO) proposed adjustments aggregating to ₹120.89 crore, which were later reduced to ₹99.33 crore pursuant to directions of the Dispute Resolution Panel (DRP). The final assessed income was computed at ₹306.58 crore. Before the Tribunal, the dispute primarily revolved around rejection of TNMM, adoption of the “Other Method” without comparable data, determination of Arm’s Length Price (ALP) at NIL for intra-group services, and separate benchmarking of royalty, trademark, and licensing transactions. The assessee also challenged the reallocation of costs by applying Safe Harbour Rules despite not opting for them. On the issue of cost allocation, the Tribunal held that the TPO erred in invoking Rule 10TA (Safe Harbour Rules) when the assessee had not exercised that option. It observed that reallocation of costs based on sales ratio without proper reasoning was unsustainable, and directed the authorities to accept the assessee’s allocation methodology based on actuals and reasonable allocation keys. The Tribunal also dealt with adjustments relating to royalty and lump sum license fees. It noted that the TPO had rejected the TNMM approach without justification and applied the “Other Method” without identifying comparables. Observing that these payments were commercially justified and already benchmarked under TNMM, the Tribunal directed deletion of the adjustments relating to lump sum license fees and royalty. The Tribunal held that such payments formed part of the overall royalty arrangement and had already been considered within the TNMM framework. It ruled that separate benchmarking of the same transaction would amount to impermissible double adjustment. Accordingly, the Tribunal directed the authorities to accept the TNMM applied by the assessee for benchmarking the trademark fee. A key aspect of the ruling is the Tribunal’s strong rejection of ad-hoc and arbitrary TP adjustments. It emphasized that determination of ALP must strictly adhere to the methods prescribed under Section 92C of the Income Tax Act and relevant rules, and cannot be based on assumptions or absence of evidence. The ITAT partly allowed the assessee’s appeal, deleting major TP adjustments and reaffirming that once TNMM is accepted at the entity or segment level, individual transactions forming part of that segment cannot be selectively re-benchmarked. The ruling reinforces the principles against double adjustment and underscores the requirement of comparables and methodological discipline in transfer pricing assessments. Case Details Case Title: Bosch Chassis Versus DCIT Citation: JURISHOUR-959-ITA-2026(PUN) Case No.: ITA No.1935/PUN/2024 Date: 30-03-2026 Counsel For Appellant: Darpan Kirpalani Counsel For Respondent: Prakash L Pathade Click Here To Read Order Read More: Arbitration | Unsuccessful Party Can Seek Interim Relief Under S. 9 Post-Award: Supreme Court

ITAT Pune Deletes Rs. 99 Cr TP Adjustments in Bosch Case, Upholds TNMM

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