ITA No.2121/Chny/2024 & Cross-Objection No.1/Chny/2025

Parties Involved

Facts Summary

The assessee company, M/s. M.S. Joyson Anand Abhishek Safety Systems Pvt. Ltd., was incorporated on 20.06.2007 and is engaged in the manufacture and supply of automotive safety products such as seat belts, airbags, and steering wheel systems to OEMs in India. It is a joint venture between Takata Corporation, Japan, and the Anand Group, India. During the year under consideration, the assessee entered into international transactions with its Associated Enterprises (AEs), including the import of raw materials and capital goods. The Transfer Pricing Officer (TPO) rejected the assessee’s benchmarking to a large extent and adopted TNMM as the most appropriate method (MAM). The operating margin of the assessee was determined at (-)46.25%, while the average margin of comparables was computed at 11%, resulting in a proposed adjustment. The TPO also granted capacity utilization adjustment based on the percentage of personnel and other operating expenses to the total cost of the assessee based on subsequent years.…

Legal Issues

• 1. Acceptance of CUP method by the CIT(A) without adequate substantiation.
• 2. Violation of Rule 46A for accepting fresh submissions without calling for a remand report.
• 3. Allowance and manner of computation of capacity utilization adjustment.
• 4. Acceptance of assessee’s methodology in preference to that adopted by the TPO.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

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