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Issue 1 and 2: General objections and objections to TPO's analysis of Freight Forwarding Segment

1. The Hon'ble DRP and the Ld. TPO/ Ld. AO have grossly erred, in law and in facts by incorrectly computing the margins of Freight Forwarding Segment by including and excluding comparables without appreciating the functional profile/business operations and satisfaction of appropriate filters applied by the TPO/Appellant.

:-4-: IT(TP)A Nos.63 & 102/Chny/2024 &

7. However, we notice that the Ld.AR has not raised any contentions with regard to issue No.5 & 6. Hence, the issue Nos.5 & 6 raised before the Tribunal are dismissed. We shall adjudicate the surviving issues as under.

Issue No.1 & 2 : General objections and objections to TPO's analysis of Freight Forwarding Segment (Ground Nos. 2 to 5 in the original grounds of appeal):

8. The brief fact of the issue is that the TPO has denied the working capital adjustments for TNMM analysis of freight charges paid/received by making a downward adjustment of Rs.6,14,87,286/- which was reduced to Rs.5,73,82,857/- by passing an order u/s.154 of the Act. Subsequently, the assessee filed an objection before the DRP-2, Bangalore against the adjustments made by the TPO. The DRP confirmed the working capital adjustment for TNMM analysis of freight charges paid/received by holding as under:

Accordingly, the AO by passing a final assessment order as per the directions of the DRP and reduced the downward adjustment related to freight forwarding segment to Rs.4,74,14,955/-.

9. Before us, the ld.AR submitted that the authorities have grossly erred in law and in facts by incorrectly computing the margin of freight forwarding segment by including and excluding certain comparables without appreciating the business operations and satisfaction of appropriate filters applied by the TPO against the assessee. Further, the ld. AR submitted that the TPO, AO and DRP have grossly erred in law by rejecting the working capital adjustment margin for comparable companies in freight forwarding segment. In support of the above arguments, the ld.AR submitted that the working capital adjustment has to be allowed to the assessee as the issue is directly covered by the assessee's own case in the decision of the Chennai Tribunal in ITA No.3444/Chny/2016 dated 23.02.2022. The said ruling has been followed and allowed the appeal of the assessee for the assessment year 2015-16 in IT(TP)A No.18/Chny/2020 dated 04.12.2024.

In view of the above arguments and following the judicial precedents of the assessee's own case, the ld.AR prayed for directing the TPO to give the working capital adjustment as claimed by the assessee.

11. Per contra, the ld.DR supported the orders of the authorities and prayed for confirming the same.

12. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities along with the paper book filed and judicial precedence relied on. On perusal of the TPO's order in respect of :-9-: IT(TP)A Nos.63 & 102/Chny/2024 & the freight forwarding segment, we note that the TPO has rejected the working capital adjustment claimed by the assessee and made a separate independent search of comparables by rejecting the working capital adjustments in the freight forwarding segment. The same has been confirmed by the DRP in its directions as noted in Para 3.5 of the proceedings of the DRP dated 18.06.2024 (supra). On perusal of the decision of the Chennai Tribunal in assessee's own case in ITA No. 3444/Chny/2016 dated 23.02.2022 (supra) for the assessment year 2011-12, we find that in the similar set of facts and the Tribunal has already decided the issue in favour of the assessee by directing the TPO to provide working capital adjustment.