Juniper Networks Solution India Private Limited (“the assessee”) was subject to transfer pricing proceedings for AY 2022-23, where the AO initially made an upward adjustment of ₹11,75,72,460 under Section 92CA(4). The assessee subsequently filed a rectification application under Section 154. The rectification order recognised that the assessee's trading-segment margin of -1.74% was within the working-capital-adjusted arm's length range of -1.78% to 0.16% and reduced the TP adjustment of ₹6,32,02,940 to NIL.
Assessee’s Contentions | Revenue’s Contentions | Court’s Judgment |
|---|---|---|
The assessee submitted that the TPO, through the rectification order, acknowledged that its operating margin of -1.74% fell within the working-capital-adjusted arm’s length range of -1.78% to 0.16%. Accordingly, the TP adjustment was reduced to Nil. | The Revenue agreed that the assessee’s grievance had been settled pursuant to the rectification order, which revised the TP adjustment to NIL after considering the corrected ALP computation. | The Tribunal noted that the rectification order had resolved the assessee’s grievance by reducing the TP adjustment to NIL and, therefore, the original grounds of appeal no longer survived for adjudication. |
The assessee submitted that its trading-segment OP/OR of -1.74% was within the working-capital-adjusted comparable range of -1.78% to 0.16% and requested directions to give effect to the rectification order. | The Revenue did not dispute the effect of the rectification order and accepted that, after the revised computation, the assessee’s international transactions were at arm’s length with no TP adjustment remaining. | The Tribunal accordingly directed the AO to give effect to the rectification order and consequentially treat the TP adjustment as NIL. Since the assessee’s grievance had been addressed through rectification, the appeal was partly allowed. |
ITAT held that once the TP adjustment is reduced to Nil through a rectification order, the original grounds of appeal become infructuous. ITAT directed the AO to give effect to the rectification order and delete the TP adjustment from the final assessment order.
