The assessee contended that the TPO erroneously applied adjustments on the entire turnover of INR 5.99 crore instead of limiting the adjustments strictly to transactions with the AEs, which amounted to only INR 4.80 crore.

The Revenue supported the TPO and DRP’s approach, maintaining that the transfer pricing adjustments made were appropriate and justified under the facts and circumstances of the case.

The ITAT held that transfer pricing adjustments must be restricted solely to international transactions with AEs and should not be applied at the entity-wide turnover level.

The assessee maintained that it had used internal TNMM for spare parts manufactured by it and exported to AEs and external TNMM for spare parts sourced from the domestic market and exported to AEs (Global Sourcing).

The Revenue argued that all exports of spare parts, whether manufactured by the assessee or sourced from third parties, constitute a single trading function and therefore should be evaluated together under one Transfer Pricing method.

Relied on earlier ITAT rulings in its own case (AY 2006–07 onwards) where such segmentation was accepted.

The Revenue maintained that a unified approach would better reflect the commercial reality and align with the arm’s length principle, thereby opposing the assessee’s reliance on different TNMM methods for different segments.

The AE, VRSA, was appointed as Development Manager under a Development Management Agreement (DMA) to supervise the mall project.

The Revenue, via the TPO, questioned the genuineness of development supervision services claimed from AE VRSA, alleging no real or tangible benefit was derived by the assessee from these services.

The ITAT held that the TPO overstepped its jurisdiction by evaluating the necessity or business expediency of the service instead of determining the arm’s length price.

The assessee demonstrated limited in-house capabilities, with minimal employee cost and no internal project management infrastructure.

The Revenue contended that the expense should be disallowed because the TPO believed the services were not commercially expedient or necessary for the project, implying that the arrangement was designed to shift profits rather than reflect a genuine business transaction.

The Tribunal observed that there was substantial evidence demonstrating the AEs multifaceted involvement in the project. Consequently, the ITAT directed the deletion of the transfer pricing adjustment of INR 9.83 crores in full.

The merger with Bharti Airtel Ltd. was sanctioned by NCLT on 08.03.2018 and effective from 14.05.2018. The AO was duly informed via a letter dated 12.06.2018.

The Revenue relied on the existing assessment orders as they were issued and did not provide any detailed explanation or justification for issuing orders in the name of the merged (non-existent) entity.

Despite frequent reminders, all assessment-related notices and orders were issued in the name of Telenor India Communications Pvt. Ltd., which was legally non-existent at the time.

The Revenue did not dispute the fact that the merger was approved and the AO was informed, but did not consider this a valid reason to invalidate the assessment orders.

Highlighted that the TPO’s order even acknowledged the merger, yet proceeded in the wrong entity’s name.

The Revenue did not address or respond to the assessee’s argument that issuing orders in the name of a non-existent entity makes the assessment void.

Cited the judgments in Vedanta Ltd. and Maruti Suzuki India Ltd. to assert that such an assessment order passed in the name of a non-existent entity is void ab initio and cannot be cured under Section 292B.

Essentially, the Revenue took a procedural stance, relying on the assessment documents as issued, without substantiating why the procedural lapse should not affect the validity of the assessment.

The assessee had not opted for Safe Harbour Rules, making the TPO’s invocation of Rule 10TA invalid and without jurisdiction. The assessee contented that foreign exchange gains and losses are inherently linked to its operating revenue from IT services provided to AEs in foreign currency.

The Revenue relied on Rule 10TA (Safe Harbour Rules) to exclude foreign exchange gains from operating income, saying this is how operating margin should be calculated.

The ITAT ruled that Rule 10TA applies solely to assessees who have voluntarily opted for the Safe Harbour Rules; as the assessee had not done so, the TPO’s invocation of the rule was invalid. The Tribunal further noted that the foreign exchange gain was directly related to the assessee’s revenue from IT services and should be classified as operating income.

To support its position, the assessee cited several Pune ITAT rulings, including Dana India, Delval Flow Controls, and Robertshaw Controls, which held that foreign exchange fluctuations from regular business operations are operating in nature.

However, the revenue did not address the assessee’s claim that both forex gains and losses are operating, nor the inconsistent treatment of gains versus losses.

The ITAT referred to several rulings of the Pune ITAT, as well as the decision of the Delhi High Court in Fiserv India Pvt. Ltd, which supported the assessee’s position regarding the treatment of foreign exchange fluctuations.

Contended that CCD issuance was a quasi-capital transaction, not subject to Transfer Pricing (TP) provisions and agrued that TPO while determining the ALP at NIL, did not adopt any of the methods prescribed under Section 92C(1) read with Rule 10AB.

Supported the AO's stance, arguing that the assessee failed to obtain a proper valuation of shares before issuing the preferential CCDs to the investor.

ITAT held that the issuance of CCDs is quasi-capital in nature, and therefore, transfer Pricing provisions are not applicable.

Relied on High Court precedents (Vodafone, Equinox Business Park, Shell India Markets) stating Chapter X doesn't apply to share/quasi-capital issuance to foreign AEs.

Contented that each assessment year is distinct, thus the principle of res judicata doesn't apply, meaning the CIT(A)'s AY 2012-13 decision shouldn't automatically bind the current year.

ITAT affirmed the deletion of the TP adjustment related to the issuance of CCDs and the consequential deletion of interest on debentures.

Contended that the issuance of a corporate guarantee on behalf of its AE is not an international transaction as per Section 92B of the Act and argued that argued that it is a shareholder function and does not involve the provision of a service that warrants a separate charge.

TPO/AO/DRP treated the corporate guarantee provided by the assessee to its AEs as an international transaction.

ITAT held that a corporate guarantee qualifies as an international transaction under Section 92B (2) and Explanation (i)(c), includes "capital financing, including any type of long-term or short-term borrowing, lending or guarantee" within the inclusive definition of "international transaction."

Highlighted that the guarantee fee was excessive, citing ITAT rates of 0.20%-0.53% and its own 0.5% precedent from AY 2018-19.

Held that the transaction qualifies under Section 92B since it affects the profits, income, losses, or assets of the enterprises and confers a benefit (lower interest rates) to the AE.

ITAT noted that the issue of corporate guarantee fee calculation has been addressed by various judicial forums, with a common range of 0.2% to 0.5% being considered justified.

TP proceedings were invalid as the AO failed to establish the required “arrangement” causing “more than ordinary profit” under Section 80IA (10).

Under the proviso to Section 80IA(10), profits from a reported SDT must be determined based on the arm’s length price.

The ITAT emphasized that Section 80IA (10) applies only if an arrangement designed to shift profits exists between the AE parties.

Consistent operating profits across years show no inflated or “more than ordinary” profit due to any arrangement.

TPO applied strict filters (turnover, export, RPT) for selecting comparables, which the DRP largely accepted.

TPO can determine ALP under Section 80IA (10) proviso for SDTs only if an arrangement is first established.

Contented AE relationship with MGL ended after two months due to director’s resignation and share sale and only ₹1.86 crore should be benchmarked, not ₹10.95 crore.

Contended that the entire amount of INR 11,20,16,432/- for software services to MGL was reported as an AE transaction in the original Form 3CEB.

Argued no “business restructuring” disclosure needed and  showed two month AE transactions at arm’s length with 22% margin.

Rejected assessee’s addendum to Form 3CEB and shareholding change evidence due to procedural non-compliance.

Assessee used the "Other Method" with SBI PLR (13.75%) to benchmark interest (paid at 10.45%) on its ₹5.5 crore INR-denominated ECB, claiming it was at arm’s length.

Rejected the assessee's benchmarking approach, asserting that since the interest and principal were to be discharged in Indian rupees, the transaction was similar to "Masala Bonds."

ITAT upheld the assessee's use of SBI PLR for benchmarking interest on INR-denominated ECBs, distinguishing them from Masala Bonds by noting that the borrower bears no currency risk.

Relied on Hyderabad ITAT ruling in Adama India Pvt. Ltd. and Special Bench decision in Invesco (India) Pvt. Ltd., which held domestic rates suitable for INR loans.

Argued that domestic rates like SBI-PLR could not be adopted for benchmarking an ECB transaction, even if denominated in Indian rupees, as it is fundamentally an external borrowing.

ITAT followed coordinate bench rulings in Adama India Pvt Ltd and the Special Bench ruling in Invesco (India) Private Limited, which supported benchmarking INR-denominated loans with Indian domestic rates.