Your MAP resolution settles the transactions with the treaty-country associated enterprise. Can the same treatment be claimed for your associated enterprises in other countries?
Not automatically, but the claim is arguable and the Tribunal will not shut it out. The Chennai Bench restored the adjustment on the transactions with the non-Korean associated enterprises to the Transfer Pricing Officer to examine whether they are similar in nature to those covered by the India-Korea MAP resolution, and, if they are found to be so, to consider giving them the same treatment as adopted in the MAP. The relief is a remand on a similarity test, not a direction to apply the agreed margin.
Decided by the ITAT (Aby T. Varkey, Judicial Member and Amitabh Shukla, Accountant Member (Chennai Bench)) on 2024-07-10, reported as IT(TP)A No. 2/Chny/2019, assessment year 2014-15. It bears on section 92CA, section 92CA(3), section 92C, section 144C(5), section 143(3), section Rule 44G, section Rule 44G(6) of the Income Tax Act 1961, in Assessment & Scrutiny and Appeals matters.
A MAP resolution binds the two competent authorities and covers only the transactions with the associated enterprise in the treaty State. Where a taxpayer deals with associated enterprises in several countries under the same functional profile, the residue is left unresolved and the department's position is that the resolution cannot travel. This is the order that gives the residue a route, and it sets out what has to be proved to use it.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The appeal was against the Assessing Officer's order dated 31 October 2018 under s.143(3) read with s.144C(5) and s.92CA(3), passed pursuant to the Dispute Resolution Panel's order of 19 September 2018 for assessment year 2014-15 (para 1). The Transfer Pricing Officer had made an adjustment of Rs 1,06,37,66,707 on international transactions with related Korean and non-Korean entities (para 2). The assessee applied for the Mutual Agreement Procedure under Article 25 of the India-Korea DTAA in respect of its transactions with its Korean associated enterprises, and the competent authorities of the two States agreed to resolve the dispute. That resolution, F.No. MAP/1380509 of the Foreign Tax and Tax Research Division of the Board, was communicated to the assessee by letter dated 13 May 2022 in accordance with Rule 44G(6) (para 2). The computation in the resolution shows an adjustment of Rs 148,984,783 sustained in full for the earlier year and, for the year with which this appeal is concerned, an initial adjustment of Rs 1,063,766,707 of which Rs 372,467,380 was sustained and Rs 691,299,327 withdrawn, with correlative relief in Korea of KRW 3,051,208,369 and KRW 6,611,295,991 for the two fiscal years; the resolution recorded that the agreement between the Board and the Korean National Tax Service would not serve as a precedent for any other assessment year of the taxpayer (para 3). An order giving effect was passed on 29 June 2022, reducing the assessed income from Rs 75,34,96,920 to Rs 6,21,97,593 (para 4). That left Rs 43,10,66,281, or 10.22 per cent of the TPO's adjustment, on transactions with non-Korean associated enterprises, which the MAP did not cover.
The adjustment on the transactions with the non-Korean associated enterprises was set aside and restored to the file of the Transfer Pricing Officer, to consider whether those transactions are similar in nature to those covered by the MAP and, if that is found to be correct, to consider giving them the same treatment as adopted in the MAP, after affording the assessee an opportunity (para 8). The appeal was allowed for statistical purposes (para 9).
The Bench worked from the figures: 89.78 per cent of the TPO's adjustment stood covered by the MAP resolution and the balance of 10.22 per cent related to the non-Korean associated enterprises, in respect of which the assessee's case was that there was a similarity in the functions performed, assets employed and risks assumed, so that the same approach could be carried across when computing the arm's length price (para 7). The Departmental Representative answered that a MAP resolution is arrived at between two countries by the competent authorities empowered to do so, is specific to the assessee and to the assessment years, and cannot be used for a transfer pricing adjustment in the case of other associated enterprises situated in other countries (para 6). The Bench reproduced at para 7 the extracts from the two decisions cited for the assessee - the Chennai Bench in Grundfoss Pumps India Pvt. Ltd., where a MAP-settled treatment of fees paid to a Danish entity was applied to similar fees paid to a Singapore entity, and the Bangalore Bench in Amazon Development Centre (India) Pvt. Ltd., where a margin determined for the United States transactions was carried across to the small residue of non-United States transactions - and, after considering the totality of the facts and those precedents, made the remand (para 8). It did not itself decide that the transactions were similar; that question was left to the TPO.
the TPO may consider the same treatment be given to the transaction as adopted by MAP
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Handle my notice → Ask a CA on WhatsAppNot automatically, but the claim is arguable and the Tribunal will not shut it out. The Chennai Bench restored the adjustment on the transactions with the non-Korean associated enterprises to the Transfer Pricing Officer to examine whether they are similar in nature to those covered by the India-Korea MAP resolution, and, if they are found to be so, to consider giving them the same treatment as adopted in the MAP. The relief is a remand on a similarity test, not a direction to apply the agreed margin. This was decided by the ITAT (Aby T. Varkey, Judicial Member and Amitabh Shukla, Accountant Member (Chennai Bench)) and bears on section 92CA, section 92CA(3), section 92C, section 144C(5), section 143(3), section Rule 44G, section Rule 44G(6) of the Income Tax Act 1961. It is reported as IT(TP)A No. 2/Chny/2019, assessment year 2014-15. A MAP resolution binds the two competent authorities and covers only the transactions with the associated enterprise in the treaty State. Where a taxpayer deals with associated enterprises in several countries under the same functional profile, the residue is left unresolved and the department's position is that the resolution cannot travel. This is the order that gives the residue a route, and it sets out what has to be proved to use it. If it applies to you, the first step is this: Put the competent authority letter and the order giving effect to it on record, with a table showing what proportion of the total adjustment the MAP covered and what is left.
The appeal was against the Assessing Officer's order dated 31 October 2018 under s.143(3) read with s.144C(5) and s.92CA(3), passed pursuant to the Dispute Resolution Panel's order of 19 September 2018 for assessment year 2014-15 (para 1). The Transfer Pricing Officer had made an adjustment of Rs 1,06,37,66,707 on international transactions with related Korean and non-Korean entities (para 2). The assessee applied for the Mutual Agreement Procedure under Article 25 of the India-Korea DTAA in respect of its transactions with its Korean associated enterprises, and the competent authorities of the two States agreed to resolve the dispute. That resolution, F.No. MAP/1380509 of the Foreign Tax and Tax Research Division of the Board, was communicated to the assessee by letter dated 13 May 2022 in accordance with Rule 44G(6) (para 2). The computation in the resolution shows an adjustment of Rs 148,984,783 sustained in full for the earlier year and, for the year with which this appeal is concerned, an initial adjustment of Rs 1,063,766,707 of which Rs 372,467,380 was sustained and Rs 691,299,327 withdrawn, with correlative relief in Korea of KRW 3,051,208,369 and KRW 6,611,295,991 for the two fiscal years; the resolution recorded that the agreement between the Board and the Korean National Tax Service would not serve as a precedent for any other assessment year of the taxpayer (para 3). An order giving effect was passed on 29 June 2022, reducing the assessed income from Rs 75,34,96,920 to Rs 6,21,97,593 (para 4). That left Rs 43,10,66,281, or 10.22 per cent of the TPO's adjustment, on transactions with non-Korean associated enterprises, which the MAP did not cover. The matter was decided on 2024-07-10 by the ITAT (Aby T. Varkey, Judicial Member and Amitabh Shukla, Accountant Member (Chennai Bench)). On those facts the ITAT held as follows. The adjustment on the transactions with the non-Korean associated enterprises was set aside and restored to the file of the Transfer Pricing Officer, to consider whether those transactions are similar in nature to those covered by the MAP and, if that is found to be correct, to consider giving them the same treatment as adopted in the MAP, after affording the assessee an opportunity (para 8). The appeal was allowed for statistical purposes (para 9).
The Bench worked from the figures: 89.78 per cent of the TPO's adjustment stood covered by the MAP resolution and the balance of 10.22 per cent related to the non-Korean associated enterprises, in respect of which the assessee's case was that there was a similarity in the functions performed, assets employed and risks assumed, so that the same approach could be carried across when computing the arm's length price (para 7). The Departmental Representative answered that a MAP resolution is arrived at between two countries by the competent authorities empowered to do so, is specific to the assessee and to the assessment years, and cannot be used for a transfer pricing adjustment in the case of other associated enterprises situated in other countries (para 6). The Bench reproduced at para 7 the extracts from the two decisions cited for the assessee - the Chennai Bench in Grundfoss Pumps India Pvt. Ltd., where a MAP-settled treatment of fees paid to a Danish entity was applied to similar fees paid to a Singapore entity, and the Bangalore Bench in Amazon Development Centre (India) Pvt. Ltd., where a margin determined for the United States transactions was carried across to the small residue of non-United States transactions - and, after considering the totality of the facts and those precedents, made the remand (para 8). It did not itself decide that the transactions were similar; that question was left to the TPO. In the words reproduced by the source cited on this page: "the TPO may consider the same treatment be given to the transaction as adopted by MAP" The decision followed or applied Grundfoss Pumps India Pvt. Ltd. (IT(TP)A No. 92/Chny/2019, assessment year 2015-16) - extract reproduced at para 7 and acted on at para 8; Amazon Development Centre (India) Pvt. Ltd. (IT(TP)A No. 76/Bang/2014, assessment year 2008-09) - extract reproduced at para 7 and acted on at para 8.
It was decided by the ITAT on 2024-07-10 and is reported as IT(TP)A No. 2/Chny/2019, assessment year 2014-15. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 92CA, section 92CA(3), section 92C, section 144C(5), section 143(3), section Rule 44G, section Rule 44G(6), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The adjustment on the transactions with the non-Korean associated enterprises was set aside and restored to the file of the Transfer Pricing Officer, to consider whether those transactions are similar in nature to those covered by the MAP and, if that is found to be correct, to consider giving them the same treatment as adopted in the MAP, after affording the assessee an opportunity (para 8). The appeal was allowed for statistical purposes (para 9). It arises in Assessment & Scrutiny and Appeals matters, on section 92CA, section 92CA(3), section 92C, section 144C(5), section 143(3), section Rule 44G, section Rule 44G(6) of the Income Tax Act 1961, and was decided by Aby T. Varkey, Judicial Member and Amitabh Shukla, Accountant Member (Chennai Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Prove similarity on the Bench's own test - functions performed, assets employed and risks assumed for the covered and the uncovered transactions - rather than asserting that the transactions are the same. Ask for a remand to the TPO to conduct that comparison, which is the relief given; the Bench did not direct that the agreed margin be applied. Read the competent authority letter for its own precedent caveat before relying on the resolution in any other year; the letter here said in terms that it would not serve as a precedent for any other assessment year of the taxpayer. Watch the Rule 44G(6) acceptance and the Rule 44G withdrawal obligations separately; the appeal survived here only in respect of the transactions the MAP did not cover.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying, doubting or overruling this order was located and opened. It is itself a 2024 order that follows an existing Chennai and Bangalore line, so the proposition is not novel, but nothing read here cites this order by name. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Two corrections to the discovery record. First, the sentence that the margin adopted for the United States transactions in the ITES segment, as decided in the MAP resolution, shall be adopted for the non-United States transactions as well is NOT this Bench's holding. It sits inside the extract from Amazon Development Centre reproduced at para 7, and the name JP Morgan Services appears only within that extract, as an authority relied on in the Bangalore order. The Chennai Bench itself went no further than a remand for a similarity check at para 8, and the entry should be cited for that and nothing more. Second, para 2 describes the Board's letter as resolving the dispute 'for previous AYs 2012-13 and 2013-14', but the table at para 3 is set out by previous year, and the figure of Rs 1,063,766,707 shown against 2013-14 is the very adjustment made for the year under appeal, assessment year 2014-15. Read together, the resolution covered the year in appeal. Anyone relying on the years should check the competent authority letter itself. The resolution's own caveat, that it is not a precedent for any other assessment year of this taxpayer, is worth quoting to a TPO who argues the reverse. Section 90 is not discussed in the order; Article 25 of the India-Korea DTAA and Rule 44G(6) and (8) are. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The adjustment on the transactions with the non-Korean associated enterprises was set aside and restored to the file of the Transfer Pricing Officer, to consider whether those transactions are similar in nature to those covered by the MAP and, if that is found to be correct, to consider giving them the same treatment as adopted in the MAP, after affording the assessee an opportunity (para 8). The appeal was allowed for statistical purposes (para 9).
TaxSphere, “Mando Automotive India Pvt Ltd v ACIT”, https://taxnotice.vittsphere.com/caselaw/case/mando-automotive-india-v-acit-map-margin-for-transactions-outside-the-map/ (validity last checked 2026-09-16)
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The DRP issued its directions years ago and the Assessing Officer has still not passed a final assessment order. Is the assessment now dead, or can he pass one whenever he likes?
We are considering objecting to a draft order. Can the Dispute Resolution Panel make our position worse, can it send the matter back for fresh enquiry, and if we lose before it, do we appeal to the Commissioner (Appeals) or straight to the Tribunal?
The Assessing Officer has served a final assessment order on our foreign company raising a transfer pricing addition, without ever serving a draft order. Was he obliged to serve one first, and what was I supposed to do with it if he had?
We received a draft order on 12 March. Nobody objected. When was the final order due, and if we had objected, by when must the Dispute Resolution Panel have issued its directions and by when must the officer have given effect to them?
