My APA has expired. The TPO now wants to benchmark an open year against the margin agreed in it. Can he?
No. The Pune Bench held that comparing the operating profit margin agreed in an advance pricing agreement covering assessment years 2014-15 to 2018-19 with the actual operating margin earned in assessment year 2020-21, which is not a covered year of that agreement, is inappropriate and against the provisions of the Act. Section 92CC(4) read with sub-section (9A) confines an agreement to the years specified in it, and the confinement runs against the department as much as against the assessee. The issue was restored to the Assessing Officer and the TPO and the appeal was partly allowed.
Decided by the ITAT (Shri R. K. Panda, Vice President and Shri Pavan Kumar Gadale, Judicial Member) on 2026-07-17, reported as ITA No. 1906/PUN/2024, assessment year 2020-21 (ITAT Pune). It bears on section 92CC, section 92CC(4), section 92CC(9A), section 92C, section 92CA, section 144C of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
APA margins are increasingly used by transfer pricing officers as a ready benchmark for years the agreement never covered, usually the year immediately after the term expires, where the assessee's own margin has fallen. This is a decided answer to that: the officer is held to the same five-year window the assessee is held to, and the objection is a statutory one under s.92CC(4) rather than a plea on comparability. It also settles, for practical purposes, the status of the passage on the five-year span that has been circulating in Tribunal orders as though it were a Departmental Representative's submission - the Pune Bench's own holding in AGS Customer Services is reproduced here at para 76.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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Tetra Pak India develops, manufactures and commercialises processing and packaging systems for liquid and other food products, and the year in dispute is assessment year 2020-21, the assessment having gone through the Dispute Resolution Panel route. The assessee had signed a bilateral advance pricing agreement with the Board on 3 August 2018 covering financial years 2013-14 to 2017-18, in which an operating margin of 6.18 per cent was agreed. For assessment year 2020-21, a year outside that agreement, the Transfer Pricing Officer first proposed an upward adjustment of Rs 2,26,03,992 on the manufacturing and distribution in the export market segment, working from comparables returning margins in a range of 5.02 to 8.02 per cent with a median of 5.79 per cent against the assessee's 4.88 per cent. By a second show-cause notice he re-benchmarked the export segment on the bilateral APA signed for the past years and enhanced the adjustment to Rs 3,22,91,417 by adopting the agreed margin of 6.18 per cent as the profit level indicator (para 75). The assessee's answer was that under s.92CC(4) read with sub-section (9A) an APA is applicable only for the specified time span not exceeding five consecutive previous years (para 75).
The appeal was partly allowed (para 79). On the transfer pricing ground the Bench found force in the assessee's argument (para 75) and held: "We, therefore, hold that the approach proposed by the TPO to compare the operating profit margin as agreed in the APA for assessment year 2014-15 to assessment year 2018-19 with the actual operating margin earned by the assessee for assessment year 2020-21 which is not a covered year of the said APA is inappropriate and against the provisions of the Act." (para 78). Having so held, it restored the issue to the file of the Assessing Officer and the TPO with a direction to re-adjudicate the arm's length price of the manufacturing and distribution in the export market segment, after giving the assessee an opportunity of being heard (para 78). The disposition reads: "In the result, the appeal filed by the assessee is partly allowed in the above terms." (para 79).
The Bench took the limit in s.92CC(4) read with sub-section (9A) at face value: an advance pricing agreement is applicable only for the specified time span, not exceeding five consecutive previous years, and the year before it was not within that span (para 75). It then set out its own earlier decision in DCIT v. AGS Customer Services India Pvt Ltd, ITA No. 162/Pun/2022, reproducing it at para 76, in which the Pune Bench had accepted the Revenue's stand on the same limit and had reversed the Commissioner (Appeals)'s findings as going against s.92CC(4) read with sub-section (9A), remitting the appeal for fresh decision - an application of the limit in the Revenue's favour, which the Bench uses here to show that the limit is a limit on the agreement itself and not a rule of convenience for either side. At para 77 it drew the parallel from the Delhi High Court's decision in Aon Consulting Private Limited, taking from it that an agreement arrived at by the competent authorities of two contracting states under the mutual agreement procedure cannot substitute the determination of arm's length price under the Act and the Rules in cases not covered by the MAP. From those two, the conclusion at para 78 follows: what was agreed for the covered years cannot be carried into a year the agreement does not cover, and the ordinary machinery has to be worked for that year, which is why the issue went back to the Assessing Officer and the TPO rather than being decided on the numbers.
We, therefore, hold that the approach proposed by the TPO to compare the operating profit margin as agreed in the APA for assessment year 2014-15 to assessment year 2018-19 with the actual operating margin earned by the assessee for assessment year 2020-21 which is not a covered year of the said APA is inappropriate and against the provisions of the Act.
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Handle my notice → Ask a CA on WhatsAppNo. The Pune Bench held that comparing the operating profit margin agreed in an advance pricing agreement covering assessment years 2014-15 to 2018-19 with the actual operating margin earned in assessment year 2020-21, which is not a covered year of that agreement, is inappropriate and against the provisions of the Act. Section 92CC(4) read with sub-section (9A) confines an agreement to the years specified in it, and the confinement runs against the department as much as against the assessee. The issue was restored to the Assessing Officer and the TPO and the appeal was partly allowed. This was decided by the ITAT (Shri R. K. Panda, Vice President and Shri Pavan Kumar Gadale, Judicial Member) and bears on section 92CC, section 92CC(4), section 92CC(9A), section 92C, section 92CA, section 144C of the Income Tax Act 1961. It is reported as ITA No. 1906/PUN/2024, assessment year 2020-21 (ITAT Pune). APA margins are increasingly used by transfer pricing officers as a ready benchmark for years the agreement never covered, usually the year immediately after the term expires, where the assessee's own margin has fallen. This is a decided answer to that: the officer is held to the same five-year window the assessee is held to, and the objection is a statutory one under s.92CC(4) rather than a plea on comparability. It also settles, for practical purposes, the status of the passage on the five-year span that has been circulating in Tribunal orders as though it were a Departmental Representative's submission - the Pune Bench's own holding in AGS Customer Services is reproduced here at para 76. If it applies to you, the first step is this: Check the years the agreement specifies and the rollback years under s.92CC(9A); if the year under assessment is outside both, the agreement does not govern it.
Tetra Pak India develops, manufactures and commercialises processing and packaging systems for liquid and other food products, and the year in dispute is assessment year 2020-21, the assessment having gone through the Dispute Resolution Panel route. The assessee had signed a bilateral advance pricing agreement with the Board on 3 August 2018 covering financial years 2013-14 to 2017-18, in which an operating margin of 6.18 per cent was agreed. For assessment year 2020-21, a year outside that agreement, the Transfer Pricing Officer first proposed an upward adjustment of Rs 2,26,03,992 on the manufacturing and distribution in the export market segment, working from comparables returning margins in a range of 5.02 to 8.02 per cent with a median of 5.79 per cent against the assessee's 4.88 per cent. By a second show-cause notice he re-benchmarked the export segment on the bilateral APA signed for the past years and enhanced the adjustment to Rs 3,22,91,417 by adopting the agreed margin of 6.18 per cent as the profit level indicator (para 75). The assessee's answer was that under s.92CC(4) read with sub-section (9A) an APA is applicable only for the specified time span not exceeding five consecutive previous years (para 75). The matter was decided on 2026-07-17 by the ITAT (Shri R. K. Panda, Vice President and Shri Pavan Kumar Gadale, Judicial Member). On those facts the ITAT held as follows. The appeal was partly allowed (para 79). On the transfer pricing ground the Bench found force in the assessee's argument (para 75) and held: "We, therefore, hold that the approach proposed by the TPO to compare the operating profit margin as agreed in the APA for assessment year 2014-15 to assessment year 2018-19 with the actual operating margin earned by the assessee for assessment year 2020-21 which is not a covered year of the said APA is inappropriate and against the provisions of the Act." (para 78). Having so held, it restored the issue to the file of the Assessing Officer and the TPO with a direction to re-adjudicate the arm's length price of the manufacturing and distribution in the export market segment, after giving the assessee an opportunity of being heard (para 78). The disposition reads: "In the result, the appeal filed by the assessee is partly allowed in the above terms." (para 79).
The Bench took the limit in s.92CC(4) read with sub-section (9A) at face value: an advance pricing agreement is applicable only for the specified time span, not exceeding five consecutive previous years, and the year before it was not within that span (para 75). It then set out its own earlier decision in DCIT v. AGS Customer Services India Pvt Ltd, ITA No. 162/Pun/2022, reproducing it at para 76, in which the Pune Bench had accepted the Revenue's stand on the same limit and had reversed the Commissioner (Appeals)'s findings as going against s.92CC(4) read with sub-section (9A), remitting the appeal for fresh decision - an application of the limit in the Revenue's favour, which the Bench uses here to show that the limit is a limit on the agreement itself and not a rule of convenience for either side. At para 77 it drew the parallel from the Delhi High Court's decision in Aon Consulting Private Limited, taking from it that an agreement arrived at by the competent authorities of two contracting states under the mutual agreement procedure cannot substitute the determination of arm's length price under the Act and the Rules in cases not covered by the MAP. From those two, the conclusion at para 78 follows: what was agreed for the covered years cannot be carried into a year the agreement does not cover, and the ordinary machinery has to be worked for that year, which is why the issue went back to the Assessing Officer and the TPO rather than being decided on the numbers. In the words reproduced by the source cited on this page: "We, therefore, hold that the approach proposed by the TPO to compare the operating profit margin as agreed in the APA for assessment year 2014-15 to assessment year 2018-19 with the actual operating margin earned by the assessee for assessment year 2020-21 which is not a covered year of the said APA is inappropriate and against the provisions of the Act." The decision followed or applied DCIT v. AGS Customer Services India Pvt Ltd, ITA No. 162/Pun/2022 (ITAT Pune) - the Bench's own earlier order, reproduced in full at para 76 and applied; Aon Consulting Private Limited v. PCIT (Delhi High Court) - relied on at para 77 for the proposition that a MAP agreement cannot substitute the determination of arm's length price under the Act and the Rules for cases not covered by it.
It was decided by the ITAT on 2026-07-17 and is reported as ITA No. 1906/PUN/2024, assessment year 2020-21 (ITAT Pune). 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 92CC, section 92CC(4), section 92CC(9A), section 92C, section 92CA, section 144C, 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 helps the taxpayer. The appeal was partly allowed (para 79). On the transfer pricing ground the Bench found force in the assessee's argument (para 75) and held: "We, therefore, hold that the approach proposed by the TPO to compare the operating profit margin as agreed in the APA for assessment year 2014-15 to assessment year 2018-19 with the actual operating margin earned by the assessee for assessment year 2020-21 which is not a covered year of the said APA is inappropriate and against the provisions of the Act." (para 78). Having so held, it restored the issue to the file of the Assessing Officer and the TPO with a direction to re-adjudicate the arm's length price of the manufacturing and distribution in the export market segment, after giving the assessee an opportunity of being heard (para 78). The disposition reads: "In the result, the appeal filed by the assessee is partly allowed in the above terms." (para 79). It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 92CC, section 92CC(4), section 92CC(9A), section 92C, section 92CA, section 144C of the Income Tax Act 1961, and was decided by Shri R. K. Panda, Vice President and Shri Pavan Kumar Gadale, Judicial Member. 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. Object to a show-cause notice that re-benchmarks on the APA margin as a matter of jurisdiction under s.92CC(3), (4) and (5), not merely as a matter of comparability - the sections tie the agreement to the transaction and to the specified years. Record the sequence of the TPO's own positions; here he first proposed an adjustment on a comparables set and only by a second show-cause notice substituted the APA margin, which is what made the objection concrete. Keep in mind what the Bench did not do: it did not fix the arm's length price, it restored the issue to the Assessing Officer and the TPO for fresh adjudication after hearing the assessee, so the comparables case still has to be argued. Where a mutual agreement procedure resolution is being used in the same way, cite Aon Consulting, which the Bench adopts at para 77: a MAP agreement cannot substitute the determination of arm's length price under the Act and the Rules for years not covered by it.
Searched for later treatment; none was found. That is not the same as a source affirming it. Pronounced 17 July 2026 and nothing applying, doubting or reversing it was located, which is the expected position for an order this recent; whether the Revenue has appealed to the Bombay High Court is not known. The proposition it applies is not new to the Pune Bench: it reproduces its own earlier order in DCIT v. AGS Customer Services India Pvt Ltd, ITA No. 162/Pun/2022, and the same extract from that order appears in DLF Urban Pvt Ltd v. ACIT (ITAT Delhi, 8 April 2024), Jindal Pipes Ltd (ITAT Delhi, 19 September 2024), Concentrix Daksh Services India and A.T. Kearney. 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.
This is a long order disposing of many transfer pricing and corporate tax grounds for the year. What was read for this entry is the advance pricing agreement issue and the disposition - paras 74 to 79, extracted word for word on two separate readings, on the print view and on the full document view - together with the cause title, the coram and the dates. The other grounds have not been examined and nothing is said here about them, so read the order itself before citing it for anything beyond s.92CC(4). Two points of care on the text. The sentence used as the key quote runs past the length at which the reading layer truncates, and was recovered in three consecutive fragments and rejoined; it was returned identically on both readings and matches the sentence as independently reported. The name of the reproduced Pune Bench order is AGS Customer Services India Pvt Ltd, not ACS, which is how it has been mis-transcribed elsewhere; the AGS order itself is not separately reachable on indiankanoon and has not been read apart from the reproduction at para 76. Paragraph 75 also records that the TPO's own first position for the year was a comparables-based adjustment of Rs 2,26,03,992 and that the APA margin was substituted only by a second show-cause notice. The date of the Dispute Resolution Panel's direction is not printed on the copy read. indiankanoon indexes the order under the hearing date of 20 April 2026; the date of pronouncement printed on the order, 17 July 2026, is the date used here. 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 appeal was partly allowed (para 79). On the transfer pricing ground the Bench found force in the assessee's argument (para 75) and held: "We, therefore, hold that the approach proposed by the TPO to compare the operating profit margin as agreed in the APA for assessment year 2014-15 to assessment year 2018-19 with the actual operating margin earned by the assessee for assessment year 2020-21 which is not a covered year of the said APA is inappropriate and against the provisions of the Act." (para 78). Having so held, it restored the issue to the file of the Assessing Officer and the TPO with a direction to re-adjudicate the arm's length price of the manufacturing and distribution in the export market segment, after giving the assessee an opportunity of being heard (para 78). The disposition reads: "In the result, the appeal filed by the assessee is partly allowed in the above terms." (para 79).
TaxSphere, “Tetra Pak India Pvt Ltd v DCIT”, https://taxnotice.vittsphere.com/caselaw/case/tetra-pak-india-v-dcit-92cc-4-apa-margin-outside-covered-year/ (validity last checked 2026-09-16)
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My advance pricing agreement covers five years. What about the year just outside it - can the agreed margin be held against me, or held to my benefit, for that year?
I want the four rollback years with my APA. Can I pick only the years that help me, and what will knock rollback out before I start?
Your APA with the Board covers later years only. Can you use it to settle the transfer pricing in an earlier year that is still open?
Your APA was concluded after the appeal was filed. Can you raise it as a fresh ground before the Tribunal for an earlier year, and does it dispose of the comparables fight?
