ITAT Kolkata Remands DIC Fine Chemicals' Transfer Pricing, Book Profit, Interest Adjustments Per APA

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) on 6 April, held that when a company enters into an Advance Pricing Agreement (APA) with the Central Board of Direct Taxes (CBDT) covering the relevant assessment year, transfer pricing disputes must be reconsidered in accordance with the APA.

A Bench of Judicial Member Sonjoy Sarma and Accountant Member Rakesh Mishra remanded the arm's length price determination for AY 2021-22 in favour of DIC Fine Chemicals, observing that the APA dated 24 March 2025 applies to this year and must guide the adjustments. The Tribunal held:

“Since the assessee had entered into an APA with the CBDT and the impugned AY 2021-22 is also covered in the APA dated 24.03.2025, the issue of Arm's Length Price... is hereby remanded to the Ld. AO who shall consider the APA and thereafter make an adjustment as per law.”

DIC Fine Chemicals challenged the final assessment order passed by the Deputy Commissioner of Income Tax, which assessed its income at Rs. 18.71 crore, against the returned income of Rs. 3.73 crore after transfer pricing adjustments of about Rs. 14.97 crore.

The Tribunal noted that the APA covers AY 2019-20 to AY 2023-24, including the disputed transactions. It remanded the addition of Rs. 9.13 crore to book profits under Section 115JB and directed the AO to reconsider the book profit specifically “as per the intimation u/s 143(1)”, after granting the taxpayer an opportunity to be heard.

Regarding interest and fees, the Tribunal directed the AO to verify the filing date—12.03.2022—against the extended due date of 15 March 2022 and recompute interest under Section 234B in light of APA-based adjustments.

Ultimately, the ITAT partly allowed the appeal for statistical purposes and dismissed general grounds as not pressed, It remanding the transfer pricing, book profit, and interest issues to the AO for fresh adjudication in light of the APA and Sections 92CD and 92CE.