IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 4630/MUM/2024 (AY : 2020-21)

&

ITA No. 6099/MUM/2024 (AY : 2021-22)

(Physical hearing)

M/s. Lubrizol India Private Limited Deputy Commissioner of Plant 9/3, Thane-Belapur Road, Turbhe, Vs Income Tax, DCIT/ACIT, Navi Mumbai – 400705. Circle – 3(4), Mumbai.

[PAN No. AAACL 0126 H]

Appellant / assessee Respondent / Revenue Assessee by Shri Paras Savla Advocate a/w Ms. Rajnandini Shukla, CA/ AR Revenue by Ms. Neena Jeph, (CIT DR) / Shri Kiran Unavekar, Sr. DR Date of hearing 27.03.2025 Date of pronouncement 21.04.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER;

1. These two appeals by assessee are directed against the separate orders of ld.

CIT(A) for Assessment Year 2020-21 and 2021-22. In both the appeals, the assessee has raised certain common grounds of appeal, certain facts for both the years are similar, therefore with the consent of parties, both the appeals were clubbed, heard together and decided by common order to avoid the conflicting decision. For appreciation of fact, facts in Assessment Year 2020- 21 is treated as lead case. The assessee has raised the following grounds of appeal:

General:

1. Erred in making transfer pricing adjustment and assessing, the Income of the Appellant at INR 2,37,76,15,886 as against the total income as per return of income filed for AY 2020-21 (on 31 March 2021) declaring income of INR

2,18,37,92,336.

Transfer Pricing ('TP') issues

2. The Ld AO/TPO erred in proposing and the Hon'ble DRP further erred in upholding an adjustment of INR 19,38,23,546/- in respect of the international transactions pertaining to export of chemical additives, alleging that the same to be not at arm's length in terms of the provisions of Sections 92C(1) and 92C(2) of the Act read with Rule 100 of the Income-tax Rules, 1962 ("Rules"). 3. Erred in rejecting the application of Transactional Net Margin Method ("TNMM") as the Most Appropriate Method ("MAM") used by the Appellant for benchmarking the international transaction in respect of its exports of chemical additives to its associated enterprise ("AES").

4. Erred in not appreciating the operating margin ("OM") earned by the Appellant of 16.15% at entity level is higher than the updated weighted average arm's length range l.e. 5.35% to 6.40% with median of 5.88%.

5. Erred in not appreciating that, the Appellant during the relevant period had performed a scientific analysis for selection of the MAM having regard to the provisions of the rule 108 of the Rules. Further, the TPO in its order has not provided any cogent and detailed reasons in rejecting TNMM as the MAM.

6. Erred in disregarding the aggregation approach adopted by Appellant for benchmarking its International transactions (including transaction of export of chemical additives).

7. Erred in rejecting TNMM as the MAM for benchmarking the transaction of export of chemical additives on the grounds that the said transaction should be benchmarked separately and thereby contradicting themselves, since no such separate benchmarking was conducted by the Ld TPO while benchmarking the balance international transaction pertaining to export of chemical additives for which TNMM was accepted.

8. Erred in selecting Comparable Uncontrolled Price ("CUP") Method as the MAM for benchmarking the said international transaction merely on the basis that the details pertaining to similar transactions with third parties were available.

9. Erred in applying CUP method by comparing sales made to unrelated parties with that of export sales made to AEs in overseas market, in spite of significant factors like difference in volume geographical market, lot size difference, credit and bad debt risk difference, inventory carrying cost difference etc. Additionally, not appreciating the quantifiable and non-quantifiable differences while making a comparison between local sales and e