The Income Tax Appellate Tribunal Mumbai directed De Novo benchmarking and limited the DRP’s Powers in Celio’s Tax dispute.


The assessee is a company and is engaged in the business of trading in ready-made garments and accessories under the name and style of “Celio”. For the year under consideration, the assessee filed its return of income on 28/11/2017, declaring a total loss of Rs.26,58,77,636. The return filed by the assessee was selected for scrutiny under CASS and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee.


The division bench of Prashant Maharishi, Accountant Member And Sandeep Singh Karhail, Judicial Member found that the coordinate bench of the Tribunal in assessee’s own case in M/s.Celio Future Fashion Private Limited v/s ACIT, for the assessment year 2011-12, while deciding a similar issue held that RPM is the most appropriate method for benchmarking the international transaction of “import of men’s wear for resale”.

The bench held that the order passed by the TPO/AO on the issue is set aside and the TPO/AO is directed to de novo benchmark the international transaction pertaining to “import of men’s wear for resale” by applying RPM as the most appropriate method. 

On another issue the Tribunal said that as per section 144C(8) of the Act, the DRP can confirm, reduce, or enhance the variation(s) proposed in the draft assessment order, while issuing the directions under section 144C(5) of the Act. However, the DRP is not empowered to set aside any proposed variation or issue any direction for further enquiry and passing the assessment order, as was done in the present case.

Case title: M/s. Celio Future Fashion Pvt. Ltd. v/s  Addl. Commissioner of Income Tax National Faceless Appeal Centre, Delhi

Citation: ITA no.741/Mum./2022 

Amit Sharma

Author of Tax Concept

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