Ponni Sugars Challenges Income Tax Department's Order on Transfer Pricing

Ponni Sugars (Erode) Ltd has received an order from the Commissioner of Income Tax (Transfer Pricing) (CIT-TP), Chennai, directing the Transfer Pricing Officer (TPO) to revise the earlier order for AY 2021-22. The CIT-TP has set aside the issue of determination of the Arm's Length Price (ALP) of inter unit transfer of bagasse from sugar unit to the eligible co-gen unit. The company, which follows a methodology for transfer pricing that is not legally tenable, will challenge this order. The financial implications are expected to be material, but precise quantification is not possible at this juncture.