TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal upholds Transfer Pricing Officer's decision on management fee, dismisses appeal.</h1> <h3>Taegu Tec India (P.) Ltd. Versus Deputy Commissioner of Income-tax, Large Tax Payer Unit (LTU) Bengaluru</h3> Taegu Tec India (P.) Ltd. Versus Deputy Commissioner of Income-tax, Large Tax Payer Unit (LTU) Bengaluru - TMI Issues Involved:1. Legality of the assessment order.2. Rejection of Transfer Pricing (TP) documentation.3. Arm's Length Price (ALP) determination of management services fee.4. Interest liability under Sections 234C and 234D.Detailed Analysis:1. Legality of the assessment order:The appellant contended that the assessment order passed by the Deputy Commissioner of Income Tax, Large Tax Payers Unit, Bangalore, and the Joint Director of Income-tax (Transfer Pricing) - II was prejudicial and should be quashed. The Tribunal did not find merit in this contention and upheld the legality of the assessment order.2. Rejection of Transfer Pricing (TP) documentation:The appellant argued that the AO and the Dispute Resolution Panel (DRP) erred in rejecting the TP documentation prepared in good faith. The Tribunal noted that the Transfer Pricing Officer (TPO) had accepted the TP study for all transactions except the management fee. The TPO treated the management fee as a separate transaction and did not accept the aggregation of this fee with other transactions. The Tribunal upheld the TPO's decision to benchmark the management fee separately.3. Arm's Length Price (ALP) determination of management services fee:The appellant challenged the TPO's determination of the ALP for the management services fee at 'Nil.' The TPO had inferred that the payment of Rs. 2,21,64,344 did not result in any tangible benefit and lacked economic value. The Tribunal referenced the Delhi High Court decision in CIT v. EKL Appliances Ltd., which stated that the AO/TPO cannot question the necessity of expenditure or deny deductions based on the perceived benefit. However, the Tribunal emphasized that the onus lies on the assessee to furnish proof of actual receipt of services. The appellant failed to provide sufficient evidence of services rendered by the Associated Enterprises (AE). Consequently, the Tribunal upheld the TPO's adjustment of the ALP to 'Nil.'4. Interest liability under Sections 234C and 234D:The appellant contended that the interest liability under Sections 234C and 234D arose due to the addition made by the AO and should abate if the order is set aside. Since the Tribunal upheld the TPO's adjustment, the interest liability under these sections remained consequential.Conclusion:The Tribunal dismissed the appeal filed by the assessee, upholding the TPO's separate benchmarking of the management fee and the ALP adjustment to 'Nil' due to the lack of proof of actual services rendered by the AE. The interest liabilities under Sections 234C and 234D were also upheld as consequential to the adjustments made.
TaxTMI 