Transfer pricing on intra-group services deleted where evidence showed actual receipt and integrated business nexus.

Transfer pricing adjustment for intra-group services was held unsustainable where the assessee produced evidence of actual receipt and the services formed part of an integrated composite arrangement linked to its core business. The transactions could not be artificially split into isolated components for benchmarking, and the tax authority could not substitute its view of commercial expediency for the assessee's business judgment. Relying on the assessee's consistent position in earlier years, the adjustment on account of intra-group services was deleted.

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Issues: Whether the transfer pricing adjustment made in respect of intra-group services received from associated enterprises was sustainable.

Analysis: The assessee produced substantial evidence showing receipt of intra-group services. The services formed part of a composite arrangement linked to the assessee's core business operations, and the transactions could not be split into isolated fragments for benchmarking. Following the consistent view taken in the assessee's own earlier years, and the principle that the tax authority cannot substitute its view of commercial expediency for that of the assessee, the adjustment was held to be unsustainable.

Conclusion: The transfer pricing adjustment on account of intra-group services was deleted.

Ratio Decidendi: Where intra-group services are part of an integrated composite arrangement and are supported by evidence of actual receipt and business nexus, the arm's length price cannot be rejected by isolating individual services or by questioning the assessee's commercial decision.

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