Transfer pricing ALP cannot be fixed at nil for intra-group services without proper benchmarking or evidence of non-rendition.

Transfer pricing adjustment at nil for intra-group GHO non-IT services, GHO IT services and RHO services was held unsustainable because the revenue authorities did not conduct a proper benchmarking exercise under the prescribed methods. The Tribunal accepted the assessee's documentary evidence showing rendition of services and followed its own earlier orders for prior years, which had been affirmed by the High Court. It held that ALP could not be determined at nil merely on assertions that the services were duplicative, shareholder in nature, or that insufficient benefit was derived. The adjustment was deleted.

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

Analysis: The dispute concerned the ALP of GHO non-IT services, GHO IT services and RHO services received from overseas associated enterprises. The assessee had produced documentary material showing rendition of services and relied on the earlier orders in its own case for prior years, which had been affirmed by the High Court. The Tribunal noted that the revenue authorities had not undertaken a proper benchmarking exercise under the prescribed methods and could not determine ALP at nil merely on the premise that the services were duplicative, shareholder in nature, or that the assessee had not derived sufficient benefit. The Tribunal followed the binding earlier decisions in the assessee's own case and the High Court's affirmation thereof.

Conclusion: The transfer pricing adjustment of Rs. 17,11,13,551 was deleted and the issue was decided in favour of the assessee.

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