TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1700
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....vance of the assessee is separately raised in Ground No.16. Ground No.11,12 & 16 read as under: "On the facts and in the circumstances of the case and in law, the learned AO based on the order of the learned Transfer Pricing Officer (learned TPO) and the directions of the Hon'ble DRP has erred in law and on facts in: "11. Considering companies which are functionally different, as comparables to the Appellant. 12. Considering incorrect operating margins for two additional comparable companies relied upon by the learned AO/TPO namely Indus Technical & Financial Consultants Limited and WAPCOS Ltd., 16. Treating the arm's length price of the professional fees paid towards availing of managerial services as NIL. 3. The assessee company is an Indian Company and is a subsidiary of Platinum Guild SA, Switzerland and the assessee is engaged in the business of promotion and marketing of platinum jewellery in India. It has entered into following international transactions with two of its AEs: S. No. Nature of service F.Y.2007-08 Method adopted by assessee 1. Provision of promotion and marketing services 2,59,67,732 2. Professional fees paid 5,22,962 Transaction....
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....84.43 3.49 25.77 11. Technicom Chemie (India) Ltd. Prowess 1.97 94.42 0 7.32 12. Vapi Waste & Effluent Mgmt. Co. Ltd. Prowess 19.9 79.85 0 18.53 13. WAPCOS Ltd. Capitaline 81.97 97.55 0 40.37 Average 20.04 The TPO adopted 20.04% mean margin of the aforementioned 13 comparables as against 14.25% shown by the assessee and an addition of Rs. 13,16,756/- was worked out on account of international transaction relating to provision of promotion and marketing services. 4. It is the case of Ld. AR that in subsequent year Ld. TPO himself has accepted the submission of the assessee regarding exclusion of Choksi Laboratory Ltd., Genins India, ICRA Management, IDC India, India Cements, Indus Technical, ORG Informatics, Rites Ltd. (Seg), Technicom, Vapi Waste & Effluent Management Co. Ltd. and WAPCOS Ltd. and calculated the mean margin of comparables on the basis of Apitco Ltd. Co and Best Mulyankayan. To support such contention Ld. AR has submitted before us a letter dated 18/9/2012 written to TPO in the course of proceedings being him for A.Y 2009- 10, wherein it was pleaded that the comparables adopted for A.Y 2008-09....
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....f these professional services should not be treated as Nil as the assessee has failed to furnish evidence to prove that the services were requested by the assessee, that services were actually rendered and the payment was at market rate. In response to the same, the assessee filed a submission on 29th October, 2012. Amongst other arguments, the major argument taken by the assessee was that these expenses form part of cost base on which it earns a markup of 14.5%. I have carefully perused the contentions of the assessee and have found that same does not hold good in the assessee's case. Further, the assessee has not provided any evidence to prove that services were actually requested and that the services were actually rendered. No independent party would pay for services which were neither requested by it nor were they actually rendered. Hence, the price of the transaction of availing of managerial services is determined not to be at arm's length and accordingly an adjustment of Rs. 6,31,186/- is made. Conclusion In view of the above, an adjustment is to be made in respect of international transaction mentioned at Sr. No. 2 being availing of managerial services of Rs. 6,31....
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....case of Ld. AR that even if one out of three comparables namely Rites Ltd, Vapi Waste & Effluent Management Company Ltd. and WAPCOS Ltd. are excluded then the assessee's case will be within safe harbour. It was also the request of the Ld. AR that the issue raised by the assessee may be decided on that basis only. Keeping in view such request of Ld. AR, we consider it just and proper to restore this issue to the file of Ld. TPO to verify such contention of the assessee. If the aforementioned comparables namely Rites Ltd, Vapi Waste & Effluent Management Company Ltd. and WAPCOS Ltd. are excluded from the proceedings for A.Y 2009-10 then the same also should be excluded from the list of comparables for the year under consideration and after that if assessee's margin fall within the range of safe harbour then no addition on account of this international transaction should be made. We direct accordingly. Ground No.11 and 12 are considered to be allowed for statistical purposes in the manner aforesaid and other grounds taken in this regard are not adjudicated at the request of Ld. AR for the reason that they will be rendered academic in view of the relief given to the assessee in respect....
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....lso made to copy of invoices which has been field at page 509 of the paper book, vide which the bill has been raised against the assessee by Platinum Guild International and the charges pertains to consultancy services provided by Mr. James Courage to PGI India during July to December 2007 and total was stated at 5638.98 UK Pounds which include a mark up of 6.5%. Reference was also made to the letter dated 22/10/2011 written by the assessee to TPO giving the details and relevant portion reads as under: "In order to develop a marketing strategy in sync with that of the group, during F.Y 2007-08, PGI India has availed consultancy/managerial services from PGI UK. These services are provided by the CEO of PGI UK, Mr. James Courage who is also director on the Board of PGI India. These services consist of review and supervision of the promotional programs conducted by PGI India and provision of overall guidance and strategic advisory. During the said year, Mr. James Courage also visited India for the overall supervision of the India International Jewellery show, India Summer planning meeting and various sponsors visit to India. The service fee payable to PGI UK is determined on the bas....
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....ntire sum of Rs. 1,96,050/- in the computation of income, copy of which is filed at page 511 of the paper book. It was also seen that in the assessment order the AO has adopted computation of income shown in the return filed by the assessee which is a sum of Rs. 1,19,45,940/-. It was further pointed out that at page 39 of the paper book a sum of Rs. 33,319/- was stated in Annexure-11 as TDS on the professional fees payable to non-resident and this amount is a TDS which was required to be deducted in respect of a sum of Rs. 1,96,050/-. It was the submission of Ld. AR that when entire sum has been added to the income in the computation of income filed by the assessee then further addition of Rs. 33,319/- will be double addition. 13. We have heard both the parties on this issue and we are satisfied with the contention of Ld. AR. In view of addition of Rs. 1,96,050/- to the income of the assessee the separate addition made by AO of a sum of Rs. 33,319/- is required to be deleted. Therefore, we delete this addition and this ground of the assessee is allowed. 14. The next ground argued by Ld. AR was ground No.18, which reads as under: Ground No.18: not granting credit of Minim....