TaxTMI 
TaxTMI 
2016 (2) TMI 406
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....g therein Rs. 6,25,88,125/- and Rs. 6,52,70,749/- respectively towards Arm's Length Price on its international transactions by adopting Cost Plus Method undertaken as the said transaction fulfils the requisite conditions as enumerated under Section 12A and 12B. The assessing authority did not agree and disallow the same and added towards its income. Being aggrieved thereof, the assessee has preferred an appeal and the First Appellate Authority while setting aside the findings so recorded by the assessing authority in disallowing the TPO have observed as under: "I have considered the transfer pricing documentation maintained by the appellant, the appellant's submission and the rebuttal of the Remand Report by the Appellant and the observa....
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....ine of the group and retains 75% of the revenue. In both the above two models the appellant undertakes and assumes significant and analogous functions and risks and consequently undertakes full responsibility for the delivery of all IT development services to a customer. I agree with the appellant's submissions, which has been reproduced in detail above, that under both the above scenarios, the functional and risk profiles of 12A and 12B remain the same. Incidentally, 12A and 12B do not have the technical competencies and financial capabilities to bear any loss arising in the form of bad debt or delivery failure; and would need to revert back to the appellant in case any such events occur. It is a fundamental principle of transfer pricing t....
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....he documents submitted by the appellant and the arguments put forward before me, under either of the two situations, the functional, asset and risk profiles of 12A and 12B remain the same and the major risks relatable to bad debt and delivery failure/nonperformance, always remain with the appellant, irrespective of the two business models. I find that the TPO had in-principle accepted the remuneration model of 25% revenue sharing in case where the customers enter into contract with 12A and 12B. I also find that the remuneration model of 25% revenue sharing has been substantiated and justified by the appellant to be at arm's length, by carrying out proper comparability analysis, as part of the documentation submitted with the TPO. Since, ....
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....me. In view of the above findings, I delete the addition of Rs. 6,25,88,125 and allow this ground of the Appellant." Being aggrieved, the revenue went to second appeal and the Second Appellate Authority after going through the entire records and perusing the terms and conditions of the contract which has been entered into between the appellant and associated enterprise's 12A/12B affirmed the findings so recorded by the First Appellate Authority and thus dismissed the appeal. Being aggrieved thereof, the department has preferred the instant appeal on the following questions of law in ITAT 96 of 2015 : i) Whether on the facts and in the circumstances of the case Ld. Tribunal has erred in law as well as on facts in holding that the adj....
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....adjustment made by the TPO of Rs. 6,52,70,749/- on account of Account Management charges is arbitrary without proper appreciation of facts and without proper appreciation of facts and without specify any basis for allowing relief to the assessee on this issue? ii) Whether on the facts and in the circumstances of the case Ld. Tribunal has erred in law as well as on facts in holding that the adjustment made by the TPO of Rs. 6,52,70,749/- on account of Account Management charges is arbitrary without considering fact that even if the issue enjoys certain tax benefits, the adjustments in Arm's Lengh Price would still be made? iii) Whether on the facts and in the circumstances of the case Ld. Tribunal has erred in law as well as on facts in ....