TaxTMI 
TaxTMI 
2015 (3) TMI 1276
X X X X Extracts X X X X
X X X X Extracts X X X X
....und No.1 & 2 relates to the Transfer Pricing adjustment. Ground No.3 relates to initiation of penalty proceedings. This ground is premature and is not maintainable, hence, ground no.3 is dismissed. Ground No.4 is regarding levy of interest u/s 234B and 234C. The levy of interest under the above provisions is mandatory and consequential. Hence, ground no.4 is rejected. 3. Briefly stated, the facts of the case are as follows. The assessee is engaged in manufacturing/assembling automation and industrial control products/systems. Apart from manufacturing / assembling, the assessee company is also engaged in trading in certain products. The assessee company is also providing services like information technology and engineering based consultanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order/directions dated 02.12.2014. The DRP confirmed the TP adjustment made by the TPO/AO. Pursuant to the DRP's directions, final assessment order was passed on 31.12.2014. 4. Aggrieved by the TP adjustment, the assessee has filed the appeal before us. Both the sides agreed that the Transfer Pricing issue is to be restored to the AO/TPO for fresh consideration in the light of the judgment of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT-I Vs. Cushman and Wakefield (India) (P.) Ltd. reported in [2014] 46 taxmann.com 317 (Delhi). It was submitted that similar view was taken by tribunal in assessee's own cases for AY 2008-09 and 2009-10 in ITA No.6262/Del./2012 & ITA No.504/Del./2014 (order dated 22.12.2014). 5. We have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, global business oversight services were not needed. It is difficult to understand, much less approve, this line of reasoning. It is only elementary that how an Assessee conducts his business is entirely his prerogative and it is not for the revenue authorities to decide what 6 ITA Nos.6262/Del /2012 ITA No.504/D/2014 is necessary for an Assessee and what is not. An Assessee may have any number of qualified accountants and management experts on his rolls, and yet he may decide to engage services of outside experts for auditing and management consultancy; it is not for the revenue officers to question Assessee's wisdom in doing so. The Transfer Pricing Officer was not only going much beyond his powers in questioning commercial wisdom o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the arm's length price of the costs incurred by the assessee in cost contribution arrangement. We have also noted that the stand of the revenue authorities in this case is that no services were rendered by the AE at all, and that since there is No. evidence of services having been rendered at all, the arm's length price of these services is 'nil'." 35. The TPO's Report is, subsequent to the Finance Act, 2007, binding on the AO. Thus, it becomes all the more important to clarify the extent of the TPO's authority in this case, which is to determining the ALP for international transactions referred to him or her by the AO, rather than determining whether such services exist or benefits have accrued. That exercise - ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents. This is a case where the assessee has not determined the arm's length price. The burden is initially on the assessee to determine the arm's length price. Thus, the argument of the assessee that the Transfer Pricing Officer has exceeded his jurisdiction by disallowing certain expenditure, is against the facts. The Transfer Pricing Officer has not disallowed any expenditure. Only the arm's length price was determined. It was the Assessing Officer who computed the income by adopting the arm's length price decided by the Transfer Pricing Officer at "nil"." This is a slender yet crucial distinction that restricts the authority of the TPO. Whilst the report of the TPO in this case ultimately noted that the ALP was 'nil&....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Mr. Braganza and Mr. Choudhary so far as they deal with specific interaction with IBM by those persons, and relate it to benefits obtained by the assessee, provide a sufficient basis to hold that benefit accrued to the assessee. However, this determination remains unclear and inchoate. The devil here lies in the details. The details of the specific activities for which cost was incurred by both CWS and CWHK (for the activities of Mr. Braganza and Mr. Choudhary), and the attendant benefit to the assessee, have not been considered till date. This must be provided, in addition to a consideration of the ALP vis-a-vis the total cost claimed by these AEs. To this extent, for the consideration of ALP in respect of these transactions, the matter is....