TaxTMI 
TaxTMI 
2018 (4) TMI 444
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....cumstance of the case and in law, the Ld. Dispute Resolution Panel (Ld.DRP) has erred in confirming the proposed additions/disallowances made in draft order by Ld.AO. TRANSFER PRICING ADJUSTMENTS 4. The Ld. AO/TPO erred on facts and in law in determining the arm's length price ("ALP") of the international transactions of reimbursement of group costs and payment of management fee to Associated Enterprise ("AE") at Nil as against the amount of Rs. 2,58,88,820 paid by the Appellant and thereby making an addition of Rs. 2,58,88,820 on that account. 4.1 The Ld. AO/TPO erred in not appreciating that the Appellant received economic and commercial benefit and the services received were not incidental or duplicate in nature. 4.2 The Ld. AO/TPO erred on facts and in law in holding that no services have actually been received by the Appellant and that no independent enterprise under comparable circumstances would be willing to pay an independent party for such services. 4.3 The Ld. AO/TPO erred in not appreciating that the payment made towards management fee is closely linked with the transactions of provision of software development services and pro....
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....at the current year (i.e. FY 2008-09) should be used despite the fact that the same was not necessarily available to the Appellant at the time of preparing its TP documentation. 6.4 The Ld. AO/TPO has erred on facts and in law in selecting companies which are functionally dissimilar to the assessee as comparable for the purpose of bench marking analysis. 6.5 That the Ld AO/TPO erred on facts and in law in applying arbitrary filters for the purpose of benchmarking analysis. 6.6 The Ld. AO/TPO has erred on facts and in law applying a filter to select comparables which have a ratio of employee costs to sales less than 25 per-cent, thereby not recognizing the fact that there is no standard disclosure norm for employee cost. 6.7 The Ld. AO/TPO has erred on facts and in law in rejecting comparables with diminishing revenues/persistent losses. 6.8. The Ld. AO/TPO has erred on facts and in law in selecting companies with highly volatile and super normal profit margins and disregarding the judicial precedents available in this regard. 6.9. The Ld. AO/TPO has erred on facts and in law in rejecting the claim of the Appellant in allowing wo....
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....e fee' paid is only a terminology being used but the substance of the transaction is that it is the purchase cost of the software traded . 7. 7 That on' the facts and in the circumstances of the case and in law, the Ld. AO/ DRP failed to appreciate that the incurrence of 'software licence fee' expenditure has nexus with the business of the Appellant and is 'an integral part of the profit earning apparatus of the appellant and thus is allowable as revenue expenditure. 8. That on the facts and in the circumstances of the case and in law, while suggesting the additions, the Ld. AO/TPO have inter-alia grossly erred in making incorrect statements in the order, based on conjectures and surmises, which are not in accordance with the facts of the case. 9. That the Ld. AO/DRP erred on facts and in law in levying interest under sections 234B and 234D of the Act and withdrawing the interest earlier paid to the Appellant under section 244A of the Act. 10. That the Ld. AO erred on facts and in law in initiating the penalty proceedings against the Appellant under section 271(1)(c) of the Act. That the above grounds of appeal are in....
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....der by making an adjustment of Rs. 5,16,24,036/- on account of transfer pricing addition and disallowance of Rs. 1,78,53,135/- treating software license fees as capital expenditure. 3. Aggrieved by the final order passed by Ld.AO, assessee is in appeal before us. 4. At the outset Ld.Counsel submits that Ground No. 1-3 are general in nature and therefore do not warrant adjudication. Accordingly we dismiss these grounds. 5. Ground No. 4 raised by assessee is in respect of intragroup services in lieu of which assessee made payments to its associated enterprise. 5.1. Ld.Counsel submitted that ALP of management fee amounting to Rs. 2,58,88,820/- paid by assessee to its AE's has been considered as 'nil' by authorities below. He submitted that this issue had arisen before this Tribunal for assessment year 2007-08 as well as 2008-09, wherein this Tribunal set aside this issue back to Ld.AO for deciding the issue in the light of evidences filed by assessee. At this juncture Ld.Counsel submitted that for the year under consideration all relevant documents/evidences were filed before Ld.TPO, however the same were not considered while deciding the issue. He submitted that an obj....
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....in the case of M/s. Cotton Naturals (India) Pvt. Ltd., vs. CIT in ITA No. 233/2014. 6.3. On the contrary Ld. CIT DR referred to the observations of ld. TPO in para 4.1 & 4.2 of the order which reads as under: "4. Examination of the balance sheet revealed receivables thereby Implying that the payment for the Invoices raised by the assessee have not been received within the stipulated time. In this regard, the assessee was requested to furnish the time period for payment as per service agreement, However, to be reasonable' and fair to the assessee, instead of charging penal interest, the delayed payments are being treated as unsecured loans advanced to the AEs and It is proposed to charge a normal rate of Interest @17.22%, for the period of delay in receipt 'of payment beyond the time stipulated In the services agreement. The basis for arriving at the rate of interest is discussed in the following Para. 4-.2 The assessee did not submit the Invoice details In order to arrive at the actual amount of payment which has been received beyond due date, Inspite of a specific query. 'Hence, the amount shown as outstanding In the books of the assessee as on 31/....
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....same time, the assumption made by Ld.TPO/AO cannot be accepted in the absence of evidences. 6.7. We, therefore, set aside this issue to be decided in the light of evidences/invoices placed on record by assessee before Ld.TPO and TP Report in respect of receivables as well as payables. In the event it is established that the receivables as well as payables relate to assessee & AE inter se, then netting off shall be granted. On the contrary if it is established that only receivables are in the nature of loan then interest at the market rate shall be applied. Accordingly this ground raised by assessee stands allowed for statistical purposes. 7. Ground No. 6 has been raised by the assessee due to the adjustment made by ld. TPO/AO on account of provision of software development services and software consultancy services. 7.1. Ld.Counsel submitted that ALP of these two segments have been computed at Rs. 80,68,034/-and Rs. 13,73,574/-respectively. However ld. TPO has not made any adjustments since the management fees has already been determined at ''nil. Ld. TPO has thus restricted the adjustment to management fees in respect of these two segments. 7.2. As we have already s....