TaxTMI 
TaxTMI 
2018 (4) TMI 1579
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....,91,84,554/-. The draft assessment order was accordingly passed, against which, the assessee preferred its objections before the DRP. DRP issued the directions vide order at 28.12.2015. In accordance with the DRPs direction, the final assessment order passed, against which, the assessee is in appeal before us by raising the following grounds of appeal: "1. The Learned Dispute Resolution Panel (DRP) / Assessing Off icer (AO) are erroneous in law and on the facts of the case. 2. The Ld. DRP/AO are not legally justif ied in making an adjustment of Rs. 3,00,05,103/- as prof it attributable to the appellant company under the Profit Split Me thod in connection with the absolute sale of intangible asset to AE when such revenue is generated by AE of the appellant company i.e., DQ Ireland which is the absolute owner of such intangible asset. 3. The Ld. DRP/AO is erroneous in not considering the f act that the Intangible asset was sold to its AE at Arms length and accepted by Ld. Transf er Pricing Off icer 1 AO and therefore did not require any further additional adjustment. 4. The Ld. DRP/AO are not justif ied in questioning the commercial wisdom of the appellant' decision to in....
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....y. As per ld. AR, "AE" was in a position to generate revenue in the last quarter of 2009-10 i.e. Jan-March, 2010. But TPO adopted the whole revenue generated by "AE" in the whole year to arrive the prof it arithmetically to the Indian Entity. The main issue bef ore us is, whether the TPO justified to determine the profit attributable to Indian entity (assessee) when he himself determined the sale consideration of IP (Jungle Book). When the TPO ITA No. 151 /Hyd/2015 D.Q. Entertainment (International) Ltd. agreed that there is a outright sale, there ends the international transaction. Now, TPO is trying to go beyond sales and making TP adjustments. We are asking ourselves, whether there is any international transaction exists. In our considered view, there is no international transaction after outright sale. There is no international transaction exists as per section 92B of the Act as there is no transaction exists between assessee and with it's AE. We are inclined to reject the stand of the TPO. M/s DQ Entertainment (International) Ltd, Hyderabad. 15.1 Moreover, after the completion of the sale process, the "AE" has done transaction with the outsiders or outside the jurisdicti....
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.... assessee's own case for the A.Y 2008- 09 in ITA No.62/Hyd/2013 dated 30th October, 2015 and at Paras 6.2 to 6.7 the Tribunal has held as under: "6.2. As can be seen from the above, the TPO analysed the accounts of DQ Entertainment Plc and DQE Mauritius in analyzing the nature of payment. Out of the total amount of US$ 7,99,000 paid, the actual Management Consultation Charges were only US$ 4,27,000 along with administrative and audit fee of US$ 14,000. As per the agreement, there is a markup of 5%. This expenditure only can be considered, in our view, as the Management Consultancy Service Fee, whereas the foreign exchange loss of US$ 3,21,000 cannot be considered as intra group service. We notice f rom the documents placed on record that instead of quarterly bills being raised as per the agreement, DQE Mauritius has raised only one bill for the whole of the year, which was placed at page 170 of the Paper Book. As can be seen from the details of payments made, placed at page 171 of the Paper Book, the amount of US$ 799,174 charged on 31-03- 08 was paid in three installments of US$ 3,00,000 on 14-09-2010, US $ 1,99,174 on 25-10-2010 and US$ 3,00,000 on 04-01- 2011. It is noticed th....
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....ict the amount to the actual management fees charged by the DQE Mauritius along with other cost of administration and audit and mark up at 5%". 11. Since the facts and circumstances are the same for the A.Y before us, respectf ully following the decision of the Coordinate Bench (to which both of us are signatories), we allow the assessee's ground of appeal. 6.1. Since the facts and circumstances before us for the relevant assessment year also the same, respectfully following the decision of the coordinate Bench this ground of appeal is allowed. 7. As regard ground No. 5, we find this issue also has arisen before the Tribunal in the assessee's own case for the A.Y 2010-11 and the Tribunal at paras 23 to 28 are reproduced here under: "23. As regards ground No. 9 pertaining to mark up on travel and other expenses reimbursed by the AE of Rs. 77,36,985/-, it is observed that DQE India had incurred expenses on behalf of DQE Ireland in the nature of travel & other expenses. DQE India recovered the same f rom DQE Ireland on the basis of actual costs incurred. It was explained by assessee to the Ld. TPO that, reimbursement of travel and other expenses were incurred solely on behalf of....
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....e transactions have no impact on profit & loss account. 26.1 Ld. AR submitted that despite the submissions made Ld TPO applied mark -up on reimbursement of travel and other expenses @ 10%, stating that the same was reasonable which any independent party would be willing to pay. It is submitted that it is only reimbursement of expenses incurred by assessee on behalf of AE and there is no services rendered This resulted in an adjustment of Rs. 7,73,699/- to the prof it of the assessee company. 26.2 Ld. AR submitted that according to Black's Law "reimburse means to pay back, to make restoration, to repay that expended, to indemnif y or make whole". As per Concise Oxford Dictionary the term reimburse means "repay (a person who has expended money) or repay( a person's expenses)" In view of the above def inition being reimbursement of actual cost there is no income element in embedded in such payment and is merely in the nature of reimbursement. Hence to apply a markup of 10% based on the prof it earned by the assessee is factually and legally incorrect. 26.3 Ld. AR submitted that in M/s. Cognizant Technology Solutions India Pvt. Ltd v, ACIT ITA Nos.114 & 2100(Mds)/2011 the B....