TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 1615
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....tion of the analysis undertaken by the Appellant in it's Transfer Pricing (TPJ documentation, by the learned TPO, and thereby erred in not appreciating that the Appellant had prepared the TP documentation bona fide and in good faith. 3. That the learned AO and the learned Panel erred both in facts and law in confirming the action of the learned TPO of considering the payment of Rs. 2,21,64,344, by the Appellant, for the international transaction pertaining to receipt of factories, facilities management and EDP support services (collectively referred to as "management services") from the associated enterprises (AEs), to be 'Nil", and in doing so grossly erred in: 3.1 Upholding the act of the learned TPO of erroneously applying the Comparable Uncontrollable Price ('CUP') Method. 3.2 Upholding the conclusion reached by the learned TPO that the Appellant received no economic and commercial value from the management services provided by the AEs. 3.3 Ignoring the fact that the Appellant was a joint venture company with one of the partners being an Indian concern, 3.4 Erred in considering the quantification of transaction value as 'Nil' for management ser....
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....the profit in terms of the percentage of sales was 48% in the financial year 2004-05 and whereas in the financial year 2005-06, after the payment of the management fee, the profit in terms of percentage of sales was 35.95%. Based on these factual information, the TPO has inferred that the above payment had not resulted in any tangible benefit to the appellant company and did not provide any economic value to the appellant. He further held that the appellant has failed to furnish any evidence regarding actual services received from Associate Enterprises and therefore held that the arm's length price is 'Nil' and accordingly suggested the TP adjustment of Rs. 2,21,64,344/-. The AO passed the draft assessment order dated 18.11.2009 incorporating the above TP adjustment. After receipt of the draft assessment order, the appellant filed an objection before the Hon'ble DRP contending interalia that TPO was not justified to treat the transaction of payment of management fee as a separate class of transaction without rejecting the TP study report submitted by the appellant. It was further contended that the TPO was not justified in not aggregating the transaction of manageme....
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....esent appeal is whether the TPO is justified in making ALP adjustment at Nil by holding that there was no necessity of incurring such expenditure and no benefit was derived and there was no proof of actual rendition of services. The TPO treated the transaction of payment of management fee on stand alone basis. No doubt the law is quite settled now. It is beyond the powers of AO/TPO to question the necessity of incurring expenditure or deny the deduction on the ground that no benefit out of such expenditure was incurred. The TPO/AO cannot determine the ALP in such transaction at Nil. The reliance in this regard can be placed on the decision of Hon'ble Delhi High Court in the case of Delhi High Court in the case of EKL Appliances Ltd. (supra). The Hon'ble Delhi High Court has reiterated the position laid down by the Hon'ble Supreme Court in the case of Eastern Investments Ltd. v. CIT [1951] 20 ITR 1 and Sassoon J. David & Co. (P.) Ltd. v. CIT [1979] 118 ITR 261/1 Taxman 485. The decision of Hon'ble Delhi High Court in the case of EKL Appliances Ltd. (supra) was followed by several coordinate benches of this Tribunal, few of them are as follows: i. Dresser-Rand India....
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....y the either party to the appeal, the additional evidence can be admitted by the Tribunal at its discretion only in the event that the party leading the additional evidence satisfied the Tribunal that it was prevented by sufficient cause from leading such evidence and this evidence would have material bearing on the issue which is to be decided by the Tribunal and ends of justice demands the admission of such evidence. The Tribunal can only admit this evidence after satisfying the above conditions and passing an order to that effect. In the present case, the appellant had not explained as to how it was prevented from furnishing evidences before lower authorities and also how this evidence would prove conclusively that AE had rendered the services for which management fee was paid by the appellant. In the circumstances, we do not find any valuable reason for admission of additional evidence as the additional evidence does not conclusively prove that the services were actually rendered by the AE. The coordinate bench of this Tribunal in the case of Volvo India (P.) Ltd. v. CIT (Appeals) [2017] 77 taxmann.com 207 of which the Hon'ble AM is the author, held as follows:- "12. Thus....