TaxTMI 
TaxTMI 
2018 (10) TMI 1504
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....the facts of the case are that Avery Dennison Group is one of the leading developers and suppliers of innovative identification and decorative solutions for businesses and consumers worldwide. The group is engaged into three business segments, namely, (i) Pressure Sensitive Materials [PSM] (ii) Retail Branding and Information Solutions [RBIS] and (iii) other Speciality Converting Businesses. 5. PSM segment includes LPM and Graphics and Reflective Solutions sub-segments. These sub-segments offer various products/solutions ranging from pressure-sensitive labelling materials, packaging materials and solutions, roll-fed sleeve, performance polymer adhesives and engineered films, graphic imaging media, reflective materials, pressure sensitive tapes for automotive, building and construction, electronics and industrial applications, diaper tapes and closures 6. RBIS Segment includes Apparel Solutions, Fasteners and Printer Systems sub-segments. Under these sub-segments, the Group provides creative services, brand embellishments, graphic tickets, tags and labels, sustainable packaging, inventory visibility and loss prevention solutions, data management services, price tickets, printe....
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.... 8. Please state as to whether any cost benefit analysis was done while entering into the agreement and while requisitioning the services for payment of IGS? a. If so the details of such cost benefit analysis should be furnished. The cost benefit analysis should include the expected benefit from the IGS vis a vis the payment made for the same. b. Please specifically state as to whether any benchmarking analysis was done at the time of entering into the agreement so as to compare the payment of IGS to the AE vis a vis an independent party under similar circumstances. If so, the details thereof. 9. Please show with evidence as to what tangible and direct benefit has been derived by the assessee company from the use of such IGS. 10. Whether the services availed from AEs, have also been performed by the assessee company itself or also availed from independent parties? If yes, a. The details of such expenditure for each of the services should be furnished. b. Please state as to why a separate payment has been made for such services to the AE. 11. Please furnish details and documentary evidence of cost incurred by the AE....
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....ctions. In case there are no such third party transactions, the details of average payable period for AE transactions should be mentioned." 10. The assessee submitted its reply vide letter dated 22.09.2017 and gave details of services which are as under: Nature of Services Amount (in INR) PSM 1 Marketing Support Services 79,828,604 2 Operations, Logistics and Technical Services 44,130,518 3 Labor Law and Employee Relations 25,206,149 4 Finance, Accounting, Administration and MIS Services 8,797,719 5 Corporate Support Centre [CSC) 33,037,258 6 ITSSC services 1,432,989 RBIS 1 Ticketing HUB 31,407,611 2 GVP Services 53,106,338 3 VIPFS Services 42,706,765 4 CSC Services 81,969,297 11. Necessary documents were also furnished. 12. After considering the submissions, the TPO was of the opinion that any transaction that has bearing on profit has to be analysed separately. The TPO was of the firm belief that there is a high possibility of duplication of services in the sense that the tax payer itself could have performed the services itself and there was no need for the sa....
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....A.Y 2007-08 and 2008-09 and the High Court once again declined to interfere following its earlier order dated 15.07.2016. 18. In A.Y 201-12 also, the Tribunal followed its orders and the Hon'ble High Court dismissed the Revenue's appeal following its order dated 28.07.2016. 19. Surprisingly, in A.Ys 2012-13 and 2013-14, the Tribunal restored the matter to the file of the Assessing Officer with the direction to the assessee to lead proper and credible evidence with respect to the nature of services and how and when those services have been rendered by the AE. 20. Before us, the ld. DR heavily relied upon the findings of the Tribunal given in A.Ys 2012-13 and 2013-14. 21. As mentioned elsewhere, the TPO made the transfer pricing adjustment by holding that no uncontrolled enterprise would have paid any amount for services which do not tantamount to intra group services with demonstrable benefits. The Hon'ble Jurisdictional High Court of Delhi in the case of CIT Vs. Cushman and Wakefield Pvt Ltd 475 of 2012 has answered to such observation and the same reads as under: "36. In this case, the issue is whether an independent entity would have paid for such ser....
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....S. No prudent business person will leave the issue of payment of fee open. The assessee has not been able to demonstrate the genuineness of the transaction, the services rendered by the group entities to merit this referral fee at a high rate nor the business purpose of the same. 4.8 On close scrutiny of the e-malls, copies of which have been given in the submissions, it is seen that most of them are cryptic mails in that most of them do not clearly mention either the client or the requirements of the client which is the mandatory requirement for any entity referring to any other entity. There is no evidence submitted regarding the services provided by the group entities to merit the referral fee. Copies of some invoices are also given but again raising invoices does not substantiate or gives proof of the work done by the group entities. 4.9 The assessee has not been able to demonstrate as to how the Indian entities from whom income was generated on account of rendering off services etc. is linked to the associate enterprise of the assessee to whom referral fee is paid. In simpler words the link between the clients based in ITA 475/2012 Page 31 India and the assoc....
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....l transactions exceeds Rs. 5,00,00,000, the Assessing Officer has a very limited role. He has to mechanically follow these instructions. There is no application of mind. There is no formation of any opinion at the stage of reference. Thus, to presume that he has allowed a particular expenditure under section 37, does not seem to be the right view of the matter. In any event, this is not a case where the Transfer Pricing Officer or the Assessing Officer made a disallowance under section 37 of the Act. It is a case where an adjustment has been made under section 92C(4) of the Act, after the Transfer Pricing Officer determined the arm's length price at nil under section 92CA(3). Hence this argument is devoid of merit." Indeed, a Division Bench of this Court, in Sony India Pvt. Ltd. v. Central Board of Direct Taxes and Anr., [2007] 288 ITR 52 (Delhi) (albeit considering the law prior to the 2007 amendment to the Act), concurred with this view: "18 ... a reading of Section 92C and 92CA does not indicate that the AO is required to form a prior considered opinion after considering all the available materials even ITA 475/2012 Page 33 before making a reference to the ....