TaxTMI 
TaxTMI 
2019 (5) TMI 327
X X X X Extracts X X X X
X X X X Extracts X X X X
....characterising the subsidy income as income received from provision of services; (ii) Rejection of Comparable Uncontrolled Price [CUP] method applied by the assessee as the Most Appropriate Method [MAM] for bench marking the international transactions pertaining to provision of consultancy services, thereby applying Transactional Net Margin Method [TNMM] as the MAM. (iii) Alternatively, the assessee pleads that the Assessing Officer erred in inappropriately allocating the costs between AEs vis a vis non AEs by taking such subsidy as a part of turnover pertaining to transaction with AEs and allocating the entire costs on the basis of that turnover. (iv) In the alternative, the assessee pleads that the TPO/ Assessin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rendered services to its AE as well as availed services from the AE. The nature of such services relate to consulting services referred to various core services as undertaken by Watson Wyatt Group of Companies, which are post-retirement benefits, actuarial valuation etc. Watson Wyatt India renders these services to both - Associated Entities and Unrelated Parties. Services were rendered to Associated Entities in order to service certain client projects overseas. 6. The assessee has also received services from its AE for projects in India or other assistance provided by its AE. Services are rendered by Associated Entities for India in order to service certain projects in India. The appellant is a loss making company since its inception an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he provision of services rendered by the assessee to its AE. It is the contention of the ld. DR that the purpose of the payment of this subsidy is to maintain the strategic presence of WW Global Network. It is the say of the ld. DR that clause 1.1 clearly mentions, "each subsidiary shall provide the WW Global Network all or any of the services outlined in Schedule 1 to the agreement. 10. We find that the Schedule 1 to the agreement which is at page 315 of the paper book lists out the services which the subsidiaries are bound to provide for receiving the service charges and reads as under: " The subsidiary agrees to provide all or some of the following services to the WW Global Network: 1. Maintenance and provision of hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is true that no third party would have paid such a subsidy to an unrelated party but the fact of the matter is that the appellant did receive this service charge subsidy which is directly related to services provided by it to its AEs. In our considered opinion, this service agreement income of Rs. 7,70,23,981/-, is part of provision of consulting services rendered by the assessee and, therefore, we do not find any error in clubbing service agreement income with provision of consulting services of Rs. 2,45,64,401/-. This ground is accordingly dismissed. 13. Next grievance relates to application of MAM. 14. The assessee has applied CUP as MAM for bench marking provision of consulting services. 15. The assessee has bench marked this t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the non-availability of external comparables, the internal comparables are most appropriate for bench marking transaction under CUP method. The ld. AR further pointed out that even as per the Associate Consulting Agreement, which governs sharing of work between all AEs, it has been clearly mentioned that the price to be charged to the AEs should be same as charged to the unrelated parties. Therefore, CUP is MAM and not TNMM applied by the TPO. 18. The ld. DR stated that for using CUP method to benchmark international transactions, strict similarity of services rendered to AE and Unrelated Enterprise (URE) must be established by the assessee on the basis of reliable evidences. The assessee has failed to establish such strict similarity o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any force in the contention that the evidences are not brought on record. The invoices raised to AEs and non AEs are exhibited in the paper book. Whether the same person is providing service to both the AEs and non AEs is irrelevant, so as long as the evidences of services provided are available. The services are provided by different set of personnel, having different qualification and it would not be justifiable to ask for invoices of the same person who has provided service to AEs and also to non AEs. 21. Moreover, considering the nature of services provided by the assessee, we do not find the geographical locations relevant because the consulting services provided by the assessee would remain the same whether the service receiver is....