TaxTMI 
TaxTMI 
2019 (8) TMI 176
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....and circumstances of the case and in law, the orders passed by the AO / Transfer Pricing Officer (TPO') and directions issued by the Dispute Resolution Panel (DRP') are not in accordance with law and is contrary to the facts and circumstances of the present case and in violation of the principle of equity and natural justice. 2. On the facts and circumstances of the case and in law, the directions issued by the DRP dated August 6, 2018, are bad in law and are in violation of section 144C(6) of the Act. 3. On the facts and circumstances of the case and in law, the AO has erred in assessing the income of the Appellant under normal provisions of the Act at INR 658,511,620 as against the returned income of INR 355,931,140. Transfer Pricing Adjustment 4. On the facts and circumstances of the case and in law, the AO/TPO/DRP while making an adjustment of INR 302,580,485 in respect of international transaction for receipt of technical assistance from the Associated Enterprise (AE') during the relevant assessment year, erred in following: 4.1 Rejecting the economic analysis and methodology adopted by the Appellant, being Transactional....
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....ed its return of income on 27.11.2013 declaring total income of Rs. 34,75,34,320/-. Along with the return of income, the assessee furnished Form No.3CEB reporting international transaction with its Associate Enterprises (AE) on account of fees paid for technical services of Rs. 27,56,68,318/-. The Assessing Officer made reference to the Transfer Pricing Officer (TPO) for computation of Arms Length Price (ALP). The TPO while passing the order under section 92CA(3) and suggested the upward adjustment of Rs. 27,56,68,318/-. On receipt of order of TPO, the Assessing Officer passed the draft assessment order under section 144C(1) dated 28.11.2016. The assessee filed objection before the ld. DRP challenging the addition/upward adjustment suggested by TPO. The ld. DRP after hearing the assessee rejected the objection and upheld the upward adjustment/addition suggested by ld. DRP vide its order dated 29.03.2017. Consequent, in pursuance of direction of ld. DRP, the Assessing Officer passed the final assessment order under section 143(3) dated 12.05.2017. 3. We have heard the submission of ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the....
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....de Ground No. 4 to 4.7 the assessee has challenged the action of AO in making addition of Rs. 28,25,18,009/- on account of transfer pricing adjustment in pursuance of direction dated 25.11.2016 passed by the Ld. DRP u/s 144C(5) of the Act. The general contention of the parties in the present appeal are similar to the contentions of the parties raised in the assessee's appeal for the A.Y. 2009-10 and 2010- 11 discussed above. During the previous year relevant to the assessment year under consideration the assessee entered into different agreement with its AEs for availing the services relating to account management, solutions, sales and marketing, finance and treasury, human resource services, industrial relation and other services as the party may agree. During the year relevant to the assessment year under consideration, the assessee availed the aforesaid services from CWT, Singapore in terms of the agreement entered with the CWT, Singapore. 12. Before us, the Ld. counsel for the assessee submitted that during the relevant year, the assessee had paid Rs. 28,25,18,009/- to CWT, Singapore. The Ld. counsel further submitted that it is not the case of the revenue that this am....
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.... has not substantially benefitted to the assessee being the AE. The Ld. DR placing reliance on the order of the ITAT, Mumbai in the case of Deloitte Consulting India Pvt. Ltd. 22 taxmann.com 107, held that an uncontrolled comparable company would not incur such expenditure, therefore the arms length price is rightly determined at Nil. The Ld. DR further pointed out that the TP study of the assessee has only established the arms length price of the markup charge by the AE without demonstrating the need of such services. The Ld. DR further pointed out that the TP study report has been prepared by using multiple year data, hence the arm's length price determined by the assessee is not acceptable. The Ld. DR further pointed out that the ranges of the seven comparables are from 4.56% to 44.98%, average of which comes to 24.83%. Since, the assessee has not provided the margin of the comparable pertaining to the assessment year under consideration, the Ld. TPO has rightly rejected the arms length price determined by the assessee. The Ld. DR further submitted that the copy of emails, presentation and templates submitted by the assessee before the authorities below have no evidentiary value....
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.... clients. Further, CWT India received regular assistance from its AE on making pricing instructions to the prospective clients. b) Operation Management - The services rendered by the AE benefitted the assessee in implementation of new system modules and solutions in India improving business efficiency in terms of web security, flexible central management and powerful logging. c) Finance and treasury - CWT India received assistance in preparing annual budgets, key performance indicators,, measures to reduce cost, updation of templates such as invoice ensuring consistency with group standards. d) Human resources - CWT India also received access to the newly launched Policy application for all the employees enabling conducive working culture. Further, assistance was received in relation to the compensation setting as per market standards and on replacement of various positions. e) Information technology and information delivery system - CWT India further received benefits from the support provided by AE in relation to migration on a new software platform along with specific instructions on the installation. 16. Thus, the assessee has produc....
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....for the assessee to have incurred the same". 16. The very foundation of the action of the TPO is thus devoid of legally sustainable merits. There is no dispute that the impugned payments are made under an arrangement with the AE to provide certain services. It is not even the TPO's case that the payments for these services were not made for specific services under the contract but he is of the view that either the services were useless or there was no evidence of actual services having been rendered. As for the services being useless, as we have noted above, it is a call taken by the assessee whether the services are commercially expedient or not and all that the TPO can see is at what price similar services, whatever be the worth of such services, are actually rendered in the uncontrolled conditions. 17. As for the evidence for each of the service stated in the agreement, it is not even necessary that each of the service, which is specifically stated in the agreement, is rendered in every financial period. The actual use of services depends on whether or not use of such services was warranted by the business situations whereas payments under contracts are mad....
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....ssee has further demonstrated that the functional analysis of the controlled transaction is in accordance with Rule 10B of the Income Tax Rules. The assessee has also demonstrated as to why the foreign AE should be selected as tested party in its TP study. Under these circumstances, we find merit in the contention of the Ld. counsel for the assessee that the assessee has rightly selected its AE as tested party for benchmarking the transaction. The assessee has submitted that it has submitted the complete financials of comparable selected for benchmarking the transactions. To identify the companies comparable to CWT Singapore, the assessee has used one source 'One Source Global Business Browser' (International data base) containing business information on 20 million large and medium size companies in the world. In the aforesaid backdrop, there is no justification of rejecting TNMM method adopted by the assessee. We therefore, hold that the assessee has rightly applied TNMM as the most appropriate methods within the meaning of Rule 10B of the Rules. In our considered view, the Ld. TPO has wrongly applied CUP method and determined the arm's length price at Nil. As has been held in the....