TaxTMI 
TaxTMI 
2019 (8) TMI 643
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....Tax (Appeals), Faridabad ("Ld. CIT(A)"), Revenue preferred these two appeals. 2. Brief facts of the case are that M/s Bain & Company India Pvt. Ltd. ("the assessee") was incorporated on 11/5/2006 as a 99.9 N percent subsidiary of 'Bain & Company Incorporation Inc., USA ("Bain USA") and has been engaged in the business of providing Management Consultant Services in India and is a part of their operations, the assessee has been providing and receiving Management Consulting Services to/from its overseas group entities. 3. For the assessment years 2008-09 and 2009-10 they have filed their return of income declaring a total loss of Rs. 7,96,12,217/-and Rs. 8,09,51,666/-. In respect of the "international transactions" entered into by the as....
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.... to the Bain & Company Inc. 5. Contention of the Ld. DR is that there was no rendering of any service whatsoever by Bain USA to the assessee and even if the services said to have been rendered or accepted, such services are only duplicate services which the assessee got through their own resources. He further submitted that no cost has ever been incurred by the Bain USA as claimed by them at 5% of the total turnover. He further submitted that whether the assessee was provided the benefits of the R&D conducted by Bain USA. He further submitted that if at all the assessee received any benefit of the tangibles from Bain USA, the assessee would not have been running in losses. 6. By inviting our attention to page No. 185 of the paper book....
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....sted by the Ld. TPO, the same was filed before the Ld. TPO but the Ld. TPO failed to consider the same in its proper perspective. It is further argued by the Ld. AR that the assessee had discharged the onus of proving the payment of royalty transaction and its being at arm's length and the Ld. TPO failed to provide specific reasons for rejecting the internal and external CUP and also is undertaken by the assessee. 9. Ld. AR submitted that pursuant to the royalty agreement, the assessee had access to the techniques and know-how developed by Bain USA and the same includes intangible asset base of Bain USA which would include techniques and know-how; 'Bain' brand which would include brand-name such as 'Bain', 'Bain' and company, Bain.com, '....
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....Ld. CIT(A) considered the question of linking the profitability of the assessee to determine if a royalty payment is warranted for the use of tangibles and the application of CUP method as a comparable uncontrolled transaction in comparable circumstances. 12. Ld. CIT(A) following the decision of the Hon'ble Delhi High Court in the case of EKL appliances Ltd in ITA No. 1068/2011 and ITA No. 1070/2011 wherein it was held that in case an expense has been incurred for the purpose of business, there is no need to link it up with the profit arising from the same. Ld. CIT(A) observed that it is important to appreciate that both assessee and the Ld. TPO have applied CUP method and knotted TNMM where the disallowance can be based on profitability....
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....ability of the assessee could have been lower are varied due to various reasons and lower profitability in one or more years cannot lead to the conclusion that no benefits were derived or technology was unproductive. 15. We find it difficult to ignore the contention of the assessee has been that the assessee had a compounded annual growth rate of 31.31% from FY 2006-07 to FY 2012-13 and the sale had been rapidly growing over the past few years, whereas, the growth in royalty payment to Bain USA has been negligible in comparison at 1% on domestic Revenue and 2% on foreign Revenue (affecting royalty of 1.18%) paid to Bain USA, for there is no evidence to disprove the same. On a perusal of the result of the search carried out by the taxpaye....