2019 (12) TMI 1238

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.... r.w.s. 144C(13) of the Income Tax Act 1961, (the 'Act'). 2. Briefly stated, the facts of the case are that the assessee filed its return of income for the assessment year (AY) 2012-13 on 08.11.2012 declaring total income of Rs. 28,91,46,998/-. A reference u/s 92CA(1) was made by the AO to the Transfer Pricing Officer (TPO) for determination of Arm's Length Price (ALP) with reference to all the transactions referred in Form 3CEB filed by the assessee. The assessee is a part of Brink's Global Services (BGS) which provides global risk management and secure logistics for valuables including diamonds, jewellery, precious metals, securities, currency, high-tech devices etc. The services provided by BGS covers the services related to pick-u....

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.... the efficiency • It reduces the cost • Deduction has not been claimed by the AE's in its Return • The AE can provide these services better as it has pool of talent in terms of personnel and technology. • The Cost allocation is as per the annual study. It doesn't maintain timesheet, allocation of time for various category of services. • Services provided are bifurcated into regional services and global services. • The allocation key is based on turnover where the total global and regional cost has been allocated. However, the TPO was not convinced with the above explanation of the assessee and observed that the assessee has not benchmarked the transaction separ....

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....vices rendered to the assessee, the TPO estimated to his best judgment to quantify the value of the services, if at all any, being rendered by the AE to the assessee. Having regard to the nature of services which are claimed to have been rendered in the present case, the TPO estimated the salary for such an employee at Rs. 3,000/- per hour. Further, he estimated the number of man hours rendered by the employees towards rendering of these services to the assessee at 750 hours. Applying the man hour rate of Rs. 3000/- per hour, he arrived at the arm's length compensation of the services rendered by the AO to the assessee at Rs. 22,50,000/- by applying CUP method. Accordingly, he made an adjustment of Rs. 3,83,75,622/- (Rs. 4,06,25,622/- minus....

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....e by the assessee, it has furnished the report titled "Brinks Global & Regional Services 2011", which provides inter alia the department/category-wise details, working and supporting in various appendices. It also included the details of services provided by the AE and break up of cost of different services. The Ld. counsel argues that the assessee had also submitted that in case the TPO requires any further detail, information or clarification, it would be glad to submit the same on knowing about the requirement. The Ld. counsel states that the TPO has wrongly made adjustment to the ALP of management fees by holding that the CUP method as the most appropriate method, without doing any benchmarking or comparison with comparable uncontrol....

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....ated that the assessee has failed to show that specific and distinct services were rendered by the AE, for which payment to the extent made by it needs to be paid. Further, it is stated that nothing has been placed either before the TPO or the DRP to demonstrate any benefit received by the assessee from the services rendered for which payment is claimed. Elaborating further, the Ld. DR submits that the assessee has not submitted any details and evidence of costs actually incurred by the AE, specifically for providing the services to the assessee; it has also not been able to give separate details of costs paid for each service stated to have been availed; all that is stated is that costs incurred by AE have been reimbursed on allocation ....

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.... of management fees paid/payable by the assessee to its AE and proposed an adjustment of Rs. 3,83,75,622/- under the CUP method, without benchmarking with comparable uncontrolled transactions. In the instant case, the TPO has resorted to an ad-hoc unilateral pricing of management fees, disregarding the facts and circumstances of the case. In the case of Kellogg India Pvt. Ltd. (supra), the Tribunal has rightly held that : "Even assuming that the benchmarking done by the assessee was not correct, the Transfer Pricing Officer should have benchmarked the royalty payment by applying any of the prescribed methods. However, without applying any prescribed method he has simply determined the arm's length price of royalty payment at Nil....