2021 (3) TMI 980

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....ed by the ld. TPO/AO qua the assessment year 2011-12 on the grounds inter alia that:- "1. On the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income Tax (Appeals) - 1 ("Hon'ble CIT(A)") has erred in confirming an addition to the extent of INR 1,09,13,894 made by the Learned Deputy Commissioner of Income Tax, Circle-2, Gurgaon ("Ld. AO")/Learned Additional Commissioner of Income Tax, Transfer Pricing Officer - 1(3), New Delhi ("Ld. TPO") on account of adjustment to the Arm's Length Price ("ALP") of the Appellant's international transaction of provision of ancillary management support services to its Associated Enterprises ("AEs"). 2. On facts and in law, the Hon'ble CIT(A) ....

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....cumstances of the case and in law, the AO has further erred in initiating penalty proceedings u/s. 271(1)(c) mechanically and without recording any adequate satisfaction for this initiation even when no such penalty is warranted in the present case." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : M/s. Intercontinental Hotels Group (India) Pvt. Ltd. (IHG India), the taxpayer was incorporated as H.I. Crowe Plaza (I) Pvt. Ltd. on August 23, 1996 as subsidiary of Bass International Holdings N.V. Netherlands (now known as Six Continents International Holding B.V.) for managing and offering services mainly to Indian Hotels. IHG India provides ancillary management support services to Six Continents Hotel....

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....ed the ALP of international transactions qua the support services as under:- Total Cost Rs. 109,948,739 ALP at a margin of 22.17% Rs. 134,324,374 Price received Rs. 120,925,638 Adjustment u/s 92CA Rs. 13,987,736 5. Assessee carried the matter before the ld. CIT(A) by way of filing an appeal who has partly allowed the same. Feeling aggrieved, the taxpayer has come up before the Tribunal by way of filing the present appeal. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 7. At the very outset, it is pointed out by the ld. AR for the....

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....PO, is correct. A. As seen from the submissions made by the appellant, it is evident that the services rendered by the appellant to the AEs are very different from the services being rendered to the other parties. The services rendered to unrelated parties include pre-commencement services and hotel management services whereas the services rendered to AEs are in the nature of system fund support, brand support and regional office services, The basis of charging of services fee is also different in the case of unrelated parties and in the case of AEs. Whereas the pre-commencement services in the case of unrelated parties are being charged on a fixed basis and the hotel management services in the case of unrelated parties are being c....

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....panies selected by Ld. TPO in AY 2010-11 and affirmed by Hon'ble CIT (A) NCP FY 2010-11 (%) 1 Apitco Limited 25.07 2 Cameo Corporate Services Limited 11.03 3 Global Procurement Consultants Limited 30.86 4 Quadrant Communication Limited 14.58 5 TSR Darashaw Limited 41.32 6 H C C A Business Services Private Limited 13.99 7 HSCC (India) Limited 16.01 8 IDC (India) Limited 10.60 9 ICRA Management Consulting Services Limited 15.71   Arithmetic Mean 19.91 B. The comparables used by the TPO were upheld by the CIT(A) in his order dated 29/03/2016. The appellant has not given any explanation or justification against the comparables adopted by t....

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..... The adjustment made by the AO is accordingly confirmed to the extent of Rs. 1,09,13,894 3.10 These grounds of appeal are partly allowed." 9. Aforesaid findings returned by the ld. CIT(A) go to show that ld. CIT(A) under the garb of "rule of consistency" adopted the TP analysis made by the TPO and accepted by the ld. CIT(A) in taxpayer's own case for AY 2010-11 without examining the legality of the TP study conducted by the taxpayer finding its international transactions at arm's length and TP analysis of the TPO vide which he has adopted the internal comparables and proposed an adjustment of Rs. 1,39,87,736/-. 10. This method of TP analysis is unheard of as every assessment year is required to be examined independen....