TaxTMI 
TaxTMI 
2020 (9) TMI 1176
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....pellant-company is a wholly owned subsidiary of BG Asia Pacific Holdings Pvt. Limited. It commenced midstream gas marketing operations in India after obtaining the approval of the Foreign Investment Promotion Board [FIPB] of the Government of India to undertake marketing and distribution of natural gas as well as LNG. 5. As per Form 3CEB, the appellant has undertaken the following international transactions: 6. The quarrel before us relates to the receipt of support services valued at Rs. 1,79,11,717/- for which the appellant has taken TNM Method as the Most Appropriate Method. Facts on record show that the appellant, BG India Energy Solutions P. Ltd. [BGEPIL], sought assistance of its group entity in India, for managing day-to-day business operations. The contention of the ld. counsel for the assessee is that BGEPIL is a company with expertise related to exploration and production activities in the oil and gas sector. BGEPIL possesses a pool of highly knowledgeable, technically trained and experienced individuals having extensive knowledge of the exploration and production sector. This pool of trained and experienced personnel has been made available by BGEPIL to the Appella....
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....by the AE is audited. 12. Whether AE is rendering such services to any other AEs/independent parties also. If yes the details thereof including the rates/amount charged from such AEs along with mark up if any. 13. If the AE has rendered services to more than one entity including the taxpayer company, then the basis of allocation amongst various entities may be furnished. Please also furnish the basis of choosing a particular allocation key. 14. If the above information is not furnished, complete in all respects, along with contemporaneous documentary evidences, the arm's length payment for these intra group services would be treated as Nil by applying CUP method. 8. Vide reply dated 30.10.2014, the assessee explained the background of Intra-group services paid by it. In support, all the agreements entered into by the assessee company related to Intra Group Services obtained by it from the AEs during the year were filed. The assessee also identified services actually received by it. 9. Reliance was placed on several judicial decisions. The reply of the assessee was duly considered by the TPO but it did not find any favour with him who was of the ....
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....erves to be deleted. 17. Per contra, the ld. DR strongly supported the findings of the TPO and read the relevant portion of the TPO's order. 18. We have given thoughtful consideration to the orders of the authorities below. A perusal of the profit and loss account of the appellant company, which is placed at page 105 of the paper book shows that the assessee has not incurred a single rupee on employee cost. Even in the notes of accounts, at clause 10, it is mentioned that no provision for retirement benefits has been made in these financial statements as there were no employees on the payroll of the company during the year. These facts clearly show that the assessee was totally dependent on the AE for running its business. But for the support and services provided by the AE, the assessee could not have booked turnover of Rs. 917 crores. 19. We have also carefully perused the time sheets of the employees of BGEPIL which are placed at pages 139 to 141 of the paper book and which are also exhibited hereinbelow: 20. On the basis of these time sheets of the employees of BGEPIL, it raised debit notes on the assessee. This further supports the fact that the appellant was f....
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....eting or sale of LNG and natural gas. (e) provide incidental support services such as, without limitation, the billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customers or vendors, and public relations services. This Includes services such as that of commission agent, as well as information technology services Including but not limited to any service in relation to designing, development or maintaining of computer software, or computerized data processing or systems networking, or any other service in relation to the operation of computer systems." 16. Article 3 provides for consideration and the same reads as under: "3.1 In consideration of the Services provided by BGEPIL under Article 2, BGEPIL agrees to pay BGEPIL for all costs and expenses incurred by BGEPIL related to the provision of the Services plus a mark-up of 12% on all such costs and expenses. All payments under this agreement shall be made in Indian Rupees and shall be subject to deduction of tax at source as applicable, 3.2 BGEPIL shall pay service tax as may be corr....
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....he aforesaid Annexure 1 services Time Sheets prepared in relation to the execution of the aforesaid services Appendix + 6 Confirmation memorandums in relation to purchase of LNG 7 Minutes of board meetings held during the year IT charge Commercial and operational services 8 Minutes of general meetings held during the year 9 VAT returns pertaining FY 2010-11 Service tax returns pertaining FY 2010-11 TDS returns pertaining FY 2010-11 Evidence of any other statutory compliances filed pertaining FY 2010- 11 Appendix 5 Appendix 6 Appendix? Appendix 8 To be provided at a later stage The taxpayer has not been able to establish as to how the AE's are in a better position to advice it on tax, legal and financial matters in India. The taxpayer is operating in India. It is not at all likely that they have developed some knowledge on these issues which the taxpayer lacks. Hence, there is no plausible reason for the taxpayer to make this payment. The taxpayer has not been able to substantiate as to how this service were useful to it. Moreover These services seem to be of a very generic nature with there....
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.... without carrying out any cost benefit analysis and has simply made a payment because it was asked to do so. This does not constitute arm's length behaviour. Moreover the taxpayer has been unable to substantiate actual receipt of these services. The taxpayer has claimed to have received following services â– Marketing services Negotiation of contracts â– Determination of prices Coordination of logistics of the products Document 3 SKJ for Prec DUTO Sex DRIDO ,CC fAfifch a482702282 FREG BO Regulations HINDE SU HSSE 2702323 274 2792222 1924 SZGIZ 5700039 421924 07617 21628 1505744 RIVEROS 8709041 HAPutive=&cr 2341504SE4 Ross Hours Gros DU 80 480 440 1,200 12 LOCIT 44 COT +7617 07617 GOODZ 74 Ñлет ZOZZOL7 2702323 2702322 5700039 77+00CT RASKEA PNational 17A 1504864 Z1924 SZGIZ ROCTZ 213 1 T Z.I LIVELOA 3- RIAANCE ICther 171504864 21924 | KG DIHESHIN WS-2007 83 41030 DIVAUGU 2702322 1501864 216àªàª 10 KGDVVX +42 פֿדוIUU0 ....