TaxTMI 
TaxTMI 
2021 (6) TMI 164
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....n the facts and in the circumstances of the case and in contrary to law, the Ld. TPO erred in going beyond the scope under section 92CA of the Act, in questioning the commercial rationale of the legitimate business expenses incurred by the Appellant and further erred in making the transfer pricing adjustment amounting to INR. 2,84,58,356/- by determining the ALP of receipt of management services to be Nil. 1.3. On the facts and in the circumstances of the case and in contrary to law, the Ld. AO / Ld. TPO erred in not appreciating the facts of the case that the receipt of management services is closely linked to the overall business of the Appellant and the same was aggregated under Transactional Net Margin Method ('TNMM'). of Rs. 92,33,314/- 1.4. On the facts and in the circumstances of the case and in contrary to law, the Ld. AO / Ld. TPO, having considered the transactions aggregated under manufacturing function to be at ALP, erred in not considering an aggregate benchmarking approach for receipt of management services from AE, being a closed linked transaction, in line with the TP documentation maintained by the Appellant. 1.5. On the facts and....
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....e Ld. TPO further erred in imputing interest on invoice to invoice basis, however failed to compute the weighted average receivables in days for all the invoices raised during the year under consideration. 3. Other grounds: 3.1. On the facts and in the circumstances of the case and in contrary to law, the Ld. AO / Ld. TPO erred in rejecting the transfer pricing ('TP') documentation and the economic analysis undertaken by the Appellant without any robust reasons to determine the arm's length price (' ALP') for receipt of management services. 3.2. On the facts and in the circumstances of the case and in contrary to law, the ldAO/ldTPO erred in not satisfying any of the conditions prescribed u/s 92CA(3) of the Act while making TP adjustments and accordingly the order passed by the Ld.TPO/Ld.AO should be set aside in entirety. Total tax effect: Rs. 1,65,67,741/- 2. It emerges from a perusal of assessee's foregoing grounds that it has sought to confess the twin issues challenging ALP adjustment qua receipt of management services and interest on receivables; respectively. Coming to the former issue involving sum of Rs. 2,84,58,356/- both ....
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....ies Shared Services Pvt Ltd (IT (TP) A No. 659/Bang/2012) In view of the above, the submissions of the assessee is rejected. The benefits derived out of management services normally depend on the various factors. In this regard, the following points are worth to mention: 1. Universally, management services are being treated at arm's length only when it is proved substantially by the taxpayer that such intangibles were actually received and further proving that such services have benefitted it. 2. The application of the arm's length principle would be to see whether the amount paid by the taxpayer for the management services reflect the same charges for the intangible that would have been, or would reasonably be expected to be levied between independent parties dealing at arms' length for comparable circumstances. 3. How much a comparable independent benefit recipient, 1 under comparable circumstances would be willing to pay for that service? 4. Whether as a result of such payment, the recipient of the service, the taxpayer, resulted in any economic or commercial value to enhance its commercial position. The expected benefit m....
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....pting anyone of the methods under section 92C. Further to Submit that the Ld. TPO neither rejected the method followed by the appellate to benchmark the transaction nor adopted any recognized method to determine the ALP of receipt of management services from AE. When the appellant has discharged its onus by providing substantial documentation by demonstrating appropriate necessity for the services rendered and the benefits derived to corroborate the arm's length nature of the transaction, the Ld. TPO's conclusion on determining the ALP as Nil is erroneous and contrary to the provisions of the stature. The case laws referred are as follows: 1. CIT Vs. Walchand & Co., Pvt ltd vide 65ITR 381 2. EKL Appliances Ltd [ITR Nos.1068/2011 & ITA Nos.1070/2011] 3. Schneider Electric India Pvt Ltd [TS-433-ITAT-2017 ((Ahd)(TP)] The management services was aggregated with TNMM under manufacturing function and was considered to meet the arm's length standard from Indian TP regulations. However the AO has taken different stand by considering management services as separate transaction, which needs to be benchmarked separately. The management services avai....
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....icer with regard to the management services. Hence the details submitted by the appellant is not accepted and the addition made by the Assessing Officer is confirmed. 3. Both the learned representatives reiterated their respective stands against and in favour of the impugned TP adjustment relating to receipt of management services in the nature of an intangible transaction. Case law CIT vs. Cushman and Wakefiled (India) Pvt.Ltd. (2014) 367 ITR 730 (Del) and CIT vs. EKL Appliances Ltd (2012) 345 ITR 241 (Del.) holds that it is not within the domain of the "TPO" to determine the actual benefits derived from the International transactions in issue which needs to be seen from assessee's view point going by common business prudence only. We make it clear that the assessee has already filed its detailed paper book in the nature of supportive evidence indicating receipt of management services in day to day functioning from its overseas Associated Enterprises. There is no rebuttal coming from Revenue's side that all the said details lack genuineness which could be taken as the benchmark for arriving at nil 'ALP' thereof. We thus hold that the learned lower authorities action making i....