TaxTMI 
TaxTMI 
2016 (10) TMI 1334
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.... the basis of the order passed under section 92CA(3) of the Act by the TPO. 2.1 That the assessing officer/ TPO erred on facts and in law in holding the arms length price of international transactions of payment of corporate charges as NIL as against Rs. 2,62,53,680 incurred by the appellant, alleging that (i) no services were received by the appellant (ii) cost are charged on allocation basis and therefore, some of the group cost may be loaded in appellant share of corporate charges. 2.2 That the assessing officer/TPO erred on facts and in law in not appreciating that the payment of corporate charges was appropriately benchmarked applying TNMM as most appropriate method and that no adverse inference could be drawn on this account. 2.3 That the assessing officer/TPO erred on facts and in law in computing adjustment on account of international transaction of payment of corporate charges without reasonably applying any prescribed methods, thereby, violating the basic principles of TP regulations. 2.4 That the assessing officer/TPO erred on facts and in law in undertaking cost benefit analysis to determine the arm's length price of payment of corporate charges without ....
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....ervices is paid as percentage of sales. 3.3 That the assessing officer/TPO erred on facts and in law in not appreciating that the intangibles provided by the AE helps the appellant to manufacture new products, upgrade existing products, reduce manpower, reduce raw material cost and increase in productivity. 3.4 That the assessing officer/TPO erred on facts and in law in holding that the appellant has wide experience and expertise in the manufacturing of products for which fees for technical know-how is paid and should in turn charge royalty from AE for the technology and technical know-how given. 3.5 That the Dispute Resolution Panel erred on facts and in law in confirming the adjustment made by the TPO with regard to the payment of royalty by relying on its order for AY 2009-10 and holding that (i) there is no change in the business model of the appellant (ii) no change in the items manufactured by the appellant on payment of royalty; (iii) royalty payment has no bearing on exports. 4. That the assessing officer/TPO erred on facts and in law in making an adjustment of Rs. 18,70,633 allegedly considering the delay in receipt of receivables from the associated enterprise....
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....cts and in law in levying interest under Section 234B and Section 234C of the Act. The appellant craves leave to add, alter, supplement, amend, vary, withdraw or otherwise modify the ground mentioned herein above at or before the time of hearing." 3. Ground No. 1 in this appeal is general in nature so does not require any comment on our part. 4. Vide Ground Nos. 2 to 2.9, the grievance of the assessee relates to the transfer pricing adjustment of Rs. 2,62,53,680/- made by the AO on account of corporate expenses. 5. Facts of the case related to this issue in brief are that the assessee e-filed its return of income declaring total income of Rs. 7,28,40,766/-. Since the assessee had undertaken international transactions with its associated enterprises (AE), the AO made a reference to the TPO, New Delhi u/s 92CA(1) of the Act vide order dated 23.12.2013. During the year under consideration, the assessee in terms of agreement dated 20.10.2006 for availing the technical, marketing and administrative support services had entered into, inter alia, international transaction for payment of corporate charges amounting to Rs. 2,62,53,680/- with its AE. In the transfer pricing docum....
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.... the file of the TPO/AO as has been done in the earlier year. 7. The ld. DR in his rival submissions although supported the orders of the authorities below but could not controvert the aforesaid contention of the ld. Counsel for the assessee. 8. We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is an admitted fact that the assessee could not procure summary of the invoices raised on it by its AE and could not furnish the specific details or complete break-up of how the cost had been allocated, during the proceeding before the TPO or DRP. Therefore, this issue was set aside to the file of the TPO/AO in the appeal relating to the assessment year 2008-09 and the said order has been followed by the ITAT in ITA No. 455/Del/2014 for the assessment year 2009-10. The relevant findings have been given vide para 4.5 of the order dated 29.08.2014 in ITA No. 5765/Del/2012 for the assessment year 2008-09 which read as under: "4.5. We have heard the rival submissions and perused the material on record. The assessee, in accordance with the terms of service agreement dated 20.10.2006 received various technical,....
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.... that an identical issue having similar facts was involved in ITA No. 455/Del/2014 for the assessment year 2009-10 wherein vide order dated 18.02.2016 the matter was remanded back to the file of the AO/TPO for reconsideration and deciding it in conformity with law laid down by the recent judgment of the Hon'ble Delhi High Court in the case of CIT Vs Cushman & Wakefield India Pvt. Ltd. (2014) 367 ITR 730. 12. In his rival submissions the ld. DR could not controvert the aforesaid contention of the ld. Counsel for the assessee. 13. After considering the submissions of both the parties and the material on record, it is noticed that an identical issue having similar facts has already been adjudicated by this bench of the Tribunal in ITA No. 455/Del/2014 for the assessment year 2009-10 in assessee's own case vide order dated 18.02.2016 wherein relevant findings have been given in paras 8 to 11 of the said order which read as under: "8. We have heard the rival submissions and perused the relevant material on record. It is observed that the TPO has computed ALP of the international transaction of `Payment of Royalty' at Nil by holding that the assessee did not avail any benefit an....
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....dependent investigation in terms of the deductibility or otherwise of such payment in terms of section 37(1) of the Act. As per the ratio decidendi of Cushman & Wakefield India (P.) Ltd. (supra), the TPO was required to simply determine the ALP of this transaction unconcerned with the fact, if any benefit accrued to the assessee and thereafter, it was for the AO to decide the deductibility of this amount u/s 37(1) of the Act. 11. Since the authorities below have acted in contradiction to the ratio laid down in Cushman & Wakefield (supra), we set aside the impugned order on this score and remit the matter to the file of AO/TPO for deciding it in conformity with the law laid down by the Hon'ble jurisdictional High Court in the case of Cushman & Wakefield (India) (P.) Ltd. (supra)." 14. So, respectfully following the aforesaid referred to order for the assessment year 2009-10 in assessee's own case, this issue is set aside to the file of the AO/TPO to be adjudicated as directed vide order dated 18.02.2016 in assessee's own case in ITA No. 455/Del/2014 for the assessment year 2009-10. 15. Another issue raised by the assessee vide Ground Nos. 4 to 4.8 relates to the adjustm....
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....d third parties with a time lag of 2-3 months and in some cases the assessee had either not received the remittance or received after a year. Therefore, there was no inordinate delay in receipt of the amount and the time lag was as per industry norms. It was stated that even after applying CUP, the transaction relating to the receipt of proceeds from AE was at arm's length. Therefore, no interest was to be charged on the receivables of the AE when the assessee was not charging interest on receivable of unrelated parties. The reliance was placed on the decisions of the ITAT rendered in the following cases: • DCIT Vs Indo American Jewellery Ltd. in ITA No. 5872/Mum/2009 • Baush and Laumb Eyecare India Pvt. Ltd. Vs ACIT in ITA No. 3861/Del/2010 19. Alternatively, it was submitted that in a number invoices raised on the AE, the assessee had received remittances well in advance and was under liability to pay to its AE for the services rendered by them and did not incur any expense on such payables to its AE. Therefore, when the assessee had not incurred any expenses on payables to its AE and had received payment in advance, there could not be any adverse inf....