TaxTMI 
TaxTMI 
2021 (10) TMI 909
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....onverted products. Avery's business segment is involved in the production of pressure-sensitive materials, Fasson-brand self-adhesive materials, office products and a variety of tickets, tags, labels and other converted products. Some pressure-sensitive materials are 'converted' into labels and other products through embossing, printing, stamping and die-cutting, whilst others are sold in unconverted form as base materials, tapes and reflective sheeting. These activities fall under Avery's PSM or Materials business. Roll Materials is a major business unit under the PSM Segment. 5. Avery also develops, manufactures and markets a wide range of products for consumer and industrial markets, including peel-and-stick postage stamps, reflective highway safety products, automated retail tag and labeling systems, and specialty tapes and chemicals, graphics imaging media, specialty tapes, tickets, tags, and imprinting equipment for retail and apparel manufacturers. These activities fall under the RIS segment of Avery's business. 6. The RIS Segment's largest product line consists of the Information Brand Management Division ("IBMD") products such as woven and pri....
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....450 VIPFS 19,400,122 Ticketing HUB 47,838,053 Total 226,469,722 12. While computing the total income, the AO made the following additions to e as declared by the Assessee in its return of income: Nature of addition Amount (in) 1 Addition in pursuance of impugned order under section92CA(3) of the Act (on account of intra-group services) 212,101,593 2 Addition in pursuance of impugned order under section 92CA(3) of the Act (on account of accounts receivable) 5,666,322 Total 217,767,915 13. We find that the AO has held the arm's length price of the intra-group services at "Nil" by applying CUP method on the ground that no uncontrolled enterprise would have paid any amount for services which do not tantamount to intra group services with demonstrable benefits. 14. In this case, the assessee has received following intra-group services: Marketing Support Services, Management Services (GVP Services), Operations and Logistics, Ticketing Hub and VIPFS Services in RIS Segment; Marketing Services, Finance, Distribution and Logistics, HR, Technology Deployment in Material Division Segment. 15. The AO while making the addition, made t....
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.... value of the goods/services intended to be availed, in the market and that too at the bests negotiated prices. No such effort has been demonstrated to be made at the end of the assessee, which weighs heavily against the normal practises of business prudence. 16. The ld. CIT(A) deleted the addition relying on the orders of the Co-ordinate Bench of ITAT and the Hon'ble Jurisdictional High Court in assessee's own case for the earlier years. 17. Aggrieved the revenue filed appeal before us. 18. During the arguments, the ld. DR unsuccessfully tried to differentiate the facts and law applied in the case of the assessee in the instant year in relation to the earlier years. 19. Before us, the ld. AR submitted that the ITAT, in the assessee's own case for AY 2007-08 and AY 2008-09, after understanding the nature of the Assessee's business operations and the nature of various intra-group services received by the Assessee held that there existed a direct, nexus between the intra-group services received by the Assessee vis-à-vis the revenue earned/cost incurred by the assessee. 20. Hence, the Co-ordinate Bench of ITAT held that these services are intrinsi....
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....el/2014 is as under: "33. Further, the ld. DR had raised a contention that the assessee has not demonstrated how the services received are beneficial to the assessee. We are of the opinion that, ascertaining whether a service has actually benefited the taxpayer or not is not within the prerogative of the Tax Authorities. To avail a service or not is a commercial decision which cannot be challenged by the Tax Authorities." 22. The Co-ordinate bench of ITAT in the assessee's case for AY 2008-09 held that OECD guidelines end an aggregated benchmarking approach in a situation, where the underline transactions are closely linked to the core business operations. The relevant extracts in this regard are reproduced below: "28. We are of the considered opinion that, with regard to PSM and RIS segments, the mark-up charged by the AEs is within the +/-5% range, allowed under second proviso to section 92C of the Indian Income Tax Act, 1961. Accordingly, these services can be considered to be at arm's length; and with regard to of GVP services, VIPFS services and Ticketing Hub Services, the service charges paid by the assessee, represents the actual cost incurred by....
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....and the Hon'ble High Court of Delhi, in the absence of any change in the material facts and the proposition of law, we decline to interfere with the considered decision of the ld. CIT(A). Interest on the receivables: 25. Heard the arguments of both the parties and perused the material available on record. Perused the order of the ld. CIT(A) in details which makes mention below. 26. We find that the Assessing Officer made an adjustment of Rs. 56,66,322/- on account of interest on the over-due intra-group receivables, which were pending for more than 30 days. The assessee pointed out that the ratio between the international transactions on the cost side (leading to creation of creditors) and on the revenue side (leading to creation of debtors) is 66:34. The assessee submitted the details of net monthly balance payable to the AEs which are tabulated below: Month Amount payable (in INR) April 2008 100,468,512.31 May 2008 122,926,408.85 June 2008 131,329,666.56 July 2008 122,044,694.25 August 2008 169,014,895.12 September 2008 209,041,292.33 October 2008 207,378,648.26 November 2008 207,604,201.90 December 2008 169....