TaxTMI 
TaxTMI 
2022 (1) TMI 81
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....fer Pricing Officer ('TPO') / Ld. Assessing Officer ('AO') on account of Arm's Length Price u/s 92CA, wholly on illegal, erroneous and untenable grounds. 2. The order passed by the Ld. CIT(A) is bad in law and on the facts and under the circumstances of the case, on account of Arm's Length Price u/s 92CA. TRANSFER PRICING GROUNDS - INTRA GROUP SERVICES ('IGS') 3. That the Ld. AO's order based on the findings of the Ld. TPO and the order of the Ld. CIT(A) are erroneous and untenable in law and on the facts for various reasons and not limited to the following:- 3.1 The Ld. TPO and consequently the Ld. CIT(A) have grossly erred in law and on facts, in rejecting "Any Other Method", applied by the appellant to benchmark the international transaction of receipt of Intra Group Services in nature of managerial support services from its associated enterprise ('AE'), without giving cogent reasons. 3.2 The Ld. CIT(A) has grossly erred in law and on facts of the appellant's case in holding that: (i) Services received are of duplicate nature based on erroneous factual findings in Para 9.13 of her order; (ii) Nature of services to be....
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.... trick side rails, and metal fuel systems for automobiles and light trucks in North America. 4. The only issue under dispute pertains to determination of ALP of international transaction in the nature of payment of management fees amounting to Rs. 69,65,962/-,by the appellant to its parent AE, Metalsa Mexico for availing the Intra Group services ('IGS'). 5. The facts apropos the dispute are that TPO passed an order u/s 92CA(3) of the Income Tax Act, 1961 ('the Act') dated 19.01.2016, making TP adjustment of Rs. 69,65,962/- by treating the arm's length price ('ALP') of IGS at NIL under the Comparable Uncontrolled Price ('CUP') method primarily applying the benefit test. The appellant agitated the action of TPO before CIT(A). Before the CIT(A), the appellant sought to filed certain additional evidences under Rule 46A of the IT Rules, 1962 in form of email correspondences with the parent AE pertaining to rendering of IGS services to which the CIT(A) asked remand report from the TPO. In remand report dated 13.09.2018 the TPO objected to admission of additional evidences on various grounds and also contended that such payment to AE are in nature of duplicate services as appellant ....
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....h rule ('r.w.r.'), Rule 10B of the Income Tax Rules, 1962 ('the Rules') which describes in detail each method, which can be used as the MAM and the methodology to be adopted while applying the method for benchmarking the transactions and further directs us to Rule 10C of the Rules which lays out the factors which one should always take into consideration while determining the MAM.In this regard, strong reliance was placed in the case of Frigo Glass India Pvt Ltd Vs DCIT [TS-112-ITAT-2014(Del)]. 11. Further, reliance was placed on the following judicial precedents: • NTT Data Global Delivery Services Ltd [TS-325-ITAT-2015(Hyd)- TP] • Indo American Jewellery Ltd. [(2012) 15 ITR(T) 158 (Mumbai)] • Alumeco India Ltd. [ITA No. 1712/Hyd/2012] • MSS India P. Ltd [TS-14-ITAT-2009(Pun)-TP] or [2009-TII- 07-ITAT-PUNE-TP] 12. The ld. AR has stated that both TPO and CIT(A) have made incorrect assumptions and erred by considering that the appellant had also incurred various expenses namely compensation charges, miscellaneous expenses and Legal and Professional Expenses (Prior Period Expenses) and this fact allegedly has been used as basi....
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..... 70-73) and invoices (refer PB Page No. 80-87) in the appealsubmission dated 13.08.2018. The ld. AR has heavily placed reliance on the recent judgment of Hon'ble Delhi ITAT in the case of Corning Technologies India Pvt Ltd [TS-427-ITAT-2021(DEL)-TP]. On similar lines further reliance was placed on the following judicial precedents wherein the emails, invoices, agreements, details of cost allocation, etc. are considered as necessary evidences in respect of rendering and receipt of services: • M/s Bombardier Transportation India Pvt. Ltd. [I.T.(T.P)A.No.1626/Bang /2015], • Control Techniques India Pvt Ltd (2021-TII-146-ITAT-MADTP) • IMC Global Technology Services Pvt Ltd [TS-272-ITAT- 2019(PUN)-TP] • Avery Dennison [India] Pvt Ltd [TS-1219-ITAT-2018(DEL)-TP] 15. Before us, the ld. AR has submitted that the appellanthas incurred a loss before tax of Rs. 46,12,92,042/- and even after not considering the management fee of Rs. 69,65,692/-, the appellant will be in the losses amounting to Rs. 45,43,26,350/, therefore the contention of TPO/CIT(A) that the management support services received by the appellant are a device aimed a....
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....while applying the CUP method. In relation to the same, reliance was placed on the following judicial pronouncements: • Agro Tech Foods Limited [TS-136-ITAT-2021(HYD)-TP] • Ciba India Ltd [2021-TII-72-ITAT-MUM-TP] • Adcock Ingram Ltd [TS-57-ITAT-2018(Bang)-TP] • AWB India Private Limited vs ACIT (ITA No 4454/Del/2011) • Lifestyle International (P) Limited [TS-526-ITAT-2021(Bang)- TP] 18. Apart from aforesaid specific issues discussed before us, the ld. AR has further stated that the TPO/ Ld. CIT(A) has exceeded their jurisdiction in determining the ALP of IGS at Nil by using benefit test. To support the said view, reliance was placed on the on the judgments of Hon'ble Delhi High Court in the case of EKL Appliances Ltd [TS-206-HC-2012(DEL)-TP] and CIT vs Cushman and Wakefield (India) (P) Ltd [(2014) 367 ITR 730 (Del)]. 19. The ld. Departmental Representative has strongly relied on the findings given by TPO and CIT(A) in their respective orders. 20. We have heard both the parties and perused submissions advanced by both the sides in light of records placed before us. 21. Ground no. 1 and 2 are general in ....
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.... of the fact that the management services received by the appellant are duplicate Services in view of the fact that compensation charges, miscellaneous charges and legal and professional expenses had been paid separately by the appellant to the AE. The documents filed by the appellant also do not support the contention of the appellant. The ground of appeal is dismissed." In this regard, the ld. AR has provided detailed nature wise breakup of the said expenses which were paid to third parties clearly demonstrated that these 'other expenses'were incurred for distinct purposes and are related to different services availed from third parties and not from the AE.The details of such expenses are reproduced hereunder for the sake of ready reference. "Table 2: Details of Compensation charges Particulars Amount (INR) Nature of Services BMF TOTAL SOLUTIONS 67,70,500 Compensation charges (Provision made for dispute settlement with material supplier -paid in April 2012) Table 3: Details of Miscellaneous Charges Particulars Amount (INR) Nature of Services BLUE DART EXPRESS LIMITED 40,457 Courier Services Bureau Veritas India Private Limited 45....
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....as erred in determining the ALP of management support services at Nil based on various alleged observations made by the TPO while passing order u/s 92CA of the Act, relevant extract of the same is reproduced below: "The taxpayer has not been able to show as to when and how the services under consideration were requisitioned from the AEs, whether the services were actually needed by it, whether the same were actually received it by producing contemporaneous documentary evidence, at the time of entering into agreement or at the time of availing the services (if actually availed) what benchmarking analysis has been done, what cost benefit analysis was done when a huge payment has been made by it to the AEs." 27. The ld. AR has argued that the TPO has judged the commercial expediency of the services availed by the appellant from AE and therefore has surpassed its jurisdiction by concluding that there was no necessity of availing such services in the nature of IGS from the AE. Hon'ble SC in case of Pr CIT Vs Frigoglass India Pvt. Ltd. [2018-TII-03-SC- TP] which referred and relied upon the judgment of Hon'ble Jurisdictional High Court in case of EKL Appliances Ltd. [TS-20....
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....f us was a party, it has been held that where the assessee has provided evidences including the e-mails, invoices, agreements and has also provided details of cost allocation, it cannot be said that the services have not been provided to the assessee. Relevant extract of the said judgment is reproduced here below: "26. The entire grounds consists of two issues, whether in fact the services were rendered and availed by the assesse and if so, whether the mark-up of 5% can be considered as comparable with the market averages. Culling from the details filed and arguments of both the parties, we find that there is no dispute about availing of the services. The evidences include the e-mails, invoices, agreements submitted at page nos. 294 to 397 of the paper book. The assessee has also provided details of cost al location at page nos. 285 to 288 of the paper book. Hence, it cannot be said that the services have not been provided to the assessee. With regard to the mark-up of 5%paid by the assessee, we find that the economical analysis submitted by the assessee at page nos. 121 to 128 of the paper book is acceptable at the same time, the comparable namely, Pay Cheques. Inc. showi....
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....enditure of Rs. 236.12 Crores incurred by the AE. The working of allocation has provided by the appellant is reproduced hereunder for reference. "Details of allocation of expenses incurred by AE in relation to management services: Name of Group companies Budgeted sales (in USD '000) Budgeted sales (in INR) 1 USD = INR 45.30 Percentage of budgeted sales Actual expenditure incurred allocated in ratio of budgeted sales (inUSD '000) Actual expenditure incurred allocated in ratio of budgeted sales (in INR) Metalsa SA de CV 8,51,03 1.48 38,55,17,26,096 48.47% 25,232.78 1,14,44,33,264 Metalsa Argentina SA 1,87,389.15 8,48,87,28,473 10.67% 5,556.02 25,19,93,470 Metalsa Structural Solutions, Venezuela 2,42,407.79 10,98,10,72,922 13.81% 7,187.30 32,59,80,349 Metalsa Hopkinsville 1,23,305.05 5,58,57,18,595 7.02% 3,655.95 16,58,15,719 Metalsa Owensboro Inc. 1,01,536.99 4,59,96,25,488 5.78% 3,010.54 13,65,42,898 Metalsa Australia PTY Ltd 38,738.49 1,75,48,53,522 2.21% 1,148.58 5,20,93,977 Metalsa Roanoke Inc. 76,505.93 3,46,57,18,712 4.36% 2,268.37 ....