TaxTMI 
TaxTMI 
2022 (7) TMI 1293
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.... The company started its operation in India since May, 2000. The assessee deals with clients, who are into the business of healthcare consumer goods, industrial goods, energy utility, financial services and high technology and commission. The assessee's case was taken up for scrutiny assessment and order under section 144(3) r.w.s. 144C(13) of the Income-tax Act, 1961 was passed. The assessee filed its objection before Ld. DRP. 3. The AO/TPO made adjustments in respect of three transactions pertaining to licence fees paid by the assessee for using the time and billing software, regional training administration and coordination and cost allocation and information technology intra group cost allocation to the assessee. The TPO determined the value of these transactions at Nil except in the case of regional training, administration and co-ordination where the sum of Rs. 50 lakhs was allowed by the TPO. The Assessing Officer made some addition to the total income apart from the adjustments in TP proceedings. The assessee disputed the order of the Assessing Officer before the Disputes Resolution Panel-II(DRP), Mumbai and the DRP, vide order dated 30/12/2013 confirmed the addition....
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....as licence fee to BCG Holding Corporation, USA. The assessee has adopted CUP method to benchmark this transaction by taking AE as tested party. The prices of similar software module licensed by Oracle Corporation was used as comparable uncontrolled price (CUP). It was alleged that the annual charge for the Oracle modules was Rs. 9,34,937/- whereas the adjustment on account of additional function in respect of BCG system was USD 1,73,94,264/- in which case, the difference in comparison between the two transactions were huge. It was further stated that the assessee failed to prove as to in what ways it was superior to the Oracle system thereby holding that the payment of royalty with regard to the licence fees paid for time and billing software is unwarranted and determined the ALP at Nil. The Ld. DRP upheld the findings of AO/TPO in spite of submission of additional evidences by the assessee substantiating that royalty paid was at arm's length. The assessee had also submitted various other related agreements entered into by three parties, which are similar to the impugned transaction. The three comparables were rejected by the TPO and the same was upheld by the DRP for the follo....
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.... Rs. 4,29,27,940/- on the ground that it was an inferior cost allocation where the assessee has estimated Rs. 1.29 crores for allowing its employees to use certain commonly used software, which, according to the AO/TPO was much more than what a company in ordinarily uncontrolled situation would spend for the same. The AO/TPO had made allocation of Rs. 50 lakhs for purchase and use of these softwares which includes the remuneration of personnel required to install and educate the staff for using the same and thereby disregarding the arm's length price determined by the assessee. The Ld. DRP upheld the decision of the AO/TPO. 8. During the appellate proceedings, the Ld. Senior Counsel for the assessee contended that the AO/TPO has not prescribed any method for determination of ALP; therefore, the ALP determined by the assessee by using CUP method should be accepted. The Ld. Senior Counsel further stated that the issues in grounds 1, 2, & 3 are squarely covered by the decision of the co-ordinate bench of this Tribunal in assessee's own case for A.Y. 2008-09 in ITA No. 7600/Mum/2012 dated 31/07/2020. 9. The Ld. DR, on the other hand, contended that the AO/TPO has not disp....
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..... CIT vs. Lever Exports Ltd. (2017) 78 taxmann.com 88 5. Boston Consulting Group (India) Pvt. Ltd. - ITA No. 7600/Mum/2012 order dated 31/07/2020. 12. That being the case, the determination of arm's length price at Nil in grounds 1 & 2 and at Rs. 50 lakhs on ad hoc basis in ground 3 is contrary to the provisions of the Act. Resultantly, the benchmarking done by the assessee is more acceptable and the transactions of the assessee with its AE for the services availed is held to be at arm's length. In view of the same, grounds 1 to 3 are allowed. 13. Ground 4 pertains to disallowance of foreign travel expenses of Rs. 15,85,847/-. It was alleged by the Assessing Officer that various family members of the employees visited foreign countries for which cost was incurred by the assessee in the previous year under consideration. The Assessing Officer rejected this claim for deduction on the ground that the assessee was unable to bring any supporting evidence to prove that the impugned expenditure was for business purpose, though the evidences produced by the assessee that travel of family members of the employees of assessee to foreign countries was for business prosp....