TaxTMI 
TaxTMI 
2021 (9) TMI 1419
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....services were actually rendered by the AE, not appreciating the details, explanations and evidences submitted by the Appellant. 3. Brief facts of the case are that assessee company is engaged in the business of trading of importing testers and meters from its principles in UK and selling the same in India. In aforesaid assessment, the AO has made disallowances of management support services u/s. 37(1) and /or/u/s. 40A(2)(b) of the Act. In this regard, he also referred to the observation of TPO for AY 2012-13 and noted that assessee's contention in this regard has been rejected by the TPO in the previous year. He also observed that during assessment proceedings assessee did not file "any of the specific details to support as to why these payments have been derived at". We may gainfully refer to the order of the AO in this regard as under:- "It was observed during the course of the assessment proceedings that as part of Expenses in the P&L Account, the assessee has claimed an expense amounting to Rs.78,99,011/- in respect of payment of Management Support fee to its holding company M/s Megger Group Ltd. (MGL). The issue was discussed with the AR of the assessee during the ....
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....;s order dated 29/01/2016, for A.Y. 2012-13, the TPO has given a categorical finding, reproduced as under: "a) The assessee did not produce any primary evidence to show that the services are actually rendered by the AE except describing the nature of services, allocation of cost. At arm's length, the parties dealing in similar circumstances would have such evidence in possession. b) The assessee did not produce any evidences regarding the actual services rendered by the AE and how they would be quantified at an arm's length condition. c) Details submitted by the assessee, it does not show the utility of services rendered and quantification of the same in arm's length condition. 77ns shows that ' these charges are not linked with actual services. d) The assessee could not produce the details and quantum of expenditure spent by the AE in rendering services in connection with these services even though he was asked specifically, e) Just by describing various services, it will not suffice to justify the price charged in intra group services. The assessee is only describing various services rendered by the AE, but did not give....
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....of the assessment proceedings, to furnish any specific details which could determine whether the expenses so made are not excessive and reasonable. Penalty proceedings u/s.271(1)(c) of the Act are initiated simultaneously for furnishing inaccurate particulars of income. 4. Upon assessee's appeal Ld.CIT(A) observed that on identical issue, DRP has decided the issue, in the earlier AY 2012-13, against the assessee, hence he quoted from that order and held that since the facts and circumstances this year are identical to that of AY 2012-13, there is no reason to deviate from the finding of the DRP in the earlier year. Hence, Ld.CIT(A) upheld the order of AO. 5. Against this order, assessee is in appeal before us. 6. We have heard both the parties and perused the records. Ld. Counsel of the assessee submitted that the issue is squarely covered in favour of the assessee the decision of ITAT in assessee's own case for AY 2012-13. Hence, he submitted that orders of the authorities below should be set aside and the issue be decided in favour of the assessee. 7. Per contra, Ld. DR submitted that facts in the present case are different as much as in the earlier, it was the TPO's ....
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....tegration segment Transactional Net Margin Method Adjusted Operating Profit / Sales 17.01 per cent 4.37 per cent On this basis, the assessee contended that its international transactions are at the arm's length. The TPO in Order passed u/s. 92CA(3), determined the arm's length price of the international transactions of payment made for administrative and management services at NIL as against Rs.71,67,037/- claimed by the assessee. 5. While making the adjustment Transfer Pricing officer gave following reasoning :- a) The assessee did not produce any primary evidence to show that the services are actually rendered by the AE except describing the nature of services, allocation of cost. At arm's length, the parties dealing in similar circumstances would have such evidence in possession. b) The assessee did not produce any evidences regarding the actual services rendered by the AE and how they would be quantified at an arm's length condition. c) Details submitted by the assessee, it does not show the utility of services rendered and quantification of the same in arm's length condition. This shows that these cha....
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....nd facts of the case, it is not possible to determine as to whether the expenses amounting to Rs.71,67,037/- have been incurred wholly and exclusively of the purpose of the business. Therefore, the said expenses are hereby not allowed u/s.37(l) of the I.T. Act, 1961. Alternatively, they shall also stand disallowed u/s.40A(2)(b) of the Act as the assessee failed to establish both before the TPO and the undersigned during the course of the assessment proceedings, to furnish any specific details which could determine whether the expenses so made are not excessive and reasonable. 6. The Assessing Officer in this regard referring to the TPO's order concluded as under :- "7.2 The assessee has not raised any objection against the above proposed addition/disallowance. However, since the TPO has taken the ALP of the said transaction at NIL, and effectively there has been an upward adjustment of Rs.71,67,037/-, which has also been upheld by the Hon'ble DRP, therefore, the said expenses after being not allowed u/s.37(l) and/or u/s.40A(2)(b) of the Act, are not added back to the total income of the assessee, as the same may result into the double taxation of the said amou....