TaxTMI 
TaxTMI 
2022 (3) TMI 1471
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....t satisfy the arm's length principle envisaged under the Act. In doing so, the Ld. DRP/TPO grossly erred in: 1.1 disregarding the benchmarking approach and methodology followed by the Appellant for determining the arm's length price ('ALP') for availing of corporate management services excluding IT cost in its transfer pricing documentation maintained under Section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962 ('Rules'); 1.2 rejecting use of Transactional Net Margin Method ('TNMM') as the most appropriate method for benchmarking impugned international transaction under a combined transaction approach and instead applying Comparable Uncontrolled Price ('CUP') by challenging the commercial wisdom of the Appellant; 1.3 considering the ALP of the transaction to be Nil by inappropriate application of CUP method in contravention of the provision of Rule 10B of the Income Tax Rules, 1962 merely based on presumptions without furnishing details of price charged in any comparable uncontrolled transaction; 1.4 holding that the corporate management services are in the nature of shareholder services and hence unwarranted; 2. Tha....
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..... TPO has passed order dated 29/01/2016 under Section 92CA(3) of the Act by rejecting the analysis carried out by the assessee in its transfer pricing study and made adjustment amounting to Rs. 4,38,70,088/- on account of payment made to AE for availing corporate management services and further, computed the Arm's Length Price for the aforesaid services at 'NIL'. 6. As against the order dated 29/01/2016 of the Ld. TPO, the assessee has filed its objection before the Ld. Dispute Resolution Panel ('DRP' for short). Further, the assessee has also filed an application for admission of additional evidence before the DRP. The Ld. DRP has issued directions u/s 144C(5) of the Act vide order dated 01/12/2016 to the TPO for re-computing the Arm's Length price in accordance with the said direction. In response, the TPO vide order dated 19/01/2017 has reduced the Arm's Length Price adjustment to Rs.1,53,10,762/- as against Rs.4,38,70,088/-. 7. In compliance with the directions of the Ld. DRP, the final assessment order has been passed u/s 143(3) of the Act vide order dated 20/01/2017. 8. Aggrieved by the final assessment order passed u/s 143(3) of the Act dated 20/01/2017, the assesse....
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.... has justified the order of the TPO/DRP/AO and further submitted that, the Revenue has no objection to remand the matter to Ld. TPO with a direction to consider all the relevant facts and materials and decide the issue afresh as per Law. 13. We have heard the rival submission on the issue under consideration; we have also gone through the entire materials available on record and gave our thoughtful consideration. The moot grievance of the assessee has that, assessee had produced all the documents to prove that the assessee had availed services from its AE's, but the authorities below have not considered the materials available on record. On the other hand, the Ld. DR has vehemently disputed the said contention of the assessee. 14. In an identical situation, the Coordinate Bench of the Tribunal in the case of Donaldson India Filter Systems Vs. DCIT (ITA No. 3218/Del/2015) vide order dated 03/10/2018 held as under:_ "18. Moreover Revenue Officer cannot decide while sitting on the armchair of a businessman to decide as to what services are required. So far as question of deriving the benefit of such services is concerned, benefit may always not be the result of any busi....
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....#39;ble High Court and coordinate Bench of the Tribunal, as discussed in the preceding paras, we are of the considered view that it is beyond the jurisdiction of ld. TPO to determine the benchmarking of technical services and project management services by applying the "benefit test" and "commercial expediency test" rather his jurisdiction is limited to determine the ALP of transactions with the standpoint of a businessman and not by sitting on the chair of the businessman. Moreover, in the instant case, assessee has brought on record plethora of evidence for availing of the technical services and ITA No.7510/Del./2017 payment made for technical services received on the basis of USD 1600 per man-month on actual time spent by the relevant personnel, copy of technical services agreement between the taxpayer and the Huawei, China and also brought on record invoices filed on sample basis for availing technical services, but all these documents have not been examined by the TPO/DRP rather benchmarked the technical services/project management services availed of by the taxpayer from its AE at nil by mechanically dealing with the issue by applying the benefit test and commercial expedienc....