2019 (12) TMI 1630

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....e facts of A.Y. 2007-08 (ITA- 8535-2018) are being adverted to, to adjudicate the issue(s) in the appeals. 3. The Respondent Assessee is a private limited company and is a wholly owned subsidiary of M/s. Knorr Bremse Far East Ltd. and is engaged in the business of manufacturing air brake sets of passenger cars and wagon coaches, shock Absorbers for passenger cars and locomotives, distributor valves, computer control brake system, tread break unit and other brake accessories. The Respondent assessee filed its return of income on 31st October, 2007 declaring total income of Rs. 1,71,64,832/-. The Transfer Pricing Officer while evaluating the international transactions held that the transactions of professional consultancy, management fee for....

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....tion of Rs. 2,92,64,006/- on account of professional consultancy and management fee of Rs. 1,61,36,323/- on account of SAP charges after giving benefit of depreciation. 4. The Assessee filed an appeal before the ITAT. The Tribunal vide order dated 31st October, 2012 partly allowed the appeal of the assessee holding that the Sap license and MS Office had been purchased at lower rate as per the finding given by the DRP and hence deleted the addition to that extent all other additions were confirmed. The assessee as well as the department filed appeals bearing ITAs No. 182 of 2013 and 172 of 2013 , respectively, against the order passed by the ITAT before this Court. This Court vide order dated 6th November, 2015 restored the matter back to t....

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....ost appropriate method in the absence of cup which is applicable where nature of activities involved, assets used and risk assumed are comparable to those undertaken by an independent enterprise. The ITAT concluded that the assessee had divided its operation into manufacturing and distribution segment and the profit level indicator of OP/sales was disclosed at 9.26 as against five comparable companies of 8.40. Similarly in the distribution segment the assessee through TNMM had shown its OP/Sales at 15.21% as compared to six comparables who had only 3.96% profits. The tribunal thus concluded that the adjustment made by the TPO on account of professional consultancy services and management support services rendered by the employees of the A.E....

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....r the revenue further contended that the ITAT had fallen in error in accepting TNMM as the most appropriate method for evaluation of international transactions including Intra Group Services. 8. The Tribunal while deciding the application of method for determining the Arm's Length Price held as under:- "...In the present case, the TPO although applied the CUP method but nothing was brought on record to substantiate that the AE provided the similar services to an independent enterprise in comparable circumstances. He also did not bring on record any instance where comparable services were provided to an independent enterprise in the recipient market. Therefore, in our opinion, in the assessee's case the CUP method was not the most appropr....