TaxTMI 
TaxTMI 
2022 (4) TMI 1492
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Hon'ble DRP have erred in not following Hon'ble Tribunal's ruling in Appellant's own case for AY 2010-11 to AY 2013-14 in relation to above international transactions, more so considering that there is no change in facts as compare to the said years. 3. On facts and circumstances of the case and in law, the learned TPO and the learned AO, under the directions of the Hon'ble DRP have erred in not appreciating the factual details, submissions and various documentary evidences which demonstrate receipt of services by the Appellant. 4. On facts and circumstances of the case and in law, the learned TPO and the learned AO under the directions of Hon'ble DRP have erred in rejecting the benchmarking analysis undertaken by the Appellant using Other method, as the most appropriate method and computing the transfer pricing addition without undertaking any comparable analysis and applying Other Method (Need Evidence Benefit Test method) which is not a prescribed methods as provided under section 92C (1) of the Act. 5. On facts and circumstances of the case and in law, the learned TPO and the learned AO under the directions of Hon'ble DRP, have erred in c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and in law, the learned TPO, the AO and the Hon'ble DRP have erred in computing the ALP of these transaction at NIL, and not following one of the prescribed methods under section 92C(1) of the Act, thereby making an ad-hoc disallowance. 13. On the facts and circumstances of the case and in law, the learned TPO and the learned AO under the directions of Hon'ble DRP have erred in questioning the commercial wisdom and expediency of the Appellant for receiving MSF and MNC services. 14. On facts and circumstances of the case and in law, the learned TPO and the learned AO under the directions of Hon'ble DRP, erred in rejecting the benchmarking analysis undertaken by the Appellant considering overseas AEs as the tested party, even though the said approach is within the provisions enshrined under Chapter X of the Act. 15. On the facts and circumstances of the case and in law, the learned TPO and the learned AO erred in considering the aforesaid services to be in the nature of shareholder / stewardship / duplicative / incidental / passive / on-call services without appreciating the underlying nature of the services. 4. As a plain look at the DRP order would show, it is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eatment of foreign AE as tested party without independently verifiable (not self serving certificates ) supporting evidences with TNMM as MAM by the assessee is not correct benchmarking analysis and accordingly reject the same. Further, we agree with the findings of the TPO in rejecting the Benchmarking analysis regarding GIS Services and proceeding to determine ALP as mentioned above. (iv) We find that the TPO has rightly relied upon the decisions of - Hon'ble ITAT Bangalore in the case of Gemplus India (P) Ltd-(TS-100-ITAT-2010) and Cranes Software International Ltd (ITA no 1594/Bang/2012-AY 2008-09) ; Hon'ble Delhi ITAT in the case of Bombardier Transportation India (P) Ltd. (ITA No. 1626/Del/2015) - where the Hon'ble ITAT has held that the ALP can be determined at NIL if the taxpayer has not proved that it has received any commensurate benefit against the payments of service charges to the AEs. The TPO has also placed rightly reliance on the decision of Hon'ble Delhi High Court in the case of Cushman and Wakefield in ITA No. 475/2012 dated 23.05.2014, Decision of Hon'ble ITAT Bangalore in the case of Forsoc Chemicals India (P)Ltd. - ITA 148/Bang/2014 date....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r passed in this year is different from the approach adopted by the TPO in earlier years. We are in agreement with the TPO that the analysis of facts of the relevant financial year and stand adopted by TPO are different from that of earlier orders of TPO and hence the decisions of ITAT being relied upon are not squarely applicable. We are in agreement with the TPO that the facts of the relevant assessment year and the adoption of "Other method" by the TPO duly differentiates the facts of the current year with that of earlier years, whose ITAT orders have been relied upon by the assessee. (vii) The contention raised by the assessee that the TPO has adopted estimation/ad-hoc basis for determining the ALP of international Transactions is not found to be correct. The contention that the TPO has challenged the commercial wisdom of the assessee is not correct. The TPO has the duty to examine the benchmarking exercise and adoption of correct MAM and correct ALP of the international transactions and hence we find that the TPO has not exceeded his jurisdiction in this regard. The lack of opportunity claim has been made, however we find that the assesee has made submissions before the AO,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hether in favour of the assessee or against the assessee). On the issues which have not been handled correctly by the AO, the DRP issues appropriate directions u/s. 144C(5). As such, the DRP does not deal with an appeal filed by the assessee arising from a final order issued by the AO. It has been held by Hon'ble Bombay High Court in the case of Vodafone India Service (P.) Ltd.[2013] 37 taxmann.com 250 (Bombay) that any type of objection can be raised before the DRP, jurisdictional or related to international transactions. In light of the above discussion and even otherwise, the DRP is not bound by its own orders for earlier year(s), if there is a variation in the surrounding circumstances or the facts of the case. Further, it is necessary to point out that for the year under consideration, only the assessee has a right to appeal against the final assessment order framed by the AO after incorporating the directions of the DRP and the Department does not have any such right of appeal. Under these circumstances, whereby the decision of the Panel cannot be challenged by the Department, the DRP would not be bound by its decisions given in the earlier year(s), when the decision of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vant sections and the relevant rules, we find that the duty of the ld. TPO is restricted only to the determination of the arm's length price of an international transaction between two related parties by applying any of the methods prescribed u/s.92C of the Act read with rule 10B of the rules. Thus, there is no provision made in the statute empowering ld. TPO for determining the ALP on a particular international transaction on an estimation basis / adhoc basis. 8.2. We find that the Hon'ble Jurisdictional High Court in the case of CIT vs. Johnson & Johnson Limited in ITA No.1030 of 2014 dated 07/03/2017 wherein it was held as under:- "4.Regarding question (D) :- (a)The respondent assessee paid to its Associated Enterprises (AE), technical know how royalty of 2%. The Transfer Pricing Officer (TPO) by order dated 24th March, 2005 restricted the technical know how royalty paid by the respondent assessee to its AE at 1% instead of 2%, as claimed. In terms of the determination dated 24th March, 2005 of the TPO on the above issue amongst others, an assessment order dated 28th March, 2005 for the subject Assessment Year was passed by Assessing Officer under Section 143(3) of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l aspect and grounds raised by the revenue are dismissed on this technical aspect. (AY 2011-12) 8. We have heard the rival submissions and perused the materials available on record. We find that both the parties before us agreed that the issue in dispute is already addressed by this tribunal in assessee's own case for the Asst Year 2010-11 in ITA Nos. 1156 & 1187/Mum/2015 dated 12.6.2019 wherein it was held as under:- 8. We have heard the rival submissions and perused the materials available on record. It would be pertinent to address the preliminary issue raised by the ld. AR before us that the ld. TPO had failed to apply any method while determining the ALP at nil for GIS services; for determining the ALP of payment made towards MSF services by accepting 20% thereon on adhoc basis and accepting 50% for MNC services on adhoc basis thereon. We find that provisions of Section 92C(1)of the Act mandates adoption of one of the prescribed method mentioned therein for determining the ALP of international transactions. It is not in dispute that the disallowances/adjustments made by the ld. TPO to ALP were made without following any of the prescribed methods as per law. 8.1. We ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 20th August, 2013 the Tribunal dismissed the Revenue's appeal inter alia upholding the order of the CIT(A). (d)We find that the impugned order of the Tribunal upholding the order of the CIT(A) in the present facts cannot be found fault with. The TPO is mandated by law to determine the ALP by following one of the methods prescribed in Section 92C of the Act read with Rule 10B of the Income Tax Rules. However, the aforesaid exercise of determining the ALP in respect of the royalty payable for technical know how has not been carried out as required under the Act. Further, as held by the CIT(A) and upheld by the impugned order of the Tribunal, the TPO has given no reasons justifying the technical know how royalty paid by the Assessing Officer to its Associated Enterprise being restricted to 1% instead of 2%, as claimed by the respondent assessee. This determination of ALP of technical know how royalty by the TPO was ad¬hoc and arbitrary as held by the CIT(A) and the Tribunal. (e)In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained." 8.3. Respectfully following the aforesaid decision of Hon'ble Jurisdi....